SWIM — Latham Group, Inc.

Summary of Latham Group, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Sales: $117 million, up 5% from $111 million in Q1 2025, with 3% organic growth and 2% from the Freedom Pools acquisition.
• In-Ground Pool Sales: $60 million, a 4% increase, primarily driven by the Freedom Pools acquisition.
• Cover Sales: $33 million, up 6%.
• Liner Sales: $24 million, up 9%.
• Gross Margin: 32%, an increase of 220 basis points from 30% in the prior year.
• SG&A Expenses: $37 million, a 20% increase due to strategic investments and acquisition-related costs.
• Net Loss: $9 million, or $0.07 per diluted share, compared to a net loss of $6 million, or $0.05 per diluted share, in Q1 2025.
• Adjusted EBITDA: $12 million, up 9% from $11 million, with an adjusted EBITDA margin of 10.4%, a 40 basis point increase.

2. Strategic Updates and Business Highlights

• Sand States Strategy: Continued execution with double-digit sales growth in fiberglass pools in Florida, with plans to accelerate growth in this region.
• Freedom Pools Acquisition: Successfully integrating and expanding presence in Australia and New Zealand, expected to yield revenue synergies.
• Marketing Initiatives: Increased focus on educational campaigns to promote pool safety and raise awareness of fiberglass pools, including partnerships with notable advocates.
• Sales Strategy Restructuring: Implementing a new market development framework focusing on neighborhood segmentation to enhance sales effectiveness.

3. Forward Guidance and Outlook

• 2026 Guidance Reaffirmed: Anticipating revenue growth of 9% and adjusted EBITDA growth of 13%, despite a challenging macro environment with flat pool starts expected.
• CapEx Expectations: Projected between $42 million and $48 million for the year, including investments in newly acquired manufacturing facilities.

4. Bad News, Challenges, or Points of Concern

• Weather Impact: Adverse weather conditions in Q1 affected sales, although trends improved in April.
• Increased SG&A Expenses: Rising costs due to strategic investments and acquisition-related expenses could pressure margins.
• Market Competition: Increased competition noted, with dealers reporting more quotes per job, indicating a tougher selling environment.
• Geopolitical Risks: Monitoring potential impacts from geopolitical developments, particularly in the Middle East, on costs and consumer demand.

5. Notable Q&A Insights

• Order Trends: Strong order file in April, indicating positive momentum moving into the peak season.
• Market Segmentation: Tweaks to sales strategy include a focus on neighborhood-specific targeting to improve conversion rates.
• Input Costs: Transportation costs are being mitigated through temporary fuel surcharges; commodity cost impacts remain uncertain.
• Dealer Network: Emphasis on maximizing the current dealer network's effectiveness while also seeking to fill gaps in underrepresented areas.
• Consumer Financing Concerns: Difficulty in obtaining financing for pool purchases noted as a significant challenge affecting demand.

Overall, Latham Group, Inc. reported a solid start to 2026, with strategic initiatives in place to drive growth despite facing some headwinds from weather and increased competition. The company remains optimistic about its growth prospects, particularly in the Sand States and through its recent acquisitions.