Latham Group's Q4 2024 Earnings Call: Contradictions Unveiled in Fiberglass Penetration, Market Growth, and Acquisition Strategies

These are the key contradictions discussed in Latham Group's latest 2024Q4 earnings call, specifically including: Fiberglass Penetration in the Sand States, Market Conditions and Growth Drivers, and Coverstar Acquisitions and Market Penetration:



Market Performance and Fiberglass Growth:
- Latham Group reported that fiberglass pools represented 24% of U.S. pool starts in 2024, up from 23% in 2023.
- The increase in market penetration is driven by the focus on key benefits like fast installation, low maintenance, and eco-friendly attributes compared to concrete pools.

Financial Improvement and Strategic Acquisitions:
- The company’s adjusted EBITDA for the full year reached $80 million, with an adjusted EBITDA margin of 15.8%, slightly ahead of the prior year despite lower sales.
- This improvement was supported by robust gross margin expansion, disciplined SG&A spending, and the strategic acquisition of Coverstar Central.

Strategic Focus on Sand States and Product Development:
- Latham Group plans to expand its market share in the Sand States (Florida, Texas, Arizona, and California), which account for approximately two-thirds of U.S. pool starts.
- The expansion involves targeted marketing, product development tailored to regional demand, and increased dealer support in master planned communities.

Tariff Mitigation and Production Strategy:
- The company is managing tariffs by shifting production and supply chain strategies to offset tariff-related costs.
- Latham is utilizing its manufacturing footprint to mitigate tariff impacts and adjusting domestic and international production to balance costs and logistical efficiencies.