Solo Brands, Inc. Q4 FY2025 earnings call

• Since stepping into the CEO role in 2025, focused on product - led turnaround, simplifying business, reducing cost structure, and generating positive operating cash flow for three consecutive quarters.
• Reset capital structure, reinstated NYSE listing, changed ticker symbol to SBDS. Repaired relationships with retail partners for SoloStove, accelerated and added new innovative products, consolidated operations, reduced run rate SG&A by over 30%.
• 2025 delivered $317 million in net sales, introduced five new products, maintained stable gross margins. Chubby's had over 9% year - over - year growth. One Solo Stove, the Summit 24 smokeless fire pit, was named Forbes' best choice.
• Reset balance sheet in early 2025 drove ~$75 million in operational cash flows, generated nearly $30 million in operating cash flow in the last three quarters of 2025, aggregating $28.6 million. Adjusted EBITDA for the year was ~$19 million, with 52% increase in fourth quarter adjusted EBITDA.

In 2025, Solo Brands had net sales of $317 million. The Solo Stove segment's sales declined, while Chubby's delivered full - year sales of $122.9 million, representing 9.1% growth. Chubby's accounted for approximately 38.77% of the total net sales (122.9 / 317 ≈ 0.3877) and Solo Stove accounted for approximately 61.23%. Fourth quarter consolidated sales were $94 million, down 34.5% year - over - year, with adjusted gross margin for the fourth quarter at 61%, flat year - over - year and up 40 basis points from the third quarter. Fourth quarter adjusted EBITDA was positive $9.6 million, 10.2% of sales.

• 2026 focus on profitability at channel, market, and product level. Plan to continue investing in innovation across SoloStove and Chubbies, expanded water sports assortment via strategic partnership with Costco. Pursue international opportunities where returns justify investment, remain disciplined in converting revenue growth into positive earnings and cash. Expect to invest approximately $3 to $4 million in growth capital in 2026, primarily for new product innovation. Utilize revolving credit facility in first quarter as it's seasonally light sales quarter, expect to repay borrowings if cash is generated in following quarters.

• Tariff exposure, including need to pursue refund opportunities and mitigate risk via diversified sourcing strategy. Consumer market uncertainty, uneven consumer environment with selective spending. Low - end competition in the fire pit category with many knockoff products not meeting quality standard.

Q: Good morning. Congrats on the profit improvements. I was wondering if you could give us a sense as to, like, how the categories performed across your different brands in the fourth quarter, just so we maybe could get a sense as to market share changes for the solo brands.

A: Yeah, that's a good question, Will, and good morning. Thank you for taking the time. On the fire pit side, it's been pretty flat in terms of the category itself, but there's been a lot of low - end competition. So if you look throughout Amazon, there's a tremendous amount of low - end kind of knockoff products that certainly don't meet our quality standard. So I would say from a market share standpoint on units, we're certainly down, but certainly at a much higher AOV. So we're performing fairly well there. When you look at Chubbies, we've definitely had some market share gains in the areas with some of the new introductions they had on shorts lines last year. And so, although a small piece of the overall apparel category, some market share improvement there.

Q: I know you've been focused on new products. Maybe you could elaborate a little bit more as to how they performed in the quarter and how that, you know, for your thoughts on 26. And Like, if you could share what percentage of fourth quarter sales were from these new products, what would be, in your mind, success in 26 for the new products in terms of share of revenue?

A: Sure. Great question, and I'm assuming you're focused a little bit more on Solosco with that, given the number of products we did launch. If you look at our DTC business, new products made up roughly 25% of the sales in Q4. So a significant percentage of the sales. We did just launch a number of new products last week as well. We completed the full line of the all - new Summit series of fire pits. We added a portable steel fire 22 griddle, as well as adding a smaller cooler. And, you know, just looking through it last night in detail, you know, over the last four or five days, six of our eight top - selling SKUs are products we have launched since the fourth quarter of last year. So we feel the reception has been fairly strong on it. You know, the underlying question is the underlying demand on core products that we had. You'd say our core fire pits. And, you know, that's a highly durable, long - lasting product. That's why our customers love it so much. But for us to expand sales, we really need to sell accessories related to those products, try to reinvent the category, which we've done with the Summit Series. And then those customers that love us so much really try to move them into the adjacent categories, and that's what we're trying to do with those new products.

Q: Last question, just on OpEx. You obviously cut a lot last year. I think you, in your remarks, indicated you might be cutting more. Just maybe how much restructuring or cost cutting is left, and if you could give us some color on that.

A: Yeah. You know, I think I mentioned that at the end of the third quarter as well. You know, as we did see revenue decline in Q3, it became obvious that we needed to be structurally smaller. leaner, profitable company. And so we really are using tools available to us. AI, you know, we view as a great tool for building efficiency. Uh, but we are definitely looking at cost reduction in the coming year. We haven't come out with exact numbers, but structurally we're taking as soon as skin amount out and payroll, uh, just as we did last year, I believe in Q4 payrolls down about 27% year over year and the rest of the initiatives that we put in coming in. So I have that full run rate for 26. But we are leaning down even further. You know, I look at the consumer environment here. It's a little uneven. The customers are selective. Our AOVs are up, you know, so the people who do want to shop are spending more. But I think at the low - end discretionary spending, you know, there's some caution moving forward. So, you know, we're setting up the company to operate and not counting on revenue to go up dramatically to drive our business model, just becoming leaner and really right - sizing the company at the right level. But we're still investing in innovation, new products coming out and pushing in some new categories as we discussed earlier.

Q: Hi, can you talk a little bit more, a little about the reset that you did in 25 and kind of what your concerns are for 26 with all the different things that you've been doing from a cost - cutting and new product stance?

A: Sure. I mean, I think there's a little bit of risk with the consumer market. You know, we're not sure exactly what's going to happen with what's going on geopolitically in the world. Definitely a reset in 2025. As I look at 2026, I mean, I do think the challenge facing us is how do we stem the revenue decline in the stove division and how do we begin to increase And that's why we're aggressively launching significant new products in adjacent categories. The griddles have been really well received. The small griddle is looking like it's very hot out of the chutes. So we feel good about that. I think the all - new FireFit line, they've immediately moved up in our top sellers DTC after launching it just last week. So I think that's the challenge behind us. We are set up to flow through any revenue gains. We'll flow right through to the bottom line very efficiently. and in the cash flow because we've reduced our cost structure so dramatically. But I look at that as our challenge right there.