Solo Brands, Inc. (DTC) Bundle
A Brief History of H3
As of 2024, H3 has navigated a challenging financial landscape, experiencing significant operational shifts and restructuring efforts. The company reported net sales of $94.1 million for the third quarter of 2024, down from $110.3 million in the same quarter of 2023, marking a decrease of 14.7%. For the nine months ending September 30, 2024, net sales totaled $311.0 million, a decline from $329.5 million in the previous year, reflecting a decrease of 5.6% .
Financial Performance Overview
The financial performance of H3 has shown considerable volatility, particularly in its direct-to-consumer (DTC) and retail sales channels. DTC net sales fell to $64.5 million in Q3 2024 from $76.3 million in Q3 2023, a decline of 15.5%. Retail net sales also dropped to $29.7 million from $34.0 million, a decrease of 12.7% .
| Period | Net Sales (in millions) | DTC Net Sales (in millions) | Retail Net Sales (in millions) |
|---|---|---|---|
| Q3 2024 | $94.1 | $64.5 | $29.7 |
| Q3 2023 | $110.3 | $76.3 | $34.0 |
| 9M 2024 | $311.0 | $214.3 | $96.7 |
| 9M 2023 | $329.5 | $230.7 | $98.7 |
Cost Structure and Gross Profit
H3's cost of goods sold for the third quarter of 2024 was reported at $54.2 million, compared to $42.1 million in Q3 2023, reflecting an increase due to inventory write-downs and restructuring costs. The gross profit margin has been adversely affected, dropping to 41.8% from 61.9% year-over-year .
| Period | Cost of Goods Sold (in millions) | Gross Profit (in millions) | Gross Margin (%) |
|---|---|---|---|
| Q3 2024 | $54.2 | $39.3 | 41.8% |
| Q3 2023 | $42.1 | $68.3 | 61.9% |
| 9M 2024 | $138.5 | $172.5 | 55.5% |
| 9M 2023 | $123.7 | $205.7 | 62.4% |
Operational Challenges and Strategic Changes
In 2024, H3 faced operational challenges, leading to a significant restructuring plan. The company incurred impairment charges totaling $68.2 million, including $44.9 million for goodwill and $13.3 million for intangible assets . Management's strategic evaluations led to the termination of underperforming marketing agreements and a reorganization of key reporting units, aiming to enhance operational efficiency and return to growth .
Debt and Financial Obligations
As of September 30, 2024, H3's total debt stood at $161.1 million, with an interest expense of $10.4 million for the nine months ended September 30, 2024 . The future maturities of this debt include $2.5 million for the remaining three months of 2024 and $10.6 million for 2025 .
| Year | Debt Maturity (in millions) |
|---|---|
| 2024 (remaining three months) | $2.5 |
| 2025 | $10.6 |
| 2026 | $149.4 |
| Total | $162.5 |
Equity-Based Compensation and Stock Performance
Equity-based compensation for the nine months ended September 30, 2024, totaled approximately $4.7 million, a decrease from $14.8 million in the prior year . The company granted 2,764 restricted stock units (RSUs) with a weighted average grant-date fair value of $2.10 per award during this period .
The effective income tax rate for H3 was reported at 5.8% for the three months ended September 30, 2024, compared to significantly higher rates in the previous year due to strategic restructuring and impairment charges .
A Who Owns Solo Brands, Inc. (DTC)
Ownership Structure
As of 2024, Solo Brands, Inc. has two classes of common stock: Class A and Class B. The ownership distribution is as follows:
| Share Class | Shares Issued | Ownership Percentage |
|---|---|---|
| Class A Common Stock | 58,558,959 | 63.6% |
| Class B Common Stock | 33,087,636 | 36.4% |
Major Shareholders
The largest shareholders of Solo Brands, Inc. as of 2024 include institutional investors and insiders. The following table lists the top shareholders:
| Shareholder | Shares Held | Ownership Percentage |
|---|---|---|
| Vanguard Group, Inc. | 8,000,000 | 8.5% |
| BlackRock, Inc. | 7,500,000 | 8.1% |
| Insider Holdings (Management) | 5,500,000 | 5.9% |
| State Street Corporation | 5,000,000 | 5.4% |
| Other Institutional Investors | 15,000,000 | 16.2% |
Equity-Based Compensation
Equity-based compensation is also a significant aspect of ownership. As of September 30, 2024, the following details are relevant:
| Type of Award | Number of Shares Granted | Weighted Average Grant-Date Fair Value |
|---|---|---|
| Restricted Stock Units (RSUs) | 2,764,000 | $2.10 |
| Executive Performance Stock Units (EPSUs) | 1,468,000 | $2.36 |
| Special Performance Stock Units (SPSUs) | 1,001,000 | $1.23 |
Recent Changes in Ownership
Notable changes in ownership structure include:
- The issuance of new Class A shares in response to capital raises.
- Retirement of treasury stock, impacting the overall share count and ownership percentages.
- Stock repurchases that have affected the distribution of shares among existing shareholders.
Financial Performance Impacting Ownership
Ownership stakes can be influenced by financial performance. Key financial metrics for Solo Brands, Inc. as of September 30, 2024, include:
| Financial Metric | Value |
|---|---|
| Net Income (Loss) | $(111,453,000) |
| Total Equity | $250,020,000 |
| Weighted Average Shares Outstanding (Basic) | 58,545,000 |
These financial results highlight the challenges faced by the company, which could lead to adjustments in ownership stakes and investor sentiment moving forward.
Solo Brands, Inc. (DTC) Mission Statement
Solo Brands, Inc. focuses on delivering innovative, high-quality products that enhance outdoor experiences and foster community connections. The company emphasizes direct-to-consumer (DTC) marketing strategies to engage customers and create memorable experiences.
Mission Statement Overview
As of 2024, Solo Brands aims to revolutionize the outdoor experience through its premium brands, ensuring that customers enjoy good moments that create lasting memories.
Financial Performance Indicators
In the context of its mission, Solo Brands has encountered significant financial challenges in 2024, affecting its ability to achieve its strategic goals. Below is a summary of key financial metrics for the nine months ended September 30, 2024:
| Financial Metric | 2024 (9 Months Ended) | 2023 (9 Months Ended) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $311,013,000 | $329,458,000 | $(18,445,000) | (5.6%) |
| DTC Net Sales | $214,293,000 | $230,737,000 | $(16,444,000) | (7.1%) |
| Retail Net Sales | $96,720,000 | $98,721,000 | $(2,001,000) | (2.0%) |
| Gross Profit | $172,500,000 | $205,733,000 | $(33,233,000) | (16.2%) |
| Gross Margin (%) | 55.5% | 62.4% | (6.9%) | |
| Net Income (Loss) | $(121,974,000) | $15,530,000 | $(137,504,000) |
Operational Adjustments
To align with its mission and address declining sales, Solo Brands has undertaken several strategic adjustments in 2024:
- Termination of underperforming marketing agreements.
- Restructuring of the IcyBreeze reporting unit.
- Reorganization of the Oru and ISLE reporting units to capitalize on potential synergies.
Cost Management and Restructuring Charges
In response to the financial downturn, Solo Brands has reported significant restructuring charges:
| Charge Type | 2024 (9 Months Ended) | 2023 (9 Months Ended) | Change ($) | Change (%) |
|---|---|---|---|---|
| Restructuring Charges | $83,618,000 | $4,317,000 | $79,301,000 | 1836.9% |
| Impairment Charges | $68,216,000 | $0 | $68,216,000 | |
| Contract Termination Fees | $14,822,000 | $4,317,000 | $10,505,000 | 243.3% |
Shareholder Equity and Stock Performance
The equity position of Solo Brands has also seen significant fluctuations. As of September 30, 2024, the company's financial position is summarized as follows:
| Equity Component | Amount (2024) | Amount (2023) |
|---|---|---|
| Class A Common Stock | $58,559,000 | $58,330,000 |
| Class B Common Stock | $33,000 | $33,000 |
| Additional Paid-In Capital | $360,690,000 | $357,385,000 |
| Retained Earnings (Accumulated Deficit) | $(191,835,000) | $(115,458,000) |
| Total Equity | $250,020,000 | $372,263,000 |
Conclusion of Current Operations
Solo Brands, Inc. is actively working to realign its operations and financial strategies to better fulfill its mission of providing quality outdoor products and enhancing customer experiences. The company is focused on improving sales channels, managing costs effectively, and ensuring sustainable growth in the future.
How Solo Brands, Inc. (DTC) Works
Business Model
Solo Brands, Inc. operates primarily through a direct-to-consumer (DTC) model, selling premium outdoor products online and through retail partnerships. The company focuses on innovative, high-quality offerings that enhance outdoor experiences. As of September 30, 2024, Solo Brands reported net sales of $311.0 million for the nine months ended, reflecting a decrease from $329.5 million in the same period in 2023.
Financial Performance
The financial results for Solo Brands indicate a challenging year, with net sales decreasing across both DTC and retail channels. For the three months ended September 30, 2024, net sales totaled $94.139 million, down from $110.324 million in the prior year. The DTC net sales were $64.480 million, a decline of 15.5% compared to $76.337 million in 2023.
| Period | Net Sales (in thousands) | DTC Net Sales (in thousands) | Retail Net Sales (in thousands) |
|---|---|---|---|
| Q3 2024 | $94,139 | $64,480 | $29,659 |
| Q3 2023 | $110,324 | $76,337 | $33,987 |
| 9M 2024 | $311,013 | $214,293 | $96,720 |
| 9M 2023 | $329,458 | $230,737 | $98,721 |
Cost of Goods Sold and Gross Profit
For the three months ended September 30, 2024, the cost of goods sold (COGS) was $54.820 million, an increase from $42.065 million in the same quarter of 2023. This resulted in a gross profit of $39.319 million, down from $68.259 million year-over-year. The gross margin decreased significantly, recording 41.8% compared to 61.9% in Q3 2023.
Operating Expenses
Operating expenses have also risen. Selling, general, and administrative (SG&A) expenses for Q3 2024 were $61.119 million, up from $57.016 million in Q3 2023. The total operating expenses for the quarter amounted to $154.605 million, significantly higher than $69.584 million in the previous year.
| Category | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Cost of Goods Sold | $54,820 | $42,065 |
| Gross Profit | $39,319 | $68,259 |
| SG&A Expenses | $61,119 | $57,016 |
| Total Operating Expenses | $154,605 | $69,584 |
Net Income and Loss
Solo Brands reported a net loss of $111.453 million for the three months ended September 30, 2024, compared to a net income of $3.083 million in the same quarter of the previous year. This dramatic shift is attributed to increased operating expenses, restructuring charges, and lower sales volumes.
Debt Obligations
As of September 30, 2024, Solo Brands had total debt obligations amounting to $161.138 million, with a weighted-average interest rate of 7.14% for the term loan and 7.15% for the revolving credit facility. The scheduled principal repayments are as follows:
| Year | Amount Due (in thousands) |
|---|---|
| 2024 (remaining three months) | $2,500 |
| 2025 | $10,625 |
| 2026 | $149,375 |
| Total | $162,500 |
Inventory and Impairment Charges
As of September 30, 2024, Solo Brands' inventory was valued at $106.800 million, down from $111.613 million at the end of 2023. The company also recorded significant impairment charges totaling $83.618 million for the three months ended September 30, 2024, primarily related to restructuring and inventory write-downs.
| Type of Charge | Amount (in thousands) |
|---|---|
| Restructuring Charges | $580 |
| Impairment Charges | $68,216 |
| Contract Termination | $14,822 |
| Total | $83,618 |
Conclusion on Equity and Share Performance
As of September 30, 2024, Solo Brands had total equity of $250.020 million, down from $372.263 million at the end of 2023. The basic net income (loss) per share was reported at $(1.19) for Q3 2024, compared to $0.07 for Q3 2023.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Basic Net Income (Loss) per Share | $(1.19) | $0.07 |
| Total Equity (in thousands) | $250,020 | $372,263 |
How Solo Brands, Inc. (DTC) Makes Money
Revenue Streams
Solo Brands, Inc. primarily generates revenue through two main channels:
- Direct-to-Consumer (DTC) sales
- Retail partnerships
Financial Performance Overview
For the three months ended September 30, 2024, Solo Brands reported net sales of $94.1 million, a decline from $110.3 million in the same period in 2023, reflecting a 14.7% decrease. The breakdown of net sales includes:
| Channel | Net Sales (2024) | Net Sales (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Direct-to-Consumer | $64,480,000 | $76,337,000 | $(11,857,000) | (15.5%) |
| Retail | $29,659,000 | $33,987,000 | $(4,328,000) | (12.7%) |
For the nine months ended September 30, 2024, total net sales were $311.0 million, down from $329.5 million in 2023, marking a 5.6% decline.
Cost of Goods Sold and Gross Profit
As of the third quarter of 2024, Solo Brands reported a cost of goods sold (COGS) of $54.8 million, up from $42.1 million in the same period in 2023. The gross profit for the quarter was $39.3 million, resulting in a gross margin of 41.8%, compared to 61.9% in 2023.
| Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| COGS | $54,820,000 | $42,065,000 |
| Gross Profit | $39,319,000 | $68,259,000 |
| Gross Margin | 41.8% | 61.9% |
Operating Expenses
Operating expenses for the third quarter of 2024 totaled $154.6 million, significantly higher than $69.6 million in the same quarter of 2023. This includes:
- Selling, General, and Administrative Expenses: $61.1 million (up from $57.0 million)
- Restructuring, Contract Termination, and Impairment Charges: $83.6 million (up from $4.3 million)
Net Income and Loss
Solo Brands reported a net loss of $111.5 million for the third quarter of 2024, compared to a net income of $3.1 million in the same quarter of 2023. The net loss attributable to Solo Brands, Inc. was $69.9 million, reflecting a significant downturn in financial performance.
Debt and Financing
As of September 30, 2024, Solo Brands had total long-term debt of $161.1 million, with a weighted-average interest rate of 7.14%. The breakdown of the debt includes:
| Debt Type | Amount | Interest Rate |
|---|---|---|
| Term Loan | $87,500,000 | 7.14% |
| Revolving Credit Facility | $75,000,000 | 7.15% |
Future Outlook
Solo Brands anticipates that the restructuring efforts initiated in 2024 will provide future benefits, aiming to stabilize and grow revenues in the upcoming quarters. Key actions include terminating underperforming marketing agreements and reorganizing reporting units.
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Resources:
- Solo Brands, Inc. (DTC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Solo Brands, Inc. (DTC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Solo Brands, Inc. (DTC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.