Latham (US:SWIM)2021-08-08 09:58Financial Data and Key Metrics Changes - In Q2 2021, net sales increased by 60.3% year-over-year to $180.9 million, driven by strong consumer demand and order volume [11][30] - Adjusted EBITDA grew by 29.5% to $42.8 million, while the adjusted EBITDA margin decreased to 23.7% due to gross margin compression [11][37] - The net loss for Q2 was $53.6 million, or a loss of $0.49 per share, compared to a net income of $16.4 million, or $0.17 per share, in Q2 2020 [37] Business Line Data and Key Metrics Changes - Net sales for in-ground pools increased by 73.8% to $108 million, covers increased by 55.9% to $26.2 million, and liners increased by 37.8% to $46.7 million [30] - For the first half of fiscal 2021, net sales increased by 101.1% to $329.6 million, with in-ground pools up 120.2% to $201.6 million [38] Market Data and Key Metrics Changes - The company was added to the U.S. small-cap Russell 2000 Index on June 28, enhancing visibility within the investment community [12] - The demand for pools remains strong, with homeowners continuing to invest in outdoor living spaces [21] Company Strategy and Development Direction - The company is focused on driving material conversion to fiberglass pools, aiming for fiberglass to represent 25% of the U.S. residential in-ground pool market by 2023 [20] - A new 170,000 square foot fiberglass manufacturing facility is planned in Kingston, Ontario, to enhance capacity and meet growing demand [18][19] - The company is enhancing its digital and brand initiatives to improve consumer engagement and streamline the pool buying process [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from material inflation and raw material shortages but expressed confidence in navigating these issues through price increases and productivity initiatives [25][26] - The outlook for the full year has been raised, with expected revenue between $600 million and $620 million, reflecting strong first-half results and ongoing consumer demand [46] Other Important Information - Selling, general and administrative expenses increased significantly due to non-cash stock-based compensation and the acquisition of GLI [35] - The company plans to open a world-class training center to support dealer education and productivity [24] Q&A Session Summary Question: Is there conservatism in the revenue outlook for the second half? - Management indicated that strong comparisons from the previous year and supply chain challenges are factors in the revenue outlook [54][55] Question: What is the expectation for material deflation? - Management does not foresee material deflation in the near future, expecting prices to remain elevated [57] Question: How is the capacity and backlog situation? - The company is not sold out for 2021 and has plenty of capacity, with ongoing investments to stay ahead of demand [64] Question: When will the company be price cost neutral? - Management aims to have price exceed costs, with expectations for improvement in margins as price increases take effect [72] Question: How have raw material shortages impacted sales? - Some revenue has been missed due to intermittent shortages, but the impact is considered minimal [78] Question: What are the labor pressures affecting the business? - The company has been successful in hiring and increasing wages to meet market demands, which has helped boost output [84] Question: What is the strategy for dealer partners to increase installation capacity? - The company provides leads, training, and incentives to help dealers increase their capacity and efficiency [106]