Solo Brands, Inc.

Ladies and gentlemen, hello and welcome to the Solo Brands Inc third quarter fiscal 2023 financial results. My name is Maxine and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. I will now hand you over to Bruce Williams to begin. Bruce, please go ahead when you are ready.

Good morning, everyone, and thank you for joining the call to discuss Solo Brands' third quarter results, which we released this morning, and it 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. Those 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 10-Q, and will be available on the Investors portion of our website at investors.solobrands.com. Now, I'd like to turn the call over to John.

Thank you, Bruce, and thank you for joining the call today to discuss Solo Brands and our third quarter results. I will begin with a review of our third quarter performance and then talk more about our vision and strategy. Summer will then review the financials in more detail and provide our outlook. I am pleased with our third quarter results, which came in ahead of our expectations. We delivered sales of 110 million, an increase of 8% over last year, and adjusted EBITDA margins that increased 250 basis points to roughly 14%. Our results were driven by strong sales through our wholesale channel as our brand momentum continues to grow. While we know that consumer wallets are stretched, we are well positioned to navigate an uncertain consumer environment, given the resilience and strength of our financial model. Solo Brands generates healthy EBITDA margins, has low financial leverage, a balanced omnichannel sales approach, and is capital light, leading to strong free cash flow. We are proud to report on the momentum that Solo Brands is gaining with our wholesale partners. For the quarter, our wholesale revenues increased 114% compared to last year, due to strong sell-ins with new and existing partners matched with strong sell-throughs. Our sell-throughs have been solid because of the unique value that our brands offer to wholesalers fueled by our marketing efforts, which help us connect directly with many new customers that are experiencing our brands for the first time. We attribute the success of our wholesale strategy to this. Our customers appreciate and value options. The same consumer who is shopping online today may find themselves in a jam tomorrow as they prepare for a birthday party or a wedding. We have heard feedback from customers who are thrilled to be able to drive to a store to pick up a solo stove right then. Customers want optionality, and we are responding to their needs as part of our ongoing commitment to customer satisfaction. Allow me to remind you of our omnichannel strategy, which we rolled out at the beginning of the year. Our belief was that, as we built our wholesale business, we would inevitably cannibalize some of our online business in the near term. However, we expected that we would be able to drive many of those customers back to our site for the purchase of accessories and other products, and we are seeing that play out successfully. So far this year, we have witnessed a 23% increase in the customer group of first-time customers shopping on our website who are buying a fire pit accessory. We expect that the majority of these are customers buying solar cell fire pits from retailers and then coming to our website to buy accessories, showcasing our ability to build direct relationships with entirely new cohorts of customers. We are making connections with thousands and thousands of new customers who may be exposed to our branch for the first time, and this is part of a strategy that will ultimately grow our brand and business over the long run. As an important reminder, from a profitability standpoint, we are channel agnostic because we see similar profitability in wholesale as we do in our online business. As an added benefit of our strategic wholesale partnerships, we are building our brand awareness at an accelerated rate, which we believe will lead to higher sales in both channels over time. We are excited to work with retail partners who can optimize the in-person experience, allowing customers to interact with our products in new ways. We are accelerating our brand awareness through compelling shop-and-shop and in-store displays that enable us to showcase more of our product line in a solo brand's way, and our customers are feeling the love. We have found great success in Dick's Sporting Goods, Public Lands, and Shields, where we have more robust displays and in-person experiences, and this is intentional and in keeping with a larger strategy. It's part of our DNA to treat our customers just as well in physical stores as we do online. So we are seeing continuity in terms of the way that we connect with our customers. Nevertheless, we believe that we are very under-penetrated at retail and see significant runway to continue growing with our current retail partners through share of shelf and strategic marketing initiatives. Currently, our enhanced presentation is in only 200 doors, driving increased productivity in those doors. The reality is that we are in 7,500 doors in total across solo brands. But from a shop and shop perspective, we're only in a fraction of them. We believe there's still substantial opportunity to build shop and shop experiences and many more doors. And we will continue this rollout with our current and future retail partners. To this end, we are excited to begin offering our products with new retailers, including Target this quarter. And we are very happy to report that we have renewed our partnership with REI in a meaningful way. We couldn't be more thrilled to have the kind of growth we're having this early in our story. As a brand that still believes we're in our early days, the impact of this increased growth in retail is remarkable. First and foremost, it's underscoring the stunning synchronicity that's occurring between our on and offline channels. We are working within our wholesale channel to protect profitability, even while our retail partners are seeing great gains. No matter where we meet our customers, the focus is on fostering a deeper connection, which is leading customers back to our websites. Solo Brand's obsession with the customer experience has been part of our DNA from the start, and we are happy to report that our approach is continuing to blaze trails wherever we go. As we dig into this channel shift a little more, we believe that our retail growth places a halo over our entire business, creating a flywheel effect. As I stated, we have noticed a significant increase in customers that are purchasing accessories on our website who have not purchased a fire pit on SoloStove.com. Essentially, these would be customers that bought a fire pit at a retail and are coming back to our website to purchase accessories, hence the flywheel. The purchasing patterns of these customers result in the near-term pressure that we are seeing in our direct channel. However, we do believe that over time, this flywheel effect will extend the lifetime value of a retail-initiated customer once they are in the solo ecosystem. What does this all mean for solo brands? It means we're well on our path to reaching the omnichannel balance that we talked about earlier this year. We said that we were going to aim for more balance in our channel mix, and our retail partners are leaning in to help turn our goals into reality. And while there are near-term headwinds to year-over-year growth for our e-commerce channel, in the long term, we continue to expect that the brand exposure our new retail partners bring to the business will create stability and solidarity for all channels. I want to emphasize our view that solo brands expansion of wholesale relationships is not a diversion from our D2C expertise, but part of an integrated channel strategy that allows us to build deeper connections with customers. Turning to product innovation, we are excited about our product launches during the quarter. We continue to be successful introducing solo branded products where we believe that we have permission to play in the backyard category. Building on the momentum of our pizza oven, Pie, the most successful new category that we have entered into after fire pits, we launched Pie Prime during the quarter. In addition, we introduced Mesa Torches, which rolled out in September. Mesa Torch brings entertainment, ambiance, and backyard comfort via our innovative torches that customers can stake in the ground to enjoy a live fire and long-lasting light source with either a standard or a citronella insect repellent fuel. While it is still very early, we have been pleased with the results of both of these launches. A year ago September, we launched Mesa, our tabletop fire pit. We are continuing to see strong demand for Mesa from our retail partners, and we believe that we have a long runway for growth with this product. Our focus on continuous innovation, combined with consistent feedback from our customers, enables us to offer new accessories and enhancements to our core products. We will continue to roll out innovation in the upcoming quarter. As part of our efforts to expand the Solo brand into new capabilities and categories, we recently acquired two unique businesses, Terraflame and Icy Breeze. Both of these are great companies on their own, but we believe that they fit nicely within SoloStove. The Terraflame acquisition allows us to safely bring fire inside and s'mores indoors. This addition also brings a proprietary concrete manufacturing facility, giving us a new material and capability to include in our product innovations. While still small, TerraFlame is seeing significant year-over-year growth since joining the Solo family. Icy Breeze is a portable air conditioner and a cooler that you can use at the campground, the ballpark, on your boat, or just in your backyard. We expect to integrate Icy Breeze into SoloStove in 2024, and we are excited to add the supply chain, marketing, and distribution scale to this extraordinary product as we move into peak selling season next spring and summer. While Icy Breeze is out of season in the winter months, We will introduce a new product innovation around the holidays, which will make Icy Breeze more giftable even out of season. Innovation is driving greater market penetration by enabling customers in a wide variety of climates to manage home comfort. In colder climates, our products create a whole new living space that customers didn't have before, fire pits and heaters on the deck. And in warmer climates, we have customers who love to make a nice toasty s'more even when it's 100 degrees outside. They can do that now with TerraFlame in their kitchen, just as Icy Breeze allows customers to extend their outdoor living space during warm periods of the year. And this kind of value is immeasurable and helpful in expanding market share. So both of these new innovations are opening up opportunities for rethinking the way customers connect with each other around the home. Solo is committed to making the outdoor living room experience as comfortable as the indoor living experience. And we will continue to look for strategic tuck-in acquisitions that will allow us to extend the solo stove brand across backyard and outdoor categories with the ultimate goal of helping customers create good moments and lasting memories. Additionally, we continue to expand our customization offerings. Ahead of the holiday season, we are excited to share we have signed a new NFL licensing agreement. Customers can now support their favorite team all while gathering with friends and watching the game or tailgating around their solo stoves. In closing, we remain committed to a strategy focused on profitability and free cash flow generation. This strategy allows us to invest in opportunities where we can continue to deliver growth and brand expansion, and most importantly, build stronger and more direct connections with customers. At the end of the day, we believe that what's good for our customer is good for our shareholders. The current environment remains uncertain, dynamic, and hard to predict. We are focused on what we can control, which is to deliver the best experiences for great products. We provide a wide range of price points and an offering that meets the needs of our ever-growing customer base. As we look into the all-important fourth quarter, we have a lot of exciting things planned to reach new customers through unique and compelling marketing programs, which we believe will stand out from the crowd and drive enthusiasm for our brand. Before I turn the call over to Summer, I'd like to take a moment to thank her for all she has done for Solo Brands. She's been a great partner to me and leader of our finance team. We will miss her and wish her all the best. I will now turn the call over to Summer to discuss the financials. Summer?