Solo Brands (DTC) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $94.1 million, down 14.7% year-over-year, with adjusted EBITDA of $6.5 million and adjusted EBITDA margin of 6.9%.

• Significant one-time charges totaling $83.6 million for restructuring, contract termination, and impairments, including the wind-down of IcyBreeze and a $25 million goodwill impairment at Solo Stove, resulted in a net loss of $111.5 million.

• Direct-to-consumer (D2C) sales declined 15.5%–16% due to lower site traffic and lack of product newness, while retail sales grew 10% excluding a prior year barter agreement but fell 12.7% including it.

• Strategic priorities include product innovation, omnichannel expansion, talent acquisition, operational discipline, and leadership restructuring.

• Management reaffirmed full-year 2024 guidance and is focused on returning to growth through brand realignment and cost actions.

Financial highlights

• Gross profit was $39.3 million, with gross margin at 41.8% versus 61.9% a year ago, impacted by an $18.7 million IcyBreeze inventory write-down; adjusted gross margin was 61.9%.

• SG&A expenses rose to $61.1 million, or 64.9% of sales, mainly due to changes in fair value of contingent consideration and restructuring costs.

• Adjusted net income was $1.4 million; basic and diluted EPS for Q3 2024 was $(1.19).

• Inventory at quarter-end was $106.8 million, down 6.4% year-over-year.

• Cash and cash equivalents were $12.5 million as of September 30, 2024, down from $19.8 million at year-end 2023.

Outlook and guidance

• Fiscal 2024 revenue guidance reaffirmed at $470–$490 million, with adjusted EBITDA margin expected in the 9–10% range.

• Guidance reaffirmed based on early Q4 sales trends and current positioning.

• Anticipates retail acceleration and D2C stabilization in the first half of 2025, with D2C growth expected in the second half as new products and website launch.

• Ongoing restructuring activities in Q4 2024 are expected to be immaterial.