8-K/A: Latham Group Exceeds Market, Boosts 2025 Profit & 2026 Outlook

Latham Group, Inc. reported strong fourth quarter and full year 2025 financial results, outperforming the U.S. in-ground pool market and providing optimistic 2026 guidance, bolstered by a strategic acquisition.

Summary

• Latham Group, Inc. (Nasdaq: SWIM) announced financial results for the fourth quarter and full year ended December 31, 2025, and provided 2026 guidance.
• The company reported full year 2025 net sales of $545.9 million, an increase of 7.4% from the prior year, significantly outperforming a U.S. in-ground pool market estimated to have declined by a lowto mid-single-digit rate.
• Full year 2025 net income was $11.1 million, or $0.09 per diluted share, a substantial improvement from a net loss of $17.9 million, or $0.15 per diluted share, in 2024.
• Adjusted EBITDA for the full year 2025 increased by 24.4% to $99.8 million, reaching 18.3% of net sales, reflecting significant margin expansion.
• Fourth quarter 2025 net sales grew 14.5% to $100.0 million, with Adjusted EBITDA surging 189.6% to $10.5 million.
• Gross margin expanded by 320 basis points for the full year and 340 basis points in the fourth quarter, driven by higher volumes, lean manufacturing, and value engineering initiatives.
• Net cash provided by operating activities for the full year 2025 was $63.4 million, a correction from the previously reported $51.4 million due to reclassification of a $12 million deposit.
• In February 2026, Latham acquired Freedom Pools, a fiberglass pool manufacturer in Australia and New Zealand, expected to add approximately $20 million in net sales and $4 million in adjusted EBITDA annually.
• The company provided 2026 guidance anticipating net sales between $580 million and $610 million (9.0% growth at midpoint) and Adjusted EBITDA between $105 million and $120 million (12.7% growth at midpoint).

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, reflecting excellent operational execution and strategic growth initiatives that allowed Latham to significantly outperform a challenging market and project continued growth.

Positives

• Full year 2025 net sales increased 7.4% to $545.9 million, significantly outperforming a declining U.S. in-ground pool market.
• Achieved net income of $11.1 million for full year 2025, a turnaround from a net loss of $17.9 million in 2024.
• Adjusted EBITDA for full year 2025 grew 24.4% to $99.8 million, with Adjusted EBITDA margin expanding by 250 basis points to 18.3%.
• Fourth quarter 2025 net sales increased 14.5% to $100.0 million, demonstrating strong year-end momentum.
• Fourth quarter Adjusted EBITDA soared 189.6% to $10.5 million, with margin expanding 630 basis points to 10.5%.
• Gross margin expanded by 320 basis points for the full year and 340 basis points in Q4, attributed to production efficiencies and accretive acquisitions.
• Fiberglass pool sales, accounting for 76.5% of total in-ground pool sales in 2025, drove a 15% increase in in-ground pool sales in Q4.
• Successfully expanded market position in Florida, with double-digit fiberglass pool sales growth in 2025.
• The acquisition of Freedom Pools in Australia/New Zealand is expected to be immediately accretive to earnings, adding approximately $20 million in net sales and $4 million in adjusted EBITDA annually.
• Strong 2026 guidance projects 9.0% net sales growth and 12.7% Adjusted EBITDA growth at the midpoints, reflecting continued outperformance and operating leverage.

Negatives

• Selling, general, and administrative expenses increased by 13.1% for the full year and 15.6% in Q4, primarily due to increased investments in sales and marketing and digital transformation efforts.
• The U.S. in-ground pool market is estimated to have declined by a lowto mid-single-digit rate in 2025, indicating a challenging broader market environment.
• Capital expenditures are projected to increase significantly in 2026, ranging from $42 million to $48 million, up from $25.4 million in 2025.

Risks

• Potential breaches to technological infrastructure and information systems.
• Geopolitical instability and market instability caused by such instability.
• Inflationary impacts, including on consumer demand for products.
• Impact of trade policies on the global supply chain, import or export of goods and their related costs, as well as on consumer confidence.
• Natural disasters, public health issues, or other catastrophic events.
• Adverse weather conditions impacting sales, which can lead to significant variability of sales in reporting periods.
• Interruption of production capability at manufacturing facilities from accident, fire, calamity, and other causes.
• Unfavorable economic conditions and related impact on consumer spending and demand for products.
• Ability to keep pace with technological developments and standards, such as generative artificial intelligence.
• Compliance with government regulations.
• Declining home ownership affecting demand for products.
• Ability to globally source raw materials and components for manufacturing products.
• Competitive risks.
• Product quality issues, warranty claims, or safety concerns such as those due to the failure of builders to follow product installation instructions and specifications.
• Ability and the cost to obtain transportation services.
• Protection of intellectual property and defense of third-party infringement claims.
• International business risks.
• Realizing anticipated benefits from acquisitions.
• Possible asset impairments.
• Ability to secure financing and substantial indebtedness.

Future Outlook

Latham Group anticipates strong revenue growth in 2026, projecting net sales between $580 million and $610 million, representing a 9.0% increase at the midpoint. Adjusted EBITDA is expected to grow by 12.7% at the midpoint, ranging from $105 million to $120 million. This guidance assumes U.S. in-ground pool starts remain consistent with 2025 levels, reflecting Latham's continued market outperformance and mid-single-digit organic growth, particularly in fiberglass pools and autocovers. The company plans to expand branding and marketing investments, focusing on increasing its presence in the Sand States through greater contractor and homebuilder engagement.

Management Comments

• "2025 marked another year of strong execution by the Latham team. A disciplined focus on strategic priorities enabled the Company to continue to outperform the U.S. in-ground pool market while driving meaningful margin expansion." Sean Gadd, President and CEO of Latham Group.
• "Latham's strengthening market position in the important Sand States provides significant growth opportunities as we move into 2026 and beyond." Sean Gadd, President and CEO of Latham Group.
• "Underpinning our revenue guidance is our expectation for mid-single-digit organic growth reflecting Latham's leadership in the design and manufacture of fiberglass pools and autocovers, two product categories with significant growth runways." Sean Gadd, President and CEO of Latham Group.
• "Adjusted EBITDA growth of 12.7% at the midpoint reflects the significant operating leverage inherent in our business model and includes the impact of increased spending on growth initiatives." Sean Gadd, President and CEO of Latham Group.

Industry Context

StockSavvy.ai notes that Latham Group's ability to achieve 7.4% net sales growth and significant margin expansion in 2025, despite an estimated lowto mid-single-digit decline in the broader U.S. in-ground pool market, highlights its strong competitive positioning and effective strategic execution. The focus on fiberglass pools and autocovers, coupled with expansion in key 'Sand States' like Florida, positions the company to capitalize on specific growth segments within a mature or contracting overall market. The acquisition of Freedom Pools further diversifies its geographic footprint and adds an immediately accretive revenue stream, reinforcing its leadership in North America, Australia, and New Zealand.

Comparison to Industry Standards

• Latham Group's 7.4% net sales growth in 2025 significantly outpaced the estimated lowto mid-single-digit decline in the overall U.S. in-ground pool market, demonstrating strong market share gains and resilience compared to general industry trends.
• The expansion of gross margin by 320 basis points and Adjusted EBITDA margin by 250 basis points for the full year 2025 indicates superior operational efficiency and cost management relative to many competitors who might struggle with inflationary pressures and lower volumes.
• The double-digit growth in fiberglass pool sales in Florida, a key 'Sand State,' suggests successful execution of targeted regional strategies, potentially outperforming regional competitors in high-growth areas.
• The acquisition of Freedom Pools, expected to add approximately $20 million in net sales and $4 million in adjusted EBITDA annually, strengthens Latham's international presence and market leadership in Australia and New Zealand, a strategic move that differentiates it from purely domestic players.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, return to profitability, significant margin expansion, and optimistic future guidance, potentially leading to increased share value.
• Employees: Continued investment in growth initiatives and strategic expansion may indicate job stability and potential for growth within the company.
• Customers: Increased investment in sales and marketing, and expansion in key markets, could lead to better product availability and service.
• Suppliers: Increased sales volumes and production efficiencies may lead to stable or increased demand for raw materials and components.
• Creditors: Improved financial health, positive cash flow from operations, and a manageable net debt leverage ratio of 2.1x enhance the company's creditworthiness.

Next Steps

• Expand and refine branding and marketing investments in 2026.
• Increase focus on building presence in the Sand States through greater contractor and homebuilder engagement.
• Develop programs to enhance dealer conversion and expand presence in target markets.
• Host a conference call on March 3, 2026, at 4:30 PM Eastern Time to discuss results and guidance.

Key Dates

Recommendation

Latham Group's performance in 2025, marked by significant revenue growth and a return to profitability despite a declining overall market, demonstrates exceptional operational execution and strategic strength. The substantial margin expansion, successful penetration into key 'Sand States,' and the immediately accretive acquisition of Freedom Pools position the company for continued outperformance. The robust 2026 guidance, projecting double-digit Adjusted EBITDA growth, further reinforces a positive outlook. For a seasoned investor, these results indicate a company with strong fundamentals, effective management, and clear growth drivers, making it a compelling 'strong buy' opportunity.

Keywords

Latham Group, SWIM, Financial Results, Earnings, 2025, 2026 Guidance, Fiberglass Pools, In-Ground Pools, Adjusted EBITDA, Net Sales, Acquisition, Freedom Pools, Australia, New Zealand, Sand States, Pool Market, Gross Margin, Cash Flow, SEC Filing