Solo Brands, Inc.

Hello, everyone, and welcome to the Solo Brands Fourth Quarter Fiscal 2022 Financial Results. My name is Bruno, and I'll be operating your call today. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. I will now hand over to your host, Bruce Williams. Please go ahead.

Good morning, everyone, and thank you for joining the call to discuss Solo Brands' fourth quarter results, which we released this morning and 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 Maris and Chief Financial Officer Summer Webb. Before we get started, I want to remind everyone that management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on current management expectations. These may include, without limitation, predictions, expectations, targets, or estimates, including regarding our anticipated financial performance, business plans and objectives, and future events and developments, and actual results could differ materially from those mentioned. These forward-looking statements also 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, among others, are discussed in our filings with the SEC. We encourage you to review these filings for a discussion of these risks, including our soon-to-be-filed annual report on Form 10-K, and will be available on the Investors portion of our website at investors.solobrands.com. We should not place undue reliance on these forward-looking statements. These statements are made only as of today, and we undertake no obligation to update or advise them for any new information except as required by law. This call will also contain certain non-GAAP financial measures, including net income as adjusted, diluted earnings per share as adjusted, gross margin as adjusted, adjusted EBITDA, and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past performance, and facilitate period-to-period comparisons of our core operating results and the results of peer companies. Reconciliation of these non-GAAP measures to the most comparable GAAP measures and definitions of these indicators are included in our earnings release, which will be available to our 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 fourth quarter and full year 2022 results, as well as our 2023 outlook. To begin, we were incredibly pleased with our fourth quarter results, with sales and adjusted EBITDA increasing double digits despite a difficult macro environment. At the beginning of 2022, we shared our investment strategy, along with confidence that our business model would allow us to make investments in long-term growth without sacrificing strong profits and positive free cash flow. I'm happy to share that our investments began paying off in the back half of the year and culminated in strong Q4 results. Customer response to our products was not only high during the key selling period we call Cyber 5, or Thanksgiving Day through Cyber Monday, but also continued through the remainder of the holiday selling season. This positive customer response was most evident in the number of shoppers we saw come through our online stores and the rate at which these shoppers converted to customers. When the dust settled on the quarter, we had delivered strong top line growth, all while generating strong adjusted EBITDA and solid free cash flow, just as we had planned. Overall, our results are a testament to the strength of our business model, which allows us to drive growth while reinvesting into the business. Customer relationships have been and will continue to be at the heart of our business. It took us about 10 years to acquire nearly 2 million customers through our website. It took only two years to double that number. The rate at which we are acquiring customers and the direct relationship we maintain with them differentiates our business and creates a competitive mode around it. As our loyal customer base grows, so does our moat. But the story doesn't end here. We remain relentlessly focused on delivering an exceptional customer experience, and our team finds new ways to wow them frequently. Innovating new products, enhancing the online shopping experience, and shipping orders the same day they are placed on our website are just a few ways we surprise and delight our customers regularly. Create good is a core value at Solo Brands. And it turns out you can create a lot of good by just treating your customers exceptionally well. Expect for us to continue obsessing over customer experience simply because it's the right thing to do. But know that focusing on the customer isn't just good for customers. It's good for our team and shareholders too. Fellow branch referral rate is something we are extremely proud of, and it's fueled by customers' desire to share with their friends and family the incredible experiences they've had with our company. Innovation is found all around our business. One of the obvious places is in new products. In 2022, we launched more new products than any other year in our history, and the new products quickly became customer favorites. There are too many to list, but I'll highlight a couple. Last spring, we entered the exciting and fast-growing portable pizza oven category by launching Pie, an oven that leverages our signature 360-degree airflow and can cook homemade pizzas in less than two minutes. Customer feedback has been exceptional for Pie, and last year's demand peaked in Q4 when we sold out of Pie inventory in December. Mesa, a tabletop fire pit, was launched in late summer and was a response to customers asking for an outdoor fire pit that could be used in more spaces. This small but mighty solo stove generates the same secondary burn as our well-known larger stoves, but it's even faster and easier to use and costs less than $100. Early data shows that Mesa is attracting more customers faster while giving us access to backyard patios and yards that may be too small for our popular bonfire fire pit. I hope it is obvious how core new product innovation is to our business and how important we believe it is to our long-term success. All in all, Solo Brands launched over 15 new products last year, and we expect them to have a meaningful impact on our business in the future. Another area of innovation at Solo Brands is in our digital and data infrastructure. Last year, we made big improvements in how we ingest, digest, and utilize first-party and third-party data at Solo Brands. Our investments into data and digital had far-reaching impacts on marketing efficiencies and scalability. And because we believe we have barely scratched the surface on potential market penetration, our unique and proprietary digital and data focus has a long runway to find prospects and profitably convert them to new customers. In addition, we are finding new, more efficient ways to get existing customers to come back again and again for additional purchases. 2023 is all about leaning into the things that are working well. And so our priorities for this year are, first, to continue expanding our data management and infrastructure, Second, drive growth internationally. And third, broaden and deepen our wholesale partnerships. Data and digital investments began paying off in the back half of last year, and we expect to continue investing in them this year. Our first part of data and our ability to use this data to drive meaningful interactions with customers improves engagement, retention, and referral rates. We started seeing strong momentum in our international markets in the second half of Q4 and want to continue pushing profitable growth internationally in 2023. We have significant growth opportunities in our existing countries, and we plan to launch localized e-commerce stores and additional new markets this year. We still believe that in the long term, our international business has the potential to become the same size as our U.S. business, and our new markets will get us closer to realizing this vision. And finally, expansion with our retail partners is a key area of opportunity in 2023. As we continue to focus on delivering a great customer experience, We want to be where our customers need and want us to be. Dix, Ace, Academy, Shields, Costco, and others have been solid partners, and we are working closely with them to strategically add doors, expand SKUs, and coordinate promotions so more customers can be exposed to and participate with our company. As I mentioned earlier, because we're early in our story, we believe this shift to stronger alignment with strategic retailers will significantly accelerate brand exposure and market penetration for seller brands. Of course, this will initiate a planned shift mix between DTC and wholesale, but one that we expect to strengthen our business and our profit generating model. We are operating in an interesting environment. On the one hand, we have tremendous wind at our backs. Our investments from last year paid off. We have built a strong foundation on which to stand, and we're focused on some exciting new initiatives that we feel confident will only provide additional wind to our sails. On the other hand, the macro environment is uncertain. Inflation remains high, and there is obvious risk to consumer discretionary spending. It's easy to get tossed around with so many conflicting factors, but our business remains on solid footing. We have produced healthy growth, strong profits, and positive free cash flow. I'm proud of our team and their resilience, and I can honestly say we're excited for the future. The outlook you will hear from Summer is one that accounts for the uncertainties in the macro environment. We can't predict the future of the consumer, inflation, or interest rates. but we can and will execute our playbook, which is long-term and profit-oriented. I'm so thankful for our team that is truly the backbone of this company, and now turn the call over to Summer to discuss the financials and our outlook on 2023.