Solo Brands, Inc.

Hello everyone and welcome to the Solo Brands Incorporated first quarter fiscal 2024 financial results. My name is Emily and I'll be coordinating your call today. After the prepared remarks you will have the opportunity to ask any questions which you can do so by pressing start followed by the number one on your telephone keypads. I will now hand the call over to our host Bruce Williams. Please go ahead Bruce.

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 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 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 nine 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 investor portion of our website at investors.solobrands.com. Now, I'd like to turn the call over to Chris.

Thank you, Bruce, and thank you all for joining us today. I will begin by discussing our first quarter performance and provide an update on our strategic priorities outlined in our last quarterly call. I will then turn the call over to Laura to discuss our financial results in more detail and our outlook for fiscal 2024. We are pleased with our first quarter results as sales and adjusted EBITDA came in ahead of our expectations. Revenues declined 3.3% for the quarter. By channel, direct-to-consumer declined 6.8% for the quarter, which was a significant sequential improvement from Q4, which declined 21%. Wholesale revenues increased 2.5% despite very difficult comparisons due to a timing shift that we experienced last year. Adjusted EBITDA was better than anticipated, though lower than our expected normalized run rate due to planned investments in people and capabilities in our smallest revenue quarter, which pressured margins. I will discuss in a moment in more detail our two highest focused businesses, Solo Stove and Chubby's. But first, let me share an update on our key enterprise-wide strategic priorities. I am pleased with the progress we are making on developing our company-wide strategic plan. We hired a leading firm to help us with this exercise and are about 50% of the way through the work stream. Again, the strategic work will inform where we focus our investments, resources, and ultimately how we regain our footing as a high-growth and high-profitability company. I like what I see so far and will update you in future calls. On our last call, I talked about fixing our direct-to-consumer or D2C business and returning this channel to growth. Although still way too early, I very much like the progress we saw in Q1. As I mentioned earlier, we went from minus 21% in Q4 versus prior year to minus 6.8% in Q1 versus prior year. Certainly not a victory, but a marked improvement. And importantly, we gained momentum as Q1 progressed. On our last call, I also talked about developing a more balanced omni-channel strategy that would not be dilutive to our EBITDA margins. In Q1, we saw a sequential improvement in our D2C performance, and we continued to see growth in our retail channel, which I will discuss more when I talk about the brands in a moment. Now turning to solo stoves. In our last call, I mentioned that our top three priorities are revenue growth, product innovation, and talent acquisition. On the revenue front, the changes we are making in our D2C channel are starting to show signs of stabilization with marked improvement in sales year over year in Q1 versus our performance in Q4. Led by our new talent, we made tactical changes to our marketing to create a more balanced approach to acquisition versus retention marketing. stabilizing our ROAS or return on ad spend. We also believe we were able to capitalize on the new customers we acquired through the Snoop campaign. Importantly, we also continue to see solid momentum in our retail channel, supporting the strategic initiative of creating a balanced omnichannel business. With Dick's, we saw our door count increase in Q1 from 350 stores to 700 stores. We were also able to capitalize on 100 store tests with tractor supply, which resulted in increasing our door count in Q1 from 100 doors to over 1,500 doors. Now, it will take time to see significant sales growth from the new doors, but I'm encouraged about the trajectory for our retail channel moving forward. During the last call, I discussed our plans to change marketing agencies. We officially entered a new relationship with a world-class marketing agency that has full funnel performance and digital capabilities. I am highly confident this will pay dividends as we move through the balance of this year and beyond. On the talent front, we promoted Mike McGowan to take on the added responsibilities of President of Solo Stove, in addition to his role as Chief Growth Officer. We also hired a new sales leader, John Junker, for our growing retail channel. John brings broad experience with our key customers that will enable us to develop deeper, more strategic partnerships with our key customers. Turning to Chubbies. After a record-breaking year in 2023, I am pleased to report that the momentum has continued in Q1. The first quarter marks the beginning of shorts and swim trunk season at retail, and we ran a very successful brand campaign called Trunks for All. Starting in 2024, Chubby's offered swim trunks for all shapes and sizes, from people who are newborn to 100 years old, size six months to triple X large. For this campaign, we shipped most of our biggest retail partners' initial floor sets at the end of Q4, so that we were in stores before the critical spring break selling season began. Importantly, for us and our retail partners sell through exceeded expectations. This is important to see as we enter the height of shorts and trunk season in Q2. As we look forward, we continue to take an omnichannel approach and expect continued growth in D2C, retail, and our owned retail locations. I'm encouraged by the green shoots we are seeing in the business. While we are very early in our turnaround, our brands are strong, and continue to resonate with our customers. This gives us confidence that we have tremendous growth opportunities ahead of us. Our portfolio is supported by a company that is in a strong financial position, generates strong free cash flow with little debt, which allows us to make the necessary investments to position us for long-term sustainable growth. I want to thank our team for working with a sense of urgency as we continue to execute against our turnaround. I will now turn the call over to Laura. Laura?