Latham Group, Inc. Q1 FY2026 earnings call

• First quarter sales growth in all product lines, category leadership and geographic diversification as competitive advantages. - Effectively executing Sand States strategy with double-digit fiberglass pool sales growth in Florida, taking further actions to accelerate growth. - Expanded margins via operating leverage, lean manufacturing, and value engineering. - Freedom Pools acquisition integrating as expected, expanding presence in Australia/New Zealand and new markets in Western Australia. - Cover sales growth driven by auto cover demand and educational marketing. - Liner sales up due to increased demand. - Building commercial organization, introducing new market development framework, adding sales resources, revamping marketing/advertising to capture growth.

Net sales for 2026 Q1 were $117 million, 5% above $111 million in 2025, with 3% organic growth and 2% from the Freedom Pools acquisition. In-ground pool sales were $60 million, up 4% (virtually all from Freedom Pools acquisition); cover sales advanced 6% driven by auto cover demand; liner sales up 9% year on year. First quarter gross margin was 32% (220 basis points increase). SG&A expenses increased to $37 million (20% up from 2025) due to strategic investments. Net loss was $9 million. First quarter adjusted EBITDA was $12 million (9% above prior year), margin 10.4% (40 basis points expansion). Cash position $27 million, total debt $311 million, net debt leverage ratio 2.8. CapEx $23 million in Q1 2026.

Reaffirms 2026 guidance with significant sales growth and adjusted EBITDA growth, anticipating pool starts flat to last year. Includes moderate increase in transportation and commodity costs, mitigated by temporary fuel surcharges. Monitoring Middle East situation's impact on costs and demand.

• Adverse weather conditions affecting organic performance. - High oil prices impacting transportation and commodity costs. - Geopolitical developments in Middle East potentially affecting costs and consumer demand. - Competitive dealer landscape with multiple quotes per job. - Uncertainty around input costs, especially resins, due to Middle East situation.

Q: About fiberglass backlog and orders as season enters, and tweaks to strategy.

A: April order file looks strong, tweaking strategy by segmenting market, adding commercialization areas (sales strategy, operations, execution).

Q: On demand environment and input costs.

A: Market likely flat, order trend strong, transportation cost mitigated by temporary surcharges, commodities too early to tell.

Q: On resegmentation and sales force investments.

A: Some additive, some reallocation, SG&A as % of sales to stay same.

Q: On pricing magnitude, commodities, and pricing dynamics.

A: Transportation surcharge ~60 basis points, commodities too early to tell, mid-season price increase possible.

Q: On adverse weather impact on sales and Q2/Q3 visibility.

A: Adverse weather pushed some sales, April trends in line, Q2 mostly set, Q3 order file looks good.

Q: On buyer concerns and branding/marketing spend.

A: Financing tough, branding/marketing includes national campaign and tactical neighborhood efforts.

Q: On auto covers and input costs.

A: Auto covers adoption not decreasing, lean manufacturing and value engineering key for margins.

Q: On Florida success and surcharges.

A: Florida success due to sales headcount, dealer partners, marketing, surcharges offset transportation cost on dollar basis.

Q: On earnout expense.

A: Earnout included in SG&A, backed out for EBITDA.