Solo Brands, Inc.

Hello, everyone, and welcome to Solo Brand's first quarter fiscal 2023 financial results. My name is Bruno, and I'll be the operator of today. During this presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. I'll 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' first 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 Marris 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, 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 quarterly report on Form 10Q, and will be available on the Investors portion of our website at investors.solobrands.com. You 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 revise 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 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 nine gap measures to the most comparable gap 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 turn the call over to John.

Thank you, Bruce, and thank you for joining the call to discuss our first quarter results. I will begin by reviewing our Q1 performance, then provide an update on our key operational strategies. Summer will review our first quarter financial results and provide an update to our outlook. We are extremely pleased with our performance this quarter. Despite a volatile macro environment, we managed our business prudently and generated solid gross profit and healthy EBITDA margins. These results are a reflection of our disciplined focus on profitable growth and positive free cash flow generation. We are still in the early stages of our story as our household penetration remains low, and we believe we have significant white space ahead. As such, even in a tougher economic environment, We believe that a renewed focus on customer experience and continued investment into product innovation, wholesale penetration, and international expansion are good strategic uses of capital that position us for long-term growth. During the first quarter, our sales grew 7.3% to 88.2 million, driven by strength in the wholesale channel. As we stated during our fourth quarter call, we expected to experience strong momentum during the quarter, and we were encouraged to see larger replenishment orders than we expected, reflecting earlier sell-through at retail. Even so, our first high season of the year is just kicking off, and we will know more about full sell-through as we get through the rest of Q2. Moving on to the direct-to-consumer, our D2C sales were $54.8 million, in line with our expectations for the first quarter. The strength in our wholesale channel allowed us to be less promotional than the same period in the prior year without negatively impacting overall new customer acquisition. Our new products and innovation continue to be a draw for both new and existing customers, which is reflected in our consistently high referral and repeat purchase rates. In addition to new products, our team also continues to delight customers with a differentiated experience and outstanding customer service that reinforces the great experiences customers have with our products and strengthens the referral and repeat purchase behaviors previously mentioned. Said differently, our unique ability to connect with and retain customers allows our business to better navigate through periods when consumers are making trade-offs. We delivered significant newness in 2022, and our new products have quickly become fan favorites. However, I want to highlight that our legacy products continue to provide a solid foundation for our company. They are the engine that creates a dynamic for strong repeat purchases and high referral rates. We will build on this momentum in 2023 as we execute on the playbook we laid out last quarter, elevate and innovate our products, broaden and deepen our wholesale partnerships and grow our business internationally. Starting with innovation, we are proud of the newness delivered over the past few months and we look to build on this success going forward. We have a history of continuous product innovation focused on delivering high quality products for our customers. Our deep connection with our customers provides a feedback loop that allows for a shortened product development timeline. As such, we continue to find new ways to innovate and expand our product line and we are excited that we will continue delivering a healthy lineup of new products in the remainder of this year. Continuous product development not only helps attract new customers, but it is also easily marketable to our existing customer database, which drives repeat purchases, increases lifetime value, and lowers our overall customer acquisition costs. Turning to wholesale, the conversations and feedback from our wholesale partners continue to be very positive. Our focus is on growing our market share with our existing partners by expanding into new doors and increasing shelf space with existing doors. While the wholesale channel is very exciting, we are in the early innings of its growth story. To that end, we are disciplined in managing our selling rate by keeping a close eye on our sell-throughs. As I discussed earlier, our D2C heritage allows for us to have strong engagement with our customers. We are finding that there are great ways to build direct connections with our customers and the wholesale channel as well. The strongest brands are those that are able to maintain and build upon their connection with their customers by providing a fluid experience and presentation with both the direct and wholesale channels. As such, we are excited about what our strategic partners are doing to build brand awareness and store where we can establish a direct relationship with that customer. We believe that working with our retailers to develop greater brand affinity will lead to stronger sell-throughs and increase shelf space and our existing customers, all while driving healthy merchandise margins. And finally, we are also pleased with the performance of our international business and believe we are in the beginning stages in our global expansion. We have invested in local leadership in Europe and are enthusiastic about capitalizing on a significant growth opportunity in the EU. Additionally, we are exploring new markets, including Asia, and will be strategic as we determine the right timing to open these markets. We continue to believe that our international business can grow to be the size of our domestic business. We are operating in an uncertain macro environment where consumers are being selective in their purchases. However, our direct connection to customers, combined with strong execution by our team in the three areas mentioned before, product innovation, channel expansion, and international growth, create a wide competitive mode around our business, and most importantly, create a foundation for years to come. Brands that are innovating and creating great products that lead to meaningful experiences will win. And that is our focus. Solo Brands is centered on a common mission to build a company that is great at facilitating moments that put smiles on faces across the globe. I'm grateful for our amazing team, which continues to execute at the highest level for each other and for our customers. We will maintain our disciplined approach to financial management, which we believe enables us to generate healthy growth, positive free cash flow, and strong returns on capital over the long term for our shareholders. I will now turn the call over to Summer to discuss the financials. Summer?