Solo Brands, Inc. saw net sales increase 7.3 percent to $88.2 million in the first quarter from $82.2 million in the first quarter of 2022. The increase was primarily driven by new strategic partnerships and continued market penetration within the wholesale sales channel.

  • Wholesale revenues increased 52.3 percent to $33.5 million from $22.0 million in the first quarter of 2022; and
  • Direct-to-consumer revenues decreased 9.1 percent to $54.8 million in Q1 from $60.2 million in Q1 2022.

Gross margin increased 230 basis points to 61.7 percent of sales due to less promotional pricing within the direct-to-consumer channel.

SG&A expenses decreased to $44.6 million compared to $45.6 million in the first quarter of 2022. The decrease was driven by a $5.4 million reduction in variable costs, partially offset by $4.3 million of higher fixed costs. The variable cost decrease was primarily due to lower marketing and distribution expenses. The fixed cost increase was primarily due to increased employee-related costs due to increased headcount and higher rent.

Income per Class A common stock was 1 cent per share for the first quarter compared to a loss of 3 cents per share for the first quarter of 2022. Adjusted EPS was 16 cents per diluted share for the first quarter compared to 19 cents a share for the first quarter of 2022.

“We are extremely pleased with our first quarter results. We generated solid gross profit and healthy adjusted EBITDA margins, all while making strategic investments in our business,” said CEO John Merris of Solo Brands, “In an uncertain and volatile macro environment, we remain focused on innovating and delivering great products that create meaningful experiences for customers. We will maintain our disciplined approach to financial management, which positions us to generate healthy growth, positive free cash flow, and strong returns on capital for our shareholders.”

Cash and cash equivalents were $25.7 million at quarter-end compared to $23.3 million at December 31, 2022.

Outstanding borrowings were $15.0 million under the Revolving Credit Facility and $95.0 million under the Term Loan Agreement as of March 31. The borrowing capacity on the Revolving Credit Facility was $350.0 million as of March 31, leaving $335.0 million of availability.

Inventory was $125.0 million at March 31 compared to $133.0 million at December 31, 2022. The decrease in inventory is due to prudent inventory management resulting in lower replenishments following the peak season in the fourth quarter.

Looking ahead, Solo reaffirmed its full-year guidance for total revenue to range between $520 million and $540 million for 2023. Management said that in the current environment, it is forecasting to the midpoint of the range.

The adjusted EBITDA margin is expected to be between 16.5 percent and 17.5 percent for 2023.

Photo courtesy Solo Stove