Latham Group Shares Plunge 12.06% on Flat Revenue, Tariff Concerns
1min read Latham Group's stock price dropped 12.06% in pre-market trading on May 8, 2025, following the release of its Q1 2025 financial results. The company, a leading manufacturer of residential swimming pools, reported revenue of $111.4 million, meeting Wall Street's expectations but remaining flat year over year. The company's GAAP loss of $0.05 per share was better than analysts' estimates, but the overall market reaction was negative, with shares trading down 5.1% immediately following the results.
Latham's Q1 results were in line with expectations, with revenue meeting analyst estimates and adjusted EBITDA beating expectations by 1.4%. However, the company's operating margin contracted to negative 4.4%, down from negative 1.9% in the same quarter last year. This contraction was due to increased expenses relative to revenue, indicating that the company was less efficient in the quarter.
Management's cautious commentary about demand and the impact of elevated tariffs on imported raw materials added uncertainty to the outlook. Latham's President and CEO, Scott Rajeski, noted that the company remains cautious on 2025 new pool starts and is closely monitoring the impact of tariffs on its manufacturing process. Imports represent approximately 15-20% of the raw materials used in Latham's manufacturing process, and any disruption could impact the company's financial performance.
Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, but this projection is still below the sector average. Latham's long-term sales performance has been lackluster, with revenue declining by 10.9% annually over the last two years. The company's recent performance shows that demand remained suppressed, and its newer products and services will need to spur better top-line performance to meet market expectations.
Ask Aime: What impact will Latham Group's Q1 2025 financial results have on its stock price?
