• Net Sales (Q4 2024): $87 million, down 4% from $91 million in Q4 2023.
• In-Ground Pool Sales (Q4 2024): $44 million, down 5% from Q4 2023.
• Cover Sales (Q4 2024): $31 million, down 2% from Q4 2023.
• Liner Sales (Q4 2024): $12 million, down 5% from Q4 2023.
• Gross Margin (Q4 2024): 25%, up 130 basis points from 23% in Q4 2023.
• SG&A Expenses (Q4 2024): $27 million, up from $24 million in Q4 2023.
• Net Loss (Q4 2024): $29 million or $0.25 per diluted share.
• Adjusted EBITDA (Q4 2024): $4 million, down 63% from $10 million in Q4 2023.
• Net Sales (Full Year 2024): $509 million, down 10% from $566 million in 2023.
• In-Ground Pool Sales (Full Year 2024): $259 million, down 13% year-over-year.
• Liner Sales (Full Year 2024): $180 million, down 8% year-over-year.
• Cover Sales (Full Year 2024): $131 million, down 7% year-over-year.
• Gross Margin (Full Year 2024): Over 30%, up 320 basis points from 27% in 2023.
• Net Loss (Full Year 2024): $18 million or $0.15 per diluted share.
• Adjusted EBITDA (Full Year 2024): $80 million, down from $88 million in 2023.
• Cash Position (End of 2024): $56 million.
• Total Debt (End of 2024): $282 million.
• Net Debt Leverage Ratio (End of 2024): 2.8.
• Capital Expenditures (Full Year 2024): $20 million.
• 2025 Guidance - Net Sales: $535 million to $565 million.
• 2025 Guidance - Adjusted EBITDA: $90 million to $100 million.
• 2025 Guidance - Capital Expenditures: $27 million to $33 million.

• Warning! GuruFocus has detected 4 Warning Sign with SWIM.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Latham Group Inc (NASDAQ:SWIM) achieved increased market penetration of fiberglass pools, with fiberglass pools representing 24% of US pool starts in 2024, up from 23% in 2023.
• The company reported strong adjusted EBITDA results, reaching over $80 million with a margin of 15.8%, which is 30 basis points ahead of the prior year.
• The acquisition of Coverstar Central has enabled vertical integration of the automatic safety cover line, setting the stage for revenue synergy opportunities.
• Latham Group Inc (NASDAQ:SWIM) ended 2024 in a strong financial position, providing flexibility for organic growth projects and potential acquisitions.
• The company is focusing on expanding its market share in the Sand States (Florida, Texas, Arizona, and California), which account for approximately two-thirds of US pool starts.

Negative Points

• Net sales for the fourth quarter of 2024 were down 4% compared to Q4 2023, reflecting lower volumes from industry softness.
• The company reported a net loss of $29 million for Q4 2024, compared to a net income of $0.1 million in the prior year fourth quarter.
• Fourth quarter adjusted EBITDA was down 63% from the prior period, primarily due to increased sales and marketing spend and higher performance-based compensation.
• Net sales for the full year 2024 were down 10% compared to the prior year, reflecting lower sales volume due to industry softness.
• The company anticipates trough market conditions to continue through much of 2025, managing to new US pool starts that will approximate 2024 levels.

Q & A Highlights

Q: Can you break down the 8% sales growth guidance for 2025 between volume, price, and M&A? A: Oliver Gloe, CFO: The 8% sales growth is composed of approximately 3% from the full-year effect of the Coverstar Central acquisition and two new acquisitions, with the remaining 5% from organic growth. This growth is driven by continued fiberglass penetration and the Sand State strategy, along with increased adoption of automatic covers. Pricing is expected to be sluggish, similar to last year.

Q: What feedback are you receiving from dealers, especially in the Sand States, as the season approaches? A: Scott Rajeski, CEO: Feedback from dealers is more positive this year compared to last year. Many dealers report their backlogs are flat or up compared to the previous year. In the Sand States, we're seeing progress with new dealers and increased leads. Our GOOTSA campaign in Texas resulted in a 40% increase in leads, and we're launching similar campaigns in Florida.

Q: How is Latham managing the impact of tariffs, particularly with production in Kingston and the US? A: Scott Rajeski, CEO: We have diversified our supplier base and can shift production between facilities. Kingston will focus on local production for Canada, while US facilities will fill US demand. We have pre-bought materials and staged inventory to mitigate tariff impacts. Pricing adjustments may be used to offset any remaining impact.

Q: What are the expectations for capital expenditures related to the Sand States strategy? A: Scott Rajeski, CEO: We are focusing on improving production flow and capacity at existing facilities like Zephyrhills and Oklahoma. We plan to introduce new fiberglass pool models tailored to Sand State preferences. We do not foresee a need for a large investment like Kingston in the near term, as we have sufficient capacity to meet demand.

Q: How does the Sand States strategy affect fiberglass pool penetration, and what are the growth opportunities? A: Scott Rajeski, CEO: Fiberglass is significantly underpenetrated in the Sand States compared to the national average. With 65% of pool starts in these states, there is a substantial opportunity for growth. We are focusing on increasing dealer presence and targeting master-planned communities to drive fiberglass adoption.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.