Document and Entity Information
Document and Entity Information | 9 Months Ended |
Oct. 02, 2021 | |
Document and Entity Information [Abstract] | |
Document Type | S-1 |
Entity Registrant Name | Latham Group, Inc. |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001833197 |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets $ in Thousands | Dec. 31, 2019USD ($) |
Current assets: | |
Cash | $ 56,655 |
Trade receivables, net | 31,427 |
Inventories, net | 35,611 |
Prepaid expenses and other current assets | 3,998 |
Total current assets | 127,691 |
Property and equipment, net | 37,845 |
Deferred tax assets | 206 |
Goodwill | 101,672 |
Intangible assets, net | 258,297 |
Total assets | 525,711 |
Current liabilities: | |
Accounts payable | 12,093 |
Current maturities of long-term debt | 6,891 |
Accrued expenses and other current liabilities | 22,233 |
Contingent consideration liability | 8,978 |
Total current liabilities | 50,195 |
Long-term debt, net of discount and current portion | 216,332 |
Deferred income tax liabilities, net | 60,008 |
Liability for uncertain tax positions | 5,075 |
Other long-term liabilities | 306 |
Total liabilities | 331,916 |
Commitments and contingencies | |
Stockholders' equity: | |
Common stock, $0.0001 par value; 500,000,000 shares authorized as of December 31, 2020 and 2019; 118,854,249 and 96,498,943 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 10 |
Additional paid-in capital | 196,474 |
(Accumulated deficit) retained earnings | (2,218) |
Accumulated other comprehensive income (loss) | (471) |
Total stockholders' equity | 193,795 |
Total liabilities and stockholders' equity | $ 525,711 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 02, 2021 | Apr. 22, 2021 | Apr. 13, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900,000,000 | 900,000,000 | 500,000,000 | 500,000,000 | 500,000,000 |
Common stock, shares issued | 119,849,589 | 118,854,249 | 96,498,943 | ||
Common stock, shares outstanding | 119,849,589 | 118,854,249 | 96,498,943 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Operations | ||||||||||
Net sales | $ 491,592 | $ 291,468 | $ 403,389 | $ 317,975 | ||||||
Cost of sales | 329,805 | 186,699 | 260,616 | 219,819 | ||||||
Gross profit | 161,787 | 104,769 | 142,773 | 98,156 | ||||||
Selling, general and administrative expense | 170,532 | 50,888 | 85,527 | 57,388 | ||||||
Amortization | 16,560 | 12,173 | 17,347 | 15,643 | ||||||
(Loss) income from operations | (25,305) | 41,708 | 39,899 | 25,125 | ||||||
Other expense (income): | ||||||||||
Interest expense | 20,843 | 13,633 | 18,251 | 22,639 | ||||||
Other (income) expense , net | (3,887) | 1,121 | (1,111) | (300) | ||||||
Total other expense, net | 16,956 | 14,754 | 17,140 | 22,339 | ||||||
Earnings from equity method investment | 1,808 | |||||||||
(Loss) income before income taxes | (40,453) | 26,954 | 22,759 | 2,786 | ||||||
Income tax expense | 15,908 | 8,251 | 6,776 | (4,671) | ||||||
Net (loss) income | $ (11,296) | $ (53,598) | $ 8,533 | $ 17,740 | $ 16,414 | $ (15,451) | $ (56,361) | $ 18,703 | $ 15,983 | $ 7,457 |
Net income per share | ||||||||||
Basic | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 | ||||||
Diluted | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 | ||||||
Weighted-average common shares outstanding-basic and diluted | ||||||||||
Basic | 110,121,240 | 96,665,708 | 101,606,966 | 95,032,265 | ||||||
Diluted | 110,121,240 | 97,122,885 | 102,602,738 | 95,400,528 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Consolidated Statements of Comprehensive Income | |
Net (loss) income | $ 7,457 |
Other comprehensive income (loss), net of tax: | |
Foreign currency translation adjustments | (664) |
Benefit pension plan adjustments | (6) |
Total other comprehensive income (loss), net of tax | (670) |
Comprehensive (loss) income | $ 6,787 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-in Capital | (Accumulated Deficit) Retained EarningsCumulative Effect, Period of Adoption, Adjustment | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balance, beginning of period at Dec. 31, 2018 | $ 10,000 | $ 188,049,000 | $ (7,978,000) | $ 199,000 | $ 180,280,000 | ||
Balance, beginning of period (in shares) at Dec. 31, 2018 | 92,925,353 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 7,457,000 | 7,457,000 | |||||
Foreign currency translation adjustments | (664,000) | (664,000) | |||||
Issuance of common stock | 7,817,000 | $ 7,817,000 | |||||
Issuance of common stock (in shares) | 3,673,677 | 3,548,568 | |||||
Defined benefit pension plan adjustment | (6,000) | $ (6,000) | |||||
Capital contribution from parent | $ (1,697,000) | $ (1,697,000) | |||||
Repurchase and retirement of treasury stock | (200,000) | $ (200,000) | |||||
Repurchase and retirement of treasury stock (in shares) | (100,087) | 100,087 | |||||
Stock-based compensation expense | 808,000 | $ 808,000 | |||||
Balance, end of period at Dec. 31, 2019 | $ 10,000 | 196,474,000 | (2,218,000) | (471,000) | 193,795,000 | ||
Balance, end of period (in shares) at Dec. 31, 2019 | 96,498,943 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (15,451,000) | (15,451,000) | |||||
Foreign currency translation adjustments | (1,938,000) | (1,938,000) | |||||
Repurchase and retirement of treasury stock | (400,000) | (400,000) | |||||
Repurchase and retirement of treasury stock (in shares) | 200,173 | ||||||
Stock-based compensation expense | 224,000 | 224,000 | |||||
Balance, end of period at Mar. 28, 2020 | $ 10,000 | 196,298,000 | (17,669,000) | (2,409,000) | 176,230,000 | ||
Balance, end of period (in shares) at Mar. 28, 2020 | 96,298,770 | ||||||
Balance, beginning of period at Dec. 31, 2019 | $ 10,000 | 196,474,000 | (2,218,000) | (471,000) | 193,795,000 | ||
Balance, beginning of period (in shares) at Dec. 31, 2019 | 96,498,943 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | $ 18,703,000 | ||||||
Issuance of common stock (in shares) | 758,694 | ||||||
Balance, end of period at Sep. 26, 2020 | $ 10,000 | 200,163,000 | 16,485,000 | (67,000) | $ 216,591,000 | ||
Balance, end of period (in shares) at Sep. 26, 2020 | 97,187,596 | ||||||
Balance, beginning of period at Dec. 31, 2019 | $ 10,000 | 196,474,000 | (2,218,000) | (471,000) | 193,795,000 | ||
Balance, beginning of period (in shares) at Dec. 31, 2019 | 96,498,943 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 15,983,000 | 15,983,000 | |||||
Foreign currency translation adjustments | 2,825,000 | 2,825,000 | |||||
Issuance of common stock | $ 2,000 | 65,551,000 | $ 65,553,000 | ||||
Issuance of common stock (in shares) | 21,871,850 | 758,694 | |||||
Repurchase and retirement of treasury stock | (582,000) | $ (582,000) | |||||
Repurchase and retirement of treasury stock (in shares) | (275,238) | 275,238 | |||||
Contingent consideration settlement | $ 758,694 | 2,208,000 | $ 2,208,000 | ||||
Stock-based compensation expense | 1,827,000 | 1,827,000 | |||||
Balance, end of period at Dec. 31, 2020 | $ 12,000 | 265,478,000 | 13,765,000 | 2,354,000 | 281,609,000 | ||
Balance, end of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||||
Balance, beginning of period at Mar. 28, 2020 | $ 10,000 | 196,298,000 | (17,669,000) | (2,409,000) | 176,230,000 | ||
Balance, beginning of period (in shares) at Mar. 28, 2020 | 96,298,770 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 16,414,000 | 16,414,000 | |||||
Foreign currency translation adjustments | 2,295,000 | 2,295,000 | |||||
Repurchase and retirement of treasury stock | (176,000) | (176,000) | |||||
Repurchase and retirement of treasury stock (in shares) | 75,065 | ||||||
Stock-based compensation expense | 240,000 | 240,000 | |||||
Balance, end of period at Jun. 27, 2020 | $ 10,000 | 196,362,000 | (1,255,000) | (114,000) | 195,003,000 | ||
Balance, end of period (in shares) at Jun. 27, 2020 | 96,223,705 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 17,740,000 | 17,740,000 | |||||
Foreign currency translation adjustments | 47,000 | 47,000 | |||||
Issuance of common stock | 615,000 | 615,000 | |||||
Issuance of common stock (in shares) | 205,197 | ||||||
Contingent consideration settlement | 2,208,000 | 2,208,000 | |||||
Stock-based compensation expense | 978,000 | 978,000 | |||||
Balance, end of period at Sep. 26, 2020 | $ 10,000 | 200,163,000 | 16,485,000 | (67,000) | 216,591,000 | ||
Balance, end of period (in shares) at Sep. 26, 2020 | 97,187,596 | ||||||
Balance, beginning of period at Dec. 31, 2020 | $ 12,000 | 265,478,000 | 13,765,000 | 2,354,000 | 281,609,000 | ||
Balance, beginning of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 8,533,000 | 8,533,000 | |||||
Foreign currency translation adjustments | (1,201,000) | (1,201,000) | |||||
Dividend | (110,033,000) | (110,033,000) | |||||
Repurchase and retirement of treasury stock | $ (2,000) | (64,936,000) | (64,938,000) | ||||
Repurchase and retirement of treasury stock (in shares) | 21,666,653 | ||||||
Stock-based compensation expense | 1,464,000 | 1,464,000 | |||||
Balance, end of period at Apr. 03, 2021 | $ 10,000 | 91,973,000 | 22,298,000 | 1,153,000 | 115,434,000 | ||
Balance, end of period (in shares) at Apr. 03, 2021 | 97,187,596 | ||||||
Balance, beginning of period at Dec. 31, 2020 | $ 12,000 | 265,478,000 | 13,765,000 | 2,354,000 | 281,609,000 | ||
Balance, beginning of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (56,361,000) | ||||||
Balance, end of period at Oct. 02, 2021 | $ 12,000 | 377,649,000 | (42,596,000) | 430,000 | 335,495,000 | ||
Balance, end of period (in shares) at Oct. 02, 2021 | 119,849,589 | ||||||
Balance, beginning of period at Apr. 03, 2021 | $ 10,000 | 91,973,000 | 22,298,000 | 1,153,000 | 115,434,000 | ||
Balance, beginning of period (in shares) at Apr. 03, 2021 | 97,187,596 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (53,598,000) | (53,598,000) | |||||
Foreign currency translation adjustments | 164,000 | 164,000 | |||||
Repurchase and retirement of treasury stock | $ (1,000) | (216,699,000) | (216,700,000) | ||||
Repurchase and retirement of treasury stock (in shares) | 12,264,438 | ||||||
Stock-based compensation expense | 75,511,000 | 75,511,000 | |||||
Balance, end of period at Jul. 03, 2021 | $ 12,000 | 350,046,000 | (31,300,000) | 1,317,000 | 320,075,000 | ||
Balance, end of period (in shares) at Jul. 03, 2021 | 120,409,271 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (11,296,000) | (11,296,000) | |||||
Foreign currency translation adjustments | (887,000) | (887,000) | |||||
Stock-based compensation expense | 27,603,000 | 27,603,000 | |||||
Balance, end of period at Oct. 02, 2021 | $ 12,000 | $ 377,649,000 | $ (42,596,000) | $ 430,000 | $ 335,495,000 | ||
Balance, end of period (in shares) at Oct. 02, 2021 | 119,849,589 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Cash flows from operating activities: | ||
Net income | $ 15,983 | $ 7,457 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 25,365 | 21,659 |
Amortization of deferred financing costs and debt discount | 2,317 | 3,151 |
Bad debt expense | 358 | 253 |
Change in fair value of interest rate swap | 334 | |
Deferred income taxes | (4,670) | (10,226) |
Stock-based compensation expense | 1,827 | 808 |
Loss on sale and disposal of property and equipment | 332 | 680 |
Provision on liability for uncertain tax positions | 465 | 5,075 |
Change in fair value of contingent consideration for Narellan Group Pty Limited | (204) | 1,441 |
Changes in operating assets and liabilities: | ||
Trade receivables | 9,462 | (7,104) |
Inventories | (17,023) | 12,960 |
Prepaid expenses and other current assets | 1,680 | 1,460 |
Income tax receivable | (4,190) | (503) |
Accounts payable | 12,647 | (2,278) |
Accrued expenses and other current liabilities | 17,685 | 699 |
Other long-term liabilities | 793 | 123 |
Net cash provided by operating activities | 63,161 | 35,655 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (16,264) | (8,165) |
Proceeds from the sale of property and equipment | 579 | 1,296 |
Acquisitions of businesses, net of cash acquired | (74,736) | (20,214) |
Equity method investment in Premier Pools & Spas | (25,384) | |
Net cash used in investing activities | (115,805) | (27,083) |
Cash flows from financing activities: | ||
Proceeds from long-term debt borrowings | 20,000 | 22,310 |
Payments on long-term debt borrowings | (24,044) | (5,809) |
Distributions to parent | (600) | (200) |
Proceeds from issuance of common stock | 65,553 | 250 |
Repurchase and retirement of treasury stock | (582) | (200) |
Payments of initial public offering costs | (1) | |
Payments of Narellan Group Pty Limited contingent consideration | (6,624) | |
Net cash provided by financing activities | 54,302 | 16,551 |
Effect of exchange rate changes on cash | 997 | (956) |
Net increase in cash | 2,655 | 24,167 |
Cash at beginning of period | 56,655 | 32,488 |
Cash at end of period | 59,310 | 56,655 |
Supplemental cash flow information: | ||
Cash paid for interest | 15,625 | 19,488 |
Income taxes paid, net | 14,815 | 168 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable and accrued expenses | 1,235 | 312 |
Capitalized internal-use software included in accounts payable - related party | 500 | |
Deferred offering costs included in accounts payable and accrued expenses | 1,040 | |
Fair value of contingent consideration recorded in connection with acquisition of Narellan Group Pty Limited | 8,869 | |
Fair value of 3,548,568 and 758,694 shares of common stock issued during the years ended December 31, 2019 and 2020, respectively, in connection with the acquisition of Narellan Group Pty Limited | 2,208 | 7,567 |
Change in defined benefit pension plan liability | (149) | $ 31 |
Net working capital adjustment receivable | $ 750 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - shares | Oct. 20, 2020 | Oct. 14, 2020 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Consolidated Statements of Cash Flows | |||||
Issuance of common stock (in shares) | 21,666,653 | 21,666,653 | 758,694 | 758,694 | 3,548,568 |
NATURE OF THE BUSINESS
NATURE OF THE BUSINESS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NATURE OF THE BUSINESS | ||
NATURE OF THE BUSINESS | 1. Latham Group, Inc. (“the Company”) wholly owns Latham Pool Products, Inc. (“Latham Pool Products”) (together, “Latham”) and is a designer, manufacturer and marketer of in-ground residential swimming pools in North America, Australia and New Zealand. Latham offers a portfolio of pools and related products, including in-ground swimming pools, pool liners and pool covers. On December 18, 2018, Latham Investment Holdings, LP (“Parent”), an investment fund managed by affiliates of Pamplona Capital Management (the “Sponsor”), Wynnchurch Capital, L.P. and management acquired all of the outstanding equity interests of Latham Topco., Inc., a newly incorporated entity in the State of Delaware. Latham Topco, Inc. changed its name to Latham Group, Inc. on March 3, 2021. Initial Public Offering, Reorganization and Stock Split On April 27, 2021, the Company completed its initial public offering (the “IPO”), pursuant to which it issued and sold 23,000,000 shares of common stock, inclusive of 3,000,000 shares sold by the Company pursuant to the full exercise of the underwriters’ option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO were $399.3 million, after deducting underwriting discounts and commissions and other offering costs. Prior to the closing of the Company’s IPO on April 27, 2021 (the “Closing of the IPO”), the Company’s parent entity, Parent, merged with and into Latham Group, Inc., with Latham Group, Inc. surviving the merger (the “Reorganization”). The purpose of the Reorganization was to allow existing indirect owners of the Company to become direct shareholders of the Company. In connection with the Reorganization, Class A units of the Parent (the “Class A units”) were converted into shares of the Company’s common stock, and Class B units of the Parent (the “Class B units”) were converted into an economically equivalent number of restricted and unrestricted shares of the Company’s common stock on a pro rata basis. The Reorganization was accounted for as an equity reorganization between entities under common control. As the Class A units were akin to common shares as all holders held economic interest of the Parent and were entitled to distributions on a pro rata basis to their ownership, the conversion of Class A units to common shares as part of the Reorganization was considered to be equivalent to a stock split, which requires retrospective treatment for accounting purposes. Accordingly, all share and per share amounts in these condensed consolidated financial statements and related notes have been retroactively restated, where applicable, to give effect to the conversion ratio applied in connection with the Reorganization. Class B units were historically accounted for as compensatory arrangements in accordance with ASC 718 “ Compensation—Stock Compensation | 1. Latham Group, Inc. (“the Company”) wholly owns Latham Pool Products, Inc. (“Latham Pool Products”) (together, “Latham”) and a designer, manufacturer and marketer of in-ground residential swimming pools in North America, Australia and New Zealand. Latham offers a portfolio of pools and related products, including in-ground swimming pools, pool liners and pool covers. On December 18, 2018, Latham Investment Holdings, LP (“Parent”), an investment fund managed by affiliates of Pamplona Capital Management (the “Sponsor”), Wynnchurch Capital, L.P. and management acquired all of the outstanding equity interests of Latham Topco., Inc. a newly incorporated entity in the State of Delaware. Latham Topco, Inc. changed its name to Latham Group, Inc. on March 3, 2021. Impact of COVID-19 Pandemic On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. In response to the COVID-19 pandemic, federal, state and local governments put in place travel restrictions, quarantines, “shelter-in-place” orders, and various other restrictive measures in an attempt to control the spread of the disease. Such restrictions or orders have resulted in, and continue to result in, business closures, work stoppages, slowdowns and delays, among other effects that impact its operations, as well as customer demand and the operations of its suppliers. Since the onset of the COVID-19 pandemic, the Company has been focused on protecting its employees’ health and safety, meeting its customers’ needs as they navigate an uncertain financial and operating environment, working closely with its suppliers to protect its ongoing business operations and rapidly adjusting its short-, medium- and long-term operational plans to proactively and effectively respond to the current and potential future public health crises. To mitigate the impact of the COVID-19 pandemic on the Company’s business, it increased frequency and intensity of cleaning of its properties, implemented policies to enable its factory employees to work flexible working hours, shifted its corporate employees to remote work, temporarily stopped hiring, temporarily cut salaries (which cuts the Company has repaid to its employees later in the year) and have greatly reduced travel for its employees. Substantially all of the Company’s plants have remained operational throughout the pandemic and it has not experienced any significant supply issues. The Company did not experience any significant impacts on its liquidity as a result of the COVID-19 pandemic. Following a slow-down in orders in March and April of 2020 as some of the Company’s dealers shut down during the peak season, the Company saw a sustained increase in demand for its products during 2020. Although the Company has implemented measures to mitigate the impact of the COVID-19 pandemic on its business, financial condition and results of operations, the Company expects that these measures may not fully mitigate the impact of the COVID-19 pandemic on its business, financial condition and results of operations. The Company cannot predict the degree to, or the period over, which the Company will be affected by the pandemic and resulting governmental and other measures. The global impact of the COVID-19 pandemic continues to rapidly evolve, and the Company will continue to monitor the situation closely. Stock Split On April 13, 2021, the Company’s certificate of incorporation was amended and restated. Under the amended and restated certificate of incorporation, the Company has authority to issue 500,000,000 shares of common stock, par value $0.0001 per share. On April 12, 2021, the Company’s board of directors declared and on April 13, 2021, the Company effected a 109,673,709-for-one stock split of its issued and outstanding shares of common stock. Accordingly, all share and per share data included in these consolidated financial statements and notes thereto have been adjusted retroactively to reflect the impact of the amended and restated certificate of incorporation and the stock split. Reorganization Prior to the closing of the Company’s IPO on April 27, 2021 (the “Closing of the IPO”), the Company’s parent entity, Parent, merged with and into Latham Group, Inc., The purpose of the Reorganization was to allow existing indirect owners of the Company to become direct shareholders of the Company. In connection with the Reorganization, Class A units of the Parent (the “Class A units”) were converted into economically equivalent number of shares of the Company’s common stock on a pro rata basis to the individual holders’ ownership, and Class B units of the Parent (the “Class B units”) were converted into an economically equivalent number of restricted and unrestricted shares of the Company’s common stock, based on each individual’s respective equity value, as derived by individual Class B ownership. The Reorganization was accounted for as an equity reorganization between entities under common control. As the Class A units were akin to common shares as all holders held economic interest of the Parent and were entitled to distributions on a pro rata basis to their respective the individual holders’ ownership, the conversion of Class A units to common shares as part of the Reorganization was considered to be the equivalent to a stock split, which requires retrospective treatment for accounting purposes. Accordingly, all share and per share amounts in these consolidated financial statements and related notes have been retroactively restated, where applicable, for all periods herein, to give effect to the conversion ratio applied in connection with the Reorganization. As a result of the retrospective application of the Reorganization, any transaction between the Company and Parent has been eliminated from these consolidated financial statements as these represent intercompany transactions. Class B units were historically accounted for as compensatory arrangements in accordance with ASC 718 “Compensation—Stock Compensation,” akin to stock appreciation rights, that when vested would share on the economic appreciation of the equity value of Parent over the agreed hurdles. As a result of the Reorganization, the Company determined that only vested Class B units are considered outstanding for accounting purposes. A portion of the Class B units vest based on continued employment by the holder, or time-vesting units, and the remaining Class B units vest upon defined performance and market conditions, or performance-vesting units. Therefore, the Company has considered any unvested restricted shares as contingentable issuable shares until they vest. The conversion of time-vesting Class B units to restricted shares is retrospectively included in the weighted-average common shares outstanding used to calculate diluted net income (loss) per share using the treasury stock method for each period in which the individual unit holder’s threshold was met at the reporting date and therefore the individual unit holder would have participated in a hypothetical distribution to the Parent unit holders, if dilutive. The conversion of performance-vesting Class B units to restricted shares is not included in the weighted-average shares outstanding used to calculate diluted net income (loss) per share for any period prior to the Reorganization and IPO as the performance vesting thresholds were not satisfied and the performance units were not considered probable to vest historically. Refer to Note 15 for additional details relating to net income (loss) per share. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The consolidated balance sheet at December 31, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of October 2, 2021 and for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of October 2, 2021 and results of operations for the three fiscal quarters ended October 2, 2021 and September 26, 2020 and cash flows for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been made. The Company’s results of operations for the three fiscal quarters ended October 2, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021. Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Seasonality Although the Company generally has demand for its products throughout the year, its business is seasonal and weather is one of the principal external factors affecting the business. Historically, net sales and net income are highest during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. Accounting Policies Refer to the Company’s Audited Consolidated Financial Statements herein for a discussion of the Company’s accounting policies, as updated below. Stock-based Compensation Stock-based compensation is measured and recognized based on the grant date fair value of the awards. The Class B units of the Parent were granted to employees in the form of Profits Interest Units (“PIUs”). The Company determined the grant date fair value of PIUs using the Black-Scholes option pricing model. As part of the Reorganization, the vested and unvested PIUs of the Parent, were converted on a pro rata basis into equivalent restricted stock units and restricted stock awards of the Company’s underlying common stock. The fair value of the awards is expensed 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. 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 PIUs 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. The Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The Company utilized a dividend yield of zero, as it had 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. Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021, the Company effected its Omnibus Incentive Plan in which it granted to certain employees of the Company restricted stock awards, restricted stock units and option awards inclusive of the as converted Class B units as a result of the Reorganization (see Note 14). 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. 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 from equity method investment in the condensed 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 condensed consolidated statements of operations on a three-month lag. The Company recorded its interest in the net earnings of Premier Pools & Spas of $1.8 million for the three fiscal quarters ended October 2, 2021, which included a $0.2 million adjustment for the amortization of basis differences, within earnings from equity method investment in the condensed consolidated statements of operations during the three fiscal quarters ended October 2, 2021. As the Company initially invested in Premier Pools & Spas on October 30, 2020, there was no earnings from equity method investment recorded during the three fiscal quarters ended September 26, 2020. The Company received distributions of $2.2 million during the three fiscal quarters ended October 2, 2021. For presentation in the condensed 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 be 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 be 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 condensed consolidated statements of operations in the period the impairment occurs. Recently Issued Accounting Pronouncements The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. In February 2016, the FASB issued ASU 2016-02 , Leases (Topic 842) ASU No. 2018-11, Leases (Topic 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments — Credit Losses Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) public entities, ASU 2020-01 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2020-01 is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. The Company is currently evaluating the impact that the adoption of ASU 2020-01 will have on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope | 2. Basis of Presentation The accompanying consolidated financial statements and accompanying 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 during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. Revenue Recognition The Company adopted accounting standards codification (“ASC”) 606, Revenue from Contracts with Customers Under 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 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, cash discounts or other sales incentives. Customer rebates, cash discounts, 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 at the time of the initial sale. 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, 2019 and 2020. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component as 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 which 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 expenses and other current liabilities and other long-term liabilities on the consolidated balance sheets as of December 31, 2019 and 2020. 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 accompanying 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, 2019 and 2020 was $1.3 million and $1.4 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. During the years ended December 31, 2019 and 2020, one customer represented approximately 25.7% and 22.3% of the Company’s net sales, respectively. As of December 31, 2019 and 2020, outstanding trade receivables related to this customer were $12.0 million and $5.4 million, respectively. The Company provides extended payment terms to qualified customers for sales under its “Early Buy” program, which allows customers to take delivery in December and receive payment terms for April through June of the following year. 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, 2019 and 2020. Interest Rate Swap Borrowings under the Credit Agreement (see Note 9) accrue interest at variable rates and expose the Company to interest rate risk. On April 30, 2020, the Company entered into an interest rate swap with a notional amount of $200.0 million and a three-year term to reduce the interest rate risk associated with the Company’s Credit Agreement. The Company’s interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as other long-term liabilities in the consolidated balance sheets at fair value. The resulting gain (loss) on the interest rate swap is recognized within other expense (income), net in the consolidated statements of operations. 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. Acquisition-related contingent consideration was recorded in the consolidated balance sheets at its acquisition-date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration was remeasured each reporting period, with changes in fair value recorded in other expense (income), net in the consolidated statements of operations. The fair value measurement is based on significant inputs not observable by market participants and thus represents a Level 3 input in the fair value hierarchy (see Note 5). 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. 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 (losses) from equity method investment in the consolidated statements of operations on a three-month lag. Accordingly, the consolidated statement of operations for the year ended December 31, 2020 does not reflect any proportionate share of earnings or losses of Premier Pools & Spas. 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. 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, 2019 and 2020, the Company’s reserves for estimated slow moving products or obsolescence were $2.1 million and $1.8 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 Machinery and equipment (including computer equipment and software) 3 Furniture and fixtures 5 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 which 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 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, 2019 and 2020. 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 (see Note 6): Estimated Asset Useful Life Patented technology 5 Trade names and trademarks 9 Pool designs 14 years Franchise relationships 4 years Dealer relationships 5 Non-competition agreements 5 years 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 fiscal quarter and whenever events occur or changes in circumstances indicate that impairment may have occurred. Historically, including for the Company’s annual impairment test conducted during the year ended December 31, 2020, the Company had two reporting units for the purpose of performing its goodwill impairment test. In November 2020, the Company made changes to its internal organizational structure, including roles and responsibilities and to its internal reporting, resulting in a change to segment management. As a result of the change in segment management and in the information that is regularly reviewed, the results of the previous two reporting units are no longer being reviewed for profitability on an individual basis. Due to these factors, the Company recognized a change in reporting units effective in November 2020 and determined that only one reporting unit exists. The Company completed an assessment of any potential impairment for all reporting units immediately prior to and after the reporting unit change and determined that no impairment existed. 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. The Company measures fair value of its reporting unit based on the enterprise values derived using an income approach and a market approach. The Company applies a weighting of 75% to the income approach and a weighting of 25% to the market approach. The income approach uses a discounted cash flows model that indicates the fair value of the reporting unit based on the present value of the cash flows that the reporting unit is expected to generate in the future. Significant estimates in the discounted cash flows model include: the weighted-average cost of capital; and long-term rate of growth and profitability of the business. The market approach uses a guideline transactions method to indicate the fair value of the reporting unit based on a selected multiple. Significant estimates in the market approach model include identifying appropriate market multiples and assessing earnings before interest, income taxes, depreciation and amortization (“EBITDA”) in estimating the fair value of the reporting unit. 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 (see Note 9). Deferred Offering Costs The Company capitalizes certain legal, professional accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations. There were no deferred offering costs as of December 31, 2019. As of December 31, 2020, the Company had recorded $1.0 million of deferred offering costs related to its planned IPO of common stock. 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 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 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 (benefit) expense 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 (benefit) expense within the consolidated statements of operations. There were no penalties or accrued interest as of December 31, 2019. The Company had $0.2 million of accrued interest and no accrued penalties as of December 31, 2020. 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. Stock-Based Compensation Prior to the Reorganization, certain of the Company’s employees, directors and officers have been granted profits interest units (“PIUs”) in the form of Class B units in the Company’s parent entity, Latham Investment Holdings, LP (“Parent”). As the employees and officers provide services to the Company, the stock-based compensation is deemed to be for the benefit of the Company (see Note 16). The Company records an allocation of stock-based compensation expense based on the fair value of the award at grant date from its Parent and recognizes a corresponding capital contribution in additional paid-in capital. The Company accounts for the PIUs as equity classified awards. PIUs are measured at fair value on the grant date. The Company estimates the grant-date fair value of PIUs using the Contingent Claims Analysis Model, which uses the risk-free rate, expected term, volatility and dividend yield as inputs. A portion of the PIUs vest in five equal annual installments, based on continued service (“Time Vesting PIUs”). The Company recognizes the grant date fair value of these Time Vesting PIUs as an expense over the employee’s requisite service period. However, the Parent has a repurchase right for $0 per share until the third anniversary of the Acquisition in the event of voluntary termination or termination without cause (the “$0 Repurchase Right”). The Company will reverse stock-based compensation expense in the event that the Parent exercises the $0 Repurchase Right since it functions as a vesting condition. In the event of a change-in-control event, the Company will immediately recognize the unrecognized stock-based compensation expense related to the unvested Time Vesting PIUs. The remaining units (the “Performance PIUs”) will vest upon the consummation of a change-in-control, as defined in the Parent’s partnership agreement, a performance condition and the achievement of either a specified internal rate of return or a specific return on the Sponsor’s investment, both of which are market conditions. As the Performance PIUs contain both performance and market conditions, compensation expense for those awards will be equal to the grant date fair value of all awards for which the performance condition is met and the requisite service period is satisfied regardless of whether the market conditions are ultimately satisfied. No stock-based compensation expense has been recognized to-date for the remaining units as the Company has not deemed the performance condition to be probable. The Company accounts for forfeitures of stoc |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
ACQUISITIONS | ||
ACQUISITIONS | 3. GL International, LLC On October 22, 2020, Latham Pool Products acquired GL International, LLC (“GLI”) for a total purchase price of $79.7 million (the “GLI Acquisition”). The results of GLI’s operations have been included in the condensed consolidated financial statements since that date. GLI specializes in manufacturing custom pool liners and safety covers. As a result, this acquisition expanded the Company’s liner and safety cover product offerings. In connection with the GLI Acquisition, consideration paid was $79.7 million in cash, or $74.7 million net of cash acquired of $5.0 million, and excluding a net working capital adjustment receivable of $0.8 million. The net working capital adjustment receivable was settled during fiscal quarter ended April 3, 2021. The cash consideration was funded from existing cash on hand. The Company incurred $2.4 million in transaction costs. The Company accounted for the GLI Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations (“ASC 805”). This requires that the assets acquired and liabilities assumed be measured at fair value. The Company estimated, using Level 3 inputs, the fair value of certain fixed assets using a combination of the cost approach and the market approach. Inventories were valued using the comparative sales method, less the cost of disposal. Specific to intangible assets, dealer relationships were valued using the multi-period excess earnings method, whereas trade names were valued using the relief from royalty method. The Company recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The following summarizes the purchase price allocation for the GLI Acquisition: (in thousands) October 22, 2020 Total consideration $ 79,743 Allocation of purchase price: Cash 5,007 Trade receivables 10,639 Inventories 11,854 Prepaid expenses and other current assets 3,949 Property and equipment 1,402 Intangible assets 46,700 Total assets acquired 79,551 Accounts payable 3,536 Accrued expenses and other current liabilities 8,853 Other long-term liabilities 524 Total liabilities assumed 12,913 Total fair value of net assets acquired, excluding goodwill: 66,638 Goodwill $ 13,105 The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $13.1 million. Goodwill resulting from the GLI Acquisition was attributable to the expanded market share and product offerings. Goodwill resulting from the GLI Acquisition is deductible for tax purposes. The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Period Definite-lived intangible assets: (in thousands) (in years) Trade names $ 9,500 9 Dealer relationships 37,200 8 $ 46,700 Pro Forma Financial Information (Unaudited) The following pro forma financial information presents the statements of operations of the Company combined with GLI as if the acquisition occurred on January 1, 2020. The pro forma results do not include any anticipated synergies, cost savings or other expected benefits of an 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, 2020 and is not necessarily indicative of the Company’s future financial results. Three Fiscal Quarters Ended (in thousands) September 26,2020 Net sales $ 345,200 Net loss $ 21,952 The pro forma financial information presented above has been calculated after adjusting for the results of the GLI Acquisition for the three fiscal quarters ended September 26, 2020 to reflect the accounting effects as a result of the acquisition, including the amortization expense from acquired intangible assets, the depreciation and amortization expense from acquired property and equipment, the additional cost of sales from acquired inventory, interest expense from debt financing, and any related tax effects. | 3. Narellan Group Pty Limited On May 31, 2019 (the “Acquisition Date”), Latham Pool Products acquired Narellan Group Pty Limited and its subsidiaries (collectively “Narellan”) for a total purchase price of $35.2 million (the “Narellan Acquisition”). The results of Narellan’s operations have been included in the consolidated financial statements since that date. Narellan is a fiberglass pool manufacturer based in Australia with operations in Australia, New Zealand and Canada. The acquisition expanded the Company’s market share with a broader geographical footprint. Additionally, the acquisition provided the Company with an increase in dealer and franchise relationships. In connection with the Narellan Acquisition, consideration paid included $20.2 million in cash, $7.6 million in equity consideration and $7.4 million of contingent consideration as of the Acquisition Date. The cash consideration was funded, in part, through long-term debt proceeds of $22.3 million, net of discount of $0.7 million. The equity consideration consisted of common stock. The valuation of the common stock was prepared using a quantitative put options method. The Company incurred $1.1 million in transaction costs. The Company agreed to pay the contingent consideration in the form of cash and equity consideration to the seller if certain EBITDA targets were achieved for any of the trailing twelve months periods ended December 31, 2019, June 30, 2020 or the year ended December 31, 2020 (the “Contingent Consideration”). The fair value of the Contingent Consideration at the Acquisition Date was $7.4 million (see Note 5). On September 25, 2020, the Company amended the terms of the Narellan share purchase agreement to accelerate the settlement of the Contingent Consideration with the selling shareholders of Narellan based upon estimated EBITDA for the year ended December 31, 2020. The Contingent Consideration was settled through a cash payment of $6.6 million and the issuance of an additional 758,697 shares of common stock as equity consideration, which had a contractual value of $2.2 million and was recorded as a capital contribution on the consolidated statements of stockholders’ equity. As the fair value of the common stock issued of $2.8 million exceeded the contractual value of $2.2 million and the selling shareholders are also employees of the Company, the Company recorded the excess remuneration paid to the selling shareholders of $0.6 million as stock-based compensation in the consolidated statements of operations and as contributed capital in the consolidated statements of stockholders’ equity as of and for the year-ended December 31, 2020. The Company accounted for the Narellan Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations The following summarizes the purchase price allocation for the Company’s acquisition of Narellan: (in thousands) May 31, 2019 Total consideration $ 35,233 Allocation of purchase price: Cash 24 Trade receivables 1,420 Inventories 4,501 Prepaid expenses and other current assets 472 Property and equipment 4,861 Intangible assets 18,332 Deferred tax asset 126 Total assets acquired 29,736 Accounts payable 3,379 Accrued expenses and other current liabilities 442 Deferred tax liabilities 470 Total liabilities assumed 4,291 Total fair value of net assets acquired, excluding goodwill: 25,445 Goodwill $ 9,788 Total consideration was comprised of the following: (in thousands) Amount Cash consideration $ 20,238 Fair value of equity consideration 7,567 Fair value of contingent consideration 7,428 Total consideration $ 35,233 The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $9.8 million. Goodwill resulting from the acquisition was attributable to the expanded market share and broader geographical footprint. The goodwill recognized is not deductible for tax purposes. The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Definite-lived intangible assets: (in thousands) Period (in years) Trade names and trademarks $ 9,535 25 Pool designs 5,728 14 Patented technology 1,410 5 Franchise relationships 1,187 4 Dealer relationships 472 5 The following are the net sales and net loss from Narellan included in the Company’s results from the Acquisition Date through December 31, 2019: (in thousands) Amount Net sales $ 15,893 Net loss $ (1,047) GL International, LLC On October 22, 2020, Latham Pool Products acquired GL International, LLC ( “GLI”) for a total purchase price of $79.7 million (the “GLI Acquisition”). The results of GLI’s operations have been included in the consolidated financial statements since that date. GLI specializes in manufacturing custom pool liners and safety covers. As a result, this acquisition expanded the Company’s liner and safety cover product offerings. In connection with the GLI Acquisition, consideration paid was $79.7 million in cash, or $74.7 million net of cash acquired of $5.0 million, and excluding a net working capital adjustment receivable of $0.8 million. The net working capital adjustment receivable was recorded in prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2020. The cash consideration was funded from existing cash on hand. The Company incurred $2.4 million in transaction costs. The Company accounted for the GLI Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations The following summarizes the purchase price allocation for the Company’s acquisition of GLI: (in thousands) October 22, 2020 Total consideration $ 79,743 Allocation of purchase price: Cash 5,007 Trade receivables 10,639 Inventories 11,854 Prepaid expenses and other current assets 3,949 Property and equipment 1,402 Intangible assets 46,700 Total assets acquired 79,551 Accounts payable 3,536 Accrued expenses and other current liabilities 8,853 Other long-term liabilities 524 Total liabilities assumed 12,913 Total fair value of net assets acquired, excluding goodwill: 66,638 Goodwill $ 13,105 The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $13.1 million. Goodwill resulting from the GLI Acquisition was attributable to the expanded market share and product offerings. Goodwill resulting from the GLI Acquisition is deductible for tax purposes. The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Definite-lived intangible assets: (in thousands) Period (in years) Trade names $ 9,500 9 Dealer relationships 37,200 8 $ 46,700 The following are the net sales and net loss from GLI included in the Company’s results from the GLI Acquisition Date through December 31, 2020: Year Ended (in thousands) December 31, 2020 Net sales $ 7,689 Net loss $ (1,123) Pro Forma Financial Information (Unaudited) The following pro forma financial information presents the statements of operations of the Company combined with Narellan and GLI as if the acquisitions occurred on January 1, 2019. The pro forma results do not include any anticipated synergies, cost savings or other expected benefits of an acquisition. As the Narellan Acquisition closed on May 31, 2019, Narellan’s operating results have already been reflected in the Company’s consolidated statements of operations for the year ended December 31, 2020. The pro forma financial information is not necessarily indicative of what the financial results would have been had the acquisitions been completed on January 1, 2019 and is not necessarily indicative of the Company’s future financial results. Year Ended December 31, (in thousands) 2019 2020 Net sales $ 382,029 $ 462,802 Net income $ 6,066 $ 26,344 The pro forma financial information presented above has been calculated after adjusting for the results of the Narellan Acquisition and GLI Acquisition for the year ended December 31, 2019 and for the GLI Acquisition for the year ended December 31, 2020 to reflect the accounting effects as a result of the acquisitions, including the amortization expense from acquired intangible assets, the depreciation and amortization expense from acquired property and equipment, the additional cost of sales from acquired inventory, interest expense from debt financing, and any related tax effects. With respect to the GLI Acquisition, transaction costs incurred during the year ended December 31, 2020 are reflected within pro forma net income for the year ended December 31, 2019, in order to reflect the GLI Acquisition as if it had occurred on January 1, 2019. |
EQUITY METHOD INVESTMENT
EQUITY METHOD INVESTMENT | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
EQUITY METHOD INVESTMENT | ||
EQUITY METHOD INVESTMENT | 4. 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. As a result of the transaction, the Company received cash proceeds of $6.8 million and recorded a gain on the sale of equity method investment of $3.9 million, which was recorded within other (income) expense, net on the condensed consolidated statements of operations during the three fiscal quarters ended October 2, 2021. The Company’s post-sale ownership interest in Premier Pools & Spas is 20.1%. The Company concluded, both before and after the sale of common units on August 6, 2021, that it holds common stock of Premier Pools & Spas and has the ability to exercise significant influence over Premier Pools & Spas but does not have a controlling financial interest. Accordingly, the Company accounts for this investment using the equity method of accounting. The Company’s proportionate share of the earnings or losses of the investee are reported as a separate line in the condensed 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”). Premier Pools & Spas does not consolidate the operations of the Premier Franchisees. Per the supply agreement, Latham is the exclusive supplier of the Premier Franchisees for specific pool and pool products. These products include fiberglass products and package pool products. The initial term of the supply agreement is ten years. For the first three years of the supply agreement, the Customer is entitled to a low-teens percentage rebate for all fiberglass pools sold and an additional growth rebate of a low single-digit to low-teens percentage based on year over year sales growth on fiberglass pools (the “Rebates”). The Rebates will be paid directly to Premier Pools Management Corp. Holdco. As of October 2, 2021, the Company’s carrying amount for the equity method investment in Premier Pools & Spas was $22.0 million. During the three fiscal quarters ended October 2, 2021, Premier Pools & Spas paid the Company dividends of $2.2 million that are presented on the condensed consolidated statement of cash flows as distribution received from equity method investment of $1.8 million and return of equity method investment of $0.4 million, respectively. The Company has elected a three-month financial reporting lag. The Company recorded its interest in net earnings of Premier Pools & Spas $1.8 million for the three fiscal quarters ended October 2, 2021, along with a basis difference adjustment of $0.2 million. | 4. 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. The Company concluded that it holds common stock of Premier Pools & Spas and has the ability to exercise significant influence over Premier Pools & Spas, but does not have a controlling financial interest. Accordingly, the Company accounts for this investment using the equity method of accounting. 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”). PremierPools & Spas does not consolidate the operations of the Premier Franchisees. Per the supply agreement, Latham is the exclusive supplier of the Premier Franchisees for specific pool and pool products. These products include fiberglass products and package pool products. The initial term of the supply agreement is ten years. For the first three years of the supply agreement, the Customer is entitled to a low-teens percentage rebate for all fiberglass pools sold and an additional growth rebate of a low single-digit to low-teens percentage based on year over year sales growth on fiberglass pools (the “Rebates”). The Rebates will be paid directly to Premier Pools Management Corp. Holdco. As of December 31, 2020, the Company’s carrying amount for the equity method investment in Premier Pools & Spas was $25.4 million. Because of the three-month financial reporting lag, the Company did not record any earnings from its interest in Premier Pools & Spas’ earnings for the year ended December 31, 2020. The Company will begin to record its interest in the net earnings of Premier Pools & Spas, along with adjustments for amortization of basis differences and any investee capital transactions, during the fiscal quarter ended April 3, 2021. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
FAIR VALUE MEASUREMENTS | ||
FAIR VALUE MEASUREMENTS | 5. 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 three fiscal quarters ended October 2, 2021 or September 26, 2020. 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 or remeasured to fair value when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 2 and Level 3 inputs. Assets and liabilities measured at fair value on a recurring basis On May 31, 2019 (the “Acquisition Date”), Latham Pool Products acquired Narellan Group Pty Limited and its subsidiaries (collectively “Narellan”) for a total purchase price of $35.2 million (the “Narellan Acquisition”). In connection with the Narellan Acquisition, consideration paid included $20.2 million in cash, $7.6 million in equity consideration and $7.4 million of contingent consideration as of the Acquisition Date. The Company agreed to pay the contingent consideration in the form of cash and equity consideration to the seller if certain EBITDA targets were achieved for any of the trailing twelve months periods ended December 31, 2019, June 30, 2020 or the year ended December 31, 2020 (the “Contingent Consideration”). The fair value of the Contingent Consideration at the Acquisition Date was $7.4 million. On September 25, 2020, the Company amended the terms of the Narellan Share Purchase Agreement and settled the Contingent Consideration with the selling shareholders of Narellan based upon estimated EBITDA for the year ended December 31, 2020. The fair value of the Company’s Contingent Consideration was measured and recorded on the condensed consolidated balance sheets using Level 3 inputs because it was valued based on unobservable inputs and other estimation techniques due to the absence of quoted market prices. The Company valued the Contingent Consideration using a Monte Carlo simulation, which relied on management’s projections of EBITDA and the estimated probability of achieving such targets. Estimates of fair value are subjective in nature, involve uncertainties and matters of significant judgment, and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimate of fair value. Pension Plan The fair value of the benefit plan assets related to the Company’s pension plan was historically measured and recorded on the condensed consolidated balance sheets using Level 2 inputs. During the fiscal quarter ended September 26, 2020, the Company terminated its defined benefit pension plan. 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 due to the short-term maturities of these instruments. Term loan The term loan is carried at amortized cost; however, the Company estimates the fair value of the term loan for disclosure purposes. The fair value of the term loan is determined using inputs based on observable market data of a non-public exchange using, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of the term loan (in thousands): October 2, 2021 December 31, 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 234,201 $ 235,372 $ 221,496 $ 221,081 Interest rate swap The Company estimates the fair value of the interest rate swap (see Note 8) on a quarterly basis using Level 2 inputs, including the forward LIBOR 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 LIBOR curve. As of October 2, 2021 and December 31, 2020, the Company’s interest rate swap liability was $0.6 million and $0.3 million, respectively, which was recorded within other long-term liabilities on the condensed consolidated balance sheets. | 5. 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 or remeasured to fair value when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 2 and Level 3 inputs. Assets and liabilities measured at fair value on a recurring basis The fair value of the Company’s Contingent Consideration is measured and recorded on the consolidated balance sheets using Level 3 inputs because it is valued based on unobservable inputs and other estimation techniques due to the absence of quoted market prices. The Company values the Contingent Consideration using a Monte Carlo simulation, which relies on management’s projections of EBITDA and the estimated probability of achieving such targets. Estimates of fair value are subjective in nature, involve uncertainties and matters of significant judgment, and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimate of fair value. The following table presents a reconciliation of the Company’s Contingent Consideration measured and recorded at fair value on a recurring basis as of December 31, 2019, using significant unobservable inputs (Level 3) (in thousands): Fair Value Balance as of May 31, 2019 $ 7,428 Change in fair value of Contingent Consideration 1,441 Foreign currency translation adjustment 109 Balance as of December 31, 2019 8,978 Change in fair value of Contingent Consideration (204) Foreign currency translation adjustment 58 Payment of Contingent Consideration and issuance of common stock (see Note 3) (8,832) Balance as of September 25, 2020 $ — The Monte Carlo simulation utilized the following unobservable inputs to determine the fair value of the Contingent Consideration as of December 31, 2019: Year Ended December 31, 2019 EBITDA risk adjustment 17.30 % Annual EBITDA volatility 55.00 % Risk-free rate of return 2.10 % The fair value of the benefit plan assets is measured and recorded on the Company’s consolidated balance sheets using Level 2 inputs. The fair value of the Company’s plan assets was $1.3 million as of December 31, 2019. During the year ended December 31, 2020, the Company terminated its defined benefit pension plan (see Note 15). 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 due to the short-term maturities of these instruments. Term loan The term loan is carried at amortized cost; however, the Company estimates the fair value of the term loan for disclosure purposes. The fair value of the term loan is determined using inputs based on observable market data of a non-public exchange using, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of the term loan (in thousands): December 31, 2019 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 223,223 $ 220,712 $ 221,496 $ 221,081 Interest rate swap The Company estimates the fair value of the interest rate swap (see Note 9) on a quarterly basis using Level 2 inputs, including the forward LIBOR 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 LIBOR curve. As of December 31, 2019 and 2020, the Company’s interest rate swap liability was $0 and $0.3 million, which was recorded within other long-term liabilities on the consolidated balance sheets. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
GOODWILL AND INTANGIBLE ASSETS, NET | ||
GOODWILL AND INTANGIBLE ASSETS, NET | 6. Goodwill The carrying amount of goodwill as of October 2, 2021 and as of December 31, 2020 was $115.2 million and $115.8 million, respectively. The change in the carrying value during the three fiscal quarters ended October 2, 2021 was solely due to fluctuations in foreign currency exchange rates. Intangible Assets Intangible assets, net as of October 2, 2021 consisted of the following (in thousands): October 2, 2021 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 476 $ 14,839 $ 120,737 Patented technology 16,126 70 4,772 11,424 Pool designs 5,728 286 956 5,058 Franchise relationships 1,187 59 694 552 Dealer relationships 160,376 23 27,434 132,965 Non-competition agreements 2,476 — 1,381 1,095 $ 320,993 $ 914 $ 50,076 $ 271,831 The Company recognized $16.6 million of amortization expense related to intangible assets during the three fiscal quarters ended October 2, 2021. Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31,2020 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 The Company recognized $12.2 million of amortization expense related to intangible assets during the three fiscal quarters ended September 26, 2020. The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Year Ended Amortization Expense Remainder of fiscal 2021 $ 5,415 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 180,950 $ 271,831 | 6. Goodwill The following table presents the changes in the carrying value of goodwill during the years ended December 31, 2019 and 2020 (in thousands): Amount Balance as of December 31, 2018 $ 91,782 Acquisition 9,788 Foreign currency translation adjustment 102 Balance as of December 31, 2019 101,672 Acquisition 13,105 Foreign currency translation adjustment 973 Balance as of December 31, 2020 $ 115,750 The Company performed an annual test for goodwill impairment in the fourth quarter of the fiscal year ended December 31, 2019 and 2020 in accordance with Step 1 of ASC 350 and determined that goodwill was not impaired. Intangible Assets Intangible assets, net as of December 31, 2019 consisted of the following (in thousands): December 31, 2019 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 125,600 $ 99 $ 5,032 $ 120,667 Patented technology 16,126 14 1,698 14,442 Pool designs 5,728 59 239 5,548 Franchise relationships 1,187 12 173 1,026 Dealer relationships 123,176 5 8,530 114,651 Non-competition agreements 2,476 — 513 1,963 $ 274,293 $ 189 $ 16,185 $ 258,297 The Company recognized $15.6 million of amortization expense related to intangible assets during the year ended December 31, 2019. Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31, 2020 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 The Company recognized $17.3 million of amortization expense related to intangible assets during the year ended December 31, 2020. The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Amortization Year Ended Expense 2021 $ 21,959 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 182,048 $ 289,473 |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
INVENTORIES, NET | ||
INVENTORIES, NET | 7. Inventories, net consisted of the following (in thousands): October 2, 2021 December 31,2020 Raw materials $ 57,165 $ 37,010 Finished goods 23,540 27,808 $ 80,705 $ 64,818 | 7. Inventories, net consisted of the following (in thousands): December 31, 2019 2020 Raw materials $ 19,035 $ 37,010 Finished goods 16,576 27,808 $ 35,611 $ 64,818 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 8. Property and equipment, net consisted of the following (in thousands): December 31, 2019 2020 Land $ 1,613 $ 1,613 Building and improvements 5,495 5,898 Machinery and equipment 17,661 21,478 Furniture and fixtures 511 1,406 Computer equipment and software 5,090 6,633 Molds and dyes 5,602 9,051 Leasehold improvements 2,611 3,573 Vehicles 2,338 3,061 Construction in progress 3,046 8,525 43,967 61,238 Less: Accumulated depreciation (6,122) (13,881) $ 37,845 $ 47,357 Depreciation and amortization expense related to property and equipment during the years ended December 31, 2019 and 2020 was $6.0 million and $8.0 million, respectively. Construction in progress recorded as of December 31, 2019 and 2020 primarily related to an increase in fiberglass molds and fiberglass production capacity. The Company recorded aggregate losses on sales and disposals of property and equipment of $0.7 million and $0.3 million during the years ended December 31, 2019 and 2020 respectively. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
LONG-TERM DEBT | ||
LONG-TERM DEBT | 8. The components of the Company’s outstanding debt obligations consisted of the following (in thousands): October 2,2021 December 31, 2020 Term loan $ 238,314 $ 228,147 Less: Unamortized discount and debt issuance costs (4,113) (6,651) Total debt 234,201 221,496 Less: Current portion of long-term debt (14,234) (13,042) Total long-term debt $ 219,967 $ 208,454 Revolving Credit Facility On December 18, 2018, the Latham Pool Products entered into an agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC (“Nomura”) that included a revolving line of credit (the “Revolver”) and letters of credit (“Letters of Credit” or collectively with the Revolver, the “Revolving Credit Facility”), as well as a term loan (as described below). The Revolving Credit Facility is available to finance ongoing general corporate and working capital needs with the Revolver of up to $30.0 million. The Revolving Credit Facility matures on December 18, 2023. On April 27, 2021, upon completion of the IPO, the Company used $16.0 million of the net proceeds from the IPO to repay $16.0 million then outstanding on the Revolver. The Revolving Credit Facility allows for either Eurocurrency borrowings, bearing interest ranging from 4.50% to 4.75%, or base rate borrowings, bearing interest ranging from 3.50% to 3.75% depending on the First Lien Net Leverage Ratio, as defined in the Credit Agreement. 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 is equal to the applicable margin times the actual daily amount by which the $30.0 million initial commitment exceeds the sum of the outstanding borrowings under the Revolver and outstanding Letters of Credit obligations. The applicable margin ranges from 0.375% to 0.500% as determined by the Company’s First Lien Net Leverage Ratio as defined in the Credit Agreement. 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 and make prepayments. As of October 2, 2021 and December 31, 2020, the Company was in compliance with all financial-related covenants related to the Credit Agreement. There were no amounts outstanding as of both October 2, 2021 and December 31, 2020, on the Revolving Credit Facility or Letters of Credit. Term Loan Facility On December 18, 2018, in connection with the Acquisition, the Company entered into the Credit Agreement with Nomura to borrow $215.0 million (the “Original Term Loan”). The Company incurred debt issuance costs of $11.5 million related to the transaction. The Original Term Loan was amended on May 29, 2019, to provide additional borrowings of $23.0 million at a discount of $0.7 million (the “First Amendment”) to fund the Narellan Acquisition. Any portion of the First Amendment not used to fund the Narellan Acquisition was required to be applied to repay the First Amendment in an aggregate amount equal to such portion of the First Amendment, without any premium or penalty. On August 6, 2020, the Company entered into a Form of Affiliated Lender Assignment and Assumption with Nomura (the “Assignment”). Under the Assignment, the Company repaid $5.0 million of the outstanding principal balance. On October 14, 2020, the Company entered into a subsequent amendment under the Original Term Loan with Nomura to borrow an additional $20.0 million (the “Second Amendment” and collectively with the Original Term Loan and the First Amendment, the “Term Loan”). The Company accounted for the borrowings under the Second Amendment as new debt and recorded $0.1 million of third-party costs as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet. There were no financing costs incurred with the Second Amendment. The Term Loan has a maturity date of June 18, 2025. Interest and principal payments are due quarterly. On January 25, 2021, the Company entered into a subsequent amendment to the Term Loan with Nomura to borrow an additional $175.0 million (the “Third Amendment” and collectively with the “Term Loan,” the “Amended Term Loan”). In connection with the Third Amendment, the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $5.8 million, commencing March 31, 2021. The amendment did not change the maturity date of the Term Loan and the Amended Term Loan bears interest under the same terms as the Term Loan. The Company accounted for $165.0 million of the borrowings under the Third Amendment as new debt and $10.0 million of the borrowings under the Third Amendment as a debt modification. The Company recorded an aggregate of $1.2 million of debt issuance costs as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet. During the fiscal quarter ended July 3, 2021, in accordance with the terms of the Amended Term Loan, the Company elected to change the terms of the prepayment schedule from an inverse application to a pro rata application and as a result the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $3.6 million, commencing June 30, 2021. The Amended Term Loan allowed for the $175.0 million of proceeds to be distributed to common stockholders. On February 2, 2021, the Company used the proceeds of the Amended Term Loan to repurchase and retire treasury stock of $64.9 million and to pay a dividend to Class A unitholders of $110.0 million. On April 27, 2021, upon completion of the IPO, the Company used $152.7 million of the net proceeds from the IPO to repay $152.7 million of the Amended Term Loan. The Term Loan bears interest at (1) a base rate equal to the highest of (i) the Federal Funds Rate plus 1∕2 of 1 As of October 2, 2021, the unamortized debt issuance costs and discount on the Term Loan were $2.9 million and $1.2 million, respectively. As of December 31, 2020, the unamortized debt issuance costs and discount on the Term Loan were $6.3 million and $0.4 million, respectively. The effective interest rate was 7.24% at October 2, 2021. Interest rate risk associated with the Company’s Credit Agreement is managed through an interest rate swap which the Company executed on April 30, 2020. The swap has an effective date of May 18, 2020 and a termination date of May 18, 2023. Under the terms of the swap, the Company fixed its LIBOR borrowing rate at 0.442% on a notional amount of $200.0 million. The interest rate swap is not designated as a hedging instrument for accounting purposes (see Note 2 and Note 5). Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Year Ended Term Loan Facility Remainder of fiscal 2021 $ 3,558 2022 14,234 2023 14,234 2024 14,234 2025 192,054 $ 238,314 The obligations under the Credit Agreement are guaranteed by certain wholly owned subsidiaries (the “Guarantors”) of the Company as defined in the security 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. | 9. The components of the Company’s outstanding debt obligations consisted of the following (in thousands): December 31, 2019 2020 Term loan $ 232,191 $ 228,147 Less: Unamortized discount and debt issuance costs (8,968) (6,651) Total debt 223,223 221,496 Less: Current portion of long-term debt (6,891) (13,042) Total long-term debt $ 216,332 $ 208,454 Revolving Credit Facility On December 18, 2018, the Latham Pool Products entered into an agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC (“Nomura”) that included a revolving line of credit (the “Revolver”) and letters of credit (“Letters of Credit” or collectively with the Revolver, the “Revolving Credit Facility”), as well as a term loan (as described below). The Revolving Credit Facility was utilized to finance ongoing general corporate and working capital needs with the Revolver of up to $30.0 million. The Revolving Credit Facility matures on December 18, 2023. The Revolving Credit Facility allows for either Eurocurrency borrowings, bearing interest ranging from 4.50% to 4.75%, or base rate borrowings, bearing interest ranging from 3.50% to 3.75% depending on the First Lien Net Leverage Ratio, as defined in the Credit Agreement. 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 is equal to the applicable margin times the actual daily amount by which the $30.0 million initial commitment exceeds the sum of the outstanding borrowings under the Revolver and outstanding Letters of Credit obligations. The applicable margin ranges from 0.375% to 0.500% as determined by the Company’s First Lien Net Leverage Ratio as defined in the Credit Agreement. 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 and make prepayments. As of December 31, 2019 and 2020, the Company was in compliance with all financial-related covenants related to the Credit Agreement. There were no amounts outstanding as of December 31, 2019 and 2020 on the Revolving Credit Facility or Letters of Credit. Term Loan Facility On December 18, 2018, in connection with the Acquisition, the Company entered into the Credit Agreement with Nomura to borrow $215.0 million (the “Original Term Loan”). The Company incurred debt issuance costs of $11.5 million related to the transaction. The Original Term Loan was amended on May 29, 2019, to provide additional borrowings of $23.0 million at a discount of $0.7 million (the “First Amendment”) to fund the Company’s acquisition of Narellan (see Note 3). Any portion of the First Amendment not used to fund the acquisition of Narellan was required to be applied to repay the First Amendment in an aggregate amount equal to such portion of the First Amendment, without any premium or penalty. On August 6, 2020, the Company entered into a Form of Affiliated Lender Assignment and Assumption with Nomura (the “Assignment”). Under the Assignment, the Company repaid $4.975 million of the outstanding principal balance, which was accepted as full repayment of $5.0 million of the outstanding principal balance. The Company treated the $25.0 thousand as a gain on extinguishment of debt and recorded it within interest expense, net in its consolidated statements of operations during the year ended December 31, 2020. On October 14, 2020, the Company entered into a subsequent amendment under the Original Term Loan with Nomura to borrow an additional $20.0 million (the “Second Amendment” and collectively with the Original Term Loan and the First Amendment, the “Term Loan”). The Company accounted for the borrowings under the Second Amendment as new debt and recorded $0.1 million of third party costs as a direct reduction to the carrying amount of long-term debt on the consolidated balance sheet. There were no financing costs incurred with the Second Amendment. The Term Loan has a maturity date of June 18, 2025. Interest and principal payments are due quarterly. The Term Loan bears interest at (1) a base rate equal to the highest of (i) the Federal Funds Rate plus 1∕2 of 1%, (ii) the “prime rate” published in the Money Rates section of the Wall Street Journal and (iii) LIBOR plus 1.00% (2) plus a Loan Margin of (i) 6.00% for Eurocurrency Rate Loans and (ii) 5.00% for Base Rate Loans, as defined in the Credit Agreement. Principal payments under the First Amendment were calculated as 0.629% of the outstanding principal balance. In connection with the Second Amendment, the Company is required to repay the outstanding principal balance of the Term Loan in fixed quarterly payments of $3.3 million, commencing March 31, 2021. The Company was required to make a $1.6 million principal payment for the partial period of October 14, 2020 through December 31, 2020. Outstanding borrowings at December 31, 2019 and 2020 were $223.2 million and $221.5 million, respectively, net of discount and debt issuance costs of $9.0 million and $6.7 million, respectively. In connection with the Term Loan, the Company is subject to various financial reporting, financial and other covenants, including maintaining specific liquidity measurements. Under the Term Loan, the Company is required to make mandatory prepayments based on the Company’s excess cash flow for the year, as follows (as a percentage of the Company’s excess cash flow for the year): Mandatory Prepayment Leverage Ratio Percentage > 3.50:1.00 90 % > 3.00:1.00 and ≤ 3.50:1.00 75 % > 2.50:1.00 and ≤ 3.00:1.00 50 % > 2.00:1.00 and ≤ 2.50:1.00 25 % ≤ 2.00:1.00 0 % Leverage Ratio in the table above is defined as of any date of determination, the ratio of the aggregate principal amount of indebtedness at such date to consolidated earnings before interest, taxes, depreciation and amortization. As of December 31, 2019, the estimated mandatory prepayment to be paid was $0.9 million. There was no estimated mandatory prepayment to be paid as of December 31, 2020. As of December 31, 2020, the current portion of principal due on the Term Loan was $13.0 million, and this amount is shown as a current liability in current maturities of long-term debt on the consolidated balance sheets. There are also negative covenants, including, but not limited to, 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 and make prepayments. As of December 31, 2019 and 2020, the Company was in compliance with all financial-related covenants related to the Term Loan. As of December 31, 2019, the unamortized debt issuance costs and discount on the Term Loan were $8.4 million and $0.5 million, respectively. As of December 31, 2020, the unamortized debt issuance costs and discount on the Term Loan were $6.3 million and $0.4 million, respectively. The effective interest rate was 10.47% and 8.03% for the years ended December 31, 2019 and 2020, respectively. Interest rate risk associated with the Company’s Credit Agreement is managed through an interest rate swap which the Company executed on April 30, 2020. The swap has an effective date of May 18, 2020 and a termination date of May 18, 2023. Under the terms of the swap, the Company fixed its LIBOR borrowing rate at 0.442% on a notional amount of $200.0 million. The interest rate swap is not designated as a hedging instrument for accounting purposes (see Note 2 and Note 5). The Company recorded interest expense associated with the Revolving Credit Facility, Second Amendment and interest rate swap, as follows (in thousands): Year Ended December 31, 2019 2020 Cash interest expense $ 19,488 $ 15,625 Amortization of debt issuance costs 2,968 2,179 Amortization of original issue discount 183 138 Interest rate swap — 334 Gain on extinguishment of debt — (25) Total interest expense $ 22,639 $ 18,251 Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Term Loan Year Ended Facility 2021 $ 13,042 2022 13,042 2023 13,042 2024 13,042 2025 175,979 $ 228,147 The obligations under the Credit Agreement are guaranteed by certain wholly owned subsidiaries (the “Guarantors”) of the Company as defined in the security 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. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 10. Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2019 2020 Accrued sales rebates $ 6,520 $ 15,511 Accrued product warranties 2,663 2,705 Accrued incentives 2,448 11,244 Accrued vacation 2,425 3,805 Accrued payroll 2,334 6,098 Deferred offering costs — 1,040 Accrued third-party services 1,556 2,172 Other 4,287 8,031 Total accrued expenses and other current liabilities $ 22,233 $ 50,606 |
PRODUCT WARRANTIES
PRODUCT WARRANTIES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
PRODUCT WARRANTIES | ||
PRODUCT WARRANTIES | 9. The warranty reserve activity consisted of the following (in thousands): Three Fiscal Quarters Ended October 2,2021 September 26, 2020 Balance at the beginning of the year $ 2,882 $ 2,846 Accruals for warranties issued 4,369 2,270 Less: Settlements made (in cash or in kind) (3,825) (2,501) Balance at the end of the year $ 3,426 $ 2,615 | 11. The warranty reserve activity consisted of the following (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ 1,977 $ 2,846 Accruals for warranties issued 3,729 3,966 Warranty liabilities assumed in GLI Acquisition — 118 Less: Settlements made (in cash or in kind) (2,860) (4,048) Balance at the end of the year 2,846 2,882 Less: Current portion of accrued warranty costs (2,663) (2,705) Accrued warranty costs — less current portion $ 183 $ 177 |
NET SALES
NET SALES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET SALES | ||
NET SALES | 10. The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 In-ground Swimming Pools $ 285,704 $ 169,681 Covers 94,354 53,528 Liners 111,534 68,259 $ 491,592 $ 291,468 | 12. The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Year Ended December 31, 2019 2020 In-ground Swimming Pools $ 175,033 $ 237,410 Covers 70,984 84,524 Liners 71,958 81,455 $ 317,975 $ 403,389 The allowance for bad debt activity during the years ended December 31, 2019 and 2020 was as follows (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ 1,535 $ 1,322 Bad debt expense 253 358 Write-offs (466) (242) Balance at the end of the year $ 1,322 $ 1,438 |
INCOME TAXES
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
INCOME TAXES | 11. The effective income tax rate for the three fiscal quarters ended October 2, 2021 was (39.3)%, compared to 30.6% for the three fiscal quarters ended September 26, 2020. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three fiscal quarters ended October 2, 2021 was primarily attributable to the discrete impact of stock compensation expense pursuant to the Reorganization. The results include pre-tax stock compensation expense of $98.9 million for three fiscal quarters ended October 2, 2021 related to the Reorganization for which there is no associated tax benefit. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three fiscal quarters ended September 26, 2020 was impacted by a variety of factors, primarily stemming from impact of state taxes. The pre-tax income for three fiscal quarters ended September 26, 2020 included losses in tax jurisdictions for which the company did not record a tax benefit, which increased the effective income tax rate for the three fiscal quarters ended September 26, 2020. | 13. 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 are as follows (in thousands): Year Ended December 31, 2019 2020 Income (loss) before income taxes: Domestic $ 9,939 $ 19,609 Foreign (7,153) 3,150 Total $ 2,786 $ 22,759 Current and deferred income tax (benefit) expense is composed of the following (in thousands): Year Ended December 31, 2019 2020 Current income tax (benefit) expense: Domestic $ 5,424 $ 10,342 Foreign 131 1,104 Total current tax (benefit) expense 5,555 11,446 Deferred income tax (benefit) expense: Domestic (10,020) (4,532) Foreign (206) (138) Total deferred tax (benefit) expense (10,226) (4,670) Total income tax (benefit) expense $ (4,671) $ 6,776 The reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows (% of Income Before Income Taxes): Year Ended Year Ended December 31, 2019 December 31, 2020 Federal statutory tax rate 21.0 % 21.0 % Foreign taxes less than U.S. statutory rate 1.1 % 1.2 % State income tax, net of federal benefit (67.2) % 1.4 % Uncertain tax positions 348.2 % 0.8 % Change in valuation allowance (5.9) % (1.1) % GILTI 21.1 % 1.5 % Meals and entertainment 6.8 % 0.5 % Foreign expenses not deductible for tax 56.1 % 1.7 % Transaction costs not deductible for tax 13.3 % 2.0 % Canadian restructuring (562.4) % — Canadian Branch Income 0.0 % 1.8 % Other expenses not deductible for tax (0.1) % (1.0) % (168.0) % 29.8 % The Company continues to maintain valuation allowances in Canada primarily related to tax losses where it believes it is not more likely than not that the losses will be utilized. The following table summarizes changes in the valuation allowance (in thousands): Year Ended December 31, 2019 2020 Balance at January 1 $ (12,300) $ (12,463) Additions (163) (241) Balance at December 31 $ (12,463) $ (12,704) On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the U.S. Tax Cuts and Jobs Act of 2017 (the “Act”). The Act made broad and complex changes to the U.S. tax code, including, but not limited to (1) reducing the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, (2) bonus depreciation that allows for full expensing of qualified property, (3) interest expense deduction limitation rules, and (4) new international tax provisions including, but not limited to, GILTI and Foreign Derived Intangible Income (“FDII”). The Act also required companies to record/pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. The one-time transition tax was based on the Company’s total post-1986 earnings and profits (“E&P”) that were previously deferred for U.S. income tax purposes. The Company did not record a liability for the one-time transition tax for all of its foreign subsidiaries as the Company did not have aggregate E&P from those foreign subsidiaries. During the year ended December 31, 2019, the Company finalized the computations of the income tax effects of the Act. Although the Company has completed its accounting for the effects of the Act, the determination of the Act’s income tax effects may change following future legislation or further interpretation of the Act based on the publication of recently proposed U.S. Treasury regulations and guidance from the Internal Revenue Service and state tax authorities. The Company has elected with respect to its treatment of GILTI to account for taxes on GILTI as incurred. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted in response to the coronavirus (“COVID-19”) pandemic. The CARES Act is aimed at providing assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company’s consolidated financial condition or results of operations for the year ended December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was enacted in further response to the COVID-19 pandemic. The CAA extended many of the provisions enacted by the CARES Act, the extension of which likewise did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020. 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 (“NOL”) 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. Deferred income tax assets and liabilities recorded on the balance sheets as of December 31, 2019 and 2020 consist of the following (in thousands): December 31, 2019 2020 Deferred tax assets: Net operating loss carryforwards $ 12,110 $ 12,099 Inventories, net 680 473 Warranty reserve 649 789 Trade receivables 477 360 Profits interest units 389 760 Section 163(j) 289 — Deferred taxes in equity 257 257 Accrued expenses 224 498 Transaction costs 107 607 Canadian tax credits 86 255 Other 64 216 Gross deferred tax assets 15,332 16,314 Valuation allowance (12,463) (12,704) Total deferred tax asset 2,869 3,610 Less: Foreign deferred tax benefit (206) (345) Total domestic deferred tax asset 2,663 3,265 Deferred tax liabilities: Intangible assets (57,221) (53,874) Property and equipment, net (4,677) (4,120) Prepaid expenses (773) (464) Total deferred tax liabilities (62,671) (58,458) Net deferred tax liabilities $ (60,008) $ (55,193) ASC 740 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. After consideration of all evidence, both positive and negative, the Company concluded that it is more likely than not that it will be unable to realize a portion of its deferred tax assets and that a valuation allowance of $12.7 million is necessary as of December 31, 2020. 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. As of December 31, 2020, the Company had net operating loss (“NOL”) carryforwards of approximately $12.1 million (tax effected), which will be available to offset future taxable income and tax liabilities. The NOL carryforwards expire in calendar years 2026 through 2039. As of December 31, 2020, a valuation allowance of $12.1 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 expect that the potential tax liability would be insignificant. Tax Uncertainties The liability related to uncertain tax positions, exclusive of interest, is $5.4 million at December 31, 2020. Of this amount, $5.4 million, if recognized, would impact the effective tax rate. The Company does not expect this balance to significantly change within the next twelve months. The Company’s policy is to record interest and penalties related to unrecognized tax benefits in the income tax provision (benefit). As of December 31, 2020, the Company had $0.2 million of accrued interest and no accrued penalties. 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 as several combined or consolidated state tax returns and separate state tax returns. In addition, the Company files Canadian and Australian tax returns for its Canadian, Australian, and New Zealand entities. The Company is subject to the regular examination of its income tax returns by tax authorities. The Company has audits ongoing for the year 2018 related to Utah State Income Tax. 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 its provision for taxes. It is possible the outcomes from these examinations will have a material adverse effect on the Company’s financial condition and operating results. Tax years from the fiscal year ended December 31, 2017 through present are open for examination in the U.S. Tax years and tax periods ended December 31, 2016 through present are open for state examination. Tax years and tax periods from June 30, 2017 through present are currently open for examination in Canada. Tax years and tax periods from June 30, 2016 through present are currently open for examination in Australia. Tax years and tax periods from March 31, 2016 through present are currently open for examination in New Zealand. The following is a reconciliation of the beginning and ending amount of uncertain tax positions (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ — $ 9,681 Additions for tax positions taken during prior years — 181 Additions for tax positions taken during the current year 9,681 — Balance at the end of the year $ 9,681 $ 9,862 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 14. Lease Commitments The Company leases certain property and equipment under agreements generally with terms of five years or less and may include certain renewal options. Rental expense during the years ended December 31, 2019 and 2020 was $6.1 million and $6.8 million, respectively. The minimum annual rental commitments under non-cancelable operating leases as of December 31, 2020 are due as follows (in thousands): Year Ended 2021 $ 6,484 2022 5,971 2023 4,455 2024 3,834 2025 3,491 Thereafter 5,094 $ 29,329 Litigation In the normal course of its business, the Company is involved in various legal proceedings involving contractual and employment relationships, product liability claims, trademark rights and a variety of other matters. The Company does not believe there are any pending legal proceedings that will have a material impact on the Company’s financial position, results of operations or cash flows. 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. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2020 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 15. 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 contributed $0.9 million and $0.8 million to such plans during the years ended December 31, 2019 and 2020, respectively. During the year-ended December 31, 2020, the Company terminated its defined benefit pension plan, liquidating the existing plan assets and settling all remaining plan obligations associated with the Company’s pension plans, which resulted in an immaterial impact to the consolidated financial statements. |
PROFITS INTEREST UNITS
PROFITS INTEREST UNITS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
PROFITS INTEREST UNITS | ||
PROFITS INTEREST UNITS | 13. Prior to the Reorganization, the Company’s Parent granted PIUs in the form of Class B units of the Parent to certain key employees and directors for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of the Company. The following table summarizes the activity for all PIUs during the three fiscal quarters ended October 2, 2021 and the year ended December 31, 2020: Weighted- Average Grant- Number of PIUs Date Fair Value Balance at January 1, 2020 21,734,170 $ 0.60 Granted 7,843,107 0.35 Forfeited (2,152,315) 0.43 Balance at December 31, 2020 27,424,962 Granted — Forfeited (1,266,068) 0.34 Balance at April 21, 2021 26,158,894 Converted at IPO in connection with the Reorganization (26,158,894) $ 0.43 Balance at October 2, 2021 — On January 29, 2021 an employee holder of PIUs terminated his employment with the Company, at which time all 1,055,057 of his performance-vesting units were forfeited. At the time of his termination, the employee held 527,528 of time-vesting units, of which 211,011 time-vesting units were vested. Per the terms of his termination agreement, the Company accelerated the vesting of an additional 105,506 time-vesting units, such that the total time-vesting units vested were equal to 316,517 upon his termination and the remaining 211,011 of unvested time-vesting units were forfeited upon his termination. As the employee’s profits interest units had not vested from an accounting perspective, the retention and immediate vesting of the retained time-vesting units was accounted for as a cancellation of the original award and a new grant under the revised terms. A cumulative catch-up charge of $1.1 million was recorded during the fiscal quarter ended April 3, 2021 to reflect the incremental fair value of the awards as of the date of the modification, as compared to the grant-date fair value. | 16. Total stock-based compensation expense related to the PIUs was $0.8 million and $1.2 million during the years ended December 31, 2019 and 2020, respectively, which is recorded in selling, general and administrative expense in the consolidated statements of operations. There was $6.4 million and $9.8 million of unrecognized compensation expense related to the units as of December 31, 2019 and 2020, respectively. The following table summarizes the activity for all PIUs during the years ended December 31, 2019 and 2020: Weighted-Average Grant-Date Number of PIUs Fair Value Balance at January 1, 2019 20,890,124 $ 0.41 Granted 3,692,699 $ 0.38 Forfeited (2,848,653) $ 0.41 Balance at December 31, 2019 21,734,170 Granted 7,843,107 $ 0.60 Forfeited (2,152,315) $ 0.35 Balance at December 31, 2020 27,424,962 $ 0.43 As of December 31, 2020, there are 18,011,127 Performance PIUs which are not expected to vest as the performance condition is not considered to be probable. As of December 31, 2020, there are 9,413,835 Time-Vesting PIUs which will continue to vest over the employees’ requisite service periods. As of December 31, 2019 and 2020, none of the Time-Vesting PIUs have vested for accounting purposes due to the Parent’s $0 Repurchase Right. The Company uses the following assumptions in conjunction with the Contingent Claims Analysis Model to estimate the fair value of the PIUs: Year Ended Year Ended December 31, 2019 December 31, 2020 Expected volatility 49.00 % 55.00 % Risk-free interest rate 1.90 % 0.20 % Expected term (in years) 4.6 3.2 % Expected dividend yield — % — % During the year ended December 31, 2020, the Company recorded $0.6 million in stock-based compensation expense related to the settlement of the Contingent Consideration (see Note 3 and Note 5), which is recorded in selling, general and administrative expense in the consolidated statements of operations. |
COMMON STOCK
COMMON STOCK | 12 Months Ended |
Dec. 31, 2020 | |
COMMON STOCK | |
COMMON STOCK | 17. As of December 31, 2019 and 2020, the Company’s amended and restated certificate of incorporation authorized the Company to issue 500,000,000 shares of $0.0001 par value common stock. Each share of common stock entitles the holder to one vote for each share of common stock held. Common stockholders are entitled to receive dividends, as declared by the board of directors. Through December 31, 2020, no dividends had been paid. During the years ended December 31, 2019 and 2020, the Company paid $0.2 million and $0.6 million, respectively, for the repurchase and retirement of treasury stock. During the years ended December 31, 2019 and 2020, the Company repurchased and retired 100,087 and 275,238 shares of treasury stock, respectively. On October 14 and 20, 2020, the Company authorized the sale of 21,666,653 shares of the Company’s common stock to its existing shareholders for an aggregate of $64.9 million. The Company repurchased and retired those shares on February 2, 2021 (see Note 21). |
NET INCOME PER SHARE
NET INCOME PER SHARE | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET INCOME (LOSS) PER SHARE | ||
NET INCOME (LOSS) PER SHARE | 15. Basic and diluted net income (loss) per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Numerator: Net (loss) income attributable to common stockholders $ (56,361) $ 18,703 Denominator: Weighted-average common shares outstanding Basic 110,121,240 96,665,708 Diluted 110,121,240 97,122,885 Net (loss) income per share attributable to common stockholders: Basic $ (0.51) $ 0.19 Diluted $ (0.51) $ 0.19 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 income (loss) per share because the effect was anti-dilutive: Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Restricted stock awards 6,813,166 47,446 Restricted stock units 84,866 — Stock options 4,235 — | 18. Basic and diluted net income per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Year Ended December 31, 2019 2020 Numerator: Net income attributable to common stockholders $ 7,457 $ 15,983 Denominator: Weighted-average common shares outstanding Basic 95,032,265 101,606,966 Diluted 95,400,528 102,602,738 Net income per share attributable to common stockholders Basic $ 0.08 $ 0.16 Diluted $ 0.08 $ 0.16 There were no potentially dilutive securities outstanding during the year ended December 31, 2019. 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 income per share because the effect was anti-dilutive: Year Ended December 31, 2019 2020 Restricted stock awards 97,718 22,524 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
RELATED PARTY TRANSACTIONS | ||
RELATED PARTY TRANSACTIONS | 16. BrightAI Services Starting in 2020, BrightAI rendered services to the Company, for which the cost was capitalized as internal-use software. A co-founder of BrightAI Services has served on the Company’s board of directors since December 9, 2020. During the three fiscal quarters ended October 2, 2021 and the year ended December 31, 2020, the Company incurred $1.9 million and $0.5 million, respectively, associated with services performed by BrightAI, which is recorded as construction in progress within property and equipment, net on the condensed consolidated balance sheet as of October 2, 2021. As of October 2, 2021 and December 31, 2020, the Company had accounts payable-related party to BrightAI of $1.1 million and $0.5 million, respectively. There were no services rendered by BrightAI during the three fiscal quarters ended September 26, 2020. Expense Reimbursement and Management Fees The Company had an expense reimbursement agreement (the “management fee arrangement”) with the Sponsor and Wynnchurch Capital, L.P. for ongoing consulting and advisory services. The management fee arrangement provided for the aggregate payment of up to $1.0 million each year for reimbursement of expenses incurred with services provided and, depending on the extent of services provided, management fees. The management fee arrangement terminated upon consummation of the Company’s IPO. The Company entered into a Stockholders’ Agreement with 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. There were no management fees incurred by the Company during the three fiscal quarters ended October 2, 2021 and September 26, 2020. The Company reimbursed less than $0.1 million of out-of-pocket costs and expenses to the Sponsor and Wynnchurch Capital, L.P. during both the three fiscal quarters ended October 2, 2021 and September 26, 2020. As of October 2, 2021, there were no outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. As of September 26, 2020, there was less than $0.1 million outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. Operating Lease In May 2019, in connection with the Narellan Acquisition, the Company assumed an operating lease for the manufacture, sale and storage of swimming pools and associated equipment with Acquigen Pty Ltd, which is owned by an employee who is also a shareholder of the Company. The lease expires in June 2028. As of October 2, 2021 and December 31, 2020, future minimum lease payments related to this lease totaled $3.6 million and $4.2 million, respectively. The Company recognized $0.1 million of rent expense related to this lease during each of the fiscal quarters ended October 2, 2021 and September 26, 2020, as well as $0.4 million and $0.3 million of rent expense during the three fiscal quarters ended October 2, 2021 and September 26, 2020, which is recognized within selling, general and administrative expense on the condensed consolidated statements of operations. | 19. BrightAI Services Starting in 2020, BrightAI rendered services to the Company, for which the cost was capitalized as internal-use software. A co-founder of BrightAI Services has served on the Company’s board of directors since December 9, 2020. During the year ended December 31, 2020, the Company incurred $0.5 million associated with services performed by BrightAI, which is recorded as construction in progress within in property and equipment, net and accounts payable — related party on the consolidated balance sheet as of December 31, 2020. Expense Reimbursement and Management Fees The Company has an expense reimbursement agreement (the “management fee arrangement”) with the Sponsor and Wynnchurch Capital, L.P. for ongoing consulting and advisory services. The management fee arrangement provides for the aggregate payment of up to $1.0 million each year for reimbursement of expenses incurred with services provided and, depending on the extent of services provided, management fees. The management fee arrangement will terminate upon consummation of the Company’s initial public offering. The Company expensed $0.5 million of management fees during the year ended December 31, 2019 and expensed $47.7 thousand of reimbursement expenses during the year ended December 31, 2020. These fees are reported in selling, general and administrative expense in the consolidated statements of operations. As of December 31, 2019 and 2020, there were no outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. Operating Lease In May 2019, in connection with the Narellan Acquisition, the Company assumed an operating lease for the manufacture, sale and storage of swimming pools and associated equipment with Acquigen Pty Ltd, which is owned by an employee who is also a shareholder of the Company. The lease expires in June 2028. As of December 31, 2019 and 2020, future minimum lease payments totaled $4.3 million and $4.2 million, respectively, related to this lease. The Company recognized $0.2 million and $0.4 million of rent expense related to this lease during the years ended December 31, 2019 and 2020, respectively, which is recognized within selling, general and administrative expense on the consolidated statements of operations. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SEGMENT AND GEOGRAPHIC INFORMATION | ||
SEGMENT AND GEOGRAPHIC INFORMATION | 17. Segment Information During 2020, the Company made operational changes in how its CODM manages the business including organizational alignment, performance assessment and resource allocation. The segment disclosure is based on the intention to provide the users of the financial statements with a view of the business from the Company’s perspective. The Company conducts its business as one operating 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): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Net sales United States $ 385,259 $ 234,439 Canada 76,619 38,197 Australia 18,581 13,187 New Zealand 5,277 2,357 Other 5,856 3,288 Total $ 491,592 $ 291,468 Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): October 2, 2021 December 31, 2020 Long-lived assets United States $ 48,158 $ 37,680 Canada 4,358 3,050 Australia 4,394 4,979 New Zealand 1,857 1,648 Total $ 58,767 $ 47,357 | 20. Segment Information During 2020, the Company made operational changes in how its CODM manages the business including organizational alignment, performance assessment and resource allocation. The segment disclosure is based on the intention to provide the users of the financial statements with a view of the business from the Company’s perspective. The Company conducts its business as one operating and reportable 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, 2019 2020 Net sales United States $ 257,786 $ 325,716 Canada 43,157 50,499 Australia 12,126 20,181 New Zealand 2,432 3,984 Other 2,474 3,009 Total $ 317,975 $ 403,389 Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): December 31, 2019 2020 Long-lived assets United States $ 30,433 $ 37,680 Canada 2,279 3,050 Australia 4,094 4,979 New Zealand 1,039 1,648 Total $ 37,845 $ 47,357 |
CONDENSED FINANCIAL INFORMATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) | 12 Months Ended |
Dec. 31, 2020 | |
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) | |
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) | 21. Latham Group, Inc. (Parent Company Only) CONDENSED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2019 2020 Assets Investment in subsidiary $ 193,795 $ 281,609 Total assets $ 193,795 $ 281,609 Liabilities and Stockholders’ Equity Total liabilities $ — $ — Stockholders’ Equity Common stock, $0.0001 par value; 500,000,000 shares authorized at December 31, 2019 and 2020; 96,498,943 and 118,854,249 shares issued outstanding 10 12 Additional paid-in capital 196,474 265,478 Retained earnings (accumulated deficit) (2,218) 13,765 Accumulated other comprehensive income (loss) (471) 2,354 Total stockholders’ equity 193,795 281,609 Total liabilities and stockholders’ equity $ 193,795 $ 281,609 The accompanying notes are an integral part of these condensed financial statements. Latham Group, Inc. (Parent Company Only) CONDENSED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended December 31, 2019 2020 Equity in net income of subsidiary $ 7,457 $ 15,983 Net income attributable to common stockholders $ 7,457 $ 15,983 Net income per share Net income per share attributable to common stockholders Basic $ 0.08 $ 0.16 Diluted $ 0.08 $ 0.16 Weighted-average common shares outstanding—basic and diluted Basic 95,032,265 101,606,966 Diluted 95,400,528 102,602,738 The accompanying notes are an integral part of these condensed financial statements. Latham Group, Inc. (Parent Company Only) CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended December 31, 2019 2020 Net income $ 7,457 $ 15,983 Equity in other comprehensive income (loss) of subsidiary (670) 2,825 Comprehensive income $ 6,787 $ 18,808 The accompanying notes are an integral part of these condensed financial statements. Latham Group, Inc. (Parent Company Only) CONDENSED STATEMENT OF CASH FLOWS (in thousands) Year Ended December 31, 2019 2020 Cash flows from operating activities: Net income $ 7,457 $ 15,983 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net income of subsidiary (7,457) (15,983) Net cash provided by operating activities — — Cash flows from investing activities: Investment in subsidiary — (65,553) Net cash used in investing activities — (65,553) Cash flows from financing activities: Proceeds from issuance of common stock — 65,553 Net cash provided by financing activities — 65,553 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. Notes to Condensed Financial Statements of Registrant (Parent Company Only) 1. 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, 2019 and 2020, 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 the notes to the condensed financial statements, with the only exception being that the parent company accounts for its subsidiary using the equity method. 2. On October 14, 2020 and October 20, 2020, existing shareholders purchased an aggregate of 21,666,653 shares of Latham Group, Inc.’s common stock for an aggregate of $64.9 million. In addition, during the year ended December 31, 2020, the Company issued 205,197 shares of common stock for an aggregate of $0.6 million. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SUBSEQUENT EVENT | ||
SUBSEQUENT EVENT | 18. Debt Amendment and Acquisition On November 24, 2021, the Company entered into a subsequent amendment to the Amended Term Loan (the “Fifth Amendment”) with Nomura to provide for incremental term loans in an aggregate principal amount of $50.0 million (the “Incremental Term Loans”). The Incremental Term Loans will constitute a single class of term loans with the existing Amended Term Loan and will have terms identical including with respect to, among other things, maturity, the interest rate and amortization. The other terms of the existing Amended Term Loan as previously disclosed remain unchanged. In connection with the Fifth Amendment and the Amended Term Loan, the Company is required to repay the outstanding principal balance in fixed quarterly payments of $4.3 million, commencing December 31, 2021. On November 24, 2021, the Incremental Term Loans, along with cash on hand, were used to finance the acquisition of Trojan Leisure Products, LLC d/b/a Radiant Pools (“Radiant Acquisition”) and to pay the fees and expenses incurred in connection with the Radiant Acquisition and the Fifth Amendment. The purchase price for the Radiant Acquisition was $90.0 million, subject to certain adjustments, including for working capital as compared to an agreed target, and certain indebtedness, cash and transaction expenses. | 22. Debt Recapitalization On January 25, 2021, the Company entered into a subsequent amendment to the Term Loan with Nomura to borrow an additional $175.0 million (the “Third Amendment” and collectively with the “Term Loan,” the “Amended Term Loan”). In connection with the Third Amendment, the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $5.8 million, commencing March 31, 2021. The amendment did not change the maturity date of the Term Loan and the Amended Term Loan bears interest under the same terms as the Term Loan. The Company accounted for $165.0 million of the borrowings under the Third Amendment as new debt and $10.0 million of the borrowings under the Third Amendment as a debt modification. The Company recorded an aggregate of $1.2 million of debt issuance costs as a direct reduction to the carrying amount of long-term debt on the consolidated balance sheet. The Amended Term Loan allowed for the $175.0 million of proceeds to be distributed to common stockholders. On February 2, 2021, the Company used the proceeds of the Amended Term Loan to repurchase and retire treasury stock of $64.9 million and pay a dividend to Class A unitholders of $110.0 million. |
SUBSEQUENT EVENT (UNAUDITED)
SUBSEQUENT EVENT (UNAUDITED) | 12 Months Ended |
Dec. 31, 2020 | |
SUBSEQUENT EVENT (UNAUDITED) | |
SUBSEQUENT EVENT (UNAUDITED) | 23. Omnibus Incentive Plan On April 12, 2021, the Company’s stockholders approved the 2021 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), which became effective on April 22, 2021, upon pricing of the IPO. The Omnibus Incentive Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based and cash-based awards. The maximum aggregate number of shares reserved for issuance under the Omnibus Incentive Plan is 13,170,212 shares. The maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director under the Omnibus Incentive Plan during any one fiscal year, together with any cash fees paid to such non-employee director during such fiscal year, will be $750 thousand. If any award granted under the Omnibus Incentive Plan expires, terminates, or is canceled or forfeited without being settled, vested or exercised, shares of the Company's common stock subject to such award will again be made available for future grants. Any shares that are surrendered or tendered to pay the exercise price of an award or to satisfy withholding taxes owed, or any shares reserved for issuance, but not issued, with respect to settlement of a stock appreciation right, will not again be available for grant under the Omnibus Incentive Plan. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The consolidated balance sheet at December 31, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of October 2, 2021 and for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of October 2, 2021 and results of operations for the three fiscal quarters ended October 2, 2021 and September 26, 2020 and cash flows for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been made. The Company’s results of operations for the three fiscal quarters ended October 2, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021. | Basis of Presentation The accompanying consolidated financial statements and accompanying 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 | Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. | 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 | 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. Historically, net sales and net income are highest during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. | 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 during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. |
Revenue Recognition | Revenue Recognition The Company adopted accounting standards codification (“ASC”) 606, Revenue from Contracts with Customers Under 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 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, cash discounts or other sales incentives. Customer rebates, cash discounts, 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 at the time of the initial sale. 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, 2019 and 2020. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component as 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 | 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 which 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 expenses and other current liabilities and other long-term liabilities on the consolidated balance sheets as of December 31, 2019 and 2020. | |
Cost of Sales | 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 accompanying consolidated statements of operations. | |
Trade Receivables, Net | 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, 2019 and 2020 was $1.3 million and $1.4 million, respectively. | |
Concentration of Credit Risk | 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. During the years ended December 31, 2019 and 2020, one customer represented approximately 25.7% and 22.3% of the Company’s net sales, respectively. As of December 31, 2019 and 2020, outstanding trade receivables related to this customer were $12.0 million and $5.4 million, respectively. The Company provides extended payment terms to qualified customers for sales under its “Early Buy” program, which allows customers to take delivery in December and receive payment terms for April through June of the following year. | |
Fair Value Measurements | 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, 2019 and 2020. | |
Interest Rate Swap | Interest Rate Swap Borrowings under the Credit Agreement (see Note 9) accrue interest at variable rates and expose the Company to interest rate risk. On April 30, 2020, the Company entered into an interest rate swap with a notional amount of $200.0 million and a three-year term to reduce the interest rate risk associated with the Company’s Credit Agreement. The Company’s interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as other long-term liabilities in the consolidated balance sheets at fair value. The resulting gain (loss) on the interest rate swap is recognized within other expense (income), net in the consolidated statements of operations. | |
Business Combinations | 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. Acquisition-related contingent consideration was recorded in the consolidated balance sheets at its acquisition-date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration was remeasured each reporting period, with changes in fair value recorded in other expense (income), net in the consolidated statements of operations. The fair value measurement is based on significant inputs not observable by market participants and thus represents a Level 3 input in the fair value hierarchy (see Note 5). | |
Equity Method Investments | 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. 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 from equity method investment in the condensed 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 condensed consolidated statements of operations on a three-month lag. The Company recorded its interest in the net earnings of Premier Pools & Spas of $1.8 million for the three fiscal quarters ended October 2, 2021, which included a $0.2 million adjustment for the amortization of basis differences, within earnings from equity method investment in the condensed consolidated statements of operations during the three fiscal quarters ended October 2, 2021. As the Company initially invested in Premier Pools & Spas on October 30, 2020, there was no earnings from equity method investment recorded during the three fiscal quarters ended September 26, 2020. The Company received distributions of $2.2 million during the three fiscal quarters ended October 2, 2021. For presentation in the condensed 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 be 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 be 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 condensed consolidated statements of operations in the period the impairment occurs. | 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. 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 (losses) from equity method investment in the consolidated statements of operations on a three-month lag. Accordingly, the consolidated statement of operations for the year ended December 31, 2020 does not reflect any proportionate share of earnings or losses of Premier Pools & Spas. 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. |
Inventories, Net | 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, 2019 and 2020, the Company’s reserves for estimated slow moving products or obsolescence were $2.1 million and $1.8 million, respectively. | |
Property and Equipment, Net | 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 Machinery and equipment (including computer equipment and software) 3 Furniture and fixtures 5 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 which 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 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 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, 2019 and 2020. 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 (see Note 6): Estimated Asset Useful Life Patented technology 5 Trade names and trademarks 9 Pool designs 14 years Franchise relationships 4 years Dealer relationships 5 Non-competition agreements 5 years | |
Goodwill | 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 fiscal quarter and whenever events occur or changes in circumstances indicate that impairment may have occurred. Historically, including for the Company’s annual impairment test conducted during the year ended December 31, 2020, the Company had two reporting units for the purpose of performing its goodwill impairment test. In November 2020, the Company made changes to its internal organizational structure, including roles and responsibilities and to its internal reporting, resulting in a change to segment management. As a result of the change in segment management and in the information that is regularly reviewed, the results of the previous two reporting units are no longer being reviewed for profitability on an individual basis. Due to these factors, the Company recognized a change in reporting units effective in November 2020 and determined that only one reporting unit exists. The Company completed an assessment of any potential impairment for all reporting units immediately prior to and after the reporting unit change and determined that no impairment existed. 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. The Company measures fair value of its reporting unit based on the enterprise values derived using an income approach and a market approach. The Company applies a weighting of 75% to the income approach and a weighting of 25% to the market approach. The income approach uses a discounted cash flows model that indicates the fair value of the reporting unit based on the present value of the cash flows that the reporting unit is expected to generate in the future. Significant estimates in the discounted cash flows model include: the weighted-average cost of capital; and long-term rate of growth and profitability of the business. The market approach uses a guideline transactions method to indicate the fair value of the reporting unit based on a selected multiple. Significant estimates in the market approach model include identifying appropriate market multiples and assessing earnings before interest, income taxes, depreciation and amortization (“EBITDA”) in estimating the fair value of the reporting unit. | |
Debt Issuance Costs | 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 (see Note 9). | |
Deferred Offering Costs | Deferred Offering Costs The Company capitalizes certain legal, professional accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations. There were no deferred offering costs as of December 31, 2019. As of December 31, 2020, the Company had recorded $1.0 million of deferred offering costs related to its planned IPO of common stock. | |
Segment Reporting | 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 | |
Income Taxes | 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 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 (benefit) expense 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 (benefit) expense within the consolidated statements of operations. There were no penalties or accrued interest as of December 31, 2019. The Company had $0.2 million of accrued interest and no accrued penalties as of December 31, 2020. 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. | |
Stock-Based Compensation | Stock-based Compensation Stock-based compensation is measured and recognized based on the grant date fair value of the awards. The Class B units of the Parent were granted to employees in the form of Profits Interest Units (“PIUs”). The Company determined the grant date fair value of PIUs using the Black-Scholes option pricing model. As part of the Reorganization, the vested and unvested PIUs of the Parent, were converted on a pro rata basis into equivalent restricted stock units and restricted stock awards of the Company’s underlying common stock. The fair value of the awards is expensed 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. 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 PIUs 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. The Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The Company utilized a dividend yield of zero, as it had 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. Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021, the Company effected its Omnibus Incentive Plan in which it granted to certain employees of the Company restricted stock awards, restricted stock units and option awards inclusive of the as converted Class B units as a result of the Reorganization (see Note 14). | Stock-Based Compensation Prior to the Reorganization, certain of the Company’s employees, directors and officers have been granted profits interest units (“PIUs”) in the form of Class B units in the Company’s parent entity, Latham Investment Holdings, LP (“Parent”). As the employees and officers provide services to the Company, the stock-based compensation is deemed to be for the benefit of the Company (see Note 16). The Company records an allocation of stock-based compensation expense based on the fair value of the award at grant date from its Parent and recognizes a corresponding capital contribution in additional paid-in capital. The Company accounts for the PIUs as equity classified awards. PIUs are measured at fair value on the grant date. The Company estimates the grant-date fair value of PIUs using the Contingent Claims Analysis Model, which uses the risk-free rate, expected term, volatility and dividend yield as inputs. A portion of the PIUs vest in five equal annual installments, based on continued service (“Time Vesting PIUs”). The Company recognizes the grant date fair value of these Time Vesting PIUs as an expense over the employee’s requisite service period. However, the Parent has a repurchase right for $0 per share until the third anniversary of the Acquisition in the event of voluntary termination or termination without cause (the “$0 Repurchase Right”). The Company will reverse stock-based compensation expense in the event that the Parent exercises the $0 Repurchase Right since it functions as a vesting condition. In the event of a change-in-control event, the Company will immediately recognize the unrecognized stock-based compensation expense related to the unvested Time Vesting PIUs. The remaining units (the “Performance PIUs”) will vest upon the consummation of a change-in-control, as defined in the Parent’s partnership agreement, a performance condition and the achievement of either a specified internal rate of return or a specific return on the Sponsor’s investment, both of which are market conditions. As the Performance PIUs contain both performance and market conditions, compensation expense for those awards will be equal to the grant date fair value of all awards for which the performance condition is met and the requisite service period is satisfied regardless of whether the market conditions are ultimately satisfied. No stock-based compensation expense has been recognized to-date for the remaining units as the Company has not deemed the performance condition to be probable. The Company accounts for forfeitures of stock-based awards as they occur rather than applying an estimated forfeiture rate to stock-based compensation expense. |
Pension and Other Postretirement Plans | Pension and Other Postretirement Plans The Company sponsors a noncontributory defined benefit pension plan that covers certain former employees. Funding of accrued pension costs is subject to limitations in the Internal Revenue Code | |
Foreign Currency Translation and Foreign Currency Transactions | 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 expense (income), net within the consolidated statements of operations. | |
Advertising Costs | 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 $3.8 million and $5.9 million during the years ended December 31, 2019 and 2020, respectively. | |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is a measure of net income 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. Other comprehensive income (loss) consists of foreign currency translation adjustments and defined benefit plan adjustments. Income tax (benefit) expense on the components of other comprehensive income (loss) was not significant for the years ended December 31, 2019 and 2020. | |
Earnings Per Share | Earnings Per Share Basic net income per share is calculated by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is calculated by dividing net income available to common stockholders by the diluted weighted-average number of shares of common stock outstanding for the period. There were no potentially dilutive securities outstanding during the year ended December 31, 2019 and 2020. | |
Treasury Stock | 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 Adopted Accounting Standards | Recently Issued Accounting Pronouncements The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. In February 2016, the FASB issued ASU 2016-02 , Leases (Topic 842) ASU No. 2018-11, Leases (Topic 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments — Credit Losses Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) public entities, ASU 2020-01 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2020-01 is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. The Company is currently evaluating the impact that the adoption of ASU 2020-01 will have on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope | Recently Adopted Accounting Standards In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement period and the explicit requirement to disclose the range and weighted-average of significant unobservable inputs used for Level 3 fair value measurements. The other provisions of ASU 2018-13 include eliminated and modified disclosure requirements. For all entities, this guidance is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2018-13 as of the required effective date of January 1, 2020. The adoption of ASU 2018-13 did not have a material impact on the Company’s consolidated financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. In February 2016, the FASB issued ASU 2016-02 , Leases (Topic 842) ASU No. 2018-11, Leases (Topic 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments — Credit Losses Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities December 15, 2020 and interim periods beginning after December 15, 2021. Early application is permitted in any interim period after the issuance of the update. The Company is currently evaluating the impact that the adoption of ASU 2017-12 will have on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of estimated useful lives of property, plant and equipment | 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 Machinery and equipment (including computer equipment and software) 3 Furniture and fixtures 5 Vehicles 5 years |
Schedule of weighted-average estimated useful lives of finite lived intangible assets | 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 (see Note 6): Estimated Asset Useful Life Patented technology 5 Trade names and trademarks 9 Pool designs 14 years Franchise relationships 4 years Dealer relationships 5 Non-competition agreements 5 years |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | ||
Summary of purchase price allocation | (in thousands) October 22, 2020 Total consideration $ 79,743 Allocation of purchase price: Cash 5,007 Trade receivables 10,639 Inventories 11,854 Prepaid expenses and other current assets 3,949 Property and equipment 1,402 Intangible assets 46,700 Total assets acquired 79,551 Accounts payable 3,536 Accrued expenses and other current liabilities 8,853 Other long-term liabilities 524 Total liabilities assumed 12,913 Total fair value of net assets acquired, excluding goodwill: 66,638 Goodwill $ 13,105 | |
Schedule of purchase price to specific intangible asset categories | Fair Value Amortization Period Definite-lived intangible assets: (in thousands) (in years) Trade names $ 9,500 9 Dealer relationships 37,200 8 $ 46,700 | |
Schedule of pro forma financial information | Three Fiscal Quarters Ended (in thousands) September 26,2020 Net sales $ 345,200 Net loss $ 21,952 | Year Ended December 31, (in thousands) 2019 2020 Net sales $ 382,029 $ 462,802 Net income $ 6,066 $ 26,344 |
Narellan Group Pty Limited | ||
Business Acquisition [Line Items] | ||
Summary of purchase price allocation | The following summarizes the purchase price allocation for the Company’s acquisition of Narellan: (in thousands) May 31, 2019 Total consideration $ 35,233 Allocation of purchase price: Cash 24 Trade receivables 1,420 Inventories 4,501 Prepaid expenses and other current assets 472 Property and equipment 4,861 Intangible assets 18,332 Deferred tax asset 126 Total assets acquired 29,736 Accounts payable 3,379 Accrued expenses and other current liabilities 442 Deferred tax liabilities 470 Total liabilities assumed 4,291 Total fair value of net assets acquired, excluding goodwill: 25,445 Goodwill $ 9,788 | |
Schedule of purchase price to specific intangible asset categories | The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Definite-lived intangible assets: (in thousands) Period (in years) Trade names and trademarks $ 9,535 25 Pool designs 5,728 14 Patented technology 1,410 5 Franchise relationships 1,187 4 Dealer relationships 472 5 | |
Schedule of components total consideration | Total consideration was comprised of the following: (in thousands) Amount Cash consideration $ 20,238 Fair value of equity consideration 7,567 Fair value of contingent consideration 7,428 Total consideration $ 35,233 | |
Schedule of net sales and net loss from acquiree included in the Company's results from the Acquisition Date | The following are the net sales and net loss from Narellan included in the Company’s results from the Acquisition Date through December 31, 2019: (in thousands) Amount Net sales $ 15,893 Net loss $ (1,047) | |
GL International, LLC | ||
Business Acquisition [Line Items] | ||
Summary of purchase price allocation | The following summarizes the purchase price allocation for the Company’s acquisition of GLI: (in thousands) October 22, 2020 Total consideration $ 79,743 Allocation of purchase price: Cash 5,007 Trade receivables 10,639 Inventories 11,854 Prepaid expenses and other current assets 3,949 Property and equipment 1,402 Intangible assets 46,700 Total assets acquired 79,551 Accounts payable 3,536 Accrued expenses and other current liabilities 8,853 Other long-term liabilities 524 Total liabilities assumed 12,913 Total fair value of net assets acquired, excluding goodwill: 66,638 Goodwill $ 13,105 | |
Schedule of purchase price to specific intangible asset categories | The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Definite-lived intangible assets: (in thousands) Period (in years) Trade names $ 9,500 9 Dealer relationships 37,200 8 $ 46,700 | |
Schedule of net sales and net loss from acquiree included in the Company's results from the Acquisition Date | The following are the net sales and net loss from GLI included in the Company’s results from the GLI Acquisition Date through December 31, 2020: Year Ended (in thousands) December 31, 2020 Net sales $ 7,689 Net loss $ (1,123) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
Contingent consideration | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Schedule of reconciliation of Company's Contingent Consideration measured and recorded at fair value on a recurring basis, using significant unobservable inputs (Level 3) | The following table presents a reconciliation of the Company’s Contingent Consideration measured and recorded at fair value on a recurring basis as of December 31, 2019, using significant unobservable inputs (Level 3) (in thousands): Fair Value Balance as of May 31, 2019 $ 7,428 Change in fair value of Contingent Consideration 1,441 Foreign currency translation adjustment 109 Balance as of December 31, 2019 8,978 Change in fair value of Contingent Consideration (204) Foreign currency translation adjustment 58 Payment of Contingent Consideration and issuance of common stock (see Note 3) (8,832) Balance as of September 25, 2020 $ — | |
Schedule of significant unobservable inputs for fair value measurements | The Monte Carlo simulation utilized the following unobservable inputs to determine the fair value of the Contingent Consideration as of December 31, 2019: Year Ended December 31, 2019 EBITDA risk adjustment 17.30 % Annual EBITDA volatility 55.00 % Risk-free rate of return 2.10 % | |
Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Schedule of financial liabilities at fair value on a recurring basis | October 2, 2021 December 31, 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 234,201 $ 235,372 $ 221,496 $ 221,081 | The following table sets forth the carrying amount and fair value of the term loan (in thousands): December 31, 2019 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 223,223 $ 220,712 $ 221,496 $ 221,081 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
GOODWILL AND INTANGIBLE ASSETS, NET | ||
Schedule of changes in the carrying value of goodwill | The following table presents the changes in the carrying value of goodwill during the years ended December 31, 2019 and 2020 (in thousands): Amount Balance as of December 31, 2018 $ 91,782 Acquisition 9,788 Foreign currency translation adjustment 102 Balance as of December 31, 2019 101,672 Acquisition 13,105 Foreign currency translation adjustment 973 Balance as of December 31, 2020 $ 115,750 | |
Schedule of Intangible assets | Intangible assets, net as of October 2, 2021 consisted of the following (in thousands): October 2, 2021 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 476 $ 14,839 $ 120,737 Patented technology 16,126 70 4,772 11,424 Pool designs 5,728 286 956 5,058 Franchise relationships 1,187 59 694 552 Dealer relationships 160,376 23 27,434 132,965 Non-competition agreements 2,476 — 1,381 1,095 $ 320,993 $ 914 $ 50,076 $ 271,831 Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31,2020 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 | Intangible assets, net as of December 31, 2019 consisted of the following (in thousands): December 31, 2019 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 125,600 $ 99 $ 5,032 $ 120,667 Patented technology 16,126 14 1,698 14,442 Pool designs 5,728 59 239 5,548 Franchise relationships 1,187 12 173 1,026 Dealer relationships 123,176 5 8,530 114,651 Non-competition agreements 2,476 — 513 1,963 $ 274,293 $ 189 $ 16,185 $ 258,297 The Company recognized $15.6 million of amortization expense related to intangible assets during the year ended December 31, 2019. Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31, 2020 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 |
Schedule of estimated amortization expense related to definite-lived intangible assets | The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Year Ended Amortization Expense Remainder of fiscal 2021 $ 5,415 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 180,950 $ 271,831 | The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Amortization Year Ended Expense 2021 $ 21,959 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 182,048 $ 289,473 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
INVENTORIES, NET | ||
Schedule of inventories, net | Inventories, net consisted of the following (in thousands): October 2, 2021 December 31,2020 Raw materials $ 57,165 $ 37,010 Finished goods 23,540 27,808 $ 80,705 $ 64,818 | Inventories, net consisted of the following (in thousands): December 31, 2019 2020 Raw materials $ 19,035 $ 37,010 Finished goods 16,576 27,808 $ 35,611 $ 64,818 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of Property and Equipment, net | Property and equipment, net consisted of the following (in thousands): December 31, 2019 2020 Land $ 1,613 $ 1,613 Building and improvements 5,495 5,898 Machinery and equipment 17,661 21,478 Furniture and fixtures 511 1,406 Computer equipment and software 5,090 6,633 Molds and dyes 5,602 9,051 Leasehold improvements 2,611 3,573 Vehicles 2,338 3,061 Construction in progress 3,046 8,525 43,967 61,238 Less: Accumulated depreciation (6,122) (13,881) $ 37,845 $ 47,357 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
LONG-TERM DEBT | ||
Components of the Company's outstanding debt obligations | The components of the Company’s outstanding debt obligations consisted of the following (in thousands): October 2,2021 December 31, 2020 Term loan $ 238,314 $ 228,147 Less: Unamortized discount and debt issuance costs (4,113) (6,651) Total debt 234,201 221,496 Less: Current portion of long-term debt (14,234) (13,042) Total long-term debt $ 219,967 $ 208,454 | The components of the Company’s outstanding debt obligations consisted of the following (in thousands): December 31, 2019 2020 Term loan $ 232,191 $ 228,147 Less: Unamortized discount and debt issuance costs (8,968) (6,651) Total debt 223,223 221,496 Less: Current portion of long-term debt (6,891) (13,042) Total long-term debt $ 216,332 $ 208,454 |
Schedule of mandatory prepayments based on Company's excess cash flow for the year | Under the Term Loan, the Company is required to make mandatory prepayments based on the Company’s excess cash flow for the year, as follows (as a percentage of the Company’s excess cash flow for the year): Mandatory Prepayment Leverage Ratio Percentage > 3.50:1.00 90 % > 3.00:1.00 and ≤ 3.50:1.00 75 % > 2.50:1.00 and ≤ 3.00:1.00 50 % > 2.00:1.00 and ≤ 2.50:1.00 25 % ≤ 2.00:1.00 0 % | |
Components of interest expense | Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Year Ended Term Loan Facility Remainder of fiscal 2021 $ 3,558 2022 14,234 2023 14,234 2024 14,234 2025 192,054 $ 238,314 | The Company recorded interest expense associated with the Revolving Credit Facility, Second Amendment and interest rate swap, as follows (in thousands): Year Ended December 31, 2019 2020 Cash interest expense $ 19,488 $ 15,625 Amortization of debt issuance costs 2,968 2,179 Amortization of original issue discount 183 138 Interest rate swap — 334 Gain on extinguishment of debt — (25) Total interest expense $ 22,639 $ 18,251 |
Principal payments due on the outstanding debt | Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Term Loan Year Ended Facility 2021 $ 13,042 2022 13,042 2023 13,042 2024 13,042 2025 175,979 $ 228,147 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Summary of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2019 2020 Accrued sales rebates $ 6,520 $ 15,511 Accrued product warranties 2,663 2,705 Accrued incentives 2,448 11,244 Accrued vacation 2,425 3,805 Accrued payroll 2,334 6,098 Deferred offering costs — 1,040 Accrued third-party services 1,556 2,172 Other 4,287 8,031 Total accrued expenses and other current liabilities $ 22,233 $ 50,606 |
PRODUCT WARRANTIES (Tables)
PRODUCT WARRANTIES (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
PRODUCT WARRANTIES | ||
Summary of Warranty reserve activity | The warranty reserve activity consisted of the following (in thousands): Three Fiscal Quarters Ended October 2,2021 September 26, 2020 Balance at the beginning of the year $ 2,882 $ 2,846 Accruals for warranties issued 4,369 2,270 Less: Settlements made (in cash or in kind) (3,825) (2,501) Balance at the end of the year $ 3,426 $ 2,615 | The warranty reserve activity consisted of the following (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ 1,977 $ 2,846 Accruals for warranties issued 3,729 3,966 Warranty liabilities assumed in GLI Acquisition — 118 Less: Settlements made (in cash or in kind) (2,860) (4,048) Balance at the end of the year 2,846 2,882 Less: Current portion of accrued warranty costs (2,663) (2,705) Accrued warranty costs — less current portion $ 183 $ 177 |
NET SALES (Tables)
NET SALES (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET SALES | ||
Summary of disaggregation of net sales by product line | The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 In-ground Swimming Pools $ 285,704 $ 169,681 Covers 94,354 53,528 Liners 111,534 68,259 $ 491,592 $ 291,468 | The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Year Ended December 31, 2019 2020 In-ground Swimming Pools $ 175,033 $ 237,410 Covers 70,984 84,524 Liners 71,958 81,455 $ 317,975 $ 403,389 |
Schedule for allowance of bad debt activity | The allowance for bad debt activity during the years ended December 31, 2019 and 2020 was as follows (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ 1,535 $ 1,322 Bad debt expense 253 358 Write-offs (466) (242) Balance at the end of the year $ 1,322 $ 1,438 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
Schedule of domestic and foreign components of its income (loss) before income taxes | Year Ended December 31, 2019 2020 Income (loss) before income taxes: Domestic $ 9,939 $ 19,609 Foreign (7,153) 3,150 Total $ 2,786 $ 22,759 |
Schedule of current and deferred income tax (benefit) expense | Year Ended December 31, 2019 2020 Current income tax (benefit) expense: Domestic $ 5,424 $ 10,342 Foreign 131 1,104 Total current tax (benefit) expense 5,555 11,446 Deferred income tax (benefit) expense: Domestic (10,020) (4,532) Foreign (206) (138) Total deferred tax (benefit) expense (10,226) (4,670) Total income tax (benefit) expense $ (4,671) $ 6,776 |
Schedule of reconciliation of statutory federal income tax rate with Company's effective income tax rate | Year Ended Year Ended December 31, 2019 December 31, 2020 Federal statutory tax rate 21.0 % 21.0 % Foreign taxes less than U.S. statutory rate 1.1 % 1.2 % State income tax, net of federal benefit (67.2) % 1.4 % Uncertain tax positions 348.2 % 0.8 % Change in valuation allowance (5.9) % (1.1) % GILTI 21.1 % 1.5 % Meals and entertainment 6.8 % 0.5 % Foreign expenses not deductible for tax 56.1 % 1.7 % Transaction costs not deductible for tax 13.3 % 2.0 % Canadian restructuring (562.4) % — Canadian Branch Income 0.0 % 1.8 % Other expenses not deductible for tax (0.1) % (1.0) % (168.0) % 29.8 % |
Schedule of changes in valuation allowance | Year Ended December 31, 2019 2020 Balance at January 1 $ (12,300) $ (12,463) Additions (163) (241) Balance at December 31 $ (12,463) $ (12,704) |
Schedule of deferred income tax assets and liabilities | December 31, 2019 2020 Deferred tax assets: Net operating loss carryforwards $ 12,110 $ 12,099 Inventories, net 680 473 Warranty reserve 649 789 Trade receivables 477 360 Profits interest units 389 760 Section 163(j) 289 — Deferred taxes in equity 257 257 Accrued expenses 224 498 Transaction costs 107 607 Canadian tax credits 86 255 Other 64 216 Gross deferred tax assets 15,332 16,314 Valuation allowance (12,463) (12,704) Total deferred tax asset 2,869 3,610 Less: Foreign deferred tax benefit (206) (345) Total domestic deferred tax asset 2,663 3,265 Deferred tax liabilities: Intangible assets (57,221) (53,874) Property and equipment, net (4,677) (4,120) Prepaid expenses (773) (464) Total deferred tax liabilities (62,671) (58,458) Net deferred tax liabilities $ (60,008) $ (55,193) |
Schedule of reconciliation of beginning and ending amount of uncertain tax positions | Year Ended December 31, 2019 2020 Balance at the beginning of the year $ — $ 9,681 Additions for tax positions taken during prior years — 181 Additions for tax positions taken during the current year 9,681 — Balance at the end of the year $ 9,681 $ 9,862 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of minimum annual rental commitments under non-cancelable operating leases | The minimum annual rental commitments under non-cancelable operating leases as of December 31, 2020 are due as follows (in thousands): Year Ended 2021 $ 6,484 2022 5,971 2023 4,455 2024 3,834 2025 3,491 Thereafter 5,094 $ 29,329 |
PROFITS INTEREST UNITS (Tables)
PROFITS INTEREST UNITS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PROFITS INTEREST UNITS | |
Schedule of activity of all PIUs | Weighted-Average Grant-Date Number of PIUs Fair Value Balance at January 1, 2019 20,890,124 $ 0.41 Granted 3,692,699 $ 0.38 Forfeited (2,848,653) $ 0.41 Balance at December 31, 2019 21,734,170 Granted 7,843,107 $ 0.60 Forfeited (2,152,315) $ 0.35 Balance at December 31, 2020 27,424,962 $ 0.43 |
Schedule of assumptions in conjunction with the Contingent Claims Analysis Model to estimate the fair value of the PIUs | Year Ended Year Ended December 31, 2019 December 31, 2020 Expected volatility 49.00 % 55.00 % Risk-free interest rate 1.90 % 0.20 % Expected term (in years) 4.6 3.2 % Expected dividend yield — % — % |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET INCOME (LOSS) PER SHARE | ||
Schedule of basic and diluted earnings (loss) per share | Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Numerator: Net (loss) income attributable to common stockholders $ (56,361) $ 18,703 Denominator: Weighted-average common shares outstanding Basic 110,121,240 96,665,708 Diluted 110,121,240 97,122,885 Net (loss) income per share attributable to common stockholders: Basic $ (0.51) $ 0.19 Diluted $ (0.51) $ 0.19 | Basic and diluted net income per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Year Ended December 31, 2019 2020 Numerator: Net income attributable to common stockholders $ 7,457 $ 15,983 Denominator: Weighted-average common shares outstanding Basic 95,032,265 101,606,966 Diluted 95,400,528 102,602,738 Net income per share attributable to common stockholders Basic $ 0.08 $ 0.16 Diluted $ 0.08 $ 0.16 |
Schedule of antidilutive securities excluded from computation of dilutive net income per share | Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Restricted stock awards 6,813,166 47,446 Restricted stock units 84,866 — Stock options 4,235 — | Year Ended December 31, 2019 2020 Restricted stock awards 97,718 22,524 |
SEGMENT AND GEOGRAPHIC INFORM_2
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SEGMENT AND GEOGRAPHIC INFORMATION | ||
Schedule of Net sales by geography | Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): October 2, 2021 December 31, 2020 Long-lived assets United States $ 48,158 $ 37,680 Canada 4,358 3,050 Australia 4,394 4,979 New Zealand 1,857 1,648 Total $ 58,767 $ 47,357 | 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, 2019 2020 Net sales United States $ 257,786 $ 325,716 Canada 43,157 50,499 Australia 12,126 20,181 New Zealand 2,432 3,984 Other 2,474 3,009 Total $ 317,975 $ 403,389 |
Schedule of Long-lived assets by geographic area | 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): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Net sales United States $ 385,259 $ 234,439 Canada 76,619 38,197 Australia 18,581 13,187 New Zealand 5,277 2,357 Other 5,856 3,288 Total $ 491,592 $ 291,468 | Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): December 31, 2019 2020 Long-lived assets United States $ 30,433 $ 37,680 Canada 2,279 3,050 Australia 4,094 4,979 New Zealand 1,039 1,648 Total $ 37,845 $ 47,357 |
CONDENSED FINANCIAL INFORMATI_2
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) | |
Schedule of condensed balance sheets | CONDENSED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2019 2020 Assets Investment in subsidiary $ 193,795 $ 281,609 Total assets $ 193,795 $ 281,609 Liabilities and Stockholders’ Equity Total liabilities $ — $ — Stockholders’ Equity Common stock, $0.0001 par value; 500,000,000 shares authorized at December 31, 2019 and 2020; 96,498,943 and 118,854,249 shares issued outstanding 10 12 Additional paid-in capital 196,474 265,478 Retained earnings (accumulated deficit) (2,218) 13,765 Accumulated other comprehensive income (loss) (471) 2,354 Total stockholders’ equity 193,795 281,609 Total liabilities and stockholders’ equity $ 193,795 $ 281,609 |
Schedule of condensed statements of operations | CONDENSED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended December 31, 2019 2020 Equity in net income of subsidiary $ 7,457 $ 15,983 Net income attributable to common stockholders $ 7,457 $ 15,983 Net income per share Net income per share attributable to common stockholders Basic $ 0.08 $ 0.16 Diluted $ 0.08 $ 0.16 Weighted-average common shares outstanding—basic and diluted Basic 95,032,265 101,606,966 Diluted 95,400,528 102,602,738 |
Schedule of condensed statements of comprehensive income | CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended December 31, 2019 2020 Net income $ 7,457 $ 15,983 Equity in other comprehensive income (loss) of subsidiary (670) 2,825 Comprehensive income $ 6,787 $ 18,808 |
Schedule of condensed statements of cash flows | CONDENSED STATEMENT OF CASH FLOWS (in thousands) Year Ended December 31, 2019 2020 Cash flows from operating activities: Net income $ 7,457 $ 15,983 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net income of subsidiary (7,457) (15,983) Net cash provided by operating activities — — Cash flows from investing activities: Investment in subsidiary — (65,553) Net cash used in investing activities — (65,553) Cash flows from financing activities: Proceeds from issuance of common stock — 65,553 Net cash provided by financing activities — 65,553 Net increase in cash — — Cash at beginning of period — — Cash at end of period $ — $ — |
NATURE OF THE BUSINESS (Details
NATURE OF THE BUSINESS (Details) | Apr. 27, 2021USD ($)shares | Apr. 13, 2021$ / sharesshares | Oct. 20, 2020shares | Oct. 14, 2020shares | Sep. 26, 2020shares | Dec. 31, 2020$ / sharesshares | Dec. 31, 2019$ / sharesshares | Oct. 02, 2021$ / sharesshares | Apr. 22, 2021$ / sharesshares |
Business Acquisition [Line Items] | |||||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | 900,000,000 | 900,000,000 | ||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Stock split ratio | 109,673,709 | ||||||||
Issuance of common stock (in shares) | 21,666,653 | 21,666,653 | 758,694 | 758,694 | 3,548,568 | ||||
IPO | |||||||||
Business Acquisition [Line Items] | |||||||||
Issuance of common stock (in shares) | 23,000,000 | ||||||||
Net proceeds from the IPO | $ | $ 399.3 | ||||||||
Underwriters Option | |||||||||
Business Acquisition [Line Items] | |||||||||
Issuance of common stock (in shares) | 3,000,000 | ||||||||
Subsequent Event | |||||||||
Business Acquisition [Line Items] | |||||||||
Common stock, shares authorized | 500,000,000 | ||||||||
Common stock, par value | $ / shares | $ 0.0001 | ||||||||
Stock split ratio | 109,673,709 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Oct. 02, 2021 | Dec. 31, 2019 | Jan. 01, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Retained earnings (accumulated deficit) | $ 13,765 | $ (42,596) | $ (2,218) | |
Increase to accrued expenses | $ 50,606 | $ 59,454 | $ 22,233 | |
Product warranty term | 5 years | |||
ASC 606 | Initial application cumulative effect | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Retained earnings (accumulated deficit) | $ 1,700 | |||
Reduction to prepaid expenses | 1,200 | |||
Increase to accrued expenses | $ 500 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Trade Receivables, Net (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for bad debts | $ 1.4 | $ 1.3 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of Credit Risk (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)customer | Dec. 31, 2019USD ($)customer | Oct. 02, 2021USD ($) | |
Concentration Risk [Line Items] | |||
Number of largest customers | customer | 1 | 1 | |
Trade receivables | $ 32,758 | $ 31,427 | $ 75,314 |
Net sales | Customer concentration | Customer one | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 22.30% | 25.70% | |
Trade receivables | $ 5,400 | $ 12,000 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Interest Rate Swap (Details) - Interest Rate Swap $ in Millions | 1 Months Ended |
Apr. 30, 2020USD ($) | |
Derivative [Line Items] | |
Derivative notional amount | $ 200 |
Derivative contract term | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories, Net (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Reserves for estimated slow moving products or obsolescence | $ 1.8 | $ 2.1 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, Net (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Building and improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 25 years |
Molds and dyes | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Molds and dyes | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Machinery and equipment (including computer equipment and software) | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Machinery and equipment (including computer equipment and software) | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Software | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-Lived Assets (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Pool designs | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 14 years |
Franchise relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 4 years |
Non-competition agreements | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 5 years |
Maximum | Patented technology | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 10 years |
Maximum | Trade names and trademarks | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 25 years |
Maximum | Dealer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 15 years |
Minimum | Patented technology | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 5 years |
Minimum | Trade names and trademarks | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 9 years |
Minimum | Dealer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-average estimated useful lives (in years) | 5 years |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill, Deferred Offering Costs, Segment Reporting, Income Taxes (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Nov. 30, 2020item | Oct. 02, 2021segment | Dec. 31, 2020USD ($)segmentitem | Dec. 31, 2019USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Number of reporting units | item | 1 | 2 | ||
Weightage applied to income approach | 75.00% | |||
Weightage applied to market approach | 25.00% | |||
Deferred offering costs | $ 1,000,000 | $ 0 | ||
Number of operating segments | segment | 1 | 1 | ||
Number of reportable segments | segment | 1 | 1 | ||
Penalties or accrued interest on unrecognized tax benefits | $ 0 | |||
Accrued interest on unrecognized tax benefits | $ 200,000 | |||
Accrued penalties on unrecognized tax benefits | 0 | |||
Impairment | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation, Pension and Other Postretirement Plans, Advertising , Earnings Per Share (Details) | 12 Months Ended | |
Dec. 31, 2020USD ($)installment$ / sharesshares | Dec. 31, 2019USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Defined benefit plan assets | $ 1,300,000 | |
Defined benefit plan obligations | $ 1,500,000 | |
Plan assets as percentage of total assets | 0.30% | |
Benefit obligations as percentage of total assets | 0.30% | |
Total advertising costs | $ 5,900,000 | $ 3,800,000 |
Outstanding potentially dilutive securities | shares | 0 | 0 |
PIUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of vesting annual installments | installment | 5 | |
Amount of repurchase right per share | $ / shares | $ 0 | |
Repurchase Right voluntary termination | $ 0 | |
Stock-based compensation expense | $ 0 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | Oct. 22, 2021 | Oct. 22, 2020 | Sep. 25, 2020 | May 31, 2019 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||||||
Total purchase price, net of cash acquired | $ 74,736 | $ 20,214 | |||||||
Net working capital adjustment receivable | 750 | ||||||||
Proceeds from long term debt used to pay Acquisition consideration | $ 172,813 | 20,000 | 22,310 | ||||||
Contingent Consideration settled through a cash payment | $ 6,624 | 6,624 | |||||||
Fair value of the Class A units issued in settlement of contingent consideration | 2,208 | 7,567 | |||||||
Goodwill | 115,158 | 115,750 | 101,672 | $ 91,782 | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||||||
Deferred tax asset | 793 | 345 | 206 | ||||||
Deferred tax liabilities | 55,949 | 55,193 | 60,008 | ||||||
Goodwill | 115,158 | 115,750 | $ 101,672 | $ 91,782 | |||||
Narellan Group Pty Limited | |||||||||
Business Acquisition [Line Items] | |||||||||
Total purchase price | $ 35,233 | ||||||||
Total purchase price in cash | 20,238 | ||||||||
Business acquisition, transaction costs | 1,100 | ||||||||
Business acquisition, equity consideration | 7,567 | ||||||||
Business acquisition, contingent consideration | 7,400 | $ 7,400 | |||||||
Proceeds from long term debt used to pay Acquisition consideration | 22,300 | ||||||||
long-term debt, discount | 700 | ||||||||
Contingent Consideration settled through a cash payment | $ 6,600 | ||||||||
Contingent Consideration settled through Class A units as equity consideration | 758,697 | ||||||||
Contractual value of shares issued to settle contingent consideration | $ 2,200 | ||||||||
Fair value of the Class A units issued in settlement of contingent consideration | 2,800 | ||||||||
Stock-based compensation expense arising in contingent consideration settlement | $ 600 | ||||||||
Goodwill | 9,788 | ||||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||||||
Total consideration | 35,233 | ||||||||
Cash | 24 | ||||||||
Trade receivables | 1,420 | ||||||||
Inventories | 4,501 | ||||||||
Prepaid expenses and other current assets | 472 | ||||||||
Property and equipment | 4,861 | ||||||||
Intangible assets | 18,332 | ||||||||
Deferred tax asset | 126 | ||||||||
Total assets acquired | 29,736 | ||||||||
Accounts payable | 3,379 | ||||||||
Accrued expenses and other current liabilities | 442 | ||||||||
Deferred tax liabilities | 470 | ||||||||
Total liabilities assumed | 4,291 | ||||||||
Total fair value of net assets acquired, excluding goodwill: | 25,445 | ||||||||
Goodwill | $ 9,788 | ||||||||
GL International, LLC | |||||||||
Business Acquisition [Line Items] | |||||||||
Total purchase price | $ 79,700 | $ 79,700 | |||||||
Total purchase price in cash | 79,700 | ||||||||
Total purchase price, net of cash acquired | 74,700 | 74,700 | |||||||
Cash acquired | 5,000 | 5,000 | |||||||
Net working capital adjustment receivable | 800 | 800 | |||||||
Business acquisition, transaction costs | 2,400 | 2,400 | |||||||
Goodwill | 13,105 | 13,105 | 13,100 | ||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||||||
Total consideration | 79,743 | 79,743 | |||||||
Cash | 5,007 | 5,007 | |||||||
Trade receivables | 10,639 | 10,639 | |||||||
Inventories | 11,854 | 11,854 | |||||||
Prepaid expenses and other current assets | 3,949 | 3,949 | |||||||
Property and equipment | 1,402 | 1,402 | |||||||
Intangible assets | 46,700 | 46,700 | |||||||
Total assets acquired | 79,551 | 79,551 | |||||||
Accounts payable | 3,536 | 3,536 | |||||||
Accrued expenses and other current liabilities | 8,853 | 8,853 | |||||||
Other long-term liabilities | 524 | 524 | |||||||
Total liabilities assumed | 12,913 | 12,913 | |||||||
Total fair value of net assets acquired, excluding goodwill: | 66,638 | 66,638 | |||||||
Goodwill | $ 13,105 | $ 13,105 | $ 13,100 |
ACQUISITIONS - Financial Inform
ACQUISITIONS - Financial Information (Details) - USD ($) $ in Thousands | Oct. 22, 2020 | May 31, 2019 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Business Acquisition, Pro Forma Information [Abstract] | |||||
Net sales | $ 462,802 | $ 382,029 | |||
Net income (loss) | $ 26,344 | 6,066 | |||
Narellan Group Pty Limited | |||||
Business Acquisition, Pro Forma Information [Abstract] | |||||
Net sales | 15,893 | ||||
Net income (loss) | $ (1,047) | ||||
GL International, LLC | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 46,700 | ||||
Business Acquisition, Pro Forma Information [Abstract] | |||||
Net sales | 7,689 | $ 345,200 | |||
Net income (loss) | (1,123) | $ 21,952 | |||
Trade names | GL International, LLC | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 9,500 | ||||
Amortization Period | 9 years | ||||
Trade names and trademarks | Narellan Group Pty Limited | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 9,535 | ||||
Amortization Period | 25 years | ||||
Pool designs | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Amortization Period | 14 years | ||||
Pool designs | Narellan Group Pty Limited | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 5,728 | ||||
Amortization Period | 14 years | ||||
Patented technology | Narellan Group Pty Limited | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 1,410 | ||||
Amortization Period | 5 years | ||||
Franchise relationships | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Amortization Period | 4 years | ||||
Franchise relationships | Narellan Group Pty Limited | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 1,187 | ||||
Amortization Period | 4 years | ||||
Dealer relationships | Narellan Group Pty Limited | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 472 | ||||
Amortization Period | 5 years | ||||
Dealer relationships | GL International, LLC | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 37,200 | ||||
Amortization Period | 8 years |
ACQUISITIONS - Consideration (D
ACQUISITIONS - Consideration (Details) - USD ($) $ in Thousands | Oct. 22, 2021 | Oct. 22, 2020 | May 31, 2019 |
Narellan Group Pty Limited | |||
Business Combination, Consideration Transferred [Abstract] | |||
Cash consideration | $ 20,238 | ||
Fair value of equity consideration | 7,567 | ||
Fair value of contingent consideration as of the acquisition date | 7,428 | ||
Total consideration | $ 35,233 | ||
GL International, LLC | |||
Business Combination, Consideration Transferred [Abstract] | |||
Cash consideration | $ 79,700 | ||
Total consideration | $ 79,700 | $ 79,700 |
EQUITY METHOD INVESTMENT (Detai
EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands | Oct. 30, 2020 | Dec. 31, 2020 | Oct. 02, 2021 | Dec. 31, 2020 |
Schedule of Equity Method Investments [Line Items] | ||||
Consideration paid | $ 25,384 | |||
Distributions received from equity method investment | $ 1,808 | |||
Premier Pools & Spas | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership percentage | 28.00% | 20.10% | ||
Consideration paid | $ 25,400 | |||
Term of the supply agreement | 10 years | 3 months | 10 years | |
Period defined in agreement for calculating percentage of rebates | 3 years | 3 years | ||
Distributions received from equity method investment | $ 2,200 | $ 25,400 |
FAIR VALUE MEASUREMENTS - Recon
FAIR VALUE MEASUREMENTS - Reconciliation of the Company's Contingent Consideration (Details) - USD ($) $ in Thousands | 7 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2019 | Sep. 25, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Change in fair value of Contingent Consideration | $ (204) | $ 1,441 | ||
Recurring | Level 3 | Contingent consideration | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | $ 7,428 | $ 8,978 | $ 8,978 | |
Change in fair value of Contingent Consideration | 1,441 | (204) | ||
Foreign currency translation adjustment | 109 | 58 | ||
Payment of Contingent Consideration and issuance of Class A units (see Note 3) | (8,832) | |||
Ending balance | $ 8,978 | $ 0 | $ 8,978 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and liabilities measured at fair value on a recurring basis (Details) $ in Millions | Dec. 31, 2019USD ($) |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Fair value of plan assets | $ 1.3 |
Contingent consideration | EBITDA risk adjustment | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Measurement inputs | 17.30 |
Contingent consideration | Annual EBITDA volatility | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Measurement inputs | 55 |
Contingent consideration | Risk-free rate of return | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Measurement inputs | 2.10 |
Level 2 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Fair value of plan assets | $ 1.3 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair value of financial instruments (Details) - USD ($) | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Derivative liabilities | $ 600,000 | $ 300,000 | |
Term loan | Carrying Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Amount | 234,201,000 | 221,496,000 | |
Term loan | Carrying Value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Amount | 221,496,000 | $ 223,223,000 | |
Term loan | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Amount | $ 235,372,000 | 221,081,000 | |
Term loan | Estimated Fair Value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Derivative liabilities | 221,081,000 | 220,712,000 | |
Interest Rate Swap | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Derivative liabilities | $ 300,000 | $ 0 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
GOODWILL AND INTANGIBLE ASSETS, NET | ||
Beginning balance | $ 101,672 | $ 91,782 |
Acquisition | 13,105 | 9,788 |
Foreign currency translation adjustment | 973 | 102 |
Ending balance | $ 115,750 | $ 101,672 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | $ 320,993 | $ 320,993 | $ 274,293 | |
Foreign Currency Translation | 914 | 2,013 | 189 | |
Accumulated Amortization | 50,076 | 33,533 | 16,185 | |
Net Amount | 271,831 | 289,473 | 258,297 | |
Amortization of Intangible Assets | 16,560 | $ 12,173 | 17,347 | 15,643 |
Trade names and trademarks | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 135,100 | 135,100 | 125,600 | |
Foreign Currency Translation | 476 | 1,047 | 99 | |
Accumulated Amortization | 14,839 | 10,258 | 5,032 | |
Net Amount | 120,737 | 125,889 | 120,667 | |
Patented technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 16,126 | 16,126 | 16,126 | |
Foreign Currency Translation | 70 | 155 | 14 | |
Accumulated Amortization | 4,772 | 3,452 | 1,698 | |
Net Amount | 11,424 | 12,829 | 14,442 | |
Pool designs | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 5,728 | 5,728 | 5,728 | |
Foreign Currency Translation | 286 | 629 | 59 | |
Accumulated Amortization | 956 | 648 | 239 | |
Net Amount | 5,058 | 5,709 | 5,548 | |
Franchise relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 1,187 | 1,187 | 1,187 | |
Foreign Currency Translation | 59 | 130 | 12 | |
Accumulated Amortization | 694 | 470 | 173 | |
Net Amount | 552 | 847 | 1,026 | |
Dealer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 160,376 | 160,376 | 123,176 | |
Foreign Currency Translation | 23 | 52 | 5 | |
Accumulated Amortization | 27,434 | 17,697 | 8,530 | |
Net Amount | 132,965 | 142,731 | 114,651 | |
Non-competition agreements | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 2,476 | 2,476 | 2,476 | |
Accumulated Amortization | 1,381 | 1,008 | 513 | |
Net Amount | $ 1,095 | $ 1,468 | $ 1,963 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Amortization Expense (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2021 | $ 5,415 | $ 21,959 | |
2022 | 21,959 | 21,959 | |
2023 | 21,768 | 21,768 | |
2024 | 20,948 | 20,948 | |
2025 | 20,791 | 20,791 | |
Thereafter | 180,950 | 182,048 | |
Total | $ 271,831 | $ 289,473 | $ 258,297 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
INVENTORIES, NET | |||
Raw materials | $ 57,165 | $ 37,010 | $ 19,035 |
Finished goods | 23,540 | 27,808 | 16,576 |
Inventory, Net, Total | $ 80,705 | $ 64,818 | $ 35,611 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Oct. 02, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 61,238 | $ 43,967 | |
Less: Accumulated depreciation | (13,881) | (6,122) | |
Property and equipment, net | 47,357 | 37,845 | $ 58,767 |
Depreciation and amortization expense | 8,000 | 6,000 | |
Loss on sales and disposal of Property and Equipment | 300 | 700 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 1,613 | 1,613 | |
Building and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 5,898 | 5,495 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 21,478 | 17,661 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 1,406 | 511 | |
Computer equipment and software | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 6,633 | 5,090 | |
Molds and dyes | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 9,051 | 5,602 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 3,573 | 2,611 | |
Vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 3,061 | 2,338 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 8,525 | $ 3,046 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Term loan | $ 238,314 | $ 228,147 | |
Less: Unamortized discount and debt issuance costs | (4,113) | (6,651) | $ (8,968) |
Total debt | 234,201 | 221,496 | 223,223 |
Less: Current portion of long-term debt | (14,234) | (13,042) | (6,891) |
Total long-term debt | 219,967 | 208,454 | 216,332 |
Term loan | |||
Debt Instrument [Line Items] | |||
Term loan | 238,314 | 228,147 | 232,191 |
Less: Unamortized discount and debt issuance costs | $ (4,100) | (6,700) | $ (9,000) |
Less: Current portion of long-term debt | $ (13,000) |
LONG-TERM DEBT - Revolving Cred
LONG-TERM DEBT - Revolving Credit Facility (Details) - USD ($) $ in Thousands | Dec. 18, 2018 | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||
Debt, principal amount outstanding | $ 238,314 | $ 228,147 | ||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee rate range, depending on leverage ratio | 0.375% | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee rate range, depending on leverage ratio | 0.50% | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Borrowing capacity | $ 30,000 | |||
Debt, principal amount outstanding | $ 0 | $ 0 | $ 0 | |
Eurocurrency | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate range, depending on leverage ratio | 4.50% | |||
Eurocurrency | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate range, depending on leverage ratio | 4.75% | |||
Base | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate range, depending on leverage ratio | 3.50% | |||
Base | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate range, depending on leverage ratio | 3.75% |
LONG-TERM DEBT - Term Loan Faci
LONG-TERM DEBT - Term Loan Facility (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Mar. 31, 2021 | Feb. 02, 2021 | Jan. 25, 2021 | Oct. 14, 2020 | Aug. 06, 2020 | Dec. 18, 2018 | Dec. 31, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | May 29, 2019 |
Debt Instrument [Line Items] | |||||||||||||
Additional borrowings under amendment | $ 23,000 | ||||||||||||
Long-term debt, net of discount and current portion | $ 208,454 | $ 219,967 | $ 208,454 | $ 216,332 | |||||||||
Repayment of debt | 164,833 | $ 20,925 | 24,044 | 5,809 | |||||||||
Gain on extinguishment of debt | 25 | ||||||||||||
Proceeds used to pay dividend to Parent | $ 110,000 | ||||||||||||
Discount and debt issuance costs | 6,651 | 4,113 | 6,651 | 8,968 | |||||||||
Amount outstanding, net of discount and issuance costs | 221,496 | 234,201 | 221,496 | 223,223 | |||||||||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | 6,651 | $ 4,113 | $ 6,651 | $ 8,968 | |||||||||
Effective interest rate | 7.24% | 8.03% | 10.47% | ||||||||||
Estimated mandatory prepayment to be paid | 0 | $ 0 | $ 900 | ||||||||||
Current maturities of long-term debt | 13,042 | $ 14,234 | 13,042 | 6,891 | |||||||||
Financing costs | 1,250 | ||||||||||||
Term loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Original term loan | $ 215,000 | ||||||||||||
Debt issuance costs incurred | $ 1,200 | $ 100 | $ 11,500 | ||||||||||
Additional borrowings under amendment | 175,000 | $ 20,000 | |||||||||||
Debt discount | 400 | $ 1,200 | $ 400 | 500 | 700 | ||||||||
Long-term debt, net of discount and current portion | $ 4,975 | ||||||||||||
Repayment of debt | 5,000 | ||||||||||||
Amount of debt extinguished | $ 25,000 | ||||||||||||
Repayment amount to be paid quarterly | $ 3,600 | 5,800 | 1,600 | ||||||||||
Borrowings treated as principal | 165,000 | ||||||||||||
Borrowings treated as debt modification | 10,000 | ||||||||||||
Proceeds used to repay note to Parent | $ 64,900 | 175,000 | |||||||||||
Principal payments calculated as percent of outstanding principal | 0.629% | 0.629% | |||||||||||
Outstanding Borrowings | $ 234,200 | $ 221,500 | 223,200 | ||||||||||
Discount and debt issuance costs | 6,700 | 4,100 | 6,700 | 9,000 | |||||||||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | 6,700 | 4,100 | 6,700 | 9,000 | |||||||||
Unamortized debt issuance costs | 6,300 | 2,900 | 6,300 | 8,400 | |||||||||
Unamortized discount | 400 | $ 1,200 | 400 | $ 500 | $ 700 | ||||||||
Current maturities of long-term debt | $ 13,000 | $ 13,000 | |||||||||||
Term loan | Federal Funds Rate | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 0.05% | ||||||||||||
Term loan | LIBOR | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 1.00% | ||||||||||||
Eurocurrency | Term loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 6.00% | 6.00% | |||||||||||
Base | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 5.00% | ||||||||||||
Base | Term loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 5.00% | ||||||||||||
Subsequent Event | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt issuance costs incurred | $ 1,200 | ||||||||||||
Subsequent Event | Term loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Repayment amount to be paid quarterly | $ 3,300 |
LONG-TERM DEBT - Interest rate
LONG-TERM DEBT - Interest rate swap (Details) - Interest Rate Swap $ in Millions | Dec. 31, 2020USD ($) | May 18, 2020USD ($) |
Derivative [Line Items] | ||
LIBOR borrowings fixed interest rate | 0.442 | 0.442 |
LIBOR borrowings hedged | $ 200 | $ 200 |
LONG-TERM DEBT - Schedule of ma
LONG-TERM DEBT - Schedule of mandatory prepayments based on Company's excess cash flow for the year (Details) | 12 Months Ended |
Dec. 31, 2020 | |
> 3.50:1.00 | |
Debt Instrument [Line Items] | |
Mandatory Prepayment Percentage | 90.00% |
> 3.00:1.00 and 3.50:1.00 | |
Debt Instrument [Line Items] | |
Mandatory Prepayment Percentage | 75.00% |
> 2.50:1.00 and 3.00:1.00 | |
Debt Instrument [Line Items] | |
Mandatory Prepayment Percentage | 50.00% |
> 2.00:1.00 and 2.50:1.00 | |
Debt Instrument [Line Items] | |
Mandatory Prepayment Percentage | 25.00% |
2.00:1.00 | |
Debt Instrument [Line Items] | |
Mandatory Prepayment Percentage | 0.00% |
LONG-TERM DEBT - Amendments and
LONG-TERM DEBT - Amendments and Interest rate swap (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
LONG-TERM DEBT | ||||
Cash interest expense | $ 15,625 | $ 19,488 | ||
Amortization of debt issuance costs | 2,179 | 2,968 | ||
Amortization of original issue discount | 138 | 183 | ||
Interest rate swap | 334 | |||
Gain on extinguishment of debt | (25) | |||
Total interest expense | $ 20,843 | $ 13,633 | $ 18,251 | $ 22,639 |
LONG-TERM DEBT - Principal paym
LONG-TERM DEBT - Principal payments due (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Principal payments due | |||
Total payments due | $ 238,314 | $ 228,147 | |
Term loan | |||
Principal payments due | |||
Remainder of fiscal 2021 | 3,558 | ||
2022 | 14,234 | 13,042 | |
2023 | 14,234 | 13,042 | |
2024 | 14,234 | 13,042 | |
2025 | 192,054 | 13,042 | |
2025 | 175,979 | ||
Total payments due | $ 238,314 | $ 228,147 | $ 232,191 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued sales rebates | $ 15,511 | $ 6,520 |
Accrued product warranties | 2,705 | 2,663 |
Accrued incentives | 11,244 | 2,448 |
Accrued vacation | 3,805 | 2,425 |
Accrued payroll | 6,098 | 2,334 |
Deferred offering costs | 1,040 | |
Accrued third-party services | 2,172 | 1,556 |
Other | 8,031 | 4,287 |
Total accrued expenses and other current liabilities | $ 50,606 | $ 22,233 |
PRODUCT WARRANTIES (Details)
PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at the beginning of the year | $ 2,882 | $ 2,846 | $ 2,846 | $ 1,977 |
Accruals for warranties issued | 4,369 | 2,270 | 3,966 | 3,729 |
Warranty liabilities assume in GLI Acquisition | 118 | |||
Less: Settlements made (in cash or in kind) | (3,825) | (2,501) | (4,048) | (2,860) |
Balance at the end of the year | $ 3,426 | $ 2,615 | 2,882 | 2,846 |
Less: Current portion of accrued warranty costs | (2,705) | (2,663) | ||
Accrued warranty costs - less current portion | $ 177 | $ 183 |
NET SALES (Details)
NET SALES (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 491,592 | $ 291,468 | $ 403,389 | $ 317,975 |
In-ground Swimming Pools | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 285,704 | 169,681 | 237,410 | 175,033 |
Covers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 94,354 | 53,528 | 84,524 | 70,984 |
Liners | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 111,534 | $ 68,259 | $ 81,455 | $ 71,958 |
NET SALES - Allowance for bad d
NET SALES - Allowance for bad debt activity (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Allowance for bad debt activity roll forward | ||
Balance at the beginning of the year | $ 1,322 | $ 1,535 |
Bad debt expense | 358 | 253 |
Write-offs | (242) | (466) |
Balance at the end of the year | $ 1,438 | $ 1,322 |
INCOME TAXES - Components of in
INCOME TAXES - Components of income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income (loss) before income taxes: | ||
Domestic | $ 19,609 | $ 9,939 |
Foreign | 3,150 | (7,153) |
Total | $ 22,759 | $ 2,786 |
INCOME TAXES - Current and defe
INCOME TAXES - Current and deferred income tax (benefit) expense (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current income tax (benefit) expense: | ||||
Domestic | $ 10,342 | $ 5,424 | ||
Foreign | 1,104 | 131 | ||
Total current tax (benefit) expense | 11,446 | 5,555 | ||
Deferred income tax (benefit) expense: | ||||
Domestic | (4,532) | (10,020) | ||
Foreign | (138) | (206) | ||
Total deferred tax (benefit) expense | (4,670) | (10,226) | ||
Total income tax (benefit) expense | $ 15,908 | $ 8,251 | $ 6,776 | $ (4,671) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory federal income tax rate with the Company's effective income tax rate (Details) | Jan. 01, 2018 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
INCOME TAXES | |||||
Federal statutory tax rate | 35.00% | 21.00% | 21.00% | ||
Foreign taxes less than U.S. statutory rate | 1.20% | 1.10% | |||
State income tax, net of federal benefit | 1.40% | (67.20%) | |||
Uncertain tax positions | 0.80% | 348.20% | |||
Change in valuation allowance | (1.10%) | (5.90%) | |||
GILTI | 1.50% | 21.10% | |||
Meals and entertainment | 0.50% | 6.80% | |||
Foreign expenses not deductible for tax | 1.70% | 56.10% | |||
Transaction costs not deductible for tax | 2.00% | 13.30% | |||
Canadian restructuring | (562.40%) | ||||
Canadian Branch Income | 1.80% | 0.00% | |||
Other expenses not deductible for tax | (1.00%) | (0.10%) | |||
Total | 39.30% | 30.60% | 29.80% | (168.00%) |
INCOME TAXES - Changes in the v
INCOME TAXES - Changes in the valuation allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
INCOME TAXES | ||
Balance at January 1 | $ (12,463) | $ (12,300) |
Additions | (241) | (163) |
Balance at December 31 | $ (12,704) | $ (12,463) |
INCOME TAXES - Deferred Income
INCOME TAXES - Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | |||
Net operating loss carryforwards | $ 12,099 | $ 12,110 | |
Inventories, net | 473 | 680 | |
Warranty reserve | 789 | 649 | |
Trade receivables | 360 | 477 | |
Profits interest units | 760 | 389 | |
Section 163(j) | 289 | ||
Deferred taxes in equity | 257 | 257 | |
Accrued expenses | 498 | 224 | |
Transaction costs | 607 | 107 | |
Canadian tax credits | 255 | 86 | |
Other | 216 | 64 | |
Gross deferred tax assets | 16,314 | 15,332 | |
Valuation allowance | (12,704) | (12,463) | $ (12,300) |
Total deferred tax asset | 3,610 | 2,869 | |
Less: Foreign deferred tax benefit | (345) | (206) | |
Total domestic deferred tax asset | 3,265 | 2,663 | |
Deferred tax liabilities: | |||
Intangible assets | (53,874) | (57,221) | |
Property and equipment, net | (4,120) | (4,677) | |
Prepaid expenses | (464) | (773) | |
Total deferred tax liabilities | (58,458) | (62,671) | |
Net deferred tax liabilities | $ (55,193) | $ (60,008) |
INCOME TAXES - Uncertain tax po
INCOME TAXES - Uncertain tax positions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
INCOME TAXES | ||
Balance at the beginning of the year | $ 9,681 | |
Additions for tax positions taken during prior years | 181 | |
Additions for tax positions taken during the current year | $ 9,681 | |
Balance at the end of the year | $ 9,862 | $ 9,681 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
INCOME TAXES | ||||
Federal statutory tax rate | 35.00% | 21.00% | 21.00% | |
Valuation allowance | $ 12,704 | $ 12,463 | $ 12,300 | |
Operating Loss Carryforwards | 12,100 | |||
Liability related to uncertain tax positions, exclusive of interest | 5,400 | |||
Liability related to uncertain tax positions, if recognized, would impact the effective tax rate | 5,400 | |||
Accrued interest | 200 | |||
Accrued penalty | $ 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | ||
Term of lease | 5 years | |
Rental expense | $ 6,800 | $ 6,100 |
Minimum annual rental commitments under non-cancelable operating leases | ||
2021 | 6,484 | |
2022 | 5,971 | |
2023 | 4,455 | |
2024 | 3,834 | |
2025 | 3,491 | |
Thereafter | 5,094 | |
Total | $ 29,329 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
EMPLOYEE BENEFIT PLANS | ||
Discretionary matching and other contributions | $ 0.8 | $ 0.9 |
PROFITS INTEREST UNITS (Details
PROFITS INTEREST UNITS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 104,600 | $ 1,400 | ||
Contingent consideration | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 600 | |||
Selling, general and administrative expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 97,800 | |||
Unrecognized compensation expense | 9,800 | $ 6,400 | ||
Performance PIUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 1,200 | 800 | ||
Units that are not expected to vest | 18,011,127 | |||
Time-Vesting PIUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 0 | $ 0 | ||
Units expected to vest | 9,413,835 | |||
Units vested | 0 | 0 |
PROFITS INTEREST UNITS - Number
PROFITS INTEREST UNITS - Number of PIUs and Weighted - Average Grant Date Fair Value - (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of PIUs | ||
Balance at beginning | 21,734,170 | 20,890,124 |
Granted | 7,843,107 | 3,692,699 |
Forfeited | (2,152,315) | (2,848,653) |
Balance at ending | 27,424,962 | 21,734,170 |
Weighted-Average Grant Date Fair Value | ||
Balance at beginning | $ 0.41 | |
Granted | $ 0.60 | 0.38 |
Forfeited | 0.35 | $ 0.41 |
Balance at ending | $ 0.43 |
PROFITS INTEREST UNITS - Fair v
PROFITS INTEREST UNITS - Fair value of the PIUs - (Details) | 9 Months Ended | 12 Months Ended | |
Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
PROFITS INTEREST UNITS | |||
Expected volatility | 38.16% | 55.00% | 49.00% |
Risk-free interest rate | 0.63% | 0.20% | 1.90% |
Expected term (in years) | 6 years 3 months | 3 years 2 months 12 days | 4 years 7 months 6 days |
Expected dividend yield | 0.00% |
COMMON STOCK (Details)
COMMON STOCK (Details) $ / shares in Units, $ in Thousands | Oct. 20, 2020USD ($)shares | Oct. 14, 2020USD ($)shares | Jul. 03, 2021USD ($) | Apr. 03, 2021USD ($) | Sep. 26, 2020USD ($) | Jun. 27, 2020USD ($) | Mar. 28, 2020USD ($) | Sep. 26, 2020shares | Dec. 31, 2020USD ($)Vote$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Oct. 02, 2021$ / sharesshares | Apr. 22, 2021$ / sharesshares | Apr. 13, 2021$ / sharesshares |
COMMON STOCK | |||||||||||||
Common stock, shares authorized | shares | 500,000,000 | 500,000,000 | 900,000,000 | 900,000,000 | 500,000,000 | ||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||
Common stock, votes per share | Vote | 1 | ||||||||||||
Common stock, dividends paid | $ 0 | ||||||||||||
Common stock, distributions to Parent for the repurchase of Parent's shares | $ 600 | $ 200 | |||||||||||
Issuance of common stock (in shares) | shares | 21,666,653 | 21,666,653 | 758,694 | 758,694 | 3,548,568 | ||||||||
Value of shares issued during the period | $ 64,900 | $ 64,900 | $ 615 | $ 65,553 | $ 7,817 | ||||||||
Number of shares repurchased and retired during the period | shares | 275,238 | 100,087 | |||||||||||
Value of shares repurchased and retired | $ 216,700 | $ 64,938 | $ 176 | $ 400 | $ 582 | $ 200 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | ||||||||||
Net income attributable to common stockholders | $ (11,296) | $ (53,598) | $ 8,533 | $ 17,740 | $ 16,414 | $ (15,451) | $ (56,361) | $ 18,703 | $ 15,983 | $ 7,457 |
Weighted-average common shares outstanding | ||||||||||
Basic | 110,121,240 | 96,665,708 | 101,606,966 | 95,032,265 | ||||||
Diluted | 110,121,240 | 97,122,885 | 102,602,738 | 95,400,528 | ||||||
Net income per share attributable to common stockholders | ||||||||||
Basic | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 | ||||||
Diluted | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 | ||||||
Potentially dilutive securities outstanding | 0 | 0 | ||||||||
Restricted stock awards | ||||||||||
Net income per share attributable to common stockholders | ||||||||||
Potentially dilutive securities outstanding | 6,813,166 | 47,446 | 22,524,000 | 97,718,000 |
RELATED PARTY TRANSACTIONS - Br
RELATED PARTY TRANSACTIONS - Bright AI Services (Details) - Bright AI Services - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Costs incurred | $ 1.1 | $ 0 | $ 0.5 |
Development Of Internal Use Software | |||
Related Party Transaction [Line Items] | |||
Costs incurred | $ 1.9 | $ 0.5 |
RELATED PARTY TRANSACTIONS - Ex
RELATED PARTY TRANSACTIONS - Expense Reimbursement and Management Fees (Details) - Sponsor - Management Fee Arrangement - USD ($) | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 26, 2020 | |
Related Party Transaction [Line Items] | ||||
Maximum annual reimbursement | $ 1,000,000 | $ 1,000,000 | ||
Management fees incurred | 0 | 47,700 | $ 500,000 | |
Amounts payable | $ 0 | $ 0 | $ 0 | $ 100,000 |
RELATED PARTY TRANSACTIONS - Op
RELATED PARTY TRANSACTIONS - Operating Lease (Details) - Lease Agreement - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||
Rent expense | $ 0.1 | $ 0.1 | ||
Acquigen Pty Ltd. | ||||
Related Party Transaction [Line Items] | ||||
Future minimum lease payments | 3.6 | $ 4.2 | $ 4.3 | |
Rent expense | $ 0.4 | $ 0.3 | $ 0.4 | $ 0.2 |
SEGMENT AND GEOGRAPHIC INFORM_3
SEGMENT AND GEOGRAPHIC INFORMATION - Segment Information (Details) - segment | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SEGMENT AND GEOGRAPHIC INFORMATION | ||
Number of operating segments | 1 | 1 |
Number of reportable segments | 1 | 1 |
SEGMENT AND GEOGRAPHIC INFORM_4
SEGMENT AND GEOGRAPHIC INFORMATION - Geographic Information (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 491,592 | $ 291,468 | $ 403,389 | $ 317,975 |
Property and equipment, net | 58,767 | 47,357 | 37,845 | |
United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 385,259 | 234,439 | 325,716 | 257,786 |
Property and equipment, net | 48,158 | 37,680 | 30,433 | |
Canada | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 76,619 | 38,197 | 50,499 | 43,157 |
Property and equipment, net | 4,358 | 3,050 | 2,279 | |
Australia | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 18,581 | 13,187 | 20,181 | 12,126 |
Property and equipment, net | 4,394 | 4,979 | 4,094 | |
New Zealand | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 5,277 | 2,357 | 3,984 | 2,432 |
Property and equipment, net | 1,857 | 1,648 | 1,039 | |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 5,856 | $ 3,288 | $ 3,009 | $ 2,474 |
CONDENSED FINANCIAL INFORMATI_3
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) - CONDENSED BALANCE SHEETS (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Dec. 31, 2020 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | |||||||||
Total assets | $ 733,745 | $ 646,676 | $ 525,711 | ||||||
Liabilities and Stockholders' Equity | |||||||||
Total liabilities | 398,250 | 365,067 | 331,916 | ||||||
Stockholders' equity: | |||||||||
Common stock, $0.0001 par value; 500,000,000 shares authorized at December 31, 2019 and 2020; 96,498,943 and 118,854,249 shares issued and outstanding as of December 31, 2019 and 2020, respectively | 12 | 12 | 10 | ||||||
Additional paid-in capital | 377,649 | 265,478 | 196,474 | ||||||
Retained earnings (accumulated deficit) | (42,596) | 13,765 | (2,218) | ||||||
Accumulated other comprehensive income (loss) | 430 | 2,354 | (471) | ||||||
Total stockholders' equity | 335,495 | $ 320,075 | $ 115,434 | 281,609 | $ 216,591 | $ 195,003 | $ 176,230 | 193,795 | $ 180,280 |
Total liabilities and stockholders' equity | $ 733,745 | 646,676 | 525,711 | ||||||
Parent | |||||||||
Assets | |||||||||
Investment in subsidiary | 281,609 | 193,795 | |||||||
Total assets | 281,609 | 193,795 | |||||||
Stockholders' equity: | |||||||||
Common stock, $0.0001 par value; 500,000,000 shares authorized at December 31, 2019 and 2020; 96,498,943 and 118,854,249 shares issued and outstanding as of December 31, 2019 and 2020, respectively | 12 | 10 | |||||||
Additional paid-in capital | 265,478 | 196,474 | |||||||
Retained earnings (accumulated deficit) | 13,765 | (2,218) | |||||||
Accumulated other comprehensive income (loss) | 2,354 | (471) | |||||||
Total stockholders' equity | 281,609 | 193,795 | |||||||
Total liabilities and stockholders' equity | $ 281,609 | $ 193,795 |
CONDENSED FINANCIAL INFORMATI_4
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) - CONDENSED BALANCE SHEETS (Parenthetical) (Details) - $ / shares | Oct. 02, 2021 | Apr. 22, 2021 | Apr. 13, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Condensed Balance Sheet Statements, Captions [Line Items] | |||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 900,000,000 | 900,000,000 | 500,000,000 | 500,000,000 | 500,000,000 |
Common Stock, Shares, Issued | 119,849,589 | 118,854,249 | 96,498,943 | ||
Common Stock, Shares, Outstanding | 119,849,589 | 118,854,249 | 96,498,943 | ||
Parent | |||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |||
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 | |||
Common Stock, Shares, Issued | 118,854,249 | 96,498,943 | |||
Common Stock, Shares, Outstanding | 118,854,249 | 96,498,943 |
CONDENSED FINANCIAL INFORMATI_5
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) - CONDENSED STATEMENTS OF OPERATIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net income per share | ||||
Net income per share attributable to common stockholders - Basic | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 |
Net income per share attributable to common stockholders - Diluted | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 |
Weighted-average common shares outstanding-basic and diluted | ||||
Weighted-average common shares outstanding - Basic | 110,121,240 | 96,665,708 | 101,606,966 | 95,032,265 |
Weighted-average common shares outstanding - Diluted | 110,121,240 | 97,122,885 | 102,602,738 | 95,400,528 |
Parent | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Equity in net income of subsidiary | $ 15,983 | $ 7,457 | ||
Net income attributable to common stockholders | $ 15,983 | $ 7,457 | ||
Net income per share | ||||
Net income per share attributable to common stockholders - Basic | $ 0.16 | $ 0.08 | ||
Net income per share attributable to common stockholders - Diluted | $ 0.16 | $ 0.08 | ||
Weighted-average common shares outstanding-basic and diluted | ||||
Weighted-average common shares outstanding - Basic | 101,606,966 | 95,032,265 | ||
Weighted-average common shares outstanding - Diluted | 102,602,738 | 95,400,528 |
CONDENSED FINANCIAL INFORMATI_6
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) - CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Condensed Statement of Income Captions [Line Items] | ||||||||||
Net (loss) income | $ (11,296) | $ (53,598) | $ 8,533 | $ 17,740 | $ 16,414 | $ (15,451) | $ (56,361) | $ 18,703 | $ 15,983 | $ 7,457 |
Equity in other comprehensive income (loss) of subsidiary | 2,825 | (670) | ||||||||
Comprehensive (loss) income | $ (58,285) | $ 19,107 | 18,808 | 6,787 | ||||||
Parent | ||||||||||
Condensed Statement of Income Captions [Line Items] | ||||||||||
Net (loss) income | 15,983 | 7,457 | ||||||||
Equity in other comprehensive income (loss) of subsidiary | 2,825 | (670) | ||||||||
Comprehensive (loss) income | $ 18,808 | $ 6,787 |
CONDENSED FINANCIAL INFORMATI_7
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) - CONDENSED STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||||
Net income | $ (56,361) | $ 18,703 | $ 15,983 | $ 7,457 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Net cash provided by operating activities | 29,426 | 55,056 | 63,161 | 35,655 |
Cash flows from investing activities: | ||||
Net cash used in investing activities | (11,966) | (9,117) | (115,805) | (27,083) |
Cash flows from financing activities: | ||||
Proceeds from issuance of common stock | 615 | 65,553 | 250 | |
Net cash provided by financing activities | 14,323 | (27,510) | 54,302 | 16,551 |
Net increase in cash | 31,559 | 19,198 | 2,655 | 24,167 |
Cash at beginning of period | 59,310 | 56,655 | 56,655 | 32,488 |
Cash at end of period | 90,869 | 75,853 | 59,310 | 56,655 |
Supplemental cash flow information: | ||||
Cash paid for interest | $ 14,208 | $ 12,693 | 15,625 | 19,488 |
Parent | ||||
Cash flows from operating activities: | ||||
Net income | 15,983 | 7,457 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Equity in net income of subsidiary | (15,983) | $ (7,457) | ||
Cash flows from investing activities: | ||||
Investment in subsidiary | (65,553) | |||
Net cash used in investing activities | (65,553) | |||
Cash flows from financing activities: | ||||
Proceeds from issuance of common stock | 65,553 | |||
Net cash provided by financing activities | $ 65,553 |
CONDENSED FINANCIAL INFORMATI_8
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) - Additional information (Details) - USD ($) $ in Thousands | Oct. 20, 2020 | Oct. 14, 2020 | Sep. 26, 2020 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Condensed Financial Statements, Captions [Line Items] | ||||||
Issuance of common stock (in shares) | 21,666,653 | 21,666,653 | 758,694 | 758,694 | 3,548,568 | |
Value of shares issued during the period | $ 64,900 | $ 64,900 | $ 615 | $ 65,553 | $ 7,817 | |
Parent | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Issuance of common stock (in shares) | 21,666,653 | 21,666,653 | 205,197 | |||
Value of shares issued during the period | $ 64,900 | $ 64,900 | $ 600 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Feb. 02, 2021 | Jan. 25, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||||
Common stock, distributions to Parent for the repurchase of Parent's shares | $ 0.6 | $ 0.2 | |||
Payment of dividend to Parent | $ 110 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Aggregate debt issuance costs | $ 1.2 | ||||
Subsequent Event | Amended Term Loan | |||||
Subsequent Event [Line Items] | |||||
Fixed quarterly payments | $ 5.8 | ||||
Common stock, distributions to Parent for the repurchase of Parent's shares | 175 | ||||
Payment of note payable to Parent | 64.9 | ||||
Payment of dividend to Parent | $ 110 | ||||
Subsequent Event | Third Amendment [Member] | |||||
Subsequent Event [Line Items] | |||||
Principal amount | 175 | ||||
Borrowings treated as debt modification | 10 | ||||
Amount Borrowed Treated As Debt | $ 165 |
SUBSEQUENT EVENT (UNAUDITED) (D
SUBSEQUENT EVENT (UNAUDITED) (Details) - USD ($) $ in Thousands | Apr. 12, 2021 | Oct. 02, 2021 | Sep. 26, 2020 |
Subsequent Event [Line Items] | |||
Cash fees paid | $ 104,600 | $ 1,400 | |
2021 Omnibus Incentive Plan | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Maximum aggregate number of shares reserved for issuance | 13,170,212 | ||
2021 Omnibus Incentive Plan | Subsequent Event | Non-employee director | |||
Subsequent Event [Line Items] | |||
Cash fees paid | $ 750 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 90,869 | $ 59,310 |
Trade receivables, net | 75,314 | 32,758 |
Inventories, net | 80,705 | 64,818 |
Income tax receivable | 6,129 | 4,377 |
Prepaid expenses and other current assets | 10,676 | 6,063 |
Total current assets | 263,693 | 167,326 |
Property and equipment, net | 58,767 | 47,357 |
Equity method investment | 21,997 | 25,384 |
Deferred tax assets | 793 | 345 |
Deferred offering costs | 1,041 | |
Goodwill | 115,158 | 115,750 |
Intangible assets, net | 271,831 | 289,473 |
Other assets | 1,506 | 0 |
Total assets | 733,745 | 646,676 |
Current liabilities: | ||
Accounts payable | 39,921 | 29,789 |
Accounts payable-related party | 1,050 | 500 |
Current maturities of long-term debt | 14,234 | 13,042 |
Accrued expenses and other current liabilities | 59,454 | 50,606 |
Total current liabilities | 114,659 | 93,937 |
Long-term debt, net of discount and current portion | 219,967 | 208,454 |
Deferred income tax liabilities, net | 55,949 | 55,193 |
Liability for uncertain tax positions | 5,649 | 5,540 |
Other long-term liabilities | 2,026 | 1,943 |
Total liabilities | 398,250 | 365,067 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; 100,000,000 and no shares authorized as of October 2, 2021 and December 31, 2020 respectively; no shares issued and outstanding as of both October 2, 2021 and December 31, 2020 | ||
Common stock, $0.0001 par value; 500,000,000 shares authorized as of December 31, 2020 and 2019; 118,854,249 and 96,498,943 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 12 | 12 |
Additional paid-in capital | 377,649 | 265,478 |
(Accumulated deficit) retained earnings | (42,596) | 13,765 |
Accumulated other comprehensive income | 430 | 2,354 |
Total stockholders' equity | 335,495 | 281,609 |
Total liabilities and stockholders' equity | $ 733,745 | $ 646,676 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 02, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 100,000,000 | 0 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900,000,000 | 500,000,000 |
Common stock, shares issued | 119,849,589 | 118,854,249 |
Common stock, shares outstanding | 119,849,589 | 118,854,249 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Operations | ||||||||||
Net sales | $ 491,592 | $ 291,468 | $ 403,389 | $ 317,975 | ||||||
Cost of sales | 329,805 | 186,699 | 260,616 | 219,819 | ||||||
Gross profit | 161,787 | 104,769 | 142,773 | 98,156 | ||||||
Selling, general and administrative expense | 170,532 | 50,888 | 85,527 | 57,388 | ||||||
Amortization | 16,560 | 12,173 | 17,347 | 15,643 | ||||||
(Loss) income from operations | (25,305) | 41,708 | 39,899 | 25,125 | ||||||
Other expense (income): | ||||||||||
Interest expense | 20,843 | 13,633 | 18,251 | 22,639 | ||||||
Other (income) expense , net | (3,887) | 1,121 | (1,111) | (300) | ||||||
Total other expense, net | 16,956 | 14,754 | 17,140 | 22,339 | ||||||
Earnings from equity method investment | 1,808 | |||||||||
(Loss) income before income taxes | (40,453) | 26,954 | 22,759 | 2,786 | ||||||
Income tax expense | 15,908 | 8,251 | 6,776 | (4,671) | ||||||
Net (loss) income | $ (11,296) | $ (53,598) | $ 8,533 | $ 17,740 | $ 16,414 | $ (15,451) | $ (56,361) | $ 18,703 | $ 15,983 | $ 7,457 |
Net income per share attributable to common stockholders | ||||||||||
Basic | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 | ||||||
Diluted | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 | ||||||
Weighted average common shares outstanding: | ||||||||||
Basic | 110,121,240 | 96,665,708 | 101,606,966 | 95,032,265 | ||||||
Diluted | 110,121,240 | 97,122,885 | 102,602,738 | 95,400,528 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Comprehensive Income | ||||||||||
Net (loss) income | $ (11,296) | $ (53,598) | $ 8,533 | $ 17,740 | $ 16,414 | $ (15,451) | $ (56,361) | $ 18,703 | $ 15,983 | $ 7,457 |
Other comprehensive (loss) income, net of tax: | ||||||||||
Foreign currency translation adjustments | (1,924) | 404 | 2,825 | (664) | ||||||
Comprehensive (loss) income | $ (58,285) | $ 19,107 | $ 18,808 | $ 6,787 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-in Capital | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance, beginning of period at Dec. 31, 2018 | $ 10,000 | $ 188,049,000 | $ (7,978,000) | $ 199,000 | $ 180,280,000 |
Balance, beginning of period (in shares) at Dec. 31, 2018 | 92,925,353 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 7,457,000 | 7,457,000 | |||
Foreign currency translation adjustments | (664,000) | (664,000) | |||
Issuance of common stock | 7,817,000 | $ 7,817,000 | |||
Issuance of common stock (in shares) | 3,673,677 | 3,548,568 | |||
Shares issued to parent | 3,673,677 | 3,548,568 | |||
Repurchase and retirement of treasury stock | (200,000) | $ (200,000) | |||
Repurchase and retirement of treasury stock (in shares) | 100,087 | (100,087) | |||
Stock-based compensation expense | 808,000 | $ 808,000 | |||
Balance, end of period at Dec. 31, 2019 | $ 10,000 | 196,474,000 | (2,218,000) | (471,000) | 193,795,000 |
Balance, end of period (in shares) at Dec. 31, 2019 | 96,498,943 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (15,451,000) | (15,451,000) | |||
Foreign currency translation adjustments | (1,938,000) | (1,938,000) | |||
Repurchase and retirement of treasury stock | (400,000) | (400,000) | |||
Repurchase and retirement of treasury stock (in shares) | (200,173) | ||||
Stock-based compensation expense | 224,000 | 224,000 | |||
Balance, end of period at Mar. 28, 2020 | $ 10,000 | 196,298,000 | (17,669,000) | (2,409,000) | 176,230,000 |
Balance, end of period (in shares) at Mar. 28, 2020 | 96,298,770 | ||||
Balance, beginning of period at Dec. 31, 2019 | $ 10,000 | 196,474,000 | (2,218,000) | (471,000) | 193,795,000 |
Balance, beginning of period (in shares) at Dec. 31, 2019 | 96,498,943 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | $ 18,703,000 | ||||
Issuance of common stock (in shares) | 758,694 | ||||
Shares issued to parent | 758,694 | ||||
Balance, end of period at Sep. 26, 2020 | $ 10,000 | 200,163,000 | 16,485,000 | (67,000) | $ 216,591,000 |
Balance, end of period (in shares) at Sep. 26, 2020 | 97,187,596 | ||||
Balance, beginning of period at Dec. 31, 2019 | $ 10,000 | 196,474,000 | (2,218,000) | (471,000) | 193,795,000 |
Balance, beginning of period (in shares) at Dec. 31, 2019 | 96,498,943 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 15,983,000 | 15,983,000 | |||
Foreign currency translation adjustments | 2,825,000 | 2,825,000 | |||
Issuance of common stock | $ 2,000 | 65,551,000 | $ 65,553,000 | ||
Issuance of common stock (in shares) | 21,871,850 | 758,694 | |||
Shares issued to parent | 21,871,850 | 758,694 | |||
Repurchase and retirement of treasury stock | (582,000) | $ (582,000) | |||
Repurchase and retirement of treasury stock (in shares) | 275,238 | (275,238) | |||
Contingent consideration settlement | $ 758,694 | 2,208,000 | $ 2,208,000 | ||
Stock-based compensation expense | 1,827,000 | 1,827,000 | |||
Balance, end of period at Dec. 31, 2020 | $ 12,000 | 265,478,000 | 13,765,000 | 2,354,000 | 281,609,000 |
Balance, end of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||
Balance, beginning of period at Mar. 28, 2020 | $ 10,000 | 196,298,000 | (17,669,000) | (2,409,000) | 176,230,000 |
Balance, beginning of period (in shares) at Mar. 28, 2020 | 96,298,770 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 16,414,000 | 16,414,000 | |||
Foreign currency translation adjustments | 2,295,000 | 2,295,000 | |||
Repurchase and retirement of treasury stock | (176,000) | (176,000) | |||
Repurchase and retirement of treasury stock (in shares) | (75,065) | ||||
Stock-based compensation expense | 240,000 | 240,000 | |||
Balance, end of period at Jun. 27, 2020 | $ 10,000 | 196,362,000 | (1,255,000) | (114,000) | 195,003,000 |
Balance, end of period (in shares) at Jun. 27, 2020 | 96,223,705 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 17,740,000 | 17,740,000 | |||
Foreign currency translation adjustments | 47,000 | 47,000 | |||
Issuance of common stock | 615,000 | 615,000 | |||
Issuance of common stock (in shares) | 205,197 | ||||
Shares issued to parent | 205,197 | ||||
Contingent consideration settlement | 2,208,000 | 2,208,000 | |||
Contingent consideration settlement (In shares) | 758,694 | ||||
Stock-based compensation expense | 978,000 | 978,000 | |||
Balance, end of period at Sep. 26, 2020 | $ 10,000 | 200,163,000 | 16,485,000 | (67,000) | 216,591,000 |
Balance, end of period (in shares) at Sep. 26, 2020 | 97,187,596 | ||||
Balance, beginning of period at Dec. 31, 2020 | $ 12,000 | 265,478,000 | 13,765,000 | 2,354,000 | 281,609,000 |
Balance, beginning of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 8,533,000 | 8,533,000 | |||
Foreign currency translation adjustments | (1,201,000) | (1,201,000) | |||
Dividend | (110,033,000) | (110,033,000) | |||
Repurchase and retirement of treasury stock | $ (2,000) | (64,936,000) | (64,938,000) | ||
Repurchase and retirement of treasury stock (in shares) | (21,666,653) | ||||
Stock-based compensation expense | 1,464,000 | 1,464,000 | |||
Balance, end of period at Apr. 03, 2021 | $ 10,000 | 91,973,000 | 22,298,000 | 1,153,000 | 115,434,000 |
Balance, end of period (in shares) at Apr. 03, 2021 | 97,187,596 | ||||
Balance, beginning of period at Dec. 31, 2020 | $ 12,000 | 265,478,000 | 13,765,000 | 2,354,000 | 281,609,000 |
Balance, beginning of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (56,361,000) | ||||
Aggregate net proceeds received from IPO | 399,264,000 | ||||
Balance, end of period at Oct. 02, 2021 | $ 12,000 | 377,649,000 | (42,596,000) | 430,000 | 335,495,000 |
Balance, end of period (in shares) at Oct. 02, 2021 | 119,849,589 | ||||
Balance, beginning of period at Apr. 03, 2021 | $ 10,000 | $ 91,973,000 | 22,298,000 | 1,153,000 | 115,434,000 |
Balance, beginning of period (in shares) at Apr. 03, 2021 | 97,187,596 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (53,598,000) | (53,598,000) | |||
Foreign currency translation adjustments | 164,000 | $ 164,000 | |||
Aggregate net proceeds received from IPO | $ 2,000 | ||||
Net proceeds from initial public offering (in shares) | 23,000,000 | 399,262,000 | 399,264,000 | ||
Repurchase and retirement of treasury stock | $ (1,000) | $ (216,699,000) | $ (216,700,000) | ||
Repurchase and retirement of treasury stock (in shares) | (12,264,438) | ||||
Issuance of restricted stock in connection with the Reorganization | $ 1,000 | (1,000) | |||
Issuance of restricted stock in connection with the Reorganization (in shares) | 8,340,126 | ||||
Issuance of common stock upon conversion of Class B units (in shares) | 4,145,987 | ||||
Stock-based compensation expense | 75,511,000 | 75,511,000 | |||
Balance, end of period at Jul. 03, 2021 | $ 12,000 | 350,046,000 | (31,300,000) | 1,317,000 | 320,075,000 |
Balance, end of period (in shares) at Jul. 03, 2021 | 120,409,271 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (11,296,000) | (11,296,000) | |||
Foreign currency translation adjustments | (887,000) | (887,000) | |||
Retirement of restricted stock | $ (559,682) | ||||
Stock-based compensation expense | 27,603,000 | 27,603,000 | |||
Balance, end of period at Oct. 02, 2021 | $ 12,000 | $ 377,649,000 | $ (42,596,000) | $ 430,000 | $ 335,495,000 |
Balance, end of period (in shares) at Oct. 02, 2021 | 119,849,589 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) | 3 Months Ended |
Apr. 03, 2021$ / shares | |
Condensed Consolidated Statements of Stockholders' Equity | |
Dividend per share | $ 1 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 02, 2021 | Sep. 26, 2020 | |
Cash flows from operating activities: | ||
Net income | $ (56,361) | $ 18,703 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 23,689 | 17,461 |
Amortization of deferred financing costs and debt discount | 5,907 | 1,867 |
Stock-based compensation expense | 104,578 | 1,442 |
Other non-cash | 1,349 | 825 |
Gain on sale of equity method investment | (3,856) | |
Earnings from equity method investment | (1,808) | |
Distribution received from equity method investment | 1,808 | |
Changes in operating assets and liabilities: | ||
Trade receivables | (43,134) | (18,732) |
Inventories | (16,128) | (2,202) |
Prepaid expenses and other current assets | (4,774) | 279 |
Income tax receivable | (1,752) | (1,287) |
Other assets | (465) | |
Accounts payable | 10,550 | 16,192 |
Accrued expenses and other current liabilities | 9,740 | 20,449 |
Other long-term liabilities | 83 | 59 |
Net cash provided by operating activities | 29,426 | 55,056 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (19,242) | (9,677) |
Proceeds from the sale of property and equipment | 33 | 560 |
Return of equity method investment | 447 | |
Proceeds from the sale of equity method investment | 6,796 | |
Net cash used in investing activities | (11,966) | (9,117) |
Cash flows from financing activities: | ||
Proceeds from long-term debt borrowings | 172,813 | |
Payments on long-term debt borrowings | (164,833) | (20,925) |
Proceeds from borrowings on the revolving credit facility | 16,000 | 5,000 |
Payments on revolving credit facility borrowings | (16,000) | (5,000) |
Deferred financing fees paid | (1,250) | |
Dividend to Class A unitholders | (110,033) | |
Proceeds from issuance of common stock | 615 | |
Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs | 399,264 | |
Repurchase and retirement of treasury stock | (281,638) | (576) |
Payments of Narellan Group Pty Limited contingent consideration | (6,624) | |
Net cash provided by financing activities | 14,323 | (27,510) |
Effect of exchange rate changes on cash | (224) | 769 |
Net increase in cash | 31,559 | 19,198 |
Cash at beginning of period | 59,310 | 56,655 |
Cash at end of period | 90,869 | 75,853 |
Supplemental cash flow information: | ||
Cash paid for interest | 14,208 | 12,693 |
Income taxes paid, net | 15,213 | 9,100 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable and accrued expenses | 226 | 635 |
Capitalized internal-use software included in accounts payable - related party | $ 1,050 | |
Fair value of 758,694 shares of common stock issued during the three fiscal quarters ended September 26, 2020 in connection with the acquisition of Narellan Group Pty Limited | $ 2,208 |
Consolidated Statements of Ca_3
Consolidated Statements of Cash Flows (Parenthetical) - shares | Oct. 20, 2020 | Oct. 14, 2020 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Consolidated Statements of Cash Flows | |||||
Issuance of common stock (in shares) | 21,666,653 | 21,666,653 | 758,694 | 758,694 | 3,548,568 |
NATURE OF THE BUSINESS_2
NATURE OF THE BUSINESS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NATURE OF THE BUSINESS | ||
NATURE OF THE BUSINESS | 1. Latham Group, Inc. (“the Company”) wholly owns Latham Pool Products, Inc. (“Latham Pool Products”) (together, “Latham”) and is a designer, manufacturer and marketer of in-ground residential swimming pools in North America, Australia and New Zealand. Latham offers a portfolio of pools and related products, including in-ground swimming pools, pool liners and pool covers. On December 18, 2018, Latham Investment Holdings, LP (“Parent”), an investment fund managed by affiliates of Pamplona Capital Management (the “Sponsor”), Wynnchurch Capital, L.P. and management acquired all of the outstanding equity interests of Latham Topco., Inc., a newly incorporated entity in the State of Delaware. Latham Topco, Inc. changed its name to Latham Group, Inc. on March 3, 2021. Initial Public Offering, Reorganization and Stock Split On April 27, 2021, the Company completed its initial public offering (the “IPO”), pursuant to which it issued and sold 23,000,000 shares of common stock, inclusive of 3,000,000 shares sold by the Company pursuant to the full exercise of the underwriters’ option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO were $399.3 million, after deducting underwriting discounts and commissions and other offering costs. Prior to the closing of the Company’s IPO on April 27, 2021 (the “Closing of the IPO”), the Company’s parent entity, Parent, merged with and into Latham Group, Inc., with Latham Group, Inc. surviving the merger (the “Reorganization”). The purpose of the Reorganization was to allow existing indirect owners of the Company to become direct shareholders of the Company. In connection with the Reorganization, Class A units of the Parent (the “Class A units”) were converted into shares of the Company’s common stock, and Class B units of the Parent (the “Class B units”) were converted into an economically equivalent number of restricted and unrestricted shares of the Company’s common stock on a pro rata basis. The Reorganization was accounted for as an equity reorganization between entities under common control. As the Class A units were akin to common shares as all holders held economic interest of the Parent and were entitled to distributions on a pro rata basis to their ownership, the conversion of Class A units to common shares as part of the Reorganization was considered to be equivalent to a stock split, which requires retrospective treatment for accounting purposes. Accordingly, all share and per share amounts in these condensed consolidated financial statements and related notes have been retroactively restated, where applicable, to give effect to the conversion ratio applied in connection with the Reorganization. Class B units were historically accounted for as compensatory arrangements in accordance with ASC 718 “ Compensation—Stock Compensation | 1. Latham Group, Inc. (“the Company”) wholly owns Latham Pool Products, Inc. (“Latham Pool Products”) (together, “Latham”) and a designer, manufacturer and marketer of in-ground residential swimming pools in North America, Australia and New Zealand. Latham offers a portfolio of pools and related products, including in-ground swimming pools, pool liners and pool covers. On December 18, 2018, Latham Investment Holdings, LP (“Parent”), an investment fund managed by affiliates of Pamplona Capital Management (the “Sponsor”), Wynnchurch Capital, L.P. and management acquired all of the outstanding equity interests of Latham Topco., Inc. a newly incorporated entity in the State of Delaware. Latham Topco, Inc. changed its name to Latham Group, Inc. on March 3, 2021. Impact of COVID-19 Pandemic On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. In response to the COVID-19 pandemic, federal, state and local governments put in place travel restrictions, quarantines, “shelter-in-place” orders, and various other restrictive measures in an attempt to control the spread of the disease. Such restrictions or orders have resulted in, and continue to result in, business closures, work stoppages, slowdowns and delays, among other effects that impact its operations, as well as customer demand and the operations of its suppliers. Since the onset of the COVID-19 pandemic, the Company has been focused on protecting its employees’ health and safety, meeting its customers’ needs as they navigate an uncertain financial and operating environment, working closely with its suppliers to protect its ongoing business operations and rapidly adjusting its short-, medium- and long-term operational plans to proactively and effectively respond to the current and potential future public health crises. To mitigate the impact of the COVID-19 pandemic on the Company’s business, it increased frequency and intensity of cleaning of its properties, implemented policies to enable its factory employees to work flexible working hours, shifted its corporate employees to remote work, temporarily stopped hiring, temporarily cut salaries (which cuts the Company has repaid to its employees later in the year) and have greatly reduced travel for its employees. Substantially all of the Company’s plants have remained operational throughout the pandemic and it has not experienced any significant supply issues. The Company did not experience any significant impacts on its liquidity as a result of the COVID-19 pandemic. Following a slow-down in orders in March and April of 2020 as some of the Company’s dealers shut down during the peak season, the Company saw a sustained increase in demand for its products during 2020. Although the Company has implemented measures to mitigate the impact of the COVID-19 pandemic on its business, financial condition and results of operations, the Company expects that these measures may not fully mitigate the impact of the COVID-19 pandemic on its business, financial condition and results of operations. The Company cannot predict the degree to, or the period over, which the Company will be affected by the pandemic and resulting governmental and other measures. The global impact of the COVID-19 pandemic continues to rapidly evolve, and the Company will continue to monitor the situation closely. Stock Split On April 13, 2021, the Company’s certificate of incorporation was amended and restated. Under the amended and restated certificate of incorporation, the Company has authority to issue 500,000,000 shares of common stock, par value $0.0001 per share. On April 12, 2021, the Company’s board of directors declared and on April 13, 2021, the Company effected a 109,673,709-for-one stock split of its issued and outstanding shares of common stock. Accordingly, all share and per share data included in these consolidated financial statements and notes thereto have been adjusted retroactively to reflect the impact of the amended and restated certificate of incorporation and the stock split. Reorganization Prior to the closing of the Company’s IPO on April 27, 2021 (the “Closing of the IPO”), the Company’s parent entity, Parent, merged with and into Latham Group, Inc., The purpose of the Reorganization was to allow existing indirect owners of the Company to become direct shareholders of the Company. In connection with the Reorganization, Class A units of the Parent (the “Class A units”) were converted into economically equivalent number of shares of the Company’s common stock on a pro rata basis to the individual holders’ ownership, and Class B units of the Parent (the “Class B units”) were converted into an economically equivalent number of restricted and unrestricted shares of the Company’s common stock, based on each individual’s respective equity value, as derived by individual Class B ownership. The Reorganization was accounted for as an equity reorganization between entities under common control. As the Class A units were akin to common shares as all holders held economic interest of the Parent and were entitled to distributions on a pro rata basis to their respective the individual holders’ ownership, the conversion of Class A units to common shares as part of the Reorganization was considered to be the equivalent to a stock split, which requires retrospective treatment for accounting purposes. Accordingly, all share and per share amounts in these consolidated financial statements and related notes have been retroactively restated, where applicable, for all periods herein, to give effect to the conversion ratio applied in connection with the Reorganization. As a result of the retrospective application of the Reorganization, any transaction between the Company and Parent has been eliminated from these consolidated financial statements as these represent intercompany transactions. Class B units were historically accounted for as compensatory arrangements in accordance with ASC 718 “Compensation—Stock Compensation,” akin to stock appreciation rights, that when vested would share on the economic appreciation of the equity value of Parent over the agreed hurdles. As a result of the Reorganization, the Company determined that only vested Class B units are considered outstanding for accounting purposes. A portion of the Class B units vest based on continued employment by the holder, or time-vesting units, and the remaining Class B units vest upon defined performance and market conditions, or performance-vesting units. Therefore, the Company has considered any unvested restricted shares as contingentable issuable shares until they vest. The conversion of time-vesting Class B units to restricted shares is retrospectively included in the weighted-average common shares outstanding used to calculate diluted net income (loss) per share using the treasury stock method for each period in which the individual unit holder’s threshold was met at the reporting date and therefore the individual unit holder would have participated in a hypothetical distribution to the Parent unit holders, if dilutive. The conversion of performance-vesting Class B units to restricted shares is not included in the weighted-average shares outstanding used to calculate diluted net income (loss) per share for any period prior to the Reorganization and IPO as the performance vesting thresholds were not satisfied and the performance units were not considered probable to vest historically. Refer to Note 15 for additional details relating to net income (loss) per share. |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The consolidated balance sheet at December 31, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of October 2, 2021 and for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of October 2, 2021 and results of operations for the three fiscal quarters ended October 2, 2021 and September 26, 2020 and cash flows for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been made. The Company’s results of operations for the three fiscal quarters ended October 2, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021. Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Seasonality Although the Company generally has demand for its products throughout the year, its business is seasonal and weather is one of the principal external factors affecting the business. Historically, net sales and net income are highest during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. Accounting Policies Refer to the Company’s Audited Consolidated Financial Statements herein for a discussion of the Company’s accounting policies, as updated below. Stock-based Compensation Stock-based compensation is measured and recognized based on the grant date fair value of the awards. The Class B units of the Parent were granted to employees in the form of Profits Interest Units (“PIUs”). The Company determined the grant date fair value of PIUs using the Black-Scholes option pricing model. As part of the Reorganization, the vested and unvested PIUs of the Parent, were converted on a pro rata basis into equivalent restricted stock units and restricted stock awards of the Company’s underlying common stock. The fair value of the awards is expensed 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. 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 PIUs 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. The Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The Company utilized a dividend yield of zero, as it had 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. Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021, the Company effected its Omnibus Incentive Plan in which it granted to certain employees of the Company restricted stock awards, restricted stock units and option awards inclusive of the as converted Class B units as a result of the Reorganization (see Note 14). 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. 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 from equity method investment in the condensed 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 condensed consolidated statements of operations on a three-month lag. The Company recorded its interest in the net earnings of Premier Pools & Spas of $1.8 million for the three fiscal quarters ended October 2, 2021, which included a $0.2 million adjustment for the amortization of basis differences, within earnings from equity method investment in the condensed consolidated statements of operations during the three fiscal quarters ended October 2, 2021. As the Company initially invested in Premier Pools & Spas on October 30, 2020, there was no earnings from equity method investment recorded during the three fiscal quarters ended September 26, 2020. The Company received distributions of $2.2 million during the three fiscal quarters ended October 2, 2021. For presentation in the condensed 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 be 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 be 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 condensed consolidated statements of operations in the period the impairment occurs. Recently Issued Accounting Pronouncements The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. In February 2016, the FASB issued ASU 2016-02 , Leases (Topic 842) ASU No. 2018-11, Leases (Topic 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments — Credit Losses Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) public entities, ASU 2020-01 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2020-01 is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. The Company is currently evaluating the impact that the adoption of ASU 2020-01 will have on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope | 2. Basis of Presentation The accompanying consolidated financial statements and accompanying 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 during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. Revenue Recognition The Company adopted accounting standards codification (“ASC”) 606, Revenue from Contracts with Customers Under 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 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, cash discounts or other sales incentives. Customer rebates, cash discounts, 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 at the time of the initial sale. 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, 2019 and 2020. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component as 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 which 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 expenses and other current liabilities and other long-term liabilities on the consolidated balance sheets as of December 31, 2019 and 2020. 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 accompanying 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, 2019 and 2020 was $1.3 million and $1.4 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. During the years ended December 31, 2019 and 2020, one customer represented approximately 25.7% and 22.3% of the Company’s net sales, respectively. As of December 31, 2019 and 2020, outstanding trade receivables related to this customer were $12.0 million and $5.4 million, respectively. The Company provides extended payment terms to qualified customers for sales under its “Early Buy” program, which allows customers to take delivery in December and receive payment terms for April through June of the following year. 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, 2019 and 2020. Interest Rate Swap Borrowings under the Credit Agreement (see Note 9) accrue interest at variable rates and expose the Company to interest rate risk. On April 30, 2020, the Company entered into an interest rate swap with a notional amount of $200.0 million and a three-year term to reduce the interest rate risk associated with the Company’s Credit Agreement. The Company’s interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as other long-term liabilities in the consolidated balance sheets at fair value. The resulting gain (loss) on the interest rate swap is recognized within other expense (income), net in the consolidated statements of operations. 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. Acquisition-related contingent consideration was recorded in the consolidated balance sheets at its acquisition-date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration was remeasured each reporting period, with changes in fair value recorded in other expense (income), net in the consolidated statements of operations. The fair value measurement is based on significant inputs not observable by market participants and thus represents a Level 3 input in the fair value hierarchy (see Note 5). 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. 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 (losses) from equity method investment in the consolidated statements of operations on a three-month lag. Accordingly, the consolidated statement of operations for the year ended December 31, 2020 does not reflect any proportionate share of earnings or losses of Premier Pools & Spas. 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. 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, 2019 and 2020, the Company’s reserves for estimated slow moving products or obsolescence were $2.1 million and $1.8 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 Machinery and equipment (including computer equipment and software) 3 Furniture and fixtures 5 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 which 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 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, 2019 and 2020. 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 (see Note 6): Estimated Asset Useful Life Patented technology 5 Trade names and trademarks 9 Pool designs 14 years Franchise relationships 4 years Dealer relationships 5 Non-competition agreements 5 years 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 fiscal quarter and whenever events occur or changes in circumstances indicate that impairment may have occurred. Historically, including for the Company’s annual impairment test conducted during the year ended December 31, 2020, the Company had two reporting units for the purpose of performing its goodwill impairment test. In November 2020, the Company made changes to its internal organizational structure, including roles and responsibilities and to its internal reporting, resulting in a change to segment management. As a result of the change in segment management and in the information that is regularly reviewed, the results of the previous two reporting units are no longer being reviewed for profitability on an individual basis. Due to these factors, the Company recognized a change in reporting units effective in November 2020 and determined that only one reporting unit exists. The Company completed an assessment of any potential impairment for all reporting units immediately prior to and after the reporting unit change and determined that no impairment existed. 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. The Company measures fair value of its reporting unit based on the enterprise values derived using an income approach and a market approach. The Company applies a weighting of 75% to the income approach and a weighting of 25% to the market approach. The income approach uses a discounted cash flows model that indicates the fair value of the reporting unit based on the present value of the cash flows that the reporting unit is expected to generate in the future. Significant estimates in the discounted cash flows model include: the weighted-average cost of capital; and long-term rate of growth and profitability of the business. The market approach uses a guideline transactions method to indicate the fair value of the reporting unit based on a selected multiple. Significant estimates in the market approach model include identifying appropriate market multiples and assessing earnings before interest, income taxes, depreciation and amortization (“EBITDA”) in estimating the fair value of the reporting unit. 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 (see Note 9). Deferred Offering Costs The Company capitalizes certain legal, professional accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations. There were no deferred offering costs as of December 31, 2019. As of December 31, 2020, the Company had recorded $1.0 million of deferred offering costs related to its planned IPO of common stock. 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 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 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 (benefit) expense 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 (benefit) expense within the consolidated statements of operations. There were no penalties or accrued interest as of December 31, 2019. The Company had $0.2 million of accrued interest and no accrued penalties as of December 31, 2020. 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. Stock-Based Compensation Prior to the Reorganization, certain of the Company’s employees, directors and officers have been granted profits interest units (“PIUs”) in the form of Class B units in the Company’s parent entity, Latham Investment Holdings, LP (“Parent”). As the employees and officers provide services to the Company, the stock-based compensation is deemed to be for the benefit of the Company (see Note 16). The Company records an allocation of stock-based compensation expense based on the fair value of the award at grant date from its Parent and recognizes a corresponding capital contribution in additional paid-in capital. The Company accounts for the PIUs as equity classified awards. PIUs are measured at fair value on the grant date. The Company estimates the grant-date fair value of PIUs using the Contingent Claims Analysis Model, which uses the risk-free rate, expected term, volatility and dividend yield as inputs. A portion of the PIUs vest in five equal annual installments, based on continued service (“Time Vesting PIUs”). The Company recognizes the grant date fair value of these Time Vesting PIUs as an expense over the employee’s requisite service period. However, the Parent has a repurchase right for $0 per share until the third anniversary of the Acquisition in the event of voluntary termination or termination without cause (the “$0 Repurchase Right”). The Company will reverse stock-based compensation expense in the event that the Parent exercises the $0 Repurchase Right since it functions as a vesting condition. In the event of a change-in-control event, the Company will immediately recognize the unrecognized stock-based compensation expense related to the unvested Time Vesting PIUs. The remaining units (the “Performance PIUs”) will vest upon the consummation of a change-in-control, as defined in the Parent’s partnership agreement, a performance condition and the achievement of either a specified internal rate of return or a specific return on the Sponsor’s investment, both of which are market conditions. As the Performance PIUs contain both performance and market conditions, compensation expense for those awards will be equal to the grant date fair value of all awards for which the performance condition is met and the requisite service period is satisfied regardless of whether the market conditions are ultimately satisfied. No stock-based compensation expense has been recognized to-date for the remaining units as the Company has not deemed the performance condition to be probable. The Company accounts for forfeitures of stoc |
ACQUISITIONS_2
ACQUISITIONS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
ACQUISITIONS | ||
ACQUISITIONS | 3. GL International, LLC On October 22, 2020, Latham Pool Products acquired GL International, LLC (“GLI”) for a total purchase price of $79.7 million (the “GLI Acquisition”). The results of GLI’s operations have been included in the condensed consolidated financial statements since that date. GLI specializes in manufacturing custom pool liners and safety covers. As a result, this acquisition expanded the Company’s liner and safety cover product offerings. In connection with the GLI Acquisition, consideration paid was $79.7 million in cash, or $74.7 million net of cash acquired of $5.0 million, and excluding a net working capital adjustment receivable of $0.8 million. The net working capital adjustment receivable was settled during fiscal quarter ended April 3, 2021. The cash consideration was funded from existing cash on hand. The Company incurred $2.4 million in transaction costs. The Company accounted for the GLI Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations (“ASC 805”). This requires that the assets acquired and liabilities assumed be measured at fair value. The Company estimated, using Level 3 inputs, the fair value of certain fixed assets using a combination of the cost approach and the market approach. Inventories were valued using the comparative sales method, less the cost of disposal. Specific to intangible assets, dealer relationships were valued using the multi-period excess earnings method, whereas trade names were valued using the relief from royalty method. The Company recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The following summarizes the purchase price allocation for the GLI Acquisition: (in thousands) October 22, 2020 Total consideration $ 79,743 Allocation of purchase price: Cash 5,007 Trade receivables 10,639 Inventories 11,854 Prepaid expenses and other current assets 3,949 Property and equipment 1,402 Intangible assets 46,700 Total assets acquired 79,551 Accounts payable 3,536 Accrued expenses and other current liabilities 8,853 Other long-term liabilities 524 Total liabilities assumed 12,913 Total fair value of net assets acquired, excluding goodwill: 66,638 Goodwill $ 13,105 The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $13.1 million. Goodwill resulting from the GLI Acquisition was attributable to the expanded market share and product offerings. Goodwill resulting from the GLI Acquisition is deductible for tax purposes. The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Period Definite-lived intangible assets: (in thousands) (in years) Trade names $ 9,500 9 Dealer relationships 37,200 8 $ 46,700 Pro Forma Financial Information (Unaudited) The following pro forma financial information presents the statements of operations of the Company combined with GLI as if the acquisition occurred on January 1, 2020. The pro forma results do not include any anticipated synergies, cost savings or other expected benefits of an 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, 2020 and is not necessarily indicative of the Company’s future financial results. Three Fiscal Quarters Ended (in thousands) September 26,2020 Net sales $ 345,200 Net loss $ 21,952 The pro forma financial information presented above has been calculated after adjusting for the results of the GLI Acquisition for the three fiscal quarters ended September 26, 2020 to reflect the accounting effects as a result of the acquisition, including the amortization expense from acquired intangible assets, the depreciation and amortization expense from acquired property and equipment, the additional cost of sales from acquired inventory, interest expense from debt financing, and any related tax effects. | 3. Narellan Group Pty Limited On May 31, 2019 (the “Acquisition Date”), Latham Pool Products acquired Narellan Group Pty Limited and its subsidiaries (collectively “Narellan”) for a total purchase price of $35.2 million (the “Narellan Acquisition”). The results of Narellan’s operations have been included in the consolidated financial statements since that date. Narellan is a fiberglass pool manufacturer based in Australia with operations in Australia, New Zealand and Canada. The acquisition expanded the Company’s market share with a broader geographical footprint. Additionally, the acquisition provided the Company with an increase in dealer and franchise relationships. In connection with the Narellan Acquisition, consideration paid included $20.2 million in cash, $7.6 million in equity consideration and $7.4 million of contingent consideration as of the Acquisition Date. The cash consideration was funded, in part, through long-term debt proceeds of $22.3 million, net of discount of $0.7 million. The equity consideration consisted of common stock. The valuation of the common stock was prepared using a quantitative put options method. The Company incurred $1.1 million in transaction costs. The Company agreed to pay the contingent consideration in the form of cash and equity consideration to the seller if certain EBITDA targets were achieved for any of the trailing twelve months periods ended December 31, 2019, June 30, 2020 or the year ended December 31, 2020 (the “Contingent Consideration”). The fair value of the Contingent Consideration at the Acquisition Date was $7.4 million (see Note 5). On September 25, 2020, the Company amended the terms of the Narellan share purchase agreement to accelerate the settlement of the Contingent Consideration with the selling shareholders of Narellan based upon estimated EBITDA for the year ended December 31, 2020. The Contingent Consideration was settled through a cash payment of $6.6 million and the issuance of an additional 758,697 shares of common stock as equity consideration, which had a contractual value of $2.2 million and was recorded as a capital contribution on the consolidated statements of stockholders’ equity. As the fair value of the common stock issued of $2.8 million exceeded the contractual value of $2.2 million and the selling shareholders are also employees of the Company, the Company recorded the excess remuneration paid to the selling shareholders of $0.6 million as stock-based compensation in the consolidated statements of operations and as contributed capital in the consolidated statements of stockholders’ equity as of and for the year-ended December 31, 2020. The Company accounted for the Narellan Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations The following summarizes the purchase price allocation for the Company’s acquisition of Narellan: (in thousands) May 31, 2019 Total consideration $ 35,233 Allocation of purchase price: Cash 24 Trade receivables 1,420 Inventories 4,501 Prepaid expenses and other current assets 472 Property and equipment 4,861 Intangible assets 18,332 Deferred tax asset 126 Total assets acquired 29,736 Accounts payable 3,379 Accrued expenses and other current liabilities 442 Deferred tax liabilities 470 Total liabilities assumed 4,291 Total fair value of net assets acquired, excluding goodwill: 25,445 Goodwill $ 9,788 Total consideration was comprised of the following: (in thousands) Amount Cash consideration $ 20,238 Fair value of equity consideration 7,567 Fair value of contingent consideration 7,428 Total consideration $ 35,233 The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $9.8 million. Goodwill resulting from the acquisition was attributable to the expanded market share and broader geographical footprint. The goodwill recognized is not deductible for tax purposes. The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Definite-lived intangible assets: (in thousands) Period (in years) Trade names and trademarks $ 9,535 25 Pool designs 5,728 14 Patented technology 1,410 5 Franchise relationships 1,187 4 Dealer relationships 472 5 The following are the net sales and net loss from Narellan included in the Company’s results from the Acquisition Date through December 31, 2019: (in thousands) Amount Net sales $ 15,893 Net loss $ (1,047) GL International, LLC On October 22, 2020, Latham Pool Products acquired GL International, LLC ( “GLI”) for a total purchase price of $79.7 million (the “GLI Acquisition”). The results of GLI’s operations have been included in the consolidated financial statements since that date. GLI specializes in manufacturing custom pool liners and safety covers. As a result, this acquisition expanded the Company’s liner and safety cover product offerings. In connection with the GLI Acquisition, consideration paid was $79.7 million in cash, or $74.7 million net of cash acquired of $5.0 million, and excluding a net working capital adjustment receivable of $0.8 million. The net working capital adjustment receivable was recorded in prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2020. The cash consideration was funded from existing cash on hand. The Company incurred $2.4 million in transaction costs. The Company accounted for the GLI Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations The following summarizes the purchase price allocation for the Company’s acquisition of GLI: (in thousands) October 22, 2020 Total consideration $ 79,743 Allocation of purchase price: Cash 5,007 Trade receivables 10,639 Inventories 11,854 Prepaid expenses and other current assets 3,949 Property and equipment 1,402 Intangible assets 46,700 Total assets acquired 79,551 Accounts payable 3,536 Accrued expenses and other current liabilities 8,853 Other long-term liabilities 524 Total liabilities assumed 12,913 Total fair value of net assets acquired, excluding goodwill: 66,638 Goodwill $ 13,105 The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $13.1 million. Goodwill resulting from the GLI Acquisition was attributable to the expanded market share and product offerings. Goodwill resulting from the GLI Acquisition is deductible for tax purposes. The Company allocated a portion of the purchase price to specific intangible asset categories as follows: Fair Value Amortization Definite-lived intangible assets: (in thousands) Period (in years) Trade names $ 9,500 9 Dealer relationships 37,200 8 $ 46,700 The following are the net sales and net loss from GLI included in the Company’s results from the GLI Acquisition Date through December 31, 2020: Year Ended (in thousands) December 31, 2020 Net sales $ 7,689 Net loss $ (1,123) Pro Forma Financial Information (Unaudited) The following pro forma financial information presents the statements of operations of the Company combined with Narellan and GLI as if the acquisitions occurred on January 1, 2019. The pro forma results do not include any anticipated synergies, cost savings or other expected benefits of an acquisition. As the Narellan Acquisition closed on May 31, 2019, Narellan’s operating results have already been reflected in the Company’s consolidated statements of operations for the year ended December 31, 2020. The pro forma financial information is not necessarily indicative of what the financial results would have been had the acquisitions been completed on January 1, 2019 and is not necessarily indicative of the Company’s future financial results. Year Ended December 31, (in thousands) 2019 2020 Net sales $ 382,029 $ 462,802 Net income $ 6,066 $ 26,344 The pro forma financial information presented above has been calculated after adjusting for the results of the Narellan Acquisition and GLI Acquisition for the year ended December 31, 2019 and for the GLI Acquisition for the year ended December 31, 2020 to reflect the accounting effects as a result of the acquisitions, including the amortization expense from acquired intangible assets, the depreciation and amortization expense from acquired property and equipment, the additional cost of sales from acquired inventory, interest expense from debt financing, and any related tax effects. With respect to the GLI Acquisition, transaction costs incurred during the year ended December 31, 2020 are reflected within pro forma net income for the year ended December 31, 2019, in order to reflect the GLI Acquisition as if it had occurred on January 1, 2019. |
EQUITY METHOD INVESTMENT_2
EQUITY METHOD INVESTMENT | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
EQUITY METHOD INVESTMENT | ||
EQUITY METHOD INVESTMENT | 4. 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. As a result of the transaction, the Company received cash proceeds of $6.8 million and recorded a gain on the sale of equity method investment of $3.9 million, which was recorded within other (income) expense, net on the condensed consolidated statements of operations during the three fiscal quarters ended October 2, 2021. The Company’s post-sale ownership interest in Premier Pools & Spas is 20.1%. The Company concluded, both before and after the sale of common units on August 6, 2021, that it holds common stock of Premier Pools & Spas and has the ability to exercise significant influence over Premier Pools & Spas but does not have a controlling financial interest. Accordingly, the Company accounts for this investment using the equity method of accounting. The Company’s proportionate share of the earnings or losses of the investee are reported as a separate line in the condensed 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”). Premier Pools & Spas does not consolidate the operations of the Premier Franchisees. Per the supply agreement, Latham is the exclusive supplier of the Premier Franchisees for specific pool and pool products. These products include fiberglass products and package pool products. The initial term of the supply agreement is ten years. For the first three years of the supply agreement, the Customer is entitled to a low-teens percentage rebate for all fiberglass pools sold and an additional growth rebate of a low single-digit to low-teens percentage based on year over year sales growth on fiberglass pools (the “Rebates”). The Rebates will be paid directly to Premier Pools Management Corp. Holdco. As of October 2, 2021, the Company’s carrying amount for the equity method investment in Premier Pools & Spas was $22.0 million. During the three fiscal quarters ended October 2, 2021, Premier Pools & Spas paid the Company dividends of $2.2 million that are presented on the condensed consolidated statement of cash flows as distribution received from equity method investment of $1.8 million and return of equity method investment of $0.4 million, respectively. The Company has elected a three-month financial reporting lag. The Company recorded its interest in net earnings of Premier Pools & Spas $1.8 million for the three fiscal quarters ended October 2, 2021, along with a basis difference adjustment of $0.2 million. | 4. 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. The Company concluded that it holds common stock of Premier Pools & Spas and has the ability to exercise significant influence over Premier Pools & Spas, but does not have a controlling financial interest. Accordingly, the Company accounts for this investment using the equity method of accounting. 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”). PremierPools & Spas does not consolidate the operations of the Premier Franchisees. Per the supply agreement, Latham is the exclusive supplier of the Premier Franchisees for specific pool and pool products. These products include fiberglass products and package pool products. The initial term of the supply agreement is ten years. For the first three years of the supply agreement, the Customer is entitled to a low-teens percentage rebate for all fiberglass pools sold and an additional growth rebate of a low single-digit to low-teens percentage based on year over year sales growth on fiberglass pools (the “Rebates”). The Rebates will be paid directly to Premier Pools Management Corp. Holdco. As of December 31, 2020, the Company’s carrying amount for the equity method investment in Premier Pools & Spas was $25.4 million. Because of the three-month financial reporting lag, the Company did not record any earnings from its interest in Premier Pools & Spas’ earnings for the year ended December 31, 2020. The Company will begin to record its interest in the net earnings of Premier Pools & Spas, along with adjustments for amortization of basis differences and any investee capital transactions, during the fiscal quarter ended April 3, 2021. |
FAIR VALUE MEASUREMENTS_2
FAIR VALUE MEASUREMENTS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
FAIR VALUE MEASUREMENTS | ||
FAIR VALUE MEASUREMENTS | 5. 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 three fiscal quarters ended October 2, 2021 or September 26, 2020. 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 or remeasured to fair value when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 2 and Level 3 inputs. Assets and liabilities measured at fair value on a recurring basis On May 31, 2019 (the “Acquisition Date”), Latham Pool Products acquired Narellan Group Pty Limited and its subsidiaries (collectively “Narellan”) for a total purchase price of $35.2 million (the “Narellan Acquisition”). In connection with the Narellan Acquisition, consideration paid included $20.2 million in cash, $7.6 million in equity consideration and $7.4 million of contingent consideration as of the Acquisition Date. The Company agreed to pay the contingent consideration in the form of cash and equity consideration to the seller if certain EBITDA targets were achieved for any of the trailing twelve months periods ended December 31, 2019, June 30, 2020 or the year ended December 31, 2020 (the “Contingent Consideration”). The fair value of the Contingent Consideration at the Acquisition Date was $7.4 million. On September 25, 2020, the Company amended the terms of the Narellan Share Purchase Agreement and settled the Contingent Consideration with the selling shareholders of Narellan based upon estimated EBITDA for the year ended December 31, 2020. The fair value of the Company’s Contingent Consideration was measured and recorded on the condensed consolidated balance sheets using Level 3 inputs because it was valued based on unobservable inputs and other estimation techniques due to the absence of quoted market prices. The Company valued the Contingent Consideration using a Monte Carlo simulation, which relied on management’s projections of EBITDA and the estimated probability of achieving such targets. Estimates of fair value are subjective in nature, involve uncertainties and matters of significant judgment, and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimate of fair value. Pension Plan The fair value of the benefit plan assets related to the Company’s pension plan was historically measured and recorded on the condensed consolidated balance sheets using Level 2 inputs. During the fiscal quarter ended September 26, 2020, the Company terminated its defined benefit pension plan. 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 due to the short-term maturities of these instruments. Term loan The term loan is carried at amortized cost; however, the Company estimates the fair value of the term loan for disclosure purposes. The fair value of the term loan is determined using inputs based on observable market data of a non-public exchange using, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of the term loan (in thousands): October 2, 2021 December 31, 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 234,201 $ 235,372 $ 221,496 $ 221,081 Interest rate swap The Company estimates the fair value of the interest rate swap (see Note 8) on a quarterly basis using Level 2 inputs, including the forward LIBOR 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 LIBOR curve. As of October 2, 2021 and December 31, 2020, the Company’s interest rate swap liability was $0.6 million and $0.3 million, respectively, which was recorded within other long-term liabilities on the condensed consolidated balance sheets. | 5. 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 or remeasured to fair value when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 2 and Level 3 inputs. Assets and liabilities measured at fair value on a recurring basis The fair value of the Company’s Contingent Consideration is measured and recorded on the consolidated balance sheets using Level 3 inputs because it is valued based on unobservable inputs and other estimation techniques due to the absence of quoted market prices. The Company values the Contingent Consideration using a Monte Carlo simulation, which relies on management’s projections of EBITDA and the estimated probability of achieving such targets. Estimates of fair value are subjective in nature, involve uncertainties and matters of significant judgment, and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimate of fair value. The following table presents a reconciliation of the Company’s Contingent Consideration measured and recorded at fair value on a recurring basis as of December 31, 2019, using significant unobservable inputs (Level 3) (in thousands): Fair Value Balance as of May 31, 2019 $ 7,428 Change in fair value of Contingent Consideration 1,441 Foreign currency translation adjustment 109 Balance as of December 31, 2019 8,978 Change in fair value of Contingent Consideration (204) Foreign currency translation adjustment 58 Payment of Contingent Consideration and issuance of common stock (see Note 3) (8,832) Balance as of September 25, 2020 $ — The Monte Carlo simulation utilized the following unobservable inputs to determine the fair value of the Contingent Consideration as of December 31, 2019: Year Ended December 31, 2019 EBITDA risk adjustment 17.30 % Annual EBITDA volatility 55.00 % Risk-free rate of return 2.10 % The fair value of the benefit plan assets is measured and recorded on the Company’s consolidated balance sheets using Level 2 inputs. The fair value of the Company’s plan assets was $1.3 million as of December 31, 2019. During the year ended December 31, 2020, the Company terminated its defined benefit pension plan (see Note 15). 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 due to the short-term maturities of these instruments. Term loan The term loan is carried at amortized cost; however, the Company estimates the fair value of the term loan for disclosure purposes. The fair value of the term loan is determined using inputs based on observable market data of a non-public exchange using, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of the term loan (in thousands): December 31, 2019 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 223,223 $ 220,712 $ 221,496 $ 221,081 Interest rate swap The Company estimates the fair value of the interest rate swap (see Note 9) on a quarterly basis using Level 2 inputs, including the forward LIBOR 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 LIBOR curve. As of December 31, 2019 and 2020, the Company’s interest rate swap liability was $0 and $0.3 million, which was recorded within other long-term liabilities on the consolidated balance sheets. |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS, NET | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
GOODWILL AND INTANGIBLE ASSETS, NET | ||
GOODWILL AND INTANGIBLE ASSETS, NET | 6. Goodwill The carrying amount of goodwill as of October 2, 2021 and as of December 31, 2020 was $115.2 million and $115.8 million, respectively. The change in the carrying value during the three fiscal quarters ended October 2, 2021 was solely due to fluctuations in foreign currency exchange rates. Intangible Assets Intangible assets, net as of October 2, 2021 consisted of the following (in thousands): October 2, 2021 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 476 $ 14,839 $ 120,737 Patented technology 16,126 70 4,772 11,424 Pool designs 5,728 286 956 5,058 Franchise relationships 1,187 59 694 552 Dealer relationships 160,376 23 27,434 132,965 Non-competition agreements 2,476 — 1,381 1,095 $ 320,993 $ 914 $ 50,076 $ 271,831 The Company recognized $16.6 million of amortization expense related to intangible assets during the three fiscal quarters ended October 2, 2021. Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31,2020 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 The Company recognized $12.2 million of amortization expense related to intangible assets during the three fiscal quarters ended September 26, 2020. The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Year Ended Amortization Expense Remainder of fiscal 2021 $ 5,415 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 180,950 $ 271,831 | 6. Goodwill The following table presents the changes in the carrying value of goodwill during the years ended December 31, 2019 and 2020 (in thousands): Amount Balance as of December 31, 2018 $ 91,782 Acquisition 9,788 Foreign currency translation adjustment 102 Balance as of December 31, 2019 101,672 Acquisition 13,105 Foreign currency translation adjustment 973 Balance as of December 31, 2020 $ 115,750 The Company performed an annual test for goodwill impairment in the fourth quarter of the fiscal year ended December 31, 2019 and 2020 in accordance with Step 1 of ASC 350 and determined that goodwill was not impaired. Intangible Assets Intangible assets, net as of December 31, 2019 consisted of the following (in thousands): December 31, 2019 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 125,600 $ 99 $ 5,032 $ 120,667 Patented technology 16,126 14 1,698 14,442 Pool designs 5,728 59 239 5,548 Franchise relationships 1,187 12 173 1,026 Dealer relationships 123,176 5 8,530 114,651 Non-competition agreements 2,476 — 513 1,963 $ 274,293 $ 189 $ 16,185 $ 258,297 The Company recognized $15.6 million of amortization expense related to intangible assets during the year ended December 31, 2019. Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31, 2020 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 The Company recognized $17.3 million of amortization expense related to intangible assets during the year ended December 31, 2020. The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Amortization Year Ended Expense 2021 $ 21,959 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 182,048 $ 289,473 |
INVENTORIES, NET_2
INVENTORIES, NET | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
INVENTORIES, NET | ||
INVENTORIES, NET | 7. Inventories, net consisted of the following (in thousands): October 2, 2021 December 31,2020 Raw materials $ 57,165 $ 37,010 Finished goods 23,540 27,808 $ 80,705 $ 64,818 | 7. Inventories, net consisted of the following (in thousands): December 31, 2019 2020 Raw materials $ 19,035 $ 37,010 Finished goods 16,576 27,808 $ 35,611 $ 64,818 |
LONG-TERM DEBT_2
LONG-TERM DEBT | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
LONG-TERM DEBT | ||
LONG-TERM DEBT | 8. The components of the Company’s outstanding debt obligations consisted of the following (in thousands): October 2,2021 December 31, 2020 Term loan $ 238,314 $ 228,147 Less: Unamortized discount and debt issuance costs (4,113) (6,651) Total debt 234,201 221,496 Less: Current portion of long-term debt (14,234) (13,042) Total long-term debt $ 219,967 $ 208,454 Revolving Credit Facility On December 18, 2018, the Latham Pool Products entered into an agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC (“Nomura”) that included a revolving line of credit (the “Revolver”) and letters of credit (“Letters of Credit” or collectively with the Revolver, the “Revolving Credit Facility”), as well as a term loan (as described below). The Revolving Credit Facility is available to finance ongoing general corporate and working capital needs with the Revolver of up to $30.0 million. The Revolving Credit Facility matures on December 18, 2023. On April 27, 2021, upon completion of the IPO, the Company used $16.0 million of the net proceeds from the IPO to repay $16.0 million then outstanding on the Revolver. The Revolving Credit Facility allows for either Eurocurrency borrowings, bearing interest ranging from 4.50% to 4.75%, or base rate borrowings, bearing interest ranging from 3.50% to 3.75% depending on the First Lien Net Leverage Ratio, as defined in the Credit Agreement. 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 is equal to the applicable margin times the actual daily amount by which the $30.0 million initial commitment exceeds the sum of the outstanding borrowings under the Revolver and outstanding Letters of Credit obligations. The applicable margin ranges from 0.375% to 0.500% as determined by the Company’s First Lien Net Leverage Ratio as defined in the Credit Agreement. 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 and make prepayments. As of October 2, 2021 and December 31, 2020, the Company was in compliance with all financial-related covenants related to the Credit Agreement. There were no amounts outstanding as of both October 2, 2021 and December 31, 2020, on the Revolving Credit Facility or Letters of Credit. Term Loan Facility On December 18, 2018, in connection with the Acquisition, the Company entered into the Credit Agreement with Nomura to borrow $215.0 million (the “Original Term Loan”). The Company incurred debt issuance costs of $11.5 million related to the transaction. The Original Term Loan was amended on May 29, 2019, to provide additional borrowings of $23.0 million at a discount of $0.7 million (the “First Amendment”) to fund the Narellan Acquisition. Any portion of the First Amendment not used to fund the Narellan Acquisition was required to be applied to repay the First Amendment in an aggregate amount equal to such portion of the First Amendment, without any premium or penalty. On August 6, 2020, the Company entered into a Form of Affiliated Lender Assignment and Assumption with Nomura (the “Assignment”). Under the Assignment, the Company repaid $5.0 million of the outstanding principal balance. On October 14, 2020, the Company entered into a subsequent amendment under the Original Term Loan with Nomura to borrow an additional $20.0 million (the “Second Amendment” and collectively with the Original Term Loan and the First Amendment, the “Term Loan”). The Company accounted for the borrowings under the Second Amendment as new debt and recorded $0.1 million of third-party costs as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet. There were no financing costs incurred with the Second Amendment. The Term Loan has a maturity date of June 18, 2025. Interest and principal payments are due quarterly. On January 25, 2021, the Company entered into a subsequent amendment to the Term Loan with Nomura to borrow an additional $175.0 million (the “Third Amendment” and collectively with the “Term Loan,” the “Amended Term Loan”). In connection with the Third Amendment, the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $5.8 million, commencing March 31, 2021. The amendment did not change the maturity date of the Term Loan and the Amended Term Loan bears interest under the same terms as the Term Loan. The Company accounted for $165.0 million of the borrowings under the Third Amendment as new debt and $10.0 million of the borrowings under the Third Amendment as a debt modification. The Company recorded an aggregate of $1.2 million of debt issuance costs as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet. During the fiscal quarter ended July 3, 2021, in accordance with the terms of the Amended Term Loan, the Company elected to change the terms of the prepayment schedule from an inverse application to a pro rata application and as a result the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $3.6 million, commencing June 30, 2021. The Amended Term Loan allowed for the $175.0 million of proceeds to be distributed to common stockholders. On February 2, 2021, the Company used the proceeds of the Amended Term Loan to repurchase and retire treasury stock of $64.9 million and to pay a dividend to Class A unitholders of $110.0 million. On April 27, 2021, upon completion of the IPO, the Company used $152.7 million of the net proceeds from the IPO to repay $152.7 million of the Amended Term Loan. The Term Loan bears interest at (1) a base rate equal to the highest of (i) the Federal Funds Rate plus 1∕2 of 1 As of October 2, 2021, the unamortized debt issuance costs and discount on the Term Loan were $2.9 million and $1.2 million, respectively. As of December 31, 2020, the unamortized debt issuance costs and discount on the Term Loan were $6.3 million and $0.4 million, respectively. The effective interest rate was 7.24% at October 2, 2021. Interest rate risk associated with the Company’s Credit Agreement is managed through an interest rate swap which the Company executed on April 30, 2020. The swap has an effective date of May 18, 2020 and a termination date of May 18, 2023. Under the terms of the swap, the Company fixed its LIBOR borrowing rate at 0.442% on a notional amount of $200.0 million. The interest rate swap is not designated as a hedging instrument for accounting purposes (see Note 2 and Note 5). Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Year Ended Term Loan Facility Remainder of fiscal 2021 $ 3,558 2022 14,234 2023 14,234 2024 14,234 2025 192,054 $ 238,314 The obligations under the Credit Agreement are guaranteed by certain wholly owned subsidiaries (the “Guarantors”) of the Company as defined in the security 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. | 9. The components of the Company’s outstanding debt obligations consisted of the following (in thousands): December 31, 2019 2020 Term loan $ 232,191 $ 228,147 Less: Unamortized discount and debt issuance costs (8,968) (6,651) Total debt 223,223 221,496 Less: Current portion of long-term debt (6,891) (13,042) Total long-term debt $ 216,332 $ 208,454 Revolving Credit Facility On December 18, 2018, the Latham Pool Products entered into an agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC (“Nomura”) that included a revolving line of credit (the “Revolver”) and letters of credit (“Letters of Credit” or collectively with the Revolver, the “Revolving Credit Facility”), as well as a term loan (as described below). The Revolving Credit Facility was utilized to finance ongoing general corporate and working capital needs with the Revolver of up to $30.0 million. The Revolving Credit Facility matures on December 18, 2023. The Revolving Credit Facility allows for either Eurocurrency borrowings, bearing interest ranging from 4.50% to 4.75%, or base rate borrowings, bearing interest ranging from 3.50% to 3.75% depending on the First Lien Net Leverage Ratio, as defined in the Credit Agreement. 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 is equal to the applicable margin times the actual daily amount by which the $30.0 million initial commitment exceeds the sum of the outstanding borrowings under the Revolver and outstanding Letters of Credit obligations. The applicable margin ranges from 0.375% to 0.500% as determined by the Company’s First Lien Net Leverage Ratio as defined in the Credit Agreement. 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 and make prepayments. As of December 31, 2019 and 2020, the Company was in compliance with all financial-related covenants related to the Credit Agreement. There were no amounts outstanding as of December 31, 2019 and 2020 on the Revolving Credit Facility or Letters of Credit. Term Loan Facility On December 18, 2018, in connection with the Acquisition, the Company entered into the Credit Agreement with Nomura to borrow $215.0 million (the “Original Term Loan”). The Company incurred debt issuance costs of $11.5 million related to the transaction. The Original Term Loan was amended on May 29, 2019, to provide additional borrowings of $23.0 million at a discount of $0.7 million (the “First Amendment”) to fund the Company’s acquisition of Narellan (see Note 3). Any portion of the First Amendment not used to fund the acquisition of Narellan was required to be applied to repay the First Amendment in an aggregate amount equal to such portion of the First Amendment, without any premium or penalty. On August 6, 2020, the Company entered into a Form of Affiliated Lender Assignment and Assumption with Nomura (the “Assignment”). Under the Assignment, the Company repaid $4.975 million of the outstanding principal balance, which was accepted as full repayment of $5.0 million of the outstanding principal balance. The Company treated the $25.0 thousand as a gain on extinguishment of debt and recorded it within interest expense, net in its consolidated statements of operations during the year ended December 31, 2020. On October 14, 2020, the Company entered into a subsequent amendment under the Original Term Loan with Nomura to borrow an additional $20.0 million (the “Second Amendment” and collectively with the Original Term Loan and the First Amendment, the “Term Loan”). The Company accounted for the borrowings under the Second Amendment as new debt and recorded $0.1 million of third party costs as a direct reduction to the carrying amount of long-term debt on the consolidated balance sheet. There were no financing costs incurred with the Second Amendment. The Term Loan has a maturity date of June 18, 2025. Interest and principal payments are due quarterly. The Term Loan bears interest at (1) a base rate equal to the highest of (i) the Federal Funds Rate plus 1∕2 of 1%, (ii) the “prime rate” published in the Money Rates section of the Wall Street Journal and (iii) LIBOR plus 1.00% (2) plus a Loan Margin of (i) 6.00% for Eurocurrency Rate Loans and (ii) 5.00% for Base Rate Loans, as defined in the Credit Agreement. Principal payments under the First Amendment were calculated as 0.629% of the outstanding principal balance. In connection with the Second Amendment, the Company is required to repay the outstanding principal balance of the Term Loan in fixed quarterly payments of $3.3 million, commencing March 31, 2021. The Company was required to make a $1.6 million principal payment for the partial period of October 14, 2020 through December 31, 2020. Outstanding borrowings at December 31, 2019 and 2020 were $223.2 million and $221.5 million, respectively, net of discount and debt issuance costs of $9.0 million and $6.7 million, respectively. In connection with the Term Loan, the Company is subject to various financial reporting, financial and other covenants, including maintaining specific liquidity measurements. Under the Term Loan, the Company is required to make mandatory prepayments based on the Company’s excess cash flow for the year, as follows (as a percentage of the Company’s excess cash flow for the year): Mandatory Prepayment Leverage Ratio Percentage > 3.50:1.00 90 % > 3.00:1.00 and ≤ 3.50:1.00 75 % > 2.50:1.00 and ≤ 3.00:1.00 50 % > 2.00:1.00 and ≤ 2.50:1.00 25 % ≤ 2.00:1.00 0 % Leverage Ratio in the table above is defined as of any date of determination, the ratio of the aggregate principal amount of indebtedness at such date to consolidated earnings before interest, taxes, depreciation and amortization. As of December 31, 2019, the estimated mandatory prepayment to be paid was $0.9 million. There was no estimated mandatory prepayment to be paid as of December 31, 2020. As of December 31, 2020, the current portion of principal due on the Term Loan was $13.0 million, and this amount is shown as a current liability in current maturities of long-term debt on the consolidated balance sheets. There are also negative covenants, including, but not limited to, 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 and make prepayments. As of December 31, 2019 and 2020, the Company was in compliance with all financial-related covenants related to the Term Loan. As of December 31, 2019, the unamortized debt issuance costs and discount on the Term Loan were $8.4 million and $0.5 million, respectively. As of December 31, 2020, the unamortized debt issuance costs and discount on the Term Loan were $6.3 million and $0.4 million, respectively. The effective interest rate was 10.47% and 8.03% for the years ended December 31, 2019 and 2020, respectively. Interest rate risk associated with the Company’s Credit Agreement is managed through an interest rate swap which the Company executed on April 30, 2020. The swap has an effective date of May 18, 2020 and a termination date of May 18, 2023. Under the terms of the swap, the Company fixed its LIBOR borrowing rate at 0.442% on a notional amount of $200.0 million. The interest rate swap is not designated as a hedging instrument for accounting purposes (see Note 2 and Note 5). The Company recorded interest expense associated with the Revolving Credit Facility, Second Amendment and interest rate swap, as follows (in thousands): Year Ended December 31, 2019 2020 Cash interest expense $ 19,488 $ 15,625 Amortization of debt issuance costs 2,968 2,179 Amortization of original issue discount 183 138 Interest rate swap — 334 Gain on extinguishment of debt — (25) Total interest expense $ 22,639 $ 18,251 Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Term Loan Year Ended Facility 2021 $ 13,042 2022 13,042 2023 13,042 2024 13,042 2025 175,979 $ 228,147 The obligations under the Credit Agreement are guaranteed by certain wholly owned subsidiaries (the “Guarantors”) of the Company as defined in the security 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. |
PRODUCT WARRANTIES_2
PRODUCT WARRANTIES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
PRODUCT WARRANTIES | ||
PRODUCT WARRANTIES | 9. The warranty reserve activity consisted of the following (in thousands): Three Fiscal Quarters Ended October 2,2021 September 26, 2020 Balance at the beginning of the year $ 2,882 $ 2,846 Accruals for warranties issued 4,369 2,270 Less: Settlements made (in cash or in kind) (3,825) (2,501) Balance at the end of the year $ 3,426 $ 2,615 | 11. The warranty reserve activity consisted of the following (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ 1,977 $ 2,846 Accruals for warranties issued 3,729 3,966 Warranty liabilities assumed in GLI Acquisition — 118 Less: Settlements made (in cash or in kind) (2,860) (4,048) Balance at the end of the year 2,846 2,882 Less: Current portion of accrued warranty costs (2,663) (2,705) Accrued warranty costs — less current portion $ 183 $ 177 |
NET SALES_2
NET SALES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET SALES | ||
NET SALES | 10. The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 In-ground Swimming Pools $ 285,704 $ 169,681 Covers 94,354 53,528 Liners 111,534 68,259 $ 491,592 $ 291,468 | 12. The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Year Ended December 31, 2019 2020 In-ground Swimming Pools $ 175,033 $ 237,410 Covers 70,984 84,524 Liners 71,958 81,455 $ 317,975 $ 403,389 The allowance for bad debt activity during the years ended December 31, 2019 and 2020 was as follows (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ 1,535 $ 1,322 Bad debt expense 253 358 Write-offs (466) (242) Balance at the end of the year $ 1,322 $ 1,438 |
INCOME TAXES_2
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
INCOME TAXES | 11. The effective income tax rate for the three fiscal quarters ended October 2, 2021 was (39.3)%, compared to 30.6% for the three fiscal quarters ended September 26, 2020. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three fiscal quarters ended October 2, 2021 was primarily attributable to the discrete impact of stock compensation expense pursuant to the Reorganization. The results include pre-tax stock compensation expense of $98.9 million for three fiscal quarters ended October 2, 2021 related to the Reorganization for which there is no associated tax benefit. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three fiscal quarters ended September 26, 2020 was impacted by a variety of factors, primarily stemming from impact of state taxes. The pre-tax income for three fiscal quarters ended September 26, 2020 included losses in tax jurisdictions for which the company did not record a tax benefit, which increased the effective income tax rate for the three fiscal quarters ended September 26, 2020. | 13. 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 are as follows (in thousands): Year Ended December 31, 2019 2020 Income (loss) before income taxes: Domestic $ 9,939 $ 19,609 Foreign (7,153) 3,150 Total $ 2,786 $ 22,759 Current and deferred income tax (benefit) expense is composed of the following (in thousands): Year Ended December 31, 2019 2020 Current income tax (benefit) expense: Domestic $ 5,424 $ 10,342 Foreign 131 1,104 Total current tax (benefit) expense 5,555 11,446 Deferred income tax (benefit) expense: Domestic (10,020) (4,532) Foreign (206) (138) Total deferred tax (benefit) expense (10,226) (4,670) Total income tax (benefit) expense $ (4,671) $ 6,776 The reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows (% of Income Before Income Taxes): Year Ended Year Ended December 31, 2019 December 31, 2020 Federal statutory tax rate 21.0 % 21.0 % Foreign taxes less than U.S. statutory rate 1.1 % 1.2 % State income tax, net of federal benefit (67.2) % 1.4 % Uncertain tax positions 348.2 % 0.8 % Change in valuation allowance (5.9) % (1.1) % GILTI 21.1 % 1.5 % Meals and entertainment 6.8 % 0.5 % Foreign expenses not deductible for tax 56.1 % 1.7 % Transaction costs not deductible for tax 13.3 % 2.0 % Canadian restructuring (562.4) % — Canadian Branch Income 0.0 % 1.8 % Other expenses not deductible for tax (0.1) % (1.0) % (168.0) % 29.8 % The Company continues to maintain valuation allowances in Canada primarily related to tax losses where it believes it is not more likely than not that the losses will be utilized. The following table summarizes changes in the valuation allowance (in thousands): Year Ended December 31, 2019 2020 Balance at January 1 $ (12,300) $ (12,463) Additions (163) (241) Balance at December 31 $ (12,463) $ (12,704) On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the U.S. Tax Cuts and Jobs Act of 2017 (the “Act”). The Act made broad and complex changes to the U.S. tax code, including, but not limited to (1) reducing the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, (2) bonus depreciation that allows for full expensing of qualified property, (3) interest expense deduction limitation rules, and (4) new international tax provisions including, but not limited to, GILTI and Foreign Derived Intangible Income (“FDII”). The Act also required companies to record/pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. The one-time transition tax was based on the Company’s total post-1986 earnings and profits (“E&P”) that were previously deferred for U.S. income tax purposes. The Company did not record a liability for the one-time transition tax for all of its foreign subsidiaries as the Company did not have aggregate E&P from those foreign subsidiaries. During the year ended December 31, 2019, the Company finalized the computations of the income tax effects of the Act. Although the Company has completed its accounting for the effects of the Act, the determination of the Act’s income tax effects may change following future legislation or further interpretation of the Act based on the publication of recently proposed U.S. Treasury regulations and guidance from the Internal Revenue Service and state tax authorities. The Company has elected with respect to its treatment of GILTI to account for taxes on GILTI as incurred. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted in response to the coronavirus (“COVID-19”) pandemic. The CARES Act is aimed at providing assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company’s consolidated financial condition or results of operations for the year ended December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was enacted in further response to the COVID-19 pandemic. The CAA extended many of the provisions enacted by the CARES Act, the extension of which likewise did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020. 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 (“NOL”) 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. Deferred income tax assets and liabilities recorded on the balance sheets as of December 31, 2019 and 2020 consist of the following (in thousands): December 31, 2019 2020 Deferred tax assets: Net operating loss carryforwards $ 12,110 $ 12,099 Inventories, net 680 473 Warranty reserve 649 789 Trade receivables 477 360 Profits interest units 389 760 Section 163(j) 289 — Deferred taxes in equity 257 257 Accrued expenses 224 498 Transaction costs 107 607 Canadian tax credits 86 255 Other 64 216 Gross deferred tax assets 15,332 16,314 Valuation allowance (12,463) (12,704) Total deferred tax asset 2,869 3,610 Less: Foreign deferred tax benefit (206) (345) Total domestic deferred tax asset 2,663 3,265 Deferred tax liabilities: Intangible assets (57,221) (53,874) Property and equipment, net (4,677) (4,120) Prepaid expenses (773) (464) Total deferred tax liabilities (62,671) (58,458) Net deferred tax liabilities $ (60,008) $ (55,193) ASC 740 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. After consideration of all evidence, both positive and negative, the Company concluded that it is more likely than not that it will be unable to realize a portion of its deferred tax assets and that a valuation allowance of $12.7 million is necessary as of December 31, 2020. 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. As of December 31, 2020, the Company had net operating loss (“NOL”) carryforwards of approximately $12.1 million (tax effected), which will be available to offset future taxable income and tax liabilities. The NOL carryforwards expire in calendar years 2026 through 2039. As of December 31, 2020, a valuation allowance of $12.1 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 expect that the potential tax liability would be insignificant. Tax Uncertainties The liability related to uncertain tax positions, exclusive of interest, is $5.4 million at December 31, 2020. Of this amount, $5.4 million, if recognized, would impact the effective tax rate. The Company does not expect this balance to significantly change within the next twelve months. The Company’s policy is to record interest and penalties related to unrecognized tax benefits in the income tax provision (benefit). As of December 31, 2020, the Company had $0.2 million of accrued interest and no accrued penalties. 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 as several combined or consolidated state tax returns and separate state tax returns. In addition, the Company files Canadian and Australian tax returns for its Canadian, Australian, and New Zealand entities. The Company is subject to the regular examination of its income tax returns by tax authorities. The Company has audits ongoing for the year 2018 related to Utah State Income Tax. 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 its provision for taxes. It is possible the outcomes from these examinations will have a material adverse effect on the Company’s financial condition and operating results. Tax years from the fiscal year ended December 31, 2017 through present are open for examination in the U.S. Tax years and tax periods ended December 31, 2016 through present are open for state examination. Tax years and tax periods from June 30, 2017 through present are currently open for examination in Canada. Tax years and tax periods from June 30, 2016 through present are currently open for examination in Australia. Tax years and tax periods from March 31, 2016 through present are currently open for examination in New Zealand. The following is a reconciliation of the beginning and ending amount of uncertain tax positions (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ — $ 9,681 Additions for tax positions taken during prior years — 181 Additions for tax positions taken during the current year 9,681 — Balance at the end of the year $ 9,681 $ 9,862 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Oct. 02, 2021 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 12. SHAREHOLDERS’ EQUITY Equity Structure Prior to Reorganization Prior to the IPO and the Reorganization, the Parent owned 100% of the issued and outstanding common stock of the Company. The capital structure of the Parent consisted of two different classes of limited partnership interests, Class A and Class B units (profits interests). Prior to the Reorganization, none of the Class B units would have been vested for accounting purposes due to the Parent’s $0 Repurchase Right, which applied in the event of a voluntary termination or termination without cause, since it functions as a vesting condition. Equity Structure Subsequent to the Reorganization On April 13, 2021, the Company’s certificate of incorporation was amended, which amended and restated certain terms of the certificate of incorporation. Under the amended certificate of incorporation, the Company had authority to issue 500,000,000 shares of common stock, par value $0.0001 per share. On April 12, 2021, the Company’s board of directors declared and on April 13, 2021, the Company effected a 109,673,709-for-one stock split of its issued and outstanding shares of common stock. As a part of the equity Reorganization, on April 22, 2021, 194,207,115 Class A units converted into 97,187,596 shares of common stock and 26,158,894 Class B units converted into 4,145,987 shares of common stock and 8,340,126 shares of unvested restricted stock. Refer to Note 1 for detail regarding the Company’s Reorganization and conversion of Class A and Class B units to common and restricted shares. Amendment and Restatement of Certificate of Incorporation On April 22, 2021, the Company’s certificate of incorporation was further amended and restated to, among other things, increase the authorized shares to 1,000,000,000, of which 900,000,000 are shares of common stock, par value $0.0001 per share and 100,000,000 are shares of preferred stock, par value 0.0001 per share. As of October 2, 2021 and December 31, 2020, 112,153,832 and 118,854,249 shares of common stock are issued and outstanding for accounting purposes, respectively. |
PROFITS INTEREST UNITS_2
PROFITS INTEREST UNITS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
PROFITS INTEREST UNITS | ||
PROFITS INTEREST UNITS | 13. Prior to the Reorganization, the Company’s Parent granted PIUs in the form of Class B units of the Parent to certain key employees and directors for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of the Company. The following table summarizes the activity for all PIUs during the three fiscal quarters ended October 2, 2021 and the year ended December 31, 2020: Weighted- Average Grant- Number of PIUs Date Fair Value Balance at January 1, 2020 21,734,170 $ 0.60 Granted 7,843,107 0.35 Forfeited (2,152,315) 0.43 Balance at December 31, 2020 27,424,962 Granted — Forfeited (1,266,068) 0.34 Balance at April 21, 2021 26,158,894 Converted at IPO in connection with the Reorganization (26,158,894) $ 0.43 Balance at October 2, 2021 — On January 29, 2021 an employee holder of PIUs terminated his employment with the Company, at which time all 1,055,057 of his performance-vesting units were forfeited. At the time of his termination, the employee held 527,528 of time-vesting units, of which 211,011 time-vesting units were vested. Per the terms of his termination agreement, the Company accelerated the vesting of an additional 105,506 time-vesting units, such that the total time-vesting units vested were equal to 316,517 upon his termination and the remaining 211,011 of unvested time-vesting units were forfeited upon his termination. As the employee’s profits interest units had not vested from an accounting perspective, the retention and immediate vesting of the retained time-vesting units was accounted for as a cancellation of the original award and a new grant under the revised terms. A cumulative catch-up charge of $1.1 million was recorded during the fiscal quarter ended April 3, 2021 to reflect the incremental fair value of the awards as of the date of the modification, as compared to the grant-date fair value. | 16. Total stock-based compensation expense related to the PIUs was $0.8 million and $1.2 million during the years ended December 31, 2019 and 2020, respectively, which is recorded in selling, general and administrative expense in the consolidated statements of operations. There was $6.4 million and $9.8 million of unrecognized compensation expense related to the units as of December 31, 2019 and 2020, respectively. The following table summarizes the activity for all PIUs during the years ended December 31, 2019 and 2020: Weighted-Average Grant-Date Number of PIUs Fair Value Balance at January 1, 2019 20,890,124 $ 0.41 Granted 3,692,699 $ 0.38 Forfeited (2,848,653) $ 0.41 Balance at December 31, 2019 21,734,170 Granted 7,843,107 $ 0.60 Forfeited (2,152,315) $ 0.35 Balance at December 31, 2020 27,424,962 $ 0.43 As of December 31, 2020, there are 18,011,127 Performance PIUs which are not expected to vest as the performance condition is not considered to be probable. As of December 31, 2020, there are 9,413,835 Time-Vesting PIUs which will continue to vest over the employees’ requisite service periods. As of December 31, 2019 and 2020, none of the Time-Vesting PIUs have vested for accounting purposes due to the Parent’s $0 Repurchase Right. The Company uses the following assumptions in conjunction with the Contingent Claims Analysis Model to estimate the fair value of the PIUs: Year Ended Year Ended December 31, 2019 December 31, 2020 Expected volatility 49.00 % 55.00 % Risk-free interest rate 1.90 % 0.20 % Expected term (in years) 4.6 3.2 % Expected dividend yield — % — % During the year ended December 31, 2020, the Company recorded $0.6 million in stock-based compensation expense related to the settlement of the Contingent Consideration (see Note 3 and Note 5), which is recorded in selling, general and administrative expense in the consolidated statements of operations. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Oct. 02, 2021 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 14. On April 12, 2021, the Company’s stockholders approved the 2021 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), which became effective on April 22, 2021, upon pricing of the IPO. The Omnibus Incentive Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based and cash-based awards. The maximum aggregate number of shares reserved for issuance under the Omnibus Incentive Plan is 13,170,212 shares. The maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director under the Omnibus Incentive Plan during any one fiscal year, together with any cash fees paid to such non-employee director during such fiscal year, will be $750 thousand. Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021 the Company granted 8,340,126 of restricted stock awards, 341,301 of restricted stock units and 886,862 of option awards under the Omnibus Incentive Plan to employees of the Company. Of the 8,340,126 restricted stock awards granted, (i) 6,799,414 vest every six months in equal installments beginning on December 27, 2021 and ending on December 27, 2023, and (ii) 1,540,712 vest every six months in equal installments, beginning on December 27, 2021 and ending on December 27, 2024. Of the 341,301 restricted stock unit awards granted, (i) 251,828 vest 1/3 1/3 1/3 Stock-based compensation expense for the three fiscal quarters ended October 2, 2021 was $104.6 million. Stock-based compensation expense for the three fiscal quarters ended September 26, 2020 was $1.4 million. Stock-based compensation expense of $6.8 million and $97.8 million was recorded in cost of sales and selling, general and administrative expense, respectively, for the three fiscal quarters ended October 2, 2021. Stock-based compensation expense for the three fiscal quarters ended September 26, 2020 was recorded in selling, general and administrative expense on the condensed consolidated statements of operations. Of the $104.6 million of stock-based compensation expense recorded during the three fiscal quarters ended October 2, 2021, $0.5 million was due to the accelerated vesting of restricted stock and $49.0 million was due to the modification as a result of the Reorganization. Refer to Note 12 above for detail regarding the Company’s equity-based awards issued in the form of PIUs prior to the Reorganization and IPO. As of October 2, 2021, total unrecognized stock-based compensation expense related to all unvested stock-based awards of $106.2 million, which is expected to be recognized over a weighted-average period of 1.49 years. The following table sets forth the significant assumptions used in the Black-Scholes option-pricing model on a weighted-average basis to determine the fair value of option awards granted: Three Fiscal Quarters Ended October 2, 2021 Risk-free interest rate 0.63 % Expected volatility 38.16 % Expected term (in years) 6.25 Expected dividend yield 0.00 % Restricted Stock Awards The following table represents the Company’s restricted stock awards activity during the three fiscal quarters ended October 2, 2021: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2021 — $ — Granted 8,340,126 19.00 Vested (84,687) — Forfeited (559,682) 19.00 Outstanding at October 2, 2021 7,695,757 $ 19.00 Restricted Stock Units The following table represents the Company’s restricted stock units activity during the three fiscal quarters ended October 2, 2021: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2021 — $ — Granted 341,301 19.00 Vested — — Forfeited (16,767) 19.00 Outstanding at October 2, 2021 324,534 $ 19.00 Stock Options The following table represents the Company’s stock option activity during the three fiscal quarters ended October 2, 2021: Weighted- Weighted-Average Average Exercise Remaining Aggregate Shares Price per Share Contract Term Intrinsic Value (in years) (in thousands) Outstanding on January 1, 2021 — $ — — $ — Granted 886,862 19.00 Exercised — Forfeited (81,092) Outstanding at October 2, 2021 805,770 $ 19.00 9.55 $ — Vested and expected to vest at October 2, 2021 805,770 $ 19.00 9.55 $ — Options exercisable at October 2, 2021 — — — — 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 The weighted average grant-date fair value of stock options granted during the three fiscal quarters ended October 2, 2021 was $7.20 per share. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET INCOME (LOSS) PER SHARE | ||
NET INCOME (LOSS) PER SHARE | 15. Basic and diluted net income (loss) per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Numerator: Net (loss) income attributable to common stockholders $ (56,361) $ 18,703 Denominator: Weighted-average common shares outstanding Basic 110,121,240 96,665,708 Diluted 110,121,240 97,122,885 Net (loss) income per share attributable to common stockholders: Basic $ (0.51) $ 0.19 Diluted $ (0.51) $ 0.19 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 income (loss) per share because the effect was anti-dilutive: Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Restricted stock awards 6,813,166 47,446 Restricted stock units 84,866 — Stock options 4,235 — | 18. Basic and diluted net income per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Year Ended December 31, 2019 2020 Numerator: Net income attributable to common stockholders $ 7,457 $ 15,983 Denominator: Weighted-average common shares outstanding Basic 95,032,265 101,606,966 Diluted 95,400,528 102,602,738 Net income per share attributable to common stockholders Basic $ 0.08 $ 0.16 Diluted $ 0.08 $ 0.16 There were no potentially dilutive securities outstanding during the year ended December 31, 2019. 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 income per share because the effect was anti-dilutive: Year Ended December 31, 2019 2020 Restricted stock awards 97,718 22,524 |
RELATED PARTY TRANSACTIONS_2
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
RELATED PARTY TRANSACTIONS | ||
RELATED PARTY TRANSACTIONS | 16. BrightAI Services Starting in 2020, BrightAI rendered services to the Company, for which the cost was capitalized as internal-use software. A co-founder of BrightAI Services has served on the Company’s board of directors since December 9, 2020. During the three fiscal quarters ended October 2, 2021 and the year ended December 31, 2020, the Company incurred $1.9 million and $0.5 million, respectively, associated with services performed by BrightAI, which is recorded as construction in progress within property and equipment, net on the condensed consolidated balance sheet as of October 2, 2021. As of October 2, 2021 and December 31, 2020, the Company had accounts payable-related party to BrightAI of $1.1 million and $0.5 million, respectively. There were no services rendered by BrightAI during the three fiscal quarters ended September 26, 2020. Expense Reimbursement and Management Fees The Company had an expense reimbursement agreement (the “management fee arrangement”) with the Sponsor and Wynnchurch Capital, L.P. for ongoing consulting and advisory services. The management fee arrangement provided for the aggregate payment of up to $1.0 million each year for reimbursement of expenses incurred with services provided and, depending on the extent of services provided, management fees. The management fee arrangement terminated upon consummation of the Company’s IPO. The Company entered into a Stockholders’ Agreement with 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. There were no management fees incurred by the Company during the three fiscal quarters ended October 2, 2021 and September 26, 2020. The Company reimbursed less than $0.1 million of out-of-pocket costs and expenses to the Sponsor and Wynnchurch Capital, L.P. during both the three fiscal quarters ended October 2, 2021 and September 26, 2020. As of October 2, 2021, there were no outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. As of September 26, 2020, there was less than $0.1 million outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. Operating Lease In May 2019, in connection with the Narellan Acquisition, the Company assumed an operating lease for the manufacture, sale and storage of swimming pools and associated equipment with Acquigen Pty Ltd, which is owned by an employee who is also a shareholder of the Company. The lease expires in June 2028. As of October 2, 2021 and December 31, 2020, future minimum lease payments related to this lease totaled $3.6 million and $4.2 million, respectively. The Company recognized $0.1 million of rent expense related to this lease during each of the fiscal quarters ended October 2, 2021 and September 26, 2020, as well as $0.4 million and $0.3 million of rent expense during the three fiscal quarters ended October 2, 2021 and September 26, 2020, which is recognized within selling, general and administrative expense on the condensed consolidated statements of operations. | 19. BrightAI Services Starting in 2020, BrightAI rendered services to the Company, for which the cost was capitalized as internal-use software. A co-founder of BrightAI Services has served on the Company’s board of directors since December 9, 2020. During the year ended December 31, 2020, the Company incurred $0.5 million associated with services performed by BrightAI, which is recorded as construction in progress within in property and equipment, net and accounts payable — related party on the consolidated balance sheet as of December 31, 2020. Expense Reimbursement and Management Fees The Company has an expense reimbursement agreement (the “management fee arrangement”) with the Sponsor and Wynnchurch Capital, L.P. for ongoing consulting and advisory services. The management fee arrangement provides for the aggregate payment of up to $1.0 million each year for reimbursement of expenses incurred with services provided and, depending on the extent of services provided, management fees. The management fee arrangement will terminate upon consummation of the Company’s initial public offering. The Company expensed $0.5 million of management fees during the year ended December 31, 2019 and expensed $47.7 thousand of reimbursement expenses during the year ended December 31, 2020. These fees are reported in selling, general and administrative expense in the consolidated statements of operations. As of December 31, 2019 and 2020, there were no outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. Operating Lease In May 2019, in connection with the Narellan Acquisition, the Company assumed an operating lease for the manufacture, sale and storage of swimming pools and associated equipment with Acquigen Pty Ltd, which is owned by an employee who is also a shareholder of the Company. The lease expires in June 2028. As of December 31, 2019 and 2020, future minimum lease payments totaled $4.3 million and $4.2 million, respectively, related to this lease. The Company recognized $0.2 million and $0.4 million of rent expense related to this lease during the years ended December 31, 2019 and 2020, respectively, which is recognized within selling, general and administrative expense on the consolidated statements of operations. |
SEGMENT AND GEOGRAPHIC INFORM_5
SEGMENT AND GEOGRAPHIC INFORMATION | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SEGMENT AND GEOGRAPHIC INFORMATION | ||
SEGMENT AND GEOGRAPHIC INFORMATION | 17. Segment Information During 2020, the Company made operational changes in how its CODM manages the business including organizational alignment, performance assessment and resource allocation. The segment disclosure is based on the intention to provide the users of the financial statements with a view of the business from the Company’s perspective. The Company conducts its business as one operating 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): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Net sales United States $ 385,259 $ 234,439 Canada 76,619 38,197 Australia 18,581 13,187 New Zealand 5,277 2,357 Other 5,856 3,288 Total $ 491,592 $ 291,468 Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): October 2, 2021 December 31, 2020 Long-lived assets United States $ 48,158 $ 37,680 Canada 4,358 3,050 Australia 4,394 4,979 New Zealand 1,857 1,648 Total $ 58,767 $ 47,357 | 20. Segment Information During 2020, the Company made operational changes in how its CODM manages the business including organizational alignment, performance assessment and resource allocation. The segment disclosure is based on the intention to provide the users of the financial statements with a view of the business from the Company’s perspective. The Company conducts its business as one operating and reportable 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, 2019 2020 Net sales United States $ 257,786 $ 325,716 Canada 43,157 50,499 Australia 12,126 20,181 New Zealand 2,432 3,984 Other 2,474 3,009 Total $ 317,975 $ 403,389 Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): December 31, 2019 2020 Long-lived assets United States $ 30,433 $ 37,680 Canada 2,279 3,050 Australia 4,094 4,979 New Zealand 1,039 1,648 Total $ 37,845 $ 47,357 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SUBSEQUENT EVENT | ||
SUBSEQUENT EVENTS | 18. Debt Amendment and Acquisition On November 24, 2021, the Company entered into a subsequent amendment to the Amended Term Loan (the “Fifth Amendment”) with Nomura to provide for incremental term loans in an aggregate principal amount of $50.0 million (the “Incremental Term Loans”). The Incremental Term Loans will constitute a single class of term loans with the existing Amended Term Loan and will have terms identical including with respect to, among other things, maturity, the interest rate and amortization. The other terms of the existing Amended Term Loan as previously disclosed remain unchanged. In connection with the Fifth Amendment and the Amended Term Loan, the Company is required to repay the outstanding principal balance in fixed quarterly payments of $4.3 million, commencing December 31, 2021. On November 24, 2021, the Incremental Term Loans, along with cash on hand, were used to finance the acquisition of Trojan Leisure Products, LLC d/b/a Radiant Pools (“Radiant Acquisition”) and to pay the fees and expenses incurred in connection with the Radiant Acquisition and the Fifth Amendment. The purchase price for the Radiant Acquisition was $90.0 million, subject to certain adjustments, including for working capital as compared to an agreed target, and certain indebtedness, cash and transaction expenses. | 22. Debt Recapitalization On January 25, 2021, the Company entered into a subsequent amendment to the Term Loan with Nomura to borrow an additional $175.0 million (the “Third Amendment” and collectively with the “Term Loan,” the “Amended Term Loan”). In connection with the Third Amendment, the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $5.8 million, commencing March 31, 2021. The amendment did not change the maturity date of the Term Loan and the Amended Term Loan bears interest under the same terms as the Term Loan. The Company accounted for $165.0 million of the borrowings under the Third Amendment as new debt and $10.0 million of the borrowings under the Third Amendment as a debt modification. The Company recorded an aggregate of $1.2 million of debt issuance costs as a direct reduction to the carrying amount of long-term debt on the consolidated balance sheet. The Amended Term Loan allowed for the $175.0 million of proceeds to be distributed to common stockholders. On February 2, 2021, the Company used the proceeds of the Amended Term Loan to repurchase and retire treasury stock of $64.9 million and pay a dividend to Class A unitholders of $110.0 million. |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The consolidated balance sheet at December 31, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of October 2, 2021 and for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of October 2, 2021 and results of operations for the three fiscal quarters ended October 2, 2021 and September 26, 2020 and cash flows for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been made. The Company’s results of operations for the three fiscal quarters ended October 2, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021. | Basis of Presentation The accompanying consolidated financial statements and accompanying 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 | Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. | 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 | 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. Historically, net sales and net income are highest during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. | 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 during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales. |
Accounting Policies | Accounting Policies Refer to the Company’s Audited Consolidated Financial Statements herein for a discussion of the Company’s accounting policies, as updated below. | |
Stock-Based Compensation | Stock-based Compensation Stock-based compensation is measured and recognized based on the grant date fair value of the awards. The Class B units of the Parent were granted to employees in the form of Profits Interest Units (“PIUs”). The Company determined the grant date fair value of PIUs using the Black-Scholes option pricing model. As part of the Reorganization, the vested and unvested PIUs of the Parent, were converted on a pro rata basis into equivalent restricted stock units and restricted stock awards of the Company’s underlying common stock. The fair value of the awards is expensed 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. 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 PIUs 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. The Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The Company utilized a dividend yield of zero, as it had 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. Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021, the Company effected its Omnibus Incentive Plan in which it granted to certain employees of the Company restricted stock awards, restricted stock units and option awards inclusive of the as converted Class B units as a result of the Reorganization (see Note 14). | Stock-Based Compensation Prior to the Reorganization, certain of the Company’s employees, directors and officers have been granted profits interest units (“PIUs”) in the form of Class B units in the Company’s parent entity, Latham Investment Holdings, LP (“Parent”). As the employees and officers provide services to the Company, the stock-based compensation is deemed to be for the benefit of the Company (see Note 16). The Company records an allocation of stock-based compensation expense based on the fair value of the award at grant date from its Parent and recognizes a corresponding capital contribution in additional paid-in capital. The Company accounts for the PIUs as equity classified awards. PIUs are measured at fair value on the grant date. The Company estimates the grant-date fair value of PIUs using the Contingent Claims Analysis Model, which uses the risk-free rate, expected term, volatility and dividend yield as inputs. A portion of the PIUs vest in five equal annual installments, based on continued service (“Time Vesting PIUs”). The Company recognizes the grant date fair value of these Time Vesting PIUs as an expense over the employee’s requisite service period. However, the Parent has a repurchase right for $0 per share until the third anniversary of the Acquisition in the event of voluntary termination or termination without cause (the “$0 Repurchase Right”). The Company will reverse stock-based compensation expense in the event that the Parent exercises the $0 Repurchase Right since it functions as a vesting condition. In the event of a change-in-control event, the Company will immediately recognize the unrecognized stock-based compensation expense related to the unvested Time Vesting PIUs. The remaining units (the “Performance PIUs”) will vest upon the consummation of a change-in-control, as defined in the Parent’s partnership agreement, a performance condition and the achievement of either a specified internal rate of return or a specific return on the Sponsor’s investment, both of which are market conditions. As the Performance PIUs contain both performance and market conditions, compensation expense for those awards will be equal to the grant date fair value of all awards for which the performance condition is met and the requisite service period is satisfied regardless of whether the market conditions are ultimately satisfied. No stock-based compensation expense has been recognized to-date for the remaining units as the Company has not deemed the performance condition to be probable. The Company accounts for forfeitures of stock-based awards as they occur rather than applying an estimated forfeiture rate to stock-based compensation expense. |
Equity Method Investments | 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. 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 from equity method investment in the condensed 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 condensed consolidated statements of operations on a three-month lag. The Company recorded its interest in the net earnings of Premier Pools & Spas of $1.8 million for the three fiscal quarters ended October 2, 2021, which included a $0.2 million adjustment for the amortization of basis differences, within earnings from equity method investment in the condensed consolidated statements of operations during the three fiscal quarters ended October 2, 2021. As the Company initially invested in Premier Pools & Spas on October 30, 2020, there was no earnings from equity method investment recorded during the three fiscal quarters ended September 26, 2020. The Company received distributions of $2.2 million during the three fiscal quarters ended October 2, 2021. For presentation in the condensed 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 be 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 be 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 condensed consolidated statements of operations in the period the impairment occurs. | 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. 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 (losses) from equity method investment in the consolidated statements of operations on a three-month lag. Accordingly, the consolidated statement of operations for the year ended December 31, 2020 does not reflect any proportionate share of earnings or losses of Premier Pools & Spas. 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. |
Recently Adopted Accounting Standards | Recently Issued Accounting Pronouncements The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. In February 2016, the FASB issued ASU 2016-02 , Leases (Topic 842) ASU No. 2018-11, Leases (Topic 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments — Credit Losses Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) public entities, ASU 2020-01 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2020-01 is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. The Company is currently evaluating the impact that the adoption of ASU 2020-01 will have on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope | Recently Adopted Accounting Standards In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement period and the explicit requirement to disclose the range and weighted-average of significant unobservable inputs used for Level 3 fair value measurements. The other provisions of ASU 2018-13 include eliminated and modified disclosure requirements. For all entities, this guidance is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2018-13 as of the required effective date of January 1, 2020. The adoption of ASU 2018-13 did not have a material impact on the Company’s consolidated financial statements. |
ACQUISITIONS (Tables)_2
ACQUISITIONS (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
ACQUISITIONS | ||
Summary of purchase price allocation | (in thousands) October 22, 2020 Total consideration $ 79,743 Allocation of purchase price: Cash 5,007 Trade receivables 10,639 Inventories 11,854 Prepaid expenses and other current assets 3,949 Property and equipment 1,402 Intangible assets 46,700 Total assets acquired 79,551 Accounts payable 3,536 Accrued expenses and other current liabilities 8,853 Other long-term liabilities 524 Total liabilities assumed 12,913 Total fair value of net assets acquired, excluding goodwill: 66,638 Goodwill $ 13,105 | |
Schedule of purchase price to specific intangible asset categories | Fair Value Amortization Period Definite-lived intangible assets: (in thousands) (in years) Trade names $ 9,500 9 Dealer relationships 37,200 8 $ 46,700 | |
Schedule of pro forma financial information | Three Fiscal Quarters Ended (in thousands) September 26,2020 Net sales $ 345,200 Net loss $ 21,952 | Year Ended December 31, (in thousands) 2019 2020 Net sales $ 382,029 $ 462,802 Net income $ 6,066 $ 26,344 |
FAIR VALUE MEASUREMENTS (Tabl_2
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
Contingent consideration | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Schedule of significant unobservable inputs for fair value measurements | The Monte Carlo simulation utilized the following unobservable inputs to determine the fair value of the Contingent Consideration as of December 31, 2019: Year Ended December 31, 2019 EBITDA risk adjustment 17.30 % Annual EBITDA volatility 55.00 % Risk-free rate of return 2.10 % | |
Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Schedule of financial liabilities at fair value on a recurring basis | October 2, 2021 December 31, 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 234,201 $ 235,372 $ 221,496 $ 221,081 | The following table sets forth the carrying amount and fair value of the term loan (in thousands): December 31, 2019 2020 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Term loan $ 223,223 $ 220,712 $ 221,496 $ 221,081 |
GOODWILL AND INTANGIBLE ASSET_7
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
GOODWILL AND INTANGIBLE ASSETS, NET | ||
Schedule of Intangible assets | Intangible assets, net as of October 2, 2021 consisted of the following (in thousands): October 2, 2021 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 476 $ 14,839 $ 120,737 Patented technology 16,126 70 4,772 11,424 Pool designs 5,728 286 956 5,058 Franchise relationships 1,187 59 694 552 Dealer relationships 160,376 23 27,434 132,965 Non-competition agreements 2,476 — 1,381 1,095 $ 320,993 $ 914 $ 50,076 $ 271,831 Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31,2020 Gross Foreign Carrying Currency Accumulated Amount Translation Amortization Net Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 | Intangible assets, net as of December 31, 2019 consisted of the following (in thousands): December 31, 2019 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 125,600 $ 99 $ 5,032 $ 120,667 Patented technology 16,126 14 1,698 14,442 Pool designs 5,728 59 239 5,548 Franchise relationships 1,187 12 173 1,026 Dealer relationships 123,176 5 8,530 114,651 Non-competition agreements 2,476 — 513 1,963 $ 274,293 $ 189 $ 16,185 $ 258,297 The Company recognized $15.6 million of amortization expense related to intangible assets during the year ended December 31, 2019. Intangible assets, net as of December 31, 2020 consisted of the following (in thousands): December 31, 2020 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 135,100 $ 1,047 $ 10,258 $ 125,889 Patented technology 16,126 155 3,452 12,829 Pool designs 5,728 629 648 5,709 Franchise relationships 1,187 130 470 847 Dealer relationships 160,376 52 17,697 142,731 Non-competition agreements 2,476 — 1,008 1,468 $ 320,993 $ 2,013 $ 33,533 $ 289,473 |
Schedule of estimated amortization expense related to definite-lived intangible assets | The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Year Ended Amortization Expense Remainder of fiscal 2021 $ 5,415 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 180,950 $ 271,831 | The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands): Estimated Future Amortization Year Ended Expense 2021 $ 21,959 2022 21,959 2023 21,768 2024 20,948 2025 20,791 Thereafter 182,048 $ 289,473 |
INVENTORIES, NET (Tables)_2
INVENTORIES, NET (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
INVENTORIES, NET | ||
Schedule of inventories, net | Inventories, net consisted of the following (in thousands): October 2, 2021 December 31,2020 Raw materials $ 57,165 $ 37,010 Finished goods 23,540 27,808 $ 80,705 $ 64,818 | Inventories, net consisted of the following (in thousands): December 31, 2019 2020 Raw materials $ 19,035 $ 37,010 Finished goods 16,576 27,808 $ 35,611 $ 64,818 |
LONG-TERM DEBT (Tables)_2
LONG-TERM DEBT (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
LONG-TERM DEBT | ||
Components of the Company's outstanding debt obligations | The components of the Company’s outstanding debt obligations consisted of the following (in thousands): October 2,2021 December 31, 2020 Term loan $ 238,314 $ 228,147 Less: Unamortized discount and debt issuance costs (4,113) (6,651) Total debt 234,201 221,496 Less: Current portion of long-term debt (14,234) (13,042) Total long-term debt $ 219,967 $ 208,454 | The components of the Company’s outstanding debt obligations consisted of the following (in thousands): December 31, 2019 2020 Term loan $ 232,191 $ 228,147 Less: Unamortized discount and debt issuance costs (8,968) (6,651) Total debt 223,223 221,496 Less: Current portion of long-term debt (6,891) (13,042) Total long-term debt $ 216,332 $ 208,454 |
Components of interest expense | Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Year Ended Term Loan Facility Remainder of fiscal 2021 $ 3,558 2022 14,234 2023 14,234 2024 14,234 2025 192,054 $ 238,314 | The Company recorded interest expense associated with the Revolving Credit Facility, Second Amendment and interest rate swap, as follows (in thousands): Year Ended December 31, 2019 2020 Cash interest expense $ 19,488 $ 15,625 Amortization of debt issuance costs 2,968 2,179 Amortization of original issue discount 183 138 Interest rate swap — 334 Gain on extinguishment of debt — (25) Total interest expense $ 22,639 $ 18,251 |
Principal payments due on the outstanding debt | Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands): Term Loan Year Ended Facility 2021 $ 13,042 2022 13,042 2023 13,042 2024 13,042 2025 175,979 $ 228,147 |
PRODUCT WARRANTIES (Tables)_2
PRODUCT WARRANTIES (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
PRODUCT WARRANTIES | ||
Summary of Warranty reserve activity | The warranty reserve activity consisted of the following (in thousands): Three Fiscal Quarters Ended October 2,2021 September 26, 2020 Balance at the beginning of the year $ 2,882 $ 2,846 Accruals for warranties issued 4,369 2,270 Less: Settlements made (in cash or in kind) (3,825) (2,501) Balance at the end of the year $ 3,426 $ 2,615 | The warranty reserve activity consisted of the following (in thousands): Year Ended December 31, 2019 2020 Balance at the beginning of the year $ 1,977 $ 2,846 Accruals for warranties issued 3,729 3,966 Warranty liabilities assumed in GLI Acquisition — 118 Less: Settlements made (in cash or in kind) (2,860) (4,048) Balance at the end of the year 2,846 2,882 Less: Current portion of accrued warranty costs (2,663) (2,705) Accrued warranty costs — less current portion $ 183 $ 177 |
NET SALES (Tables)_2
NET SALES (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET SALES | ||
Summary of disaggregation of net sales by product line | The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 In-ground Swimming Pools $ 285,704 $ 169,681 Covers 94,354 53,528 Liners 111,534 68,259 $ 491,592 $ 291,468 | The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Year Ended December 31, 2019 2020 In-ground Swimming Pools $ 175,033 $ 237,410 Covers 70,984 84,524 Liners 71,958 81,455 $ 317,975 $ 403,389 |
PROFITS INTEREST UNITS (Table_2
PROFITS INTEREST UNITS (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
PROFITS INTEREST UNITS | |
Summary of the activity for all PIUs | Weighted- Average Grant- Number of PIUs Date Fair Value Balance at January 1, 2020 21,734,170 $ 0.60 Granted 7,843,107 0.35 Forfeited (2,152,315) 0.43 Balance at December 31, 2020 27,424,962 Granted — Forfeited (1,266,068) 0.34 Balance at April 21, 2021 26,158,894 Converted at IPO in connection with the Reorganization (26,158,894) $ 0.43 Balance at October 2, 2021 — |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Oct. 02, 2021 | |
STOCK-BASED COMPENSATION | |
Summary of significant assumptions used in the Black-Scholes option-pricing model on a weighted-average basis to determine the fair value of option awards granted | The following table sets forth the significant assumptions used in the Black-Scholes option-pricing model on a weighted-average basis to determine the fair value of option awards granted: Three Fiscal Quarters Ended October 2, 2021 Risk-free interest rate 0.63 % Expected volatility 38.16 % Expected term (in years) 6.25 Expected dividend yield 0.00 % |
Summary of restricted stock awards activity | The following table represents the Company’s restricted stock awards activity during the three fiscal quarters ended October 2, 2021: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2021 — $ — Granted 8,340,126 19.00 Vested (84,687) — Forfeited (559,682) 19.00 Outstanding at October 2, 2021 7,695,757 $ 19.00 |
Summary of restricted stock units activity | The following table represents the Company’s restricted stock units activity during the three fiscal quarters ended October 2, 2021: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2021 — $ — Granted 341,301 19.00 Vested — — Forfeited (16,767) 19.00 Outstanding at October 2, 2021 324,534 $ 19.00 |
Summary of stock option activity | The following table represents the Company’s stock option activity during the three fiscal quarters ended October 2, 2021: Weighted- Weighted-Average Average Exercise Remaining Aggregate Shares Price per Share Contract Term Intrinsic Value (in years) (in thousands) Outstanding on January 1, 2021 — $ — — $ — Granted 886,862 19.00 Exercised — Forfeited (81,092) Outstanding at October 2, 2021 805,770 $ 19.00 9.55 $ — Vested and expected to vest at October 2, 2021 805,770 $ 19.00 9.55 $ — Options exercisable at October 2, 2021 — — — — |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
NET INCOME (LOSS) PER SHARE | ||
Schedule of basic and diluted earnings (loss) per share | Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Numerator: Net (loss) income attributable to common stockholders $ (56,361) $ 18,703 Denominator: Weighted-average common shares outstanding Basic 110,121,240 96,665,708 Diluted 110,121,240 97,122,885 Net (loss) income per share attributable to common stockholders: Basic $ (0.51) $ 0.19 Diluted $ (0.51) $ 0.19 | Basic and diluted net income per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Year Ended December 31, 2019 2020 Numerator: Net income attributable to common stockholders $ 7,457 $ 15,983 Denominator: Weighted-average common shares outstanding Basic 95,032,265 101,606,966 Diluted 95,400,528 102,602,738 Net income per share attributable to common stockholders Basic $ 0.08 $ 0.16 Diluted $ 0.08 $ 0.16 |
Schedule of antidilutive securities excluded from computation of dilutive net income per share | Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Restricted stock awards 6,813,166 47,446 Restricted stock units 84,866 — Stock options 4,235 — | Year Ended December 31, 2019 2020 Restricted stock awards 97,718 22,524 |
SEGMENT AND GEOGRAPHIC INFORM_6
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SEGMENT AND GEOGRAPHIC INFORMATION | ||
Schedule of Net sales by geography | Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): October 2, 2021 December 31, 2020 Long-lived assets United States $ 48,158 $ 37,680 Canada 4,358 3,050 Australia 4,394 4,979 New Zealand 1,857 1,648 Total $ 58,767 $ 47,357 | 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, 2019 2020 Net sales United States $ 257,786 $ 325,716 Canada 43,157 50,499 Australia 12,126 20,181 New Zealand 2,432 3,984 Other 2,474 3,009 Total $ 317,975 $ 403,389 |
Schedule of Long-lived assets by geographic area | 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): Three Fiscal Quarters Ended October 2, 2021 September 26, 2020 Net sales United States $ 385,259 $ 234,439 Canada 76,619 38,197 Australia 18,581 13,187 New Zealand 5,277 2,357 Other 5,856 3,288 Total $ 491,592 $ 291,468 | Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands): December 31, 2019 2020 Long-lived assets United States $ 30,433 $ 37,680 Canada 2,279 3,050 Australia 4,094 4,979 New Zealand 1,039 1,648 Total $ 37,845 $ 47,357 |
NATURE OF THE BUSINESS (Detai_2
NATURE OF THE BUSINESS (Details) - USD ($) | Apr. 27, 2021 | Apr. 22, 2021 | Oct. 20, 2020 | Oct. 14, 2020 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||||||
Issuance of common stock (in shares) | 21,666,653 | 21,666,653 | 758,694 | 758,694 | 3,548,568 | ||
Class A units | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued upon conversion of units | 97,187,596 | ||||||
Class B units | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued upon conversion of units | 4,145,987 | ||||||
IPO | |||||||
Subsequent Event [Line Items] | |||||||
Issuance of common stock (in shares) | 23,000,000 | ||||||
Net proceeds from the IPO | $ 399.3 | ||||||
Underwriters Option | |||||||
Subsequent Event [Line Items] | |||||||
Issuance of common stock (in shares) | 3,000,000 |
SUMMARY OF SIGNIFICANT ACCOU_15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | |
Schedule of Equity Method Investments [Line Items] | |||
Interest in net earnings | $ 1,808,000 | ||
Distribution received from equity method investment | 1,808,000 | ||
Premier Pools & Spas | |||
Schedule of Equity Method Investments [Line Items] | |||
Interest in net earnings | 1,800,000 | $ 0 | |
Adjustment for the amortization of basis differences | 200,000 | ||
Distribution received from equity method investment | $ 2,200,000 | $ 25,400,000 |
ACQUISITIONS (Details)_2
ACQUISITIONS (Details) - USD ($) $ in Thousands | Oct. 22, 2021 | Oct. 22, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Oct. 02, 2021 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||||
Total purchase price, net of cash acquired | $ 74,736 | $ 20,214 | ||||
Net working capital adjustment receivable | 750 | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||||
Goodwill | $ 115,750 | $ 101,672 | $ 115,158 | $ 91,782 | ||
GL International, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Total purchase price | $ 79,700 | $ 79,700 | ||||
Total purchase price in cash | 79,700 | |||||
Total purchase price, net of cash acquired | 74,700 | 74,700 | ||||
Cash acquired | 5,000 | 5,000 | ||||
Net working capital adjustment receivable | 800 | 800 | ||||
Business acquisition, transaction costs | 2,400 | 2,400 | ||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||||
Total consideration | 79,743 | 79,743 | ||||
Cash | 5,007 | 5,007 | ||||
Trade receivables | 10,639 | 10,639 | ||||
Inventories | 11,854 | 11,854 | ||||
Prepaid expenses and other current assets | 3,949 | 3,949 | ||||
Property and equipment | 1,402 | 1,402 | ||||
Intangible assets | 46,700 | 46,700 | ||||
Total assets acquired | 79,551 | 79,551 | ||||
Accounts payable | 3,536 | 3,536 | ||||
Accrued expenses and other current liabilities | 8,853 | 8,853 | ||||
Other long-term liabilities | 524 | 524 | ||||
Total liabilities assumed | 12,913 | 12,913 | ||||
Total fair value of net assets acquired, excluding goodwill: | 66,638 | 66,638 | ||||
Goodwill | $ 13,105 | $ 13,105 | $ 13,100 |
ACQUISITIONS - Financial Info_2
ACQUISITIONS - Financial Information (Details) - USD ($) $ in Thousands | Oct. 22, 2020 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Business Acquisition, Pro Forma Information [Abstract] | ||||
Net sales | $ 462,802 | $ 382,029 | ||
Net loss | $ 26,344 | $ 6,066 | ||
GL International, LLC | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Fair Value | $ 46,700 | |||
Business Acquisition, Pro Forma Information [Abstract] | ||||
Net sales | 7,689 | $ 345,200 | ||
Net loss | (1,123) | $ 21,952 | ||
Trade names | GL International, LLC | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Fair Value | $ 9,500 | |||
Amortization Period | 9 years | |||
Dealer relationships | GL International, LLC | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Fair Value | $ 37,200 | |||
Amortization Period | 8 years |
EQUITY METHOD INVESTMENT (Det_2
EQUITY METHOD INVESTMENT (Details) - USD ($) | Oct. 30, 2020 | Dec. 31, 2020 | Oct. 02, 2021 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Aug. 06, 2020 |
Schedule of Equity Method Investments [Line Items] | |||||||
Consideration paid | $ 25,384,000 | ||||||
Proceeds from the sale of equity method investment | $ 6,796,000 | ||||||
Gain on sale of equity method investment | 3,856,000 | ||||||
Equity method investment | $ 25,384,000 | $ 21,997,000 | 21,997,000 | 25,384,000 | |||
Distributions received from equity method investment | 1,808,000 | ||||||
Return of equity method investment | 400,000 | ||||||
Interest in net earnings | $ 1,808,000 | ||||||
Premier Pools & Spas | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage | 28.00% | 20.10% | 20.10% | ||||
Consideration paid | $ 25,400,000 | ||||||
Proceeds from the sale of equity method investment | $ 6,800,000 | ||||||
Gain on sale of equity method investment | 3,900,000 | ||||||
Term of the supply agreement | 10 years | 3 months | 10 years | ||||
Period defined in agreement for calculating percentage of rebates | 3 years | 3 years | |||||
Equity method investment | $ 22,000,000 | $ 22,000,000 | |||||
Distributions received from equity method investment | 2,200,000 | $ 25,400,000 | |||||
Interest in net earnings | 1,800,000 | $ 0 | |||||
Basis difference adjustment | $ 200,000 | ||||||
Premier Pools & Spas | Premier Group Holdings Inc. | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage | 29.80% |
FAIR VALUE MEASUREMENTS - Ass_2
FAIR VALUE MEASUREMENTS - Assets and liabilities measured at fair value on a recurring basis (Details) $ in Thousands | May 31, 2019USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of plan assets | $ 1,300 | ||
Change in fair value of Contingent Consideration | $ (204) | $ 1,441 | |
Contingent consideration | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of contingent consideration as of the acquisition date | $ 7,400 | ||
Contingent consideration | EBITDA risk adjustment | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Measurement inputs | 17.30 | ||
Contingent consideration | Annual EBITDA volatility | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Measurement inputs | 55 | ||
Contingent consideration | Risk-free rate of return | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Measurement inputs | 2.10 | ||
Narellan Group Pty Limited | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Cash consideration | 20,238 | ||
Total purchase price | 35,233 | ||
Fair value of equity consideration | 7,567 | ||
Fair value of contingent consideration as of the acquisition date | 7,400 | $ 7,400 | |
Narellan Group Pty Limited | Contingent consideration | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Cash consideration | 20,200 | ||
Fair value of equity consideration | 7,600 | ||
Fair value of contingent consideration as of the acquisition date | $ 7,400 |
FAIR VALUE MEASUREMENTS - Fai_2
FAIR VALUE MEASUREMENTS - Fair value of financial instruments (Details) - USD ($) | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Derivative liabilities | $ 600,000 | $ 300,000 | |
Term loan | Carrying Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Amount | 234,201,000 | 221,496,000 | |
Term loan | Carrying Value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Amount | 221,496,000 | $ 223,223,000 | |
Term loan | Estimated Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Amount | $ 235,372,000 | 221,081,000 | |
Term loan | Estimated Fair Value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Derivative liabilities | 221,081,000 | 220,712,000 | |
Interest Rate Swap | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Derivative liabilities | $ 300,000 | $ 0 |
GOODWILL AND INTANGIBLE ASSET_8
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
GOODWILL AND INTANGIBLE ASSETS, NET | ||||
Carrying amount of goodwill | $ 115,158 | $ 115,750 | $ 101,672 | $ 91,782 |
GOODWILL AND INTANGIBLE ASSET_9
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | $ 320,993 | $ 320,993 | $ 274,293 | |
Foreign Currency Translation | 914 | 2,013 | 189 | |
Accumulated Amortization | 50,076 | 33,533 | 16,185 | |
Net Amount | 271,831 | 289,473 | 258,297 | |
Amortization of Intangible Assets | 16,560 | $ 12,173 | 17,347 | 15,643 |
Trade names and trademarks | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 135,100 | 135,100 | 125,600 | |
Foreign Currency Translation | 476 | 1,047 | 99 | |
Accumulated Amortization | 14,839 | 10,258 | 5,032 | |
Net Amount | 120,737 | 125,889 | 120,667 | |
Patented technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 16,126 | 16,126 | 16,126 | |
Foreign Currency Translation | 70 | 155 | 14 | |
Accumulated Amortization | 4,772 | 3,452 | 1,698 | |
Net Amount | 11,424 | 12,829 | 14,442 | |
Pool designs | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 5,728 | 5,728 | 5,728 | |
Foreign Currency Translation | 286 | 629 | 59 | |
Accumulated Amortization | 956 | 648 | 239 | |
Net Amount | 5,058 | 5,709 | 5,548 | |
Franchise relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 1,187 | 1,187 | 1,187 | |
Foreign Currency Translation | 59 | 130 | 12 | |
Accumulated Amortization | 694 | 470 | 173 | |
Net Amount | 552 | 847 | 1,026 | |
Dealer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 160,376 | 160,376 | 123,176 | |
Foreign Currency Translation | 23 | 52 | 5 | |
Accumulated Amortization | 27,434 | 17,697 | 8,530 | |
Net Amount | 132,965 | 142,731 | 114,651 | |
Non-competition agreements | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross Carrying Amount | 2,476 | 2,476 | 2,476 | |
Accumulated Amortization | 1,381 | 1,008 | 513 | |
Net Amount | $ 1,095 | $ 1,468 | $ 1,963 |
GOODWILL AND INTANGIBLE ASSE_10
GOODWILL AND INTANGIBLE ASSETS, NET - Amortization Expense (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Remainder of fiscal 2021 | $ 5,415 | $ 21,959 | |
2022 | 21,959 | 21,959 | |
2023 | 21,768 | 21,768 | |
2024 | 20,948 | 20,948 | |
2025 | 20,791 | 20,791 | |
Thereafter | 180,950 | 182,048 | |
Total | $ 271,831 | $ 289,473 | $ 258,297 |
INVENTORIES, NET (Details)_2
INVENTORIES, NET (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
INVENTORIES, NET | |||
Raw materials | $ 57,165 | $ 37,010 | $ 19,035 |
Finished goods | 23,540 | 27,808 | 16,576 |
Inventory, Net, Total | $ 80,705 | $ 64,818 | $ 35,611 |
LONG-TERM DEBT (Details)_2
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Term loan | $ 238,314 | $ 228,147 | |
Less: Unamortized discount and debt issuance costs | (4,113) | (6,651) | $ (8,968) |
Total debt | 234,201 | 221,496 | 223,223 |
Less: Current portion of long-term debt | (14,234) | (13,042) | (6,891) |
Total long-term debt | 219,967 | 208,454 | 216,332 |
Term loan | |||
Debt Instrument [Line Items] | |||
Term loan | 238,314 | 228,147 | 232,191 |
Less: Unamortized discount and debt issuance costs | (4,100) | (6,700) | (9,000) |
Less: Current portion of long-term debt | (13,000) | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Term loan | $ 0 | $ 0 | $ 0 |
LONG-TERM DEBT - Revolving Cr_2
LONG-TERM DEBT - Revolving Credit Facility (Details) - USD ($) $ in Thousands | Apr. 27, 2021 | Dec. 18, 2018 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||||
Aggregate net proceeds received from IPO | $ 399,264 | |||||
Repayment of Revolver credit facility | 16,000 | $ 5,000 | ||||
Debt, principal amount outstanding | 238,314 | $ 228,147 | ||||
Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee rate range, depending on leverage ratio | 0.375% | |||||
Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee rate range, depending on leverage ratio | 0.50% | |||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Borrowing capacity | $ 30,000 | |||||
Aggregate net proceeds received from IPO | $ 16,000 | |||||
Repayment of Revolver credit facility | $ 16,000 | |||||
Debt, principal amount outstanding | $ 0 | $ 0 | $ 0 | |||
Eurocurrency | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate range, depending on leverage ratio | 4.50% | |||||
Eurocurrency | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate range, depending on leverage ratio | 4.75% | |||||
Base | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate range, depending on leverage ratio | 3.50% | |||||
Base | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate range, depending on leverage ratio | 3.75% |
LONG-TERM DEBT - Term Loan Fa_2
LONG-TERM DEBT - Term Loan Facility (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Apr. 27, 2021 | Feb. 02, 2021 | Jan. 25, 2021 | Oct. 14, 2020 | Aug. 06, 2020 | Dec. 18, 2018 | Dec. 31, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | May 29, 2019 |
Debt Instrument [Line Items] | |||||||||||||
Additional borrowings under amendment | $ 23,000 | ||||||||||||
Repayment of debt | $ 164,833 | $ 20,925 | $ 24,044 | $ 5,809 | |||||||||
Gain on extinguishment of debt | 25 | ||||||||||||
Aggregate net proceeds received from IPO | 399,264 | ||||||||||||
Repayment of Revolver credit facility | 16,000 | $ 5,000 | |||||||||||
Proceeds used to pay dividend to Parent | $ 110,000 | ||||||||||||
Discount and debt issuance costs | $ 6,651 | $ 4,113 | $ 6,651 | $ 8,968 | |||||||||
Effective interest rate | 7.24% | 8.03% | 10.47% | ||||||||||
Term loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Original term loan | $ 215,000 | ||||||||||||
Debt issuance costs incurred | $ 1,200 | $ 100 | $ 11,500 | ||||||||||
Additional borrowings under amendment | 175,000 | $ 20,000 | |||||||||||
Debt discount | 400 | $ 1,200 | $ 400 | $ 500 | 700 | ||||||||
Repayment of debt | $ 5,000 | ||||||||||||
Amount of debt extinguished | $ 25,000 | ||||||||||||
Repayment amount to be paid quarterly | $ 3,600 | 5,800 | 1,600 | ||||||||||
Aggregate net proceeds received from IPO | $ 152,700 | ||||||||||||
Repayment of Revolver credit facility | $ 152,700 | ||||||||||||
Borrowings treated as principal | 165,000 | ||||||||||||
Borrowings treated as debt modification | 10,000 | ||||||||||||
Proceeds used to repay note to Parent | $ 64,900 | $ 175,000 | |||||||||||
Principal payments calculated as percent of outstanding principal | 0.629% | 0.629% | |||||||||||
Outstanding Borrowings | $ 234,200 | $ 221,500 | 223,200 | ||||||||||
Discount and debt issuance costs | 6,700 | 4,100 | 6,700 | 9,000 | |||||||||
Unamortized debt issuance costs | 6,300 | 2,900 | 6,300 | 8,400 | |||||||||
Unamortized discount | $ 400 | $ 1,200 | $ 400 | $ 500 | $ 700 | ||||||||
Term loan | Federal Funds Rate | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 0.05% | ||||||||||||
Term loan | LIBOR | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 1.00% | ||||||||||||
Eurocurrency | Term loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 6.00% | 6.00% | |||||||||||
Base | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 5.00% | ||||||||||||
Base | Term loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest added to the specified index rate | 5.00% |
LONG-TERM DEBT - Interest rat_2
LONG-TERM DEBT - Interest rate swap (Details) - Interest Rate Swap $ in Millions | Dec. 31, 2020USD ($) | May 18, 2020USD ($) |
Derivative [Line Items] | ||
LIBOR borrowings fixed interest rate | 0.442 | 0.442 |
LIBOR borrowings hedged | $ 200 | $ 200 |
LONG-TERM DEBT - Principal pa_2
LONG-TERM DEBT - Principal payments due (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Principal payments due | |||
Total payments due | $ 238,314 | $ 228,147 | |
Term loan | |||
Principal payments due | |||
Remainder of fiscal 2021 | 3,558 | ||
2022 | 14,234 | 13,042 | |
2023 | 14,234 | 13,042 | |
2024 | 14,234 | 13,042 | |
2025 | 192,054 | 13,042 | |
Total payments due | $ 238,314 | $ 228,147 | $ 232,191 |
PRODUCT WARRANTIES (Details)_2
PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at the beginning of the year | $ 2,882 | $ 2,846 | $ 2,846 | $ 1,977 |
Accruals for warranties issued | 4,369 | 2,270 | 3,966 | 3,729 |
Warranty liabilities assume in GLI Acquisition | 118 | |||
Less: Settlements made (in cash or in kind) | (3,825) | (2,501) | (4,048) | (2,860) |
Balance at the end of the year | $ 3,426 | $ 2,615 | 2,882 | 2,846 |
Less: Current portion of accrued warranty costs | (2,705) | (2,663) | ||
Accrued warranty costs - less current portion | $ 177 | $ 183 |
NET SALES (Details)_2
NET SALES (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 491,592 | $ 291,468 | $ 403,389 | $ 317,975 |
In-ground Swimming Pools | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 285,704 | 169,681 | 237,410 | 175,033 |
Covers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 94,354 | 53,528 | 84,524 | 70,984 |
Liners | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 111,534 | $ 68,259 | $ 81,455 | $ 71,958 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Effective income tax rate | 39.30% | 30.60% | 29.80% | (168.00%) | ||||||
Stock-based compensation expense | $ 27,603 | $ 75,511 | $ 1,464 | $ 978 | $ 240 | $ 224 | $ 1,827 | $ 808 | ||
Reorganization | ||||||||||
Stock-based compensation expense | $ 98,900 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) $ / shares in Units, $ in Thousands | Apr. 27, 2021shares | Apr. 22, 2021$ / sharesshares | Apr. 13, 2021$ / sharesshares | Oct. 20, 2020shares | Oct. 14, 2020shares | Oct. 02, 2021USD ($)$ / sharesshares | Sep. 26, 2020shares | Dec. 31, 2020$ / sharesshares | Dec. 31, 2019$ / sharesshares |
Class of Stock [Line Items] | |||||||||
Common stock, shares authorized | 900,000,000 | 500,000,000 | 900,000,000 | 500,000,000 | 500,000,000 | ||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Stock split ratio | 109,673,709 | ||||||||
Preferred stock shares authorised | 100,000,000 | 100,000,000 | 0 | ||||||
Preferred stock par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Number of restricted shares issued upon conversion of units | 7,843,107 | 3,692,699 | |||||||
Issuance of common stock (in shares) | 21,666,653 | 21,666,653 | 758,694 | 758,694 | 3,548,568 | ||||
Aggregate net proceeds received from IPO | $ | $ 399,264 | ||||||||
Common stock issued and outstanding | 112,153,832 | 118,854,249 | |||||||
Total authorized shares under certificate of incorporation | 1,000,000,000 | ||||||||
Parent | |||||||||
Class of Stock [Line Items] | |||||||||
Ownership interest of parent before reorganization | 100.00% | ||||||||
Class A units | |||||||||
Class of Stock [Line Items] | |||||||||
Number of units converted | 194,207,115 | ||||||||
Number of shares issued upon conversion of units | 97,187,596 | ||||||||
Class B units | |||||||||
Class of Stock [Line Items] | |||||||||
Number of units converted | 26,158,894 | ||||||||
Number of shares issued upon conversion of units | 4,145,987 | ||||||||
Number of restricted shares issued upon conversion of units | 8,340,126 | ||||||||
IPO | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of common stock (in shares) | 23,000,000 | ||||||||
Underwriters Option | |||||||||
Class of Stock [Line Items] | |||||||||
Issuance of common stock (in shares) | 3,000,000 |
PROFITS INTEREST UNITS -Summary
PROFITS INTEREST UNITS -Summary of the activity for all PIUs (Details) - $ / shares | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Apr. 03, 2021 | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted-Average Grant Date Fair Value | ||||
Balance at beginning | $ 0.43 | $ 0.41 | ||
Weighted average grant date fair, Granted | $ 0.60 | 0.38 | ||
Weighted average grant date fair, Forfeited | 0.35 | $ 0.41 | ||
Balance at ending | $ 0.43 | |||
Performance-vesting Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Beginning Balance | 27,424,962 | 26,158,894 | 21,734,170 | |
Granted | 7,843,107 | |||
Forfeited | (1,266,068) | (2,152,315) | ||
Converted at IPO in connection with the Reorganization | (26,158,894) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance | 26,158,894 | 27,424,962 | 21,734,170 | |
Weighted-Average Grant Date Fair Value | ||||
Balance at beginning | $ 0.60 | |||
Weighted average grant date fair, Granted | 0.35 | |||
Weighted average grant date fair, Forfeited | $ 0.34 | $ 0.43 | ||
Weighted average grant date fair, Converted at IPO in connection with the Reorganization | $ 0.43 | |||
Balance at ending | $ 0.60 |
PROFITS INTEREST UNITS (Detai_2
PROFITS INTEREST UNITS (Details) - USD ($) $ in Millions | Jan. 29, 2021 | Apr. 03, 2021 | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Cumulative catch-up charge from modification | $ 0.5 | ||||
Terminated Employee | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Cumulative catch-up charge from modification | $ 1.1 | ||||
Performance-vesting Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units forfeited | 1,266,068 | 2,152,315 | |||
Vested and nonvested units held at time of termination | 26,158,894 | 27,424,962 | 21,734,170 | ||
Performance-vesting Units | Terminated Employee | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units forfeited | 1,055,057 | ||||
Vested and nonvested units held at time of termination | 527,528 | ||||
Vested units at time of termination, pre-modification | 211,011 | ||||
Accelerated vesting, number of units | 105,506 | ||||
Vested units at time of termination, after modification | 316,517 |
PROFITS INTEREST UNITS - Additi
PROFITS INTEREST UNITS - Additional Information (Details) - shares | Apr. 22, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | |||
Number of restricted shares issued upon conversion of units | 7,843,107 | 3,692,699 | |
Class B units | |||
Class of Stock [Line Items] | |||
Number of units converted | 26,158,894 | ||
Number of shares issued upon conversion of units | 4,145,987 | ||
Number of restricted shares issued upon conversion of units | 8,340,126 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) $ in Thousands | Apr. 12, 2021USD ($)shares |
STOCK-BASED COMPENSATION | |
Shares reserved for issuance | shares | 13,170,212 |
Maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director | $ | $ 750 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 22, 2021 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted | 7,843,107 | 3,692,699 | |||
Expiration term | 10 years | ||||
Share based compensation expense | $ 104.6 | $ 1.4 | |||
Stock-based compensation expense due to accelerated vesting of restricted stock | 0.5 | ||||
Stock-based compensation expense due to the modification | 49 | ||||
Total unrecognized stock-based compensation expense | $ 106.2 | ||||
Total unrecognized stock-based compensation expense expected to be recognized over a weighted-average period | 1 year 5 months 26 days | ||||
Cost of sales | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation expense | $ 6.8 | ||||
Selling, general and administrative expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation expense | $ 97.8 | ||||
Share-based Payment Arrangement, Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of Restricted shares vested | 6,799,414 | ||||
Share-based Payment Arrangement, Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of Restricted shares vested | 1,540,712 | ||||
Share-based Payment Arrangement, Tranche Three | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of Restricted shares vested | 251,828 | ||||
Vesting percentage | 0.33% | ||||
Share-based Payment Arrangement, Tranche Four | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 0.33% | ||||
Vest 1/3 on the two-year anniversary of the Closing of the IPO | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 0.33% | ||||
Vest on the first anniversary of the Closing of the IPO | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of Restricted shares vested | 22,367 | ||||
Vest on the nine-month anniversary of the Closing of the IPO | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of Restricted shares vested | 51,316 | ||||
Vest evenly on each of the first three anniversaries of the Closing of the IPO | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of Restricted shares vested | 15,790 | ||||
Vest 25% annually on each of the first four anniversaries of the Closing of the IPO | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted | 886,862 | ||||
Vesting percentage | 25.00% | ||||
Restricted stock awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted | 8,340,126 | 8,340,126 | |||
Number of Restricted shares vested | 84,687 | ||||
Restricted stock awards | Share-based Payment Arrangement, Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted | 8,340,126 | ||||
Restricted stock units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted | 341,301 | 341,301 | |||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted | 886,862 | 886,862 | |||
Strike price | $ 19 | ||||
weighted average grant-date fair | $ 7.20 |
STOCK-BASED COMPENSATION - Weig
STOCK-BASED COMPENSATION - Weighted average basis for fair value option award granted (Details) | 9 Months Ended | 12 Months Ended | |
Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
STOCK-BASED COMPENSATION | |||
Risk-free interest rate | 0.63% | 0.20% | 1.90% |
Expected volatility | 38.16% | 55.00% | 49.00% |
Expected term (in years) | 6 years 3 months | 3 years 2 months 12 days | 4 years 7 months 6 days |
Expected dividend yield | 0.00% |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Awards (Details) - $ / shares | Apr. 22, 2021 | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Shares | ||||
Balance at beginning | 27,424,962 | 21,734,170 | 20,890,124 | |
Granted | 7,843,107 | 3,692,699 | ||
Forfeited | (2,152,315) | (2,848,653) | ||
Balance at ending | 27,424,962 | 21,734,170 | ||
Weighted-Average Grant-Date Fair Value | ||||
Balance at beginning | $ 0.43 | $ 0.41 | ||
Granted | $ 0.60 | 0.38 | ||
Forfeited | 0.35 | $ 0.41 | ||
Balance at ending | $ 0.43 | |||
Restricted stock awards | ||||
Shares | ||||
Granted | 8,340,126 | 8,340,126 | ||
Vested | (84,687) | |||
Forfeited | (559,682) | |||
Balance at ending | 7,695,757 | |||
Weighted-Average Grant-Date Fair Value | ||||
Granted | $ 19 | |||
Forfeited | 19 | |||
Balance at ending | $ 19 |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - $ / shares | Apr. 22, 2021 | Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Shares | ||||
Balance at beginning | 27,424,962 | 21,734,170 | 20,890,124 | |
Granted | 7,843,107 | 3,692,699 | ||
Forfeited | (2,152,315) | (2,848,653) | ||
Balance at ending | 27,424,962 | 21,734,170 | ||
Weighted-Average Grant-Date Fair Value | ||||
Balance at beginning | $ 0.43 | $ 0.41 | ||
Granted | $ 0.60 | 0.38 | ||
Forfeited | 0.35 | $ 0.41 | ||
Balance at ending | $ 0.43 | |||
Restricted stock units | ||||
Shares | ||||
Granted | 341,301 | 341,301 | ||
Forfeited | (16,767) | |||
Balance at ending | 324,534 | |||
Weighted-Average Grant-Date Fair Value | ||||
Granted | $ 19 | |||
Forfeited | 19 | |||
Balance at ending | $ 19 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) - Stock options - $ / shares | Apr. 22, 2021 | Oct. 02, 2021 |
Shares | ||
Granted | 886,862 | 886,862 |
Forfeited | (81,092) | |
Outstanding at the end | 805,770 | |
Vested and expected to vest at the end | 805,770 | |
Weighted-Average Exercise Price per Share | ||
Granted (in dollars per share) | $ 19 | |
Outstanding at the end (in dollars per share) | 19 | |
Vested and expected to vest at the end (in dollars per share) | $ 19 | |
Weighted-Average Remaining Contract Term | ||
Outstanding at the beginning (in years) | 9 years 6 months 18 days | |
Vested and expected to vest at the end (in years) | 9 years 6 months 18 days | |
Options exercisable at the end (in years) | 0 years | |
Outstanding at the end (in years) | 9 years 6 months 18 days |
NET INCOME (LOSS) PER SHARE - B
NET INCOME (LOSS) PER SHARE - Basic and diluted net income (loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | ||||||||||
Net income attributable to common stockholders | $ (11,296) | $ (53,598) | $ 8,533 | $ 17,740 | $ 16,414 | $ (15,451) | $ (56,361) | $ 18,703 | $ 15,983 | $ 7,457 |
Weighted average common shares outstanding: | ||||||||||
Basic | 110,121,240 | 96,665,708 | 101,606,966 | 95,032,265 | ||||||
Diluted | 110,121,240 | 97,122,885 | 102,602,738 | 95,400,528 | ||||||
Net income per share attributable to common stockholders | ||||||||||
Basic | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 | ||||||
Diluted | $ (0.51) | $ 0.19 | $ 0.16 | $ 0.08 |
NET INCOME (LOSS) PER SHARE - A
NET INCOME (LOSS) PER SHARE - Antidilutive securities (Details) - shares | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Outstanding potentially dilutive securities | 0 | 0 | ||
Restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Outstanding potentially dilutive securities | 6,813,166 | 47,446 | 22,524,000 | 97,718,000 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Outstanding potentially dilutive securities | 84,866 | |||
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Outstanding potentially dilutive securities | 4,235 |
RELATED PARTY TRANSACTIONS - _2
RELATED PARTY TRANSACTIONS - Bright AI Services (Details) - Bright AI Services - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Costs incurred | $ 1.1 | $ 0 | $ 0.5 |
Development Of Internal Use Software | |||
Related Party Transaction [Line Items] | |||
Costs incurred | $ 1.9 | $ 0.5 |
RELATED PARTY TRANSACTIONS - _3
RELATED PARTY TRANSACTIONS - Expense Reimbursement and Management Fees (Details) - Sponsor - Management Fee Arrangement - USD ($) | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 26, 2020 | |
Related Party Transaction [Line Items] | ||||
Maximum annual reimbursement | $ 1,000,000 | $ 1,000,000 | ||
Management fees incurred | 0 | 47,700 | $ 500,000 | |
Reimbursement of out-of-pocket costs and expenses | 100,000 | |||
Amounts payable | $ 0 | $ 0 | $ 0 | $ 100,000 |
RELATED PARTY TRANSACTIONS - _4
RELATED PARTY TRANSACTIONS - Operating Lease (Details) - Lease Agreement - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||
Rent expense | $ 0.1 | $ 0.1 | ||
Acquigen Pty Ltd. | ||||
Related Party Transaction [Line Items] | ||||
Future minimum lease payments | 3.6 | $ 4.2 | $ 4.3 | |
Rent expense | $ 0.4 | $ 0.3 | $ 0.4 | $ 0.2 |
SEGMENT AND GEOGRAPHIC INFORM_7
SEGMENT AND GEOGRAPHIC INFORMATION - Segment Information (Details) - segment | 9 Months Ended | 12 Months Ended |
Oct. 02, 2021 | Dec. 31, 2020 | |
SEGMENT AND GEOGRAPHIC INFORMATION | ||
Number of operating segments | 1 | 1 |
Number of reportable segments | 1 | 1 |
SEGMENT AND GEOGRAPHIC INFORM_8
SEGMENT AND GEOGRAPHIC INFORMATION - Geographic Information (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Oct. 02, 2021 | Sep. 26, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 491,592 | $ 291,468 | $ 403,389 | $ 317,975 |
Property and equipment, net | 58,767 | 47,357 | 37,845 | |
United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 385,259 | 234,439 | 325,716 | 257,786 |
Property and equipment, net | 48,158 | 37,680 | 30,433 | |
Canada | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 76,619 | 38,197 | 50,499 | 43,157 |
Property and equipment, net | 4,358 | 3,050 | 2,279 | |
Australia | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 18,581 | 13,187 | 20,181 | 12,126 |
Property and equipment, net | 4,394 | 4,979 | 4,094 | |
New Zealand | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | 5,277 | 2,357 | 3,984 | 2,432 |
Property and equipment, net | 1,857 | 1,648 | 1,039 | |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales | $ 5,856 | $ 3,288 | $ 3,009 | $ 2,474 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ in Millions | Nov. 24, 2021 | Mar. 31, 2021 |
Radiant Acquisition | ||
Subsequent Event [Line Items] | ||
Total purchase price | $ 90 | |
Amended Term Loan | ||
Subsequent Event [Line Items] | ||
Fixed quarterly payments | $ 5.8 | |
Fifth Amendment | ||
Subsequent Event [Line Items] | ||
Principal amount | 50 | |
Fixed quarterly payments | $ 4.3 |