Latham (US:SWIM)2022-03-10 19:03Financial Data and Key Metrics Changes - In Q4 2021, the company reported net sales growth of 24.1% year-over-year, reaching $138.9 million, with adjusted EBITDA growth of 56.5% to $27.3 million [7][22][18] - For the full year 2021, net sales increased by 56.3% to $630.5 million, with adjusted EBITDA rising by 66.8% to $139.8 million [22][25] - Gross profit for Q4 2021 was $42.4 million, an increase of 11.5%, while gross margin decreased to 30.5% from 34.0% year-over-year [19][24] Business Line Data and Key Metrics Changes - In-ground swimming pools sales increased by $15.0 million to $82.8 million in Q4 2021, covers increased by $6.8 million to $37.8 million, and liners increased by $5.1 million to $18.3 million [18] - For the full year, sales growth across product lines included $131.1 million for in-ground swimming pools, $47.6 million for covers, and $48.4 million for liners [23] Market Data and Key Metrics Changes - The company noted strong consumer interest and demand for pools, with a significant increase in fiberglass production levels, which rose 35% sequentially from Q3 2021 [7][10] - The company is focused on expanding its market share in the U.S. pool installations, particularly in states like Florida, Texas, Nevada, and Arizona [13] Company Strategy and Development Direction - The company continues to execute its growth strategy by converting concrete pools to fiberglass and enhancing its digital tools for consumer engagement [8][11] - The acquisition of Radiant Pools is expected to expand the company's product portfolio and addressable market [8][12] - The company plans to invest in capacity expansion, including a new fiberglass facility in Kingston, Canada, to support long-term growth [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving robust growth in 2022, with expected net sales between $850 million and $880 million, representing a year-over-year growth of 35% to 40% [14][32] - The company anticipates continued strong demand for its products driven by trends in outdoor living and suburban migration [14][30] - Management acknowledged potential challenges in the first half of 2022 due to tough comparisons and labor availability but expects a ramp-up in growth in the second half [31] Other Important Information - The company refinanced its term loan and revolving credit facilities, enhancing financial flexibility and reducing interest expenses [27] - Non-cash stock-based compensation is expected to be approximately $56 million in 2022, impacting SG&A expenses [33] Q&A Session Summary Question: Impact of oil price movements on pricing strategy - Management indicated they will continue to monitor inflation and have pricing strategies in place to support their 2022 outlook [40] Question: Growth of grand dealers and strategy in sand states - Management confirmed ongoing efforts to grow dealer installation capacity and noted positive progress in sand states [41][42] Question: Backlogs and lead times - Management expects to narrow the price gap and work through backlogs by late Q2 or early Q3 2022 [51][52] Question: Resin supply and backlog fulfillment - Management confirmed improved resin supply and production rates, indicating they have enough resin to meet backlog demands [56] Question: Contribution of Radiant acquisition to revenue guidance - Management noted that Radiant's revenue contribution is relatively small but is expected to grow in 2023 [63] Question: Utilization rates and capacity expectations - Management anticipates a return to 70% to 80% utilization rates as capacity ramps up, with Kingston facility contributing additional capacity [75] Question: Sustainability of pool demand post-pandemic - Management expressed confidence in sustained strong demand for pools, driven by consumer education and market conversion trends [81] Question: Confidence in achieving fiberglass penetration targets - Management remains optimistic about reaching a 25% penetration rate for fiberglass pools by 2023, with plans to double the fiberglass business in the next few years [82]