Solo Brands, Inc.

Hello everyone and welcome to the Solo Brands Inc second quarter fiscal 2022 financial results call. My name is Seb and I'll be the operator on the call today. There will be an opportunity for Q&A and you can register your question by pressing star one on your telephone keypad or press star two if you would like to withdraw your question. If you need operator assistance at any time, please press star zero. We'll now hand the floor over to Bruce Williams to begin.

Thank you, operator. Good morning, everyone, and thank you for joining the call to discuss Solo Brands' second quarter results, which we released this morning. You can be found on the investor relations section of our website at investors.solobrands.com. Today's call will be hosted by Chief Executive Officer John Marris and Chief Financial Officer Summer Webb. Before we get started, I want to remind everyone that statements made on this call and the earnings release contain forward-looking statements regarding our financial outlook, business plans, and objectives. and other future events and developments, including statements about the market potential of our products, anticipated financial performance, and our goals and strategies. These forward-looking statements now involve substantial risks and uncertainties, some of which may be outside of our control, and that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include those described in the company's earnings release and other filings with the SEC speak only as of today's date. In addition, our discussion today includes references to certain supplemental non-GAAP financial measures, including dead income as adjusted, diluted earnings per share as adjusted, adjusted gross profit, adjusted gross margin, adjusted EBITDA, and adjusted EBITDA margin, which should be considered in addition to and not as a substitute for our GAAP results. We use these non-GAAP measures in evaluating our ability to generate earnings, provide consistency and comparability with our past performance, and facilitate a period-to-period comparison of our core operating results. Reconciliation of these non-GAAP measures to the most comparable GAAP measures and definition of the reference non-GAAP measures are included in our earnings release and our filings with the SEC, which are available on the investors portion of our website at investors.solobrands.com. Now, I would like to turn the call over to John.

Thank you, Bruce, and thank you for joining the call to discuss our second quarter 2022 results. I'd like to begin by welcoming Summer Webb. She joined us in May as our CFO, and I'm grateful for the partnership that she and I have created in such a short time. Today, I'll be sharing a quick summary of our Q2 results, followed by an update on our strategic initiatives. I will then turn the call to Summer for a more detailed update on our financial performance. Following summer's update, I will wrap up with additional comments on the current market and how we feel about our ability to operate in this environment. Our second quarter results reflect improving sales trends as we move into our seasonally stronger months of May and June, driven by our direct-to-consumer channel. During the second quarter, total revenue grew 53% to $136 million, compared to $88.7 million in the prior year, alongside healthy growth margins. I want to thank our operations, sales, and marketing teams who did a great job managing supply chain and promotion to deliver such strong gross margins, all while generating solid top-line growth. Our direct-to-consumer sales increased 63.2% to $116 million compared to $71.1 million in the prior year, with sales strengthening as the quarter progressed. Sales in our wholesale channel increased 13.1% to $20 million compared to $17.7 million in the prior year. Although our international business still makes up a small percentage of our overall business, we were pleased with the increased consumer demand we experienced in this channel and believe there is meaningful international growth ahead. We are also happy to share that our key retention and acquisition metrics remain healthy with referral rates and repeat purchase rates both above 40%, and our average net promoter score across all brands is 82%. We remain focused on executing our strategic priority to deliver an exceptional customer experience through our four key investment areas. First, innovating and elevating our product offerings. Second, building and leveraging our data warehouse to drive conversion and marketing efficiencies. Third, expanding our wholesale distribution. And fourth, growing our international business. Let's start with innovation. We're excited about the response to the new products introduced so far this year and are thrilled about what we have planned for the back half of the year. We've continued to see momentum from products launched earlier this year, including our new pizza oven, Pie, which began to ship in Q2. The feedback on Pie has been fantastic and a great testament to our ability to deliver innovation that helps new and existing customers make amazing memories with friends and family. Many existing customers wrote us, including Nelda H. from Texas, who said, I love my pizza oven. Great quality, easy to use. Our pizza night with five couples was a huge success, and now everyone wants to order one for themselves. This is my third item to purchase and I have no regrets. Solo stove rocks. It's equally exciting for us when we hear from brand new customers to solo brands. John H. from California wrote, love the pizza oven, have not purchased any of the other products, but now I am looking at their fire pits. Both returning and new customers are loving pie, which is a solid indicator of the opportunity ahead of us to create millions of passionate, loyal customers. Over 35% of our pie orders are coming from existing customers. which also demonstrates our ability to extend the Solo brand into adjacent categories, thereby increasing the lifetime value of our existing customers and creating competitive modes around our business. Innovation is at the heart of everything we do at Solo Brands. To that end, we are excited to announce the launch of several new products across Solo Stove, Chubbies, and Aisle. The first is Solo Stove 2.0, a product that incorporates a removable grate and ash pan in our fire pits. This product enhancement, which was launched in mid-July, came in response to customer requests to solve the challenge of emptying ash from the fire pits and makes our solo-stove fire pits much easier to use. While it is early, customer feedback has been positive and we're excited to release product enhancements that remind our customers that we're committed to listening to their feedback. Our plan is to clear through legacy solo-stove 1.0 product through our international markets, select wholesale customers, and domestic B2C channels. In addition to Ranger, Bonfire, and Yukon 2.0, SoloStuff will have several exciting product innovations launching in the back half of the year. Last week at Chubby's, we launched our Everywhere Pant, or as we like to call them internally, Longs. This long-anticipated launch, no pun intended, extends Chubby's seasonal reach into cooler months and allows us to better appeal to consumers throughout the year. Early feedback has been fantastic. Tyler S. says, As someone that's been a massive fan of Chubbies ever since the brand's launch, there's only been one flaw I've experienced. It's that I have to store my Chubbies away each and every winter. Now with the Everywhere Pant, Chubbies' sole flaw has been terminated. I can finally wear my Chubbies year-round, and I've never been more excited. At IO, we launched Switch last month, an inflatable stand-up paddleboard that doubles as a kayak, a unique category-differentiated product. We anticipate that this multi-purpose paddleboard will be well-received by enthusiasts as well as novices. As you could probably sense, our product teams have been busy and focused on the quality and quantity of innovation that we are bringing to the market this year. In fact, this year we will launch more new products than ever before in a calendar year. Turning to our data investments, we continue to focus on leveraging our vast customer database to cross-market our brands and drive efficient marketing spends. Today, we have over 3.2 million customers, of which 50,000 have purchased from at least two of our brands. This number has doubled from the start of the year. Leveraging our one-to-one relationship with customers has been instrumental to our growth to date, and we see our data investment as a key component of our future growth as we integrate our brands to drive marketing efficiencies across the platform. In our wholesale channel, we have been very pleased with the demand from retailers for our products. We have created some exclusive product offerings from Solo Stove, including colorways and bundles that will roll out in the second half of the year. And at Chubby's, our increase in brand awareness and strong performance in stores is driving a significant expansion in door counts at a number of national retailers, including two key partners, Dick's Sporting Goods and REI. The logistics associated with expanding our footprint would usually put a major strain on our 3PL partners. Fortunately, as we've transitioned Chubby's warehousing and fulfillment in-house, We gained confidence in our ability to service our retailers in a best-in-class manner, another testament to the differentiated value of B2C and our differentiated model. We are incredibly excited about our international business. We will be launching Australia this month, which we believe will add even more momentum to our international growth. Our European rollout is going really well as brand awareness increases. We are focused on creating authentic messaging that is customized for each country, which requires additional marketing investments on the front end, but the investments are expected to pay off. As I previously said, Solosto's international rollout has paved the way for other brands, and I'm thrilled to share that Oru, Ayo, and Chubbies are now live in Canada and Europe as well. We believe that the investments we are making, especially in marketing, to build our brands in these markets will deliver solid returns for years to come. In terms of strategic acquisitions, we continue to consider a number of compelling opportunities. We're mindful of the uncertain economic environment and recognize the importance of being highly selective and patient. In closing, I'm thrilled about the product launches we have planned for the back half of the year. We've listened to our customers and I'm grateful for and proud of our product teams who have worked tirelessly to make this happen. Their exceptional efforts and dedication are representative of our entire team and our solo brand's mission to create good moments and lasting memories for our customers. While we are optimistic about our future, we recognize that the macro environment is uncertain and changing quickly. We also recognize that we are at a stage in our business where investing in long-term growth is important. As a result, in a few moments, you will hear from Summer, who will be updating our outlook for fiscal 2022 to reflect both market uncertainties and higher costs, as well as our expectations to continue investing in our long-term growth initiatives. With that, I will now turn the call over to Summer to review our second quarter results.