In This Article:
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Net Sales: $150.5 million, down 6.4% from $160.8 million in the prior year.
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Gross Margin: Expanded by 250 basis points to 32.4%.
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Net Income: $5.9 million or $0.05 per diluted share.
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Adjusted EBITDA: $29.8 million, a decrease of 17.3% from $36.1 million last year.
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Adjusted EBITDA Margin: 19.8%, down 260 basis points from 22.4% in the prior year period.
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Cash Position: $59.9 million at the end of the quarter.
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Total Debt: $282.8 million with a net debt leverage ratio of 2.6.
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Capital Expenditures: $4 million for the third quarter and $13.9 million for the first nine months of 2024.
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2024 Net Sales Guidance: Narrowed to $500 million to $510 million.
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2024 Adjusted EBITDA Guidance: Narrowed to $77 million to $83 million.
Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Latham Group Inc (NASDAQ:SWIM) achieved stable gross profit and expanded gross margin by 250 basis points in the third quarter despite lower sales.
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The company ended the third quarter with a strong financial position, holding approximately $60 million in cash after significant acquisitions and debt repayments.
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Latham Group Inc (NASDAQ:SWIM) continues to drive awareness and adoption of fiberglass pools and automatic safety covers, which are key growth areas.
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The acquisition of Carstar Central has been successfully integrated, with revenue synergy initiatives underway, expected to add $20 million in net sales annually.
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Lean manufacturing and value engineering programs have resulted in nearly $8 million in savings year-to-date, enhancing production efficiencies and reducing costs.
Negative Points
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Net sales for the third quarter decreased by 6.4% year-over-year, primarily due to lower sales volumes.
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The company expects a 15% decline in new pool starts for 2024, reflecting challenging market conditions.
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Adjusted EBITDA decreased by 17.3% from the previous year, with a margin decline of 260 basis points.
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Hurricanes caused operational disruptions, including a week-long plant shutdown, impacting sales and shipments.
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Increased SG&A expenses, up by $4.9 million, were driven by higher sales and marketing investments and performance-based compensation.
Q & A Highlights
Q: Can you elaborate on the structural changes that have increased profitability and whether Latham can achieve 20%+ EBITDA margins in a recovery scenario? A: Scott Rajeski, CEO, explained that past restructuring initiatives, lean manufacturing, and cost reduction efforts have positioned Latham for higher margins. Oliver Gloe, CFO, added that the company has reduced its cost base and is prepared to handle increased volume, suggesting that 20% EBITDA margins are achievable with market recovery.