SWIM 10-K & 10-Q changes, risk factors and insider trading
Latham Group, Inc. · Nasdaq · Plastics Products, Nec · CIK 1833197 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Global political uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts could make it more difficult for us to access financing and could adversely affect our business and operations.”
New heading “Inflation could adversely impact our financial condition and results of operations.”
New heading “Catastrophic events, including earthquakes, wildfires, floods, war, terrorism, public health emergencies, or other such events could adversely affect our business. financial condition and results of operations.”
Removed heading “Declining home ownership rates could lead to reduced demand for our products and adversely affect our business, financial condition and results of operations.”
Removed heading “Natural disasters, including resulting from climate change, geopolitical events, war, terrorism, public health emergencies, or other catastrophic events could adversely affect our business. financial condition and results of operations.”
Largest changes
“Exposure to various types of cybersecurity threats such as malware, phishing, computer viruses, worms, ransomware attacks or other malicious acts, as well as human error, also could potentially disrupt our operations, lead to unauthorized payments or result in a significant interruption in the delivery of our goods and services. As with most companies, we have experienced cybersecurity threats, attempts to breach our systems and other similar incidents, none of which were material to our operations or financial results in 2025. …”see in full comparison
“Exposure to various types of cybersecurity threats such as malware, computer viruses, worms or other malicious acts, as well as human error, also could potentially disrupt our operations or result in a significant interruption in the delivery of our goods and services. As with most companies, we have experienced cybersecurity threats, attempts to breach our systems and other similar incidents, none of which were material to our operations or financial results in 2024. …”see in full comparison
“Our operations and financial results have been, and may be in the future, adversely impacted by local, regional, national or global catastrophic events or extraordinary circumstances, such as: natural or environmental disasters; weather events; public health emergencies, epidemics or pandemics; other serious disruption to our facilities due to fire, flood, hurricane, earthquake, war, acts of terrorism, civil insurrection or social unrest; political uncertainty; and regional or global conflicts, including the conflicts in the Middle East and Ukraine. …”see in full comparison
“Our operations and financial results have been, and may be in the future, adversely impacted by local, regional, national or global catastrophic events or extraordinary circumstances, such as: natural or environmental disasters; weather events driven by climate change or other factors; public health emergencies, epidemics or pandemics; other serious disruption to our facilities due to fire, flood, hurricane, earthquake, war, acts of terrorism, civil insurrection or social unrest; political uncertainty; and regional or global conflicts, including the conflicts in the Middle East and Ukraine. …”see in full comparison
“To be successful in our industry, we must keep pace with technological developments and innovations (such as the use of artificial intelligence (“AI”) and machine learning) and evolving industry standards. For example, in 2024, we continued the roll-out of Measure, a proprietary advanced AI-powered device that significantly reduces dealer time and error in measuring swimming pool safety covers. …”see in full comparison
“While inflation in the United States began to plateau or subside in 2024, higher costs of labor and services, and could continue to cause costs to increase as well as scarcity of certain products and there are indications that recent deflation in raw material costs may reverse. The imposition of tariffs on products and materials by the United States and other countries may negatively impact current inflation rates for an extended period of time, result in increases to our operating costs and negatively impact our business. …”see in full comparison
Full comparison: every changed paragraph (93)
•potential cyber-attacks or system failures on our information technology infrastructure;
•global and domestic political uncertainty and instability resulting in changes in international trade relationships and financial market volatility could make it more difficult for us to access financing and adversely affect our business and operations;
•inflationary impacts, including on our costs of labor, raw materials and services and on consumer demand for pool products;
•the impact of trade policies, including tariffs, on products, raw materials and components we import into the U.S.;
•catastrophic events such as natural disasters, including those resulting from earthquakes, wildfires and floods, war, terrorism, public health emergencies such as pandemics;
•adverse weather conditions impacting our sales and timing of sales;
•interruption of our production capability at one or more of our manufacturing facilities from accident, fire, calamity or other causes or events affecting the global economy;
•adverse economic conditions and the related impact on consumer spending and demand for our products;
•our ability to keep pace with and integrate into our operations rapidly evolving technological developments and standards, such as artificial intelligence;
•compliance with new and existing government regulations;
•declining home ownership rates adversely affecting demand for our products;
•delays in, or systems disruptions issues caused by, the implementation of our enterprise resource planning system;
•our reliance on global third-party suppliers and related impact on price, quality and quantity of raw materials;
•competition that we face;
•our ability to generate sufficient cash flow to satisfy our debt service obligations;
•product quality issues, warranty claims, installation or safety concerns and other claims, including those due to the failure of builders to follow our product installation instructions and specifications and our installation of autocovers;
•our ability to realize the anticipated growth opportunities and cost synergies from acquisitions;
•our ability to attract, develop and retain highly qualified personnel;
•pricing pressures resulting from industry consolidation;
•our ability to collect accounts receivables from our customers;
•our ability to obtain, maintain and enforce intellectual property protection for our current and future products, and third-party claims against us for violation of their intellectual property;
•the risks of doing business internationally;
•possible impairments to our goodwill, other intangible assets or fixed assets; and
•the other factors set forth under “Risk Factors.”
Exposure to various types of cybersecurity threats such as malware, phishing, computer viruses, worms, ransomware attacks or other malicious acts, as well as human error, also could potentially disrupt our operations, lead to unauthorized payments or result in a significant interruption in the delivery of our goods and services. As with most companies, we have experienced cybersecurity threats, attempts to breach our systems and other similar incidents, none of which were material to our operations or financial results in 2025. It is possible that cyber attackers could compromise our security measures and obtain the personal and/or confidential information of the customers, employees, and suppliers that we hold or our business information. Cybersecurity threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated and may not immediately produce signs of intrusion. The development of AI technologies may exacerbate these risks. Moreover, such cybersecurity threats may disrupt access to our and/or our suppliers’ networks and systems. Such disruptions could result in delays or cancellations of customer orders, delays or interruptions in the shipment of orders, lower net sales, increased insurance costs, litigation, increased regulatory oversight and additional investments by the Company in threat prevention technology. In addition, cybersecurity threats may cause us to incur significant remediation costs, result in delays and disruptions to key business operations, damage business relationships or our reputation or divert attention of management and key information technology resources. With some employees working remotely, there may be increased opportunities for unauthorized access and cybersecurity threats. Additionally, while we perform due diligence prior to acquisitions and take actions to safeguard the businesses that we acquire, these businesses may not have invested as significantly as we do in security and technology and may be more susceptible to cyber-attacks, which may make us more vulnerable to cyber-attacks as well. Further, the United States government has warned of the potential risk of Russian cybersecurity threats stemming from the ongoing Russian-Ukraine conflict as well as ongoing threats from other state actors such as China. The occurrence of any cybersecurity incident or security breach could also subject us to liability, expose us to significant expense, and cause significant harm to our reputation and our business.
Advances in computer and software capabilities, encryption technology and other discoveries such as generative and agentic AI increase the complexity of our technological environment, including how each interact with our various software platforms. Such advances could delay or hinder our ability to process transactions or could compromise the integrity of our data, resulting in a material adverse impact on our financial condition and results of operations. We also may experience occasional system interruptions and delays that make our information systems unavailable or slow to respond, including the interaction of our information systems with those of third parties. A lack of sophistication or reliability of our information systems could adversely impact our operations and customer service and could require major repairs or replacements, resulting in significant costs and foregone sales.
Global political uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts could make it more difficult for us to access financing and could adversely affect our business and operations.
Political uncertainty, an increase in trade protectionism or geopolitical conflict could have a material adverse effect on global macroeconomic activities and trade and adversely affect our business, results of operations and financial condition.
The rise of economic nationalist sentiments, trade protectionism and geopolitical security has led to increasing political uncertainty and unpredictability throughout the world. Additionally, there can be no assurance that additional or new trade tensions, imposition of import and export restrictions and tariffs will not arise between various trade partners. These potential developments, market perceptions concerning these and related issues and the attendant regulatory uncertainty regarding, for example, the posture of governments with respect to international trade or national security issues, could have a material adverse effect on global trade and economic growth which, in turn, can adversely affect our business, results of operation and financial condition.
Increased trade protectionism or the perception that it may occur could materially adversely affect our business. Increasing trade protectionism may cause an increase in the cost of products exported from regions globally, the length of time required to transport products, and the risks associated with exporting products. Such increases may have an adverse impact on our business, operating schedule and financial condition. If the current global economy or outlook is undermined by downside risks and there is a prolonged economic downturn, governments may resort to new or enhanced trade barriers to protect their domestic industries against imports, thereby depressing demand.
Protectionist developments or adverse international political tensions or developments, or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Increasing trade protectionism in the markets could increase the risks associated with exporting goods to such markets. These developments could have a material adverse effect on our business, results of operations and financial condition.
Inflation could adversely impact our financial condition and results of operations.
Higher costs of labor, goods and services, and could continue to cause costs to increase as well as scarcity of certain products. The imposition of tariffs on products and materials by the United States and other countries may negatively impact current inflation rates for an extended period of time, result in increases to our operating costs and negatively impact our business. See “—Changes in trade policies, including the imposition of tariffs, could negatively impact our business, financial condition, and results of operations.” There is substantial risk that inflation will escalate should these tariffs, and the potential imposition of tariffs by the Trump administration on additional countries, continue for an extended period of time.
We procure certain raw materials and components we use in the manufacturing of our products directly or indirectly from outside of the U.S. We also import finished products into the U.S. from our Canadian production facility in Kingston, Ontario. The imposition of or increase in tariffs on raw materials such as steel and aluminum, the imposition of or increase in tariffs on finished products that we import, and other potential changes in U.S. and global trade policy could substantially increase the cost of and limit the availability of raw materials or our finished products. The variability and complexity of tariffs and duties exposes us to the risk of higher costs and inadvertent noncompliance associated with our imported products. Tariffs and retaliatory tariffs announced by the U.S. and other countries could impact the cost of certain of our raw materials and finished products, the implementation, size and timing of which remain uncertain and rapidly evolving. The implementation of these tariffs and future tariffs, or any changes in trade policies that have a similar effect, or the threat of any of the foregoing, could result in further interruptions in the supply chain. If we are unable to pass price increases on to our customer base or otherwise mitigate the costs or availability of products and raw materials associated with tariffs and other similar trade policies, our business, financial condition and operating results could be materially adversely affected.
Catastrophic events, including earthquakes, wildfires, floods, war, terrorism, public health emergencies, or other such events could adversely affect our business. financial condition and results of operations.
Our operations and financial results have been, and may be in the future, adversely impacted by local, regional, national or global catastrophic events or extraordinary circumstances, such as: natural or environmental disasters; weather events; public health emergencies, epidemics or pandemics; other serious disruption to our facilities due to fire, flood, hurricane, earthquake, war, acts of terrorism, civil insurrection or social unrest; political uncertainty; and regional or global conflicts, including the conflicts in the Middle East and Ukraine. Any such event could disrupt our supply chain, our ability to manufacture and deliver our products, and our dealers’ and distributors’ ability to install our products, as well as adversely impact customer demand for our products. Further, such events could also adversely impact consumer discretionary spending, and resulting in a macroeconomic downturn and disruption in the financial markets. Given the seasonality inherent in our business, the impact of such events or circumstances on our business would be particularly severe if the timing coincides with the peak months of swimming pool use and pool installation and maintenance. Our response and the response of other impacted persons to any such event may result in an increase in our operating costs and require significant management resources, and we could incur impairment expense for any impacted assets.
Due to such seasonality, our net sales are significantly stronger in the second and third quarters each year, and are moderated in the first and fourth quarters. Further, adverse weather conditions can cause the timing of sales and cash flows to shift significantly between quarterly and annual reporting periods and therefore significantly impact the meaningfulness of period-to-period comparisons of financial and operating results.
Consumer discretionary spending affects our sales of swimming pools and related products and is impacted by factors outside of our control, including general economic conditions, housing affordability, demographic trends, employment rates and wage levels, interest rate fluctuations, inflation, disposable income levels, consumer confidence and spending and to the availability of credit . In particular, we believe that the availability of credit is an important factor enabling the purchase of new pools because a significant percentage of consumers finance their pool installations. The recent and continued combination of highhigher interest rates and high inflation have reduced the affordability of mortgages and increased the cost of home improvement projects. Tightening consumer credit or increases in interest rates could reduce the number of consumers that obtain financing for pools, which would negatively impact our sales. In economic downturns such as we experienced in 20232024 and 2024,2025, and which is expected to continue into 2025,2026, the demand for swimming pools and related products has declined and we expect that such demand will be constrained in the future until we see a recovery in discretionary consumer spending among pool eligible households.
To be successful in our industry, we must keep pace with technological developments and innovations (such as the use of artificial intelligence (“AI”) and machine learning) and evolving industry standards. For example, in 2025, we continued the roll-out of Measure, a proprietary advanced AI-powered device that significantly reduces dealer time and error in measuring swimming pool safety covers. If we are unable to provide enhancements and new features and develop new products that achieve market acceptance or innovate quickly enough to keep pace with these rapid technological developments, our business could be harmed. For example, we believe our introduction of Latham Measure, which employs AI technology, has the potential disrupt competition in the market for safety covers and liners. If our competitors more successfully incorporate AI into their products and achieve higher market acceptance of their AI solutions than we can our ability to compete effectively could be impaired which may adversely effect our results of operations. Further, the development, adoption, and uses for generative and agentic AI technologies is rapidly evolving and ineffective or inadequate AI development or deployment practices by the Company or our third-party vendors could result in unintended consequences, which could impact our future growth and increase our costs and liability risk. For example, the use of artificial intelligence has the potential to result in bias, miscalculations, data errors and other unintended consequences. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs, and we cannot be sure that our use of AI will increase efficiency or provide any other benefits. Further, the use of AI tools may unintentionally compromise confidential or sensitive information, put our intellectual property at risk, or subject us to claims related to data privacy management or intellectual property infringement. It is also possible that the AI tools we use may negatively affect our reputation, disrupt our operations, or have a material adverse impact on our business, financial condition, and results of operations.
InflationDeclining home ownership rates could lead to reduced demand for our products and adversely impactaffect our business, financial condition and results of operations.
While inflation in the United States began to plateau or subside in 2024, higher costs of labor and services, and could continue to cause costs to increase as well as scarcity of certain products and there are indications that recent deflation in raw material costs may reverse. The imposition of tariffs on products and materials by the United States and other countries may negatively impact current inflation rates for an extended period of time, result in increases to our operating costs and negatively impact our business. See “—Changes in trade policies, including the imposition of tariffs, could negatively impact our business, financial condition, and results of operations.” There is substantial risk that inflation will escalate should these tariffs, and the potential imposition of tariffs by the Trump administration on additional countries, continue for an extended period of time.
We procure certain raw materials and components we use in the manufacturing of our products directly or indirectly from outside of the U.S. We also import finished products into the U.S. from our Canadian production facility in Kingston, Ontario. The imposition of or increase in tariffs on raw materials such as steel and aluminum, the imposition of or increase in tariffs on finished products that we import, and other potential changes in U.S. and global trade policy could substantially increase the cost of and limit the availability of raw materials or our finished products. The variability and complexity of tariffs and duties exposes us to the risk of higher costs and inadvertent noncompliance associated with our imported products. There have recently been a number of tariffs and retaliatory tariffs announced by the U.S. and other countries that would impact certain of our raw materials and finished products, the implementation, size and timing of which remain uncertain and rapidly evolving. The implementation of these tariffs and future tariffs, or any changes in trade policies that have a similar effect, or the threat of any of the foregoing, could result in further interruptions in the supply chain. If we are unable to pass price increases on to our customer base or otherwise mitigate the costs or availability of products and raw materials associated with tariffs and other similar trade policies, our business, financial condition and operating results could be materially adversely affected.
Declining home ownership rates could lead to reduced demand for our products and adversely affect our business, financial condition and results of operations.
Natural disasters, including resulting from climate change, geopolitical events, war, terrorism, public health emergencies, or other catastrophic events could adversely affect our business. financial condition and results of operations.
Our operations and financial results have been, and may be in the future, adversely impacted by local, regional, national or global catastrophic events or extraordinary circumstances, such as: natural or environmental disasters; weather events driven by climate change or other factors; public health emergencies, epidemics or pandemics; other serious disruption to our facilities due to fire, flood, hurricane, earthquake, war, acts of terrorism, civil insurrection or social unrest; political uncertainty; and regional or global conflicts, including the conflicts in the Middle East and Ukraine. Any such event could disrupt our supply chain, our ability to manufacture and deliver our products, and our dealers’ and distributors’ ability to install our products, as well as adversely impact customer demand for our products.
For example, the conflict in the Middle East could disrupt our ability to deliver product to customers in Israel resulting in delayed or lost sales. Further, such events could also adversely impact consumer discretionary spending, causing geopolitical uncertainty, and resulting in a macroeconomic downturn and disruption in the financial markets. Given the seasonality inherent in our business, the impact of such events or circumstances on our business would be particularly severe if the timing coincides with the peak months of swimming pool use and pool installation and maintenance. Our response and the response of other impacted persons to any such event may result in an increase in our operating costs and require significant management resources, and we could incur impairment expense for any impacted assets.
Exposure to various types of cybersecurity threats such as malware, computer viruses, worms or other malicious acts, as well as human error, also could potentially disrupt our operations or result in a significant interruption in the delivery of our goods and services. As with most companies, we have experienced cybersecurity threats, attempts to breach our systems and other similar incidents, none of which were material to our operations or financial results in 2024. It is possible that cyber attackers could compromise our security measures and obtain the personal and/or confidential information of the customers, employees, and suppliers that we hold or our business information. Cybersecurity threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated and may not immediately produce signs of intrusion. The development of AI technologies may exacerbate these risks. Moreover, such cybersecurity threats may disrupt access to our and/or our suppliers’ networks and systems. Such disruptions could result in delays or cancellations of customer orders, delays or interruptions in the shipment of orders, lower net sales, increased insurance costs, litigation, increased regulatory oversight and additional investments by the Company in threat prevention technology. In addition, cybersecurity threats may cause us to incur significant remediation costs, result in delays and disruptions to key business operations, damage business relationships or our reputation or divert attention of management and key information technology resources. With some employees working remotely, there may be increased opportunities for unauthorized access and cybersecurity threats. Additionally, while we perform due diligence prior to acquisitions and take actions to safeguard the businesses that we acquire, these businesses may not have invested as significantly as we do in security and technology and may be more susceptible to cyber-attacks, which may make us more vulnerable to cyber-attacks as well. Further, the United States government has warned of the potential risk of Russian cybersecurity threats stemming from the ongoing Russian-Ukraine conflict as well as ongoing threats from other state actors such as China. The occurrence of any cybersecurity incident or security breach could also subject us to liability, expose us to significant expense, and cause significant harm to our reputation and our business.
Advances in computer and software capabilities, encryption technology and other discoveries such as generative AI increase the complexity of our technological environment, including how each interact with our various software platforms. Such advances could delay or hinder our ability to process transactions or could compromise the integrity of our data, resulting in a material adverse impact on our financial condition and results of operations. We also may experience occasional system interruptions and delays that make our information systems unavailable or slow to respond, including the interaction of our information systems with those of third parties. A lack of sophistication or reliability of our information systems could adversely impact our operations and customer service and could require major repairs or replacements, resulting in significant costs and foregone sales.
Due to such seasonality, our net sales are significantly stronger in the second and third quarters each year, and are moderated in the first and fourth quarters. Further, adverse weather conditions can cause the timing of sales and cash flows to shift significantly between quarterly and annual reporting periods and therefore significantly impact the meaningfulness of period-to-period comparisons of financial and operating results. For example, as a result of the hurricanes that impacted the west coast of Florida and other areas of the southeastern U.S. in the second half of 2024, we experienced a temporary decline in demand for our products and prospective customers were focused on recovering from the damage caused by the storms to their homes.
These risks are heightened with respect to our largest customer, which accounted for 21.0% of our net sales in 2024, and our top ten dealers and distributors, which accounted for 42.8% of our net sales in 2024. A reduction in sales to our customers, particularly the loss of, or a reduction in sales to, our largest customers, could have a material adverse effect on our business, financial condition, and results of operations.
Installation services for our pool products for homeowners is provided by us in the case of our autocover products and our dealers and other third party installers. We provide dealer and third party installers with pool installation specifications, instructions and training. To the extent that our specifications and instructions are not adhered to by the installer, our pools may be damaged or not function properly leading to homeowner dissatisfaction. While the Company disclaims responsibility for faulty installation by dealers and other installers, dissatisfied homeowners may bring warranty or legal claims against us which can cause the Company to incur legal fees and adversely affect our insurance costs. The defense of such claims can also be a distraction to management and to our warranty team, as well as cause reputational harm. Following the acquisition of CoverStar Central in AprilAugust 2024, we are now directly involved in the installation of autocovers for some homeowners, and we may be subject to direct customer claims based on dissatisfaction with the installation of our autocovers.
To be successful in our industry, we must keep pace with technological developments and innovations (such as the use of artificial intelligence (“AI”) and machine learning) and evolving industry standards. For example, in 2024, we continued the roll-out of Measure, a proprietary advanced AI-powered device that significantly reduces dealer time and error in measuring swimming pool safety covers. If we are unable to provide enhancements and new features and develop new products that achieve market acceptance or innovate quickly enough to keep pace with these rapid technological developments, our business could be harmed. For example, we believe our introduction of Latham Measure, which employs AI technology, has the potential disrupt competition in the market for safety covers and liners. If our competitors more successfully incorporate AI into their products and achieve higher market acceptance of their AI solutions than we can our ability to compete effectively could be impaired which may adversely effect our results of operations. Further, the development, adoption, and uses for generative AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices by the Company or our third-party vendors could result in unintended consequences, which could impact our future growth and increase our costs and liability risk. For example, the use of artificial intelligence has the potential to result in bias, miscalculations, data errors and other unintended consequences. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs, and we cannot be sure that our use of AI will increase efficiency or provide any other benefits. Further, the use of AI tools may unintentionally compromise confidential or sensitive information, put our intellectual property at risk, or subject us to claims related to data privacy management or intellectual property infringement. It is also possible that the AI tools we use may negatively affect our reputation, disrupt our operations, or have a material adverse impact on our business, financial condition, and results of operations.
These risks are heightened with respect to our largest customer, which accounted for 22.6% of our net sales in 2025, and our top ten dealers and distributors, which accounted for 49.0% of our net sales in 2025. A reduction in sales to our customers, particularly the loss of, or a reduction in sales to, our largest customers, could have a material adverse effect on our business, financial condition, and results of operations.
•difficulty in staffing international subsidiary operations and increased costs of managing international operations;
•different political, economic, and regulatory conditions;
•local laws and customs and enforcement thereof;
•violations of anti-bribery and anti-corruption laws, such as the United States Foreign Corrupt Practices Act;
•violations of economic sanctions laws, such as the regulations enforced by the U.S. Department of The Treasury’s Office of Foreign Assets Control;
•tariffs and other import/export trade restrictions;
•currency fluctuations;
Management's Discussion & Analysis (MD&A)
New heading “Leadership Transition”
New heading “Year ended December 31, 2025 Compared to Year ended December 31, 2024”
New heading “Other (Income) Expense, Net”
New heading “Income Tax Expense”
New heading “Net Income (Loss)”
New heading “Net Income (Loss) Margin”
New heading “Adjusted EBITDA”
Removed heading “Other Expense (Income), Net”
Removed heading “Income Tax Expense (Benefit)”
Removed heading “Net Loss Margin”
Removed heading “Year ended December 31, 2023 Compared to Year ended December 31, 2022”
Largest changes
“We are required to meet certain financial covenants, including maintain specific liquidity measurements. There are also negative covenants, including certain restrictions on our ability and the ability of our subsidiaries to incur additional indebtedness, create liens, make investments, consolidate or merge with other entities, enter into transactions with affiliates, make prepayments with respect to certain indebtedness, make dividend payments, loans, or advances to us, declare dividends and make restricted payments and other distributions.”see in full comparison
“•Economic conditions: Demand for our products is affected by a number of economic factors impacting our customers and consumers. Customers typically pay for their new pools from assets on hand or from borrowing. A frequent source of borrowing is home equity financing, and accordingly, the level of equity in homes will affect consumers’ ability to obtain a home equity line of credit and to engage in backyard renovations that would result in purchases of our products. …”see in full comparison
“Year ended December 31, 2025 Compared to Year ended December 31, 2024”see in full comparison
“Year ended December 31, 2023 Compared to Year ended December 31, 2022”see in full comparison
“For our quantitative impairment test performed for our reporting unit at October 1, 2023, we estimated the fair value of our reporting unit based on a market approach. Under the market approach, we estimated the fair value of our single reporting unit based on enterprise value using our share price on the Nasdaq Global Select Market and an appropriate control premium. The market approach utilizes consideration of control premium associated with cost synergies that arise from obtaining control over a reporting unit and guideline transactions. …”see in full comparison
“Income tax expense was $9.1 million for the year ended December 31, 2024, compared to a $ (7.7) million income tax benefit for the year ended December 31, 2023. Our effective tax rate was (104.3)% for the year ended December 31, 2024, compared to 76.3% for the year ended December 31, 2023. The income tax expense of $9.1 million for the year ended December 31, 2024 was primarily due to the valuation allowance established on foreign deferred tax assets, the effects of branch accounting and the jurisdictional mix of income. …”see in full comparison
Full comparison: every changed paragraph (117)
We are the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand. We hold the leading position in North America in every product category in which we compete. It is our view that we are the most sought-after brand in the pool industry and the only pool company that has established a direct relationship with the homeowner.industry. We are Latham, The Pool Company.CompanyTM.
Partnership with our dealers is integral to our collective success, and we have enjoyed long-tenured relationships averaging over 1415 years. We support our dealer network with business development tools, co-branded marketing programs.programs, and in-house training.
Our operations consist of approximately 1,850 employees on average across approximately 30 locations. The broad geographic reach of our national manufacturing and distribution network allows us to service our customers on short lead times and to deliver our products in a cost-effective manner. Our mission is to design and manufacture high-quality pool products, with the homeowner in mind, and to be a value-added partner to our dealers.
Our operations consist of approximately 1,800 employees across about 30 locations. The broad geographic reach of our national manufacturing and distribution network allows us to service our customers on short lead times and to deliver our products in a cost-effective manner. Our mission is to design and manufacture high-quality pool products, with the homeowner in mind, and to be a value-added partner to our dealers.
•Increase in net sales of 7.4%, or $37.4 million, to $545.9 million for the year ended December 31, 2025, compared to $508.5 million for the year ended December 31, 2024.
•Increase in net income of $29.0 million, to $11.1 million for the year ended December 31, 2025 and representing a 2.0% net income margin for the year ended December 31, 2025, compared to a net loss of $17.9 million for the year ended December 31, 2024.
•Increase in Adjusted EBITDA (as defined below) of $19.6 million, to $99.8 million for the year ended December 31, 2025, compared to $80.2 million for the year ended December 31, 2024. Adjusted EBITDA margin increased from 15.8% to 18.3%.
In 2025, we built on our market leadership with further gains in fiberglass and autocover penetration and greater representation in the Sand States. In 2026, we will continue to execute on our key strategic priorities, namely, to build the Latham brand and drive increased awareness and adoption of fiberglass pools and autocovers, which we expect will enable us to continue to significantly outperform the U.S. in-ground pool market which we believe will remain flat in 2026. We plan to expand and further target our branding and marketing spend in 2026, with increased focus on building out our presence in the important Sand State markets through greater contractor and homebuilder engagement.
Ongoing macroeconomic softness has impacted and is expected to continue to impact consumer spending and demand. As anticipated, this resulted in a decline in new in-ground residential pool installations during the year ended December 31, 2024. Within our in-ground pool product line, fiberglass pools continue to show strength relative to packaged pools.
We continue to make progress executing our strategy to drive adoption and awareness of fiberglass pools and automatic safety covers and gain additional operating efficiencies through value engineering and lean manufacturing initiatives. We continue to take a disciplined approach to capital investments, with the focus on theproduct completioninnovation, offacility previouslyupgrades announced projects such as our recent multi-year capital plan to invest in our facilities,and technology and systems. Notably,These thisinitiatives involvescomplement continued investment in our sales, marketing, engineering and research and development efforts that are designed to accelerate conversion to fiberglass pool products and ongoing digital transformation programs.
Leadership Transition
Effective January 5, 2026, Sean Gadd was appointed as our President and Chief Executive Officer and as a member of the Board. Scott Rajeski retired from such positions effective as of January 4, 2026 and will serve as a Special Adviser for a six-month period.
As previously disclosed, we have responded to economic uncertainty by implementing cost reduction programs and lean manufacturing initiatives that structurally reduce our cost basis, while maintaining capacity.
We believe that Latham’s financial model has changed structurally, which has increased our underlying earnings capabilities amid an industry recovery. We are increasing our investments in sales and marketing and product development initiatives to ensure that we capture an incremental share of in-ground pool sales once volumes rebound.
Strategic transactions continue to be part of our growth strategy. On February 26, 2026 we completed the acquisition of Freedom Pools, a fiberglass pool manufacturer and installer operating in Australia and New Zealand. The acquisition is expected to be immediately accretive to our earnings, adding approximately $20.0 million in net sales and approximately $4.0 million in adjusted EBITDA, on an annualized basis, before acquisition synergies. The purchase price was approximately $17.0 million, and the transaction was fully funded with cash on hand.
Strategic transactions continue to be part of our growth strategy. On August 2, 2024, we completed a stock acquisition of Coverstar Central, our exclusive dealer of automatic safety covers in 29 states – mainly in the center of the U.S. Coverstar Central has been our trusted partner since 2006, and this acquisition represents a valuable strategic opportunity that we expect to benefit from in multiple ways. First, the vertical integration of our automatic safety cover product line in the acquired geographies is expected to increase margins. Second, as one company with a fully integrated sales and marketing strategy, we expect to accelerate the sales growth of this product line. Finally, we see opportunities to leverage Coverstar Central’s long-standing relationships with pool builders in its markets to increase the awareness of, and conversion to, fiberglass pools. The Coverstar Central Acquisition was immediately accretive to our net income, Adjusted EBITDA and Adjusted EBITDA margin for the fiscal year ended December 31, 2024 and will enhance our gross margins in the long-term. The cash purchase price was $64.5 million, net of cash acquired. The transaction was fully funded with cash on hand. With key integration activities completed, we are moving forward with a unified sales and marketing strategy designed to accelerate the sales growth of this product line. We further strengthened our position in this growing category by acquiring two of our smaller autocover dealers in February of this year.
•Sales, distribution, and marketing: In addition to the efforts of our dealers and distributors to raise awareness of our products, we pioneered the first “direct-to-homeowner” digital and social marketing strategy that has transformed the homeowner’s purchase journey. Through this marketing strategy, we are able to create demand for our pools and generate and provide high quality, purchase-ready consumer leads to our dealer partners. In order to strengthen our relationship with our loyal dealer partners, we have implemented “Latham Grand,” a key dealer strategy whereby we have securedestablished exclusivityexclusive fromsupply arrangements with over 300375 of our largest dealers in North America. We also have a strong distribution network as a result of over 475 distributor branch locations that represent our products. Through our significant investments in partnerships with dealers and distributors and our consumer-oriented marketing efforts, we have created both a “push and pull” demand dynamic for our products in the marketplace. We invest in our exclusive dealers through localized marketing spend, co-branding opportunities, tailored offerings, and priority lead generation. We also provide our dealers with enhanced product literature, in-store display samples, and other initiatives to drive sales. We have directed a significant portion of our advertising spend to digital channels, including social media and search advertising. Our improved digital marketing engine has the ability to strategically target market spend and to generate leads in territories where dealers have capacity to install more pools, markets where we are underpenetrated, or simply into the largest in-ground swimming pool markets. Our volume of product sales in a given period will be impacted by changes in our distribution platform and by our ability to generate leads for our dealers.
•Material conversion: We have continued to consummate sales of our products through our focused efforts to drive material conversion and market penetration of our products, specifically our fiberglass pools, which continue to take market share from traditional concrete pools and enable meaningfully improved economics for consumers, dealers, and pool installers. From our perspective this will be a long-term trend toward material conversion from traditional concrete pools. We believe that our fiberglass pools offer a compelling value proposition because of their lower up-front and lifecycle costs, better quality, fewer chemicals, faster and easier installation, and more convenient experience, compared to products manufactured from traditional materials. We anticipate that sales of our fiberglass pool products will continue to benefit from material conversion. We have taken a similar approach with our automatic safety cover line. Autocovers provide increased safety and economic benefits and can be installed on almost any size and shape of fiberglass, vinyl or concrete pool. We completed acquisitions in 2025 to improve our market share in autocovers. The success of our efforts to drive conversion during any given period will impact the volume of our products sold during that period.
•Product innovation: We continue to develop and introduce innovative products to accelerate material conversion and to expand our markets. The continuous evolution and expansion of our product portfolio is critical to our future sales growth, expansion of market share, and overall success. Our broad product offering allows dealers and distributors to offer consumers a wide variety of innovative pool shapes, depths, and lengths. Specifically, our innovative fiberglass pool offering employs the most durable components, consisting of a carbon fiber, Kevlar, and ceramic fiberglass build. Our use of innovative technology and premium materials result in long-lasting products that not only require lower up-front costs, but also save homeowners time and money from continuous maintenance throughout the product lifecycle. We expect that new products will enhance our ability to compete with traditional materials at a variety of price points, and that we will continue to devote significant resources to developing innovative new products. The volume of our products sold during a given period will depend in part on our successfully introducing new products that generate additional demand, as well as the extent to which new products may impact our sales of existing products.
•Economic conditions: Demand for our products is affected by a number of economic factors impacting our customers and consumers. Customers typically pay for their new pools from assets on hand or from borrowing. A frequent source of borrowing is home equity financing, and accordingly, the level of equity in homes will affect consumers’ ability to obtain a home equity line of credit and to engage in backyard renovations that would result in purchases of our products. Demand for our products is also affected by the level of interest rates and the availability of credit, consumer confidence and ability and willingness to spend, housing affordability, demographic trends, employment levels, tariffs and other macroeconomic factors that may influence the extent to which consumers engage in renovations to their backyard, including pool installation projects to enhance the outdoor living spaces of their homes.
•Seasonality and weather: Although we generally have demand for our products throughout the year, our business is seasonal, and weather is one of the principal external factors affecting the business. In general, net sales and net income are highest during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Severe weather also may play a role in affecting sales growth, as particularly rainy or cold years tend to slow the volume of sales, including as a result of complicating conditions for pool installations. Catastrophic events, such as hurricanes, tornadoes, and earthquakes can cause interruptions to our operations, as well as our dealers and distributors, and may cause customers to delay purchases. These scenarios are partially mitigated by our geographic diversity, both across the United States and through international markets.
In general, our products are priced to be competitive in the in-ground swimming pool market, including the prices for concrete pools, and to keep in line with changes in our input costs.costs, while also maintaining a good value proposition for the homeowner. We continue to monitor the potential impact of tariffs in our pricing models.
Strategic transactions continue to be part of our growth strategy. On August 2, 2024, we completed an acquisition of Coverstar Central, our exclusive dealer of automatic safety covers in 29 states – mainly in the center of the U.S. Coverstar Central was our trusted partner since 2006, and this acquisition represented a valuable strategic opportunity that we benefited from in multiple ways. First, the vertical integration of our automatic safety cover product line in the acquired geographies increased margins. Second, as one company with a fully integrated sales and marketing strategy, we were able to accelerate the sales growth of this product line. Finally, we leveraged Coverstar Central’s long-standing relationships with pool builders in its markets to increase the awareness of, and conversion to, fiberglass pools. In February 2025, we acquired two smaller Coverstar dealers in New York and Tennessee.
On August 2, 2024, we acquired Coverstar Central, our exclusive dealer of automatic safety covers. This acquisition has allowed us to vertically integrate the automatic safety cover product line and to align on sales and marketing strategies.
On November 8, 2022, we acquired certain fiberglass pool manufacturing assets in Seminole, Oklahoma, which qualified as a business combination. This acquisition replaced lost fiberglass manufacturing capacity in Odessa, TX because of a plant fire and placed our production closer to strong consumer markets in the region.
On October 30, 2020, we entered into a long-term strategic partnership with and acquired a minority interest in Premier Pools & Spas, a pool builder focusing on in-ground swimming pools. The purpose of this investment in Premier Pools & Spas is to help expand our sales and distribution channels. Products are sold directly to the franchisees, third parties independent of Premier Pools & Spas, and are therefore not considered related party transactions. Our investment in Premier Pools & Spas is reflected as an equity method investment on our consolidated balance sheetsheets as of December 31, 20242025 and 2023,2024, and our proportionate share of earnings or losses of Premier Pools & Spas is recognized in earnings (losses) from equity method investment in our consolidated statementstatements of operations on a three-month lag.
Net Sales
We derive our revenue from the design, manufacture, and sale of in-ground swimming pools, pool covers, and pool liners. We sell fiberglass pools, which are one-piece manufactured fiberglass pools that are ready to be installed in a consumer’s backyard, and custom vinyl pools, which are manufactured pools that are made out of non-corrosive steel or composite polymer frame, on top of which a vinyl liner is installed. We sell liners for the interior surface of vinyl pools (including pools that were not manufactured by us). We also sell all-season pool covers, which are winterizing mesh or solid pool covers that protect pools against debris and cold or inclement weather, and automatic safety covers for pools that can be operated with a switch.
Each product shipped is considered to be one performance obligation. With the exception of our extended service warranties and our custom product contracts, we recognize our revenue when control of our promised goods is transferred to our customers (dealer in one-step distribution channel or distributor in two-step distribution channel), either upon shipment or arrival at our customer’s destination depending upon the terms of the purchase order. Sales are recognized net of any estimated rebates, returns, allowances, cash discountsallowances or other sales incentives. Revenue that is derived from our extended service warranties, which are separately priced and sold, is recognized over the term of the contracts. Revenue from custom products is recognized over time utilizing an input method that compares the cost of cumulative work-in-process to date to the most current estimates for the entire cost of the performance obligation. See “— Critical Accounting Policies and Estimates — Revenue Recognition.”
Adjusted EBITDA and Adjusted EBITDA margin are key metrics used by management and our Board to assess our financial performance. Adjusted EBITDA and Adjusted EBITDA margin are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use Adjusted EBITDA and Adjusted EBITDA margin to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to utilize as a significant performance metric in our annual management incentive bonus plan compensation, and to compare our performance against that of other companies using similar measures. We have presented Adjusted EBITDA and Adjusted EBITDA margin solely as supplemental disclosures because we believe they allow for a more complete analysis of results of operations and assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit), (iv) loss (gain) loss on sale and disposal of property and equipment, (v) restructuring charges, (vi) stock-based compensation expense, (vii) unrealized (gains) losses on foreign currency transactions, (viii) strategic initiative costs, (ix) acquisition and integration related costs, (x) loss on extinguishment of debt, (xi) underwriting fees related to offering of common stock, (xii) the Odessa fire and other such unusual events, and (xiiixi) other.
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and should not be considered as alternatives to net income (loss) as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. YouWe areencourage encouragedevaluation to evaluateof these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be awaremindful that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Adjusted EBITDA margin in the future, and any such modification may be material. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by any such adjustments. In addition, other companies, including companies in our industry, may not calculate Adjusted EBITDA and Adjusted EBITDA margin at all or may calculate Adjusted EBITDA and Adjusted EBITDA margin differently and accordingly, are not necessarily comparable to similarly entitled measures of other companies, which reduces the usefulness of Adjusted EBITDA and Adjusted EBITDA margin as tools for comparison.
Year ended December 31, 2025 Compared to Year ended December 31, 2024
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024:
Net Sales
Net sales was $545.9 million for the year ended December 31, 2025, compared to $508.5 million for the year ended December 31, 2024. The $37.4 million, or 7.4%, increase in net sales was driven by a $32.8 million increase from volume and a $4.6 million increase from tariff related pricing increases. The $32.8 million volume increase was primarily driven by organic- and acquisition-related growth. The increase in total net sales across our product lines was $29.4 million for covers, $5.2 million for liners and $2.7 million for in-ground swimming pools.
Cost of sales was $363.8 million for the year ended December 31, 2025, compared to $354.8 million for the year ended December 31, 2024, and decreased as a percentage of net sales by 3.2%. Gross margin increased by 3.2% to 33.4% for the year ended December 31, 2025, compared to 30.2% for the year ended December 31, 2024. The $9.0 million, or 2.6%, increase in cost of sales was primarily the result of an increase in sales volume, partially offset by the impact of production efficiencies. The 3.2% increase in gross margin was primarily driven by production efficiencies from our lean manufacturing and value engineering initiatives and the accretive benefit of the three Coverstar acquisitions.
Selling, general, and administrative expense was $122.6 million for the year ended December 31, 2025, compared to $108.4 million for the year ended December 31, 2024, and increased as a percentage of net sales by 1.2%. The $14.2 million, or 13.1%, increase in selling, general, and administrative expense was primarily due to commercial headcount and marketing expense due to investment in the fiberglass conversion strategy in the Sand States, our digital transformation efforts and the inclusion of the three Coverstar acquisitions.
Amortization
Amortization was $28.9 million for the year ended December 31, 2025, compared to $27.1 million for the year ended December 31, 2024. The $1.8 million, or 6.8%, increase in amortization was driven by the three Coverstar acquisitions.
Interest expense, net was $25.8 million for the year ended December 31, 2025, compared to $24.8 million for the year ended December 31, 2024. The $1.0 million, or 3.9%, increase in interest expense, net was primarily the result of the change in the fair value of our interest rate swap, compared to the year ended December 31, 2024.
Other (Income) Expense, Net
Other income, net was $3.5 million for the year ended December 31, 2025, compared to other expense of $6.2 million for the year ended December 31, 2024. The $9.7 million increase in other income, net was primarily driven by a favorable change in net foreign currency transaction gains and losses associated with our international subsidiaries.
Earnings from equity method investment of Premier Pools & Spas was $5.2 million for the year ended December 31, 2025, compared to $4.1 million for the year ended December 31, 2024, due to the financial performance of Premier Pools & Spas.
Income Tax Expense
Income tax expense was $2.4 million for the year ended December 31, 2025, compared to $9.1 million for the year ended December 31, 2024. Our effective tax rate was 17.5% for the year ended December 31, 2025, compared to (104.4)% for the year ended December 31, 2024. The income tax expense of $2.4 million for the year ended December 31, 2025 was primarily due to the effects of branch accounting, the jurisdictional mix of income and $1.3 million of federal research credits. The income tax expense of $9.1 million for the year ended December 31, 2024 was primarily due to the valuation allowance established on foreign deferred tax assets, the effects of branch accounting and the jurisdictional mix of income.
Net Income (Loss)
Net income was $11.1 million for the year ended December 31, 2025, compared to net loss of $17.9 million for the year ended December 31, 2024. The $29.0 million, or 162.3%, increase in net income was primarily driven by the factors described above.
Net Income (Loss) Margin
Net income margin was 2.0% for the year ended December 31, 2025, compared to net loss margin of 3.5% for the year ended December 31, 2024. The 5.5% increase in net income margin was driven by a $29.0 million increase in net income and a $37.4 million increase in net sales, compared to the year ended December 31, 2024 because of the factors described above.
Adjusted EBITDA
Adjusted EBITDA was $99.8 million for the year ended December 31, 2025, compared to $80.2 million for the year ended December 31, 2024. The $19.6 million, or 24.4%, increase in Adjusted EBITDA was primarily because of the increase in net income of $29.0 million, partially offset by the change in unrealized gains in foreign currency transactions. For a discussion of Adjusted EBITDA and Adjusted EBITDA margin and the limitations on their use, and the reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, and our calculation of Adjusted EBITDA margin see “— Non-GAAP Financial Measures” below.
Adjusted EBITDA margin was 18.3% for the year ended December 31, 2025, compared to 15.8% for the year ended December 31, 2024.
The following table summarizes our results of operations for the years ended December 31, 2024 and 2023:
Net sales was $508.5 million for the year ended December 31, 2024, compared to $566.5 million for the year ended December 31, 2023. The $58.0 million, or 10.2%, decrease in net sales was driven by a $55.1 million decrease from volume and a $2.9 million decrease from pricing. The $55.1 million volume decrease was largely driven by soft industry conditions. The decrease in total net sales across our product lines was $38.6 million for in-ground swimming pools, $9.7 million for liners and $9.6 million for covers.
Cost of sales was $354.8 million for the year ended December 31, 2024, compared to $413.5 million for the year ended December 31, 2023, and decreased as a percentage of net sales by 3.2%. Gross margin increased by 3.2% to 30.2% for the year ended December 31, 2024, compared to 27.0% for the year ended December 31, 2023. The $58.7 million, or 14.2%, decrease in cost of sales was primarily the result of a decrease in sales volume. The 3.2% increase in gross margin was primarily driven by production efficiencies from lean manufacturing and value engineering initiatives, improved procurement, and modest deflation.
Selling, general, and administrative expense was $108.4 million for the year ended December 31, 2024, compared to $110.3 million for the year ended December 31, 2023, and increased as a percentage of net sales by 1.8%. The $1.9 million, or 1.8%, decrease in selling, general, and administrative expense was primarily driven by an $11.3 million reduction in non-cash stock-based compensation expenses, as well as our cost containment initiatives and restructuring programs, which were partially offset by approximately $8 million in higher performance-based compensation and higher sales and marketing spend to gain share in the Sand States and further strengthen our market position.
Amortization was $27.1 million for the year ended December 31, 2024, compared to $26.5 million for the year ended December 31, 2023. The $0.6 million, or 2.2%, increase in amortization was driven by the acquisition of Coverstar Central.
Interest expense, net was $24.8 million for the year ended December 31, 2024, compared to $30.9 million for the year ended December 31, 2023. The $6.1 million, or 19.7%, decrease in interest expense, net was primarily the result of the change in the fair value of our interest rate swap, compared to the year ended December 31, 2023.
Other Expense (Income), Net
Other expense (income), net was $6.2 million for the year ended December 31, 2024, compared to $ (1.0) million for the year ended December 31, 2023. The $7.2 million increase in other expense (income), net was primarily driven by an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries.
What changed in the latest 10-Q
Risk Factors
Largest changes
We have disclosed under the heading “Risk Factors” in our Annual Report, the risk factors that materially affect our business, financial condition, and results of operations.see in full comparisonExcept as set forth below, thereThere have been no material changes from the risk factors previously disclosed in our AnnualReport.Report and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 28,2026. You should carefully consider the risks, uncertainties, assumptions and other important factors set forth in the Annual Report and other subsequent reports we file with the SEC, including this Quarterly Report on Form 10-Q, any of which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied. For similar reasons, our past results may not be a reliable indicator of future performance and trends. You also should be aware that these risk factors and other information do not describe every risk that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may affect us. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time, and we anticipate that subsequent events and developments will cause our views to change. In addition, these risks do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may undertake. Any of these known or emerging factors may materially adversely affect our business, financial condition, and operating results, as well as the trading price of our common stock.
Full comparison: every changed paragraph (2)
We have disclosed under the heading “Risk Factors” in our Annual Report, the risk factors that materially affect our business, financial condition, and results of operations. Except as set forth below, thereThere have been no material changes from the risk factors previously disclosed in our Annual Report.Report and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 28,2026. You should carefully consider the risks, uncertainties, assumptions and other important factors set forth in the Annual Report and other subsequent reports we file with the SEC, including this Quarterly Report on Form 10-Q, any of which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied. For similar reasons, our past results may not be a reliable indicator of future performance and trends. You also should be aware that these risk factors and other information do not describe every risk that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may affect us. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time, and we anticipate that subsequent events and developments will cause our views to change. In addition, these risks do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may undertake. Any of these known or emerging factors may materially adversely affect our business, financial condition, and operating results, as well as the trading price of our common stock.
The conflict in the Middle East between the United States, Israel and Iran and related geopolitical instability may adversely affect our business. In February 2026, the United States and Israel launched coordinated military strikes against Iran, which retaliated with missile attacks across the region and has since taken actions to disrupt ocean boundocean-bound vessels carrying petroleum and other supplies from passing through the Strait of Hormuz. The ongoing conflict and any further escalation, including additional military actions, retaliatory measures, sanctions, disruptions to trade or transportation routes, cyberattacks, or other governmental or market responses, has led and could continue to lead to significant disruption of global energy supplies and increases in global energy prices, heighten inflationary pressures on our input costs and supply chain, adversely affect global supply chains, energy markets, commodity prices, currency exchange rates, interest rates, financial markets and overall macroeconomic conditions, increase the cost or reduce the availability of debt financing, and adversely impact customer spending patterns in markets in which we operate. To the extent that we are unable to offset potential increases in energy and commodity costs with price increases and other mitigation actions, our profitability and overall financial results could be adversely impacted by the ongoing conflict.
Management's Discussion & Analysis (MD&A)
New heading “Highlights for the two fiscal quarters ended June 27, 2026”
New heading “Two Fiscal Quarters Ended June 27, 2026 Compared to Two Fiscal Quarters Ended June 28, 2025”
New heading “Cost of Sales and Gross Margin”
New heading “Selling, General, and Administrative Expense”
New heading “Interest Expense, net”
New heading “Other (Income) Expense, Net”
New heading “Earnings from Equity Method Investment”
New heading “Income Tax Expense”
New heading “Net Income Margin”
New heading “Adjusted EBITDA”
New heading “Adjusted EBITDA Margin”
Removed heading “Leadership Transition”
Largest changes
“Two Fiscal Quarters Ended June 27, 2026 Compared to Two Fiscal Quarters Ended June 28, 2025”see in full comparison
“We continued to gain traction in the Sand States, a key growth market for Latham, where second quarter sales increased at a double-digit rate. As noted last quarter, we are moving ahead with several new initiatives to accelerate our growth in these geographies, which have the potential to drive a step-change in companywide sales. …”see in full comparison
Full comparison: every changed paragraph (81)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission,Commission (“SEC”) on March 4, 2026 (the “Annual Report”).
Highlights for the fiscal quarter ended MarchJune 28,27, 2026
•Increase in net sales of 5.3%,14.4%, or $5.9$24.8 million, to $117.3$197.5 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $111.4$172.6 million for the fiscal quarter ended MarchJune 29,28, 2025.
•IncreaseDecrease in net lossincome of $2.6$3.2 million to $8.5$12.8 million and representing a 7.3%6.5% net lossincome margin for the fiscal quarter ended MarchJune 28,27, 2026, compared to $6.0$16.0 million and representing a 5.4%9.3% net lossincome margin for the fiscal quarter ended MarchJune 29,28, 2025.
•Increase in Adjusted EBITDA (as defined below) of $1.0$4.7 million to $12.2$44.6 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $11.1$39.9 million for the fiscal quarter ended MarchJune 29,28, 2025. Adjusted EBITDA margin increaseddecreased from 10.0%23.1% to 10.4%.22.6%.
Highlights for the two fiscal quarters ended June 27, 2026
•Increase in net sales of 10.8%, or $30.7 million, to $314.8 million for the two fiscal quarters ended June 27, 2026, compared to $284.1 million for the two fiscal quarters ended June 28, 2025.
•Decrease in net income of $5.8 million to a net income of $4.2 million and representing a 1.3% net income margin for the two fiscal quarters ended June 27, 2026, compared to net income of $10.0 million and representing a 3.5% net income margin for the two fiscal quarters ended June 28, 2025.
•Increase in Adjusted EBITDA of $5.7 million to $56.8 million for the two fiscal quarters ended June 27, 2026, compared to $51.0 million for the two fiscal quarters ended June 28, 2025. Adjusted EBITDA margin remained flat at 18.0%.
Second quarter sales growth was driven by execution of our strategic priorities and supports our expectations of continued share gains across our product lines. Our in-ground pool sales increased 22.5%, or 13.6% organically, led by fiberglass pool sales, which are on track to account for approximately 80% of our full year in-ground pool sales in 2026. Cover sales were up 10% in the second quarter, led by growth in autocovers, indicating a steady increase in attachment rates on new pool installations.
We continued to gain traction in the Sand States, a key growth market for Latham, where second quarter sales increased at a double-digit rate. As noted last quarter, we are moving ahead with several new initiatives to accelerate our growth in these geographies, which have the potential to drive a step-change in companywide sales. In the last several months, we have made considerable progress in building our commercial organization, identified multiple target micro-markets as part of a refined market development framework around segmentation by communities, and added sales resources in the field to facilitate the sales process in concert with our dealers.
Second quarter gross profit increased, supported by higher volume and continued progress with lean manufacturing and value engineering initiatives. Demand for fiberglass pools accelerated faster than our typical seasonal ramp-up, resulting in approximately $2.8 million of incremental costs in the quarter, which represented a gross margin headwind of approximately 140 basis points. The majority of these costs are expected to be recovered in the second half of the year. Adjusted EBITDA increased 11.9% year over year, with Adjusted EBITDA margin of 22.6%, reflecting the impact of lower gross margin and the timing of sales and marketing investments. We also completed a program to optimize certain operational and administrative functions, which is enabling us to redeploy resources to sales and marketing initiatives designed to accelerate growth.
We continue to execute effectively on our strategic priorities and achieved sales growth in each of our product lines in the first quarter. Sales growth was led by gains in autocovers and liners and the benefits of the Freedom Pools acquisition while adverse weather conditions in North America kept organic in-ground pool sales steady year-over-year. Adjusted EBITDA growth outpaced sales growth by a considerable margin, demonstrating our substantial operating leverage and cost discipline, which more than offset the impact of higher investments in growth initiatives.
We continued to gain traction in Florida, our initial Sand State target market, where our fiberglass pool sales increased at a double-digit rate in the first quarter. This growth reflected the new dealer sign-ups we executed in 2025 and increased brand and product awareness driven by our advertising and marketing campaign. To accelerate our growth in Florida and the other Sand State markets, we are moving forward with several new initiatives to capture consumer demand and provide additional value to our dealers. These initiatives include the build out of our commercial organization, a new market development framework around segmentation by neighborhood, and the addition of sales resources in the field to keep Latham engaged with the consumer throughout the pool purchasing process while linking customers to our dealer network. These initiatives will be supported by a targeted marketing campaign aimed at educating consumers on the benefits of fiberglass and pool ownership.
Leadership Transition
Effective January 5, 2026, Sean Gadd was appointed as our President and Chief Executive Officer and as a member of the Board. Scott Rajeski retired from such positions effective as of January 4, 2026 and will serve as a Special Adviser for a six-month period.
Strategic transactions continue to be part of our growth strategy. On February 26, 2026, we completed the acquisition of Freedom Pools, a fiberglass pool manufacturer and installer operating in Australia and New Zealand. The acquisition has been and is expected to continue to be immediately accretive to our earnings, adding approximately $20.0 million in net sales and approximately $4.0 million in adjustedAdjusted EBITDA, on an annualized basis, before acquisition synergies. The GAAP purchase price was $15.4 million, and included a holdback of $1.6 million that has been accrued on our condensed consolidated balance sheet. The transaction was fully funded with cash on hand.
WeDuring the fiscal quarter ended March 28, 2026, we purchased four fiberglass production facilities that had previously been leased during the quarter ended March 28, 2026.leased. The transaction was completed on February 6, 2026 for a total purchase price of $17.6 million. The purchase price included a $12 million deposit made in the fourth quarter of 2025, and $5.6 million paid at closing. This purchase was the primary reason for the increase of property and equipment, net on the condensed consolidated balance sheet.sheet as of June 27, 2026.
Fiscal Quarter Ended MarchJune 28,27, 2026 Compared to Fiscal Quarter Ended MarchJune 29,28, 2025
The following table summarizes our results of operations for the fiscal quarter ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 (dollars in thousands):
________________________________________ (a)Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Financial Measures” for a reconciliation to net loss,income, the most directly comparable GAAP measure, and for information regarding our use of Adjusted EBITDA.
Net sales was $117.3$197.5 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $111.4$172.6 million for the fiscal quarter ended MarchJune 29,28, 2025. The $5.9$24.8 million, or 5.3%,14.4%, increase in net sales was due to a $3.0$19.0 million increase in sales volume and a $2.9$5.8 million increase from higher pricing. The increase in net sales was primarily driven by organic growth in linerseach andof covers,our product lines, particularly the growth of our in-ground pool sales, sales growth in the Sand States, the acquisition of Freedom Pools, sales growth in FloridaPools and the full year benefit of the 2025 price increase partially offset by adverse weather conditions across North America.increase. The increase in net sales of $5.9$24.8 million across our product lines consisted of an increase of $2.0$17.7 million for in-ground swimming pools, $2.0$3.7 million for linerscovers and $1.9$3.4 million for covers.liners.
Cost of sales was $80.2$127.4 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $78.5$108.7 million for the fiscal quarter ended MarchJune 29,28, 2025. Gross margin increaseddecreased by 2.2%,1.6%, to 31.7%35.5% of net sales for the fiscal quarter ended MarchJune 28,27, 2026, compared to 29.5%37.1% of net sales for the fiscal quarter ended MarchJune 29,28, 2025. The $1.6$18.7 million, or 2.1%,17.2%, increase in cost of sales was primarily the result of the increase in sales volume, partially offset by the impact of production efficiencies resulting from lean manufacturing and value engineering programs. The 2.2%1.6% increasedecrease in gross margin was primarily driven by volumequarter leveragespecific andramp-up the benefitscosts of lean$2.8 manufacturing and value engineering initiatives.million.
Selling, general, and administrative expense was $36.6$37.6 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $30.6$31.9 million for the fiscal quarter ended MarchJune 29,28, 2025. The $6.0$5.7 million, or 19.5%,17.8%, increase in selling, general, and administrative expense was primarily due to acquisitioninvestments andin integrationour relatedgrowth costs,strategies, increasedthe timing of sales and marketing investmentinitiatives to accelerate the fiberglass conversion strategy in the Sand StateStates, markets,acquisition and integration related costs, which included $2.2 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024, as well as our digital transformation efforts.
Amortization was $7.2$7.4 million for boththe offiscal quarter ended June 27, 2026 and $7.3 million for the fiscal quartersquarter ended MarchJune 28, 20262025. andThe March$0.1 29,million, 2025.or 0.9%, increase in amortization was due to the Freedom Pools acquisition.
Interest expense, net was $4.8$5.9 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $6.4$7.1 million for the fiscal quarter ended MarchJune 29,28, 2025. The $1.6$1.2 million, or 25.3%,17.1%, decrease in interest expense, net was primarily the result of the change in the fair value of our interest rate swap,swap and a decrease in interest rates, compared to the fiscal quarter ended MarchJune 29,28, 2025.
Other expense, net was $0.8$1.4 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to other income, net of $0.3$3.0 million for fiscal quarter ended MarchJune 29,28, 2025. The $1.1$4.4 million increase in other expense, net was primarily driven by an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries.
Earnings from our equity method investment in Premier Pools & Spas was $0.8$1.1 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $1.0$0.5 million for the fiscal quarter ended MarchJune 29,28, 2025, due to the financial performance of Premier Pools & Spas.
Income Tax BenefitExpense
Income tax benefitexpense was $2.8$6.1 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $4.1$5.1 million for the fiscal quarter ended MarchJune 29,28, 2025. Our effective tax rate was 24.8%32.4% for the fiscal quarter ended MarchJune 28,27, 2026, compared to 40.6%24.3% for the fiscal quarter ended MarchJune 29,28, 2025. The differences between the U.S. federal statutory income tax rate and our effective income tax rates for the fiscal quarter ended MarchJune 28,27, 2026 and the fiscal quarter ended MarchJune 29,28, 2025 were primarily attributable to the discrete impact of stock-basedstock compensation expense for which there is no associated tax benefit andbenefit, the effects of branch accounting for Latham Canada.Canada and the jurisdictional mix of income.
Net LossIncome
Net lossincome was $8.5$12.8 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $6.0$16.0 million for the fiscal quarter ended MarchJune 29,28, 2025. The $2.6$3.2 million, or 43.1%,20.2%, increasedecrease in net lossincome was primarily becausedriven by an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $5.0 million, as well as the other factors described above.
Net LossIncome Margin
Net lossincome margin was 7.3%6.5% for the fiscal quarter ended MarchJune 28,27, 2026, compared to 5.4%9.3% for the fiscal quarter ended MarchJune 29,28, 2025. The 1.9%2.8% increasedecrease in net lossincome margin was primarily driven by the $3.2 million decrease in net income, as well as the other factors described above.
Adjusted EBITDA was $12.2$44.6 million for the fiscal quarter ended MarchJune 28,27, 2026, compared to $11.1$39.9 million for the fiscal quarter ended MarchJune 29,28, 2025. The $1.0$4.7 million, or 9.2%,11.9%, increase in Adjusted EBITDA was primarily because of the gross profit growth from the increase in net sales, as well as the other factors described above.
Adjusted EBITDA margin was 10.4%22.6% for the fiscal quarter ended MarchJune 28,27, 2026, compared to 10.0%23.1% for the fiscal quarter ended MarchJune 29,28, 2025. The 0.4%0.5% increasedecrease in Adjusted EBITDA margin was primarily because of athe $1.0 million increasedecrease in Adjustedgross EBITDA,margin comparedand the timing of sales and marketing campaigns to accelerate market penetration in the fiscalSand quarterStates endedas Marchwell 29, 2025, which was impacted byas the other factors described above.
Two Fiscal Quarters Ended June 27, 2026 Compared to Two Fiscal Quarters Ended June 28, 2025
The following table summarizes our results of operations for the two fiscal quarters ended June 27, 2026 and June 28, 2025:
______________________________________________________________ (a)Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Financial Measures” for a reconciliation to net income, the most directly comparable GAAP measure, and for information regarding our use of Adjusted EBITDA.
Net Sales
Net sales were $314.8 million for the two fiscal quarters ended June 27, 2026, compared to $284.1 million for the two fiscal quarters ended June 28, 2025. The $30.7 million, or 10.8%, increase in net sales was due to a $22.0 million increase in sales volume and a $8.7 million increase from higher pricing. The sales volume increase was primarily due to organic growth of 7.5% with the acquisition of Freedom Pools contributing the remainder. The increase in net sales across our product lines consisted of an increase of $19.7 million for in-ground swimming pools, $5.6 million for covers and $5.4 million for liners.
Cost of Sales and Gross Margin
Cost of sales was $207.6 million for the two fiscal quarters ended June 27, 2026, compared to $187.2 million for the two fiscal quarters ended June 28, 2025. Gross margin was 34.1% of net sales for the two fiscal quarters ended June 27, 2026 and June 28, 2025. The $20.3 million increase in cost of sales was primarily the result of the increase in sales volume, partially offset by the impact of production efficiencies resulting from lean manufacturing and value engineering programs. Gross margin was in line with prior year, and included second-quarter-specific ramp-up costs that offset the benefits of lean manufacturing and value engineering initiatives.
Selling, General, and Administrative Expense
Selling, general, and administrative expense was $74.2 million for the two fiscal quarters ended June 27, 2026, compared to $62.6 million for the two fiscal quarters ended June 28, 2025. The $11.6 million, or 18.6%, increase in selling, general, and administrative expense was primarily driven by increased sales and marketing investments to accelerate our fiberglass conversion strategy in the Sand States, acquisition and integration related costs, which included $4.5 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024 and costs related to our digital transformation program.
Amortization
Amortization was $14.5 million for both the two fiscal quarters ended June 27, 2026 and June 28, 2025.
Interest Expense, net
Interest expense, net was $10.7 million for the two fiscal quarters ended June 27, 2026, compared to $13.5 million for the two fiscal quarters ended June 28, 2025. The $2.8 million, or 21.0%, decrease in interest expense, net was the result of the change in the fair value of our interest rate swap and a decrease in the outstanding balance of long-term debt, compared to the two fiscal quarters ended June 28, 2025.
Other (Income) Expense, Net
Other expense, net was $2.2 million for the two fiscal quarters ended June 27, 2026, compared to other income, net of $3.4 million for the two fiscal quarters ended June 28, 2025. The $5.5 million increase in other expense, net was primarily driven by an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries.
Earnings from Equity Method Investment
Earnings from our equity method investment in Premier Pools & Spas were $1.9 million for the two fiscal quarters ended June 27, 2026, compared to $1.4 million for the two fiscal quarters ended June 28, 2025, due to the financial performance of Premier Pools & Spas.
Income Tax Expense
Income tax expense was $3.3 million for the two fiscal quarters ended June 27, 2026, compared to income tax expense of $1.1 million for the two fiscal quarters ended June 28, 2025. Our effective tax rate was 43.9% for the two fiscal quarters ended June 27, 2026, compared to 9.5% for the two fiscal quarters ended June 28, 2025. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for both the two fiscal quarters ended June 27, 2026 and June 28, 2025 was primarily attributable to the discrete impact of stock compensation expense for which there is no associated tax benefit, the effects of branch accounting for Latham Canada and the jurisdictional mix of income.
Net Income
Net income was $4.2 million for the two fiscal quarters ended June 27, 2026, compared to $10.0 million for the two fiscal quarters ended June 28, 2025. The $5.8 million, or 57.9%, decrease in net income was primarily driven by an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $6.4 million, as well as the other factors described above.
Net Income Margin
Net income margin was 1.3% for the two fiscal quarters ended June 27, 2026, compared to 3.5% for the two fiscal quarters ended June 28, 2025. The 2.2% decrease in net income margin was driven by a $5.8 million decrease in net income as well as the other factors described above.
Adjusted EBITDA
SWIM insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (2 insiders, 2 trade dates, 65,050 shares, about $315.7K) and open-market sales in 0 filings. Net open-market shares: 65,050 (purchases minus sales); net value about $315.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-09 | Antonelli Todd A |
Grant/award | 51,606 | — | — |
| 2026-08-07 | Kunchala Suraj |
Option exercise | 13,483 | $3.24 | $43.7K |
| 2026-08-07 | Kunchala Suraj |
Disposition to issuer | 8,693 | $7.29 | $63.4K |
| 2026-05-20 | Gloe Oliver C. |
Open-market purchase | 15,050 | $4.90 | $73.7K |
| 2026-05-20 | Maczko Nikki Vaughan |
Shares withheld for tax | 3,356 | $4.89 | $16.4K |
| 2026-05-19 | Cline James E |
Open-market purchase | 50,000 | $4.84 | $242.0K |
| 2026-05-01 | Dellaquila Frank J |
Grant/award | 17,677 | — | — |
| 2026-05-01 | Laven Mark Phillip |
Grant/award | 17,677 | — | — |
| 2026-05-01 | Jackson Delu |
Grant/award | 17,677 | — | — |
| 2026-05-01 | Morno-Wade Suzan |
Grant/award | 17,677 | — | — |
| 2026-05-01 | Jackson Jeffrey T |
Grant/award | 17,677 | — | — |
| 2026-05-01 | Cline James E |
Grant/award | 22,727 | — | — |
Well-known investors holding SWIM (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 1,303,746 | $8.4M | 0.0% | Added 57% |
| Renaissance Technologies | 2026-06-30 | 452,900 | $2.9M | 0.0% | Reduced 9% |
| D. E. Shaw & Co. | 2026-06-30 | 212,630 | $1.4M | 0.0% | Reduced 40% |
| Two Sigma Investments | 2026-06-30 | 151,073 | $977.4K | 0.0% | Reduced 9% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 50,907 | $329.4K | 0.0% | Reduced 1% |
| Millennium Management (Israel Englander) | 2026-06-30 | 45,145 | $242.4K | — | Sold out |