Top-line Growth and Composition
Net sales of $117M in Q1 2026, up 5% year-over-year ($111M in Q1 2025). Growth comprised 3% organic and 2% from the one-month contribution of the Freedom Pools acquisition.
Latham Group
· SWIM
May 5th, 2026
Summary
- Earnings Call Date:
- 2026-05-05
- Change Since:
- +3.24%
- Next Earnings Date:
- 2026-08-11
Earnings Call Sentiment
PositiveThe call conveyed a generally positive tone: the company reported modest top-line growth across all product lines, meaningful margin expansion (gross margin +220 bps, adjusted EBITDA margin +40 bps), accretive M&A (Freedom Pools) and reaffirmed 2026 guidance for revenue and EBITDA growth. Management acknowledged near-term headwinds — higher SG&A (including a $9M earnout), a larger capex profile, Q1 operating cash outflow, weather-driven organic softness, and commodity/transportation cost risks (temporary fuel surcharge ~60 bps) — but emphasized operational levers (lean/value engineering, targeted marketing, dealer segmentation) and strong early-season order trends. On balance, the positives (growth, margin improvement, accretive acquisition, confident guidance and strategic growth initiatives) outweigh the negatives (higher operating expenses, seasonal cash usage, cost inflation risk), supporting an overall constructive outlook.
Company Guidance
The company reaffirmed full-year 2026 guidance calling for roughly 9% revenue growth and about 13% adjusted EBITDA growth at the midpoint while assuming U.S. pool starts are flat year‑over‑year; guidance factors in a moderate increase in transportation and commodity costs (temporary fuel surcharges estimated to offset roughly 60 basis points of transportation pressure for the year). Q1 results supporting the outlook included net sales of $117 million (up 5% vs. $111M in Q1 2025; +3% organic, +2% from the one‑month Freedom Pools acquisition), in‑ground pool sales of $60M (+4%), cover sales $33M (+6%), liner sales $24M (+9%), gross margin of 32% (+220 bps), SG&A of $37M (+20% with SG&A expected to remain ~22.5% of sales), adjusted EBITDA of $12M (+9%) and a 10.4% adjusted EBITDA margin (+40 bps). The company ended Q1 with $27M cash, used $48M of cash in operations, carried $311M of total debt (net leverage 2.8x), incurred $23M of Q1 CapEx (and expects $42–48M for the year, including ~$25M of maintenance CapEx tied to acquired fiberglass facilities), and is carrying acquisition‑related earnout costs (~$2.3M in Q1; roughly $9M total for 2026); management also expects fiberglass to approach ~80% of full‑year in‑ground pool sales.
Product Line Sales Gains
In-ground pool sales $60M (+4% YoY, largely driven by Freedom Pools), cover sales $33M (+6% YoY), and liner sales $24M (+9% YoY).
Margin Expansion
Reported gross margin improved to 32%, up 220 basis points versus prior year (from 30%), driven by volume leverage and lean manufacturing/value engineering.
Adjusted EBITDA Improvement
Q1 adjusted EBITDA was $12M, up 9% year-over-year (from $11M). Adjusted EBITDA margin expanded to 10.4%, a 40 basis-point improvement.
Reaffirmed 2026 Guidance
Company reaffirmed full-year 2026 guidance of ~9% revenue growth and ~13% adjusted EBITDA growth at the midpoint, despite a flat U.S. pool-start outlook.
Strategic Acquisition and Market Expansion
Freedom Pools acquisition (closed Feb 26) is immediately accretive, expands presence in Australia/New Zealand (including Perth), and is expected to produce substantial revenue synergies and direct-to-consumer learnings.
Fiberglass Momentum and Sand States Strategy
Double-digit sales gains in fiberglass in priority Florida market; company expects fiberglass to approach ~80% of full-year in-ground pool sales in 2026 and is accelerating investments (sales, segmentation, marketing) to capture Sand States growth.
Operational and Financial Discipline
Lean manufacturing and value engineering continue to contribute meaningfully (~$2.0–$2.5M per quarter), companies maintained cash of $27M, net debt leverage ratio of 2.8x, and completed purchases of key fiberglass facilities to support capacity.
Strong Early-Season Order Trends
Management reported a strong April order file and pickup into May, supporting confidence in seasonal ramp and the decision to reaffirm guidance.
Operator
Good afternoon, and welcome to the Latham Group, Inc. First Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary, Investor Relations representative. Please go ahead. Thank you.
This afternoon, we issued our first quarter 2026 earnings press release, which is available on the Investor Relations portion of our website.
Casey Kotary
On today's call are Latham Group, Inc.'s President and CEO, Sean Gadd, and CFO, Oliver Gloe. Following their remarks, we will open the call to questions. During this call, Latham Group, Inc. may make certain statements that constitute forward-looking statements, which reflect the company's views with respect to future events and financial performance as of today or the date specified. Actual events and results may differ materially from those contemplated by such forward-looking statements due to risks and other factors that are set forth in the company's Annual Report on Form 10 and subsequent reports filed or furnished with the SEC as well as today's earnings release. Latham Group, Inc. expressly disclaims any obligation to update any forward-looking statements except as required by applicable law. In addition, during today's call, the company will discuss certain non-GAAP financial measures.
Reconciliations of the directly comparable GAAP measures to these non-GAAP measures can be found in the slide presentation that is available on our Investor Relati...
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