SWIM — Latham Group, Inc.

Summary of Latham Group, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Performance:

  • Net Sales: $100 million, up 15% from $87 million in Q4 2024.
  • Organic Growth: 14%.
  • In-Ground Pool Sales: $50 million, up 15%.
  • Cover Sales: $37 million, up 19%.
  • Liner Sales: $13 million, up 2%.
  • Gross Margin: Expanded by 340 basis points to 28%.
  • Adjusted EBITDA: $10 million, up from $3.6 million in Q4 2024; adjusted EBITDA margin at 11%, a 630 basis point increase year-over-year.
  • Net Loss: $7 million ($0.06 per diluted share), improved from a loss of $29 million ($0.25 per diluted share) in Q4 2024.

• Full Year 2025 Performance:

  • Net Sales: $546 million, up 7% from $509 million in 2024.
  • Adjusted EBITDA: $100 million, up $20 million from $80 million in 2024; adjusted EBITDA margin at 18.3%, up 250 basis points.
  • Net Income: $11 million ($0.09 per diluted share), compared to a net loss of $18 million ($0.15 per diluted share) in 2024.

2. Strategic Updates and Business Highlights

• Product Performance:

  • In-Ground Pool sales for 2025 increased by 1% despite a decline in U.S. pool starts.
  • Fiberglass pools accounted for 76.5% of In-Ground Pool sales, with a market share increase to approximately 24%.
  • Autocover sales grew by 22%, attributed to safety features and marketing partnerships.
  • Successful rollout of AI-powered measuring tool, MeasurePRO, enhancing liner sales.

• Market Expansion:

  • Focus on expanding presence in the Sand States, particularly Florida and Arizona, with double-digit growth in Florida.
  • Acquisition of Freedom Pools expected to enhance market position in Australia and New Zealand.

3. Forward Guidance and Outlook

• 2026 Guidance:
  • Projected Net Sales: $580 million to $610 million (9% growth at midpoint).
  • Projected Adjusted EBITDA: $105 million to $120 million (12.7% growth at midpoint).
  • Anticipated mid-single-digit organic growth across all product lines, with a focus on fiberglass pools and autocovers.
  • Capital Expenditures: Expected to be between $42 million and $48 million, including investments in manufacturing facilities.

4. Bad News, Challenges, or Points of Concern

• Market Conditions:

  • U.S. In-Ground Pool starts expected to remain flat in 2026, reflecting ongoing tough market conditions.
  • Interest rates and consumer confidence are potential headwinds affecting demand.
  • Texas market faced challenges with a double-digit decline in pool permits.

• Competitive Pressures:

  • Need for increased consumer awareness and education regarding fiberglass pools.
  • The company acknowledged the importance of managing installation costs to remain competitive.

5. Notable Q&A Insights

• CEO Transition:

  • Sean Gadd emphasized the importance of focusing on market development in the Sand States and improving dealer engagement.

• Sales Strategy:

  • Plans to enhance lead generation and dealer segmentation to drive sales growth, particularly in new construction markets.

• Pricing Outlook:

  • Pricing expected to add approximately 2% to top-line growth in 2026, influenced by previous price increases and seasonal adjustments.

• Capacity and Production:

  • Current capacity is deemed sufficient for future needs, with strategic investments in manufacturing facilities to support growth.

This summary encapsulates Latham Group's financial performance, strategic initiatives, future outlook, and challenges as discussed in the Q4 2025 earnings call.