10-Q: Latham Group Reports Slight Sales Increase in Q1 2025, Net Loss Decreases

Latham Group's Q1 2025 net sales increased slightly, while the net loss decreased compared to the same period last year.

Summary

• Latham Group, Inc. reported a slight increase in net sales for the fiscal quarter ended March 29, 2025, reaching $111.4 million compared to $110.6 million in the same period of 2024.
• The company's net loss decreased to $6.0 million, representing a 5.4% net loss margin, compared to a net loss of $7.9 million in the first quarter of 2024.
• Adjusted EBITDA decreased to $11.1 million from $12.3 million year-over-year.
• The increase in net sales was primarily driven by category share gains in fiberglass pools and autocovers, as well as contributions from recent acquisitions.
• The company remains cautious about 2025 new pool starts, projecting them to be roughly in line with 2024 levels.
• Latham is closely monitoring the potential impact of macroeconomic and geopolitical conditions, including tariffs on imported raw materials.
• The company completed the acquisition of Coverstar Central in August 2024 and two smaller autocover dealers in early 2025 to strengthen its position in the autocover category.
• The company's mission is to design and manufacture high-quality pool products, with the homeowner in mind, and to be a value-added partner to its dealers.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company experienced a decrease in net loss, Adjusted EBITDA also decreased. The company is cautious about future performance due to macroeconomic and geopolitical conditions.

Positives

• Net loss decreased by $1.9 million to $6.0 million.
• Gross margin increased by 1.8% to 29.5% of net sales.
• The company is making progress in executing its strategy to drive adoption and awareness of fiberglass pools and automatic safety covers.
• The company is gaining additional operating efficiencies through value engineering and lean manufacturing initiatives.
• The company is taking a disciplined approach to capital investments, with a focus on product innovation, facility upgrades, and technology and systems.

Negatives

• Adjusted EBITDA decreased by $1.2 million to $11.1 million.
• The company remains cautious about 2025 new pool starts, projecting them to be roughly in line with 2024 levels.
• The company is monitoring the potential impact of current macroeconomic and geopolitical conditions, including the global trade environment and elevated tariffs on imported raw materials.
• Selling, general, and administrative expense increased by $4.3 million, or 16.6%.

Risks

• The company is closely monitoring the potential impact of macroeconomic and geopolitical conditions, including the global trade environment and elevated tariffs on imported raw materials.
• There is general reduced consumer confidence and increased economic uncertainty.
• The company is exposed to additional recently implemented tariffs, although the exposure is relatively limited.
• The company is subject to risks associated with interest rates and foreign currency exchange rates.

Future Outlook

The company expects progressively higher year-on-year comparisons during the typically stronger second and third fiscal quarters of the year, while remaining cautious on 2025 new pool starts, which are projected to be roughly in line with 2024 levels.

Management Comments

• Based on our current business trends reflecting the seasonal ramp-up orders in the later part of the first fiscal quarter, our results of operations for the fiscal quarter ended March 29, 2025 were aligned with our expectations.
• We are confident in our ability to offset raw material cost increases through strategic pre-purchasing and operational adjustments.
• We continue to make progress executing our strategy to drive adoption and awareness of fiberglass pools and automatic safety covers and gain additional operating efficiencies through value engineering and lean manufacturing initiatives.

Industry Context

Latham Group is the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand, holding the leading position in North America in every product category in which it competes.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• Without specific competitor data or industry benchmarks, it is difficult to assess Latham's performance relative to its peers.
• A more comprehensive analysis would require comparing Latham's financial metrics (e.g., revenue growth, profitability, debt levels) to those of companies like Hayward Holdings, Pentair, or Fluidra.

Legal Proceedings

• Currently, there are no legal proceedings against us that we believe will have a material adverse effect on our business, financial condition, results of operations or cash flows.

Stakeholder Impact

• The company's performance and strategic initiatives may impact shareholders, employees, customers, suppliers, and creditors.

Next Steps

• The company will continue to execute its strategy to drive adoption and awareness of fiberglass pools and automatic safety covers.
• The company will continue to gain additional operating efficiencies through value engineering and lean manufacturing initiatives.
• The company will continue to take a disciplined approach to capital investments, with a focus on product innovation, facility upgrades, and technology and systems.

Key Dates

Keywords

swimming pools, fiberglass pools, autocovers, pool covers, pool liners, acquisitions, EBITDA, net sales, Latham Group, financial results