Latham Group, Inc. · NASDAQ:SWIM
Latham — Investor Presentation (December 2021)
24 slides from Latham's investor presentation, Dec 6, 2021
Slide 1: December 2021 Investor Presentation
DECEMBER 2021 INVESTOR PRESENTATION
Slide 2: Disclaimer: Forward-looking Statements
DISCLAIMER Forward - looking Statements Some of the statements contained in this presentation are forward - looking statements within the meaning of Section 27A of the Se curities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward - looking sta
Slide 3: Table of Contents
TABLE OF CONTENTS Latham Story 04 Radiant Acquisition 14 Q4’21 Update on Resin Supply 15 & Fiberglass Production Financial Highlights 16 Appendix 22
Slide 4: Latham at a Glance
LATHAM AT A GLANCE THE MARKET LEADER IN EVERY POOL SUB - CATEGORY IN WHICH WE COMPETE THE ONLY POOL COMPANY THAT HAS ESTABLISHED A DIRECT RELATIONSHIP WITH THE HOMEOWNER UNIQUE DIRECT - TO - HOMEOWNER MODEL DELIVERS PURCHASE - READY LEADS TO THE LARGEST DEALER NETWORK IN THE WORLD CAPITALIZING ON TH
Slide 5: Balanced Portfolio Serving an Attractive Market
BALANCED PORTFOLIO SERVING AN ATTRACTIVE MARKET NET SALES BY PRODUCT (1) NET SALES BY END MARKET (1)(2) NET SALES BY GEOGRAPHY (1) _______________________ Source: Management’s analysis based on information from studies by a third - party research consulting firm commissioned by the Co mpany, managem
Slide 6: Latham's Leading Position Driven by Geographic Reach and Scaled Manufacturing
LATHAM’S LEADING POSITION IS DRIVEN BY ITS UNPARALLELED GEOGRAPH IC REACH, SCALED MANUFACTURING FOOTPRINT AND BROAD OFFERING OF PRODUCTS GEOGRAPHIC REACH COMPELLING VALUE PROPOSITION MANUFACTURING PROCESSES AND PRODUCTION CAPABILITY LATHAM’S EXTENSIVE FOOTPRINT, INCLUDING 12 FIBERGLASS MANUFACTURING
Slide 7: Latham's Commitment to ESG Excellence
LATHAM’S COMMITMENT TO ESG EXCELLENCE SUSTAINABILITY SOCIAL IMPACT CORPORATE GOVERNANCE FOCUS ON SAFETY OUR PRODUCTS SAVE WATER AND ENERGY AUTOMATIC SAFETY COVERS LEAD TO ~90% REDUCTION IN WATER EVAPORAT ION AND OVER 50% REDUCTION IN ENERGY USAGE FIBERGLASS PENETRATION REDUCES POLLUTION FIBERGLASS S
Slide 8: Unique Long-Term Growth Formula
UNIQUE LONG - TERM GROWTH FORMULA Content - rich platform provides homeowners with education and engagement tools that help them navigate the pool buying journey and connects them with our dealer partners LEVERAGE LEADING BRAND AND DIGITAL ASSETS ACCELERATE PACE OF FIBERGLASS MATERIAL CONVERSION STR
Slide 9: Investing in Digital Assets and Capabilities
WE HAVE INVESTED MORE IN OUR PORTFOLIO OF DIGITAL ASSETS AND CAPABILITIES THAN THE REST OF THE INDUSTRY, COMBINED OUR ONLINE RESOURCES AND EDUCATIONAL TOOLS SIMPLIFY THE CONSUMER BUYING EXPERIENCE WE GENERATE DEMAND FOR OUR POOLS BY PROVIDING HIGH QUALITY, PURCHASE - READY CONSUMER - LEAD GENERATION
Slide 10: Fiberglass Pool Benefits and Material Conversion
35% 40% 15% 40% 52% 70% 2020E FRANCE 2020E SPAIN 1990A 2000A 2010A 2020E PREMIUM QUALITY AND EXCEPTIONAL DESIGN WITH IMPRESSIVE STRENGTH THAT OUTPERFORMS CONCRETE AND OUR PROPRIETARY STUNNING FINISHES, OUR FIBERGLASS POOLS ARE THE MOST DURABLE AND ATTRACTIVE SWIMMING POOLS IN THE MARKET. BUY TODAY,
Slide 11: Accelerating Conversion: Fiberglass Value Proposition
+43% SAVINGS IN TOTAL LIFECYCLE UPKEEP COSTS ACCELERATING CONVERSION FIBERGLASS POOLS OFFER A SUPERIOR VALUE PROPOSITION THAT IS UNDE RPINNED BY, LOWER UP - FRONT AND TOTAL LIFECYCLE COSTS FOR THE HOMEOWNER AND ATTRACTIVE ECONOMICS FOR T HE DEALER _______________________ Source: Management’s analysi
Slide 12: Exclusive Dealer Partnerships
+380 EXCLUSIVE PARTNERSHIPS FORMED GLOBALLY “Latham Grand” dealer program allows 250+ U.S. Dealers to benefit from access to purchase ready leads Latham has transitioned its dealers away from three legacy sub - brand affiliations Exclusive 10 - yr supply agreement with Premier Pool & Spas, the natio
Slide 13: Execute and Integrate Strategic Acquisitions
STRATEGICALLY EXPAND U.S. AND INTERNATIONAL FOOTPRINT SEEK HIGH QUALITY BUSINESSES WITH COMPLEMENTARY OFFERINGS FOCUS ON THE CONSUMER EXPERIENCE THROUGH SHARED TECHNOLOGY AND BEST PRACTICES TARGET COMPANIES WITH HIGH GROWTH AND STRONG MARGINS LATHAM HAS A HISTORY OF SUCCESSFUL M&A INTEGRATION AND HA
Slide 14: Radiant Pools Acquisition
• ON NOVEMBER 30, 2021, LATHAM ANNOUNCED THE ACQUISITION OF RADIANT POOLS FOR APPROXIMATELY $90 MILLION o Expands addressable market o Enhances ability to further capitalize on growing homeowner interest in pools o Expands product portfolio with a premium - quality product at a lower price point for
Slide 15: Q4'21 Update on Resin Supply and Fiberglass Production
15 Q4’21 UPDATE ON RESIN SUPPLY AND FIBERGLASS PRODUCTION Q4’21 UPDATE Q3’21 EARNINGS CALL DISCUSSION • Historically sales and orders tracked together • B2B2C strategy and consumer marketing launch success accelerated orders trend ahead of sales realization • Ongoing digital investments continued to
Slide 16: Latham Is Driving Extraordinary Growth
NET SALES ADJ. EBITDA AND ADJ. EBITDA MARGIN 3 $247 $265 $287 $318 $403 $463 2016A 2017A 2018A 2019A 2020A PF2020A $39 $47 $54 $61 $84 15.8% 17.8% 18.8% 19.2% 20.8% 2016A 2017A 2018A 2019A 2020A ($ IN MILLIONS) ($ IN MILLIONS) OUR FIBERGLASS POOL SALES HAVE GROWN AT A 27% CAGR FROM 2016 TO 2020 ____
Slide 17: Accelerated Capex Investments Unlock Future Growth
ACCELERATED CAPEX INVESTMENTS UNLOCK FUTURE GROWTH As results from our business transformation began to take hold, capital investments increased from historical levels Capex in 2019 and 2020 was primarily driven by fiberglass production / delivery equipment and new fiberglass molds as demand for fib
Slide 18: Q3'21 Financial Highlights
$291 Q3’21 FINANCIAL HIGHLIGHTS QUARTERLY FINANCIAL HIGHLIGHTS: Q3 net sales grew 27% year - over - year to $162 million • Growth achieved despite supply chain disruptions, particularly in fiberglass pools • Orders continue to grow across the product lines with the most aggressive growth in fibergla
Slide 19: Financial Outlook
FINANCIAL OUTLOOK FISCAL 2021 OUTLOOK 1 ADJUSTED EBITDA $130 MILLION TO $138 MILLION NET SALES $600 MILLION TO $620 MILLION CAPITAL EXPENDITURES $24 MILLION TO $28 MILLION THREE TO FIVE YEAR TARGETS 2 ADJUSTED EBITDA GROWTH 12% TO 15% NET SALES GROWTH 10% TO 12% ADJUSTED EBITDA MARGIN +500 BPS The f
Slide 20: Capitalization Summary
• Latham is a strong cash flow generator with a history of deleveraging the balance sheet and we expect that trend to continue through adjusted EBITDA and cash flow growth • On April 27, 2021, Latham’s total debt was reduced to $238 million as a result of repaying $152 million of our term debt and o
Slide 21: Latham: A Compelling Growth Story
SERVING A LARGE AND ATTRACTIVE MARKET BENEFITTING FROM MATERIAL CONVERSION THE LEADING CONSUMER BRAND IN THE RESIDENTIAL POOL MARKET UNIQUE DIRECT - TO - HOMEOWNER MODEL DRIVING BUSINESS FOR OUR DEALER PARTNERS BROAD REACH, REGULATORY EXPERTISE AND TECHNOLOGICAL CAPABILITIES CREATE SIGNIFICANT COMPE
Slide 22: Appendix
APPENDIX
Slide 23: Non-GAAP Reconciliations: Adjusted EBITDA
NON - GAAP RECONCILIATIONS ADJUSTED EBITDA RECONCILIATION ($ in millions) Predecessor Successor Fiscal Year Ended December 31, Period of January 1, 2018A through December 18, Period of December 19, 2018A through December 31, Fiscal Year Ended December 31, 2016A 2017A 2018A 2018A 2019A 2020A Net Inco
Slide 24: Non-GAAP Reconciliations: Adjusted EBITDA Quarterly
NON - GAAP RECONCILIATIONS ADJUSTED EBITDA RECONCILIATION Fiscal Quarter Ended Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Net (loss) income $ (11,296) $ 17,740 $ (56,361) $ 18,703 Depreciation and amortization 8,019 5,852 23,689 17,461 Interest