Latham Group experiencing growth of going public, but challenges remain

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The months since becoming a publicly-traded company have been good for Latham Group, the 65-year-old manufacturer of residential in-ground swimming pools that brags it holds “the No. 1 market position in North America in every product category in which we compete.”

After raising $437 million in its initial public offering in April, the Latham-based company expanded into a new pool line with another acquisition last month, and accelerated plans for a new factory in Canada about an hour north of Watertown.

Sales in the fiscal third quarter, which ended in October, were up significantly from last year. However, Latham Group recorded a net loss due to higher costs tied to becoming a public company, including increased stock-based compensation expenses.

But demand continues apace, thanks in part to a new “B2B2C” initiative under which consumers can digitally plan a backyard oasis on Latham’s website, with the company passing on their interest as sales leads to the dealers who put the pools it manufactures into the ground.

Traditionally, manufacturers interacted only with the dealers, but the “Plan Your Pool” move was genius in the COVID era, when demand for pools turned red hot as consumers opted to stay close to home. A backlog of orders promised to keep Latham and its dealers busy into 2023.

Yet just as clouds can mar a sunny day by the pool, Latham had to scramble when resin shortages – key to its line of fiberglass pools – emerged over the summer, tied to interruptions in suppliers’ needed epoxy and methacrylic acid components.

Although new resin sources have now been located (or promises secured from existing suppliers to prioritize Latham’s orders), the company nevertheless felt an impact in the third quarter.

“The raw material shortfall in resin was the principal driver of our lack of profit flow-through from our sales growth,” CEO Scott Rajeski told analysts on the quarterly conference call last month, as fewer higher-margin fiberglass pools could be in the sales mix.

Later, in response to an analyst question, Rajeski estimated that $23- to- $25 million in additional revenue was lost because Latham was unable to match second-quarter production volume in the third.

On the bright side, though, executives said they expect to have enough capacity in 2022 – assuming resin availability – to double fiberglass pool production.

In addition to fiberglass pools, which Latham aims to see replace concrete construction, the company produces vinyl liners and pool covers. Those product lines were augmented in fall 2020 with the acquisition of GL International of Ohio. And the acquisition of Radiant Pools of Albany, announced last month, adds vinyl-lined, aluminum-walled pools that can be installed fully or partially in-ground.

In 2019, Latham acquired fiberglass pool manufacturer Narellan Group of Australia, expanding operations to that country, New Zealand and Canada. 

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

 

 

 

 

  

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