Earnings call transcript Q3 2022

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Operator

Good morning. Welcome to the Solo Brands, Inc.

Third Quarter Fiscal 2022 Financial Results Call. My name is Jaquita. I will be the moderator for today’s call. muted opportunity presentation end. to be call of will an with questions-and-answers lines during portion the the All at the Instructions] [Operator

I please pass host, to would over now your to the Bruce ahead. go conference Bruce, Williams. like

Bruce Williams

of Thank be for the you, Investor found third results, on call you this released section Brands’ joining which Solo the Operator. we everyone. our discuss morning thank investors.solobrands.com. morning, quarter Good website And in to and Relations can

John Merris; hosted Webb. be by Officer, Officer, Chief will Chief call Somer and Executive Today’s Financial

market call forward-looking Before plans remind financial anticipated we regarding statements laws. get everyone other statements are that started, our potential and business strategies the securities performance the that and I objectives and want under statements of and to made earnings events our on and federal outlook, including future statements products, contains release the goals and our financial developments, this about

risks other of of could which date. involve statements. of company’s and release These by now some statements such results actual the risks expressed cause control speak forward-looking our from SEC or to differ implied and uncertainties in those substantial the These with as described those uncertainties, earnings include materially outside filings and and only be may that today’s

as not EBITDA addition, adjusted addition GAAP as in In adjusted, and share financial should adjusted, adjusted our and gross measures, profit, adjusted supplemental earnings which for to EBITDA certain diluted gross a includes references our be including per to discussion non-GAAP today results. as net income margin, margin, substitute considered adjusted

with period-to-period results. of earnings, and to a our core provide in measures non-GAAP our evaluating comparison use We ability our facilitate generate consistency performance comparability past operating and these

are included website measures portion Reconciliation which our measures most with in on non-GAAP investors.solobrands.com.\ to earnings are measures and the definition at of the of GAAP in SEC, release, our of available filings Investors the referenced our these comparable non-GAAP the

over call to I turn Now, to the John. like would

John Merris

Thank discuss begin for XXXX joining the on financial on discuss third you, to Somer I call you will a performance program Bruce. turn an with of Then call initiative. then quarter our third update provide the to Today, to our over strategic results. our our summary And I and will outlook. thank the results. quarter

a of strategic strong benefits and ongoing macro we the our a deep product with During quarter the our headwinds, demonstrate our customers our number power connection model, executed business and investments These of innovation. unique strategy results results. delivered with our and of

first-party data. We talk a proprietary customer lot our about of the importance

marketing grow. a our X Our it is list larger derived as continues competitive which nearly online efforts million, now creates around from customer larger to and business moat

not Our their and initial back love only customers more products come but us. they from purchase after purchase, our often

products, family our leading addition, friends In high enjoy their rates. telling satisfied and about customers to referral our

is Our customers. to insights differentiated matters deep to us innovation future customers DXC and and allows most get better leverage into our current model our to our engagement with what

started. new with next We By continue we have product strategy launched ever the getting are end a come. releases products to many released year more than we plan have into this of will year, in exciting still year just and we to this

will all beyond. innovations believe we especially team’s and the is growth proud new we drive this The continue yet come while and XXXX you been work, and to our ramp margins. I of EBITDA when to able am to we healthy of incredibly in have consider generating achieve launched hard year best this

increased million. XX.X% to sales the $XXX.X quarter, third net For

by our offered the customers margin of our to importantly, enabling healthy products grow million. XX.X% new innovative Our direct-to-consumer of continue sales to database increased we growth this Both in clients. wholesale existing responded driven was $XX.X channel XX.X%. our Sales increased to us million. $XX.X And gross quarter, XX.X% to to and sales

We levels. are see extremely engagement to high consumer at our remain statistics pleased

ability demonstrate Score numbers remains an consistently XXs. to the our Promoter Net in These performing best-in-class Our experience deliver value. that our customers

elevating strategic continue make warehouse offerings; our drive product our We first, and growing and executing leveraging fourth, efficiencies; international conversion business. data expanding second, our innovating wholesale to building and progress to our third, and initiative; marketing distribution; our

Turning to the of earlier, product, as of we introduced are and proud very amount innovation during mentioned quality the quarter.

market. new as We the improve expand products customers, total well that products existing will as have our that our experience meaningfully for introduced addressable

an in entry example, colors, into does firepit, $XXX. which of that price gives Mesa. has Solo the brand airflow an only and it is QX, our attractive a our Not tabletop Stove XXX-degree As we signature variety it under provide point, more in launched technology and come prospects

can its price business, we point believe the etching, personalize and perfect larger is not more in business. makes momentum adaptable direct-to-consumer than of the is firepits. gift. Companies accessible our is creating which This size Stove through patios but and backyards corporate is increasing Solo TAM our corporate for Mesa many more to Mesa’s the in also only lineup

the increased We drive have this still with repeat lifetime we will pleased been value. very believe leading early, results, purchases, is it and while product initial to an

released consumables will Mesa for also that additional beyond. capitalize we and XXXX have on We in

are far. oven, to second new Pi, pleased ship Our with pizza in so quarter began the we the and response

international plan been accessories, new our Pi launched similarly we We the consumables line Pi Pi received to During to in out the before our additional we customers. Stand, well growing including holidays has for to markets look XXXX. roll which and forward by quarter,

firepits. of the half smokeless, pellet-fueled launched goes In first a the patio Tower, a Surround, we also and around heater, that QX, larger table

to offer expanded we program firepits. our new our all for Additionally, colored options colorways

the that enthusiastic December can the been we given are timing of at products, our these conversion and have in Stove. especially historically new like about launch busy traffic Solo you and launches. increased and tell, see We November As we

in QX response the Switch been has introduced customer good. ISLE and

we a in stock time In strong due had have demand. fact, hard Switch keeping to

catalyst XXXX. it meaningful be through innovation a will ISLE the when acquired saw with we all achieving As in potential our we brands,

have ISLE leadership place future. at strong In its in team we we addition a innovation, confident feel and in to

Our investments strategy in central our differentiate platform. to help data are our and

customers a have third see increase than over in of continued XX,XXX to the and encouraged brands. are By significant this across of one X.X our more million customers, quarter, from to runway spending we brand, by purchased number. We customers to with the have end multiple continue grow

In achieve able the challenging efficiencies during advertising to in addition, environment. our we were a marketing spend in quarter

be investments have more As of achieve crucial a in mentioned data earlier, with innovation probability in precise and us our allowing our to higher to been success.

expanding to terms In expansion, success see doors partners. retail our of continue we with channel

Costco we Solo legacy During the agreement to Stove product. quarter, X.X our entered into sell with an

excited it demographic. a our opportunity believe we We this reach about because are to broadens new customer

significantly in the brand doors brand Sporting Chubbies gaining The most also Goods in XXXX. momentum to excited at to is wholesale we are Dick’s and channel expand the

a International and Our kicking retailers we to business off with also top proud is beginning form Stove with direct are Canadian be to Tire. partnership Solo relationships

In closing, the pleased results challenging in face incredibly a backdrop. are we to this of deliver economic strong quarter

While of need our the dynamic are us positioned evolving, and macro to is range environment of to customers believe compelling points and that we quickly a meet where with products collection price they recognize we a be. that we

market we to the expense deliver same continuing while disciplined and to which conditions, current our can not offering maintaining allowing approach and elevate we to long-term grow growth. innovate is time a on to at but management, control, are product immune We are us to profits focused what organically, topline

I to, give of more review third to and will overall a call turn the quarter now over detailed Somer, results our outlook.

Somer Webb

results third and I outlook walk quarter morning, and then our you through will everyone. Thanks, commentary on our XXXX. Today, good provide some John, for

third quarter our extremely We results. with are pleased

performance led was both to response market. results. Our products bottomline continued better and the by as products growth introduced new to we channels, as than strong expected This throughout of our driven core all the well top to

We key model believe operating us. that is for our differentiator a

innovation financial healthy to allow will high strategic us and Our the environment. beyond that economic and initiatives into XXXX despite low benefit margins into returning and us leverage uncertain reinvest

expected Our results to innovation. demonstrate returns in our QX investments we on begin the

to our the Stove period. the the Sales by were increased Mesa. $XX.X prior acquisitions, quarter results, quarter in products, net including million to of third the year contribution sales million, and growth compared customer third Turning new in to new Solo XX.X% launch from $XXX.X driven

direct-to-consumer increased to the $XX.X period compared $XX.X prior XX.X% million million, in year. in to the same Our sales

to million, Wholesale compared net $XX.X increased to XX.X% sales million year. $XX.X in prior the

total line our Our in mix. direct-to-consumer with of XX% sales, blend of channel roughly remains business historical

Moving profit. to gross Gross XX.X% profit $XX.X to million. increased

the higher QX margin XX% impacted to compared XX.X%, XXXX freight. rate to $XX.X margin was year, fair million. was and prior gross was XX.X%, accounting for of to margin inventory, write-up gross XX.X% profit year. adjusted value Our increased the related in which prior the gross gross in of inbound by the of impact our profile Adjusting Adjusted adjustments acquisition compared to purchase XX.X%

net third the million full Selling, year. of have general million third related included or to as to sales, The of increased of last the $X.X in $XX.X period quarter compared period. activity in did expenses $XX.X million for XXXX administrative not activity and quarter the comparative increase acquired the businesses for same and XX.X%

initiatives, of becoming fixed distribution investments increases primarily costs long-term and increased The headcount. remaining due and to were cost variable globe, increasing costs and variance higher variable public million marketing across incremental associated of to by primarily strategic The driven the with fixed warehouse cost. was $XX.X in were million increases company $X.X expenses. a our footprint The cost due

and net share Our loss quarter loss third million was per was $X net $X.XX.

Third million was $X.XX. $X.X quarter net and our EPS was adjusted income adjusted

long-term in $XX.X adjusted and continued adjusted During data, to invest of quarter, in our and initiatives delivered million international XX%. the EBITDA margin strategic we and EBITDA of innovation product

the had of cash to cash end Now balance the million At we the and equivalents. in turning sheet. period, $XX.X

loan outstanding under capacity availability. leaving revolving had facility agreement. borrowing $XXX.X September of million revolving $XX.X as $XX.X we the September term XXth, the credit of XXth, the was in of credit $XXX under facility million and borrowings The on million million As

less position believe strategic with to strong We leverage net than take advantage able have liquidity a opportunities remains we times. of and a that are X we

due higher wholesale Inventory combination in-transit new inventory pre-bookings. product and by third expansion, at increase orders, to the inventory was of the The quarter and million. a is driven international QX $XXX.X for XXXX launches wholesale of end

as expect season. we be inventory third in period and holiday anticipate quarter the QX lower be in peak and We exit we dollars the QX to will levels our

recognize number innovation this environment macroeconomic our is that we are although to excited will about pressures we consumers of facing outlook, launch year, the are of and year the uncertain. a Turning full pipeline we

for in of our us addition, the quarter of have a we amount In accounted front fourth has significant business historically of XX% XX% to given sales.

Taking tempering revenue these and expectations XX% XX% we our and levels current year-over-year topline of factors now to consideration growth. expect are volatility, into

margin year. mid-teens for be the EBITDA in expect to to full adjusted We XX% continue the margin our gross adjusted and plus

and new In products our teams just exciting delivering didn’t we out their closing, I’d potential. scratch believe on call customers. work be remiss to incredible are market if starting the I to our surface for our in I

With the our we of the health that monitoring consumer and in the financial are strength economy. shifts highest said, our is the actively and priority

We the will continue deliberate waters in nimble navigating be to ahead. and

returns Solo positive and shareholders. team Brands remain initiatives that growth for long-term drive our our will customers, on strategy focused and

I begin call will now the the to Operator Q&A. to over turn

Operator

Instructions] Ohmes [Operator question comes Absolutely. the of of with from Robby line The Bank first America.

You may proceed.

Robby Ohmes

and Great morning, john Somer. Hey. quarter. Good

think maybe year-over-year quarter, one, I buying is is the actually And think there changes out you fourth going model strong I after -- you that think revenues for ask could am third either are everybody wholesale decline should with we can -- you also, DXC quarter? ask to wholesale is going current implies are help which patterns that versus the guidance are seeing there you really to thinking number and fourth the going quarter is, I partners? a can in play to question how how us will or about DXC

John Merris

Appreciate the question. Thanks, Yeah. Robby.

very So seeing guidance it. out about especially we are quarter and the QX of after first, forth, are what a momentum that in we that shift strong just putting we coming talking had the as

consumers. forward to QXand that and wanting hearing that take from into in the balancing What really the looking had the on uncertainty momentum with balanced volatility a hearing are at view and just from even our that rolled approach that some QX you ongoing to momentum of we us we at just everywhere are an moving guidance is

Remember are balanced of this seasonality, particular, business, momentum, especially concentration even last saw. that that weeks because feel of because out the QX Stove the just of so for guidance is year, that obviously, right to Solo the six we there’s we our our though move approach in much we coming the seeing

mix, the as and overall, will talk or In DXC, long-term. the of the that of part well in terms market. we drastic all more happening business through in wholesale more of it’s we area aware softness I just -- both about kind short- that’s us not that overarching answer this I as in of But to expecting are seeing of volatility happening that’s than any that, think, thematic leading nothing are I one there’s the -- are

as results, balance of Wholesale, DXC, both wholesale growth. the of in year-over-year there and you terms we heard a QX lot in saw

that are very how came We pleased through. with balance

but between two. talk that the we You are right XX-XX this, about at mix heard Somer maintaining

wholesale. target I years least think we next think look long term, out this, talked XX-XX if to kind the is DXC expect as being are of to mix you with business XX% at and our but have again, and being to continuing about the at where to we about three operate split year we XX%-ish the

Robby Ohmes

in a take remind us just are acquisitions? being thinking helpful. And how guys further That’s about opportunity, terms and you of you. of Got advantage of can strategic liquidity quick you follow-up, to the able sort very just

John Merris

Yeah. Absolutely.

So founder family strategy to that businesses we we to relationships a and see overall we brands. want strategic strategic long-term of that the and look our are and -- as additive owned build continuing growth to strategic with places and operated be as

cheap cash cognizant the us and two more they just fact acquisitions itself is a of capital, very is right factors stock for make are standpoint otherwise of and valuation also that than of now, those cost so We might from be. going difficult probably cost our up

especially cheaper. continuing We think acquisition basis. are weekly be and to are do that are are that in We we opportunities get to companies there continuing great But us and evaluate for to to into opportunities to we future, lean going going on the evaluate. a believe talk to

there. lot or a that activity to lean is Hard we We say feel there acquisitions. So need certainly into. of don’t

organic if feels we strategic focus growth. initiatives, into strategic delivering going our found driving investing now, cash us the to best initiatives opportunity right But could that it see like We new could we to is additive return on those be are you the expect on that. felt a like continue to and into Right capital. acquisition to lean definitely

Robby Ohmes

Great. of season. luck Thanks, for holiday Best John. the

John Merris

Thanks, Robby.

Operator

The next with question comes of Piper from Keith Peter line you. the Sandler. Thank

may You proceed.

Peter Keith

to for Hi. Thanks. great a Good just Certainly, Solo Stove. the on morning, wanted bit dig Costco in new everyone. seems I relationship. opportunity little a it deeper like

of balance what’s the or on business Although, at your prices that partners month maybe Q just your where how bit DXC wholesale a existing won’t might talk or offered the the cannibalize about and existing little upset any be than higher Costco?

John Merris

question. Great Peter. Yeah. you, Thank

with past, conversations move to initially in for work Costco multiple to collectively been up deciding about forward In we been ended have and years. how we years. relationship wanted this We have Costco we in the prescriptive and not us prior pretty

year was -- resurrect this our with Bonfire competitive start and a felt Costco store and had to this on product then actually in moved of X.X. in leaned with partnership into able it it we like was knockoff kind to were out that over, had they we and opportunity

said and would I have front our where we what is audience focus already that you we in what partnerships with is us to secondarily, which may our be before, need tell an be. us of. in not or customers to be look be bringing And retailers wholesale are to that is with that And want we

things these of Costco both that for believe We does us.

been putting from We there, with not have other saturating the of think partners. we taking inventory so there. have retail are We or amount over that careful been careful our we are that we away

the also have with in arrangement are with approaching way their come they consumers pricing stores. to good of that in really Costco the We a terms

pace been or ahead Costco initially. of expected far, from what so so good, us has So, sell-through

effort be at XXXX SKUs thought request Bonfire the the of conversations to we would looking X.X opportunities their we already product, focused it While initially just a have with around they relationship. see as started spring grow additional into

going to here. are balanced You us very be see

point, the be also partners not to other undermining we going with and threaten to BXC that relationships business. your are making sure retail the key careful, are We our to not

that right a that it approach. to even and we well like be coming channel We there balance. through balanced now with striking So demand significant are that balance feel is seems

Peter Keith

Okay.

Costco that Sounds other products good. been the on in away. sounds There’s down? product, knockoff taken some of selling marketplace. clear was And like John, violations that on you they there look had a patent Any updates success mentioned have knockoff closing some like your those

John Merris

leaned which with a us we knockoff that for with partnership. litigation additionally, a Yeah. to as that was Great But Duraflame organization so result we some into trademark was did question. product, in through the knockoff successful we the very we an had remove win Yeah. product licensing actually that a Costco from close that pleased came there. that were are big and

knockoffs names, consistent or with well other mentioned, We either names have particularly no that coming are you smaller had enforcement wins significant but well-known marketplace. through as less as

pleased overall, was and significant protect us. Duraflame with So, our we the to IP we that and SAS that with important ability again, are win to have,

Peter Keith

Okay.

good Sounds good. much Thanks luck. so and

John Merris

you. Thank

Operator

The you. comes Thank with next line of Jefferies. from Randy the Konik question

proceed. may You

Randy Konik

help. kind have freight Hey, just just to seen sit be you where guys. some about, the Recognizing for Thanks the I longer some headwinds. may want perspective business. thinking for should how margins get we of think you term, on

SG&A of growth We have growth. sales seen some definitely dollar ahead

against probably think is feel of feels the the the kind to for after Just okay to quarter, so kind especially last the consumer more you the conservative, of for maybe through business but long-term understand which great. which what because couple choppy, the conservative that market fourth fourth where the now is get feels trying margins kind forth, quarter sit of and so guidance trying I margins a term backdrop and to of adjust and sales years considering get on we is where may versus right think longer again, feels your profit

of thoughts not margins, the So right out direction thinking just maybe just few maybe years? the next your guys. Thanks, on but point be quantify kind on want we play margins about would in over the how should how us

Somer Webb

Yeah. Great questions.

June locked about have the we we March, dynamic margins, when of We May, timeframe. thinking was year We freight bit margin in started Obviously, are kind freight. I little So we when at contract. with start will of a were rates down. had this where a higher the gross come them and buying inbound high seen April, still into

What on do basis sheet the are to freight. that points that is points now that higher inventory are we inventory our the XXXX seeing with as XXX holiday about working right in on through basis we we the gross the pressure abate margin. balance would that over through of XXX quantify season. I We on to expect work as that

As through the far margins, planning right cycle are we working as XXXX EBITDA now.

did So operating grow give do We year. will product in this what But move significant won’t make international the on business. I we to say forward expect leverage to XXXX. and continue investments we guidance specific as is, data, innovation I and get

in be years, to three the to at back we over expect long -- margin. the Our years next two run, XX% EBITDA

That’s the where run business we in of that long-term. believe will the kind

next XX%. continue years but investments make to three we our at margins over the expect will that long-term, two to We EBITDA out settle will the years in

Randy Konik

trends helpful. super I you maybe, point. from up vantage to And John, around acquire could customer’s cost That’s follow then maybe your with

-- what’s know plays healthy think, Apple of on million then on think how will Thanks. specifically, list privacy market what cost broad very would a your versus point? forward? customers, kind around you -- company nice your gone how changes. think and from your speaking -- helpful the out, to you do perspective going X.X perspective, We vantage the million you customers And you to it your get broader acquire of of a what be about then level in you you from have with this broadly trends said. in are X.X maybe iOS to Maybe You about CAC new trend I

John Merris

Brands question platform. great it the what differentiation It’s opportunity Randy. of special. great and exactly to our This about so a Thanks, is us is really talk for Yeah. Solo makes a

calls acquisition seen the have this that year on about We of customer this the talked previous we have costs year. rise

or year. the Somer, I think, expensive acquire more it’s to roughly this half up of through that been call mentioned the first on XX%-ish our so customer last

I share saw excited actually am to we QX a in of that reversal trend. that

were we saw more asking actually people do of it’s us, is you expensive? well reversal. get leveled QX it’s it we executed out, to going and continue lot think a you the at that So the know How to do bottom?

So at up. seeing basis, year-over-year contribution a pace. started trend a consumer better We the we on convert go saw

about me Let for that and that’s drives what talk a happening. second how

the I because that particularly way it’s differentiated really think Solo Brands is with that executing. important this is

direct that is first The we have customers. with connection this our

just these that it, a million our purchased whatever. about are that store have customers talked These purchased You But these aren’t X.X in through customers. site. or customers have

so And information. we have their

with communicate that where product into to innovation able them comes, are when in we and We in investments our is about talk handy particular. particular,

to we Let’s launch is Mesa, participate they did are for brand point, a the what cool faster pulled Mesa acquisition about. they saw we use faster allowed an go -- as with to which it reactivate who wanted much it’s a we gift QX customers excited experience the with to us. us or customers. price to wanted were a things of really to also But of two at for participate new cohorts easier, that back add saw example, brand. as the it Solo of it with whether then It Stove, existing lower in super with to in an rate the

line. them that ratio new those but customers, customers are as customer pull acquisition with Whenever and with customer purchases upgrade early not we acquisition we our what only goes a them down, those to innovation up the it’s leverage our cost but Mesa lower only convert drive not and list to LTV-to-CAC is new then costs, we saw down customer to firepit the signs to ultimately, drive able Mesa, going to can larger

but to customer said lowness back the that, don’t acquisition and of we middle terms in year, We XXXX XXXX where we believe be like the year the around of in that cost, about. expect of have saw leveled we flattening middle excited bottoming out a the in to costs of that believe were customer QX we saw acquisition costs those of slight we would out what So are we look do as and the out. at again, the a or improvements

that acquire customer innovation is again, key costs are product new down, lower to keeping through the -- The we launching digital much customers than cost a channel. to relying because contributor acquisition via only email is so on

Randy Konik

helpful. much. Super so you Thank Yeah.

Operator

Thank Horvers the of JPMorgan. you. question The proceed. line Please next comes from Chris with

Chris Horvers

could Thanks. so wood, Good up, the to quarter. looks follow-up product well. a morning. I and fourth obviously, technology the mean, patio nicer prior Maybe guidance the it wish latest launch. awesome. I bought burn I much like so for propane-powered it’s I It to the hadn’t really the Maybe heater around question Robby’s just this burns earlier follow on

versus XXXX what’s extent was And what maybe I the you would exiting election mean overhang an a lot end guess, occurred momentum the are I change happened in talked in had mentioned October, XXXX the and business? quarter, and early are of just business? the early all up in consumer lapping are on this in your a a you selling holiday volatility, you To then that the how it diagnose having hearing of volatility about clarify, retail November. lot of category seeing quarter-to-date? third to just also you you So back half, we

John Merris

But don’t market unique a the -- as well. to minimum, overhang Yeah will on and going whether layer company. be at that or it’s here think -- on one an to any I right, it’s Somer

that have layer of we to think both things I on consistent. are couple a

What point But prior nailed to is the that the QX than just you make. two to makes factors you this described. more the exactly I wanted forecast just challenging years two

the there there. first year, compared to happening, obviously, is, anything wasn’t a The one wasn’t there election, last distraction

year their of the making we going that earlier importantly, shopping But latter of were and much were wanted because factor into because is biggest holidays they October, out are to even the they to difficult that that Consumers the worried that less the seeing so supply holiday the chain weren’t last shopping happened predictable they items most it get that’s for part challenges. houses.

And of to of the started again, that, year, we so to and be able whereas shopping Monday predict it looks that makes get of -- some Black still holiday us, really that, Cyber of challenging knowing rest in bulk had front already Friday, out that like. what this quarter it with seeing to and is last the

of factor intuitive So it. little think I you and standpoint, about seeing. our she’s I articulate everybody step to think what in it. kind understands nailing it just guidance that’s But It’s Somer from more are a I pretty have of and part the bit on and will talk

Somer Webb

We saw we it we will QX of feeling it good. I then point momentum, behavior. that some add Yeah. came just saw that to consumer’s we started unpredictability build John’s seeing to and as well is, really in actually was of you and hit on continuing the out kind head

of consumer it QX. at the sense of that the a what election, of it guidance, that’s the year coming we of pull it seeing when urgency so the spending decided is with kind we out was looked whether the of was were was And was which whether forward, unpredictable changing, with balanced nature the data a of we consumer, to holiday balanced is or we approach some take hard the whether view QX, last to use, points

take a to factors chose for now going unpredictable. bit on The consumer approach we the but so -- macroeconomic to are approach. balanced is a believe fourth balanced The be right ought we the seems that are So, little quarter. this unpredictable and

Chris Horvers

of did what like, and quarter And you have really and we consumer that you extent and that year for incremental very ago? architecture the promotion, maintained events embed a of in promotion. laid fourth pricing out terms the lot the is into retailers around wanted To and just Got you about helpful. promotionality a you that hearing it. potential That’s that the you as from are responsive think

John Merris

Yeah. Thanks, Chris, for the question.

that discipline the year with we really shown pleased have are promotional our with strategy. throughout the We

have we were this our putting levels more that’s position that this promotional up is been to at time what the And promotional to in -- we point. us this So to maintain a year not last year. do

our we been. So of have If to been and/or at last we and we than have the anything, being don’t year promotional were do we beneath any that. continue more promotional slightly levels to anticipate that anticipation we have ability

responding well. are consumers The

We again, new a through. mentioned, also you coming have, that’s lot of like innovation

new come have innovation, to on because especially excited brand. with are the don’t back so to promotional be through and You as customers consumers, participate existing our

So, again, we paying this the this across power and lean on innovation decided general say, promotions. timeframe that just I’d us we back off most customers. brands in consistently going in investments into more to a hearing that we are those where are basis, heavily for is of On to going really year were expecting early that

our not We targets. have we that to growth that are to in do achieve seeing still order

Chris Horvers

Great. very Thank you much.

Operator

Thank William from of you. comes Blair. The next question the Sundby Ryan line with

proceed. You may

Ryan Sundby

have like about the how has that you incremental Hi, Tower? with database. Solo Pi then held that still I mentioned we should through one, and question. something guys. think highly last was the new Thanks for innovation to you two, coming quarter, with John, other guess, today,

John Merris

customers excited categories, are Yeah. new are an that existing heating decades. last in really several past cohorts example, also into base brand different are been new with customers, then that’s the Tower, some over as categories, that now about being new in the hadn’t uninnovated been seeing, us we completely that getting Obviously, of patio are so this participants game of a customers and participants

Pi continues to well. do

we the for space, food gathering, as gets year of pizzas. which in the more more new enthusiasts food with and backyard friends us what of least and pertains and pleased some products Pi gather obviously the the terms Pi to creates done again, launch into this really allowing space and like, type of at families to it’s bit bringing, that memory moment, a -- it make these little are kind We lasting us good of

especially saying that product It’s the people are just What we been pleased are with in what tremendous. is reviews.

if that weeks the familiar deal. not word in one gifts as on fact, advertising guys huge was holidays, best we last gimmick. actually for Oprah’s it of selected of an which the In a with -- got unsolicited, is of you Pi are It’s Oprah’s couple just

play. to don’t pay You

It’s in fact with Pi and awesome. she’s fell truly guide her she she and it pretty threw the that in that use that have the that gift recognized that holidays, radar it’s the just as on love for her products come to

are that we category next product that forward beyond. with grow to happy year and to continue and looking So

Ryan Sundby

a a there? to a offering important follow-up be then and is And standpoint, can how there you sub is it. $XXX the whether of, Got Ranger time over would maybe it just in anything terms or Mesa, we it past, on be from to with what out Bonfire should the cycle upgrade accessories, in from point Yukon there then psychological maybe an expect from to some of kind upgrades to of

John Merris

acquisition, the new in are to addition which Yeah. in that I many innovation, so year there’s the firepit much core mean, business business. we ways on haven’t last us have for early that huge drive the all tapped driving so there’s into just with for products, to market that retention very we our particularly a finding and we addressable are saying we been

really, better. of participants fantastic from But been be a the really facing. part and well timing brand, Stove in is to perspective come headwinds a to great definitely to that we from entry-level participating of point and a with brands, allow price and start our as have perspective, a current product the and the economic across really community conditions Solo Mesa are all couldn’t timing This

really in time. also the this of customers seeing earlier, excited for are about about are we that we the coming in I that. mentioned are data early And So first signs we again, stoked

with existing it been been equally brand new attracting the created adoption participants. about customers but has on So Mesa tremendous, our the new increase that we acquisition customers, opportunity and have excited to

a seeing having And Ranger to that upgrade get into Bonfire. a choosing early Mesa, what we with then is experience customers those great are or are they and a are and

from portable So to Bonfire or like customers Yukon and Bonfire. a trends. going then with with those off-hand Yukon of Bonfire you to share down or we more a data to to a don’t in upgrading have terms starting I Ranger

customer across is is the tell per cohorts can I order you unit that average what increasing. But our

than launching have we So we this their goes more brand are seeing are us. show, we be historically, bigger purchases the items and broader innovation success and on with to customers to that of customers purchase which willing again, participants

Ryan Sundby

hear. to Great guys. Thanks, Yeah.

Operator

question you. comes next The Citi. with Thank from of the Chasen Bender line

You may proceed.

Chasen Bender

it Great. I don’t offered you level, talk guys how And kind new know each coming through, about at various there stuff. Thanks wrap all of around for a but how commentary is you way color the the are exciting taking the the in brand throughout innovation terms monthly quarter? question. brands I kind you appreciate all really and the performing they progress cadence any of some can of about of

John Merris

Yeah.

about But QX that Stove talked in is seasonally Solo offer. the have -- past. has is most the to the generally brand We this

warm offset The brands. other that holiday holiday three the mother -- But, -- slightly. brands are weather sales obviously, primarily warm

other goes shopping generally, Solo that throughout up brands for the ramp Stove sales. again So, by quarter. will same the driven holiday and The are

is So contributor the the quarter because in the Stove, biggest particularly of seasonality.

then a experience November, throughout similar probably, it the strong terms of pretty beginning end last week of the then of quarter be and the December. quarter through brands to the the and ramping slower the being And of then in of quarter, the the peaking early of very ramp December continuing part all

Chasen Bender

you for pricing markets? portion just going? those then about thinking still how is you Thank on dollar strength, business, maybe are Thanks. comment and the that. expansion it. but the small business I a International maybe the Got how And know of U.S. could juxtapose super in you side And against the there just the it’s of then

John Merris

what kind with Yeah. internationally. will start then back of and I to we reverse seeing are maybe pricing

we financial So, to profile them are approaching with markets operate those a the similar is very domestic generally, have business. way our to

So same the we thing think are pricing, domestically. as we factoring about we are in

the those are acquisition driving here ultimately, and the customer what What which in is margin freight goods, we as then similar that to domestically. cost to the we drive cost into get product markets, international to is expense a contribution includes have of the to looking or

International and for has this year us. to been watch fun interesting

with which are particularly and Solo a kind the We have basically been very brands first the and business, rinse leaned other who International of more kickoff then our of repeat. in Stove of pleased

kind a of use So catalyst we the for -- the business have to Stove drive the Stove as to expansion been other then international able three brands in platform.

feels more last happening the say international conditions six the a it are are that rate macro four feels that to weeks has than they just like but here the conditions, unique obviously will been impacting it are are And not macroeconomic domestically. to severe impacted in a shift, there U.S., that markets. they internationally, the I weeks, definitely at almost being

But market into current great indicate and we we buying International important continuing will conditions It’s going that we we are and to internationally. look it. calls. as consumers, the for on to to an help more future how on them their are consumers be eye so are the holidays keeping about definitely decisions, will and impact talk So year a been watch us the XXXX, the that

Chasen Bender

Super. Appreciate the color.

Operator

questions no waiting are There at you. time. Thank this

turn Q&A. the Executive for call the I back John the would Chief So to Merris, over closing to remarks Officer, following like

John Merris

you that call great you the the there. sports bit, to haven’t, you the on It’s for a those says and highly are little of looking gift. nobody year but It’s which that price point. a for product And Pi started you of of out the go Mesa. holiday out being recommend a are everybody haven’t is shopping, great appreciate those has, to if hearing we check oven today We Yeah. of course, get your Oprah

to a So, to call few everybody months. the being and on you appreciate again look but forward we in today talking

Operator

your concludes conference Thank call. That the you for participation.

line. disconnect You may now your

Solo Brands (DTC) 10 Nov 222022 Q3 Earnings call transcript