Latham (SWIM) 5 Nov 24 2024 Q3 Earnings call transcript
AInvestThursday, Nov 7, 2024 4:33 am ET
2min read
SWIM --

The Latham Group, a leading manufacturer and marketer of residential and commercial pools, recently held a conference call to discuss its third quarter 2024 earnings. The call, led by CEO Scott Rajeski and CFO Oliver Gloe, provided valuable insights into the company's financial performance and strategic initiatives.

Market Conditions and Growth Strategies

Despite the challenging industry environment, Latham's third quarter results demonstrated resilience and progress. Market conditions for new pool starts showed a decline of approximately 15%, as expected. However, Latham has continued to drive awareness and adoption of its key growth areas, including Fiberglass Pools and Automatic Safety Covers. These initiatives, coupled with lean manufacturing and value engineering programs, have resulted in cost reductions and stable gross profit, despite lower sales.

Fiberglass Pools and Automatic Safety Covers

Latham's commitment to innovation and customer preferences has been instrumental in the growing adoption of Fiberglass Pools. The company's broadest lineup of pool configurations, cost efficiency, and focus on space-saving designs have made Fiberglass Pools a compelling choice for consumers. Latham's recent addition of the Enchantment series to its plunge pool offering is a testament to its market differentiators and commitment to meeting evolving consumer needs.

The acquisition of Coverstar Central in August 2024 significantly strengthened Latham's position in Automatic Safety Covers. Integration activities are underway, and revenue synergies are being pursued to accelerate the growth of this standout product line. Latham's Automatic Safety Covers offer unparalleled safety and cost savings, making them an attractive value proposition for homeowners. The company plans to leverage Coverstar Central's relationships with pool builders to increase awareness of the Fiberglass Pool value proposition.

Financial Position and Future Outlook

Latham ended the third quarter in a strong financial position, with approximately $60 million in cash after significant disbursements and debt repayment. The company's operational and financial model has structurally changed, enabling it to increase underlying earnings capabilities amid industry recovery and positioning it for longer-term margin expansion. Latham is also increasing investments in sales and marketing and product development initiatives to capture incremental market share.

Strategic Acquisitions and Geographic Expansion

Latham's strategic acquisition of Coverstar Central in the third quarter underscores its focus on strategic acquisitions that are accretive and provide entry into new markets or strengthen its position in existing geographies. The company's financial flexibility allows it to consider further acquisitions that can accelerate the growth of existing product lines.

Safety and Operational Excellence

Latham's focus on safety has yielded a significant drop in incidents across all manufacturing locations. This operational excellence has been a cornerstone of the company's success and will continue to contribute to its growth and profitability.

In conclusion, Latham Group's third quarter earnings call painted a picture of a company that is navigating industry challenges with resilience and strategic foresight. Its focus on innovation, cost efficiency, and strategic acquisitions positions it well for growth and profitability in the coming years. Latham's commitment to safety and operational excellence, coupled with its strong financial position, bodes well for its future outlook.

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