Solo Brands (SBDS) Q4 2025 Earnings Transcript

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DATE

Thursday, March 19, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — John Larson
• Chief Financial Officer — Laura Coffey

TAKEAWAYS

• Net Sales -- $317 million for the year, with consolidated fourth quarter sales of $94 million, representing a 34.5% decline year over year primarily due to lower direct-to-consumer and retail performance in the Solo Stove segment.
• Chubbies Segment Sales -- Full-year Chubbies sales reached $122.9 million, reflecting 9.1% growth driven by increased online demand and expanded strategic partnerships.
• Adjusted EBITDA -- Achieved $19 million in adjusted EBITDA annually, with $9.6 million for the fourth quarter, a 52% increase compared to the same quarter last year.
• Adjusted Gross Margin -- 61% in the fourth quarter, flat year over year and improved by 40 basis points sequentially.
• SG&A Expense Reduction -- Fourth quarter SG&A expenses decreased by 38.8% year over year as a result of structural cost actions, including a reported 27% reduction in payroll.
• Operating Cash Flow -- Generated positive operating cash flow for three consecutive quarters, totaling $28.6 million during 2025 after the first quarter, supported by stricter working capital and inventory management.
• Restructuring and Impairment Charges -- Fourth quarter included $75.5 million in restructuring and impairment charges, with $74.1 million attributed to non-cash impairment.
• Inventory Management -- Year-end inventory balances reduced by nearly 25%, attributed to improved supply chain discipline and tighter planning.
• Net Income and Loss -- Reported a GAAP net loss of $83.2 million for the fourth quarter, primarily from impairment and restructuring, with non-GAAP adjusted net income of $2.3 million, flat year over year but improved from a sequential adjusted net loss of $11.9 million.
• Product Innovation -- Launched five new Solo Stove products in 2025; about 25% of fourth quarter sales were from new products, and six of the eight top-performing SKUs post-quarter were new introductions.
• Capital Structure -- Corporate restructuring in December eliminated the Up-C structure, consolidated to a single class of stock, and limited tax receivable agreement cash impact.
• Liquidity Position -- Ended the year with $20 million in cash and equivalents, no outstanding revolver balance, a $253.1 million term loan at a weighted average interest rate of 8.97%, and all covenants in compliance with no major maturities until 2028.
• Cost Structure -- Run-rate SG&A reduced by over 30% and further payroll and cost reductions planned for 2026; efficiency efforts include leveraging AI for operations.
• Segment Performance -- Solo Stove unit market share decreased while average order value increased; Chubbies gained share in select apparel categories based on new product launches.
• Retail and Channel Update -- Actively engaging retail partners for 2026, including Costco, DICK'S Sporting Goods, Scheels, Ace Hardware, and REI.
• Capital Expenditures -- $34 million in planned growth investments for 2026, focused on product innovation across brands.
• Strategic Brand Launches -- Introduction of Cheeky's, a women's swimwear brand under Chubbies, sold via direct-to-consumer and retail channels.

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RISKS

• CEO Larson said, "there is a little bit of risk with the consumer market. We are not sure exactly what is going to happen with what is going on geopolitically in the world."
• Larson stated that Solo Stove's "we are certainly down, but at a much higher AOV, so we are performing fairly well there," driven by "a lot of low-end competition" in the category, while revenue stabilization remains a significant challenge.
• Full-year sales at Solo Stove declined, and management sees the "challenge facing us is how do we stem the revenue decline in the Stove division and how do we begin to increase."
• $75.5 million in fourth quarter restructuring and impairment, with $74.1 million non-cash, resulted in a GAAP net loss of $83.2 million for the quarter.

SUMMARY

Solo Brands (NYSE:SBDS) reported sequential improvements in margin and profitability metrics, including three straight quarters of positive operating cash flow and a substantial fourth quarter rebound in adjusted EBITDA. The company eliminated its Up-C organizational structure, consolidated its equity, and reinforced liquidity with $20 million in year-end cash and no revolver borrowings. Leadership allocated $34 million for 2026 growth capital, specifically prioritizing margin-accretive new product launches and operational innovation. Management confirmed all debt covenants were met and highlighted the absence of significant debt maturities until 2028, bolstering near-term financial flexibility.

• CFO Coffey indicated distribution and marketing expenses declined proportionally with sales, reflecting tighter control and efficiency in spending.
• Adjusted gross margin stability was attributed to disciplined pricing and promotion strategy, with expectations for continued margin stability in 2026.
• CEO Larson identified that approximately 25% of fourth quarter sales stemmed from new product launches, with rapid consumer adoption driving six of the eight top-performing SKUs post-quarter.
• Active retail partnership expansion—especially the addition of Costco and new international efforts—may provide further revenue opportunities if consumer response is favorable.

INDUSTRY GLOSSARY

• Up-C structure: An organizational framework that enables certain tax benefits to legacy holders in newly public companies, allowing for tax receivable agreements and dual organizational entities.
• SKU: Stock-Keeping Unit, a unique identifier for each product and service that can be purchased.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding one-time or non-recurring items, used by management as a measure of normalized operating performance.

Full Conference Call Transcript

John Larson, and Chief Financial Officer, Laura Coffey. This call is being webcast and can be accessed through the Investors portion of our website at investors.solobrands.com. Today's conference call will be recorded. Please be advised that any time-sensitive information may no longer be accurate as of any replay or transcript reading date. I would also like to remind you that the statements in today's discussion that are not historical facts, including statements about future financial and operating performance, liquidity and cash flows, covenant compliance, and strategic transformation goals, are forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements, by their nature, are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to today's earnings press release for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Solo Brands, Inc. assumes no obligation to publicly update or revise any forward-looking statements. Management will refer to non-GAAP measures, and reconciliations to the nearest GAAP measures are included at the end of our earnings release. We expect to file our Form 10-K in the coming days, which will include additional details on our financial results.

Finally, the earnings release has been furnished to the SEC on Form 8-K. Now I would like to turn the call over to the company's CEO, John Larson.

John Larson: Thank you, Mark, and good morning, everyone. Thank you for joining us today and for your continued interest in Solo Brands, Inc. Laura and I will begin by reviewing progress on the 2025 initiatives and provide some initial commentary on 2026 before opening the call to analyst questions. Since stepping into the CEO role in 2025, first on an interim basis in February and permanently in June, we have focused on executing a product-led turnaround while building a structurally leaner, profit-driven business. While this transformation is still in its early stages, I am encouraged by our progress simplifying the business, significantly reducing our cost structure, and generating positive operating cash flow for the third consecutive quarter.

We believe that 2025 was a revolution and not a renovation—one defined by meaningful enterprise-level actions that position the company for the future. First, we reset the company's capital structure through a comprehensive refinancing. Next, our New York Stock Exchange listing was reinstated and our ticker symbol was changed to SBDS. Building a durable platform for growth required a comprehensive reset of the business at the Solo Stove division. We started by repairing relationships with retail partners by introducing greater discipline in marketing, pricing, and promotional activity, while prioritizing cash flow and bottom-line profitability. At the same time, we accelerated and, in some cases, added new innovative products to Solo Stove's product portfolio.

Across Solo Brands, Inc., we consolidated operations during the year and reduced our run-rate SG&A by more than 30%, with further actions planned for 2026. But this is not just a cost exercise. We are reengineering how the company operates, elevating discipline, accountability, and decision-making across critical processes. In parallel work streams, we made strategic investments for the future across all of Solo Brands, Inc., building a strong pipeline of new product launches scheduled in 2025 that continues into 2026. Together, I believe these actions have repositioned the business with greater discipline, clarity, and a clear line of sight to profitable growth. In 2025, we delivered $317 million in net sales, introduced five new products, and maintained stable gross margins.

While sales declined in the Solo Stove segment, Chubbies delivered more than 9% year-over-year growth driven by solid online demand and growth in our strategic partnerships. We continue to build and scale omnichannel brands supported by a product pipeline with strong momentum and durability. Reflecting the strength of that innovation, one of our Solo Stoves, the all-new Summit 24 smokeless fire pit, was recently reviewed by Forbes and named its best choice in the category for the year. The recognition underscores our team's dedication to innovative design, functionality, and high quality. If you recall, we reset our balance sheet in early 2025, which drove roughly $75 million of operational cash flows, primarily settling legacy accounts payable balances.

Beyond the first quarter, we generated nearly $30 million in operating cash flow, delivering three consecutive quarters of positive cash generation. We believe this is clear evidence of a significantly improved operating model anchored in disciplined cost management and enhanced working capital management. We intentionally realigned pricing and promotional activity of Solo Stove to reinforce pricing integrity and reset retail partnerships. While this significantly impacted near-term sales results, it established a more disciplined foundation to support current and future retail partnerships. We generated roughly $19 million of adjusted EBITDA for the year and delivered a 52% increase in fourth quarter adjusted EBITDA, underscoring the operating leverage in our model as these changes take hold.

We are clearly product-led, but disciplined in how we grow. Every launch must be margin accretive, supported by pricing integrity and coordinated promotions with partners to drive long-term value to our customers. In February, we launched a new women's swim brand that we believe is a natural extension of Chubbies. Over the years, many of the women who bought Chubbies for the men in their lives began asking for swimwear built with the same confidence, personality, and attention to fit but explicitly designed for women. Cheeky's is now sold through both direct-to-consumer channels and select retail.

We believe it is important to keep the model intentionally simple: a relentless focus on customers and partners, and the launch of products that matter, measured by profitability and cash generation. With that, I will hand it to Laura for the financials.

Laura Coffey: Thank you, John, and good morning, everyone. Let me start with a quick discussion of our previously announced corporate transaction. In December, we simplified our organizational structure by eliminating the Up-C structure, generally limiting the cash impact of the tax receivable agreement, and moving to a single class common stock effective 01/01/2026. We believe this streamlined structure is more attractive to investors and enhances good corporate governance. Before turning to the fourth quarter results, I want to provide some additional context for our ongoing transformation. Fiscal 2025 was a year of significant transformation across our organization.

Changes to our sales, marketing, and retail partner strategy, as well as meaningful improvement to our internal operation, under John's leadership, significantly improved our ability to generate cash while working to build a sustainable business for the long term. We started by fundamentally reshaping our go-to-market strategy, changing how we reach customers, engage with partners, and generate sales. Given the magnitude of the transformation over the past year, we continue to focus on year-over-year performance while also monitoring sequential progress. With that perspective in mind, let me walk you through our fourth quarter results.

Consolidated sales were $94 million, down 34.5% versus the prior-year quarter, driven by declines in direct-to-consumer (DTC) and retail sales channels, particularly within the Solo Stove segment. While fourth quarter sales were seasonally higher than quarter three in absolute dollars, we narrowed the year-over-year percentage decline by nearly 10 percentage points compared to the third quarter, reflecting meaningful progress. Adjusted gross margin for the fourth quarter was 61%, flat versus a year ago and up by 40 basis points from quarter three. With more disciplined, predictable pricing and promotional cadence, we expect further margin stability in 2026.

As a result of our transformation initiative, we reduced fourth quarter SG&A expenses by 38.8% year over year, reflecting meaningful structural cost reductions across the organization. We lowered marketing and distribution costs and tightened overall expense. Distribution expenses decreased in line with lower sales volumes while marketing and other operating expenses declined through more disciplined, efficiency-focused spending. Restructuring and impairment charges totaled $75.5 million in the fourth quarter, of which $74.1 million was a non-cash impairment charge. In 2024, restructuring and other one-time charges were $52.5 million, the majority of which represented non-cash impairment charges in that quarter. Net interest expense for the quarter was $7.4 million, reflecting interest paid in kind on the term loan.

We utilized the revolver during the fourth quarter and ended the year with no outstanding balance. We reported a net loss of $83.2 million in the fourth quarter, driven primarily by the non-cash impairment charges and restructuring costs previously discussed. Our non-GAAP adjusted net income was $2.3 million for the period, flat compared to a year ago but a significant sequential improvement from an adjusted net loss of $11.9 million in 2025. Adjusted EBITDA for the quarter was positive $9.6 million, or 10.2% of sales. This represented a significant 52% year-over-year improvement and a reversal of the negative EBITDA reported in the third quarter.

Importantly, we generated positive operating cash flows for the third consecutive quarter, demonstrating the improved discipline and cash conversion of our operating model. During the last March 2025, we generated positive operating cash flow aggregating $28.6 million. These results are encouraging and reflect the progress in repositioning Solo Brands, Inc. as a structurally leaner, profit-focused organization. Full-year sales were challenged in 2025 due to the transformation initiatives at Solo Stove, resulting in net sales of $167.2 million. In contrast, Chubbies delivered full-year sales of $122.9 million, representing 9.1% growth. We launched five new Solo Stove segment products in 2025, and we are encouraged by online customer engagement through our DTC channel during the fourth quarter holiday selling season.

We are continuing to engage with retail partners as they plan their 2026 assortment across Solo Stove, Chubbies, and our water sports brands. On the balance sheet, we ended the year with $20 million in cash and cash equivalents. Through disciplined working capital management and leaner operations, we reduced inventory balances by nearly 25% year over year. This improvement reflects tighter inventory planning, improved supply chain discipline, and our focus on converting earnings into cash. We will continue to monitor cash and inventories closely and are carefully managing all of our working capital. Our debt structure includes a $240 million term loan and a $90 million revolving credit facility, both of which mature in 2028.

We ended the year with no borrowings outstanding under the revolver, and our weighted average interest rate for the year was 6.63%. At the end of the year, the term loan had $253.1 million outstanding, with a weighted average interest rate of 8.97% for the year. As of December 31, we are in compliance with all financial covenants and have no significant debt maturity until 2028. This provides both strength and flexibility as we execute the business's strategic transformation. A few other final topics to cover. We continue to closely monitor tariff exposure, including pursuing refund opportunities if and where applicable, while leveraging our diversified sourcing strategy to mitigate risk. Our approach to capital allocation remains disciplined.

This year, we expect to invest approximately $34 million in growth capital, primarily focused on new product innovation that supports our long-term strategic priority. These investments support our innovation pipeline across Solo Stove, Chubbies, and water sports, which remain an important driver of future growth. We are also continuing to right-size our structure to align with today's demand environment, with sustained focus on profitability, efficiency, and cash generation. We believe that the ongoing execution of our profit-focused operating model positions us to improve our performance and deliver attractive long-term returns for our shareholders.

Finally, as a reminder, the first quarter is our seasonally lightest sales quarter, and retail sell-ins with our partners occur during the quarter with related cash receipts recognized in the second quarter. As a result, we plan to utilize our revolving credit facility during the quarter and expect to repay those borrowings as cash is generated in the following quarters. This concludes my prepared remarks. John?

John Larson: Thanks, Laura. In 2025, we set out to fundamentally transform the organization without overpromising, and the progress is tangible. Three consecutive quarters of positive operating cash flow and more than 50% improvement in fourth quarter EBITDA underscore that our actions are having a significant positive impact. Our methods and objectives are simple: stem the sales decline, invest in profitable growth, and convert revenue into earnings and cash more efficiently. Looking ahead to 2026, we have a clear focus on profitability at the channel, market, and product level. We plan to continue to invest in innovation across Solo Stove and Chubbies and have expanded our water sports assortment through our strategic partnership with Costco.

In addition, DICK'S Sporting Goods, Scheels, Ace Hardware, and REI remain important strategic retail partners for our brands. We are also pursuing international opportunities where returns justify the investment and will remain disciplined in converting revenue growth into positive earnings and cash. Last week, we launched a significant lineup refresh at Solo Stove featuring a new fire pit series, a new griddle, and more cooler offerings. At Chubbies, we reimagined our iconic men's shorts for our fifteenth anniversary and extended the celebration with the launch of Cheeky's, our new women's swim brand. All of our lifestyle brands are unique, fun, and playful, encouraging consumers to enjoy the outdoors more during leisure time.

The team and I are building a strong foundation that positions the company to be structurally leaner and more profitable, driven by disciplined expense management, cash generation, the strength of our brands, and communities. With continued execution, this platform is expected to drive sustainable long-term growth and lasting shareholder value. To close, we encourage investor engagement and look forward to speaking with new and existing investors. We plan to host two days of one-on-one meetings at the upcoming ROTH Conference on the West Coast in March. Please contact our IR team if you would like to meet with us or connect in person at the conference. With that, operator, I would like to open the line for questions.

Operator: At this time, we will begin the question-and-answer session. Please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one. Our first question today comes from William Hamilton from Kestrel Partners. Please go ahead with your question.

William Hamilton: Good morning, and congrats on the profit improvements. I was wondering if you could give us a sense as to how the categories performed across your different brands in the fourth quarter so we can get a sense as to market share changes for the Solo Brands, Inc. portfolio?

John Larson: That is a good question, Will, and good morning. Thank you for taking the time. On the fire pit side, it has been pretty flat in terms of the category itself, but there is a lot of low-end competition. If you look throughout Amazon, there is a tremendous amount of low-end knock-off products that certainly do not meet our quality standard. I would say from a market share standpoint on units, we are certainly down, but at a much higher AOV, so we are performing fairly well there. When you look at Chubbies, it definitely has some market share gains in the areas with some of the new introductions they had on shorts lined last year.

Although a small piece of the overall apparel category, there was some market share improvement there.

William Hamilton: Okay, thanks. I know you have been focused on new products—maybe you could elaborate a little bit more as to how they performed in the quarter and how that informs your thoughts on 2026, and if you could share what percentage of fourth quarter sales were from these new products, or what would be, in your mind, success in 2026 for the new products in terms of share of revenue?

John Larson: Great question. I am assuming you are focused a little bit more on Solo Stove with that, given the number of products we did launch. If you look at our sales in Q4, approximately 25% of the sales were from new products, given the number of products we launched. We did just launch a number of new products last week as well. We completed the full line of the all-new Summit series of fire pits. We added a portable steel fire 22" griddle, as well as adding a smaller cooler. I was just looking through it last night in detail.

Over the last four or five days, six of our eight top-selling SKUs are products we have launched since the fourth quarter of last year, so we feel the reception has been fairly strong. The underlying question is the underlying demand on core products that we had, our core fire pits. That is a highly durable, long-lasting product. That is why our customers love it so much.

For us to expand sales, we really need to sell accessories related to those products, try to reinvent the category, which we have done with the Summit series, and then those customers that love us so much—really try to move them into the adjacent categories, and that is what we are trying to do with those new products.

William Hamilton: Got it. Okay, thank you. Last question just on OpEx. You obviously cut a lot last year. I think you indicated in your remarks you might be cutting more. How much restructuring or cost cutting is left, and could you give us some color on that?

John Larson: I think I mentioned that at the end of third quarter as well. As we did see revenue decline in Q3, it became obvious that we need to be a structurally smaller, leaner, profitable company. We are using tools available to us—AI we view as a great tool for building efficiency. We are definitely looking at cost reduction in the coming year. We have not come out with the exact numbers, but structurally we are taking a significant amount out in payroll, just as we did last year. I believe in Q4, payroll was down about 27% year over year, and the rest of the initiatives that we put in are coming in.

We will have that full run rate for 2026, but we are leaning down even further. I look at the consumer environment here—it is a little uneven. Customers are selective. Our AOVs are up, so the people who do want to shop are spending more. At the low end of discretionary spending, there are some costs moving forward. We are setting up the company to operate without counting on revenue to go up dramatically to drive our business model—just becoming leaner and really rightsizing the company at the right level. We are still investing in innovation, with new products coming out, and pushing in some new categories as we discussed earlier.

William Hamilton: Alright. Thanks. Good luck.

John Larson: Thank you, Will.

Operator: Next question comes from Mitchell Sacks from Grand Slam. Please go ahead with your question.

Mitchell Sacks: Hi. Can you talk a little bit more about the reset that you did in 2025 and what your concerns are for 2026 with all the different things that you have been doing from a cost-cutting and new product stance?

John Larson: I am sorry, I did not hear the first part of your question, Mitchell. It kind of cut out.

Mitchell Sacks: Yes. So you guys did a pretty good reset of the business in 2025—how you operate the business. Just talk about what your concerns are in 2026, what opportunities you see, and what the risks are.

John Larson: Sure. I think there is a little bit of risk with the consumer market. We are not sure exactly what is going to happen with what is going on geopolitically in the world. Definitely, a reset in 2025. As I look at 2026, the challenge facing us is how do we stem the revenue decline in the Stove division and how do we begin to increase. That is why we are aggressively launching significant new products in adjacent categories. The griddles have been really well received. The small griddle is looking like it is very hot out of the chute, so we feel good about that.

I think the all-new fire pit line has immediately moved up in our top sellers DTC after launching it just last week. That is the challenge. We are set up to flow through any revenue gains—they will flow right through the bottom line very efficiently and into cash flow because we have reduced our cost structure so dramatically. I look at that as our challenge right there. Thanks.

Operator: Ladies and gentlemen, there are no additional questions at this time. I would like to turn the floor back over to John Larson for any closing remarks.

John Larson: Thank you for continuing to follow our company, and we look forward to providing our first quarter results and updates on strategic initiatives in a couple of months. Have a great day.

Operator: With that, we will be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

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