Latham Group, Inc. 10-Q

Item 1. Financial Statements Index to Condensed Consolidated Financial Statements (Unaudited) ​ ​ ​ Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations ​ 5 Condensed Consolidated Statements of Comprehensive Loss ​ 6 Condensed Consolidated Statements of Stockholders’ Equity ​ 7 Condensed Consolidated Statements of Cash Flows ​ 9 Notes to Condensed Consolidated Financial Statements ​ 10 ​ ​ 3 Table of Contents Latham Group, Inc. Condensed Consolidated Balance Sheets (in thousands, except share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 29, ​ December 31, ​ ​ 2025 2024 ​ Assets ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ Cash ​ $ 23,966 ​ $ 56,398 ​ Trade receivables, net ​ 83,760 ​ 32,299 ​ Inventories, net ​ 86,863 ​ 77,101 ​ Income tax receivable ​ 8,588 ​ 3,964 ​ Prepaid expenses and other current assets ​ 8,363 ​ 8,536 ​ Total current assets ​ 211,540 ​ 178,298 ​ Property and equipment, net ​ 112,000 ​ 112,848 ​ Equity method investment ​ 25,844 ​ 24,891 ​ Deferred tax assets ​ 729 ​ 729 ​ Operating lease right-of-use assets ​ ​ 27,154 ​ ​ 28,259 ​ Goodwill ​ 154,681 ​ 152,625 ​ Intangible assets, net ​ 289,230 ​ 292,913 ​ Other assets ​ ​ 3,407 ​ ​ 3,644 ​ Total assets ​ $ 824,585 ​ $ 794,207 ​ Liabilities and Stockholders’ Equity ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ $ 28,035 ​ $ 13,141 ​ Current maturities of long-term debt ​ 3,250 ​ 3,250 ​ Current operating lease liabilities ​ ​ 7,100 ​ ​ 7,176 ​ Accrued expenses and other current liabilities ​ 44,640 ​ 47,410 ​ Total current liabilities ​ 83,025 ​ 70,977 ​ Long-term debt, net of discount, debt issuance costs, and current portion ​ 303,663 ​ 278,271 ​ Deferred income tax liabilities, net ​ 32,347 ​ 32,347 ​ Non-current operating lease liabilities ​ ​ 20,951 ​ ​ 22,138 ​ Other long-term liabilities ​ 3,457 ​ 3,252 ​ Total liabilities ​ $ 443,443 ​ $ 406,985 ​ Commitments and contingencies ​ ​ ​ Stockholders’ equity: ​ ​ ​ Preferred stock, $ 0.0001 par value; 100,000,000 shares authorized as of both March 29, 2025 and December 31, 2024; no shares issued and outstanding as of both March 29, 2025 and December 31, 2024 ​ ​ — ​ ​ — ​ Common stock, $ 0.0001 par value; 900,000,000 shares authorized as of March 29, 2025 and December 31, 2024; 116,362,977 and 115,764,839 shares issued and outstanding, as of March 29, 2025 and December 31, 2024, respectively ​ 12 ​ 12 ​ Additional paid-in capital ​ 466,741 ​ 467,076 ​ Accumulated deficit ​ ( 80,778 ) ​ ( 74,816 ) ​ Accumulated other comprehensive loss ​ ( 4,833 ) ​ ( 5,050 ) ​ Total stockholders’ equity ​ 381,142 ​ 387,222 ​ Total liabilities and stockholders’ equity ​ $ 824,585 ​ $ 794,207 ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 4 Table of Contents Latham Group, Inc. Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ March 29, 2025 March 30, 2024 Net sales ​ $ 111,420 ​ $ 110,629 ​ Cost of sales ​ 78,539 ​ 80,040 ​ Gross profit ​ 32,881 ​ 30,589 ​ Selling, general, and administrative expense ​ 30,620 ​ 26,250 ​ Amortization ​ 7,192 ​ 6,412 ​ Loss from operations ​ ( 4,931 ) ​ ( 2,073 ) ​ Other expense: ​ ​ ​ Interest expense, net ​ 6,371 ​ 4,982 ​ Other (income) expense, net ​ ( 308 ) ​ 1,586 ​ Total other expense, net ​ 6,063 ​ 6,568 ​ Earnings from equity method investment ​ ​ 953 ​ ​ 1,309 ​ Loss before income taxes ​ ( 10,041 ) ​ ( 7,332 ) ​ Income tax (benefit) expense ​ ( 4,079 ) ​ 532 ​ Net loss ​ $ ( 5,962 ) ​ $ ( 7,864 ) ​ Net loss per share attributable to common stockholders: ​ ​ ​ Basic ​ $ ( 0.05 ) ​ $ ( 0.07 ) ​ Diluted ​ $ ( 0.05 ) ​ $ ( 0.07 ) ​ Weighted-average common shares outstanding – basic and diluted ​ ​ ​ Basic ​ 115,885,111 ​ 115,038,929 ​ Diluted ​ 115,885,111 ​ 115,038,929 ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 5 Table of Contents Latham Group, Inc. Condensed Consolidated Statements of Comprehensive Loss (in thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ March 29, 2025 March 30, 2024 Net loss ​ $ ( 5,962 ) ​ $ ( 7,864 ) ​ Other comprehensive income (loss), net of tax: ​ ​ ​ Foreign currency translation adjustments ​ 217 ​ ( 811 ) ​ Total other comprehensive income (loss), net of tax ​ 217 ​ ( 811 ) ​ Comprehensive loss ​ $ ( 5,745 ) ​ $ ( 8,675 ) ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 6 Table of Contents Latham Group, Inc. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ Other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Accumulated ​ Comprehensive ​ Stockholders' ​ ​ Shares ​ Amount ​ Capital ​ Deficit ​ Loss ​ Equity Balances at December 31, 2023 114,871,782 ​ $ 11 ​ $ 459,684 ​ $ ( 56,956 ) ​ $ ( 3,539 ) ​ $ 399,200 Net loss — ​ — ​ — ​ ( 7,864 ) ​ — ​ ( 7,864 ) Foreign currency translation adjustments — ​ — ​ — ​ — ​ ( 811 ) ​ ( 811 ) Issuance of common stock upon release of restricted stock units ​ 517,907 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense — ​ — ​ 1,243 ​ — ​ — ​ 1,243 Balances at March 30, 2024 115,389,689 ​ $ 11 ​ $ 460,927 ​ $ ( 64,820 ) ​ $ ( 4,350 ) ​ $ 391,768 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 7 Table of Contents Latham Group, Inc. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ Other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Accumulated ​ Comprehensive ​ Stockholders' ​ ​ Shares ​ Amount ​ Capital ​ Deficit ​ Loss ​ Equity Balances at December 31, 2024 115,764,839 ​ $ 12 ​ $ 467,076 ​ $ ( 74,816 ) ​ $ ( 5,050 ) ​ $ 387,222 Net loss — ​ — ​ — ​ ( 5,962 ) ​ — ​ ( 5,962 ) Foreign currency translation adjustments — ​ — ​ — ​ — ​ 217 ​ 217 Issuance of common stock upon release of restricted stock units ​ 941,370 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Common stock withheld for taxes on restricted stock units ​ ( 343,232 ) ​ ​ — ​ ​ ( 2,306 ) ​ ​ — ​ ​ — ​ ​ ( 2,306 ) Stock-based compensation expense — ​ — ​ 1,971 ​ — ​ — ​ 1,971 Balances at March 29, 2025 116,362,977 ​ $ 12 ​ $ 466,741 ​ $ ( 80,778 ) ​ $ ( 4,833 ) ​ $ 381,142 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 8 Table of Contents Latham Group, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ ​ March 29, ​ March 30, ​ ​ ​ 2025 2024 ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 5,962 ) ​ $ ( 7,864 ) ​ Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Depreciation and amortization ​ 12,400 ​ 10,374 ​ Unrealized foreign currency (gain) loss ​ ​ ( 417 ) ​ ​ 1,584 ​ Amortization of deferred financing costs and debt discount ​ 430 ​ 430 ​ Non-cash lease expense ​ 1,776 ​ 1,780 ​ Change in fair value of interest rate swap ​ 283 ​ ( 1,804 ) ​ Stock-based compensation expense ​ 1,971 ​ 1,243 ​ Bad debt expense ​ ​ 875 ​ ​ 1,299 ​ Other non-cash, net ​ ​ ( 63 ) ​ ​ 173 ​ Earnings from equity method investment ​ ​ ( 953 ) ​ ​ ( 1,309 ) ​ Distributions received from equity method investment ​ ​ — ​ ​ 908 ​ Changes in operating assets and liabilities: ​ ​ ​ Trade receivables ​ ( 52,550 ) ​ ( 44,895 ) ​ Inventories ​ ( 9,559 ) ​ 1,648 ​ Prepaid expenses and other current assets ​ 189 ​ 467 ​ Income tax receivable ​ ( 4,624 ) ​ ( 428 ) ​ Other assets ​ ​ ( 10 ) ​ ​ ( 146 ) ​ Accounts payable ​ 14,271 ​ 8,179 ​ Accrued expenses and other current liabilities ​ ( 4,861 ) ​ ( 5,987 ) ​ Other long-term liabilities ​ ( 78 ) ​ ( 164 ) ​ Net cash used in operating activities ​ ( 46,882 ) ​ ( 34,512 ) ​ Cash flows from investing activities : ​ ​ ​ Purchases of property and equipment ​ ( 3,452 ) ​ ( 5,345 ) ​ Acquisition of business, net of cash acquired ​ ( 4,934 ) ​ — ​ Net cash used in investing activities ​ ( 8,386 ) ​ ( 5,345 ) ​ Cash flows from financing activities : ​ ​ ​ Payments on long-term debt borrowings ​ — ​ ( 18,813 ) ​ Proceeds from borrowings on revolving credit facility ​ ​ 25,000 ​ ​ — ​ Repayments of finance lease obligations ​ ​ ( 201 ) ​ ​ ( 189 ) ​ Common stock withheld for taxes on restricted stock units ​ ​ ( 2,306 ) ​ ​ — ​ Net cash provided by (used in) financing activities ​ 22,493 ​ ( 19,002 ) ​ Effect of exchange rate changes on cash ​ 343 ​ ( 93 ) ​ Net decrease in cash ​ ( 32,432 ) ​ ( 58,952 ) ​ Cash at beginning of period ​ 56,398 ​ 102,763 ​ Cash at end of period ​ $ 23,966 ​ $ 43,811 ​ Supplemental cash flow information : ​ ​ ​ Cash paid for interest ​ $ 6,266 ​ $ 9,513 ​ Income taxes paid, net ​ ​ 344 ​ ​ 39 ​ Supplemental disclosure of non-cash investing and financing activities : ​ ​ ​ ​ Purchases of property and equipment included in accounts payable and accrued expenses ​ $ 1,360 ​ $ 426 ​ Right-of-use operating and finance lease assets obtained in exchange for lease liabilities ​ ​ 994 ​ ​ 198 ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 9 Table of Contents Notes to Condensed Consolidated Financial Statements  (unaudited) 1. NATURE OF THE BUSINESS Latham Group, Inc. (the “Company” or “Latham”) wholly owns Latham Pool Products, Inc. (“Latham Pool Products”), a designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand. Latham Pool Products offers a portfolio of pools and related products, including in-ground swimming pools, pool covers, and pool liners. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The unaudited condensed consolidated balance sheet at December 31, 2024 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of March 29, 2025 and for the fiscal quarters ended March 29, 2025 and March 30, 2024, respectively, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with Latham Group, Inc.’s audited consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2024 included in the Company’s 2024 Annual Report on Form 10-K, filed with the SEC on March 5, 2025 (the “Annual Report”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of these condensed consolidated financial statements, have been included. The Company’s results of operations for the fiscal quarter ended March 29, 2025 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending December 31, 2025 or other interim periods thereof. Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends, and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Seasonality Although the Company generally has demand for its products throughout the year, its business is seasonal and weather is one of the principal external factors affecting the business. In general, net sales and net income are highest (or net loss is the lowest) during the second and third quarters, representing the peak months of swimming pool use, pool installation, and remodeling and repair activities. Severe weather may also affect net sales in all periods. Significant Accounting Policies Refer to the Annual Report for a discussion of the Company’s significant accounting policies, as updated below. 10 Table of Contents Recently Issued Accounting Pronouncements The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), in an effort to enhance the transparency and decision usefulness of income tax disclosures. For all entities, ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The a mendments should be applied prospectively with retrospective application permitted. Early adoption is also permitted. The Company is currently evaluating ASU 2023-09 and its potential impact on the notes to the condensed consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which improves disclosures to provide more detailed information about a business entity’s expenses. ASU 2024-03 is effective for public business entities for fiscal years beginning after December 15, 2026. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating ASU 2024-03 and its potential impact on the condensed consolidated financial statements. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), requiring public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. The Company adopted ASU 2023-07 during the year ended December 31, 2024. See Note 15 for further detail. ​ In March 2024, the FASB issued ASU 2024-01, Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), which improves financial reporting by providing clarity on when an entity should apply the scope guidance in paragraph 718-10-15-3. ASU 2024-01 is effective for public business entities for fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with early adoption permitted. Adoption of the new standard did not have an impact on the Company’s condensed consolidated financial statements. ​ ​ ​ 11 Table of Contents 3. ACQUISITIONS Coverstar Central, LLC On August 2, 2024 (the “Acquisition Date”), Latham Pool Products acquired Coverstar Central, LLC (“Coverstar Central”) for total consideration of $ 71.5 million (the “Coverstar Central Acquisition”). The total consideration included $ 66.5 million in cash (including a net working capital adjustment of $ 1.2 million) and a non-cash settlement of preexisting obligations of $ 4.9 million. Preexisting relationships are effectively settled since such a relationship becomes intercompany upon the acquisition and is eliminated in post-combination financial statements. The cash consideration was funded with cash on hand. The Company incurred $ 0.9 million in transaction costs. The results of Coverstar Central’s operations have been included in the condensed consolidated financial statements since that date. Coverstar Central is an automatic safety cover dealer based in the United States. The acquisition allows for vertical integration of the Company’s automatic safety cover product category. Additionally, the acquisition provides the Company with an increase in dealer and franchise relationships. The Company accounted for the Coverstar Central Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations. This requires that the assets acquired and liabilities assumed be measured at fair value. Inventories were valued using the comparative sales method. Specific to intangible assets, backlog and customer relationships were valued using the multi-period excess earnings method. The Company recorded the assets acquired and liabilities assumed at their respective fair values as of the Acquisition Date. The fair value of assets acquired and liabilities assumed recorded in the condensed consolidated financial statements may be subject to adjustment pending completion of final evaluation. These fair value estimates will be reevaluated and adjusted, if needed, during the measurement period of up to one year from the Acquisition Date, and recorded as adjustments to goodwill. The following summarizes the purchase price allocation for the Company’s acquisition of Coverstar Central: ​ ​ ​ ​ ​ (in thousands) August 2, 2024 Total consideration ​ $ 71,516 Allocation: ​ Cash ​ 2,084 Trade receivables ​ 7,020 Inventories ​ 4,293 Prepaid expenses and other current assets ​ 53 Property and equipment ​ 344 Intangible assets ​ 38,220 Deferred tax assets ​ 43 Total assets acquired, excluding goodwill ​ 52,057 Accounts payable ​ 131 Accrued expenses and other current liabilities ​ 2,457 Total liabilities assumed ​ 2,588 Total fair value of net assets acquired, excluding goodwill ​ 49,469 Goodwill ​ $ 22,047 ​ The excess of the total consideration over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $ 22.0 million. Goodwill resulting from the acquisition was attributable to vertical integration, the expanded market share and broader geographical footprint. The goodwill recognized is deductible for tax purposes. The Company allocated a portion of the total consideration to specific intangible asset categories as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ Amortization Definite-lived intangible assets: (in thousands) Period (in years) Dealer relationships ​ $ 37,800 13 Order backlog ​ 420 1 ​ ​ 12 Table of Contents Pro Forma Financial Information (Unaudited) The following pro forma financial information presents the statements of operations of the Company with Coverstar Central as if the acquisition occurred on January 1, 2024. The pro forma results do not include any anticipated synergies, cost savings or other expected benefits of the acquisition. The pro forma financial information is not necessarily indicative of what the financial results would have been had the acquisition been completed on January 1, 2024 and is not necessarily indicative of the Company’s future financial results. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ March 29, ​ March 30, (in thousands) 2025 2024 Net sales ​ $ 111,420 ​ $ 111,584 Net loss ​ ​ ( 6,270 ) ​ ​ ( 6,428 ) ​ The pro forma financial information presented above reflects the effects as a result of the acquisition, including the amortization expense from acquired intangible assets, the additional cost of sales from acquired inventory, the elimination of intercompany transactions and the removal of certain costs (primarily payroll costs) that would not have occurred and any related tax effects. Transaction costs for Coverstar Central are reflected within pro forma net loss for the fiscal quarter ended March 30, 2024. Other Business Combinations During the fiscal quarter ended March 29, 2025, the Company completed the acquisition of two autocover dealers located in New York and Tennessee that qualified as a business combination. This transaction resulted in an increase to goodwill and intangibles, but was not material to our condensed consolidated financial statements, and as a result, additional business combination disclosures for this acquisition have been omitted. 4. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value. Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 3 — Unobservable inputs that reflect the Company’s own assumptions incorporated into valuation techniques. These valuations require significant judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When there is more than one input at different levels within the hierarchy, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessment of the significance of a particular input to the fair value measurement in its entirety requires substantial judgment and consideration of factors specific to the asset or liability. Level 3 inputs are inherently difficult to estimate. Changes to these inputs can have significant impact on fair value measurements. Assets and liabilities measured at fair value using Level 3 inputs are based on one or more of the following valuation techniques: market approach, income approach or cost approach. There were no transfers between fair value measurement levels during the fiscal quarters ended March 29, 2025 and March 30, 2024. Assets and liabilities measured at fair value on a nonrecurring basis The Company’s non-financial assets such as goodwill, intangible assets, and property and equipment are measured at fair value upon acquisition and remeasured to fair value when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 2 and Level 3 inputs. 13 Table of Contents Fair value of financial instruments The Company considers the carrying amounts of cash, trade receivables, prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities to approximate fair value because of the short-term maturities of these instruments. Term loans Term loans are carried at amortized cost; however, the Company estimates the fair value of term loans for disclosure purposes. The fair value of a term loan is determined using inputs based on observable market data of a non-public exchange, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of the term loans (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 29, 2025 ​ December 31, 2024 ​ ​ ​ Carrying ​ Estimated ​ Carrying ​ Estimated ​ ​ Value Fair Value Value Fair Value ​ Term Loan ​ $ 281,913 ​ $ 272,046 ​ $ 281,521 ​ $ 276,946 ​ ​ Interest rate swap The Company estimates the fair value of the interest rate swap on a quarterly basis using Level 2 inputs, including the forward SOFR curve. The fair value is estimated by comparing (i) the present value of all future monthly fixed rate payments versus (ii) the variable payments based on the forward SOFR curve. As of March 29, 2025 and December 31, 2024, the Company’s interest rate swap was a liability of $ 0.7 million and $ 0.4 million, respectively, which were recorded within other long-term liabilities on the condensed consolidated balance sheets. 5. GOODWILL AND INTANGIBLE ASSETS, NET Goodwill The carrying amount of goodwill as of March 29, 2025 and as of December 31, 2024 was $ 154.7 million and $ 152.6 million, respectively. The change in the carrying value during the fiscal quarter ended March 29, 2025 was primarily driven by acquisitions made in the first fiscal quarter of 2025. Intangible Assets Intangible assets, net as of March 29, 2025 consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 29, 2025 ​ ​ Gross ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ Currency ​ Accumulated ​ Net ​ Amount Translation Amortization Amount Trade names and trademarks ​ $ 148,100 ​ $ ( 471 ) ​ $ 37,834 ​ $ 109,795 Patented technology ​ 16,126 ​ ( 7 ) ​ 10,671 ​ 5,448 Technology ​ ​ 13,000 ​ ​ — ​ ​ 2,890 ​ ​ 10,110 Pool designs ​ 13,628 ​ ( 233 ) ​ 4,143 ​ 9,252 Franchise relationships ​ 1,187 ​ — ​ 1,187 ​ — Dealer relationships ​ 238,551 ​ ( 2 ) ​ 84,064 ​ 154,485 Order backlog ​ ​ 2,020 ​ ​ — ​ ​ 1,880 ​ ​ 140 Non-competition agreements ​ 2,476 ​ — ​ 2,476 ​ — ​ ​ $ 435,088 ​ $ ( 713 ) ​ $ 145,145 ​ $ 289,230 ​ The Company recognized $ 7.2 million of amortization expense related to intangible assets during the fiscal quarter ended March 29, 2025. The Company recognized $ 6.4 million of amortization expense related to intangible assets during the fiscal quarter ended March 30, 2024. The change in the carrying value of dealer relationships is driven by the acquisitions made in the first fiscal quarter of 2025. ​ 14 Table of Contents Intangible assets, net as of December 31, 2024 consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ Gross ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ Currency ​ Accumulated ​ Net ​ Amount Translation Amortization Amount Trade names and trademarks ​ $ 148,100 ​ $ ( 592 ) ​ $ 36,183 ​ $ 111,325 Patented technology ​ 16,126 ​ ( 9 ) ​ 10,303 ​ 5,814 Technology ​ ​ 13,000 ​ ​ — ​ ​ 2,673 ​ ​ 10,327 Pool designs ​ 13,628 ​ ( 293 ) ​ 3,909 ​ 9,426 Franchise relationships ​ 1,187 ​ — ​ 1,187 ​ — Dealer relationships ​ 235,176 ​ ( 3 ) ​ 79,397 ​ 155,776 Order backlog ​ ​ 2,020 ​ ​ — ​ ​ 1,775 ​ ​ 245 Non-competition agreements ​ 2,476 ​ — ​ 2,476 ​ — ​ ​ $ 431,713 ​ $ ( 897 ) ​ $ 137,903 ​ $ 292,913 ​ The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five fiscal years and thereafter (in thousands): ​ ​ ​ ​ ​ ​ ​ Estimated Future ​ ​ Amortization Fiscal Year Ending Expense Remainder of fiscal year 2025 ​ $ 21,679 2026 ​ 28,719 2027 ​ 28,719 2028 ​ 27,760 2029 ​ ​ 22,391 Thereafter ​ 159,962 ​ ​ $ 289,230 ​ ​ 6. INVENTORIES, NET Inventories, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 29, 2025 December 31, 2024 ​ Raw materials ​ $ 58,736 ​ $ 49,322 ​ Finished goods ​ 28,127 ​ 27,779 ​ ​ ​ $ 86,863 ​ $ 77,101 ​ ​ ​ 7. LONG-TERM DEBT The components of the Company’s outstanding long-term debt obligations consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 29, 2025 December 31, 2024 ​ Term Loan ​ $ 288,063 ​ $ 288,063 ​ Revolving Credit Facility ​ ​ 25,000 ​ ​ — ​ Less: Unamortized discount and debt issuance costs ​ ( 6,150 ) ​ ( 6,542 ) ​ Total debt ​ 306,913 ​ 281,521 ​ Less: Current portion of long-term debt ​ ( 3,250 ) ​ ( 3,250 ) ​ Total long-term debt ​ $ 303,663 ​ $ 278,271 ​ ​ On February 23, 2022, Latham Pool Products and certain subsidiary guarantors entered into a credit and guaranty agreement (the “Credit Agreement”) with Barclays Bank PLC, which provides a senior secured multicurrency revolving line of credit (the “Revolving Credit Facility”) in an initial principal amount of $ 75.0 million and a U.S. Dollar senior secured term loan facility (the “Term Loan”) in an initial principal amount of $ 325.0 million. 15 Table of Contents The Company is required to meet certain financial covenants, including maintaining specific liquidity measurements. There are also negative covenants, including certain restrictions on the Company’s ability to incur additional indebtedness, create liens, make investments, consolidate or merge with other entities, enter into transactions with affiliates, make prepayments with respect to certain indebtedness and make restricted payments and other distributions. As of March 29, 2025, the Company was in compliance with all financial covenants under the Credit Agreement. Revolving Credit Facility The Revolving Credit Facility may be utilized to finance ongoing general corporate and working capital needs and permits Latham Pool Products to borrow loans in U.S. Dollars, Canadian Dollars, Euros and Australian Dollars. The Revolving Credit Facility matures on February 23, 2027. Loans outstanding under the Revolving Credit Facility denominated in U.S. Dollars and Canadian Dollars bear interest, at the borrower’s option, at a rate per annum based on Term SOFR or CDO (each, as defined in the Credit Agreement), as applicable, plus a margin of 3.50 %, or at a rate per annum based on the Base Rate or the Canadian Prime Rate (each, as defined in the Credit Agreement), plus a margin of 2.50 %. Loans outstanding under the Revolving Credit Facility denominated in Euros or Australian Dollars bear interest based on EURIBOR or the AUD Rate (each, as defined in the Credit Agreement), respectively, plus a margin of 3.50 %. A commitment fee accrues on any unused portion of the commitments under the Revolving Credit Facility. The commitment fee is due and payable quarterly in arrears, and initially was 0.375 % per annum and thereafter accrues at a rate per annum ranging from 0.25 % to 0.50 %, depending on the First Lien Net Leverage Ratio (as defined in the Credit Agreement, the “First Lien Net Leverage Ratio”). Borrowings under the Revolving Credit Facility are not subject to amortization and are due at maturity. The Company incurred debt issuance costs of $ 0.8 million related to the Revolving Credit Facility. The debt issuance costs were recorded within other assets on the condensed consolidated balance sheet and are being amortized over the life of the Revolving Credit Facility. As of March 29, 2025, there was $ 25.0 million of outstanding borrowings on the Revolving Credit Facility and $ 50.0 million was available for future borrowing. Term Loan Pursuant to the Credit Agreement, Latham Pool Products borrowed $ 325.0 million in term loans. The Term Loan matures on February 23, 2029. Loans outstanding under the Term Loan bear interest, at the borrower’s option, at a rate per annum based on Term SOFR (as defined in the Credit Agreement), plus a margin ranging from 3.75 % to 4.00 %, depending on the First Lien Net Leverage Ratio, or based on the Base Rate (each, as defined in the Credit Agreement), plus a margin ranging from 2.75 % to 3.00 %, depending on the First Lien Net Leverage Ratio. Loans under the Term Loan are subject to scheduled quarterly amortization payments of $ 812,500 , equal to 0.25 % of the initial principal amount of the Term Loan. The Term Loan contains customary mandatory prepayment provisions, including requirements to make mandatory prepayments with 50 % of any excess cash flow and with 100 % of the net cash proceeds from the incurrence of indebtedness not otherwise permitted to be incurred by the covenants, asset sales, and casualty and condemnation events, in each case, subject to customary exceptions. During the fiscal quarter ended March 30, 2024, the Company made a pre-payment of $ 18.0 million in addition to the required annual payments of $ 3.3 million. No additional pre-payments are expected to be made during the year ending December 31, 2025. Outstanding borrowings as of March 29, 2025 were $ 281.9 million, net of discount and debt issuance costs of $ 6.2 million. In connection with the Term Loan, the Company is subject to various negative, reporting, financial, and other covenants, including maintaining specific liquidity measurements. As of March 29, 2025, the unamortized debt issuance costs and discount on the Term Loan were $ 3.4 million and $ 2.7 million, respectively. The effective interest rate was 9.31 % at March 29, 2025, including the impact of the Company’s interest rate swap. Interest Rate Risk Interest rate risk associated with the Credit Agreement is mitigated partially through an interest rate swap. ​ 16 Table of Contents The Company entered into an interest rate swap that was executed on March 10, 2023. The swap has an effective date of May 18, 2023 and a termination date of May 18, 2026. Under the terms of the swap, the Company fixed its SOFR borrowing rate at 4.3725 % on a notional amount of $ 161.0 million. The interest rate swap is not designated as a hedging instrument for accounting purposes (see Note 4). Debt Maturities Principal payments due on the outstanding debt, excluding the Revolving Credit Facility, in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ending ​ Term Loan Remainder of fiscal year 2025 $ 3,250 2026 ​ 3,250 2027 ​ 3,250 2028 ​ 3,250 2029 ​ ​ 275,063 ​ ​ $ 288,063 ​ Guarantees The obligations under the Credit Agreement are guaranteed by certain wholly owned subsidiaries (the “Guarantors”) of the Company that are party to that certain security agreement, which was executed in connection with the Credit Agreement. The obligations under the Credit Agreement are secured by substantially all of the Guarantors’ tangible and intangible assets, including their accounts receivables, equipment, intellectual property, inventory, cash and cash equivalents, deposit accounts, and security accounts. The Credit Agreement also restricts payments and other distributions unless certain conditions are met, which could restrict the Company’s ability to pay dividends. The ownership chain between Latham Pool Products and the Company consists of a series of holding companies with no material assets, liabilities, or standalone operations other than indirect equity interests in Latham Pool Products. 8. PRODUCT WARRANTIES The warranty reserve activity consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ March 29, 2025 March 30, 2024 ​ Balance at the beginning of the fiscal year ​ $ 2,647 ​ $ 3,161 ​ Adjustments to reserve ​ 669 ​ 537 ​ Less: Settlements made (in cash or in kind) ​ ( 285 ) ​ ( 679 ) ​ Balance at the end of the fiscal quarter ​ $ 3,031 ​ $ 3,019 ​ ​ ​ 9. LEASES For leases with initial terms greater than 12 months, the Company considers these right-of-use assets and records the related asset and obligation at the present value of lease payments over the term. For leases with initial terms equal to or less than 12 months, the Company does not consider them as right-of-use assets and instead considers them short-term lease costs that are recognized on a straight-line basis over the lease term. The Company’s leases may include escalation clauses, renewal options, and/or termination options that are factored into the Company’s determination of lease term and lease payments when it is reasonably certain the option will be exercised. The Company elected to take the practical expedient and not separate lease and non-lease components of contracts. The Company estimates an incremental borrowing rate to discount the lease payments based on information available at lease commencement because the implicit rate of the lease is generally not known. The Company leases manufacturing facilities, office space, land, and certain vehicles and equipment under operating leases. The Company also leases certain vehicles and equipment under finance leases. The Company determines if an arrangement is a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. ​ 17 Table of Contents The components of lease expense for the fiscal quarters ended March 29, 2025 and March 30, 2024 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ March 29, 2025 March 30, 2024 ​ Operating lease expense ​ $ 2,162 ​ $ 2,163 ​ Finance lease amortization of assets ​ ​ 210 ​ ​ 212 ​ Finance lease interest on lease liabilities ​ ​ 68 ​ ​ 84 ​ Short-term lease expense ​ 97 ​ 56 ​ Variable lease expense ​ 199 ​ 158 ​ Total lease expense ​ $ 2,736 ​ $ 2,673 ​ ​ Operating and finance lease right-of-use assets and lease-related liabilities as of March 29, 2025 and December 31, 2024 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 29, 2025 ​ December 31, 2024 ​ Classification ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease right-of-use assets: ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ $ 27,154 ​ $ 28,259 ​ Operating lease right-of-use assets Finance leases ​ ​ 3,064 ​ ​ 3,261 ​ Other assets Total lease right-of-use assets ​ $ 30,218 ​ $ 31,520 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease-related liabilities ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ $ 7,100 ​ $ 7,176 ​ Current operating lease liabilities Finance leases ​ ​ 768 ​ ​ 779 ​ Accrued expenses and other current liabilities Non-current ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 20,951 ​ ​ 22,138 ​ Non-current operating lease liabilities Finance leases ​ ​ 2,501 ​ ​ 2,678 ​ Other long-term liabilities Total lease liabilities ​ $ 31,320 ​ $ 32,771 ​ ​ ​ The table below presents supplemental information related to leases as of March 29, 2025 and December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 29, 2025 ​ December 31, 2024 Weighted-average remaining lease term (years) ​ ​ ​ ​ ​ ​ ​ ​ Finance leases ​ ​ 4.2 ​ ​ ​ 4.4 ​ Operating leases ​ ​ 5.2 ​ ​ ​ 5.3 ​ Weighted-average discount rate ​ ​ ​ ​ ​ ​ ​ ​ Finance leases ​ ​ 8.2 % ​ ​ 8.2 % Operating leases ​ ​ 5.5 % ​ ​ 5.4 % ​ The table below presents supplemental information related to the cash flows for operating leases recorded on the condensed consolidated statements of cash flows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ March 29, 2025 March 30, 2024 ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ ​ Operating cash flows for operating leases ​ $ 1,829 ​ $ 1,794 ​ ​ ​ 18 Table of Contents The following table summarizes fiscal year maturities of operating lease liabilities as of March 29, 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Leases ​ Finance Leases ​ Total Remainder of fiscal year 2025 ​ $ 6,482 ​ $ 765 ​ $ 7,247 2026 ​ ​ 7,129 ​ ​ 939 ​ ​ 8,068 2027 ​ ​ 5,323 ​ ​ 863 ​ ​ 6,186 2028 ​ ​ 3,967 ​ ​ 851 ​ ​ 4,818 2029 ​ ​ 3,396 ​ ​ 367 ​ ​ 3,763 Thereafter ​ ​ 6,032 ​ ​ 74 ​ ​ 6,106 Total lease payments ​ ​ 32,329 ​ ​ 3,859 ​ ​ 36,188 Less: Interest ​ ​ ( 4,278 ) ​ ​ ( 590 ) ​ ​ ( 4,868 ) Present value of lease liability ​ $ 28,051 ​ $ 3,269 ​ $ 31,320 ​ ​ 10. NET SALES The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ ​ March 29, 2025 March 30, 2024 ​ In-ground Swimming Pools ​ ​ $ 57,734 ​ $ 59,832 ​ Covers ​ ​ 31,611 ​ 26,868 ​ Liners ​ ​ 22,075 ​ 23,929 ​ ​ ​ ​ $ 111,420 ​ $ 110,629 ​ ​ ​ 11. INCOME TAXES The effective income tax rate for the fiscal quarter ended March 29, 2025 was 40.6 % compared to ( 7.2 )% for the fiscal quarter ended March 30, 2024. The differences between the U.S. federal statutory income tax rate and the Company’s effective income tax rates for the fiscal quarter ended March 29, 2025 and the fiscal quarter ended March 30, 2024 were primarily attributable to the discrete impact of stock-based compensation expense for which there is no associated tax benefit and the effects of branch accounting for Latham Canada. 12. STOCKHOLDERS’ EQUITY Repurchase Program On May 10, 2022, the Board of Directors of the Company (the “Board”) approved a stock repurchase program (the “Repurchase Program”), which authorizes the Company to repurchase up to $ 100 million of the Company’s shares of common stock by May 2025. The Company may effect these repurchases in open market transactions, privately negotiated purchases, or other acquisitions. The Company is not obligated to repurchase any of its shares of its common stock under the Repurchase Program and the timing and amount of any repurchases will depend on market conditions, the Company’s stock price, alternative uses of capital, the terms of the Company’s debt instruments, and other factors. As of March 29, 2025, $ 77.0 million remained available for share repurchases pursuant to the Repurchase Program. The Company did no t repurchase any shares of its common stock during the fiscal quarter ended March 29, 2025. The Company accounts for the excess of the repurchase price over the par value of shares acquired as a reduction to additional paid-in capital. 13. STOCK-BASED COMPENSATION On April 12, 2021, the Company’s stockholders approved the Latham Group, Inc. 2021 Omnibus Equity Incentive Plan (the “2021 Omnibus Equity Plan”), which became effective on April 22, 2021. The 2021 Omnibus Equity Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock units and other stock-based and cash-based awards. The maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director under the 2021 Omnibus Equity Plan during any one fiscal year, together with any cash fees paid to such non-employee director during such fiscal year, is $ 750,000 . 19 Table of Contents On May 2, 2023, at the 2023 annual meeting of stockholders of the Company, the stockholders approved the first amendment (the “Equity Plan First Amendment”) to the 2021 Omnibus Equity Plan, which was previously approved by the Board. The Equity Plan First Amendment became effective upon stockholder approval, and provides for (i) an increase by 8,000,000 shares of the share pool, i.e. the maximum number of shares of the Company’s common stock that may be issued pursuant to awards granted under the 2021 Omnibus Equity Plan, (ii) a prohibition on recycling of shares withheld or remitted to pay taxes for all awards, (iii) a minimum vesting period of one year for all awards, with an exception for shares representing 5 % of the share pool, and (iv) a prohibition on the transfer of stock options and stock appreciation rights for value or to third-party financial institutions without stockholder approval. Except as amended by the Equity Plan First Amendment, the other terms of the 2021 Omnibus Equity Plan remain in full force and effect. Subsequent to the Equity Plan First Amendment, the maximum aggregate number of shares reserved for issuance under the 2021 Omnibus Equity Plan is 21,170,212 shares. The following table summarizes the Company’s stock-based compensation expense (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ ​ ​ March 29, 2025 March 30, 2024 ​ ​ Selling, general, and administrative ​ $ 1,971 ​ $ 1,243 ​ ​ ​ ​ $ 1,971 ​ $ 1,243 ​ ​ ​ As of March 29, 2025, total unrecognized stock-based compensation expense related to all unvested stock-based awards was $ 15.7 million, which is expected to be recognized over a weighted-average period of 2.2 years. Restricted Stock Units The following table represents the Company’s restricted stock units activity during the fiscal quarter ended March 29, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Average Grant- ​ ​ Shares ​ Date Fair Value Outstanding at January 1, 2025 4,200,759 ​ $ 3.12 Granted 798,077 ​ 7.31 Vested ( 941,370 ) ​ 3.20 Forfeited ( 56,405 ) ​ 3.16 Outstanding at March 29, 2025 4,001,061 ​ $ 3.93 ​ Stock Options The following table represents the Company’s stock option activity during the fiscal quarter ended March 29, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- Weighted- ​ ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ ​ ​ Exercise Price ​ Remaining ​ Aggregate ​ Shares per Share Contract Term Intrinsic Value ​ ​ ​ ​ ​ (in years) ​ (in thousands) Outstanding at January 1, 2025 1,383,738 ​ $ 15.20 ​ ​ ​ ​ Granted — ​ ​ — ​ Exercised — ​ — ​ Forfeited — ​ ​ — ​ Expired ​ — ​ ​ — ​ ​ ​ ​ ​ Outstanding at March 29, 2025 1,383,738 ​ $ 15.20 6.61 ​ $ 83 Vested and expected to vest at March 29, 2025 1,383,738 ​ $ 15.20 6.61 ​ $ 83 Options exercisable at March 29, 2025 976,745 ​ $ 15.72 6.58 ​ $ 42 ​ The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock . 20 Table of Contents Stock Appreciation Rights The following table represents the Company’s stock appreciation rights activity during the quarter ended March 29, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- Weighted- ​ ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ ​ ​ Exercise Price ​ Remaining ​ Aggregate ​ Shares per Share Contract Term Intrinsic Value ​ ​ ​ ​ ​ (in years) ​ (in thousands) Outstanding at January 1, 2025 660,556 ​ $ 3.15 ​ ​ ​ ​ Granted — ​ ​ — ​ Exercised — ​ — ​ Forfeited — ​ — ​ Outstanding at March 29, 2025 660,556 ​ $ 3.15 8.13 ​ $ 2,168 Vested and expected to vest at March 29, 2025 660,556 ​ $ 3.15 8.13 ​ $ 2,168 Stock appreciation rights exercisable at March 29, 2025 292,602 ​ $ 3.19 8.12 ​ $ 949 ​ The aggregate intrinsic value of stock appreciation rights is calculated as the difference between the strike price of the stock appreciation rights and the fair value of the Company’s common stock for those stock appreciation rights that had strike prices lower than the fair value of the Company’s common stock. Performance Stock Units During the fiscal quarter ended March 29, 2025 the Compensation Committee of the Board approved the grant of performance stock units (“PSUs”) as a portion of the annual equity award to the Company’s executive officers. Thirty-three percent of the target number of PSUs awarded on the date of grant will be earned annually at 0 % to 200 % of the target number of PSUs based on the Company’s achievement of Adjusted EBITDA (with 100 % of PSUs being earned at target performance, and linear interpolation between threshold and target and maximum performance) as defined in the award agreement, for each year of the three-year performance period beginning January 1, 2025 and ending December 31, 2027. Any earned PSUs cliff vest on the third anniversary of the grant date. Adjusted EBITDA is considered a performance condition and the grant date fair value corresponds with management’s expectation of the probable outcome of the performance condition as of the grant date. The grant date fair value is determined based on the fair market value of the Company’s stock at market close on the grant date multiplied by the target number of shares subject to the award and adjusted for management's expectation of the probable outcome of the performance condition. The probability of achieving the performance criteria is assessed quarterly during the performance period. Compensation expense related to unvested PSUs is recognized ratably over the performance period. The following table represents the Company’s PSU activity during the fiscal quarter ended March 29, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Average ​ ​ ​ ​ Grant Date ​ Shares Fair Value ​ ​ ​ ​ Outstanding at January 1, 2025 807,771 ​ $ 2.91 Granted 325,613 ​ ​ 7.33 Adjustment for performance achievement (1) — ​ ​ — Forfeited — ​ ​ — Outstanding at March 29, 2025 1,133,384 ​ $ 4.18 ​ (1) Represents the adjustment to previously granted PSUs based on performance expectations as of the end of each respective fiscal year. (2) An additional 325,613 PSUs could potentially be included if the maximum performance level of 200 % is earned for all PSUs granted during the fiscal quarter ended March 29, 2025. ​ 21 Table of Contents 14. NET LOSS PER SHARE Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ March 29, 2025 March 30, 2024 ​ Numerator: ​ ​ ​ ​ ​ ​ Net loss attributable to common stockholders ​ ​ $ ( 5,962 ) ​ $ ( 7,864 ) ​ Denominator: ​ ​ ​ ​ Weighted-average common shares outstanding ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ ​ 115,885,111 ​ ​ 115,038,929 ​ Diluted ​ ​ ​ 115,885,111 ​ ​ 115,038,929 ​ Net loss per share attributable to common stockholders: ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ $ ( 0.05 ) ​ $ ( 0.07 ) ​ Diluted ​ ​ $ ( 0.05 ) ​ $ ( 0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 29, 2025 and December 31, 2024, 116,362,977 and 115,764,839 shares of common stock were issued and outstanding, respectively. The following table includes the number of shares that may be dilutive common shares in the future that were not included in the computation of diluted net loss per share because the effect was anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ ​ ​ March 29, 2025 March 30, 2024 ​ Restricted stock awards ​ — 42,886 ​ Restricted stock units ​ 200,279 24,146 ​ Stock options ​ 1,278,535 1,521,158 ​ Stock appreciation rights ​ ​ — ​ 657,999 ​ Performance stock units ​ ​ 87,462 ​ 75,937 ​ ​ ​ 15. SEGMENT REPORTING The Company conducts business as one operating and reportable segment that designs, manufactures, and markets in-ground swimming pools, pool covers, and pool liners. The Company’s Chief Executive Officer, who is the chief operating decision maker (“CODM”), reviews financial information presented on a consolidated basis for purposes of assessing financial performance and allocating resources. The Company reports consolidated net income (loss), as management believes that is the measure most consistent with the measurement principles in the Company’s condensed consolidated financial statements. Consolidated net income (loss) is used by the CODM predominantly in the annual budget and forecasting, including consideration of budget-to-actual variances when making decisions about the allocation of operating and capital resources. ​ 22 Table of Contents Operations of the Company’s single segment consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Quarter Ended ​ March 29, 2025 ​ March 30, 2024 Net sales $ 111,420 ​ $ 110,629 Other cost of sales (1) ​ 74,580 ​ ​ 76,438 Other selling, general and administrative expense (2) ​ 26,684 ​ ​ 23,421 Depreciation ​ 4,998 ​ ​ 3,748 Amortization (3) ​ 7,192 ​ ​ 6,411 Stock-based compensation expense ​ 1,971 ​ ​ 1,243 Strategic initiative costs (4) ​ 644 ​ ​ 1,123 Acquisition and integration related costs (5) ​ 267 ​ ​ - Restructuring charges (6) ​ 15 ​ ​ 318 Interest expense, net ​ 6,371 ​ ​ 4,982 Other (income) expense, net ​ ( 308 ) ​ ​ 1,586 Earnings from equity method investment ​ ( 953 ) ​ ​ ( 1,309 ) Income tax (benefit) expense ​ ( 4,079 ) ​ ​ 532 Net loss $ ( 5,962 ) ​ $ ( 7,864 ) ​ (1) Other cost of sales includes total cost of sales (as presented in the condensed consolidated statements of operations) excluding depreciation, stock-based compensation, restructuring charges, and strategic initiative costs. (2) Other selling, general and administrative expense includes total selling, general and administrative expense (as presented in the condensed consolidated statements of operations) excluding depreciation, amortization, stock-based compensation, strategic initiative costs and acquisition and integration related costs. (3) Inclusive of finance lease amortization. (4) Represents fees paid to external consultants and other expenses for our strategic initiatives (5) Represents acquisition and integration costs as well as other costs related to potential transactions. (6) Represents costs related to a cost reduction plan that includes severance and other costs for our executive management changes and additional costs related to our cost reduction plans, which include further actions to reduce our manufacturing overhead by reducing headcount in addition to facility shutdowns. ​ 23 Table of Contents