Latham Group 2025 Q1 Earnings Performance In Line with Expectations as Net Loss Improves by 24%

Latham Group (NASDAQ: SWIM) reported its fiscal 2025 Q1 earnings on May 07th, 2025. Latham Group's results for the first quarter of 2025 exceeded analyst expectations as the company recorded net sales of $111.4 million, surpassing the estimated $111.08 million. The company maintained its full-year guidance for 2025, projecting net sales between $535 million and $565 million. This aligns with previous estimates and reflects 8% growth at midpoints. Adjusted EBITDA is expected to grow by 19% year-over-year within a range of $90 million to $100 million. Management expressed confidence in their strategic initiatives and market position, continuing to focus on fiberglass pools and autocovers.

Revenue

Latham Group's revenue in the first quarter of 2025 rose by 0.7%, totaling $111.42 million, compared to $110.63 million in the same period of 2024. The in-ground swimming pools segment contributed $57.73 million to this figure, while the covers segment added $31.61 million. Additionally, the liners segment generated $22.07 million in revenue, showcasing the diverse stream of income across different segments.

Earnings/Net Income

The company narrowed its losses, reporting a loss of $0.05 per share in 2025 Q1, down from a $0.07 loss per share in 2024 Q1, marking a 28.6% improvement. Net loss also reduced to $-5.96 million in 2025 Q1, compared to $-7.86 million in 2024 Q1, showcasing a 24.2% improvement. The EPS performance indicates a positive trend for Latham Group.

Price Action

The stock price of Latham Group increased by 7.57% during the latest trading day, surged 9.24% over the most recent trading week, and climbed 9.34% month-to-date.

Post Earnings Price Action Review

Historically, the strategy of acquiring Latham Group (SWIM) shares after quarters of revenue growth and holding them for 30 days has yielded a return of 10.32%, which underperforms the benchmark by 19.08%. Despite the lower-than-benchmark returns, the strategy's Sharpe ratio of 0.23 reflects some risk-adjusted profitability. However, the maximum drawdown of -17.86% and a volatility of 10.93% highlight risks. The compound annual growth rate (CAGR) stands at 2.47%, illustrating moderate long-term growth. In summary, while the post-earnings strategy has provided returns, it has not consistently matched broader market performance, underscoring the need for cautious investing.

CEO Commentary

Scott Rajeski, President and CEO, expressed satisfaction with the company's first-quarter results, citing consistent performance with expectations and emphasizing the strength of Latham's fiberglass pool and autocover categories. The Sand State expansion strategy, aimed at increasing market share in Florida, Texas, Arizona, and California, has been successful. Rajeski noted rising consumer awareness and adoption in these categories. Despite increased selling, general, and administrative expenses due to growth initiatives, lean manufacturing and value engineering efforts expanded gross margins by 190 basis points. He conveyed cautious optimism about maintaining the full-year guidance.

Guidance

Latham Group maintains its full-year guidance for 2025, projecting net sales between $535 million and $565 million, reflecting 8% growth at midpoints. The company expects adjusted EBITDA to grow by 19% year-over-year, targeting a range of $90 million to $100 million. Capital expenditures are anticipated to be between $27 million and $33 million. The guidance is underpinned by category share gains in fiberglass pools and autocovers, along with contributions from recent acquisitions.

Additional News

Marshall Wace LLP sold 166,455 shares of Latham Group, reflecting a strategic adjustment in their investment portfolio. This move was reported amid the company's steady performance and successful Sand State expansion strategy. Additionally, Latham Group recently affirmed its fiscal year 2025 sales guidance, maintaining the projected range of $535 million to $565 million, which aligns with market estimates. The company released its first-quarter 2025 earnings 8-K filing, detailing the resilience of its operations despite challenging market conditions. With a strong presence in North America, Australia, and New Zealand, Latham Group continues to focus on expanding its market share in key regions.