Latham (SWIM)2022-11-12 18:47Financial Data and Key Metrics Changes - Q3 net sales increased by 17% year-over-year to 42 million [7][18] - Gross profit for Q3 was 588 million, up 20% year-over-year, with adjusted EBITDA at 102 million in Q3, covers increased by 18% to 35 million [18] - For the first nine months, in-ground pools saw a 14% increase to 123 million, and liners increased by 24% to 12 million in fiscal 2023 [10][27] - Continued investment in fiberglass manufacturing capacity and direct-to-homeowner strategies are seen as critical for long-term growth [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current macroeconomic challenges while maintaining growth initiatives [15][34] - The company anticipates that the current headwinds will persist into 2023, with a focus on managing costs and maintaining production efficiency [40][41] Other Important Information - The company is on track to begin production at a new facility in Kingston, Ontario, in 2023, which is expected to enhance production efficiency and reduce lead times [13][14] - Capital expenditures for the first nine months of 2022 totaled $29 million, reflecting increased investment in fiberglass capacity [24] Q&A Session Summary Question: Industry volume expectations for 2023 - Management indicated it is too early to predict 2023 pool starts, noting that current headwinds are expected to persist into the next year [40] Question: Performance of fiberglass during economic downturns - Management highlighted that fiberglass has consistently outperformed the market in various cycles, with expectations for growth even in a down market [42] Question: Guidance on decremental margins for 2023 - Management refrained from providing specific guidance for 2023 but noted that seasonality and volume pressures would impact margins [51][52] Question: Impact of raw material costs on margins - Management acknowledged that while some raw material costs have decreased, they remain elevated compared to previous levels, affecting pricing strategies [53] Question: Sales impact from destocking and homeowner purchasing delays - Management clarified that the majority of the sales decline is attributed to destocking in the packaged pool category, with homeowner purchasing decisions also slowing down [58][70]