Latham Group, Inc. · NASDAQ:SWIM
Latham — Q3 2023 Earnings Presentation
15 slides from Latham's earnings presentation, Nov 7, 2023
Slide 1: Q3 2023 Earnings Call
Q3 2023 Earnings Call November 7, 2023
Slide 2: Disclaimer
Disclaimer Forward-looking Statements Certain statements in this presentation constitute forward-looking statements under federal securities laws. These forward-looking statements reflect our views with respect to future events and financial performance as of the date of this presentation or otherwi
Slide 3: Q3 / YTD 2023 Highlights
Q3 / YTD 2023 Highlights Cost reduction actions are delivering improved margins 1 • Drove a return to YoY adjusted EBITDA margin(1) expansion in Q3’23 • Sequentially, Q3 adjusted EBITDA(1) increased $5 million (or 16%) and adjusted EBITDA margin(1) improved 490 basis points vs. Q2’23 on 9% lower net
Slide 4: Strategic Priorities
Strategic Priorities Drive material conversion from concrete to fiberglass Leverage direct-to-homeowner strategy and digital innovations Enhance and expand strategic partnerships with dealers Execute continuous improvement initiatives and prudently manage costs 4
Slide 5: Disciplined Cost Actions Supporting Margin Improvement
Enhancing and Disciplined CostExpanding Actions Supporting Strategic Margin Partnerships Improvement with Latham G • Cost reduction actions and lean initiatives have yielded desired results on adjusted EBITDA margin as we drove a return to year-over-year adjusted EBITDA margin(1) expansion in Q3’23,
Slide 6: U.S. Fiberglass Penetration Continues to Grow
U.S. Fiberglass Penetration Continues to Grow Upside opportunity compared to more mature fiberglass markets Fiberglass Share of Pool Installations (% of residential in-ground swimming pools) 70% Latham’s Fiberglass U.S. penetration expected to increase 6%pts over 4 years Leadership 16% 18% 18% 21% 2
Slide 7: Driven by Latham's Marketing Initiatives
...Driven by Latham’s Marketing Initiatives Unique direct-to-homeowner and dealer strategies continue to yield results Strong underlying homeowner interest in pools • Based on monthly search volume, Latham ranks #1 for ‘fiberglass pools’ and in the top 10 for ‘inground pool’(1) • Drove YoY Latham we
Slide 8: Q3 and YTD 2023 Financial Highlights
Q3 and YTD 2023 Financial Highlights Q3 Net Sales Adjusted EBITDA(1) ($ in millions) ($ in millions) $189 1 100.0% $200 $161 0.8 $60 80.0% Key Drivers $150 $42 0.6 $40 $36 60.0% • Year-over-year volume declines due to continued $100 0.4 22.3% 22.4% 40.0% macroeconomic challenges $50 0.2 $20 20.0% •
Slide 9: Disciplined Approach to Capital Allocation
Disciplined Approach to Capital Allocation • Targeted investments in organic growth opportunities that generate significant returns and Reinvesting in the Business value creation • Focus on fiberglass production / delivery equipment and new fiberglass molds Selective Strategic Investments • Selectiv
Slide 10: Fiscal 2023 Outlook
Fiscal 2023 Outlook(1) $ in millions Updated Outlook Prior Outlook Metric Low High Low High Net Sales $555 $570 $570 $600 Adjusted EBITDA(2) $82 $87 $90 $100 Capital Expenditures $32 $35 $32 $38 Reflects • Expected declines in U.S. new in-ground pool installations in 2023, with softness in pool dema
Slide 11: Latham: A Compelling Long-term Growth Story
Serving a large and attractive market benefitting from material conversion The leading consumer brand in the residential pool market Unique direct-to-homeowner model driving business for our dealer partners Latham: A Compelling 1 Broadest portfolio of branded products known for quality, durability a
Slide 12: Q&A
Q&A
Slide 13: Appendix
Appendix Latham Group SWIM | Nasdaq Listed
Slide 14: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA and Adjusted EBITDA Margin Fiscal Quarter Ended Three Fiscal Quarters Ended Sept 30, 2023 Oct 1, 2022 Sept 30, 2023 Oct 1, 2022 (in thousands) Net income (loss) $ 6,153 $ 11,876 $ (2,500) $ 13,339 Depreciation and amortization 10,500 9,560 29,784 28,834 Inter
Slide 15: Non-GAAP Reconciliations
Non-GAAP Reconciliations Net Debt and Net Debt Leverage Ratio (in thousands) As of September 30, As of July 1, 2023 2023 Total debt $ 301,621 312,041 Less: Cash (78,113) (43,116) Net Debt 223,508 268,925 LTM Adjusted EBITDA(a) 82,500 88,669 Net Debt Leverage Ratio 2.7x 3.0x (a) LTM Adjusted EBITDA i