Latham Group (SWIM) Q3 2024 earnings summary

Executive summary

• Q3 2024 results were in line with expectations, with net sales down 6.4% to $150.5M amid a 15% industry decline in new pool starts and ongoing macroeconomic softness.

• Gross margin expanded to 32.4% in Q3, driven by cost reductions, production efficiencies, and the Coverstar Central acquisition.

• Net income for Q3 was $5.9M (3.9% margin), nearly flat year-over-year; YTD net income was $11.3M, reversing a prior year loss.

• Adjusted EBITDA for Q3 was $29.8M (19.8% margin), down from $36.1M (22.4%) last year; YTD Adjusted EBITDA was $76.6M (18.2% margin).

• Completed the $65M acquisition of Coverstar Central, with integration finished and synergy initiatives underway to accelerate growth in automatic safety covers.

Financial highlights

• Q3 2024 net sales: $150.5M (down 6.4% YoY); YTD net sales: $421.2M (down 11.4% YoY).

• Q3 2024 net income: $5.9M (3.9% margin); YTD net income: $11.3M (2.7% margin).

• Q3 2024 Adjusted EBITDA: $29.8M (19.8% margin); YTD Adjusted EBITDA: $76.6M (18.2% margin).

• Gross margin Q3 2024: 32.4% (up 2.5 pts YoY); YTD: 31.4% (up 3.7 pts YoY).

• Net cash from operations was $37.2M in Q3 and $55.2M YTD; cash at quarter-end was $59.9M.

Outlook and guidance

• Full-year 2024 net sales guidance narrowed to $500–$510M; Adjusted EBITDA guidance narrowed to $77–$83M, reaffirming a midpoint of $80M.

• CapEx guidance unchanged at $18–$22M for the year.

• Expectation of a 15% decline in new pool starts for 2024, with dealers more optimistic about 2025 as interest rates are expected to decline.