0001558370-23-013960 | 10-Q | XBRL Viewer

NET INCOME (LOSS) PER SHARE (Tables)

6 Months Ended

Jul. 01, 2023

Schedule of basic and diluted earnings (loss) per share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data):


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Numerator:
Net income (loss) attributable to common stockholders	$	5,715	$	4,303	$	(8,653)	$	1,463
Denominator:
Weighted-average common shares outstanding
Basic		112,248,822		113,692,160		112,175,510		113,695,354
Diluted		112,692,543		115,384,273		112,175,510		115,698,368
Net income (loss) per share attributable to common stockholders:
Basic	$	0.05	$	0.04	$	(0.08)	$	0.01
Diluted	$	0.05	$	0.04	$	(0.08)	$	0.01

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


	Fiscal Quarter Ended		Two Fiscal Quarters Ended
	July 1, 2023	July 2, 2022	July 1, 2023	July 2, 2022
Restricted stock awards	87,576	—	1,331,897	—
Restricted stock units	102,129	102,108	301,440	56,764
Stock options	1,730,204	1,809,704	1,808,350	1,501,528
Stock appreciation awards	529,681	—	264,841	—

PRODUCT WARRANTIES

6 Months Ended

Jul. 01, 2023

PRODUCT WARRANTIES

PRODUCT WARRANTIES

7. PRODUCT WARRANTIES

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



	Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022
Balance at the beginning of the fiscal year	$	3,990	$	4,909
Adjustments to reserve		2,280		4,110
Less: Settlements made (in cash or in kind)		(2,871)		(3,534)
Balance at the end of the fiscal quarter	$	3,399	$	5,485

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2023	Jul. 02, 2022
Cash flows from operating activities:
Net loss	$ (8,653)	$ 1,463
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	19,284	19,274
Amortization of deferred financing costs and debt discount	860	709
Non-cash lease expense	3,738	3,731
Change in fair value of interest rate swap	2,930	(3,889)
Stock-based compensation expense	12,533	33,354
Underwriting fees related to offering of common stock		11,437
Loss on extinguishment of debt		3,465
Bad debt expense	4,390	1,191
Other non-cash, net	1,166	1,615
Earnings from equity method investment	(697)	(1,262)
Changes in operating assets and liabilities:
Trade receivables	(37,276)	(45,696)
Inventories	38,902	(53,182)
Prepaid expenses and other current assets	(916)	759
Income tax receivable	(1,409)	(1,349)
Other assets	(392)	(375)
Accounts payable	8,935	15,865
Accrued expenses and other current liabilities	(6,882)	(2,428)
Other long-term liabilities	(224)	232
Net cash used in operating activities	36,289	(15,086)
Cash flows from investing activities:
Purchases of property and equipment	(23,365)	(16,750)
Proceeds from the sale of property and equipment		23
Acquisitions of businesses, net of cash acquired		(384)
Net cash used in investing activities	(23,365)	(17,111)
Cash flows from financing activities:
Proceeds from long-term debt borrowings		320,125
Payments on long-term debt borrowings	(1,625)	(284,822)
Proceeds from borrowings on revolving credit facilities	48,000	25,000
Payments on revolving credit facility	(48,000)	(25,000)
Deferred financing fees paid		(6,865)
Proceeds from the issuance of common stock		257,663
Repayments of finance lease obligations	(259)
Repurchases and retirements of common stock		(272,663)
Net cash provided by financing activities	(1,884)	13,438
Effect of exchange rate changes on cash	(550)	27
Net increase (decrease) in cash	10,490	(18,732)
Cash at beginning of period	32,626	43,952
Cash at end of period	43,116	25,220
Supplemental cash flow information:
Cash paid for interest	11,247	5,080
Income taxes paid, net	1,206	13,353
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses	1,111	990
Capitalized internal-use software included in accounts payable - related party	325	900
Right-of-use operating and finance lease assets obtained in exchange for lease liabilities	$ 4,108	$ 39,501

RELATED PARTY TRANSACTIONS - Bright AI Services (Details) - Bright AI Services - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jul. 01, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Accounts payable	$ 0.3	$ 0.4
Development Of Internal Use Software
Related Party Transaction [Line Items]
Costs incurred		$ 0.2
Development Of Internal Use Software \| Maximum
Related Party Transaction [Line Items]
Costs incurred	$ 0.8

PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	6 Months Ended
PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Jul. 02, 2022
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at the beginning of the fiscal year	$ 3,990	$ 4,909
Adjustments to reserve	2,280	4,110
Less: Settlements made (in cash or in kind)	(2,871)	(3,534)
Balance at the end of the fiscal quarter	$ 3,399	$ 5,485

FAIR VALUE MEASUREMENTS - Fair value of financial instruments (Details) - Level 2 - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Term loan \| Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amount	$ 312,041	$ 312,881
Term loan \| Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amount	297,999	290,979
Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of interest rate swap asset	$ 600	$ 3,500

LONG-TERM DEBT (Details) - USD ($) $ in Thousands	Feb. 23, 2022	Jul. 01, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Gross debt		$ 320,938
Less: Unamortized discount and debt issuance costs		(8,897)	$ (9,681)
Total debt		312,041	312,881
Less: Current portion of long-term debt		(3,250)	(3,250)
Total long-term debt		308,791	309,631
Revolving Credit Facility
Debt Instrument [Line Items]
Total debt		0
Maximum borrowing capacity	$ 75,000	75,000
Repayment of debt	$ 294,000
Term loan
Debt Instrument [Line Items]
Gross debt		$ 320,938	$ 322,562

NET SALES

6 Months Ended

Jul. 01, 2023

NET SALES.

NET SALES

9. NET SALES

The following table sets forth the Company’s disaggregation of net sales by product line (in thousands):



	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
In-ground Swimming Pools	$	90,534	$	112,153	$	169,146	$	223,956
Covers		28,755		38,389		61,500		70,914
Liners		57,839		56,258		84,201		103,544
	$	177,128	$	206,800	$	314,847	$	398,414

- 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.

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+ Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jul. 01, 2023	Apr. 01, 2023	Jul. 02, 2022	Apr. 02, 2022	Jul. 01, 2023	Jul. 02, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 5,715	$ (14,368)	$ 4,303	$ (2,840)	$ (8,653)	$ 1,463

- 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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Jul. 01, 2023
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 unaudited condensed consolidated balance sheet at December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of July 1, 2023 and for the fiscal and two fiscal quarters ended July 1, 2023 and July 2, 2022 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 fiscal year ended December 31, 2022 included in the Company’s 2022 Annual Report on Form 10-K, filed with the SEC on March 7, 2023 (the “Annual Report”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of these condensed consolidated financial statements, have been included. The Company’s results of operations for the fiscal quarter and two fiscal quarters ended July 1, 2023 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending December 31, 2023.
Use of Estimates	Use of Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, known trends, and other market-specific relevant factors that it believes to be reasonable under the circumstances. Estimates are evaluated on an ongoing basis and revised as there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known.
Reclassifications	Reclassifications Certain prior period balances have been reclassified to conform to the current period presentation in the condensed consolidated financial statements and the accompanying notes.
Seasonality	Seasonality Although the Company generally has demand for its products throughout the fiscal 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 the second and third fiscal quarters, representing the peak months of swimming pool use, pool installation, and remodeling and repair activities. Severe weather may also affect net sales in all periods.
Accounting Policies	Significant Accounting Policies Refer to the Annual Report for a discussion of the Company’s significant accounting policies, as updated below.
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 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. The adoption of this standard on January 1, 2023 did not have a material impact on the Company’s condensed consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which amends ASC 805 by requiring acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. For public entities, ASU 2021-08 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022. For all other entities, ASU 2021-08 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The adoption of this standard on January 1, 2023 did not have a material impact on the Company’s condensed consolidated financial statements.

GOODWILL AND INTANGIBLE ASSETS, NET

6 Months Ended

Jul. 01, 2023

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

4. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The carrying amount of goodwill as of July 1, 2023 and as of December 31, 2022 was $131.2 million and $131.4 million, respectively. The change in the carrying value during the two fiscal quarters ended July 1, 2023 was solely because of fluctuations in foreign currency exchange rates.

Intangible Assets

Intangible assets, net as of July 1, 2023 consisted of the following (in thousands):


	July 1, 2023
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	(334)	$	26,281	$	121,485
Patented technology		16,126		84		7,835		8,375
Technology		13,000		—		1,372		11,628
Pool designs		13,628		(92)		2,504		11,032
Franchise relationships		1,187		106		1,212		81
Dealer relationships		197,376		28		54,578		142,826
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		2,247		229
	$	393,493	$	(208)	$	97,629	$	295,656

The Company recognized $6.6 million and $13.3 million of amortization expense related to intangible assets during the fiscal quarter and two fiscal quarters ended July 1, 2023. The Company recognized $7.2 million and $14.3 million of amortization expense related to intangible assets during the fiscal quarter and two fiscal quarters ended July 2, 2022.

Intangible assets, net as of December 31, 2022 consisted of the following (in thousands):


	December 31, 2022
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	(84)	$	22,982	$	125,034
Patented technology		16,126		37		6,959		9,204
Technology		13,000		—		939		12,061
Pool designs		13,628		(10)		2,037		11,581
Franchise relationships		1,187		45		1,064		168
Dealer relationships		197,376		13		46,699		150,690
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		1,999		477
	$	393,493	$	1	$	84,279	$	309,215

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


	Estimated Future
	Amortization
Year Ended	Expense
Remainder of fiscal 2023	$	13,264
2024		25,708
2025		25,550
2026		25,550
2027		25,550
Thereafter		180,034
	$	295,656

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Apr. 12, 2021	Jul. 01, 2023	Jul. 02, 2022	Jul. 01, 2023	Jul. 02, 2022	May 02, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance		21,170,212		21,170,212		8,000,000
Maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director	$ 750,000
Stock-based compensation expense		$ 5,764	$ 16,429	$ 12,533	$ 33,354
Total unrecognized stock-based compensation expense		14,400		$ 14,400
Total unrecognized stock-based compensation expense expected to be recognized over a weighted-average period				1 year 6 months
Cost of sales
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		(626)	1,140	$ (200)	2,316
Selling, general and administrative expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense		$ 6,390	$ 15,289	$ 12,733	$ 31,038

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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

NET SALES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
NET SALES (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Jul. 02, 2022	Jul. 01, 2023	Jul. 02, 2022
Disaggregation of Revenue [Line Items]
Net sales	$ 177,128	$ 206,800	$ 314,847	$ 398,414
In-ground Swimming Pools
Disaggregation of Revenue [Line Items]
Net sales	90,534	112,153	169,146	223,956
Covers
Disaggregation of Revenue [Line Items]
Net sales	28,755	38,389	61,500	70,914
Liners
Disaggregation of Revenue [Line Items]
Net sales	$ 57,839	$ 56,258	$ 84,201	$ 103,544

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- 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
-Topic 924
-SubTopic 10
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-Section S99
-Paragraph 1
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

FAIR VALUE MEASUREMENTS

6 Months Ended

Jul. 01, 2023

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

3. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value.

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3 — Unobservable inputs that reflect the Company’s own assumptions incorporated into valuation techniques. These valuations require significant judgment.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When there is more than one input at different levels within the hierarchy, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessment of the significance of a particular input to the fair value measurement in its entirety requires substantial judgment and consideration of factors specific to the asset or liability. Level 3 inputs are inherently difficult to estimate. Changes to these inputs can have significant impact on fair value measurements. Assets and liabilities measured at fair value using Level 3 inputs are based on one or more of the following valuation techniques: market approach, income approach or cost approach. There were no transfers between fair value measurement levels during the two fiscal quarters ended July 1, 2023 or July 2, 2022.

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 and remeasured to fair value when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 2 and Level 3 inputs.

Fair value of financial instruments

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

Term loan

The Company’s term loan (see Note 6) 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, which are classified as Level 2 inputs. The following table sets forth the carrying amount and fair value of its term loan (in thousands):



	July 1, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Term Loan	$	312,041	$	297,999	$	312,881	$	290,979

Interest rate swaps

The Company estimates the fair value of interest rate swaps (see Note 6) on a fiscal quarterly basis using Level 2 inputs, including the forward SOFR curve. The fair value is estimated by comparing (i) the present value of all future monthly fixed rate payments versus (ii) the variable payments based on the forward SOFR curve. As of July 1, 2023 and December 31, 2022, the net fair value of the Company’s interest rate swaps was an asset balance of $0.6 million and $3.5 million, respectively, which were recorded within other assets 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

STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - Restricted stock units	6 Months Ended
	Jul. 01, 2023 $ / shares shares
Shares
Balance at beginning \| shares	617,941
Granted \| shares	2,018,828
Vested \| shares	(121,052)
Forfeited \| shares	(111,084)
Balance at ending \| shares	2,404,633
Weighted-Average Grant Date Fair Value
Balance at beginning \| $ / shares	$ 8.37
Granted \| $ / shares	3.15
Vested \| $ / shares	16.59
Forfeited \| $ / shares	4.81
Balance at ending \| $ / shares	$ 3.74

NET SALES (Tables)

6 Months Ended

Jul. 01, 2023

NET SALES.

Summary of disaggregation of net sales by product line

The following table sets forth the Company’s disaggregation of net sales by product line (in thousands):



	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
In-ground Swimming Pools	$	90,534	$	112,153	$	169,146	$	223,956
Covers		28,755		38,389		61,500		70,914
Liners		57,839		56,258		84,201		103,544
	$	177,128	$	206,800	$	314,847	$	398,414

NATURE OF THE BUSINESS

6 Months Ended

Jul. 01, 2023

NATURE OF THE BUSINESS

NATURE OF THE BUSINESS

1. NATURE OF THE BUSINESS

Latham Group, Inc. (the “Company”) wholly owns Latham Pool Products, Inc. (“Latham Pool Products”) (together, “Latham”), 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.

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment	Accumulated Deficit	Accumulated Other Comprehensive Income	Cumulative Effect, Period of Adoption, Adjustment	Total
Balance, beginning of period at Dec. 31, 2021	$ 12	$ 401,846		$ (48,583)	$ 370		$ 353,645
Balance, beginning of period (in shares) at Dec. 31, 2021	119,445,611
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income (Loss)				(2,840)			(2,840)
Foreign currency translation adjustments					1,220		1,220
Sale of common stock	$ 1	269,099					269,100
Sale of common stock (in shares)	13,800,000
Repurchase and retirement of common stock	$ (1)	(257,662)					(257,663)
Repurchase and retirement of common stock (in shares)	(13,800,244)
Retirement of restricted stock (in shares)	(53,961)
Issuance of common stock upon release of restricted stock units (in shares)	78,341
Stock-based compensation expense		16,925					16,925
Balance, end of period at Apr. 02, 2022	$ 12	430,208	$ (291)	(51,714)	1,590	$ (291)	380,096
Balance, end of period (in shares) at Apr. 02, 2022	119,469,747
Balance, beginning of period at Dec. 31, 2021	$ 12	401,846		(48,583)	370		353,645
Balance, beginning of period (in shares) at Dec. 31, 2021	119,445,611
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income (Loss)							1,463
Balance, end of period at Jul. 02, 2022	$ 12	431,637		(47,411)	(2,327)		381,911
Balance, end of period (in shares) at Jul. 02, 2022	117,547,558
Balance, beginning of period at Apr. 02, 2022	$ 12	430,208	$ (291)	(51,714)	1,590	$ (291)	380,096
Balance, beginning of period (in shares) at Apr. 02, 2022	119,469,747
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income (Loss)				4,303			4,303
Foreign currency translation adjustments					(3,917)		(3,917)
Repurchase and retirement of common stock		(15,000)					(15,000)
Repurchase and retirement of common stock (in shares)	(2,026,231)
Issuance of common stock upon release of restricted stock units (in shares)	104,042
Stock-based compensation expense		16,429					16,429
Balance, end of period at Jul. 02, 2022	$ 12	431,637		(47,411)	(2,327)		381,911
Balance, end of period (in shares) at Jul. 02, 2022	117,547,558
Balance, beginning of period at Dec. 31, 2022	$ 11	440,880		(54,568)	(3,533)		382,790
Balance, beginning of period (in shares) at Dec. 31, 2022	114,667,975
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income (Loss)				(14,368)			(14,368)
Foreign currency translation adjustments					(144)		(144)
Issuance of common stock upon release of restricted stock units (in shares)	22,078
Stock-based compensation expense		6,769					6,769
Balance, end of period at Apr. 01, 2023	$ 11	447,649		(68,936)	(3,677)		375,047
Balance, end of period (in shares) at Apr. 01, 2023	114,690,053
Balance, beginning of period at Dec. 31, 2022	$ 11	440,880		(54,568)	(3,533)		382,790
Balance, beginning of period (in shares) at Dec. 31, 2022	114,667,975
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income (Loss)							(8,653)
Balance, end of period at Jul. 01, 2023	$ 11	453,413		(63,221)	(4,006)		386,197
Balance, end of period (in shares) at Jul. 01, 2023	114,734,756
Balance, beginning of period at Apr. 01, 2023	$ 11	447,649		(68,936)	(3,677)		375,047
Balance, beginning of period (in shares) at Apr. 01, 2023	114,690,053
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income (Loss)				5,715			5,715
Foreign currency translation adjustments					(329)		(329)
Retirement of restricted stock (in shares)	(54,271)
Issuance of common stock upon release of restricted stock units (in shares)	98,974
Stock-based compensation expense		5,764					5,764
Balance, end of period at Jul. 01, 2023	$ 11	$ 453,413		$ (63,221)	$ (4,006)		$ 386,197
Balance, end of period (in shares) at Jul. 01, 2023	114,734,756

STOCK-BASED COMPENSATION - Restricted Stock Awards (Details) - Restricted stock awards	6 Months Ended
	Jul. 01, 2023 $ / shares shares
Shares
Balance at beginning \| shares	2,576,219
Granted \| shares
Vested \| shares	(1,239,520)
Forfeited \| shares	(54,271)
Balance at ending \| shares	1,282,428
Weighted-Average Grant Date Fair Value
Balance at beginning \| $ / shares	$ 19.00
Granted \| $ / shares
Vested \| $ / shares	19.00
Forfeited \| $ / shares	19.00
Balance at ending \| $ / shares	$ 19.00

STOCKHOLDER'S EQUITY

6 Months Ended

Jul. 01, 2023

STOCKHOLDER'S EQUITY

STOCKHOLDER'S EQUITY

11. STOCKHOLDERS’ EQUITY

Offering of Common Stock

On January 11, 2022, the Company completed an offering of 13,800,000 shares of common stock, par value $0.0001 per share, including the exercise in full by the underwriters of their option to purchase up to 1,800,000 additional shares of common stock, at a public offering price of $19.50 per share. The Company received proceeds of $257.7 million from this offering, net of $11.4 million of underwriting fees. The proceeds of $257.7 million were used to purchase 13,800,000 shares of common stock from certain of the Company’s stockholders, primarily investment funds managed by the Sponsor and Wynnchurch Capital, L.P., and also a small percentage of shares of common stock owned by some of the Company’s directors and executive officers.

Repurchase Program

On May 10, 2022, the Company approved a stock repurchase program (the “Repurchase Program”), which authorized the Company to repurchase up to $100 million of the Company’s shares of common stock over the next three years. The Company may effect these repurchases in open market transactions, privately negotiated purchases, or other acquisitions. The Company is not obligated to repurchase any of its shares of its common stock under the Repurchase Program and the timing and amount of any repurchases will depend on market conditions, the Company’s stock price, alternative uses of capital, the terms of the Company’s debt instruments, and other factors.

As of July 1, 2023, approximately $77.0 million remained available for share repurchases pursuant to the Repurchase Program. The Company did not repurchase any shares of its common stock during the fiscal quarter ended July 1, 2023. The Company accounts for the excess of the repurchase price over the par value of shares acquired as a reduction to additional paid-in capital.

- Definition

The entire disclosure for equity.

+ References

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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jul. 01, 2023	Apr. 01, 2023	Jul. 02, 2022	Apr. 02, 2022	Jul. 01, 2023	Jul. 02, 2022	Dec. 31, 2022
Numerator:
Net loss attributable to common stockholders	$ 5,715	$ (14,368)	$ 4,303	$ (2,840)	$ (8,653)	$ 1,463
Weighted-average common shares outstanding
Basic	112,248,822		113,692,160		112,175,510	113,695,354
Diluted	112,692,543		115,384,273		112,175,510	115,698,368
Net loss per share attributable to common stockholders:
Basic	$ 0.05		$ 0.04		$ (0.08)	$ 0.01
Diluted	$ 0.05		$ 0.04		$ (0.08)	$ 0.01
Common stock issued and outstanding for accounting purposes	113,452,328				113,452,328		112,091,756
Restricted stock awards
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	87,576				1,331,897
Restricted stock units
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	102,129		102,108		301,440	56,764
Employee Stock Option [Member]
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	1,730,204		1,809,704		1,808,350	1,501,528
Stock Appreciation Rights (SARs) [Member]
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	529,681				264,841

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jul. 01, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

LONG-TERM DEBT - Interest rate swap (Details) - Interest Rate Swap - USD ($) $ in Millions	Mar. 10, 2023	Feb. 28, 2022
Derivative [Line Items]
Derivative notional amount	$ 161.0	$ 200.0
SOFR
Derivative [Line Items]
Fixed borrowing rate	4.3725%	0.496%

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jul. 01, 2023

FAIR VALUE MEASUREMENTS

Schedule of financial liabilities at fair value on a recurring basis



	July 1, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Term Loan	$	312,041	$	297,999	$	312,881	$	290,979

INVENTORIES, NET

6 Months Ended

Jul. 01, 2023

INVENTORIES, NET

INVENTORIES, NET

5. INVENTORIES, NET

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



	July 1, 2023		December 31, 2022
Raw materials	$	74,047	$	95,388
Finished goods		52,471		69,832
	$	126,518	$	165,220

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jul. 02, 2022	Jul. 01, 2023	Jul. 02, 2022
Condensed Consolidated Statements of Operations
Net sales	$ 177,128	$ 206,800	$ 314,847	$ 398,414
Cost of sales	126,895	139,193	231,244	260,153
Gross profit	50,233	67,607	83,603	138,261
Selling, general and administrative expense	30,209	41,804	63,266	87,029
Underwriting fees related to offering of common stock				11,437
Amortization	6,635	7,156	13,267	14,348
(Loss) income from operations	13,389	18,647	7,070	25,447
Other expense (income):
Interest expense	4,486	3,164	15,290	4,929
Loss on extinguishment of debt				3,465
Other expense (income), net	(1,036)	917	(826)	562
Total other expense, net	3,450	4,081	14,464	8,956
Earnings from equity method investment	660	720	697	1,262
(Loss) income before income taxes	10,599	15,286	(6,697)	17,753
Income tax (benefit) expense	4,884	10,983	1,956	16,290
Net loss	$ 5,715	$ 4,303	$ (8,653)	$ 1,463
Net loss per share attributable to common stockholders:
Basic	$ 0.05	$ 0.04	$ (0.08)	$ 0.01
Diluted	$ 0.05	$ 0.04	$ (0.08)	$ 0.01
Weighted-average common shares outstanding - basic and diluted
Basic	112,248,822	113,692,160	112,175,510	113,695,354
Diluted	112,692,543	115,384,273	112,175,510	115,698,368

LONG-TERM DEBT - Principal payments due (Details) $ in Thousands	Jul. 01, 2023 USD ($)
Principal payments due
Remainder of fiscal 2023	$ 1,625
2024	3,250
2025	3,250
2026	3,250
2027	3,250
Thereafter	306,313
Total payments due	$ 320,938

GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

Jul. 01, 2023

GOODWILL AND INTANGIBLE ASSETS, NET

Schedule of Intangible assets

Intangible assets, net as of July 1, 2023 consisted of the following (in thousands):


	July 1, 2023
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	(334)	$	26,281	$	121,485
Patented technology		16,126		84		7,835		8,375
Technology		13,000		—		1,372		11,628
Pool designs		13,628		(92)		2,504		11,032
Franchise relationships		1,187		106		1,212		81
Dealer relationships		197,376		28		54,578		142,826
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		2,247		229
	$	393,493	$	(208)	$	97,629	$	295,656

Intangible assets, net as of December 31, 2022 consisted of the following (in thousands):


	December 31, 2022
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	(84)	$	22,982	$	125,034
Patented technology		16,126		37		6,959		9,204
Technology		13,000		—		939		12,061
Pool designs		13,628		(10)		2,037		11,581
Franchise relationships		1,187		45		1,064		168
Dealer relationships		197,376		13		46,699		150,690
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		1,999		477
	$	393,493	$	1	$	84,279	$	309,215

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
	Amortization
Year Ended	Expense
Remainder of fiscal 2023	$	13,264
2024		25,708
2025		25,550
2026		25,550
2027		25,550
Thereafter		180,034
	$	295,656

INCOME TAXES (Details)	3 Months Ended		6 Months Ended
INCOME TAXES (Details)	Jul. 01, 2023	Jul. 02, 2022	Jul. 01, 2023	Jul. 02, 2022
INCOME TAXES
Effective income tax rate	46.10%	71.90%	(29.20%)	91.80%

LONG-TERM DEBT - Revolving Credit Facility (Details) - Revolving Credit Facility - USD ($) $ in Millions	Feb. 23, 2022	Jul. 01, 2023
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 75.0	$ 75.0
Commitment fee rate range, depending on leverage ratio	0.375%
Debt issuance costs	$ 0.8
Minimum
Debt Instrument [Line Items]
Commitment fee rate range, depending on leverage ratio	0.25%
Maximum
Debt Instrument [Line Items]
Commitment fee rate range, depending on leverage ratio	0.50%
SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	3.50%
Canadian Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	2.50%
EURIBOR or AUD Rate
Debt Instrument [Line Items]
Basis spread on variable rate	3.50%

LONG-TERM DEBT - Term Loan Facility (Details) - USD ($)		6 Months Ended
LONG-TERM DEBT - Term Loan Facility (Details) - USD ($)	Feb. 23, 2022	Jul. 01, 2023	Jul. 02, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Gross debt		$ 320,938,000
Amount outstanding, net of discount and issuance costs		312,041,000		$ 312,881,000
Discount and debt issuance costs		8,897,000		$ 9,681,000
Repayment of long term debt		1,625,000	$ 284,822,000
Term Loan Facility
Debt Instrument [Line Items]
Principal payments calculated as percent of outstanding principal	0.25%
Mandatory prepayment rate as a percentage of excess cash flow	50.00%
Mandatory prepayment rate as a percentage of non-permitted indebtedness	100.00%
Debt issuance costs	$ 6,100,000	5,000,000.0
Unamortized discount	4,900,000	3,900,000
Amount outstanding, net of discount and issuance costs		$ 312,000,000.0
Maximum borrowing capacity	325,000,000.0
Effective interest rate		10.23%
Repayment amount to be paid quarterly	$ 812,500
Term Loan Facility \| SOFR \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	3.75%
Term Loan Facility \| SOFR \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	4.00%
Term Loan Facility \| Base Rate \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	2.75%
Term Loan Facility \| Base Rate \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	3.00%

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jul. 01, 2023

PROFITS INTEREST UNITS

Summary of stock-based compensation expense



	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Cost of sales	$	(626)	$	1,140	$	(200)	$	2,316
Selling, general, and administrative		6,390		15,289		12,733		31,038
	$	5,764	$	16,429	$	12,533	$	33,354

Schedule of assumptions used to determine the fair value of option awards granted

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


	Two Fiscal Quarters Ended
	July 2, 2022
Risk-free interest rate	1.82	%
Expected volatility	39.77	%
Expected term (in years)	6.25
Expected dividend yield	0.00	%

No stock options were granted under this plan during the fiscal quarter ended July 1, 2023.

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 stock appreciation rights awards granted:


	Two Fiscal Quarters Ended
	July 1, 2023
Risk-free interest rate	3.45	%
Expected volatility	40.29	%
Expected term (in years)	6.25
Expected dividend yield	0.00	%

Schedule of restricted stock awards

The following table represents the Company’s restricted stock awards activity during the two fiscal quarters ended July 1, 2023:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2023	2,576,219	$	19.00
Granted	—		—
Vested	(1,239,520)		19.00
Forfeited	(54,271)		19.00
Outstanding at July 1, 2023	1,282,428	$	19.00

Schedule of restricted stock units

The following table represents the Company’s restricted stock units activity during the two fiscal quarters ended July 1, 2023:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2023	617,941	$	8.37
Granted	2,018,828		3.15
Vested	(121,052)		16.59
Forfeited	(111,084)		4.81
Outstanding at July 1, 2023	2,404,633	$	3.74

Schedule of stock option activity

The following table represents the Company’s stock option activity during the two fiscal quarters ended July 1, 2023:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2023	1,914,670	$	14.85
Granted	—		—
Exercised	—		—
Forfeited	(198,894)		8.51
Outstanding at July 1, 2023	1,715,776	$	15.58	8.31	$	—
Vested and expected to vest at July 1, 2023	1,715,776	$	15.58	8.31	$	—
Options exercisable at July 1, 2023	546,107	$	17.58	7.92	$	—

Share-Based Payment Arrangement, Stock Appreciation Right, Activity [Table Text Block]


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2023	—	$	—
Granted	790,181		3.24
Exercised	—		—
Forfeited	—		—
Outstanding at July 1, 2023	790,181	$	3.24	9.84	$	371
Vested and expected to vest at July 1, 2023	790,181	$	3.24	9.84	$	371
Stock appreciation rights exercisable at July 1, 2023	—	$	—	—	$	—

PRODUCT WARRANTIES (Tables)

6 Months Ended

Jul. 01, 2023

PRODUCT WARRANTIES

Warranty reserve activity

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



	Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022
Balance at the beginning of the fiscal year	$	3,990	$	4,909
Adjustments to reserve		2,280		4,110
Less: Settlements made (in cash or in kind)		(2,871)		(3,534)
Balance at the end of the fiscal quarter	$	3,399	$	5,485

GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jul. 02, 2022	Jul. 01, 2023	Jul. 02, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 393,493		$ 393,493		$ 393,493
Foreign Currency Translation	(208)		(208)		1
Accumulated Amortization	97,629		97,629		84,279
Net Amount	295,656		295,656		309,215
Amortization of Intangible Assets	6,635	$ 7,156	13,267	$ 14,348
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	148,100		148,100		148,100
Foreign Currency Translation	(334)		(334)		(84)
Accumulated Amortization	26,281		26,281		22,982
Net Amount	121,485		121,485		125,034
Patented technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	16,126		16,126		16,126
Foreign Currency Translation	84		84		37
Accumulated Amortization	7,835		7,835		6,959
Net Amount	8,375		8,375		9,204
Technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	13,000		13,000		13,000
Accumulated Amortization	1,372		1,372		939
Net Amount	11,628		11,628		12,061
Pool designs
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	13,628		13,628		13,628
Foreign Currency Translation	(92)		(92)		(10)
Accumulated Amortization	2,504		2,504		2,037
Net Amount	11,032		11,032		11,581
Franchise relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,187		1,187		1,187
Foreign Currency Translation	106		106		45
Accumulated Amortization	1,212		1,212		1,064
Net Amount	81		81		168
Dealer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	197,376		197,376		197,376
Foreign Currency Translation	28		28		13
Accumulated Amortization	54,578		54,578		46,699
Net Amount	142,826		142,826		150,690
Order backlog
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,600		1,600		1,600
Accumulated Amortization	1,600		1,600		1,600
Non-competition agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,476		2,476		2,476
Accumulated Amortization	2,247		2,247		1,999
Net Amount	$ 229		$ 229		$ 477

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Current assets:
Cash	$ 43,116	$ 32,626
Trade receivables, net	81,797	48,847
Inventories, net	126,518	165,220
Income tax receivable	3,725	2,316
Prepaid expenses and other current assets	6,908	5,998
Total current assets	262,064	255,007
Property and equipment, net	111,137	98,184
Equity method investment	25,792	25,095
Deferred tax assets	6,602	7,762
Operating lease right-of-use assets	33,462	38,308
Goodwill	131,168	131,383
Intangible assets, net	295,656	309,215
Other assets	5,260	4,729
Total assets	871,141	869,683
Current liabilities:
Current maturities of long-term debt	3,250	3,250
Current operating lease liabilities	6,894	6,923
Accrued expenses and other current liabilities	42,875	50,885
Total current liabilities	87,843	86,865
Long-term debt, net of discount, debt issuance costs, and current portion	308,791	309,631
Deferred income tax liabilities, net	50,181	50,181
Liability for uncertain tax positions	7,374	7,123
Non-current operating lease liabilities	27,526	32,391
Other long-term liabilities	3,229	702
Total liabilities	484,944	486,893
Commitments and contingencies
Stockholders' equity:
Common stock, $0.0001 par value; 900,000,000 shares authorized as of April 1, 2023 and December 31, 2022; 114,690,053 and 114,667,975 shares issued and outstanding, as of April 1, 2023 and December 31, 2022, respectively	11	11
Additional paid-in capital	453,413	440,880
Accumulated deficit	(63,221)	(54,568)
Accumulated other comprehensive loss	(4,006)	(3,533)
Total stockholders' equity	386,197	382,790
Total liabilities and stockholders' equity	871,141	869,683
Related Party [Member]
Current liabilities:
Accounts payable	333	358
Nonrelated Party [Member]
Current liabilities:
Accounts payable	$ 34,491	$ 25,449

LONG-TERM DEBT

6 Months Ended

Jul. 01, 2023

LONG-TERM DEBT

LONG-TERM DEBT

6. LONG-TERM DEBT

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



	July 1, 2023		December 31, 2022
Term Loan	$	320,938	$	322,562
Less: Unamortized discount and debt issuance costs		(8,897)		(9,681)
Total debt		312,041		312,881
Less: Current portion of long-term debt		(3,250)		(3,250)
Total long-term debt	$	308,791	$	309,631

On February 23, 2022, Latham Pool Products entered into an agreement (the “Credit Agreement”) with Barclays Bank PLC, which provides a senior secured multicurrency revolving line of credit (the “Revolving Credit Facility”) in an initial principal amount of $75.0 million and a U.S. Dollar senior secured term loan facility (the “Term Loan”) in an initial principal amount of $325.0 million. On such date, proceeds under the Credit Agreement were used to terminate the previous credit agreement by repayment of $294.0 million of outstanding debt thereunder and for general corporate purposes.

Revolving Credit Facility

The Revolving Credit Facility may be utilized to finance ongoing general corporate and working capital needs and permits Latham Pools Products to borrow loans in U.S. Dollars, Canadian Dollars, Euros and Australian Dollars. The Revolving Credit Facility matures on February 23, 2027. Loans outstanding under the Revolving Credit Facility denominated in U.S. Dollars and Canadian Dollars bear interest, at the borrower’s option, at a rate per annum based on Term SOFR or CDO (each, as defined in the Credit Agreement), as applicable, plus a margin of 3.50%, or at a rate per annum based on the Base Rate or the Canadian Prime Rate (each, as defined in the Credit Agreement), plus a margin of 2.50%. Loans outstanding under the Revolving Credit Facility denominated in Euros or Australian Dollars bear interest based on EURIBOR or the AUD Rate (each, as defined in the Credit Agreement), respectively, plus a margin of 3.50%. 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, initially, 0.375% per annum and will, thereafter, accrue at a rate per annum ranging from 0.25% to 0.50%, depending on the First Lien Net Leverage Ratio (as defined in the Credit Agreement, the “First Lien Net Leverage Ratio”). Borrowings under the Revolving Credit Facility are due at maturity.

The Company incurred debt issuance costs of $0.8 million related to the Revolving Credit Facility. The debt issuance costs were recorded within other assets on the condensed consolidated balance sheet as of the applicable period and are being amortized over the life of the Revolving Credit Facility.

The Company is required to meet certain financial covenants, including maintaining specific liquidity measurements. There are also negative covenants, including certain restrictions on the Company’s and its subsidiaries’ ability to incur additional indebtedness, create liens, make investments, consolidate, or merge with other entities, enter into transactions with affiliates, make prepayments with respect to certain indebtedness, make dividend payments, loans, or advances to the Company, declare dividends and make restricted payments and other distributions.

As of July 1, 2023, there were no outstanding borrowings on the Revolving Credit Facility and $75.0 million was available for future borrowing.

Term Loan

The Term Loan matures on February 23, 2029. Loans outstanding under the Term Loan bear interest, at the borrower’s option, at a rate per annum based on Term SOFR (as defined in the Credit Agreement), plus a margin ranging from 3.75% to 4.00%, depending on the First Lien Net Leverage Ratio, or based on the Base Rate (as defined in the Credit Agreement), plus a margin ranging from 2.75% to 3.00%, depending on the First Lien Net Leverage Ratio. Loans under the Term Loan are subject to scheduled quarterly amortization payments of $812,500, equal to 0.25% of the initial principal amount of the Term Loan. The Credit Agreement contains customary mandatory prepayment provisions, including requirements to make mandatory prepayments with 50% of any excess cash flow and with 100% of the net cash proceeds from the incurrence of indebtedness not otherwise permitted to be incurred by the covenants, asset sales, and casualty and condemnation events, in each case, subject to customary exceptions.

The Company recorded $6.1 million of debt issuance costs and $4.9 million of debt discount related to the Term Loan as a direct reduction to the carrying amount of long-term debt on the condensed consolidated balance sheet as of the applicable period.

Outstanding borrowings as of July 1, 2023 were $312.0 million, net of discount and debt issuance costs of $8.9 million. In connection with the Term Loan, the Company is subject to various negative, reporting, financial, and other covenants, including maintaining specific liquidity measurements.

As of July 1, 2023, the unamortized debt issuance costs and discount on the Term Loan were $5.0 million and $3.9 million, respectively. The effective interest rate was 10.23% at July 1, 2023, including the impact of the Company’s interest rate swaps.

As of July 1, 2023, the Company was in compliance with all financial covenants under the Credit Agreement.

Interest Rate Risk

Interest rate risk associated with the Credit Agreement is mitigated partially through interest rate swaps.

The Company executed an interest rate swap on April 30, 2020. The swap had an effective date of May 18, 2020 and a termination date of May 18, 2023. In February of 2022, the Company amended its interest rate swap to change the index rate from LIBOR to SOFR in connection with the entry into the Credit Agreement. Under the terms of the amended swap, the Company fixed its SOFR borrowing rate at 0.496% on a notional amount of $200.0 million. The interest rate swap was not designated as a hedging instrument for accounting purposes (see Note 3).

Additionally, the Company entered into an interest rate swap that was executed on March 10, 2023. The swap has an effective date of May 18, 2023 and a termination date of May 18, 2026. Under the terms of the swap, the Company fixed its SOFR borrowing rate at 4.3725% on a notional amount of $161.0 million. The interest rate swap is not designated as a hedging instrument for accounting purposes (see Note 3).

Debt Maturities

Principal payments due on the outstanding debt, excluding the Revolving Credit Facility, 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
Remainder of fiscal 2023	$	1,625
2024		3,250
2025		3,250
2026		3,250
2027		3,250
Thereafter		306,313
	$	320,938

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.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

STOCK-BASED COMPENSATION - Weighted average basis for fair value option award granted (Details)	6 Months Ended
	Jul. 01, 2023	Jul. 02, 2022
PROFITS INTEREST UNITS
Risk-free interest rate	3.45%	1.82%
Expected volatility	40.29%	39.77%
Expected term (in years)	6 years 3 months	6 years 3 months
Expected dividend yield	0.00%	0.00%

RELATED PARTY TRANSACTIONS - Expense Reimbursement (Details) - Sponsor - Management Fee Arrangement - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jul. 01, 2023	Jul. 01, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Reimbursements to related party of out-of-pocket costs or expenses	$ 0.1	$ 0.2
Maximum
Related Party Transaction [Line Items]
Amounts payable	$ 0.1	$ 0.1	$ 0.1

NET INCOME (LOSS) PER SHARE

6 Months Ended

Jul. 01, 2023

NET (LOSS) INCOME PER SHARE

NET INCOME (LOSS) PER SHARE

13. NET INCOME (LOSS) PER SHARE

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data):


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Numerator:
Net income (loss) attributable to common stockholders	$	5,715	$	4,303	$	(8,653)	$	1,463
Denominator:
Weighted-average common shares outstanding
Basic		112,248,822		113,692,160		112,175,510		113,695,354
Diluted		112,692,543		115,384,273		112,175,510		115,698,368
Net income (loss) per share attributable to common stockholders:
Basic	$	0.05	$	0.04	$	(0.08)	$	0.01
Diluted	$	0.05	$	0.04	$	(0.08)	$	0.01

As of July 1, 2023 and December 31, 2022, 113,452,328 and 112,091,756 shares of common stock were issued and outstanding for accounting purposes, respectively.

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


	Fiscal Quarter Ended		Two Fiscal Quarters Ended
	July 1, 2023	July 2, 2022	July 1, 2023	July 2, 2022
Restricted stock awards	87,576	—	1,331,897	—
Restricted stock units	102,129	102,108	301,440	56,764
Stock options	1,730,204	1,809,704	1,808,350	1,501,528
Stock appreciation awards	529,681	—	264,841	—

LEASES - Maturities of operating lease liabilities (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
LEASES
Remainder of fiscal 2023	$ 4,341
2024	7,953
2025	7,183
2026	5,687
2027	4,042
Thereafter	10,740
Total lease payments	39,946
Less: Interest	(5,526)
Present value of lease liability	34,420
Finance Leases
Remainder of fiscal 2023	425
2024	849
2025	795
2026	703
2027	688
Thereafter	934
Total lease payments	4,394
Less: Interest	(864)
Present value of lease liability	3,530
Total
Remainder of fiscal 2023	4,766
2024	8,802
2025	7,978
2026	6,390
2027	4,730
Thereafter	11,674
Total lease payments	44,340
Less: Interest	(6,390)
Present value of lease liability	$ 37,950	$ 39,612

LEASES (Tables)

6 Months Ended

Jul. 01, 2023

LEASES

Summary of components of lease expense


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Operating lease expense	$	2,317	$	2,366	$	4,668	$	4,504
Finance lease amortization of assets		156		5		265		7
Finance lease interest on lease liabilities		68		2		120		3
Short-term lease expense		96		12		150		32
Variable lease expense		268		126		595		304
Total lease expense	$	2,905	$	2,511	$	5,798	$	4,850

Schedule of supplemental lease information

Operating and finance lease right-of-use assets and lease-related liabilities as of July 1, 2023 and December 31, 2022 were as follows (in thousands):


	July 1, 2023		December 31, 2022		Classification

Lease right-of-use assets:
Operating leases	$	33,462	$	38,308	Operating lease right-of-use assets
Finance leases		3,459		316	Other assets
Total lease right-of-use assets	$	36,921	$	38,624

Lease-related liabilities
Current
Operating leases	$	6,894	$	6,923	Current operating lease liabilities
Finance leases		586		105	Accrued expenses and other current liabilities
Non-current
Operating leases		27,526		32,391	Non-current operating lease liabilities
Finance leases		2,944		193	Other long-term liabilities
Total lease liabilities	$	37,950	$	39,612

The table below presents supplemental information related to leases as of July 1, 2023 and December 31, 2022:


	July 1, 2023			December 31, 2022
Weighted-average remaining lease term (years)
Finance leases		5.6			2.8
Operating leases		6.0			6.5
Weighted-average discount rate
Finance leases		8.1	%		5.4	%
Operating leases		4.9	%		4.9	%

The table below presents supplemental information related to the cash flows for operating leases recorded on the condensed consolidated statements of cash flows (in thousands):


	Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	3,781	$	3,526

Summary of maturities of operating lease liabilities


	Operating Leases		Finance Leases		Total
Remainder of fiscal 2023	$	4,341	$	425	$	4,766
2024		7,953		849		8,802
2025		7,183		795		7,978
2026		5,687		703		6,390
2027		4,042		688		4,730
Thereafter		10,740		934		11,674
Total lease payments		39,946		4,394		44,340
Less: Interest		(5,526)		(864)		(6,390)
Present value of lease liability	$	34,420	$	3,530	$	37,950

LEASES - Lease expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
LEASES - Lease expense (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Jul. 02, 2022	Jul. 01, 2023	Jul. 02, 2022	Dec. 31, 2022	Dec. 31, 2021
Leases
Retained earnings	$ (63,221)		$ (63,221)		$ (54,568)
Components of lease expense:
Operating lease expense	2,317	$ 2,366	4,668	$ 4,504
Finance lease amortization of assets	156	5	265	7
Finance lease interest on lease liabilities	68	2	120	3
Short-term lease expense	96	12	150	32
Variable lease expense	268	126	595	304
Total lease expense	$ 2,905	$ 2,511	$ 5,798	$ 4,850
ASU 2016-02 \| Adjustment
Leases
Retained earnings						$ (300)

LEASES

6 Months Ended

Jul. 01, 2023

LEASES

LEASES

8. LEASES

On January 1, 2022, the Company adopted ASU 2016-02, “Leases (Topic 842),” and the related amendments. The optional transition method of adoption was used, in which the cumulative effect of initially applying the new standard to existing leases was $0.3 million to record the operating lease right-of-use assets and the related liabilities as of January 1, 2022. Under this method of adoption, the comparative information has not been revised and continues to be reported under the previously applicable lease accounting guidance.

For leases with initial terms greater than 12 months, the Company considers these right-of-use assets and records the related asset and obligation at the present value of lease payments over the term. For leases with initial terms equal to or less than 12 months, the Company does not consider them as right-of-use assets and instead considers them short-term lease costs that are recognized on a straight-line basis over the lease term. The Company’s leases may include escalation clauses, renewal options, and/or termination options that are factored into the Company’s determination of lease term and lease payments when it is reasonably certain the option will be exercised. The Company elected to take the practical expedient and not separate lease and non-lease components of contracts. The Company estimates an incremental borrowing rate to discount the lease payments based on information available at lease commencement because the implicit rate of the lease is generally not known.

The Company leases manufacturing facilities, office space, land, and certain vehicles and equipment under operating leases. The Company also leases certain vehicles and equipment under finance leases. The Company determines if an arrangement is a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The components of lease expense for the fiscal quarters ended July 1, 2023 and July 2, 2022 were as follows (in thousands):


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Operating lease expense	$	2,317	$	2,366	$	4,668	$	4,504
Finance lease amortization of assets		156		5		265		7
Finance lease interest on lease liabilities		68		2		120		3
Short-term lease expense		96		12		150		32
Variable lease expense		268		126		595		304
Total lease expense	$	2,905	$	2,511	$	5,798	$	4,850

Operating and finance lease right-of-use assets and lease-related liabilities as of July 1, 2023 and December 31, 2022 were as follows (in thousands):


	July 1, 2023		December 31, 2022		Classification

Lease right-of-use assets:
Operating leases	$	33,462	$	38,308	Operating lease right-of-use assets
Finance leases		3,459		316	Other assets
Total lease right-of-use assets	$	36,921	$	38,624

Lease-related liabilities
Current
Operating leases	$	6,894	$	6,923	Current operating lease liabilities
Finance leases		586		105	Accrued expenses and other current liabilities
Non-current
Operating leases		27,526		32,391	Non-current operating lease liabilities
Finance leases		2,944		193	Other long-term liabilities
Total lease liabilities	$	37,950	$	39,612

The table below presents supplemental information related to leases as of July 1, 2023 and December 31, 2022:


	July 1, 2023			December 31, 2022
Weighted-average remaining lease term (years)
Finance leases		5.6			2.8
Operating leases		6.0			6.5
Weighted-average discount rate
Finance leases		8.1	%		5.4	%
Operating leases		4.9	%		4.9	%

The table below presents supplemental information related to the cash flows for operating leases recorded on the condensed consolidated statements of cash flows (in thousands):


	Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	3,781	$	3,526

The following table summarizes maturities of operating lease liabilities as of July 1, 2023 (in thousands):


	Operating Leases		Finance Leases		Total
Remainder of fiscal 2023	$	4,341	$	425	$	4,766
2024		7,953		849		8,802
2025		7,183		795		7,978
2026		5,687		703		6,390
2027		4,042		688		4,730
Thereafter		10,740		934		11,674
Total lease payments		39,946		4,394		44,340
Less: Interest		(5,526)		(864)		(6,390)
Present value of lease liability	$	34,420	$	3,530	$	37,950

LEASES - Operating and finance lease right-of-use assets and liabilities and Supplemental information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2023	Jul. 02, 2022	Dec. 31, 2022
Lease right-of-use assets:
Operating leases	$ 33,462		$ 38,308
Finance leases	$ 3,459		316
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets
Total lease right-of-use assets	$ 36,921		38,624
Lease-related liabilities
Operating leases, Current	6,894		6,923
Finance leases, Current	$ 586		105
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Other Liabilities, Current
Operating leases, Non-current	$ 27,526		32,391
Finance leases, Non-current	$ 2,944		193
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other Liabilities, Noncurrent
Total finance lease liabilities	$ 37,950		$ 39,612
Weighted-average remaining lease term (years)
Finance leases	5 years 7 months 6 days		2 years 9 months 18 days
Operating leases	6 years		6 years 6 months
Weighted-average discount rate
Finance leases	8.10%		5.40%
Operating leases	4.90%		4.90%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 3,781	$ 3,526

INVENTORIES, NET (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
INVENTORIES, NET
Raw materials	$ 74,047	$ 95,388
Finished goods	52,471	69,832
Inventory, Net, Total	$ 126,518	$ 165,220

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jul. 01, 2023

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 unaudited condensed consolidated balance sheet at December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of July 1, 2023 and for the fiscal and two fiscal quarters ended July 1, 2023 and July 2, 2022 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 fiscal year ended December 31, 2022 included in the Company’s 2022 Annual Report on Form 10-K, filed with the SEC on March 7, 2023 (the “Annual Report”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of these condensed consolidated financial statements, have been included. The Company’s results of operations for the fiscal quarter and two fiscal quarters ended July 1, 2023 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending December 31, 2023.

Use of Estimates

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

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation in the condensed consolidated financial statements and the accompanying notes.

Seasonality

Although the Company generally has demand for its products throughout the fiscal 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 the second and third fiscal quarters, representing the peak months of swimming pool use, pool installation, and remodeling and repair activities. Severe weather may also affect net sales in all periods.

Significant Accounting Policies

Refer to the Annual Report for a discussion of the Company’s significant accounting policies, as updated below.

Recently Issued Accounting Pronouncements

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

In 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. The adoption of this standard on January 1, 2023 did not have a material impact on the Company’s condensed consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which amends ASC 805 by requiring acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. For public entities, ASU 2021-08 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022. For all other entities, ASU 2021-08 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The adoption of this standard on January 1, 2023 did not have a material impact on the Company’s condensed consolidated financial statements.

RELATED PARTY TRANSACTIONS

6 Months Ended

Jul. 01, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

14. RELATED PARTY TRANSACTIONS

BrightAI Services

Starting in 2020, BrightAI has 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. In December 2022, the Company executed an additional agreement with BrightAI for the provision of hardware that will run the technology developed by BrightAI and the Company. During the two fiscal quarters ended July 1, 2023 and the fiscal year ended December 31, 2022, the Company incurred $0.8 million and $0.2 million, respectively, associated with services performed by BrightAI, which is recorded as construction in progress within property and equipment, net on the condensed consolidated balance sheet as of July 1, 2023. As of July 1, 2023 and December 31, 2022, the Company had accounts payable related to BrightAI of $0.3 million and $0.4 million, respectively.

Expense Reimbursement

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.

The Company recognized less than $0.1 million and $0.2 million for the reimbursement of out-of-pocket costs and expenses to Wynnchurch Capital, L.P. and no amounts for the reimbursement of out-of-pocket costs and expenses to the Sponsor during the fiscal quarter and two fiscal quarters ended July 1, 2023, respectively. The Company did not reimburse any out-of-pocket costs or expenses to the Sponsor and Wynnchurch Capital, L.P. during the fiscal quarter and the two fiscal quarters ended July 2, 2022. As of both July 1, 2023 and December 31, 2022, there was less than $0.1 million outstanding amounts payable to the Sponsor and no outstanding amounts payable to Wynnchurch Capital, L.P.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Name Accounting Standards Codification
-Section 50
-Paragraph 5
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-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 2
-Subparagraph (c)
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 1
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-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
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-Section 50
-Paragraph 1
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

GOODWILL AND INTANGIBLE ASSETS, NET - Amortization Expense (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of fiscal 2023	$ 13,264
2024	25,708
2025	25,550
2026	25,550
2027	25,550
Thereafter	180,034
Net Amount	$ 295,656	$ 309,215

STOCK-BASED COMPENSATION

6 Months Ended

Jul. 01, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

12. STOCK-BASED COMPENSATION

On April 12, 2021, the Company’s stockholders approved the 2021 Omnibus Equity Incentive Plan (the “2021 Omnibus Equity Plan”), which became effective on April 22, 2021, upon pricing of its initial public offering. The Omnibus Equity 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 grant date fair value of cash and equity awards that may be awarded to a non-employee director under the Omnibus Equity Plan during any one fiscal year, together with any cash fees paid to such non-employee director during such fiscal year, is $750,000.

On May 2, 2023, at the 2023 annual meeting of stockholders the Company, the stockholders approved the first amendment (the “First Amendment”) to the Latham Group, Inc. 2021 Omnibus Equity Plan, which was previously approved by the Board of Directors of the Company. The First Amendment became effective upon stockholder approval, and provides for (i) an increase by 8,000,000 shares of the share pool, i.e. the maximum number of shares of the Company’s common stock that may be issued pursuant to awards granted under the 2021 Omnibus Equity Plan, (ii) a prohibition on recycling of shares withheld or remitted to pay taxes for all awards, (iii) a minimum vesting period of one year for all awards, with an exception for shares representing 5% of the share pool, and (iv) a prohibition on the transfer of stock options and stock appreciation rights for value or to third-party financial institutions without stockholder approval.

Except as amended by the First Amendment, the other terms of the 2021 Omnibus Equity Plan remain in full force and effect. Subsequent to the First Amendment, the maximum aggregate number of shares reserved for issuance under the Omnibus Equity Plan is 21,170,212 shares.

The following table summarizes the Company’s stock-based compensation expense (in thousands):



	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Cost of sales	$	(626)	$	1,140	$	(200)	$	2,316
Selling, general, and administrative		6,390		15,289		12,733		31,038
	$	5,764	$	16,429	$	12,533	$	33,354

As of July 1, 2023, total unrecognized stock-based compensation expense related to all unvested stock-based awards was $14.4 million, which is expected to be recognized over a weighted-average period of 1.5 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 stock option awards granted:


	Two Fiscal Quarters Ended
	July 2, 2022
Risk-free interest rate	1.82	%
Expected volatility	39.77	%
Expected term (in years)	6.25
Expected dividend yield	0.00	%

No stock options were granted under this plan during the fiscal quarter ended July 1, 2023.


	Two Fiscal Quarters Ended
	July 1, 2023
Risk-free interest rate	3.45	%
Expected volatility	40.29	%
Expected term (in years)	6.25
Expected dividend yield	0.00	%

Restricted Stock Awards

The following table represents the Company’s restricted stock awards activity during the two fiscal quarters ended July 1, 2023:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2023	2,576,219	$	19.00
Granted	—		—
Vested	(1,239,520)		19.00
Forfeited	(54,271)		19.00
Outstanding at July 1, 2023	1,282,428	$	19.00

Restricted Stock Units

The following table represents the Company’s restricted stock units activity during the two fiscal quarters ended July 1, 2023:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2023	617,941	$	8.37
Granted	2,018,828		3.15
Vested	(121,052)		16.59
Forfeited	(111,084)		4.81
Outstanding at July 1, 2023	2,404,633	$	3.74

Stock Options

The following table represents the Company’s stock option activity during the two fiscal quarters ended July 1, 2023:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2023	1,914,670	$	14.85
Granted	—		—
Exercised	—		—
Forfeited	(198,894)		8.51
Outstanding at July 1, 2023	1,715,776	$	15.58	8.31	$	—
Vested and expected to vest at July 1, 2023	1,715,776	$	15.58	8.31	$	—
Options exercisable at July 1, 2023	546,107	$	17.58	7.92	$	—

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.

Stock Appreciation Rights

During the fiscal quarter ended April 1, 2023, as a portion of the annual equity award grants to the Company’s executive officers, the Compensation Committee of the Board of Directors approved stock appreciation rights for an aggregate of 790,181 shares of the Company’s common stock, with a strike price of $3.24 per share (the “Contingent Grants”). At the time of such approval, the Company did not have enough shares of the Company’s common stock in the share pool under the Omnibus Equity Plan to support such grant. As of April 1, 2023, the Contingent Grants remained subject to stockholder approval of the First Amendment. On May 2,

2023, following stockholder approval of the First Amendment, the foregoing stock appreciation right awards became effective without condition.

The following table represents the Company’s stock appreciation rights activity during the two fiscal quarters ended July 1, 2023:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2023	—	$	—
Granted	790,181		3.24
Exercised	—		—
Forfeited	—		—
Outstanding at July 1, 2023	790,181	$	3.24	9.84	$	371
Vested and expected to vest at July 1, 2023	790,181	$	3.24	9.84	$	371
Stock appreciation rights exercisable at July 1, 2023	—	$	—	—	$	—

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

LONG-TERM DEBT (Tables)

6 Months Ended

Jul. 01, 2023

LONG-TERM DEBT

Components of the Company's outstanding debt obligations



	July 1, 2023		December 31, 2022
Term Loan	$	320,938	$	322,562
Less: Unamortized discount and debt issuance costs		(8,897)		(9,681)
Total debt		312,041		312,881
Less: Current portion of long-term debt		(3,250)		(3,250)
Total long-term debt	$	308,791	$	309,631

Principal payments due on the outstanding debt



Year Ended	Term Loan
Remainder of fiscal 2023	$	1,625
2024		3,250
2025		3,250
2026		3,250
2027		3,250
Thereafter		306,313
	$	320,938

- 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.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 69B
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-URI https://asc.fasb.org//1943274/2147481568/470-20-55-69B

Reference 2: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jul. 02, 2022	Jul. 01, 2023	Jul. 02, 2022
Condensed Consolidated Statements of Comprehensive Loss
Net Income (Loss)	$ 5,715	$ 4,303	$ (8,653)	$ 1,463
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(329)	(3,917)	(473)	(2,697)
Total other comprehensive (loss) income, net of tax	(329)	(3,917)	(473)	(2,697)
Comprehensive loss	$ 5,386	$ 386	$ (9,126)	$ (1,234)

- Definition

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

+ References

+ Details

INVENTORIES, NET (Tables)

6 Months Ended

Jul. 01, 2023

INVENTORIES, NET

Schedule of inventories, net

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



	July 1, 2023		December 31, 2022
Raw materials	$	74,047	$	95,388
Finished goods		52,471		69,832
	$	126,518	$	165,220

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jul. 01, 2023	Aug. 04, 2023
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jul. 01, 2023
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	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		114,841,362
Entity Central Index Key	0001833197
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jul. 01, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	114,734,756	114,667,975
Common stock, shares outstanding	114,690,053	114,667,975

GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill	$ 131,168	$ 131,383

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

STOCKHOLDER'S EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		6 Months Ended
	May 10, 2022	Jan. 11, 2022	Jul. 02, 2022	Apr. 02, 2022	Jul. 02, 2022	Jul. 01, 2023	Dec. 31, 2022
Common stock, par value		$ 0.0001				$ 0.0001	$ 0.0001
Value of shares repurchased and retired			$ 15,000	$ 257,663
Underwriting fees					$ 11,437
Common stock issued and outstanding						113,452,328	112,091,756
Repurchase Program [Member]
Amount authorized	$ 100,000
Term of repurchase program	3 years
Amount remaining for repurchases						$ 77,000
Common Stock
Proceeds from sale of common stock (in shares)		13,800,000		13,800,000
Offering price per share		$ 19.50
Value of shares repurchased and retired		$ 257,700		$ 1
Underwriting fees		$ 11,400
Number of shares repurchased and retired during the period		13,800,000	2,026,231	13,800,244
Common Stock \| Underwriters Option
Proceeds from sale of common stock (in shares)		1,800,000

STOCK-BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended	12 Months Ended
	Jul. 01, 2023	Apr. 01, 2023	Jul. 01, 2023	Dec. 31, 2022
Employee Stock Option [Member]
Shares
Outstanding at the beginning		1,914,670	1,914,670
Granted	0
Forfeited			(198,894)
Outstanding at the end	1,715,776		1,715,776	1,914,670
Vested and expected to vest	1,715,776		1,715,776
Options exercisable at the end	546,107		546,107
Weighted-Average Exercise Price per Share
Outstanding at the beginning (in dollars per share)		$ 14.85	$ 14.85
Forfeited (in dollars per share)			8.51
Outstanding at the end (in dollars per share)	$ 15.58		15.58	$ 14.85
Vested and expected to vest at the end (in dollars per share)	15.58		15.58
Options exercisable at the end (in dollars per share)	$ 17.58		$ 17.58
Weighted-Average Remaining Contract Term
Outstanding at the end (in years)			8 years 3 months 21 days	0 years
Vested and expected to vest at the end (in years)			8 years 3 months 21 days
Options exercisable at the end (in years)			0 years
Options exercisable at the end (in dollars)
Stock Appreciation Rights (SARs) [Member]
Shares
Granted		790,181	790,181
Outstanding at the end	790,181		790,181
Vested and expected to vest	790,181		790,181
Weighted-Average Exercise Price per Share
Granted (in dollars per share)		$ 3.24	$ 3.24
Outstanding at the end (in dollars per share)	$ 3.24		3.24
Vested and expected to vest at the end (in dollars per share)	$ 3.24		$ 3.24
Weighted-Average Remaining Contract Term
Outstanding at the end (in years)			9 years 10 months 2 days
Vested and expected to vest at the end (in years)			9 years 10 months 2 days
Options exercisable at the end (in years)			0 years
Outstanding at the end (in dollars)	$ 371		$ 371
Vested and expected to vest (in dollars)	$ 371		$ 371

INCOME TAXES

6 Months Ended

Jul. 01, 2023

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

The effective income tax rate for the fiscal and two fiscal quarters ended July 1, 2023 was 46.1% and (29.2)%, respectively, compared to 71.9% and 91.8% for the fiscal and two fiscal quarters ended July 2, 2022, respectively. The differences between the U.S. federal statutory income tax rate and the Company’s effective income tax rates for the fiscal quarter ended July 1, 2023 and the fiscal quarter ended July 2, 2022 were primarily attributable to the discrete impacts of stock-based compensation expense for which there is no associated tax benefit.

The Inflation Reduction Act ("IRA") is effective beginning in 2023. Key provisions from the IRA include the implementation of a 15% corporate alternative minimum tax for corporations with book income in excess of $1 billion, an excise tax on the fair market value of stock buybacks (offset by the fair market value of stock issued in the same tax year), and significant tax incentives for energy and climate initiatives. Enactment of the new law has not impacted the Company’s financial condition, results of operations or cash flows for the period ended July 1, 2023 and the Company does not expect a material impact on our future results at this time. The Company will continue to monitor any impacts of further guidance on the IRA as released and assess any impacts as applicable.

- 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.

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+ Details