Latham Group, Inc. (Nasdaq: SWIM), the largest designer,
manufacturer, and marketer of in-ground residential swimming pools
in North America, Australia, and New Zealand, today announced
financial results for the second quarter 2024 ended June 29, 2024.
Commenting on the results, Scott Rajeski, President and CEO,
said, “This was another quarter of strong execution, in which we
drove substantial increases in profitability, while managing
through difficult industry conditions and supporting future growth
initiatives. Margin expansion was a key highlight of our second
quarter performance, reflecting our improved cost structure and the
impact of production efficiencies resulting from lean manufacturing
and value engineering programs, ongoing cost containment, and lower
raw material costs.
“Fiberglass pools are a key area of focus and are positioned to
gain share due to their cost efficiency and installation and
eco-friendly advantages over concrete pools. In the second quarter,
we continued to increase awareness and adoption of fiberglass
pools, building out our national dealer network and adding new
products. We added the Astoria 14 to our best-selling Astoria pool
collection. This new model is designed to fit narrower outdoor
spaces and features a built-in spa and tanning ledge.
“In a separate release today, we were pleased to announce the
accretive acquisition of Coverstar Central, Latham’s exclusive
automatic safety cover dealer in 29 states. 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. Automatic covers
provide unparalleled safety and offer significant operating cost
savings for the homeowner. And 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 acquisition is expected to be
immediately accretive to our earnings, and we estimate adding
annualized net sales of approximately $20 million and expanding our
adjusted EBITDA margin by approximately 140 basis points on an
annual basis as we vertically integrate our automatic safety cover
line in the acquired geographies. The purchase price was $64.5
million, subject to certain adjustments, including for working
capital as compared to an agreed upon target and transaction
expenses. The transaction was fully funded with cash on hand.”
Second Quarter 2024 Results
Net sales for the second quarter of 2024 were $160.1 million,
down $17.0 million or 9.6%, from $177.1 million in the prior year’s
second quarter, primarily due to soft industry conditions and
tracking in line with our forecasts for full year 2024.
Second Quarter Net Sales by Product Line(in
thousands) |
|
|
Quarter Ended |
|
June 29, 2024 |
July 1, 2023 |
In-Ground Swimming Pools |
$ |
80,958 |
$ |
90,534 |
Covers |
|
25,503 |
|
28,755 |
Liners |
|
53,661 |
|
57,839 |
Total |
$ |
160,122 |
$ |
177,128 |
Gross profit for the second quarter of 2024 was $53.0 million,
an increase of $2.8 million or 5.6%, from $50.2 million in the
prior year’s second quarter. Gross margin expanded by 470 basis
points to 33.1% from 28.4% in the year-ago quarter, primarily due
to the impact of previously announced restructuring programs,
production efficiencies resulting from lean manufacturing and value
engineering programs, and ongoing cost containment in addition to
lower raw material costs.
Selling, general, and administrative expenses were $26.6
million, down $3.6 million or 12.0%, from $30.2 million in the
second quarter of 2023, mainly due to a $4.3 million decrease in
non-cash stock-based compensation, as well as $4.1 million from our
cost containment initiatives and restructuring projects, partially
offset by an increase of $4.8 million in accrued performance-based
compensation.
Net income was $13.3 million, or $0.11 per diluted share, more
than twice the net income of $5.7 million, or $0.05 per diluted
share, reported for the prior year’s second quarter. Net income
margin was 8.3%, compared to net income margin of 3.2% for the
second quarter of 2023.
Adjusted EBITDA for the second quarter of 2024 was $34.5
million, up $3.5 million or 11.2% from $31.0 million in the prior
year’s second quarter. Adjusted EBITDA margin reached 21.5%, 400
basis points above the 17.5% reported in the prior-year period.
Six Months 2024 Results
Net sales were $270.8 million, down $44.0 million or 14.0%, from
$314.8 million in the prior year period, primarily attributable to
lower sales volume due to continued macroeconomic weakness, lower
backlogs entering the year, and normalized seasonality.
Gross profit was $83.6 million, in line with $83.6 million in
the prior year period. Gross margin expanded by 430 basis points to
30.9% from 26.6% in the prior year period, primarily resulting from
our previously announced restructuring programs, production
efficiencies from lean manufacturing and value engineering
programs, cost containment programs, and lower material costs.
Selling, general, and administrative expenses decreased to $52.8
million, down $10.5 million or 16.5%, from $63.3 million in the
prior year period, primarily due to a $9.4 million decrease in
non-cash stock-based compensation expense, as well as our cost
containment initiatives and restructuring programs, and was
partially offset by a $4.8 million increase in accrued
performance-based compensation.
Net income was $5.4 million, or $0.05 per diluted share, as
compared to a net loss of $8.7 million, or ($0.08) per diluted
share in the prior year period. Net income margin was 2.0% compared
to a net loss margin of 2.7% in the prior year period.
Adjusted EBITDA was $46.8 million, up $4.8 million or 11.3% from
$42.0 million in the prior year period. Adjusted EBITDA margin was
17.3%, a 400-basis point increase from 13.3% in the prior year
period.
Balance Sheet, Cash Flow, and Liquidity
Latham ended the second quarter with cash of $90.8 million after
the repayment of $19.6 million of debt in the first half of 2024.
Net cash provided by operating activities was $52.4 million in the
second quarter and $17.9 million for the first half of 2024.
Total debt was $282.4 million and the net debt leverage ratio
was 2.1 at the end of the second quarter, down from 2.7 at the end
of the first quarter.
Capital expenditures totaled $4.5 million in the second quarter
of 2024, in line with the Company’s guidance of approximately $5
million per quarter, compared to $13.4 million in the second
quarter of 2023. First half capital expenditures were $9.8 million
compared to $23.4 million in the first half of 2023.
Summary and Outlook
“Through actions to improve our cost structure, drive
productivity gains, and reduce working capital needs, we are
effectively managing through challenging industry conditions in
2024. As a result of these actions, we have outpaced our initial
expectations for full year 2024 adjusted EBITDA performance.
“Our revised full year 2024 guidance is contained in the table
below. The increase in the midpoint of our sales guidance reflects
the expected five-month contribution of the Coverstar Central
acquisition. We increased the midpoint of our adjusted EBITDA
guidance range by $15 million, $12 million of which is organic
growth attributable to our ongoing business performance, and the
remaining $3 million reflects a contribution from the
acquisition.
FY 2024 Updated Guidance Ranges |
|
|
Updated |
Original |
Net Sales |
$495-525 million |
$490-520 million |
Adjusted EBITDA1 |
$75-85 million |
$60-70 million |
Capital Expenditures |
$18-22 million |
$18-22 million |
1) |
A
reconciliation of Latham’s projected Adjusted EBITDA to net income
(loss) for 2024 is not available without unreasonable effort due to
uncertainty related to our future income tax expense. |
“As we navigate a year of lower pool starts, our priorities
remain consistent, namely, to advance the adoption and awareness of
both fiberglass pools and automatic safety covers, which represent
key long-term growth drivers for Latham. We will continue to
implement value engineering and lean manufacturing programs to
reduce structural costs, while investing in organic growth
initiatives and evaluating other opportunistic acquisitions that
position Latham to rapidly grow as pool starts rebound,” Mr.
Rajeski concluded.
Conference Call Details
Latham will hold a conference call to discuss its second quarter
2024 financial results today, August 6, 2024, at 4:30 PM Eastern
Time.
Participants are encouraged to pre-register for the conference
call by visiting https://dpregister.com/sreg/10190456/fcf6664840.
Callers who pre-register will be sent a confirmation e-mail
including a conference passcode and unique PIN to gain immediate
access to the call. Participants may pre-register at any time,
including up to and after the call start time. To ensure you are
connected for the full call, please register at least 10 minutes
before the start of the call.
A live audio webcast of the conference call, along with related
presentation materials, will be available online at
https://ir.lathampool.com/ under “Events & Presentations”.
Those without internet access or unable to pre-register may dial
in by calling:
PARTICIPANT DIAL IN (TOLL FREE): 1-833-953-2435
PARTICIPANT INTERNATIONAL DIAL IN:
1-412-317-5764
An archived webcast will be available approximately two hours
after the conclusion of the call, through August 6, 2025, on the
Company’s investor relations website under “Events &
Presentations”. A transcript of the event will also be available on
the Company’s investor relations website approximately three
business days after the call.
About Latham Group, Inc.
Latham Group, Inc., headquartered in Latham, NY, is the largest
designer, manufacturer, and marketer of in-ground residential
swimming pools in North America, Australia, and New Zealand. Latham
has a coast-to-coast operations platform consisting of
approximately 1,800 employees across 24 locations.
Non-GAAP Financial Measures
We track our non-GAAP financial measures to monitor and manage
our underlying financial performance. This news release includes
the presentation of Adjusted EBITDA, Adjusted EBITDA margin and net
debt leverage ratio, which are non-GAAP financial measures that
exclude the impact of certain costs, losses, and gains that are
required to be included under GAAP. Although we believe these
measures are useful to investors and analysts for the same reasons
it is useful to management, as discussed below, these measures are
neither a substitute for, nor superior to, U.S. GAAP financial
measures or disclosures. Other companies may calculate
similarly-titled non-GAAP measures differently, limiting their
usefulness as comparative measures. In addition, our presentation
of non-GAAP financial measures should not be construed to imply
that our future results will be unaffected by any such adjustments.
We have reconciled our historic non-GAAP financial measures to the
applicable most comparable GAAP measures in this news release.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are key metrics used
by management and our board of directors 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
incentive compensation plans, 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 (benefit) expense, (iv) loss (gain) 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) Odessa
fire and other such unusual events and (xi) 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. You are
encouraged to evaluate these adjustments and the reasons we
consider them appropriate for supplemental analysis. In evaluating
Adjusted EBITDA and Adjusted EBITDA margin, you should be aware
that in the future we may incur expenses that are the same as or
similar to some of the adjustments in this news release. 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. 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.
Adjusted EBITDA and Adjusted EBITDA margin have their
limitations as analytical tools, and you should not consider them
in isolation or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are that Adjusted
EBITDA and Adjusted EBITDA margin:
- do not reflect every expenditure, future requirements for
capital expenditures or contractual commitments;
- do not reflect changes in our working capital needs;
- do not reflect the interest expense, net, or the amounts
necessary to service interest or principal payments, on our
outstanding debt;
- do not reflect income tax (benefit) expense, and because the
payment of taxes is part of our operations, tax expense is a
necessary element of our costs and ability to operate;
- do not reflect non-cash stock-based compensation, which will
remain a key element of our overall compensation package; and
- do not reflect the impact of
earnings or charges resulting from matters we consider not to be
indicative of our ongoing operations.
Although depreciation and amortization are eliminated in the
calculation of Adjusted EBITDA and Adjusted EBITDA margin, the
assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA and Adjusted EBITDA
margin do not reflect any costs of such replacements.
Net Debt and Net Debt Leverage Ratio
Net Debt and Net Debt Leverage Ratio are non-GAAP financial
measures used in monitoring and evaluating our overall liquidity,
financial flexibility, and leverage. Other companies may calculate
similarly titled non-GAAP measures differently, limiting their
usefulness as comparative measures. We define Net Debt as total
debt less cash and cash equivalents. We define the Net Debt
Leverage Ratio as Net Debt divided by last twelve months (“LTM”) of
Adjusted EBITDA. We believe this measure is an important indicator
of our ability to service our long-term debt obligations. There are
material limitations to using Net Debt Leverage Ratio as we may not
always be able to use cash to repay debt on a dollar-for-dollar
basis.
Forward-Looking Statements
Certain statements in this earnings release constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements contained
in this release other than statements of historical fact may
constitute forward-looking statements, including statements
regarding our future operating results and financial position, our
business strategy and plans, business and market trends, our
objectives for future operations, macroeconomic and geopolitical
conditions, the implementation of our cost reduction plans and
expected benefits, the implementation of our digital transformation
and lean manufacturing activities, a potential non-cash impairment
charge for goodwill, the recent acquisition of Coverstar Central,
LLC, and the sufficiency of our cash balances, working capital and
cash generated from operating, investing, and financing activities
for our future liquidity and capital resource needs. These
statements involve known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
of our control, which may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including: unfavorable economic
conditions and related impact on consumer spending; adverse weather
conditions impacting our sales, and can lead to significant
variability of sales in reporting periods; natural disasters,
including resulting from climate change, geopolitical events, war,
terrorism, public health issues or other catastrophic events;
competitive risks; our ability to attract, develop and retain
highly qualified personnel; inflationary impacts, including on
consumer demand; our ability to source raw materials and components
for manufacturing our products, our ability to collect accounts
receivables from our customers; our ability to keep pace with
technological developments and standards, such as generative
artificial intelligence; the consequences of industry consolidation
on our customer base and pricing; interruption of our production
capability at our manufacturing facilities from accident, fire,
calamity, regulatory action or other causes; product quality
issues, warranty claims or safety concerns such as those due to the
failure of builders to follow our product installation instructions
and specifications; delays in, or systems disruptions issues caused
by the implementation of our enterprise resource planning system;
cyber-security breaches and data leaks, and our dependence on
information technology systems; compliance with government
regulations; our ability to transportation services; the protection
of our intellectual property and defense of third-party
infringement claims; international business risks; and our ability
to secure financing and our substantial indebtedness; and other
factors set forth under “Risk Factors” and elsewhere in our most
recent Annual Report on Form 10-K and subsequent reports we file or
furnish with the SEC. Moreover, we operate in a very competitive
and rapidly changing environment, and new risks emerge from time to
time that may impair our business, financial condition, results of
operations and cash flows.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable and our expectations
based on third-party information and projections are from sources
that management believes to be reputable, we cannot guarantee
future results, levels of activities, performance or achievements.
These forward-looking statements reflect our views with respect to
future events as of the date hereof or the date specified herein,
and we have based these forward-looking statements on our current
expectations and projections about future events and trends. Given
these uncertainties, you should not place undue reliance on these
forward-looking statements. Except as required by law, we undertake
no obligation to update or review publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise after the date hereof. We anticipate that subsequent
events and developments will cause our views to change. Our
forward-looking statements further do not reflect the potential
impact of any future acquisitions, merger, dispositions, joint
ventures or investments we may undertake.
Contact: Lynn Morgen Casey
KotaryADVISIRY Partnerslathamir@advisiry.com
212-750-5800
Latham Group, Inc. Condensed Consolidated
Statements of Operations (in thousands, except share and
per share data) (unaudited) |
|
|
Fiscal Quarter Ended |
|
|
Two Fiscal Quarters Ended |
|
|
June 29, 2024 |
|
July 1, 2023 |
|
|
June 29, 2024 |
|
July 1, 2023 |
|
Net sales |
$ |
160,122 |
|
$ |
177,128 |
|
|
$ |
270,751 |
|
$ |
314,847 |
|
Cost of sales |
|
107,100 |
|
|
126,895 |
|
|
|
187,140 |
|
|
231,244 |
|
Gross profit |
|
53,022 |
|
|
50,233 |
|
|
|
83,611 |
|
|
83,603 |
|
Selling, general, and
administrative expense |
|
26,588 |
|
|
30,209 |
|
|
|
52,838 |
|
|
63,266 |
|
Amortization |
|
6,428 |
|
|
6,635 |
|
|
|
12,840 |
|
|
13,267 |
|
Income from operations |
|
20,006 |
|
|
13,389 |
|
|
|
17,933 |
|
|
7,070 |
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
6,013 |
|
|
4,486 |
|
|
|
10,995 |
|
|
15,290 |
|
Other expense (income), net |
|
804 |
|
|
(1,036 |
) |
|
|
2,390 |
|
|
(826 |
) |
Total other expense, net |
|
6,817 |
|
|
3,450 |
|
|
|
13,385 |
|
|
14,464 |
|
Earnings from equity method
investment |
|
532 |
|
|
660 |
|
|
|
1,841 |
|
|
697 |
|
Income (loss) before income taxes |
|
13,721 |
|
|
10,599 |
|
|
|
6,389 |
|
|
(6,697 |
) |
Income tax expense |
|
442 |
|
|
4,884 |
|
|
|
974 |
|
|
1,956 |
|
Net income (loss) |
$ |
13,279 |
|
$ |
5,715 |
|
|
$ |
5,415 |
|
$ |
(8,653 |
) |
Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.12 |
|
$ |
0.05 |
|
|
$ |
0.05 |
|
$ |
(0.08 |
) |
Diluted |
$ |
0.11 |
|
$ |
0.05 |
|
|
$ |
0.05 |
|
$ |
(0.08 |
) |
Weighted-average common shares
outstanding – basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
115,469,246 |
|
|
112,248,822 |
|
|
|
115,254,088 |
|
|
112,175,510 |
|
Diluted |
|
117,023,112 |
|
|
112,692,543 |
|
|
|
116,472,164 |
|
|
112,175,510 |
|
Latham Group, Inc. |
Condensed Consolidated Balance Sheets |
(in thousands, except share and per share data)(unaudited) |
|
|
June 29, |
|
|
December 31, |
|
|
2024 |
|
|
2023 |
|
Assets |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash |
$ |
90,768 |
|
|
$ |
102,763 |
|
Trade receivables, net |
|
65,872 |
|
|
|
30,407 |
|
Inventories, net |
|
83,668 |
|
|
|
97,137 |
|
Income tax receivable |
|
1,648 |
|
|
|
983 |
|
Prepaid expenses and other current assets |
|
9,428 |
|
|
|
7,327 |
|
Total current assets |
|
251,384 |
|
|
|
238,617 |
|
Property
and equipment, net |
|
112,650 |
|
|
|
113,014 |
|
Equity
method investment |
|
24,920 |
|
|
|
25,940 |
|
Deferred
tax assets |
|
7,968 |
|
|
|
7,485 |
|
Operating lease right-of-use assets |
|
26,993 |
|
|
|
30,788 |
|
Goodwill |
|
131,178 |
|
|
|
131,363 |
|
Intangible assets, net |
|
269,696 |
|
|
|
282,793 |
|
Other
assets |
|
5,237 |
|
|
|
5,003 |
|
Total
assets |
$ |
830,026 |
|
|
$ |
835,003 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
26,567 |
|
|
$ |
17,124 |
|
Accounts payable – related party |
|
— |
|
|
|
8 |
|
Current maturities of long-term debt |
|
3,250 |
|
|
|
21,250 |
|
Current operating lease liabilities |
|
6,631 |
|
|
|
7,133 |
|
Accrued expenses and other current liabilities |
|
41,692 |
|
|
|
40,691 |
|
Total current liabilities |
|
78,140 |
|
|
|
86,206 |
|
Long-term debt, net of discount, debt issuance costs, and current
portion |
|
279,111 |
|
|
|
279,951 |
|
Deferred
income tax liabilities, net |
|
40,088 |
|
|
|
40,088 |
|
Non-current operating lease liabilities |
|
21,449 |
|
|
|
24,787 |
|
Other
long-term liabilities |
|
3,107 |
|
|
|
4,771 |
|
Total liabilities |
$ |
421,895 |
|
|
$ |
435,803 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 100,000,000 shares authorized
as of both June 29, 2024 and December 31, 2023; no shares issued
and outstanding as of both June 29, 2024 and December 31, 2023 |
|
— |
|
|
|
— |
|
Common
stock, $0.0001 par value; 900,000,000 shares authorized as of June
29, 2024 and December 31, 2023; 115,577,103 and 114,871,782 shares
issued and outstanding, as of June 29, 2024 and December 31, 2023,
respectively |
|
12 |
|
|
|
11 |
|
Additional paid-in capital |
|
463,027 |
|
|
|
459,684 |
|
Accumulated deficit |
|
(51,541 |
) |
|
|
(56,956 |
) |
Accumulated other comprehensive loss |
|
(3,367 |
) |
|
|
(3,539 |
) |
Total stockholders’ equity |
|
408,131 |
|
|
|
399,200 |
|
Total liabilities and stockholders’ equity |
$ |
830,026 |
|
|
$ |
835,003 |
|
Latham Group, Inc. |
Condensed Consolidated Statement of Cash
Flows |
(in thousands) (unaudited) |
|
Two Fiscal Quarters Ended |
|
June 29, |
|
|
July 1, |
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
5,415 |
|
|
$ |
(8,653 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
20,967 |
|
|
|
19,284 |
|
Amortization of deferred financing costs and debt discount |
|
860 |
|
|
|
860 |
|
Non-cash lease expense |
|
3,550 |
|
|
|
3,738 |
|
Change in fair value of interest rate swaps |
|
(2,101 |
) |
|
|
2,930 |
|
Stock-based compensation expense |
|
3,343 |
|
|
|
12,533 |
|
Bad debt expense |
|
1,277 |
|
|
|
4,390 |
|
Other non-cash, net |
|
1,731 |
|
|
|
1,166 |
|
Earnings from equity method investment |
|
(1,841 |
) |
|
|
(697 |
) |
Distributions received from equity method investment |
|
2,860 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Trade receivables |
|
(36,831 |
) |
|
|
(37,276 |
) |
Inventories |
|
13,139 |
|
|
|
38,902 |
|
Prepaid expenses and other current assets |
|
(2,309 |
) |
|
|
(916 |
) |
Income tax receivable |
|
(665 |
) |
|
|
(1,409 |
) |
Other assets |
|
323 |
|
|
|
(392 |
) |
Accounts payable |
|
9,817 |
|
|
|
8,935 |
|
Accrued expenses and other current liabilities |
|
(1,181 |
) |
|
|
(6,882 |
) |
Other long-term liabilities |
|
(443 |
) |
|
|
(224 |
) |
Net cash provided by operating activities |
|
17,911 |
|
|
|
36,289 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchases of property and
equipment |
|
(9,833 |
) |
|
|
(23,365 |
) |
Net cash used in investing activities |
|
(9,833 |
) |
|
|
(23,365 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Payments on long-term debt
borrowings |
|
(19,625 |
) |
|
|
(1,625 |
) |
Proceeds from borrowings on
revolving credit facilities |
|
— |
|
|
|
48,000 |
|
Payments on revolving credit
facilities |
|
— |
|
|
|
(48,000 |
) |
Repayments of finance lease
obligations |
|
(380 |
) |
|
|
(259 |
) |
Net cash used in financing activities |
|
(20,005 |
) |
|
|
(1,884 |
) |
Effect of exchange rate changes on cash |
|
(68 |
) |
|
|
(550 |
) |
Net (decrease)
increase in cash |
|
(11,995 |
) |
|
|
10,490 |
|
Cash at beginning of
period |
|
102,763 |
|
|
|
32,626 |
|
Cash at end of period |
$ |
90,768 |
|
|
$ |
43,116 |
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
Cash paid for interest |
$ |
16,131 |
|
|
$ |
11,247 |
|
Income taxes paid, net |
|
2,581 |
|
|
|
1,206 |
|
Supplemental
disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
Purchases of property and
equipment included in accounts payable and accrued expenses |
$ |
28 |
|
|
$ |
1,111 |
|
Capitalized internal-use
software included in accounts payable – related party |
|
— |
|
|
|
325 |
|
Right-of-use operating and
finance lease assets obtained in exchange for lease
liabilities |
|
198 |
|
|
|
4,108 |
|
Latham Group, Inc. Adjusted EBITDA and
Adjusted EBITDA Margin Reconciliation (Non-GAAP
Reconciliation) (in thousands) |
|
|
Fiscal Quarter Ended |
|
Two Fiscal Quarters Ended |
|
June 29, 2024 |
|
|
July 1, 2023 |
|
|
June 29, 2024 |
|
|
July 1, 2023 |
|
Net income (loss) |
$ |
13,279 |
|
|
$ |
5,715 |
|
|
$ |
5,415 |
|
|
$ |
(8,653 |
) |
Depreciation and
amortization |
|
10,593 |
|
|
|
10,026 |
|
|
|
20,967 |
|
|
|
19,284 |
|
Interest expense, net |
|
6,013 |
|
|
|
4,486 |
|
|
|
10,995 |
|
|
|
15,290 |
|
Income tax expense |
|
442 |
|
|
|
4,884 |
|
|
|
974 |
|
|
|
1,956 |
|
Loss on sale and disposal of
property and equipment |
|
65 |
|
|
|
5 |
|
|
|
77 |
|
|
|
13 |
|
Restructuring charges(a) |
|
47 |
|
|
|
278 |
|
|
|
365 |
|
|
|
797 |
|
Stock-based compensation
expense(b) |
|
2,100 |
|
|
|
5,764 |
|
|
|
3,343 |
|
|
|
12,533 |
|
Unrealized losses (gains) on
foreign currency transactions(c) |
|
806 |
|
|
|
(1,198 |
) |
|
|
2,390 |
|
|
|
(468 |
) |
Strategic initiative
costs(d) |
|
851 |
|
|
|
935 |
|
|
|
1,974 |
|
|
|
2,002 |
|
Acquisition and integration
related costs(e) |
|
375 |
|
|
|
— |
|
|
|
375 |
|
|
|
11 |
|
Odessa fire(f) |
|
— |
|
|
|
93 |
|
|
|
— |
|
|
|
(771 |
) |
Other(g) |
|
(93 |
) |
|
|
11 |
|
|
|
(105 |
) |
|
|
38 |
|
Adjusted EBITDA |
$ |
34,478 |
|
|
$ |
30,999 |
|
|
$ |
46,770 |
|
|
$ |
42,032 |
|
Net sales |
$ |
160,122 |
|
|
$ |
177,128 |
|
|
$ |
270,751 |
|
|
$ |
314,847 |
|
Net income (loss) margin |
|
8.3 |
% |
|
|
3.2 |
% |
|
|
2.0 |
% |
|
|
(2.7 |
)% |
Adjusted EBITDA margin |
|
21.5 |
% |
|
|
17.5 |
% |
|
|
17.3 |
% |
|
|
13.3 |
% |
(a) |
Represents costs related to a cost reduction plan that includes
severance and other costs for our executive management changes and
additional costs related to our cost reduction plans, which include
further actions to reduce our manufacturing overhead by reducing
headcount in addition to facility shutdowns. |
(b) |
Represents non-cash stock-based
compensation expense. |
(c) |
Represents unrealized foreign
currency transaction losses associated with our international
subsidiaries. |
(d) |
Represents fees paid to external
consultants and other expenses for our strategic initiatives. |
(e) |
Represents acquisition and
integration costs, as well as other costs related to potential
transactions. |
(f) |
Represents costs incurred and
insurance recoveries related to a production facility fire in
Odessa, Texas. |
(g) |
Other costs consist of other
discrete items as determined by management, primarily including:
(i) fees paid to external advisors for various matters and
(ii) other items. |
Latham Group, Inc. |
Net Debt Leverage Ratio |
(Non-GAAP Reconciliation)(in thousands) |
|
|
|
|
|
June 29, 2024 |
|
|
March 30, 2024 |
|
Total Debt |
$ |
282,361 |
|
$ |
282,781 |
|
Cash |
|
(90,768 |
) |
|
(43,811 |
) |
Net Debt |
|
191,593 |
|
|
238,970 |
|
LTM Adjusted EBITDA(a) |
|
92,763 |
|
|
89,285 |
|
Net Debt Leverage Ratio |
|
2.1 |
x |
|
2.7 |
x |
(a) |
LTM Adjusted EBITDA is the sum of the Company’s Adjusted EBITDA for
the four quarters ended June 29, 2024 and March 30, 2024,
respectively. See above for the reconciliation of Adjusted EBITDA
to net income (loss). |
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