Solo Brands, Inc.
For the period ended Mar 31, 2025. Filed May 12, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 12, 2025
SBDS$4.050.0%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001870600-24-000114
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-12.
0001870600-25-000059
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 86 current paragraphs.
16 unchanged; 23 reworded; 46 added; 46 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (46)
Current report
As previously reported, effective April 22, 2025, our Class A common stock has been suspended from trading on the New York Stock Exchange (“NYSE”). Our Class A common stock is currently being quoted on the OTC Pink Market under the symbol “DTCB”. Pursuant to our right to a review of the staff of NYSE Regulation’s determination to delist our Class A common stock by a Committee of the Board of Directors of the NYSE, on May 6, 2025, we sent a notice to the NYSE appealing the determination of the staff of NYSE Regulation to commence proceedings to delist our Class A common stock from the NYSE. During the appeal period, our Class A common stock remains listed on the NYSE, though trading in the Class A common stock is suspended.
Current report
Economic Factors Affecting our Performance
Current report
We sell our products in the U.S. as well as various foreign countries, primarily Europe, Canada and Australia. We also source and procure inventory, primarily out of China and Vietnam, with some products sourced through Mexico. As such, we are exposed to and impacted by global macroeconomic factors. In the first and second quarters of 2025, tariffs on goods manufactured in these countries increased significantly. However, the Company did not have any significant purchases in the first quarter of 2025, and as a result, the increased tariffs did not impact inventory on the consolidated balance sheets or cost of goods sold within the consolidated statements of operations and comprehensive income (loss) in such period. We expect inventory and costs of goods sold could increase significantly in future periods as a result of these tariffs, to the extent they remain or become effective.
Current report
Tariffs on certain foreign origin goods continue to put pressure on input costs, for which we expect to reduce through contracting with suppliers in lower tariff jurisdictions, while negotiating lower product costs with our current suppliers. Our product lines involve production with steel manufactured outside the U.S., the target of recent tariff actions, impacting virtually all of our Solo Stove brand products. Further, certain of our Oru and TerraFlame brands’ products are produced in, with these products and certain Chubbies brands’ products also being distributed from, Mexico and are subject to any applicable tariffs placed on goods imported from Mexico. These tariffs and retaliatory actions, if sustained, are expected to have a significant adverse effect on our results of operations and margins and on the sales of our products outside the U.S. Any strategies we implement to mitigate the impact of such tariffs or other trade actions may not be successful. In addition, there can be no assurances that we will be able to pass any increased costs from tariffs on to our customers, that demand or profitability will not be materially adversely impacted, or that we will be successful in implementing efforts to mitigate the effect of tariffs on our business. Sourcing materials from domestic suppliers and manufacturing vendors or transitioning production to the U.S. would be a costly and lengthy process with uncertain results. For additional information, see Part I, Item 1A. "Risk Factors" in our 2024 Form 10-K,“Tariffs or other restrictions placed on foreign imports or any related counter-measures are taken by other countries harm our business and results of operations” and“Our products are manufactured by third parties outside of the United States, and our business may be harmed by legal, regulatory, economic, societal, and political risks associated with those markets.”
Current report
Current macroeconomic factors, including overall economic and political uncertainty, financial and capital markets instability, new or increasing tariffs, high interest rates and high inflation, remain very dynamic and highly uncertain. The effects of the macroeconomic environment could further reduce our net sales and negatively impact our gross margin, net income (loss) and cash flows.
Current report
In the first quarter of 2025, management, along with our Board of Directors, engaged strategic consulting firms to assist with improving the financial results of our operations. This operational improvement is being conducted, primarily, to support the potential refinancing or restructuring of our outstanding debt and included the engagement of restructuring, legal and investment banking consultants to perform financial planning, forecasting and project management activities. Certain of these strategic consulting firms have assisted and are expected to continue to assist us in developing an operational plan for the near and long-term, identify cost saving initiatives to reduce operational expenses and aid in the development of enhanced internal reporting to deliver timely insight to management. Those activities which were determined to be specifically related to the potential refinancing or restructuring of our outstanding debt have been separately capitalized as debt issuance costs. See our policy as it relates to debt issuance costs in Note 1, Significant Accounting Policies and additional information on the debt issuance costs capitalized during the first quarter of 2025 in Note 9, Debt, Net.
Current report
The cost saving initiatives identified and executed upon in the first quarter of 2025 were designed to reduce operational expenditures over the long-term, and as a result, in the short-term, the expected benefits from these initiatives have been limited. The key cost saving initiatives and operational planning activities undertaken in the first quarter of 2025 were as follows:
Current report
•reduction in force (“RIF”) of management and non-management personnel in an effort to align headcount with the operational needs of the business, resulting in a moderate decline in related expenses in the short term, with the significance of the savings anticipated to be recognized in future periods;
Current report
•closure of two distribution centers to reduce fixed costs in the short term and in future periods, as well as unnecessary capacity; and
Current report
•reduction in marketing spend within the Solo Stove segment to better align product pricing with our retail partners.
Current report
Consolidated Results for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
Current report
Consolidated Net Sales
Current report
The decrease in net sales for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily driven by a decline in DTC channel net sales within the Solo Stove segment as a result of the reduction in promotional discounting and marketing spend in the current quarter and lack of new product launches, offset in part by increases in DTC channel net sales within the Chubbies segment. Retail channel net sales improved over the prior year period primarily as a result of increased retail demand over the prior year period within the Chubbies segment, offset in part by the decline in retail channel net sales within Solo Stove segment driven by the lack of new product launches and decline in strategic retail partner replenishments activity in the current quarter when compared to the prior year period.
Current report
Consolidated Gross Profit and Gross Margin
Current report
(1)Change in gross margin period over period in basis points
Current report
Cost of goods sold decreased for the three months ended March 31, 2025 compared to the prior year period, in connection with the decline in net sales. Gross profit for the three months ended March 31, 2025 compared to the prior year period declined 400 basis points, primarily due to the channel mix shifting to more retail this year compared to last year, which generates lower gross margin.
Current report
Consolidated Operating Expenses
Current report
Operating expenses consist of (1) selling, general and administrative (“SG&A”) expenses, (2) restructuring, contract termination and impairment charges, (3) depreciation and amortization expenses and (4) other operating expenses, as defined below.
Current report
•Restructuring, Contract Termination and Impairment Charges -Restructuring, contract termination and impairment charges consist of severance and employee-related benefits, contract termination fees and asset impairment charges.
Current report
•Depreciation and Amortization Expenses -Depreciation and amortization expenses consist of depreciation of property and equipment and amortization of definite-lived intangible assets.
Current report
The decrease in operating expenses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily driven by a decrease in SG&A, as a result of the decreases in advertising and marketing expenses and a decrease in distribution costs resulting from the decline in DTC net sales.
Current report
This decrease was partially offset by increases in restructuring, contract termination and impairment charges, primarily as a result of expenses related to the execution of cost savings initiatives, such as severance resulting from a reduction in force and the costs incurred to exit two distribution centers and engagement of strategic consulting firms for operational performance improvements, as described in detail in Note 2, Restructuring, Contract Termination and Impairment Charges.
Current report
Consolidated Interest Expense
Current report
Consolidated Income Taxes
Current report
Income tax expense increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by valuation allowances recorded on the Solo Brands, Inc. deferred tax assets.
Current report
Solo Stove Segment Results for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
Current report
Solo Stove Net Sales
Current report
The decrease in net sales for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was driven by declines in both DTC and retail channel net sales, each of which was impacted by a lack of new product launches. DTC channel net sales were further impacted by a reduction in promotional discounting to better align to our retail partners and marketing spend in the current quarter, which, while resulting in a decline in net sales, resulted in an overall reduction to operating expenses. Retail channel net sales within the Solo Stove segment were additionally impacted by a decline in replenishment orders, as many of our strategic retail partners held sufficient inventory from the fourth quarter 2024 selling season, with the prior year benefiting from replenishment orders from these vendors due to sell through of held inventory balances in the fourth quarter 2023 selling season.
Current report
Solo Stove Cost of Goods Sold
Current report
The decrease in cost of goods sold for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily in line with the decrease in net sales. The lessened decline in cost of goods sold when compared to the decline in net sales was driven by channel mix, with retail channel net sales, which typically result in higher cost of goods sold, comprising a larger percentage of net sales for the current year period when compared to the prior year period.
Current report
Solo Stove Segment Operating Expenses
Current report
Segment operating expenses consist of (1) marketing expenses, (2) employee related expenses, such as wages and benefits, and (3) other segment operating expenses, which primarily consist of seller fees, shipping and fulfillment related expenses.
Current report
Segment operating expenses decreased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, with a decrease in brand level marketing expenses, as well as decreases in other segment operating expenses as a result of a decrease in seller fees and shipping expenses, each stemming from the decline in DTC channel net sales.
Current report
Chubbies Segment Results for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
Current report
Chubbies Net Sales
Current report
The increase in net sales for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was driven by increases within the retail net sales channel as a result of continued growth within our retail strategic partnerships, coupled with the ongoing ability to identify and meet consumer demands within the DTC net sales channel, with both website and owned retail store performance exceeding the prior period.
Current report
Chubbies Cost of Goods Sold
Current report
The increase in cost of goods sold for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily the result of the increase in net sales. The greater increase in cost of goods sold when compared to the increase in net sales was driven by channel mix, as a result of the growth in retail channel net sales, which typically result in higher cost of goods sold.
Current report
Chubbies Segment Operating Expenses
Current report
The increase in segment operating expenses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily driven by increases in other segment operating expenses as a result of an increase in seller fees, shipping and fulfillment related expenses as a result of the increase in DTC channel net sales.
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Removed paragraphs (46)
Previous report
For the three months ended September 30, 2024, we experienced a decrease in our net sales from $110.3 million for the three months ended September 30, 2023 to $94.1 million for the current period. The decline in net sales was primarily driven by a continued decline within our DTC channel net sales, resulting from softer demand trends as a result of consumers being more selective with their spending. As a result, we’ve experienced weaker traffic in our DTC channel this quarter compared to the same quarter in the prior year. The retail channel net sales 1 experienced its first quarter in 2024 of decline when compared to the comparable period in the prior year, primarily as a result of a non-recurring transaction with a marketing barter partner in the third quarter of 2023.
Previous report
For the nine months ended September 30, 2024, we experienced a decrease in our net sales from $329.5 million for the nine months ended September 30, 2023 to $311.0 million for the current period. The decline in net sales was primarily driven by a decline in DTC channel net sales in the year to date period. This decline is primarily related to softness in demand as a result of consumers being more selective with their spending. as identified in the second quarter of 2024. The retail channel net sales similarly experienced a decline in the current year period when compared to the same period in the prior year, driven entirely by a non-recurring transaction with the marketing barter partner in the third quarter of 2023.
Previous report
In 2024, the Company underwent significant changes to its management team, bringing about a change in strategic vision and evaluation of the Company’s current initiatives and brands. The evaluation included analysis of the brand level financials, strengths of each of the brands, product design and customer service metrics, marketing campaign effectiveness and cost, efficiencies of brands on a standalone or aggregated basis, amongst other things. This evaluation, undertaken over the course of the nine months ended September 30, 2024, led the Company to undertake the following activities within the third quarter of 2024:
Previous report
•termination of underperforming marketing agreements with marketing barter partners that no longer aligned with the Company’s current marketing strategy;
Previous report
•charges related to the IcyBreeze reporting unit stemming from underperformance and management’s determination to revise product designs; and
Previous report
•reorganizing the Oru and ISLE reporting units to eliminate costs and capitalize on potential synergies, through restructuring under a revised management structure.
Previous report
Management undertook these activities with the intent of enhancing the foundation of the Company as part of the strategic initiative to return the Company to growth. The restructuring items noted above are intended to provide future benefit to this return to growth, in the following manner:
Previous report
•Through the termination of the underperforming marketing agreements, management is able to repurpose the funds previously allocated to these marketing contracts, towards increased investment in direct response marketing. Marketing spend under a certain marketing agreement was $16.9 million in full year 2023 and $3.4 million in the nine months ended September 30, 2024. The redirection of these marketing funds to direct response marketing is anticipated to generate more favorable returns on the marketing dollars spent, as direct response marketing is better aligned to how our target market consumes their media.
Previous report
•The reorganization of the Oru and ISLE reporting units under a single brand president and leadership team was determined to be strategically beneficial, as both brands operate within the same outdoor watersports space. Through the reorganization under combined leadership, the Company expects to benefit from improved margins through the consolidation of overhead and exploration of manufacturing and logistics synergies. In addition, the Company expects to be able to better leverage the combined scale of the Oru and ISLE reporting units as we seek to scale and achieve growth.
Previous report
•IcyBreeze was acquired in 2023 and we anticipated it to be a driver of the Company’s key metrics in the period of acquisition and beyond. Through the course of ownership, however, we determined that IcyBreeze underperformed projections. Management made the decision to
Previous report
1 Retail channel net sales were previously referred to as wholesale channel net sales. Retail channel net sales have been reflected in this Quarterly Report and will be reflected as such in subsequent filings of the Company with the SEC.
Previous report
wind-down the operations of IcyBreeze in the third quarter of 2024, with run-off operations limited to selling through remaining legacy products and IcyBreeze personnel being repurposed within the Company. While the operations of IcyBreeze are being wound down, the Company anticipates introducing revised product designs in a future period. This wind-down of operations, while resulting in a direct reduction to revenue attributable to the Company, is also anticipated to reduce the expenses of the brand that continued to exceed the revenues, which we expect to benefit net income (loss) in future periods.
Previous report
Results of Operations
Previous report
Three and Nine Months Ended September 30, 2024 Compared to the Three and Nine Months Ended September 30, 2023
Previous report
Net Sales
Previous report
The decrease in net sales for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was driven by a decline in DTC channel net sales, coupled with a decline in retail channel net sales of lesser magnitude. DTC channel net sales declined, primarily resulting from softer demand trends as a result of consumers being more selective with their spending, while the decline in retail channel net sales is attributable to a non-recurring transaction in the prior year period with a marketing barter partner. The non-recurring transaction with a marketing barter partner in the third quarter of 2023 contributed $7.2 million of retail channel net sales in the 2023 periods.
Previous report
Cost of Goods Sold and Gross Profit
Previous report
In the third quarter of 2024, the Company wrote down $18.7 million of inventory and related purchase orders of the IcyBreeze reporting unit as part of the restructuring, contract termination and impairment charge activity. This write down was reflected in cost of goods sold, resulting in both the three months and nine months ended September 30, 2024 exceeding the respective prior year periods amounts and negatively impacting the gross margins of each respective period in the current year period.
Previous report
When excluding the write down of inventory and purchase orders described above, cost of goods sold decreased for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, in line with the decrease in net sales in the current year period. Gross profit decreased in the current year period when compared to the same period in the prior year and was negatively impacted by the decline in revenue.
Previous report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Previous report
When excluding the write down of inventory and purchase orders described above, cost of goods sold decreased for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, in line with the decline in net sales. Gross profit for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 also declined in line with the decline recognized within net sales.
Previous report
Selling, General & Administrative Expenses
Previous report
The increase in SG&A for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was driven by a $6.8 million increase in the fair market value changes in contingent consideration related to certain of our 2023 acquisitions and $1.1 million of variable cost increases, partially offset by $3.8 million of fixed cost decreases.
Previous report
The variable cost increases for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 were primarily the result of a $1.9 million increase in write-offs of prepaid marketing related to marketing campaigns that management determined did not align with the current marketing strategy.
Previous report
The fixed cost decreases for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 were primarily the result of a decrease in employee-related costs primarily driven by a significant reduction in equity based compensation expense and bonus expense, offset in part by costs associated with the separation of certain management personnel and addition of senior leadership positions. Partially offsetting the net decrease in employee-related costs were increases in professional services and information technology expenditures, each of which were incurred to support future growth plans.
Previous report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Previous report
The increase in SG&A for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was driven by a $7.0 million increase in fair market value changes in contingent consideration related to certain of our 2023 acquisitions and $11.0 million of variable cost increases, partially offset by $2.7 million of fixed cost decreases.
Previous report
The variable cost increases for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 were primarily the result of a $6.3 million increase in marketing spend, of which $3.4 million was spent in 2024 under a marketing contract terminated in the third quarter of 2024, and a $1.9 million increase in write-offs of prepaid marketing related to marketing campaigns that management determined did not align with the current marketing strategy.
Previous report
The fixed cost decreases for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 were primarily the result of a $7.5 million decrease in employee-related costs primarily driven by a significant reduction in equity based compensation expense and bonus expense, offset in part by separation of certain management personnel and addition of senior leadership positions. Partially offsetting this decrease were increases of $1.7 million in professional services costs, $1.8 million in software expenses and $1.2 million in rent expense.
Previous report
Restructuring, contract termination and impairment charges consist of the activities as described above.
Previous report
The increase in restructuring charges for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was the result of management undertaking the strategic activities noted above, resulting in $0.6 million of restructuring charges, $14.8 million of charges related to contract terminations and $43.2 million of impairment charges at the IcyBreeze reporting unit, as well as a $25.0 million goodwill impairment charge at the Solo Stove reporting unit driven by the sustained decline in share price, compared to a $4.3 million one-time contact termination fee, with offsetting benefits that were fully realized by the end of 2023, in the prior year period.
Previous report
Other Operating Expenses
Previous report
Other operating expenses increased for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, primarily as a result of increases to management transition costs, including additional cost associated with onboarding senior leadership positions and strategic consulting engagements. These strategic consulting arrangements consisted primarily of engagements for brand strategy, product roadmap development, information technology, accounting and finance transformation and brand marketing strategy.
Previous report
Interest Expense, Net
Previous report
Income Taxes
Previous report
Income tax benefit increased for the three and nine months ended September 30, 2024 when compared to the three and nine months ended September 30, 2023, primarily driven by the book losses due to the restructuring, contract termination and impairment charges (see Note 2, Restructuring, Contract Termination and Impairment Charges for more information), offset in part by the increase in the Company’s valuation allowance, as compared to the prior year period which included a net release of the Company’s valuation allowance.
Previous report
As of September 30, 2024, there are no material changes to our primary short-term and long-term requirements for liquidity and capital as disclosed in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2023 Form 10-K.
Previous report
Although we cannot predict with certainty all of our particular short-term cash uses or the timing or amount of cash requirements, we believe that our available cash on hand, along with amounts available under our Revolving Credit Facility will be sufficient to satisfy our liquidity requirements for at least the next twelve months. However, growth opportunities, such as continued expansion into international markets, may significantly increase our expenses (including our capital expenditures) and cash requirements. Furthermore, we will continue to seek possible brand and mission consistent acquisition opportunities that would require additional capital. In addition, the amount of our future product sales is difficult to predict, and actual sales may not be in line with our forecasts. As a result, we may be required to seek additional funds in the future from issuances of equity or debt, obtaining additional credit facilities, or loans from other sources.
Previous report
•a $37.0 million decrease in cash provided by changes in inventory due to increased inventory replenishment for the nine months ended September 30, 2024, as a result of a lower ending inventory balance upon exiting the fourth quarter of the year ended 2023 when compared to the prior year period, whereas the prior year period benefited from a higher ending inventory balance upon exiting the fourth quarter of the year ended 2022;
Previous report
•a $11.6 million increase in cash used in changes in accrued expenses and other current liabilities primarily due to reductions in accrued bonus and larger cash outflows in the nine months ended September 30, 2024 when compared to the same period in the prior year for accrued inventory purchases; partially offset by
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Reworded paragraphs (23)
Previous wording
In the following discussion, references to “we,” “us,” “our,” the “Company,” and similar references mean Solo Brands, Inc. and its consolidated subsidiaries, unless the context otherwise requires. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report, as well as our audited consolidated financial statements included in our 2023 Form 10-K. Some of the numbers included herein have been rounded for the convenience of the presentation. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Item I, Part 1A, “Risk Factors” of our 2023 Form-K and elsewhere in this Quarterly Report. See further our “Special Note Regarding Forward-Looking Statements” in this Quarterly Report.
Current wording
In the following discussion, references to “we,” “us,” “our,” the “Company,” and similar references mean Solo Brands, Inc. and its consolidated subsidiaries, unless the context otherwise requires. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report, as well as our audited consolidated financial statements included in our 2024 Form 10-K. Some of the numbers included herein have been rounded for the convenience of the presentation. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Item I, Part 1A, “Risk Factors” of our 2024 Form 10-K and elsewhere in this Quarterly Report. See further our “Forward-Looking Statements” in this Quarterly Report.
Previous wording
We own and operate premium brands with ingenious products that we market and deliver through our direct-to-consumer (“DTC”) platform and retail partnerships. We aim to help our customers enjoy good moments that create lasting memories. We consistently deliver innovative, high-quality products that are loved by our customers and revolutionize the outdoor experience, build community and help everyday people reconnect with what matters most.
Current wording
We own and operate premium brands with ingenious products that we market and deliver through our direct-to-consumer (“DTC”) platform and retail partnerships. We aim to help our customers enjoy good moments that create lasting memories. We consistently deliver innovative, high-quality products that are loved by our customers and revolutionize the outdoor experience, build community and help everyday people reconnect with what matters most. We operate as two reportable segments: Solo Stove, which includes the Solo Stove and TerraFlame brands and primarily offers indoor and outdoor firepits, stoves, and accessories, and Chubbies, which offers premium casual apparel and activewear. The remaining operating segments are included within the Corporate and All Other category. The CODM makes operating decisions, assesses financial performance, and allocates resources based upon discrete financial information at the reportable segment level.
Previous wording
Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023
Current wording
For the three months ended March 31, 2025, we experienced a decrease in our net sales from $85.3 million for the three months ended March 31, 2024 to $77.3 million. The decline in net sales was primarily driven by the Solo Stove segment, partially the result of a lack of significant new product launches. The DTC net sales channel was additionally impacted by a reduction in marketing spend within the Solo Stove segment in the first quarter of 2025, with certain offsetting benefits realized through a reduction to operating expenses, as well as an increase in DTC channel net sales within the Chubbies segment. Retail channel net sales improved over the prior year period primarily as a result of increased retail demand over the prior year period within the Chubbies segment, offset in part by the decline in retail channel net sales within Solo Stove segment also driven by the lack of new product launches noted above, resulting in a further decline in strategic retail partner replenishments activity in the current year quarter when compared to the prior year period.
Previous wording
While these activities are intended to provide future benefit to the Company, the majority of these activities above required some form of current or future period cash outlay. In order to fund these cash outlays in the current and future periods, the Company leveraged and will continue to leverage income from operations and draws on the Revolving Credit Facility (as defined below). The following table outlines the cash outlays and the period in which they occurred or are anticipated to occur.
Current wording
We anticipate that the strategic consulting firms’ activities will continue to occur through, and potentially beyond, any potential refinancing or restructuring date in 2025. Additionally, we are evaluating and identifying additional cost saving initiatives that we may execute in the near term, with certain upfront costs to be reflected within restructuring, contract termination and impairment charges. While these activities are intended to provide future benefit to the Company, most of these activities required cash outlays in the current period, with certain additional cash outlays expected to occur throughout 2025. In order to fund these cash outlays, the Company used cash from operations and borrowings under the Revolving Credit Facility (as defined below). The following table outlines the cash outlays and the period in which they occurred.
Previous wording
Net sales are comprised of DTC and retail channel net sales to retail partners. Net sales in both channels reflect the impact of partial shipments, product returns, and discounts for certain sales programs or promotions.
Current wording
Net sales are comprised of DTC and retail channel sales to retail partners. Net sales in both channels reflect the impact of partial shipments, product returns, and discounts for certain sales programs or promotions.
Previous wording
Our net sales have historically included a seasonal component. In the DTC net sales channel, our historical net sales tend to be highest in our second and fourth quarters, while our retail net sales channel has historically generated higher sales in the first and third quarters. For 2024, the Company has identified a shift in the trend of the retail net sales channel, and expects higher sales to be generated in the first and fourth quarters. This trend may continue in the future. Additionally, we expect variances in our net sales throughout the year relative to the timing of new product launches.
Current wording
Our net sales have historically included a seasonal component. In the DTC channel, our historical net sales tend to be highest in our second and fourth quarters, while our retail channel has generated higher sales in the first and third quarters. Additionally, we expect variances in our net sales throughout the year relative to the timing of new product launches.
Previous wording
Selling, general and administrative (“SG&A”) expenses consist primarily of marketing costs, wages, equity-based compensation expense, benefits costs, costs of our warehousing and logistics operations, costs of operating on third-party DTC marketplaces, professional fees and services, costs of shipping product to our customers and general corporate expenses.
Current wording
•Selling, General and Administrative (“SG&A”) Expenses - SG&A expenses consist primarily of marketing costs, wages, equity-based compensation expense, benefits costs, costs of our warehousing and logistics operations, costs of operating on third-party DTC marketplaces, professional fees and services, costs of shipping product to our customers and general corporate expenses.
Previous wording
Other operating expenses include certain costs incurred as a public company, acquisition-related expenses, business optimization and expansion expenses and management transition costs.
Current wording
•Other Operating Expenses-Other operating expenses include certain costs incurred as a result of being a public company, acquisition-related expenses, business optimization and expansion expenses and management transition costs, including severance.
Previous wording
Interest expense, net consists primarily of interest on our Revolving Credit Facility and Term Loan.
Current wording
Interest expense, net consists primarily of interest on our Revolving Credit Facility and Term Loan (as defined herein).
Previous wording
Interest expense, net increased for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 due to an increase in the weighted average interest rate on our total debt balance, as well as a higher average debt balance in the current year when compared to the prior year.
Current wording
Interest expense, net increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to a higher average debt balance.
Previous wording
The Company is subject to U.S. federal, state, and local income taxes on the Company's allocable share of taxable income of Solo Stove Holdings, LLC (“Holdings”). The subsidiaries of Holdings are also subject to income taxes in the foreign jurisdictions in which they operate. We are the sole managing member of Holdings, and as a result, consolidate the financial results of Holdings. Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Holdings is generally not subject to U.S. federal and certain state and local income taxes. Instead, taxable income or loss is allocated to its members on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of Holdings, as well as any stand-alone income or loss generated by Solo Brands, Inc.
Current wording
Income taxes represent federal, state, and local income taxes on the Company's allocable share of taxable income of Holdings, as well as Oru's and Chubbies' federal, state and foreign tax expense related to international subsidiaries. We are the sole managing member of Holdings, and as a result, consolidate the financial results of Holdings. Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Holdings is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of Holdings, as well as any stand-alone income or loss generated by Solo Brands, Inc.
Previous wording
Historically, our cash requirements have principally been for working capital purposes and acquisitions. We expect these needs to continue as we develop and grow our business. We fund our working capital, primarily comprised of inventory, and acquisitions from cash flows from operating activities, cash on hand, and borrowings under our Revolving Credit Facility. We maintain the majority of our cash and cash equivalents in accounts with major highly rated multi-national and local financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions, and any inability to access or delay in accessing these funds could adversely affect our business and financial position.
Current wording
We maintain the majority of our cash and cash equivalents in bank deposit and overnight sweep accounts with major highly rated multi-national and local financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions, and any inability to access or delay in accessing these funds could adversely affect our business and financial position.
Previous wording
The table below reflects our sources, facilities and availability of liquidity as of September 30, 2024. See Note 9, Long-Term Debt, Net, to the unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Current wording
The table below reflects our sources, facilities and availability of liquidity as of March 31, 2025. See below for details on our outstanding debt balance as of March 31, 2025.
Previous wording
On May 12, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., the Lenders and L/C Issuers party thereto (each as defined therein) and the other parties thereto (as subsequently amended on June 2, 2021, and September 1, 2021, the “Revolving Credit Facility”). As so amended, the Revolving Credit Facility allows us to borrow up to $350.0 million of revolving loans, including the ability to issue up to $20.0 million in letters of credit, with $0.6 million of letters of credit issued and outstanding as of September 30, 2024. While our issuance of letters of credit does not increase our borrowings outstanding under the Revolving Credit Facility, it does reduce the amounts available under the Revolving Credit Facility. The Revolving Credit Facility matures on May 12, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an applicable margin, which as of September 30, 2024, was based on SOFR. Interest is due on the last business day of each March, June, September and December.
Current wording
On May 12, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., the Lenders and L/C Issuers party thereto (each as defined therein) and the other parties thereto (as subsequently amended on June 2, 2021, September 1, 2021 and May 22, 2023, the “Revolving Credit Facility”). As so amended, the Revolving Credit Facility allows us to borrow up to $350.0 million of revolving loans, including the ability to issue up to $20.0 million in letters of credit, with $3.7 million of letters of credit issued and outstanding as of March 31, 2025. While our issuance of letters of credit does not increase our borrowings outstanding under the Revolving Credit Facility, it does reduce the amounts available under the Revolving Credit Facility. The Revolving Credit Facility matures on May 12, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an applicable margin, which as of March 31, 2025, was based on SOFR. Interest is due on the last business day of each March, June, September and December. Principal under the Revolving Credit Facility is not due until maturity.
Previous wording
In addition to the above, the amendment on September 1, 2021 included a provision to borrow up to $100.0 million under a term loan (the “Term Loan”). The proceeds from the Term Loan were used to fund the Chubbies acquisition. The Term Loan matures on May 12, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an applicable margin, which as of September 30, 2024, was based on SOFR. We were required to make quarterly principal payments on the Term Loan beginning on December 31, 2021. All outstanding principal and interest due on the Term Loan are due at maturity. All required principal payments were made on time and with available cash through the nine months ended September 30, 2024. Interest payments are due on a quarterly basis under the Term Loan, with the same due dates as noted for the Revolving Credit Facility above.
Current wording
In addition to the above, the amendment on September 1, 2021 included a provision to borrow up to $100.0 million under a term loan (the “Term Loan”). The proceeds from the Term Loan were used to fund the Chubbies acquisition. The Term Loan matures on May 12, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an applicable margin, which as of March 31, 2025, was based on SOFR. We were required to make quarterly principal payments on the Term Loan beginning on December 31, 2021. All outstanding principal and interest due on the Term Loan are due at maturity. All required principal payments were made on time and with available cash through the three months ended March 31, 2025. Interest payments are due on a quarterly basis under the Term Loan, with the same due dates as noted for the Revolving Credit Facility above.
Previous wording
The Revolving Credit Facility and Term Loan are subject to certain financial and non-financial covenants as described in our 2023 Form 10-K in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” As of September 30, 2024, we were in compliance with all required covenants.
Current wording
The Revolving Credit Facility and Term Loan are subject to certain financial and non-financial covenants as described in our 2024 Form 10-K in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.”
Previous wording
The $41.6 million increase in cash used in operating activities period over period, as shown in the table above, was due to a $2.6 million increase in cash usage from changes in operating assets and liabilities (“working capital”) and a $39.1 million increase in cash usage from changes in net income (loss) after non-cash adjustments, primarily due to the decline in gross profit coupled with the increase in selling, general and administrative expenses driven by increases in marketing spend and distribution costs in the nine month period of 2024. The decrease in cash provided by working capital was primarily due to:
Current wording
The $56.7 million increase in cash used in operating activities period over period, was due to a $41.9 million increase in cash usage from changes in operating assets and liabilities (“working capital”), which was primarily driven by an increase in cash usage in the current quarter for accounts payable as of December 31, 2024, with the significant amount of payables related to inventory purchases and marketing expenses incurred in the fourth quarter of 2024. The increase in changes in working capital was coupled with an increase in cash usage of $14.8 million from changes in net income (loss) after non-cash adjustments, driven by a decline in our operations, primarily net sales, reflected through changes in net income (loss).
Previous wording
The $39.4 million decrease in cash used in investing activities in the current period when compared to the prior period was due to non-recurring acquisition activity in the prior period.
Current wording
The $0.8 million increase in cash used in investing activities in the current period when compared to the prior period was due to an increase in capital expenditures.
Previous wording
The $1.4 million increase in cash provided by financing activities in the current period when compared to the prior period was primarily the result of non-recurring common stock repurchases in the prior period of $37.0 million, which were offset by net draws on the Revolving Credit Facility and payments on the Term Loan.
Current wording
The $256.5 million increase in cash provided by financing activities in the current period when compared to the prior period was primarily driven by a $252.3 million increase in cash provided by net draw downs and payments on our debt.
Previous wording
For information regarding our other contractual obligations, see Note 9 - Long-Term Debt, Net, Note 10 - Leases, and Note 1 - Significant Accounting Policies in this Quarterly Report and Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2023 Form 10-K.
Current wording
For information regarding our contractual obligations, see above under “Going Concern,” Note 1, Significant Accounting Policies and Note 9, Debt, Net in this Quarterly Report and Note 14, Leases and Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2024 Form 10-K.
Previous wording
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosure of contingent assets and liabilities. We re-evaluate our estimates on an ongoing basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.
Current wording
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosure of contingent assets and liabilities. We re-evaluate our estimates on an ongoing basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.
Previous wording
See Note 2 - Significant Accounting Policies, to the audited consolidated financial statements included in our 2023 Form 10-K for more information about our significant accounting policies, including our critical accounting policies. The critical accounting estimates that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements are described in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2023 Form 10-K. During the nine months ended September 30, 2024, there were no material changes to our critical accounting policies and estimates from those discussed in our 2023 Form 10-K. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Current wording
See Note 2 - Significant Accounting Policies, to the audited consolidated financial statements included in our 2024 Form 10-K for more information about our significant accounting policies, including our critical accounting policies. The critical accounting estimates that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements are described in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2024 Form 10-K. During the three months ended March 31, 2025, there were no material changes to our critical accounting policies and estimates from those discussed in our 2024 Form 10-K. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Previous wording
We currently qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Accordingly, we are provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We have elected to adopt new or revised accounting guidance within the same time period as private companies, unless management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. Our utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act.
Current wording
We currently qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Accordingly, we are provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. Until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act, we have elected to adopt new or revised accounting guidance within the same time period as private companies, unless management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. Our utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Discussion within the relevant comparative periods and sections have been included below.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023
Previous report — wording carried elsewhere
Restructuring, Contract Termination and Impairment Charges