Latham Group, Inc. Reports Third Quarter 2026 Financial Results

Latham’s Q3 2026 sales and margins rose sharply, but growth investments are ramping costs.

What the company is saying

Latham Group, Inc. reports a 12.5% year-over-year increase in Q3 net sales to $182.2 million, highlighting 8.4% organic growth and a 22.6% surge in in-ground pool sales, with fiberglass pools as the main driver. The company emphasizes strong momentum in the Sand States, especially Florida and Texas, and points to a new partnership with a national homebuilder, though only one model home pool is installed so far. Management, led by President and CEO Sean Gadd, frames these results as evidence of successful execution, market share gains, and operating leverage, while also noting increased investments in sales, marketing, and digital transformation. The appointment of Todd Antonelli as Chief Commercial Officer and the expansion of the commercial team are positioned as foundational for future growth. The company acknowledges higher SG&A costs, mainly from growth initiatives and acquisition-related earn-outs, and discloses a $5.0 million one-time debt extinguishment loss. Latham narrows full-year guidance, projects further market share gains for fiberglass pools, and announces a three-year $100 million stock repurchase plan to signal long-term confidence.

What the data suggests

Q3 2026 net sales grew 12.5% to $182.2 million, with in-ground pool sales up 22.6% to $92.4 million and covers up 8.7% to $59.6 million. Gross profit rose 16.6% to $66.8 million, and gross margin improved by 130 basis points to 36.7%. SG&A expenses jumped 25.5% to $35.9 million, including $3.2 million in performance-based earn-outs for the Coverstar Central acquisition and costs for digital transformation. Net income was $12.1 million ($0.10 per diluted share), up from $8.1 million ($0.07) last year, but included a $5.0 million one-time debt extinguishment loss. Adjusted EBITDA increased 18.1% to $45.3 million, with margin expanding to 24.8%. For the first nine months, net sales reached $497.0 million (up 11.4%), gross profit $174.1 million (up 12.9%), and adjusted EBITDA $102.0 million (up 14.2%). Net income for the nine months declined to $16.3 million from $18.1 million due to the debt loss. Cash at quarter-end was $94.8 million, with $48.8 million in Q3 operating cash flow. Debt refinancing extended maturities to 2033, with total debt at $292.5 million and net leverage at 1.8x. Capital expenditures were $6.1 million for Q3 and $34.2 million year-to-date, including four site purchases. The Freedom Pools acquisition cost $17.0 million. FY 2026 guidance is net sales of $605–615 million and adjusted EBITDA of $112–118 million. The company claims fiberglass pools will reach 25% of U.S. market share in 2026, but this is a projection, not a realised figure.

Analysis

The announcement is upbeat and supported by strong realised financial results: net sales, gross profit, net income, and adjusted EBITDA all increased year-over-year, with detailed numerical disclosure. However, the narrative is inflated by repeated forward-looking statements about market share gains, growth opportunities, and strategic initiatives, many of which are not yet realised or quantified (e.g., the homebuilder partnership, Sand States expansion, and expected fiberglass share gains). The capital intensity is notable, with significant capex, a recent acquisition, and a $100 million stock repurchase plan, but the benefits of these outlays are not immediate and are largely projected. While the company provides updated guidance for FY 2026, much of the language around future growth and market share is aspirational. The gap between narrative and evidence is moderate: realised financial progress is clear, but some operational and strategic claims lack direct supporting data.

Risk flags

• ●SG&A expenses are rising faster than sales, up 25.5% in Q3 versus 12.5% sales growth, driven by investments in growth, marketing, and acquisition-related costs. If revenue growth slows, margin pressure could increase.
• ●The $5.0 million one-time debt extinguishment loss and recent debt refinancing add to financial complexity. Total debt stands at $292.5 million, and while maturities are extended, higher leverage (1.8x) could constrain future flexibility if cash flow weakens.
• ●Strategic initiatives in the Sand States and the homebuilder partnership are in early phases, with limited evidence of realised volume or profit impact. Execution risk remains if these initiatives do not scale as anticipated.
• ●The $100 million stock repurchase plan is approved but not yet executed; its impact on shareholder value depends on actual buybacks and timing, which are not detailed.
• ●Capital expenditures are up significantly year-to-date ($34.2 million vs. $16.2 million last year), including site purchases and the $17.0 million Freedom Pools acquisition. Returns on these investments are not yet quantified, exposing the company to capital allocation risk.

Bottom line

Latham Group delivered strong Q3 2026 results, with double-digit sales and margin growth, driven by in-ground pool and cover sales, especially in the Sand States. However, SG&A costs are rising rapidly due to aggressive investment in growth and integration, and the company absorbed a $5.0 million debt extinguishment loss tied to refinancing. While cash flow and liquidity remain solid, and leverage is manageable, the full impact of recent acquisitions, capital expenditures, and strategic partnerships is not yet visible in the numbers. The narrowed FY 2026 guidance and the new $100 million buyback plan show management's confidence, but investors should watch for evidence that high-cost growth initiatives translate into sustained market share and profitability gains. The most important takeaway: realised financial momentum is strong, but future upside depends on execution of expansion strategies and disciplined cost control.

Announcement summary

(NASDAQ:SWIM) Latham Group, Inc. announced its financial results for the third quarter ended September 26, 2026. Net sales for the third quarter increased 12.5% to $182.2 million, driven by 8.4% organic growth and a 22.6% increase in in-ground pool sales, of which 13.9% was organic. Cover sales rose 8.7%, with strong organic growth in autocovers, benefiting from revenue synergies from recent Coverstar dealer acquisitions. The Sand States market saw sales growth accelerate to 21.1% in the third quarter and 16.6% year-to-date, led by Florida and Texas. Latham partnered with a national homebuilder to offer fiberglass pools in new home construction in Florida, with one pool already installed in a model home. The company appointed Todd Antonelli as Chief Commercial Officer and added key leadership in sales strategy and operations. Gross profit for the third quarter increased 16.6% to $66.8 million, with gross margin rising to 36.7%. SG&A expenses increased 25.5% to $35.9 million, including $3.2 million in performance-based earn-out expenses related to the Coverstar Central acquisition and costs for digital transformation. Net income for the quarter was $12.1 million, or $0.10 per diluted share, compared to $8.1 million, or $0.07 per diluted share, in the prior year. The quarter included a one-time $5.0 million loss on extinguishment and modification of debt. Adjusted EBITDA increased 18.1% to $45.3 million, with margin expanding to 24.8%. For the first nine months of 2026, net sales rose 11.4% to $497.0 million, gross profit increased 12.9% to $174.1 million, and SG&A expenses rose 20.8% to $110.1 million, including $7.7 million in earn-out expenses for Coverstar Central. Net income for the nine months was $16.3 million, or $0.14 per diluted share, compared to $18.1 million, or $0.15 per diluted share, in the prior year, and included a $5.0 million debt extinguishment loss. Adjusted EBITDA for the nine months increased 14.2% to $102.0 million, with margin up to 20.5%. Latham ended the quarter with $94.8 million in cash. Net cash from operating activities was $48.8 million for the quarter and $54.6 million for the nine months. The company completed a debt refinancing, including a $75 million revolver and $300 million term loan, extending maturities to 2033. Total debt was $292.5 million at quarter end, with a net debt leverage ratio of 1.8. Capital expenditures were $6.1 million for the quarter and $34.2 million for the nine months, including the purchase of four previously leased production sites. Latham acquired Freedom Pools for $17.0 million in February 2026. The Board approved a three-year $100 million stock repurchase plan. Updated FY 2026 guidance is net sales of $605-615 million, adjusted EBITDA of $112-118 million, and capital expenditures of $40-45 million. The company expects fiberglass to gain at least one percentage point of market share in 2026, reaching approximately 25% of total U.S. in-ground pool sales.

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