Latham Group reports Q4 EPS (25c), consensus (10c)

Reports Q4 revenue $87.3M, consensus $85.14M.”Latham’s leadership position in fiberglass pools was a key driver of our pool market outperformance against U.S. in-ground pool starts which were down approximately 15% in 2024. Fiberglass pools represented 75% of Latham’s in-ground pool sales in 2024, compared to 73% in 2023. According to management estimates, fiberglass pools gained one percentage point of total in-ground-pool market share, accounting for 24% of all in-ground pools installed in the U.S. last year, up from 23% in 2023. In addition to its cost advantages, consumers increasingly are attracted to the fast and easy installation and the eco-friendly aspects of fiberglass in contrast to concrete pools. Our 2024 sales performance also benefitted from a five-month contribution from our Coverstar Central acquisition and increased awareness and adoption of automatic safety covers, which in addition to pool safety, offer significant costs savings to homeowners. Our diversified product mix continues to contribute to Latham’s ability to outperform new U.S. pool starts, as our broad portfolio of pool liners and covers provides access to the more stable replacement market. “A key highlight of 2024 was our ability to drive margin expansion on lower year-on-year sales. Gross margin expanded by over 300 basis points led by our lean manufacturing and value engineering initiatives together with supplier diversification initiatives and overall improved procurement activity that are expected to enable further margin expansion in 2025 and beyond. Adjusted EBITDA margin expanded by 30 basis points as higher gross margin more than offset increased spending on growth projects, including the build-out of our market position in the Sand States. “Latham ended 2024 in a strong financial position. Operating cash flow exceeded $60 million, and our year-end cash balance was $56 million, after spending approximately $65 million on the Coverstar Central acquisition and repaying $21 million in debt. Our strong balance sheet provides us with important financial flexibility to support both organic and acquisitive growth.”