Shares of Latham Group, Inc. (NASDAQ: SWIM) are showing a notable rise on the US stock charts following the release of its earnings report. As of the last check during the pre-market session, SWIM stock was experiencing a significant increase of 24.44%, trading at $3.87.
Financial Performance
Latham Group (SWIM) released its financial data for Q2 2024 ended June 29, 2024. Key highlights of the quarter include significant margin expansion, which can be attributed to enhanced cost structures and production efficiencies. Lean manufacturing techniques, value engineering initiatives, continuous cost containment initiatives, and lower raw material costs were the main drivers of these gains.
Net sales dropped $17.0 million to $160.1 million from $177.1 million mostly because of continued weakness of the market, but was consistent with the company’s 2024 guidance. However, net income more than doubled to $13.3 million, or $0.11 per diluted share, from the $5.7 million, or $0.05 per diluted share, whereas net income margin increased to 8.3%.
Strategic Expansion Strategy of Latham
In a separate press release, Latham Group also announced the strategic acquisition of Coverstar Central, its exclusive automatic safety cover dealer across 29 states. Coverstar Central, a trusted partner since 2006, is expected to provide multiple strategic advantages. The vertical integration of SWIM’s automatic safety cover product line in these regions is anticipated to boost margins and accelerate sales growth.
The acquisition is also expected to enhance safety features and offer operational cost savings for homeowners. Furthermore, Latham Group aims to leverage Coverstar Central’s established relationships with pool builders to increase fiberglass pool adoption.
The acquisition, valued at $64.5 million and funded with available cash, is projected to be immediately accretive to earnings. It is estimated to contribute approximately $20 million in annualized net sales and expand the adjusted EBITDA margin by approximately 140 basis points on an annual basis. The purchase price is subject to adjustments for working capital and transaction expenses.
