0001558370-24-007191 | 10-Q | XBRL Viewer

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 30, 2024	Dec. 31, 2023
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	115,389,689	114,871,782
Common stock, shares outstanding	115,389,689	114,871,782

PRODUCT WARRANTIES

3 Months Ended

Mar. 30, 2024

PRODUCT WARRANTIES

PRODUCT WARRANTIES

7. PRODUCT WARRANTIES

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



	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Balance at the beginning of the fiscal year	$	3,161	$	3,990
Adjustments to reserve		537		354
Less: Settlements made (in cash or in kind)		(679)		(761)
Balance at the end of the fiscal quarter	$	3,019	$	3,583

RELATED PARTY TRANSACTIONS - Bright AI Services (Details) $ in Millions	Dec. 31, 2023 USD ($)
Bright AI Services
Related Party Transaction [Line Items]
Accounts payable	$ 0

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 30, 2024

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 2021 Omnibus Equity Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance 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 2021 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 of the Company, the stockholders approved the first amendment (the “First Amendment”) to the 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 included 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.

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 2021 Omnibus Equity Plan is 21,170,212 shares.

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



	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Cost of sales	$	—	$	426
Selling, general, and administrative		1,243		6,343
	$	1,243	$	6,769

As of March 30, 2024, total unrecognized stock-based compensation expense related to all unvested stock-based awards was $13.3 million, which is expected to be recognized over a weighted-average period of 2.2 years.

Restricted Stock Awards

The following table represents the Company’s restricted stock awards activity during the fiscal quarter ended March 30, 2024:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2024	42,886	$	19.00
Granted	—		—
Vested	—		—
Forfeited	—		—
Outstanding at March 30, 2024	42,886	$	19.00

Restricted Stock Units

The following table represents the Company’s restricted stock units activity during the fiscal quarter ended March 30, 2024:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2024	2,235,479	$	3.60
Granted	2,282,336		2.87
Vested	(411,301)		3.94
Forfeited	(85,392)		2.93
Outstanding at March 30, 2024	4,021,122	$	3.17

Stock Options

The following table represents the Company’s stock option activity during the fiscal quarter ended March 30, 2024:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2024	1,554,294	$	15.43
Granted	—		—
Exercised	—		—
Forfeited	(42,004)		16.92
Expired	(57,616)		17.78
Outstanding at March 30, 2024	1,454,674	$	15.30	7.58	$	—
Vested and expected to vest at March 30, 2024	1,454,674	$	15.30	7.58	$	—
Options exercisable at March 30, 2024	678,477	$	16.10	7.38	$	—

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. 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 2021 Omnibus Equity Plan to support such grant. As of April 1, 2023, the contingent grant of stock appreciation rights 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 fiscal quarter ended March 30, 2024:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2024	755,802	$	3.16
Granted	—		—
Exercised	—		—
Forfeited	(49,342)		3.24
Outstanding at March 30, 2024	706,460	$	3.15	9.13	$	569,296
Vested and expected to vest at March 30, 2024	706,460	$	3.15	9.13	$	569,296
Stock appreciation rights exercisable at March 30, 2024	161,893	$	3.24	9.09	$	116,563

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.

No stock appreciation rights were granted under this plan during the fiscal quarter ended March 30, 2024.

Performance Stock Units

During the fiscal quarter ended March 30, 2024 the Compensation Committee of the Board of Directors approved the grant of performance stock units (“PSUs”) as a portion of the annual equity award to the Company’s executive officers for an aggregate of 427,145 shares of the Company’s common stock.

The PSUs will be earned at 0% to 200% of the target PSUs (with 100% of PSUs being earned at target performance, and linear interpolation between threshold and target and maximum performance) based on the Company’s achievement of Adjusted EBITDA, as defined in the award agreement, over a one-year performance period ending December 31, 2024. Any earned PSUs cliff vest on the third anniversary of the grant date. Adjusted EBITDA is considered a performance condition and the grant date fair value corresponds with management’s expectation of the probable outcome of the performance condition as of the grant date. The grant date fair value is determined based on the fair market value of the Company’s stock at market close on the grant date multiplied by the target number of shares subject to the award. The probability of achieving the performance criteria is assessed quarterly during the performance period. Compensation expense related to unvested PSUs is recognized ratably over the service period.

The following table represents the Company’s PSU activity during the fiscal quarter ended March 30, 2024:


			Weighted-
			Average
			Grant Date
	Shares		Fair Value

Outstanding at January 1, 2024	—	$	—
Granted	427,145		2.87
Adjustment for expected performance achievement ⁽¹⁾	—		—
Forfeited	—		—
Outstanding at March 30, 2024 ⁽²⁾	427,145	$	2.87

(1)

Represents the adjustment to previously granted PSUs based on performance expectations as of the end of each respective fiscal year.

(2)

An additional 427,145 PSUs could potentially be included if the maximum performance level of 200% is earned for all PSUs outstanding as of March 30, 2024.

STOCK-BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 30, 2024	Apr. 01, 2023	Dec. 31, 2023
Employee Stock Option
Shares
Outstanding at the beginning	1,554,294
Forfeited	(42,004)
Expired	(57,616)
Outstanding at the end	1,454,674		1,554,294
Vested and expected to vest	1,454,674
Options exercisable at the end	678,477
Weighted-Average Exercise Price per Share
Outstanding at the beginning (in dollars per share)	$ 15.43
Forfeited (in dollars per share)	16.92
Expired (in dollars per share)	17.78
Outstanding at the end (in dollars per share)	15.30		$ 15.43
Vested and expected to vest at the end (in dollars per share)	15.30
Options exercisable at the end (in dollars per share)	$ 16.10
Weighted-Average Remaining Contract Term
Outstanding at the end (in years)	7 years 6 months 29 days		0 years
Vested and expected to vest at the end (in years)	7 years 6 months 29 days
Options exercisable at the end (in years)	7 years 4 months 17 days
Stock Appreciation Rights (SARs)
Shares
Outstanding at the beginning	755,802
Granted	0	790,181
Forfeited	(49,342)
Outstanding at the end	706,460		755,802
Vested and expected to vest	706,460
Options exercisable at the end	161,893
Weighted-Average Exercise Price per Share
Outstanding at the beginning (in dollars per share)	$ 3.16
Granted (in dollars per share)	3.24
Forfeited (in dollars per share)	3.24
Outstanding at the end (in dollars per share)	3.15		$ 3.16
Vested and expected to vest at the end (in dollars per share)	3.15
Options exercisable at the end (in dollars per share)	$ 3.24
Weighted-Average Remaining Contract Term
Outstanding at the end (in years)	9 years 1 month 17 days
Vested and expected to vest at the end (in years)	9 years 1 month 17 days
Options exercisable at the end (in years)	9 years 1 month 2 days
Outstanding at the end (in dollars)	$ 569,296
Vested and expected to vest (in dollars)	569,296
Options exercisable at the end (in dollars)	$ 116,563

RESTRUCTURING COSTS (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
RESTRUCTURING COSTS (Details) - USD ($) $ in Millions	Mar. 30, 2024	Dec. 31, 2023
RESTRUCTURING COSTS
Exit or disposal cost	$ 0.1	$ 0.2

PRODUCT WARRANTIES (Tables)

3 Months Ended

Mar. 30, 2024

PRODUCT WARRANTIES

Schedule of warranty reserve activity

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



	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Balance at the beginning of the fiscal year	$	3,161	$	3,990
Adjustments to reserve		537		354
Less: Settlements made (in cash or in kind)		(679)		(761)
Balance at the end of the fiscal quarter	$	3,019	$	3,583

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Mar. 30, 2024	Apr. 01, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (7,864)	$ (14,368)

- 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

FAIR VALUE MEASUREMENTS - Fair value of financial instruments (Details) - Level 2 - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 31, 2023
Term Loan \| Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amount	$ 282,781	$ 301,201
Term Loan \| Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amount	277,832	289,153
Interest rate swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of interest rate swap asset	$ 600
Fair value of interest rate swap liability		$ 1,200

NET LOSS PER SHARE (Tables)

3 Months Ended

Mar. 30, 2024

NET LOSS PER SHARE

Schedule of basic and diluted net 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
	March 30, 2024		April 1, 2023
Numerator:
Net loss attributable to common stockholders	$	(7,864)	$	(14,368)
Denominator:
Weighted-average common shares outstanding
Basic		115,038,929		112,102,198
Diluted		115,038,929		112,102,198
Net loss per share attributable to common stockholders:
Basic	$	(0.07)	$	(0.13)
Diluted	$	(0.07)	$	(0.13)

Schedule of antidilutive securities excluded from computation of diluted net loss per share


	Fiscal Quarter Ended
	March 30, 2024	April 1, 2023
Restricted stock awards	42,886	2,576,219
Restricted stock units	24,146	500,751
Stock options	1,521,158	1,886,497
Stock appreciation rights	657,999	—
Performance stock units	75,937	—

LONG-TERM DEBT - Revolving Credit Facility (Details) - Revolving Credit Facility - USD ($) $ in Millions	Feb. 23, 2022	Mar. 30, 2024
Debt Instrument [Line Items]
Commitment fee rate range, depending on leverage ratio	0.375%
Debt issuance costs	$ 0.8
Amount outstanding		$ 0.0
Maximum borrowing capacity	$ 75.0	$ 75.0
Minimum
Debt Instrument [Line Items]
Commitment fee rate range, depending on leverage ratio	0.25%
Maximum
Debt Instrument [Line Items]
Commitment fee rate range, depending on leverage ratio	0.50%
SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	3.50%
Canadian Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	2.50%
EURIBOR or AUD Rate
Debt Instrument [Line Items]
Basis spread on variable rate	3.50%

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 30, 2024

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

11. STOCKHOLDERS’ EQUITY

Repurchase Program

On May 10, 2022, the Board of Directors of the Company approved a stock repurchase program (the “Repurchase Program”), which authorizes the Company to repurchase up to $100 million of the Company’s shares of common stock by May 2025. 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 March 30, 2024, $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 March 30, 2024. 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

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 505
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481004/946-505-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
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-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Consolidated Statements of Operations
Net sales	$ 110,629	$ 137,719
Cost of sales	80,040	104,349
Gross profit	30,589	33,370
Selling, general, and administrative expense	26,250	33,057
Amortization	6,412	6,632
Loss from operations	(2,073)	(6,319)
Other expense:
Interest expense, net	4,982	10,804
Other expense, net	1,586	210
Total other expense, net	6,568	11,014
Earnings from equity method investment	1,309	37
Loss before income taxes	(7,332)	(17,296)
Income tax expense (benefit)	532	(2,928)
Net loss	$ (7,864)	$ (14,368)
Net loss per share attributable to common stockholders:
Basic	$ (0.07)	$ (0.13)
Diluted	$ (0.07)	$ (0.13)
Weighted-average common shares outstanding - basic and diluted
Basic	115,038,929	112,102,198
Diluted	115,038,929	112,102,198

LONG-TERM DEBT - Term Loan (Details) - USD ($)		3 Months Ended
LONG-TERM DEBT - Term Loan (Details) - USD ($)	Feb. 23, 2022	Mar. 30, 2024	Apr. 01, 2023	Dec. 31, 2023
Debt Instrument [Line Items]
Repayment of long term debt		$ 18,813,000	$ 813,000
Amount outstanding, net of discount and issuance costs		282,781,000		$ 301,201,000
Discount and debt issuance costs		7,719,000		$ 8,112,000
Term Loan Facility
Debt Instrument [Line Items]
Repayment amount to be paid quarterly	$ 812,500
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%
Repayment of long term debt		18,000,000.0
Amount outstanding, net of discount and issuance costs		282,800,000
Debt issuance costs		4,300,000
Unamortized discount		$ 3,400,000
Effective interest rate		9.89%
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 - Restricted Stock Awards (Details) - Restricted stock awards	3 Months Ended
	Mar. 30, 2024 $ / shares shares
Shares
Balance at beginning \| shares	42,886
Granted \| shares
Balance at ending \| shares	42,886
Weighted Average Grant Date Fair Value
Balance at beginning \| $ / shares	$ 19.00
Granted \| $ / shares
Balance at ending \| $ / shares	$ 19.00

LEASES

3 Months Ended

Mar. 30, 2024

LEASES

LEASES

8. LEASES

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 March 30, 2024 and April 1, 2023 were as follows (in thousands):


	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Operating lease expense	$	2,163	$	2,351
Finance lease amortization of assets		212		109
Finance lease interest on lease liabilities		84		52
Short-term lease expense		56		54
Variable lease expense		158		327
Total lease expense	$	2,673	$	2,893

Operating and finance lease right-of-use assets and lease-related liabilities as of March 30, 2024 and December 31, 2023 were as follows (in thousands):


	March 30, 2024		December 31, 2023		Classification

Lease right-of-use assets:
Operating leases	$	28,696	$	30,788	Operating lease right-of-use assets
Finance leases		3,887		3,912	Other assets
Total lease right-of-use assets	$	32,583	$	34,700

Lease-related liabilities
Current
Operating leases	$	6,823	$	7,133	Current operating lease liabilities
Finance leases		782		746	Accrued expenses and other current liabilities
Non-current
Operating leases		22,963		24,787	Non-current operating lease liabilities
Finance leases		3,247		3,285	Other long-term liabilities
Total lease liabilities	$	33,815	$	35,951

The table below presents supplemental information related to leases as of March 30, 2024 and December 31, 2023:


	March 30, 2024			December 31, 2023
Weighted-average remaining lease term (years)
Finance leases		5.0			5.2
Operating leases		5.6			5.7
Weighted-average discount rate
Finance leases		8.2	%		8.2	%
Operating leases		5.0	%		5.1	%

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):


	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,794	$	1,817

The following table summarizes maturities of operating lease liabilities as of March 30, 2024 (in thousands):


	Operating Leases		Finance Leases		Total
Remainder of fiscal year 2024	$	6,260	$	813	$	7,073
2025		7,309		1,030		8,339
2026		5,805		934		6,739
2027		4,097		858		4,955
2028		3,111		845		3,956
Thereafter		7,637		436		8,073
Total lease payments		34,219		4,916		39,135
Less: Interest		(4,433)		(886)		(5,319)
Present value of lease liability	$	29,786	$	4,030	$	33,816

GOODWILL AND INTANGIBLE ASSETS, NET - Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of fiscal year 2024	$ 19,282
2025	25,551
2026	25,551
2027	25,551
2028	24,593
Thereafter	155,348
Net Amount	$ 275,876	$ 282,793

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Cash flows from operating activities:
Net loss	$ (7,864)	$ (14,368)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	10,374	9,258
Amortization of deferred financing costs and debt discount	430	430
Non-cash lease expense	1,780	1,877
Change in fair value of interest rate swaps	(1,804)	4,866
Stock-based compensation expense	1,243	6,769
Bad debt expense	1,299	1,700
Other non-cash, net	1,757	860
Earnings from equity method investment	(1,309)	(37)
Distributions received from equity method investment	908
Changes in operating assets and liabilities:
Trade receivables	(44,895)	(55,286)
Inventories	1,648	15,615
Prepaid expenses and other current assets	467	(593)
Income tax receivable	(428)	(2,816)
Other assets	(146)	(1,225)
Accounts payable	8,179	20,947
Accrued expenses and other current liabilities	(5,987)	(3,190)
Other long-term liabilities	(164)	717
Net cash used in operating activities	(34,512)	(14,476)
Cash flows from investing activities:
Purchases of property and equipment	(5,345)	(9,942)
Net cash used in investing activities	(5,345)	(9,942)
Cash flows from financing activities:
Payments on long-term debt borrowings	(18,813)	(813)
Proceeds from borrowings on revolving credit facility		48,000
Repayments of finance lease obligations	(189)	(101)
Net cash (used in) provided by financing activities	(19,002)	47,086
Effect of exchange rate changes on cash	(93)	(278)
Net (decrease) increase in cash	(58,952)	22,390
Cash at beginning of period	102,763	32,626
Cash at end of period	43,811	55,016
Supplemental cash flow information:
Cash paid for interest	9,513	5,123
Income taxes paid, net	39	637
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses	426	5,849
Capitalized internal-use software included in accounts payable - related party		359
Right-of-use operating and finance lease assets obtained in exchange for lease liabilities	$ 198	$ 1,625

LEASES - Maturities of operating lease liabilities (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 31, 2023
Operating Leases
Remainder of fiscal 2024	$ 6,260
2025	7,309
2026	5,805
2027	4,097
2028	3,111
Thereafter	7,637
Total lease payments	34,219
Less: Interest	(4,433)
Present value of lease liability	29,786
Finance Leases
Remainder of fiscal 2024	813
2025	1,030
2026	934
2027	858
2028	845
Thereafter	436
Total lease payments	4,916
Less: Interest	(886)
Present value of lease liability	4,030
Total
Remainder of fiscal year 2024	7,073
2025	8,339
2026	6,739
2027	4,955
2028	3,956
Thereafter	8,073
Total lease payments	39,135
Less: Interest	(5,319)
Present value of lease liability	33,815	$ 35,951
Rounding (member)
Total
Present value of lease liability	$ 33,816

RESTRUCTURING COSTS

3 Months Ended

Mar. 30, 2024

RESTRUCTURING COSTS

RESTRUCTURING COSTS

15. RESTRUCTURING COSTS

During the second and third fiscal quarters of 2023, the Company initiated an additional plan focused on efforts to improve efficiencies and decrease costs. The plan involved a reduction in the Company’s workforce as well as closures of various manufacturing facilities. The Company had an exit or disposal cost related liability of $0.1 million as of March 30, 2024 and $0.2 million as of December 31, 2023.

NET SALES (Tables)

3 Months Ended

Mar. 30, 2024

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
	March 30, 2024		April 1, 2023
In-ground Swimming Pools	$	59,832	$	78,612
Covers		26,868		32,745
Liners		23,929		26,362
	$	110,629	$	137,719

NET LOSS PER SHARE

3 Months Ended

Mar. 30, 2024

NET LOSS PER SHARE

NET LOSS PER SHARE

13. NET 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
	March 30, 2024		April 1, 2023
Numerator:
Net loss attributable to common stockholders	$	(7,864)	$	(14,368)
Denominator:
Weighted-average common shares outstanding
Basic		115,038,929		112,102,198
Diluted		115,038,929		112,102,198
Net loss per share attributable to common stockholders:
Basic	$	(0.07)	$	(0.13)
Diluted	$	(0.07)	$	(0.13)

As of March 30, 2024 and December 31, 2023, 115,346,803 and 114,828,896 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 loss per share because the effect was anti-dilutive:


	Fiscal Quarter Ended
	March 30, 2024	April 1, 2023
Restricted stock awards	42,886	2,576,219
Restricted stock units	24,146	500,751
Stock options	1,521,158	1,886,497
Stock appreciation rights	657,999	—
Performance stock units	75,937	—

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 30, 2024

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, 2023 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of March 30, 2024 and for the fiscal quarters ended March 30, 2024 and April 1, 2023, respectively, 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, 2023 included in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on March 13, 2024 (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 ended March 30, 2024 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending December 31, 2024 or other interim periods thereof.

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 (or net loss is lowest) 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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful analysis. For all entities, ASU 2023-07 is effective for fiscal years beginning after December 15, 2023. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating ASU 2023-07 and its potential impact on the notes to the condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), in an effort to enhance the transparency and decision usefulness of income tax disclosures. For all entities, ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The amendments should be applied prospectively with retrospective application permitted. Early adoption is also permitted. The Company is currently evaluating ASU 2023-09 and its potential impact on the notes to the condensed consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), which improves financial reporting by providing clarity on when an entity should apply the scope guidance in paragraph 718-10-15-3. For all public entities, ASU 2024-01 is effective for fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating ASU 2024-01 and its potential impact on the notes to the condensed consolidated financial statements.

NET SALES

3 Months Ended

Mar. 30, 2024

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
	March 30, 2024		April 1, 2023
In-ground Swimming Pools	$	59,832	$	78,612
Covers		26,868		32,745
Liners		23,929		26,362
	$	110,629	$	137,719

- Definition

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

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
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-Section 50
-Paragraph 12
-Subparagraph (d)
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Mar. 30, 2024
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	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, 2023 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of March 30, 2024 and for the fiscal quarters ended March 30, 2024 and April 1, 2023, respectively, 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, 2023 included in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on March 13, 2024 (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 ended March 30, 2024 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending December 31, 2024 or other interim periods thereof.
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 (or net loss is lowest) 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	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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful analysis. For all entities, ASU 2023-07 is effective for fiscal years beginning after December 15, 2023. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating ASU 2023-07 and its potential impact on the notes to the condensed consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), in an effort to enhance the transparency and decision usefulness of income tax disclosures. For all entities, ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The amendments should be applied prospectively with retrospective application permitted. Early adoption is also permitted. The Company is currently evaluating ASU 2023-09 and its potential impact on the notes to the condensed consolidated financial statements. In March 2024, the FASB issued ASU 2024-01, Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), which improves financial reporting by providing clarity on when an entity should apply the scope guidance in paragraph 718-10-15-3. For all public entities, ASU 2024-01 is effective for fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating ASU 2024-01 and its potential impact on the notes to the condensed consolidated financial statements.

STOCK-BASED COMPENSATION - Performance Stock Units (Details) - $ / shares	3 Months Ended
	Mar. 30, 2024	May 02, 2023
Weighted Average Grant Date Fair Value
Shares reserved for issuance	21,170,212	8,000,000
Performance Stock Units
Shares
Granted	427,145
Balance at ending	427,145
Weighted Average Grant Date Fair Value
Granted	$ 2.87
Balance at ending	$ 2.87
Shares reserved for issuance	427,145
Performance level percent	100.00%
Performance period	1 year
Additional shares authorized	427,145
Performance Stock Units \| Maximum
Weighted Average Grant Date Fair Value
Performance level percent	200.00%
Performance Stock Units \| Minimum
Weighted Average Grant Date Fair Value
Performance level percent	0.00%
Performance Stock Units \| Maximum performance level
Weighted Average Grant Date Fair Value
Performance level percent	200.00%

INVENTORIES, NET

3 Months Ended

Mar. 30, 2024

INVENTORIES, NET

INVENTORIES, NET

5. INVENTORIES, NET

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



	March 30, 2024		December 31, 2023
Raw materials	$	53,145	$	55,081
Finished goods		42,006		42,056
	$	95,151	$	97,137

PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	3 Months Ended
PRODUCT WARRANTIES (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Apr. 01, 2023
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at the beginning of the fiscal year	$ 3,161	$ 3,990
Adjustments to reserve	537	354
Less: Settlements made (in cash or in kind)	(679)	(761)
Balance at the end of the fiscal quarter	$ 3,019	$ 3,583

NET LOSS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023	Dec. 31, 2023
Numerator:
Net loss	$ (7,864)	$ (14,368)
Weighted-average common shares outstanding
Basic	115,038,929	112,102,198
Diluted	115,038,929	112,102,198
Net loss per share attributable to common stockholders:
Basic	$ (0.07)	$ (0.13)
Diluted	$ (0.07)	$ (0.13)
Common stock issued and outstanding for accounting purposes	115,346,803		114,828,896
Restricted stock awards
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	42,886	2,576,219
Restricted stock units
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	24,146	500,751
Employee Stock Option
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	1,521,158	1,886,497
Stock appreciation rights
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	657,999
Performance stock units
Net loss per share attributable to common stockholders:
Potentially dilutive securities outstanding	75,937

INVENTORIES, NET (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 31, 2023
INVENTORIES, NET
Raw materials	$ 53,145	$ 55,081
Finished goods	42,006	42,056
Inventory, net, Total	$ 95,151	$ 97,137

LEASES - Operating and finance lease right-of-use assets and liabilities and Supplemental information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023	Dec. 31, 2023
Lease right-of-use assets:
Operating leases	$ 28,696		$ 30,788
Finance leases	$ 3,887		$ 3,912
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets		Other Assets
Total lease right-of-use assets	$ 32,583		$ 34,700
Lease-related liabilities
Operating leases, Current	6,823		7,133
Finance leases, Current	$ 782		$ 746
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Other Liabilities, Current		Other Liabilities, Current
Operating leases, Non-current	$ 22,963		$ 24,787
Finance leases, Non-current	$ 3,247		$ 3,285
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other Liabilities, Noncurrent		Other Liabilities, Noncurrent
Total finance lease liabilities	$ 33,815		$ 35,951
Weighted-average remaining lease term (years)
Finance leases	5 years		5 years 2 months 12 days
Operating leases	5 years 7 months 6 days		5 years 8 months 12 days
Weighted-average discount rate
Finance leases	8.20%		8.20%
Operating leases	5.00%		5.10%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 1,794	$ 1,817

LEASES (Tables)

3 Months Ended

Mar. 30, 2024

LEASES

Summary of components of lease expense

The components of lease expense for the fiscal quarters ended March 30, 2024 and April 1, 2023 were as follows (in thousands):


	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Operating lease expense	$	2,163	$	2,351
Finance lease amortization of assets		212		109
Finance lease interest on lease liabilities		84		52
Short-term lease expense		56		54
Variable lease expense		158		327
Total lease expense	$	2,673	$	2,893

Schedule of supplemental lease information

Operating and finance lease right-of-use assets and lease-related liabilities as of March 30, 2024 and December 31, 2023 were as follows (in thousands):


	March 30, 2024		December 31, 2023		Classification

Lease right-of-use assets:
Operating leases	$	28,696	$	30,788	Operating lease right-of-use assets
Finance leases		3,887		3,912	Other assets
Total lease right-of-use assets	$	32,583	$	34,700

Lease-related liabilities
Current
Operating leases	$	6,823	$	7,133	Current operating lease liabilities
Finance leases		782		746	Accrued expenses and other current liabilities
Non-current
Operating leases		22,963		24,787	Non-current operating lease liabilities
Finance leases		3,247		3,285	Other long-term liabilities
Total lease liabilities	$	33,815	$	35,951

The table below presents supplemental information related to leases as of March 30, 2024 and December 31, 2023:


	March 30, 2024			December 31, 2023
Weighted-average remaining lease term (years)
Finance leases		5.0			5.2
Operating leases		5.6			5.7
Weighted-average discount rate
Finance leases		8.2	%		8.2	%
Operating leases		5.0	%		5.1	%

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):


	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,794	$	1,817

Summary of maturities of operating lease liabilities

The following table summarizes maturities of operating lease liabilities as of March 30, 2024 (in thousands):


	Operating Leases		Finance Leases		Total
Remainder of fiscal year 2024	$	6,260	$	813	$	7,073
2025		7,309		1,030		8,339
2026		5,805		934		6,739
2027		4,097		858		4,955
2028		3,111		845		3,956
Thereafter		7,637		436		8,073
Total lease payments		34,219		4,916		39,135
Less: Interest		(4,433)		(886)		(5,319)
Present value of lease liability	$	29,786	$	4,030	$	33,816

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 30, 2024

FAIR VALUE MEASUREMENTS

Schedule of financial liabilities at fair value on a recurring basis

The following table sets forth the carrying amount and fair value of its term loan (in thousands):



	March 30, 2024				December 31, 2023
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Term Loan	$	282,781	$	277,832	$	301,201	$	289,153

RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 30, 2024

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

14. RELATED PARTY TRANSACTIONS

BrightAI Services

Starting in 2020, BrightAI Corporation (“BrightAI”) has rendered services to the Company, for which the cost has been capitalized as internal-use software. A co-founder of BrightAI Services served on the Company’s Board of Directors from December 9, 2020 until his resignation on February 21, 2024. In December 2022, the Company executed an additional agreement with BrightAI for the provision of hardware to run the technology developed by BrightAI and the Company. The Company had no material transactions with BrightAI during the quarters ended March 30, 2024 and April 1, 2023. As of December 31, 2023, the Company had no accounts payable related to BrightAI.

- 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
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

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

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Section 50
-Paragraph 2
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

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

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Paragraph 1
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Paragraph 1
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
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-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

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

+ Details

LONG-TERM DEBT

3 Months Ended

Mar. 30, 2024

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):



	March 30, 2024		December 31, 2023
Term Loan	$	290,500	$	309,313
Revolving Credit Facility		—		—
Less: Unamortized discount and debt issuance costs		(7,719)		(8,112)
Total debt		282,781		301,201
Less: Current portion of long-term debt		(3,250)		(21,250)
Total long-term debt	$	279,531	$	279,951

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.

As of March 30, 2024, the Company was in compliance with all financial covenants under the Credit Agreement.

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 initially was 0.375% per annum and thereafter accrues 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 in connection with the Revolving Credit Facility, 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 March 30, 2024, 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. The Term Loan bears 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. The Term Loan is 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 for the Term Loan, 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.

During the quarter ended March 30, 2024, the Company made a payment of $18.0 million.

Outstanding borrowings as of March 30, 2024 were $282.8 million, net of unamortized discount and debt issuance costs of $7.7 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 March 30, 2024, the unamortized debt issuance costs and discount on the Term Loan were $4.3 million and $3.4 million, respectively. The effective interest rate was 9.89% at March 30, 2024, including the impact of the Company’s interest rate swaps.

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 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, are as follows (in thousands):



Year Ended	Term Loan
Remainder of fiscal year 2024	$	2,438
2025		3,250
2026		3,250
2027		3,250
2028		3,250
Thereafter		275,062
	$	290,500

Guarantees

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
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-Paragraph 1
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-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
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-Name Accounting Standards Codification
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+ Details

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%

NATURE OF THE BUSINESS (Details) $ in Millions	Apr. 27, 2021 USD ($) shares	Apr. 13, 2021
Business Acquisition [Line Items]
Stock split ratio		109,673.709
IPO
Business Acquisition [Line Items]
Proceeds from sale of common stock (in shares)	23,000,000
Net proceeds from the IPO \| $	$ 399.3
Underwriters Option
Business Acquisition [Line Items]
Proceeds from sale of common stock (in shares)	3,000,000

NATURE OF THE BUSINESS

3 Months Ended

Mar. 30, 2024

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 in-ground swimming pools and related products, including pool liners and pool covers.

Stock Split, Initial Public Offering and Reorganization

On April 13, 2021, the Company’s certificate of incorporation was amended and restated. On April 13, 2021, the Company effected a 109,673.709-for-one stock split of its issued and outstanding shares of common stock. Accordingly, all share and per share data included in these condensed consolidated financial statements and notes thereto have been adjusted retroactively to reflect the impact of the amended and restated certificate of incorporation and the stock split.

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

Prior to the closing of the Company’s IPO, the Company’s parent entity, Latham Investment Holdings, L.P., merged with and into Latham Group, Inc.

GOODWILL AND INTANGIBLE ASSETS, NET

3 Months Ended

Mar. 30, 2024

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

4. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The carrying amount of goodwill as of March 30, 2024 and as of December 31, 2023 was $131.0 million and $131.4 million, respectively. The change in the carrying value during the fiscal quarter ended March 30, 2024 was solely because of fluctuations in foreign currency exchange rates.

Intangible Assets

Intangible assets, net as of March 30, 2024 consisted of the following (in thousands):


	March 30, 2024
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	(251)	$	31,233	$	116,616
Patented technology		16,126		(4)		9,111		7,011
Technology		13,000		—		2,023		10,977
Pool designs		13,628		(124)		3,207		10,297
Franchise relationships		1,187		—		1,187		—
Dealer relationships		197,376		(1)		66,400		130,975
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		2,476		—
	$	393,493	$	(380)	$	117,237	$	275,876

The Company recognized $6.4 million of amortization expense related to intangible assets during the fiscal quarter ended March 30, 2024. The Company recognized $6.6 million of amortization expense related to intangible assets during the fiscal quarter ended April 1, 2023.

Intangible assets, net as of December 31, 2023 consisted of the following (in thousands):


	December 31, 2023
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	72	$	29,583	$	118,589
Patented technology		16,126		1		8,713		7,414
Technology		13,000		—		1,806		11,194
Pool designs		13,628		35		2,973		10,690
Franchise relationships		1,187		—		1,187		—
Dealer relationships		197,376		—		62,470		134,906
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		2,476		—
	$	393,493	$	108	$	110,808	$	282,793

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 year 2024	$	19,282
2025		25,551
2026		25,551
2027		25,551
2028		24,593
Thereafter		155,348
	$	275,876

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	(Accumulated Deficit) Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance, beginning of period at Dec. 31, 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 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, 2023	$ 11	459,684	(56,956)	(3,539)	399,200
Balance, beginning of period (in shares) at Dec. 31, 2023	114,871,782
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss			(7,864)		(7,864)
Foreign currency translation adjustments				(811)	(811)
Issuance of common stock upon release of restricted stock units (in shares)	517,907
Stock-based compensation expense		1,243			1,243
Balance, end of period at Mar. 30, 2024	$ 11	$ 460,927	$ (64,820)	$ (4,350)	$ 391,768
Balance, end of period (in shares) at Mar. 30, 2024	115,389,689

- 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

INVENTORIES, NET (Tables)

3 Months Ended

Mar. 30, 2024

INVENTORIES, NET

Schedule of inventories, net

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



	March 30, 2024		December 31, 2023
Raw materials	$	53,145	$	55,081
Finished goods		42,006		42,056
	$	95,151	$	97,137

LONG-TERM DEBT (Tables)

3 Months Ended

Mar. 30, 2024

LONG-TERM DEBT

Schedule of components of the Company's outstanding debt obligations

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



	March 30, 2024		December 31, 2023
Term Loan	$	290,500	$	309,313
Revolving Credit Facility		—		—
Less: Unamortized discount and debt issuance costs		(7,719)		(8,112)
Total debt		282,781		301,201
Less: Current portion of long-term debt		(3,250)		(21,250)
Total long-term debt	$	279,531	$	279,951

Schedule of principal payments due on the outstanding debt



Year Ended	Term Loan
Remainder of fiscal year 2024	$	2,438
2025		3,250
2026		3,250
2027		3,250
2028		3,250
Thereafter		275,062
	$	290,500

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GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 393,493		$ 393,493
Foreign Currency Translation	(380)		108
Accumulated Amortization	117,237		110,808
Net Amount	275,876		282,793
Amortization of Intangible Assets	6,412	$ 6,632
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	148,100		148,100
Foreign Currency Translation	(251)		72
Accumulated Amortization	31,233		29,583
Net Amount	116,616		118,589
Patented technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	16,126		16,126
Foreign Currency Translation	(4)		1
Accumulated Amortization	9,111		8,713
Net Amount	7,011		7,414
Technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	13,000		13,000
Accumulated Amortization	2,023		1,806
Net Amount	10,977		11,194
Pool designs
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	13,628		13,628
Foreign Currency Translation	(124)		35
Accumulated Amortization	3,207		2,973
Net Amount	10,297		10,690
Franchise relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,187		1,187
Accumulated Amortization	1,187		1,187
Dealer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	197,376		197,376
Foreign Currency Translation	(1)
Accumulated Amortization	66,400		62,470
Net Amount	130,975		134,906
Order backlog
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,600		1,600
Accumulated Amortization	1,600		1,600
Non-competition agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,476		2,476
Accumulated Amortization	$ 2,476		$ 2,476

LONG-TERM DEBT (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 31, 2023	Feb. 23, 2022
Debt Instrument [Line Items]
Gross debt	$ 290,500
Less: Unamortized discount and debt issuance costs	(7,719)	$ (8,112)
Total debt	282,781	301,201
Less: Current portion of long-term debt	(3,250)	(21,250)
Total long-term debt	279,531	279,951
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	75,000		$ 75,000
Term Loan
Debt Instrument [Line Items]
Gross debt	$ 290,500	$ 309,313
Maximum borrowing capacity			$ 325,000

- Definition

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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Consolidated Statements of Comprehensive Loss
Net loss	$ (7,864)	$ (14,368)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(811)	(144)
Total other comprehensive loss, net of tax	(811)	(144)
Comprehensive loss	$ (8,675)	$ (14,512)

- Definition

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

+ References

+ Details

STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 30, 2024

STOCK-BASED COMPENSATION

Summary of stock-based compensation expense

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



	Fiscal Quarter Ended
	March 30, 2024		April 1, 2023
Cost of sales	$	—	$	426
Selling, general, and administrative		1,243		6,343
	$	1,243	$	6,769

Schedule of restricted stock awards

The following table represents the Company’s restricted stock awards activity during the fiscal quarter ended March 30, 2024:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2024	42,886	$	19.00
Granted	—		—
Vested	—		—
Forfeited	—		—
Outstanding at March 30, 2024	42,886	$	19.00

Schedule of restricted stock units

The following table represents the Company’s restricted stock units activity during the fiscal quarter ended March 30, 2024:


		Weighted-
		Average Grant-
	Shares	Date Fair Value
Outstanding at January 1, 2024	2,235,479	$	3.60
Granted	2,282,336		2.87
Vested	(411,301)		3.94
Forfeited	(85,392)		2.93
Outstanding at March 30, 2024	4,021,122	$	3.17

Schedule of stock option activity

The following table represents the Company’s stock option activity during the fiscal quarter ended March 30, 2024:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2024	1,554,294	$	15.43
Granted	—		—
Exercised	—		—
Forfeited	(42,004)		16.92
Expired	(57,616)		17.78
Outstanding at March 30, 2024	1,454,674	$	15.30	7.58	$	—
Vested and expected to vest at March 30, 2024	1,454,674	$	15.30	7.58	$	—
Options exercisable at March 30, 2024	678,477	$	16.10	7.38	$	—

Schedule of stock appreciation rights activity

The following table represents the Company’s stock appreciation rights activity during the fiscal quarter ended March 30, 2024:


			Weighted-	Weighted-
			Average	Average
		Exercise Price		Remaining	Aggregate
	Shares	per Share		Contract Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2024	755,802	$	3.16
Granted	—		—
Exercised	—		—
Forfeited	(49,342)		3.24
Outstanding at March 30, 2024	706,460	$	3.15	9.13	$	569,296
Vested and expected to vest at March 30, 2024	706,460	$	3.15	9.13	$	569,296
Stock appreciation rights exercisable at March 30, 2024	161,893	$	3.24	9.09	$	116,563

Schedule of PSU activity

The following table represents the Company’s PSU activity during the fiscal quarter ended March 30, 2024:


			Weighted-
			Average
			Grant Date
	Shares		Fair Value

Outstanding at January 1, 2024	—	$	—
Granted	427,145		2.87
Adjustment for expected performance achievement ⁽¹⁾	—		—
Forfeited	—		—
Outstanding at March 30, 2024 ⁽²⁾	427,145	$	2.87

(1)

Represents the adjustment to previously granted PSUs based on performance expectations as of the end of each respective fiscal year.

(2)

An additional 427,145 PSUs could potentially be included if the maximum performance level of 200% is earned for all PSUs outstanding as of March 30, 2024.

INCOME TAXES

3 Months Ended

Mar. 30, 2024

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

The effective income tax rate for the fiscal quarter ended March 30, 2024 was (7.2)% compared to 16.9% for the fiscal quarter ended April 1, 2023. The differences between the U.S. federal statutory income tax rate and our effective income tax rates for the fiscal quarter ended March 30, 2024 and the fiscal quarter ended April 1, 2023 were primarily attributable to the discrete impact of stock compensation expense for which there is no associated tax benefit.

- Definition

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

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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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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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 30, 2024
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 - Principal payments due (Details) $ in Thousands	Mar. 30, 2024 USD ($)
Principal payments due
Remainder of fiscal year 2024	$ 2,438
2025	3,250
2026	3,250
2027	3,250
2028	3,250
Thereafter	275,062
Total payments due	$ 290,500

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 30, 2024

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 fiscal quarters ended March 30, 2024 and April 1, 2023.

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):



	March 30, 2024				December 31, 2023
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Term Loan	$	282,781	$	277,832	$	301,201	$	289,153

Interest rate swap

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 March 30, 2024 and December 31, 2023, the fair value of the Company’s interest rate swap was an asset of $0.6 million and a liability of $1.2 million, respectively, which were recorded within other assets and other long-term liabilities on the condensed consolidated balance sheets, respectively.

- Definition

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

+ References + Details

GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

3 Months Ended

Mar. 30, 2024

GOODWILL AND INTANGIBLE ASSETS, NET

Schedule of Intangible assets

Intangible assets, net as of March 30, 2024 consisted of the following (in thousands):


	March 30, 2024
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	(251)	$	31,233	$	116,616
Patented technology		16,126		(4)		9,111		7,011
Technology		13,000		—		2,023		10,977
Pool designs		13,628		(124)		3,207		10,297
Franchise relationships		1,187		—		1,187		—
Dealer relationships		197,376		(1)		66,400		130,975
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		2,476		—
	$	393,493	$	(380)	$	117,237	$	275,876

Intangible assets, net as of December 31, 2023 consisted of the following (in thousands):


	December 31, 2023
	Gross		Foreign
	Carrying		Currency		Accumulated		Net
	Amount		Translation		Amortization		Amount
Trade names and trademarks	$	148,100	$	72	$	29,583	$	118,589
Patented technology		16,126		1		8,713		7,414
Technology		13,000		—		1,806		11,194
Pool designs		13,628		35		2,973		10,690
Franchise relationships		1,187		—		1,187		—
Dealer relationships		197,376		—		62,470		134,906
Order backlog		1,600		—		1,600		—
Non-competition agreements		2,476		—		2,476		—
	$	393,493	$	108	$	110,808	$	282,793

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 year 2024	$	19,282
2025		25,551
2026		25,551
2027		25,551
2028		24,593
Thereafter		155,348
	$	275,876

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 30, 2024	May 03, 2024
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 30, 2024
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		115,572,774
Entity Central Index Key	0001833197
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Apr. 01, 2023
INCOME TAXES
Effective income tax rate	(7.20%)	16.90%
Tax benefits	$ 0	$ 0

STOCKHOLDERS' EQUITY (Details) - Repurchase Program - USD ($) $ in Millions	3 Months Ended
	Mar. 30, 2024	May 10, 2022
Amount authorized		$ 100.0
Amount remaining for repurchases	$ 77.0
Common Stock
Number of shares repurchased during the period	0

STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - Restricted stock units	3 Months Ended
	Mar. 30, 2024 $ / shares shares
Shares
Balance at beginning \| shares	2,235,479
Granted \| shares	2,282,336
Vested \| shares	(411,301)
Forfeited \| shares	(85,392)
Balance at ending \| shares	4,021,122
Weighted Average Grant Date Fair Value
Balance at beginning \| $ / shares	$ 3.60
Granted \| $ / shares	2.87
Vested \| $ / shares	3.94
Forfeited \| $ / shares	2.93
Balance at ending \| $ / shares	$ 3.17

NET SALES (Details) - USD ($) $ in Thousands	3 Months Ended
NET SALES (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Apr. 01, 2023
Disaggregation of Revenue [Line Items]
Net sales	$ 110,629	$ 137,719
In-ground Swimming Pools
Disaggregation of Revenue [Line Items]
Net sales	59,832	78,612
Covers
Disaggregation of Revenue [Line Items]
Net sales	26,868	32,745
Liners
Disaggregation of Revenue [Line Items]
Net sales	$ 23,929	$ 26,362

- 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
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-Section S99
-Paragraph 1
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

LEASES - Lease expense (Details) - USD ($) $ in Thousands	3 Months Ended
LEASES - Lease expense (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Apr. 01, 2023
Components of lease expense:
Operating lease expense	$ 2,163	$ 2,351
Finance lease amortization of assets	212	109
Finance lease interest on lease liabilities	84	52
Short-term lease expense	56	54
Variable lease expense	158	327
Total lease expense	$ 2,673	$ 2,893

GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 31, 2023
GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill	$ 130,987	$ 131,363

- 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

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended
	Apr. 12, 2021	Mar. 30, 2024	Apr. 01, 2023	May 02, 2023
STOCK-BASED COMPENSATION
Maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director	$ 750,000
Shares reserved for issuance		21,170,212		8,000,000
Share based compensation expense		$ 1,243	$ 6,769
Total unrecognized stock-based compensation expense		$ 13,300
Total unrecognized stock-based compensation expense expected to be recognized over a weighted-average period		2 years 2 months 12 days
Cost of sales
STOCK-BASED COMPENSATION
Share based compensation expense			426
Selling, general and administrative
STOCK-BASED COMPENSATION
Share based compensation expense		$ 1,243	$ 6,343

- 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

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+ Details

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 31, 2023
Current assets:
Cash	$ 43,811	$ 102,763
Trade receivables, net	73,944	30,407
Inventories, net	95,151	97,137
Income tax receivable	1,411	983
Prepaid expenses and other current assets	6,996	7,327
Total current assets	221,313	238,617
Property and equipment, net	112,795	113,014
Equity method investment	26,341	25,940
Deferred tax assets	7,310	7,485
Operating lease right-of-use assets	28,696	30,788
Goodwill	130,987	131,363
Intangible assets, net	275,876	282,793
Other assets	5,294	5,003
Total assets	808,612	835,003
Current liabilities:
Current maturities of long-term debt	3,250	21,250
Current operating lease liabilities	6,823	7,133
Accrued expenses and other current liabilities	35,781	40,691
Total current liabilities	70,876	86,206
Long-term debt, net of discount, debt issuance costs, and current portion	279,531	279,951
Deferred income tax liabilities, net	40,088	40,088
Non-current operating lease liabilities	22,963	24,787
Other long-term liabilities	3,386	4,771
Total liabilities	416,844	435,803
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value; 100,000,000 shares authorized as of both March 30, 2024 and December 31, 2023; no shares issued and outstanding as of both March 30, 2024 and December 31, 2023
Common stock, $0.0001 par value; 900,000,000 shares authorized as of March 30, 2024 and December 31, 2023; 115,389,689 and 114,871,782 shares issued and outstanding, as of March 30, 2024 and December 31, 2023, respectively	11	11
Additional paid-in capital	460,927	459,684
Accumulated deficit	(64,820)	(56,956)
Accumulated other comprehensive loss	(4,350)	(3,539)
Total stockholders' equity	391,768	399,200
Total liabilities and stockholders' equity	808,612	835,003
Related Party
Current liabilities:
Accounts payable		8
Nonrelated Party
Current liabilities:
Accounts payable	$ 25,022	$ 17,124