Latham Group, Inc. (SWIM): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Latham Group's business segments as of late 2025, and honestly, it's a story of a market leader outperforming a flat industry. Here's the quick math: Fiberglass Pools is the clear Star, driving growth with an estimated 50% market share, while the Pool Liners segment acts as a reliable Cash Cow, posting Q3 sales up 13% thanks to that huge installed base. The real question is how they fund the high-growth Question Marks, like Automatic Safety Covers seeing sales jump 15%, which require substantial CapEx to secure their future. Let's dive into the details of where Latham Group is winning, milking, and defintely needing to invest below.

Background of Latham Group, Inc. (SWIM)

You're looking at Latham Group, Inc. (SWIM), which stands as the largest producer and marketer of in-ground residential swimming pools across North America, Australia, and New Zealand. The company really benefits from having a dominant market share in fiberglass pools, plus it pulls in recurring revenue from its liners and covers business.

For the first nine months of fiscal 2025, Latham Group posted net sales of $446.0 million, marking a 5.9% increase compared to the same period last year. Honestly, the profitability side has seen a much sharper jump; net income for those nine months reached $18.1 million, which is up a solid 60.3% year-over-year.

Looking specifically at the third quarter of 2025, net sales were $161.9 million, showing a 7.6% increase over the prior year's third quarter. This growth included an organic component of 4.7%, which is quite good when management noted the overall U.S. in-ground pool market was expected to be flat to slightly down for 2025.

The operational efficiency is definitely improving, which is key for a company working through economic uncertainty. In Q3 2025, the gross margin expanded by 300 basis points to 35.4%, and the adjusted EBITDA margin hit 23.7%, a 390 basis point improvement. This was supported by strong performance in the covers segment, with sales up 15%, and liners, up 13%.

Management has since narrowed its full-year 2025 guidance, now targeting net sales between $540 million and $550 million at the midpoint, representing 7% growth. The adjusted EBITDA guidance is set between $92 million and $98 million, implying 19% growth at the midpoint. Still, analysts note the company is currently unprofitable but is forecast to turn profitable within the next three years.

The strategic focus remains on fiberglass pools, which are projected to capture about 24% of the total U.S. in-ground pool sales for 2025, gaining another 1% of market share. The balance sheet is also showing some positive movement; as of the end of Q3 2025, the net debt leverage ratio improved to 2.3 from 3.0 in the second quarter, with cash on hand at $70.5 million.

Latham Group, Inc. (SWIM) - BCG Matrix: Stars

The Fiberglass Pools segment clearly occupies the Star quadrant for Latham Group, Inc. (SWIM) as of 2025. Stars are defined by having a high market share within a market segment that is experiencing high growth. This segment is the leader in the business but requires significant cash investment for promotion and placement to maintain its leading position and convert future growth into Cash Cow status when the market growth inevitably slows.

The premise for this categorization is the segment's strong positioning. Fiberglass Pools are considered to hold an estimated 50% market share in the fastest-growing in-ground pool sub-segment. This internal dominance, coupled with the overall market trend, solidifies its Star status. The commitment to this segment is evident in Latham Group, Inc.'s internal sales mix, where fiberglass is on track to represent approximately 75% of the Company's full-year 2025 in-ground pool sales, driving organic growth.

The broader market context supports the high-growth narrative. While the overall U.S. in-ground pool market saw a significant decline of approximately 15% in 2024 starts, Latham Group, Inc.'s fiberglass segment continued to gain ground. The segment is gaining share, expected to hit 24% of total U.S. in-ground pool sales in 2025, following its gain to 24% in 2024 from 23% in 2023. This indicates that the fiberglass category is growing faster than the overall market, which is why Latham Group, Inc.'s in-ground pool sales only fell by a comparatively less painful 13% in 2024.

To sustain this leadership and capture future value, the strategy centers on continued investment, particularly in high-potential geographies. This involves continued investment in Sand States (Florida/Texas) to drive adoption in high-potential markets. In 2024, these Sand States accounted for two-thirds of U.S. new in-ground pool starts, yet only represented approximately 17% of Latham Group, Inc.'s fiberglass pool sales, up from 15% in 2023. This gap represents the clear opportunity for future investment and growth.

The financial commitment required to maintain this Star status is reflected in the capital expenditure guidance for 2025. The Company anticipates capital expenditures to be approximately $30 million at the midpoint for the full year 2025, which is an increase of $10 million over 2024 levels, specifically due to planned initiatives to drive fiberglass adoption in the Sand States. This investment is intended to secure the future transition to Cash Cow status.

Here's a look at the segment's performance trajectory:

• Fiberglass pools represented 75% of Latham Group, Inc.'s in-ground pool sales in 2024.
• Latham Group, Inc. is maintaining full-year 2025 guidance for 8% net sales growth and 19% Adjusted EBITDA growth at the midpoints.
• In Q2 2025, Adjusted EBITDA margin reached 23.1% of net sales, up from 21.5% in the prior year's second quarter.
• The Company ended Q2 2025 with cash of $26.9 million, while net cash used in operating activities for the first half of 2025 was $10.9 million.
• The Sand States expansion strategy is a key focus area for driving adoption.

To give you a clearer picture of the investment versus current results, here's a comparison of the full-year 2024 results against the 2025 guidance midpoints:

The high investment level, represented by the $10 million increase in capital expenditures, is necessary to ensure the segment maintains its market leadership and converts its high-growth trajectory into sustained, high-margin cash flow as the market matures. If market share is kept, this segment is definitely poised to grow into a Cash Cow.

Latham Group, Inc. (SWIM) - BCG Matrix: Cash Cows

You see the Pool Liners segment operating exactly as a Cash Cow should. For the third quarter of 2025, net sales for this product line increased by approximately 13% year-over-year. This growth is a direct reflection of the stable, recurring nature of the replacement market, which requires less market development spend than new construction. This business unit generates consistent cash flow because it services the established, large installed base of vinyl liner pools across North America, Australia, and New Zealand.

The high-margin revenue stream from this mature installed base is what fuels the entire portfolio. You can see the direct result of this in the company's profitability metrics, even as the overall U.S. in-ground pool market is expected to be flat to slightly below 2024 levels for the full year 2025. Because the market is mature, the need for heavy promotion and placement investment is lower here, allowing the unit to convert revenue efficiently into cash.

The company's vertically integrated manufacturing approach is definitely helping control costs and expand margins, which is the hallmark of a well-managed Cash Cow. For Q3 2025, the Gross Margin expanded by 300 basis points year-over-year, reaching 35.4%. This operational efficiency and scale allowed Gross Profit for the quarter to hit $57.3 million, a 17.7% increase from the prior year's third quarter, even with modest overall industry growth.

Here's a quick look at the Q3 2025 performance that underpins this Cash Cow status:

The financial evidence supporting the Cash Cow designation for this segment includes:

• Liner sales growth of 13% in Q3 2025, outpacing the flat industry.
• Gross Margin reached 35.4% in Q3 2025.
• Gross Profit grew by 17.7% to $57.3 million in Q3 2025.
• Year-to-date Adjusted EBITDA margin reached 20.0% for the first nine months of 2025.
• The segment contributes to the narrowed 2025 net sales guidance of $540 million to $550 million.

Finance: Re-forecast the required maintenance CapEx for Liner production to maintain the 300 basis point margin expansion trend into Q4 2025 by Monday.

Latham Group, Inc. (SWIM) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Packaged Pool Sales, which represent the segment underperforming the fiberglass line, fit this profile. This segment operates within a mature, low-growth portion of the overall flat U.S. pool market. The low relative market share growth of this product line drags on the overall performance metrics for Latham Group, Inc.

The segment requires minimal new capital expenditure, which aligns with the 'Dogs' characteristic of not consuming much cash, but its low relative market share growth prevents it from being a meaningful contributor to top-line expansion. The company is actively shifting focus toward fiberglass, which represented 75% of Latham Group, Inc.'s in-ground pool sales in 2024, up from 73% in 2023.

The broader market context for low growth is evident in the U.S. pool market's projected growth rate for the year 2025.

The underperformance of the non-fiberglass packaged pool segment is contrasted by the company's overall guidance, which anticipates growth driven by the stronger segment.

• Latham Group, Inc. 2025 Net Sales Guidance Midpoint: $550 million (range of $535 million-$565 million).
• Latham Group, Inc. 2025 Adjusted EBITDA Guidance Midpoint: $95 million (range of $90 million-$100 million).
• Latham Group, Inc. Q1 2025 Net Sales: $111.4 million.
• Latham Group, Inc. Q2 2025 Net Sales: $172.6 million.
• U.S. Pool Starts Expectation for 2025: Approximate 2024 levels.

Latham Group, Inc. (SWIM) - BCG Matrix: Question Marks

You're looking at the segments within Latham Group, Inc. (SWIM) that are burning cash now but hold the promise of becoming future market leaders. These are the Question Marks, characterized by high market growth but currently low relative market share for Latham Group, Inc.

Automatic Safety Covers: High growth with sales up 15% in Q3 2025, but market share is still being built via acquisitions.

The momentum in the autocovers category is clear. For the third quarter of 2025, sales for covers showed a year-over-year increase of 15%. This growth is supported by marketing initiatives driving awareness and adoption, alongside the accretive benefit of recent acquisitions, such as the three Coverstar deals. These acquisitions help tighten the grip on the automatic pool cover business.

Sand States Expansion: Significant CapEx investment ($22-$24 million for 2025) to gain share in these high-growth geographic markets.

Latham Group, Inc. is heavily funding its push into the Sand States-Florida, Texas, Arizona, and California-which account for the majority of U.S. in-ground pool installations. The company revised its capital expenditure estimate for 2025 to a range of $22-$24 million. This investment is earmarked for expanding fiberglass production and adding usable space at facilities in Florida and Oklahoma, supporting the Sand States strategy. The initial 2025 CapEx projection was between $27 million and $33 million. The goal is to replicate the 70% fiberglass pool penetration seen in Australia within these regions.

New Product Innovations (e.g., Plunge Pools, The Attendant smart monitor): High-growth potential trends, but current market share is low.

The push for fiberglass pool market share is a primary focus. Management's initial analysis indicates fiberglass pools are poised to gain another percentage point of total market share to represent approximately 24% of total U.S. in-ground pool sales in 2025. The company is also investing in tools like Measure by Latham, an AI tool for measuring pool liners and covers, which is helping to expand market share in liners and covers.

The investment required to convert this high growth into dominant market share is substantial, as reflected in the capital allocation plan:

These segments consume cash to fuel expansion. For instance, net cash used in operating activities for the first quarter of 2025 was $46.9 million, reflecting seasonal working capital needs. The strategy demands heavy investment to quickly capture share, otherwise, these units risk becoming Dogs.

• Automatic Safety Covers Q3 Sales Growth: 7.6% overall net sales increase, with covers up 15% year-over-year.
• Sand States CapEx Range: Revised estimate is $22 million to $24 million for 2025.
• Fiberglass Market Share Target: Expected to reach 24% of U.S. in-ground pool sales in 2025.
• Nine Months 2025 CapEx: Totaled $16.2 million.