EX-99.1 5 solobrandsearningsrelease2.htm EX-99.1

Solo Brands, Inc. Announces Fourth Quarter and Fiscal Year 2024 Results

Company Accelerates Strategic Transformation Plan to Stabilize the Business

Grapevine, Texas, March 12, 2025: Solo Brands, Inc. (NYSE: DTC) (“Solo Brands” or “the Company”) a leading portfolio of lifestyle brands (Solo Stove, Chubbies, Isle and Oru) that are redefining the outdoor and apparel industries, today announced its financial results for the three months and the year ended December 31, 2024.

John Larson, Interim President and Chief Executive Officer, commented, “During the fourth quarter, the Board and management team engaged in developing an aggressive turnaround plan for 2025. As a part of our transformation plan, we hired external financial advisors to help us go through every line item of the business. Notwithstanding challenging results, Solo Brands has a solid foundation for success, including great “enthusiasts” brands, a pipeline of new products and highly loyal customers. Our Board and management team are fully aligned and engaged on the turnaround plan and taking appropriate steps to implement 30+ value accretive initiatives identified in our turnaround plan.”

Liz Vanzura, a member of the Solo Brands Board of Directors has been appointed as the Company’s Interim Chief Marketing Officer. Ms. Vanzura will continue to serve as a member of the Board. Ms. Vanzura has a successful track record as CMO and Head of Brand Strategy for companies such as Cadillac and Hummer. She also earned the Ad Age’s Marketer of the Year award and was inducted into the AAF Advertising Hall of Achievement.

This release reflects current and prior period results revised to align with our new segment reporting structure, under which we report as two reportable segments.

Consolidated Fourth Quarter 2024 Highlights Compared to Fourth Quarter 2023

•Net sales decreased $21.8 million to $143.5 million, down 13.2%, driven by declines in both retail and direct to consumer (“DTC”) channels within the Solo Stove segment, partially offset by an increase in net sales in the Chubbies segment.

•Gross profit of $87.8 million, or 61.1% of net sales, an increase of 280 basis points versus a year ago. Adjusted gross profit(2) of $87.6 million, or 61.0% of net sales, an increase of 170 basis points versus the prior year.

•Operating expenses decreased $194.2 million to $143.0 million, down 57.6%, primarily driven by the reduction in restructuring, contract termination and impairment charges of $192.2 million in the current period.

•Net loss of $58.2 million, or (40.6)% of net sales and $0.63 per basic and diluted Class A common share, improved over the prior year period. Adjusted net income(2)(3) of $2.3 million, or $0.03 earnings per basic and diluted share, declined from the prior year period.

•Adjusted EBITDA(2) of $6.3 million, or 4.4% of net sales, declined from the prior year period.

Segment Fourth Quarter 2024 Highlights Compared to Fourth Quarter 2023

Solo Stove

•Net sales decreased $23.6 million to $116.6 million, down 16.8%, driven by declines in both retail and DTC channel net sales, as a result of the lack of significant new product launches.

•Segment EBITDA of $6.1 million, or 5.2% of net sales, declined from the prior year period.

Chubbies

•Net sales increased $2.6 million to $24.2 million, up 12.2%, driven primarily by increased demand within the retail net sales channel.

•Segment EBITDA of $3.3 million, or 13.7% of net sales, improved over the prior year period.

Consolidated Full Year 2024 Highlights Compared to Full Year 2023

•Net sales decreased $40.2 million to $454.6 million, down 8.1%, driven by declines in both retail and DTC channel net sales within the Solo Stove segment, partially offset by an increase in net sales in the Chubbies segment.

•Gross profit of $260.3 million, or 57.3% of net sales, a decrease of 390 basis points versus a year ago,includes a write down of inventory resulting from the wind-down of IcyBreeze. Adjusted gross profit(2) of $280.3 million, or 61.7% of net sales, an increase of 30 basis points versus the prior year.

•Operating expenses decreased $95.1 million to $434.9 million, down 17.9%, primarily driven by the reduction in restructuring, contract termination and impairment charges of $112.9 million in the current year.

•Net loss of $180.2 million, or (39.6)% of net sales and $1.94 loss per basic and diluted Class A common share, improved over the prior year. Adjusted net income(2)(3) of $11.4 million, or $0.12 earnings per basic and diluted share, declined from the prior year.

•Adjusted EBITDA(2) of $32.6 million, or 7.2% of net sales, declined from the prior year.

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Segment Full Year 2024 Highlights Compared to Full Year 2023

Solo Stove

•Net sales decreased $54.2 million to $297.4 million, down 15.4%, driven by declines in retail and DTC channel net sales, as a result of the lack of significant new product launches and a non-recurring retail channel transaction in the prior year.

•Segment EBITDA of $45.9 million, or 15.4% of net sales, declined from the prior year.

Chubbies

•Net sales increased $11.1 million to $112.7 million, up 10.9%, driven by continued demand within the DTC net sales channel driven by both website and owned retail store performance, coupled with increases realized in the retail net sales channel as a result of continued growth within our retail strategic partnerships.

•Segment EBITDA of $15.8 million, or 14.0% of net sales, improved over the prior year.

Consolidated Balance Sheet

Cash and cash equivalents were $12.0 million as of December 31, 2024 compared to $19.8 million at December 31, 2023.

Inventory was $108.6 million as of December 31, 2024 compared to $111.6 million at December 31, 2023.

Outstanding borrowings were $69.0 million under the Revolving Credit Facility, and $83.0 million under the Term Loan as of December 31, 2024. Subsequent to December 31, 2024, we drew an additional $277.3 million under our Revolving Credit Facility, which matures on May 12, 2026 together with the Term Loan.

Going Concern

Our 2024 Annual Report on Form 10-K discloses that there is substantial doubt about our ability to continue as a going concern. We are evaluating strategies to refinance our existing debt and our plans are focused on improving our results and liquidity through a variety of operational improvements throughout 2025. More information on these topics will be provided on today’s conference call.

(1) This release reflects a change to the presentation of our reportable segments, with Solo Stove and Chubbies being presented as our reportable segments, while previous releases presented as one reportable segment. Prior periods are presented on this new basis for comparability purposes.

(2) This release includes references to non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” later in this release for the definitions of the non-GAAP financial measures presented and a reconciliation of these measures to their closest comparable GAAP measures.

(3) This release reflects a previously disclosed change to the presentation of adjusted net income (loss) per Class A common stock from periods prior to the three and twelve months ended December 31, 2023, in order to provide a more concise view. Prior periods are presented on this new basis for comparability purposes. Please see the definition of “Adjusted Net Income (Loss) per Class A Common Stock” below for more information.

Conference Call Details

Prepared remarks about the Company's fourth quarter and full year 2024 results are scheduled for March 12, 2025, at 9:00 a.m. ET. Investors and analysts who wish to listen to the call are invited to dial +1-866-652-5200 (international callers, please dial +1-412-317-6060) approximately 10 minutes prior to the start of the call. A live webcast of the conference call will be available in the investor relations section of DTC’s website, https://investors.solobrands.com, where accompanying materials will be posted prior to the conference call.

A recorded replay of the call will be available shortly after the conclusion of the call and remain available until March 19, 2025. To access the telephone replay, dial +1-877-344-7259 (international callers, please dial +1-412-317-0088). The access code for the replay is 2589860. A replay of the webcast will also be available within two hours of the conclusion of the call and will remain available on the website, https://investors.solobrands.com, for one year.

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About Solo Brands, Inc.

Solo Brands, headquartered in Grapevine, TX, is a leading omnichannel lifestyle brand company. Leveraging e-commerce, strategic retail relationships and physical retail stores, Solo Brands offers innovative products to consumers through five lifestyle brands – Solo Stove and TerraFlame, known for firepits, stoves, and accessories; Chubbies, a premium casual apparel and activewear brand; ISLE, maker of inflatable and hard paddle boards and accessories; and Oru Kayak, innovator of origami folding kayaks.

Contacts:

Mark Anderson, Senior Director of Treasury & Investor Relations

Investors@solobrands.com

Three Part Advisors, LLC

Sandy Martin: smartin@threepa.com, 214-616-2207

Steven Hooser: shooser@threepa.com, 214-872-2710

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding our future financial position, turnaround efforts, strategic transformation goals, future growth and shareholder value,

our ability to continue as a going concern, our plans and strategy to improve our liquidity, the expected benefits of operational improvements and restructuring efforts, and seasonal trends. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “guidance,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. These statements are neither promises nor guarantees, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our ability to continue as a going concern; our ability to realize expected benefits from our strategic plans, our ability to implement any restructuring and cost-reduction efforts; our limited liquidity; our dependence on cash generated from operations to support our business and our growth initiatives; the limits placed by our indebtedness to invest in the ongoing needs of our business; our ability to maintain and strengthen our brand to generate and maintain ongoing demand for our products; our ability to design, develop and introduce new products; our ability to manage our future growth effectively; our ability to expand into additional markets; our ability to maintain and strengthen our brand to generate and maintain ongoing demand for our products; our ability to mitigate the impact of new and increased tariffs and similar restrictions on our business; risks associated with our international operations; our reliance on third-party manufacturers and problems with, or the loss of, our suppliers or an inability to obtain raw materials; our ability to sustain historic growth rates;; our ability to cost-effectively attract new customers and retain our existing customers; the highly competitive market in which we operate; our failure to maintain product quality and product performance at an acceptable cost; the impact of product liability and warranty claims and product recalls; business interruptions resulting from fluctuations in the price of our Class A common stock; failure to regain compliance with the continued listing requirements of the New York Stock Exchange or any future failure to meet such requirements; geopolitical actions, natural disasters, or pandemics; risks associated with our international operations; problems with, or loss of, our suppliers or an inability to obtain raw materials; and the ability of our largest stockholders to influence corporate matters. These and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, and any subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, or other filings we make with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Forward-looking statements speak only as of the date the statements are made and are based on information available to Solo Brands at the time those statements are made and/or management's good faith belief as of that time with respect to future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Availability of Information on Solo Brands’ Website and Social Media Profiles

Investors and others should note that Solo Brands routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the Solo Brands investors website at https://investors.solobrands.com. We also intend to use the social media profiles listed below as a means of disclosing information about us to our customers, investors and the public. While not all of the information that the Company posts to the Solo Brands investors website or to social media profiles is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in Solo Brands to review the information that it shares at the “Investors” link located at the top of the page on https://solobrands.com and to regularly follow our social media profiles. Users may automatically receive email alerts and other information about Solo Brands when enrolling an email address by visiting "Investor Email Alerts" in the "Resources" section of Solo Brands investor website at https://investors.solobrands.com.

Social Media Profiles:

https://linkedin.com/company/solo-brands/

https://instagram.com/solobrands/

https://www.facebook.com/groups/368095467245044/

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SOLO BRANDS, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

			Three Months Ended December 31,												Twelve Months Ended December 31,
(In thousands, except per share data)			2024						2023						2024						2023
Net sales			$	143,537					$	165,318					$	454,550					$	494,776
Cost of goods sold			55,773						68,899						194,286						192,624
Gross profit			87,764						96,419						260,264						302,152
Operating expenses
Selling, general & administrative expenses			81,835						84,270						262,172						249,432
Restructuring, contract termination and impairment charges			52,481						244,650						136,099						248,967
Depreciation and amortization expenses			6,447						7,014						25,702						26,593
Other operating expenses			2,221						1,274						10,909						5,010
Total operating expenses			142,984						337,208						434,882						530,002
Income (loss) from operations			(55,220)						(240,789)						(174,618)						(227,850)
Non-operating (income) expense
Interest expense, net			3,652						3,462						14,004						11,004
Other non-operating (income) expense			906						(436)						528						(7,297)
Total non-operating (income) expense			4,558						3,026						14,532						3,707
Income (loss) before income taxes			(59,778)						(243,815)						(189,150)						(231,557)
Income tax expense (benefit)			(1,560)						(32,953)						(8,958)						(36,225)
Net income (loss)			(58,218)						(210,862)						(180,192)						(195,332)
Less: net income (loss) attributable to noncontrolling interests			(21,239)						(87,039)						(66,836)						(83,985)
Net income (loss) attributable to Solo Brands, Inc.			$	(36,979)					$	(123,823)					$	(113,356)					$	(111,347)
Other comprehensive income (loss)
Foreign currency translation, net of tax			(210)						204						(204)						(268)
Comprehensive income (loss)			(58,428)						(210,658)						(180,396)						(195,600)
Less: other comprehensive income (loss) attributable to noncontrolling interests			(69)						74						(66)						(97)
Less: net income (loss) attributable to noncontrolling interests			(21,239)						(87,039)						(66,836)						(83,985)
Comprehensive income (loss) attributable to Solo Brands, Inc.			$	(37,120)					$	(123,693)					$	(113,494)					$	(111,518)
Net income (loss) per Class A common stock
Basic and diluted			$	(0.63)					$	(2.14)					$	(1.94)					$	(1.84)
Weighted-average Class A common stock outstanding
Basic and diluted			58,643						57,882						58,388						60,501

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Solo Brands, Inc.

Segment Operating Results

			Three Months Ended December 31, 2024
(in thousands)			Solo Stove						Chubbies
Net sales			$	116,612					$	24,155
Cost of goods sold			45,072						10,910
Gross profit			71,540						13,245
Marketing expense			32,254						1,644
Employee related compensation			3,632						3,448
Other segment operating expenses			29,546						4,837
Segment EBITDA			6,108						3,316

			Year Ended December 31, 2024
(in thousands)			Solo Stove						Chubbies
Net sales			$	297,379					$	112,713
Cost of goods sold			113,977						45,707
Gross profit			183,402						67,006
Marketing expense			67,682						14,569
Employee related compensation			12,642						13,833
Other segment operating expenses			57,165						22,791
Segment EBITDA			45,913						15,813

Solo Brands, Inc.

Segment Operating Results

			Three Months Ended December 31, 2023
(in thousands)			Solo Stove						Chubbies
Net sales			$	140,206					$	21,537
Cost of goods sold			57,542						10,159
Gross profit			82,664						11,378
Marketing expense			43,099						2,406
Employee related compensation			2,660						2,761
Other segment operating expenses			22,527						4,356
Segment EBITDA			14,378						1,855

			Year Ended December 31, 2023
(in thousands)			Solo Stove						Chubbies
Net sales			$	351,583					$	101,599
Cost of goods sold			135,544						40,004
Gross profit			216,039						61,595
Marketing expense			71,837						13,863
Employee related compensation			8,848						10,942
Other segment operating expenses			55,710						23,234
Segment EBITDA			79,644						13,556

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SOLO BRANDS, INC.

Consolidated Balance Sheets

(In thousands, except par value and per unit data)			December 31, 2024						December 31, 2023
ASSETS
Current assets
Cash and cash equivalents			$	11,980					$	19,842
Accounts receivable, net of allowance for credit losses of $1.1 million and $1.3 million for the years ended December 31, 2024 and 2023, respectively			39,440						42,725
Inventory			108,575						111,613
Prepaid expenses and other current assets			12,223						21,893
Total current assets			172,218						196,073
Non-current assets
Property and equipment, net			24,195						26,159
Intangible assets, net			189,701						221,010
Goodwill			73,119						169,648
Operating lease right-of-use assets			27,683						30,788
Other non-current assets			8,144						15,640
Total non-current assets			322,842						463,245
Total assets			$	495,060					$	659,318
LIABILITIES AND EQUITY
Current liabilities
Accounts payable			$	69,598					$	21,846
Accrued expenses and other current liabilities			41,661						55,155
Deferred revenue			1,829						5,310
Current portion of long-term debt			8,625						6,250
Total current liabilities			121,713						88,561
Non-current liabilities
Long-term debt, net			142,060						142,993
Deferred tax liability			6,795						17,319
Operating lease liabilities			22,079						24,648
Other non-current liabilities			9,056						13,534
Total non-current liabilities			179,990						198,494
Commitments and contingencies (Note 17)
Equity
Class A common stock, par value $0.001 per share; 468,767,205 shares authorized, 58,800,001 shares issued and outstanding; 468,767,205 authorized, 57,947,711 issued and outstanding			59						58
Class B common stock, par value $0.001 per share; 50,000,000 shares authorized, 33,091,989 shares issued and outstanding; 50,000,000 shares authorized, 33,047,780 issued and outstanding			33						33
Additional paid-in capital			363,601						357,385
Retained earnings (accumulated deficit)			(228,814)						(115,458)
Accumulated other comprehensive income (loss)			(434)						(230)
Treasury stock			(733)						(526)
Equity attributable to the controlling interest			133,712						241,262
Equity attributable to noncontrolling interests			59,645						131,001
Total equity			193,357						372,263
Total liabilities and equity			$	495,060					$	659,318

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SOLO BRANDS, INC.

Consolidated Statements of Cash Flows

			Year Ended December 31,
(In thousands)			2024						2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)			$	(180,192)					$	(195,332)
Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by (used in) operating activities
Restructuring, contract termination and impairment charges			136,099						248,967
Depreciation and amortization			26,632						27,349
Inventory charges associated with restructuring and consolidation activities			18,309						—
Noncash operating lease expense			8,517						8,373
Equity-based compensation			6,754						15,050
Change in fair value of contingent consideration			4,438						(1,573)
Prepaid marketing charges			1,871						—
Amortization of debt issuance costs			860						860
Other noncash adjustments			922						1,204
Barter credits			—						(7,160)
Deferred income taxes			(11,684)						(47,040)
Changes in assets and liabilities
Inventory			(14,673)						28,182
Accrued expenses and other current liabilities			(14,133)						6,811
Accounts receivable			3,195						(16,328)
Other non-current assets and liabilities			176						2,409
Deferred revenue			(3,481)						(1,571)
Operating lease liabilities			(8,586)						(8,113)
Prepaid expenses and other current assets			343						(9,222)
Accounts payable			38,150						9,557
Payments of contingent consideration			(3,000)						—
Net cash provided by (used in) operating activities			10,517						62,423
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(14,512)						(9,093)
Payments of contingent consideration			—						(9,386)
Acquisitions, net of cash acquired			—						(34,600)
Net cash provided by (used in) investing activities			(14,512)						(53,079)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt			80,000						70,000
Repayments of long-term debt			(79,250)						(35,000)
Debt issuance costs paid			(167)						—
Finance lease liability principal paid			(144)						(379)
Exercise of Options for Class A common stock			—						39
Common stock repurchases			—						(36,957)
Distributions to non-controlling interests			(4,284)						(10,511)
Taxes paid related to net share settlement of equity awards			(207)						(305)
Stock issued under employee stock purchase plan			395						247
Net cash provided by (used in) financing activities			(3,657)						(12,866)
Effect of exchange rate changes on cash			(210)						71
Net change in cash and cash equivalents			(7,862)						(3,451)
Cash and cash equivalents balance, beginning of period			19,842						23,293
Cash and cash equivalents balance, end of period			$	11,980					$	19,842

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Non-GAAP Financial Measures

We report our financial results in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”); however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We use adjusted gross profit, adjusted gross profit margin, free cash flow, adjusted net income, adjusted net income (loss) per Class A common stock, adjusted EBITDA and adjusted EBITDA margin non-GAAP financial measures, because we believe they are useful indicators of our operating performance. Our management uses these non-GAAP measures principally as measures of our operating performance, and in the case of free cash flow of our liquidity, and believes that these non-GAAP measures are useful to our investors because they are frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance and liquidity of companies in industries similar to ours. Our management also uses these non-GAAP measures for planning purposes, including the preparation of our annual operating budget and financial projections.

None of these non-GAAP measures is a measurement of financial performance under U.S. GAAP. These non-GAAP measures should not be considered in isolation or as a substitute for a measure of our liquidity or operating performance prepared in accordance with U.S. GAAP and are not indicative of net income (loss) as determined under U.S. GAAP. In addition, the exclusion of certain gains or losses in the calculation of non-GAAP financial measures should not be construed as an inference that these items are unusual or infrequent as they may recur in the future, nor should it be construed that our future results will be unaffected by unusual or non-recurring items. These non-GAAP financial measures have limitations that should be considered before using these measures to evaluate our liquidity or financial performance. Some of these limitations are as follows.

These non-GAAP measures exclude certain tax payments that may require a reduction in cash available to us; do not reflect our cash expenditures, or future requirements, for capital expenditures (including capitalized software developmental costs) or contractual commitments; do not reflect changes in, or cash requirements for, our working capital needs; do not reflect the cash requirements necessary to service interest or principal payments on our debt; exclude certain purchase accounting adjustments related to acquisitions; and exclude equity-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy.

In addition, other companies may define and calculate similarly-titled non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other U.S. GAAP-based financial performance measures.

Free Cash Flow

We calculate free cash flow as net cash provided by (used in) operating activities, reduced by capital expenditures (consisting of purchases of property and equipment, purchases of intangible assets and capitalization of internal use software). We believe free cash flow is an important liquidity measure of the cash that is available for operational expenses, investments in our business, strategic acquisitions, and for certain other activities such as repaying debt obligations.

Adjusted Free Cash Flow

Adjusted free cash flow is defined as free cash flow eliminating the cash impact of the following costs that are believed by management to be non-operating in nature and not representative of the Company’s core operating performance, as listed below under “Non-GAAP Adjustments”: business optimization and expansion expense, management transition costs, transaction costs, sales tax audit expense, tax refunds, prepaid marketing charges (in the period in which cash outflows occurred) and payments of contingent consideration included in net cash provided by (used in) operating activities. We believe that adjusted free cash flow enhances investors’ understanding of the liquidity of our ongoing operations. Our definition of adjusted free cash flow may differ from those used by other companies.

Adjusted Net Income (Loss)

We calculate adjusted net income as net income (loss) excluding impairment charges and the costs that are believed by management to be non-operating in nature and not representative of the Company’s core operating performance, as listed below under “Non-GAAP Adjustments”. Adjusted net income (loss) attributable to noncontrolling interests is calculated as income (loss) before income taxes, adjusted in the same manner as adjusted net income, adjusted for the allocable attribution to the noncontrolling interest.

Adjusted Net Income (Loss) per Class A Common Stock

We calculate adjusted net income (loss) per Class A common stock as adjusted net income, as defined above, less the allocable portion of net income to the noncontrolling interest, divided by weighted average diluted shares or weighted average shares of Class A common stock, respectively, as calculated under U.S. GAAP.

Beginning with the reporting of our results for the three and twelve month periods ended December 31, 2023, adjusted net income (loss) per Class A Common Stock removes the portion of adjusted net income (loss) attributable to noncontrolling interests as management believes this presentation provides investors with a more concise view of the Company’s results. The Company intends to present adjusted net income (loss) per Class A Common Stock on this basis going forward and has presented prior periods on the same basis for comparability purposes.

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EBITDA

We calculate EBITDA as net income (loss) before interest expense, income taxes, and depreciation and amortization expenses.

Adjusted EBITDA

We calculate adjusted EBITDA as net income (loss) before interest expense, income taxes, depreciation and amortization expenses, impairment charges, equity-based compensation expense, and the costs that are believed by management to be non-operating in nature and not representative of the Company’s core operating performance, as listed below under “Non-GAAP Adjustments”.

Adjusted EBITDA Margin

We calculate adjusted EBITDA margin as adjusted EBITDA, divided by net sales.

Adjusted Gross Profit

We calculate adjusted gross profit as gross profit, less inventory charges associated with restructuring and consolidation activities, inventory fair value write-ups and tooling depreciation.

Adjusted Gross Profit Margin

We calculate adjusted gross profit margin as adjusted gross profit, divided by net sales.

Non-GAAP Adjustments

In addition to the costs specifically noted under the non-GAAP metrics above, the Company believes that evaluation of its financial performance can be enhanced by a supplemental presentation of results that exclude costs believed by management to be non-operating in nature and not representative of the Company’s core operating performance. These costs are excluded in order to enhance consistency and comparability with results in prior periods that do not include such items and to provide a basis for evaluating operating results in future periods.

•Restructuring, contract termination, impairment and related charges - Represents contract termination, impairment and restructuring charges related to the termination of underperforming marketing contracts, reorganization of the Oru and ISLE reporting units of the Company under a revised management structure, and charges related to the IcyBreeze reporting unit and the related inventory charges associated with the restructuring and consolidation activities, as well as the goodwill impairment charges related to the Solo Stove reporting unit driven by the sustained decline in share price.

•Amortization expense - Represents the non-cash amortization of intangible assets related to the reorganization transactions in 2020 and the 2021 and 2023 acquisitions and additions to patents in regard to their defense.

•Business optimization and expansion expenses - Represents select consulting and software implementation fees.

•Equity-based compensation expense - Represents the non-cash expense related to the incentive units, restricted stock units, options, performance stock units, executive performance stock units and employee stock purchases, with vestings occurring over time and settled with the Company’s Class A common stock.

•Changes in fair value of contingent earn-out liability - Represents the charge to mark the contingent earn-out consideration to fair value in connection with the 2023 acquisitions.

•Management transition costs - Represents costs primarily related to executive transition costs for executive search fees and related costs for the transition of certain members of management, such as severance costs.

•Transaction costs - Represents transaction costs primarily related to professional service fees incurred in connection with the secondary offering, Form S-3 registration statement filed in 2023 and acquisition activities, including financial diligence and legal fees.

•Prepaid marketing charges - Represents the write-off of marketing campaigns that were determined to be inconsistent with current marketing strategies.

•Inventory fair value write-ups - Represents the recognition of fair market value write-ups of inventory accounted for under ASC 805 related to the 2023 acquisitions.

•Sales tax audit expense - Represents a sales tax assessment related to prior periods.

•Tax refunds - Represents a one-time tax refund related to COVID-19 era benefits.

•Tooling depreciation - Represents the depreciation applicable to the tooling used in the manufacturing process that is recognized within cost of goods sold.

•Tax impact of adjusting items - Represents the tax impact of the respective adjustments for each non-GAAP financial measure calculated at an expected statutory rate of 21.0%, adjusted to reflect the allocation to the controlling interest.

•Removal of valuation allowance - Represents the removal of the valuation allowance recorded within the period, as determined through revision of the current period tax provision to reflect the Non-GAAP Adjustments to income (loss) before income taxes.

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SOLO BRANDS, INC.

Reconciliation of Non-GAAP Financial Information to GAAP

(Unaudited) (In thousands, except per share amounts)

Adjusted Gross Profit

The following tables reconcile the non-GAAP financial measures to their most comparable GAAP measure for the periods presented:

			Three Months Ended December 31,												Year Ended December 31,
(dollars in thousands)			2024						2023						2024						2023
Gross profit			$	87,764					$	96,419					$	260,264					$	302,152
Inventory charges associated with restructuring and consolidation activities			(433)						—						18,309						—
Inventory fair value write-up			—						907						805						907
Tooling depreciation			240						756						927						756
Adjusted gross profit			$	87,571					$	98,082					$	280,305					$	303,815
Gross profit margin (Gross profit as a % of net sales)			61.1		%				58.3		%				57.3		%				61.1		%
Adjusted gross profit margin (Adjusted gross profit as a % of net sales)			61.0		%				59.3		%				61.7		%				61.4		%

Free Cash Flow

The following table reconciles net cash (used in) provided by operating activities to free cash flow and adjusted free cash flow for the periods presented:

			Year Ended December 31,
(dollars in thousands)			2024						2023
Net cash (used in) provided by operating activities (as reported)			$	10,517					$	62,423
Capital expenditures			(14,512)						(9,093)
Free cash flow			$	(3,995)					$	53,330
Business optimization and expansion expense			8,108						462
Management transition costs			3,133						1,621
Transaction costs			1,029						3,347
Sales tax audit expense			485						—
Tax refunds			—						(5,121)
Prepaid marketing charges			1,871						—
Payments of contingent consideration			3,000						—
Adjusted free cash flow			$	13,631					$	53,639

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Consolidated Adjusted Net Income and Adjusted EPS

The following table reconciles net income (loss) to adjusted net income (loss) for the periods presented:

			Three Months Ended December 31,												Year Ended December 31,
(dollars in thousands)			2024						2023						2024						2023
Net income (loss)			$	(58,218)					$	(210,862)					$	(180,192)					$	(195,332)
Restructuring, contract termination, impairment and related charges			52,048						244,650						154,408						248,967
Amortization expense			4,944						6,133						20,107						22,396
Business optimization and expansion expense			1,852						6						8,108						462
Equity-based compensation expense			2,062						21						6,802						14,787
Changes in fair value of contingent earn-out liability			(283)						669						4,438						(1,573)
Management transition costs			43						706						3,133						1,621
Transaction costs			41						492						1,029						3,347
Prepaid marketing charges			—						—						1,871						—
Inventory fair value write-ups			—						907						805						907
Sales tax audit expense			—						—						485						—
Tax refunds			—						—						—						(5,121)
Tax impact of adjusting items			(8,180)						(31,401)						(27,033)						(35,708)
Reversal of valuation allowance			7,955						—						17,463						—
Adjusted net income (loss)			$	2,264					$	11,321					$	11,424					$	54,753
Less: adjusted net income (loss) attributable to noncontrolling interests			335						3,548						4,334						19,697
Adjusted net income (loss) attributable to Solo Brands, Inc.			$	1,929					$	7,773					$	7,090					$	35,056
Net income (loss) per Class A common stock			$	(0.63)					$	(2.14)					$	(1.94)					$	(1.84)
Adjusted net income (loss) per Class A common stock			$	0.03					$	0.13					$	0.12					$	0.58
Weighted-average Class A common stock outstanding - basic and diluted			58,643						57,882						58,388						60,501

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Adjusted EBITDA

Consolidated Adjusted EBITDA Reconciliation

The following table reconciles consolidated net income (loss) to consolidated adjusted EBITDA for the periods presented:

			Three Months Ended December 31,												Year Ended December 31,
(dollars in thousands)			2024						2023						2024						2023
Net income (loss)			$	(58,218)					$	(210,862)					$	(180,192)					$	(195,332)
Interest expense			3,652						3,462						14,004						11,004
Income tax (benefit) expense			(1,560)						(32,953)						(8,958)						(36,225)
Depreciation and amortization expense			6,687						7,770						26,629						27,349
EBITDA			$	(49,439)					$	(232,583)					$	(148,517)					$	(193,204)
Restructuring, contract termination, impairment and related charges			52,048						244,650						154,408						248,967
Equity-based compensation expense			2,062						21						6,802						14,787
Business optimization and expansion expense			1,852						6						8,108						462
Changes in fair value of contingent earn-out liability			(283)						669						4,438						(1,573)
Management transition costs			43						706						3,133						1,621
Prepaid marketing charges			—						—						1,871						—
Inventory fair value write-ups			—						907						805						907
Transaction costs			41						492						1,029						3,347
Sales tax audit expense			—						—						485						—
Tax refunds			—						—						—						(5,121)
Consolidated Adjusted EBITDA			$	6,324					$	14,868					$	32,562					$	70,193
Net income (loss) margin (Net income (loss) as a % of net sales)			(40.6)		%				(127.5)		%				(39.6)		%				(39.5)		%
Adjusted EBITDA margin (Adjusted EBITDA as a % of net sales)			4.4		%				9.0		%				7.2		%				14.2		%

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