Company Overview
Latham Group, Inc. functions as a specialized manufacturer and marketer focused on the in-ground residential swimming pool sector across North America, Australia, and New Zealand. The company's product portfolio encompasses fiberglass and packaged pools, along with essential accessories such as automatic safety covers, all-season pool covers, and liners. Operating within the Industrials sector, specifically the Building Products & Equipment industry, Latham Group serves as a key provider of structural and aesthetic solutions for residential construction and backyard development projects. The company holds a market capitalization of $667.32M and reported total revenue of $545.91M over the trailing twelve-month period, supported by an employee base of 1,804 individuals. These financial figures indicate that while the company is a mid-cap entity with a significant revenue stream relative to its valuation, its operating margins suggest a capital-intensive business model where revenue generation does not directly translate to proportional profitability. The scale of operations, evidenced by the revenue and workforce size, positions the firm as an established player in a niche market that requires substantial manufacturing infrastructure and logistical reach to serve international regions.
Financial Health
Over the trailing twelve months, Latham Group generated $545.91M in revenue, recorded a net income of $11.12M, and achieved an EBITDA of $81.93M. The substantial gap between the $545.91M in revenue and the $11.12M in net income reveals a complex cost structure where operating expenses, likely including raw materials, labor, and overhead, significantly erode the bottom line before arriving at profit. The company maintained a free cash flow of $33.84M, which demonstrates a degree of financial flexibility allowing for operational continuity and potential capital allocation decisions despite lower net income. Analyzing the margin structure, the gross margin stands at 33.4%, indicating that manufacturing costs consume roughly two-thirds of sales revenue, while the operating margin is negative at -10.7%, signaling that operating expenses currently exceed gross profit. The profit margin sits at 2.0%, confirming that the company retains only a small fraction of total revenue as actual earnings after all costs are accounted for. Regarding liquidity and leverage, the company holds $83.91M in cash against $315.48M in debt, resulting in a debt-to-equity ratio of 77.73, which characterizes a highly leveraged balance sheet rather than a conservative one. The current ratio is 2.77, indicating that the company possesses 2.77 times the current assets necessary to cover its short-term liabilities, suggesting strong short-term liquidity despite the heavy debt load. Return on Equity is 2.8% and Return on Assets is 2.4%, metrics that reveal management effectiveness is currently limited by the high cost of capital and low profitability relative to the equity invested and assets deployed.
Valuation Assessment
The trailing twelve-month P/E ratio is 63.50, while the forward P/E is significantly lower at 20.99, implying that the market expects earnings growth sufficient to drastically reduce the valuation multiple in the coming year. The price-to-book ratio is 1.64, which indicates that the market values the company at a 64% premium over its tangible book value, reflecting intangible assets or brand value despite current earnings struggles. Alternative valuation metrics show a price-to-sales ratio of 1.22 and an EV/EBITDA of 10.74, suggesting that investors are pricing the stock based on future earnings potential and cash flow generation rather than current profitability. The 52-week high is $8.97 and the 52-week low is $4.56; without a specific current share price provided in the facts, the precise location within this range cannot be calculated, but the range itself defines the historical volatility experienced by the stock over the last year. The beta is 1.70, which means the stock price is expected to be 70% more volatile than the broader market, exposing investors to higher risk during market upswings and potentially deeper declines during downturns.
Growth & Income
Revenue growth over the year-over-year period is 14.5%, while earnings growth is listed as N/A, indicating that earnings are currently not growing at a measurable rate comparable to the top-line expansion. Since the company does not pay a dividend, with a dividend yield of N/A and a payout ratio of 0.0%, it does not distribute cash to shareholders and instead reinvests its earnings back into the business operations or uses them to service its substantial debt obligations. The absence of a dividend payout confirms that the company prioritizes capital preservation and debt reduction over providing current income to investors, a strategy often seen in leveraged companies with low current profitability. The overall growth and income profile is characterized by strong top-line expansion in a niche market but is constrained by low profitability, preventing the company from generating significant free cash flow for shareholder returns.