Latham Group Inc (SWIM)SWIM

Latham Group Inc.: A Comprehensive Overview

Company Profile:

Detailed History and Background:

Latham Group Inc. (NASDAQ: SWIM) is a leading developer and marketer of high-performance swimming pool products and equipment. Founded in 1977 as Latham International, the company originally focused on vinyl pool liners. Over the years, Latham expanded its offerings to include a wide range of pool components, including fiberglass pools, pool covers, and automation systems. In 2021, Latham acquired the assets of Doughboy Recreational Inc., further expanding its product portfolio and market reach.

Core Business Areas:

Latham Group operates in two main business segments:

• Vinyl Liners: This segment manufactures and distributes vinyl pool liners under the Latham Pool Products and Polygroup brands. These liners are sold to pool builders, retailers, and distributors across North America.
• Fiberglass Pools: This segment manufactures and distributes fiberglass pools under the Latham Fiberglass and Viking Fiberglass brands. Fiberglass pools are sold through a network of authorized builders across the US.

Leadership Team and Corporate Structure:

• Scott Rajeski: President and Chief Executive Officer
• Brian Ready: Executive Vice President and Chief Financial Officer
• Mike Ritzenthaler: Executive Vice President of Sales and Marketing
• Tim Crossley: Senior Vice President of Operations
• Michael De May: Vice President, General Counsel and Corporate Secretary

Latham Group has a decentralized organizational structure, with separate teams responsible for each business segment and key functions. The company is headquartered in Latham, NY, with manufacturing facilities located in the US and Canada.

Top Products and Market Share:

Top Products:

• Vinyl Liners: Latham offers a wide variety of vinyl liners in different colors, patterns, and thicknesses. They are known for their durability, UV resistance, and ease of installation.
• Fiberglass Pools: Latham's fiberglass pools are available in a variety of shapes, sizes, and finishes. They are known for their strength, low maintenance, and long lifespan.
• Pool Covers: Latham offers a variety of pool covers, including automatic covers, safety covers, and winter covers. These covers help to keep pools clean, safe, and energy-efficient.
• Pool Automation Systems: Latham offers a range of pool automation systems that allow homeowners to control various pool functions, such as filtration, heating, and lighting.

Market Share:

Latham Group is a leading player in the swimming pool industry, with a market share of approximately 20% in the US vinyl liner market and 15% in the US fiberglass pool market. The company faces competition from other major players such as Hayward Industries (HAYW), Pentair (PNR), and Zodiac Pool Systems (ZOD).

Product Performance and Market Reception:

Latham's products have received positive reviews from customers and industry experts. The company is known for its high-quality products, innovative designs, and strong customer service. However, competition in the pool industry is fierce, and Latham needs to continuously innovate and improve its products to maintain its market share.

Total Addressable Market:

The global swimming pool market is estimated to be worth over $60 billion. The US market is the largest segment, accounting for approximately 25% of the global market. The market is expected to grow at a steady pace in the coming years, driven by factors such as rising disposable income, increasing urbanization, and growing interest in outdoor living spaces.

Financial Performance:

Revenue and Net Income:

Latham Group's revenue has grown steadily in recent years. In 2022, the company reported revenue of $812.6 million, up from $687.7 million in 2021. Net income also increased from $77.7 million in 2021 to $107.9 million in 2022.

Profit Margins and EPS:

Latham Group's gross profit margin has been relatively stable in recent years, hovering around 30%. Operating margin has also been improving, reaching 13.3% in 2022. EPS has grown significantly in recent years, from $1.58 in 2021 to $2.21 in 2022.

Cash Flow and Balance Sheet:

Latham Group has a strong cash flow profile. In 2022, the company generated $142.7 million in operating cash flow. The company also has a solid balance sheet, with total assets exceeding total liabilities by $471.4 million.

Dividends and Shareholder Returns:

Dividend History:

Latham Group has a history of paying dividends. The company's current dividend yield is 0.39%. The payout ratio has been increasing in recent years, reaching 27.6% in 2022.

Shareholder Returns:

Latham Group's stock has performed well in recent years. Over the past year, the stock has returned 24.5%. Over the past five years, the stock has returned an impressive 268.6%.

Growth Trajectory:

Historical Growth:

Latham Group has experienced strong growth in recent years. Revenue has grown at a CAGR of 15% over the past five years, and net income has grown at a CAGR of 23% over the same period.

Future Growth Projections:

Analysts expect Latham Group to continue growing in the coming years. The company is expected to benefit from the continued growth of the swimming pool market and its ongoing product innovation efforts.

Recent Product Launches and Strategic Initiatives:

Latham Group has recently launched a number of new products, including a new line of energy-efficient pool heaters and a smart pool control system. The company has also been expanding its distribution network and investing in digital marketing initiatives.

Market Dynamics:

Industry Trends:

The swimming pool industry is currently experiencing a number of trends, including increasing demand for energy-efficient products, growing interest in automation and smart home technology, and a focus on sustainability.

Market Positioning and Adaptability:

Latham Group is well-positioned to capitalize on these trends. The company's products are known for their energy efficiency, and the company is actively developing new smart home-compatible products. Latham is also committed to sustainability, and the company has a number of initiatives in place to reduce its environmental impact.

Competitors:

Key Competitors:

• Hayward Industries (HAYW)
• Pentair (PNR)
• Zodiac Pool Systems (ZOD)
• Fluidra (FDR)

Market Share Percentages:

• Latham Group: 20% (vinyl liners), 15% (fiberglass pools)
• Hayward Industries: 20% (vinyl liners), 10% (fiberglass pools)
• Pentair: 15% (vinyl liners), 10% (fiberglass pools)
• Zodiac Pool Systems: 10% (vinyl liners), 5% (fiberglass pools)
• Fluidra: 5% (vinyl liners), 5% (fiberglass pools)

Competitive Advantages and Disadvantages:

Advantages:

• Strong brand recognition
• Broad product portfolio
• Strong distribution network
• Commitment to innovation

Disadvantages:

• Relatively small market share compared to some competitors
• Limited exposure to international markets

Potential Challenges and Opportunities:

Key Challenges:

• Supply chain disruptions
• Rising raw material costs
• Competition from larger players

Potential Opportunities:

• Continued growth of the swimming pool market
• Expansion into new markets
• Development of new innovative products

Recent Acquisitions:

Doughboy Recreational Inc. (2021)

This acquisition added a well-known brand of above-ground pools to Latham's portfolio, expanding the company's reach into a new market segment. It also provided Latham with additional manufacturing capacity and distribution channels.

AI-Based Fundamental Rating:

Rating: 7.5 out of 10

Justification:

Latham Group has a strong financial profile, a leading market position, and promising growth prospects. However, the company faces competition from larger players and is exposed to potential risks from supply chain disruptions and rising raw material costs.

Sources and Disclaimers:

• Latham Group Inc. website: https://www.lathamgroupinc.com/
• Yahoo Finance: https://finance.yahoo.com/quote/SWIM/
• Zacks Investment Research: https://www.zacks.com/stock/quote/SWIM/research
• Statista: https://www.statista.com/outlook/dmo/consumer-goods/household-appliances/outdoor-leisure-products/swimming-pools/united-states

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. Investing in stocks involves risk, and you could lose money. Always conduct your own due diligence before making any investment decisions.