Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 02, 2022 | Aug. 09, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jul. 02, 2022 | |
Entity File Number | 001-40358 | |
Entity Registrant Name | LATHAM GROUP, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-2797583 | |
Entity Address State Or Province | NY | |
Entity Address, Address Line One | 787 Watervliet Shaker Road | |
Entity Address, City or Town | Latham | |
Entity Address, Postal Zip Code | 12110 | |
City Area Code | 800 | |
Local Phone Number | 833-3800 | |
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Trading Symbol | SWIM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 117,121,134 | |
Entity Central Index Key | 0001833197 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 02, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 25,220 | $ 43,952 |
Trade receivables, net | 104,704 | 60,753 |
Inventories, net | 161,919 | 109,556 |
Income tax receivable | 5,388 | 4,039 |
Prepaid expenses and other current assets | 9,888 | 10,766 |
Total current assets | 307,119 | 229,066 |
Property and equipment, net | 74,831 | 63,506 |
Equity method investment | 24,624 | 23,362 |
Deferred tax assets | 9,796 | 10,603 |
Operating lease right-of-use assets | 35,470 | |
Goodwill | 128,628 | 128,871 |
Intangible assets, net | 323,024 | 338,310 |
Other assets | 5,728 | 765 |
Total assets | 909,220 | 794,483 |
Current liabilities: | ||
Accounts payable | 53,830 | 37,998 |
Accounts payable - related party | 900 | 850 |
Current maturities of long-term debt | 3,250 | 17,220 |
Current operating lease liabilities | 6,641 | |
Accrued expenses and other current liabilities | 59,849 | 59,097 |
Total current liabilities | 124,470 | 115,165 |
Long-term debt, net of discount, debt issuance costs and current portion | 310,471 | 263,188 |
Deferred income tax liabilities, net | 56,343 | 56,343 |
Liability for uncertain tax positions | 5,790 | 5,689 |
Non-current operating lease liabilities | 29,550 | |
Other long-term liabilities | 685 | 453 |
Total liabilities | 527,309 | 440,838 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; 100,000,000 shares authorized as of both July 2, 2022 and December 31, 2021; no shares issued and outstanding as of both July 2, 2022 and December 31, 2021 | ||
Common stock, $0.0001 par value; 900,000,000 shares authorized as of July 2, 2022 and December 31, 2021; 117,547,558 and 119,445,611 shares issued and outstanding, as of July 2, 2022 and December 31, 2021, respectively | 12 | 12 |
Additional paid-in capital | 431,637 | 401,846 |
Accumulated deficit | (47,411) | (48,583) |
Accumulated other comprehensive (loss) income | (2,327) | 370 |
Total stockholders' equity | 381,911 | 353,645 |
Total liabilities and stockholders' equity | $ 909,220 | $ 794,483 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 02, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 117,547,558 | 119,445,611 |
Common stock, shares outstanding | 117,547,558 | 119,445,611 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Condensed Consolidated Statements of Operations | ||||
Net sales | $ 206,800 | $ 180,889 | $ 398,414 | $ 329,635 |
Cost of sales | 139,193 | 122,534 | 260,153 | 218,840 |
Gross profit | 67,607 | 58,355 | 138,261 | 110,795 |
Selling, general and administrative expense | 41,804 | 95,288 | 87,029 | 122,460 |
Underwriting fees related to offering of common stock | 11,437 | |||
Amortization | 7,156 | 5,479 | 14,348 | 11,074 |
Income (loss) from operations | 18,647 | (42,412) | 25,447 | (22,739) |
Other expense (income): | ||||
Interest expense | 3,164 | 7,516 | 4,929 | 16,572 |
Loss on extinguishment of debt | 3,465 | |||
Other expense (income), net | 917 | (794) | 562 | (1,349) |
Total other expense, net | 4,081 | 6,722 | 8,956 | 15,223 |
Earnings from equity method investment | 720 | 754 | 1,262 | 998 |
Income (loss) before income taxes | 15,286 | (48,380) | 17,753 | (36,964) |
Income tax expense | 10,983 | 5,218 | 16,290 | 8,101 |
Net income (loss) | $ 4,303 | $ (53,598) | $ 1,463 | $ (45,065) |
Net income (loss) per share attributable to common stockholders: | ||||
Basic | $ 0.04 | $ (0.49) | $ 0.01 | $ (0.41) |
Diluted | $ 0.04 | $ (0.49) | $ 0.01 | $ (0.41) |
Weighted-average common shares outstanding - basic and diluted | ||||
Basic | 113,692,160 | 109,163,698 | 113,695,354 | 109,115,991 |
Diluted | 115,384,273 | 109,163,698 | 115,698,368 | 109,115,991 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income (loss) | $ 4,303 | $ (53,598) | $ 1,463 | $ (45,065) |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustments | (3,917) | 164 | (2,697) | (1,037) |
Total other comprehensive (loss) income, net of tax | (3,917) | 164 | (2,697) | (1,037) |
Comprehensive income (loss) | $ 386 | $ (53,434) | $ (1,234) | $ (46,102) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balance, beginning of period at Dec. 31, 2020 | $ 12 | $ 265,478 | $ 13,765 | $ 2,354 | $ 281,609 | ||
Balance, beginning of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 8,533 | 8,533 | |||||
Foreign currency translation adjustments | (1,201) | (1,201) | |||||
Dividend | (110,033) | (110,033) | |||||
Repurchase and retirement of common stock | $ (2) | (64,936) | (64,938) | ||||
Repurchase and retirement of common stock (in shares) | (21,666,653) | ||||||
Stock-based compensation expense | 1,464 | 1,464 | |||||
Balance, end of period at Apr. 03, 2021 | $ 10 | 91,973 | 22,298 | 1,153 | 115,434 | ||
Balance, end of period (in shares) at Apr. 03, 2021 | 97,187,596 | ||||||
Balance, beginning of period at Dec. 31, 2020 | $ 12 | 265,478 | 13,765 | 2,354 | 281,609 | ||
Balance, beginning of period (in shares) at Dec. 31, 2020 | 118,854,249 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (45,065) | ||||||
Balance, end of period at Jul. 03, 2021 | $ 12 | 350,046 | (31,300) | 1,317 | 320,075 | ||
Balance, end of period (in shares) at Jul. 03, 2021 | 120,409,271 | ||||||
Balance, beginning of period at Apr. 03, 2021 | $ 10 | 91,973 | 22,298 | 1,153 | 115,434 | ||
Balance, beginning of period (in shares) at Apr. 03, 2021 | 97,187,596 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (53,598) | (53,598) | |||||
Foreign currency translation adjustments | 164 | 164 | |||||
Net proceeds from initial public offering | $ 2 | 399,262 | 399,264 | ||||
Net proceeds from initial public offering (in shares) | 23,000,000 | ||||||
Repurchase and retirement of common stock | $ (1) | (216,699) | (216,700) | ||||
Repurchase and retirement of common stock (in shares) | (12,264,438) | ||||||
Issuance of restricted stock in connection with the Reorganization | $ 1 | (1) | |||||
Issuance of restricted stock in connection with the Reorganization (in shares) | 8,340,126 | ||||||
Issuance of common stock upon conversion of Class B units | 4,145,987 | ||||||
Stock-based compensation expense | 75,511 | 75,511 | |||||
Balance, end of period at Jul. 03, 2021 | $ 12 | 350,046 | (31,300) | 1,317 | 320,075 | ||
Balance, end of period (in shares) at Jul. 03, 2021 | 120,409,271 | ||||||
Balance, beginning of period at Dec. 31, 2021 | $ 12 | 401,846 | (48,583) | 370 | 353,645 | ||
Balance, beginning of period (in shares) at Dec. 31, 2021 | 119,445,611 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (2,840) | (2,840) | |||||
Foreign currency translation adjustments | 1,220 | 1,220 | |||||
Sale of common stock | $ 1 | 269,099 | 269,100 | ||||
Sale of common stock (in shares) | 13,800,000 | ||||||
Repurchase and retirement of common stock | $ (1) | (257,662) | (257,663) | ||||
Repurchase and retirement of common stock (in shares) | (13,800,244) | ||||||
Retirement of restricted stock (in shares) | (53,961) | ||||||
Issuance of common stock upon release of restricted stock units (in shares) | 78,341 | ||||||
Stock-based compensation expense | 16,925 | 16,925 | |||||
Balance, end of period at Apr. 02, 2022 | $ 12 | 430,208 | $ (291) | (51,714) | 1,590 | $ (291) | 380,096 |
Balance, end of period (in shares) at Apr. 02, 2022 | 119,469,747 | ||||||
Balance, beginning of period at Dec. 31, 2021 | $ 12 | 401,846 | (48,583) | 370 | 353,645 | ||
Balance, beginning of period (in shares) at Dec. 31, 2021 | 119,445,611 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 1,463 | ||||||
Balance, end of period at Jul. 02, 2022 | $ 12 | 431,637 | (47,411) | (2,327) | 381,911 | ||
Balance, end of period (in shares) at Jul. 02, 2022 | 117,547,558 | ||||||
Balance, beginning of period at Apr. 02, 2022 | $ 12 | 430,208 | $ (291) | (51,714) | 1,590 | $ (291) | 380,096 |
Balance, beginning of period (in shares) at Apr. 02, 2022 | 119,469,747 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 4,303 | 4,303 | |||||
Foreign currency translation adjustments | (3,917) | (3,917) | |||||
Repurchase and retirement of common stock | $ (15,000) | (15,000) | (15,000) | ||||
Repurchase and retirement of common stock (in shares) | (2,026,231) | ||||||
Issuance of common stock upon release of restricted stock units (in shares) | 104,042 | ||||||
Stock-based compensation expense | 16,429 | 16,429 | |||||
Balance, end of period at Jul. 02, 2022 | $ 12 | $ 431,637 | $ (47,411) | $ (2,327) | $ 381,911 | ||
Balance, end of period (in shares) at Jul. 02, 2022 | 117,547,558 |
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 | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,463 | $ (45,065) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 19,274 | 15,670 |
Amortization of deferred financing costs and debt discount | 709 | 5,698 |
Stock-based compensation expense | 33,354 | 76,975 |
Underwriting fees related to offering of common stock | 11,437 | |
Loss on extinguishment of debt | 3,465 | |
Other non-cash, net | 2,648 | 1,041 |
Earnings from equity method investment | (1,262) | (998) |
Distributions received from equity method investment | 0 | 998 |
Changes in operating assets and liabilities: | ||
Trade receivables | (45,696) | (44,472) |
Inventories | (53,182) | (9,455) |
Prepaid expenses and other current assets | 759 | (3,680) |
Income tax receivable | (1,349) | (75) |
Other assets | (375) | 830 |
Accounts payable | 15,865 | 11,007 |
Accrued expenses and other current liabilities | (2,428) | 5,551 |
Other long-term liabilities | 232 | 113 |
Net cash (used in) provided by operating activities | (15,086) | 14,138 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (16,750) | (12,967) |
Proceeds from the sale of property and equipment | 23 | 16 |
Acquisitions of businesses, net of cash acquired | (384) | |
Return of equity method investment | 108 | |
Net cash used in investing activities | (17,111) | (12,843) |
Cash flows from financing activities: | ||
Proceeds from long-term debt borrowings | 320,125 | 172,813 |
Payments on long-term debt borrowings | (284,822) | (161,275) |
Proceeds from borrowings on revolving credit facilities | 25,000 | 16,000 |
Payments on revolving credit facilities | (25,000) | (16,000) |
Deferred financing fees paid | (6,865) | (1,250) |
Dividend to Class A unitholders | (110,033) | |
Proceeds from sale of common stock | 257,663 | |
Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs | 399,264 | |
Repurchases and retirement of common stock | (272,663) | (281,638) |
Net cash provided by financing activities | 13,438 | 17,881 |
Effect of exchange rate changes on cash | 27 | (1,969) |
Net (decrease) increase in cash | (18,732) | 17,207 |
Cash at beginning of period | 43,952 | 59,310 |
Cash at end of period | 25,220 | 76,517 |
Supplemental cash flow information: | ||
Cash paid for interest | 5,080 | 10,267 |
Income taxes paid, net | 13,353 | 6,751 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable and accrued expenses | 990 | 530 |
Capitalized internal-use software included in accounts payable - related party | 900 | $ 1,350 |
Right-of-use operating assets obtained in exchange for lease liabilities | $ 39,501 |
NATURE OF THE BUSINESS
NATURE OF THE BUSINESS | 6 Months Ended |
Jul. 02, 2022 | |
NATURE OF THE BUSINESS | |
NATURE OF THE BUSINESS | 1. NATURE OF THE BUSINESS 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jul. 02, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of July 2, 2022 and for the fiscal and two fiscal quarters ended July 2, 2022 and July 3, 2021 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with Latham Group, Inc.’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s 2021 Annual Report on Form 10-K, filed with the SEC on March 10, 2022 (the “Annual Report”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of these condensed consolidated financial statements, have been included. The Company’s results of operations for the fiscal and two fiscal quarters ended July 2, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022. 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 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. Segment Reporting The Company identifies operating segments based on how the chief operating decision maker manages the business, allocates resources, makes operating decisions and evaluates operating performance. The Company conducts its business as one operating and reportable 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. Severe weather may also affect net sales in all periods. Accounting Policies Refer to the Company’s Annual Report for a discussion of the Company’s accounting policies, as updated below. 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 annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. As an “emerging growth company”, the Company is not yet required to adopt the standard and is currently evaluating the impact that the adoption of ASU 2016-13 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 Reference Rate Reform (Topic 848): Scope In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Jul. 02, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | 3. ACQUISITIONS Trojan Leisure Products, LLC d/b/a Radiant Pools On November 24, 2021, Latham Pool Products acquired Trojan Leisure Products, LLC d/b/a Radiant Pools (“Radiant”) for a total purchase price of $90.7 million (the “Radiant Acquisition”). The results of Radiant’s operations have been included in the consolidated financial statements since that date. Radiant specializes in manufacturing proprietary vinyl liner aluminum swimming pools which can be built completely in-ground, semi-inground, or above ground. As a result, this acquisition expanded the Company’s product offerings. In connection with the Radiant Acquisition, consideration paid was $90.7 million in cash, or $90.5 million net of cash acquired of $0.2 million. The cash consideration was funded, in part, through long-term debt proceeds of $50.0 million. The Company incurred $2.9 million in transaction costs. Subsequent to the acquisition date, there was an additional amount due to the seller of $0.4 million related to the finalization of the net working capital adjustment, which was accounted for as a measurement period adjustment. The measurement period adjustment resulted in an increase in the total consideration transferred of $0.4 million and an increase to goodwill of $0.4 million. The net working capital adjustment was settled during the fiscal quarter ended July 2, 2022. The Company accounted for the Radiant Acquisition using the acquisition method of accounting in accordance with 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, customer relationships and backlog were valued using the multi-period excess earnings method, whereas trade names, technology and pool designs 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 Radiant Acquisition: (in thousands) November 24, 2021 Total consideration $ 91,109 Allocation of purchase price: Cash 217 Trade receivables 2,805 Inventories 5,528 Prepaid expenses and other current assets 396 Property and equipment 1,263 Intangible assets 72,500 Total assets acquired 82,709 Accounts payable 1,744 Accrued expenses and other current liabilities 1,038 Other long-term liabilities 2,920 Total liabilities assumed 5,702 Total fair value of net assets acquired, excluding goodwill: 77,007 Goodwill $ 14,102 The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the Radiant Acquisition was allocated to goodwill in the amount of $14.1 million. Goodwill resulting from the Radiant Acquisition was attributable to the expanded market share and product offerings. Goodwill resulting from the Radiant 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 Dealer relationships $ 37,000 13 years Trade names 13,000 25 years Technology 13,000 15 years Pool designs 7,900 15 years Backlog 1,600 10 months $ 72,500 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jul. 02, 2022 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value. Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 3 — Unobservable inputs that reflect the Company’s own assumptions incorporated into valuation techniques. These valuations require significant judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When there is more than one input at different levels within the hierarchy, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessment of the significance of a particular input to the fair value measurement in its entirety requires substantial judgment and consideration of factors specific to the asset or liability. Level 3 inputs are inherently difficult to estimate. Changes to these inputs can have significant impact on fair value measurements. Assets and liabilities measured at fair value using Level 3 inputs are based on one or more of the following valuation techniques: market approach, income approach or cost approach. There were no transfers between fair value measurement levels during the two fiscal quarters ended July 2, 2022 or July 3, 2021. 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. 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 loans Term loans (see Note 7) are carried at amortized cost; however, the Company estimates the fair value of term loans for disclosure purposes. The fair value of term loans is determined using inputs based on observable market data of a non-public exchange, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of its term loans (in thousands): July 2, 2022 December 31, 2021 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value New Term Loan $ 313,721 $ 298,819 $ — $ — Amended Term Loan $ — $ — $ 280,408 $ 281,926 Interest rate swap The Company estimates the fair value of the interest rate swap (see Note 7) on a quarterly basis using Level 2 inputs, including the forward SOFR curve. The fair value is estimated by comparing (i) the present value of all future monthly fixed rate payments versus (ii) the variable payments based on the forward SOFR curve. As of July 2, 2022 and December 31, 2021, the fair value of the Company’s interest rate swap asset was $4.4 million and $0.5 million, respectively, which was recorded within other assets on the condensed consolidated balance sheets. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 6 Months Ended |
Jul. 02, 2022 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |
GOODWILL AND INTANGIBLE ASSETS, NET | 5. GOODWILL AND INTANGIBLE ASSETS, NET Goodwill The carrying amount of goodwill as of July 2, 2022 and as of December 31, 2021 was $128.6 million and $128.9 million, respectively. The change in the carrying value during the two fiscal quarters ended July 2, 2022 was due to an increase of $0.4 million as a result of a measurement period adjustment (see Note 3) and fluctuations in foreign currency exchange rates. Intangible Assets Intangible assets, net as of July 2, 2022 consisted of the following (in thousands): July 2, 2022 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 148,100 $ (91) $ 19,684 $ 128,325 Patented technology 16,126 34 6,082 10,078 Technology 13,000 — 506 12,494 Pool designs 13,628 (16) 1,569 12,043 Franchise relationships 1,187 40 916 311 Dealer relationships 197,376 12 38,820 158,568 Backlog 1,600 1,120 480 Non-competition agreements 2,476 — 1,751 725 $ 393,493 $ (21) $ 70,448 $ 323,024 The Company recognized $7.2 million and $14.3 million of amortization expense related to intangible assets during the fiscal and two fiscal quarters ended July 2, 2022, respectively. The Company recognized $5.5 million and $11.1 million of amortization expense related to intangible assets during the fiscal and two fiscal quarters ended July 3, 2021, respectively. Intangible assets, net as of December 31, 2021 consisted of the following (in thousands): December 31, 2021 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 148,100 $ 439 $ 16,382 $ 132,157 Patented technology 16,126 65 5,205 10,986 Technology 13,000 — 72 12,928 Pool designs 13,628 265 1,101 12,792 Franchise relationships 1,187 54 767 474 Dealer relationships 197,376 22 30,838 166,560 Backlog 1,600 — 160 1,440 Non-competition agreements 2,476 — 1,503 973 $ 393,493 $ 845 $ 56,028 $ 338,310 Estimated Future Year Ended Amortization Expense Remainder of fiscal 2022 $ 13,840 2023 26,528 2024 25,708 2025 25,550 2026 25,550 Thereafter 205,848 $ 323,024 |
INVENTORIES, NET
INVENTORIES, NET | 6 Months Ended |
Jul. 02, 2022 | |
INVENTORIES, NET | |
INVENTORIES, NET | 6. INVENTORIES, NET Inventories, net consisted of the following (in thousands): July 2, 2022 December 31, 2021 Raw materials $ 105,131 $ 77,510 Finished goods 56,788 32,046 $ 161,919 $ 109,556 |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jul. 02, 2022 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 7. LONG-TERM DEBT The components of the Company’s outstanding debt obligations consisted of the following (in thousands): July 2, 2022 December 31, 2021 New Term Loan $ 324,187 $ — Amended Term Loan — 284,009 Less: Unamortized discount and debt issuance costs (10,466) (3,601) Total debt 313,721 280,408 Less: Current portion of long-term debt (3,250) (17,220) Total long-term debt $ 310,471 $ 263,188 On February 23, 2022, Latham Pool Products entered into an agreement (the “New Credit Agreement”) with Barclays Bank PLC, which provides a senior secured multicurrency revolving line of credit (the “New Revolving Credit Facility”) in an initial principal amount of $75.0 million and a U.S. Dollar senior secured term loan facility (the “New Term Loan Facility”) in an initial principal amount of $325.0 million (the “Refinancing”). On the closing date, proceeds under the agreement were used to repay $294.0 million and terminate the Credit Agreement (as defined below) and for general corporate purposes. New Revolving Credit Facility On February 23, 2022, Latham Pool Products entered into the New Credit Agreement with Barclays Bank PLC, which provides a senior secured multicurrency revolving line of credit in an initial principal amount of $75.0 million. The New Revolving Credit Facility may be utilized to finance ongoing general corporate and working capital needs and permits Latham Pools Products to borrow loans in U.S. Dollars, Canadian Dollars, Euros and Australian Dollars. The New Revolving Credit Facility matures on February 23, 2027. Loans outstanding under the New Revolving Credit Facility denominated in U.S. Dollars and Canadian Dollars bear interest, at the borrower’s option, at a rate per annum based on Term SOFR or CDO (each, as defined in the New Credit Agreement), as applicable, plus a margin of 3.50%, or at a rate per annum based on the Base Rate or the Canadian Prime Rate (each, as defined in the New Credit Agreement), plus a margin of 2.50%. Loans outstanding under the New Revolving Credit Facility denominated in Euros or Australian Dollars bear interest based on EURIBOR or the AUD Rate (each, as defined in the New Credit Agreement), respectively, plus a margin of 3.50%. A commitment fee accrues on any unused portion of the commitments under the New Revolving Credit Facility. The commitment fee is due and payable quarterly in arrears and is, initially, 0.375% per annum and will, thereafter, accrue at a rate per annum ranging from 0.25% to 0.50%, depending on the First Lien Net Leverage Ratio (as defined in the New Credit Agreement, the “First Lien Net Leverage Ratio”). Borrowings under the New Revolving Credit Facility are due at maturity. The Company incurred debt issuance costs of $0.8 million related to the New Revolving Credit Facility. The debt issuance costs were recorded within other assets on the condensed consolidated balance and are being amortized over the life of the New Revolving Credit Facility. The Company is required to meet certain financial covenants, including maintaining specific liquidity measurements. There are also negative covenants, including certain restrictions on the Company’s ability to incur additional indebtedness, create liens, make investments, consolidate or merge with other entities, enter into transactions with affiliates, make prepayments with respect to certain indebtedness and make restricted payments and other distributions. As of July 2, 2022, there were no New Term Loan Facility Pursuant to the New Credit Agreement, Latham Pool Products also borrowed $325.0 million in term loans. The New Term Loan Facility matures on February 23, 2029. Loans outstanding under the New Term Loan Facility bear interest, at the borrower’s option, at a rate per annum based on Term SOFR (as defined in the New Credit Agreement), plus a margin ranging from 3.75% to 4.00%, depending on the First Lien Net Leverage Ratio, or based on the Base Rate (as defined in the Credit Agreement), plus a margin ranging from 2.75% to 3.00%, depending on the First Lien Net Leverage Ratio. Loans under the Term Loan Facility are subject to scheduled quarterly amortization payments equal to 0.25% of the initial principal amount of the Term Loan Facility. The New Credit Agreement contains customary mandatory prepayment provisions, including requirements to make mandatory prepayments with 50% of any excess cash flow and with 100% of the net cash proceeds from the incurrence of indebtedness not otherwise permitted to be incurred by the covenants, asset sales and casualty and condemnation events, in each case, subject to customary exceptions. The Company recorded $6.1 million of debt issuance costs and $4.9 million of debt discount related to the New Term Loan Facility as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet. Outstanding borrowings as of July 2, 2022 were $313.7 million, net of discount and debt issuance costs of $10.5 million. In connection with the New Term Loan, the Company is subject to various negative, reporting, financial and other covenants, including maintaining specific liquidity measurements. As of July 2, 2022, the unamortized debt issuance costs and discount on the New Term Loan were $5.8 million and $4.7 million, respectively. The effective interest rate was 5.95% at July 2, 2022, including the impact of the Company’s interest rate swap. As of July 2, 2022, the Company was in compliance with all financial covenants under the New Credit Agreement. Revolving Credit Facility On December 18, 2018, Latham Pool Products entered into an agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC 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”) in the amount of up to $30 million, as well as a Term Loan (as described and defined below). The Revolving Credit Facility was utilized to finance ongoing general corporate and working capital needs. The Revolving Credit Facility was terminated in connection with the Refinancing. Term Loan Facility Pursuant to the Credit Agreement, Latham Pool Products also borrowed $215.0 million in term loans (the “Term Loan”). The Term Loan was amended on May 29, 2019, to provide additional borrowings of $23.0 million, which was accounted for as a modification to the Term Loan, to fund the Company’s acquisition of Narellan Group Pty Limited and its subsidiaries (the “First Amendment”). On October 14, 2020, Latham Pool Products amended the First Amendment to provide additional borrowings of $20.0 million, which was accounted for as new debt (the “Second Amendment”). The Second Amendment was further amended on January 25, 2021, to provide an additional incremental term loan of $175.0 million (the “Third Amendment”). On January 25, 2021, Latham Pool Products borrowed the incremental term loan, and the proceeds were used on February 2, 2021 to purchase and retire equity interests and to pay a distribution. On March 31, 2021, Latham Pool Products amended our Term Loan to revise the applicable reporting requirements (the “Fourth Amendment”). On November 24, 2021, Latham Pool Products amended the Term Loan to provide additional borrowings of $50 million (the “Fifth Amendment”). The proceeds from this incremental term loan were used to finance the Radiant Acquisition in part. The Term Loan, collectively with the First Amendment, Second Amendment, Third Amendment, the Fourth Amendment and the Fifth Amendment, is referred to as the “Amended Term Loan.” The Amended Term Loan was repaid and terminated in connection with the Refinancing. Interest Rate Risk Interest rate risk associated with the New Credit Agreement is managed through an interest rate swap that 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. In February of 2022, the Company amended its interest rate swap to change the index rate from LIBOR to SOFR in connection with the entry into the New Credit Agreement. Under the terms of the amended swap, the Company fixed its SOFR borrowing rate at 0.496% 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 4). Debt Maturities 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 2022 $ 1,625 2023 3,250 2024 3,250 2025 3,250 2026 3,250 Thereafter 309,562 $ 324,187 The obligations under the New Credit Agreement are guaranteed by certain wholly owned subsidiaries (the “Guarantors”) of the Company as defined in the security agreement. The obligations under the New 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 New 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
PRODUCT WARRANTIES | 6 Months Ended |
Jul. 02, 2022 | |
PRODUCT WARRANTIES | |
PRODUCT WARRANTIES | 8. PRODUCT WARRANTIES The warranty reserve activity consisted of the following (in thousands): Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 Balance at the beginning of the year $ 4,909 $ 2,882 Accruals for warranties issued 4,110 3,338 Less: Settlements made (in cash or in kind) (3,534) (2,504) Balance at the end of the year $ 5,485 $ 3,716 |
LEASES
LEASES | 6 Months Ended |
Jul. 02, 2022 | |
LEASES | |
LEASES | 9. LEASES On January 1, 2022, the Company adopted ASU 2016-02, “Leases (Topic 842),” and the related amendments (collectively “ASC 842”). The optional transition method of adoption was used, in which the cumulative effect of initially applying the new standard to existing leases was $0.3 million to record the operating lease right-of-use assets and the related liabilities as of January 1, 2022. Under this method of adoption, the comparative information has not been revised and continues to be reported under the previously applicable lease accounting guidance (ASC 840). For leases with initial terms greater than 12 months, the Company considers these right-of-use assets and records the related asset and obligation at the present value of lease payments over the term. For leases with initial terms equal to or less than 12 months, the Company does not consider them as right-of-use assets and instead considers them short-term lease costs that are recognized on a straight-line basis over the lease term. The Company’s leases may include escalation clauses, renewal options and/or termination options that are factored into the Company’s determination of lease term and lease payments when it is reasonably certain the option will be exercised. The Company has elected to take the practical expedient and not separate lease and non-lease components of contracts. The Company estimates an incremental borrowing rate to discount the lease payments based on information available at lease commencement because the implicit rate of the lease is generally not known. The Company leases vehicles, manufacturing facilities, office space, land, and equipment under operating leases. The Company determines if an arrangement is a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company does not have material finance leases. The components of lease expense for the fiscal and two fiscal quarters ended July 2, 2022 were as follows (in thousands): Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 2, 2022 Operating lease expense $ 2,366 $ 4,504 Short-term lease expense 12 32 Variable lease expense 126 304 Total lease expense $ 2,504 $ 4,840 The table below presents supplemental information related to leases as of July 2, 2022: July 2, 2022 Weighted-average remaining lease term (years) Operating leases 6.2 Weighted-average discount rate Operating leases 4.6 % The table below presents supplemental information related to the cash flows for operating leases recorded on the condensed consolidated statements of cash flows (in thousands): Two Fiscal Quarters Ended July 2, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,526 The following table summarizes maturities of operating lease liabilities as of July 2, 2022 (in thousands): Operating Leases Remainder of fiscal 2022 $ 4,266 2023 7,544 2024 7,159 2025 6,547 2026 5,121 Thereafter 11,207 Total lease payments 41,844 Less: Interest (5,653) Present value of lease liability $ 36,191 |
NET SALES
NET SALES | 6 Months Ended |
Jul. 02, 2022 | |
NET SALES. | |
NET SALES | 10. NET SALES The following table sets forth the Company’s disaggregation of net sales by product line (in thousands): Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 In-ground Swimming Pools $ 112,153 $ 108,001 $ 223,956 $ 201,644 Covers 38,389 26,223 70,914 50,229 Liners 56,258 46,665 103,544 77,762 $ 206,800 $ 180,889 $ 398,414 $ 329,635 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jul. 02, 2022 | |
INCOME TAXES | |
INCOME TAXES | 11. INCOME TAXES The effective income tax rate for the fiscal and two fiscal quarters ended July 2, 2022 was 71.9% and 91.8%, respectively, compared to (10.8)% and (21.9)% for the fiscal and two fiscal quarters ended July 3, 2021. The difference between the U.S. federal statutory income tax rate and the Company’s effective income tax rate for both the fiscal and two fiscal quarters ended July 2, 2022 was primarily attributable to the discrete impact of stock-based compensation expense for which there is no associated tax benefit. The difference between the U.S. federal statutory income tax rate and the Company’s effective income tax rate for both the fiscal and two fiscal quarters ended July 3, 2021 was primarily attributable to the discrete impact of stock-based compensation expense. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jul. 02, 2022 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 12. SHAREHOLDERS’ EQUITY Stock Split, Initial Public Offering and Reorganization On April 13, 2021, the Company’s certificate of incorporation was amended and restated. 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 condensed 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. 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 Company’s parent entity, Parent, merged with and into Latham Group, Inc. (the “Reorganization”). Offering of Common Stock On January 11, 2022, the Company completed an offering of 13,800,000 shares of common stock, par value $0.0001 per share, including the exercise in full by the underwriters of their option to purchase up to 1,800,000 additional shares of common stock, at a public offering price of $19.50 per share. The Company received proceeds of $257.7 million from this offering, net of $11.4 million of underwriting fees. The proceeds of Repurchase Program On May 10, 2022, the Company approved a stock repurchase program (the “Repurchase Program”), which authorized the Company to repurchase up to $100 million of the Company’s shares of common stock over the next three years . The Company may effect these repurchases in open market transactions, privately negotiated purchases or other acquisitions. The Company is not obligated to repurchase any of its shares of its common stock under the Repurchase Program and the timing and amount of any repurchases will depend on market conditions, the Company’s stock price, alternative uses of capital, the terms of the Company’s debt instruments and other factors. During the fiscal quarter ended July 2, 2022, the Company repurchased and concurrently retired 2,026,231 shares of the Company’s common stock for an aggregate amount of $15.0 million, pursuant to the Repurchase Program. As of July 2, 2022, approximately $85.0 million remained available for share repurchases pursuant to the Repurchase Program. The Company accounts for the excess of the repurchase price over the par value of shares acquired as a reduction to additional paid-in capital. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jul. 02, 2022 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 13. STOCK-BASED COMPENSATION 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, is $750,000. The following table summarizes the Company’s stock-based compensation expense: Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Cost of sales $ 1,140 $ 4,923 $ 2,316 $ 4,923 Selling, general and administrative 15,289 70,588 31,038 72,052 $ 16,429 $ 75,511 $ 33,354 $ 76,975 As of July 2, 2022, total unrecognized stock-based compensation expense related to all unvested stock-based awards was $47.0 million, which is expected to be recognized over a weighted-average period of 1.36 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: Two Fiscal Quarters Ended July 2, 2022 Risk-free interest rate 1.82 % Expected volatility 39.77 % 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 two fiscal quarters ended July 2, 2022: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2022 5,803,124 $ 19.00 Granted — — Vested (1,373,260) 19.00 Forfeited (53,961) 19.00 Outstanding at July 2, 2022 4,375,903 $ 19.00 Restricted Stock Units The following table represents the Company’s restricted stock units activity during the two fiscal quarters ended July 2, 2022: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2022 278,591 $ 19.08 Granted 108,134 15.27 Vested (182,383) 19.00 Forfeited (5,173) 19.00 Outstanding at July 2, 2022 199,169 $ 17.09 Stock Options The following table represents the Company’s stock option activity during the two fiscal quarters ended July 2, 2022: Weighted- Weighted- Average Average Exercise Price Remaining Aggregate Shares per Share Contract Term Intrinsic Value (in years) (in thousands) Outstanding on January 1, 2022 822,886 $ 19.08 Granted 1,144,865 15.56 Exercised — — Forfeited (185,129) 17.22 Outstanding at July 2, 2022 1,782,622 $ 17.02 9.24 $ — Vested and expected to vest at July 2, 2022 1,782,622 $ 17.02 9.24 $ — Options exercisable at July 2, 2022 181,271 19.00 8.66 — 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 two fiscal quarters ended July 2, 2022 was $6.48 per share. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 6 Months Ended |
Jul. 02, 2022 | |
NET INCOME (LOSS) PER SHARE | |
NET INCOME (LOSS) PER SHARE | 14. NET INCOME (LOSS) PER SHARE Basic and diluted net income (loss) per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Numerator: Net income (loss) attributable to common stockholders $ 4,303 $ (53,598) $ 1,463 $ (45,065) Denominator: Weighted-average common shares outstanding Basic 113,692,160 109,163,698 113,695,354 109,115,991 Diluted 115,384,273 109,163,698 115,698,368 109,115,991 Net income (loss) per share attributable to common stockholders: Basic $ 0.04 $ (0.49) $ 0.01 $ (0.41) Diluted $ 0.04 $ (0.49) $ 0.01 $ (0.41) As of July 2, 2022 and December 31, 2021, 113,171,655 and 113,642,487 shares of common stock are issued and outstanding for accounting purposes, respectively. The following table includes the number of shares that may be dilutive common shares in the future that were not included in the computation of diluted net income (loss) per share because the effect was anti-dilutive: Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Restricted stock awards — 5,075,346 — 8,721,817 Restricted stock units 102,108 112,449 56,764 55,613 Stock options 1,809,704 81,017 1,501,528 40,068 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jul. 02, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 15. RELATED PARTY TRANSACTIONS 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 two fiscal quarters ended July 2, 2022 and the year ended December 31, 2021, the Company incurred $0.3 million and $2.1 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 July 2, 2022. As of both July 2, 2022 and December 31, 2021, the Company had accounts payable - related party to BrightAI of $0.9 million. 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 fiscal and two fiscal quarters ended July 2, 2022 and July 3, 2021. The Company did not reimburse any out-of-pocket costs or expenses to the Sponsor and Wynnchurch Capital, L.P. during the two fiscal quarters ended July 2, 2022. The Company reimbursed less than $0.1 million of out-of-pocket costs or expenses to the Sponsor and Wynnchurch Capital, L.P. during the two fiscal quarters ended July 3, 2021. As of both July 2, 2022 and December 31, 2021, there were no outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jul. 02, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Unaudited Interim Financial Information | 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, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of July 2, 2022 and for the fiscal and two fiscal quarters ended July 2, 2022 and July 3, 2021 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with Latham Group, Inc.’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s 2021 Annual Report on Form 10-K, filed with the SEC on March 10, 2022 (the “Annual Report”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of these condensed consolidated financial statements, have been included. The Company’s results of operations for the fiscal and two fiscal quarters ended July 2, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022. |
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 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. |
Segment Reporting | Segment Reporting The Company identifies operating segments based on how the chief operating decision maker manages the business, allocates resources, makes operating decisions and evaluates operating performance. The Company conducts its business as one operating and reportable |
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. Severe weather may also affect net sales in all periods. |
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 annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. As an “emerging growth company”, the Company is not yet required to adopt the standard and is currently evaluating the impact that the adoption of ASU 2016-13 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 Reference Rate Reform (Topic 848): Scope In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
ACQUISITIONS | |
Summary of purchase price allocation | (in thousands) November 24, 2021 Total consideration $ 91,109 Allocation of purchase price: Cash 217 Trade receivables 2,805 Inventories 5,528 Prepaid expenses and other current assets 396 Property and equipment 1,263 Intangible assets 72,500 Total assets acquired 82,709 Accounts payable 1,744 Accrued expenses and other current liabilities 1,038 Other long-term liabilities 2,920 Total liabilities assumed 5,702 Total fair value of net assets acquired, excluding goodwill: 77,007 Goodwill $ 14,102 |
Schedule of purchase price to specific intangible asset categories | Fair Value Amortization Definite-lived intangible assets: (in thousands) Period Dealer relationships $ 37,000 13 years Trade names 13,000 25 years Technology 13,000 15 years Pool designs 7,900 15 years Backlog 1,600 10 months $ 72,500 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
FAIR VALUE MEASUREMENTS | |
Schedule of financial liabilities at fair value on a recurring basis | July 2, 2022 December 31, 2021 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value New Term Loan $ 313,721 $ 298,819 $ — $ — Amended Term Loan $ — $ — $ 280,408 $ 281,926 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |
Schedule of Intangible assets | Intangible assets, net as of July 2, 2022 consisted of the following (in thousands): July 2, 2022 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 148,100 $ (91) $ 19,684 $ 128,325 Patented technology 16,126 34 6,082 10,078 Technology 13,000 — 506 12,494 Pool designs 13,628 (16) 1,569 12,043 Franchise relationships 1,187 40 916 311 Dealer relationships 197,376 12 38,820 158,568 Backlog 1,600 1,120 480 Non-competition agreements 2,476 — 1,751 725 $ 393,493 $ (21) $ 70,448 $ 323,024 Intangible assets, net as of December 31, 2021 consisted of the following (in thousands): December 31, 2021 Gross Foreign Carrying Currency Accumulated Net Amount Translation Amortization Amount Trade names and trademarks $ 148,100 $ 439 $ 16,382 $ 132,157 Patented technology 16,126 65 5,205 10,986 Technology 13,000 — 72 12,928 Pool designs 13,628 265 1,101 12,792 Franchise relationships 1,187 54 767 474 Dealer relationships 197,376 22 30,838 166,560 Backlog 1,600 — 160 1,440 Non-competition agreements 2,476 — 1,503 973 $ 393,493 $ 845 $ 56,028 $ 338,310 |
Schedule of estimated amortization expense related to definite-lived intangible assets | Estimated Future Year Ended Amortization Expense Remainder of fiscal 2022 $ 13,840 2023 26,528 2024 25,708 2025 25,550 2026 25,550 Thereafter 205,848 $ 323,024 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
INVENTORIES, NET | |
Schedule of inventories, net | Inventories, net consisted of the following (in thousands): July 2, 2022 December 31, 2021 Raw materials $ 105,131 $ 77,510 Finished goods 56,788 32,046 $ 161,919 $ 109,556 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
LONG-TERM DEBT | |
Components of the Company's outstanding debt obligations | July 2, 2022 December 31, 2021 New Term Loan $ 324,187 $ — Amended Term Loan — 284,009 Less: Unamortized discount and debt issuance costs (10,466) (3,601) Total debt 313,721 280,408 Less: Current portion of long-term debt (3,250) (17,220) Total long-term debt $ 310,471 $ 263,188 |
Principal payments due on the outstanding debt | Year Ended Term Loan Facility Remainder of fiscal 2022 $ 1,625 2023 3,250 2024 3,250 2025 3,250 2026 3,250 Thereafter 309,562 $ 324,187 |
PRODUCT WARRANTIES (Tables)
PRODUCT WARRANTIES (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
PRODUCT WARRANTIES | |
Warranty reserve activity | The warranty reserve activity consisted of the following (in thousands): Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 Balance at the beginning of the year $ 4,909 $ 2,882 Accruals for warranties issued 4,110 3,338 Less: Settlements made (in cash or in kind) (3,534) (2,504) Balance at the end of the year $ 5,485 $ 3,716 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
LEASES | |
Summary of components of lease expense | Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 2, 2022 Operating lease expense $ 2,366 $ 4,504 Short-term lease expense 12 32 Variable lease expense 126 304 Total lease expense $ 2,504 $ 4,840 |
Schedule of supplemental lease information | The table below presents supplemental information related to leases as of July 2, 2022: July 2, 2022 Weighted-average remaining lease term (years) Operating leases 6.2 Weighted-average discount rate Operating leases 4.6 % The table below presents supplemental information related to the cash flows for operating leases recorded on the condensed consolidated statements of cash flows (in thousands): Two Fiscal Quarters Ended July 2, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,526 |
Summary of maturities of operating lease liabilities | Operating Leases Remainder of fiscal 2022 $ 4,266 2023 7,544 2024 7,159 2025 6,547 2026 5,121 Thereafter 11,207 Total lease payments 41,844 Less: Interest (5,653) Present value of lease liability $ 36,191 |
NET SALES (Tables)
NET SALES (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
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): Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 In-ground Swimming Pools $ 112,153 $ 108,001 $ 223,956 $ 201,644 Covers 38,389 26,223 70,914 50,229 Liners 56,258 46,665 103,544 77,762 $ 206,800 $ 180,889 $ 398,414 $ 329,635 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
STOCK-BASED COMPENSATION. | |
Summary of stock-based compensation expense | Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Cost of sales $ 1,140 $ 4,923 $ 2,316 $ 4,923 Selling, general and administrative 15,289 70,588 31,038 72,052 $ 16,429 $ 75,511 $ 33,354 $ 76,975 |
Schedule of assumptions used 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: Two Fiscal Quarters Ended July 2, 2022 Risk-free interest rate 1.82 % Expected volatility 39.77 % Expected term (in years) 6.25 Expected dividend yield 0.00 % |
Schedule of restricted stock awards | The following table represents the Company’s restricted stock awards activity during the two fiscal quarters ended July 2, 2022: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2022 5,803,124 $ 19.00 Granted — — Vested (1,373,260) 19.00 Forfeited (53,961) 19.00 Outstanding at July 2, 2022 4,375,903 $ 19.00 |
Schedule of restricted stock units | The following table represents the Company’s restricted stock units activity during the two fiscal quarters ended July 2, 2022: Weighted- Average Grant- Shares Date Fair Value Outstanding at January 1, 2022 278,591 $ 19.08 Granted 108,134 15.27 Vested (182,383) 19.00 Forfeited (5,173) 19.00 Outstanding at July 2, 2022 199,169 $ 17.09 |
Schedule of stock option activity | The following table represents the Company’s stock option activity during the two fiscal quarters ended July 2, 2022: Weighted- Weighted- Average Average Exercise Price Remaining Aggregate Shares per Share Contract Term Intrinsic Value (in years) (in thousands) Outstanding on January 1, 2022 822,886 $ 19.08 Granted 1,144,865 15.56 Exercised — — Forfeited (185,129) 17.22 Outstanding at July 2, 2022 1,782,622 $ 17.02 9.24 $ — Vested and expected to vest at July 2, 2022 1,782,622 $ 17.02 9.24 $ — Options exercisable at July 2, 2022 181,271 19.00 8.66 — |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jul. 02, 2022 | |
NET INCOME (LOSS) PER SHARE | |
Schedule of basic and diluted earnings (loss) per share | Basic and diluted net income (loss) per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Numerator: Net income (loss) attributable to common stockholders $ 4,303 $ (53,598) $ 1,463 $ (45,065) Denominator: Weighted-average common shares outstanding Basic 113,692,160 109,163,698 113,695,354 109,115,991 Diluted 115,384,273 109,163,698 115,698,368 109,115,991 Net income (loss) per share attributable to common stockholders: Basic $ 0.04 $ (0.49) $ 0.01 $ (0.41) Diluted $ 0.04 $ (0.49) $ 0.01 $ (0.41) |
Schedule of antidilutive securities excluded from computation of dilutive net income per share | Fiscal Quarter Ended Two Fiscal Quarters Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Restricted stock awards — 5,075,346 — 8,721,817 Restricted stock units 102,108 112,449 56,764 55,613 Stock options 1,809,704 81,017 1,501,528 40,068 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) | 6 Months Ended |
Jul. 02, 2022 segment | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Adoption of ASU 2016-02 (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Dec. 31, 2021 |
Recently Issued Accounting Pronouncements | ||
Operating lease right-of-use assets | $ 35,470 | |
Operating lease liabilities | 36,191 | |
Retained earnings | $ (47,411) | $ (48,583) |
ASU 2016-02 | Adjustment | ||
Recently Issued Accounting Pronouncements | ||
Operating lease right-of-use assets | 33,500 | |
Operating lease liabilities | 34,000 | |
Deferred rent | (200) | |
Retained earnings | $ (300) |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Nov. 25, 2021 | Nov. 24, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Business Acquisition [Line Items] | ||||
Total purchase price, net of cash acquired | $ 384 | |||
Proceeds from long term debt used to pay Acquisition consideration | 320,125 | $ 172,813 | ||
Trojan Leisure Products, LLC d/b/a Radiant Pools | ||||
Business Acquisition [Line Items] | ||||
Business acquisition, cash consideration | $ 90,700 | |||
Cash acquired | 200 | |||
Total purchase price, net of cash acquired | 90,500 | |||
Proceeds from long term debt used to pay Acquisition consideration | 50,000 | |||
Business acquisition, transaction costs | $ 2,900 | |||
Measurement period adjustment | $ 400 | $ 400 |
ACQUISITIONS - Purchase price a
ACQUISITIONS - Purchase price allocation (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Dec. 31, 2021 | Nov. 24, 2021 |
Allocation of purchase price: | |||
Goodwill | $ 128,628 | $ 128,871 | |
Trojan Leisure Products, LLC d/b/a Radiant Pools | |||
Business Acquisition [Line Items] | |||
Total consideration | $ 91,109 | ||
Allocation of purchase price: | |||
Cash | 217 | ||
Trade receivables | 2,805 | ||
Inventories | 5,528 | ||
Prepaid expenses and other current assets | 396 | ||
Property and equipment | 1,263 | ||
Intangible assets | 72,500 | ||
Total assets acquired | 82,709 | ||
Accounts payable | 1,744 | ||
Accrued expenses and other current liabilities | 1,038 | ||
Other long-term liabilities | 2,920 | ||
Total liabilities assumed | 5,702 | ||
Total fair value of net assets acquired, excluding goodwill: | 77,007 | ||
Goodwill | $ 14,102 |
ACQUISITIONS - Allocation of pu
ACQUISITIONS - Allocation of purchase price (Details) - Trojan Leisure Products, LLC d/b/a Radiant Pools $ in Thousands | 6 Months Ended |
Jul. 02, 2022 USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 72,500 |
Dealer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 37,000 |
Amortization Period | 13 years |
Trade names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 13,000 |
Amortization Period | 25 years |
Technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 13,000 |
Amortization Period | 15 years |
Pool designs | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 7,900 |
Amortization Period | 15 years |
Backlog | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 1,600 |
Amortization Period | 10 months |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair value of financial instruments (Details) - Level 2 - USD ($) $ in Thousands | Jul. 02, 2022 | Dec. 31, 2021 |
New Term Loan Facility | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amount | $ 313,721 | |
New Term Loan Facility | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amount | 298,819 | |
Amended Term Loan | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amount | $ 280,408 | |
Amended Term Loan | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amount | 281,926 | |
Interest Rate Swap | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of interest rate swap asset | $ 4,400 | $ 500 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Nov. 25, 2021 | Jul. 02, 2022 | Dec. 31, 2021 | Nov. 24, 2021 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 128,628 | $ 128,871 | ||
Trojan Leisure Products, LLC d/b/a Radiant Pools | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 14,102 | |||
Measurement period adjustment | $ 400 | $ 400 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 393,493 | $ 393,493 | $ 393,493 | ||
Finite Lived Intangible Assets, Accumulated Foreign Currency Translation Gain (Loss) | (21) | (21) | 845 | ||
Accumulated Amortization | 70,448 | 70,448 | 56,028 | ||
Net Amount | 323,024 | 323,024 | 338,310 | ||
Amortization of Intangible Assets | 7,156 | $ 5,479 | 14,348 | $ 11,074 | |
Trade names and trademarks | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 148,100 | 148,100 | 148,100 | ||
Finite Lived Intangible Assets, Accumulated Foreign Currency Translation Gain (Loss) | (91) | (91) | 439 | ||
Accumulated Amortization | 19,684 | 19,684 | 16,382 | ||
Net Amount | 128,325 | 128,325 | 132,157 | ||
Patented technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 16,126 | 16,126 | 16,126 | ||
Finite Lived Intangible Assets, Accumulated Foreign Currency Translation Gain (Loss) | 34 | 34 | 65 | ||
Accumulated Amortization | 6,082 | 6,082 | 5,205 | ||
Net Amount | 10,078 | 10,078 | 10,986 | ||
Technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 13,000 | 13,000 | 13,000 | ||
Accumulated Amortization | 506 | 506 | 72 | ||
Net Amount | 12,494 | 12,494 | 12,928 | ||
Pool designs | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 13,628 | 13,628 | 13,628 | ||
Finite Lived Intangible Assets, Accumulated Foreign Currency Translation Gain (Loss) | (16) | (16) | 265 | ||
Accumulated Amortization | 1,569 | 1,569 | 1,101 | ||
Net Amount | 12,043 | 12,043 | 12,792 | ||
Franchise relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 1,187 | 1,187 | 1,187 | ||
Finite Lived Intangible Assets, Accumulated Foreign Currency Translation Gain (Loss) | 40 | 40 | 54 | ||
Accumulated Amortization | 916 | 916 | 767 | ||
Net Amount | 311 | 311 | 474 | ||
Dealer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 197,376 | 197,376 | 197,376 | ||
Finite Lived Intangible Assets, Accumulated Foreign Currency Translation Gain (Loss) | 12 | 12 | 22 | ||
Accumulated Amortization | 38,820 | 38,820 | 30,838 | ||
Net Amount | 158,568 | 158,568 | 166,560 | ||
Backlog | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 1,600 | 1,600 | 1,600 | ||
Accumulated Amortization | 1,120 | 1,120 | 160 | ||
Net Amount | 480 | 480 | 1,440 | ||
Non-competition agreements | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 2,476 | 2,476 | 2,476 | ||
Accumulated Amortization | 1,751 | 1,751 | 1,503 | ||
Net Amount | $ 725 | $ 725 | $ 973 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Amortization Expense (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of fiscal 2022 | $ 13,840 | |
2023 | 26,528 | |
2024 | 25,708 | |
2025 | 25,550 | |
2026 | 25,550 | |
Thereafter | 205,848 | |
Net Amount | $ 323,024 | $ 338,310 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Dec. 31, 2021 |
INVENTORIES, NET | ||
Raw materials | $ 105,131 | $ 77,510 |
Finished goods | 56,788 | 32,046 |
Inventory, Net, Total | $ 161,919 | $ 109,556 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Feb. 23, 2022 | Jul. 02, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | |||
Gross debt | $ 324,187 | ||
Less: Unamortized discount and debt issuance costs | (10,466) | $ (3,601) | |
Total debt | 313,721 | 280,408 | |
Less: Current portion of long-term debt | (3,250) | (17,220) | |
Total long-term debt | 310,471 | 263,188 | |
Repayment of debt | $ 294,000 | ||
New Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 75,000 | ||
New Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Gross debt | 324,187 | ||
Total debt | $ 313,700 | ||
Maximum borrowing capacity | $ 325,000 | ||
Amended Term Loan | |||
Debt Instrument [Line Items] | |||
Gross debt | $ 284,009 |
LONG-TERM DEBT - New Revolving
LONG-TERM DEBT - New Revolving Credit Facility (Details) - New Revolving Credit Facility - USD ($) $ in Millions | Feb. 23, 2022 | Jul. 02, 2022 |
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 75 | |
Commitment fee rate range, depending on leverage ratio | 0.375% | |
Debt issuance costs | $ 0.8 | |
Amount outstanding | $ 0 | |
Minimum | ||
Debt Instrument [Line Items] | ||
Commitment fee rate range, depending on leverage ratio | 0.25% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Commitment fee rate range, depending on leverage ratio | 0.50% | |
SOFR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3.50% | |
Canadian Prime Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.50% | |
EURIBOR or AUD Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3.50% |
LONG-TERM DEBT - New Term Loan
LONG-TERM DEBT - New Term Loan Facility (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Feb. 23, 2022 | Jul. 02, 2022 | Dec. 31, 2021 | Dec. 18, 2018 | |
Debt Instrument [Line Items] | ||||
Gross debt | $ 324,187 | |||
Amount outstanding, net of discount and issuance costs | 313,721 | $ 280,408 | ||
Discount and debt issuance costs | 10,466 | $ 3,601 | ||
New Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Gross debt | 324,187 | |||
Principal payments calculated as percent of outstanding principal | 0.25% | |||
Mandatory prepayment rate as a percentage of excess cash flow | 50% | |||
Mandatory prepayment rate as a percentage of non-permitted indebtedness | 100% | |||
Debt issuance costs | $ 6,100 | 5,800 | ||
Unamortized discount | 4,900 | 4,700 | ||
Amount outstanding, net of discount and issuance costs | $ 313,700 | |||
Maximum borrowing capacity | $ 325,000 | |||
Effective interest rate | 5.95% | |||
New Term Loan Facility | SOFR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.75% | |||
New Term Loan Facility | SOFR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 4% | |||
New Term Loan Facility | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.75% | |||
New Term Loan Facility | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3% | |||
Revolver | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 30,000 |
LONG-TERM DEBT - Term Loan Faci
LONG-TERM DEBT - Term Loan Facility (Details) - USD ($) $ in Thousands | Jul. 02, 2022 | Nov. 24, 2021 | Jan. 25, 2021 | Oct. 14, 2020 | May 29, 2019 |
Debt Instrument [Line Items] | |||||
Gross debt | $ 324,187 | ||||
Term loan | |||||
Debt Instrument [Line Items] | |||||
Gross debt | $ 215,000 | ||||
Additional borrowings under amendment | $ 50,000 | $ 175,000 | $ 20,000 | $ 23,000 |
LONG-TERM DEBT - Interest rate
LONG-TERM DEBT - Interest rate swap (Details) - Interest Rate Swap $ in Millions | Feb. 28, 2022 USD ($) |
Derivative [Line Items] | |
Derivative notional amount | $ 200 |
SOFR | |
Derivative [Line Items] | |
Fixed borrowing rate | 0.496% |
LONG-TERM DEBT - Principal paym
LONG-TERM DEBT - Principal payments due (Details) $ in Thousands | Jul. 02, 2022 USD ($) |
Principal payments due | |
Remainder of fiscal 2022 | $ 1,625 |
2023 | 3,250 |
2024 | 3,250 |
2025 | 3,250 |
2026 | 3,250 |
Thereafter | 309,562 |
Total payments due | $ 324,187 |
PRODUCT WARRANTIES (Details)
PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2022 | Jul. 03, 2021 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the year | $ 4,909 | $ 2,882 |
Accruals for warranties issued | 4,110 | 3,338 |
Less: Settlements made (in cash or in kind) | (3,534) | (2,504) |
Balance at the end of the year | $ 5,485 | $ 3,716 |
LEASES - Lease expense (Details
LEASES - Lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jul. 02, 2022 | Jul. 02, 2022 | Dec. 31, 2021 | |
Leases | |||
Retained earnings | $ (47,411) | $ (47,411) | $ (48,583) |
Components of lease expense: | |||
Operating lease expense | 2,366 | 4,504 | |
Short-term lease expense | 12 | 32 | |
Variable lease expense | 126 | 304 | |
Total lease expense | $ 2,504 | $ 4,840 | |
ASU 2016-02 | Adjustment | |||
Leases | |||
Retained earnings | $ (300) |
LEASES - Supplemental informati
LEASES - Supplemental information (Details) $ in Thousands | 6 Months Ended |
Jul. 02, 2022 USD ($) | |
Weighted-average remaining lease term (years) | |
Operating leases | 6 years 2 months 12 days |
Weighted-average discount rate | |
Operating leases | 4.60% |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 3,526 |
LEASES - Maturities of operatin
LEASES - Maturities of operating lease liabilities (Details) $ in Thousands | Jul. 02, 2022 USD ($) |
LEASES | |
Remainder of fiscal 2022 | $ 4,266 |
2023 | 7,544 |
2024 | 7,159 |
2025 | 6,547 |
2026 | 5,121 |
Thereafter | 11,207 |
Total | 41,844 |
Less: Interest | (5,653) |
Present value of lease liability | $ 36,191 |
NET SALES (Details)
NET SALES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 206,800 | $ 180,889 | $ 398,414 | $ 329,635 |
In-ground Swimming Pools | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 112,153 | 108,001 | 223,956 | 201,644 |
Covers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 38,389 | 26,223 | 70,914 | 50,229 |
Liners | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 56,258 | $ 46,665 | $ 103,544 | $ 77,762 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
INCOME TAXES | ||||
Effective income tax rate | 71.90% | (10.80%) | 91.80% | (21.90%) |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||||
May 10, 2022 USD ($) | Jan. 11, 2022 USD ($) $ / shares shares | Apr. 27, 2021 USD ($) shares | Apr. 13, 2021 | Jul. 02, 2022 USD ($) $ / shares shares | Apr. 02, 2022 USD ($) shares | Jul. 03, 2021 USD ($) shares | Apr. 03, 2021 USD ($) shares | Jul. 02, 2022 USD ($) $ / shares | Dec. 31, 2021 $ / shares | |
Net proceeds from initial public offering | $ 399,300 | $ 399,264 | ||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Value of shares repurchased and retired | $ 15,000 | $ 257,663 | $ 216,700 | $ 64,938 | ||||||
Underwriting fees | $ 11,437 | |||||||||
Repurchase Program [Member] | ||||||||||
Amount authorized | $ 100,000 | |||||||||
Term of repurchase program | 3 years | |||||||||
Amount remaining for repurchases | 85,000 | $ 85,000 | ||||||||
Common Stock | ||||||||||
Stock split ratio | 109,673.709 | |||||||||
Net proceeds from initial public offering (in shares) | shares | 23,000,000 | 23,000,000 | ||||||||
Net proceeds from initial public offering | $ 2 | |||||||||
Sale of common stock (in shares) | shares | 13,800,000 | 13,800,000 | ||||||||
Offering price per share | $ / shares | $ 19.50 | |||||||||
Value of shares repurchased and retired | $ 257,700 | $ 15,000 | $ 1 | $ 1 | $ 2 | |||||
Underwriting fees | $ 11,400 | |||||||||
Number of shares repurchased and retired during the period | shares | 13,800,000 | 2,026,231 | 13,800,244 | 12,264,438 | 21,666,653 | |||||
Common Stock | Underwriters Option | ||||||||||
Net proceeds from initial public offering (in shares) | shares | 3,000,000 | |||||||||
Sale of common stock (in shares) | shares | 1,800,000 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Apr. 12, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares reserved for issuance | 13,170,212 | ||||
Maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director | $ 750,000 | ||||
Stock-based compensation expense | $ 16,429 | $ 75,511 | $ 33,354 | $ 76,975 | |
Total unrecognized stock-based compensation expense | 47,000 | $ 47,000 | |||
Total unrecognized stock-based compensation expense expected to be recognized over a weighted-average period | 1 year 4 months 9 days | ||||
Weighted average grant-date fair value | $ 6.48 | ||||
Cost of sales | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | 1,140 | 4,923 | $ 2,316 | 4,923 | |
Selling, general and administrative expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 15,289 | $ 70,588 | $ 31,038 | $ 72,052 |
STOCK-BASED COMPENSATION - Weig
STOCK-BASED COMPENSATION - Weighted average basis for fair value option award granted (Details) | 6 Months Ended |
Jul. 02, 2022 | |
STOCK-BASED COMPENSATION. | |
Risk-free interest rate | 1.82% |
Expected volatility | 39.77% |
Expected term (in years) | 6 years 3 months |
Expected dividend yield | 0% |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Awards (Details) - Restricted stock awards | 6 Months Ended |
Jul. 02, 2022 $ / shares shares | |
Shares | |
Balance at beginning | shares | 5,803,124 |
Granted | shares | |
Vested | shares | (1,373,260) |
Forfeited | shares | (53,961) |
Balance at ending | shares | 4,375,903 |
Weighted-Average Grant Date Fair Value | |
Balance at beginning | $ / shares | $ 19 |
Granted | $ / shares | |
Vested | $ / shares | 19 |
Forfeited | $ / shares | 19 |
Balance at ending | $ / shares | $ 19 |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - Restricted stock units | 6 Months Ended |
Jul. 02, 2022 $ / shares shares | |
Shares | |
Balance at beginning | shares | 278,591 |
Granted | shares | 108,134 |
Vested | shares | (182,383) |
Forfeited | shares | (5,173) |
Balance at ending | shares | 199,169 |
Weighted-Average Grant Date Fair Value | |
Balance at beginning | $ / shares | $ 19.08 |
Granted | $ / shares | 15.27 |
Vested | $ / shares | 19 |
Forfeited | $ / shares | 19 |
Balance at ending | $ / shares | $ 17.09 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) - Stock options - USD ($) | 6 Months Ended | 12 Months Ended |
Jul. 02, 2022 | Dec. 31, 2021 | |
Shares | ||
Outstanding at the beginning | 822,886 | |
Granted | 1,144,865 | |
Forfeited | (185,129) | |
Outstanding at the end | 1,782,622 | 822,886 |
Vested and expected to vest | 1,782,622 | |
Options exercisable at the end | 181,271 | |
Weighted-Average Exercise Price per Share | ||
Outstanding at the beginning (in dollars per share) | $ 19.08 | |
Granted (in dollars per share) | 15.56 | |
Forfeited (in dollars per share) | 17.22 | |
Outstanding at the end (in dollars per share) | 17.02 | $ 19.08 |
Vested and expected to vest at the end (in dollars per share) | 17.02 | |
Options exercisable at the end (in dollars per share) | $ 19 | |
Weighted-Average Remaining Contract Term | ||
Outstanding at the end (in years) | 9 years 2 months 26 days | 0 years |
Vested and expected to vest at the end (in years) | 9 years 2 months 26 days | |
Options exercisable at the end (in years) | 0 years | |
Options exercisable at the end (in dollars) |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jul. 02, 2022 | Apr. 02, 2022 | Jul. 03, 2021 | Apr. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Dec. 31, 2021 | |
Numerator: | |||||||
Net income (loss) attributable to common stockholders | $ 4,303 | $ (2,840) | $ (53,598) | $ 8,533 | $ 1,463 | $ (45,065) | |
Weighted-average common shares outstanding | |||||||
Basic | 113,692,160 | 109,163,698 | 113,695,354 | 109,115,991 | |||
Diluted | 115,384,273 | 109,163,698 | 115,698,368 | 109,115,991 | |||
Net income (loss) per share attributable to common stockholders | |||||||
Basic | $ 0.04 | $ (0.49) | $ 0.01 | $ (0.41) | |||
Diluted | $ 0.04 | $ (0.49) | $ 0.01 | $ (0.41) | |||
Common stock issued and outstanding for accounting purposes | 113,171,655 | 113,171,655 | 113,642,487 | ||||
Restricted stock awards | |||||||
Net income (loss) per share attributable to common stockholders | |||||||
Potentially dilutive securities outstanding | 5,075,346 | 8,721,817 | |||||
Restricted stock units | |||||||
Net income (loss) per share attributable to common stockholders | |||||||
Potentially dilutive securities outstanding | 102,108 | 112,449 | 56,764 | 55,613 | |||
Stock options | |||||||
Net income (loss) per share attributable to common stockholders | |||||||
Potentially dilutive securities outstanding | 1,809,704 | 81,017 | 1,501,528 | 40,068 |
RELATED PARTY TRANSACTIONS - Br
RELATED PARTY TRANSACTIONS - Bright AI Services (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jul. 02, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||
Accounts payable - related party | $ 900 | $ 850 |
Bright AI Services | ||
Related Party Transaction [Line Items] | ||
Accounts payable - related party | 900 | 900 |
Bright AI Services | Development Of Internal Use Software | ||
Related Party Transaction [Line Items] | ||
Costs incurred | $ 300 | $ 2,100 |
RELATED PARTY TRANSACTIONS - Ex
RELATED PARTY TRANSACTIONS - Expense Reimbursement and Management Fees (Details) - Sponsor - Management Fee Arrangement - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2022 | Jul. 03, 2021 | Jul. 02, 2022 | Jul. 03, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||||
Maximum annual reimbursement | $ 1,000 | ||||
Management fees incurred | $ 0 | $ 0 | 0 | $ 0 | |
Amounts payable | $ 0 | 0 | $ 0 | ||
Maximum | |||||
Related Party Transaction [Line Items] | |||||
Reimbursements to related party of out-of-pocket costs or expenses | $ 100 |