Latham Group, Inc.

Good morning, everyone, and welcome to the Latham Group Incorporated First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please email a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one using a telephone keypad. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Nicole Breguet, Latham's Investor Relations Representative. Ma'am, please go ahead.

Thank you, Operator. Good morning, everyone. Welcome to Latham's Q1 Fiscal 2021 Earnings Call. Earlier this morning, we issued our earnings press release, which is available on the Investor Relations portion of our website. On today's call are Latham's President and CEO, Scott Rogeski, and CFO, Mark Borseth. Following their remarks, we'll open up the call to questions. During this call, the company may make certain statements that constitute forward-looking statements. Such statements reflect the company's views with respect to future events as of today and are based on our management's current expectations, estimates, forecasts, projections, assumptions, beliefs, and information. These statements are subject to a number of risks and uncertainties that could cause actual events and results to differ materially from those described in the forward-looking statements. For further details concerning these risks and uncertainties, please see our final prospectus for initial public offering filed with the SEC on April 26, 2021. The company expressly disclaims any obligation to publicly update or review any forward-looking statements whether as a result of new information, future developments, or otherwise, except as required by applicable law. In addition, during today's call, the company will discuss non-GAAP financial measures, which we believe could be useful in evaluating our performance. Reconciliations of adjusted EBITDA to net income calculated under GAAP can be found in our earnings press release and will be included in our Form 10-Q for Q1 2021. I'll now turn the call over to Scott Rajewski.

Thank you, Nicole. Good morning and welcome to Latham's first earnings call as a public company. We completed our IPO in late April, and I want to take this opportunity to thank the entire team who supported that successful process. Several years ago, we set out on a journey to reimagine the pool buying experience for customers and to increase awareness and adoption of fiberglass pools. As a public company, we now have greater opportunities and resources to continue on that path. Before we dive into the quarter, I'd like to share a little more about Latham and our industry. Latham is the largest designer, manufacturer, and marketer of residential in-ground swimming pools in North America, Australia, and New Zealand. We are the leader in the fiberglass pool product category of the residential in-ground swimming pool market in North America with over 50% share. We are transforming our industry with our unique direct-to-homeowner model, which places the consumer at the center of everything we do. Our strategy is powered by our leading brand and superior suite of digital technologies that engages the homeowner, drives them to the Latham brand, and then walks them through the decision-making process of pool selection. We are then able to deliver purchase-ready leads to our dealers. Latham is the only pool company that has established a direct relationship with the homeowner and our strong brand awareness and go-to-market strategy have enabled us to build the largest dealer network in North America and continue to drive the material conversion towards fiberglass pools. The pool market dynamics are very attractive with strong underlying growth. We are positioned to benefit from the favorable long-term consumer demand trends driven by continued homeowner investment in outdoor living. We are especially excited about the opportunities when the fast-growing fiberglass segment as we drive the education of the benefits of fiberglass over concrete, including superior lifetime performance, lower upfront and lifecycle costs, faster and easier installation, premium quality and aesthetics, and easier maintenance, along with less chemical usage. Latham would not be the company it is today without our dedicated team members, their hard work and commitment, especially in the face of what has been an incredibly challenging time and uncertain time over the last year is key to our success. We are heavily invested in our employees' well-being and strive to ensure our employees know how much they mean to Latham and our future. So, I'm excited to share that Latham was recently awarded a 2021 Top Workplaces Honor by the Albany Times Union. We are honored and humbled to have received this recognition. Let's now turn to a high-level overview of our first quarter results. Our strong results are a testament to our team's hard work and dedication to our mission of making high-quality in-ground swimming pools an attainable luxury for every homeowner's backyard. Net sales for the first quarter grew from $51.1 million in 2020 to $148.7 million in Q1 of 2021. representing a 97.6 million or 191% increase. This translated to strong adjusted EBITDA growth, reaching 33.5 million in the first quarter of 2021, increasing by 35.4 million from the prior year period. As we think about our long-term growth strategy, our results will be driven by four strategic pillars. One, strong consumer demand as a result of our brand and digital initiatives. Two, enhancing our leadership position across our entire product portfolio. Three, accelerating the material conversion to fiberglass. And four, expanding our strategic partnerships with Latham's exclusive dealers. Starting with the first pillar, we continue to drive purchase-ready leads to our dealer partners by focusing on our digital initiatives, which are resulting in new customer acquisition metrics that continue to outpace our expectations. We are seeing greater searchability and visibility through our search engine optimization efforts, with Latham ranking on page one for over 2,000 keywords. Also, we're excited to report we just launched our new Plan Your Pool section on our website. This new section provides a unique immersive experience to consumers as they plan their pool and backyard project. It also has two new interactive pieces, a pool cost estimator that enables users to build their dream pool and generate an estimate for it. Another interactive piece is MyLatham, our first logged-in area for homeowners where they can save their preferences and options for their dream backyard as well as all of the estimator scenarios that they may have run. Moving to the second pillar, we offer the industry's broadest portfolio of pools and related products, including inbound swimming pools, pool liners, and pool covers. We hold the number one market position in North America in every product category we compete in and continue to focus on strengthening our leadership position. Third, material conversion is key to our growth. We see significant opportunities to continue to accelerate the trend from concrete pools to higher quality fiberglass pools. We remain focused on driving awareness and education with homeowners and dealers on the many benefits fiberglass presents. Fiberglass is extending the pool installation season by giving dealers the ability to install earlier and later in the year. Our dealers are investing in their business to increase their capacity and capitalize on the opportunities within fiberglass. In fact, We had dealers installing fiberglass pools in New England starting as early as February of this year. Today, fiberglass accounts for about 18% of the U.S. residential in-ground swimming pool market. As compared to Australia, where 70% of all in-ground pools are fiberglass. We have a long runway ahead of us and are very confident that we can drive that number to 25% by 2023. Lastly, we are committed to maintaining and growing our strong dealer relationships. In fact, in the first quarter, we saw a significant increase in new exclusive Latham Grand dealers versus the same period last year, demonstrating our growing brand power. Additionally, we launched the Norell and franchising model in the U.S. in the first quarter, which has had a very nice start in the onboarding of many new franchisees. As we look ahead, there continues to be some headwinds in our supply chain as it relates to both material supply and inflation. This is due in large part to the deep freeze in Texas, which caused shortages in many resin-based products, ongoing challenges related to transportation, and the overall tightness in the supply of many commodities. To date, this has had a minimal impact on our ability to deliver on our strong sales and earnings growth. Our team has done a great job managing this, and it is something we will continue to monitor and offset with price and productivity. Like many other companies, we are also facing a very tight labor market, which we believe will be alleviated over time. Despite these headwinds, we are very optimistic about 2021, as reflected in the guidance that Mark will share with you. We have a very large addressable market, and the strong underlying secular trends are continuing. Outdoor living remains the fastest-growing repair and remodel segment, and we see that trend reflected in our business. As a result, our dealers are seeing strong future demand into 2022. We are also accelerating our CapEx investments in fiscal 2021 to continue our fiberglass expansion and to stay ahead of the demand curve. We also have multiple levers to drive further growth across our platforms, by continuing to leverage our brand and its digital assets, enhancing our leadership position across our products, accelerating the pace of fiberglass material conversion, and prioritizing strategic partnerships with exclusive dealers. With that, I will turn it over to Mark to take a deeper dive into our financials. Mark.