The swimming pool manufacturer Latham Group (SWIM) made a splash in its Wall Street debut Friday before giving back some of those gains in early trading on Monday.
The stock initially popped 43% on the NASDAQ after the in-ground pool seller sold 20 million shares to the public, raising $380 million at a valuation of $2.3 billion.
“We got a great material conversion story at play here,” Latham President and CEO Scott Rajeski told Yahoo Finance Live (video above). “The fiberglass pool market has only penetrated about 18% of new pool installs in the U.S. market. So we still have a long ways to go, and becoming public was the first key step to get that message out there for investors and the community at large.”
The pool business is booming: According to the Pool and Spa Alliance, the pool industry in the U.S. saw record growth of 24% in 2020 as people invested in their backyards instead of taking trips. Latham installed 8,700 fiberglass pools in the U.S. alone last year, Rajeski said, and he expects that demand to continue post-pandemic, as more homeowners choose fiberglass pools over concrete/gunite or vinyl.
“One of the key benefits about fiberglass, it's a lower upfront cost for the purchase by about 28% versus other pool types,” Rajeski said. “And the total cost of ownership over the lifetime of that pool is 43% versus the other pool types.”
Fiberglass pools command an average starting price of about $50,000, compared to $55,000 for concrete and $70,000 for vinyl pools.
The 65-year-old Latham Group employs 2,000 workers and operates in North America, Australia, and New Zealand. The New York-based company also sells pool-related products.
Parts of the pool industry have been hobbled by the rising cost of materials such as plastic resins as well as delays in material deliveries, though Rajeski says Latham has not been impacted by the supply chain issues and is “in a really good position” to meet the increased demand.
“We don't expect any impact as a result of the tightness in the supply market or the prices we're seeing out there,” he said. “We've got a great supply chain organization globally. We source from around the world all of our materials. And we got out in front of the supply constraints very early.”
Rajeski added that the company plans to use some of the new funding to pay down Latham’s existing debt in addition to investing in its dealers and plants.
In 2019, Latham bought Narellan Pools, the largest pool supply company in New Zealand and Australia, where Rajeski says 70% of new pool installations are fiberglass. Latham has already begun introducing the Narellan brand to North American markets.
“We've had a lot of great success with that launch in Canada. We're continuing the rollout here in the U.S. market,” Rajeski said. “There's almost 90 million homes without a swimming pool. 12% of homeowners have a high likelihood of buying a swimming pool the next five years, so there's plenty of demand in the marketplace for us to tap into.”
Alexis Christoforous is an anchor at Yahoo Finance. Follow her on Twitter @AlexisTVNews.
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