Breaking Down Latham Group, Inc. (SWIM) Financial Health: Key Insights for Investors

You're looking at Latham Group, Inc. (SWIM) and wondering if the pool market's choppy waters are finally settling, and honestly, the Q3 2025 numbers show a classic mixed signal for investors. The company clearly outperformed the broader U.S. in-ground pool market, delivering net sales of $161.9 million for the quarter, a solid 7.6% increase year-over-year, and pushing year-to-date net income up a significant 60.3% to $18.1 million. But here's the quick math: the reported earnings per diluted share (EPS) of just $0.07 missed the analyst consensus of $0.10, which is why the stock saw a slight dip post-earnings. Still, management is guiding for a full-year 2025 net sales range of $540 million to $550 million, plus they've improved their net debt leverage ratio to 2.3 from 3.0 in the prior quarter, which defintely shows good capital discipline. So, the question isn't just about growth-it's about how they're managing profitability and debt while navigating a challenging demand environment, especially in key areas like Texas and California.

Revenue Analysis

You're looking at Latham Group, Inc. (SWIM) and wondering if the recent revenue growth is a flash in the pan or a sustainable trend. The direct takeaway is that while the overall pool market is flat to slightly down, Latham Group, Inc. is defintely gaining market share, projecting full-year 2025 Net Sales of up to $550 million, driven by strong performance in its higher-margin product lines.

For the full fiscal year 2025, Latham Group, Inc. has narrowed its net sales guidance to a range of $540 million to $550 million. This reflects a growth rate of approximately 7% at the midpoint compared to the prior year, a solid gain considering the broader market headwinds like higher interest rates. In the third quarter of 2025 alone, net sales hit $161.9 million, marking a year-over-year increase of 7.6% from $150.5 million in Q3 2024.

Breaking Down the Primary Revenue Streams

Latham Group, Inc.'s revenue is concentrated in three main product categories, with a clear strategic pivot toward fiberglass and automatic covers. Geographically, the business is heavily weighted toward the U.S. market, which accounts for about 80% of total sales.

Here's the quick math on where the revenue comes from, based on the most recent structural breakdown (FY'24 figures are the best proxy for the current segment contribution):

• In-Ground Swimming Pools: 51% of net sales, including fiberglass and packaged pools.
• Covers: 26% of net sales, including winter safety covers and automatic safety covers.
• Liners: 23% of net sales, including new and replacement vinyl liners.

The company's strategy is paying off in the fastest-growing segments. For the third quarter of 2025, Pool Cover Sales soared by 15% year-over-year, and Liner Sales increased by 13%. Even In-ground Pool Sales, which include the more cyclical packaged pools, managed a 1% increase, showing resilience.

The Fiberglass and Autocover Shift

The most significant change in Latham Group, Inc.'s revenue composition is the increasing dominance of fiberglass pools. This is a deliberate strategic move because fiberglass is faster to install and generally higher-margin than traditional vinyl-lined pools. The company anticipates that fiberglass pools will represent about 75% of its total in-ground pool sales for 2025.

This focus on fiberglass and autocovers is what's helping them outpace the overall market. To be fair, the company is still navigating tariff headwinds, which management quantified at 350-400 basis points (around $20 million) before mitigation efforts. But still, the strong growth in the autocover segment-bolstered by acquisitions like Coverstar-is a key driver for margin expansion, which is critical for profitability. You can read more about the full financial picture in Breaking Down Latham Group, Inc. (SWIM) Financial Health: Key Insights for Investors.

Here is a snapshot of the Q3 2025 year-over-year growth by product line:

What this estimate hides is the potential for a quicker-than-expected recovery in the new pool construction market, which could push the In-ground Pool Sales segment well past that 1% growth. But for now, the recurring revenue from liners and covers gives the business a solid, less-cyclical base.

Profitability Metrics

You're looking for a clear picture of Latham Group, Inc. (SWIM)'s financial engine, and the short answer is that the company is demonstrating a sharp, margin-driven turnaround, even with modest top-line growth. While the Trailing Twelve Months (TTM) net margin still shows a loss, the recent quarterly performance is the real story, pointing to a much healthier cost structure.

For the full fiscal year 2025, Latham Group, Inc. is guiding for Net Sales between $540 million and $550 million, with Adjusted EBITDA projected to land between $92 million and $98 million. This implies an Adjusted EBITDA margin of approximately 17.43% at the midpoint, a substantial improvement driven by strategic operational shifts. Here's the quick math on their key profitability metrics based on the latest 2025 data:

Gross Margin Trends and Operational Efficiency

Latham Group, Inc.'s Gross Margin is defintely a bright spot, showing a clear competitive advantage over peers in the pool supply chain. The Q3 2025 Gross Margin hit 35.4%, significantly outpacing Pool Corporation's (POOL) comparable margin of 29.58%. This isn't accidental; it's a direct result of management's focus on operational efficiency and product mix.

The gross margin expansion is a crucial trend, driven by three concrete actions:

• Lean manufacturing and value engineering initiatives.
• Accretive acquisitions, like Coverstar, which contribute to higher margins.
• A strategic shift toward higher-margin fiberglass pools and autocovers.

The 9-month 2025 Gross Profit was $154.2 million, up 16.5% year-over-year, which shows that the cost-saving and margin-accretive strategies are working to outpace sales growth. This is how you generate leverage in a challenging market.

Net Profit: The Turnaround Story

The Net Profit Margin tells a classic turnaround story. While the TTM Net Margin is still negative at -2.54%, the company successfully flipped to positive net income in the third quarter. For Q3 2025, Latham Group, Inc. reported Net Income of $8.1 million, resulting in a Net Income Margin of 5.0%. For the first nine months of 2025, Net Income was $18.1 million, with a margin of 4.1%.

To be fair, a 5.0% net margin is still below the top-tier specialty contractor net margins of 6.9% to 8.5%, but the trajectory is what matters. The drag on the operating profit is primarily the continued investment in Selling, General, and Administrative (SG&A) expenses, which rose to support expansion into new markets like the 'Sand States' (Florida, Texas, Arizona, and California) and new ERP infrastructure. This is a conscious trade-off: sacrificing some near-term operating profit for long-term market share gains. For more context on the company's long-term vision, you can review their Mission Statement, Vision, & Core Values of Latham Group, Inc. (SWIM).

Next Step: Review the capital expenditure guidance of $22 million to $24 million for FY 2025 to ensure these investments are directly tied to the margin-boosting operational efficiencies, not just maintenance. Owner: Portfolio Manager.

Debt vs. Equity Structure

You're looking at Latham Group, Inc. (SWIM)'s balance sheet and wondering if their growth is fueled by smart borrowing or too much risk. The quick takeaway is that Latham Group, Inc. is managing a moderate debt load, which is typical for a capital-intensive manufacturer, and they've been actively working to deleverage (reduce debt) in 2025. This is defintely a positive sign in a high-interest-rate environment.

As of the third quarter of fiscal year 2025, Latham Group, Inc.'s Total Debt stood at approximately $281.1 million. This figure represents the total financial obligation, but the real story is in the mix. Looking at the March 2025 balance sheet, the company had roughly $83.0 million in liabilities due within 12 months, which includes short-term debt, and a substantial $360.4 million in liabilities due beyond that, encompassing the bulk of their long-term debt. Here's the quick math: the long-term debt is the primary financing tool for their manufacturing footprint and strategic acquisitions.

The crucial metric here is the Debt-to-Equity (D/E) ratio, which tells you how much debt a company is using to finance its assets compared to the value of its shareholders' equity. Latham Group, Inc.'s D/E ratio in the third quarter of 2025 was approximately 0.77. This means for every dollar of equity, the company has 77 cents of debt. To be fair, this is a moderate level of leverage for a company in the industrials sector, which often requires significant capital expenditure (CapEx) for facilities and equipment.

• D/E Ratio: 0.77 (Q3 2025)
• Competitor D/E: 0.76 (Pool Corporation)
• Net Debt Leverage: Improved to 2.3x (Q3 2025)

Comparing this to a major competitor like Pool Corporation (POOL), whose D/E ratio was around 0.76 in late 2025, Latham Group, Inc. is right in line with industry standards. This suggests their reliance on debt is not an outlier, but a strategic choice to fund growth and market share gains, particularly in the fiberglass pool segment. The improvement in their Net Debt Leverage Ratio, dropping from 3.0x to 2.3x in the second half of 2025, is a significant sign of financial discipline.

Regarding recent activity, Latham Group, Inc. has focused on debt reduction. They repaid approximately $21 million of debt in the year ended December 31, 2024, and continued to manage their revolving credit facility in 2025. They are balancing debt financing against equity funding by relying on internally generated cash flow to pay down debt rather than issuing new equity, which would dilute existing shareholders. Still, with elevated interest rates, analysts flag debt servicing and refinancing risk as a top concern for future earnings growth. This is a risk you need to monitor. You can get more context on the ownership structure by Exploring Latham Group, Inc. (SWIM) Investor Profile: Who's Buying and Why?

What this estimate hides is the potential impact of a prolonged housing market slowdown on their ability to generate the cash flow needed for continued debt paydown. If operating cash flow falters, the high leverage could limit their flexibility for future investments or acquisitions. So, the balance is currently stable, but it rests heavily on the company's ability to execute its margin improvement and growth strategy in a soft demand environment.

Liquidity and Solvency

You need to know if Latham Group, Inc. (SWIM) can cover its near-term obligations, and the quick answer is yes, their liquidity position is defintely strong, anchored by solid ratios and improving operating cash flow.

As of the third quarter ending September 27, 2025, Latham Group, Inc. reported total current assets of approximately $240.9 million against total current liabilities of $99.2 million. This provides a healthy cushion against short-term financial pressure, especially as the company navigates a volatile housing and pool market.

Current and Quick Ratios: A Strong Buffer

The company's liquidity ratios show a business that can comfortably meet its obligations without immediately selling off inventory or long-term assets. A ratio above 1.0 is generally good; Latham Group, Inc. is well above that benchmark.

• Current Ratio: 2.43
• Quick Ratio (Acid-Test Ratio): 1.72

A Current Ratio of 2.43 means that for every dollar of current liability, Latham Group, Inc. has $2.43 in current assets to cover it. The Quick Ratio, which strips out inventory ($70.3 million as of Q3 2025) because it's the least liquid current asset, remains high at 1.72. This is a very strong indicator of immediate liquidity, suggesting the company isn't relying on product sales to pay its bills.

Working Capital and Cash Flow Trends

Working capital-the difference between current assets and current liabilities-is a key measure of operational efficiency. For Latham Group, Inc., the working capital stood at approximately $141.7 million as of Q3 2025. This substantial figure provides the necessary capital to fund day-to-day operations and manage the seasonal nature of the pool business.

Here's the quick math on the cash flow story for the first nine months of 2025:

The $40.1 million in net cash provided by operating activities for the first nine months of 2025 is the most important number here. It shows the core pool and cover business is a net cash generator, which is exactly what you want to see. The Investing Cash Flow outflow of $16.2 million is mainly for CapEx, which is a good use of cash if it's funding strategic growth initiatives like fiberglass pool production and new technology.

Near-Term Risks and Strengths

The primary strength is the company's high liquidity and cash-generating operations, which have allowed the net debt leverage ratio to improve to 2.3 by the end of Q3 2025, down from 3.0 in Q2 2025. That's a great deleveraging move. The main risk is the cyclical nature of the pool market; a prolonged downturn in new pool starts could pressure sales and, consequently, future cash flow. Still, the current balance sheet provides a solid buffer to weather any near-term market headwinds. For a deeper dive into the company's strategic position, check out Breaking Down Latham Group, Inc. (SWIM) Financial Health: Key Insights for Investors.

Action: Monitor the Q4 2025 report for full-year operating cash flow and any changes in the inventory balance, as a buildup could signal slowing demand.

Valuation Analysis

You want to know if Latham Group, Inc. (SWIM) is a buy, a hold, or a sell right now. The quick answer is that Wall Street analysts have a mixed view, landing on a consensus of Hold, but the underlying valuation metrics suggest the stock is trading at a premium on a forward-looking earnings basis, while potentially being undervalued against some price targets.

As of November 2025, the stock is trading around $6.14 per share. The analyst community, based on the last 12 months of research from 5 firms, has an average price target of $7.95. Here's the quick math: that target implies an upside of about 29.48% from the current price, which definitely points to an opportunity, but you must dig into the ratios to see the risk.

Key Valuation Multiples (2025 Fiscal Year)

When you look at the core valuation ratios, Latham Group, Inc. presents a complex picture, which is typical for a company in a turnaround or recovery phase. Since the company is currently not profitable on a GAAP basis, the Trailing Twelve Months (TTM) Price-to-Earnings (P/E) ratio is not meaningful, but the Forward P/E is what matters for future-focused investors.

• Forward Price-to-Earnings (P/E): The Non-GAAP forward P/E is high at 59.33. This tells you investors are pricing in significant profit growth for the next year, so the stock is not cheap on expected earnings.
• Price-to-Book (P/B): The TTM P/B ratio is around 2.07. This is a reasonable multiple for a manufacturing business and suggests the stock is trading at a little over twice its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM EV/EBITDA stands at 17.54. This is a bit rich for a construction-related company, honestly. It suggests the market is assigning a premium to the company's operating cash flow (EBITDA) relative to its total value, including debt.

Stock Trends and Analyst Sentiment

The stock price trend over the last two years shows extreme volatility. The stock price fell by -23.10% in 2023, then surged by a massive 178.40% in 2024, only to dip slightly by -1.84% in 2025 through November. This kind of movement shows that the market is defintely trying to figure out the company's long-term earnings power following the post-pandemic slowdown in residential construction.

The 52-week trading range of $4.56 to $8.46 highlights the significant risk and opportunity baked into the price. The current price is closer to the low end of that range, which is why some analysts see an upside. The analyst consensus is a Hold, which breaks down into 2 Buy ratings, 1 Hold rating, and 2 Sell ratings-a truly divided house.

Latham Group, Inc. does not pay a dividend. The Trailing Twelve Months (TTM) dividend yield is 0%, and the payout ratio is 0.00%. This is not a stock for income-focused investors; it is purely a growth and turnaround play. The high forward P/E and the divided analyst consensus tell you the market is betting on the management team's ability to execute on margin expansion, which you can read more about in Breaking Down Latham Group, Inc. (SWIM) Financial Health: Key Insights for Investors.

The bottom line is this: the stock is likely undervalued if Latham Group, Inc. hits its aggressive profit growth forecasts, but it is priced for perfection with that 59.33 forward P/E. If you are an investor, your next step is to see if the company's cost-cutting and fiberglass pool strategy can justify that premium.

Risk Factors

You're looking at Latham Group, Inc. (SWIM) and seeing a company that's executing well on its strategic shift toward fiberglass, but you need to be a realist about the headwinds. The biggest takeaway is that while management is successfully driving margin expansion through operational discipline, the company is still operating in a soft market with significant financial leverage. You must watch the debt and the underlying consumer demand.

The external risks are clear. The overall U.S. in-ground pool market is expected to be flat to slightly down in 2025 compared to 2024, a direct result of higher interest rates and persistent consumer uncertainty. Since a pool is a major discretionary purchase, this environment is a significant volume headwind. This market softness is particularly noticeable in key regions like Texas and California.

On the internal side, the financial and operational risks are more nuanced. The high debt load remains a material constraint. While the net debt leverage ratio improved to 2.3x by the end of Q3 2025, the total debt of $281.1 million still limits flexibility for major new investments or acquisitions. Here's the quick math: servicing that debt, especially with elevated rates, eats into future earnings growth.

We also see a fragile margin structure despite the recent improvements. The Q1 2025 operating margin was a negative -4.4%, underscoring how quickly costs can erode profitability. Plus, the company is battling raw material price volatility and tariff uncertainty. Management has had to implement targeted price increases to mitigate these costs, but honestly, that's a tightrope walk-you risk alienating price-sensitive customers, especially when the market is soft.

Finally, the rising Selling, General, and Administrative (SG&A) expenses are a risk. SG&A costs rose 16.6% in Q1 2025 as management ramps up marketing and product expansion, particularly in the 'Sand States' (Florida, Texas, Arizona, California). The strategic bet is that these costs will drive future market share gains, but if consumer conversion remains subdued, those cost increases won't immediately translate into the sales needed to improve the net margin. It's a classic execution risk.

The good news is Latham Group, Inc. (SWIM) isn't just sitting still; they have clear mitigation strategies. They are using lean manufacturing and value engineering to drive internal cost efficiencies, which helped their Q3 2025 Adjusted EBITDA margin reach 23.7%. Their primary strategic defense is accelerating the shift to fiberglass pools, which are higher-margin and expected to capture another 1% of the total U.S. in-ground pool market in 2025, reaching approximately 24% of total sales.

The company is defintely focused on what they can control, which is smart. Mitigation plans include:

• Strategic pre-purchasing of raw materials to offset tariff uncertainty.
• Aggressive expansion into Master Planned Communities (MPCs) in Florida and other Sand States.
• Targeting a full-year 2025 Adjusted EBITDA in the range of $92 million to $98 million, showing confidence in their operational improvements.

Growth Opportunities

You're looking at Latham Group, Inc. (SWIM) and asking the right question: can they sustain growth when the overall pool market is flat? The short answer is yes, because their growth is driven by market share gains, not just market expansion. Management has narrowed its full-year 2025 guidance, but it still points to a significant outperformance against a challenging backdrop.

For fiscal year 2025, the company expects Net Sales to be in the range of $540 million to $550 million, which represents a 7% year-over-year growth at the midpoint. More importantly, they project Adjusted EBITDA to land between $92 million and $98 million, a strong 19% growth at the midpoint. Here's the quick math: they are growing profit much faster than revenue, which tells you the focus on efficiency is working.

Strategic Drivers and Financial Projections

Latham Group, Inc.'s strategy isn't about waiting for the housing market to rebound; it's about converting customers to fiberglass and autocovers. That's a defintely more reliable path. This focus is why the consensus earnings estimate for the full year 2025 is a positive $0.08 per share. This turnaround is fueled by three core initiatives:

• Fiberglass Adoption: Fiberglass pools are projected to gain another 1% of the total U.S. in-ground pool market in 2025, reaching approximately 24% of total U.S. in-ground pool sales. This is their bread and butter.
• Sand States Expansion: They are aggressively targeting high-growth markets like Florida, Texas, Arizona, and California. This includes new dealer partnerships and a focus on Master Planned Communities (MPCs). Florida sales have already increased at a high single-digit rate year-to-date.
• Accretive Acquisitions: The integration of Coverstar businesses, like Coverstar Central, continues to contribute to both incremental sales and margin expansion.

Competitive Edge and Operational Efficiency

The company's ability to grow margins in a flat market is a clear sign of a structural competitive advantage, not just a cyclical one. They've been working on a few things that are paying off now, like lean manufacturing and value engineering initiatives. For example, their gross margin expanded by 300 basis points year-over-year in the third quarter of 2025, reaching 35.4%. That's real operational excellence.

Plus, they're using technology to lock in sales. Their proprietary AI-powered measuring tool, 'Measure by Latham,' helps increase sales of high-margin products like liners and safety covers. This kind of technological innovation, coupled with the industry's largest manufacturing footprint, gives them a distinct edge over smaller competitors. If you want to dive deeper into who is buying into this strategy, you should check out Exploring Latham Group, Inc. (SWIM) Investor Profile: Who's Buying and Why?

The long-term vision is even more compelling: when new U.S. pool starts return to the 2019 level of 78,000 per year, Latham Group, Inc. projects net sales of about $750 million and Adjusted EBITDA of around $160 million. That's the leverage of their new business model.

Here's a snapshot of the 2025 financial outlook:

What this estimate hides is the risk from continued consumer uncertainty, still, the company is executing on its plan and gaining market share. Your next step should be to monitor their Sand States expansion success in the Q4 2025 report.