Latham Group (SWIM) Stifel 2024 Cross Sector Insight Conference summary

Strategic positioning and market overview

• Leading brand in residential inground pools with coast-to-coast operations and a broad product lineup across North America, Australia, and New Zealand.

• Holds #1 share in every pool category it competes in, including in-ground pools, liners, and covers, with 73% of in-ground pool sales being fiberglass.

• Operates over 30 facilities, enabling 95% of the U.S. to be reached within two days, supporting efficient distribution and cost management.

• Well-capitalized with a strong balance sheet, positioned for growth as the market rebounds, expected in 2025.

• Significant investments in manufacturing, including a new state-of-the-art facility in Kingston, Ontario, to support regional growth.

Product advantages and recurring revenue

• Fiberglass pools offer 25%-30% lower upfront costs than concrete, with a 35%-40% cost advantage over 10-20 years due to lower maintenance.

• Proprietary fiberglass pools are highly customizable, durable, and come with a lifetime warranty for the original owner.

• Vinyl liner and safety cover businesses provide recurring revenue, with 40% market share in vinyl liners and strong replacement cycles every 8-10 years.

• Automatic safety covers present a significant growth opportunity, with current adoption in the low 20% range.

• Product education and awareness are key to driving adoption, especially in markets dominated by concrete pools.

Financial performance and guidance

• 2023 revenue split: just under half from liners and covers (52% replacement), and over half from inground pools (73% fiberglass share, up 3 points YoY).

• 2024 guidance: net sales of $490–$520 million, down 11% YoY, reflecting a 15% decline in new pool starts, partially offset by fiberglass conversion and replacement business.

• Adjusted EBITDA guidance at $60–$70 million, supported by cost savings from restructuring and lean initiatives.

• Capital expenditures at $5 million per quarter, focused on maintenance, growth, and digital transformation.

• Expecting to be at the bottom of the cycle in 2024, with growth anticipated in 2025.