Solo Brands, Inc., the parent of the Solo Stove, Oru Kayak, Isle, Chubbies, and TerraFlame brands, has disclosed in its 2024 Annual Report on Form 10-K filed with the SEC that there is substantial doubt about its ability to continue as a going concern.

On a conference call with analysts on Wednesday morning, March 12, company executives said that due to uncertainty in the business and the company’s expected level of indebtedness, without the application of successful mitigating strategies, Solo Brands, Inc. expects to experience difficulty remaining in compliance with the financial covenants in its credit agreement.

Larson said during his prepared remarks that they did not plan to take questions after their prepared remarks, which is unusual for the conference calls.

“We are evaluating strategies to refinance our existing debt, and our plans are focused on improving our results and liquidity through a variety of operational improvements throughout 2025,” the company wrote in the filing.

In the Risk section of the 10-K filing, the company said:

  • We may be unable to realize expected benefits from our strategic plans, any restructuring and cost-reduction efforts, and operational improvement.
  • Our limited liquidity poses additional risks to our business and operations.
  • We depend on cash generated from our operations to support our business and our growth initiatives.
  • Our indebtedness limits our ability to invest in the ongoing needs of our business.

Solo Brands, Inc.’s direct-to-consumers (DTC) shares closed down nearly 63 percent for the day on Wednesday, to close at 24.3 cents per share.

“As most of you know, [former CEO] Chris Metz notified the Board in mid-February of his decision to resign,” offered John Larson, interim president and CEO of Solo Brands, Inc., on the call. “Given that the Board and management team were closely involved in the 2025 turnaround plan, we felt it was critical not to lose momentum. I was immediately appointed as Interim CEO and in the office the following Monday morning.”

Larson said the company’s Board and management team are fully aligned and engaged in the turnaround plan and are taking appropriate steps to implement 30-plus value accretive initiatives identified in a turnaround plan. The interim CEO said that the Board and management team engaged in developing an aggressive turnaround plan for 2025 during the fourth quarter.

“We are now aggressively working through 30-plus value-accretive initiatives to return Solo Brands to profitable and sustainable growth,” he added.

“As a part of our transformation plan, we hired external financial advisors to help us go through every line item of the business,” Larson explained. “Notwithstanding challenging results, Solo Brands has a solid foundation for success, including great ‘enthusiasts’ brands, a pipeline of new products and highly loyal customers.”

Larson indicated that resetting the company’s marketing approach – its single biggest line item of expenditure – is top of mind. Company CFO Laurea Coffey said they are carefully evaluating the effectiveness and return of the company’s marketing spend.

“Although the Snoop ads created good brand awareness last year, we are working to better position spend to be more efficient and tied to the outcomes that align closer to our goals,” she said.

Liz Vanzura, a Solo Brands Board of Directors member, has been appointed as the company’s interim chief marketing officer and will continue to serve as a member of the Board. Vanzura is said to have a successful track record as CMO and head of brand strategy for companies where she has worked, including Cadillac and Hummer. “Liz is a former colleague and highly awarded marketing rockstar,” said Larson.

“We are excited to leverage her strategic ability to lead our marketing efforts, identify the appropriate partners and leading-edge AI tools with the potential to increase efficiency dramatically and reignite our brands,” offered Larson.

Executing a complete review of the company’s product line-up, simplifying current product offerings and strategically repricing the portfolio of offerings are also on the to-do list.

“We believe there are significant pricing opportunities to provide clarity for our consumers and to achieve stronger margins,” he said.

“We are fortunate to have a cohesive collection of premium brands with deep customer following and we expect that being less promotional will help avoid channel conflicts between our direct-to-consumer and retail outlets,” Larson continued.

Accelerating and amplifying new product launches to drive further momentum in the latter half of the year and identifying new product opportunities was in the Top 5 items in the go-forward plan.

Consolidated Fourth Quarter 2024 Highlights
Fourth quarter net sales decreased $21.8 million to $143.5 million, down 13.2 percent year-over-year, driven by declines in retail and DTC channels within the Solo Stove segment, partially offset by an increase in net sales in the Chubbies segment.

Gross profit was $87.8 million, or 61.1 percent of net sales, in Q4, an increase of 280 basis points versus the prior-year Q4 period. Adjusted gross profit was $87.6 million, or 61.0 percent of net sales, an increase of 170 basis points year-over-year.

Operating expenses decreased $194.2 million to $143.0 million, down 57.6 percent, primarily driven by the reduction in restructuring, contract termination and impairment charges of $192.2 million in the current period.

The fourth quarter net loss was $58.2 million, or a loss of 63 cents per Class A common share, improved over the prior-year period when the net loss came in at $210.9 million, or a loss of $2.14 per Class A common share.

The company reported an Adjusted net income of $2.3 million, or 3 cents per share, which declined from the prior year period.

Adjusted EBITDA of $6.3 million, or 4.4 percent of net sales, declined from the prior year period.

Fourth Quarter Brand Summary

  • Solo Stove net sales decreased $23.6 million to $116.6 million, down 16.8 percent, driven by declines in retail and DTC channel net sales due to the lack of significant new product launches. Segment EBITDA of $6.1 million, or 5.2 percent of net sales, declined from the prior year period.
  • Chubbies net sales increased $2.6 million to $24.2 million, up 12.2 percent, driven primarily by increased demand within the retail net sales channel. Segment EBITDA of $3.3 million, or 13.7 percent of net sales, improved over the prior year period.

Consolidated Full Year 2024 Highlights
Net sales decreased $40.2 million to $454.6 million, down 8.1 percent, driven by declines in both retail and DTC channel net sales within the Solo Stove segment, partially offset by an increase in net sales in the Chubbies segment.

Gross profit of $260.3 million, or 57.3 percent of net sales, a decrease of 390 basis points versus a year ago, includes a writedown of inventory resulting from the wind-down of IcyBreeze. Adjusted gross profit of $280.3 million, or 61.7 percent of net sales, an increase of 30 basis points versus the prior year.

Operating expenses decreased $95.1 million to $434.9 million, down 17.9 percent, primarily driven by the reduction in restructuring, contract termination and impairment charges of $112.9 million in 2024.

Net loss was $180.2 million, or a loss of $1.94 per Class A common share, improved from a net loss of $195.3 million, or a loss of $1.84 per Class A common share in the prior year.

Full-year Adjusted net income was $11.4 million, or 12 cents earnings per basic and diluted share, which declined from the prior year.

Adjusted EBITDA of $32.6 million, or 7.2 percent of net sales, declined from the prior year.

Full-Year Brand Summary

  • Solo Stove net sales decreased $54.2 million to $297.4 million, down 15.4 percent y/y, driven by declines in retail and DTC channel net sales, said to be a result of the lack of significant new product launches and a non-recurring retail channel transaction in the prior year. Segment EBITDA of $45.9 million, or 15.4 percent of net sales, declined from the prior year.
  • Chubbies net sales increased $11.1 million to $112.7 million, up 10.9 percent, reportedly driven by continued demand within the DTC net sales channel driven by both website and owned retail store performance, coupled with increases realized in the retail net sales channel as a result of continued growth within our retail strategic partnerships.Segment EBITDA was $15.8 million, or 14.0 percent of net sales, for the full year, which improved over the prior year.

Balance Sheet and Cash Management Summary
Cash and cash equivalents were $12.0 million as of December 31, 2024, compared to $19.8 million at December 31, 2023.

Inventory was $108.6 million at year-end compared to $111.6 million at December 31, 2023.

The company’s cash provided by operating activities was $10.5 million for the year and the full year capital expenditures were $14.5 million.

Outstanding borrowings were $69.0 million under the Revolving Credit Facility and $83.0 million under the Term Loan as of December 31, 2024. As of September 31, 2024, revolver borrowings were $69 million, the term loan outstanding was $83 million and the borrowing capacity on the revolver was $350 million, according to Coffey’s remarks. “As of December 31, we were in compliance with all financial and operational covenants,” she said.

Subsequent to December 31, 2024, Solo Brands drew an additional $277.3 million under its Revolving Credit Facility, which matures on May 12, 2026, together with the Term Loan.

Coffey said the company is evaluating strategies to refinance its existing debt. Plans are focused on improving results and liquidity.

“We are working to maintain a disciplined and conservative capital allocation strategy, which includes careful cash management, and we have no M&A planned for 2025,” Coffey noted. “Investing in product innovation is essential, but we will be judicious with our cash.”

CEO Larson said his focus is 100 percent on optimizing the bottom-line and preserving cash. “We have implemented search teams to focus on the key areas of opportunity,” he offered.

Planned Actions Executed
CFO Coffey said the company continued implementing corporate restructuring and cost optimization initiatives in early 2025 to “re-baseline expenses and right-size” the business based on expected sales this year.

“We have examined the company’s marketing effectiveness and have a multi-step plan to improve efficiencies and address spend,” Coffey said.” We have begun creating better performance management metrics and are evaluating talent at every level.”

Coffey went on to say the company has consolidated two distribution centers and are looking to sub-lease those facilities. “We believe this is necessary to maintain operating leverage across our fulfillment network,” she said. She also shared that the company successfully renegotiated freight contracts for the organization in mid-2024 and are currently exploring other opportunities to reduce the spend in that area.

Coffey also said that management has decided to pause financial guidance based on the challenging and uneven consumer environment anticipated this year and uncertainty with tariffs.

“However, we are targeting improving profitability compared to a year ago, especially as we expect our major initiatives to ramp up in the second half of the year,” she said.

Tariff Talks
Regarding tariffs, Coffey said they are actively addressing the impact on the business.

“In some instances, we have proactively shifted production to alternative countries to avoid China-specific impacts, while exploring mitigation tactics to even further reduce tariff headwinds,” the CFO shared. “Although there continues to be uncertainty regarding the operation and duration of tariffs, we are currently estimating the impact to be significant to our operations before planned mitigation activities.”

Staff and Operating Cuts
“After the holiday period, we decided to take an action on a reduction in force primarily to streamline our Solo Stove segment marketing and operational functions,” Coffey noted. “We also rationalized certain operations, reduced overhead costs and re-baseline costs to better align with the sales going forward.”

“To summarize, the company is resetting the organization’s cost structure, identifying the key performance drivers in our portfolio, revamping our marketing approach, overhauling our pricing and promotion strategies, accelerating and amplifying our new product launches and creating a metric-based culture to track performance in real time,” explained Larson. “Bottom-line, we have great brands and products with best-in-class reviews. We have the foundation.”

Image courtesy Solo Stoves/Solo Brands, Inc.