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01/11 03:32
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite missing EPS expectations, Latham Group shows resilience with positive feedback from dealers and growth in fiberglass pool penetration. Adjusted EBITDA exceeded prior year margins, and strategic initiatives indicate potential future growth. However, lack of share repurchase and challenging market conditions temper positive sentiment, resulting in a neutral outlook.
EPS Reported EPS is $-0.19, compared to expectations of $-0.09.
Adjusted EBITDA Adjusted EBITDA reached just over $80 million, with a margin of 15.8%, which is 30 basis points ahead of the prior year.
Fiberglass Pools Market Penetration Fiberglass pools represented 24% of US pool starts in 2024, up from 23% in 2023.
In-ground Pool Sales Composition Fiberglass pools represented 75% of our in-ground pool sales in 2024, compared to 73% in 2023.
Market Penetration of Fiberglass Pools: Fiberglass pools represented 24% of US pool starts in 2024, up from 23% in 2023, and a gain of six percentage points since 2021.
Sales Composition of In-Ground Pools: Fiberglass pools represented 75% of in-ground pool sales in 2024, compared to 73% in 2023.
Adjusted EBITDA: Adjusted EBITDA reached just over $80 million, representing an adjusted EBITDA margin of 15.8%, 30 basis points ahead of the prior year.
Gross Margin Expansion: Strong performance led by robust gross margin expansion reflecting a structurally reduced cost structure and disciplined SG&A spending.
Sales and Marketing Focus: Sales and marketing campaigns are emphasizing the competitive benefits of fiberglass pools over concrete pools, including fast installation, low maintenance, and eco-friendly attributes.
Earnings Expectations: Latham Group, Inc. reported an EPS of $-0.19, missing expectations of $-0.09, indicating potential financial instability.
Market Conditions: The company faced a challenging industry environment with an estimated 15% decline in US pool starts, which could impact future sales.
Competitive Pressures: Despite outperforming the market, the company is in a competitive landscape where fiberglass pools are gaining market share, necessitating continued innovation and marketing efforts.
Cost Structure: While the company achieved gross margin expansion, maintaining a reduced cost structure is essential to sustain profitability amid declining sales.
Regulatory Issues: The company referenced risks associated with forward-looking statements and regulatory compliance, which could affect future operations.
Economic Factors: The overall economic environment may influence consumer spending on pool installations, impacting future revenue.
Market Penetration of Fiberglass Pools: Fiberglass pools represented 24% of US pool starts in 2024, up from 23% in 2023, and a gain of six percentage points since 2021.
Sales Composition: Fiberglass pools represented 75% of in-ground pool sales in 2024, compared to 73% in 2023.
Adjusted EBITDA: Adjusted EBITDA reached just over $80 million, with an adjusted EBITDA margin of 15.8%, 30 basis points ahead of the prior year.
Cost Structure: Strong gross margin expansion reflects a structurally reduced cost structure and disciplined SG&A spending.
Growth Initiatives: Continued investments in growth initiatives despite lower sales.
Sales Growth and Profitability Outlook: Positioned to achieve considerable sales growth and accelerated profitability in 2025 and beyond.
Market Conditions: Navigated challenging industry conditions in 2024, with an estimated decline of approximately 15% in US pool starts.
Share Repurchase Program: Latham Group, Inc. has not announced any share repurchase program during the earnings call.
The earnings call reflects positive sentiment with strong financial metrics, including a decrease in leverage ratio and increased leads. The company's strategic focus on fiberglass pools and expansion in key markets like Florida and the Sand States is promising. Despite tariff uncertainties, price adjustments and productivity initiatives have improved margins. The Q&A section highlighted strategic partnerships and market share gains, particularly in fiberglass, contributing to a positive outlook. Although some guidance lacked clarity, overall sentiment remains positive, indicating a potential stock price increase in the near term.
The earnings call indicates strong potential for growth, particularly due to the Sand State expansion, increased marketing efforts, and acquisitions. The gross margin improvement and narrowing net loss signal financial health. The Q&A highlighted sustainable margin improvements and positive lead generation, although management was vague on some specifics. Overall, the optimistic guidance, recovery from weather impacts, and strategic initiatives suggest a likely positive stock price movement in the short term.
The earnings call presented mixed signals: while there was a slight increase in net sales and a significant gross margin improvement, key areas like inbound pool and liner sales saw declines. Despite positive market strategies and acquisitions, the adjusted EBITDA decreased, and net loss persisted. The Q&A highlighted management's optimism but also revealed uncertainties, particularly around COGS and future demand trends. No share buyback or dividend program was mentioned, and the guidance was not notably strong. These factors suggest a neutral market reaction, with no strong catalysts for significant stock price movement.
Despite missing EPS expectations, Latham Group shows resilience with positive feedback from dealers and growth in fiberglass pool penetration. Adjusted EBITDA exceeded prior year margins, and strategic initiatives indicate potential future growth. However, lack of share repurchase and challenging market conditions temper positive sentiment, resulting in a neutral outlook.
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