Second quarter 2026
Filed Aug 4, 2026Second Quarter Net Sales Up 14.4% Driven By 10.3% Organic Growth; Increasing Full-Year Guidance to 11.7% Net Sales Growth and 15.2% Adjusted EBITDA Growth at the Midpoints
Net sales and Adjusted EBITDA increased, and full-year net sales and Adjusted EBITDA guidance was raised, but gross margin contracted, net income declined, and SG&A growth exceeded sales growth.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, fiscal quarter ended June 27, 2026GAAP | $ 197,474 (in thousands) | – | 14.4% |
| Gross profit, second quarter 2026GAAP | $70.1 million | – | 9.6% |
| Gross margin, second quarter 2026GAAP | 35.5% | – | 160-basis points below year-ago levels |
| Selling, general, and administrative expenses, second quarter 2026GAAP | $37.6 million | – | 17.8% |
| Net income, second quarter 2026GAAP | $12.8 million | – | – |
| Net income per diluted share, second quarter 2026GAAP | $0.11 | – | – |
| Net income margin, second quarter 2026GAAP | 6.5% | – | – |
| Adjusted EBITDA, second quarter 2026non-GAAP | $44.6 million | – | 11.9% |
| Adjusted EBITDA margin, second quarter 2026non-GAAP | 22.6% | – | contracted by 50 basis points |
| Net sales, two fiscal quarters ended June 27, 2026GAAP | $ 314,789 (in thousands) | – | 10.8% |
| Gross profit, six months 2026GAAP | $107.2 million | – | 10.7% |
| Gross margin, six months 2026GAAP | 34.1% | – | in line with the prior year |
| Selling, general, and administrative expenses, six months 2026GAAP | $74.2 million | – | 18.6% |
| Net income, six months 2026GAAP | $4.2 million | – | – |
| Net income per diluted share, six months 2026GAAP | $0.04 | – | – |
| Net income margin, six months 2026GAAP | 1.3% | – | – |
| Adjusted EBITDA, six months 2026non-GAAP | $56.8 million | – | 11.3% |
| Adjusted EBITDA margin, six months 2026non-GAAP | 18.0% | – | remained flat |
| Net cash provided by operating activities, second quarter 2026GAAP | $53.5 million | – | – |
| Net cash provided by operating activities, first half 2026GAAP | $5.8 million | – | – |
| Capital expenditures, second quarter 2026GAAP | $5.6 million | – | – |
| Capital expenditures, first half 2026GAAP | $28.1 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| In-ground Swimming PoolsSales were led by fiberglass pool sales; in-ground pool sales increased 13.6% organically. | $ 96,314 (in thousands) | – | 22.5% |
| CoversGrowth was led by autocovers, indicating a steady increase in attachment rates on new pool installations. | $ 40,984 (in thousands) | – | 10% |
| LinersThe company cited organic growth in each product line. | $ 60,176 (in thousands) | – | – |
FY 2026 Updated Guidance Ranges outlook
- Revenue$600-620 million
- NoteAdjusted EBITDA: $110-120 million
- NoteCapital Expenditures: $40-45 million
- NoteNet sales growth of 11.7% at the midpoint
- Note8.4% is expected to be organic growth
- NoteAdjusted EBITDA growth of 15.2% at the midpoint
What drove it
- Second-quarter net sales growth reflected organic growth in each product line, growth in the Sand States, the acquisition of Freedom Pools, and the full year benefit of the 2025 price increase.
- In-ground pool sales increased 22.5%, or 13.6% organically, led by fiberglass pool sales.
- Sand States second-quarter sales increased at a double-digit rate.
- Gross profit benefited from higher volume and continued progress with lean manufacturing and value engineering initiatives.
- The company completed a program to optimize certain operational and administrative functions and is redeploying resources to sales and marketing initiatives.
Concerns
- Demand for fiberglass pools accelerated faster than the typical seasonal ramp-up, resulting in approximately $2.8 million of incremental costs and a gross margin headwind of approximately 140 basis points.
- Second-quarter gross margin was 35.5%, 160-basis points below year-ago levels.
- SG&A increased by 17.8% due to growth investments, Sand States sales and marketing initiatives, acquisition and integration-related costs, and digital transformation efforts.
- Net income declined to $12.8 million from $16.0 million, while net income margin declined to 6.5% from 9.3%.
- Second-quarter net income included an unfavorable change in net foreign currency transaction gains and losses associated with international subsidiaries of $5.0 million.
- First-half net income included an unfavorable change in net foreign currency transaction gains and losses associated with international subsidiaries of $6.4 million.
What to watch
- Recovery of the majority of the approximately $2.8 million of quarter-specific ramp-up costs in the second half of the year.
- Execution of sales and marketing investments intended to accelerate fiberglass conversion and market penetration in the Sand States.
- Progress in target micro-markets and additional field sales resources supporting dealers in the Sand States.
- Delivery against FY 2026 updated net sales guidance of $600-620 million and Adjusted EBITDA guidance of $110-120 million.
- Capital expenditures of $40-45 million under FY 2026 guidance following $28.1 million of first-half capital expenditures.
Balance sheet and cash flow
- Cash of $43.5 million at the end of the second quarter of 2026
- Total debt was $279.8 million at the end of the second quarter
- Net debt leverage ratio was 2.2
- Net cash provided by operating activities was $53.5 million in the second quarter
- In the first half, net cash provided by operating activities was $5.8 million
- Capital expenditures totaled $5.6 million in the second quarter of 2026, compared to $6.8 million in the comparable quarter last year
- First half capital expenditures were $28.1 million, inclusive of the purchase of the four key production sites. In last year’s first half, capital expenditures were $10.3 million.
- The Company completed the acquisition of Freedom Pools for a purchase price of $17.0 million in February 2026.
Analysis
Latham reported second-quarter net sales of $197.5 million, up 14.4%, driven by 10.3% organic growth. The company cited growth across all product lines, Sand States sales growth, the Freedom Pools acquisition, and the full year benefit of the 2025 price increase. In-ground swimming pool revenue was $ 96,314 (in thousands), with sales up 22.5%, while covers revenue was $ 40,984 (in thousands) and cover sales were up 10%.
Demand and mix favored fiberglass pools, which management said are on track to account for approximately 80% of full year in-ground pool sales in 2026. The company also highlighted double-digit sales growth in the Sand States and ongoing commercial investments, target micro-market identification, and added field sales resources. These initiatives are intended to accelerate material conversion and sales growth in those geographies.
Profitability reflected the cost of the faster-than-typical seasonal ramp in fiberglass demand. Gross profit rose 9.6% to $70.1 million, but gross margin was 35.5%, 160-basis points below year-ago levels. Approximately $2.8 million of quarter-specific ramp-up costs created an approximately 140 basis-point gross-margin headwind. SG&A increased 17.8% to $37.6 million, reflecting growth strategy investments, Sand States sales and marketing, acquisition and integration costs, and digital transformation. Net income declined to $12.8 million from $16.0 million, including an unfavorable $5.0 million change in net foreign currency transaction gains and losses.
Adjusted EBITDA increased 11.9% to $44.6 million, although adjusted EBITDA margin contracted by 50 basis points to 22.6%. For the first half, net sales increased 10.8% to $314.8 million and Adjusted EBITDA increased 11.3% to $56.8 million, while net income fell to $4.2 million from $10.0 million. First-half operating cash flow was $5.8 million, described as reflecting seasonal working-capital trends, and first-half capital expenditures were $28.1 million, inclusive of the purchase of four key production sites.
The company raised FY 2026 net sales guidance to $600-620 million from $580-610 million and maintained the upper end of Adjusted EBITDA guidance while raising the lower end to $110-120 million from $105-120 million. Management expects net sales growth of 11.7% at the midpoint, including expected organic growth of 8.4%, and Adjusted EBITDA growth of 15.2% at the midpoint. The central execution issue is whether the company recovers the majority of the quarter-specific ramp-up costs in the second half while sustaining growth investments and delivering the updated guidance.
Management, verbatim
Second quarter sales growth was driven by execution of our strategic priorities and supports our expectations of continued share gains across our product lines.
Sean Gadd, President and CEO
Demand for fiberglass pools accelerated faster than our typical seasonal ramp-up, resulting in approximately $2.8 million of incremental costs in the quarter, which represented a gross margin headwind of approximately 140 basis points.
Sean Gadd, President and CEO
Our strong first-half results support our conviction that Latham has substantial growth opportunities, and that we are gaining share in a market that we expect to be flat versus the prior year.
Sean Gadd, President and CEO
Not in the filing
stated, not guessed- Operating income and operating margin
- Free cash flow
- Dividends
- Share repurchases
- Prior-quarter comparisons for reported metrics
- Prior-year gross profit amounts
- Prior-year SG&A amounts
- Prior-year Adjusted EBITDA amounts
- Prior-year gross margin percentage
- Prior-year Adjusted EBITDA margin percentage
- FY 2026 gross margin guidance
- FY 2026 operating expense guidance
- FY 2026 tax rate guidance
- CFO commentary
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.