Latham Group, Inc. (SWIM), a leading manufacturer of in-ground residential swimming pools, saw its stock price soar by 13.19% in the pre-market trading session on Wednesday, despite reporting mixed results for the fourth quarter and full year of 2024.

The company's net sales declined by 4% in Q4 and 10% for the full year due to industry softness. However, Latham Group demonstrated resilience with improved gross margins and a strong adjusted EBITDA margin of 15.8% for the year, reflecting its ability to navigate challenging market conditions.

Driving the stock surge is Latham Group's strategic focus on expanding its market share in the Sand States (Florida, Texas, Arizona, and California), which account for approximately two-thirds of US pool starts. The company's fiberglass pools represented 24% of US pool starts in 2024, up from 23% in the previous year, signaling increased market penetration and growth potential.

Additionally, the acquisition of Coverstar Central has positioned Latham Group for revenue synergy opportunities through vertical integration of the automatic safety cover line. With a strong financial position and flexibility for organic growth projects and potential acquisitions, the company is well-positioned to capitalize on emerging opportunities.

While Latham Group expects trough market conditions to persist through much of 2025, analysts remain optimistic about the company's growth prospects and margin expansion potential. With a focus on expanding its footprint in key regions and continued innovation in fiberglass pool offerings, Latham Group is poised to capture a larger share of the residential pool market, driving long-term value for shareholders.