Latham Group (NASDAQ:SWIM) released first-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more.
View the webcast at https://edge.media-server.com/mmc/p/7pgk2wbo/
Summary
Latham Group reported a 5% increase in net sales for Q1 2026, with a 3% organic growth and 2% contributed by the Freedom Pools acquisition.
The company confirmed its 2026 guidance, anticipating 9% revenue growth and 13% adjusted EBITDA growth despite flat pool starts.
Strategic initiatives include expanding in the sand states, particularly Florida, and increasing awareness and adoption of fiberglass pools.
The integration of the Freedom Pools acquisition is on track, expanding the company’s presence in Australia and New Zealand.
Operational highlights include a 6% increase in cover sales and a 9% increase in liner sales, driven by effective marketing campaigns.
Management is addressing rising transportation and commodity costs with temporary fuel surcharges and is closely monitoring geopolitical impacts.
The company is investing in its commercial organization to enhance sales strategy, operations, and execution to support growth.
Latham Group is focused on increasing consumer awareness of fiberglass pools through targeted marketing and branding campaigns.
Full Transcript
OPERATOR
Good afternoon and welcome to The The Latham Group first quarter 2026 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Casey Codery of Investor Relations Representative. Please go ahead.
Casey Codery (Investor Relations Representative)
Thank you. This afternoon we issued our first quarter 2026 earnings press release which is available on the Investor Relations portion of our website. On today’s call are Latham’s President and CEO Sean Gad and CFO Oliver Glow. Following their remarks, we will open the call to questions. During this call, the Company may make certain statements that constitute forward looking statements which reflect the Company’s views with respect to future events and financial performance as of today or the date specified. Actual events and results may differ materially from those contemplated by such forward looking statements due to risks and other factors that are set forth in the Company’s Annual report on Form 10-K and subsequent reports filed or furnished with the SEC as well as today’s earnings release. The Company expressly disclaims any obligation to update any forward looking statements except as required by applicable law. In addition, during today’s call, the Company will discuss certain non-GAAP financial measures. Reconciliations of the directly comparable GAAP measures, to these non-GAAP measures, can be found in the slide presentation that is available on our investor relations website. I’ll now turn the call over to Sean Gad.
Sean Gad (President and CEO)
Thank you Casey. And thank you all for joining us today to review our first quarter results and discuss our business outlook. Our first quarter results represent a good start to 2026. We are especially pleased with our performance given the adverse weather conditions that plagued most of North America. There are several key takeaways from the quarter that are worth noting. First, there was another quarter, during which we saw year on year sales growth in each of our product lines. Latham’s category leadership position across our product portfolio and our geographic diversification are key competitive advantages for us. Secondly, we continue to effectively execute our sand state strategy showing double digit sales gains in fiberglass pools in our priority Florida market. We are taking further actions to accelerate our growth in this region. Third, we expanded our margins benefiting from operating leverage inherent in our business model and from the lean manufacturing and value engineering initiatives that continue to yield very positive results. Oliver will provide additional detail on this later on in the call. And lastly, we are pleased to confirm our 2026 guidance which anticipates significant sales growth and even stronger growth in adjusted EBITDA within a challenging macro environment and where pool starts will be about flat from last year. Our guidance includes moderate increase in transportation and commodity costs due to today’s high oil prices which we are mitigating with temporary fuel surcharges. We are closely monitoring the dynamic situation in the Middle East and the potential impacts on costs and consumer demand. Taking a closer look at our first quarter results in ground pool sales increased 3.5% and virtually all of that growth can be attributed to the one month contribution from the Freedom Pools acquisition. Adverse weather was definitely a factor in our organic performance, keeping organic in ground pool sales steady year on year. However, April sales trends were in line with our expectations and we are on track for fiberglass pools to approach 80% of our full year in ground pool sales in 2026. The Freedom Pool acquisition we completed on February 26th is integrating as expected. As we’ve noted, the acquisition expands our presence in Australia and New Zealand markets where fiberglass pool models have a strong foothold and borders are reaching to new markets in Western Australia including Perth which is the fastest growing city in the country. We recently spent a week in Australia bringing together the Narellan and Freedom teams. In addition to this transaction being immediately accretive to Latham and giving us a market leading position in the country, we anticipate achieving considerable revenue synergies from this combination over time as well as gain first hand experience from the direct to consumer business model. Cover sales advanced 6% in the first quarter driven by growth in order cover demand as consumers increasingly recognize the safety and economic benefits of this excellent product. Our industry leading auto covers are compatible with all in ground pool types in many parts of the US that provide the homeowner with an alternative to fencing while delivering additional cost savings from reduced evaporation and chemical usage. Educational marketing campaigns including our partnership with Olympic gold medalist and pool safety advocate Olympic gold medalist and pool safety advocate, Odie Miller and his wife Morgan to promote pool safety have served to build consumer awareness and increase attachment rates. Order covers are being attached to new pool installations. First quarter line of sales were up 9% year on year reflecting increased demand and buying in advance of the pool season. We continue to gain traction with our sand state strategy in the first quarter and are moving forward with plans to accelerate our growth in this important region. Many of the investors and analysts whom I’ve met since taking on the CEO role in January have asked Me where I see the major growth opportunities ahead for Latham, what our playbook is for capturing that growth. Let me start by saying that the opportunity is substantial. We do not need to wait for the recovery in the US pool market to drive growth. There are enough pool starts for us to go and attack the same states now given our relatively low penetration in that region. The key here is that fibreglass is a growing category and we are the number one player in it in the US and so we are best positioned to gain share. Fiberglass pools are an excellent fit for the sand states for many of the same reasons that the category is growing nationally. Fast and easy installation, lasting durability, low maintenance and we have an exceptional design, range of sizes and options to choose from, many of which are smaller rectangular shaped pools with attached spas that are perfect for our target communities. Latham has laid a good foundation for growth in the sand states. There is definitely increased brand awareness among consumers and dealers in Florida thanks to several high profile marketing campaigns paired with local activations. In 2026 we plan to build on that foundation to set the stage for accelerated long term growth. As you know, I have many years of experience successfully selling against the standard in the building product industry. When I apply that experience to Latham’s current position in the sand state, I have identified several actions to capture consumer demand and provide additional value to our dealers. First, we’re building out a commercial organization with the key pillars being sales strategy, sales operation and sales execution with responsibilities to design and drive sales plans, product leadership and sales effectiveness. Our goal is to provide a world class commercial organization that supports our growth not just in Florida, but across all the sand states and all of North America. Second, we have introduced a new market development framework and approach at Latin that I believe will make us even more effective at capturing share. The key element of this framework is segmentation, meaning that we’ll be very selective with our targeted sand state markets determining the specific sections and neighborhoods that offer the greatest opportunity for us. In essence, it’s all about neighborhoods. We’re looking for neighborhoods with a large number of homes with home values, lot sizes and household incomes that fall within our parameters. These can be in, adjacent to or outside of master plan communities. Third, we’ll be adding sales resources in the field to make sure we stay close to the consumer throughout the pool buying process. In this way we’ll be able to assist our dealers in converting more leads into sales and getting greater understanding of the consumer journey. We know that consumers are looking for designs that fit their lifestyles. We believe that LACEM has the best range of products to meet those needs. In 2026, we are increasing our investment in branding and marketing in a very targeted way to capture greater consumer awareness together with our network of trusted dealers who are able to fulfill the demand we generate. In support of all this, we are revamping our marketing and advertising campaigns to give homeowners a full understanding of the true benefits of fibreglass. The why it is the right solution for their backyard to enable their dreams of creating wonderful memories to come true. With that, I will turn over the call to Oliver Glow, our CFO for a financial review.
Oliver Glow (Chief Financial Officer)
Oliver thank you Sean and good afternoon everyone. I am pleased to report on what was a solid start to 2026. Please note that all comparisons we discussed today on a year over year basis compared to the first quarter of fiscal 2025. Unless otherwise noted, net sales for the first quarter of 2026 were 117 million, 5% above 111 million in Q1 of 2025, of which 3% represented organic growth and 2% represented the one month benefit of the Freedom Pools acquisition we completed at the end of February. Organic growth was led by the continued strength of auto covers and increased demand for our pool liners by product line. In ground pool sales were 60 million, up 4% from Q1 2025, with virtually all the year on year growth coming from Fraen’s fiberglass pool sets. Cover sales were 33 million at 6% and liner sales were 24 million, up 9%. Compared to the first quarter of 2025, we achieved a first quarter gross margin of 32%, reflecting a 220 basis point increase above last year’s 30%. This performance is primarily due to volume leverage along with production efficiencies driven by our lean manufacturing and value engineering initiatives. SGLA expenses increased to 37 million, up 20% from 31 million in Q1 of 2025. This was largely tied to strategic investment in sales and marketing to accelerate fiberglass adoption, digital transformation initiatives and acquisition and integration related costs which includes 2.3 million of performance based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024. Target synergies have been realized for Coverstar Central and we are pleased with the contribution from the acquisition which has exceeded our initial expectations. This Earnout will total roughly 9 million over the course of the year with similar impacts in each remaining quarter. In 2026, net loss was 9 million or $0.07 per diluted share compared to a net loss of 6 million or $0.05 per diluted share for the prior year’s first quarter primarily due to the before mentioned increase in SGA expenses. First quarter adjusted EBITDA was 12 million 9% above 11 million in the prior year period, primarily resulting from volume, leverage and efficiencies gained through our lean manufacturing and value engineering initiatives. Adjusted EBITDA margin was 10.4%, a 40 basis point expansion compared to last year’s first quarter. Turning to the balance sheet, we continue to maintain a strong financial position, ending the first quarter with a cash position of 27 million in line with our expectations. Net cash used in operating activities was 48 million, reflecting a seasonal increase in working capital needs ahead of peak food selling season. We ended the quarter with total …
This post was originally published here
