Latham Group, Inc.

Good afternoon and welcome to the Latham Group first quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Casey Cotery. investor relations representative. Please go ahead.

Thank you. This afternoon, we issued our first quarter 2024 earnings press release, which is available on the investor relations portion of our website, where you can also find the slide presentation that accompanies our prepared remarks. On today's call are Latham's president and CEO, Scott Rogeski, and CFO, Oliver Glow. Following their remarks, we will open the call to questions. During this call, the company may make certain statements that constitute forward-looking statements which reflect the company's views with respect to future events and financial performance as of today or the date specified. Actual events and results may differ materially from those contemplated by such forward-looking statements due to risks and other factors that are set forth in the company's annual report on Form 10-K and subsequent reports filed or furnished with the SEC as well as today's earnings release. The company expressly disclaims any obligation to update any forward-looking statements except as required by applicable law. In addition, during today's call, the company will discuss certain non-GAAP financial measures. Reconciliations of the directly comparable GAAP measures to these non-GAAP measures can be found in the slide presentation that accompanies our prepared remarks, which can be found on our investor relations website. I'll now turn the call over to Scott Rogeski.

Thank you, Casey. Good afternoon, everyone, and thank you all for joining today's call to review our first quarter 2024 results and discuss our latest business trends. In terms of key takeaways, first, we were pleased with our first quarter results. They represented a solid start to the year and exceeded the guidance we provided at the time of our fourth quarter conference call in March. Second, our performance demonstrated our ability to execute effectively during periods of uneven order flows and reflects the benefits of our reduced cost structure and actions we have taken to accelerate our value engineering efforts and lean manufacturing initiatives. These actions continue to drive ongoing production efficiencies and incremental capacity in our plants, providing us with more flexibility to serve customers with our industry-leading lead times. And third, we continue to maintain a substantial cash position even after the usual seasonal outlay for working capital and an $18.8 million debt repayment. This cash provides Latham the significant resilience to manage through soft business conditions for the pool industry and and the resources to take advantage of opportunities to drive future growth. Taking a closer look at Q1. After a slow start to the quarter, we saw a significant pickup in orders starting in mid-March. Our operations team was able to do a great job on execution, achieving lead times of three to five days. Fiberglass pool sales, while down year on year, showed relative strength and continued to represent the majority of our in-ground pool sales. On our last earnings conference call, we cited Latham's priorities for 2024. The first was to continue to drive the adoption and awareness of both fiberglass and automatic safety covers, and in the first quarter, we made considerable progress in the areas of new and refreshed product introductions as well as new dealer wins. During the quarter, we launched the Enchantment Pludge Pool Series for our California plant, which served the important California, Arizona, and Nevada markets. Plunge pools are becoming increasingly popular as they provide the homeowner with space-saving, lower-cost options that are ideal for aquatic exercises and rehabilitation. In the first quarter, we also relaunched the Providence and Tuscany series in North America, which is a very trendy rectangular pool with an attractive side-entry feature. Additionally, we put the finishing touches on a new fiberglass pool model that has a broad array of features, including swim-up seating and a built-in spa that is currently available to our largest dealers. We are also in the early stages of rolling out a line of plunge pools in our vinyl liner in-ground pool category. More on that in the coming months. With respect to automatic safety covers, which are another key priority for us, we continue to work with our pool cover distribution network, as well as many of our competitors' dealers, including concrete pool builders, to advance awareness and adoption of these products. In addition to providing unparalleled protection, these auto covers offer significant resource savings, resulting in up to a 70% reduction in both pool heating costs and chemical usage. We are continuing to drive operational improvements in our auto cover plants to reduce lead times and gain incremental capacity. Our operations team is also working on changes to our product lineup that will expand price points and capabilities. and we're making it a key focus to ensure that all of our newly launched pool models in our in-ground category are auto cover ready. We also continue the successful rollout of Measure by Latham, the first tool of its kind that simplifies the pool measuring and coating process for liner and cover installers. This easy-to-use, AI-powered device provides dealers with high-performance measuring accuracy with precise specifications for swimming pool covers and vinyl liners. all within minutes and all integrated with our project management portal, which enables dealers to quickly and easily receive quotes and submit and track orders. As you can imagine, this tool has been met with a very positive response from our dealers and contractors. We will continue its rollout to make sure all of our dealers have it and all the functionalities in place ahead of the 2025 pool building season. Latham's extensive and appealing product lineups, together with our industry-leading service levels and best-in-class lead times, are strengthening our ability to attract new dealers. In the first quarter, we were able to convert several new dealers in the U.S. and Canada that we believe will enable us to continue to drive penetration and growth in several key markets. For some of these dealers, while they are established pool builders, this will be their first experience with fiberglass products. They are motivated by the much shorter installation time, which of course, very attractive to their end consumers as well as the ease of installation and the aesthetics of the product, both of which often result in additional leads for them from neighboring homeowners. In working with Latham, even the most experienced new dealers go through our boot camp to be trained in fiberglass installation to maximize their success. The second priority for 2024 that we mentioned on our last earnings call is our programs to continue to gain additional operating efficiencies through value engineering and lean manufacturing initiatives. These structural cost benefits will have a long-term positive impact on Latham's margin profile and will be an important factor for us in 2025 when we expect improved market conditions to drive increased volumes. For example, the initial benefits from these programs in our largest liner and cover manufacturing plant include an 8% improvement in labor efficiency, a 20% increase in throughput, and an overall improvement in employee health and safety. All of this contributed to our first quarter margin performance. Lastly, we prioritize maintaining a strong balance sheet to both retain our resilience in today's soft market environment and retain the resources to support future growth. Oliver will provide details on that in a moment, but I can say that we've been very disciplined in our spending and have the operational and financial flexibility to flex up and down in response to market conditions, as well as take advantage of opportunities to drive future growth. With that, I will turn over the call to our CFO, Oliver Glow, for a first quarter financial review. Oliver?