Latham Group Inc ((SWIM)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Latham Group Inc’s recent earnings call conveyed a generally positive sentiment, highlighting robust revenue and adjusted EBITDA growth. The company demonstrated resilience through strategic initiatives, particularly in the Sand States, despite facing challenges such as adverse weather impacting in-ground pool sales and increased SG&A expenses. The outlook remains optimistic as Latham Group continues to position itself for future growth amid current market conditions.
Revenue and Adjusted EBITDA Growth
Latham Group reported a commendable year-on-year revenue growth of 7.8% and an impressive adjusted EBITDA growth of 15.7% in the second quarter of 2025. This growth underscores the company’s ability to enhance its financial performance despite market challenges.
Autocovers Performance
The sales of autocovers surged by 46%, driven by both organic growth and strategic acquisitions. This significant increase contributed notably to the company’s overall sales growth, showcasing the success of its product offerings.
Gross Margin Improvement
The company achieved a gross margin of 37.1%, marking a 400 basis point improvement over the previous year. This enhancement in gross margin reflects Latham Group’s effective cost management and operational efficiency.
Sand State Strategy Progress
Latham Group has made significant strides in expanding its pool dealer base in Florida and Texas. The company’s strategic focus on these regions has resulted in increased product offerings and heightened interest from homeowners, contributing to its growth strategy.
Adoption of Measure by Latham
The introduction of the proprietary AI tool, Measure by Latham, has bolstered growth in the replacement liner business. Notably, 25% of new device users were new to Latham, indicating successful market penetration.
In-ground Pool Sales Decline
Adverse weather conditions led to a slight decline in in-ground pool sales, particularly affecting packaged pool sales. This challenge highlights the impact of external factors on the company’s performance.
SG&A Expenses Increase
The company experienced a $5.3 million increase in SG&A expenses due to investments in marketing and new personnel. While this adds pressure on operational costs, it is part of Latham’s strategy to drive growth.
Challenging Market Conditions
The market for new pool starts is currently in a trough period, with expectations of a slight decline in 2025 compared to 2024. This presents a challenging environment for Latham Group, affecting overall market conditions.
Forward-Looking Guidance
Latham Group reaffirmed its 2025 guidance, projecting an 8% net sales growth and a 19% adjusted EBITDA growth. These projections are supported by strategic acquisitions and lean manufacturing initiatives, demonstrating confidence in the company’s future performance.
In summary, Latham Group’s earnings call reflected a positive sentiment with strong revenue and EBITDA growth, driven by successful product strategies and market expansion efforts. Despite facing challenges such as adverse weather and increased expenses, the company remains optimistic about its growth prospects, supported by strategic initiatives and forward-looking guidance.