Solo Brands, Inc. Announces Third Quarter Results
Reaffirms Full Year 2024 Guidance
"Our third quarter results were in line with our expectations despite a continued challenging macroeconomic backdrop for big ticket consumer durable items," said
Third Quarter 2024 Highlights Compared to Third Quarter 2023
-
Net sales of
$94.1 million , down$16.2 million or 14.7% -
Net loss of
$111.5 million , down$114.5 million -
Net loss per Class A common stock - basic and diluted of
$1.19 , down$1.26 -
Adjusted net income(1)(2) of
$1.4 million , down$13.8 million -
Adjusted EBITDA(1) of
$6.5 million , down$8.5 million -
Adjusted net income per Class A common stock(1)(2) of
$0.02 per diluted share, down$0.17
First Nine Months 2024 Highlights Compared to First Nine Months 2023
-
Net sales of
$311.0 million , down$18.4 million or 5.6% -
Net loss of
$122.0 million , down$137.5 million -
Net loss per Class A common stock - basic and diluted of
$1.31 , down$1.51 -
Adjusted net income(1)(2) of
$9.2 million , down$34.3 million -
Adjusted EBITDA(1) of
$26.2 million , down$29.1 million -
Adjusted net income per Class A common stock(1)(2) of
$0.09 per diluted share, down$0.35
Operating Results for the Three Months Ended
Net sales decreased to
-
Direct-to-consumer revenues decreased to
$64.5 million , or 15.5%, compared to$76.3 million in the third quarter of 2023. -
Retail revenues decreased to
$29.7 million , or 12.7%, compared to$34.0 million in the third quarter of 2023. The non-recurring transaction with a marketing barter partner in the third quarter of 2023 contributed$7.2 million to retail channel net sales in the 2023 period.
Gross profit decreased to
Selling, general and administrative expenses increased to
The fixed costs decrease was primarily the result of the decrease in employee-related costs primarily driven by a significant reduction in equity-based compensation expense and bonus expense, offset in part by separation costs of certain management personnel and addition of senior leadership positions. Partially offsetting the net decrease in employee-related costs were increases in professional services and information technology expenditures.
Restructuring, Contract Termination and Impairment Charges increased to
Other operating expenses increased to
Interest expense, net increased to
Net (loss) income per Class A common stock was
Adjusted net income (loss) per Class A common stock(1)(2) was
Operating Results for the Nine Months Ended
Net sales decreased to
-
Direct-to-consumer revenues decreased to
$214.3 million , or 7.1%, compared to$230.7 million in the prior year. -
Retail revenues decreased to
$96.7 million , or 2.0%, compared to$98.7 million in the prior year. The non-recurring transaction with a marketing barter partner in the third quarter of 2023 contributed$7.2 million to retail channel net sales in the 2023 period.
Gross profit decreased to
Selling, general and administrative expenses increased to
The fixed cost decrease was primarily the result of decreases in employee-related costs which benefited from a reduction in equity-based compensation and bonus expense, offset in part by separation costs of certain management personnel and addition of senior leadership positions. Partially offsetting this net decrease in employee-related costs were increases in professional services costs, software expenses and rent expense.
Restructuring, Contract Termination and Impairment Charges increased to
Other operating expenses increased to
Interest expense, net increased to
Net (loss) income per Class A common stock year to date was
Adjusted net income per Class A common stock(1)(2) year to date was
Consolidated Balance Sheet
Cash and cash equivalents were
Inventory was
Outstanding borrowings were
Full Year 2024 Outlook
The Company’s reaffirmed 2024 outlook is as follows:
Total revenue is expected to be between
Adjusted EBITDA margin* is expected to be between 9% to 10% for 2024.
The Company’s full year 2024 guidance is based on a number of assumptions that are subject to change, many of which are outside the Company’s control. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
* The Company has not provided a quantitative reconciliation of forecasted adjusted EBITDA margin to forecasted GAAP net income (loss) margin as a percent of net sales, respectively, within this press release because the Company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. With respect to GAAP net income (loss) margin, these items include, but are not limited to, equity-based compensation with respect to future grants and forfeitures, which could materially affect the computation of forward-looking GAAP net income, and are inherently uncertain and depend on various factors, some of which are outside of the Company’s control.
(1) This release includes references to non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” later in this release for the definitions of the non-GAAP financial measures presented and a reconciliation of these measures to their closest comparable GAAP measures.
(2) This release reflects a change to the presentation of the adjusted net income (loss) per Class A common stock from previous periods in order to provide a more concise view. Prior periods are presented on this new basis for comparability purposes. Please see the definition of “Adjusted Net Income (Loss) per Class A Common Stock” below for more information.
(3) We previously referred to our retail sales channel as our wholesale channel. In this release and future releases, we intend to refer to our retail sales and associated business results from such retail sales as results attributable to our retail sales channel.
Conference Call Details
A conference call to discuss the Company's third quarter 2024 results is scheduled for
A recorded replay of the call will be available shortly after the conclusion of the call and remain available until
About
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding our financial position, seasonal trends, momentum from retail partners, impacts of restructuring efforts and our anticipated GAAP and non-GAAP guidance for the fiscal year ending
Availability of Information on Solo Brands’ Website and Social Media Profiles
Investors and others should note that
Social Media Profiles:
https://linkedin.com/company/solo-brands/
https://instagram.com/solobrands/
https://www.facebook.com/groups/368095467245044/
|
|||||||||||||||
Consolidated Statements of Operations and Comprehensive Income (Loss) |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
(In thousands, except per share data) |
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net sales |
$ |
94,139 |
|
|
$ |
110,324 |
|
|
$ |
311,013 |
|
|
$ |
329,458 |
|
Cost of goods sold |
|
54,820 |
|
|
|
42,065 |
|
|
|
138,513 |
|
|
|
123,725 |
|
Gross profit |
|
39,319 |
|
|
|
68,259 |
|
|
|
172,500 |
|
|
|
205,733 |
|
Operating expenses |
|
|
|
|
|
|
|
||||||||
Selling, general & administrative expenses |
|
61,119 |
|
|
|
57,016 |
|
|
|
180,337 |
|
|
|
165,162 |
|
Restructuring, contract termination and impairment charges |
|
83,618 |
|
|
|
4,317 |
|
|
|
83,618 |
|
|
|
4,317 |
|
Depreciation and amortization expenses |
|
6,574 |
|
|
|
7,052 |
|
|
|
19,255 |
|
|
|
19,579 |
|
Other operating expenses |
|
3,294 |
|
|
|
1,199 |
|
|
|
8,688 |
|
|
|
3,736 |
|
Total operating expenses |
|
154,605 |
|
|
|
69,584 |
|
|
|
291,898 |
|
|
|
192,794 |
|
Income (loss) from operations |
|
(115,286 |
) |
|
|
(1,325 |
) |
|
|
(119,398 |
) |
|
|
12,939 |
|
Non-operating (income) expense |
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
3,683 |
|
|
|
2,766 |
|
|
|
10,352 |
|
|
|
7,542 |
|
Other non-operating (income) expense |
|
(619 |
) |
|
|
(983 |
) |
|
|
(378 |
) |
|
|
(6,861 |
) |
Total non-operating (income) expense |
|
3,064 |
|
|
|
1,783 |
|
|
|
9,974 |
|
|
|
681 |
|
Income (loss) before income taxes |
|
(118,350 |
) |
|
|
(3,108 |
) |
|
|
(129,372 |
) |
|
|
12,258 |
|
Income tax expense (benefit) |
|
(6,897 |
) |
|
|
(6,191 |
) |
|
|
(7,398 |
) |
|
|
(3,272 |
) |
Net income (loss) |
|
(111,453 |
) |
|
|
3,083 |
|
|
|
(121,974 |
) |
|
|
15,530 |
|
Less: net income (loss) attributable to noncontrolling interests |
|
(41,589 |
) |
|
|
(1,045 |
) |
|
|
(45,597 |
) |
|
|
3,054 |
|
Net income (loss) attributable to |
$ |
(69,864 |
) |
|
$ |
4,128 |
|
|
$ |
(76,377 |
) |
|
$ |
12,476 |
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
||||||||
Foreign currency translation, net of tax |
|
82 |
|
|
|
(593 |
) |
|
|
6 |
|
|
|
(472 |
) |
Comprehensive income (loss) |
|
(111,371 |
) |
|
|
2,490 |
|
|
|
(121,968 |
) |
|
|
15,058 |
|
Less: other comprehensive income (loss) attributable to noncontrolling interests |
|
(24 |
) |
|
|
(214 |
) |
|
|
3 |
|
|
|
(171 |
) |
Less: net income (loss) attributable to noncontrolling interests |
|
(41,589 |
) |
|
|
(1,045 |
) |
|
|
(45,597 |
) |
|
|
3,054 |
|
Comprehensive income (loss) attributable to |
$ |
(69,758 |
) |
|
$ |
3,749 |
|
|
$ |
(76,374 |
) |
|
$ |
12,175 |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per Class A common stock |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(1.19 |
) |
|
$ |
0.07 |
|
|
$ |
(1.31 |
) |
|
$ |
0.20 |
|
Diluted |
$ |
(1.19 |
) |
|
$ |
0.07 |
|
|
$ |
(1.31 |
) |
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average Class A common stock outstanding |
|
|
|
|
|
|
|
||||||||
Basic |
|
58,545 |
|
|
|
57,883 |
|
|
|
58,303 |
|
|
|
61,370 |
|
Diluted |
|
58,545 |
|
|
|
58,368 |
|
|
|
58,303 |
|
|
|
61,581 |
|
|
|||||||
Consolidated Balance Sheets |
|||||||
(unaudited) |
|||||||
(In thousands, except par value and per unit data) |
|
|
|
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
12,494 |
|
|
$ |
19,842 |
|
Accounts receivable, net of allowance for credit losses of |
|
38,270 |
|
|
|
42,725 |
|
Inventory |
|
106,800 |
|
|
|
111,613 |
|
Prepaid expenses and other current assets |
|
14,923 |
|
|
|
21,893 |
|
Total current assets |
|
172,487 |
|
|
|
196,073 |
|
Non-current assets |
|
|
|
||||
Property and equipment, net |
|
24,227 |
|
|
|
26,159 |
|
Intangible assets, net |
|
193,905 |
|
|
|
221,010 |
|
|
|
124,796 |
|
|
|
169,648 |
|
Operating lease right-of-use assets |
|
30,361 |
|
|
|
30,788 |
|
Other non-current assets |
|
7,450 |
|
|
|
15,640 |
|
Total non-current assets |
|
380,739 |
|
|
|
463,245 |
|
Total assets |
$ |
553,226 |
|
|
$ |
659,318 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
61,047 |
|
|
$ |
21,846 |
|
Accrued expenses and other current liabilities |
|
36,904 |
|
|
|
55,155 |
|
Deferred revenue |
|
1,744 |
|
|
|
5,310 |
|
Current portion of long-term debt |
|
10,000 |
|
|
|
6,250 |
|
Total current liabilities |
|
109,695 |
|
|
|
88,561 |
|
Non-current liabilities |
|
|
|
||||
Long-term debt, net |
|
151,138 |
|
|
|
142,993 |
|
Deferred tax liability |
|
8,149 |
|
|
|
17,319 |
|
Operating lease liabilities |
|
24,831 |
|
|
|
24,648 |
|
Other non-current liabilities |
|
9,393 |
|
|
|
13,534 |
|
Total non-current liabilities |
|
193,511 |
|
|
|
198,494 |
|
|
|
|
|
||||
Commitments and contingencies (Note 1) |
|
|
|
||||
|
|
|
|
||||
Equity |
|
|
|
||||
Class A common stock, par value |
|
59 |
|
|
|
58 |
|
Class B common stock, par value |
|
33 |
|
|
|
33 |
|
Additional paid-in capital |
|
360,690 |
|
|
|
357,385 |
|
Retained earnings (accumulated deficit) |
|
(191,835 |
) |
|
|
(115,458 |
) |
Accumulated other comprehensive income (loss) |
|
(224 |
) |
|
|
(230 |
) |
|
|
(714 |
) |
|
|
(526 |
) |
Equity attributable to the controlling interest |
|
168,009 |
|
|
|
241,262 |
|
Equity attributable to noncontrolling interests |
|
82,011 |
|
|
|
131,001 |
|
Total equity |
|
250,020 |
|
|
|
372,263 |
|
Total liabilities and equity |
$ |
553,226 |
|
|
$ |
659,318 |
|
|
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(unaudited) |
|||||||
|
Nine Months Ended |
||||||
(In thousands) |
2024 |
|
2023 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income (loss) |
$ |
(121,974 |
) |
|
$ |
15,530 |
|
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities |
|
|
|
||||
Restructuring, contract termination and impairment charges |
|
83,618 |
|
|
|
4,317 |
|
Depreciation and amortization |
|
19,942 |
|
|
|
20,125 |
|
Inventory charges associated with restructuring and consolidation activities |
|
18,742 |
|
|
|
— |
|
Operating lease right-of-use assets |
|
6,517 |
|
|
|
4,704 |
|
Equity-based compensation |
|
4,408 |
|
|
|
14,714 |
|
Change in fair value of contingent consideration |
|
4,721 |
|
|
|
(2,242 |
) |
Prepaid marketing charges |
|
1,871 |
|
|
|
— |
|
Amortization of debt issuance costs |
|
645 |
|
|
|
645 |
|
Changes in accounts receivable reserves |
|
401 |
|
|
|
1,312 |
|
Deferred income taxes |
|
(9,631 |
) |
|
|
(10,924 |
) |
Other |
|
26 |
|
|
|
186 |
|
Changes in assets and liabilities |
|
|
|
||||
Accounts receivable |
|
4,058 |
|
|
|
(5,472 |
) |
Inventory |
|
(12,434 |
) |
|
|
24,607 |
|
Prepaid expenses and other current assets |
|
(807 |
) |
|
|
(4,995 |
) |
Accounts payable |
|
29,608 |
|
|
|
(891 |
) |
Accrued expenses and other current liabilities |
|
(20,282 |
) |
|
|
(8,713 |
) |
Deferred revenue |
|
(3,566 |
) |
|
|
(2,878 |
) |
Operating lease liabilities |
|
(4,176 |
) |
|
|
(5,442 |
) |
Other non-current assets and liabilities |
|
(1,157 |
) |
|
|
(5,419 |
) |
Payments of contingent consideration |
|
(3,000 |
) |
|
|
— |
|
Net cash (used in) provided by operating activities |
|
(2,470 |
) |
|
|
39,164 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Capital expenditures |
|
(11,512 |
) |
|
|
(6,943 |
) |
Payments of contingent consideration |
|
— |
|
|
|
(9,386 |
) |
Acquisitions, net of cash acquired |
|
— |
|
|
|
(34,620 |
) |
Net cash (used in) provided by investing activities |
|
(11,512 |
) |
|
|
(50,949 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from long-term debt |
|
40,000 |
|
|
|
60,000 |
|
Repayments of long-term debt |
|
(28,750 |
) |
|
|
(8,750 |
) |
Finance lease liability principal paid |
|
(144 |
) |
|
|
— |
|
Common stock repurchases |
|
— |
|
|
|
(36,957 |
) |
Distributions to non-controlling interests |
|
(4,284 |
) |
|
|
(8,944 |
) |
Surrender of stock to settle taxes on restricted stock awards |
|
(188 |
) |
|
|
(42 |
) |
Stock issued under employee stock purchase plan |
|
178 |
|
|
|
106 |
|
Net cash (used in) provided by financing activities |
|
6,812 |
|
|
|
5,413 |
|
Effect of exchange rate changes on cash |
|
(178 |
) |
|
|
(370 |
) |
Net change in cash and cash equivalents |
|
(7,348 |
) |
|
|
(6,742 |
) |
Cash and cash equivalents balance, beginning of period |
|
19,842 |
|
|
|
23,293 |
|
Cash and cash equivalents balance, end of period |
$ |
12,494 |
|
|
$ |
16,551 |
|
|
|
|
|
||||
SUPPLEMENTAL NONCASH INVESTING AND FINANCING DISCLOSURES: |
|
|
|
||||
Operating lease right of use assets obtained in exchange for lease obligations |
|
6,109 |
|
|
|
2,532 |
|
Financing lease right of use assets obtained in exchange for lease obligations |
|
— |
|
|
|
899 |
|
|
|
— |
|
|
|
31,164 |
|
Re-issuance of treasury stock |
|
— |
|
|
|
5,342 |
|
Non-GAAP Financial Measures
We report our financial results in accordance with accounting principles generally accepted in
None of these non-GAAP measures is a measurement of financial performance under
These non-GAAP measures exclude certain tax payments that may require a reduction in cash available to us; do not reflect our cash expenditures, or future requirements, for capital expenditures (including capitalized software developmental costs) or contractual commitments; do not reflect changes in, or cash requirements for, our working capital needs; do not reflect the cash requirements necessary to service interest or principal payments on our debt; exclude certain purchase accounting adjustments related to acquisitions; and exclude equity-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy.
In addition, other companies may define and calculate similarly-titled non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other
Free Cash Flow
We calculate free cash flow as net cash provided by (used in) operating activities, reduced by capital expenditures (consisting of purchases of property and equipment, purchases of intangible assets and capitalization of internal use software). We believe free cash flow is an important liquidity measure of the cash that is available for operational expenses, investments in our business, strategic acquisitions, and for certain other activities such as repaying debt obligations and stock repurchases.
Adjusted Free Cash Flow
Adjusted free cash flow is defined as free cash flow eliminating the cash impact of the following costs that are believed by management to be non-operating in nature and not representative of the Company’s core operating performance, as listed below under “Non-GAAP Adjustments”: business optimization and expansion expense, management transition costs, transaction costs, sales tax audit expense, tax refunds, prepaid marketing charges (in the period in which cash outflows occurred) and payments of contingent consideration included in net cash provided by (used in) operating activities. We believe that adjusted free cash flow enhances investors’ understanding of the liquidity of our ongoing operations. Our definition of adjusted free cash flow may differ from those used by other companies.
Adjusted Net Income (Loss)
We calculate adjusted net income as net income (loss) excluding impairment charges and the costs that are believed by management to be non-operating in nature and not representative of the Company’s core operating performance, as listed below under “Non-GAAP Adjustments”. Adjusted net income (loss) attributable to noncontrolling interests is calculated as income (loss) before income taxes, adjusted in the same manner as adjusted net income, adjusted for the allocable attribution to the noncontrolling interest.
Adjusted Net Income (Loss) per Class A Common Stock
We calculate adjusted net income (loss) per Class A common stock as adjusted net income, as defined above, less the allocable portion of net income to the noncontrolling interest, divided by weighted average diluted shares or weighted average shares of Class A common stock, respectively, as calculated under
Beginning with the reporting of our results for the three and twelve month periods ended
EBITDA
We calculate EBITDA as net income (loss) before interest expense, income taxes, and depreciation and amortization expenses.
Adjusted EBITDA
We calculate adjusted EBITDA as net income (loss) before interest expense, income taxes, depreciation and amortization expenses, impairment charges, equity-based compensation expense, and the costs that are believed by management to be non-operating in nature and not representative of the Company’s core operating performance, as listed below under “Non-GAAP Adjustments”.
Adjusted EBITDA Margin
We calculate adjusted EBITDA margin as adjusted EBITDA, divided by net sales.
Adjusted Gross Profit
We calculate adjusted gross profit as gross profit, less inventory charges associated with restructuring and consolidation activities, inventory fair value write-ups and tooling depreciation.
Adjusted Gross Profit Margin
We calculate adjusted gross profit margin as adjusted gross profit, divided by net sales.
Non-GAAP Adjustments
In addition to the costs specifically noted under the non-GAAP metrics above, the Company believes that evaluation of its financial performance can be enhanced by a supplemental presentation of results that exclude costs believed by management to be non-operating in nature and not representative of the Company’s core operating performance. These costs are excluded in order to enhance consistency and comparability with results in prior periods that do not include such items and to provide a basis for evaluating operating results in future periods.
- Restructuring, contract termination, impairment and related charges - Represents contract termination, impairment and restructuring charges related to the termination of underperforming marketing contracts, reorganization of the Oru and ISLE reporting units of the Company under a revised management structure, and charges related to the IcyBreeze reporting unit and the related inventory charges associated with the restructuring and consolidation activities, as well as the goodwill impairment charges related to the Solo Stove reporting unit driven by the sustained decline in share price.
- Amortization expense - Represents the non-cash amortization of intangible assets related to the reorganization transactions in 2020 and the 2021 and 2023 acquisitions.
- Business optimization and expansion expenses - Represents select consulting and software implementation fees.
- Equity-based compensation expense - Represents the non-cash expense related to the incentive units, restricted stock units, options, performance stock units, executive performance stock units and employee stock purchases, with vestings occurring over time and settled with the Company’s common stock.
- Changes in fair value of contingent earn-out liability - Represents the charge to mark the contingent earn-out consideration to fair value in connection with the 2023 acquisitions.
- Management transition costs - Represents costs primarily related to executive transition costs for executive search fees and related costs for the transition of certain members of management, such as severance costs.
- Transaction costs - Represents transaction costs primarily related to professional service fees incurred in connection with the secondary offering, S-3 registration statement filed in 2023 and acquisition activities, including financial diligence and legal fees.
- Prepaid marketing charges - Represents the write-off of marketing campaigns that were determined to be inconsistent with current marketing strategies.
- Inventory fair value write-ups - Represents the recognition of fair market value write-ups of inventory accounted for under ASC 805 related to the 2023 acquisitions.
- Sales tax audit expense - Represents a sales tax assessment related to prior periods.
- Tax refunds - Represents a one-time tax refund related to COVID-19 era benefits.
- Tooling depreciation - Represents the depreciation applicable to the tooling used in the manufacturing process that is recognized within cost of goods sold.
- Tax impact of adjusting items - Represents the tax impact of the respective adjustments for each non-GAAP financial measure calculated at an expected statutory rate of 21.0%, adjusted to reflect the allocation to the controlling interest.
- Removal of valuation allowance - Represents the removal of the valuation allowance recorded within the period, as determined through revision of the current period tax provision to reflect the Non-GAAP Adjustments to income (loss) before income taxes.
|
|||||||||||||||
Reconciliation of Non-GAAP Financial Information to GAAP |
|||||||||||||||
(Unaudited) (In thousands, except per share amounts) |
|||||||||||||||
The following tables reconcile the non-GAAP financial measures to their most comparable GAAP measure for the periods presented: |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
(dollars in thousands) |
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Gross profit |
$ |
39,319 |
|
|
$ |
68,259 |
|
|
$ |
172,500 |
|
|
$ |
205,733 |
|
Inventory charges associated with restructuring and consolidation activities |
|
18,742 |
|
|
|
— |
|
|
|
18,742 |
|
|
|
— |
|
Inventory fair value write-up |
|
— |
|
|
|
— |
|
|
|
805 |
|
|
|
— |
|
Tooling depreciation |
|
241 |
|
|
|
186 |
|
|
|
687 |
|
|
|
546 |
|
Adjusted gross profit |
$ |
58,302 |
|
|
$ |
68,445 |
|
|
$ |
192,734 |
|
|
$ |
206,279 |
|
|
|
|
|
|
|
|
|
||||||||
Gross profit margin |
|
|
|
||||||||||||
(Gross profit as a % of net sales) |
|
41.8 |
% |
|
61.9 |
% |
|
55.5 |
% |
|
62.4 |
% |
|||
|
|
|
|
|
|
|
|
||||||||
Adjusted gross profit margin |
|
|
|
||||||||||||
(Adjusted gross profit as a % of net sales) |
|
61.9 |
% |
|
62.0 |
% |
|
62.0 |
% |
|
62.6 |
% |
The following table reconciles net cash (used in) provided by operating activities to free cash flow and adjusted free cash flow for the periods presented: |
|||||||
|
Nine Months Ended |
||||||
(dollars in thousands) |
2024 |
|
2023 |
||||
Net cash (used in) provided by operating activities (as reported) |
$ |
(2,470 |
) |
|
$ |
39,164 |
|
Capital expenditures |
|
(11,512 |
) |
|
|
(6,943 |
) |
Free cash flow |
$ |
(13,982 |
) |
|
$ |
32,221 |
|
Business optimization and expansion expense |
|
6,256 |
|
|
|
456 |
|
Management transition costs |
|
3,090 |
|
|
|
915 |
|
Transaction costs |
|
988 |
|
|
|
2,855 |
|
Sales tax audit expense |
|
485 |
|
|
|
— |
|
Tax refunds |
|
— |
|
|
|
(5,121 |
) |
Prepaid marketing charges |
|
510 |
|
|
|
1,361 |
|
Payments of contingent consideration |
|
3,000 |
|
|
|
— |
|
Adjusted free cash flow |
$ |
347 |
|
|
$ |
32,687 |
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
(dollars in thousands) |
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net income (loss) |
$ |
(111,453 |
) |
|
$ |
3,083 |
|
|
$ |
(121,974 |
) |
|
$ |
15,530 |
|
Restructuring, contract termination, impairment and related charges |
|
102,360 |
|
|
|
4,317 |
|
|
|
102,360 |
|
|
|
4,317 |
|
Amortization expense |
|
5,067 |
|
|
|
5,744 |
|
|
|
15,163 |
|
|
|
16,263 |
|
Business optimization and expansion expense |
|
2,776 |
|
|
|
210 |
|
|
|
6,256 |
|
|
|
456 |
|
Equity-based compensation expense |
|
1,859 |
|
|
|
4,964 |
|
|
|
4,740 |
|
|
|
14,766 |
|
Changes in fair value of contingent earn-out liability |
|
4,559 |
|
|
|
(2,242 |
) |
|
|
4,721 |
|
|
|
(2,242 |
) |
Management transition costs |
|
250 |
|
|
|
263 |
|
|
|
3,090 |
|
|
|
915 |
|
Transaction costs |
|
672 |
|
|
|
728 |
|
|
|
988 |
|
|
|
2,855 |
|
Prepaid marketing charges |
|
1,871 |
|
|
|
— |
|
|
|
1,871 |
|
|
|
— |
|
Inventory fair value write-ups |
|
— |
|
|
|
— |
|
|
|
805 |
|
|
|
— |
|
Sales tax audit expense |
|
4 |
|
|
|
— |
|
|
|
485 |
|
|
|
— |
|
Tax refunds |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,121 |
) |
Tax impact of adjusting items |
|
(16,024 |
) |
|
|
(1,858 |
) |
|
|
(18,851 |
) |
|
|
(4,313 |
) |
Reversal of valuation allowance |
|
9,508 |
|
|
|
— |
|
|
|
9,508 |
|
|
|
— |
|
Adjusted net income (loss) |
$ |
1,449 |
|
|
$ |
15,209 |
|
|
$ |
9,162 |
|
|
$ |
43,426 |
|
Less: adjusted net income (loss) attributable to noncontrolling interests |
|
386 |
|
|
|
3,942 |
|
|
|
4,010 |
|
|
|
16,117 |
|
Adjusted net income (loss) attributable to |
$ |
1,063 |
|
|
$ |
11,267 |
|
|
$ |
5,152 |
|
|
$ |
27,309 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net income (loss) per Class A common stock |
$ |
0.02 |
|
|
$ |
0.19 |
|
|
$ |
0.09 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average Class A common stock outstanding - basic |
|
58,545 |
|
|
|
57,883 |
|
|
|
58,303 |
|
|
|
61,370 |
|
Weighted-average Class A common stock outstanding - diluted |
|
58,545 |
|
|
|
58,368 |
|
|
|
58,303 |
|
|
|
61,581 |
|
|
|
|
|||||||||||||
Net income (loss) |
$ |
(111,453 |
) |
|
$ |
3,083 |
|
|
$ |
(121,974 |
) |
|
$ |
15,530 |
|
Interest expense |
|
3,683 |
|
|
|
2,766 |
|
|
|
10,352 |
|
|
|
7,542 |
|
Income tax (benefit) expense |
|
(6,897 |
) |
|
|
(6,191 |
) |
|
|
(7,398 |
) |
|
|
(3,272 |
) |
Depreciation and amortization expense |
|
6,815 |
|
|
|
7,052 |
|
|
|
19,942 |
|
|
|
19,579 |
|
EBITDA |
$ |
(107,852 |
) |
|
$ |
6,710 |
|
|
$ |
(99,078 |
) |
|
$ |
39,379 |
|
Restructuring, contract termination, impairment and related charges |
|
102,360 |
|
|
|
4,317 |
|
|
|
102,360 |
|
|
|
4,317 |
|
Business optimization and expansion expense |
|
2,776 |
|
|
|
210 |
|
|
|
6,256 |
|
|
|
456 |
|
Equity-based compensation expense |
|
1,859 |
|
|
|
4,964 |
|
|
|
4,740 |
|
|
|
14,766 |
|
Changes in fair value of contingent earn-out liability |
|
4,559 |
|
|
|
(2,242 |
) |
|
|
4,721 |
|
|
|
(2,242 |
) |
Management transition costs |
|
250 |
|
|
|
263 |
|
|
|
3,090 |
|
|
|
915 |
|
Transaction costs |
|
672 |
|
|
|
728 |
|
|
|
988 |
|
|
|
2,855 |
|
Prepaid marketing charges |
|
1,871 |
|
|
|
— |
|
|
|
1,871 |
|
|
|
— |
|
Inventory fair value write-ups |
|
— |
|
|
|
— |
|
|
|
805 |
|
|
|
— |
|
Sales tax audit expense |
|
4 |
|
|
|
— |
|
|
|
485 |
|
|
|
— |
|
Tax refunds |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,121 |
) |
Adjusted EBITDA |
$ |
6,499 |
|
|
$ |
14,950 |
|
|
$ |
26,238 |
|
|
$ |
55,325 |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) margin |
|
|
|
||||||||||||
(Net income (loss) as a % of net sales) |
|
(118.4 |
)% |
|
2.8 |
% |
|
(39.2 |
)% |
|
4.7 |
% |
|||
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA margin |
|
|
|
||||||||||||
(Adjusted EBITDA as a % of net sales) |
|
6.9 |
% |
|
13.6 |
% |
|
8.4 |
% |
|
16.8 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241107038423/en/
Investors@solobrands.com
Investors@solobrands.com
Source: