Latham Group (SWIM) risk factors, FY2024 10-K

Risks Related to Our Operations and Industry

1. 01Net sales of our swimming pools and related products are adversely affected by unfavorable economic conditions and the related impact on consumer spending, which are driven by factors outside of our control
2. 02Inflation could adversely impact our financial condition and results of operations
3. 03We depend on a global network of third-party suppliers to provide components and raw materials essential to the manufacturing of our pools and price increases or deviations in the quantity or quality of the raw materials used to manufacture our products could adversely affect our net sales and operating results
4. 04Changes in trade policies, including the imposition of or increase in tariffs, could negatively impact our business, financial condition, and results of operations
5. 05Declining home ownership rates could lead to reduced demand for our products and adversely affect our business, financial condition and results of operations
6. 06We face competition both from within our industry and from other outdoor living products and if we are not able to compete effectively, our prospects for future success will be jeopardized
7. 07Natural disasters, including resulting from climate change, geopolitical events, war, terrorism, public health emergencies, or other catastrophic events could adversely affect our business. financial condition and results of operations
8. 08Adverse weather conditions could negatively impact our sales, as well as result in significant variability of sales in reporting periods
9. 09Industry consolidation, including among our network of dealers and distributors could lead to downward pressure on the price of our products or the loss of our largest customers, which could adversely affect our business, financial condition, and results of operations
10. 10An interruption of our production capability at one or more of our manufacturing facilities from accident, calamity or other causes, or events affecting the global economy, could adversely affect our business and results of operations
11. 11the installation of autocovers for some homeowners, and we may be subject to direct customer claims based on dissatisfaction with the installation of our autocovers
12. 12Our ability to keep pace with rapidly evolving technological developments and standards, such as generative artificial intelligence, could impact our future growth and increase our costs and liability risk
13. 13Delays in, or systems disruptions issues caused by, the implementation of our new enterprise resource planning system could adversely affect our operations and results of operations
14. 14We depend on our ability to attract, develop, and retain highly qualified personnel
15. 15Our ability to collect accounts receivables from our customers may adversely impact our cash flows and our ability to reduce our debt
16. 16The nature of our business subjects us to compliance with employment, environmental, health, transportation, safety, anti-corruption, trade, and other governmental regulations
17. 17matters in amounts that may be material to us, we may be required to make such expenditures in the future. These laws and regulations have changed substantially and rapidly and we anticipate that there will be continuing changes, which may require us to incur costs to maintain our business
18. 18We depend on third parties for transportation services to some extent, and the lack of availability of and/or increases in the cost of transportation could have a material adverse effect on our business and results of operations
19. 19Our business operations could suffer if we fail to protect adequately our intellectual property rights, and we may experience claims by third parties that we are violating their intellectual property rights
20. 20Moreover, since our patents, trademarks and service marks are primarily registered in the United States and Canada, we may not be successful in asserting patent or trademark protection in other countries
21. 21We conduct business internationally, which exposes us to additional risks
22. 22We process, store, and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and violation of these privacy obligations could result in a claim for damages, regulatory action, loss of business, or unfavorable publicity
23. 23Any of the foregoing could materially adversely affect our brand, reputation, business, results of operations, and financial condition
24. 24Our insurance coverage may be inadequate to protect against the potential hazards inherent to our business
25. 25If our goodwill, other intangible assets or fixed assets become impaired, we may be required to record a significant charge to earnings

Risks Related to Our Indebtedness

1. 26Our substantial indebtedness could adversely affect our financial condition
2. 27We may be unable to generate sufficient cash flow to satisfy our significant debt service obligations, which would adversely affect our financial condition and results of operations
3. 28Our Credit Agreement has restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects
4. 29Our indebtedness is variable rate, subjecting us to interest rate risk, which could cause our indebtedness service obligations to increase significantly

Risks Related to Ownership of Our Common Stock

1. 30Our stock price has been volatile, and you may not be able to resell our common stock at or above the price you paid
2. 31Our Principal Stockholders continue to have significant influence over us, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote
3. 32Our organizational documents and Delaware law may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium on their shares
4. 33Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities
5. 34We do not anticipate paying quarterly cash dividends, and accordingly, stockholders must rely on stock appreciation for any return on their investment