Solo Brands, Inc.

Previous wording

For the three and six months ended June 30, 2025, we experienced a decrease in our net sales from $131.6 million and $216.9 million for the three and six months ended June 30, 2024 to $92.3 million and $169.5 million, respectively. The decline in net sales was primarily driven by the Solo Stove segment, offset in part by an increase in DTC channel net sales within the Chubbies segment. Retail channel net sales were relatively flat when comparing the second quarter of 2025 to the same period in 2024, with slight growth recognized over the first half of 2025 when compared to the same period in 2024, primarily as a result of increased retail demand over the prior year period within the Chubbies segment.

Current wording

For the three and nine months ended September 30, 2025, we experienced a decrease in our net sales from $94.1 million and $311.0 million for the three and nine months ended September 30, 2024 to $53.0 million and $222.5 million, respectively. The decline in net sales, for both the three and nine months ended September 30, 2025 when compared to the prior year periods, was primarily driven by the decline in DTC and retail channel net sales within the Solo Stove segment, with the nine month period being offset in part by an increase in net sales across both channels within the Chubbies segment. The Chubbies segment, while experiencing a decline in retail and relatively flat DTC channel net sales in the three months ended September 2025, continues to exceed the prior year period net sales in both channels on a year to date basis.

Previous wording

We sell our products in the U.S. as well as various foreign countries, primarily Europe, Canada and Australia. We also have historically sourced and procured inventory primarily out of China and Vietnam, with some products sourced through Mexico. Tariffs on certain foreign origin goods, particularly from China, continue to put pressure on our input costs. As a result of higher tariffs and tariff uncertainty, in the second quarter of 2025, we diversified our supply base and began to place a higher volume of purchase orders from Vietnam and Cambodia, reducing our sourcing from China for Solo Stove and eliminating our sourcing from China almost entirely for Chubbies. Additionally, we reduced our purchase volumes in the first half of 2025, and as a result, the increased tariffs only nominally impacted inventory on the consolidated balance sheets and 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 in future periods as a result of these and anticipated tariffs, to the extent they remain effective, as applicable.

Current wording

We sell our products in the U.S. as well as various foreign countries, primarily Europe, Canada and Australia. We also have historically sourced and procured inventory primarily out of China and Vietnam, with some products sourced through Mexico. Tariffs on certain foreign origin goods, particularly from China, continue to put pressure on our input costs. As a result of higher tariffs and tariff uncertainty, in 2025, we diversified our supply base and began to place a higher volume of purchase orders from Vietnam and Cambodia, reducing our sourcing from China for Solo Stove and eliminating our sourcing from China almost entirely for Chubbies. Additionally, we closed and relocated the operations of a distribution center in Mexico to the U.S., in response to the repeal of the 321 Tariff Relief as of August 31, 2025. As a result of lower purchase volumes in the first half of 2025, we increased purchasing activity in the third quarter in anticipation of the holiday selling season. This led to higher tariff impacts on inventory reflected in the consolidated balance sheets and on cost of goods sold within the consolidated statements of operations and comprehensive income (loss). We expect inventory and costs of goods sold, on a per unit basis, to increase in future periods as a result of these tariffs, to the extent they remain effective. However, the proposed tariff reductions that are scheduled to go into effect on November 10, 2025 are anticipated to provide limited relief from the current tariffs. The tariff environment remains fluid and any expectations may be subject to change.

Previous wording

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. In addition, certain of our Oru and TerraFlame brands are manufactured in Mexico, and both these products and certain Chubbies products are also being distributed from Mexico. As such, they are subject to any applicable tariffs placed on goods imported from Mexico.

Current wording

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. In addition, certain of our Oru and TerraFlame brands are manufactured in and distributed from Mexico. As such, they are subject to any applicable tariffs placed on goods imported from Mexico.

Previous wording

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective beginning in 2026. The Company is evaluating the future impact of these tax law changes on our financial statements.

Current wording

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective beginning in 2026. We will continue to evaluate the future impact of these tax law changes on our financial statements; however, we believe that due to our sustained losses we will not realize a material benefit from these changes.

Previous wording

In the first half 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 involved 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 and improving our operational plan for the near and long-term, identifying cost saving initiatives to reduce operational expenses and aiding in the development of enhanced internal reporting to deliver timely insight to management.

Current wording

To date in 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 involved the engagement of restructuring, legal and investment banking consultants to perform financial planning, forecasting and project management activities. Certain of these strategic consulting firms assisted in developing operational plans for the near- and long-term, as well as having assisted and continuing to assist in identifying cost saving initiatives to reduce our operational expenses and aid in the development of enhanced internal reporting to deliver timely insight to management.

Previous wording

The cost saving initiatives identified and executed upon in the three and six months ended June 30, 2025 were designed to reduce operational expenditures over the long-term, and as a result, in the short-term, the realized benefits from these initiatives have been limited. The key cost saving initiatives and operational planning activities undertaken in the first half of 2025 were as follows:

Current wording

The cost saving initiatives identified and executed upon in the three and nine months ended September 30, 2025 were designed to reduce operational expenditures over the long-term. The key cost saving initiatives and operational planning activities undertaken so far in 2025 were as follows:

Previous wording

•closure of two distribution centers to reduce fixed costs in the short term and in future periods, as well as unnecessary capacity;

Current wording

•closure of two distribution centers in the first half of 2025, with the closure of a third in the third quarter of 2025, to reduce fixed costs in the short term and in future periods, as well as unnecessary capacity;

Previous wording

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 2021 Revolving Credit Facility (as defined below) and the 2025 Revolving Credit Facility (as defined below). The following table outlines the cash outlays and the period in which they occurred.

Current wording

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 the remainder of 2025. In order to fund these cash outlays, the Company used cash from operations and borrowings under the 2021 Revolving Credit Facility (as defined below) and the 2025 Revolving Credit Facility (as defined below). The following table outlines the cash outlays and the period in which they occurred.

Previous wording

We anticipate that the strategic consulting firms’ activities will continue to occur beyond the 2025 Refinancing Amendment (as defined below). 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.

Current wording

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.

Previous wording

The decrease in operating expenses for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 was primarily driven by a decrease in SG&A, as a result of a significant decrease in advertising and marketing expenses, coupled with a decrease in distribution costs resulting from the decline in DTC net sales.

Current wording

The decrease in operating expenses for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily driven by a decrease in restructuring, contract termination and impairment charges, as a result of non-recurring impairment charges to both goodwill and intangible assets, net and non-recurring terminations of underperforming marketing agreements, offset in part by the current period activity discussed in Note 2, Restructuring, Contract Termination and Impairment Charges in our Notes to Consolidated Financial Statements. Additionally, SG&A experienced a significant decline for both three and nine months ended September 30, 2025 when compared to the prior year periods, as a result of a significant decrease in advertising and marketing expenses, coupled with a decrease in distribution costs resulting from the decline in DTC net sales.

Previous wording

Additionally, a decrease was realized in other operating expenses, as a result of a reduction in management transition costs consisting of severance for key management personnel and executive search fees. This decrease was offset in part by the loss recognized from the disposition of the TerraFlame manufacturing operations, in the second quarter of 2025. See Note 17, Variable Interest Entities for additional information regarding the partial disposition.

Current wording

Additionally, a decrease was realized in other operating expenses, as a result of a reduction in management transition costs consisting of severance for key management personnel, including additional cost associated with onboarding senior leadership positions, and strategic consulting engagements. For the nine months ended September 30, 2025 when compared to the prior year period, this decrease was offset in part by the loss recognized from the disposition of the TerraFlame manufacturing operations, in the second quarter of 2025. See Note 17, Variable Interest Entities for additional information regarding the partial disposition.

Previous wording

Interest expense, net increased for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 due to a higher average debt balance. Interest rates under the 2025 Refinancing Agreement are higher than those previously incurred, which will result in the weighted average interest rates in future periods being in excess of the current and prior periods.

Current wording

Interest expense, net increased for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 due to a higher average debt balance and higher average interest rates. Interest rates under the 2025 Refinancing Agreement are higher than those previously incurred, which has resulted in the weighted average interest rates on the 2025 Term Loan and 2025 Revolving Credit Facility to be in excess of prior periods.

Previous 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.

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 and state, and the Company’s 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

The income tax expense decrease for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and the income tax expense increase for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily driven by valuation allowances on deferred tax assets generated by the losses from the Solo Stove segment in the current year periods.

Current wording

The income tax benefit decrease for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 and the income tax expense increase for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, was primarily driven by valuation allowances on deferred tax assets generated by the losses from the Solo Stove segment in the current year periods.

Previous wording

Solo Stove Segment Results for the Three and Six Months Ended June 30, 2025 Compared to the Three and Six Months Ended June 30, 2024

Current wording

Solo Stove Segment Results for the Three and Nine Months Ended September 30, 2025 Compared to the Three and Nine Months Ended September 30, 2024

Previous wording

The decrease in cost of goods sold for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 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 wording

The decrease in cost of goods sold for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily in line with the decrease in net sales.

Previous wording

Segment operating expenses decreased for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 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 wording

Segment operating expenses decreased for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, the result of a decrease in brand level marketing expenses, as well as decreases in other segment operating expenses driven by a decrease in seller fees and shipping expenses, each stemming from the decline in DTC channel net sales.

Previous wording

Chubbies Segment Results for the Three and Six Months Ended June 30, 2025 Compared to the Three and Six Months Ended June 30, 2024

Current wording

Chubbies Segment Results for the Three and Nine Months Ended September 30, 2025 Compared to the Three and Nine Months Ended September 30, 2024

Previous wording

The increase in net sales for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 was primarily 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 wording

The increase in net sales for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily 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 year to date period.

Previous wording

Historically, our cash requirements have principally been for working capital purposes and acquisitions. In the short-term, our cash requirements are for working capital and payment of restructuring and other fees. We expect these and other cash needs to continue as we seek to improve, develop and transform our business. We fund our working capital, which is primarily comprised of inventory, accounts payable, and accounts receivable, net, and other cash requirements from cash flows from operating activities, cash on hand, and borrowings under our 2025 Revolving Credit Facility. Our cash flows from operating activities and borrowings under the 2025 Revolving Credit Facility are our principal sources of liquidity. Cash flows from operating activities result primarily from the sales of our portfolio of products. Our future product sales and our cash flows are difficult to predict, and actual sales may not be in line with our forecasts.

Current wording

Historically, our cash requirements have principally been for working capital purposes and acquisitions. In the short-term, our cash requirements are for working capital and payment of restructuring and other fees. We expect these and other cash needs to continue as we seek to improve, develop and transform our business. We fund our working capital, which is primarily comprised of inventory and accounts payable, and other cash requirements from cash flows from operating activities, cash on hand, and borrowings under our 2025 Revolving Credit Facility. Our cash flows from operating activities and borrowings under the 2025 Revolving Credit Facility are our principal sources of liquidity. Cash flows from operating activities result primarily from the sales of our portfolio of products. Our future product sales and our cash flows are difficult to predict, and actual sales may not be in line with our forecasts.

Previous wording

The first full measurement period for certain of our financial covenants under the 2025 Refinancing Amendment will occur in the third quarter of 2026, beyond the twelve month look-forward period for this going concern evaluation. We are required to meet a Credit Agreement Adjusted EBITDA floor for the twelve months ended December 31, 2025, in addition to compliance with other non financial covenants. While the 2025 Refinancing Amendment included amended financial covenants, as described in further detail in Note 11, Debt, Net, we expect to be in compliance with such covenants and believe our cash, cash equivalents and cash from operating activities will be sufficient to fund our obligations for at least the next twelve months following the issuance of these financial statements. As a result, the conditions that raised substantial doubt about our ability to continue as a going concern have been alleviated as of August 6, 2025.

Current wording

We are required to meet a Credit Agreement Adjusted EBITDA floor of $25 million for the twelve months ended December 31, 2025. In addition, the Company must comply with other financial covenants under the 2025 Refinancing Amendment (as defined below), including a minimum fixed charge coverage ratio, a maximum leverage ratio and a minimum liquidity amount, with the first full measurement period for such financial covenants to occur in the third quarter of 2026, as well as other non-financial covenants. While the 2025 Refinancing Amendment included amended financial covenants, as described in further detail below and in Note 11, Debt, Net, we expect to be in compliance with such covenants and believe our cash, cash equivalents and cash from operating activities will be sufficient to fund our obligations for at least the next twelve months following the issuance of these financial statements.

Previous wording

In the longer-term, if we fail to realize the expected benefits from our cost saving and operational improvement initiatives, if our liquidity condition deteriorates, or if we pursue potential growth opportunities that are not successful, our business, operating results and financial condition could be materially adversely impacted and could result in the violation of our financial and nonfinancial covenants, which may require us to seek additional funds from issuances of equity or debt, including from additional credit facilities or loans from other sources. There is no guarantee that such sources will be available when needed, or at all.

Current wording

If we fail to realize the expected benefits from our cost saving and operational improvement initiatives, if our liquidity condition deteriorates, or if we pursue potential growth opportunities that are not successful, our business, operating results and financial condition could be materially adversely impacted and could result in the violation of our financial and nonfinancial covenants, which may require us to seek additional funds from issuances of equity or debt, including from additional credit facilities or loans from other sources. There is no guarantee that such sources will be available when needed, or at all.

Previous wording

On May 12, 2021, we entered into the 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. The Credit Agreement was subsequently amended on June 2, 2021, September 1, 2021, May 22, 2023 and most recently by the 2025 Refinancing Amendment. Initially, the credit agreement contemplated a revolving credit facility (the “2021 Revolving Credit Facility”), with the amendment on September 1, 2021 including a provision to borrow up to $100.0 million under a term loan (the “2021 Term Loan”).

Current wording

On May 12, 2021, we entered into the 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. The Credit Agreement was subsequently amended on June 2, 2021, September 1, 2021, May 22, 2023 and most recently by the 2025 Refinancing Amendment. Initially, the credit agreement contemplated a revolving credit facility (the “2021 Revolving Credit Facility”), with the amendment on September 1, 2021 including a provision to borrow up to $100.0 million under a term loan (the “2021 Term Loan”) which was in addition to the available capacity on the 2021 Revolving Credit Facility.

Previous wording

In connection with the entry into the 2025 Refinancing Amendment, we paid down (i) $136.5 million of loans under the 2021 Revolving Credit Facility, and (ii) $32.5 million of 2021 Term Loan outstanding as of June 13, 2025.

Current wording

In connection with the entry into the 2025 Refinancing Amendment, during the nine months ended September 30, 2025, we paid down (i) $136.5 million of loans under the 2021 Revolving Credit Facility, and (ii) $32.5 million of 2021 Term Loan outstanding as of June 13, 2025.

Previous wording

The $61.4 million increase in cash used in operating activities period over period, was due to a $28.0 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 first and second quarters of 2025 for accounts payable as of December 31, 2024, mostly 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 $33.4 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).

Current wording

The $50.5 million increase in cash used in operating activities period over period, was due to a $16.1 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 first and second quarters of 2025 for accounts payable as of December 31, 2024, mostly related to inventory purchases and marketing expenses incurred in the fourth quarter of 2024, offset in part by the reduction in replenishment of inventory as we focus on prudent management of our inventory balances in the 2025 period. The increase in changes in working capital was coupled with an increase in cash usage of $34.5 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 $1.2 million increase in cash used in investing activities in the current period when compared to the prior year period was primarily due to an increase in capital expenditures for software.

Current wording

The $1.9 million decrease in cash used in investing activities in the current period when compared to the prior year period was primarily due to a decline in the number of retail store openings within our Chubbies Segment in the current year when compared to the prior, with just one store opening as of September 30, 2025 and six store openings as of September 30, 2024.

Previous wording

The $68.4 million increase in cash provided by financing activities in the current period when compared to the prior year period was primarily driven by a $67.0 million increase in cash provided by net debt activity, inclusive of borrowings, repayments and debt issuance costs in relation to the 2025 Refinancing Amendment, offset in part by a $2.5 million payment in connection with the disposition of the TerraFlame manufacturing operations.

Current wording

The $60.0 million increase in cash provided by financing activities in the current period when compared to the prior year period was primarily driven by a $58.2 million increase in cash provided by net debt activity, inclusive of borrowings, repayments and debt issuance costs in relation to the 2025 Refinancing Amendment, offset in part by a $2.5 million payment in connection with the disposition of the TerraFlame manufacturing operations.

Previous wording

During the three and six months ended June 30, 2025, the obligation to pay a former vendor a $5.4 million payment, plus applicable interest in periods beyond January 1, 2025, as a result of terminating an agreement for advertising services in a prior period, as previously disclosed within our 2024 Form 10-K, was settled for an aggregate amount of $4.0 million. The gain recognized from the reduced settlement was recorded to restructuring, contract termination and impairment charges on the consolidated statements of operations and comprehensive income (loss).

Current wording

During the nine months ended September 30, 2025, the obligation to pay a former vendor a $5.4 million payment, plus applicable interest in periods beyond January 1, 2025, as a result of terminating an agreement for advertising services in a prior period, as previously disclosed within our 2024 Form 10-K, was settled for an aggregate amount of $4.0 million. The gain recognized from the reduced settlement was recorded to restructuring, contract termination and impairment charges on the consolidated statements of operations and comprehensive income (loss).

Previous 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 six months ended June 30, 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.

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 nine months ended September 30, 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.