Latham Group, Inc. 10-K

Item 8 – Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 54 Consolidated Balance Sheets as of December 31, 202 5 and 20 24 55 Consolidated Statements of Operations for the Years Ended December 31, 202 5 , 202 4 and 20 23 56 Consolidated Statements of Comprehensive Income ( Loss ) for the Years Ended December 31, 202 5 , 202 4 and 20 23 57 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 202 5 , 202 4 and 2 0 23 58 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 5 , 202 4 and 202 3 59 Notes to Consolidated Financial Statements 60 53 Table of Contents Report of Independent Registered Public Accounting Firm REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Latham Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Latham Group, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Hartford, Connecticut March 4, 2026 We have served as the Company’s auditor since 2020. 54 Table of Contents Latham Group, Inc. Consolidated Balance Sheets (in thousands, except share and per share data) December 31, 2025 2024 Assets Current assets: Cash $ 71,043 $ 56,398 Trade receivables, net 39,914 32,299 Inventories, net 74,926 77,101 Income tax receivable 12,178 3,964 Prepaid expenses and other current assets 20,943 8,536 Total current assets 219,004 178,298 Property and equipment, net 118,820 112,848 Equity method investment 26,482 24,891 Deferred tax assets 718 729 Operating lease right-of-use assets 30,723 28,259 Goodwill 155,189 152,625 Intangible assets, net 268,073 292,913 Other assets 4,214 3,644 Total assets $ 823,223 $ 794,207 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 19,283 $ 13,141 Current maturities of long-term debt 3,250 3,250 Current operating lease liabilities 7,630 7,176 Accrued expenses and other current liabilities 48,979 47,410 Total current liabilities 79,142 70,977 Long-term debt, net of discount, debt issuance costs, and current portion 276,591 278,271 Deferred income tax liabilities, net 34,269 32,347 Non-current operating lease liabilities 23,964 22,138 Other long-term liabilities 3,396 3,252 Total liabilities 417,362 406,985 Commitments and contingencies Stockholders’ equity: Preferred stock, $ 0.0001 par value; 100,000,000 shares authorized as of both December 31, 2025 and December 31, 2024; no shares issued and outstanding as of both December 31, 2025 and December 31, 2024 — — Common stock, $ 0.0001 par value; 900,000,000 shares authorized as of December 31, 2025 and December 31, 2024; 116,766,927 and 115,764,839 shares issued and outstanding, as of December 31, 2025 and December 31, 2024, respectively 12 12 Additional paid-in capital 473,423 467,076 Accumulated deficit ( 63,692 ) ( 74,816 ) Accumulated other comprehensive loss ( 3,882 ) ( 5,050 ) Total stockholders’ equity 405,861 387,222 Total liabilities and stockholders’ equity $ 823,223 $ 794,207 The accompanying notes are an integral part of these consolidated financial statements. 55 Table of Contents Latham Group, Inc. Consolidated Statements of Operations (in thousands, except share and per share data) Year Ended December 31, 2025 2024 2023 Net sales $ 545,912 $ 508,520 $ 566,492 Cost of sales 363,824 354,776 413,548 Gross profit 182,088 153,744 152,944 Selling, general, and administrative expense 122,565 108,364 110,296 Amortization 28,944 27,103 26,519 Income from operations 30,579 18,277 16,129 Other expense: Interest expense, net 25,805 24,840 30,916 Other (income) expense, net ( 3,492 ) 6,237 ( 1,004 ) Total other expense, net 22,313 31,077 29,912 Earnings from equity method investment 5,222 4,060 3,723 Income (loss) before income taxes 13,488 ( 8,740 ) ( 10,060 ) Income tax expense (benefit) 2,364 9,120 ( 7,672 ) Net income (loss) $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Net income (loss) per share attributable to common stockholders: Basic $ 0.10 $ ( 0.15 ) $ ( 0.02 ) Diluted $ 0.09 $ ( 0.15 ) $ ( 0.02 ) Weighted-average common shares outstanding – basic and diluted Basic 116,424,673 115,434,828 112,899,586 Diluted 119,822,088 115,434,828 112,899,586 The accompanying notes are an integral part of these consolidated financial statements. 56 Table of Contents Latham Group, Inc. Consolidated Statements of Comprehensive Income (Loss) (in thousands) Year Ended December 31, 2025 2024 2023 Net income (loss) $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 1,168 ( 1,511 ) ( 6 ) Total other comprehensive income (loss), net of tax 1,168 ( 1,511 ) ( 6 ) Comprehensive income (loss) $ 12,292 $ ( 19,371 ) $ ( 2,394 ) The accompanying notes are an integral part of these consolidated financial statements. 57 Table of Contents Latham Group, Inc. Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balances at January 1, 2023 114,667,975 $ 11 $ 440,880 $ ( 54,568 ) $ ( 3,533 ) $ 382,790 Net loss — — — ( 2,388 ) — ( 2,388 ) Foreign currency translation adjustments — — — — ( 6 ) ( 6 ) Retirement of restricted stock ( 155,450 ) — — — — — Issuance of common stock upon release of restricted stock units 359,257 — — — — — Stock-based compensation expense — — 18,804 — — 18,804 Balances at December 31, 2023 114,871,782 11 459,684 ( 56,956 ) ( 3,539 ) 399,200 Net loss — — — ( 17,860 ) — ( 17,860 ) Foreign currency translation adjustments — — — — ( 1,511 ) ( 1,511 ) Issuance of common stock upon release of restricted stock units 893,057 1 — — — 1 Stock-based compensation expense — — 7,392 — — 7,392 Balances at December 31, 2024 115,764,839 12 467,076 ( 74,816 ) ( 5,050 ) 387,222 Net income — — — 11,124 — 11,124 Foreign currency translation adjustments — — — — 1,168 1,168 Issuance of common stock upon release of restricted stock units 1,447,840 — — — — — Common stock withheld for taxes on restricted stock units ( 445,752 ) — ( 2,900 ) — — ( 2,900 ) Stock-based compensation expense — — 9,247 — — 9,247 Balances at December 31, 2025 116,766,927 $ 12 $ 473,423 $ ( 63,692 ) $ ( 3,882 ) $ 405,861 The accompanying notes are an integral part of these consolidated financial statements. 58 Table of Contents Latham Group, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 51,354 44,446 40,751 Gain on insurance proceeds received for capital — — ( 1,463 ) Unrealized foreign currency (gains) loss ( 4,131 ) 6,223 ( 110 ) Amortization of deferred financing costs and debt discount 1,720 1,720 1,720 Non-cash lease expense 7,502 7,111 7,675 Change in fair value of interest rate swap 717 ( 808 ) 4,729 Deferred income taxes 2,405 ( 1,678 ) ( 9,685 ) Stock-based compensation expense 9,247 7,392 18,804 Bad debt expense 1,736 2,069 5,379 Other non-cash, net 651 1,115 16 Earnings from equity method investment ( 5,222 ) ( 4,060 ) ( 3,723 ) Distributions received from equity method investment 3,632 5,109 2,878 Provision on liability for uncertain tax positions — — ( 7,503 ) Changes in operating assets and liabilities: Trade receivables ( 9,223 ) ( 2,378 ) 13,040 Inventories 2,840 22,695 68,190 Prepaid expenses and other current assets ( 1,622 ) ( 1,992 ) ( 1,326 ) Income tax receivable ( 8,214 ) ( 2,981 ) 1,333 Other assets ( 244 ) 1,263 ( 4,346 ) Accounts payable 5,803 ( 4,039 ) ( 8,512 ) Accrued expenses and other current liabilities ( 6,072 ) ( 1,329 ) ( 11,938 ) Other long-term liabilities ( 573 ) ( 711 ) 2,848 Net cash provided by operating activities 63,430 61,307 116,369 Cash flows from investing activities: Purchases of property and equipment ( 25,385 ) ( 20,116 ) ( 33,189 ) Deposit on property purchases ( 12,000 ) — — Capital reimbursed from insurance proceeds — — 1,463 Acquisition of business, net of cash acquired ( 4,934 ) ( 64,527 ) — Net cash used in investing activities ( 42,319 ) ( 84,643 ) ( 31,726 ) Cash flows from financing activities: Payments on long-term debt borrowings ( 3,250 ) ( 21,250 ) ( 13,250 ) Proceeds from borrowings on revolving credit facility 25,000 — 48,000 Payments on revolving credit facilities ( 25,000 ) — ( 48,000 ) Repayments of finance lease obligations ( 823 ) ( 771 ) ( 625 ) Common stock withheld for taxes on restricted stock units ( 2,900 ) — — Net cash used in financing activities ( 6,973 ) ( 22,021 ) ( 13,875 ) Effect of exchange rate changes on cash 507 ( 1,008 ) ( 631 ) Net increase (decrease) in cash 14,645 ( 46,365 ) 70,137 Cash at beginning of period 56,398 102,763 32,626 Cash at end of period $ 71,043 $ 56,398 $ 102,763 Supplemental cash flow information: Cash paid for interest $ 26,990 $ 24,894 $ 25,747 Income taxes paid, net 8,180 15,475 6,990 Supplemental disclosure of non-cash investing and financing activities: Purchases of property and equipment included in accounts payable and accrued expenses $ 1,148 $ 510 $ 955 Right-of-use operating and finance lease assets obtained in exchange for lease liabilities 10,353 5,426 6,193 The accompanying notes are an integral part of these consolidated financial statements. 59 Table of Contents Notes to Consolidated Financial Statements  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 consolidated financial statements and notes have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the Company’s 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. 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 has 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 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. The Company does not have material finance leases. Revenue Recognition Under FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify 60 Table of Contents the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines which goods or services are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when, or as, that performance obligation is satisfied. The Company sells its products through business-to-business distribution channels. With the exception of its extended service warranties and custom product contracts, the Company recognizes its revenue at a point in time when control of the promised goods is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control of the goods is considered to have been transferred upon shipping or upon arrival at the customer’s destination, depending on the terms of the purchase order. Revenue that is derived from its extended service warranties, which are separately priced and sold, is recognized over the term of the contract. Refer to “Warranties” within this same Note for further information. Revenue from custom products is recognized over time utilizing an input method that compares the cost of cumulative work-in-process to date to the most current estimates for the entire cost of the performance obligation. Custom products are generally delivered to the customer within three days of receipt of the purchase order. Each product shipped is considered to be one performance obligation. For each product shipped, the transaction price by product is specified in the purchase order. The Company recognizes revenue on the transaction price less any estimated rebates or other sales incentives. Customer rebates and other sales incentives are estimated by applying the portfolio approach using the most-likely-amount method and are recorded as a reduction to revenue. Estimates are updated each reporting period and any changes are allocated to the performance obligations on the same basis as at inception. The Company believes the most-likely-amount method best predicts the amount of consideration to which it will be entitled. The Company has elected to account for shipping and handling costs as activities to fulfill the promise to transfer the goods. As a result of this accounting policy election, the Company does not consider shipping and handling activities as promised services to its customers. Therefore, shipping and handling costs billed to customers are recorded in net sales, and the related costs in cost of sales. The Company does not engage in contracts greater than one year, and therefore does not have any contract costs capitalized as of December 31, 2025, and 2024. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the period between the transfer of a promised good to a customer and when the customer pays for that product is one year or less. Warranties The Company offers limited assurance-type warranties on most of its products, which assure that the product will comply with agreed upon specifications. These assurance-type warranties are not separately priced and are not considered separate performance obligations. The Company also offers optional extended service contracts that are separately priced. The Company recognizes revenue related to extended service contracts over the term of the contract. The Company’s assurance-type warranties generally range from five years to lifetime warranties. At the time product revenue is recognized, the Company records a liability for estimated costs that may be incurred under its warranties. The costs are estimated based on historical experience and any specific warranty issues that have been identified. The accuracy of the estimate of additional costs is dependent on the number and cost of future claims submitted during the warranty periods. Although historical warranty costs have been within expectations, there can be no assurance that future warranty costs will not exceed historical amounts. The Company believes that the reserves established for estimated and probable future product warranty claims are adequate. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the balance as necessary. Warranty costs are recorded within cost of sales on the consolidated statements of operations. The Company’s provision for product warranties was recorded within accrued 61 Table of Contents expenses and other current liabilities and other long-term liabilities on the consolidated balance sheets as of December 31, 2025 and 2024. Cost of Sales Cost of sales includes the cost of materials and all costs to make products saleable, such as labor, materials, inbound freight, including inter-plant freight, purchasing, and receiving costs, operating lease costs related to distribution and manufacturing facilities, and warehousing and distributions costs. In addition, all depreciation expense associated with assets used to manufacture products and make them saleable is included in cost of sales. The Company records shipping and handling costs associated with outbound freight as cost of sales when the related revenue is recognized in the consolidated statements of operations. Trade Receivables, Net Trade receivables are recorded at the original invoiced amount and do not bear interest. The Company maintains an allowance for bad debt. The allowance for bad debt is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowances based on historical write-off experience. The Company’s allowance for bad debt as of December 31, 2025 and 2024 was $ 6.5 million and $ 5.9 million, respectively. Concentration of Credit Risk Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and trade receivables. The Company from time to time may have bank deposits in excess of insurance limits of the Federal Deposit Insurance Corporation. The Company also has bank deposits in international accounts. The Company has not historically sustained any credit losses in such accounts and believes it is not exposed to any significant credit risk related to its cash. The Company routinely reviews the financial strength of its customers before extending credit and believes that its trade receivables credit risk exposure is limited. Generally, the Company does not require collateral from its customers. The Company provides extended payment terms to certain customers. During the years ended December 31, 2025, 2024 and 2023, one customer represented approximately 22.6 %, 21.0 % and 20.3 % of the Company’s net sales, respectively. As of December 31, 2025 and 2024, outstanding trade receivables related to this customer were $ 5.9 million and $ 4.6 million, respectively. 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 years ended December 31, 2025, 2024 and 2023. 62 Table of Contents Business Combinations In determining whether an acquisition should be accounted for as a business combination or asset acquisition, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this is the case, the single identifiable asset or the group of similar assets is not deemed to be a business, and is instead deemed to be an asset. If this is not the case, the Company then further evaluates whether the single identifiable asset or group of similar identifiable assets and activities includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If so, the Company concludes that the single identifiable asset or group of similar identifiable assets and activities is a business. The Company accounts for business combinations that are deemed to be businesses using the acquisition method of accounting. Application of this method of accounting requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill, which is not amortized for accounting purposes but is subject to testing for impairment at least annually. Any contingent assets acquired and contingent liabilities assumed are also recognized at fair value if the Company can reasonably estimate fair value during the measurement period (which cannot exceed one year from the acquisition date). The Company re-measures any contingent liabilities at fair value in each subsequent reporting period. Transaction costs related to business combinations are expensed as incurred. Determining the fair value of assets acquired and liabilities assumed in a business combination requires management to use significant judgment and estimates, especially with respect to intangible assets. During the measurement period, which extends no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, all adjustments are recorded in the consolidated statements of operations as operating expenses or income. Refer to Note 3 for additional detail. Equity Method Investments Investments and ownership interests in common stock or in-substance common stock are accounted for under the equity method accounting if the Company has the ability to exercise significant influence over the entity, but does not have a controlling financial interest. The Company also uses the equity method of accounting for investments in a partnership or limited liability company with specific ownership accounts, if the Company has an ownership interest of 5% or more. Under the equity method, investments are initially recognized at cost and adjusted to reflect the Company’s interest in net earnings, dividends received and other-than-temporary impairments. The Company records its interest in the net earnings of its equity method investee, along with adjustments for amortization of basis differences, investee capital transactions and other comprehensive income (loss), within earnings (losses) from equity method investment in the consolidated statements of operations. Basis differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to the underlying basis differences. Profits or losses related to intra-entity sales with its equity method investee are eliminated until realized by the investor or investee. The Company records its proportionate share of earnings or losses of Premier Holdco, LLC (“Premier Pools & Spas”) within earnings from equity method investment in the consolidated statements of operations on a three-month lag. For presentation in the consolidated statements of cash flows, the Company utilizes the cumulative earnings approach for purposes of determining whether distributions should be classified as either a return on investment, which are included in operating activities, or a return of investment, which would be included in investing activities. Under the cumulative earnings approach, the Company compares the distributions received to its cumulative equity-method earnings since inception. Any distributions received up to the amount of cumulative equity earnings are considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Equity method goodwill is not amortized or tested for impairment; instead the Company evaluates equity method investments for impairment when events or changes in circumstances indicate that the decline in value below the carrying amount of its equity method investment is determined to be other than temporary. In such a case, the decline in value below the carrying amount of its equity method investment is recognized in the consolidated statements of operations in the period the impairment occurs. 63 Table of Contents Inventories, Net Inventories, primarily raw materials and finished goods, are stated at the lower of cost or net realizable value. Cost is determined under the first-in, first-out method. Inventory costs include all costs directly attributable to the products, including all manufacturing overhead, and excludes costs to distribute. The Company periodically reviews its inventory for slow moving or obsolete items and writes down the related products to estimated net realizable value. As of December 31, 2025 and 2024, the Company’s reserve for estimated slow moving products or obsolescence was $ 6.9 million and $ 8.3 million, respectively. Property and Equipment, Net Property and equipment are recorded at cost and presented net of accumulated depreciation. Property and equipment acquired through business combinations are recorded at fair value at the acquisition date. Expenditures for betterments and major improvements that substantially enhance the value and increase the estimated useful life of the assets are capitalized and depreciated over the new estimated useful life. Normal repairs and maintenance costs are expensed as incurred. Depreciation and amortization expense are recognized using the straight-line method over the estimated useful lives of each respective asset category as follows: Estimated Useful Life Building and improvements 25 years Molds and dyes 5   –   10 years Machinery and equipment (including computer equipment and software) 3   –   10 years Furniture and fixtures 5  –   7 years Vehicles 5 years Leasehold improvements are amortized over the shorter of the term of the related lease or the estimated useful lives of the improvements. When property and equipment is sold or retired, the asset cost and accumulated depreciation and amortization are removed from the respective accounts and a gain or loss is recognized, if any, on the consolidated statements of operations. The Company capitalizes external costs and directly attributable internal costs to acquire or create internal-use software that are incurred subsequent to the completion of the preliminary project state. These costs relate to activities such as software design, configuration, coding, testing, and installation, and they exclude training and maintenance. Once the software is substantially complete and ready for its intended use, capitalized development costs are amortized straight-line over the estimated useful life of the software, generally not to exceed five years . Long-Lived Assets Long-lived assets include property and equipment and definite-lived intangible assets. The Company evaluates the carrying value of its long-lived assets for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. Conditions that may indicate impairment include, but are not limited to, a significant decrease in the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used or a significant decrease in its physical condition, and operating or cash flow performance that demonstrates continuing losses associated with an asset or asset group. The Company also considers non-financial data such as changes in the operating environment, competitive information, market trends, and business relationships. A potential impairment has occurred if the projected future undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group are less than the carrying value of the asset or asset group. The estimate of cash flows includes management’s assumptions of cash inflows and outflows directly resulting from the use of the asset in operation. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment charge is recorded equal to the excess of the asset or asset group’s carrying value over its fair value. Fair value is measured using appropriate valuation methodologies that would typically include a projected discounted cash flow model using a discount rate the Company believes is commensurate with the risk inherent in its business. The Company did not recognize any impairment losses on long-lived assets during the years ended December 31, 2025 and 2024. 64 Table of Contents The Company amortizes its definite-lived intangible assets using the straight-line method. The weighted-average estimated useful lives (in years) of the Company’s definite-lived intangible assets are as follows: Asset Estimated Useful Life Trade names and trademarks 9  –  25 years Technology 15 years Pool designs 14  – 15 years Dealer relationships 5   –   13 years Patented technology 5   –   10 years Non-competition agreements 5 years Franchise relationships 4 years Order backlog 10  –   12 months Goodwill The Company accounts for goodwill as the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. Goodwill is not subject to amortization; rather, the Company tests goodwill for impairment annually on the first day of the Company’s fourth quarter and whenever events occur or changes in circumstances indicate that impairment may have occurred. The Company has one reporting unit for goodwill impairment testing purposes. Impairment testing is performed for the Company’s reporting unit by first assessing qualitative factors to see if further testing of goodwill is required. If the Company concludes that it is more likely than not that its reporting unit’s fair value is less than its carrying amount based on the qualitative assessment, then a quantitative test is required. The Company may also choose to bypass the qualitative assessment and perform the quantitative test. If the estimated fair value of the reporting unit exceeds the carrying amount, the Company considers that goodwill is not impaired. If the carrying value exceeds estimated fair value, there is an impairment of goodwill and an impairment loss is recorded. The Company calculates the impairment loss by comparing the fair value of its reporting unit less the carrying amount, including goodwill. Goodwill impairment would be limited to the carrying value of the goodwill. Debt Issuance Costs The Company defers costs incurred in conjunction with acquiring third-party financing. The Company amortizes debt issuance costs over the term of the related long-term debt instruments using the effective interest method. Debt issuance costs related to long-term debt are recorded as a direct reduction to the carrying amount of long-term debt on the consolidated balance sheets. Segment Reporting The Company identifies operating segments based on how the chief operating decision maker ("CODM") manages the business, allocates resources, makes operating decisions, and evaluates operating performance. The Company conducts its 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 CODM, reviews financial information presented on a consolidated basis for purposes of assessing financial performance and allocating resources. Income Taxes The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, using enacted tax rates expected to be applicable in the years in which the temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company evaluates the realizability of its deferred tax assets and establishes a valuation 65 Table of Contents allowance when it is more likely than not that all or a portion of the deferred tax assets will not be realized. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected, scheduling of anticipated reversals of taxable temporary differences, and considering prudent and feasible tax planning strategies. If in future periods the Company were to determine that it would be able to realize its deferred tax assets in excess of the net recorded amount, an adjustment to the deferred tax assets, particularly a release of the valuation allowance, would increase income in the period such determination was made. The Company records liabilities for uncertain income tax positions based on a two-step process. The first step is recognition, where an individual tax position is evaluated as to whether it has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have less than a 50% likelihood of being sustained, no tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second step of measuring the benefit to be recorded. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized on ultimate settlement. The actual benefits ultimately realized may differ from the estimates. In future periods, changes in facts, circumstances, and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in income tax expense (benefit) and liability in the period in which such changes occur. The Company’s policy is to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense (benefit) within the consolidated statements of operations. The Company had no accrued interest and no accrued penalties as of December 31, 2025 and December 31, 2024. The Company reinvests earnings of foreign operations indefinitely and, accordingly, does not provide for income taxes that could result from the remittance of such earnings. The Company has evaluated the impact of Pillar Two in the jurisdictions in which the Company operates and has determined no additional top up tax is required. Stock-Based Compensation Stock-based compensation is measured and recognized based on the grant date fair value of the awards. The fair value of the Company’s common stock is determined based on the quoted market price of the Company’s common stock for purposes of computing stock-based compensation expense. For stock options, the Company uses a Black-Scholes model for estimating the grant date fair value. The Black-Scholes pricing model requires critical assumptions including risk-free rate, volatility, expected term and expected dividend yield. The expected term is computed using the simplified method. The Company uses the simplified method to calculate expected term of the stock options as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the stock-based award. Due to the lack of a public market for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company. The historical volatility is calculated based on a period of time corresponding with expected term assumption. The Company utilized a dividend yield of zero, since it has no history or plan of declaring dividends on its common stock. The assumptions underlying these valuations represented the Company’s best estimate, which involved inherent uncertainties and the application of judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of the Company’s stock-based compensation expense could have been materially different. For stock options, restricted stock awards, restricted stock units and stock appreciation rights, stock-based compensation is recognized using a graded vesting method over the requisite service period in which employees earn the awards. The Company accounts for forfeitures of stock-based awards as they occur rather than applying an estimated forfeiture rate to stock-based compensation expense. Employee Benefit Plans The Company has various retirement savings plans covering substantially all employees of the Company. These plans allow eligible employees to make discretionary contributions. The Company makes discretionary matching and other contributions depending on the plan and recognized expense of $ 1.8 million, $ 1.5 million, and $ 1.4 million related to such plans during the years ended December 31, 2025, 2024 and 2023, respectively. 66 Table of Contents Foreign Currency Translation and Foreign Currency Transactions The financial statements of the Company’s foreign operations are denominated in local currency and are then translated to U.S. dollars. Assets and liabilities are translated using the current rate of exchange at the balance sheet dates or historical rates of exchange, as applicable. Revenue and expenses are translated using the average monthly exchange rates prevailing throughout the reporting period. The related foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Transaction gains and losses associated with the Company’s international subsidiaries, which are denominated in currencies other than the Company’s foreign entities’ functional currencies, are recognized as a component of other (income) expense, net within the consolidated statements of operations. Advertising Costs Advertising costs, consisting of costs related to dealer conferences and commercials, are expensed as incurred and are included in selling, general, and administrative expense on the consolidated statements of operations. Total advertising costs were $ 10.0 million, $ 8.5 million, and $ 9.2 million during the years ended December 31, 2025, 2024 and 2023, respectively. Comprehensive Income (Loss) Comprehensive income (loss) is a measure of net income (loss) and all other changes in equity that result from transactions other than with equity holders and would normally be recorded in the consolidated statements of stockholders’ equity and the consolidated statements of comprehensive income (loss). Other comprehensive income (loss) consists of foreign currency translation adjustments. Income tax expense (benefit) on the components of other comprehensive income (loss) was not significant for the years ended December 31, 2025, 2024 and 2023. Earnings Per Share Basic net income (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net income (loss) per share is calculated by dividing net income (loss) available to common stockholders by the diluted weighted-average number of shares of common stock outstanding for the period. Potentially dilutive shares are included in the diluted per-share calculations when the effect of their inclusion is dilutive. In periods where the Company reports a net loss, the effect of anti-dilutive stock options, restricted stock awards, restricted stock units and stock appreciation rights are excluded and diluted loss per share is equal to basic loss per share. Treasury Stock The Company accounts for treasury stock acquisitions using the cost method. The Company accounts for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in capital on the consolidated balance sheets. 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, which will occur no later than December 31, 2026. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. 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 67 Table of Contents 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 consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which offers a practical expedient for public companies valuing their current expected credit losses. ASU 2025-05 is effective for public business entities for fiscal years beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. The amendments should be applied prospectively. The Company is currently evaluating ASU 2025-05 and its potential impact on the consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) (“ASU 2025-11”), which improves the navigability of the required interim disclosures and clarifying when that guidance is applicable. ASU 2025-11 is effective for public business entities for interim reporting periods within annual fiscal years beginning after December 15, 2027. 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 2025-11 and its potential impact on the consolidated financial statements. Recently Adopted Accounting Pronouncements 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, and interim periods within fiscal years beginning after December 15, 2025. The amendments should be applied prospectively with retrospective application permitted. The Company adopted ASU 2023-09 during the year ended December 31, 2025. See Note 14 for further detail. 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 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. These fair value estimates were evaluated during the measurement period of up to one year from the Acquisition Date, and are no longer subject to change. 68 Table of Contents 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: Definite-lived intangible assets: Fair Value (in thousands) Amortization Period (in years) Dealer relationships $ 37,800 13 Order backlog 420 1 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, 2023. 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, 2023 and is not necessarily indicative of the Company’s future financial results. Year Ended December 31, (in thousands) 2025 2024 2023 Net sales $ 545,912 $ 520,795 $ 586,717 Net income (loss) $ 11,308 $ ( 12,634 ) $ 2,794 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 income for the year ended December 31, 2023. 69 Table of Contents Other Business Combinations In February 2025, the Company completed the acquisition of two autocover dealers located in New York and Tennessee for a purchase price of $ 5.6 million. This acquisition qualified as a business combination. This transaction resulted in an increase to goodwill and intangibles, but was not material to our consolidated financial statements, and as a result, additional business combination disclosures for this acquisition have been omitted. 4. EQUITY METHOD INVESTMENT On October 30, 2020, the Company entered into a securities purchase agreement to purchase 28 % of the common units of Premier Pools & Spas for $ 25.4 million. On August 6, 2021, the Company entered into a securities purchase agreement, together with Premier Holdco LLC, Premier Pools Management Corp. Holdco, Premier Franchise Management Holdco, PFC Holdco, and PPSF, LLC, pursuant to which Premier Group Holdings Inc., an affiliate of Wynnchurch Capital, L.P., acquired 29.8 % of the common units of Premier Pools & Spas in aggregate from all sellers, including the Company. Sellers who were not related parties of Wynnchurch Capital, L.P. or the Company determined the purchase price per common unit paid by Premier Group Holdings Inc., indicating the amount paid for the common units of Premier Pools & Spas reflects the price that would be paid in an arm’s-length transaction. The Company’s post-sale ownership interest in Premier Pools & Spas was 20.1 % following such transaction. On December 17, 2021, Premier Pools & Spas issued additional non-voting common units to Premier Group Holdings Inc. The Company’s ownership interest in Premier Pools & Spas after the issuance of additional non-voting common units is 18.2 % while its voting interest remains 20.1 %. The Company historically concluded that it held common stock of Premier Pools & Spas and had the ability to exercise significant influence over Premier Pools & Spas but did not have a controlling financial interest. As required when there is a change in facts or circumstances, the Company reassessed its ability to exercise significant influence during the quarter ended December 31, 2022. The Company concluded that it no longer had the ability to exercise significant influence. However, the Company also considered that it has an ownership interest of greater than 5% in Premier Pools & Spas, which is a limited liability company with specific ownership accounts. Accordingly, because of the legal form of the investee, the Company continues to account for this investment using the equity method of accounting since it is not required to demonstrate the ability to exercise significant influence under the relevant guidance. The Company’s proportionate share of the earnings or losses of the investee are reported as a separate line in the consolidated statements of operations. Premier Pools & Spas is a holding company for its manufacturing and franchising companies including PFC LLC, Premier Franchise Management LLC, Premier Pools Management LLC, and Premier Fiberglass LLC (the “Premier Companies”). The Premier Companies are a leading swimming pool-building brand that uses its franchisee network to sell and install pools around the United States. In connection with Latham’s investment in Premier Pools & Spas, the Company entered into an exclusive supply agreement with Premier Pools & Spas, the Premier Companies, and Premier Pools & Spas’ franchisees (“Premier Franchisees”) (together, the “Customer”). In February 2024, a new supply agreement was entered into with an effective date of January 1, 2024. Premier Pools & Spas does not consolidate the operations of the Premier Franchisees. Per the supply agreement, Latham paid volume and growth rebates based on purchases of Latham fiberglass products by Premier Franchisees. The January 1, 2024 supply agreement terminated effective January 16, 2025 and was replaced with a non-exclusive, preferred supplier agreement. As of December 31, 2025 and 2024, the Company’s carrying amount for the equity method investment in Premier Pools & Spas was $ 26.5 million and $ 24.9 million, respectively. Premier Pools & Spas paid the Company dividends that are presented on the consolidated statements of cash flows as distribution received from equity method investment of $ 3.6 million and $ 5.1 million for the years ended December 31, 2025 and 2024, respectively. The Company recorded its interest in net earnings of Premier Pools & Spas of $ 5.2 million and $ 4.1 million for the years ended December 31, 2025 and 2024, respectively, which included basis difference adjustments of $ 0.2 million and $ 0.2 million, respectively. 70 Table of Contents 5. 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 years ended December 31, 2025 and December 31, 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. 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): December 31, 2025 2024 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Term Loan $ 279,841 $ 279,841 $ 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 December 31, 2025 and 2024, the Company’s interest rate swap was a liability of $ 1.1 million and $ 0.4 million, respectively, which was recorded within other long-term liabilities on the consolidated balance sheets. See Note 9 for further detail. 71 Table of Contents 6. GOODWILL AND INTANGIBLE ASSETS, NET Goodwill The following table presents the changes in the carrying value of goodwill during the years ended December 31, 2025 and 2024 (in thousands): Amount Balance as of December 31, 2023 $ 131,363 Acquisition 22,047 Foreign currency translation adjustment ( 785 ) Balance as of December 31, 2024 152,625 Acquisition 1,947 Foreign currency translation adjustment 617 Balance as of December 31, 2025 $ 155,189 The Company performed an annual test for goodwill impairment in the fourth quarter of the years ended December 31, 2025 and December 31, 2024 in accordance with Step 0 of FASB ASC 350, Intangibles - Goodwill and Other and determined that goodwill was not impaired. Intangible Assets Intangible assets, net as of December 31, 2025 consisted of the following (in thousands): December 31, 2025 Gross Carrying Amount Foreign Currency Translation Accumulated Amortization Net Amount Trade names and trademarks $ 148,100 $ ( 112 ) $ 42,784 $ 105,204 Patented technology 16,126 — 11,776 4,350 Technology 13,000 — 3,540 9,460 Pool designs 13,628 ( 78 ) 4,845 8,705 Dealer relationships 238,551 — 98,197 140,354 Order backlog 2,020 — 2,020 — $ 431,425 $ ( 190 ) $ 163,162 $ 268,073 Intangible assets, net as of December 31, 2024 consisted of the following (in thousands): December 31, 2024 Gross Carrying Amount Foreign Currency Translation Accumulated Amortization Net 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 Dealer relationships 235,176 ( 3 ) 79,397 155,776 Order backlog 2,020 — 1,775 245 $ 428,050 $ ( 897 ) $ 134,240 $ 292,913 The Company recognized $ 28.9 million, $ 27.1 million, and $ 26.5 million of amortization expense related to intangible assets during the years ended December 31, 2025, 2024, and 2023, respectively. 72 Table of Contents 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): Fiscal Year Ending Estimated Future Amortization Expense 2026 $ 28,719 2027 28,719 2028 27,760 2029 22,391 2030 21,541 Thereafter 138,943 $ 268,073 7. INVENTORIES, NET Inventories, net consisted of the following (in thousands): December 31, 2025 2024 Raw materials $ 50,973 $ 49,322 Finished goods 23,953 27,779 $ 74,926 $ 77,101 8. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following (in thousands): December 31, 2025 2024 Land $ 2,727 $ 2,684 Building and improvements 43,452 38,567 Machinery and equipment 63,152 52,715 Furniture and fixtures 2,019 2,059 Computer equipment and software 25,418 19,332 Molds and dyes 28,666 23,006 Leasehold improvements 15,577 13,744 Vehicles 6,003 5,134 Construction in progress 15,988 17,497 203,002 174,738 Less: Accumulated depreciation ( 84,182 ) ( 61,890 ) $ 118,820 $ 112,848 Depreciation and amortization expense related to property and equipment during the years ended December 31, 2025, 2024 and 2023 was $ 21.6 million, $ 16.5 million, and $ 13.8 million, respectively. Construction in progress recorded as of December 31, 2025 and 2024 primarily related to an ongoing effort to increase fiberglass molds and fiberglass production capacity as well as our ongoing digital transformation project costs. The Company recorded aggregate gains on sales and disposals of property and equipment of less than $ 0.1 million during the year ended December 31, 2025 and aggregate losses on sales and disposals of property and equipment of $ 0.4 million and $ 0.1 million during the years ended December 31, 2024 and 2023, respectively. 73 Table of Contents 9. LONG-TERM DEBT The components of the Company’s outstanding debt obligations consisted of the following (in thousands): December 31, 2025 2024 Term Loan $ 284,813 $ 288,063 Revolving Credit Facility — — Less: Unamortized discount and debt issuance costs ( 4,972 ) ( 6,542 ) Total debt 279,841 281,521 Less: Current portion of long-term debt ( 3,250 ) ( 3,250 ) Total long-term debt $ 276,591 $ 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. 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. 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). 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 consolidated balance sheet and are being amortized over the life of the Revolving Credit Facility. As of December 31, 2025, there were no outstanding borrowings on the Revolving Credit Facility and $ 75.0 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 (each, 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 (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 74 Table of Contents 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 year ended December 31, 2024, the Company made a payment of $ 18.0 million in addition to the required annual payments $ 3.3 million. No additional payments were made in the year ended December 31, 2025. Outstanding borrowings as of December 31, 2025 were $ 279.8 million, net of unamortized discount and debt issuance costs of $ 5.0 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 December 31, 2025, the unamortized debt issuance costs and discount on the Term Loan were $ 2.8 million and $ 2.2 million, respectively. The effective interest rate was 8.91 % at December 31, 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 interest rate swaps. The Company entered into an interest rate swap that was executed on March 10, 2023, (the "2023 Interest Rate Swap"). The 2023 Interest Rate Swap had an effective date of May 18, 2023 and a termination date of May 18, 2026. Under the terms of the 2023 Interest Rate Swap, the Company fixed its SOFR borrowing rate at 4.3725 % on a notional amount of $ 161.0 million. The 2023 Interest Rate Swap was not designated as a hedging instrument for accounting purposes (see Note 5 for additional detail). Subsequently, the Company entered into a new interest rate swap that was executed on June 4, 2025 (the “2025 Interest Rate Swap”). As part of the 2025 Interest Rate Swap, the Company terminated the 2023 Interest Rate Swap prior to its May 18, 2026 termination date. The 2025 Interest Rate Swap became effective on May 19, 2025 and has a termination date of May 18, 2027. Under the terms of the 2025 Interest Rate Swap, the Company fixed its SOFR borrowing rate at 3.92 % on a notional amount of $ 140.0 million. The 2025 Interest Rate Swap is not designated as a hedging instrument for accounting purposes (see Note 5). 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 2026 $ 3,250 2027 3,250 2028 3,250 2029 275,063 $ 284,813 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. 75 Table of Contents 10. COMPOSITION OF CERTAIN BALANCE SHEET ACCOUNTS Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2025 2024 Accrued sales rebates $ 18,354 $ 13,545 Accrued product warranties 3,056 2,389 Accrued incentives 6,624 8,678 Accrued vacation 2,153 2,509 Accrued payroll 3,871 4,405 Accrued interest 2,020 4,153 Deferred revenue 4,329 3,794 Other accrued expenses 8,572 7,937 Total accrued expenses and other current liabilities $ 48,979 $ 47,410 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2025 2024 Deposits $ 12,863 $ 556 Prepaid expenses 4,174 2,972 Prepaid insurance 1,615 1,538 Vendor rebate receivable 1,325 1,040 A/R other 685 1,034 Prepaid inventory 7 1,239 Other prepaids 274 157 Total prepaid expenses and other current assets $ 20,943 $ 8,536 Allowance for Bad Debt The allowance for bad debt consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Balance at the beginning of the year $ 5,869 $ 7,544 $ 3,161 Bad debt expense 1,736 2,069 5,379 Write-offs, net of recoveries ( 1,066 ) ( 3,744 ) ( 996 ) Balance at the end of the year $ 6,539 $ 5,869 $ 7,544 76 Table of Contents 11. PRODUCT WARRANTIES The warranty reserve activity consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Balance at the beginning of the fiscal year $ 2,647 $ 3,161 $ 3,990 Adjustments to reserve 3,834 2,615 5,319 Less: Settlements made (in cash or in kind) ( 3,132 ) ( 3,129 ) ( 6,148 ) Balance at the end of the fiscal year $ 3,349 $ 2,647 $ 3,161 12. LEASES The Company leases manufacturing facilities, office space, land, and certain vehicles under operating leases. The Company also leases certain vehicles and equipment under finance leases. As of December 31, 2025, our operating leases substantially have remaining terms of one year to eleven years , some of which include options to extend and/or terminate the leases. The Company does not have material finance leases. The components of lease expense for the years ended December 31, 2025 and 2024 were as follows (in thousands): Year Ended December 31, 2025 December 31, 2024 Operating lease expense $ 9,084 $ 8,613 Finance lease amortization of assets 849 848 Finance lease interest on lease liabilities 264 316 Short-term lease expense 480 433 Variable lease expense 778 562 Total lease expense $ 11,455 $ 10,772 Operating and finance lease right of use assets and lease-related liabilities as of December 31, 2025 and 2024 were as follows (in thousands): December 31, 2025 December 31, 2024 Classification Lease right-of-use assets: Operating leases $ 30,723 $ 28,259 Operating lease right-of-use assets Finance leases 2,714 3,261 Other assets Total lease right-of-use assets $ 33,437 $ 31,520 Lease-related liabilities Current Operating leases $ 7,630 $ 7,176 Current operating lease liabilities Finance leases 815 779 Accrued expenses and other current liabilities Non-current Operating leases 23,964 22,138 Non-current operating lease liabilities Finance leases 2,125 2,678 Other long-term liabilities Total lease liabilities $ 34,534 $ 32,771 77 Table of Contents The table below presents supplemental information related to leases as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Weighted-average remaining lease term (years) Finance leases 3.6 4.4 Operating leases 4.9 5.3 Weighted-average discount rate Finance leases 8.1 % 8.2 % Operating leases 5.9 % 5.4 % The table below presents supplemental information related to the cash flows for operating leases recorded on the consolidated statements of cash flows (in thousands): Year Ended December 31, 2025 December 31, 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 7,576 $ 7,134 The following table summarizes fiscal year maturities of operating lease liabilities as of the year ended December 31, 2025 (in thousands): Operating Leases Finance Leases Total 2026 $ 9,244 $ 1,016 $ 10,260 2027 7,409 924 8,333 2028 6,080 912 6,992 2029 5,456 428 5,884 2030 4,858 97 4,955 Thereafter 3,383 4 3,387 Total lease payments 36,430 3,381 39,811 Less: Interest ( 4,836 ) ( 441 ) ( 5,277 ) Present value of lease liability $ 31,594 $ 2,940 $ 34,534 13. NET SALES The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Year Ended December 31, 2025 2024 2023 In-ground Swimming Pools $ 261,960 $ 259,214 $ 297,828 Covers 160,764 131,335 140,949 Liners 123,188 117,971 127,715 $ 545,912 $ 508,520 $ 566,492 14. INCOME TAXES The Company is subject to United States federal, state, and local income taxes, as well as other foreign income taxes. The domestic and foreign components of its income (loss) before income taxes and total income taxes paid are as follows (in thousands): 78 Table of Contents Year Ended December 31, 2025 2024 2023 Income (loss) before income taxes: United States $ 9,168 $ 559 $ ( 16,303 ) Foreign 4,320 ( 9,299 ) 6,243 Total $ 13,488 $ ( 8,740 ) $ ( 10,060 ) Year Ended December 31, 2025 2024 2023 Federal $ 6,139 $ 12,271 $ 4,985 State 1,659 $ 2,520 1,050 Foreign 382 $ 684 955 Total income taxes paid $ 8,180 $ 15,475 $ 6,990 Year Ended December 31, 2025 2024 2023 Jurisdictions greater than 5% United States Federal $ 6,139 $ 12,271 $ 4,985 Australia * * * New Zealand * * 670 Canada * * * States: None * * * * The amount of income taxes paid during the year does not meet the five percent disaggregation threshold. Income tax expense (benefit) from continuing operations is composed of the following (in thousands): Year Ended December 31, 2025 2024 2023 Current income tax expense (benefit): United States federal $ ( 1,314 ) $ 8,364 $ 710 United States state and local 737 1,890 515 Foreign 536 544 788 Total current tax expense ( 41 ) 10,798 2,013 Deferred income tax (benefit) expense: United States federal 2,041 ( 7,335 ) ( 8,965 ) United States state and local 298 ( 968 ) ( 1,000 ) Foreign 66 6,625 280 Total deferred tax (benefit) $ 2,405 $ ( 1,678 ) $ ( 9,685 ) Total income tax expense (benefit): United States federal $ 727 $ 1,029 $ ( 8,255 ) United States state and local 1,035 922 ( 485 ) Foreign 602 7,169 1,068 Total income tax expense (benefit) $ 2,364 $ 9,120 $ ( 7,672 ) 79 Table of Contents Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 Federal statutory tax rate $ 2,833 21.0 % $ ( 1,835 ) 21.0 % $ ( 2,113 ) 21.0 % Domestic state and local income taxes, net of federal effect 1,330 9.9 % 1,469 ( 16.8 ) % ( 1,411 ) 14.2 % Tax Credits Research and Development Tax Credit ( 1,339 ) ( 9.9 ) % — — % — — % Effects of Cross-Border Tax Laws Global intangible low taxed income — — % ( 171 ) 2.0 % 337 ( 3.4 ) % Foreign derived intangible income ( 278 ) ( 2.1 ) % 118 ( 1.4 ) % ( 45 ) 0.4 % Canadian branch accounting ( 223 ) ( 1.7 ) % ( 1,642 ) 18.8 % ( 117 ) 1.2 % Nontaxable or Nondeductible Items Meals and entertainment 256 1.9 % 332 ( 3.8 ) % 298 ( 3.0 ) % Executive compensation disallowance 778 5.8 % 242 ( 2.8 ) % 329 ( 3.3 ) % Nondeductible stock compensation ( 504 ) ( 3.7 ) % 179 ( 2.1 ) % 2,706 ( 26.9 ) % Foreign restructuring — — % 1,509 ( 17.3 ) % — — % Capital loss expiration — — % 3,171 ( 36.3 ) % — — % Partnership income ( 449 ) ( 3.3 ) % ( 242 ) 2.8 % ( 15 ) 0.1 % Nondeductible expenses and other adjustments 264 2.0 % 32 ( 0.5 ) % ( 261 ) 2.5 % Change in Unrecognized Tax Benefits — — % — — % ( 10,237 ) 101.8 % Change in valuation allowance — — % ( 3,171 ) 36.3 % 3,114 ( 31.0 ) % Foreign Tax Effects Australia Foreign rate differential ( 10 ) ( 0.1 ) % ( 147 ) 1.7 % 511 ( 5.1 ) % Amortization 241 1.8 % 274 ( 3.1 ) % 374 ( 3.7 ) % Penalties and fines — — % — — % 411 ( 4.1 ) % Restructuring gain — — % ( 111 ) 1.3 % ( 2,141 ) 21.4 % Other 5 — % 3 — % 6 ( 0.1 ) % Canada Foreign rate differential 138 1.0 % ( 430 ) 4.9 % ( 25 ) 0.2 % Nondeductible expenses and adjustments — — % — — % 542 ( 5.4 ) % Change in valuation allowance ( 742 ) ( 5.5 ) % 8,700 ( 99.5 ) % — — % Restructuring — — % 749 ( 8.6 ) % — — % Other ( 37 ) ( 0.3 ) % 8 ( 0.1 ) % ( 7 ) 0.1 % New Zealand Foreign rate differential 97 0.7 % 82 ( 0.9 ) % 74 ( 0.7 ) % Other 4 — % 1 — % ( 2 ) — % Total $ 2,364 17.5 % $ 9,120 ( 104.4 ) % $ ( 7,672 ) 76.2 % 80 Table of Contents For the year ended December 31, 2025, state and local income taxes in California, Illinois, Indiana, Minnesota, New Jersey, Tennessee and Utah comprise the majority of the domestic state and local income taxes. For the year ended December 31, 2024 these states were Illinois, Indiana, Minnesota, New Jersey, Pennsylvania, Tennessee and Utah and in 2023, they were California, Florida, Illinois, Indiana, New Jersey, Pennsylvania and Tennessee. The following table summarizes changes in the valuation allowance (in thousands): Year Ended December 31, 2025 2024 2023 Balance at January 1 $ 8,700 $ 3,114 $ — Additions — 8,700 3,114 Deductions ( 402 ) ( 3,114 ) — Balance at December 31 $ 8,298 $ 8,700 $ 3,114 As of December 31, 2025 and 2024, after consideration of all evidence, both positive and negative, management concluded that it is not more likely than not that it would be able to realize all of its deferred tax assets of one of its foreign subsidiaries and that a valuation allowance of $ 8.3 million and $ 8.7 million was necessary as of December 31, 2025 and 2024, respectively. During the year ended December 31, 2023, there was a valuation allowance for the Company's capital loss carryforward deferred tax asset which was reversed in 2024 because the capital loss carryforward expired. It is reasonably possible that the Company’s estimates of future taxable income may change within the next 12 months, resulting in a change to the valuation allowance in one or more jurisdictions. On July 4, 2025, the President signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA maintains the 21.0% corporate tax rate and makes permanent many of the beneficial expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017, including the immediate expensing of domestic research and development expenditures, more favorable interest deductibility and 100 percent bonus depreciation with effective dates in 2025. Revisions to the international tax framework are effective for the year ended December 31, 2026. Deferred Income Taxes Deferred income taxes recognize the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts used for income tax purposes, and the impact of available net operating loss and tax credit carryforwards. These items are stated at the enacted tax rates that are expected to be in effect when taxes are actually paid or recovered. The Company has elected with respect to its treatment of global intangible low-tax income ("GILTI") to account for taxes on GILTI as incurred. 81 Table of Contents Deferred income tax assets and liabilities recorded on the consolidated balance sheets as of December 31, 2025 and 2024 consist of the following (in thousands): December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 11,179 $ 10,001 Fixed assets foreign 97 — Inventories, net 2,105 3,082 Warranty reserve 651 469 Trade receivables 1,562 1,375 Profits interest units 4,042 3,437 Section 163(j) 5,474 4,902 Accrued expenses 280 350 Transaction costs 1,130 1,180 Operating lease liabilities 7,602 6,968 Other 1,135 2,276 Gross deferred tax assets 35,257 34,040 Valuation allowance ( 8,298 ) ( 8,700 ) Total deferred tax asset 26,959 25,340 Less: Foreign deferred tax benefit ( 718 ) ( 729 ) Total domestic deferred tax asset $ 26,241 $ 24,611 Deferred tax liabilities: Intangible assets ( 40,091 ) ( 42,702 ) Property and equipment, net ( 11,196 ) ( 6,056 ) Prepaid expenses and other ( 1,505 ) ( 1,165 ) Investments in partnerships ( 322 ) ( 318 ) Operating lease right-of-use assets ( 7,392 ) ( 6,717 ) Other ( 4 ) — Total deferred tax liabilities ( 60,510 ) ( 56,958 ) Net deferred tax liabilities $ ( 34,269 ) $ ( 32,347 ) Classification in the Consolidated Balance Sheet Non-current deferred tax assets $ 718 $ 729 Non-current deferred tax liabilities ( 34,269 ) ( 32,347 ) Net deferred tax liabilities $ ( 33,551 ) $ ( 31,618 ) FASB ASC 740, Accounting for Income Taxes requires that the Company reduce its deferred income tax assets by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company reinvests earnings of foreign operations indefinitely and, accordingly, does not provide for income taxes that could result from the remittance of such earnings. The Company acknowledges that it would need to accrue and pay taxes should it decide to repatriate cash generated from earnings of its foreign subsidiaries that are considered indefinitely reinvested but expects that the potential tax liability would be insignificant. Tax Uncertainties The liability related to uncertain tax positions, exclusive of interest, was $ 6.4 million at December 31, 2022. As of December 31, 2023, the statute of limitations expired with respect to the Company’s 2019 U.S. Federal income tax return 82 Table of Contents for which the uncertain tax position liability had been recorded. As a result of the expiration of the statute of limitations, the Company released the uncertain tax position liability with a corresponding net tax benefit of $ 7.5 million (a gross tax benefit of $ 10.6 million from the liability release offset by tax expense of $ 3.1 million from establishing a valuation allowance on an associated deferred tax asset) during the fourth fiscal quarter of 2023. There was no liability related to uncertain tax positions as of December 31, 2025 and 2024. The Company is subject to income taxes in the U.S., certain states and numerous foreign jurisdictions. While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than its accrued position. Accordingly, additional provisions on federal and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. The Company files a federal consolidated tax return which includes all U.S. entities as well several combined/consolidated state tax returns and separate state tax returns. In addition, the Company files Canadian, Australian and New Zealand tax returns for its Canadian, Australian, and New Zealand entities. The Company is subject to the regular examination of our income tax returns by tax authorities. The Company does not have any federal audits in process. Examinations in material jurisdictions or changes in laws, rules, regulations or interpretations by local taxing authorities could result in impacts to tax years open under statute or to foreign operating structures currently in place. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations or changes in laws, rules, regulations or interpretations to determine the adequacy of our provision for taxes. It is possible the outcomes from these examinations will have a material adverse effect on our financial condition and operating results. Tax years from the fiscal year ended December 31, 2022 through present are open for examination in the U.S. Tax years and tax periods ended December 31, 2021 through present are open for state examination. Tax years and tax periods from June 30, 2022 through present are currently open for examination in Canada. Tax years and tax periods from June 30, 2021 through present are currently open for examination in Australia. Tax years and tax periods from March 31, 2021 through present are currently open for examination in New Zealand. 15. COMMITMENTS AND CONTINGENCIES Litigation From time to time, the Company may be involved in legal proceedings in the ordinary course of business, including, among other things, contract and employment claims, personal injury claims, intellectual property claims, product liability claims and warranty claims, some of which may be covered by insurance. As of December 31, 2025, there were no legal proceedings against the Company that it believes would have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. However, the results of any current or future legal proceedings cannot be predicted with certainty and, regardless of the outcome, the Company may incur significant costs and experience a diversion of management resources as a result of legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings. 16. STOCK-BASED COMPENSATION On April 12, 2021, the Company’s stockholders approved the 2021 Omnibus Equity Incentive Plan (the "2021 Omnibus Equity Plan"), which became effective on April 22, 2021, and was further amended on May 2, 2023 to, among other things, increase the maximum aggregate number of shares reserved for issuance under the 2021 Omnibus Equity Plan to 21,170,212 shares. 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 following table summarizes the Company’s stock-based compensation expense (in thousands): Year Ended December 31, 2025 2024 2023 Cost of sales $ — $ — $ 81 Selling, general, and administrative 9,247 7,392 18,723 $ 9,247 $ 7,392 $ 18,804 83 Table of Contents The recognized income tax benefit related to stock-based compensation was $ 0.7 million, $ 0.6 million and $ 0.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, total unrecognized stock-based compensation expense related to all unvested stock-based awards was $ 7.0 million, which is expected to be recognized over a weighted-average period of 1.78 years. No stock options or stock appreciation rights were awarded during the year ended December 31, 2025. Restricted Stock Awards The Company's restricted stock awards vested in the year ended December 31, 2024 and none are outstanding during the year ended December 31, 2025. Restricted Stock Units The following table represents the Company’s restricted stock units activity during the year ended December 31, 2025: Shares Weighted- Average Grant- Date Fair Value Outstanding at January 1, 2025 4,200,759 $ 3.25 Granted 903,766 7.12 Vested ( 1,374,814 ) 3.28 Forfeited ( 394,117 ) 3.73 Outstanding at December 31, 2025 3,335,594 $ 4.22 Stock Options The following table represents the Company’s stock option activity during the year ended December 31, 2025: Shares Weighted- Average Exercise Price per Share Weighted- Average Remaining Contract Term Aggregate Intrinsic Value (in years) (in thousands) Outstanding at January 1, 2025 1,383,738 $ 15.20 Granted — — Exercised — — Forfeited ( 34,719 ) 15.38 Expired ( 198,307 ) 17.31 Outstanding at December 31, 2025 1,150,712 $ 14.84 4.63 $ 75 Vested and expected to vest at December 31, 2025 1,150,712 $ 14.84 4.63 $ 75 Options exercisable at December 31, 2025 952,293 $ 15.23 4.53 $ 56 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 . No stock options were granted during the year ended December 31, 2025 or December 31, 2024. 84 Table of Contents Stock Appreciation Rights The following table represents the Company’s stock appreciation rights activity during the year ended December 31, 2025: Shares Weighted- Average Exercise Price per Share Weighted- Average Remaining Contract Term Aggregate Intrinsic Value (in years) (in thousands) Outstanding at January 1, 2025 660,556 $ 3.15 Granted — — Exercised ( 73,026 ) 3.24 Forfeited ( 73,027 ) 3.24 Outstanding at December 31, 2025 514,503 $ 3.12 4.81 $ 1,661 Vested and expected to vest at December 31, 2025 514,503 $ 3.12 4.81 $ 1,661 Stock appreciation rights exercisable at December 31, 2025 234,295 $ 3.11 4.84 $ 759 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. No stock appreciation rights were granted during the years ended December 31, 2025 or December 31, 2024. Performance Stock Units During the year ended December 31, 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 senior management. The 2025 PSU program includes three equal tranches of grants. Each tranche has an annual performance period, with performance goals established for 2025 in dollars and in 2026 and 2027 as a percentage of growth from actual performance in the prior year. Any earned PSUs cliff vest on the third anniversary of the grant date for the first tranche. Thirty-three percent of the target number of PSUs awarded on each grant date will be earned at 0 % to 200 % of the target PSUs based on the Company's achievement of the applicable Adjusted EBITDA performance goal (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 on January 1, 2025 and ending December 31, 2027. 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 was 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. 85 Table of Contents The following table represents the Company’s PSU activity during the year ended December 31, 2025: Shares Weighted- Average Grant Date Fair Value Outstanding at January 1, 2025 807,771 $ 4.06 Granted 325,613 7.31 Adjustment for performance achievement (1) ( 9,060 ) — Forfeited ( 182,521 ) 3.67 Outstanding at December 31, 2025 (2) 941,803 $ 5.25 (1) Represents the adjustment to previously granted PSUs based on the Company’s performance as of December 31, 2025. (2) An additional 195,254 PSUs could potentially be included if the maximum performance level of 200 % is earned for all PSUs granted during the fiscal year ended December 31, 2025 17. STOCKHOLDERS’ EQUITY Repurchase Program On May 10, 2022, the Board of the Company approved a stock repurchase program (the “Repurchase Program”), which authorized the Company to repurchase up to $ 100 million of the Company’s shares of common stock over the next three years . The Company was authorized to effect these repurchases in open market transactions, privately negotiated purchases, or other acquisitions. The Company was not obligated to repurchase any of its shares of its common stock under the Repurchase Program and the timing and amount of any repurchases was subject to market conditions, the Company’s stock price, alternative uses of capital, the terms of the Company’s debt instruments, and other factors. The Repurchase Program ended on May 10, 2025, and the Board has not authorized a new stock repurchase program. As of December 31, 2025 and 2024, 116,766,927 and 115,764,839 shares of common stock were issued and outstanding for accounting purposes, respectively. 18. NET INCOME (LOSS) PER SHARE Basic and diluted net income (loss) per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Year Ended December 31, 2025 2024 2023 Numerator: Net income (loss) attributable to common stockholders $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Denominator: Weighted-average common shares outstanding Basic 116,424,673 115,434,828 112,899,586 Diluted 119,822,088 115,434,828 112,899,586 Net income (loss) per share attributable to common stockholders: Basic $ 0.10 $ ( 0.15 ) $ ( 0.02 ) Diluted $ 0.09 $ ( 0.15 ) $ ( 0.02 ) 86 Table of Contents 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: Year Ended December 31, 2025 2024 2023 Restricted stock awards — 10,722 697,822 Restricted stock units 192,039 22,275 188,548 Stock options 1,150,250 1,410,382 1,702,316 Stock appreciation rights — 326,395 491,386 Performance stock units 99,311 20,781 — 19. RELATED PARTY TRANSACTIONS Expense Reimbursement The Company entered into a Stockholders’ Agreement with Pamplona Capital Management ("the Sponsor") and Wynnchurch Capital, L.P. on April 27, 2021. The Stockholders’ Agreement requires the Company to reimburse the Sponsor and Wynnchurch Capital, L.P. the reasonable out-of-pocket costs and expenses in connection with monitoring and overseeing their investment in the Company. The Company had less than $ 0.1 million in transactions with the Sponsor or Wynnchurch Capital, L.P. during the years ended December 31, 2025, 2024 and 2023. 20. 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 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 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. 87 Table of Contents Operations of the Company’s single segment consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Net sales $ 545,912 $ 508,520 $ 566,492 Other cost of sales (1) 346,540 339,078 398,293 Other selling, general and administrative expense (2) 104,078 93,138 86,385 Depreciation 21,560 16,494 13,817 Amortization (3) 29,794 27,952 26,934 Stock-based compensation expense 9,247 7,392 18,804 Strategic initiative costs (4) 2,806 3,329 4,092 Acquisition and integration related costs (5) 785 2,348 911 Restructuring charges (6) 523 512 3,727 Interest expense, net 25,805 24,840 30,916 Odessa fire (7) — — ( 2,600 ) Other (income) expense, net ( 3,492 ) 6,237 ( 1,004 ) Earnings from equity method investment ( 5,222 ) ( 4,060 ) ( 3,723 ) Income tax expense (benefit) 2,364 9,120 ( 7,672 ) Net income (loss) $ 11,124 $ ( 17,860 ) $ ( 2,388 ) (1) Other cost of sales includes total cost of sales (as presented in the 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 statements of operations) excluding depreciation, amortization, stock-based compensation, strategic initiative costs, acquisition and integration related costs, and Odessa fire 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. (7) Represents costs incurred and insurance recoveries related to a production facility fire in Odessa, Texas. 88 Table of Contents 21. GEOGRAPHIC INFORMATION Net sales by geography is based on the delivery address of the customer as specified in purchase order. Net sales by geographic area was as follows (in thousands): December 31, 2025 2024 2023 Net sales United States $ 462,076 $ 429,336 $ 475,024 Canada 50,105 48,138 58,443 Australia 21,783 21,455 22,534 New Zealand 6,277 5,721 6,030 Other 5,671 3,870 4,461 Total $ 545,912 $ 508,520 $ 566,492 Our long-lived assets by geographic area, which consist of property and equipment, net were as follows (in thousands): December 31, 2025 2024 Long-lived assets United States $ 76,736 $ 72,827 Canada 34,890 34,882 Australia 5,293 4,018 New Zealand 1,901 1,121 Total $ 118,820 $ 112,848 22. SUBSEQUENT EVENT On February 5, 2026, the Company entered into an agreement to purchase four of its production facilities that are currently being leased for $ 17.6 million, $ 12.0 million of which was a deposit made during the year ended December 31, 2025. On February 26, 2026, the Company acquired Freedom Pools, a fiberglass manufacturer and installer operating in Australia and New Zealand. The purchase price was approximately $ 17.0 million, and the transaction was fully funded with cash on hand. 89 Table of Contents 23. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) Latham Group, Inc. (Parent Company Only) Condensed Balance Sheets (in thousands, except share and per share data) December 31, 2025 2024 Assets Investment in subsidiary $ 405,861 $ 387,222 Total assets $ 405,861 $ 387,222 Liabilities and Stockholders’ Equity Total liabilities $ — $ — Stockholders’ Equity Preferred stock, $ 0.0001 par value; 100,000,000 shares authorized as of both December 31, 2025 and December 31, 2024; no shares issued and outstanding as of both December 31, 2025 and December 31, 2024 — — Common stock, $ 0.0001 par value; 900,000,000 shares authorized as of December 31, 2025 and December 31, 2024; 116,766,927 and 115,764,839 shares issued and outstanding, as of December 31, 2025 and December 31, 2024, respectively 12 12 Additional paid-in capital 473,423 467,076 Accumulated deficit ( 63,692 ) ( 74,816 ) Accumulated other comprehensive loss ( 3,882 ) ( 5,050 ) Total stockholders’ equity 405,861 387,222 Total liabilities and stockholders’ equity $ 405,861 $ 387,222 The accompanying notes are an integral part of these condensed financial statements. 90 Table of Contents Latham Group, Inc. (Parent Company Only) Condensed Statements of Operations (in thousands, except share and per share data) Year Ended December 31, 2025 2024 2023 Equity in net income (loss) of subsidiary $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Net income (loss) attributable to common stockholders $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Net income (loss) per share Net income (loss) per share attributable to common stockholders – basic and diluted Basic $ 0.10 $ ( 0.15 ) $ ( 0.02 ) Diluted $ 0.09 $ ( 0.15 ) $ ( 0.02 ) Weighted-average common shares outstanding – basic and diluted Basic 116,424,673 115,434,828 112,899,586 Diluted 119,822,088 115,434,828 112,899,586 The accompanying notes are an integral part of these condensed financial statements. 91 Table of Contents Latham Group, Inc. (Parent Company Only) Condensed Statements of Comprehensive Income (Loss) (in thousands) Year Ended December 31, 2025 2024 2023 Net income (loss) $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Equity in other comprehensive income (loss) of subsidiary 1,168 ( 1,511 ) ( 6 ) Comprehensive income (loss) $ 12,292 $ ( 19,371 ) $ ( 2,394 ) The accompanying notes are an integral part of these condensed financial statements. 92 Table of Contents Latham Group, Inc. (Parent Company Only) Condensed Statement of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 11,124 $ ( 17,860 ) $ ( 2,388 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Equity in net (income) loss of subsidiary ( 11,124 ) 17,860 2,388 Net cash provided by operating activities — — — Cash flows from investing activities: Distribution from subsidiary — — — Net cash provided by investing activities — — — Cash flows from financing activities: Proceeds from issuance of common stock — — — Repurchase and retirement of common stock — — — Net cash used in financing activities — — — Net increase in cash: — — — Cash at beginning of period — — — Cash at end of period $ — $ — $ — The accompanying notes are an integral part of these condensed financial statements. 93 Table of Contents Notes to Condensed Financial Statements of Registrant (Parent Company Only) 1. Basis of Presentation These condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. Latham Group, Inc. has no material assets or standalone operations other than its ownership in its consolidated subsidiaries. Under the terms of the Credit Agreement entered into by the Latham Pool Products, a wholly owned subsidiary of LIMC, which itself is a wholly owned subsidiary of Latham Group, Inc., Latham Pool Products is restricted from making dividend payments, loans or advances to Latham Group, Inc., unless certain conditions are met. As of December 31, 2025 and 2024, substantially all of the consolidated net assets of Latham Pool Products are considered restricted net assets as defined in Rule 4-08(e)(3) of Regulation S-X. Latham Group, Inc. is able to transfer assets from Latham Pool Products in order to pay certain tax liabilities. These condensed parent company financial statements have been prepared using the same accounting principles and policies described in Note 2 of the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiary using the equity method compared to the consolidation method employed by Latham Pool Products with its subsidiaries. 2. Common Stock During the year ended December 31, 2023, the Company repurchased and concurrently retired 4,483,620 shares of the Company’s common stock for an aggregate amount of $ 23.0 million, pursuant to the Repurchase Program. 94 Table of Contents Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure None