Latham Group Inc.
11/04/2026 | Press release | Distributed by Public on 11/04/2026 06:31
Quarterly Report for Quarter Ending September 26, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 4, 2026 (the "Annual Report").
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this report other than statements of historical fact may constitute forward-looking statements, including statements regarding our future operating results and financial position, our business strategy and plans, business and market trends, our objectives for future operations, macroeconomic and geopolitical conditions, acquisitions and related benefits, and the sufficiency of our cash balances, working capital and cash generated from operating, investing, and financing activities for our future liquidity and capital resource needs. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "confident," "continue," "could," "estimate," "expect," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. These statements involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our control, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those set forth under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in the Annual Report and as described in other subsequent reports we file with the SEC, including elsewhere in this Quarterly Report on Form 10-Q. For similar reasons, our past results may not be a reliable indicator of future performance or trends. We encourage you to read this report and our other filings with the SEC carefully. You also should be aware that these risk factors and other information do not describe every risk that we face. New emerging risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business, financial condition, results of operations and cash flows. We operate in a very competitive and rapidly changing environment, and new risks emerge from time to time that may impair our business, financial condition, results of operations and cash flows. Although we believe that the expectations reflected in the forward-looking statements are reasonable and our expectations based on third-party information and projections are from sources that management believes to be reputable, we cannot guarantee future results, levels of activities, performance, or achievements.
These forward-looking statements reflect our views with respect to future events as of the date of this Quarterly Report on Form 10-Q or the date specified herein, and we have based these forward-looking statements on our current expectations and projections about future events and trends. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. Our forward-looking statements further do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements.
Overview
We are the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand. We hold the leading position in North America in every product category in which we compete. It is our view that we are the most sought-after brand in the pool industry. We are Latham, The Pool CompanyTM.
With an operating history that spans over 70 years, we offer the industry's broadest portfolio of pools and related products, including in-ground swimming pools, pool covers, and pool liners.
We have a heritage of innovation. In an industry that has traditionally marketed on a business-to-business basis (pool manufacturer to dealer), we pioneered the first "direct-to-homeowner" digital and social marketing strategy that has transformed the homeowner's purchase journey. Through this marketing strategy, we are able to create demand for our pools and to provide high quality, purchase-ready consumer leads to our dealer partners.
Partnership with our dealers is integral to our collective success, and we have enjoyed long-tenured relationships averaging over 15 years. We support our dealer network with business development tools, co-branded marketing programs, and in-house training.
The full resources of our Company are dedicated to designing and manufacturing high-quality pool products, with the homeowner in mind, and positioning ourselves as a value-added partner to our dealers.
Our operations consist of approximately 1,900 employees on average across approximately 40 locations. The broad geographic reach of our national manufacturing and distribution network allows us to service our customers on short lead times and to deliver our products in a cost-effective manner. Our mission is to design and manufacture high-quality pool products, with the homeowner in mind, and to be a value-added partner to our dealers.
We conduct our business as one operating and reportable segment that designs, manufactures, and markets in-ground swimming pools, pool covers, and pool liners.
Recent Developments
Highlights for the fiscal quarter ended September 26, 2026
•Increase in net sales of 12.5%, or $20.3 million, to $182.2 million for the fiscal quarter ended September 26, 2026, compared to $161.9 million for the fiscal quarter ended September 27, 2025.
•Increase in net income of $3.9 million to $12.1 million and representing a 6.6% net income margin for the fiscal quarter ended September 26, 2026, compared to $8.1 million and representing a 5.0% net income margin for the fiscal quarter ended September 27, 2025.
•Increase in Adjusted EBITDA (as defined below) of $6.9 million to $45.3 million for the fiscal quarter ended September 26, 2026, compared to $38.3 million for the fiscal quarter ended September 27, 2025. Adjusted EBITDA margin increased from 23.7% to 24.8%.
Highlights for the three fiscal quarters ended September 26, 2026
•Increase in net sales of 11.4%, or $51.0 million, to $497.0 million for the three fiscal quarters ended September 26, 2026, compared to $446.0 million for the three fiscal quarters ended September 27, 2025.
•Decrease in net income of $1.9 million to $16.3 million and representing a 3.3% net income margin for the three fiscal quarters ended September 26, 2026, compared to net income of $18.1 million and representing a 4.1% net income margin for the three fiscal quarters ended September 27, 2025.
•Increase in Adjusted EBITDA of $12.7 million to $102.0 million for the three fiscal quarters ended September 26, 2026, compared to $89.4 million for the three fiscal quarters ended September 27, 2025. Adjusted EBITDA margin increased from 20.0% to 20.5%.
Business Update
We delivered strong third quarter and year-to-date results, demonstrating continued success in material conversion and underpinning our expectation that Latham continues to gain share across our product lines. Third quarter net sales increased by 12.5%, including 8.4% organic growth, led by in-ground pool sales, which grew by 22.6%, or 13.9% organically, compared to last year's third quarter.
The substantial increase in in-ground pool sales was driven almost entirely by fiberglass pools, which are increasingly being recognized by consumers and pool builders for their competitive advantages over concrete, namely fast and easy installation, cost efficiency, durability, lifetime warranty and lower maintenance costs. Similarly, autocovers continued to gain momentum as they have strong safety benefits, offer significant cost savings to pool owners and are compatible with all types of in-ground pools. Cover sales showed substantial organic growth of autocovers, where we are achieving meaningful revenue synergies following the acquisitions of several of our Coverstar dealers over the last two years.
The Sand States remain a key growth market for Latham, which we believe has the potential to drive a step-change in companywide sales. Sales growth in the Sand States accelerated to 21.1% in the third quarter and increased 16.6% year-to-
date, led by strong performance in Florida and Texas. We are making meaningful progress in executing the Sand States growth strategy we outlined earlier this year, delivering on key initiatives that position us to drive continued growth by building on our refined market development framework. We also partnered with a national homebuilder to offer Latham fiberglass pools as an option in their new home construction in Florida. In parallel, we continued to strengthen our sales capabilities, adding field sales resources in Florida, with further expansion planned in Texas and Arizona, while targeted marketing initiatives are gaining traction and contributing to growth.
Additionally, we completed the build-out of our commercial organization, including hiring a Chief Commercial Officer.
Strategic Acquisition
Strategic transactions continue to be part of our growth strategy. On February 26, 2026, we completed the acquisition of Freedom Pools, a fiberglass pool manufacturer and installer operating in Australia and New Zealand. The acquisition has been and is expected to continue to be accretive to our earnings, adding approximately $20.0 million in net sales and approximately $4.0 million in Adjusted EBITDA, on an annualized basis, before acquisition synergies. The purchase price was $15.4 million, and included a holdback of $1.6 million that has been accrued on our condensed consolidated balance sheet. The transaction was fully funded with cash on hand.
Purchase of Property
During the fiscal quarter ended March 28, 2026, we purchased four fiberglass production facilities that had previously been leased. The transaction was completed on February 6, 2026 for a total purchase price of $17.6 million. The purchase price included a $12.0 million deposit made in the fourth quarter of 2025, and $5.6 million paid at closing. This purchase was the primary reason for the increase in property and equipment, net on the condensed consolidated balance sheet as of September 26, 2026.
Debt Refinancing
On August 20, 2026, we entered into an agreement (the "New Credit Agreement") with Jefferies Finance LLC, 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") in an initial principal amount of $300.0 million (collectively, the "Refinancing"). On the Closing Date, proceeds under the agreement were used to repay and replace all outstanding obligations under, and terminate the Prior Credit Agreement (as defined below) and for general corporate purposes.
Key Performance Indicators
Net Sales
We derive our revenue from the design, manufacture, and sale of in-ground swimming pools, pool covers, and pool liners. We sell fiberglass pools, which are one-piece manufactured fiberglass pools that are ready to be installed in a consumer's backyard, and custom vinyl pools, which are manufactured pools that are made out of non-corrosive steel or composite polymer frame, on top of which a vinyl liner is installed. We sell liners for the interior surface of vinyl pools (including pools that were not manufactured by us). We also sell all-season pool covers, which are winterizing mesh or solid pool covers that protect pools against debris and cold or inclement weather, and automatic safety covers for pools that can be operated with a switch.
Our sales are made through one-step and two-step business-to-business distribution channels. In our one-step distribution channel, we sell our products directly to dealers who, in turn, sell our products to consumers. In our two-step distribution channel, we sell our products to distributors who warehouse our products and sell them on to dealers, who ultimately sell our products to consumers.
Each product shipped is considered to be one performance obligation. With the exception of our extended service warranties and our custom product contracts, we recognize our revenue when control of our promised goods is transferred to our customers (dealer in one-step distribution channel or distributor in two-step distribution channel), either upon shipment or arrival at our customer's destination depending upon the terms of the purchase order. Sales are recognized net of any estimated rebates, returns, allowances, or other sales incentives. Revenue that is derived from our extended service warranties, which are separately priced and sold, is recognized over the term of the contracts. Revenue from custom
products is recognized over time utilizing an input method that compares the cost of cumulative work-in-process to date to the most current estimates for the entire cost of the performance obligation.
Gross Margin
Gross margin is gross profit as a percentage of our net sales. Gross margin depends upon several factors, such as the prices we charge buyers, changes in prices of raw materials, the volume and relative sales mix among product lines, and plant performance, among other factors. Gross margin is also impacted by the costs of distribution and occupancy costs, which can vary.
Our gross profit is variable in nature and generally follows changes in net sales. The components of our cost of sales may not be comparable to the components of cost of sales or similar measures of other companies. As a result, our gross profit and gross margin may not be comparable to similar data made available by other companies.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are key metrics used by management and the Board of Directors of the Company (the "Board") to assess our financial performance. Adjusted EBITDA and Adjusted EBITDA margin are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use Adjusted EBITDA and Adjusted EBITDA margin to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to utilize as a significant performance metric in our annual management incentive bonus plan compensation, and to compare our performance against that of other companies using similar measures. We have presented Adjusted EBITDA and Adjusted EBITDA margin solely as supplemental disclosures because we believe they allow for a more complete analysis of results of operations and assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit), (iv) (gain) loss on sale and disposal of property and equipment, (v) restructuring charges, (vi) stock-based compensation expense, (vii) unrealized losses (gains) on foreign currency transactions, (viii) strategic initiative costs, (ix) acquisition and integration related costs and (x) other.
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and should not be considered as alternatives to net income (loss) as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. We encourage evaluation of these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, be mindful that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Adjusted EBITDA margin in the future, and any such modification may be material. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by any such adjustments. In addition, other companies, including companies in our industry, may not calculate Adjusted EBITDA and Adjusted EBITDA margin at all or may calculate Adjusted EBITDA and Adjusted EBITDA margin differently and accordingly, are not necessarily comparable to similarly entitled measures of other companies, which reduces the usefulness of Adjusted EBITDA and Adjusted EBITDA margin as tools for comparison.
We believe Adjusted EBITDA and Adjusted EBITDA margin are useful measurements for investors as they help identify underlying trends that could otherwise be masked by certain expenses that we do not consider indicative of our ongoing operating performance. We also use Adjusted EBITDA and Adjusted EBITDA margin for planning purposes, assessing our financial performance, and other strategic decisions. For a discussion of Adjusted EBITDA and Adjusted EBITDA margin and the limitations on their use, and the reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, and our calculation of Adjusted EBITDA margin see "- Non-GAAP Financial Measures" below.
Results of Operations
Fiscal Quarter Ended September 26, 2026 Compared to Fiscal Quarter Ended September 27, 2025
The following table summarizes our results of operations for the fiscal quarter ended September 26, 2026 and September 27, 2025 (dollars in thousands):
| Fiscal Quarter Ended | |||||||||||||||||||||||||||||||||||
| % of | % of | Change | |||||||||||||||||||||||||||||||||
| September 26, | Net | September 27, | Net | Change | % of | ||||||||||||||||||||||||||||||
| 2026 | Sales | 2025 | Sales | Amount | Net Sales | ||||||||||||||||||||||||||||||
| Net sales | $ | 182,175 | 100.0 | % | $ | 161,903 | 100.0 | % | $ | 20,272 | - | % | |||||||||||||||||||||||
| Cost of sales | 115,348 | 63.3 | % | 104,596 | 64.6 | % | 10,752 | (1.3) | % | ||||||||||||||||||||||||||
| Gross profit | 66,827 | 36.7 | % | 57,307 | 35.4 | % | 9,520 | 1.3 | % | ||||||||||||||||||||||||||
| Selling, general and administrative expense | 35,862 | 19.7 | % | 28,586 | 17.6 | % | 7,276 | 2.1 | % | ||||||||||||||||||||||||||
| Amortization | 7,358 | 4.0 | % | 7,213 | 4.5 | % | 145 | (0.5) | % | ||||||||||||||||||||||||||
| Income from operations | 23,607 | 13.0 | % | 21,508 | 13.3 | % | 2,099 | (0.3) | % | ||||||||||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||||||||||||||
| Interest expense, net | 5,423 | 3.0 | % | 6,067 | 3.7 | % | (644) | (0.7) | % | ||||||||||||||||||||||||||
| Loss on extinguishment and modification of debt | 5,022 | 2.8 | % | - | - | % | 5,022 | 2.8 | % | ||||||||||||||||||||||||||
| Other (income) expense, net | (71) | - | % | 1,168 | 0.8 | % | (1,239) | (0.8) | % | ||||||||||||||||||||||||||
| Total other expense, net | 10,374 | 5.8 | % | 7,235 | 4.5 | % | 3,139 | 1.3 | % | ||||||||||||||||||||||||||
| Earnings from equity method investment | 1,789 | 1.0 | % | 1,310 | 0.8 | % | 479 | 0.2 | % | ||||||||||||||||||||||||||
| Income before income taxes | 15,022 | 8.2 | % | 15,583 | 9.6 | % | (561) | (1.4) | % | ||||||||||||||||||||||||||
| Income tax expense | 2,966 | 1.6 | % | 7,466 | 4.6 | % | (4,500) | (3.0) | % | ||||||||||||||||||||||||||
| Net income | $ | 12,056 | 6.6 | % | $ | 8,117 | 5.0 | % | $ | 3,939 | 1.6 | % | |||||||||||||||||||||||
|
Adjusted EBITDA (a)
|
$ | 45,254 | 24.8 | % | $ | 38,328 | 23.7 | % | $ | 6,926 | 1.1 | % | |||||||||||||||||||||||
________________________________________
(a)Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Financial Measures" for a reconciliation to net income, the most directly comparable GAAP measure, and for information regarding our use of Adjusted EBITDA.
Net Sales
Net sales was $182.2 million for the fiscal quarter ended September 26, 2026, compared to $161.9 million for the fiscal quarter ended September 27, 2025. The $20.3 million, or 12.5%, increase in net sales was due to a $16.7 million increase in sales volume and a $3.6 million increase from higher pricing. The increase in net sales was primarily driven by organic growth in our in-ground pool sales including sales growth in the Sand States, organic growth of autocovers and the benefit of recent price increases, as well as the acquisition of Freedom Pools. The increase in net sales of $20.3 million across our product lines consisted of an increase of $17.1 million for in-ground swimming pools and $4.8 million for covers, partially offset by a decrease of $1.5 million for liners.
Cost of Sales and Gross Margin
Cost of sales was $115.3 million for the fiscal quarter ended September 26, 2026, compared to $104.6 million for the fiscal quarter ended September 27, 2025. The $10.8 million, or 10.3%, increase in cost of sales was primarily the result of the increase in sales volume, partially offset by the impact of production efficiencies resulting from lean manufacturing and
value engineering programs. Gross margin increased by 1.3%, to 36.7% of net sales for the fiscal quarter ended September 26, 2026, compared to 35.4% of net sales for the fiscal quarter ended September 27, 2025. The 1.3% increase in gross margin was primarily driven by greater plant absorption on higher volumes and the ongoing benefits of our lean manufacturing and value engineering initiatives.
Selling, General and Administrative Expense
Selling, general and administrative expense was $35.9 million for the fiscal quarter ended September 26, 2026, compared to $28.6 million for the fiscal quarter ended September 27, 2025. The $7.3 million, or 25.5%, increase in selling, general and administrative expense was primarily due to investments in support of our growth strategies and market share expansion, sales and marketing initiatives to accelerate the fiberglass conversion strategy in the Sand States, acquisition and integration related costs, which included $3.2 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024, as well as costs related to our digital transformation program.
Amortization
Amortization was $7.4 million for the fiscal quarter ended September 26, 2026 and $7.2 million for the fiscal quarter ended September 27, 2025. The $0.1 million, or 2.0%, increase in amortization was due to the Freedom Pools acquisition.
Interest Expense, net
Interest expense, net was $5.4 million for the fiscal quarter ended September 26, 2026, compared to $6.1 million for the fiscal quarter ended September 27, 2025. The $0.6 million, or 10.6%, decrease in interest expense, net was primarily the result of the change in the fair value of our interest rate swap, a decrease in interest rates and a change in the amortization of financing fees related to the Refinancing (defined below), compared to the fiscal quarter ended September 27, 2025.
Loss on Extinguishment and Modification of Debt
Loss on extinguishment and modification of debt was $5.0 million for the fiscal quarter ended September 26, 2026, compared to none for the fiscal quarter ended September 27, 2025 due to the Refinancing that was completed in August 2026.
Other (Income) Expense, Net
Other income, net was $0.1 million for the fiscal quarter ended September 26, 2026, compared to other expense, net of $1.2 million for fiscal quarter ended September 27, 2025. The $1.2 million increase in other income, net was primarily driven by a favorable change in net foreign currency transaction gains and losses associated with our international subsidiaries.
Earnings from Equity Method Investment
Earnings from our equity method investment in Premier Pools & Spas was $1.8 million for the fiscal quarter ended September 26, 2026, compared to $1.3 million for the fiscal quarter ended September 27, 2025, due to the financial performance of Premier Pools & Spas.
Income Tax Expense
Income tax expense was $3.0 million for the fiscal quarter ended September 26, 2026, compared to $7.5 million for the fiscal quarter ended September 27, 2025. Our effective tax rate was 19.7% for the fiscal quarter ended September 26, 2026, compared to 47.9% for the fiscal quarter ended September 27, 2025. The differences between the U.S. federal statutory income tax rate and our effective income tax rates for the fiscal quarter ended September 26, 2026 and the fiscal quarter ended September 27, 2025 were primarily attributable to the jurisdictional mix of income, the discrete impact of stock-based compensation forfeitures or windfalls and exercises and the effects of branch accounting for Latham Canada.
Net Income
Net income was $12.1 million for the fiscal quarter ended September 26, 2026, compared to $8.1 million for the fiscal quarter ended September 27, 2025. The $3.9 million, or 48.5%, increase in net income was primarily driven by an increase in net sales, as well as the other factors described above.
Net Income Margin
Net income margin was 6.6% for the fiscal quarter ended September 26, 2026, compared to 5.0% for the fiscal quarter ended September 27, 2025. The 1.6% increase in net income margin was primarily driven by the $3.9 million increase in net income, as well as the other factors described above.
Adjusted EBITDA
Adjusted EBITDA was $45.3 million for the fiscal quarter ended September 26, 2026, compared to $38.3 million for the fiscal quarter ended September 27, 2025. The $6.9 million, or 18.1%, increase in Adjusted EBITDA was primarily because of higher gross margin that more than offset higher sales and marketing expenses, as well as the factors described above.
Adjusted EBITDA Margin
Adjusted EBITDA margin was 24.8% for the fiscal quarter ended September 26, 2026, compared to 23.7% for the fiscal quarter ended September 27, 2025. The 1.1% increase in Adjusted EBITDA margin was primarily because of the increase in net sales as well as the other factors described above.
Three Fiscal Quarters Ended September 26, 2026 Compared to Three Fiscal Quarters Ended September 27, 2025
The following table summarizes our results of operations for the three fiscal quarters ended September 26, 2026 and September 27, 2025 (dollars in thousands):
| Three Fiscal Quarters Ended | |||||||||||||||||||||||||||||||||||
| % of | % of | Change | |||||||||||||||||||||||||||||||||
| September 26, | Net | September 27, | Net | Change | % of | ||||||||||||||||||||||||||||||
| 2026 | Sales | 2025 | Sales | Amount | Net Sales | ||||||||||||||||||||||||||||||
| Net sales | $ | 496,964 | 100.0 | % | $ | 445,962 | 100.0 | % | $ | 51,002 | - | % | |||||||||||||||||||||||
| Cost of sales | 322,902 | 65.0 | % | 291,811 | 65.4 | % | 31,091 | (0.4) | % | ||||||||||||||||||||||||||
| Gross profit | 174,062 | 35.0 | % | 154,151 | 34.6 | % | 19,911 | 0.4 | % | ||||||||||||||||||||||||||
| Selling, general and administrative expense | 110,071 | 22.1 | % | 91,146 | 20.4 | % | 18,925 | 1.7 | % | ||||||||||||||||||||||||||
| Amortization | 21,893 | 4.4 | % | 21,704 | 4.9 | % | 189 | (0.5) | % | ||||||||||||||||||||||||||
| Income from operations | 42,098 | 8.5 | % | 41,301 | 9.3 | % | 797 | (0.8) | % | ||||||||||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||||||||||||||
| Interest expense, net | 16,109 | 3.3 | % | 19,587 | 4.4 | % | (3,478) | (1.1) | % | ||||||||||||||||||||||||||
| Loss on extinguishment and modification of debt | 5,022 | 1.0 | % | - | - | % | 5,022 | 1.0 | % | ||||||||||||||||||||||||||
| Other expense (income), net | 2,123 | 0.4 | % | (2,187) | (0.5) | % | 4,310 | 0.9 | % | ||||||||||||||||||||||||||
| Total other expense, net | 23,254 | 4.7 | % | 17,400 | 3.9 | % | 5,854 | 0.8 | % | ||||||||||||||||||||||||||
| Earnings from equity method investment | 3,705 | 0.7 | % | 2,751 | 0.6 | % | 954 | 0.1 | % | ||||||||||||||||||||||||||
| Income before income taxes | 22,549 | 4.5 | % | 26,652 | 6.0 | % | (4,103) | (1.5) | % | ||||||||||||||||||||||||||
| Income tax expense | 6,273 | 1.2 | % | 8,517 | 1.9 | % | (2,244) | (0.7) | % | ||||||||||||||||||||||||||
| Net income | $ | 16,276 | 3.3 | % | $ | 18,135 | 4.1 | % | $ | (1,859) | (0.8) | % | |||||||||||||||||||||||
|
Adjusted EBITDA (a)
|
$ | 102,029 | 20.5 | % | $ | 89,354 | 20.0 | % | $ | 12,675 | 0.5 | % | |||||||||||||||||||||||
______________________________________________________________
(a)Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Financial Measures" for a reconciliation to net income, the most directly comparable GAAP measure, and for information regarding our use of Adjusted EBITDA.
Net Sales
Net sales was $497.0 million for the three fiscal quarters ended September 26, 2026, compared to $446.0 million for the three fiscal quarters ended September 27, 2025. The $51.0 million, or 11.4%, increase in net sales was due to a $38.8 million increase in sales volume and a $12.2 million increase from higher pricing. The sales volume increase was primarily due to organic growth of 7.9% with the acquisition of Freedom Pools contributing the remainder. The increase in net sales across our product lines consisted of an increase of $36.8 million for in-ground swimming pools, $10.4 million for covers and $3.9 million for liners.
Cost of Sales and Gross Margin
Cost of sales was $322.9 million for the three fiscal quarters ended September 26, 2026, compared to $291.8 million for the three fiscal quarters ended September 27, 2025. The $31.1 million increase in cost of sales was primarily the result of the increase in sales volume, partially offset by the impact of production efficiencies resulting from lean manufacturing and value engineering programs. Gross margin increased by 0.4% and was 35.0% of net sales for the three fiscal quarters
ended September 26, 2026, compared to 34.6% of net sales for the three fiscal quarters ended September 27, 2025. The increase in gross margin reflects the benefits of our incremental lean manufacturing and value engineering initiatives.
Selling, General and Administrative Expense
Selling, general and administrative expense was $110.1 million for the three fiscal quarters ended September 26, 2026, compared to $91.1 million for the three fiscal quarters ended September 27, 2025. The $18.9 million, or 20.8%, increase in selling, general and administrative expense was primarily driven by increased sales and marketing investments to accelerate our fiberglass conversion strategy in the Sand States, acquisition and integration related costs, which included $7.7 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024 and costs related to our digital transformation program.
Amortization
Amortization was $21.9 million for the three fiscal quarters ended September 26, 2026 compared to $21.7 million for the three fiscal quarters ended September 27, 2025. The $0.2 million, or 0.9%, increase in amortization expense was driven by the acquisition of Freedom Pools.
Interest Expense, net
Interest expense, net was $16.1 million for the three fiscal quarters ended September 26, 2026, compared to $19.6 million for the three fiscal quarters ended September 27, 2025. The $3.5 million, or 17.8%, decrease in interest expense, net was the result of the change in the fair value of our interest rate swap and lower interest rates, compared to the three fiscal quarters ended September 27, 2025.
Loss on Extinguishment and Modification of Debt
Loss on extinguishment and modification of debt was $5.0 million for the three fiscal quarters ended September 26, 2026, compared to none for the three fiscal quarters ended September 27, 2025 due to the Refinancing that was completed in August 2026.
Other Expense (Income), Net
Other expense, net was $2.1 million for the three fiscal quarters ended September 26, 2026, compared to other income, net of $2.2 million for the three fiscal quarters ended September 27, 2025. The $4.3 million increase in other expense, net was primarily driven by an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries.
Earnings from Equity Method Investment
Earnings from our equity method investment in Premier Pools & Spas were $3.7 million for the three fiscal quarters ended September 26, 2026, compared to $2.8 million for the three fiscal quarters ended September 27, 2025, due to the financial performance of Premier Pools & Spas.
Income Tax Expense
Income tax expense was $6.3 million for the three fiscal quarters ended September 26, 2026, compared to income tax expense of $8.5 million for the three fiscal quarters ended September 27, 2025. Our effective tax rate was 27.8% for the three fiscal quarters ended September 26, 2026, compared to 32.0% for the three fiscal quarters ended September 27, 2025. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for both the three fiscal quarters ended September 26, 2026 and September 27, 2025 was primarily attributable to the jurisdictional mix of income, the discrete impact of stock-based compensation forfeitures or windfalls and exercises and the effects of branch accounting for Latham Canada.
Net Income
Net income was $16.3 million for the three fiscal quarters ended September 26, 2026, compared to $18.1 million for the three fiscal quarters ended September 27, 2025. The $1.9 million, or 10.3%, decrease in net income was primarily
driven by a one-time loss on extinguishment and modification of debt related to the Refinancing, as well as the other factors described above.
Net Income Margin
Net income margin was 3.3% for the three fiscal quarters ended September 26, 2026, compared to 4.1% for the three fiscal quarters ended September 27, 2025. The 0.8% decrease in net income margin was driven by a $1.9 million decrease in net income as well as the other factors described above.
Adjusted EBITDA
Adjusted EBITDA was $102.0 million for the three fiscal quarters ended September 26, 2026, compared to $89.4 million for the three fiscal quarters ended September 27, 2025. The $12.7 million, or 14.2%, increase in Adjusted EBITDA was driven by the factors described above.
Adjusted EBITDA Margin
Adjusted EBITDA margin was 20.5% for the three fiscal quarters ended September 26, 2026 compared to 20.0% for the three fiscal quarters ended September 27, 2025. The 0.5% increase in Adjusted EBITDA margin was primarily because of the increase in net sales as well as the other factors described above.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are key metrics used by management and our Board to assess our financial performance. Adjusted EBITDA and Adjusted EBITDA margin are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use Adjusted EBITDA and Adjusted EBITDA margin to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to utilize as a significant performance metric in our annual management incentive bonus plan compensation, and to compare our performance against that of other companies using similar measures. We have presented Adjusted EBITDA and Adjusted EBITDA margin solely as supplemental disclosures because we believe they allow for a more complete analysis of results of operations and assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit), (iv) (gain) loss on sale and disposal of property and equipment, (v) restructuring charges, (vi) stock-based compensation expense, (vii) unrealized (gains) losses on foreign currency transactions, (viii) strategic initiative costs, (ix) acquisition and integration related costs, (x) loss on extinguishment and modification of debt and (xi) other.
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and should not be considered as alternatives to net income (loss) as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. We encourage evaluation of these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, be mindful that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Adjusted EBITDA margin in the future, and any such modification may be material. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by any such adjustments. In addition, other companies, including companies in our industry, may not calculate Adjusted EBITDA and Adjusted EBITDA margin at all or may calculate Adjusted EBITDA and Adjusted EBITDA margin differently and accordingly, are not necessarily comparable to similarly entitled measures of other companies, which reduces the usefulness of Adjusted EBITDA and Adjusted EBITDA margin as tools for comparison.
Adjusted EBITDA and Adjusted EBITDA margin have their limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA and Adjusted EBITDA margin:
•do not reflect every expenditure, future requirements for capital expenditures or contractual commitments;
•do not reflect changes in our working capital needs;
•do not reflect the interest expense, net, or the amounts necessary to service interest or principal payments, on our outstanding debt;
•do not reflect income tax expense (benefit), and because the payment of taxes is part of our operations, tax expense is a necessary element of our costs and ability to operate;
•do not reflect non-cash stock-based compensation, which will remain a key element of our overall compensation package; and
•do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations.
Although depreciation and amortization are eliminated in the calculation of Adjusted EBITDA and Adjusted EBITDA margin, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA margin do not reflect any costs of such replacements.
Management compensates for these limitations by primarily relying on our GAAP results, while using Adjusted EBITDA and Adjusted EBITDA margin as supplements to the corresponding GAAP financial measures.
The following table provides a reconciliation of our net income to Adjusted EBITDA for the periods presented and the calculation of Adjusted EBITDA margin (dollars in thousands):
| Fiscal Quarter Ended | Three Fiscal Quarters Ended | ||||||||||||||||||||||
| September 26, | September 27, | September 26, | September 27, | ||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | 12,056 | $ | 8,117 | $ | 16,276 | $ | 18,135 | |||||||||||||||
| Depreciation and amortization | 13,455 | 12,881 | 40,194 | 37,978 | |||||||||||||||||||
| Interest expense, net | 5,423 | 6,067 | 16,109 | 19,587 | |||||||||||||||||||
| Income tax expense | 2,966 | 7,466 | 6,273 | 8,517 | |||||||||||||||||||
| (Gain) loss on sale and disposal of property and equipment | - | (26) | - | 20 | |||||||||||||||||||
|
Restructuring charges(a)
|
1,489 | - | 1,489 | 160 | |||||||||||||||||||
|
Stock-based compensation expense(b)
|
998 | 1,980 | 3,711 | 5,332 | |||||||||||||||||||
|
Unrealized (gains) losses on foreign currency transactions(c)
|
(72) | 1,181 | 2,155 | (2,878) | |||||||||||||||||||
|
Strategic initiative costs(d)
|
686 | 684 | 1,645 | 2,246 | |||||||||||||||||||
|
Acquisition and integration related costs(e)
|
3,231 | 7 | 9,155 | 289 | |||||||||||||||||||
|
Loss on extinguishment and modification of debt(f)
|
5,022 | - | 5,022 | - | |||||||||||||||||||
|
Other(g)
|
- | (29) | - | (32) | |||||||||||||||||||
| Adjusted EBITDA | $ | 45,254 | $ | 38,328 | $ | 102,029 | $ | 89,354 | |||||||||||||||
| Net sales | $ | 182,175 | $ | 161,903 | $ | 496,964 | $ | 445,962 | |||||||||||||||
| Net income margin | 6.6 | % | 5.0 | % | 3.3 | % | 4.1 | % | |||||||||||||||
| Adjusted EBITDA margin | 24.8 | % | 23.7 | % | 20.5 | % | 20.0 | % | |||||||||||||||
______________________________________________________________
(a)Represents costs that include severance and other expenses for our program to optimize certain operational and administrative functions.
(b)Represents non-cash stock-based compensation expense.
(c)Represents unrealized foreign currency transaction losses (gains) associated with our international subsidiaries.
(d)Represents fees paid to external consultants and other expenses for our strategic initiatives.
(e)Represents acquisition and integration costs, including the earn-out related to the Coverstar Central acquisition, as well as other costs related to potential transactions.
(f)Represents the loss on extinguishment and modification of debt in connection with the Refinancing.
(g)Other costs consist of other discrete items as determined by management, primarily including (i) fees paid to external advisors for various matters and (ii) other items.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are net cash provided by operating activities and availability under our New Revolving Credit Facility (as defined below). Historically, we have funded working capital requirements, capital expenditures, payments related to acquisitions, and debt service requirements with internally generated cash on hand, through borrowings under our credit facilities, and through the issuance of shares of our common stock. Our primary cash needs are to fund working capital, capital expenditures, debt service requirements and any acquisitions or investments we may undertake.
As of September 26, 2026, we had $94.8 million of cash, $292.5 million of outstanding borrowings and an additional $75.0 million of borrowing availability under our New Revolving Credit Facility.
Our primary working capital requirements are for the purchase of inventory, payroll, rent, facility costs and other selling, general and administrative costs. Our working capital requirements fluctuate during the fiscal year, driven primarily by seasonality and the timing of raw material purchases. Our capital expenditures are primarily related to our growth strategy, including production capacity, diversifying our product offerings, storage, and delivery equipment. We are currently undergoing a digital transformation program to upgrade all of our technology and enterprise resource planning ("ERP") systems. We expect to fund these capital expenditures from net cash provided by operating activities or the utilization of a portion of our borrowing availability under our New Revolving Credit Facility.
Our disciplined capital activity allocation strategy remains focused on deploying capital opportunistically to position Latham for profitable organic and acquisition-related growth and to de-lever and further reduce our net debt leverage ratio.
It is our belief that our existing cash, cash generated from operations and availability under our New Revolving Credit Facility will be adequate to fund our operating expenses and capital expenditure requirements over the next 12 months, as well as our longer-term liquidity needs. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may issue debt or equity securities, which may provide an additional source of liquidity. However, there can be no assurance equity or debt financing will be available to us when we need it or, if available, the terms will be satisfactory to us and not dilutive to our then-current stockholders.
Our Indebtedness
On August 20, 2026 (the "Closing Date"), we completed the Refinancing. Latham Pool Products and certain subsidiary guarantors, entered into New Credit Agreement with Jefferies Finance LLC, which provides a senior secured multicurrency revolving line of credit in an initial principal amount of $75.0 million, which includes a sub-limit for letters of credit, and a U.S. Dollar senior secured term loan facility in an initial principal amount of $300.0 million. On the Closing Date, proceeds from the borrowings under the New Credit Agreement were used to repay and replace all outstanding obligations under, and terminate, the Credit and Guaranty Agreement, dated as of February 23, 2022, among Latham Pool Products, Latham International Manufacturing Corp. ("LIMC") and the other guarantors party thereto, the lenders party thereto and Barclays Bank PLC, as administrative agent (the "Prior Credit Agreement").
We are required to meet certain financial covenants, including maintaining specific liquidity measurements. To the extent that outstanding usage of the New Revolving Credit Facility exceeds 40% of the commitments under the New Revolving Credit Facility as of the last day of any fiscal quarter, LIMC is required to be in compliance with a maximum First Lien Net Leverage Ratio (as defined below) of 5.20:1.00 as of the last day of such fiscal quarter. There are also negative covenants, including certain restrictions on our 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.
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 nonpermitted indebtedness, asset sales and casualty and condemnation events, in each case, subject to customary exceptions.
As of September 26, 2026, we were in compliance with all covenants under the New Credit Agreement.
New Revolving Credit Facility
The New Revolving Credit Facility may be utilized to finance working capital and other general corporate purposes and permits Latham Pool Products to borrow loans in U.S. Dollars, Canadian Dollars, Euros and Australian Dollars. The New Revolving Credit Facility matures on August 20, 2031. 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 the Term CORRA Rate (each, as defined in the New Credit Agreement), as applicable, plus a margin ranging from 3.25% to 3.50%, depending on the First Lien Net Leverage Ratio (as defined in the New Credit Agreement, the "First Lien Net Leverage Ratio"), or at a rate per annum based on the Alternate Base Rate or the Canadian Prime Rate (each, as defined in the New Credit Agreement), plus a margin ranging from 2.25% to 2.50%, depending on the First Lien Net Leverage Ratio. Loans outstanding under the New Revolving Credit Facility denominated in Euros or Australian Dollars bear interest based on EURIBOR or the BBSY (each, as defined in the New Credit Agreement), respectively, plus a margin ranging from 3.25% to 3.50%, depending on the First Lien Net Leverage Ratio. 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 accrues at a rate per annum ranging from 0.25% to 0.50%, depending on the First Lien Net
Leverage Ratio. Borrowings under the New Revolving Credit Facility are not subject to amortization and are due at maturity.
As of September 26, 2026, we had no outstanding borrowings under the New Revolving Credit Facility and $75.0 million was available for future borrowing.
New Term Loan
Pursuant to the New Credit Agreement, we borrowed $300.0 million in term loans. The New Term Loan matures on August 20, 2033. Loans outstanding under the New Term Loan 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 of 4.00%, or based on the Alternate Base Rate (as defined in the New Credit Agreement), plus a margin of 3.00%. Loans under the New Term Loan are subject to scheduled quarterly amortization payments of $750,000, which represents 0.25% of the initial principal amount of the New Term Loan.
As of September 26, 2026, we had $292.5 million of outstanding borrowings under the New Term Loan.
Prior Revolving Credit Facility
On February 23, 2022, the Company entered into a prior revolving credit facility with Barclays Bank, PLC that was utilized to finance ongoing general corporate and working capital needs and permits Latham Pool Products to borrow loans in U.S Dollars, Canadian Dollars, Euros and Australian Dollars up to $75 million (the "Prior Revolving Credit Facility"). The Prior Revolving Credit Facility would have matured on February 23, 2027 but was terminated in connection with the Refinancing.
During the three fiscal quarters ended September 26, 2026, we repaid $35.0 million of outstanding borrowings on the Prior Revolving Credit Facility, before the Refinancing.
Prior Term Loan
Pursuant to the Prior Credit Agreement, Latham Pool Products also borrowed $325.0 million in term loans (the "Prior Term Loan"). The Prior Term Loan was repaid and terminated as of the Closing Date of the Refinancing.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented (dollars in thousands):
| Three Fiscal Quarters Ended | |||||||||||
| September 26, | September 27, | ||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 54,576 | $ | 40,121 | |||||||
| Net cash used in investing activities | (36,428) | (21,094) | |||||||||
| Net cash provided by (used in) financing activities | 5,117 | (4,918) | |||||||||
| Effect of exchange rate changes on cash | 502 | 11 | |||||||||
| Net increase in cash | $ | 23,767 | $ | 14,120 | |||||||
Operating Activities
During the three fiscal quarters ended September 26, 2026, operating activities provided $54.6 million of cash. Net income, after adjustments for non-cash items, provided cash of $70.3 million. Cash provided by operating activities was partially reduced by changes in our operating assets and liabilities, which used $15.8 million. Net cash used due to changes in our operating assets and liabilities for the three fiscal quarters ended September 26, 2026 consisted primarily of a $40.1 million increase in trade receivables, a $9.3 million increase in inventories, a $0.6 million decrease in other long-term liabilities, a $0.3 million increase in prepaid expenses and other current assets and a $0.1 million increase in other assets,
partially offset by a $15.8 million increase in accounts payable, a $13.3 million increase in accrued expenses and other current liabilities and a $5.7 million decrease in income tax receivable. The change in trade receivables was primarily driven by the increase and timing of net sales, the change in accounts payable was primarily driven by volume of purchases and timing of payments and the change in accrued expenses and other current liabilities was primarily driven by the performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024.
During the three fiscal quarters ended September 27, 2025, operating activities provided $40.1 million of cash. Net income, after adjustments for non-cash items, provided cash of $67.3 million. Cash provided by operating activities was partially reduced by changes in our operating assets and liabilities, which used $27.1 million. Net cash used by changes in our operating assets and liabilities for the three fiscal quarters ended September 27, 2025 consisted primarily of a $50.4 million increase in trade receivables, a $5.6 million increase in income tax receivable, a $0.8 million increase in prepaid expenses and other current assets, a $0.5 million decrease in other long-term liabilities and a $0.2 million increase in other assets, partially offset by a $16.3 million increase in accounts payable, a $7.3 million decrease in inventories and a $6.7 million increase in accrued expenses and other current liabilities. The change in trade receivables was primarily driven by the increase and timing of net sales and the change in accounts payable was primarily driven by volume of purchases and timing of payments.
Investing Activities
During the three fiscal quarters ended September 26, 2026, investing activities used $36.4 million of cash, consisting of purchases of property and equipment for $22.2 million and a cash payment for the acquisition of business, net of cash acquired of $14.3 million. Acquisition of business, net of cash acquired included $13.9 million cash paid for the acquisition of Freedom Pools and $0.4 million for a holdback paid related to the acquisition of two of our smaller autocover dealers in New York and Tennessee. Purchases of property and equipment included the second payment of $5.6 million that was paid as a follow up to the deposit made in the prior year of $12.0 million for the purchase of four fiberglass plants that had previously been leased. The remainder was primarily to expand capacity for production and diversify offerings, especially for fiberglass pools, and on-going strategic initiatives such as our digital transformation program.
During the three fiscal quarters ended September 27, 2025, investing activities used $21.1 million of cash, consisting of purchases of property and equipment for $16.2 million and the acquisition of two of our autocover dealers of $4.9 million. The purchase of property and equipment was primarily to expand capacity for production and diversify offerings, especially for fiberglass pools, as well as on-going strategic initiatives such as digital transformation.
Financing Activities
During the three fiscal quarters ended September 26, 2026, financing activities provided $5.1 million of cash, primarily consisting of proceeds from long-term debt borrowings, net of discount of $298.5 million, partially offset by payments on long-term debt borrowings of $284.8 million, deferred financing fees paid of $4.7 million, common stock withheld for taxes on restricted stock units of $3.2 million and repayments of finance lease obligations of $0.7 million.
During the three fiscal quarters ended September 27, 2025, financing activities used $4.9 million of cash, primarily consisting of common stock withheld for taxes on restricted stock units of $2.7 million, Term Loan payments of $1.6 million and repayments of finance lease obligations of $0.6 million.
Contractual Obligations
There have been no material changes, outside of the ordinary course of business, to our contractual obligations during the three fiscal quarters ended September 26, 2026 from those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations" in our Annual Report.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. Throughout the preparation of these financial statements, we have made estimates and assumptions that impact the reported amounts of assets, liabilities, and the disclosure of contingent liabilities at the date of the financial statements and revenues and expenses during the reporting period. Our critical accounting policies and estimates are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates" in our Annual Report and Note 2 to our condensed consolidated
financial statements in this Quarterly Report on Form 10-Q. These estimates are based on historical results, trends, and other assumptions we believe to be reasonable. We evaluate these estimates on an ongoing basis. Actual results may differ from estimates.
Recently Issued and Adopted Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows, and notes to such financial statements, is disclosed in Note 2 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
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