Slide 1: Q3 2024 Earnings Call
Q3 2024 Earnings Call November 5, 2024
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 2024 Key Takeaways
Q3 2024 Key Takeaways 1 Market conditions in-line with our forecast Continue to drive awareness and adoption of 2 Fiberglass Pools and Automatic Safety Covers Meaningful cost reductions from lean manufacturing, 3 value engineering & improved procurement 4 Maintained strong financial position 3
Slide 4: Continued Strong Execution on Key 2024 Priorities
Continued Strong Execution on Key 2024 Priorities Positioned to benefit from market recovery due to leadership in Fiberglass Pools and Auto-Covers Cost reduction actions continued to yield substantial benefits Maintained strong balance sheet and financial flexibility 4
Slide 5: Leadership in Fiberglass Pools
Leadership in Fiberglass Pools The Benefits of Fiberglass • Lower total ownership / operating cost for the homeowner • Fast and easy to install • Easier to maintain Our Unparalleled Product Offerings & Reach • Broadest line-up of pool configurations • Widest range of price points • Greatest array of
Slide 6: Strengthened Position in Automatic Safety Covers
Strengthened Position in Automatic Safety Covers Acquisition of Coverstar Central 1 Closed on August 2nd – key integration activities complete; revenue synergy initiatives underway • Latham’s exclusive automatic safety cover dealer in 29 states • Dealer partner of almost 20 years • Industry leader i
Slide 7: Continued to Benefit from Lean Manufacturing & Value Engineering Initiatives
Continued to Benefit from Lean Manufacturing & Value Engineering Initiatives Maintained Q3 gross profit levels YoY, and expanded gross margin 250bps, despite lower sales MARGIN IMPROVEMENT Earned substantial benefits from lean manufacturing and value engineering initiatives over the last two years C
Slide 8: Positioning For An Industry Recovery
Positioning For An Industry Recovery Structurally Changed Operating & Financial Model • Recent actions, such as restructuring programs and lean manufacturing & value engineering initiatives, have structurally changed our operating and financial model • The benefits from these actions will enable us
Slide 9: Ended Q3 With A Strong Balance Sheet
Ended Q3 With A Strong Balance Sheet Strong cash position post-Coverstar Central acquisition & repayment of debt Significant resilience continuing to manage through soft industry environment Capital allocation strategy supported by strong cash flow, with flexibility to be opportunistic 9
Slide 10: Q3 2024 Financial Highlights
Q3 2024 Financial Highlights Net Sales ($ in millions) Q3 Q1 2024 2024 Key Key Drivers Drivers $161 $150 • YoY volume declines primarily due to lower new pool starts Q3 2023 Q3 2024 • Consistent with expectations for a 15% decline in new pool starts in 2024 Adjusted EBITDA(1) ($ in millions) • Outpe
Slide 11: Year-to-Date 2024 Financial Highlights
Year-to-Date 2024 Financial Highlights Net Sales ($ in millions) YTD Q1 2024 Key Drivers $476 $421 2024 Themes: • Sales volumes primarily impacted by lower new pool starts YoY • Gross margin benefits driven by: YTD 2023 YTD 2024 • Previously-announced restructuring Adjusted EBITDA(1) programs ($ in
Slide 12: Balance Sheet & Cash Flow Highlights
Balance Sheet & Cash Flow Highlights Quarter-End Liquidity(1) $135 million • Maintained substantial financial flexibility even post-$65M Vs. $153 in 3Q23 Coverstar Central acquisition and $20M debt repayment Net Cash Provided by $37.2 million • Includes over $22M benefit from inventory reduction YTD
Slide 13: Coverstar Central Acquisition
Coverstar Central Acquisition Expectations remain in-line with prior guidance $65M Acquisition closed on August 2nd Purchase Price – Paid with Cash on Hand +$20M Expected increase in annualized Net Sales Net Sales, Annualized +140 bps Accretive transaction expected to expand Adjusted EBITDA Margin o
Slide 14: Full Year 2024 Outlook – Narrowing Revenue & Adjusted EBITDA
Full Year 2024 Outlook(1) – Narrowing Revenue & Adjusted EBITDA $ in millions 2024 Outlook Updated Prior Metric Low High Low High Net Sales $500 $510 $495 $525 Adjusted EBITDA(2) $77 $83 $75 $85 Capital Expenditures $18 $22 $18 $22 Reflects • Maintaining forecast of a ~15% decline in new in-ground p
Slide 15: Latham: A Compelling Long-term Growth Story
Serving a large and attractive market benefitting from fiberglass market share gains The leading consumer brand in the residential pool market Latham: A Unique direct-to-homeowner model driving business for our dealer partners Compelling Long-term 1 Broadest portfolio of branded products known for q
Slide 16: Q&A
Q&A
Slide 17: Appendix
Appendix Latham Group SWIM | Nasdaq Listed
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA and Adjusted EBITDA Margin Fiscal Quarter Ended Three Fiscal Quarters Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 (in thousands) Net income (loss) $ 5,896 $ 6,153 $ 11,310 $ (2,500) Depreciation and amortization 11,323 10
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations Net Debt and Net Debt Leverage Ratio (in thousands) September 28, 2024 June 29, 2024 Total debt $ 282,753 $ 282,361 Less: Cash (59,862) (90,768) Net Debt 222,891 191,593 LTM Adjusted EBITDA(a) 86,511 92,763 Net Debt Leverage Ratio 2.6x 2.1x LTM Pro Forma Adjusted EBITDA(2) 9