Latham Group (NASDAQ:SWIM) executives said the company delivered a “solid start to 2026” in the first quarter despite adverse weather across much of North America, and reaffirmed its full-year outlook for revenue and adjusted EBITDA growth amid expectations for flat U.S. pool starts.
First-quarter results show sales growth across product lines
President and CEO Sean Gadd said the quarter produced year-over-year sales growth “in each of our product lines,” citing Latham’s category leadership and geographic diversification as key advantages. CFO Oliver Gloe reported first-quarter 2026 net sales of $117 million, up 5% from $111 million in the first quarter of 2025. Gloe said 3% of the increase was organic, while 2% reflected “the one month’s benefit” from the Freedom Pools acquisition completed at the end of February.
- In-ground pools: $60 million, up 4% year over year, with “virtually all” growth attributed to Freedom’s fiberglass pool sales.
- Covers: $33 million, up 6%.
- Liners: $24 million, up 9%.
Gadd said adverse weather weighed on organic in-ground pool performance, keeping organic in-ground pool sales “steady year-on-year,” but noted that April sales trends were “in line with our expectations.” He added that Latham is “on track for fiberglass pools to approach 80% of our full-year in-ground pool sales in 2026.”
Margins expand on leverage, lean manufacturing and value engineering
Gloe said first-quarter gross margin was 32%, a 220-basis-point increase from 30% a year earlier. He attributed the improvement primarily to “volume leverage along with production efficiencies” driven by lean manufacturing and value engineering initiatives.
Adjusted EBITDA increased to $12 million from $11 million a year earlier, up 9%, while adjusted EBITDA margin expanded 40 basis points to 10.4%, which Gloe also tied to leverage and operational efficiencies.
On the expense side, SG&A rose to $37 million from $31 million, up 20%. Gloe said the increase was “largely tied to strategic investments in sales and marketing to accelerate fiberglass adoption, digital transformation initiatives, and acquisition and integration related costs.” He also cited $2.3 million of performance-based compensatory earn-out expense tied to the 2024 Coverstar Central acquisition, adding that the earn-out is expected to total roughly $9 million over 2026, with a similar impact in each remaining quarter. Gloe said the company has realized “target synergies” for Coverstar Central and that the acquisition’s contribution has “exceeded our initial expectations.”
Latham posted a net loss of $9 million, or $0.07 per diluted share, compared with a net loss of $6 million, or $0.05 per diluted share, in the prior-year quarter, which Gloe said was primarily due to higher SG&A.
Freedom Pools integration and Australia/New Zealand expansion
Gadd said Freedom Pools is integrating “as expected” and expands Latham’s presence in Australia and New Zealand, including entry into Western Australia and Perth, which he described as “the fastest-growing city in the country.” After spending time in Australia with the Narellan and Freedom teams, Gadd said the deal is “immediately accretive” and positions the company as a market leader in the country. He also said Latham expects “considerable revenue synergies” over time and sees value in learning from a direct-to-consumer business model.
Sand State strategy: Florida momentum and a tighter market playbook
Management emphasized its “Sand State strategy,” with Gadd highlighting double-digit sales gains in fiberglass pools in Florida and additional actions to accelerate growth. He said Latham does not need to wait for a broader U.S. pool market recovery to grow, arguing there are enough pool starts to “attack the Sand States now” given the company’s relatively low penetration in the region.
Gadd laid out several changes aimed at capturing share, including building out a commercial organization with “sales strategy, sales operation, and sales execution,” and introducing a new market development framework based on tighter segmentation. “It’s all about neighborhoods,” he said, describing a process of targeting areas with home values, lot sizes, and household incomes that fit Latham’s criteria.
He also said the company plans to add sales resources “in the field” to stay close to consumers during the buying process and help dealers convert leads, while increasing targeted branding and marketing investment in 2026. In response to questions about dealers, Gadd said Latham sees an opportunity to “get more out of our current network” through stronger account management, while also adding dealers where there is “white space.”
On Florida specifically, Gadd said Latham’s focus, dealer work over the past 18 months, and sustained marketing efforts have supported results. He added that while the company is pleased, it is “still working on pretty small numbers” in Florida and wants to accelerate further.
Costs, surcharges and outlook: guidance reaffirmed
Management said it is monitoring transportation and commodity costs, particularly given high oil prices and geopolitical uncertainty. Gadd said 2026 guidance includes a “moderate increase in transportation and commodity costs,” which Latham is mitigating with “temporary fuel surcharges,” while closely watching the Middle East situation for potential impacts on costs and demand.
Gloe said input availability is not an issue “as of today,” citing supply diversification efforts since COVID. He said the temporary fuel surcharges are intended to “fully mitigate” transportation cost increases, and later clarified the surcharges are designed to offset higher transportation costs on a “dollar basis.” In response to analyst questions, Gloe estimated the transportation headwind and surcharge impact at roughly 60 basis points for the year, while noting volatility could change that over time. On commodities such as resins and other oil derivatives, Gloe said it was “too early to tell” the full impact, though the company was beginning to see “slightly higher price levels” on early purchase orders.
Asked about pricing flexibility, Gloe said mid-season price increases are “not preferred, but it’s also not unheard of,” noting the company implemented one in June last year.
On demand, Gadd said the company still expects the overall market to be “flat” for the year, consistent with prior assumptions, but pointed to “green shoots” and said April order trends looked strong into early May. He also cited dealer feedback that the environment is competitive, with “four or five quotes per job,” compared with a more typical two to three.
Regarding consumer concerns, Gadd said financing remains a key hurdle: “Anybody who hasn’t got the cash or…a good FICO score is unable to get financing,” a dynamic he said was similar to last year.
Gloe said the company ended the quarter with $27 million in cash, while net cash used in operating activities was $48 million due to seasonal working capital needs. Total debt ended at $311 million, and net debt leverage was 2.8, which he said was in line with expectations.
Capital expenditures were $23 million in the quarter, up from $4 million a year earlier. Gloe attributed the increase primarily to the purchase of four key fiberglass manufacturing facilities in Florida, Texas, California, and West Virginia for $18 million, including settlement in the quarter of a $12 million deposit made in 2025, plus $5 million for ongoing projects. He reiterated full-year 2026 capex is expected to be $42 million to $48 million, including maintenance spending and investments to upgrade newly acquired Freedom Pools manufacturing facilities.
Looking ahead, Gloe reaffirmed guidance calling for 2026 revenue growth of 9% and adjusted EBITDA growth of 13% at the midpoint, alongside expectations that new U.S. pool starts will be flat year over year. Gadd closed by saying the company is encouraged by recent order trends, believes it is “firmly on track to outperform the market” again in 2026, and intends to use softer market conditions to accelerate its Sand State strategy.
About Latham Group (NASDAQ:SWIM)
Latham Group, Inc designs, manufactures and supplies a broad range of aquatic products and services for residential and commercial applications. Offerings include fiberglass and vinyl-liner pool shells, commercial water park structures, water slides, surf simulators, pumps, filters, heaters and sanitation systems. The company also provides parts, equipment and technical support for pool installation, maintenance and repair.
Operating across three core segments—commercial, residential and aftermarket—Latham delivers turnkey aquatic facilities and attractions for municipal, hospitality and resort clients, offers packaged pool kits and equipment packages to builders and dealers, and supplies replacement parts, service contracts and technical assistance to support ongoing pool operations.
Headquartered in the United States, Latham Group maintains manufacturing and distribution centers throughout North America and Europe.
