Latham Group, Inc. — Call Transcript 2026

Good afternoon, welcome to the Latham Group first 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. 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. Thank you. This afternoon, we issued our first quarter 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. 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. I'll now turn the call over to Sean Gadd. Thank you, Casey, and thank you all for joining us today to review our first quarter results and discuss our business outlook. Our first quarter results represent a good start to 2026. We are especially pleased with our performance given the adverse weather conditions that plagued most of North America. There are several key takeaways from the quarter that are worth noting. First, it was another quarter in which we saw year-on-year sales growth in each of our product lines. Latham's category leadership position across our product portfolio and our geographic diversification are key competitive advantages for us. Secondly, we continue to effectively execute our Sand State strategy, showing double-digit sales gains in fiberglass pools in our priority Florida market. We are taking further actions to accelerate our growth in this region. Third, we expanded our margins benefiting from operating leverage inherent in our business model and from the lean manufacturing and value engineering initiatives that continue to yield very positive results. Oliver will provide additional detail on this later on in the call. Lastly, we are pleased to confirm our 2026 guidance, which anticipates significant sales growth and even stronger growth in adjusted EBITDA within a challenging macro environment and where pool starts will be about flat from last year. Our guidance includes moderate increase in transportation and commodity costs due to today's high oil prices, which we are mitigating with temporary fuel surcharges. We are closely monitoring the dynamic situation in the Middle East and the potential impacts on costs and consumer demand. Taking a closer look at our first quarter results, in-ground pool sales increased 3.5%. Virtually all of that growth can be attributed to the one month contribution from the Freedom Pools acquisition. Adverse weather was definitely a factor in our organic performance, keeping organic in-ground pool sales steady year-on-year. However, April sales trends were in line with our expectations. We are on track for fiberglass pools to approach 80% of our full-year in-ground pool sales in 2026. The Freedom Pools acquisition we completed on February 26 is integrating as expected. As we've noted, the acquisition expands our presence in Australia and New Zealand, markets where fiberglass pool models have a strong foothold and broadens our reach into new markets in Western Australia, including Perth, which is the fastest-growing city in the country. We recently spent a week in Australia bringing together the Narellan and Freedom teams. In addition to this transaction being immediately accretive to Latham and giving us a market-leading position in the country, we anticipate achieving considerable revenue synergies from this combination over time, as well as gaining first-hand experience from the direct-to-consumer business model. Cover sales advanced 6% in the first quarter, driven by growth in order cover demand as consumers increasingly recognize the safety and economic benefits of this excellent product. Our industry-leading order covers are compatible with all in-ground pool types. In many parts of the U.S., they provide the homeowner with an alternative to fencing while delivering additional cost savings from reduced evaporation and chemical usage. Educational marketing campaigns, including our partnership with Olympic gold medalist and pool safety advocate, Bode Miller, and his wife, Morgan, to promote pool safety, have served to build consumer awareness and increase attachment rates for the covers to new pool installations. First quarter liner sales were up 9% year-over-year, reflecting increased demand and buying in advance of the pool season. We continued to gain traction with our Sand State strategy in the first quarter and are moving forward with plans to accelerate our growth in this important region. Many of the investors and analysts whom I've met since taking on the CEO role in January have asked me where I see the major growth opportunities ahead for Latham, what our playbook is for capturing that growth. Let me start by saying that the opportunity is substantial. We do not need to wait for the recovery in the U.S. pool market to drive growth. There are enough pool starts for us to go and attack the Sand States now, given our relatively low penetration in that region. The key here is that fiberglass is a growing category, and we are the number one player in it in the U.S., and so we are best positioned to gain share. Fiberglass pools are an excellent fit for the Sand States for many of the same reasons that the category is growing nationally. Fast and easy installation, lasting durability, low maintenance, and we have an exceptional designed range of sizes and options to choose from, many of which are smaller, rectangular shaped pools with attached spas that are perfect for our target communities. Latham has laid a good foundation for growth in the Sand States. There is definitely increased brand awareness among consumers and dealers in Florida, thanks to several high-profile marketing campaigns paired with local activations. In 2026, we plan to build on that foundation to set the stage for accelerated long-term growth. As you know, I have many years of experience successfully selling against the standard in the building product industry. When I applied that experience to Latham's current position in the Sand States, I have identified several actions to capture consumer demand and provide additional value to our dealers. First, we are building out a commercial organization with the key pillars being sales strategy, sales operation, and sales execution, with responsibilities to design and drive sales plans, product leadership, and sales effectiveness. Our goal is to provide a world-class commercial organization that supports our growth, not just in Florida, but across all the Sand States and all of North America. Second, we have introduced a new market development framework and approach at Latham that I believe will make us even more effective at capturing share. The key element of this framework is segmentation, meaning that we'll be very selective with our target Sand State markets in determining the specific sections and neighborhoods that offer the greatest opportunity for us. In essence, it's all about neighborhoods. We're looking for neighborhoods with a large number of homes, with home values, lot sizes, and household incomes that fall within our parameters. These can be in, adjacent to, or outside of master planned communities. Third, we'll be adding sales resources in the field to make sure we stay close to the consumer throughout the pool buying process. In this way, we'll be able to assist our dealers in converting more leads into sales and getting greater understanding of the consumer journey. We know that consumers are looking for designs that fit their lifestyles, and we believe that Latham has the best range of products to meet those needs. In 2026, we are increasing our investment in branding and marketing in a very targeted way to capture greater consumer awareness. Together with our network of trusted dealers, we're able to fulfill the demand we generate. In support of all this, we are revamping our marketing and advertising campaigns to give homeowners a full understanding of the true benefits of fiberglass and why it is the right solution for their backyard to enable their dreams of creating wonderful memories to come true. With that, I will turn over the call to Oliver Gloe, our CFO, for a financial review. Oliver. Thank you, Sean, and good afternoon, everyone. I am pleased to report on what was a solid start to 2026. Please note that all comparisons we discuss today are on a year-over-year basis compared to the first quarter of fiscal 2025, unless otherwise noted. Net sales for the first quarter of 2026 were $117 million, 5% above $111 million in Q1 2025, of which 3% represented organic growth and 2% represented the one month's benefit of the Freedom Pools acquisition we completed at the end of February. Organic growth was led by the continued strength of auto covers and increased demand for our pool liners. By product line, in-ground pool sales were $60 million, up 4% from Q1 2025, with virtually all the year-on-year growth coming from Freedom's fiberglass pool sales. Cover sales were $33 million, up 6%, and liner sales were $24 million, up 9% compared to the first quarter of 2025. We achieved a first quarter gross margin of 32%, reflecting a 220 basis point increase above last year's 30%. This performance is primarily due to volume leverage along with production efficiencies driven by our lean manufacturing and value engineering initiatives. SG&A expenses increased to $37 million, up 20% from $31 million in Q1 of 2025. This was largely tied to strategic investments in sales and marketing to accelerate fiberglass adoption, digital transformation initiatives, and acquisition and integration related costs, which includes $2.3 million of performance-based compensatory earn out expenses related to our Coverstar Central acquisition in 2024. Target synergies have been realized for Coverstar Central. We are pleased with the contribution from the acquisition, which has exceeded our initial expectations. This earn out will total roughly $9 million over the course of the year, with similar impact in each remaining quarter in 2026. Net loss was $9 million or $0.07 per diluted share compared to a net loss of $6 million or $0.05 per diluted share for the prior year's first quarter, primarily due to the beforementioned increase in SG&A expenses. First quarter adjusted EBITDA was $12 million, 9% above $11 million in the prior year period, primarily resulting from volume leverage and efficiencies gained through our lean manufacturing and value engineering initiatives. Adjusted EBITDA margin was 10.4%, a 40 basis point expansion compared to last year's first quarter. Turning to the balance sheet. We continue to maintain a strong financial position, ending the first quarter with a cash position of $27 million. In line with our expectations, net cash used in operating activities was $48 million, reflecting a seasonal increase in working capital needs ahead of peak pool selling season. We ended the quarter with total debt of $311 million and a net debt leverage ratio of 2.8, also in line with our expectations. Capital expenditures were $23 million in Q1 2026 compared to $4 million in the prior year period. The increase is primarily due to the purchase of four key fiberglass manufacturing facilities in Florida, Texas, California and West Virginia for $18 million, including a $12 million deposit made in 2025 that was settled in Q1 2026. Additionally, we incurred $5 million of CapEx relating to ongoing projects in line with our expectations. As a reminder, we expect CapEx to range between $42 million and $48 million in 2026. This includes $25 million of maintenance CapEx, expenditures related to the purchase of the fiberglass manufacturing facilities that I just mentioned, and investments to upgrade our newly acquired Freedom Pools manufacturing facilities. While the beginning of 2026 was affected by adverse weather conditions across North America, we are encouraged that April sales trends have been in line with the historical seasonal ramp. We continue to monitor geopolitical developments and their potential impact on our freight and raw material costs, but we believe we are well positioned to manage effectively through this pool building season. We are pleased by the steady progress we are seeing from our fiberglass awareness and adoption initiatives, highlighted by strong consumer engagement with our branding and marketing campaigns and continued gains in Florida, our initial Sand State target market. Based on our performance to date and our current visibility into the remaining season, we are pleased to reaffirm our guidance for 2026 revenue growth of 9% and adjusted EBITDA growth of 13% at the midpoint, amid expectation for new U.S. pool starts to be flat with last year. With that, I'll turn the call back to Sean for his closing remarks. Thanks, Oliver. In summary, we are pleased with our first quarter performance, encouraged by recent order trends, and excited by the growth opportunities we see on horizon. Latham is firmly on track to outperform the market for new U.S. pool starts again in 2026, and we intend to take advantage of soft markets to accelerate our Sand State strategy and strengthen our execution. I see tremendous opportunity for Latham to drive market penetration in the Sand States as well as the rest of North America, Australia and New Zealand. With that, operator, please open the call to questions. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your 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 Ryan Merkel with William Blair. Please go ahead. Hey, everyone. Appreciate the question. Wanted to start off with sort of the fiberglass backlog and orders as you enter the season. How is that looking? Have you seen trends pick up now that the weather has cleared? Yeah, thank you for that question, Ryan. In terms of backlog, I think we're seeing what we would have expected to see, coming out of the first quarter. The order file, in April looks strong to us and looks like it is picking up per the season. We feel good enough that we obviously have reaffirmed guidance, but generally, we are seeing the pickup in orders, and feel pretty good with trends. Got it. Okay. Thanks for that. My second question is the fiberglass conversion is key to the story, Sean, you know that, and you're adding a bunch of resources, it seems. I'm curious, what are the biggest tweaks that you're making to the strategy, and then any early results, or maybe it's a little too early? Yeah, we are definitely making some tweaks. I will tell you it's too early. The main thing, and I talked about it earlier on, is we are segmenting the market a little bit differently to how we have done it in the past. We've got our criteria now built up where we know or we feel like if a neighborhood fits that criteria, the likelihood of them going to Latham and then to fiberglass is higher. We like that. We're starting to test that, and if we get those right, with the right dealers, we'll be able to start building out more and more neighborhoods. We're early, but I feel like that's definitely on a good path for us. The second thing we're doing is adding heads, and really I'm trying to organize the commercial organization into sort of three areas. Sales strategy, which is really just understanding where is the opportunity, doing more of the segmentation, becoming a little bit smarter around sales. Then sales operations, which for me is really about converting what we think about the market into real game plans that the sales team can execute, then measuring that sales team and then sales team to go and execute. Just getting a little bit more organized so that we get the most out of our sales organization. That's really across the whole U.S. but including the Sand States. That's great. That's interesting. Okay. Appreciate that. I'll pass it on. Thank you. Our next question comes from Greg Palm with Craig-Hallum Capital Group. Please go ahead. Yeah, thanks. You know, wanted to piggyback on the first question a little bit since a lot has happened in the last couple of months since you, since we were all on the phone together. It doesn't sound like demand environment has changed, like, all that much, I guess, relative to maybe what you would have thought a couple months ago. Maybe you can just confirm that again, but from a, you know, an input cost side of things, you mentioned freight. You know, wanted to get your sense on how you're dealing with that and also anything else that's on your radar, whether it be, you know, increasing resin prices. Are you seeing any availability shortages of key inputs like that? Anything else that should be on our radar? Thanks, Greg. I'll start by talking about the market a little bit. We still see the market overall for this year look likely to remain flat. Our assumption for that hasn't changed. We are seeing some green shoots coming out, and we feel good about that. Like I said, our order trend for April looks strong and into the start of May. We feel good about that. Pk would have indicated that, Pkdata would have indicated that some more growth starting to occur with cheaper pools. Again, we like that. That's a good sign for us. Obviously, pools are getting smaller, so that is good. Obviously, the volatility is not helping, but I think we have a sound approach, I know we have a sound approach. I think we'll work through that. From a, from a dealer perspective, you know, when we caught up with the dealers, what they'll tell us is it's pretty competitive, four or five quotes per job, which is generally up. From my take is, you know, it's certainly uncertain, but I believe less people will be traveling. The price of gas doesn't help. They're staying at home. I think that's the opportunity. I think that's what the green shoots are we're seeing, is that people will rather now spend time at their home and hopefully with that build a pool. Greg, let me address the second part of your question with regards to the conflict in the Middle East and some of the updates here on input costs. Let me start off by saying we don't see availability to be an issue as of today. Partially that's due to our supply diversification coming out of COVID. Done a lot to be multi-sourced and be as diversified as possible. We are seeing obviously headwinds in costs, right? That comes in two forms. One is transportation, the price at the pump, and especially in the world of fiberglass, we are obviously incurring, you know, transportation costs. It's expensive to ship those fiberglass pool across the nation. In terms of mitigation, what we've done on that side is to introduce temporary fuel surcharges that we plan to fully mitigate us when it comes to transportation costs. I think it's too early to tell what the impact is gonna be on the commodity side. Obviously, suppliers are reaching out. We are exposed to, you know, the, again, the conflict in the Middle East as we consume a lot of oil derivatives in the world of resins, vinyl and so forth. Again, I think it's too early to tell. Certainly currently in discussions with the suppliers. I think we're making the first purchase orders as we speak under slightly higher price levels. You know, we'll have to see our the very dynamic situation evolves. I'm confident in the playbook that we have. We have applied that playbook during COVID. We have applied that playbook certainly last year. I think, you know, we have confidence that the playbook will also work this year as we work through commodities. Okay, great. On some of these initiatives that you talked about, you know, resegmentation, adding sales resources, I'm curious, how do you feel about your current dealer network right now and how important of a lever can that be not just adding new and more dealers, but also leaning into some of your more successful ones? Maybe you can talk a little bit about that as well. Sure. I'll start with dealers are very important. They are obviously the extension of us as they sit across the kitchen table. We need them to basically close the sales. What I will tell you is, I believe we've got the opportunity to get more out of our current network, which is like goal number one. I'm talking really about our core, what I would call our core markets, Midwest, Northeast Canada, and that's really about account management. We're gonna be defining what account management looks like for Latham and making sure our organization's trained around good account management. I expect to get more out of our current network. Then I think about adding where we've got white space. We're always gonna be looking for dealers to take on white space if our current dealer network doesn't get us there. That is gonna be part of the strategy. Then when I think about the Sand States and material conversion, we have a good network of dealers there right now, that we are gonna be feeding as we go into these neighborhoods. And they will be able to get the benefit of referrals and everything else that comes out of those neighborhoods. Feel good about the network in the Sand States, particularly Florida, but our intention will be over time to grow it. Yeah, fair enough. Okay. We'll leave it there. Thanks. Thank you. Our next question comes from Timothy Wojs with Baird. Please go ahead. Hey, guys. Good, good afternoon. Good afternoon. Maybe just first question just on the kind of the resegmentation of some of the sales force and things like that. Is the plan that there's incremental, you know, investments in terms of dollars that's going into some of the initiatives, or are you just kind of reallocating what you have? Going to do a little bit of both. We are definitely gonna get ahead a little bit because we need more people on the ground and actually thinking about our game plan. That will be additive. Our intention will be, if you think about sales as a, sorry, estimated as a percentage of sales, you should be over the medium and long term, that should stay the same. We will continue to fund that as we grow, and then we will look at opportunities to sort of trim back on the back side of the business to give us some space to spend on the front side of the business and invest. Okay. Then, Oliver, just on the price cost question, I guess it's not totally clear if higher resins are kinda in the guide or is it kind of a wait and see approach right now? If you do see higher resins, you guys have the ability to, you know, take costs out or improve efficiencies or pass them on price. Is that kind of the main message? That's probably more the latter. I think transportation cost is relatively foreseeable, what that means to us, and that's in the guide, right? With commodities, I think it's too early to tell. Okay. Sounds good. Thank you, guys. Thank you. Our next question comes from Andrew Carter with Stifel. Please go ahead. Hey. Thank you. Good afternoon. I wanted to ask and just double-click to make sure we understand exactly what the pricing is for the year. You are putting in temporary fuel surcharges. Can you give a magnitude of how much that's kinda incremental to the old guidance? You are not taking any price increases on products for resins. Just wanna make sure and triple-check that. I think you said we're well prepared for materials during the season. I'm guessing is that a comment that everything's good for now and you take a price increase later? Kinda finally, if you have to take a price increase, can you take one mid-season or does that mess things up? Just how do those dynamics work around when you have to make a decision on pricing? Love it. Andrew, I would say the transportation cost and the temporary surcharge, I'd say for the year is probably worth 60 basis points. Again, it's very dynamic and volatile. You know, obviously as the headwinds change, that temporary surcharge can change over time as well. That's just order of magnitude. I think again, for commodities, too early to tell. You know, quite frankly, we haven't even ordered or is just about to start ordering materials that would be subject to a change in pricing. It's really too early to tell. You know, obviously the materials get shipped to our sites, work their way through inventory ultimately as they get consumed in the P&L. We'll again, we have our playbook, and we'll react in time as necessary. If I remind you last year, we actually did do a mid-season price increase catering to, you know, the environment last year, that came in in June. It's not, it's not preferred, but it's also not unheard of. Thanks. I'll pass it on. Thanks, Andrew. Thank you. Our next question comes from Scott Stringer with Wolfe Research. Please go ahead. Hey, guys. Thanks for the question. I'm just wondering if the adverse weather mentioned in 1Q pushed some sales into the second quarter. The guidance obviously implies some acceleration through the rest of the year, right? I guess it would just be helpful to know the tailwind from sales being pulled into 2Q if that is the case. Thanks. I would say, you know, the adverse weather really means, you know, we had a lot of snow, ice on the ground in January and February. If you think of our annual organic growth of 6%, we certainly didn't quite achieve that in Q1, it was probably half of that. I would attribute that to weather. If you translate that to shipping days, that equates to about a shipping day in today's seasonality. You know, I'm not reading too much into that. The season is young. Q1 is a comparatively small quarter. Again, translating our under proportional organic growth in Q1 vis-à-vis the annual guide into shipping days, it's one day. I think that's another way of saying, you know, we put in the prepared remarks that really the trends in April have been as expected. We are seeing the seasonal ramp. Whether we'll, you know, catch up on that one day in Q2 or in Q3, we will see it early in the quarter. Certainly nothing we have seen in Q1 and in our ramp in April that would make us change our view on 2026 and the guide. Okay, got it. I think you guys talked about this a little bit earlier, but just curious on the visibility into 2Q and 3Q for in-ground pool installs. Is that pretty much set or just curious, you know, how much variability is there over the next two quarters for that segment? Thanks. Well, I'll start and I'll hand it over to Oliver. I think from a Q2 perspective, we're all but set, I mean, based on our lead times currently. That looks like, you know, as I said, we've started the quarter really well. Q3 is still obviously, while we've got orders that do fall into Q3, it's probably too early to tell. Again, from what we're hearing inside of the market and from what we're seeing, we still feel very confident of what the order file looks like, and that we'll be able to, we'll continue to hold guide. If I compare today's order book versus prior years, really nothing that would, you know, cause us to think differently about the seasonal pattern vis-à-vis, you know, the last year. Again, all confirming, you know, our guidance there. Got it. That's helpful. Thanks for the time, guys. Thank you. Thanks, Alex. Our next question comes from Matthew Bouley with Barclays. Please go ahead. Good afternoon, guys. You have Elaine Ku on for Matthew Bouley today. Good afternoon. Good afternoon. For my first question, I'm just curious, like, what are the top concerns you're seeing from buyers today? Like between rates, economic uncertainty, you know, just the need to step up more consumer awareness of fiberglass pools, what's kind of the biggest challenge today? From what I've heard, you know, the number one thing would be, which is tied to interest rates, is, you know, basic financing is difficult to get. Anybody who's hasn't got the cash or is able to get, got a good FICO score is unable to get financing. We're hearing that a fair bit, which isn't all that different to what we would've heard last year. You know, I think the other part would be the dealers are saying that, you know, they're fighting, they're having to fight for the sale a little harder than they would previously. When I mentioned 45 quotes, that's typically two to three quotes. Everyone's fighting for the business pretty hard. Reality is, you know, we feel in an environment where things are tough, actually feel good about fiberglass pools because obviously pools are getting smaller. That fits our trend. Pools have low maintenance, the actual cost on an ongoing basis is lower than our alternatives out there. The expenditure on chemicals and like I said, on evaporation is lower, especially if you have an auto cover. The durability of the pool means that there's no ongoing expenses done with the pool. While we see the market as a little tough, we still see it not adversely affecting us relative to last year. Got it. In terms of your increased branding and marketing spend, can you walk us through the cadence of what that might look like through the year and its impact on SG&A? Also, you know, what does this sort of look like? Like is it a targeted brand program for dealers? Is it more salespeople on the ground? Or is it more on like the ads and marketing spend? Thank you. Yeah, it's a bit of both. We're running a national campaign. The national campaign's good cause it, you know, it lifts all markets up, which is great. The other good part about a national campaign is when you think about the Sand States, there's a trend of people moving from the Midwest, Northeast into the Sand States. We like that because fiberglass is the standard in those markets, so they know us. We like the marketing campaign being a national format. The increase, I'll just talk about the timing. The start of the timing is really set for the pool season. We started sort of February, mid to late February, and we're moving all the way through to sort of July, August. That's with the timeframe for the national campaign. When I think about my neighborhoods, that's gonna be way more tactical in nature. I'm talking about things like digital marketing. I'm talking about door hangers and marketing around the homes. I'm talking about doing events at the home to inspire the neighborhood. Those are pretty tactical, small expenses that we will run in every neighborhood. When it comes to, you know, the increase and the cadence of the increase, you know, as we, as we said earlier on, I think over the foreseeable future, SG&A as a percent of sales will roughly be flat. It was 20.5% last year. We expect it to be a similar amount this year. And the majority of that is spent, as you heard from both in the sales organization and marketing. There's a little bit of digital transformation in there and also inflation on the core, meaning G&A. Again, the majority is going into the sales organization and marketing. There's also a little bit of increase in the absolute dollar number as we bought Freedom and Freedom, and that comes with about $3 million of SG&A. That gives you the $20.5 million. I would like to remind you that in addition, we have the earn-out expenses for Coverstar Central. That is about $9 million. It's tied to 2026, so it won't recur in 2027, neither did it occur in 2025. That is a earn-out expense that is tied to 2026. With regards to cadence, it's roughly the same as usual. You will see that Q1 and Q2 are a little bit heavier, and that is because we are running our marketing campaign, our national TV campaign, earlier and longer in 2026 versus 2025. Great. Thanks. I'll pass it on. Thank you. Our next question comes from Susan Maklari with Goldman Sachs. Please go ahead. Hey, everyone. This is Charles Perron-Piché in for Susan. Thanks for taking my question. First, I'd like to shift gear a little bit and talk about the auto cover and the opportunities that you see in this market. Considering, you know, the changing macro dynamics, is there any impact you're seeing in terms of the adoption and any efforts you can do here to, you know, further expand the penetration over the coming years? Yeah, I'll start with that. I think the answer is no, we're not seeing a decrease in adoption. We had a pretty good quarter in auto covers and covers in general. I mean, we had very large growth last year. We expect it to grow this year. We expect it to grow in the coming years as well. It's really about awareness for us. Reality is, most people still don't know that auto covers are available. Auto covers can fit on every pool. It doesn't really matter if it's a fiberglass pool or not. The market is actually very large for us. We've got our value-added resellers set up to take advantage of that. Then we also are now getting our sales organization, latent sales organization around that product, and it's still early for that to happen. We see that as more upside as we go. The product is got. Well, the product is a good product. It does what it needs to do. Consumers who have it, love it, and I think, we've just got to make sure we continue to drive the awareness, and I don't see that trend changing. Got it. Okay, that's helpful, Sean. Switching gear, I appreciate all the colors so far on the call on input cost and inflation. Should we see, you know, more unfavorable dynamics coming through from a cost perspective, can you talk about the opportunities to further lean on your lean in manufacturing and value engineering initiatives to further protect your margins? I think, lean and value engineering continues to be a key contributor to our P&L. Like you've heard me on prior calls, the contribution is about $2 million-$2.5 million per quarter. In Q1, it was $2 million, and that's just because Q1 is a light quarter, and lean and value engineering programs go up and down with volume. I think, as some of those programs mature, you'll see the tailwind that's really now getting into our DNA. This is how we lead our plants and factories, it's part of the everyday cadence. You'd see a lot of a lot more programs, maybe not of the same magnitude because the low-hanging fruits, you know, are being cleared here. That's more common for lean manufacturing, whereas value engineering, they're really in the beginning of the journey. I think there are still some low-hanging fruits out there that our team of PhD-level scientists is pursuing. Again, both initiatives under full steam and certainly in Q1, delivering what we expected them to deliver, and there's no change in our thoughts for the rest of the year. Got it. Thank you for the color, guys, and good luck with the quarter. Thank you. Thanks, Sean. Our next question comes from Shaun Calnan with Bank of America. Please go ahead. Hi, guys. Thank you for taking my question. Just first, the double-digit growth in Florida was quite impressive. What do you think has led to the success in Florida versus the other Sand States? Can you talk about what lessons you can take from Florida to apply to the other Sand States? Yeah. I'll start with, it is obviously our largest focus of all the Sand States. We are set up quite well from a sales number perspective. We're working on dealers now over the last 18 months, so we've got a set of dealers that are really the right dealers for us to help fulfill the demand that we're creating. We've been running a marketing in general campaign for now 18 months, so we've seen the flow of that. We have got, I mean, we've got a really good, strong proposition, value proposition relative to concrete. We're getting deeper and deeper into the market and being able to communicate it. We are seeing good growth, and we feel good that, and I feel good that, you know, if a homeowner understands the benefit of fiberglass over concrete, there's a really high chance they would go with fiberglass. We're just very early still in the adoption curve. Our mission is to make sure our awareness continues to get driven up and that we have the connection between that awareness and our leaders positioning at the kitchen table. I'll just remind you, at the end of the day, while we are very pleased with the numbers, we really look to accelerate that. In reality, we're still working on pretty small numbers when we think about Florida. Okay, great. Then just one cleanup question on the surcharges. Are you aiming to offset the higher transportation costs on a dollar basis or a margin basis? On a dollar basis. You know, the headwind is, you know, as we incurred is being passed on with the temporary surcharges. Okay, great. Thank you. Thanks, Shaun. Our next question comes from Andrew Carter with Stifel. Please go ahead. Hey, thanks. I wanted to double-click and make sure on that incentive cost. You're not backing that out, so if you were to put that back in, the incremental here is still $28 to $38 in investment year. I just want to understand that and double-click. Thanks. No, it's not. I'm sorry, the earn out. The earn out around Coverstar. My fault. Right. The earn out is included in SG&A and will be sitting on top the 22.5% as percent of revenue. As it is an expense tied to an acquisition for EBITDA purposes, it is backed out. Okay. It is just not excluded. It is within guidance, that expense. Just double-checking. Correct. It's an add back to EBITDA, and it is in SG&A. Okay. My fault. Sorry about that. Thank you. Thanks, Andrew. This concludes our question and answer session. I would like to turn the call back over to management for closing remarks. Thank you very much. I just wanna thank everybody for getting on the call. We felt like we had a strong quarter, obviously marred a little bit with weather, but the momentum's there. April looks strong, and we feel confident about our guide. With that, I want to conclude the call. I look forward to seeing all the folks on the call over the coming weeks and months at different types of events. Again, thank you for everyone for attending. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker 7: Good afternoon, welcome to the Latham Group first 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. 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. Good afternoon, welcome to the Latham Group first quarter 2026 earnings conference call. good afternoon welcome to the latham group first quarter 2026 earnings conference call All participants will be in listen-only mode. 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. 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. 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 ask a question you may press star then one on your telephone keypad To withdraw your question, please press star then two. to withdraw your question please press star then two Please note this event is being recorded. please note this event is being recorded I would now like to turn the conference over to Casey Kotary, Investor Relations Representative. i would now like to turn the conference over to casey kotary investor relations representative Please go ahead. please go ahead

Speaker 2: Thank you. This afternoon, we issued our first quarter 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. Thank you. thank you This afternoon, we issued our first quarter 2026 earnings press release, which is available on the investor relations portion of our website. this afternoon we issued our first quarter 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. 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. 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. 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. 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. the company expressly disclaims any obligation to update any forward-looking statements except as required by applicable law 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. I'll now turn the call over to Sean Gadd. In addition, during today's call, the company will discuss certain non-GAAP financial measures. 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. 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'll now turn the call over to Sean Gadd. i'll now turn the call over to sean gadd

Speaker 10: Thank you, Casey, and thank you all for joining us today to review our first quarter results and discuss our business outlook. Our first quarter results represent a good start to 2026. We are especially pleased with our performance given the adverse weather conditions that plagued most of North America. There are several key takeaways from the quarter that are worth noting. First, it was another quarter in which we saw year-on-year sales growth in each of our product lines. Latham's category leadership position across our product portfolio and our geographic diversification are key competitive advantages for us. Secondly, we continue to effectively execute our Sand State strategy, showing double-digit sales gains in fiberglass pools in our priority Florida market. We are taking further actions to accelerate our growth in this region. Thank you, Casey, and thank you all for joining us today to review our first quarter results and discuss our business outlook. thank you casey and thank you all for joining us today to review our first quarter results and discuss our business outlook Our first quarter results represent a good start to 2026. our first quarter results represent a good start to 2026 We are especially pleased with our performance given the adverse weather conditions that plagued most of North America. we are especially pleased with our performance given the adverse weather conditions that plagued most of north america There are several key takeaways from the quarter that are worth noting. there are several key takeaways from the quarter that are worth noting First, it was another quarter in which we saw year-on-year sales growth in each of our product lines. first it was another quarter in which we saw year-on-year sales growth in each of our product lines Latham's category leadership position across our product portfolio and our geographic diversification are key competitive advantages for us. latham's category leadership position across our product portfolio and our geographic diversification are key competitive advantages for us Secondly, we continue to effectively execute our Sand State strategy, showing double-digit sales gains in fiberglass pools in our priority Florida market. secondly we continue to effectively execute our sand state strategy showing double-digit sales gains in fiberglass pools in our priority florida market We are taking further actions to accelerate our growth in this region. we are taking further actions to accelerate our growth in this region Third, we expanded our margins benefiting from operating leverage inherent in our business model and from the lean manufacturing and value engineering initiatives that continue to yield very positive results. Oliver will provide additional detail on this later on in the call. Lastly, we are pleased to confirm our 2026 guidance, which anticipates significant sales growth and even stronger growth in adjusted EBITDA within a challenging macro environment and where pool starts will be about flat from last year. Our guidance includes moderate increase in transportation and commodity costs due to today's high oil prices, which we are mitigating with temporary fuel surcharges. We are closely monitoring the dynamic situation in the Middle East and the potential impacts on costs and consumer demand. Third, we expanded our margins benefiting from operating leverage inherent in our business model and from the lean manufacturing and value engineering initiatives that continue to yield very positive results. third we expanded our margins benefiting from operating leverage inherent in our business model and from the lean manufacturing and value engineering initiatives that continue to yield very positive results Oliver will provide additional detail on this later on in the call. oliver will provide additional detail on this later on in the call Lastly, we are pleased to confirm our 2026 guidance, which anticipates significant sales growth and even stronger growth in adjusted EBITDA within a challenging macro environment and where pool starts will be about flat from last year. lastly we are pleased to confirm our 2026 guidance which anticipates significant sales growth and even stronger growth in adjusted ebitda within a challenging macro environment and where pool starts will be about flat from last year Our guidance includes moderate increase in transportation and commodity costs due to today's high oil prices, which we are mitigating with temporary fuel surcharges. our guidance includes moderate increase in transportation and commodity costs due to today's high oil prices which we are mitigating with temporary fuel surcharges We are closely monitoring the dynamic situation in the Middle East and the potential impacts on costs and consumer demand. we are closely monitoring the dynamic situation in the middle east and the potential impacts on costs and consumer demand Taking a closer look at our first quarter results, in-ground pool sales increased 3.5%. Virtually all of that growth can be attributed to the one month contribution from the Freedom Pools acquisition. Adverse weather was definitely a factor in our organic performance, keeping organic in-ground pool sales steady year-on-year. However, April sales trends were in line with our expectations. We are on track for fiberglass pools to approach 80% of our full-year in-ground pool sales in 2026. The Freedom Pools acquisition we completed on February 26 is integrating as expected. As we've noted, the acquisition expands our presence in Australia and New Zealand, markets where fiberglass pool models have a strong foothold and broadens our reach into new markets in Western Australia, including Perth, which is the fastest-growing city in the country. Taking a closer look at our first quarter results, in-ground pool sales increased 3.5%. taking a closer look at our first quarter results in-ground pool sales increased 3.5% Virtually all of that growth can be attributed to the one month contribution from the Freedom Pools acquisition. virtually all of that growth can be attributed to the one month contribution from the freedom pools acquisition Adverse weather was definitely a factor in our organic performance, keeping organic in-ground pool sales steady year-on-year. adverse weather was definitely a factor in our organic performance keeping organic in-ground pool sales steady year-on-year However, April sales trends were in line with our expectations. however april sales trends were in line with our expectations We are on track for fiberglass pools to approach 80% of our full-year in-ground pool sales in 2026. we are on track for fiberglass pools to approach 80% of our full-year in-ground pool sales in 2026 The Freedom Pools acquisition we completed on February 26 is integrating as expected. the freedom pools acquisition we completed on february 26 is integrating as expected As we've noted, the acquisition expands our presence in Australia and New Zealand, markets where fiberglass pool models have a strong foothold and broadens our reach into new markets in Western Australia, including Perth, which is the fastest-growing city in the country. as we've noted the acquisition expands our presence in australia and new zealand markets where fiberglass pool models have a strong foothold and broadens our reach into new markets in western australia including perth which is the fastest-growing city in the country We recently spent a week in Australia bringing together the Narellan and Freedom teams. In addition to this transaction being immediately accretive to Latham and giving us a market-leading position in the country, we anticipate achieving considerable revenue synergies from this combination over time, as well as gaining first-hand experience from the direct-to-consumer business model. Cover sales advanced 6% in the first quarter, driven by growth in order cover demand as consumers increasingly recognize the safety and economic benefits of this excellent product. Our industry-leading order covers are compatible with all in-ground pool types. In many parts of the U.S., they provide the homeowner with an alternative to fencing while delivering additional cost savings from reduced evaporation and chemical usage. We recently spent a week in Australia bringing together the Narellan and Freedom teams. we recently spent a week in australia bringing together the narellan and freedom teams In addition to this transaction being immediately accretive to Latham and giving us a market-leading position in the country, we anticipate achieving considerable revenue synergies from this combination over time, as well as gaining first-hand experience from the direct-to-consumer business model. in addition to this transaction being immediately accretive to latham and giving us a market-leading position in the country we anticipate achieving considerable revenue synergies from this combination over time as well as gaining first-hand experience from the direct-to-consumer business model Cover sales advanced 6% in the first quarter, driven by growth in order cover demand as consumers increasingly recognize the safety and economic benefits of this excellent product. cover sales advanced 6% in the first quarter driven by growth in order cover demand as consumers increasingly recognize the safety and economic benefits of this excellent product Our industry-leading order covers are compatible with all in-ground pool types. our industry-leading order covers are compatible with all in-ground pool types In many parts of the U.S., they provide the homeowner with an alternative to fencing while delivering additional cost savings from reduced evaporation and chemical usage. in many parts of the u.s they provide the homeowner with an alternative to fencing while delivering additional cost savings from reduced evaporation and chemical usage Educational marketing campaigns, including our partnership with Olympic gold medalist and pool safety advocate, Bode Miller, and his wife, Morgan, to promote pool safety, have served to build consumer awareness and increase attachment rates for the covers to new pool installations. First quarter liner sales were up 9% year-over-year, reflecting increased demand and buying in advance of the pool season. We continued to gain traction with our Sand State strategy in the first quarter and are moving forward with plans to accelerate our growth in this important region. Many of the investors and analysts whom I've met since taking on the CEO role in January have asked me where I see the major growth opportunities ahead for Latham, what our playbook is for capturing that growth. Let me start by saying that the opportunity is substantial. Educational marketing campaigns, including our partnership with Olympic gold medalist and pool safety advocate, Bode Miller, and his wife, Morgan, to promote pool safety, have served to build consumer awareness and increase attachment rates for the covers to new pool installations. educational marketing campaigns including our partnership with olympic gold medalist and pool safety advocate bode miller and his wife morgan to promote pool safety have served to build consumer awareness and increase attachment rates for the covers to new pool installations First quarter liner sales were up 9% year-over-year, reflecting increased demand and buying in advance of the pool season. first quarter liner sales were up 9% year-over-year reflecting increased demand and buying in advance of the pool season We continued to gain traction with our Sand State strategy in the first quarter and are moving forward with plans to accelerate our growth in this important region. we continued to gain traction with our sand state strategy in the first quarter and are moving forward with plans to accelerate our growth in this important region Many of the investors and analysts whom I've met since taking on the CEO role in January have asked me where I see the major growth opportunities ahead for Latham, what our playbook is for capturing that growth. Let me start by saying that the opportunity is substantial. many of the investors and analysts whom i've met since taking on the ceo role in january have asked me where i see the major growth opportunities ahead for latham what our playbook is for capturing that growth. let me start by saying that the opportunity is substantial We do not need to wait for the recovery in the U.S. pool market to drive growth. There are enough pool starts for us to go and attack the Sand States now, given our relatively low penetration in that region. The key here is that fiberglass is a growing category, and we are the number one player in it in the U.S., and so we are best positioned to gain share. Fiberglass pools are an excellent fit for the Sand States for many of the same reasons that the category is growing nationally. Fast and easy installation, lasting durability, low maintenance, and we have an exceptional designed range of sizes and options to choose from, many of which are smaller, rectangular shaped pools with attached spas that are perfect for our target communities. Latham has laid a good foundation for growth in the Sand States. We do not need to wait for the recovery in the U.S. pool market to drive growth. we do not need to wait for the recovery in the u.s pool market to drive growth There are enough pool starts for us to go and attack the Sand States now, given our relatively low penetration in that region. there are enough pool starts for us to go and attack the sand states now given our relatively low penetration in that region The key here is that fiberglass is a growing category, and we are the number one player in it in the U.S., and so we are best positioned to gain share. the key here is that fiberglass is a growing category and we are the number one player in it in the u.s and so we are best positioned to gain share Fiberglass pools are an excellent fit for the Sand States for many of the same reasons that the category is growing nationally. fiberglass pools are an excellent fit for the sand states for many of the same reasons that the category is growing nationally Fast and easy installation, lasting durability, low maintenance, and we have an exceptional designed range of sizes and options to choose from, many of which are smaller, rectangular shaped pools with attached spas that are perfect for our target communities. fast and easy installation lasting durability low maintenance and we have an exceptional designed range of sizes and options to choose from many of which are smaller rectangular shaped pools with attached spas that are perfect for our target communities Latham has laid a good foundation for growth in the Sand States. latham has laid a good foundation for growth in the sand states There is definitely increased brand awareness among consumers and dealers in Florida, thanks to several high-profile marketing campaigns paired with local activations. In 2026, we plan to build on that foundation to set the stage for accelerated long-term growth. As you know, I have many years of experience successfully selling against the standard in the building product industry. When I applied that experience to Latham's current position in the Sand States, I have identified several actions to capture consumer demand and provide additional value to our dealers. First, we are building out a commercial organization with the key pillars being sales strategy, sales operation, and sales execution, with responsibilities to design and drive sales plans, product leadership, and sales effectiveness. Our goal is to provide a world-class commercial organization that supports our growth, not just in Florida, but across all the Sand States and all of North America. There is definitely increased brand awareness among consumers and dealers in Florida, thanks to several high-profile marketing campaigns paired with local activations. there is definitely increased brand awareness among consumers and dealers in florida thanks to several high-profile marketing campaigns paired with local activations In 2026, we plan to build on that foundation to set the stage for accelerated long-term growth. in 2026 we plan to build on that foundation to set the stage for accelerated long-term growth As you know, I have many years of experience successfully selling against the standard in the building product industry. as you know i have many years of experience successfully selling against the standard in the building product industry When I applied that experience to Latham's current position in the Sand States, I have identified several actions to capture consumer demand and provide additional value to our dealers. when i applied that experience to latham's current position in the sand states i have identified several actions to capture consumer demand and provide additional value to our dealers First, we are building out a commercial organization with the key pillars being sales strategy, sales operation, and sales execution, with responsibilities to design and drive sales plans, product leadership, and sales effectiveness. first we are building out a commercial organization with the key pillars being sales strategy sales operation and sales execution with responsibilities to design and drive sales plans product leadership and sales effectiveness Our goal is to provide a world-class commercial organization that supports our growth, not just in Florida, but across all the Sand States and all of North America. our goal is to provide a world-class commercial organization that supports our growth not just in florida but across all the sand states and all of north america Second, we have introduced a new market development framework and approach at Latham that I believe will make us even more effective at capturing share. The key element of this framework is segmentation, meaning that we'll be very selective with our target Sand State markets in determining the specific sections and neighborhoods that offer the greatest opportunity for us. In essence, it's all about neighborhoods. We're looking for neighborhoods with a large number of homes, with home values, lot sizes, and household incomes that fall within our parameters. These can be in, adjacent to, or outside of master planned communities. Third, we'll be adding sales resources in the field to make sure we stay close to the consumer throughout the pool buying process. In this way, we'll be able to assist our dealers in converting more leads into sales and getting greater understanding of the consumer journey. Second, we have introduced a new market development framework and approach at Latham that I believe will make us even more effective at capturing share. second we have introduced a new market development framework and approach at latham that i believe will make us even more effective at capturing share The key element of this framework is segmentation, meaning that we'll be very selective with our target Sand State markets in determining the specific sections and neighborhoods that offer the greatest opportunity for us. the key element of this framework is segmentation meaning that we'll be very selective with our target sand state markets in determining the specific sections and neighborhoods that offer the greatest opportunity for us In essence, it's all about neighborhoods. in essence it's all about neighborhoods We're looking for neighborhoods with a large number of homes, with home values, lot sizes, and household incomes that fall within our parameters. we're looking for neighborhoods with a large number of homes with home values lot sizes and household incomes that fall within our parameters These can be in, adjacent to, or outside of master planned communities. these can be in adjacent to or outside of master planned communities Third, we'll be adding sales resources in the field to make sure we stay close to the consumer throughout the pool buying process. third we'll be adding sales resources in the field to make sure we stay close to the consumer throughout the pool buying process In this way, we'll be able to assist our dealers in converting more leads into sales and getting greater understanding of the consumer journey. in this way we'll be able to assist our dealers in converting more leads into sales and getting greater understanding of the consumer journey We know that consumers are looking for designs that fit their lifestyles, and we believe that Latham has the best range of products to meet those needs. In 2026, we are increasing our investment in branding and marketing in a very targeted way to capture greater consumer awareness. Together with our network of trusted dealers, we're able to fulfill the demand we generate. In support of all this, we are revamping our marketing and advertising campaigns to give homeowners a full understanding of the true benefits of fiberglass and why it is the right solution for their backyard to enable their dreams of creating wonderful memories to come true. With that, I will turn over the call to Oliver Gloe, our CFO, for a financial review. Oliver. We know that consumers are looking for designs that fit their lifestyles, and we believe that Latham has the best range of products to meet those needs. we know that consumers are looking for designs that fit their lifestyles and we believe that latham has the best range of products to meet those needs In 2026, we are increasing our investment in branding and marketing in a very targeted way to capture greater consumer awareness. in 2026 we are increasing our investment in branding and marketing in a very targeted way to capture greater consumer awareness Together with our network of trusted dealers, we're able to fulfill the demand we generate. together with our network of trusted dealers we're able to fulfill the demand we generate In support of all this, we are revamping our marketing and advertising campaigns to give homeowners a full understanding of the true benefits of fiberglass and why it is the right solution for their backyard to enable their dreams of creating wonderful memories to come true. in support of all this we are revamping our marketing and advertising campaigns to give homeowners a full understanding of the true benefits of fiberglass and why it is the right solution for their backyard to enable their dreams of creating wonderful memories to come true With that, I will turn over the call to Oliver Gloe, our CFO, for a financial review. with that i will turn over the call to oliver gloe our cfo for a financial review Oliver. oliver

Speaker 6: Thank you, Sean, and good afternoon, everyone. I am pleased to report on what was a solid start to 2026. Please note that all comparisons we discuss today are on a year-over-year basis compared to the first quarter of fiscal 2025, unless otherwise noted. Net sales for the first quarter of 2026 were $117 million, 5% above $111 million in Q1 2025, of which 3% represented organic growth and 2% represented the one month's benefit of the Freedom Pools acquisition we completed at the end of February. Organic growth was led by the continued strength of auto covers and increased demand for our pool liners. By product line, in-ground pool sales were $60 million, up 4% from Q1 2025, with virtually all the year-on-year growth coming from Freedom's fiberglass pool sales. Thank you, Sean, and good afternoon, everyone. thank you sean and good afternoon everyone I am pleased to report on what was a solid start to 2026. i am pleased to report on what was a solid start to 2026 Please note that all comparisons we discuss today are on a year-over-year basis compared to the first quarter of fiscal 2025, unless otherwise noted. please note that all comparisons we discuss today are on a year-over-year basis compared to the first quarter of fiscal 2025 unless otherwise noted Net sales for the first quarter of 2026 were $117 million, 5% above $111 million in Q1 2025, of which 3% represented organic growth and 2% represented the one month's benefit of the Freedom Pools acquisition we completed at the end of February. net sales for the first quarter of 2026 were $117 million 5% above $111 million in q1 2025 of which 3% represented organic growth and 2% represented the one month's benefit of the freedom pools acquisition we completed at the end of february Organic growth was led by the continued strength of auto covers and increased demand for our pool liners. organic growth was led by the continued strength of auto covers and increased demand for our pool liners By product line, in-ground pool sales were $60 million, up 4% from Q1 2025, with virtually all the year-on-year growth coming from Freedom's fiberglass pool sales. by product line in-ground pool sales were $60 million up 4% from q1 2025 with virtually all the year-on-year growth coming from freedom's fiberglass pool sales Cover sales were $33 million, up 6%, and liner sales were $24 million, up 9% compared to the first quarter of 2025. We achieved a first quarter gross margin of 32%, reflecting a 220 basis point increase above last year's 30%. This performance is primarily due to volume leverage along with production efficiencies driven by our lean manufacturing and value engineering initiatives. SG&A expenses increased to $37 million, up 20% from $31 million in Q1 of 2025. This was largely tied to strategic investments in sales and marketing to accelerate fiberglass adoption, digital transformation initiatives, and acquisition and integration related costs, which includes $2.3 million of performance-based compensatory earn out expenses related to our Coverstar Central acquisition in 2024. Cover sales were $33 million, up 6%, and liner sales were $24 million, up 9% compared to the first quarter of 2025. cover sales were $33 million up 6% and liner sales were $24 million up 9% compared to the first quarter of 2025 We achieved a first quarter gross margin of 32%, reflecting a 220 basis point increase above last year's 30%. we achieved a first quarter gross margin of 32% reflecting a 220 basis point increase above last year's 30% This performance is primarily due to volume leverage along with production efficiencies driven by our lean manufacturing and value engineering initiatives. this performance is primarily due to volume leverage along with production efficiencies driven by our lean manufacturing and value engineering initiatives SG&A expenses increased to $37 million, up 20% from $31 million in Q1 of 2025. sg&a expenses increased to $37 million up 20% from $31 million in q1 of 2025 This was largely tied to strategic investments in sales and marketing to accelerate fiberglass adoption, digital transformation initiatives, and acquisition and integration related costs, which includes $2.3 million of performance-based compensatory earn out expenses related to our Coverstar Central acquisition in 2024. this was largely tied to strategic investments in sales and marketing to accelerate fiberglass adoption digital transformation initiatives and acquisition and integration related costs which includes $2.3 million of performance-based compensatory earn out expenses related to our coverstar central acquisition in 2024 Target synergies have been realized for Coverstar Central. We are pleased with the contribution from the acquisition, which has exceeded our initial expectations. This earn out will total roughly $9 million over the course of the year, with similar impact in each remaining quarter in 2026. Net loss was $9 million or $0.07 per diluted share compared to a net loss of $6 million or $0.05 per diluted share for the prior year's first quarter, primarily due to the beforementioned increase in SG&A expenses. First quarter adjusted EBITDA was $12 million, 9% above $11 million in the prior year period, primarily resulting from volume leverage and efficiencies gained through our lean manufacturing and value engineering initiatives. Adjusted EBITDA margin was 10.4%, a 40 basis point expansion compared to last year's first quarter. Turning to the balance sheet. Target synergies have been realized for Coverstar Central. target synergies have been realized for coverstar central We are pleased with the contribution from the acquisition, which has exceeded our initial expectations. we are pleased with the contribution from the acquisition which has exceeded our initial expectations This earn out will total roughly $9 million over the course of the year, with similar impact in each remaining quarter in 2026. this earn out will total roughly $9 million over the course of the year with similar impact in each remaining quarter in 2026 Net loss was $9 million or $0.07 per diluted share compared to a net loss of $6 million or $0.05 per diluted share for the prior year's first quarter, primarily due to the beforementioned increase in SG&A expenses. net loss was $9 million or $0.07 per diluted share compared to a net loss of $6 million or $0.05 per diluted share for the prior year's first quarter primarily due to the beforementioned increase in sg&a expenses First quarter adjusted EBITDA was $12 million, 9% above $11 million in the prior year period, primarily resulting from volume leverage and efficiencies gained through our lean manufacturing and value engineering initiatives. first quarter adjusted ebitda was $12 million 9% above $11 million in the prior year period primarily resulting from volume leverage and efficiencies gained through our lean manufacturing and value engineering initiatives Adjusted EBITDA margin was 10.4%, a 40 basis point expansion compared to last year's first quarter. adjusted ebitda margin was 10.4% a 40 basis point expansion compared to last year's first quarter Turning to the balance sheet. turning to the balance sheet We continue to maintain a strong financial position, ending the first quarter with a cash position of $27 million. In line with our expectations, net cash used in operating activities was $48 million, reflecting a seasonal increase in working capital needs ahead of peak pool selling season. We ended the quarter with total debt of $311 million and a net debt leverage ratio of 2.8, also in line with our expectations. Capital expenditures were $23 million in Q1 2026 compared to $4 million in the prior year period. The increase is primarily due to the purchase of four key fiberglass manufacturing facilities in Florida, Texas, California and West Virginia for $18 million, including a $12 million deposit made in 2025 that was settled in Q1 2026. Additionally, we incurred $5 million of CapEx relating to ongoing projects in line with our expectations. We continue to maintain a strong financial position, ending the first quarter with a cash position of $27 million. we continue to maintain a strong financial position ending the first quarter with a cash position of $27 million In line with our expectations, net cash used in operating activities was $48 million, reflecting a seasonal increase in working capital needs ahead of peak pool selling season. in line with our expectations net cash used in operating activities was $48 million reflecting a seasonal increase in working capital needs ahead of peak pool selling season We ended the quarter with total debt of $311 million and a net debt leverage ratio of 2.8, also in line with our expectations. we ended the quarter with total debt of $311 million and a net debt leverage ratio of 2.8 also in line with our expectations Capital expenditures were $23 million in Q1 2026 compared to $4 million in the prior year period. capital expenditures were $23 million in q1 2026 compared to $4 million in the prior year period The increase is primarily due to the purchase of four key fiberglass manufacturing facilities in Florida, Texas, California and West Virginia for $18 million, including a $12 million deposit made in 2025 that was settled in Q1 2026. the increase is primarily due to the purchase of four key fiberglass manufacturing facilities in florida texas california and west virginia for $18 million including a $12 million deposit made in 2025 that was settled in q1 2026 Additionally, we incurred $5 million of CapEx relating to ongoing projects in line with our expectations. additionally we incurred $5 million of capex relating to ongoing projects in line with our expectations As a reminder, we expect CapEx to range between $42 million and $48 million in 2026. This includes $25 million of maintenance CapEx, expenditures related to the purchase of the fiberglass manufacturing facilities that I just mentioned, and investments to upgrade our newly acquired Freedom Pools manufacturing facilities. While the beginning of 2026 was affected by adverse weather conditions across North America, we are encouraged that April sales trends have been in line with the historical seasonal ramp. We continue to monitor geopolitical developments and their potential impact on our freight and raw material costs, but we believe we are well positioned to manage effectively through this pool building season. We are pleased by the steady progress we are seeing from our fiberglass awareness and adoption initiatives, highlighted by strong consumer engagement with our branding and marketing campaigns and continued gains in Florida, our initial Sand State target market. As a reminder, we expect CapEx to range between $42 million and $48 million in 2026. as a reminder we expect capex to range between $42 million and $48 million in 2026 This includes $25 million of maintenance CapEx, expenditures related to the purchase of the fiberglass manufacturing facilities that I just mentioned, and investments to upgrade our newly acquired Freedom Pools manufacturing facilities. this includes $25 million of maintenance capex expenditures related to the purchase of the fiberglass manufacturing facilities that i just mentioned and investments to upgrade our newly acquired freedom pools manufacturing facilities While the beginning of 2026 was affected by adverse weather conditions across North America, we are encouraged that April sales trends have been in line with the historical seasonal ramp. while the beginning of 2026 was affected by adverse weather conditions across north america we are encouraged that april sales trends have been in line with the historical seasonal ramp We continue to monitor geopolitical developments and their potential impact on our freight and raw material costs, but we believe we are well positioned to manage effectively through this pool building season. we continue to monitor geopolitical developments and their potential impact on our freight and raw material costs but we believe we are well positioned to manage effectively through this pool building season We are pleased by the steady progress we are seeing from our fiberglass awareness and adoption initiatives, highlighted by strong consumer engagement with our branding and marketing campaigns and continued gains in Florida, our initial Sand State target market. we are pleased by the steady progress we are seeing from our fiberglass awareness and adoption initiatives highlighted by strong consumer engagement with our branding and marketing campaigns and continued gains in florida our initial sand state target market Based on our performance to date and our current visibility into the remaining season, we are pleased to reaffirm our guidance for 2026 revenue growth of 9% and adjusted EBITDA growth of 13% at the midpoint, amid expectation for new U.S. pool starts to be flat with last year. With that, I'll turn the call back to Sean for his closing remarks. Based on our performance to date and our current visibility into the remaining season, we are pleased to reaffirm our guidance for 2026 revenue growth of 9% and adjusted EBITDA growth of 13% at the midpoint, amid expectation for new U.S. pool starts to be flat with last year. based on our performance to date and our current visibility into the remaining season we are pleased to reaffirm our guidance for 2026 revenue growth of 9% and adjusted ebitda growth of 13% at the midpoint amid expectation for new u.s pool starts to be flat with last year With that, I'll turn the call back to Sean for his closing remarks. with that i'll turn the call back to sean for his closing remarks

Speaker 10: Thanks, Oliver. In summary, we are pleased with our first quarter performance, encouraged by recent order trends, and excited by the growth opportunities we see on horizon. Latham is firmly on track to outperform the market for new U.S. pool starts again in 2026, and we intend to take advantage of soft markets to accelerate our Sand State strategy and strengthen our execution. I see tremendous opportunity for Latham to drive market penetration in the Sand States as well as the rest of North America, Australia and New Zealand. With that, operator, please open the call to questions. Thanks, Oliver. thanks oliver In summary, we are pleased with our first quarter performance, encouraged by recent order trends, and excited by the growth opportunities we see on horizon. in summary we are pleased with our first quarter performance encouraged by recent order trends and excited by the growth opportunities we see on horizon Latham is firmly on track to outperform the market for new U.S. pool starts again in 2026, and we intend to take advantage of soft markets to accelerate our Sand State strategy and strengthen our execution. latham is firmly on track to outperform the market for new u.s pool starts again in 2026 and we intend to take advantage of soft markets to accelerate our sand state strategy and strengthen our execution I see tremendous opportunity for Latham to drive market penetration in the Sand States as well as the rest of North America, Australia and New Zealand. i see tremendous opportunity for latham to drive market penetration in the sand states as well as the rest of north america australia and new zealand With that, operator, please open the call to questions. with that operator please open the call to questions

Speaker 7: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your 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 Ryan Merkel with William Blair. Please go ahead. We will now begin the question and answer session. we will now begin the question and answer session To ask a question, you may press star then one on your telephone keypad. to ask a question you may press star then one on your telephone keypad If you are using a speakerphone, please pick up your handset before pressing the keys. if you are using a speakerphone please pick up your handset before pressing the keys To withdraw your question, please press star then two. to withdraw your question please press star then two Please limit yourself to one question and one follow-up. please limit yourself to one question and one follow-up At this time, we will pause momentarily to assemble our roster. at this time we will pause momentarily to assemble our roster Our first question comes from Ryan Merkel with William Blair. our first question comes from ryan merkel with william blair Please go ahead. please go ahead

Speaker 8: Hey, everyone. Appreciate the question. Wanted to start off with sort of the fiberglass backlog and orders as you enter the season. How is that looking? Have you seen trends pick up now that the weather has cleared? Hey, everyone. hey everyone Appreciate the question. appreciate the question Wanted to start off with sort of the fiberglass backlog and orders as you enter the season. wanted to start off with sort of the fiberglass backlog and orders as you enter the season How is that looking? how is that looking Have you seen trends pick up now that the weather has cleared? have you seen trends pick up now that the weather has cleared

Speaker 10: Yeah, thank you for that question, Ryan. In terms of backlog, I think we're seeing what we would have expected to see, coming out of the first quarter. The order file, in April looks strong to us and looks like it is picking up per the season. We feel good enough that we obviously have reaffirmed guidance, but generally, we are seeing the pickup in orders, and feel pretty good with trends. Yeah, thank you for that question, Ryan. yeah thank you for that question ryan In terms of backlog, I think we're seeing what we would have expected to see, coming out of the first quarter. in terms of backlog i think we're seeing what we would have expected to see coming out of the first quarter The order file, in April looks strong to us and looks like it is picking up per the season. the order file in april looks strong to us and looks like it is picking up per the season We feel good enough that we obviously have reaffirmed guidance, but generally, we are seeing the pickup in orders, and feel pretty good with trends. we feel good enough that we obviously have reaffirmed guidance but generally we are seeing the pickup in orders and feel pretty good with trends

Speaker 8: Got it. Okay. Thanks for that. My second question is the fiberglass conversion is key to the story, Sean, you know that, and you're adding a bunch of resources, it seems. I'm curious, what are the biggest tweaks that you're making to the strategy, and then any early results, or maybe it's a little too early? Got it. got it Okay. okay Thanks for that. thanks for that My second question is the fiberglass conversion is key to the story, Sean, you know that, and you're adding a bunch of resources, it seems. my second question is the fiberglass conversion is key to the story sean you know that and you're adding a bunch of resources it seems I'm curious, what are the biggest tweaks that you're making to the strategy, and then any early results, or maybe it's a little too early? i'm curious what are the biggest tweaks that you're making to the strategy and then any early results or maybe it's a little too early

Speaker 10: Yeah, we are definitely making some tweaks. I will tell you it's too early. The main thing, and I talked about it earlier on, is we are segmenting the market a little bit differently to how we have done it in the past. We've got our criteria now built up where we know or we feel like if a neighborhood fits that criteria, the likelihood of them going to Latham and then to fiberglass is higher. We like that. We're starting to test that, and if we get those right, with the right dealers, we'll be able to start building out more and more neighborhoods. We're early, but I feel like that's definitely on a good path for us. Yeah, we are definitely making some tweaks. yeah we are definitely making some tweaks I will tell you it's too early. i will tell you it's too early The main thing, and I talked about it earlier on, is we are segmenting the market a little bit differently to how we have done it in the past. the main thing and i talked about it earlier on is we are segmenting the market a little bit differently to how we have done it in the past We've got our criteria now built up where we know or we feel like if a neighborhood fits that criteria, the likelihood of them going to Latham and then to fiberglass is higher. we've got our criteria now built up where we know or we feel like if a neighborhood fits that criteria the likelihood of them going to latham and then to fiberglass is higher We like that. we like that We're starting to test that, and if we get those right, with the right dealers, we'll be able to start building out more and more neighborhoods. we're starting to test that and if we get those right with the right dealers we'll be able to start building out more and more neighborhoods We're early, but I feel like that's definitely on a good path for us. we're early but i feel like that's definitely on a good path for us The second thing we're doing is adding heads, and really I'm trying to organize the commercial organization into sort of three areas. Sales strategy, which is really just understanding where is the opportunity, doing more of the segmentation, becoming a little bit smarter around sales. Then sales operations, which for me is really about converting what we think about the market into real game plans that the sales team can execute, then measuring that sales team and then sales team to go and execute. Just getting a little bit more organized so that we get the most out of our sales organization. That's really across the whole U.S. but including the Sand States. The second thing we're doing is adding heads, and really I'm trying to organize the commercial organization into sort of three areas. the second thing we're doing is adding heads and really i'm trying to organize the commercial organization into sort of three areas Sales strategy, which is really just understanding where is the opportunity, doing more of the segmentation, becoming a little bit smarter around sales. sales strategy which is really just understanding where is the opportunity doing more of the segmentation becoming a little bit smarter around sales Then sales operations, which for me is really about converting what we think about the market into real game plans that the sales team can execute, then measuring that sales team and then sales team to go and execute. then sales operations which for me is really about converting what we think about the market into real game plans that the sales team can execute then measuring that sales team and then sales team to go and execute Just getting a little bit more organized so that we get the most out of our sales organization. just getting a little bit more organized so that we get the most out of our sales organization That's really across the whole U.S. but including the Sand States . that's really across the whole u.s but including the sand states

Speaker 8: That's great. That's interesting. Okay. Appreciate that. I'll pass it on. That's great. that's great That's interesting. that's interesting Okay. okay Appreciate that. appreciate that I'll pass it on. i'll pass it on

Speaker 10: Thank you. Thank you. thank you

Speaker 7: Our next question comes from Greg Palm with Craig-Hallum Capital Group. Please go ahead. Our next question comes from Greg Palm with Craig-Hallum Capital Group. our next question comes from greg palm with craig-hallum capital group Please go ahead. please go ahead

Speaker 5: Yeah, thanks. You know, wanted to piggyback on the first question a little bit since a lot has happened in the last couple of months since you, since we were all on the phone together. It doesn't sound like demand environment has changed, like, all that much, I guess, relative to maybe what you would have thought a couple months ago. Maybe you can just confirm that again, but from a, you know, an input cost side of things, you mentioned freight. You know, wanted to get your sense on how you're dealing with that and also anything else that's on your radar, whether it be, you know, increasing resin prices. Are you seeing any availability shortages of key inputs like that? Anything else that should be on our radar? Yeah, thanks. yeah thanks You know, wanted to piggyback on the first question a little bit since a lot has happened in the last couple of months since you, since we were all on the phone together. you know wanted to piggyback on the first question a little bit since a lot has happened in the last couple of months since you since we were all on the phone together It doesn't sound like demand environment has changed, like, all that much, I guess, relative to maybe what you would have thought a couple months ago. it doesn't sound like demand environment has changed like all that much i guess relative to maybe what you would have thought a couple months ago Maybe you can just confirm that again, but from a, you know, an input cost side of things, you mentioned freight. maybe you can just confirm that again but from a you know an input cost side of things you mentioned freight You know, wanted to get your sense on how you're dealing with that and also anything else that's on your radar, whether it be, you know, increasing resin prices. you know wanted to get your sense on how you're dealing with that and also anything else that's on your radar whether it be you know increasing resin prices Are you seeing any availability shortages of key inputs like that? are you seeing any availability shortages of key inputs like that Anything else that should be on our radar? anything else that should be on our radar

Speaker 10: Thanks, Greg. I'll start by talking about the market a little bit. We still see the market overall for this year look likely to remain flat. Our assumption for that hasn't changed. We are seeing some green shoots coming out, and we feel good about that. Like I said, our order trend for April looks strong and into the start of May. We feel good about that. Pk would have indicated that, Pkdata would have indicated that some more growth starting to occur with cheaper pools. Again, we like that. That's a good sign for us. Obviously, pools are getting smaller, so that is good. Thanks, Greg. thanks greg I'll start by talking about the market a little bit. i'll start by talking about the market a little bit We still see the market overall for this year look likely to remain flat. we still see the market overall for this year look likely to remain flat Our assumption for that hasn't changed. our assumption for that hasn't changed We are seeing some green shoots coming out, and we feel good about that. we are seeing some green shoots coming out and we feel good about that Like I said, our order trend for April looks strong and into the start of May. like i said our order trend for april looks strong and into the start of may We feel good about that. we feel good about that Pk would have indicated that, Pkdata would have indicated that some more growth starting to occur with cheaper pools. pk would have indicated that, pkdata would have indicated that some more growth starting to occur with cheaper pools Again, we like that. again we like that That's a good sign for us. that's a good sign for us Obviously, pools are getting smaller, so that is good. obviously pools are getting smaller so that is good Obviously, the volatility is not helping, but I think we have a sound approach, I know we have a sound approach. I think we'll work through that. From a, from a dealer perspective, you know, when we caught up with the dealers, what they'll tell us is it's pretty competitive, four or five quotes per job, which is generally up. From my take is, you know, it's certainly uncertain, but I believe less people will be traveling. The price of gas doesn't help. They're staying at home. I think that's the opportunity. I think that's what the green shoots are we're seeing, is that people will rather now spend time at their home and hopefully with that build a pool. Obviously, the volatility is not helping, but I think we have a sound approach, I know we have a sound approach. obviously the volatility is not helping, but i think we have a sound approach i know we have a sound approach I think we'll work through that. i think we'll work through that From a, from a dealer perspective, you know, when we caught up with the dealers, what they'll tell us is it's pretty competitive, four or five quotes per job, which is generally up. from a from a dealer perspective you know when we caught up with the dealers what they'll tell us is it's pretty competitive four or five quotes per job which is generally up From my take is, you know, it's certainly uncertain, but I believe less people will be traveling. from my take is you know it's certainly uncertain but i believe less people will be traveling The price of gas doesn't help. the price of gas doesn't help They're staying at home. they're staying at home I think that's the opportunity. i think that's the opportunity I think that's what the green shoots are we're seeing, is that people will rather now spend time at their home and hopefully with that build a pool. i think that's what the green shoots are we're seeing is that people will rather now spend time at their home and hopefully with that build a pool

Speaker 6: Greg, let me address the second part of your question with regards to the conflict in the Middle East and some of the updates here on input costs. Let me start off by saying we don't see availability to be an issue as of today. Partially that's due to our supply diversification coming out of COVID. Done a lot to be multi-sourced and be as diversified as possible. We are seeing obviously headwinds in costs, right? That comes in two forms. One is transportation, the price at the pump, and especially in the world of fiberglass, we are obviously incurring, you know, transportation costs. It's expensive to ship those fiberglass pool across the nation. Greg, let me address the second part of your question with regards to the conflict in the Middle East and some of the updates here on input costs. greg let me address the second part of your question with regards to the conflict in the middle east and some of the updates here on input costs Let me start off by saying we don't see availability to be an issue as of today. let me start off by saying we don't see availability to be an issue as of today Partially that's due to our supply diversification coming out of COVID. partially that's due to our supply diversification coming out of covid Done a lot to be multi-sourced and be as diversified as possible. done a lot to be multi-sourced and be as diversified as possible We are seeing obviously headwinds in costs, right? we are seeing obviously headwinds in costs right That comes in two forms. that comes in two forms One is transportation, the price at the pump, and especially in the world of fiberglass, we are obviously incurring, you know, transportation costs. one is transportation the price at the pump and especially in the world of fiberglass we are obviously incurring you know transportation costs It's expensive to ship those fiberglass pool across the nation. it's expensive to ship those fiberglass pool across the nation In terms of mitigation, what we've done on that side is to introduce temporary fuel surcharges that we plan to fully mitigate us when it comes to transportation costs. I think it's too early to tell what the impact is gonna be on the commodity side. Obviously, suppliers are reaching out. We are exposed to, you know, the, again, the conflict in the Middle East as we consume a lot of oil derivatives in the world of resins, vinyl and so forth. Again, I think it's too early to tell. Certainly currently in discussions with the suppliers. I think we're making the first purchase orders as we speak under slightly higher price levels. You know, we'll have to see our the very dynamic situation evolves. In terms of mitigation, what we've done on that side is to introduce temporary fuel surcharges that we plan to fully mitigate us when it comes to transportation costs. in terms of mitigation what we've done on that side is to introduce temporary fuel surcharges that we plan to fully mitigate us when it comes to transportation costs I think it's too early to tell what the impact is gonna be on the commodity side. i think it's too early to tell what the impact is gonna be on the commodity side Obviously, suppliers are reaching out. obviously suppliers are reaching out We are exposed to, you know, the, again, the conflict in the Middle East as we consume a lot of oil derivatives in the world of resins, vinyl and so forth. we are exposed to you know the again the conflict in the middle east as we consume a lot of oil derivatives in the world of resins vinyl and so forth Again, I think it's too early to tell. again i think it's too early to tell Certainly currently in discussions with the suppliers. certainly currently in discussions with the suppliers I think we're making the first purchase orders as we speak under slightly higher price levels. i think we're making the first purchase orders as we speak under slightly higher price levels You know, we'll have to see our the very dynamic situation evolves. you know we'll have to see our the very dynamic situation evolves I'm confident in the playbook that we have. We have applied that playbook during COVID. We have applied that playbook certainly last year. I think, you know, we have confidence that the playbook will also work this year as we work through commodities. I'm confident in the playbook that we have. i'm confident in the playbook that we have We have applied that playbook during COVID. we have applied that playbook during covid We have applied that playbook certainly last year. we have applied that playbook certainly last year I think, you know, we have confidence that the playbook will also work this year as we work through commodities. i think you know we have confidence that the playbook will also work this year as we work through commodities

Speaker 5: Okay, great. On some of these initiatives that you talked about, you know, resegmentation, adding sales resources, I'm curious, how do you feel about your current dealer network right now and how important of a lever can that be not just adding new and more dealers, but also leaning into some of your more successful ones? Maybe you can talk a little bit about that as well. Okay, great. okay great On some of these initiatives that you talked about, you know, resegmentation, adding sales resources, I'm curious, how do you feel about your current dealer network right now and how important of a lever can that be not just adding new and more dealers, but also leaning into some of your more successful ones? on some of these initiatives that you talked about you know resegmentation adding sales resources i'm curious how do you feel about your current dealer network right now and how important of a lever can that be not just adding new and more dealers but also leaning into some of your more successful ones Maybe you can talk a little bit about that as well. maybe you can talk a little bit about that as well

Speaker 10: Sure. I'll start with dealers are very important. They are obviously the extension of us as they sit across the kitchen table. We need them to basically close the sales. What I will tell you is, I believe we've got the opportunity to get more out of our current network, which is like goal number one. I'm talking really about our core, what I would call our core markets, Midwest, Northeast Canada, and that's really about account management. We're gonna be defining what account management looks like for Latham and making sure our organization's trained around good account management. I expect to get more out of our current network. Then I think about adding where we've got white space. Sure. sure I'll start with dealers are very important. i'll start with dealers are very important They are obviously the extension of us as they sit across the kitchen table. they are obviously the extension of us as they sit across the kitchen table We need them to basically close the sales. we need them to basically close the sales What I will tell you is, I believe we've got the opportunity to get more out of our current network, which is like goal number one. what i will tell you is i believe we've got the opportunity to get more out of our current network which is like goal number one I'm talking really about our core, what I would call our core markets, Midwest, Northeast Canada, and that's really about account management. i'm talking really about our core what i would call our core markets midwest northeast canada and that's really about account management We're gonna be defining what account management looks like for Latham and making sure our organization's trained around good account management. we're gonna be defining what account management looks like for latham and making sure our organization's trained around good account management I expect to get more out of our current network. i expect to get more out of our current network Then I think about adding where we've got white space. then i think about adding where we've got white space We're always gonna be looking for dealers to take on white space if our current dealer network doesn't get us there. That is gonna be part of the strategy. Then when I think about the Sand States and material conversion, we have a good network of dealers there right now, that we are gonna be feeding as we go into these neighborhoods. And they will be able to get the benefit of referrals and everything else that comes out of those neighborhoods. Feel good about the network in the Sand States, particularly Florida, but our intention will be over time to grow it. We're always gonna be looking for dealers to take on white space if our current dealer network doesn't get us there. we're always gonna be looking for dealers to take on white space if our current dealer network doesn't get us there That is gonna be part of the strategy. that is gonna be part of the strategy Then when I think about the Sand States and material conversion, we have a good network of dealers there right now, that we are gonna be feeding as we go into these neighborhoods. then when i think about the sand states and material conversion we have a good network of dealers there right now that we are gonna be feeding as we go into these neighborhoods And they will be able to get the benefit of referrals and everything else that comes out of those neighborhoods. and they will be able to get the benefit of referrals and everything else that comes out of those neighborhoods Feel good about the network in the Sand States, particularly Florida, but our intention will be over time to grow it. feel good about the network in the sand states particularly florida but our intention will be over time to grow it

Speaker 5: Yeah, fair enough. Okay. We'll leave it there. Thanks. Yeah, fair enough. yeah fair enough Okay. okay We'll leave it there. we'll leave it there Thanks. thanks

Speaker 10: Thank you. Thank you. thank you

Speaker 7: Our next question comes from Timothy Wojs with Baird. Please go ahead. Our next question comes from Timothy Wojs with Baird. our next question comes from timothy wojs with baird Please go ahead. please go ahead

Speaker 12: Hey, guys. Good, good afternoon. Hey, guys. hey guys Good, good afternoon. good good afternoon

Speaker 10: Good afternoon. Good afternoon. good afternoon

Speaker 12: Maybe just first question just on the kind of the resegmentation of some of the sales force and things like that. Is the plan that there's incremental, you know, investments in terms of dollars that's going into some of the initiatives, or are you just kind of reallocating what you have? Maybe just first question just on the kind of the resegmentation of some of the sales force and things like that. maybe just first question just on the kind of the resegmentation of some of the sales force and things like that Is the plan that there's incremental, you know, investments in terms of dollars that's going into some of the initiatives, or are you just kind of reallocating what you have? is the plan that there's incremental you know investments in terms of dollars that's going into some of the initiatives or are you just kind of reallocating what you have

Speaker 10: Going to do a little bit of both. We are definitely gonna get ahead a little bit because we need more people on the ground and actually thinking about our game plan. That will be additive. Our intention will be, if you think about sales as a, sorry, estimated as a percentage of sales, you should be over the medium and long term, that should stay the same. We will continue to fund that as we grow, and then we will look at opportunities to sort of trim back on the back side of the business to give us some space to spend on the front side of the business and invest. Going to do a little bit of both. going to do a little bit of both We are definitely gonna get ahead a little bit because we need more people on the ground and actually thinking about our game plan. we are definitely gonna get ahead a little bit because we need more people on the ground and actually thinking about our game plan That will be additive. that will be additive Our intention will be, if you think about sales as a, sorry, estimated as a percentage of sales, you should be over the medium and long term, that should stay the same. our intention will be if you think about sales as a sorry estimated as a percentage of sales you should be over the medium and long term that should stay the same We will continue to fund that as we grow, and then we will look at opportunities to sort of trim back on the back side of the business to give us some space to spend on the front side of the business and invest. we will continue to fund that as we grow and then we will look at opportunities to sort of trim back on the back side of the business to give us some space to spend on the front side of the business and invest

Speaker 12: Okay. Then, Oliver, just on the price cost question, I guess it's not totally clear if higher resins are kinda in the guide or is it kind of a wait and see approach right now? If you do see higher resins, you guys have the ability to, you know, take costs out or improve efficiencies or pass them on price. Is that kind of the main message? Okay. okay Then, Oliver, just on the price cost question, I guess it's not totally clear if higher resins are kinda in the guide or is it kind of a wait and see approach right now? then oliver just on the price cost question i guess it's not totally clear if higher resins are kinda in the guide or is it kind of a wait and see approach right now If you do see higher resins, you guys have the ability to, you know, take costs out or improve efficiencies or pass them on price. if you do see higher resins you guys have the ability to you know take costs out or improve efficiencies or pass them on price Is that kind of the main message? is that kind of the main message

Speaker 6: That's probably more the latter. I think transportation cost is relatively foreseeable, what that means to us, and that's in the guide, right? With commodities, I think it's too early to tell. That's probably more the latter. that's probably more the latter I think transportation cost is relatively foreseeable, what that means to us, and that's in the guide, right? i think transportation cost is relatively foreseeable what that means to us and that's in the guide right With commodities, I think it's too early to tell. with commodities i think it's too early to tell

Speaker 12: Okay. Sounds good. Thank you, guys. Okay. okay Sounds good. sounds good Thank you, guys. thank you guys

Speaker 10: Thank you. Thank you. thank you

Speaker 7: Our next question comes from Andrew Carter with Stifel. Please go ahead. Our next question comes from Andrew Carter with Stifel. our next question comes from andrew carter with stifel Please go ahead. please go ahead

Speaker 1: Hey. Thank you. Good afternoon. I wanted to ask and just double-click to make sure we understand exactly what the pricing is for the year. You are putting in temporary fuel surcharges. Can you give a magnitude of how much that's kinda incremental to the old guidance? You are not taking any price increases on products for resins. Just wanna make sure and triple-check that. I think you said we're well prepared for materials during the season. I'm guessing is that a comment that everything's good for now and you take a price increase later? Kinda finally, if you have to take a price increase, can you take one mid-season or does that mess things up? Just how do those dynamics work around when you have to make a decision on pricing? Hey. hey Thank you. thank you Good afternoon. good afternoon I wanted to ask and just double-click to make sure we understand exactly what the pricing is for the year. i wanted to ask and just double-click to make sure we understand exactly what the pricing is for the year You are putting in temporary fuel surcharges. you are putting in temporary fuel surcharges Can you give a magnitude of how much that's kinda incremental to the old guidance? can you give a magnitude of how much that's kinda incremental to the old guidance You are not taking any price increases on products for resins. you are not taking any price increases on products for resins Just wanna make sure and triple-check that. just wanna make sure and triple-check that I think you said we're well prepared for materials during the season. i think you said we're well prepared for materials during the season I'm guessing is that a comment that everything's good for now and you take a price increase later? i'm guessing is that a comment that everything's good for now and you take a price increase later Kinda finally, if you have to take a price increase, can you take one mid-season or does that mess things up? kinda finally if you have to take a price increase can you take one mid-season or does that mess things up Just how do those dynamics work around when you have to make a decision on pricing? just how do those dynamics work around when you have to make a decision on pricing

Speaker 6: Love it. Andrew, I would say the transportation cost and the temporary surcharge, I'd say for the year is probably worth 60 basis points. Again, it's very dynamic and volatile. You know, obviously as the headwinds change, that temporary surcharge can change over time as well. That's just order of magnitude. I think again, for commodities, too early to tell. You know, quite frankly, we haven't even ordered or is just about to start ordering materials that would be subject to a change in pricing. It's really too early to tell. You know, obviously the materials get shipped to our sites, work their way through inventory ultimately as they get consumed in the P&L. Love it. love it Andrew, I would say the transportation cost and the temporary surcharge, I'd say for the year is probably worth 60 basis points. andrew i would say the transportation cost and the temporary surcharge i'd say for the year is probably worth 60 basis points Again, it's very dynamic and volatile. again it's very dynamic and volatile You know, obviously as the headwinds change, that temporary surcharge can change over time as well. you know obviously as the headwinds change that temporary surcharge can change over time as well That's just order of magnitude. that's just order of magnitude I think again, for commodities, too early to tell. i think again for commodities too early to tell You know, quite frankly, we haven't even ordered or is just about to start ordering materials that would be subject to a change in pricing. you know quite frankly we haven't even ordered or is just about to start ordering materials that would be subject to a change in pricing It's really too early to tell. it's really too early to tell You know, obviously the materials get shipped to our sites, work their way through inventory ultimately as they get consumed in the P&L. you know obviously the materials get shipped to our sites work their way through inventory ultimately as they get consumed in the p&l We'll again, we have our playbook, and we'll react in time as necessary. If I remind you last year, we actually did do a mid-season price increase catering to, you know, the environment last year, that came in in June. It's not, it's not preferred, but it's also not unheard of. We'll again, we have our playbook, and we'll react in time as necessary. we'll again we have our playbook and we'll react in time as necessary If I remind you last year, we actually did do a mid-season price increase catering to, you know, the environment last year, that came in in June. if i remind you last year we actually did do a mid-season price increase catering to you know the environment last year that came in in june It's not, it's not preferred, but it's also not unheard of. it's not it's not preferred but it's also not unheard of

Speaker 1: Thanks. I'll pass it on. Thanks. thanks I'll pass it on. i'll pass it on

Speaker 6: Thanks, Andrew. Thanks, Andrew. thanks andrew

Speaker 10: Thank you. Thank you. thank you

Speaker 7: Our next question comes from Scott Stringer with Wolfe Research. Please go ahead. Our next question comes from Scott Stringer with Wolfe Research. our next question comes from scott stringer with wolfe research Please go ahead. please go ahead

Speaker 9: Hey, guys. Thanks for the question. I'm just wondering if the adverse weather mentioned in 1Q pushed some sales into the second quarter. The guidance obviously implies some acceleration through the rest of the year, right? I guess it would just be helpful to know the tailwind from sales being pulled into 2Q if that is the case. Thanks. Hey, guys. hey guys Thanks for the question. thanks for the question I'm just wondering if the adverse weather mentioned in 1Q pushed some sales into the second quarter. i'm just wondering if the adverse weather mentioned in 1q pushed some sales into the second quarter The guidance obviously implies some acceleration through the rest of the year, right? the guidance obviously implies some acceleration through the rest of the year right I guess it would just be helpful to know the tailwind from sales being pulled into 2Q if that is the case. i guess it would just be helpful to know the tailwind from sales being pulled into 2q if that is the case Thanks. thanks

Speaker 6: I would say, you know, the adverse weather really means, you know, we had a lot of snow, ice on the ground in January and February. If you think of our annual organic growth of 6%, we certainly didn't quite achieve that in Q1, it was probably half of that. I would attribute that to weather. If you translate that to shipping days, that equates to about a shipping day in today's seasonality. You know, I'm not reading too much into that. The season is young. Q1 is a comparatively small quarter. Again, translating our under proportional organic growth in Q1 vis-à-vis the annual guide into shipping days, it's one day. I would say, you know, the adverse weather really means, you know, we had a lot of snow, ice on the ground in January and February. If you think of our annual organic growth of 6%, we certainly didn't quite achieve that in Q1, it was probably half of that. i would say you know the adverse weather really means you know we had a lot of snow ice on the ground in january and february. if you think of our annual organic growth of 6% we certainly didn't quite achieve that in q1 it was probably half of that I would attribute that to weather. i would attribute that to weather If you translate that to shipping days, that equates to about a shipping day in today's seasonality. if you translate that to shipping days that equates to about a shipping day in today's seasonality You know, I'm not reading too much into that. you know i'm not reading too much into that The season is young. the season is young Q1 is a comparatively small quarter. q1 is a comparatively small quarter Again, translating our under proportional organic growth in Q1 vis-à-vis the annual guide into shipping days, it's one day. again translating our under proportional organic growth in q1 vis-à-vis the annual guide into shipping days it's one day I think that's another way of saying, you know, we put in the prepared remarks that really the trends in April have been as expected. We are seeing the seasonal ramp. Whether we'll, you know, catch up on that one day in Q2 or in Q3, we will see it early in the quarter. Certainly nothing we have seen in Q1 and in our ramp in April that would make us change our view on 2026 and the guide. I think that's another way of saying, you know, we put in the prepared remarks that really the trends in April have been as expected. i think that's another way of saying you know we put in the prepared remarks that really the trends in april have been as expected We are seeing the seasonal ramp. we are seeing the seasonal ramp Whether we'll, you know, catch up on that one day in Q2 or in Q3, we will see it early in the quarter. whether we'll you know catch up on that one day in q2 or in q3 we will see it early in the quarter Certainly nothing we have seen in Q1 and in our ramp in April that would make us change our view on 2026 and the guide. certainly nothing we have seen in q1 and in our ramp in april that would make us change our view on 2026 and the guide

Speaker 9: Okay, got it. I think you guys talked about this a little bit earlier, but just curious on the visibility into 2Q and 3Q for in-ground pool installs. Is that pretty much set or just curious, you know, how much variability is there over the next two quarters for that segment? Thanks. Okay, got it. okay got it I think you guys talked about this a little bit earlier, but just curious on the visibility into 2Q and 3Q for in-ground pool installs. i think you guys talked about this a little bit earlier but just curious on the visibility into 2q and 3q for in-ground pool installs Is that pretty much set or just curious, you know, how much variability is there over the next two quarters for that segment? is that pretty much set or just curious you know how much variability is there over the next two quarters for that segment Thanks. thanks

Speaker 10: Well, I'll start and I'll hand it over to Oliver. I think from a Q2 perspective, we're all but set, I mean, based on our lead times currently. That looks like, you know, as I said, we've started the quarter really well. Q3 is still obviously, while we've got orders that do fall into Q3, it's probably too early to tell. Again, from what we're hearing inside of the market and from what we're seeing, we still feel very confident of what the order file looks like, and that we'll be able to, we'll continue to hold guide. Well, I'll start and I'll hand it over to Oliver. well i'll start and i'll hand it over to oliver I think from a Q2 perspective, we're all but set, I mean, based on our lead times currently. i think from a q2 perspective we're all but set i mean based on our lead times currently That looks like, you know, as I said, we've started the quarter really well. that looks like you know as i said we've started the quarter really well Q3 is still obviously, while we've got orders that do fall into Q3, it's probably too early to tell. q3 is still obviously while we've got orders that do fall into q3 it's probably too early to tell Again, from what we're hearing inside of the market and from what we're seeing, we still feel very confident of what the order file looks like, and that we'll be able to, we'll continue to hold guide. again from what we're hearing inside of the market and from what we're seeing we still feel very confident of what the order file looks like and that we'll be able to we'll continue to hold guide

Speaker 6: If I compare today's order book versus prior years, really nothing that would, you know, cause us to think differently about the seasonal pattern vis-à-vis, you know, the last year. Again, all confirming, you know, our guidance there. If I compare today's order book versus prior years, really nothing that would, you know, cause us to think differently about the seasonal pattern vis-à-vis, you know, the last year. if i compare today's order book versus prior years really nothing that would you know cause us to think differently about the seasonal pattern vis-à-vis you know the last year Again, all confirming, you know, our guidance there. again all confirming you know our guidance there

Speaker 9: Got it. That's helpful. Thanks for the time, guys. Got it. got it That's helpful. that's helpful Thanks for the time, guys. thanks for the time guys

Speaker 10: Thank you. Thank you. thank you

Speaker 6: Thanks, Alex. Thanks, Alex. thanks alex

Speaker 7: Our next question comes from Matthew Bouley with Barclays. Please go ahead. Our next question comes from Matthew Bouley with Barclays. our next question comes from matthew bouley with barclays Please go ahead. please go ahead

Speaker 4: Good afternoon, guys. You have Elaine Ku on for Matthew Bouley today. Good afternoon, guys. good afternoon guys You have Elaine Ku on for Matthew Bouley today. you have elaine ku on for matthew bouley today

Speaker 6: Good afternoon. Good afternoon. good afternoon

Speaker 4: Good afternoon. For my first question, I'm just curious, like, what are the top concerns you're seeing from buyers today? Like between rates, economic uncertainty, you know, just the need to step up more consumer awareness of fiberglass pools, what's kind of the biggest challenge today? Good afternoon. good afternoon For my first question, I'm just curious, like, what are the top concerns you're seeing from buyers today? for my first question i'm just curious like what are the top concerns you're seeing from buyers today Like between rates, economic uncertainty, you know, just the need to step up more consumer awareness of fiberglass pools, what's kind of the biggest challenge today? like between rates economic uncertainty you know just the need to step up more consumer awareness of fiberglass pools what's kind of the biggest challenge today

Speaker 10: From what I've heard, you know, the number one thing would be, which is tied to interest rates, is, you know, basic financing is difficult to get. Anybody who's hasn't got the cash or is able to get, got a good FICO score is unable to get financing. We're hearing that a fair bit, which isn't all that different to what we would've heard last year. You know, I think the other part would be the dealers are saying that, you know, they're fighting, they're having to fight for the sale a little harder than they would previously. When I mentioned 45 quotes, that's typically two to three quotes. Everyone's fighting for the business pretty hard. From what I've heard, you know, the number one thing would be, which is tied to interest rates, is, you know, basic financing is difficult to get. from what i've heard you know the number one thing would be which is tied to interest rates is you know basic financing is difficult to get Anybody who's hasn't got the cash or is able to get, got a good FICO score is unable to get financing. anybody who's hasn't got the cash or is able to get got a good fico score is unable to get financing We're hearing that a fair bit, which isn't all that different to what we would've heard last year. we're hearing that a fair bit which isn't all that different to what we would've heard last year You know, I think the other part would be the dealers are saying that, you know, they're fighting, they're having to fight for the sale a little harder than they would previously. you know i think the other part would be the dealers are saying that you know they're fighting they're having to fight for the sale a little harder than they would previously When I mentioned 45 quotes, that's typically two to three quotes. when i mentioned 45 quotes that's typically two to three quotes Everyone's fighting for the business pretty hard. everyone's fighting for the business pretty hard Reality is, you know, we feel in an environment where things are tough, actually feel good about fiberglass pools because obviously pools are getting smaller. That fits our trend. Pools have low maintenance, the actual cost on an ongoing basis is lower than our alternatives out there. The expenditure on chemicals and like I said, on evaporation is lower, especially if you have an auto cover. The durability of the pool means that there's no ongoing expenses done with the pool. While we see the market as a little tough, we still see it not adversely affecting us relative to last year. Reality is, you know, we feel in an environment where things are tough, actually feel good about fiberglass pools because obviously pools are getting smaller. reality is you know we feel in an environment where things are tough actually feel good about fiberglass pools because obviously pools are getting smaller That fits our trend. that fits our trend Pools have low maintenance, the actual cost on an ongoing basis is lower than our alternatives out there. pools have low maintenance the actual cost on an ongoing basis is lower than our alternatives out there The expenditure on chemicals and like I said, on evaporation is lower, especially if you have an auto cover. the expenditure on chemicals and like i said on evaporation is lower especially if you have an auto cover The durability of the pool means that there's no ongoing expenses done with the pool. the durability of the pool means that there's no ongoing expenses done with the pool While we see the market as a little tough, we still see it not adversely affecting us relative to last year. while we see the market as a little tough we still see it not adversely affecting us relative to last year

Speaker 4: Got it. In terms of your increased branding and marketing spend, can you walk us through the cadence of what that might look like through the year and its impact on SG&A? Also, you know, what does this sort of look like? Like is it a targeted brand program for dealers? Is it more salespeople on the ground? Or is it more on like the ads and marketing spend? Thank you. Got it. got it In terms of your increased branding and marketing spend, can you walk us through the cadence of what that might look like through the year and its impact on SG&A? in terms of your increased branding and marketing spend can you walk us through the cadence of what that might look like through the year and its impact on sg&a Also, you know, what does this sort of look like? also you know what does this sort of look like Like is it a targeted brand program for dealers? like is it a targeted brand program for dealers Is it more salespeople on the ground? is it more salespeople on the ground Or is it more on like the ads and marketing spend? or is it more on like the ads and marketing spend Thank you. thank you

Speaker 10: Yeah, it's a bit of both. We're running a national campaign. The national campaign's good cause it, you know, it lifts all markets up, which is great. The other good part about a national campaign is when you think about the Sand States, there's a trend of people moving from the Midwest, Northeast into the Sand States. We like that because fiberglass is the standard in those markets, so they know us. We like the marketing campaign being a national format. The increase, I'll just talk about the timing. The start of the timing is really set for the pool season. We started sort of February, mid to late February, and we're moving all the way through to sort of July, August. Yeah, it's a bit of both. yeah it's a bit of both We're running a national campaign. we're running a national campaign The national campaign's good cause it, you know, it lifts all markets up, which is great. the national campaign's good cause it you know it lifts all markets up which is great The other good part about a national campaign is when you think about the Sand States, there's a trend of people moving from the Midwest, Northeast into the Sand States. the other good part about a national campaign is when you think about the sand states there's a trend of people moving from the midwest northeast into the sand states We like that because fiberglass is the standard in those markets, so they know us. we like that because fiberglass is the standard in those markets so they know us We like the marketing campaign being a national format. we like the marketing campaign being a national format The increase, I'll just talk about the timing. the increase i'll just talk about the timing The start of the timing is really set for the pool season. the start of the timing is really set for the pool season We started sort of February, mid to late February, and we're moving all the way through to sort of July, August. we started sort of february mid to late february and we're moving all the way through to sort of july august That's with the timeframe for the national campaign. When I think about my neighborhoods, that's gonna be way more tactical in nature. I'm talking about things like digital marketing. I'm talking about door hangers and marketing around the homes. I'm talking about doing events at the home to inspire the neighborhood. Those are pretty tactical, small expenses that we will run in every neighborhood. That's with the timeframe for the national campaign. that's with the timeframe for the national campaign When I think about my neighborhoods, that's gonna be way more tactical in nature. when i think about my neighborhoods that's gonna be way more tactical in nature I'm talking about things like digital marketing. i'm talking about things like digital marketing I'm talking about door hangers and marketing around the homes. i'm talking about door hangers and marketing around the homes I'm talking about doing events at the home to inspire the neighborhood. i'm talking about doing events at the home to inspire the neighborhood Those are pretty tactical, small expenses that we will run in every neighborhood. those are pretty tactical small expenses that we will run in every neighborhood

Speaker 6: When it comes to, you know, the increase and the cadence of the increase, you know, as we, as we said earlier on, I think over the foreseeable future, SG&A as a percent of sales will roughly be flat. It was 20.5% last year. We expect it to be a similar amount this year. And the majority of that is spent, as you heard from both in the sales organization and marketing. There's a little bit of digital transformation in there and also inflation on the core, meaning G&A. Again, the majority is going into the sales organization and marketing. When it comes to, you know, the increase and the cadence of the increase, you know, as we, as we said earlier on, I think over the foreseeable future, SG&A as a percent of sales will roughly be flat. when it comes to you know the increase and the cadence of the increase you know as we as we said earlier on i think over the foreseeable future sg&a as a percent of sales will roughly be flat It was 20.5% last year. it was 20.5% last year We expect it to be a similar amount this year. we expect it to be a similar amount this year And the majority of that is spent, as you heard from both in the sales organization and marketing. and the majority of that is spent as you heard from both in the sales organization and marketing There's a little bit of digital transformation in there and also inflation on the core, meaning G&A. there's a little bit of digital transformation in there and also inflation on the core meaning g&a Again, the majority is going into the sales organization and marketing. again the majority is going into the sales organization and marketing There's also a little bit of increase in the absolute dollar number as we bought Freedom and Freedom, and that comes with about $3 million of SG&A. That gives you the $20.5 million. I would like to remind you that in addition, we have the earn-out expenses for Coverstar Central. That is about $9 million. It's tied to 2026, so it won't recur in 2027, neither did it occur in 2025. That is a earn-out expense that is tied to 2026. With regards to cadence, it's roughly the same as usual. There's also a little bit of increase in the absolute dollar number as we bought Freedom and Freedom, and that comes with about $3 million of SG&A. there's also a little bit of increase in the absolute dollar number as we bought freedom and freedom and that comes with about $3 million of sg&a That gives you the $20.5 million. that gives you the $20.5 million I would like to remind you that in addition, we have the earn-out expenses for Coverstar Central. i would like to remind you that in addition we have the earn-out expenses for coverstar central That is about $9 million. that is about $9 million It's tied to 2026, so it won't recur in 2027, neither did it occur in 2025. it's tied to 2026 so it won't recur in 2027 neither did it occur in 2025 That is a earn-out expense that is tied to 2026. that is a earn-out expense that is tied to 2026 With regards to cadence, it's roughly the same as usual. with regards to cadence it's roughly the same as usual You will see that Q1 and Q2 are a little bit heavier, and that is because we are running our marketing campaign, our national TV campaign, earlier and longer in 2026 versus 2025. You will see that Q1 and Q2 are a little bit heavier, and that is because we are running our marketing campaign, our national TV campaign, earlier and longer in 2026 versus 2025. you will see that q1 and q2 are a little bit heavier and that is because we are running our marketing campaign our national tv campaign earlier and longer in 2026 versus 2025

Speaker 4: Great. Thanks. I'll pass it on. Great. great Thanks. thanks I'll pass it on. i'll pass it on

Speaker 6: Thank you. Thank you. thank you

Speaker 7: Our next question comes from Susan Maklari with Goldman Sachs. Please go ahead. Our next question comes from Susan Maklari with Goldman Sachs. our next question comes from susan maklari with goldman sachs Please go ahead. please go ahead

Speaker 3: Hey, everyone. This is Charles Perron-Piché in for Susan. Thanks for taking my question. First, I'd like to shift gear a little bit and talk about the auto cover and the opportunities that you see in this market. Considering, you know, the changing macro dynamics, is there any impact you're seeing in terms of the adoption and any efforts you can do here to, you know, further expand the penetration over the coming years? Hey, everyone. hey everyone This is Charles Perron-Piché in for Susan. this is charles perron-piché in for susan Thanks for taking my question. thanks for taking my question First, I'd like to shift gear a little bit and talk about the auto cover and the opportunities that you see in this market. first i'd like to shift gear a little bit and talk about the auto cover and the opportunities that you see in this market Considering, you know, the changing macro dynamics, is there any impact you're seeing in terms of the adoption and any efforts you can do here to, you know, further expand the penetration over the coming years? considering you know the changing macro dynamics is there any impact you're seeing in terms of the adoption and any efforts you can do here to you know further expand the penetration over the coming years

Speaker 10: Yeah, I'll start with that. I think the answer is no, we're not seeing a decrease in adoption. We had a pretty good quarter in auto covers and covers in general. I mean, we had very large growth last year. We expect it to grow this year. We expect it to grow in the coming years as well. It's really about awareness for us. Reality is, most people still don't know that auto covers are available. Auto covers can fit on every pool. It doesn't really matter if it's a fiberglass pool or not. The market is actually very large for us. We've got our value-added resellers set up to take advantage of that. Yeah, I'll start with that. yeah i'll start with that I think the answer is no, we're not seeing a decrease in adoption. i think the answer is no we're not seeing a decrease in adoption We had a pretty good quarter in auto covers and covers in general. we had a pretty good quarter in auto covers and covers in general I mean, we had very large growth last year. i mean we had very large growth last year We expect it to grow this year. we expect it to grow this year We expect it to grow in the coming years as well. we expect it to grow in the coming years as well It's really about awareness for us. it's really about awareness for us Reality is, most people still don't know that auto covers are available. reality is most people still don't know that auto covers are available Auto covers can fit on every pool. auto covers can fit on every pool It doesn't really matter if it's a fiberglass pool or not. it doesn't really matter if it's a fiberglass pool or not The market is actually very large for us. the market is actually very large for us We've got our value-added resellers set up to take advantage of that. we've got our value-added resellers set up to take advantage of that Then we also are now getting our sales organization, latent sales organization around that product, and it's still early for that to happen. We see that as more upside as we go. The product is got. Well, the product is a good product. It does what it needs to do. Consumers who have it, love it, and I think, we've just got to make sure we continue to drive the awareness, and I don't see that trend changing. Then we also are now getting our sales organization, latent sales organization around that product, and it's still early for that to happen. then we also are now getting our sales organization latent sales organization around that product and it's still early for that to happen We see that as more upside as we go. we see that as more upside as we go The product is got. the product is got Well, the product is a good product. well the product is a good product It does what it needs to do. it does what it needs to do Consumers who have it, love it, and I think, we've just got to make sure we continue to drive the awareness, and I don't see that trend changing. consumers who have it love it and i think we've just got to make sure we continue to drive the awareness and i don't see that trend changing

Speaker 3: Got it. Okay, that's helpful, Sean. Switching gear, I appreciate all the colors so far on the call on input cost and inflation. Should we see, you know, more unfavorable dynamics coming through from a cost perspective, can you talk about the opportunities to further lean on your lean in manufacturing and value engineering initiatives to further protect your margins? Got it. got it Okay, that's helpful, Sean. okay that's helpful sean Switching gear, I appreciate all the colors so far on the call on input cost and inflation. switching gear i appreciate all the colors so far on the call on input cost and inflation Should we see, you know, more unfavorable dynamics coming through from a cost perspective, can you talk about the opportunities to further lean on your lean in manufacturing and value engineering initiatives to further protect your margins? should we see you know more unfavorable dynamics coming through from a cost perspective can you talk about the opportunities to further lean on your lean in manufacturing and value engineering initiatives to further protect your margins

Speaker 6: I think, lean and value engineering continues to be a key contributor to our P&L. Like you've heard me on prior calls, the contribution is about $2 million-$2.5 million per quarter. In Q1, it was $2 million, and that's just because Q1 is a light quarter, and lean and value engineering programs go up and down with volume. I think, as some of those programs mature, you'll see the tailwind that's really now getting into our DNA. This is how we lead our plants and factories, it's part of the everyday cadence. I think, lean and value engineering continues to be a key contributor to our P&L. i think lean and value engineering continues to be a key contributor to our p&l Like you've heard me on prior calls, the contribution is about $2 million- $2.5 million per quarter. like you've heard me on prior calls the contribution is about $2 million- $2.5 million per quarter In Q1, it was $2 million, and that's just because Q1 is a light quarter, and lean and value engineering programs go up and down with volume. in q1 it was $2 million and that's just because q1 is a light quarter and lean and value engineering programs go up and down with volume I think, as some of those programs mature, you'll see the tailwind that's really now getting into our DNA. i think as some of those programs mature you'll see the tailwind that's really now getting into our dna This is how we lead our plants and factories, it's part of the everyday cadence. this is how we lead our plants and factories it's part of the everyday cadence You'd see a lot of a lot more programs, maybe not of the same magnitude because the low-hanging fruits, you know, are being cleared here. That's more common for lean manufacturing, whereas value engineering, they're really in the beginning of the journey. I think there are still some low-hanging fruits out there that our team of PhD-level scientists is pursuing. Again, both initiatives under full steam and certainly in Q1, delivering what we expected them to deliver, and there's no change in our thoughts for the rest of the year. You'd see a lot of a lot more programs, maybe not of the same magnitude because the low-hanging fruits, you know, are being cleared here. you'd see a lot of a lot more programs maybe not of the same magnitude because the low-hanging fruits you know are being cleared here That's more common for lean manufacturing, whereas value engineering, they're really in the beginning of the journey. that's more common for lean manufacturing whereas value engineering they're really in the beginning of the journey I think there are still some low-hanging fruits out there that our team of PhD-level scientists is pursuing. i think there are still some low-hanging fruits out there that our team of phd-level scientists is pursuing Again, both initiatives under full steam and certainly in Q1, delivering what we expected them to deliver, and there's no change in our thoughts for the rest of the year. again both initiatives under full steam and certainly in q1 delivering what we expected them to deliver and there's no change in our thoughts for the rest of the year

Speaker 3: Got it. Thank you for the color, guys, and good luck with the quarter. Got it. got it Thank you for the color, guys, and good luck with the quarter. thank you for the color guys and good luck with the quarter

Speaker 10: Thank you. Thank you. thank you

Speaker 6: Thanks, Sean. Thanks, Sean. thanks sean

Speaker 7: Our next question comes from Shaun Calnan with Bank of America. Please go ahead. Our next question comes from Shaun Calnan with Bank of America. our next question comes from shaun calnan with bank of america Please go ahead. please go ahead

Speaker 11: Hi, guys. Thank you for taking my question. Just first, the double-digit growth in Florida was quite impressive. What do you think has led to the success in Florida versus the other Sand States? Can you talk about what lessons you can take from Florida to apply to the other Sand States? Hi, guys. hi guys Thank you for taking my question. thank you for taking my question Just first, the double-digit growth in Florida was quite impressive. just first the double-digit growth in florida was quite impressive What do you think has led to the success in Florida versus the other Sand States? what do you think has led to the success in florida versus the other sand states Can you talk about what lessons you can take from Florida to apply to the other Sand States? can you talk about what lessons you can take from florida to apply to the other sand states

Speaker 10: Yeah. I'll start with, it is obviously our largest focus of all the Sand States. We are set up quite well from a sales number perspective. We're working on dealers now over the last 18 months, so we've got a set of dealers that are really the right dealers for us to help fulfill the demand that we're creating. We've been running a marketing in general campaign for now 18 months, so we've seen the flow of that. We have got, I mean, we've got a really good, strong proposition, value proposition relative to concrete. Yeah. yeah I'll start with, it is obviously our largest focus of all the Sand States. i'll start with it is obviously our largest focus of all the sand states We are set up quite well from a sales number perspective. we are set up quite well from a sales number perspective We're working on dealers now over the last 18 months, so we've got a set of dealers that are really the right dealers for us to help fulfill the demand that we're creating. we're working on dealers now over the last 18 months so we've got a set of dealers that are really the right dealers for us to help fulfill the demand that we're creating We've been running a marketing in general campaign for now 18 months, so we've seen the flow of that. we've been running a marketing in general campaign for now 18 months so we've seen the flow of that We have got, I mean, we've got a really good, strong proposition, value proposition relative to concrete. we have got i mean we've got a really good strong proposition value proposition relative to concrete We're getting deeper and deeper into the market and being able to communicate it. We are seeing good growth, and we feel good that, and I feel good that, you know, if a homeowner understands the benefit of fiberglass over concrete, there's a really high chance they would go with fiberglass. We're just very early still in the adoption curve. Our mission is to make sure our awareness continues to get driven up and that we have the connection between that awareness and our leaders positioning at the kitchen table. I'll just remind you, at the end of the day, while we are very pleased with the numbers, we really look to accelerate that. In reality, we're still working on pretty small numbers when we think about Florida. We're getting deeper and deeper into the market and being able to communicate it. we're getting deeper and deeper into the market and being able to communicate it We are seeing good growth, and we feel good that, and I feel good that, you know, if a homeowner understands the benefit of fiberglass over concrete, there's a really high chance they would go with fiberglass. we are seeing good growth and we feel good that and i feel good that you know if a homeowner understands the benefit of fiberglass over concrete there's a really high chance they would go with fiberglass We're just very early still in the adoption curve. we're just very early still in the adoption curve Our mission is to make sure our awareness continues to get driven up and that we have the connection between that awareness and our leaders positioning at the kitchen table. our mission is to make sure our awareness continues to get driven up and that we have the connection between that awareness and our leaders positioning at the kitchen table I'll just remind you, at the end of the day, while we are very pleased with the numbers, we really look to accelerate that. i'll just remind you at the end of the day while we are very pleased with the numbers we really look to accelerate that In reality, we're still working on pretty small numbers when we think about Florida. in reality we're still working on pretty small numbers when we think about florida

Speaker 11: Okay, great. Then just one cleanup question on the surcharges. Are you aiming to offset the higher transportation costs on a dollar basis or a margin basis? Okay, great. okay great Then just one cleanup question on the surcharges. then just one cleanup question on the surcharges Are you aiming to offset the higher transportation costs on a dollar basis or a margin basis? are you aiming to offset the higher transportation costs on a dollar basis or a margin basis

Speaker 6: On a dollar basis. You know, the headwind is, you know, as we incurred is being passed on with the temporary surcharges. On a dollar basis. on a dollar basis You know, the headwind is, you know, as we incurred is being passed on with the temporary surcharges. you know the headwind is you know as we incurred is being passed on with the temporary surcharges

Speaker 11: Okay, great. Thank you. Okay, great. okay great Thank you. thank you

Speaker 6: Thanks, Shaun. Thanks, Shaun. thanks shaun

Speaker 7: Our next question comes from Andrew Carter with Stifel. Please go ahead. Our next question comes from Andrew Carter with Stifel. our next question comes from andrew carter with stifel Please go ahead. please go ahead

Speaker 1: Hey, thanks. Hey, thanks. hey thanks I wanted to double-click and make sure on that incentive cost. You're not backing that out, so if you were to put that back in, the incremental here is still $28 to $38 in investment year. I just want to understand that and double-click. Thanks. No, it's not. I'm sorry, the earn out. The earn out around Coverstar. My fault. I wanted to double-click and make sure on that incentive cost. i wanted to double-click and make sure on that incentive cost You're not backing that out, so if you were to put that back in, the incremental here is still $28 to $38 in investment year. you're not backing that out so if you were to put that back in the incremental here is still $28 to $38 in investment year I just want to understand that and double-click. i just want to understand that and double-click Thanks. thanks No, it's not. no it's not I'm sorry, the earn out. i'm sorry the earn out The earn out around Coverstar. the earn out around coverstar My fault. my fault

Speaker 6: Right. The earn out is included in SG&A and will be sitting on top the 22.5% as percent of revenue. As it is an expense tied to an acquisition for EBITDA purposes, it is backed out. Right. right The earn out is included in SG&A and will be sitting on top the 22.5% as percent of revenue. the earn out is included in sg&a and will be sitting on top the 22.5% as percent of revenue As it is an expense tied to an acquisition for EBITDA purposes, it is backed out. as it is an expense tied to an acquisition for ebitda purposes it is backed out

Speaker 1: Okay. It is just not excluded. It is within guidance, that expense. Just double-checking. Okay. okay It is just not excluded. it is just not excluded It is within guidance, that expense. it is within guidance that expense Just double-checking. just double-checking

Speaker 6: Correct. It's an add back to EBITDA, and it is in SG&A. Correct. correct It's an add back to EBITDA, and it is in SG&A. it's an add back to ebitda and it is in sg&a

Speaker 1: Okay. My fault. Sorry about that. Thank you. Okay. okay My fault. my fault Sorry about that. sorry about that Thank you. thank you

Speaker 10: Thanks, Andrew. Thanks, Andrew. thanks andrew

Speaker 7: This concludes our question and answer session. I would like to turn the call back over to management for closing remarks. This concludes our question and answer session. this concludes our question and answer session I would like to turn the call back over to management for closing remarks. i would like to turn the call back over to management for closing remarks

Speaker 10: Thank you very much. I just wanna thank everybody for getting on the call. We felt like we had a strong quarter, obviously marred a little bit with weather, but the momentum's there. April looks strong, and we feel confident about our guide. With that, I want to conclude the call. I look forward to seeing all the folks on the call over the coming weeks and months at different types of events. Again, thank you for everyone for attending. Thank you. Thank you very much. thank you very much I just wanna thank everybody for getting on the call. i just wanna thank everybody for getting on the call We felt like we had a strong quarter, obviously marred a little bit with weather, but the momentum's there. we felt like we had a strong quarter obviously marred a little bit with weather but the momentum's there April looks strong, and we feel confident about our guide. april looks strong and we feel confident about our guide With that, I want to conclude the call. with that i want to conclude the call I look forward to seeing all the folks on the call over the coming weeks and months at different types of events. i look forward to seeing all the folks on the call over the coming weeks and months at different types of events Again, thank you for everyone for attending. again thank you for everyone for attending Thank you. thank you

Speaker 7: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. The conference is now concluded. the conference is now concluded Thank you for attending today's presentation. thank you for attending today's presentation You may now disconnect. you may now disconnect