SWIM earnings analysis
What we found in SWIM's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Latham delivered Q2 revenue of $197.5 million, up 14.4% year over year and above the prior quarter's $117.3 million, with broad-based growth led by in-ground pools. However, profitability lagged the sales growth: gross margin fell to 35.5% from 37.1%, operating margin fell to 12.7% from 14.3%, and EPS decreased to $0.11 from $0.13. Six-month operating cash flow improved to $5.8 million, but receivables rose $56.1 million, capex was $16.1 million, and the company ended with $43.5 million of cash and $279.8 million of Term Loan debt.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 14.4% and accelerated sequentially
- Q2 net sales increased $24.8 million, or 14.4%, year over year to $197.5 million, driven by $19.0 million of higher volume and $5.8 million of higher pricing. Sequentially, sales rose from $117.3 million in Q1 to $197.5 million in Q2.
- Broad product-line growth led by pools
- All product lines contributed to growth: in-ground swimming-pool sales increased $17.7 million, covers increased $3.7 million, and liners increased $3.4 million year over year. Management said in-ground pool sales rose 22.5%, or 13.6% organically, while cover sales increased 10%.
- Operating profit and EBITDA increased
- Operating income increased $0.4 million to $25.1 million and Adjusted EBITDA rose $4.7 million, or 11.9%, to $44.6 million. Operating margin improved sequentially from -5.6% in Q1 to 12.7% in Q2.
- Operating cash flow improved and revolver was repaid
- Six-month operating cash flow turned positive at $5.8 million, compared with cash use of $10.9 million a year earlier. The company repaid $35.0 million on its revolver, leaving $75.0 million of revolver availability and no revolver borrowings at June 27, 2026.
- Australia/New Zealand acquisition is accretive
- Freedom Pools was acquired for a GAAP purchase price of $15.4 million, funded entirely with cash, and management expects it to be immediately earnings-accretive. It is expected to add approximately $20.0 million of annualized net sales and approximately $4.0 million of annualized Adjusted EBITDA before synergies.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Ramp-up costs compressed gross and operating margins
- Gross margin declined 160 basis points year over year to 35.5%, and operating margin declined 160 basis points to 12.7%. Management attributed the gross-margin pressure primarily to approximately $2.8 million of fiberglass demand ramp-up costs, or about 140 basis points.
- EPS and net income declined despite sales growth
- Net income fell $3.2 million, or 20.2%, to $12.8 million, and diluted EPS declined from $0.13 to $0.11 year over year. Other expense shifted by $4.4 million to $1.4 million of expense, primarily reflecting unfavorable foreign-currency transaction gains and losses.
- Receivables build absorbed operating cash
- Working-capital investment constrained cash conversion: trade receivables increased $56.1 million in the first six months, while operating asset-and-liability changes used $32.4 million of cash. Cash finished at $43.5 million after a $27.6 million six-month decrease.
- Leverage and refinancing exposure remain
- Debt remains material at $279.8 million of Term Loan borrowings, and the $75.0 million revolving facility matures on February 23, 2027; management is discussing an extension. A 1% effective-rate change would alter annual net interest expense by approximately $1.2 million.
- No formal risk-factor update; geopolitical exposure noted
- No material risk-factor changes were reported versus the 2025 Form 10-K or Q1 2026 Form 10-Q. The filing nonetheless notes that Middle East conflict and Strait of Hormuz disruptions could raise energy and commodity costs; Q2 cost of sales already increased $18.7 million, or 17.2%, year over year.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.11
- Gross margin
- 35.5%
- Operating margin
- 12.7%
- Segment
- One reportable segment. Product-line year-over-year sales increases: in-ground swimming pools +$17.7 million, covers +$3.7 million, and liners +$3.4 million.
What they said about what is next.
The 10-Q contains no explicit quantitative full-year revenue or EPS outlook. Management said most of the approximately $2.8 million of second-quarter fiberglass ramp-up costs are expected to be recovered in the second half of 2026; Freedom Pools is expected to contribute approximately $20.0 million of annualized sales and approximately $4.0 million of annualized Adjusted EBITDA before synergies.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 6, 2026
- Latham Group, Inc. reported Q1 2026 results showing a year-over-year revenue increase of 5.3%, reaching $117.3 million, though it fell short of analyst expectations. The net loss widened to $8.5 million, a 43.1%…
- 10-K · March 4, 2026
- Latham (SWIM) positions itself as the market leader in fiberglass and vinyl in-ground residential pools with a direct-to-homeowner digital strategy and a national manufacturing/distribution footprint. Q4 2025 delivered…
- 10-Q · November 5, 2025
- Latham reported quarterly net sales of $161,903,000 (up $11,407,000 vs. the prior-year quarter) with gross profit of $57,307,000 (35.4% gross margin) and income from operations of $21,508,000 (13.3% operating margin).…
- 10-Q · August 6, 2025
- Latham Group reported Q2 net sales of $172,639,000, up $12,517,000 (7.8%) versus Q2 2024 ($160,122,000) and materially higher than the prior quarter. Gross profit rose to $63,963,000 (gross margin ~37.1%) and operating…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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