Q2 2026 Latham Group Inc Earnings Call

August 4, 2026

Speaker #1: Welcome to the Latham Group, second quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator 3: Welcome to The Latham Group Q2 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary, Investor Relations Representative. Please go ahead.

Operator: Welcome to The Latham Group Q2 2026 Earnings Conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary, Investor Relations Representative. Please go ahead.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad.

Speaker #1: To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary, y, Investor Relations Representative.

Casey Kotary: Thank you. This afternoon, we issued our Q2 2026 earnings press release, which is available on the Investor Relations portion of our website. On today's call are Latham's President and CEO, Sean Gadd, and CFO, Oliver Gloe. Following their remarks, we will open the call to questions. During this call, the company may make certain statements that constitute forward-looking statements, which reflect the company's views with respect to future events and financial performance as of today or the date specified. Actual events and results may differ materially from those contemplated by such forward-looking statements due to risks and other factors that are set forth in the company's annual report on Form 10-K and subsequent reports filed or furnished with the SEC, as well as today's earnings release. The company expressly disclaims any obligation to update any forward-looking statements, except as required by applicable law.

Speaker #2: Our Latham's President and CEO, Shaun Gadd, and CFO, Oliver Gloe. Following their remarks, we will open the call to questions. During this call, the company may make certain statements that constitute forward-looking statements, which reflect the company's views with respect to future events and financial performance as of today or the dates specified.

Speaker #2: Actual events and results may differ materially from those contemplated by such forward-looking statements. Due to risks and other factors that are set forth in the company's annual report on Form 10-K and subsequent reports filed or furnished with the SEC, as well as today's earnings release, the company expressly disclaims any obligation to update any forward-looking statements, except as required by applicable law.

Casey Kotary: Actual events and results may differ materially from those contemplated by such forward-looking statements due to risks and other factors that are set forth in the company's annual report on Form 10-K and subsequent reports filed or furnished with the SEC, as well as today's earnings release. The company expressly disclaims any obligation to update any forward-looking statements, except as required by applicable law.

Speaker #2: In addition, during today's call, the company will discuss certain non-GAAP financial measures. Reconciliations of the directly comparable GAAP measures to these non-GAAP measures can be found in the slide presentation that is available on our Investor Relations website.

Casey Kotary: During today's call, the company will discuss certain non-GAAP financial measures. Reconciliations of the directly comparable GAAP measures to these non-GAAP measures can be found in the slide presentation that is available on our Investor Relations website. I will now turn the call over to Sean Gadd.

Speaker #2: I'll now turn the call over to Shaun Gadd.

Speaker #3: Thank you, Casey, and thank you all for joining today's call to review our second quarter and discuss our business outlook for the remainder of the year.

Sean Gadd: Thank you, Casey, and thank you all for joining today's call to review our Q2 and discuss our business outlook for the remainder of the year. This was a strong quarter for Latham, demonstrating our ability to execute on our strategic priorities and deliver growth despite a flat market for new US pool starts, which was in line with our expectations. There is still substantial runway to outpace the market as our strategic initiatives gain traction. Now, more than two full quarters into my tenure as CEO, I have had the opportunity to develop a deep understanding of the business. I am encouraged by the positive momentum we are seeing. Several initiatives we have put in place are already producing encouraging early results. I am confident they position us to drive sustained growth in the quarters and years ahead.

Speaker #3: This was a strong quarter for Latham, demonstrating our ability to execute on our strategic priorities and deliver growth despite a flat market for new U.S.

Speaker #3: pool stock. Which was in line with our expectations. And there is still substantial runway to outpace the market as our strategic initiatives gain traction.

Sean Gadd: There is still substantial runway to outpace the market as our strategic initiatives gain traction. Now, more than two full quarters into my tenure as CEO, I have had the opportunity to develop a deep understanding of the business. I am encouraged by the positive momentum we are seeing. Several initiatives we have put in place are already producing encouraging early results. I am confident they position us to drive sustained growth in the quarters and years ahead.

Speaker #3: Now, more than two full quarters into my tenure as CEO, I've had the opportunity to develop a deep understanding of the business, and I'm encouraged by the positive momentum we are seeing.

Speaker #3: Several initiatives we have put in place are already producing encouraging early results, and I'm confident they position us to drive sustained growth in the quarters and years ahead.

Speaker #3: With that, I would like to highlight a few key takeaways from the quarter. First, our sales grew 14% year over year, 10% of which was organic growth.

Sean Gadd: With that, I would like to highlight a few key takeaways from the quarter. First, our sales grew 14% year-over-year, 10% of which was organic growth. Second, we continued to make solid progress in the Sand States, where sales increased at a double-digit rate. Building on this foundation, we are moving ahead with new strategies and resources designed to further accelerate growth. Third, we delivered solid growth in gross profit, driven by higher volumes and continued benefits from our lean manufacturing and value engineering initiatives. The sharper-than-expected surge in demand early in Q2 resulted in quarter-specific ramp-up costs that capped gross margin in the quarter at 35.5%. We expect to recapture the majority of these costs over the next two quarters and remain confident in our ability to deliver year-over-year growth and EBITDA margin expansion. Oliver will provide more detail later in the call.

Speaker #3: Second, we continued to make solid progress in the sand state, where sales increased at a double-digit rate, building on the foundation we are moving ahead with new strategies and resources designed to further accelerate growth.

Speaker #3: Third, we delivered solid growth in gross profit, driven by higher volumes and continued benefits from our lead manufacturing and value engineering initiatives. The sharper than expected surge in demand early in Q2 resulted in quarter-specific ramp-up costs that capped gross margin in the quarter at 35.5%.

Sean Gadd: Third, we delivered solid growth in gross profit, driven by higher volumes and continued benefits from our lean manufacturing and value engineering initiatives. The sharper-than-expected surge in demand early in Q2 resulted in quarter-specific ramp-up costs that capped gross margin in the quarter at 35.5%. We expect to recapture the majority of these costs over the next two quarters and remain confident in our ability to deliver year-over-year growth and EBITDA margin expansion. Oliver will provide more detail later in the call.

Speaker #3: We expect to recapture the majority of these costs over the next two quarters, and remain confident in our ability to deliver year over year growth and EBITDA margin expansion.

Speaker #3: And Oliver will provide more detail later in the call. And finally, our year-to-date results, together with the current audit trends, have led us to increase our full-year sales and adjusted EBITDA guidance for 2026.

Sean Gadd: Finally, our year-to-date results, together with the current order trends, have led us to increase our full-year sales and adjusted EBITDA guidance for 2026, raising the midpoint of our sales growth guidance to 11.7% from 9%, and the midpoint of our adjusted EBITDA growth guidance to 15.2% from 12.7%. This reflects our expectation for higher volumes due to continued share gains and the recapture of operating leverage. Let's take a closer look at the main contributors to our Q2 sales growth. In-ground pool sales were up substantially on both the total and organic basis, thereby strong growth in Fiberglass pools. Fiberglass pools are on track to account for approximately 80% of our full-year 2026 in-ground pool sales, and we expect Fiberglass to gain another percentage point of market share this year, representing approximately 25% of new US pool starts.

Speaker #3: Raising the midpoint of our sales growth guidance to 11.7% from 9%, and the midpoint of our adjusted EBITDA growth guidance to 15.2% from reflects our expectation for higher volumes due to continued share gains and the recapture of operating leverage.

Speaker #3: Let's take a closer look at the main contributors to our second quarter sales growth. Ingram pool sales were up substantially on both a total and organic basis, thereby strong growth in fiberglass pools.

Sean Gadd: In-ground pool sales were up substantially on both the total and organic basis, thereby strong growth in Fiberglass pools. Fiberglass pools are on track to account for approximately 80% of our full-year 2026 in-ground pool sales, and we expect Fiberglass to gain another percentage point of market share this year, representing approximately 25% of new US pool starts.

Speaker #3: Fiberglass pools are on track to account for approximately 80% of our full-year 2026 Ingram pool sales, and we expect fiberglass to gain another percentage point of market share this year.

Speaker #3: Representing approximately 25% of new U.S. pool stock. Cover sales were up year over year, primarily driven by the continued growth in order covers due to what we believe is a steady increase in order cover attachment rate on new pool installations.

Sean Gadd: Cover sales were up year over year, primarily driven by the continued growth in auto covers, due to what we believe is a steady increase in auto cover attachment rates on new pool installations. Liner sales also increased in Q2, driven by our proprietary, Measure by Latham technology, and benefiting from our industry-leading lead times. Looking ahead, Latham has substantial growth opportunities that are not reliant on the rebound in new US pool starts. To fully capture these opportunities, we are concentrating our efforts on four strategic priorities to drive growth. One, we want to continue to grow our core business in established markets, including the Northeast, Midwest, Canada, Australia, and New Zealand. Two, we want to drive material conversion to fiberglass from concrete in the Sand States.

Speaker #3: Line of sales also increased in the second quarter, driven by proprietary measure-by-latent technology and benefiting from our industry-leading lead times. Looking ahead, Latham has substantial growth opportunities that are not reliant on the rebound in new U.S.

Speaker #3: pool stock. We fully capture these opportunities through our concentrating our efforts on four strategic priorities to drive growth. One, we wanted to continue to grow our core business and establish markets, including the Northeast, Midwest, Canada, Australia, and New Zealand.

Sean Gadd: To fully capture these opportunities, we are concentrating our efforts on four strategic priorities to drive growth. One, we want to continue to grow our core business in established markets, including the Northeast, Midwest, Canada, Australia, and New Zealand. Two, we want to drive material conversion to fiberglass from concrete in the Sand States.

Speaker #3: Two, we want to drive material conversion to fiberglass from concrete in the sand state. Three, we want to increase the attachment rate of our order covers, aiming for an order cover on every new pool installation and four, continue to complete accretive acquisitions that expand our market leadership and/or our geographic reach and that are culturally aligned with Latham.

Sean Gadd: Three, we want to increase the attachment rate of our auto covers, aiming for an auto cover on every new pool installation. Four, continue to complete accretive acquisitions that expand our market leadership and/or our geographic reach, and that are culturally aligned with Latham. To support these growth drivers, we need to achieve sales excellence across all of our markets, follow a disciplined market development approach, market directly to the consumer, and own their path to purchase, continue to gain efficiencies through lean manufacturing and value engineering programs, and strengthen our focus on improving safety in all of Latham's facilities. I'm pleased to report that all these initiatives are underway. Our Sand State strategy continued to gain traction in Q2, benefiting from the close collaboration between our sales teams and the dealer network.

Speaker #3: To support these growth drivers, we need to achieve sales excellence across all of our markets. Follow a disciplined market development approach. Market directly to the consumer and own their path to purchase, continue to gain efficiencies through lead manufacturing and value engineering programs, and strengthen our focus on improving safety in all of Latham's facilities.

Sean Gadd: To support these growth drivers, we need to achieve sales excellence across all of our markets, follow a disciplined market development approach, market directly to the consumer, and own their path to purchase, continue to gain efficiencies through lean manufacturing and value engineering programs, and strengthen our focus on improving safety in all of Latham's facilities. I'm pleased to report that all these initiatives are underway. Our Sand State strategy continued to gain traction in Q2, benefiting from the close collaboration between our sales teams and the dealer network.

Speaker #3: I'm pleased to report that all these initiatives are underway. Our sand state strategy continued to gain traction in the second quarter, benefiting from the close collaboration between our sales teams and the dealer network.

Speaker #3: This contributed to another quarter of double-digit growth in Florida, our initial target market, and a double-digit growth for the sand state overall. We believe success in the sand state has the potential to drive a step change in the company-wide growth, and we are expanding our efforts to further accelerate growth in 2027 and beyond.

Sean Gadd: This contributed to another quarter of double-digit growth in Florida, our initial target market, and a double-digit growth for the Sand States overall. We believe success in the Sand States has the potential to drive a step change in the company-wide growth, and we are expanding our efforts to further accelerate growth in 2027 and beyond. We introduced several initiatives designed to capture consumer demand in the Sand States, including strengthening our commercial organization, implementing a new market development framework, and adding sales resources in the field. Through our new market development framework, we are taking a highly targeted approach by identifying areas that offer the greatest growth opportunities. Beginning in Florida, we have identified multiple high-potential micro markets, communities with favorable home values, lot sizes, and household income profiles.

Speaker #3: We introduced several initiatives designed to capture consumer demand in the sand states, including strengthening our commercial organization, implementing a new market development framework, and adding sales resources in the field.

Speaker #3: Through our new market development framework, we are taking a highly targeted approach by identifying areas that offer the greatest growth opportunities. Beginning in Florida, we have identified multiple high-potential micro markets—communities with favorable home values, lot sizes, and household income profiles—and we have deployed additional sales resources in the field to work alongside our dealers and partners to increase market penetration.

Sean Gadd: Through our new market development framework, we are taking a highly targeted approach by identifying areas that offer the greatest growth opportunities. Beginning in Florida, we have identified multiple high-potential micro markets, communities with favorable home values, lot sizes, and household income profiles.

Sean Gadd: We have deployed additional sales resources in the field to work alongside our dealers and partners to increase market penetration. At the same time, our national advertising and marketing campaigns continue to reinforce Latham's reputation for industry-leading product range, quality, and lead time. Those campaigns are resonating with consumers, generating increased demand, and supporting our growth initiatives across our target markets. In Q2, consumer leads were up 60% versus prior year. Latham website traffic was up 30%. Google search demand for Latham was up over 100%, and Latham remains the number one searched for brand among fiberglass competitors. Additionally, as part of our Sand State strategy, I recently spent time in Texas, and I believe it represents the next significant growth opportunity for Latham.

Speaker #3: At the same time, our national advertising and marketing campaigns continue to reinforce Latham's reputation for industry-leading product range, quality, and lead times. Those campaigns are resonating with consumers, generating increased demand and supporting our growth initiatives across our target markets.

Speaker #3: In the second quarter, consumer leads were up 60% versus the prior year. Latham website traffic was up 30%. Google search demand for Latham was up over 100%, and Latham remained the number one searched brand among fiberglass competitors.

Sean Gadd: In Q2, consumer leads were up 60% versus prior year. Latham website traffic was up 30%. Google search demand for Latham was up over 100%, and Latham remains the number one searched for brand among fiberglass competitors. Additionally, as part of our Sand State strategy, I recently spent time in Texas, and I believe it represents the next significant growth opportunity for Latham.

Speaker #3: Additionally, as part of our sand state strategy, I recently spent time in Texas and I believe it represents the next significant growth opportunity for Latham.

Speaker #3: We plan to expand our market development framework from Florida into Texas and thereafter extend it into the other sand states. Arizona and California. Importantly, we're funding some of this expansion through programs to optimize certain operational and administrative functions allowing us to redeploy resources towards our highest return growth initiatives.

Sean Gadd: We plan to expand our market development framework from Florida into Texas, and thereafter, expand it into the other sand states, Arizona and California. Importantly, we are funding some of this expansion through programs to optimize certain operational and administrative functions, allowing us to redeploy resources for the highest return growth initiatives. Oliver will provide additional insight on these programs, as well as the contributions from our lean manufacturing and value engineering initiatives in Q2. Finally, we recently launched our Zero Is Possible safety initiative, which is being rolled out across all of Latham's manufacturing facilities worldwide. More than a safety program, Zero Is Possible represents a foundational shift on how we operate, fostering greater workforce engagement and reinforcing the belief that every incident is preventable. I believe that this mindset is foundational to a world-class manufacturing organization.

Speaker #3: Oliver will provide additional insight on these programs, as well as the contributions from our lead manufacturing and value engineering initiatives in the second quarter.

Sean Gadd: Oliver will provide additional insight on these programs, as well as the contributions from our lean manufacturing and value engineering initiatives in Q2. Finally, we recently launched our Zero Is Possible safety initiative, which is being rolled out across all of Latham's manufacturing facilities worldwide. More than a safety program, Zero Is Possible represents a foundational shift on how we operate, fostering greater workforce engagement and reinforcing the belief that every incident is preventable. I believe that this mindset is foundational to a world-class manufacturing organization.

Speaker #3: And finally, we recently launched our Zero Is Possible safety initiative, which is being rolled out across all of Latham's manufacturing facilities worldwide. More than a safety program, Zero Is Possible represents a foundational shift in how we operate.

Speaker #3: Fostering greater workforce engagement and reinforcing the belief that every incident is preventable. I believe that this mindset is foundational to a world-class manufacturing organization and while safety is an immediate focus, the benefit will extend well beyond safety over time.

Sean Gadd: While safety is the immediate focus, the benefit will extend well beyond safety over time, through stronger operational discipline, reliability, employee engagement, and overall performance. In summary, we are pleased with our Q2 performance and the momentum we are seeing across the business. This momentum has given us increased confidence in our outlook and supported our decision to raise our full-year 2026 sales and adjusted EBITDA guidance, and sales trends in July are tracking towards those expectations. Now I will turn it over to our CFO, Oliver Gloe, for the financial review. Oliver.

Speaker #3: Through stronger operational discipline and reliability, employee engagement, and overall performance. In summary, we are pleased with our second quarter performance and the momentum we are seeing across the business.

Speaker #3: This momentum has given us increased confidence in our outlook and supported our decision to raise our full-year 2026 sales and adjusted EBITDA guidance. And sales trends in July are tracking towards those expectations.

Speaker #3: Now I will turn it over to our CFO, Oliver Gloe, for the financial review. Oliver.

Speaker #2: Thank you, Sean. And good afternoon, everyone. I'm pleased to report on our second quarter financial performance which clearly demonstrates Latham's continued outperformance of the market.

Oliver Gloe: Thank you, Sean, good afternoon, everyone. I am pleased to report on our Q2 financial performance, which clearly demonstrates Latham's continued outperformance of the market. Please note that all comparisons that I will discuss today on a year-over-year basis compare to Q2 and the H1 of fiscal 2025, unless otherwise noted. Net sales for Q2 were $197 million, 14% above $173 million in Q2 of 2025, of which 10% represented organic growth and 4% represented growth from the Freedom Pools acquisition, which we completed at the end of February 2026. Organic growth was led by robust demand for Latham products, reflecting the strength of our sales and marketing efforts and progress of our growth strategy.

Speaker #2: Please note that all comparisons that I will discuss today on a year-over-year basis compared to the second quarter and the first half of fiscal 2025 are less otherwise noted.

Speaker #2: Net sales for the second quarter were $197 million, 14% above $173 million in Q2 of 2025, of which 10% represented organic growth and 4% represented growth from the Freedom Pools acquisition which we completed at the end of February 2026.

Oliver Gloe: Net sales for Q2 were $197 million, 14% above $173 million in Q2 of 2025, of which 10% represented organic growth and 4% represented growth from the Freedom Pools acquisition, which we completed at the end of February 2026. Organic growth was led by robust demand for Latham products, reflecting the strength of our sales and marketing efforts and progress of our growth strategy.

Speaker #2: Organic growth was led by robust demand for Latham products reflecting the strengths of our sales and marketing efforts and progress of our growth strategy.

Speaker #2: Across our product categories, in-grown pool sales were $96 million, up 23% in the second quarter, or 14% organically. Driven by a rapid and better-than-anticipated influx of orders, that temporarily outpaced production early in the quarter.

Oliver Gloe: Across our product categories, in-ground pool sales were $96 million, up 23% in Q2 or 14% organically, driven by a rapid and better-than-anticipated influx of orders that temporarily outpaced production early in the quarter. With our manufacturing lines ramping to current demand levels, we are well-positioned for the remainder of the season. Cover sales were $41 million, an increase of 10%, liner sales were $60 million, up 6%. Gross profit increased 9.6% to $70 million. Gross margin was 35.5% in Q2, a 160-basis-point decline compared to last year. We continue to see benefits from our lean manufacturing and value engineering programs, which had a positive impact on gross profit of approximately $2.7 million in Q2.

Speaker #2: With our manufacturing lines ramping to current demand levels, we are well positioned for the remainder of the season. Cover sales were $41 million, an increase of 10%, and liner sales were $60 million, up 6%.

Oliver Gloe: Cover sales were $41 million, an increase of 10%, liner sales were $60 million, up 6%. Gross profit increased 9.6% to $70 million. Gross margin was 35.5% in Q2, a 160-basis-point decline compared to last year. We continue to see benefits from our lean manufacturing and value engineering programs, which had a positive impact on gross profit of approximately $2.7 million in Q2.

Speaker #2: Gross profit increased 9.6% to $70 million. Gross margin was 35.5% in the second quarter, a 160 basis point decline compared to last year. We continue to see benefits from our lean manufacturing and value engineering programs, which had a positive impact on gross profit of approximately $2.7 million in the second quarter.

Speaker #2: However, the sudden surge in demand for fiberglass pools caused our ramp-up to be more pronounced compared to prior years. Resulting in approximately $2.8 million of incremental costs in the quarter.

Oliver Gloe: The sudden surge in demand for our Fiberglass pools caused our ramp-ups to be more pronounced compared to prior years, resulting in approximately $2.8 million of incremental costs in the quarter, which represented a gross margin headwind of approximately 140 basis points. The majority of these costs are expected to be recovered in H2 of this year. SG&A expenses increased to $38 million, up $6 million, primarily due to investments in our growth strategies, the timing of sales and marketing initiatives related to our Fiberglass conversion strategy, acquisition and integration-related costs, which includes $2.2 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024, and costs related to our digital transformation program. We completed a restructuring and voluntary early retirement program, resulting in $2.5 million of annualized savings.

Speaker #2: Which represented a gross margin headwind of approximately $140 basis points. The majority of these costs are expected to be recovered in the second half of this year.

Speaker #2: SG&A expenses increased to $X million, primarily due to investments in our growth strategy, the timing of sales and marketing initiatives related to our fiberglass conversion strategy, acquisition and integration-related costs, which include $2.2 million of performance-based compensatory earnout expenses related to our Coverstar Central acquisition in 2024, and costs related to our digital transformation program.

Oliver Gloe: SG&A expenses increased to $38 million, up $6 million, primarily due to investments in our growth strategies, the timing of sales and marketing initiatives related to our Fiberglass conversion strategy, acquisition and integration-related costs, which includes $2.2 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024, and costs related to our digital transformation program. We completed a restructuring and voluntary early retirement program, resulting in $2.5 million of annualized savings.

Speaker #2: We completed a restructuring and voluntary early retirement program resulting in $2.5 million of annualized savings. These savings will be redeployed to a line talent company's strategic priorities including strengthening the commercial organization against our highest impact growth opportunities.

Oliver Gloe: These savings will be redeployed to align talent, structure, and resources with the company's strategic priorities, including strengthening the commercial organization against our highest impact growth opportunities. We will incur an associated one-time charge of $1.5 million in H2 of the year. Net income was $13 million, or $0.11 per diluted share, a decrease from $16 million, or $0.13 per diluted share for the prior year's Q2. Net income margin was 6.5% compared to 9.3% and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $5 million. Adjusted EBITDA of $45 million increased $5 million or 12% from last year's $40 million and Adjusted EBITDA margins contracted to 22.6%, a 50-basis-point decline from 23.1% in the prior year period.

Speaker #2: We will incur an associated one-time charge of $1.5 million in the second half of the year. Net income was $13 million or $0.11 per diluted share, a decrease from $16 million or $0.13 per diluted share for the prior year second quarter.

Speaker #2: Net income margin was 6.5% compared to 9.3% and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $5 million.

Oliver Gloe: Net income margin was 6.5% compared to 9.3% and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $5 million. Adjusted EBITDA of $45 million increased $5 million or 12% from last year's $40 million and Adjusted EBITDA margins contracted to 22.6%, a 50-basis-point decline from 23.1% in the prior year period.

Speaker #2: Adjusted EBITDA of $45 million increased $5 million or 12% from last year's $40 million and adjusted EBITDA margin contracted to $22.6%, a 50 basis point decline from $23.1% in the prior year period.

Speaker #2: This decrease was primarily due to lower gross margin and the timing of sales and marketing initiatives to accelerate share gains in the sand state.

Oliver Gloe: This decrease was primarily due to lower gross margin and the timing of sales and marketing initiatives to accelerate share gains in the Sand State. Turning to our H1 year-over-year results comparison. Net sales were $315 million, up 11% from $284 million, primarily due to organic growth of 7.5% with the acquisition of Freedom Pools contributing the remainder. Gross profit increased by 11% to $107 million from $97 million, and gross margin remained flat at 34.1%. Net income was $4 million compared to $10 million in the prior year period. Net income margin was 1.3% compared to 3.5% and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $6.4 million. Adjusted EBITDA increased by 11% to $57 million from $51 million, and Adjusted EBITDA margin remained flat at 18%.

Speaker #2: Now turning to our first half year-over-year results comparisons. Net sales were $315 million up 11% from $284 million primarily due to organic growth of $7.5% with the acquisition of Freedom Pools contributing the remainder.

Speaker #2: Gross profit increased by 11% to $107 million from $97 million and gross margin remained flat at $34.1%. Net income was $4 million compared to $10 million in the prior year period.

Oliver Gloe: Net income was $4 million compared to $10 million in the prior year period. Net income margin was 1.3% compared to 3.5% and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $6.4 million. Adjusted EBITDA increased by 11% to $57 million from $51 million, and Adjusted EBITDA margin remained flat at 18%.

Speaker #2: Net income margin was 1.3% compared to 3.5%, and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $6.4 million.

Speaker #2: Adjusted EBITDA increased by 11% to $57 million from $51 million and adjusted EBITDA margin remained flat at 18%. Turning to our balance sheet and cash flow statement, we continue to maintain a strong financial position with cash of $43 million at the end of the quarter.

Oliver Gloe: Turning to our balance sheet and cash flow statement, we continue to maintain a strong financial position with cash of $43 million at the end of the quarter. Net cash provided by operating activities was $54 million in Q2, and in H1, net cash provided by operating activities was $6 million. Total debt for the period was $280 million, with a net debt leverage ratio of 2.2. Based on expected cash flow generation for the remainder of the season, we are tracking towards a net debt leverage ratio of below 2 by year-end. Our capital expenditures were $6 million for the Q2 of 2026. H1 capital expenditures were $28.1 million, including the purchase of the four key Fiberglass production sites, which we have previously discussed.

Speaker #2: Net cash provided for operating activities was $54 million in the second quarter and in the first half, net cash provided for operating activities was $6 million.

Speaker #2: Total debt for the period was $280 million, with a net debt leverage ratio of 2.2. Based on expected cash flow generation for the remainder of the season, we are tracking towards a net debt leverage ratio below 2 by year-end.

Oliver Gloe: Based on expected cash flow generation for the remainder of the season, we are tracking towards a net debt leverage ratio of below 2 by year-end. Our capital expenditures were $6 million for the Q2 of 2026. H1 capital expenditures were $28.1 million, including the purchase of the four key Fiberglass production sites, which we have previously discussed.

Speaker #2: Our capital expenditures were $6 million for the second quarter of 2026. First half capital expenditures were $28.1 million including the purchase of the four key fiberglass production sites which we have previously discussed.

Speaker #2: As we've also previously discussed, the company completed the acquisition of Freedom Pools for a purchase price of $17 million in February 2026. I would like to emphasize our capital allocation priorities, which are reinvesting in the business to capture organic growth opportunities, selectively pursuing strategic acquisitions, and evaluating opportunities to return capital to shareholders over time, while maintaining a strong balance sheet.

Oliver Gloe: As we've also previously discussed, the company completed the acquisition of Freedom Pools for a purchase price of $17 million in February 2026. I would like to emphasize our capital allocation priorities, which are reinvesting in the business to capture organic growth opportunities, selectively pursuing strategic acquisitions, and evaluating opportunities to return capital to shareholders over time while maintaining a strong balance sheet. Moving on to our outlook. Our H1 performance reinforces our confidence that Latham has significant opportunities that extend beyond any recovery in new US pool starts, and we are raising our full year outlook for both net sales and adjusted EBITDA. At the midpoint of our revised guidance, we now expect net sales growth of 11.7%, including 8.4% organic growth and adjusted EBITDA growth of 15.2%.

Speaker #2: Moving on to our outlook. Our first half performance reinforces our confidence that Latham has significant opportunities that extend beyond any recovery in new US pool starts and we are raising our full-year outlook for both net sales and adjusted EBITDA.

Oliver Gloe: Moving on to our outlook. Our H1 performance reinforces our confidence that Latham has significant opportunities that extend beyond any recovery in new US pool starts, and we are raising our full year outlook for both net sales and adjusted EBITDA. At the midpoint of our revised guidance, we now expect net sales growth of 11.7%, including 8.4% organic growth and adjusted EBITDA growth of 15.2%.

Speaker #2: At the midpoint of our revised guidance, we now expect net sales growth of $11.7% including $8.4% organic growth and adjusted EBITDA growth of $15.2%.

Speaker #2: The increase in guidance reflects stronger first half demand for our products continued execution of our growth initiatives and our current visibility into the remainder of the pool season.

Oliver Gloe: The increase in guidance reflects stronger H1 demand for our products, continued execution of our growth initiatives, and our current visibility into the remainder of the pool season. We will continue investing to strengthen our leadership position in our core markets while accelerating fiberglass conversion across the sand states. Our revised guidance takes into account our assessment of the impact of the ongoing conflict in the Middle East on our costs. To mitigate the increase in our transportation costs, we instituted a surcharge, and we have additional mitigation strategies in place to fully or mostly offset commodity headwinds related to higher oil prices. With that, I will turn the call back to Shaun for his closing remarks.

Speaker #2: We will continue investing to strengthen our leadership position in our core markets, while accelerating fiberglass conversion across the Sunbelt states. Our revised guidance takes into account our assessment of the impact of the ongoing conflict in the Middle East on our costs.

Oliver Gloe: Our revised guidance takes into account our assessment of the impact of the ongoing conflict in the Middle East on our costs. To mitigate the increase in our transportation costs, we instituted a surcharge, and we have additional mitigation strategies in place to fully or mostly offset commodity headwinds related to higher oil prices. With that, I will turn the call back to Shaun for his closing remarks.

Speaker #2: To mitigate the increase, in our transportation costs we instituted a surcharge and we have additional mitigation strategies in place to fully or mostly offset commodity headwinds related to higher oil prices.

Speaker #2: With that, I will turn the call back to Shaun for his closing remarks.

Speaker #1: Thanks, Oliver. As you have heard, we are on the horizon. As he tremendous potential to expand our share in each of the markets we serve and throughout our product portfolio.

Sean Gadd: Thanks, Oliver. As you have heard, we are excited about the growth opportunities on the horizon. I see tremendous potential to expand our share in each of the markets we serve and throughout our product portfolio, and we intend to take advantage of soft markets to accelerate our sand state strategy and strengthen our execution. This is an exciting time to be at Latham. We appreciate the commitment to excellence that our people show each day and the loyalty and trust of our dealers and customers, supporting our confidence in our future performance. Operator, please open the call to questions.

Speaker #1: And we intend to take advantage of stock markets to accelerate our Sand State strategy and strengthen our execution. This is an exciting time to be at Latham.

Speaker #1: We appreciate the commitment to excellence that our people show each day, as well as the loyalty and trust of our dealers and customers, supporting our confidence in our future performance.

Speaker #1: Operator, please open the call to questions.

Operator 3: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question comes from Timothy Wojs with Baird. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question comes from Timothy Wojs with Baird. Please go ahead.

Speaker #3: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #3: If at any time your question has been addressed and you would like to withdraw the question, please press star then two. Please limit yourself to one question and one follow-up.

Speaker #3: Let's assemble our roster. Our first question comes from Timothy Weiss with Baird. Please go ahead.

Speaker #4: Hey everybody, good afternoon. Thanks for the questions and the detail. Maybe just to start off, if you could maybe kind of talk about the demand environment, kind of obviously you're talking about a surge in demand, so I'm just kind of curious how the quarter kind of played out and what specifically was better than your expectations?

Timothy Wojs: Hey, everybody. Good afternoon. Thanks for the questions and the detail. Maybe just to start off, if you could maybe talk about the demand environment. Obviously, you're talking about a surge in demand, so I'm just curious how the quarter played out and what specifically was better than your expectations?

Speaker #1: Yeah, thanks, Tim. I'd start with understanding Q1 was pretty soft, with all the bad weather we had in the country. So, I think there's a bit of pent-up demand through Q1.

Sean Gadd: Yeah. Thanks, Tim. I'd start with understanding Q1 was pretty soft with all the bad weather we had in the country. I think there's a bit of pent-up demand through Q1, which then built onto Q2. With that said, the demand in Q2 was higher than we had expected. Obviously, we were planning on, and still are planning on a flat to slightly up, probably flat pool starts. It looked like there's just a true spike in demand, which is a result, in my mind, from us taking share over the last sort of 12 months and started culminating into the new season. We didn't get any indicators in Q1, but certainly Q2, it accelerated faster than we expected compared to previous years.

Speaker #1: Which then built onto Q2 and then that said, the demand in Q2 was higher than we had expected. Obviously, we were planning on and still are planning on a flat to slightly up, probably flat to pool starts.

Sean Gadd: Obviously, we were planning on, and still are planning on a flat to slightly up, probably flat pool starts. It looked like there's just a true spike in demand, which is a result, in my mind, from us taking share over the last sort of 12 months and started culminating into the new season. We didn't get any indicators in Q1, but certainly Q2, it accelerated faster than we expected compared to previous years.

Speaker #1: And so it looked like there’s just a true spike in demand, which is a result, in my mind, from us taking share over the last sort of 12 months.

Speaker #1: And it started culminating into the new season. So we didn't get any indicators in Q1, but certainly in Q2, it accelerated faster than we expected, compared to previous years.

Speaker #4: Okay. Okay. And then, I mean, based on the KPIs you see internally, is this just kind of core share gain, or is this a much better or faster return on some of the sales strategies that you've changed, or the Sand States investments?

Timothy Wojs: Okay. Based on the KPIs you see internally, is this just kind of core share gain, or is this a much better or faster return on some of the sales strategies that you've changed or the Sand States investments?

Speaker #1: I think it's a little bit of everything. I think it's a result of our marketing campaign, now further into its run. It's certainly resonating.

Sean Gadd: I think it's a little bit of everything. I think it's a result.

Timothy Wojs: Okay

Sean Gadd: of our marketing campaign now further into its run. It's certainly resonating. We hear a lot from dealers that homeowners are saying they saw us, they heard about us. That's starting to kick in. I think our core markets are growing, which is really share gain, moving essentially into more market in the Northeast and Midwest and Canada. We are getting good gains in the South as well. Everything is sort of clicking, although plenty of upsides still to go in terms of execution.

Sean Gadd: Of our marketing campaign now further into its run. It's certainly resonating. We hear a lot from dealers that homeowners are saying they saw us, they heard about us. That's starting to kick in. I think our core markets are growing, which is really share gain, moving essentially into more market in the Northeast and Midwest and Canada. We are getting good gains in the South as well. Everything is sort of clicking, although plenty of upsides still to go in terms of execution.

Speaker #1: We hear a lot from dealers that homeowners are saying they saw us, they heard about us. That's starting to kick in. I think our core markets are growing, which is really share gain, and moving essentially into more markets in the Northeast and Midwest and Canada.

Speaker #1: And then we are getting good gains in the South as well. So everything's sort of clicking, although there's still plenty of upside to go in terms of execution.

Speaker #4: Okay. Okay, that's great. And then just maybe on the cost side, Oliver just it sounds like price cost is kind of going to be kind of net neutral this year just verifying that.

Timothy Wojs: Okay. That's great. Just maybe on the cost side, Oliver, it sounds like price cost is going to be net neutral this year, just verifying that. The second piece, why do you get the inefficiencies back in H2? What I guess happened in Q2, and why do you actually get it back?

Speaker #4: And then the second piece, why do you get the inefficiencies back in the back half of the year? What I guess happened in Q2 and why do you actually get them back?

Speaker #1: Yeah, Tim, let me start out by saying this was actually the second highest gross profit in our history as a public company. So we were within a percent of our record which was at the peak of COVID in Q1 2022.

Oliver Gloe: Yeah, Tim, let me start out by saying this was actually the second highest gross profit in our history as a public company. We were within a percent of our record, which was at the peak of COVID in Q1 2022. Gross profit and with that, gross margin could have been even higher. What held us back, as Sean said, Q1 was light, right? We had snow on the ground up until late March. We actually ran the facilities comparatively light, going into Q2, and we were met with almost an instant demand and an instant start of the season early Q2. We didn't see the usual ramp. What that caused was, A, an under-absorption in our plants, and B, we actually sold products in order to fulfill the demand out of inventory.

Speaker #1: But gross profit, and with that gross margin, could have been even higher. And what held us back, as Shaun said, Q1 was light, right?

Speaker #1: We had snow on the ground up until late March. So we actually ran the facilities comparatively light going into Q2. And we were met with almost an instant demand and an instant start of the season in early Q2.

Oliver Gloe: We actually ran the facilities comparatively light, going into Q2, and we were met with almost an instant demand and an instant start of the season early Q2. We didn't see the usual ramp. What that caused was, A, an under-absorption in our plants, and B, we actually sold products in order to fulfill the demand out of inventory.

Speaker #1: So, we didn't see the usual ramp. And what that caused was, A, an under-absorption in our plants, and B, we actually sold product in order to fulfill the demand out of inventory.

Speaker #1: So that is about two-thirds of the headwind that I outlined in my prepared remarks. That is the portion that we plan to recover balance of year as ultimately we will restock inventory we will get that absorption back as we need to prepare for the 2027 season.

Oliver Gloe: That is about two-thirds of the headwind that I outlined in my prepared remarks. That is the portion that we plan to recover balance of year, as ultimately, we will restock inventory. We will get that absorption back as we need to prepare for the 2027 season.

Speaker #1: Then about one-third of that headwind that I outlined is actually associated with the accelerated ramp, right? We obviously as I said, accelerated the ramp from a standpoint of overtime, hiring, training, and so forth.

Timothy Wojs: Okay

Oliver Gloe: of that headwind that I outlined is actually associated with the accelerated ramp, right? We obviously, as I said, accelerated the ramp from a standpoint of overtime, hiring, training, and so forth. That's obviously not the most efficient way to ramp up. I would say that headwind is part of Q2 and is in the rearview mirror. Ultimately, I'm very thankful to the outstanding performance of our operations team. Ultimately, we ramped up to demand. As we pointed out, at comparatively higher cost. I think to your question about the price cost equation, I think the simplest way to think through Q2 gross margin is that the combination of price and the contribution of lean and value engineering comparatively offset commodity inflation, tariffs, and cost inflation in our plants.

Oliver Gloe: Of that headwind that I outlined is actually associated with the accelerated ramp, right? We obviously, as I said, accelerated the ramp from a standpoint of overtime, hiring, training, and so forth. That's obviously not the most efficient way to ramp up. I would say that headwind is part of Q2 and is in the rearview mirror. Ultimately, I'm very thankful to the outstanding performance of our operations team.

Speaker #1: That's obviously not the most efficient way to ramp up. So, I would say that headwind is part of Q2, and it is in the rearview mirror.

Speaker #1: But ultimately, I'm very thankful for the outstanding performance of our operations team. Ultimately, we ramped up to demand. But, as we pointed out, that came with comparatively higher costs.

Oliver Gloe: Ultimately, we ramped up to demand. As we pointed out, at comparatively higher cost. I think to your question about the price cost equation, I think the simplest way to think through Q2 gross margin is that the combination of price and the contribution of lean and value engineering comparatively offset commodity inflation, tariffs, and cost inflation in our plants.

Speaker #1: And I think to your question about the price ROS equation, I think the simplest way to think through Q2 gross margin is that the combination of price and the contribution of lean and value engineering comfortably offset commodity inflation, tariffs, and cost inflation in our plants.

Speaker #1: So all of that probably think of that as a 50 basis points tailwind which is our normal progression that we've seen that in prior quarters as well.

Oliver Gloe: All of that, probably think of that as a 50 basis points tailwind, which is our normal progression. We've seen that in prior quarters as well. We add in Freedom.

Speaker #1: Then we add in Freedom. So Freedom is not doing anything to the group from an EBITDA percentage, but it's a slightly lower-margin, lower-cost business.

Timothy Wojs: Okay.

Oliver Gloe: Freedom is not doing anything to the group from an EBITDA percentage, it's slightly lower margin, lower cost business. Adding in Freedom is actually, is a headwind of about 40 basis points to group gross margin. The overriding contributor to the gap in EBITDA margin is the volume leverage that I discussed, the incremental absorption cost, the incremental cost associated with the accelerated ramp that I just walked through. I want to say we had two other impacts that are about $1 million, $1.5 million. They offset each other, they're important to mention and understand. We did receive IEPA tariff refunds. We collected those. That was a tailwind in the quarter. We obviously had transportation headwinds from the Middle East conflict. We instituted a surcharge, not day one, right?

Speaker #1: So adding in freedom is actually a headwind of about 40 basis points to group gross margin. And then the overriding contributor to the gap in EBITDA margin is the volume leverage.

Speaker #1: That I discussed the incremental absorption cost, the incremental cost associated with the accelerated ramp that I just walked through. Then I want to say we had two other impacts that are about a million, million five.

Speaker #1: They offset each other, but they're important to mention and understand. We did receive IEPA tariff refunds. So we collected those. So that was a tailwind in the quarter.

Oliver Gloe: They offset each other, they're important to mention and understand. We did receive IEPA tariff refunds. We collected those. That was a tailwind in the quarter. We obviously had transportation headwinds from the Middle East conflict. We instituted a surcharge, not day one, right?

Speaker #1: But then we obviously had transportation headwinds from the Middle East conflict. We instituted a surcharge—not day one, right? It took us a couple of weeks to announce, and then you always pre-announce and implement at a later date.

Oliver Gloe: It took us a couple of weeks to announce, you always pre-announce and implement at a later date. The transportation surcharge from a timing perspective lacked the impact itself. We were very thoughtful of setting the surcharge. They were not set at a level supporting an oil price and subsequent diesel price beyond the $100. Temporarily, we were a little bit uncovered from a transportation surcharge perspective. Again, summarizing, gross margin could have been even higher if the ramp would've been more gradual, right? On the other hand, as I said, I'm glad that the operation team lived up to the challenge and enabled that 14% top-line growth at a 10% growth in gross profit. Maybe one last sentence from a gross margin cadence perspective in the quarter. The headwind was really limited to April, a little bit spilled into May.

Speaker #1: So the transportation surcharge from a timing perspective lagged the impact itself. And then we were very thoughtful of setting the surcharge. But they were not set at a level supporting an oil price and subsequent diesel price beyond 100 dollars.

Speaker #1: So, temporarily, we were a little bit uncovered from a transportation surcharge perspective. So again, summarizing, gross margin could have been even higher if the ramp would have been more gradual, right?

Oliver Gloe: Again, summarizing, gross margin could have been even higher if the ramp would've been more gradual, right? On the other hand, as I said, I'm glad that the operation team lived up to the challenge and enabled that 14% top-line growth at a 10% growth in gross profit. Maybe one last sentence from a gross margin cadence perspective in the quarter. The headwind was really limited to April, a little bit spilled into May.

Speaker #1: But on the other hand, as I said, I'm glad that the operation team lived up to the challenge and enabled that 14% top line growth and a 10% growth in gross profit.

Speaker #1: Maybe one last sentence from a gross margin cadence perspective in the quarter: the headwind was really limited to April, with a little bit spilling into May.

Oliver Gloe: June, and let me add in July as well, shows the usual gross margin and EBITDA expansion versus prior year that you are used to seeing from us.

Speaker #1: June and let me add in July as well shows the usual gross margin and EBITDA expansion versus prior year that you're used to seeing from us.

Speaker #4: Okay. That's a lot of great color. I appreciate it. Nice job, and good luck to the rest of you guys. Thank you.

Timothy Wojs: Okay. That is a lot of great color. I appreciate it. Nice job, and good luck on the rest of you guys. Thank you.

Speaker #1: Thank you.

Oliver Gloe: Thank you.

Speaker #2: Our next question comes from Ryan Merkle with William Blair. Please go ahead.

Operator 3: Our next question comes from Ryan Merkel with William Blair. Please go ahead.

Operator: Our next question comes from Ryan Merkel with William Blair. Please go ahead.

Speaker #5: Hey everyone. Thanks for the questions. Yeah, I want to follow up on Tim's question on the sudden surge of demand. I found that interesting as well.

Ryan Merkel: Hey, everyone. Thanks for the questions. Yeah, I want to follow up on Tim's question on the sudden surge of demand. I found that interesting as well. Is that comment broad-based across all the geographies, or did you see that surge sort of in the Midwest and the Northeast as sort of the weather thawed? I'd like your thoughts on what I hear from contractors is everyone wants a less expensive pool because the in-ground pool has got so expensive. I wonder if you're starting to hear that from the contractors, if that's starting to help.

Speaker #5: Is that comment broad-based across all the geographies or was that did you see that surge sort of in the Midwest and the Northeast as sort of the weather thawed?

Speaker #5: And then I'd like your thoughts on what I hear from contractors is everyone wants a less expensive pool because the in-ground pool has got so expensive.

Speaker #5: I wonder if you're starting to hear that from the contractors—if that's starting to help.

Speaker #1: Yeah, I think it's across the board. So, when we looked at how the quarter performed, there's no one geography outperforming another. Generally, you've got the lift everywhere.

Sean Gadd: Yeah, I think it's across the board. When we looked at how the quarter performed, there's no one geography outperforming another. Generally, you got the lift everywhere. Which I think is a lot to do with the fact that we are doing national advertising. I think that's a good outcome. We have got our team in place. Our sales team's been in place consistently now for quite some time in our core markets, so I think we're getting the benefit of that. Our southern markets, again, are doing a lot of the right activity and then are starting to see some results through the dealers that they're working with. That would've been across the board, not just a specific geography.

Speaker #1: Which I think is a lot to do with the fact that we are doing national advertising. So I think that's a good outcome. We have got our team in place.

Speaker #1: Our sales team's been in place consistently now for quite some time in our core market. So I think we're getting the benefit of that.

Sean Gadd: Our sales team's been in place consistently now for quite some time in our core markets, so I think we're getting the benefit of that. Our southern markets, again, are doing a lot of the right activity and then are starting to see some results through the dealers that they're working with. That would've been across the board, not just a specific geography.

Speaker #1: And then our southern markets, again, are doing a lot of the right activity and then starting to see some results to the diesel that they're working with.

Speaker #1: So, that would have been across the board, not just a specific geography. In terms of less expensive pools, I’ve traveled now through the States, and I’ve seen a number of dealers in the last month where people are trying—or dealers are trying—to get to a different price point to see if it opens up more in the market.

Sean Gadd: In terms of less expensive pools, I've traveled now through the States, and I've seen, I mean, there's a number of dealers in the last month where people are trying, or dealers are trying to get to a different price point to see if it opens up more of the market. I've got an example in Florida, I've got an example in Texas where they're offering a pool at $50,000. It's a basic pool, but they're offering it at $50,000, and it's there to see if the market opens up. We're not hearing as much noise as you describe about looking for cheaper pools. However, our dealers are trying to see if opening it at a price point of $50,000 opens up more market. It is too early to tell.

Speaker #1: I got an example in Florida, I got an example in Texas where they're offering a pool at 50,000 dollars. It's a basic pool, but they're offering a 50,000 dollars and it's there to see if the market opens up.

Sean Gadd: I've got an example in Florida, I've got an example in Texas where they're offering a pool at $50,000. It's a basic pool, but they're offering it at $50,000, and it's there to see if the market opens up. We're not hearing as much noise as you describe about looking for cheaper pools. However, our dealers are trying to see if opening it at a price point of $50,000 opens up more market. It is too early to tell.

Speaker #1: So we're not hearing as much noise as you describe about looking for cheaper pools. However, our dealers are trying to see if opening at a price point of 50,000 dollars opens up more market.

Speaker #1: And it's too early to tell.

Speaker #5: Got it. Okay, that's helpful. And then just a question on seasonality. I mean, typically revenues are down kind of 6% from Q2 to Q3.

Ryan Merkel: Got it. Okay. It's helpful. Just a question on seasonality. I mean, typically revenues are down 6% from Q2 to Q3. It sounds like you might actually beat that seasonality. It sounds like orders and everything is going pretty well. Just any comments on Q3 sales, and the seasonality there.

Speaker #5: It sounds like you might actually beat that seasonality. It sounds like orders and everything is going pretty well. So just any comments on Q3 sales and the seasonality there?

Speaker #1: Yeah, the order file is looking really robust, so we like that. I think we feel good about Q3 and where it's going to go.

Sean Gadd: Yeah. The order file is looking really robust, so we like that. I think we feel good about Q3 and where it's gonna go. I think our only challenge I see is if for whatever reason we end up with snow coming in early. Outside of that, we think it should follow a sort of standard quarterly flow and cadence. That shouldn't be any different.

Speaker #1: I think our only challenge, the only challenge I see, is if for whatever reason we end up with snow coming in early. But outside of that, we think it should follow our sort of standard quarterly flow and cadence.

Speaker #1: So that shouldn't really be any different.

Speaker #5: All right. Got it. Thanks. Good quarter. Pass it on.

Ryan Merkel: All right. Got it. Thanks. Good quarter. Passing on.

Speaker #1: Thank you.

Sean Gadd: Thank you.

Speaker #2: Our next question comes from Andrew Carter with Stifel. Please go ahead.

Operator 3: Our next question comes from Andrew Carter with Stifel. Please go ahead.

Operator: Our next question comes from Andrew Carter with Stifel. Please go ahead.

Speaker #6: Hey, thank you. Good evening. I wanted to better understand kind of the issue you had during the quarter with the ramp-up. Is it was it all about planning because ideally, you're going to go to a world that pools start growing low single digits or some people are right mid single digits.

W. Andrew Carter: Hey. Thank you. Good evening. I wanted to better understand the issue you had during the quarter with the ramp-up. Was it all about planning? Ideally you're gonna go to a world that pools start growing low single digits, or if some people are right, mid-single digits. Does this say anything about your future ability to capitalize on a tidal wave of demand or anything else? Was this just truly a planning for this year, therefore isolated this, doesn't say anything about the network demands?

Andrew Carter: Hey. Thank you. Good evening. I wanted to better understand the issue you had during the quarter with the ramp-up. Was it all about planning? Ideally you're gonna go to a world that pools start growing low single digits, or if some people are right, mid-single digits. Does this say anything about your future ability to capitalize on a tidal wave of demand or anything else? Was this just truly a planning for this year, therefore isolated this, doesn't say anything about the network demands?

Speaker #6: Does this say anything about your future ability to capitalize on a tidal wave of demand or anything else? Or was this just truly planning for this year, therefore isolating this?

Speaker #6: Doesn't say anything about the network demands?

Speaker #1: Thank you, Andrew. Good question. I'll start with the ramp-up was certainly more extreme than what we've seen in the past. So it really is a planning issue.

Sean Gadd: Thank you, Andrew. Good question. I'll start with the ramp-up was certainly more extreme than what we've seen in the past. It really is a planning issue. I will tell you, as I thought, we've just come off our strategic planning. As we think in the future, we are going to make two adjustments. One is, I'm highly confident we're gonna continue to grow in the coming years. We are gonna carry a little bit of insurance, and that will be either through people or inventory or both. That'll be the adjustment we'll make moving forward. To be quite honest, we weren't in the quite the ready position when the market hit, partly because we didn't know that it was going to go that far.

Speaker #1: I will tell you, as I've thought, we've just come off our strategic planning. As we think in the future, we are going to do make two adjustments.

Speaker #1: One is because I'm highly confident we're going to continue to grow in the coming years. So we are going to carry a little bit of insurance and that will be either through people or inventory or both.

Sean Gadd: We are gonna carry a little bit of insurance, and that will be either through people or inventory or both. That'll be the adjustment we'll make moving forward. To be quite honest, we weren't in the quite the ready position when the market hit, partly because we didn't know that it was going to go that far.

Speaker #1: So that'll be the adjustment we'll make moving forward. And to be quite honest, we weren't in the quite the ready position when the market hit partly because we didn't know there was going to go that far.

Speaker #1: So we thought to go the traditional ramp-up as it had in the past. And quite honestly, it came much quicker than we thought. So it's a planning issue.

Sean Gadd: We thought it'd go to the traditional ramp-up as it had in the past, quite honestly, it came much quicker than we thought. It's a planning issue.

Speaker #6: Fair enough. Second question is, I think in the deck you have the kind of old $750 million sales, $160 million EBITDA. Up from today, I got at the midpoint, that's a 32% EBITDA margin.

W. Andrew Carter: Fair enough. Second question is, I think in the deck you have the old $750 sales, $160 EBITDA up from today. I got at the midpoint, that's a 32% EBITDA margin. Just to confirm today with the commercial initiatives that you have in place, essentially you have all the resources in hand. Right now there's no step change in SG&A or other investments such that you should still be planning on that 32% incremental from here. Thanks.

Andrew Carter: Fair enough. Second question is, I think in the deck you have the old $750 sales, $160 EBITDA up from today. I got at the midpoint, that's a 32% EBITDA margin. Just to confirm today with the commercial initiatives that you have in place, essentially you have all the resources in hand. Right now there's no step change in SG&A or other investments such that you should still be planning on that 32% incremental from here. Thanks.

Speaker #6: So, just to confirm, today with the kind of commercial initiatives that you have in place, essentially you have all the resources in hand right now.

Speaker #6: There's no step change in SG&A or other investments such that it's kind of you should still be planning on that 32% incremental from here.

Speaker #6: Thanks.

Speaker #1: Yeah, I think the strategic model that we outlined, what is it almost two years ago, I think is still very much intact, right? I think we are very well on our track to delivering the strategic part of the equation.

Sean Gadd: Yeah. I think the strategic model that we outlined, what is it? Almost two years ago, I think is still very much intact, right? I think we are very well on track to delivering the strategic part of the equation. Obviously, the market since then has been unstable, as a matter of fact, slightly going backwards. None of the assumptions have changed significantly, other than the contribution towards that model is more skewed towards the execution of the strategy rather than a snapback in the market.

Speaker #1: Obviously, the market since then has been stable, as a matter of fact, slightly going backwards. But none of the assumptions have changed significantly other than the contribution towards that model is more skewed towards the exclusion of the strategy rather than a snapback in the market.

Speaker #6: Got it. Thanks. I'll pass it on.

W. Andrew Carter: Got it. Thanks. I'll pass it on.

Andrew Carter: Got it. Thanks. I'll pass it on.

Speaker #1: Thanks, Andrew.

Sean Gadd: Thanks, Andrew.

Speaker #2: Our next question comes from Jackson Schroeder with Craig Howlem. Please go ahead.

Operator 3: Our next question comes from Jackson Schroeder with Craig-Hallum. Please go ahead.

Operator: Our next question comes from Jackson Schroeder with Craig-Hallum. Please go ahead.

Speaker #7: Hi, sorry. This is Jack Schroeder from Greg Palm. I wanted to talk a little bit more about the sand states and the growth out there.

Jackson Schroeder: Hi. Sorry. This is Jackson Schroeder on for Craig-Hallum. I wanted to talk a little bit more about the sand states and the growth out there. If you could kind of give a little bit more on the timeline to that Arizona, California expansion, where you're at with Texas, and what some of the lessons you've had from growth in Florida is gonna inform that.

Speaker #7: If you could kind of give a little bit more on the timeline to that Arizona-California expansion, kind of where you're at with Texas and what's some of the lessons you've had from growth in Florida is going to kind of inform that.

Speaker #1: Yeah, good question. I'll start with Texas. I think my visit in Texas would suggest that the majority of the market is going to be hive similar to what you'd expect in Florida.

Sean Gadd: Yeah. Good question. I'll start with Texas. I think my visit in Texas would suggest that the majority of the market is gonna behave similar to what you'd expect in Florida. In that I do believe our segmentation, targeting, and positioning around the neighborhoods and our raffle approach around neighborhoods is gonna work in Texas. I will tell you that part of the reason I'm expanding into Texas faster is one, we like the early signs in Florida of the work we're doing. Two, quite honestly, we're undermanned in Texas. Texas is a very big market. I see it as a really big opportunity for us, and we've got Dallas covered, and that's about it. We want to get into San Antonio, want to get into Austin, want to get into Houston.

Speaker #1: And that I do believe our segmentation target and positioning around the neighborhoods and our raffle approach around neighborhoods is going to work in Texas.

Speaker #1: I will tell you that part of the reason I'm expanding into Texas faster is one, we like the early signs in Florida of the work we're doing.

Sean Gadd: I will tell you that part of the reason I'm expanding into Texas faster is one, we like the early signs in Florida of the work we're doing. Two, quite honestly, we're undermanned in Texas. Texas is a very big market. I see it as a really big opportunity for us, and we've got Dallas covered, and that's about it. We want to get into San Antonio, want to get into Austin, want to get into Houston.

Speaker #1: Two, quite honestly, we're undermanned in Texas. Texas is a very big market. I see it as a really big opportunity for us. And quite we've got Dallas covered and we that's about it.

Speaker #1: So we want to get into San Antonio. We want to get to Austin. We want to get into Houston. So we are going to man out there.

Sean Gadd: We are gonna man out there, and obviously that'll be self-funded through the programs that we spoke about on the call. The next step for me then is to look out at the West Coast. We have a role open for Vice President of Sand States West. That'll be the first person we want to hire, and once we get that hire, then we'll start to look at Arizona and Southern California. I'm actually in Arizona in two weeks' time to have a look at the market.

Speaker #1: And obviously, that'll be self-funded through the programs that we spoke about on the call. And then once the next step for me then is to look after the look at the West Coast.

Speaker #1: We have an opening—a role open for the Vice President of Sand States West. That'll be the first person we want to hire.

Speaker #1: And once we get that hired, then we'll start to look at Arizona and Southern California. I'm actually in Arizona in two weeks' time, to have a look at the market.

Speaker #7: Perfect. And then I mean, just kind of a follow-up, but as we assume the kind of margin profile geographically, is it all kind of the same or are those slightly different just with how the market's a little different there?

Jackson Schroeder: Perfect. Just kind of a follow-up, as we assume the kind of margin profile geographically, is it all kind of the same, or are those slightly different just with how the market's a little different there?

Sean Gadd: Say again, I apologize. The line was not very clear.

Speaker #3: Say again, I apologize. The line was not very clear.

Speaker #7: Oh, sorry. Is it kind of similar margin profiles across geographies, or are they kind of different with the higher volumes that are produced out there?

Jackson Schroeder: Oh, sorry. Is it kind of similar margin profiles across geographies, or are they kind of different with the higher volumes that are produced out there?

Speaker #3: I would say it's a similar margin profile across the regions.

Sean Gadd: No, I'd say it's a similar margin profile across the regions.

Speaker #7: Perfect. I'll leave it there. Thanks.

Jackson Schroeder: Perfect. I'll leave it there. Thanks.

Speaker #3: Thanks for the question. Thank you.

Sean Gadd: Thanks for the question. Thank you.

Oliver Gloe: Thanks for the question.

Sean Gadd: Thank you.

Speaker #2: Our next question comes from Matthew Bowley with Barclays. Please go ahead.

Operator 3: Our next question comes from Matthew Bouley with Barclays. Please go ahead.

Operator: Our next question comes from Matthew Bouley with Barclays. Please go ahead.

Speaker #8: Good afternoon. You have a link who on for Matt Boulay today. Thanks for taking my question. So first, I guess within you're now high single digits organic growth guidance.

Elaine Ku: Good afternoon. You have Elaine Ku on for Matt Bouley today. Thanks for taking my question. First, I guess within your now high single-digits organic growth guidance, can you just call out which category between pools, liners, covers are you kind of seeing build towards that level? And on the ground, between customer channels, backlog, what's kind of driving that confidence in the sustainability of this high single-digits organic growth trend?

Speaker #8: Can you just call out which category between pools, liners, and covers you're kind of seeing build towards that level? And on the ground, between customer channels and backlog, what's driving your confidence in the sustainability of this high single-digit organic growth trend?

Speaker #1: Thank you for the question. I think from a growth perspective, all our lines are actually growing. So we feel good. We feel good across the board.

Sean Gadd: Thank you for the question. I think, from a growth perspective, all our lines are actually growing. We feel good as across the board. That's auto covers, that's liners, that's in-ground pools. We feel good about our portfolio. The second question around, is this sustainable and is there loading? Our products start with fiberglass. Our fiberglass product line goes pretty much direct to dealers, there's no real inventory or pileup of inventory. Our liners actually go through distribution primarily, and yes, they're flowing right through. We're not seeing anything out of the ordinary from a sort of inventory growth perspective. I'll also say that after speaking to a number of our dealers in the last two or four weeks, their backlogs look sustainable and look kind of normal in terms of the number of weeks in which jobs are out.

Speaker #1: So that's auto covers. That's liners. That's in-ground pools. So we feel good about our portfolio. The second question around is the sustainable and is there a load-in?

Speaker #1: Our products solid fiberglass. Our fiberglass product line goes pretty much direct to dealers. So there's no real inventory or pile-up of inventory. Our liners actually go through distribution primarily.

Sean Gadd: Our liners actually go through distribution primarily, and yes, they're flowing right through. We're not seeing anything out of the ordinary from a sort of inventory growth perspective. I'll also say that after speaking to a number of our dealers in the last two or four weeks, their backlogs look sustainable and look kind of normal in terms of the number of weeks in which jobs are out.

Speaker #1: And yes, they're flowing right through. We're not seeing anything out of the ordinary from an inventory growth perspective. And then I would also say that after speaking to a number of our dealers in the last three or four weeks, their backlogs look sustainable and look kind of normal.

Speaker #1: In terms of the number of weeks in which jobs are out.

Speaker #8: Awesome. Thanks. And secondly, could you elaborate a little bit more on just how some of your variable cost bases trending? Color on maybe your rough materials, freight cost, labor exposure.

Elaine Ku: Awesome. Thanks. Secondly, could you elaborate a little bit more on just how some of your variable cost base is trending? Color on maybe your raw materials, freight cost, and labor exposure. What does that look like now?

Speaker #8: What does that look like now?

Speaker #1: Yeah, I want to say coming out of COVID, we did a thorough job in variabilizing our cost base. I would say total cost base is about 70% variable, 30% fixed cost.

Oliver Gloe: I want to say, coming out of COVID, we did a thorough job in varializing our cost base. I would say total cost base is about 70% variable, 30% fixed cost. We usually don't typically break down raw materials versus cost to the planners. That is different by product category. I want to say coming out of COVID and after some of the restructuring and rightsizing we've done back then, I think that split 70/30 that I just mentioned before, I think has been fairly constant.

Speaker #1: We usually don't typically break down raw materials versus cost in the plant. That is different by product category. But I want to say coming out of COVID and after some of the restructuring and rightsizing we've done back then, I think that split 70-30 that I just mentioned before, I think has been fairly constant.

Speaker #8: Great. Thank you.

Elaine Ku: Great. Thank you.

Speaker #1: Thank you.

Sean Gadd: Thank you.

Speaker #2: Our next question comes from Susan McClary with Goldman Sachs. Please go ahead.

Operator 3: Our next question comes from Susan Maklari with Goldman Sachs. Please go ahead.

Operator: Our next question comes from Susan Maklari with Goldman Sachs. Please go ahead.

Speaker #9: Hi, Sean Oliver. This is Charles Perron in for Susan. Thanks for taking my question.

Charles Perron: Hi, Sean, Oliver. This is Charles Perron in for Susan. Thanks for taking my question.

Speaker #1: Hi, Charles.

Sean Gadd: Hey, Charles.

Operator 2: Hi. First I just wanna talk about the momentum you're seeing from the Sand State strategy, Florida. As you expand in Texas, Arizona, and California, can you talk about the investments needed to support that growth, How does this inform your ability to get SG&A leverage in the back half and in the coming years to support that growth?

Charles Perron: Hi. First I just wanna talk about the momentum you're seeing from the Sand State strategy, Florida. As you expand in Texas, Arizona, and California, can you talk about the investments needed to support that growth, How does this inform your ability to get SG&A leverage in the back half and in the coming years to support that growth?

Speaker #9: Hi. First, I just want to talk about the momentum you're seeing from the sand states strategy—Florida. As you expand in Texas, Arizona, and California, can you talk about the investments needed to support that growth?

Speaker #9: And how does this inform your ability to get SG&E leverage and a back half and in the coming years to support that growth?

Speaker #1: Yeah, I think it's going to require a small investment. And I say small because the marketing campaigns are already a national campaign, so we are pretty much in every market.

Sean Gadd: Yeah, I think, it's gonna require a small investment, and I say small because the marketing campaign's already a national campaign, so we are in pretty much in every market. The local marketing that we do, that we're carrying out in Texas actually is reasonably inexpensive. It's effective but inexpensive. As we expand those geographies, we don't see a lot of marketing spend necessarily going up. When you think about salespeople, which is essentially the majority of the investments with boots on the ground, we are funding that through some optimization programs that Oliver spoke about on the call, which is, we've taken certain functions inside the business and we've eliminated a bit some duplication, and we've been able to free up some dollars that will enable us to fund what we need to do in the southern market.

Speaker #1: The local marketing that we do, that we're carrying out in Texas, actually is reasonably inexpensive. So it's effective, but inexpensive. So as we expand those geographies, we don't see a lot of marketing spend necessarily going up.

Speaker #1: And when you think about salespeople, which is essentially the majority of the investments, which boots on the ground, we are funding that through some optimization programs that Oliver spoke about on the call, which is we've taken certain functions inside the business and we've eliminated a bit some duplication and we've been able to free up some dollars that will enable us to fund what we need to do in the southern market.

Sean Gadd: When you think about salespeople, which is essentially the majority of the investments with boots on the ground, we are funding that through some optimization programs that Oliver spoke about on the call, which is, we've taken certain functions inside the business and we've eliminated a bit some duplication, and we've been able to free up some dollars that will enable us to fund what we need to do in the southern market.

Speaker #1: So I would not expect SG&A as a percentage to go up necessarily because it should all be self-funded. Either through volume and/or our program that we just spoke about.

Sean Gadd: I would not expect SG&A as a percentage to go up necessarily, because it should all be self-funded either through volume and/or our program that I just spoke about.

Speaker #9: And then, Charles, let

Charles Perron: Charles, let me add the other side of the equation, the CapEx investments. You've heard us talk about an additional $10 million between this year and last year to build those molds for those models that resonate well in the Sand States. These are smaller, rectangular, feature-rich models, as well as we've taken some dollars to debottleneck and optimize the flow through our Sand State sites, especially in Florida and Oklahoma.

Speaker #3: me add the other side of the equation that the CapEx investments you've heard us talk about in additional $10 million between this year and last year, to build those molds for those models that resonate well in the sand states.

Speaker #3: These are smaller, rectangular, feature-rich models. As well as we've taken some dollars to debottleneck and optimize the flow through our sand state sites, especially in Florida and Oklahoma.

Speaker #9: Got it. No, that's helpful color. And then my second one is, you mentioned that you're going to end the year with net leverage below two times.

Charles Perron: Got it. No, that's helpful color. My second one is You mentioned that you're going to end the year with net leverage below 2 times. How do you think about the ability and willingness to do more M&A in this environment, considering the weaker macro backdrop that we're seeing these days? When you think about your expansion, especially in those states, Texas, Arizona, California, do you see maybe M&A as one way to help support and your growth and your capacity across your network? More broadly, how do you think about the ability to or willingness to do more deals in this market?

Speaker #9: How do you think about the ability and willingness to do more M&A in this environment, considering the weaker macro backdrop that we're seeing these days?

Speaker #9: And when you think about your expansion, especially in those states, Texas, Arizona, California, do you see maybe M&A as one way to help support and your growth and your capacity across your network, or more broadly, how do you think about the ability to or willingness to do more deals in this market?

Speaker #1: Yeah, in terms of M&A, I mean, the reality is we are continuously and always looking for opportunities. And we've got sort of a background of one a year.

Sean Gadd: Yeah. In terms of M&A, the reality is we are continuously and always looking for opportunities. We've got sort of a background of one a year. We are working with those, sort of looking at a number of deals, none of which are at a point where we're ready to pull the trigger on, but we certainly are doing the work to see what's out there. In terms of the Sand States and whether we think vertically integrating or doing something along those lines is necessary, it is too early to tell because, quite honestly, we're growing. The first few things that we're trying to do seem to be showing some signs of life. We want to play that out for a little bit of time before we consider doing anything else.

Speaker #1: And so we are working with a sort of looking at a… And so, a number of deals, none of which are at a point where we're ready to pull the trigger on, but we certainly are doing the work to see what's out there.

Speaker #1: In terms of the sand states and whether we think vertically integrating or doing something along those lines is necessary, it's probably no—not probable.

Sean Gadd: In terms of the Sand States and whether we think vertically integrating or doing something along those lines is necessary, it is too early to tell because, quite honestly, we're growing. The first few things that we're trying to do seem to be showing some signs of life. We want to play that out for a little bit of time before we consider doing anything else.

Speaker #1: It is too early to tell because quite honestly, we're growing. The first few things that we're trying to do seem to be showing some signs of life.

Speaker #1: And so we want to play that out for a little bit of time. Before we consider doing anything else.

Speaker #3: And maybe let me ask one more sentence from a net leverage ratio perspective. I mean, with a year-end target of below two, which is very realistic, that gives us a lot of dry powder to execute on our capital allocation policy, which one arm is M&A, but it's not the only arm.

Oliver Gloe: Maybe let me ask one more thing from a net debt leverage ratio perspective. With a year-end target of below two, which is very realistic, that gives us a lot of dry powder to execute on our capital allocation policy, which one arm is M&A, but it's not the only arm.

Speaker #9: Got it. Thank you for the color, guys, and good luck for next quarter.

Charles Perron: Got it. Thank you for the color, guys, and good luck for next quarter.

Speaker #1: Thank you.

Sean Gadd: Thank you.

Oliver Gloe: Thank you.

Speaker #2: Our next question comes from Sean Calnan with Bank of America. Please go ahead.

Operator 3: Our next question comes from Shaun Calnan with Bank of America. Please go ahead.

Operator: Our next question comes from Shaun Calnan with Bank of America. Please go ahead.

Speaker #10: Hi guys. Thank you for taking my questions. The organic growth and in-ground pool sales are obviously very impressive in the quarter. Are you able to break out the price versus volume there?

Shaun Calnan: Hi, guys. Thank you for taking my questions. The organic growth in in-ground pool sales, obviously very impressive in the quarter. Are you able to break out the price versus volume there? Are you starting to see an acceleration in the fiberglass share gains, just versus the overall in-ground pool market?

Speaker #10: And are you starting to see an acceleration in the fiberglass share gains just versus the overall in-ground pool market?

Speaker #1: Yeah, let me so if you take apart the 14% reported growth, it's 10 organic of which 3 was price, right? So the majority sits in volume and with that share.

Oliver Gloe: Yeah. If you take apart the 14% reported growth, it is 10 organic, of which three was price, right? The majority sits in volume and with that, share. Across the product lines, it is driven by in-ground pools, and within that, it is fiberglass pools. That is where the growth is coming from, and this is where we execute our strategy.

Speaker #1: And across the product lines, it's driven by in-ground pools and within that, it's fiberglass pools. So that's where the growth is coming from. And this is where we execute our strategy.

Speaker #10: Okay. And then if I back out the 2.8 million one-time expense, it looks like gross margin was slightly down year over year. Do you think you need to increase prices further this year in order to offset the input cost inflation you're seeing?

Shaun Calnan: Okay. Then if I back out the $2.8 million one-time expense, it looks like gross margin was slightly down year-over-year. Do you think you need to increase prices further this year in order to offset the input cost inflation you're seeing?

Speaker #1: So I think what you would see adding back the what we call also as an incremental ramp-up expense and you adjust for the adverse impact of the freedom addition, you should see a gross margin which is slightly up.

Oliver Gloe: I think what you would see adding back the, what we call also as an incremental ramp-up expense, and you adjust for the adverse impact of the Freedom addition, you should see a gross margin which is slightly up. To answer your question going forward, yeah, I think some of the impacts from the Middle East, especially on the commodity side, they are now going to start coming into the P&L towards mid or late Q3. This is where in my prepared remarks, I mentioned we have mitigation strategies in place. Earlier this week, we have announced a price for our vinyl liners. Price is one of the mitigation strategies, not the only one. Volume and cost contribute as well. Yeah, absolutely. I think there will be additional price that is coming into Q3 based on the announcements earlier this week.

Speaker #1: To answer your question going forward, yeah, I think some of the impacts from the Middle East, especially on the commodity side, they're not going to start coming into the P&L towards mid or late Q3.

Speaker #1: This is where in my prepared remarks, I mentioned we have mitigation strategies in place earlier this week. We have announced the price for our vinyl liners.

Oliver Gloe: This is where in my prepared remarks, I mentioned we have mitigation strategies in place. Earlier this week, we have announced a price for our vinyl liners. Price is one of the mitigation strategies, not the only one. Volume and cost contribute as well. Yeah, absolutely. I think there will be additional price that is coming into Q3 based on the announcements earlier this week.

Speaker #1: Price is one of the mitigation strategies, not the only one. Volume and cost contribute as well. But yeah, absolutely. I think there will be an additional there will be additional price that is coming into Q3 based on the announcements earlier this week.

Speaker #10: Okay, great. Thank you.

Shaun Calnan: Okay, great. Thank you.

Speaker #2: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Operator 3: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Speaker #1: Thank you. I just wanted to say once again, thank you for joining us. Feel very good about where the business is at. Very excited about the year.

Sean Gadd: Thank you. I just wanted to say, once again, thank you for joining us. Feel very good about where the business is at. Very excited about the year. We're happy to see the progress that's getting made, both from the operational side, as Oliver discussed, in terms of the ramp-up, because it did come quicker than we thought. Also, obviously from the demand side. I think the sales organization and commercial organization is starting to come together. I think the business is running rather well. With that, I just want to conclude. I want to thank everybody, and we'll speak to you guys all soon. Thank you.

Speaker #1: We're happy to see the progress that's getting made both from the operational side as Oliver discussed in terms of a ramp-up because it did come quicker than we thought.

Speaker #1: But also, obviously, from the demand side, I think the sales organization and commercial organization is starting to come together. I think the business is running rather well.

Speaker #1: So with that, I just want to conclude. I want to thank everybody and we'll speak to you all soon. Thank you.

Operator 3: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Q2 2026 Latham Group Inc Earnings Call

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