Solo Brands, the parent of Solo Stove and other outdoor brands, reported adjusted earnings climbed 39.7 percent in the third quarter ended September 30 on a 138.3 percent revenue gain.

The report marks the Texas-based company’s first quarterly report since going public on October 28.

Third Quarter FY 2021 Highlights

  • Total revenue grew 138.3 percent to $69.4 million as compared to $29.1 million in the third quarter last year.
  • Net income of $2.1 million, a decrease of (79.4) percent compared to $10.3 million in the third quarter last year.
  • Adjusted net income of $15.8 million compared to $11.3 million, an increase of 39.7 percent over the third quarter of 2020.
  • Adjusted EBITDA increased 56.7 percent to $18.2 million compared to $11.6 million in the third quarter last year.

“I am proud that we have created an innovative platform encompassing four authentic and disruptive DTC brands. Our third-quarter results reflect the strong momentum in our business across all of our brands with Solo Stove, our primary growth driver, continuing to deliver solid growth through our compelling product offerings and distinctive marketing” said John Merris, CEO of Solo Brands. “The investments we have made to our supply chain position us well to continue to generate strong revenue and profitability in 2021.”

“Looking longer-term, we continue to see significant opportunities in front of us and we will further invest our resources into product innovation, brand awareness, infrastructure, geographic and channel expansion to drive and sustain our long-term growth and profitability.”

Operating Results For Third Quarter

  • Total revenue increased 138.3 percent to $69.4 million, compared to $29.1 million in the third quarter last year driven by strong results across channels.
  • DTC revenues increased 119.6 percent to $58.1 million as compared to the previous year.
  • Wholesale revenues increased 323.4 percent to $11.4 million as compared to the previous year.
  • The results include the acquisition of Chubbies and ISLE in Q3 of 2021 that was not included in our financial results last year.
  • Gross profit increased to $41.0 million, compared to $20.8 million in the third quarter last year and adjusted gross profit(1), reflecting the impact of purchase accounting adjustments related to the transactions, increased to $46.5 million compared to $20.9 million in the third quarter last year. Gross margin declined to 59.1 percent as compared to the previous year and was attributed to increased freight rates and higher logistics costs. Adjusted gross margin(1 declined to 67.0 percent, in line with expectations as compared to the previous year and was attributed to increased freight rates and higher logistics costs.
  • Selling, general and administrative (SG&A) expenses were $28.6 million, compared to $9.5 million in the third quarter last year. The increase was primarily due to increased investments in advertising and marketing to drive brand awareness, investments in headcount to support growth and higher shipping costs.
  • Other operating expenses were $3.1 million during the quarter. The increase in other operating expenses was driven by acquisition-related and IPO-related expenses.
  • Net income was $2.1 million as compared to $10.3 million in the third quarter last year.
  • Adjusted net income was $15.8 million compared to $11.3 million.
  • Adjusted EBITDA increased 56.7 percent to $18.2 million compared to $11.6 million in the same period last year.

Balance Sheet

  • Cash and cash equivalents at the end of the third quarter totaled $9.5 million, compared to $32.8 million at December 31, 2020.
  • Inventory at end of the third quarter was $113.6 million, compared to $14.3 million at December 31, 2020. The increase in inventory reflects a strong inventory position across brands, including brands acquired in 2021.

Guidance For Full Fiscal Year 2021
Solo Brands said, “Our guidance reflects our best estimate of the business as we see it today. We are pleased with the start to the holiday selling season and are raising our full-year guidance.”

Solo Brands said it expects the following:

  • Total revenue is expected to be between $344 million and $352 million.
  • Adjusted EBITDA is expected to be between $107 million and $109 million.
  • Fully Diluted shares outstanding is expected to be 97.8 million as of December 31, 2021.

Solo Brands’ portfolio includes Solo Stove firepits, stoves and accessories; Chubbies casual apparel and activewear; Oru Kayak, a folding kayak; and ISLE paddleboards.

Photo courtesy Solo Brands/Oru Kayak