Solo Brands, Inc.

everyone and welcome to Solo Brands Incorporated fourth quarter and fiscal 2023 financial results. My name is Emily and I'll be facilitating your call today. After the presentation there will be the opportunity for you to ask any questions which you can do so by pressing start followed by the number one on your telephone keypads. I'll now turn the call over to our host Bruce Williams, Managing Director at ICR. Please go ahead Bruce.

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 Chris Metz and Chief Financial Officer Laura Coffey. 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 annual report on Form 10-K, 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 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 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'd like to turn the call over to Chris.

Thank you for joining us today. I am very excited to be the new CEO of Solo Brands, and I couldn't think of a better time to join the company. My first 60 days in has only confirmed my belief in the upside and opportunities that lie ahead of us. Many of you may be thinking, what attracted me to the role? And why was I the right choice for the role? First, let me share a bit about my background. Early in my career, I joined one of the world's premier consumer durable goods companies in Black & Decker. Over the next 13 years, I rose from assistant product manager to president. During that time, I was also part of a team that launched DeWalt Power Tools, giving me the opportunity to lead the European Professional Power Tools Group based in Germany. Black & Decker was my training ground for how to develop innovative products, compelling marketing campaigns, and build aspirational brands. From there, I spent a decade in private equity, honing my leadership skills in many different consumer-branded companies for a leading PE firm. I then spent time as CEO of public company Articat, building an iconic power sports brand and selling it to a Fortune 500 company. And most recently, I was CEO of public company Vista Outdoor, a multi-billion dollar collection of 41 leading consumer durables brands. During my tenure at Vista, we nearly doubled sales and drove incredible returns for shareholders. I was attracted to Solo Brands because of my passion for the outdoors, the strength of the core brands, and the loyal following consumers have for the brands and products. However, frankly speaking, some areas need to be strengthened. I believe there is enormous upside at a company that generates high margins and strong free cash flow with low leverage. I believe the company provides a strong platform for growth and is a perfect fit with my past experiences of leading multi-branded public companies. Developing the right strategies, attracting a talented team, and instilling a performance-based culture that executes relentlessly is what I enjoy and where I excel. In the two months since I joined Solo Brands, I've spent my time diving into the business, meeting our teams, assessing our brands, and understanding our strengths and opportunities. Today, I will share my initial observations and thoughts on areas of focus and the actions we are taking. However, before I jump into this, I'd like to introduce our new Chief Financial Officer, Laura Coffey. I couldn't be more excited to have Laura as a partner. She has extensive financial experience working with public companies and has worked in consumer-centric companies most of her career. We're excited to welcome her to the team. After my prepared remarks, I will turn the call over to Laura to take you through our financials and provide our initial outlook for fiscal 2024. Our brands were founded by entrepreneurs whose creativity and drive to innovate and disrupt created entirely new categories and opportunities. I see tremendous potential in our brands, which is supported by the company's strong financial position. However, I recognize that there is work to be done to fix our issues and improve the performance of our company. I will frame this up at a high level in terms of what we need to return to growth. First, we need to develop and execute against a well-defined company strategic plan, a plan that allows us to double down on our core businesses, Solo Stove and Chubbies. Secondly, we need to fix our D2C or direct to consumer business and return this channel to growth. Third, we need to develop a more comprehensive omni-channel strategy that will not be dilutive to our overall EBITDA margins. Fourth, We need to develop an innovative product pipeline for our core solo stove business and identify near adjacencies that will expand our TAM. And fifth, we need to recruit a talented leadership team, a team that has what I call been there, done that experience. A leadership team with a proven track record for both results and attracting other talented people to strengthen our team. These high level issues we need to address are my initial observations. However, we need to and will dig deeper. In fact, we are currently undergoing a full strategic review of every key facet of our company and have engaged a leading strategic firm to help us in this work. I've been in the seat for 60 days, and although I may not have all the answers to questions you may have today, I will in time as we formulate our strategic priorities. Let me now speak more specifically to our two largest and critical brands, and where much of my focus will be. Turning to Solo Stove, I have complete admiration for what the founders and team have built at Solo Stove. However, like many entrepreneur-founded businesses, the appropriate processes and capabilities necessary to scale the business have not been built out. From my initial observations, everything I have seen can be fixed. As I mentioned, we are currently undergoing a full strategic review that will result in a clear long-term plan. As part of this, we are conducting a deep assessment of our consumers, and these insights will lead to a better understanding of TAMs, profit pools, and channels where our products are purchased. These insights will also inform our product roadmap, our brand strategy, and how best to utilize our marketing dollars. In parallel with doing this strategic work, we're focused on three key priorities, revenue growth, product innovation, and talent acquisition. Within our top priority, revenue growth, our first immediate focus area is the need to address the decline in sales of our solo stove business. We have high gross margins, but we are not spending our marketing dollars effectively, and therefore, we are not achieving the return on ad spend or ROAS we expect to help drive our growth. To that end, in the past 30 days, we have hired a new chief growth officer and a new leader of brand marketing and consumer insights to address this issue. We have also taken immediate action to restructure our marketing partnerships. First, we're ending our marketing contract with an outside firm that has placed much of our media spend. Second, we're also replacing our current marketing agency. We have moved our business to a new marketing agency that has strong full funnel performance, and digital marketing capabilities. Our new partner has deep experience working with D2C firms that also have an omni-channel footprint, such as Nike, Athleta, Kohler, Beats by Dre, and Therabody. We are excited about the potential to partner with a leading firm to assist us with our marketing strategies. Importantly, though, we've also started to upgrade our internal marketing team so that we can develop more of these capabilities in-house to augment our partnerships with outside agencies. Another critical area of focus for us will be developing a more cohesive product innovation pipeline. We'll be hiring a new leader of product development and we'll begin building a compelling three to five year product roadmap that will enable us to bring newness to our core category while also expanding upon our core. All of our new products will be developed with our key channel partners in mind and we'll have an integrated go-to-market plan that will optimize our product launches. More to come on this in the future. Our third area of focus is building out the talent and capabilities within Solo Stove. We are fortunate to have a highly enthusiastic and energized team within Solo. However, we need to augment this team in key areas with deeper experience and skill sets. I previously mentioned the recent hiring of a chief growth officer and a leader of brand marketing and consumer insights for Solo Stove. We have also recently added a chief people officer to help us across all of our brands as we continue to upgrade our talent. All of these investments are built into our guidance and will be factored into our strategic plan. I'm very excited and confident that we will get Solo Stove back to its winning ways. I acknowledge that it will take some time, but I haven't seen anything yet that leads me to believe we can't win in a big way. Turning now to our chubbies business. Chubby's is coming off one of its best years in history in 2023 and starting the new year with strong momentum. It is one of the most exciting up and coming apparel brands in America today with a very focused business plan and continues to execute at a high level. Chubby's core customer is the young male and the business has a balanced channel strategy of direct and wholesale with an emerging retail owned footprint. I do believe we can create tremendous value by supporting these two great brands and allowing them to grow in distinct ways. Personally, I have a lot of experience in multi-brand platforms and creating the culture that allows entrepreneurial high growth brands like Solo Stove and Chubbies to flourish. We believe that both Solo Stove and Chubbies are still relatively early in their growth cycles and have significant room to grow both through direct and retail channels. We know we need to improve the performance of our solo stove direct business. However, as I've mentioned previously, we will continue to meet our consumer where they shop through a balanced omnichannel distribution strategy. As part of our strategic work, we will confirm the TAM and the full potential for each channel of distribution without diluting profitability. In closing, I'm incredibly excited to be here leading this company and believe we have tremendous upside in front of us. In my early days, I have been impressed by the strength of our core brands, Solo Stove and Chubbies. These are great businesses that have an entrepreneurial spirit with tremendous followings and are loved by our customers. However, I do recognize that there's a lot of work to be done, and it will take some time. We're working to build the infrastructure in terms of people, capabilities, and processes to lay the foundation for us to deliver consistent growth over the long term. Now we'll turn the call over to Laura.