Latham Group, Inc. · NASDAQ:SWIM
Latham — Q2 2024 Earnings Presentation
18 slides from Latham's earnings presentation, Aug 6, 2024
Slide 1: Q2 2024 Earnings Call
Q2 2024 Earnings Call August 6, 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: Q2 2024 Highlights
Q2 2024 Highlights 1 Market conditions in-line with our forecast 2 Latham outperformed on profitability 3 Fiberglass pools continued to show relative strength RECENT ACTIVITY Accretive acquisition of Coverstar Central – Latham’s exclusive automatic safety cover dealer in 29 states 3
Slide 4: Continued Strong Execution on Key 2024 Priorities
Continued Strong Execution on Key 2024 Priorities Continued to drive awareness and adoption of Fiberglass Pools and Auto-Covers Margins benefited from multiple cost reduction actions Maintained and utilized our strong balance sheet and financial flexibility 4
Slide 5: Advanced Fiberglass Pools and New Product Innovations
Advanced Fiberglass Pools and New Product Innovations Fiberglass Pools • Continued to represent the majority of our in-ground pool sales; market intelligence suggests continued fiberglass penetration and acceptance in the market Fiberglass Pools New Pool Models • Added the “Astoria 14” to our fiberg
Slide 6: Coverstar Central Acquisition
Coverstar Central Acquisition 1 Margin Expansion Vertical integration expected to expand Adjusted EBTIDA Margin by ~140bps on an annualized basis • Latham’s exclusive automatic safety cover dealer in 29 states • Dealer partner of almost 20 years • Industry leader in product sales, installation, and
Slide 7: Continued to Benefit from Lean Manufacturing & Value Engineering Initiatives
Continued to Benefit from Lean Manufacturing & Value Engineering Initiatives Structural cost benefits will have a long-term positive impact on Latham’s margin profile COST BENEFITS Achieved 27% reduction in production time across North American fiberglass plants in H1 2024 YoY PRODUCTION EFFICIENCIE
Slide 8: Ended Q2 With A Strong Balance Sheet
Ended Q2 With A Strong Balance Sheet Strong cash position benefiting from inventory reduction beyond usual seasonal inflows Significant resilience to manage through soft industry environment Capital allocation strategy supported by strong cash flow 8
Slide 9: Q2 2024 Financial Highlights
Q2 2024 Financial Highlights Net Sales ($ in millions) Q2 Q1 2024 2024 Key Key Drivers Drivers $177 $160 • YoY volume declines primarily due to continued industry softness Q2 2023 Q2 2024 • Successful execution of Q2 sales plan, in- line with forecast for peak pool building season Adjusted EBITDA(1)
Slide 10: Year-to-Date 2024 Financial Highlights
Year-to-Date 2024 Financial Highlights Net Sales ($ in millions) YTD Q1 2024 Key Drivers $315 $271 2024 Themes: • Sales volumes impacted by soft industry conditions and a normalizing sales cadence YTD 2023 YTD 2024 • Significant margin improvement driven by: Adjusted EBITDA(1) ($ in millions) • Rest
Slide 11: Balance Sheet & Cash Flow Highlights
Balance Sheet & Cash Flow Highlights • Substantial financial flexibility at quarter-end, as well as post- $166 million Coverstar Central acquisition, to navigate soft industry Quarter-End Liquidity(1) + $48 million conditions and opportunistic organic and acquisitive growth versus 2Q23 initiatives N
Slide 12: Coverstar Central Acquisition
Coverstar Central Acquisition $65M Strong cash generation enabled purchase with internally-generated funds 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 on an annu
Slide 13: Revising Full Year 2024 Outlook
Revising Full Year 2024 Outlook(1) $ in millions 2024 Outlook Updated Original Metric Low High Low High Net Sales $495 $525 $490 $520 Adjusted EBITDA(2) $75 $85 $60 $70 Capital Expenditures $18 $22 $18 $22 Reflects • Maintaining forecast of a ~15% decline in new in-ground pool installations in 2024;
Slide 14: 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 15: Q&A
Q&A
Slide 16: Appendix
Appendix Qatham Group SWIM | Nasdaq Listed
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA and Adjusted EBITDA Margin Fiscal Quarter Ended Two Fiscal Quarters Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 (in thousands) Net income (loss) $ 13,279 $ 5,715 $ 5,415 $ (8,653) Depreciation and amortization 10,593 10,026 20,967 19,284 Inter
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations Net Debt and Net Debt Leverage Ratio (in thousands) June 29, 2024 March 30, 2024 Total debt $ 282,361 $ 282,781 Less: Cash (90,768) (43,811) Net Debt 191,593 238,970 LTM Adjusted EBITDA(a) 92,763 89,285 Net Debt Leverage Ratio 2.1x 2.7x (a) LTM Adjusted EBITDA is the sum of