Latham Group, Inc.

Second-quarter net sales were $197 million, up 14% from $173 million a year ago; organic growth was 10%, with 4% from the Freedom Pools acquisition. Gross profit was $70 million, up 9.6%, while gross margin was 35.5%, down 160 basis points year over year. Net income was $13 million, or $0.11 per diluted share, versus $16 million, or $0.13 per diluted share, last year; adjusted EBITDA was $40 million and adjusted EBITDA margin was 22.6%, down 50 basis points. Management raised full-year 2026 guidance, increasing midpoint sales growth to 11.7% from 9% and midpoint adjusted EBITDA growth to 15.2% from 12.7%, and said the majority of the Q2 ramp-up costs should be recovered over the next two quarters.

Sean Gadd framed the quarter as evidence that Latham is executing better than the market and gaining share even in a flat new U.S. pool-stock environment. He emphasized strength in the core business, double-digit growth in the Sand States, and the early impact of national marketing, sales resource additions, and dealer collaboration. His tone was confident and upbeat, repeatedly saying the company has substantial runway and that several strategic initiatives are already producing encouraging results.

Oliver Gloe said Q2 gross margin was pressured by approximately $2.8 million of incremental ramp-up costs from the sudden demand surge, which he said represented about 140 basis points of headwind, while lean manufacturing and value engineering added about $2.7 million to gross profit. He also noted SG&A rose to $38 million due to growth investments, acquisition/integration costs, and digital transformation spending, and highlighted $2.5 million of annualized savings from restructuring with a one-time $1.5 million charge expected in the second half. He said cash flow remains solid, total debt was $280 million, net debt leverage was 2.2, and the company expects leverage below 2 by year-end; capex was $6 million in the quarter and $28.1 million in the first half, including fiberglass production site purchases.

Analysts pressed management on whether the demand surge was broad-based or isolated, and Sean Gadd said it was across the board rather than concentrated in one geography. Questions also focused on whether the quarter’s ramp-up issues reflected planning shortcomings; management said the issue was mainly timing and that the company will carry more “insurance” in the future via people or inventory. On margins and pricing, Oliver Gloe said gross margin should recover as the company replenishes inventory and that additional price actions, including a recently announced vinyl liner price increase, will help offset commodity and freight headwinds later in Q3.