Latham Group Reports Strong Fourth Quarter Results

Latham Group, Inc. (SWIM) recently announced their strong fourth quarter results during their Q4 2023 earnings call held on March 12, 2024. Despite the challenges posed by a decline in new pool starts in the US, Latham was able to surpass guidance expectations, outperforming the market decline by approximately 10 percentage points. They achieved this by implementing cost-saving initiatives and focusing on their leading market share in all product categories. Latham also made significant efforts to strengthen their financial position and increase profit margins by improving their cost structure. Notably, their dedication to driving the conversion to fiberglass pools has paid off, accounting for approximately 73% of their in-ground pool sales in 2023. Additionally, their covers and liners product lines remained resilient and represented 47% of their total sales. Looking ahead, although they anticipate a decline in new pool starts in 2024, Latham is poised for future growth and aims to capture market share by continuing to reduce costs and invest in future opportunities as pool starts rebound in 2025. With fourth quarter net sales of $91 million and full-year net sales of $566 million, Latham Group is well-positioned to navigate the challenges of the market and continue their trajectory of success.

Overview of Q4 2023 Earnings

Latham Group, Inc. (SWIM) recently held its Q4 2023 earnings call on March 12, 2024. During this call, the company reported that its fourth quarter results exceeded guidance expectations. This is a positive indication of the strength and resilience of Latham Group in the face of challenging market conditions. The company’s performance highlights its ability to adapt and thrive in a competitive industry.

Cost-Saving Initiatives

Latham Group has been strategically focused on implementing cost-saving initiatives to mitigate the impact of lower pool starts. By identifying areas of potential inefficiency and streamlining operations, the company has been able to reduce expenses while maintaining product quality and customer satisfaction. These cost-saving initiatives have played a crucial role in preserving the company’s financial position and profitability.

Outperforming New Pool Starts

Despite a decline in new pool starts in the US, Latham Group has managed to outperform the market by approximately 10 percentage points. This demonstrates the company’s strong competitive position and leading market share in all product categories. Latham Group’s ability to outperform market trends is a testament to its effective business strategies and customer-centric approach.

Conversion to Fiberglass Pools

Latham Group has been committed to driving the conversion to fiberglass pools, recognizing their numerous benefits for customers. In 2023, fiberglass pools accounted for approximately 73% of the company’s in-ground pool sales. This significant share demonstrates the growing preference for fiberglass pools among homeowners. Latham Group has also experienced growth in fiberglass sales and has implemented initiatives to further penetrate key markets. These efforts have positioned the company as a leader in the fiberglass pool market.

Resilience of Covers and Liners

Latham Group’s covers and liners product lines have proven to be resilient during downturns. These product lines represented 47% of the company’s total sales in 2023. The durability and quality of these products have been key factors in their success, allowing Latham Group to maintain sales and mitigate the impact of market fluctuations. The company’s ability to weather market downturns and sustain sales in this product category is a testament to Latham Group’s commitment to providing reliable and long-lasting solutions.

Expectations for Pool Starts

Latham Group anticipates a decline in new pool starts in 2024. While this may seem like a challenge, the company remains optimistic about the future. Latham Group expects a rebound in pool starts in 2025, illustrating its confidence in the long-term growth potential of the market. By closely monitoring market trends and consumer demands, Latham Group will be well-prepared to capitalize on any opportunities that arise and drive future growth.

Cost Reduction and Future Growth

To improve its cost structure and increase profit margins, Latham Group has taken a series of strategic actions. These actions have not only strengthened the company’s financial position but also provided a solid foundation for future growth. Latham Group remains committed to reducing costs and optimizing its operations. By doing so, the company aims to enhance its competitiveness and invest in future growth initiatives that will enable it to capture a larger share of the market.

Fourth Quarter Financials

Net sales for the fourth quarter of 2023 amounted to $91 million. While these sales reflected lower volumes, Latham Group was able to increase its gross margin due to its successful cost reduction programs. Despite the challenges posed by a decline in new pool starts, the company’s ability to manage its costs effectively has led to improved profitability.

Full-Year Financials for 2023

For the full year of 2023, Latham Group reported net sales of $566 million. Notably, the company’s in-ground pool sales outperformed the market decline, reflecting its competitive advantage and strong positioning within the industry. Latham Group’s gross margin for the year was recorded at 27%. These financial results demonstrate the company’s resilience and ability to generate consistent revenue despite market challenges.

Position for Future Growth

Latham Group remains committed to its focus on fiberglass pools and cost savings initiatives. By prioritizing these strategies, the company has positioned itself for future growth. Latham Group’s dedication to providing high-quality fiberglass pools that meet customer demands, coupled with its ongoing efforts to reduce costs and enhance operational efficiency, will contribute to its long-term success and enable it to capture a larger market share.

In conclusion, Latham Group, Inc. (SWIM) has demonstrated its ability to exceed expectations amidst challenging market conditions. Through its focus on cost-saving initiatives, outperforming new pool starts, conversion to fiberglass pools, resilience of covers and liners, and strategic financial management, Latham Group has established itself as a leader in the industry. Despite an anticipated decline in new pool starts, the company is well-positioned for future growth through continuous cost reduction and investments in key markets. Latham Group’s strong financial performance, as reflected in its fourth quarter and full-year financials for 2023, underscores its competitiveness and ability to navigate market fluctuations. With a focus on fiberglass pools and a commitment to delivering exceptional products and services, Latham Group is poised to continue its success and capture even greater market share in the years ahead.