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Mar 06, 2025

Latham Group, Inc. SEC 10-K Report — TradingView News

Latham Group, Inc., a leading manufacturer of in-ground swimming pools, pool covers, and pool liners, has released its annual Form 10-K report. The report provides a comprehensive overview of the

Latham Group, Inc., a leading manufacturer of in-ground swimming pools, pool covers, and pool liners, has released its annual Form 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive pool industry.

Financial Highlights

Net Sales: $508.5 million, reflecting a decrease of 10.2% from the previous year due to a $55.1 million decrease from volume and a $2.9 million decrease from pricing.

Gross Profit: $153.7 million, with a gross margin increase to 30.2% from 27.0% in the prior year, driven by production efficiencies and improved procurement.

Income from Operations: $18.3 million, an increase from $16.1 million in the previous year, indicating improved operational efficiency despite lower sales.

Net Loss: $17.9 million, compared to a net loss of $2.4 million in the previous year, primarily due to increased income tax expense and other expenses.

Net Loss Per Share: $(0.15), compared to $(0.02) in the previous year, reflecting the increased net loss.

Business Highlights

Revenue Segments: The company offers a broad portfolio of in-ground swimming pools, pool covers, and pool liners. Fiberglass pools are a significant focus, with a strong market presence in North America, Australia, and New Zealand. The company also leads in custom vinyl pools and automatic safety covers.

Geographical Performance: The Sand States (Florida, Texas, Arizona, and California) accounted for approximately two-thirds of the pool starts in the United States in 2024, presenting a significant opportunity for market share expansion.

Sales Units: The company experienced a decrease in sales volume across its product lines, with a notable decline in in-ground swimming pools, liners, and covers due to soft industry conditions.

New Product Launches: The company continues to innovate with its fiberglass pool offerings, which include customizable features such as unique colors, finishes, and water features.

New Production Launches: The acquisition of Coverstar Central in August 2024 expanded the company's production capabilities for automatic safety covers, enhancing vertical integration and market reach.

Future Outlook: The company plans to drive further adoption of fiberglass pools and automatic safety covers, particularly in the Sand States, and aims to expand its dealer base and strategic partnerships to support growth.

Strategic Initiatives

Strategic Initiatives: Latham Group, Inc. completed a strategic acquisition of Coverstar Central, an exclusive dealer of automatic safety covers, for $64.5 million. This acquisition is part of the company's growth strategy to vertically integrate its product line and enhance sales growth. The company is also investing in its digital transformation efforts to upgrade technology and enterprise resource planning systems, aiming to drive adoption and awareness of fiberglass pools and automatic safety covers.

Capital Management: The company utilized $64.5 million of cash on hand to fund the acquisition of Coverstar Central. As of December 31, 2024, Latham had $56.4 million in cash and $281.5 million in outstanding borrowings, with an additional $75.0 million available under its Revolving Credit Facility. The company has been managing its capital through cost reduction programs and lean manufacturing initiatives to maintain capacity while reducing costs. Additionally, Latham has been repurchasing and retiring common stock under its Repurchase Program.

Future Outlook: Latham plans to continue its disciplined approach to capital investments, focusing on completing previously announced projects and increasing investments in sales, marketing, and product development initiatives. The company aims to capture an incremental share of in-ground pool sales as market conditions improve. Latham also intends to leverage its acquisition of Coverstar Central to increase margins and accelerate sales growth in the automatic safety cover product line.

Challenges and Risks

Challenges and Risks: The company operates in a highly competitive market, facing competition from both within the pool industry and from other outdoor living products. The trend towards skilled tradesmen leaving the industry and the fragmented nature of the dealership market contribute to supply constraints. Additionally, the company is driving a material conversion from concrete to fiberglass pools, which requires educating both homeowners and dealer partners about the benefits of fiberglass.

Economic Conditions: Unfavorable economic conditions, such as high interest rates and inflation, have reduced consumer spending and demand for pools, impacting sales.

Supply Chain Dependence: Reliance on global third-party suppliers for raw materials exposes the company to price volatility and supply disruptions.

Regulatory Risks: Changes in trade policies, including tariffs, could increase costs and limit the availability of raw materials and finished products.

Technological Risks: The company must keep pace with rapidly evolving technological developments, such as AI, to remain competitive.

Cybersecurity Threats: The company is vulnerable to cybersecurity threats that could disrupt operations and compromise sensitive information.

Weather and Seasonality: Adverse weather conditions can significantly impact sales and cash flows, particularly during peak seasons.

Industry Consolidation: Consolidation among dealers and distributors could lead to pricing pressures and loss of major customers.

Geopolitical Risks: Events such as the conflict in the Middle East and the war in Ukraine could disrupt operations and affect global economic conditions.

Management acknowledges the challenges posed by economic downturns and inflationary pressures. The company is focused on maintaining strong relationships with suppliers and dealers to mitigate supply chain risks. Additionally, the company is investing in technological advancements to enhance product offerings and improve operational efficiency.

The company is exposed to market risks, including fluctuations in interest rates and foreign currency exchange rates, which could adversely affect financial results. The company has hedged part of its interest rate exposure but remains vulnerable to market volatility.

SEC Filing: Latham Group, Inc. [ SWIM ] - 10-K - Mar. 05, 2025