0001558370-21-015513 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Oct. 02, 2021	Nov. 09, 2021
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Oct. 02, 2021
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		119,849,589
Entity Central Index Key	0001833197
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 02, 2021	Dec. 31, 2020
Current assets:
Cash	$ 90,869	$ 59,310
Trade receivables, net	75,314	32,758
Inventories, net	80,705	64,818
Income tax receivable	6,129	4,377
Prepaid expenses and other current assets	10,676	6,063
Total current assets	263,693	167,326
Property and equipment, net	58,767	47,357
Equity method investment	21,997	25,384
Deferred tax assets	793	345
Deferred offering costs		1,041
Goodwill	115,158	115,750
Intangible assets, net	271,831	289,473
Other assets	1,506	0
Total assets	733,745	646,676
Current liabilities:
Accounts payable	39,921	29,789
Accounts payable - related party	1,050	500
Current maturities of long-term debt	14,234	13,042
Accrued expenses and other current liabilities	59,454	50,606
Total current liabilities	114,659	93,937
Long-term debt, net of discount and current portion	219,967	208,454
Deferred income tax liabilities, net	55,949	55,193
Liability for uncertain tax positions	5,649	5,540
Other long-term liabilities	2,026	1,943
Total liabilities	398,250	365,067
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value; 100,000,000 and no shares authorized as of October 2, 2021 and December 31, 2020 respectively; no shares issued and outstanding as of both October 2, 2021 and December 31, 2020
Common stock, $0.0001 par value; 900,000,000 and 500,000,000 shares authorized as of October 2, 2021 and December 31, 2020, respectively; 119,849,589 and 118,854,249 shares issued and outstanding as of October 2, 2021 and December 31, 2020, respectively	12	12
Additional paid-in capital	377,649	265,478
(Accumulated deficit) retained earnings	(42,596)	13,765
Accumulated other comprehensive income	430	2,354
Total stockholders' equity	335,495	281,609
Total liabilities and stockholders' equity	$ 733,745	$ 646,676

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Oct. 02, 2021	Dec. 31, 2020
Condensed Consolidated Balance Sheets
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	100,000,000	0
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	900,000,000	500,000,000
Common stock, shares issued	119,849,589	118,854,249
Common stock, shares outstanding	119,849,589	118,854,249

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Condensed Consolidated Statements of Operations
Net sales	$ 161,957	$ 127,512	$ 491,592	$ 291,468
Cost of sales	110,965	77,204	329,805	186,699
Gross profit	50,992	50,308	161,787	104,769
Selling, general and administrative expense	48,072	20,096	170,532	50,888
Amortization	5,486	4,047	16,560	12,173
(Loss) income from operations	(2,566)	26,165	(25,305)	41,708
Other expense (income):
Interest expense	4,271	3,992	20,843	13,633
Other (income) expense, net	(2,538)	(1,378)	(3,887)	1,121
Total other expense, net	1,733	2,614	16,956	14,754
Earnings from equity method investment	810		1,808
(Loss) income before income taxes	(3,489)	23,551	(40,453)	26,954
Income tax expense	7,807	5,811	15,908	8,251
Net (loss) income	$ (11,296)	$ 17,740	$ (56,361)	$ 18,703
Net (loss) income per share attributable to common stockholders:
Basic	$ (0.10)	$ 0.18	$ (0.51)	$ 0.19
Diluted	$ (0.10)	$ 0.18	$ (0.51)	$ 0.19
Weighted average common shares outstanding:
Basic	112,153,832	97,393,002	110,121,240	96,665,708
Diluted	112,153,832	98,011,795	110,121,240	97,122,885

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Condensed Consolidated Statements of Comprehensive (Loss) Income
Net (loss) income	$ (11,296)	$ 17,740	$ (56,361)	$ 18,703
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(887)	47	(1,924)	404
Comprehensive (loss) income	$ (12,183)	$ 17,787	$ (58,285)	$ 19,107

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	(Accumulated Deficit) Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance, beginning of period at Dec. 31, 2019	$ 10	$ 196,474	$ (2,218)	$ (471)	$ 193,795
Balance, beginning of period (in shares) at Dec. 31, 2019	96,498,943
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income			(15,451)		(15,451)
Foreign currency translation adjustments				(1,938)	(1,938)
Repurchase and retirement of treasury stock		(400)			(400)
Repurchase and retirement of treasury stock (in shares)	(200,173)
Stock-based compensation expense		224			224
Balance, end of period at Mar. 28, 2020	$ 10	196,298	(17,669)	(2,409)	176,230
Balance, end of period (in shares) at Mar. 28, 2020	96,298,770
Balance, beginning of period at Dec. 31, 2019	$ 10	196,474	(2,218)	(471)	193,795
Balance, beginning of period (in shares) at Dec. 31, 2019	96,498,943
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income					18,703
Balance, end of period at Sep. 26, 2020	$ 10	200,163	16,485	(67)	216,591
Balance, end of period (in shares) at Sep. 26, 2020	97,187,596
Balance, beginning of period at Dec. 31, 2019	$ 10	196,474	(2,218)	(471)	193,795
Balance, beginning of period (in shares) at Dec. 31, 2019	96,498,943
Balance, end of period at Dec. 31, 2020	$ 12	265,478	13,765	2,354	281,609
Balance, end of period (in shares) at Dec. 31, 2020	118,854,249
Balance, beginning of period at Mar. 28, 2020	$ 10	196,298	(17,669)	(2,409)	176,230
Balance, beginning of period (in shares) at Mar. 28, 2020	96,298,770
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income			16,414		16,414
Foreign currency translation adjustments				2,295	2,295
Repurchase and retirement of treasury stock		(176)			(176)
Repurchase and retirement of treasury stock (in shares)	(75,065)
Stock-based compensation expense		240			240
Balance, end of period at Jun. 27, 2020	$ 10	196,362	(1,255)	(114)	195,003
Balance, end of period (in shares) at Jun. 27, 2020	96,223,705
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income			17,740		17,740
Foreign currency translation adjustments				47	47
Issuance of common stock and Net proceeds from initial public offering		2,823			2,823
Issuance of common stock and Net proceeds from initial public offering (shares)	963,891
Stock-based compensation expense		978			978
Balance, end of period at Sep. 26, 2020	$ 10	200,163	16,485	(67)	216,591
Balance, end of period (in shares) at Sep. 26, 2020	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 (loss) income			8,533		8,533
Foreign currency translation adjustments				(1,201)	(1,201)
Dividend ($1.00 per share)		(110,033)			(110,033)
Repurchase and retirement of treasury stock	$ (2)	(64,936)			(64,938)
Repurchase and retirement of treasury 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 (loss) income					(56,361)
Balance, end of period at Oct. 02, 2021	$ 12	377,649	(42,596)	430	335,495
Balance, end of period (in shares) at Oct. 02, 2021	119,849,589
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 (loss) income			(53,598)		(53,598)
Foreign currency translation adjustments				164	164
Issuance of common stock and Net proceeds from initial public offering	$ 2	399,262			399,264
Issuance of common stock and Net proceeds from initial public offering (shares)	23,000,000
Repurchase and retirement of treasury stock	$ (1)	(216,699)			(216,700)
Repurchase and retirement of treasury 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 (in shares)	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
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income			(11,296)		(11,296)
Foreign currency translation adjustments				(887)	(887)
Retirement of restricted stock (in shares)	(559,682)
Stock-based compensation expense		27,603			27,603
Balance, end of period at Oct. 02, 2021	$ 12	$ 377,649	$ (42,596)	$ 430	$ 335,495
Balance, end of period (in shares) at Oct. 02, 2021	119,849,589

Condensed Consolidated Statements of Stockholders' Equity (Parenthetical)	3 Months Ended
	Apr. 03, 2021 $ / shares
Condensed Consolidated Statements of Stockholders' Equity
Dividend per share	$ 1.00

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020
Cash flows from operating activities:
Net (loss) income	$ (56,361)	$ 18,703
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	23,689	17,461
Amortization of deferred financing costs and debt discount	5,907	1,867
Stock-based compensation expense	104,578	1,442
Other non-cash	1,349	825
Gain on sale of equity method investment	(3,856)
Earnings from equity method investment	(1,808)
Distributions received from equity method investment	1,808
Changes in operating assets and liabilities:
Trade receivables	(43,134)	(18,732)
Inventories	(16,128)	(2,202)
Prepaid expenses and other current assets	(4,774)	279
Income tax receivable	(1,752)	(1,287)
Other assets	(465)
Accounts payable	10,550	16,192
Accrued expenses and other current liabilities	9,740	20,449
Other long-term liabilities	83	59
Net cash provided by operating activities	29,426	55,056
Cash flows from investing activities:
Purchases of property and equipment	(19,242)	(9,677)
Proceeds from the sale of property and equipment	33	560
Return of equity method investment	447
Proceeds from the sale of equity method investment	6,796
Net cash used in investing activities	(11,966)	(9,117)
Cash flows from financing activities:
Proceeds from long-term debt borrowings	172,813
Payments on term loan borrowings	(164,833)	(20,925)
Proceeds from borrowings on revolving credit facility	16,000	5,000
Payments on revolving credit facility borrowings	(16,000)	(5,000)
Deferred financing fees paid	(1,250)
Dividend to Class A unitholders	(110,033)
Proceeds from issuance of common stock and initial public offering, net of underwriting discounts and commissions	399,264	615
Repurchase and retirement of treasury stock	(281,638)	(576)
Payments of Narellan Group Pty Limited contingent consideration		(6,624)
Net cash provided by (used in) financing activities	14,323	(27,510)
Effect of exchange rate changes on cash	(224)	769
Net increase (decrease) in cash	31,559	19,198
Cash at beginning of period	59,310	56,655
Cash at end of period	90,869	75,853
Supplemental cash flow information:
Cash paid for interest	14,208	12,693
Income taxes paid, net	15,213	9,100
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses	226	635
Capitalized internal-use software included in accounts payable - related party	$ 1,050
Fair value of equity issued by Parent to settle contingent consideration in connection with the acquisition of Narellan Group Pty Limited		$ 2,208

NATURE OF THE BUSINESS

9 Months Ended

Oct. 02, 2021

NATURE OF THE BUSINESS

NATURE OF THE BUSINESS

Notes to Condensed Consolidated Financial Statements

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.

Initial Public Offering, Reorganization and Stock Split

On April 27, 2021, the Company completed its initial public offering (the “IPO”), pursuant to which it issued and sold 23,000,000 shares of common stock, inclusive of 3,000,000 shares sold by the Company pursuant to the full exercise of the underwriters’ option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO were $399.3 million, after deducting underwriting discounts and commissions and other offering costs.

Prior to the closing of the Company’s IPO on April 27, 2021 (the “Closing of the IPO”), the Company’s parent entity, Parent, merged with and into Latham Group, Inc., with Latham Group, Inc. surviving the merger (the “Reorganization”). The purpose of the Reorganization was to allow existing indirect owners of the Company to become direct shareholders of the Company.

In connection with the Reorganization, Class A units of the Parent (the “Class A units”) were converted into shares of the Company’s common stock, and Class B units of the Parent (the “Class B units”) were converted into an economically equivalent number of restricted and unrestricted shares of the Company’s common stock on a pro rata basis. The Reorganization was accounted for as an equity reorganization between entities under common control. As the Class A units were akin to common shares as all holders held economic interest of the Parent and were entitled to distributions on a pro rata basis to their ownership, the conversion of Class A units to common shares as part of the Reorganization was considered to be equivalent to a stock split , which requires retrospective treatment for accounting purposes. Accordingly, all share and per share amounts in these condensed consolidated financial statements and related notes have been retroactively restated, where applicable, to give effect to the conversion ratio applied in connection with the Reorganization.

Class B units were historically accounted for as compensatory arrangements in accordance with ASC 718 “Compensation – Stock Compensation”, akin to stock appreciation rights, that, when vested, would share on the economic appreciation of the equity value of Parent over the agreed hurdles. As a result of the Reorganization, the Company determined that only vested Class B units are considered outstanding for accounting purposes. A portion of the Class B units vest based on continued employment by the holder, or time-vesting units, and the remaining Class B units vest upon defined performance and market conditions, or performance-vesting units. Therefore, the Company has considered any unvested restricted shares as contingently issuable shares until they vest. The conversion of time-vesting Class B units to restricted shares is retrospectively included in the weighted-average common shares outstanding for diluted net income (loss) per share using the treasury stock method for each period in which the individual unit holder’s threshold was met at the reporting date and therefore the individual unit holder would have participated in a hypothetical distribution to the Parent unit holders. The conversion of performance-vesting Class B units to restricted shares is not included in the shares outstanding for diluted net income (loss) per share for any period prior to the Reorganization and IPO as the performance vesting thresholds were not satisfied and the performance units were not considered probable to vest historically.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Oct. 02, 2021

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, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of October 2, 2021 and for the fiscal quarters and three fiscal quarters ended October 2, 2021 and September 26, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. 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, 2020 included in the Company’s Registration Statement on Form S-1, as amended, File No. 333-254930 on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of October 2, 2021 and results of operations for the fiscal quarters and three fiscal quarters ended October 2, 2021 and September 26, 2020 and cash flows for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been made. The Company’s results of operations for the fiscal quarter and three fiscal quarters ended October 2, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known.

Seasonality

Although the Company generally has demand for its products throughout the year, its business is seasonal and weather is one of the principal external factors affecting the business. Historically, net sales and net income are highest during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales.

Accounting Policies

Refer to the Company’s final prospectus for the IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on April 26, 2021 (“the Prospectus”) for a discussion of the Company’s accounting policies, as updated below.

Stock-based Compensation

Stock-based compensation is measured and recognized based on the grant date fair value of the awards. The Class B units of the Parent were granted to employees in the form of Profits Interest Units (“PIUs”). The Company determined the grant date fair value of PIUs using the Black-Scholes option pricing model. As part of the Reorganization, the vested and unvested PIUs of the Parent, were converted on a pro rata basis into equivalent restricted stock units and restricted stock awards of the Company’s underlying common stock. The fair value of the awards is expensed using a graded vesting method over the requisite service period in which employees earn the awards. The Company accounts for forfeitures of stock-based awards as they occur rather than applying an estimated forfeiture rate to stock-based compensation expense.

The Black-Scholes pricing model requires critical assumptions including risk-free rate, volatility, expected term and expected dividend yield. The expected term is computed using the simplified method. The Company uses the simplified method to calculate expected term of the PIUs as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the stock-based award. The Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The Company utilized a dividend yield of zero, as it had no history or plan of declaring dividends on its common stock. The assumptions underlying these valuations represented the Company’s best estimate, which involved inherent

uncertainties and the application of judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of the Company’s stock-based compensation expense could have been materially different.

Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021, the Company effected its Omnibus Incentive Plan in which it granted to certain employees of the Company restricted stock awards, restricted stock units and option awards inclusive of the as converted Class B units as a result of the Reorganization (see Note 14).

Equity Method Investments

Investments and ownership interests in common stock or in-substance common stock are accounted for under the equity method accounting if the Company has the ability to exercise significant influence over the entity but does not have a controlling financial interest. Under the equity method, investments are initially recognized at cost and adjusted to reflect the Company’s interest in net earnings, dividends received and other-than-temporary impairments. The Company records its interest in the net earnings of its equity method investee, along with adjustments for amortization of basis differences, investee capital transactions and other comprehensive income (loss), within earnings from equity method investment in the condensed consolidated statements of operations. Basis differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to the underlying basis differences. Profits or losses related to intra-entity sales with its equity method investee are eliminated until realized by the investor or investee.

The Company records its proportionate share of earnings or losses of Premier Holdco, LLC (“Premier Pools & Spas”) within earnings from equity method investment in the condensed consolidated statements of operations on a three-month lag. The Company recorded its interest in the net earnings of Premier Pools & Spas of $0.8 million and $1.8 million, respectively, for the fiscal quarter and three fiscal quarters ended October 2, 2021, which included a $0.1 million and $0.2 million adjustment for the amortization of basis differences, within earnings from equity method investment in the condensed consolidated statements of operations during the fiscal quarter and three fiscal quarters ended October 2, 2021. As the Company initially invested in Premier Pools & Spas on October 30, 2020, there was no earnings from equity method investment recorded during the fiscal quarter and the three fiscal quarters ended September 26, 2020. The Company received distributions of $1.1 million and $2.2 million during the fiscal quarter and three fiscal quarters ended October 2, 2021, respectively.

For presentation in the condensed consolidated statements of cash flows, the Company utilizes the cumulative earnings approach for purposes of determining whether distributions should be classified as either a return on investment, which are be included in operating activities, or a return of investment, which would be included in investing activities. Under the cumulative earnings approach, the Company compares the distributions received to its cumulative equity-method earnings since inception. Any distributions received up to the amount of cumulative equity earnings are be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities.

Equity method goodwill is not amortized or tested for impairment; instead the Company evaluates equity method investments for impairment when events or changes in circumstances indicate that the decline in value below the carrying amount of its equity method investment is determined to be other than temporary. In such a case, the decline in value below the carrying amount of its equity method investment is recognized in the condensed consolidated statements of operations in the period the impairment occurs.

Recently Issued Accounting Pronouncements

The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is

recognized based on an effective interest method or on a straight-line basis over the term of the lease. In addition, a lessee is required to record (i) a right-of-use asset and a lease liability on its balance sheet for all leases with accounting lease terms of more than 12 months regardless of whether it is an operating or financing lease and (ii) lease expense in its consolidated statement of operations for operating leases and amortization and interest expense in its consolidated statement of operations for financing leases. Leases with a term of 12 months or less may be accounted for similar to prior guidance for operating leases today. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), which added an optional transition method that allows companies to adopt the standard as of the beginning of the year of adoption as opposed to the earliest comparative period presented. In November 2019, the FASB issued guidance delaying the effective date for all entities, except for public business entities. For nonpublic entities, this guidance is effective for annual periods beginning after December 15, 2020. In June 2020, the FASB issued additional guidance delaying the effective date for all entities, except for public business entities. For public entities, ASU 2016-02 was effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. For nonpublic entities, this guidance is effective for annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, which narrowed the scope and changed the effective date for nonpublic entities for ASU 2016-13. The FASB subsequently issued supplemental guidance within ASU 2019-05, Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief (“ASU 2019-05”). ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For public entities that are SEC filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-13 will have on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which is intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its consolidated financial statements. In addition to that main objective, the amendments in the update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. Additional updates to further clarify the guidance in ASU 2017-12 were issued by the FASB in October 2018 within ASU 2018-16. For public entities, the amendment is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For nonpublic entities, ASU 2017-12 is effective for fiscal years beginning after December 15, 2020 and interim periods beginning after December 15, 2021. Early application is permitted in any interim period after the issuance of the update. The Company is currently evaluating the impact that the adoption of ASU 2017-12 will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. For public entities, ASU 2019-12 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. For public entities, ASU 2020-01 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2020-01 is effective for annual periods beginning after December 15, 2021, and

interim periods within those reporting periods. The Company is currently evaluating the impact that the adoption of ASU 2020-01 will have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. This guidance is effective for all entities upon issuance on March 12, 2020 and may be applied through December 31, 2022. The expedients and exceptions in this guidance are optional, and the Company is evaluating the potential future financial statement impact of any such expedient or exception that it may elect to apply as the Company evaluates the effects of adopting this guidance on its consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, this guidance applies to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The ASU became effective as of March 12, 2020 and can be adopted anytime during the period of January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact that the adoption of ASU 2021-01 will have on its consolidated financial statements.

ACQUISITIONS

9 Months Ended

Oct. 02, 2021

ACQUISITIONS

ACQUISITIONS

3. ACQUISITIONS

GL International, LLC

On October 22, 2020, Latham Pool Products acquired GL International, LLC (“GLI”) for a total purchase price of $79.7 million (the “GLI Acquisition”). The results of GLI’s operations have been included in the condensed consolidated financial statements since that date. GLI specializes in manufacturing custom pool liners and safety covers. As a result, this acquisition expanded the Company’s liner and safety cover product offerings. In connection with the GLI Acquisition, consideration paid was $79.7 million in cash, or $74.7 million net of cash acquired of $5.0 million, and excluding a net working capital adjustment receivable of $0.8 million. The net working capital adjustment receivable was settled during fiscal quarter ended April 3, 2021. The cash consideration was funded from existing cash on hand. The Company incurred $2.4 million in transaction costs.

The Company accounted for the GLI Acquisition using the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations (“ASC 805”). This requires that the assets acquired and liabilities assumed be measured at fair value. The Company estimated, using Level 3 inputs, the fair value of certain fixed assets using a combination of the cost approach and the market approach. Inventories were valued using the comparative sales method, less the cost of disposal. Specific to intangible assets, dealer relationships were valued using the multi-period excess earnings method, whereas trade names were valued using the relief from royalty method. The Company recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date.

The following summarizes the purchase price allocation for the GLI Acquisition:


(in thousands)	October 22, 2020
Total consideration	$	79,743
Allocation of purchase price:
Cash		5,007
Trade receivables		10,639
Inventories		11,854
Prepaid expenses and other current assets		3,949
Property and equipment		1,402
Intangible assets		46,700
Total assets acquired		79,551
Accounts payable		3,536
Accrued expenses and other current liabilities		8,853
Other long-term liabilities		524
Total liabilities assumed		12,913
Total fair value of net assets acquired, excluding goodwill:		66,638
Goodwill	$	13,105

The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $13.1 million. Goodwill resulting from the GLI Acquisition was attributable to the expanded market share and product offerings. Goodwill resulting from the GLI Acquisition is deductible for tax purposes.

The Company allocated a portion of the purchase price to specific intangible asset categories as follows:


	Fair Value		Amortization Period
Definite-lived intangible assets:	(in thousands)		(in years)
Trade names	$	9,500	9
Dealer relationships		37,200	8
	$	46,700

Pro Forma Financial Information (Unaudited)

The following pro forma financial information presents the statements of operations of the Company combined with GLI as if the acquisition occurred on January 1, 2020. The pro forma results do not include any anticipated synergies, cost savings or other expected benefits of an acquisition. The pro forma financial information is not necessarily indicative of what the financial results would have been had the acquisition been completed on January 1, 2020 and is not necessarily indicative of the Company’s future financial results.


	Fiscal Quarter Ended		Three Fiscal Quarters Ended
(in thousands)	September 26, 2020		September 26, 2020
Net sales	$	152,508	$	345,200
Net loss	$	22,598	$	21,952

The pro forma financial information presented above has been calculated after adjusting for the results of the GLI Acquisition for the fiscal quarter and the three fiscal quarters ended September 26, 2020 to reflect the accounting effects as a result of the acquisition, including the amortization expense from acquired intangible assets, the depreciation and amortization expense from acquired property and equipment, the additional cost of sales from acquired inventory, interest expense from debt financing, and any related tax effects.

EQUITY METHOD INVESTMENT

9 Months Ended

Oct. 02, 2021

EQUITY METHOD INVESTMENT

EQUITY METHOD INVESTMENT

4. EQUITY METHOD INVESTMENT

On October 30, 2020, the Company entered into a securities purchase agreement to purchase 28% of the common units of Premier Pools & Spas for $25.4 million. On August 6, 2021, the Company entered into a securities purchase agreement, together with Premier Holdco LLC, Premier Pools Management Corp. Holdco, Premier Franchise Management Holdco, PFC Holdco, and PPSF, LLC, pursuant to which Premier Group Holdings Inc., an affiliate of Wynnchurch Capital, L.P., acquired 29.8% of the common units of Premier Pools & Spas in aggregate from all sellers, including the Company. Sellers who were not related parties of Wynnchurch Capital, L.P. or the Company determined the purchase price per common unit paid by Premier Group Holdings Inc., indicating the amount paid for the common units of Premier Pools & Spas reflects the price that would be paid in an arm's-length transaction. As a result of the transaction, the Company received cash proceeds of $6.8 million and recorded a gain on the sale of equity method investment of $3.9 million, which was recorded within other (income) expense, net on the condensed consolidated statements of operations during the fiscal quarter ended October 2, 2021.

The Company’s post-sale ownership interest in Premier Pools & Spas is 20.1%. The Company concluded, both before and after the sale of common units on August 6, 2021, that it holds common stock of Premier Pools & Spas and has the ability to exercise significant influence over Premier Pools & Spas but does not have a controlling financial interest. Accordingly, the Company accounts for this investment using the equity method of accounting. The Company’s proportionate share of the earnings or losses of the investee are reported as a separate line in the condensed consolidated statements of operations.

Premier Pools & Spas is a holding company for its manufacturing and franchising companies including PFC LLC, Premier Franchise Management LLC, Premier Pools Management LLC, and Premier Fiberglass LLC (the “Premier Companies”). The Premier Companies are a leading swimming pool-building brand that uses its franchisee network to sell and install pools around the United States.

In connection with Latham’s Investment in Premier Pools & Spas, the Company entered into an exclusive supply agreement with Premier Pools & Spas, the Premier Companies, and Premier Pools & Spas’ franchisees (“Premier Franchisees”) (together, the “Customer”). Premier Pools & Spas does not consolidate the operations of the Premier Franchisees. Per the supply agreement, Latham is the exclusive supplier of the Premier Franchisees for specific pool and pool products. These products include fiberglass products and package pool products. The initial term of the supply agreement is ten years.

For the first three years of the supply agreement, the Customer is entitled to a low-teens percentage rebate for all fiberglass pools sold and an additional growth rebate of a low single-digit to low-teens percentage based on year over year sales growth on fiberglass pools (the “Rebates”). The Rebates will be paid directly to Premier Pools Management Corp. Holdco.

As of October 2, 2021, the Company’s carrying amount for the equity method investment in Premier Pools & Spas was $22.0 million. During the three fiscal quarters ended October 2, 2021, Premier Pools & Spas paid the Company dividends of $2.2 million that are presented on the condensed consolidated statement of cash flows as distribution received from equity method investment of $1.8 million and return of equity method investment of $0.4 million, respectively. The Company has elected a three-month financial reporting lag. The Company recorded its interest in net earnings of Premier Pools & Spas of $0.8 million and $1.8 million for the fiscal quarter and three fiscal quarters ended October 2, 2021, along with a basis difference adjustment of $0.1 million and $0.2 million, respectively.

FAIR VALUE MEASUREMENTS

9 Months Ended

Oct. 02, 2021

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

5. 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 three fiscal quarters ended October 2, 2021 or September 26, 2020.

Assets and liabilities measured at fair value on a nonrecurring basis

The Company’s non-financial assets such as goodwill, intangible assets and property and equipment are measured at fair value upon acquisition or remeasured to fair value when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 2 and Level 3 inputs.

Assets and liabilities measured at fair value on a recurring basis

On May 31, 2019 (the “Acquisition Date”), Latham Pool Products acquired Narellan Group Pty Limited and its subsidiaries (collectively “Narellan”) for a total purchase price of $35.2 million (the “Narellan Acquisition”). In connection with the Narellan Acquisition, consideration paid included $20.2 million in cash, $7.6 million in equity consideration and $7.4 million of contingent consideration as of the Acquisition Date. The Company agreed to pay the contingent consideration in the form of cash and equity consideration to the seller if certain EBITDA targets were achieved for any of the trailing twelve months periods ended December 31, 2019, June 30, 2020 or the year ended December 31, 2020 (the “Contingent Consideration”). The fair value of the Contingent Consideration at the Acquisition Date was $7.4 million. On September 25, 2020, the Company amended the terms of the Narellan Share Purchase Agreement and settled the Contingent Consideration with the selling shareholders of Narellan based upon estimated EBITDA for the year ended December 31, 2020.

The fair value of the Company’s Contingent Consideration was measured and recorded on the condensed consolidated balance sheets using Level 3 inputs because it was valued based on unobservable inputs and other estimation techniques due to the absence of quoted market prices. The Company valued the Contingent Consideration using a Monte Carlo simulation, which relied on management’s projections of EBITDA and the estimated probability of achieving such targets.

Estimates of fair value are subjective in nature, involve uncertainties and matters of significant judgment, and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimate of fair value.

Pension Plan

The fair value of the benefit plan assets related to the Company’s pension plan was historically measured and recorded on the condensed consolidated balance sheets using Level 2 inputs. During the fiscal quarter ended September 26, 2020, the Company terminated its defined benefit pension plan.

Fair value of financial instruments

The Company considers the carrying amounts of cash, trade receivables, prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities, to approximate fair value due to the short-term maturities of these instruments.

Term loan

The term loan is carried at amortized cost; however, the Company estimates the fair value of the term loan for disclosure purposes. The fair value of the term loan is determined using inputs based on observable market data of a non-public exchange using, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of the term loan (in thousands):


	October 2, 2021				December 31, 2020
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Term loan	$	234,201	$	235,372	$	221,496	$	221,081

Interest rate swap

The Company estimates the fair value of the interest rate swap (see Note 8) on a quarterly basis using Level 2 inputs, including the forward LIBOR curve. The fair value is estimated by comparing (i) the present value of all future monthly fixed rate payments versus (ii) the variable payments based on the forward LIBOR curve. As of October 2, 2021 and December 31, 2020, the Company’s interest rate swap liability was $0.6 million and $0.3 million, respectively, which was recorded within other long-term liabilities on the condensed consolidated balance sheets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

GOODWILL AND INTANGIBLE ASSETS, NET

9 Months Ended

Oct. 02, 2021

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

6. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The carrying amount of goodwill as of October 2, 2021 and as of December 31, 2020 was $115.2 million and $115.8 million, respectively. The change in the carrying value during the three fiscal quarters ended October 2, 2021 was solely due to fluctuations in foreign currency exchange rates.

Intangible Assets

Intangible assets, net as of October 2, 2021 consisted of the following (in thousands):


	October 2, 2021
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	135,100	$	476	$	14,839	$	120,737
Patented technology		16,126		70		4,772		11,424
Pool designs		5,728		286		956		5,058
Franchise relationships		1,187		59		694		552
Dealer relationships		160,376		23		27,434		132,965
Non-competition agreements		2,476		—		1,381		1,095
	$	320,993	$	914	$	50,076	$	271,831

The Company recognized $5.5 million and $16.6 million of amortization expense related to intangible assets during the fiscal quarter and the three fiscal quarters ended October 2, 2021, respectively.

Intangible assets, net as of December 31, 2020 consisted of the following (in thousands):


	December 31, 2020
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	135,100	$	1,047	$	10,258	$	125,889
Patented technology		16,126		155		3,452		12,829
Pool designs		5,728		629		648		5,709
Franchise relationships		1,187		130		470		847
Dealer relationships		160,376		52		17,697		142,731
Non-competition agreements		2,476		—		1,008		1,468
	$	320,993	$	2,013	$	33,533	$	289,473

The Company recognized $4.0 million and $12.2 million of amortization expense related to intangible assets during the fiscal quarter and the three fiscal quarters ended September 26, 2020, respectively.

The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands):


	Estimated Future
Year Ended	Amortization Expense
Remainder of fiscal 2021	$	5,415
2022		21,959
2023		21,768
2024		20,948
2025		20,791
Thereafter		180,950
	$	271,831

INVENTORIES, NET

9 Months Ended

Oct. 02, 2021

INVENTORIES, NET

INVENTORIES, NET

7. INVENTORIES, NET

Inventories, net consisted of the following (in thousands):


	October 2, 2021		December 31, 2020
Raw materials	$	57,165	$	37,010
Finished goods		23,540		27,808
	$	80,705	$	64,818

LONG-TERM DEBT

9 Months Ended

Oct. 02, 2021

LONG-TERM DEBT

LONG-TERM DEBT

8. LONG-TERM DEBT

The components of the Company’s outstanding debt obligations consisted of the following (in thousands):


	October 2, 2021		December 31, 2020
Term loan	$	238,314	$	228,147
Less: Unamortized discount and debt issuance costs		(4,113)		(6,651)
Total debt		234,201		221,496
Less: Current portion of long-term debt		(14,234)		(13,042)
Total long-term debt	$	219,967	$	208,454

Revolving Credit Facility

On December 18, 2018, the Latham Pool Products entered into an agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC (“Nomura”) that included a revolving line of credit (the “Revolver”) and letters of credit (“Letters of Credit” or collectively with the Revolver, the “Revolving Credit Facility”), as well as a term loan (as described below). The Revolving Credit Facility is available to finance ongoing general corporate and working capital needs with the Revolver of up to $30.0 million. The Revolving Credit Facility matures on December 18, 2023. On April 27, 2021, upon completion of the IPO, the Company used $16.0 million of the net proceeds from the IPO to repay $16.0 million then outstanding on the Revolver.

The Revolving Credit Facility allows for either Eurocurrency borrowings, bearing interest ranging from 4.50% to 4.75%, or base rate borrowings, bearing interest ranging from 3.50% to 3.75% depending on the First Lien Net Leverage Ratio, as defined in the Credit Agreement. A commitment fee accrues on any unused portion of the commitments under the Revolving Credit Facility. The commitment fee is due and payable quarterly in arrears and is equal to the applicable margin times the actual daily amount by which the $30.0 million initial commitment exceeds the sum of the outstanding borrowings under the Revolver and outstanding Letters of Credit obligations. The applicable margin ranges from 0.375% to 0.500% as determined by the Company’s First Lien Net Leverage Ratio as defined in the Credit Agreement.

The Company is required to meet certain financial covenants, including maintaining specific liquidity measurements. There are also negative covenants, including certain restrictions on the Company’s ability to incur additional indebtedness, create liens, make investments, consolidate or merge with other entities, enter into transactions with affiliates and make prepayments. As of October 2, 2021 and December 31, 2020, the Company was in compliance with all financial-related covenants related to the Credit Agreement. There were no amounts outstanding as of both October 2, 2021 and December 31, 2020, on the Revolving Credit Facility or Letters of Credit.

Term Loan Facility

On December 18, 2018, in connection with the Acquisition, the Company entered into the Credit Agreement with Nomura to borrow $215.0 million (the “Original Term Loan”). The Company incurred debt issuance costs of $11.5 million related to the transaction.

The Original Term Loan was amended on May 29, 2019, to provide additional borrowings of $23.0 million at a discount of $0.7 million (the “First Amendment”) to fund the Narellan Acquisition. Any portion of the First Amendment not used to fund the Narellan Acquisition was required to be applied to repay the First Amendment in an aggregate amount equal to such portion of the First Amendment, without any premium or penalty.

On August 6, 2020, the Company entered into a Form of Affiliated Lender Assignment and Assumption with Nomura (the “Assignment”). Under the Assignment, the Company repaid $5.0 million of the outstanding principal balance.

On October 14, 2020, the Company entered into a subsequent amendment under the Original Term Loan with Nomura to borrow an additional $20.0 million (the “Second Amendment” and collectively with the Original Term Loan and the First Amendment, the “Term Loan”). The Company accounted for the borrowings under the Second Amendment as new debt and recorded $0.1 million of third-party costs as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet. There were no financing costs incurred with the Second Amendment. The Term Loan has a maturity date of June 18, 2025. Interest and principal payments are due quarterly.

On January 25, 2021, the Company entered into a subsequent amendment to the Term Loan with Nomura to borrow an additional $175.0 million (the “Third Amendment” and collectively with the “Term Loan”, the “Amended Term Loan”). In connection with the Third Amendment, the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $5.8 million, commencing March 31, 2021. The amendment did not change the maturity date of the Term Loan and the Amended Term Loan bears interest under the same terms as the Term Loan. The Company accounted for $165.0 million of the borrowings under the Third Amendment as new debt and $10.0 million of the borrowings under the Third Amendment as a debt modification. The Company recorded an aggregate of $1.2 million of debt issuance costs as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet. During the fiscal quarter ended July 3, 2021, in accordance with the terms of the Amended Term Loan, the Company elected to change the terms of the prepayment schedule from an inverse application

to a pro rata application and as a result the Company is required to repay the outstanding principal balance of the Amended Term Loan in fixed quarterly payments of $3.6 million, commencing June 30, 2021.

The Amended Term Loan allowed for the $175.0 million of proceeds to be distributed to Class A unitholders. On February 2, 2021, the Company used the proceeds of the Amended Term Loan to repurchase and retire treasury stock of $64.9 million and to pay a dividend to Class A unitholders of $110.0 million.

On April 27, 2021, upon completion of the IPO, the Company used $152.7 million of the net proceeds from the IPO to repay $152.7 million of the Amended Term Loan.

The Term Loan bears interest at (1) a base rate equal to the highest of (i) the Federal Funds Rate plus 1∕2 of 1%, (ii) the “prime rate” published in the Money Rates section of the Wall Street Journal and (iii) LIBOR (2) plus a Loan Margin of (i) 6.00% for Eurocurrency Rate Loans and (ii) 5.00% for Base Rate Loans, as defined in the Credit Agreement. Principal payments under the First Amendment were calculated as 0.629% of the outstanding principal balance. Outstanding borrowings as of October 2, 2021 and December 31, 2020 were $234.2 million and $221.5 million, respectively, net of discount and debt issuance costs of $4.1 million and $6.7 million, respectively. In connection with the Term Loan, the Company is subject to various financial reporting, financial and other covenants, including maintaining specific liquidity measurements.

As of October 2, 2021, the unamortized debt issuance costs and discount on the Term Loan were $2.9 million and $1.2 million, respectively. As of December 31, 2020, the unamortized debt issuance costs and discount on the Term Loan were $6.3 million and $0.4 million, respectively. The effective interest rate was 7.24% at October 2, 2021.

Interest rate risk associated with the Company’s Credit Agreement is managed through an interest rate swap which the Company executed on April 30, 2020. The swap has an effective date of May 18, 2020 and a termination date of May 18, 2023. Under the terms of the swap, the Company fixed its LIBOR borrowing rate at 0.442% on a notional amount of $200.0 million. The interest rate swap is not designated as a hedging instrument for accounting purposes (see Note 2 and Note 5).

Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands):


Year Ended	Term Loan Facility
Remainder of fiscal 2021	$	3,558
2022		14,234
2023		14,234
2024		14,234
2025		192,054
	$	238,314

The obligations under the Credit Agreement are guaranteed by certain wholly owned subsidiaries (the “Guarantors”) of the Company as defined in the security agreement. The obligations under the Credit Agreement are secured by substantially all of the Guarantors’ tangible and intangible assets, including their accounts receivables, equipment, intellectual property, inventory, cash and cash equivalents, deposit accounts and security accounts. The Credit Agreement also restricts payments and other distributions unless certain conditions are met, which could restrict the Company’s ability to pay dividends.

PRODUCT WARRANTIES

9 Months Ended

Oct. 02, 2021

PRODUCT WARRANTIES

PRODUCT WARRANTIES

9. PRODUCT WARRANTIES

The warranty reserve activity consisted of the following (in thousands):


	Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020
Balance at the beginning of the year	$	2,882	$	2,846
Accruals for warranties issued		4,369		2,270
Less: Settlements made (in cash or in kind)		(3,825)		(2,501)
Balance at the end of the year	$	3,426	$	2,615

NET SALES

9 Months Ended

Oct. 02, 2021

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				Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
In-ground Swimming Pools	$	84,060	$	78,094	$	285,704	$	169,681
Covers		44,125		25,695		94,354		53,528
Liners		33,772		23,723		111,534		68,259
	$	161,957	$	127,512	$	491,592	$	291,468

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

INCOME TAXES

9 Months Ended

Oct. 02, 2021

INCOME TAXES

INCOME TAXES

11. INCOME TAXES

The effective income tax rate for the fiscal quarter and three fiscal quarters ended October 2, 2021 was (223.8)% and (39.3)%, respectively, compared to 24.7% and 30.6% for the fiscal quarter and three fiscal quarters ended September 26, 2020, respectively. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the fiscal quarter and three fiscal quarters ended October 2, 2021 was primarily attributable to the discrete impact of stock compensation expense pursuant to the Reorganization. The results for the quarter include pre-tax stock compensation expense of $25.4 million and $98.9 million for fiscal quarters and three fiscal quarters ended October 2, 2021 related to the Reorganization for which there is no associated tax benefit. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the fiscal quarter and three fiscal quarters ended September 26, 2020 was impacted by a variety of factors, primarily stemming from impact of state taxes. The pre-tax income for three fiscal quarters ended September 26, 2020 included losses in tax jurisdictions for which the company did not record a tax benefit, which increased the effective income tax rate for the fiscal quarter ended September 26, 2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

SHAREHOLDERS' EQUITY

9 Months Ended

Oct. 02, 2021

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

12. SHAREHOLDERS’ EQUITY

Equity Structure Prior to Reorganization

Prior to the IPO and the Reorganization, the Parent owned 100% of the issued and outstanding common stock of the Company. The capital structure of the Parent consisted of two different classes of limited partnership interests, Class A and Class B units (profits interests). Prior to the Reorganization, none of the Class B units would have been vested for accounting purposes due to the Parent’s $0 Repurchase Right, which applied in the event of a voluntary termination or termination without cause, since it functions as a vesting condition.

Equity Structure Subsequent to the Reorganization

On April 13, 2021, the Company’s certificate of incorporation was amended, which amended and restated certain terms of the certificate of incorporation. Under the amended certificate of incorporation, the Company had authority to issue 500,000,000 shares of common stock, par value $0.0001 per share. On April 12, 2021, the Company’s board of directors declared and on April 13, 2021, the Company effected a 109,673.709-for-one stock split of its issued and outstanding shares of common stock.

As a part of the equity Reorganization, on April 22, 2021, 194,207,115 Class A units converted into 97,187,596 shares of common stock and 26,158,894 Class B units converted into 4,145,987 shares of common stock and 8,340,126 shares of unvested restricted stock. Refer to Note 1 for detail regarding the Company’s Reorganization and conversion of Class A and Class B units to common and restricted shares.

Amendment and Restatement of Certificate of Incorporation

On April 22, 2021, the Company’s certificate of incorporation was further amended and restated to, among other things, increase the authorized shares to 1,000,000,000, of which 900,000,000 are shares of common stock, par value $0.0001 per share and 100,000,000 are shares of preferred stock, par value 0.0001 per share.

As of October 2, 2021 and December 31, 2020, 112,153,832 and 118,854,249 shares of common stock are issued and outstanding for accounting purposes, respectively.

PROFITS INTEREST UNITS

9 Months Ended

Oct. 02, 2021

PROFITS INTEREST UNITS

PROFITS INTEREST UNITS

13. PROFITS INTEREST UNITS

Prior to the Reorganization, the Company’s Parent granted PIUs in the form of Class B units of the Parent to certain key employees and directors for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of the Company. The following table summarizes the activity for all PIUs during the three fiscal quarters ended October 2, 2021 and the year ended December 31, 2020:


		Weighted-Average
		Grant-Date
	Number of PIUs	Fair Value
Balance at January 1, 2020	21,734,170	$	0.60
Granted	7,843,107		0.35
Forfeited	(2,152,315)		0.43
Balance at December 31, 2020	27,424,962
Granted	—
Forfeited	(1,266,068)		0.34
Balance at April 21, 2021	26,158,894
Converted at IPO in connection with the Reorganization	(26,158,894)	$	0.43
Balance at October 2, 2021	—

On January 29, 2021 an employee holder of PIUs terminated his employment with the Company, at which time all 1,055,057 of his performance-vesting units were forfeited. At the time of his termination, the employee held 527,528 of time-vesting units, of which 211,011 time-vesting units were vested. Per the terms of his termination agreement, the Company accelerated the vesting of an additional 105,506 time-vesting units, such that the total time-vesting units vested were equal to 316,517 upon his termination and the remaining 211,011 of unvested time-vesting units were forfeited upon his termination. As the employee’s profits interest units had not vested from an accounting perspective, the retention and immediate vesting of the retained time-vesting units was accounted for as a cancellation of the original award and a new grant under the revised terms. A cumulative catch-up charge of $1.1 million was recorded during the fiscal quarter ended April 3, 2021 to reflect the incremental fair value of the awards as of the date of the modification, as compared to the grant-date fair value.

STOCK-BASED COMPENSATION

9 Months Ended

Oct. 02, 2021

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

14. 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, will be $750 thousand.

Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021 the Company granted 8,340,126 of restricted stock awards, 341,301 of restricted stock units and 886,862 of option awards under the Omnibus Incentive Plan to employees of the Company. Of the 8,340,126 restricted stock awards granted, (i) 6,799,414 vest every six months in equal installments beginning on December 27, 2021 and ending on December 27, 2023, and (ii) 1,540,712 vest every six months in equal installments, beginning on December 27, 2021 and ending on December 27, 2024. Of the 341,301 restricted stock unit awards granted, (i) 251,828 vest 1/3 on the nine-month anniversary of the Closing of the IPO, 1/3 on the first anniversary of the Closing of the IPO, and 1/3 on the two-year anniversary of the Closing of the IPO; (ii) 22,367 vest on the first anniversary of the Closing of the IPO; (iii) 51,316 vest on the nine-month anniversary of the Closing of the IPO; and (iv) 15,790 vest evenly on each of the first three anniversaries of the Closing of the IPO. All 886,862 of the option awards vest 25% annually on each of the first four anniversaries of the Closing of the IPO. The option awards were granted with a strike price of $19.00 per share. Under the terms of the Omnibus Incentive Plan, all stock options will expire if not exercised within ten years of the grant date.

Stock-based compensation expense for the fiscal quarters and three fiscal quarters ended October 2, 2021 was $27.6 million and $104.6 million, respectively. Stock-based compensation expense for the fiscal quarters and three fiscal quarters ended September 26, 2020 was and $1.0 million and $1.4 million, respectively. Stock-based compensation expense of $1.9 million and $25.7 was recorded

in cost of sales and selling, general and administrative expense, respectively, for the fiscal quarter ended October 2, 2021. Stock-based compensation expense of $6.8 million and $97.8 was recorded in cost of sales and selling, general and administrative expense, respectively, for the three fiscal quarters ended October 2, 2021. Stock-based compensation expense for the fiscal quarters and three fiscal quarters ended September 26, 2020 was recorded in selling, general and administrative expense on the condensed consolidated statements of operations. Of the $104.6 million of stock-based compensation expense recorded during the three fiscal quarters ended October 2, 2021, $0.5 million was due to the accelerated vesting of restricted stock and $49.0 million was due to the modification as a result of the Reorganization. Refer to Note 12 above for detail regarding the Company’s equity-based awards issued in the form of PIUs prior to the Reorganization and IPO. As of October 2, 2021, total unrecognized stock-based compensation expense related to all unvested stock-based awards of $106.2 million, which is expected to be recognized over a weighted-average period of 1.49 years.

The following table sets forth the significant assumptions used in the Black-Scholes option-pricing model on a weighted-average basis to determine the fair value of option awards granted:


	Three Fiscal Quarters Ended
	October 2, 2021
Risk-free interest rate	0.63	%
Expected volatility	38.16	%
Expected term (in years)	6.25
Expected dividend yield	0.00	%

Restricted Stock Awards

The following table represents the Company’s restricted stock awards activity during the three fiscal quarters ended October 2, 2021:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2021	—	$	—
Granted	8,340,126		19.00
Vested	(84,687)		—
Forfeited	(559,682)		19.00
Outstanding at October 2, 2021	7,695,757	$	19.00

Restricted Stock Units

The following table represents the Company’s restricted stock units activity during the three fiscal quarters ended October 2, 2021:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2021	—	$	—
Granted	341,301		19.00
Vested	—		—
Forfeited	(16,767)		19.00
Outstanding at October 2, 2021	324,534	$	19.00

Stock Options

The following table represents the Company’s stock option activity during the three fiscal quarters ended October 2, 2021:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding on January 1, 2021	—	$	—	—	$	—
Granted	886,862		19.00
Exercised	—
Forfeited	(81,092)
Outstanding at October 2, 2021	805,770	$	19.00	9.55	$	—
Vested and expected to vest at October 2, 2021	805,770	$	19.00	9.55	$	—
Options exercisable at October 2, 2021	—		—	—		—

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted average grant-date fair value of stock options granted during the three fiscal quarters ended October 2, 2021 was $7.20 per share.

NET INCOME (LOSS) PER SHARE

9 Months Ended

Oct. 02, 2021

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE

15. 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				Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Numerator:
Net (loss) income attributable to common stockholders	$	(11,296)	$	17,740	$	(56,361)	$	18,703
Denominator:
Weighted-average common shares outstanding
Basic		112,153,832		97,393,002		110,121,240		96,665,708
Diluted		112,153,832		98,011,795		110,121,240		97,122,885
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.10)	$	0.18	$	(0.51)	$	0.19
Diluted	$	(0.10)	$	0.18	$	(0.51)	$	0.19

The following table includes the number of shares that may be dilutive common shares in the future that were not included in the computation of diluted net income (loss) per share because the effect was anti-dilutive:


	Fiscal Quarter Ended		Three Fiscal Quarters Ended
	October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020
Restricted stock awards	2,952,422	47,690	6,813,166	47,446
Restricted stock units	146,398	—	84,866	—
Stock options	—	—	4,235	—

RELATED PARTY TRANSACTIONS

9 Months Ended

Oct. 02, 2021

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

16. 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 three fiscal quarters ended October 2, 2021 and the year ended December 31, 2020, the Company incurred $1.9 million and $0.5 million, respectively, associated with services performed by BrightAI, which is recorded as construction in progress within property and equipment, net on the condensed consolidated balance sheet as of October 2, 2021. As of October 2, 2021 and December 31, 2020, the Company had accounts payable - related party to BrightAI of $1.1 million and $0.5 million, respectively. There were no services rendered by BrightAI during the three fiscal quarters ended September 26, 2020.

Expense Reimbursement and Management Fees

The Company had an expense reimbursement agreement (the “management fee arrangement”) with the Sponsor and Wynnchurch Capital, L.P. for ongoing consulting and advisory services. The management fee arrangement provided for the aggregate payment of up to $1.0 million each year for reimbursement of expenses incurred with services provided and, depending on the extent of services provided, management fees. The management fee arrangement terminated upon consummation of the Company’s IPO.

The Company entered into a Stockholders’ Agreement with the Sponsor and Wynnchurch Capital, L.P. on April 27, 2021. The Stockholders’ Agreement requires the Company to reimburse the Sponsor and Wynnchurch Capital, L.P. the reasonable out-of-pocket costs and expenses in connection with monitoring and overseeing their investment in the Company.

There were no management fees incurred by the Company during the three fiscal quarters ended October 2, 2021 and September 26, 2020. The Company reimbursed less than $0.1 million of out-of-pocket costs and expenses to the Sponsor and Wynnchurch Capital, L.P. during both the three fiscal quarters ended October 2, 2021 and September 26, 2020. As of October 2, 2021, there were no outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P. As of September 26, 2020, there was less than $0.1 million outstanding amounts payable to the Sponsor and Wynnchurch Capital, L.P.

Operating Lease

In May 2019, in connection with the Narellan Acquisition, the Company assumed an operating lease for the manufacture, sale and storage of swimming pools and associated equipment with Acquigen Pty Ltd, which is owned by an employee who is also a shareholder of the Company. The lease expires in June 2028. As of October 2, 2021 and December 31, 2020, future minimum lease payments related to this lease totaled $3.6 million and $4.2 million, respectively. The Company recognized $0.1 million of rent expense related to this lease during each of the fiscal quarters ended October 2, 2021 and September 26, 2020, as well as $0.4 million and $0.3 million of rent expense during the three fiscal quarters ended October 2, 2021 and September 26, 2020, which is recognized within selling, general and administrative expense on the condensed consolidated statements of operations.

SEGMENT AND GEOGRAPHIC INFORMATION

9 Months Ended

Oct. 02, 2021

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

17. SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

During 2020, the Company made operational changes in how its CODM manages the business including organizational alignment, performance assessment and resource allocation. The segment disclosure is based on the intention to provide the users of the financial statements with a view of the business from the Company’s perspective. The Company conducts its business as one operating and reportable segment that designs, manufactures and markets in-ground swimming pools, liners and covers.

Geographic Information

Net sales by geography is based on the delivery address of the customer as specified in purchase order. Net sales by geographic area was as follows (in thousands):


	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales
United States	$	123,477	$	102,663	$	385,259	$	234,439
Canada		28,103		16,785		76,619		38,197
Australia		6,330		5,439		18,581		13,187
New Zealand		1,749		941		5,277		2,357
Other		2,298		1,684		5,856		3,288
Total	$	161,957	$	127,512	$	491,592	$	291,468

Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands):


	October 2,		December 31,
	2021		2020
Long-lived assets
United States	$	48,158	$	37,680
Canada		4,358		3,050
Australia		4,394		4,979
New Zealand		1,857		1,648
Total	$	58,767	$	47,357

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Oct. 02, 2021
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, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of October 2, 2021 and for the fiscal quarters and three fiscal quarters ended October 2, 2021 and September 26, 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. 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, 2020 included in the Company’s Registration Statement on Form S-1, as amended, File No. 333-254930 on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of October 2, 2021 and results of operations for the fiscal quarters and three fiscal quarters ended October 2, 2021 and September 26, 2020 and cash flows for the three fiscal quarters ended October 2, 2021 and September 26, 2020 have been made. The Company’s results of operations for the fiscal quarter and three fiscal quarters ended October 2, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.
Use of Estimates	Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known.
Seasonality	Seasonality Although the Company generally has demand for its products throughout the year, its business is seasonal and weather is one of the principal external factors affecting the business. Historically, net sales and net income are highest during spring and summer, representing the peak months of swimming pool use, pool installation and remodeling and repair activities. Sales periods having severe weather may also affect net sales.
Accounting Policies	Accounting Policies Refer to the Company’s final prospectus for the IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on April 26, 2021 (“the Prospectus”) for a discussion of the Company’s accounting policies, as updated below.
Stock-based Compensation	Stock-based Compensation Stock-based compensation is measured and recognized based on the grant date fair value of the awards. The Class B units of the Parent were granted to employees in the form of Profits Interest Units (“PIUs”). The Company determined the grant date fair value of PIUs using the Black-Scholes option pricing model. As part of the Reorganization, the vested and unvested PIUs of the Parent, were converted on a pro rata basis into equivalent restricted stock units and restricted stock awards of the Company’s underlying common stock. The fair value of the awards is expensed using a graded vesting method over the requisite service period in which employees earn the awards. The Company accounts for forfeitures of stock-based awards as they occur rather than applying an estimated forfeiture rate to stock-based compensation expense. The Black-Scholes pricing model requires critical assumptions including risk-free rate, volatility, expected term and expected dividend yield. The expected term is computed using the simplified method. The Company uses the simplified method to calculate expected term of the PIUs as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the stock-based award. The Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The Company utilized a dividend yield of zero, as it had no history or plan of declaring dividends on its common stock. The assumptions underlying these valuations represented the Company’s best estimate, which involved inherent uncertainties and the application of judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of the Company’s stock-based compensation expense could have been materially different. Contemporaneously with the pricing of the Company’s IPO, on April 22, 2021, the Company effected its Omnibus Incentive Plan in which it granted to certain employees of the Company restricted stock awards, restricted stock units and option awards inclusive of the as converted Class B units as a result of the Reorganization (see Note 14).
Equity Method Investments	Equity Method Investments Investments and ownership interests in common stock or in-substance common stock are accounted for under the equity method accounting if the Company has the ability to exercise significant influence over the entity but does not have a controlling financial interest. Under the equity method, investments are initially recognized at cost and adjusted to reflect the Company’s interest in net earnings, dividends received and other-than-temporary impairments. The Company records its interest in the net earnings of its equity method investee, along with adjustments for amortization of basis differences, investee capital transactions and other comprehensive income (loss), within earnings from equity method investment in the condensed consolidated statements of operations. Basis differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to the underlying basis differences. Profits or losses related to intra-entity sales with its equity method investee are eliminated until realized by the investor or investee. The Company records its proportionate share of earnings or losses of Premier Holdco, LLC (“Premier Pools & Spas”) within earnings from equity method investment in the condensed consolidated statements of operations on a three-month lag. The Company recorded its interest in the net earnings of Premier Pools & Spas of $0.8 million and $1.8 million, respectively, for the fiscal quarter and three fiscal quarters ended October 2, 2021, which included a $0.1 million and $0.2 million adjustment for the amortization of basis differences, within earnings from equity method investment in the condensed consolidated statements of operations during the fiscal quarter and three fiscal quarters ended October 2, 2021. As the Company initially invested in Premier Pools & Spas on October 30, 2020, there was no earnings from equity method investment recorded during the fiscal quarter and the three fiscal quarters ended September 26, 2020. The Company received distributions of $1.1 million and $2.2 million during the fiscal quarter and three fiscal quarters ended October 2, 2021, respectively. For presentation in the condensed consolidated statements of cash flows, the Company utilizes the cumulative earnings approach for purposes of determining whether distributions should be classified as either a return on investment, which are be included in operating activities, or a return of investment, which would be included in investing activities. Under the cumulative earnings approach, the Company compares the distributions received to its cumulative equity-method earnings since inception. Any distributions received up to the amount of cumulative equity earnings are be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Equity method goodwill is not amortized or tested for impairment; instead the Company evaluates equity method investments for impairment when events or changes in circumstances indicate that the decline in value below the carrying amount of its equity method investment is determined to be other than temporary. In such a case, the decline in value below the carrying amount of its equity method investment is recognized in the condensed consolidated statements of operations in the period the impairment occurs.
Recently Issued Accounting Pronouncements	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 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. In addition, a lessee is required to record (i) a right-of-use asset and a lease liability on its balance sheet for all leases with accounting lease terms of more than 12 months regardless of whether it is an operating or financing lease and (ii) lease expense in its consolidated statement of operations for operating leases and amortization and interest expense in its consolidated statement of operations for financing leases. Leases with a term of 12 months or less may be accounted for similar to prior guidance for operating leases today. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), which added an optional transition method that allows companies to adopt the standard as of the beginning of the year of adoption as opposed to the earliest comparative period presented. In November 2019, the FASB issued guidance delaying the effective date for all entities, except for public business entities. For nonpublic entities, this guidance is effective for annual periods beginning after December 15, 2020. In June 2020, the FASB issued additional guidance delaying the effective date for all entities, except for public business entities. For public entities, ASU 2016-02 was effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. For nonpublic entities, this guidance is effective for annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, which narrowed the scope and changed the effective date for nonpublic entities for ASU 2016-13. The FASB subsequently issued supplemental guidance within ASU 2019-05, Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief (“ASU 2019-05”). ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For public entities that are SEC filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-13 will have on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which is intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its consolidated financial statements. In addition to that main objective, the amendments in the update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. Additional updates to further clarify the guidance in ASU 2017-12 were issued by the FASB in October 2018 within ASU 2018-16. For public entities, the amendment is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For nonpublic entities, ASU 2017-12 is effective for fiscal years beginning after December 15, 2020 and interim periods beginning after December 15, 2021. Early application is permitted in any interim period after the issuance of the update. The Company is currently evaluating the impact that the adoption of ASU 2017-12 will have on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. For public entities, ASU 2019-12 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements. In January 2020, the FASB issued ASU 2020-01, Investments — Equity Securities (Topic 321), Investments — Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. For public entities, ASU 2020-01 is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. For nonpublic companies, ASU 2020-01 is effective for annual periods beginning after December 15, 2021, and interim periods within those reporting periods. The Company is currently evaluating the impact that the adoption of ASU 2020-01 will have on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. This guidance is effective for all entities upon issuance on March 12, 2020 and may be applied through December 31, 2022. The expedients and exceptions in this guidance are optional, and the Company is evaluating the potential future financial statement impact of any such expedient or exception that it may elect to apply as the Company evaluates the effects of adopting this guidance on its consolidated financial statements. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, this guidance applies to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The ASU became effective as of March 12, 2020 and can be adopted anytime during the period of January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact that the adoption of ASU 2021-01 will have on its consolidated financial statements.

ACQUISITIONS (Tables)

9 Months Ended

Oct. 02, 2021

ACQUISITIONS

Summary of purchase price allocation


(in thousands)	October 22, 2020
Total consideration	$	79,743
Allocation of purchase price:
Cash		5,007
Trade receivables		10,639
Inventories		11,854
Prepaid expenses and other current assets		3,949
Property and equipment		1,402
Intangible assets		46,700
Total assets acquired		79,551
Accounts payable		3,536
Accrued expenses and other current liabilities		8,853
Other long-term liabilities		524
Total liabilities assumed		12,913
Total fair value of net assets acquired, excluding goodwill:		66,638
Goodwill	$	13,105

Schedule of purchase price to specific intangible asset categories


	Fair Value		Amortization Period
Definite-lived intangible assets:	(in thousands)		(in years)
Trade names	$	9,500	9
Dealer relationships		37,200	8
	$	46,700

Schedule of pro forma financial information


	Fiscal Quarter Ended		Three Fiscal Quarters Ended
(in thousands)	September 26, 2020		September 26, 2020
Net sales	$	152,508	$	345,200
Net loss	$	22,598	$	21,952

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Oct. 02, 2021

Term loan

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Schedule of financial liabilities at fair value on a recurring basis


	October 2, 2021				December 31, 2020
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Term loan	$	234,201	$	235,372	$	221,496	$	221,081

GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

9 Months Ended

Oct. 02, 2021

GOODWILL AND INTANGIBLE ASSETS, NET

Schedule of Intangible assets

Intangible assets, net as of October 2, 2021 consisted of the following (in thousands):


	October 2, 2021
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	135,100	$	476	$	14,839	$	120,737
Patented technology		16,126		70		4,772		11,424
Pool designs		5,728		286		956		5,058
Franchise relationships		1,187		59		694		552
Dealer relationships		160,376		23		27,434		132,965
Non-competition agreements		2,476		—		1,381		1,095
	$	320,993	$	914	$	50,076	$	271,831

Intangible assets, net as of December 31, 2020 consisted of the following (in thousands):


	December 31, 2020
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	135,100	$	1,047	$	10,258	$	125,889
Patented technology		16,126		155		3,452		12,829
Pool designs		5,728		629		648		5,709
Franchise relationships		1,187		130		470		847
Dealer relationships		160,376		52		17,697		142,731
Non-competition agreements		2,476		—		1,008		1,468
	$	320,993	$	2,013	$	33,533	$	289,473

Schedule of estimated amortization expense related to definite-lived intangible assets

The Company estimates that amortization expense related to definite-lived intangible assets will be as follows in each of the next five years and thereafter (in thousands):


	Estimated Future
Year Ended	Amortization Expense
Remainder of fiscal 2021	$	5,415
2022		21,959
2023		21,768
2024		20,948
2025		20,791
Thereafter		180,950
	$	271,831

INVENTORIES, NET (Tables)

9 Months Ended

Oct. 02, 2021

INVENTORIES, NET

Schedule of inventories, net

Inventories, net consisted of the following (in thousands):


	October 2, 2021		December 31, 2020
Raw materials	$	57,165	$	37,010
Finished goods		23,540		27,808
	$	80,705	$	64,818

LONG-TERM DEBT (Tables)

9 Months Ended

Oct. 02, 2021

LONG-TERM DEBT

Components of the Company's outstanding debt obligations

The components of the Company’s outstanding debt obligations consisted of the following (in thousands):


	October 2, 2021		December 31, 2020
Term loan	$	238,314	$	228,147
Less: Unamortized discount and debt issuance costs		(4,113)		(6,651)
Total debt		234,201		221,496
Less: Current portion of long-term debt		(14,234)		(13,042)
Total long-term debt	$	219,967	$	208,454

Principal payments due on the outstanding debt

Principal payments due on the outstanding debt in the next five fiscal years, excluding any potential payments based on excess cash flow levels, are as follows (in thousands):


Year Ended	Term Loan Facility
Remainder of fiscal 2021	$	3,558
2022		14,234
2023		14,234
2024		14,234
2025		192,054
	$	238,314

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

PRODUCT WARRANTIES (Tables)

9 Months Ended

Oct. 02, 2021

PRODUCT WARRANTIES

Warranty reserve activity

The warranty reserve activity consisted of the following (in thousands):


	Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020
Balance at the beginning of the year	$	2,882	$	2,846
Accruals for warranties issued		4,369		2,270
Less: Settlements made (in cash or in kind)		(3,825)		(2,501)
Balance at the end of the year	$	3,426	$	2,615

NET SALES (Tables)

9 Months Ended

Oct. 02, 2021

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				Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
In-ground Swimming Pools	$	84,060	$	78,094	$	285,704	$	169,681
Covers		44,125		25,695		94,354		53,528
Liners		33,772		23,723		111,534		68,259
	$	161,957	$	127,512	$	491,592	$	291,468

PROFITS INTEREST UNITS (Tables)

9 Months Ended

Oct. 02, 2021

PROFITS INTEREST UNITS

Summary of the activity for all PIUs


		Weighted-Average
		Grant-Date
	Number of PIUs	Fair Value
Balance at January 1, 2020	21,734,170	$	0.60
Granted	7,843,107		0.35
Forfeited	(2,152,315)		0.43
Balance at December 31, 2020	27,424,962
Granted	—
Forfeited	(1,266,068)		0.34
Balance at April 21, 2021	26,158,894
Converted at IPO in connection with the Reorganization	(26,158,894)	$	0.43
Balance at October 2, 2021	—

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Oct. 02, 2021

STOCK-BASED COMPENSATION

Summary of significant assumptions used in the Black-Scholes option-pricing model on a weighted-average basis to determine the fair value of option awards granted

The following table sets forth the significant assumptions used in the Black-Scholes option-pricing model on a weighted-average basis to determine the fair value of option awards granted:


	Three Fiscal Quarters Ended
	October 2, 2021
Risk-free interest rate	0.63	%
Expected volatility	38.16	%
Expected term (in years)	6.25
Expected dividend yield	0.00	%

Summary of restricted stock awards activity

The following table represents the Company’s restricted stock awards activity during the three fiscal quarters ended October 2, 2021:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2021	—	$	—
Granted	8,340,126		19.00
Vested	(84,687)		—
Forfeited	(559,682)		19.00
Outstanding at October 2, 2021	7,695,757	$	19.00

Summary of restricted stock units activity

The following table represents the Company’s restricted stock units activity during the three fiscal quarters ended October 2, 2021:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2021	—	$	—
Granted	341,301		19.00
Vested	—		—
Forfeited	(16,767)		19.00
Outstanding at October 2, 2021	324,534	$	19.00

Summary of stock option activity

The following table represents the Company’s stock option activity during the three fiscal quarters ended October 2, 2021:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding on January 1, 2021	—	$	—	—	$	—
Granted	886,862		19.00
Exercised	—
Forfeited	(81,092)
Outstanding at October 2, 2021	805,770	$	19.00	9.55	$	—
Vested and expected to vest at October 2, 2021	805,770	$	19.00	9.55	$	—
Options exercisable at October 2, 2021	—		—	—		—

NET INCOME (LOSS) PER SHARE (Tables)

9 Months Ended

Oct. 02, 2021

NET INCOME (LOSS) PER SHARE

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				Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Numerator:
Net (loss) income attributable to common stockholders	$	(11,296)	$	17,740	$	(56,361)	$	18,703
Denominator:
Weighted-average common shares outstanding
Basic		112,153,832		97,393,002		110,121,240		96,665,708
Diluted		112,153,832		98,011,795		110,121,240		97,122,885
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.10)	$	0.18	$	(0.51)	$	0.19
Diluted	$	(0.10)	$	0.18	$	(0.51)	$	0.19

Schedule of antidilutive securities excluded from computation of dilutive net income (loss) per share


	Fiscal Quarter Ended		Three Fiscal Quarters Ended
	October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020
Restricted stock awards	2,952,422	47,690	6,813,166	47,446
Restricted stock units	146,398	—	84,866	—
Stock options	—	—	4,235	—

SEGMENT AND GEOGRAPHIC INFORMATION (Tables)

9 Months Ended

Oct. 02, 2021

SEGMENT AND GEOGRAPHIC INFORMATION

Net sales by geography

Net sales by geography is based on the delivery address of the customer as specified in purchase order. Net sales by geographic area was as follows (in thousands):


	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales
United States	$	123,477	$	102,663	$	385,259	$	234,439
Canada		28,103		16,785		76,619		38,197
Australia		6,330		5,439		18,581		13,187
New Zealand		1,749		941		5,277		2,357
Other		2,298		1,684		5,856		3,288
Total	$	161,957	$	127,512	$	491,592	$	291,468

Long-lived assets by geographic area

Our long-lived assets by geographic area, which consist of property and equipment, net assets were as follows (in thousands):


	October 2,		December 31,
	2021		2020
Long-lived assets
United States	$	48,158	$	37,680
Canada		4,358		3,050
Australia		4,394		4,979
New Zealand		1,857		1,648
Total	$	58,767	$	47,357

NATURE OF THE BUSINESS (Details) - USD ($) $ in Millions	Apr. 27, 2021	Apr. 22, 2021
Class A units
Subsequent Event [Line Items]
Number of shares issued upon conversion of units		97,187,596
Class B units
Subsequent Event [Line Items]
Number of shares issued upon conversion of units		4,145,987
IPO
Subsequent Event [Line Items]
Common stock shares issued	23,000,000
Net proceeds from the IPO	$ 399.3
Underwriters Option
Subsequent Event [Line Items]
Common stock shares issued	3,000,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Schedule of Equity Method Investments [Line Items]
Interest in net earnings	$ 810		$ 1,808
Distributions received from equity method investment			1,808
Premier Pools & Spas
Schedule of Equity Method Investments [Line Items]
Interest in net earnings	800	$ 0	1,800	$ 0
Adjustment for the amortization of basis differences	100		200
Distributions received from equity method investment	$ 1,100		$ 2,200

ACQUISITIONS (Details) - USD ($) $ in Thousands	Oct. 22, 2020	Oct. 02, 2021	Dec. 31, 2020
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Goodwill		$ 115,158	$ 115,750
GL International, LLC
Business Acquisition [Line Items]
Total purchase price	$ 79,700
Total purchase price in cash	79,700
Total purchase price, net of cash acquired	74,700
Cash acquired	5,000
Net working capital adjustment receivable excluded from consideration paid	800
Transaction costs	2,400
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Total consideration	79,743
Cash	5,007
Trade receivables	10,639
Inventories	11,854
Prepaid expenses and other current assets	3,949
Property and equipment	1,402
Intangible assets	46,700
Total assets acquired	79,551
Accounts payable	3,536
Accrued expenses and other current liabilities	8,853
Other long-term liabilities	524
Total liabilities assumed	12,913
Total fair value of net assets acquired, excluding goodwill:	66,638
Goodwill	$ 13,105	$ 13,100

ACQUISITIONS - Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Business Acquisition, Pro Forma Information [Abstract]
Net sales	$ 152,508		$ 345,200
Net income (loss)	$ 22,598		$ 21,952
GL International, LLC
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value		$ 46,700
Trade names \| GL International, LLC
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value		$ 9,500
Amortization Period		9 years
Dealer relationships \| GL International, LLC
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value		$ 37,200
Amortization Period		8 years

EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands		2 Months Ended	3 Months Ended		9 Months Ended
EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands	Oct. 30, 2020	Dec. 31, 2020	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020	Aug. 06, 2021
Schedule of Equity Method Investments [Line Items]
Proceeds from the sale of equity method investment					$ 6,796
Gain on sale of equity method investment					3,856
Equity method investment		$ 25,384	$ 21,997		21,997
Distributions received from equity method investment					1,808
Return of equity method investment					400
Interest in net earnings			$ 810		$ 1,808
Premier Pools & Spas
Schedule of Equity Method Investments [Line Items]
Ownership percentage	28.00%		20.10%		20.10%
Consideration paid	$ 25,400
Proceeds from the sale of equity method investment			$ 6,800
Gain on sale of equity method investment			3,900
Term of the supply agreement		3 months			10 years
Period defined in agreement for calculating percentage of rebates					3 years
Equity method investment			22,000		$ 22,000
Distributions received from equity method investment			1,100		2,200
Interest in net earnings			800	$ 0	1,800	$ 0
Basis difference adjustment			$ 100		$ 200
Premier Pools & Spas \| Premier Group Holdings Inc.
Schedule of Equity Method Investments [Line Items]
Ownership percentage							29.80%

FAIR VALUE MEASUREMENTS - Assets and liabilities measured at fair value on a recurring basis (Details) $ in Millions	May 31, 2019 USD ($)
Contingent consideration
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of contingent consideration as of the acquisition date	$ 7.4
Change in the fair value of the Contingent Consideration	7.4
Narellan Acquisition
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash consideration	35.2
Narellan Acquisition \| Contingent consideration
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash consideration	20.2
Equity consideration	$ 7.6

FAIR VALUE MEASUREMENTS - Fair value of financial instruments (Details) - Level 2 - USD ($) $ in Thousands	Oct. 02, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liabilities	$ 600	$ 300
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amount	234,201	221,496
Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amount	$ 235,372	$ 221,081

GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Dec. 31, 2020
GOODWILL AND INTANGIBLE ASSETS, NET
Carrying amount of goodwill	$ 115,158	$ 115,750

GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 320,993		$ 320,993		$ 320,993
Foreign Currency Translation			914		2,013
Accumulated Amortization	50,076		50,076		33,533
Net Amount	271,831		271,831		289,473
Amortization of Intangible Assets	5,486	$ 4,047	16,560	$ 12,173
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	135,100		135,100		135,100
Foreign Currency Translation			476		1,047
Accumulated Amortization	14,839		14,839		10,258
Net Amount	120,737		120,737		125,889
Patented technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	16,126		16,126		16,126
Foreign Currency Translation			70		155
Accumulated Amortization	4,772		4,772		3,452
Net Amount	11,424		11,424		12,829
Pool designs
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	5,728		5,728		5,728
Foreign Currency Translation			286		629
Accumulated Amortization	956		956		648
Net Amount	5,058		5,058		5,709
Franchise relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,187		1,187		1,187
Foreign Currency Translation			59		130
Accumulated Amortization	694		694		470
Net Amount	552		552		847
Dealer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	160,376		160,376		160,376
Foreign Currency Translation			23		52
Accumulated Amortization	27,434		27,434		17,697
Net Amount	132,965		132,965		142,731
Non-competition agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,476		2,476		2,476
Accumulated Amortization	1,381		1,381		1,008
Net Amount	$ 1,095		$ 1,095		$ 1,468

GOODWILL AND INTANGIBLE ASSETS, NET - Amortization Expense (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of fiscal 2021	$ 5,415
2022	21,959
2023	21,768
2024	20,948
2025	20,791
Thereafter	180,950
Total	$ 271,831	$ 289,473

INVENTORIES, NET (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Dec. 31, 2020
INVENTORIES, NET
Raw materials	$ 57,165	$ 37,010
Finished goods	23,540	27,808
Inventory, Net, Total	$ 80,705	$ 64,818

LONG-TERM DEBT (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Debt, principal amount outstanding	$ 0	$ 0
Less: Unamortized discount and debt issuance costs	(4,113)	(6,651)
Total debt	234,201	221,496
Less: Current portion of long-term debt	(14,234)	(13,042)
Total long-term debt	219,967	208,454
Term loan
Debt Instrument [Line Items]
Debt, principal amount outstanding	238,314	228,147
Less: Unamortized discount and debt issuance costs	$ (4,100)	$ (6,700)

LONG-TERM DEBT - Revolving Credit Facility (Details) - USD ($) $ in Thousands			9 Months Ended
	Apr. 27, 2021	Dec. 18, 2018	Oct. 02, 2021	Sep. 26, 2020	Dec. 31, 2020
Debt Instrument [Line Items]
Aggregate net proceeds received from IPO			$ 399,264	$ 615
Repayment of Revolver credit facility			16,000	$ 5,000
Debt, principal amount outstanding			$ 0		$ 0
Minimum
Debt Instrument [Line Items]
Commitment fee rate range, depending on leverage ratio		0.375%
Maximum
Debt Instrument [Line Items]
Commitment fee rate range, depending on leverage ratio		0.50%
Revolving credit facility
Debt Instrument [Line Items]
Borrowing capacity		$ 30,000
Aggregate net proceeds received from IPO	$ 16,000
Repayment of Revolver credit facility	$ 16,000
Eurocurrency \| Minimum
Debt Instrument [Line Items]
Interest rate range, depending on leverage ratio		4.50%
Eurocurrency \| Maximum
Debt Instrument [Line Items]
Interest rate range, depending on leverage ratio		4.75%
Base \| Minimum
Debt Instrument [Line Items]
Interest rate range, depending on leverage ratio		3.50%
Base \| Maximum
Debt Instrument [Line Items]
Interest rate range, depending on leverage ratio		3.75%

LONG-TERM DEBT - Term Loan Facility (Details) - USD ($) $ in Thousands								3 Months Ended	9 Months Ended		12 Months Ended
	Jun. 30, 2021	Apr. 27, 2021	Feb. 02, 2021	Jan. 25, 2021	Oct. 14, 2020	Aug. 06, 2020	Dec. 18, 2018	Oct. 02, 2021	Oct. 02, 2021	Sep. 26, 2020	Dec. 31, 2020	May 29, 2019
Debt Instrument [Line Items]
Additional borrowings under amendment												$ 23,000
Repayment of debt									$ 164,833	$ 20,925
Aggregate net proceeds received from IPO									399,264	615
Repayment of Revolver credit facility									16,000	$ 5,000
Proceeds used to pay dividend to Parent			$ 110,000
Discount and debt issuance costs								$ 4,113	4,113		$ 6,651
Effective interest rate								7.24%
Term loan
Debt Instrument [Line Items]
Original term loan							$ 215,000
Debt issuance costs incurred				$ 1,200	$ 100		$ 11,500
Additional borrowings under amendment				175,000	$ 20,000
Debt discount								$ 1,200	$ 1,200		400	700
Repayment of debt						$ 5,000
Repayment amount to be paid quarterly	$ 3,600			5,800
Aggregate net proceeds received from IPO		$ 152,700
Repayment of Revolver credit facility		$ 152,700
Borrowings treated as principal				165,000
Borrowings treated as debt modification				10,000
Proceeds used to repay note to Parent			$ 64,900	$ 175,000
Principal payments calculated as percent of outstanding principal									0.629%
Outstanding Borrowings									$ 234,200		221,500
Discount and debt issuance costs								4,100	4,100		6,700
Unamortized debt issuance costs								2,900	2,900		6,300
Unamortized discount								$ 1,200	$ 1,200		$ 400	$ 700
Term loan \| Federal Funds Rate
Debt Instrument [Line Items]
Interest added to the specified index rate									0.50%
Eurocurrency \| Term loan
Debt Instrument [Line Items]
Interest added to the specified index rate									6.00%
Base \| Term loan
Debt Instrument [Line Items]
Interest added to the specified index rate									5.00%

LONG-TERM DEBT - Interest rate swap (Details) - Interest rate swap $ in Millions	May 18, 2020 USD ($)
Derivative [Line Items]
LIBOR borrowings fixed interest rate	0.442
LIBOR borrowings hedged	$ 200.0

LONG-TERM DEBT - Principal payments due (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Dec. 31, 2020
Principal payments due
Total payments due	$ 0	$ 0
Term loan
Principal payments due
Remainder of fiscal 2021	3,558
2022	14,234
2023	14,234
2024	14,234
2025	192,054
Total payments due	$ 238,314	$ 228,147

PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	9 Months Ended
PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Sep. 26, 2020
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at the beginning of the year	$ 2,882	$ 2,846
Accruals for warranties issued	4,369	2,270
Less: Settlements made (in cash or in kind)	(3,825)	(2,501)
Balance at the end of the year	$ 3,426	$ 2,615

NET SALES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
NET SALES (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Disaggregation of Revenue [Line Items]
Net sales	$ 161,957	$ 127,512	$ 491,592	$ 291,468
In-ground swimming pools
Disaggregation of Revenue [Line Items]
Net sales	84,060	78,094	285,704	169,681
Covers
Disaggregation of Revenue [Line Items]
Net sales	44,125	25,695	94,354	53,528
Liners
Disaggregation of Revenue [Line Items]
Net sales	$ 33,772	$ 23,723	$ 111,534	$ 68,259

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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-Subparagraph (a)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Jul. 03, 2021	Apr. 03, 2021	Sep. 26, 2020	Jun. 27, 2020	Mar. 28, 2020	Oct. 02, 2021	Sep. 26, 2020
Effective income tax rate	(223.80%)			24.70%			(39.30%)	30.60%
Stock-based compensation expense	$ 27,603	$ 75,511	$ 1,464	$ 978	$ 240	$ 224
Reorganization
Stock-based compensation expense	$ 25,400						$ 98,900

SHAREHOLDERS' EQUITY (Details) $ / shares in Units, $ in Thousands				9 Months Ended
	Apr. 27, 2021 shares	Apr. 22, 2021 $ / shares shares	Apr. 13, 2021 $ / shares shares	Oct. 02, 2021 USD ($) $ / shares shares	Sep. 26, 2020 USD ($)	Dec. 31, 2020 $ / shares shares
Class of Stock [Line Items]
Common stock, shares authorized		900,000,000	500,000,000	900,000,000		500,000,000
Common stock, par value \| $ / shares		$ 0.0001	$ 0.0001	$ 0.0001		$ 0.0001
Stock split ratio			109,673.71
Preferred stock shares authorized		100,000,000		100,000,000		0
Preferred stock par value \| $ / shares		$ 0.0001		$ 0.0001		$ 0.0001
Aggregate net proceeds received from IPO \| $				$ 399,264	$ 615
Common stock issued and outstanding				112,153,832		118,854,249
Total authorized shares under certificate of incorporation		1,000,000,000
Latham Investment Holdings, LP
Class of Stock [Line Items]
Ownership interest of parent before reorganization				100.00%
Class A units
Class of Stock [Line Items]
Number of units converted		194,207,115
Number of shares issued upon conversion of units		97,187,596
Class B units
Class of Stock [Line Items]
Number of units converted		26,158,894
Number of shares issued upon conversion of units		4,145,987
Number of restricted shares issued upon conversion of units		8,340,126
IPO
Class of Stock [Line Items]
Common stock shares issued	23,000,000
Underwriters Option
Class of Stock [Line Items]
Common stock shares issued	3,000,000

PROFITS INTEREST UNITS -Summary of the activity for all PIUs (Details) - Performance-vesting Units - $ / shares	2 Months Ended	4 Months Ended	5 Months Ended	12 Months Ended
	Jul. 03, 2021	Apr. 21, 2021	Oct. 02, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Balance at beginning of the period	26,158,894	27,424,962	26,158,894	21,734,170
Granted				7,843,107
Forfeited		(1,266,068)		(2,152,315)
Converted at IPO in connection with the Reorganization			(26,158,894)
Balance at end of the period		26,158,894		27,424,962
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Outstanding at the beginning (in dollars per share)				$ 0.60
Weighted average grant date fair, Granted				0.35
Weighted average grant date fair, Forfeited		$ 0.34		$ 0.43
Weighted average grant date fair, Converted at IPO in connection with the Reorganization	$ 0.43

PROFITS INTEREST UNITS (Details) - USD ($) $ in Millions		4 Months Ended	9 Months Ended	12 Months Ended
PROFITS INTEREST UNITS (Details) - USD ($) $ in Millions	Jan. 29, 2021	Apr. 21, 2021	Oct. 02, 2021	Dec. 31, 2020	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cumulative catch-up charge from modification			$ 0.5
Terminated Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cumulative catch-up charge from modification			$ 1.1
Performance-vesting Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units forfeited		1,266,068		2,152,315
Vested and nonvested units held at time of termination		26,158,894		27,424,962	21,734,170
Performance-vesting Units \| Terminated Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units forfeited	1,055,057
Time-vesting units \| Terminated Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested and nonvested units held at time of termination	527,528
Vested units at time of termination, pre-modification	211,011
Accelerated vesting, number of units	105,506
Vested units at time of termination, after modification	316,517

PROFITS INTEREST UNITS - Additional Information (Details) - Class B units	Apr. 22, 2021 shares
Class of Stock [Line Items]
Number of units converted	26,158,894
Number of shares issued upon conversion of units	4,145,987
Number of restricted shares issued upon conversion of units	8,340,126

STOCK-BASED COMPENSATION (Details) $ in Thousands	Apr. 12, 2021 USD ($) shares
STOCK-BASED COMPENSATION
Maximum aggregate number of shares reserved for issuance \| shares	13,170,212
Maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director \| $	$ 750

STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
	Apr. 22, 2021	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration term	10 years
Stock-based compensation expense		$ 27.6	$ 1.0	$ 104.6	$ 1.4
Stock-based compensation expense due to accelerated vesting of restricted stock				0.5
Stock-based compensation expense due to the modification				49.0
Total unrecognized stock-based compensation expense		106.2		$ 106.2
Total unrecognized stock-based compensation expense expected to be recognized over a weighted-average period				1 year 5 months 26 days
weighted average grant-date fair				$ 7.20
Cost of sales
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		1.9		$ 6.8
Selling, general and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		$ 25.7		$ 97.8
Vest every six months in equal installments beginning on December 27, 2021 and ending on December 27, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards other than options vested	6,799,414
Vest every six months in equal installments, beginning on December 27, 2021 and ending on December 27, 2024
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards other than options vested	1,540,712
Vest 1/3 on the nine-month anniversary of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards other than options vested	251,828
Vesting percentage	33.33%
Vest 1/3 on the first anniversary of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Vest 1/3 on the two-year anniversary of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.33%
Vest on the first anniversary of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards other than options vested	22,367
Vest on the nine-month anniversary of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards other than options vested	51,316
Vest evenly on each of the first three anniversaries of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards other than options vested	15,790
Vest 25% annually on each of the first four anniversaries of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Restricted stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	8,340,126			8,340,126
Number of awards other than options vested				84,687
Restricted stock awards \| Vest every six months in equal installments beginning on December 27, 2021 and ending on December 27, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	8,340,126
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	341,301			341,301
Option awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted	886,862			886,862
Strike price	$ 19.00
Option awards \| Vest 25% annually on each of the first four anniversaries of the Closing of the IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted	886,862

STOCK-BASED COMPENSATION - Weighted average basis for fair value option award granted (Details)	9 Months Ended
	Oct. 02, 2021
STOCK-BASED COMPENSATION
Risk-free interest rate	0.63%
Expected volatility	38.16%
Expected term (in years)	6 years 3 months
Expected dividend yield	0.00%

STOCK-BASED COMPENSATION - Restricted Stock Awards (Details) - Restricted stock awards - $ / shares		9 Months Ended
	Apr. 22, 2021	Oct. 02, 2021
Shares
Granted	8,340,126	8,340,126
Vested		(84,687)
Forfeited		(559,682)
Outstanding at the end		7,695,757
Weighted-Average Grant-Date Fair Value
Granted (in dollars per share)		$ 19.00
Forfeited (in dollars per share)		19.00
Outstanding at the end (in dollars per share)		$ 19.00

STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - Restricted stock units - $ / shares		9 Months Ended
	Apr. 22, 2021	Oct. 02, 2021
Shares
Granted	341,301	341,301
Forfeited		(16,767)
Outstanding at the end		324,534
Weighted-Average Grant-Date Fair Value
Granted (in dollars per share)		$ 19.00
Forfeited (in dollars per share)		19.00
Outstanding at the end (in dollars per share)		$ 19.00

STOCK-BASED COMPENSATION - Stock Options (Details) - Option awards - USD ($) $ / shares in Units, $ in Thousands		9 Months Ended	12 Months Ended
	Apr. 22, 2021	Oct. 02, 2021	Dec. 31, 2020
Shares
Outstanding at the beginning		0
Granted	886,862	886,862
Forfeited		(81,092)
Outstanding at the end		805,770	0
Vested and expected to vest at the end		805,770
Options exercisable at the end		0
Weighted-Average Exercise Price per Share
Outstanding at the beginning (in dollars per share)		$ 0
Granted (in dollars per share)		19.00
Outstanding at the end (in dollars per share)		19.00	$ 0
Vested and expected to vest at the end (in dollars per share)		19.00
Options exercisable at the end (in dollars per share)		$ 0
Weighted-Average Remaining Contract Term
Outstanding at the end (in years)		9 years 6 months 18 days	0 years
Vested and expected to vest at the end (in years)		9 years 6 months 18 days
Options exercisable at the end (in years)		0 years
Outstanding at the end (in dollars)			$ 0
Options exercisable at the end (in dollars)		$ 0

NET INCOME (LOSS) PER SHARE - Basic and diluted net income (loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Oct. 02, 2021	Jul. 03, 2021	Apr. 03, 2021	Sep. 26, 2020	Jun. 27, 2020	Mar. 28, 2020	Oct. 02, 2021	Sep. 26, 2020
Numerator:
Net income (loss) attributable to common stockholders	$ (11,296)	$ (53,598)	$ 8,533	$ 17,740	$ 16,414	$ (15,451)	$ (56,361)	$ 18,703
Weighted average common shares outstanding:
Basic	112,153,832			97,393,002			110,121,240	96,665,708
Diluted	112,153,832			98,011,795			110,121,240	97,122,885
Net (loss) income per share attributable to common stockholders:
Basic	$ (0.10)			$ 0.18			$ (0.51)	$ 0.19
Diluted	$ (0.10)			$ 0.18			$ (0.51)	$ 0.19

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

NET INCOME (LOSS) PER SHARE - Antidilutive securities (Details) - shares	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Restricted stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net income (loss) pe share	2,952,422	47,690	6,813,166	47,446
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net income (loss) pe share	146,398		84,866
Option awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net income (loss) pe share			4,235

RELATED PARTY TRANSACTIONS - Bright AI Services (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Oct. 02, 2021	Dec. 31, 2020
Bright AI Services \| Development Of Internal Use Software
Related Party Transaction [Line Items]
Costs incurred	$ 1.9	$ 0.5

RELATED PARTY TRANSACTIONS - Purchase of Treasury Stock (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended	12 Months Ended
	Jul. 03, 2021	Apr. 03, 2021	Jun. 27, 2020	Mar. 28, 2020	Oct. 02, 2021	Dec. 31, 2020
Related Party Transaction [Line Items]
Purchases and retirement of treasury stock	$ 216,700	$ 64,938	$ 176	$ 400
Parent
Related Party Transaction [Line Items]
Purchases and retirement of treasury stock (in shares)					1.1
Purchases and retirement of treasury stock						$ 500

RELATED PARTY TRANSACTIONS - Expense Reimbursement and Management Fees (Details) - Sponsor - Management Fee Arrangement - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020
Related Party Transaction [Line Items]
Maximum annual reimbursement	$ 1,000
Management fees incurred	0	$ 0
Reimbursement of out-of-pocket costs and expenses	100	100
Amounts payable	$ 0	$ 100

RELATED PARTY TRANSACTIONS - Operating Lease (Details) - Acquigen Pty Ltd. - Lease Agreement - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020	Dec. 31, 2020
Related Party Transaction [Line Items]
Future minimum lease payments	$ 3.6		$ 3.6		$ 4.2
Rent expense	$ 0.1	$ 0.1	$ 0.4	$ 0.3

SEGMENT AND GEOGRAPHIC INFORMATION - Segment Information (Details)	9 Months Ended
	Oct. 02, 2021 segment
SEGMENT AND GEOGRAPHIC INFORMATION
Number of operating segments	1
Number of reportable segments	1

SEGMENT AND GEOGRAPHIC INFORMATION - Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020	Dec. 31, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 161,957	$ 127,512	$ 491,592	$ 291,468
Property and equipment, net	58,767		58,767		$ 47,357
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	123,477	102,663	385,259	234,439
Property and equipment, net	48,158		48,158		37,680
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	28,103	16,785	76,619	38,197
Property and equipment, net	4,358		4,358		3,050
Australia
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	6,330	5,439	18,581	13,187
Property and equipment, net	4,394		4,394		4,979
New Zealand
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	1,749	941	5,277	2,357
Property and equipment, net	1,857		1,857		$ 1,648
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 2,298	$ 1,684	$ 5,856	$ 3,288

- Definition

+ References

+ Details