Solo Brands, Inc. Q3 FY2025 earnings call

• Third quarter sales environment was challenging with continued pressure on consumer demand and excess retailer inventory, especially in Solo Stove division. - Maintained stable gross margins and generated $11 million of operating cash flow, second consecutive quarter of positive cash generation. - SG&A expenses declined 35.4% year-over-year in Q3 due to lower marketing spend, reduced employee-related costs and structural efficiencies. - Deliberately aligned promotional activity and pricing integrity across channels to rebuild retail partnerships for Solo Stove. - Recent product launches like Summit 24 firepit in late September and Propane Infinity Flame firepit in late October showing positive signs in Q4. - Focused on profitability first, simplifying organization, taking permanent costs out, holding line on marketing efficiency, and product-led approach with differentiated and margin accretive launches.

Solo Brands' net sales for the third quarter were $53 million. For Solo Stove segment, net sales were $30.8 million, down 48.1% from the prior year, driven by retail partners managing elevated on-hand inventory. For Chubbies segment, revenue declined 16% year-over-year, with DTC essentially flat. Chubbies sales were $16.5 million. Solo Stove contributed approximately 30.8/53 * 100% ≈ 58.1% of net sales, while Chubbies contributed approximately 16.5/53 * 100% ≈ 31.1%.

• Encouraged by initial consumer response to recently launched Summit 24 and Infinity Flame firepits, which improved year-over-year sales trends in October. - Expect some continued volatility in turnaround but have stabilized foundation and are leaning into innovation and operational discipline. - Plan to continue simplifying business, focus on profitable growth, protect liquidity, and invest where customer and data point. - Intend to participate in the IDEAS Conference in Dallas on November 19.

• Continued pressure on consumer demand. - Excess retailer inventory and challenges in rebuilding retail relationships, especially with Solo Stove due to earlier delisting. - Uncertainty from tariffs and need to manage supply chain mitigation plans. - Interest rate risk as weighted average interest rate was 8.38% on term loan and 5.95% on revolver at September 30.

Q: Congrats on the positive cash flow in a difficult environment. Could you expand on new product front, online at websites and rollout to retail over next couple months and quarters?

A: We launched Summit 24 at end of September and Infinity Flame October 24. Initial response is encouraging with increased orders from partners. More than 70% of customers for these products are new. Infinity Flame is #1 in California. Moving into other markets. Reviewing new lineup with partners and have aggressive lineup for 2026 spring.

Q: Regarding destocking with retailers, particularly Solo Stove, nearing completion by end of holiday season?

A: It was a difficult transition with retailers having significant inventory. Hit trough in Q3, inventories now in line with normal levels. Conversations with retailers have been great. Had successful promotion coordinated with retailers in October. Aligned with key retail partners for Q4 and seeing positive initial results.