Latham Group Reports Resilient First Quarter Despite Market Weakness By Investing.com

Latham Group Reports Resilient First Quarter Despite Market Weakness By Investing.com
Latham Group Reports Resilient First Quarter Despite Market Weakness By Investing.com

Latham Group, Inc. (SWIM) began the first quarter of 2024 with results that exceeded its own forecasts, showing the company’s resilience in a difficult market for the pool sector. The company’s strategic cost reductions and efficiency improvements have resulted in a stronger margin profile, despite declining net sales compared to the prior year. Latham’s interest in driving adoption of its fiberglass and automatic safety covers, along with its strong cash position, puts it in a good position to weather the uncertain economic outlook.

Key aspects

  • Latham Group’s first quarter results beat forecasts with gross margins rising and net losses narrowing.
  • Net sales fell 19.7% year-over-year to $110.6 million, but gross margin improved to 27.7%.
  • The company’s net loss narrowed to $7.9 million, an improvement from the previous year.
  • Latham’s cash position remained strong at $43.8 million.
  • Investment in growth initiatives such as sales, marketing and R&D remains a priority.

Company Outlook

  • Latham Group expects steady capital expenditures throughout 2024, in line with a conservative capital allocation strategy.
  • The company is prepared to allocate capital to growth as market conditions improve.
  • Forecasts for the full year 2024 are based on first quarter results, with a reassessment expected in August.

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Bearish Highlights

  • The market outlook for new pool construction is expected to decline by 15% compared to the previous year.
  • Despite a high-end consumer base, distributors have had to adapt to lower demand by reducing projects and, in some cases, lowering prices.

Positive aspects

  • The company has seen good results with lower-cost options, such as fiberglass pools and radiant panels.
  • They are optimistic about gaining market share with the launch of their Measure tool for roofing and siding.
  • Latham expects a rebound in pool construction in 2025 and 2026.

miss

  • The decline in net sales reflects weak overall market conditions in the pool sector.
  • Rising interest rates have not significantly affected Latham’s business, but pool construction has slowed.

The most outstanding

  • The Latham Group will decide variable expense adjustments in late May or mid-June.
  • They anticipate modest deflation in input costs throughout the year, with prices flat in the first quarter.
  • Financing options, such as 20-year loans, and dealer retrofits are helping to maintain consumer presence in the market.

In summary, Latham Group’s first quarter of 2024 has demonstrated the company’s ability to exceed expectations and strengthen its financial position in a weak market. The company’s strategic initiatives and product innovations are laying the foundation for future growth, despite the expected decline in new pool openings this year. Latham Group remains focused on its long-term strategy, with the goal of emerging from the current market challenges as a stronger competitor.

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InvestingPro Insights

Latham Group, Inc. (SWIM) has demonstrated a remarkable ability to navigate through a decline in net sales, however, its strategic initiatives have not gone unnoticed in financial metrics. Below, InvestingPro presents some key data and insights that investors may be interested in:

  • The company’s market capitalization stands at $427.62 million, reflecting its current market valuation.
  • With a P/E of 103.06 and an Adjusted P/E for trailing twelve months from Q1 2024 of 103.89, the stock is trading at a high earnings multiple, which could be a point of caution for focused investors. in the value.
  • Despite the challenges, Latham Group has seen a significant return over the past week, with a total price return of 31.67%, demonstrating investor confidence in the company’s recent performance and its future prospects. .

InvestingPro’s advice for Latham Group highlights the company’s high shareholder return and the fact that three analysts have revised its earnings upwards for the coming period, suggesting a possible positive outlook on the company’s profitability.

Additionally, for those looking for more information, there are 15 other InvestingPro tips available at https://www.investing.com/pro/SWIM, which could help you make investment decisions. Remember you can use the coupon code PRONEWS24 for an additional 10% discount on annual or semi-annual Pro and Pro+ subscriptions, adding even more value to your financial analysis tools.

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This article has been generated and translated with the support of AI and reviewed by an editor. For more information, see our T&Cs.

 
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