Q3 2023 Solo Brands Inc Earnings Call

Speaker 1: and will be available on the investors portion of our website at investors.solo brands.com.

Investors portion of our website at investors got solo brand's dotcom.

Now I'd like to turn the call over to John.

Speaker 2: Thank you, Bruce, and thank you for joining the call today to discuss solar brands and our third quarter results. I will begin with a review of our third quarter performance and then talk more about our vision and strategy. Summer will then review the financials in more detail and provide our outlook.

Thank you Bruce and thank you for joining the call today to discuss solar brands in our third quarter results I will begin with a review of our third quarter performance and then talk more about our vision and strategy Summer will then review the financials in more detail and provide our outlook.

Speaker 2: I'm pleased with our third quarter results, which came in ahead of our expectations. We delivered sales of 110 million, an increase of 8% over last year, and adjusted EBITDA margins that increased 250 basis points to roughly 14%. Our results were driven by strong sales through our wholesale channel as our brand momentum continues to grow. While we know that consumer wallets are stretched, we are well positioned to navigate an uncertain consumer environment given the resilience and strength of our financial model.

I am pleased with our third quarter results, which came in ahead of our expectations. We delivered sales of $110 million, an increase of 8% over last year and adjusted EBITDA margin increased 250 basis points to roughly 14%. Our results were driven by strong sell through our wholesale channel as our brand momentum continues to grow.

While we know that consumer wallets are stretched we are well positioned to navigate an uncertain consumer environment, given the resilience and strength of our financial model.

Speaker 2: The fellow branch generates healthy EBITDA margins, has low financial leverage, a balanced omnichannel sales approach, and is capital light leading to strong free cash flow.

Hello branch generates healthy EBITDA margins as low financial leverage a balanced omni channel sales approach and is capital light leading to strong free cash flow.

Speaker 2: We are proud to report on the momentum that solo brands is gaining with our wholesale partners.

We are proud to report on the momentum that solo branches, gaining with our wholesale partners for the quarter, our wholesale revenues increased 114% compared to last year due to strong sell in with new and existing partners match with strong sell throughs.

Speaker 2: For the quarter, our wholesale revenues increased 114% compared to last year due to strong sell-ins with new and existing partners matched with strong sell-throughs. Our sell-throughs have been solid because of the unique value that our brands offer to wholesalers fueled by our marketing efforts, which help us connect directly with many new customers that are experiencing our brands for the first time.

Our sell throughs have been solid because of the unique value that our brands offered a wholesalers fueled by our marketing efforts, which help us connect directly with many new customers that are experiencing our brands for the first time.

Speaker 2: We attribute the success of our wholesale strategy to this. Our customers appreciate and value often. The same consumer who is shopping online today may find themselves in a jam tomorrow as they prepare for a birthday party or a wedding. We have heard feedback from customers who are thrilled to be able to drive through a store to pick up a source of right then. Customers want optionality and we are responding to their needs as part of our ongoing commitment to customer satisfaction. We have heard feedback from customers who are thrilled to be able to drive through a store to pick up a source of right then.

We attribute the success of our wholesale strategy to the our customers appreciate and value often the same consumer who is shopping online today may find themselves in a jam tomorrow as they prepare for a birthday party or a wedding. We have heard feedback from customers, who are thrilled to be able to drive to a store to pick up a solar stuff right.

Customers want Optionality, and we're responding to their needs as part of our ongoing commitment to customer satisfaction.

Speaker 2: Allow me to remind you of our omni-channel strategy, which we rolled out at the beginning of the year. Our belief was that, as we built our wholesale business, we would inevitably cannibalize some of our online business in the near term. However, we expected that we would be able to drive many of those customers back to our site for the purchase of accessories and other products, and we are seeing that play out successfully.

Allow me to remind you of our Omnichannel strategy, which we rolled out at the beginning of the year.

Our belief was that as we built our wholesale business, we would inevitably cannibalize some of our online business in the near term. However, we expected that we would be able to drive many of those customers back to our site for the purchase of accessories and other products and we're seeing that play out successfully so.

Speaker 2: So far this year, we have witnessed a 23% increase in the customer group of first-time customers shopping on our website who are buying a fire pit accessory.

So far this year, we have witnessed a 23% increase in the customer group are first time customers shopping on our web site, who are buying a fire pit accessory.

Speaker 2: We expect that the majority of these are customers buying philosophical fire pits from retailers and then coming to our website to buy accessories. Show casing our ability to build direct relationships with entirely new cohorts of customers.

We expect that the majority of these are customers buying solar so fire pits from retailers and then coming to our website to buy accessories showcasing our ability to build direct relationships with entirely new cohorts of customers, we are making connections with thousands and thousands of new customers, who may be exposed to a branch for the first time and this is.

Speaker 2: We are making connections with thousands and thousands of new customers who may be exposed to our brands for the first time. And this is part of a strategy that will ultimately grow our brand in business over the long run.

As part of a strategy that will ultimately grow our brand and business over the long run.

Speaker 2: As an important reminder, from a profitability standpoint, we are channel agnostic because we see similar profitability in wholesale as we do in our online business.

As an important reminder, from a profitability standpoint, we are channel agnostic, because we see similar profitability in wholesale as we do in our online business as an added benefit of our strategic wholesale partnerships. We are building our brand awareness at an accelerated rate, which we believe will lead to higher sales in both channels over time.

Speaker 2: As an added benefit of our strategic wholesale partnerships, we are building our brand awareness at an accelerated rate, which we believe will lead to higher sales in both channels over time.

Speaker 2: We are excited to work with retail partners who can optimize the in-person experience, allowing customers to interact with our products in new ways.

We are excited to work with retail partners, who can optimize the in person experience, allowing customers to interact with our products in new ways.

Speaker 2: We are accelerating our brand awareness through compelling shop-in-shop and in-store displays that enable us to showcase more of our product line in a solo brand's way, and our customers are feeling the love. We have found great success in Dick's Sporting Goods, Public Lands, and Shields, where we have more robust displays and in-person experiences, and this is intentional and in keeping with a larger strategy. It's part of our DNA to treat our customers just as well in physical stores as we do online.

We're accelerating our brand awareness through compelling shop in shops and in store displays that enable us to showcase more of our product line and a solo branch way and our customers are feeling the love. We have found great success in Dick's Sporting goods public lands and shields, where we have more robust displays and in person experiences and this is.

Intentional and in keeping with a larger strategy, it's part of our DNA to treat our customers just as well in physical stores as we do online.

Speaker 2: So we are seeing continuity in terms of the way that we connect with our customers.

So we are seeing continuity in terms of the way that we connect with our customers.

Speaker 2: Nevertheless, we believe that we are very under-penetrated at retail and see significant runway to continue growing with our current retail partners through Share a Shell and Strategic Marketing initiatives.

Nevertheless, we believe that we are very underpenetrated at retail and see significant runway to continue growing with our current retail partners through share of shelf and strategic marketing initiatives.

Speaker 2: Currently, our enhanced presentation is in only 200 doors, driving increased productivity in those doors. The reality is that we are in 7,500 doors in total across solo brands, but from a shop-in-shop perspective, we're only in a fraction of them.

Currently our enhanced presentation is in only 200 doors driving increased productivity in those doors. The reality is is that we earned 7500 doors in total across solo brands or from a shop in shop perspective, we're only in a fraction of them.

Speaker 2: We believe there's still substantial opportunity to build shop and shop experiences and many more doors. And we will continue this rollout with our current and future retail partners.

We believe there's still substantial opportunity to build shop in shop experiences and many more doors and we will continue this rollout with our current and future retail partners.

Speaker 2: To this end we are excited to begin offering our products with new retailers including target this quarter and we are very happy to report that we have renewed our partnership with REI in a meaningful way. We couldn't be more thrilled to have the kind of growth we're having this early in our stories.

This and we are excited to begin offering our products with new retailers, including target. This quarter and we are very happy to report that we have renewed our partnership with Rei in a meaningful way.

We couldn't be more thrilled to have the kind of growth. We're having this early in our story.

Speaker 2: As a brand that still believes we're in our early days, the impact of this increased growth in retail is remarkable. First and foremost, it's underscoring the stunning synchronicity that's occurring between our on and offline channels. We are working within our wholesale channel to protect profitability, even while our retail partners are seeing great gains. No matter where we meet our customers, the focus is on fostering a deeper connection, which is leading customers back to our website.

As a brand that still believes we're in our early days the impact of this increased growth in retail is remarkable.

First and foremost it's underscoring the stunning synchronicity, that's occurring between our on and offline channels. We are working within our wholesale channel to protect profitability, even while our retail partners are seeing great games, no matter, where we meet our customers. The focus is on fostering a deeper connection which is leading customers back to our websites.

Speaker 2: Philo Brands Obsession with the customer experience has been part of our DNA from the start, and we are happy to report that our approach is continuing to blaze trails wherever we go.

Hello brands obsession with the customer experience has been part of our DNA from the start and we are happy to report that our approach is continuing to blaze trails wherever we go.

Speaker 2: As we dig into this channel shift a little more, we believe that our retail grows places a halo over our entire business, creating a flywheel effect. As I stated, we have noticed the significant increase in customers that are purchasing accessories on our website who have not purchased a fire pit on solosno.com. Essentially, these would be customers that bought a fire pit at a retail and are coming back to our website to purchase accessories, hence the flywheel.

As we dig into this channel shift a little more we believe that our retail growth places a halo over our entire business, creating a flywheel effect as I stated we have noticed a significant increase in customers that are purchasing accessories on our website, who have not purchased a fire pit on <unk> dot com essentially these would be customers that bought it.

Fire pit out of retail and are coming back to our website to purchase accessories, hence the flywheel.

Speaker 2: The purchasing patterns of these customers result in the near term pressure that we are seeing in our direct channel. However, we do believe that over time, this flywheel effect will extend the lifetime value of a retail initiated customer once they are in the solo ecosystem. Joseph Hughes,

Purchasing patterns of these customers result in the near term pressure that we're seeing in our direct channel. However, we do believe that over time. This flywheel effect will extend the lifetime value of our retail initiated customer once they are in the solo ecosystem.

What does this all mean for solar brands.

Speaker 2: It means we're well on our path to reaching the omni-channel balance that we talked about earlier this year. We said that we were going to aim for more balance in our channel mix, and our retail partners are leaning in to help turn our goals into reality.

It means we're well on our path to reaching the Omnichannel balance that we've talked about earlier. This year. We said that we were going to aim for more balance in our channel mix and our retail partners are leaning in to help turn our goals into reality.

Speaker 2: And while there are near-term headwinds to year-over-year growth for our e-commerce channel, and the long term, we continue to expect that the brand exposure our new retail partner spring to the business will create stability and solidarity for all channels.

And while there are near term headwinds to year over year growth for E Commerce channel and the long term, we continue to expect that the brand exposure, our new retail partners bring to the business will create stability and solidarity for all channels.

Speaker 2: I want to emphasize our view that Sola Brands' expansion of wholesale relationships is not a diversion from our D2C expertise, but part of an integrated channel strategy that allows us to build deeper connections with customers.

I want to emphasize our view that solo branch expansion of wholesale relationships is not a diversion from our D to C expertise, but part of an integrated channel strategy that allows us to build deeper connections with customers.

Speaker 2: Turning to product innovation, we are excited about our product launches during the quarter. We continue to be successful introducing solo branded products where we believe that we have permission to play in the backyard category.

Turning to product innovation, we are excited about our product launches during the quarter. We continued to be successful introducing solo branded products, where we believe that we have permission to play in the backyard category.

Speaker 2: Building on the momentum of our pizza oven pie, the most successful new category that we have entered into after fire pits, we launched pie prime during the quarter. In addition, we introduced mesa torches, which rolled out in September . Mesa Torch brings entertainment, ambiance, and backyard comfort, VR or innovative torches that customers can stake in the ground to enjoy a live fire and long-lasting light source with either a standard or a citronella insect repellent fuel.

Building on the momentum of our pizza oven Pi the most successful new category that we have entered into after fire pits, we launched Pi prime during the quarter.

In addition, we introduced Mesa torches, which rolled out in September Mesa Torch brings entertainment ambiance and backyard comfort via our innovative torches that customers can stake in the ground to enjoy life fire and long lasting life source with either a standard or a citronella insect repellent fuel.

Speaker 2: While it is still very early, we have been pleased with the results of both of these launch.

While it is still very early we have been pleased with the results of both of these launches.

Speaker 2: A year ago, September , we launched Mesa, our tabletop fire pit. We are continuing to see strong demands from Mesa from our retail partners. And we believe that we have a long runway for growth with this product. Our focus on continuous innovation combined with consistent feedback from our customers enables us to offer new accessories and enhancements to our core products. We will continue to roll out innovation in the upcoming quarter.

A year ago September we launched Mesa, our tabletop Firepit, we're continuing to see strong demand from Asia from our retail partners and we believe that we have a long runway for growth with this product our focus on continuous innovation combined with consistent feedback from our customers enables us to offer new accessories and enhancements.

Our core products, we will continue to rollout innovation in the upcoming quarter.

Speaker 2: As part of our efforts to expand the solo brand into new capabilities and categories, we recently acquired two unique businesses, Cariflame and IT breeze. Both of these are great companies on their own, but we believe that they fit nicely within solo flow. The tariff lane acquisition allows us to safely bring fire inside and s'mores indoors. This addition also brings a proprietary concrete manufacturing facility, giving us a new material and capability to include in our product innovation.

As part of our efforts to expand the solo brand, it's a new capabilities in categories. We recently acquired two unique businesses tariff lame and icy breeze. Both of these are great companies on their own, but we believe that they fit nicely within solar stuff.

The Terra flame acquisition allows us to safely bring fire inside and Smores indoors. This addition, also brings a proprietary concrete manufacturing facility, giving us a new material and capability to include in our product innovation.

Speaker 2: While still small, cariflan is seeing significant year of year growth since joining the Philadelphia M.

While still small tariff lane is seeing significant year over year growth since joining the fill a family.

Speaker 2: ICBREES is a portable air conditioner and a cooler that you can use at the campground, the ballpark on your boat or just in your backyard. We expect to integrate ICBREES into Solosville in 2024 and we are excited to add the supply chain marketing and distribution scale to this extraordinary product as we move into peak selling season next spring and summer. While ICBREES is out of season in the winter months, we will introduce a new product innovation around the holidays, which will make ICBREES more giftable even out of season.

I see Bruce is a portable air conditioner in a cooler that you can use at the campground, but ballpark on your boat or just in your backyard, we expect to integrate IC breeze and to sell a stone in 2024, and we are excited to add the supply chain marketing and distribution scale to this extraordinary product as we move into peak selling season next spring and summer.

Well I see breezes out of season in the winter months, we will introduce a new product innovation around the holidays, which will make icy breeze more giftable even out of season.

Speaker 2: Innovation is driving greater market penetration by enabling customers in a wide variety of climates to manage home comfort. In colder climates, our products create a whole new living space that customers didn't have before. Fire pits and heaters on the deck.

Innovation is driving greater market penetration by enabling customers in a wide variety of climates to manage home comfort and colder climates, our products create a whole new living space that customers didn't have before fire pits in theaters on the deck.

Speaker 2: And in warmer climates, we have customers who love to make a nice toast these more, even when it's 100 degrees outside. They can do that now with tariff lane and their kitchen, just as icy breeze allows customers to extend their outdoor living space during warm periods of the year. And this kind of value is immeasurable and helpful in expanding market share.

And a warmer climates, we have customers, who love to make a nice toasty some more even when it's 100 degrees outside they can do that now with tariff lame in their kitchen, just as icy breeze allows customers to extend their outdoor living space during warm periods of the year and this kind of value is immeasurable and helpful in expanding market share.

Speaker 2: So both of these innovations are opening up opportunities for rethinking the way customers connect with each other around the home. So lowest committed to making the outdoor living room experience as comfortable as the indoor living experience. And we will continue to look for strategic, puffing and acquisitions that will allow us to extend the syllabus of brand across backyard and outdoor categories with the ultimate goal of helping customers create good moments and lastly, memory.

So both of these new innovations are opening up opportunities for rethinking the way customers connect with each other around the home.

<unk> is committed to making the outdoor living room experience as comfortable as the indoor living experience and we will continue to look for strategic tuck in acquisitions that will allow us to extend the <unk> brand across backyard in outdoor categories with the ultimate goal of helping customers create good moments and lastly memories.

Speaker 2: Additionally, we continue to expand our customization offerings. Ahead of the holiday season, we are excited to share. We have signed a new NFL licensing agreement. Customers can now support their favorite team, all while gathering with friends and watching the game or colegating around their solo skills.

Additionally, we continued to expand our customization offerings ahead of the holiday season, we are excited to share we assign a new NFL licensing agreement customers can now support their favorite team all while gathering with friends and watching the game or tailgating around their solar stuff.

Speaker 2: In closing, we remain committed to a strategy focus on profitability and free cash flow generation.

In closing, we remain committed to our strategy focused on profitability and free cash flow generation. This strategy allows us to invest in opportunities, where we can continue to deliver growth and brand expansion and most importantly build stronger and more direct connections with customers at the end of the day, we believe that what's good for our customer is good.

Speaker 2: This strategy allows us to invest in opportunities where we can continue to deliver growth and brand expansion. And most importantly, build stronger and more direct connections with customers.

Speaker 2: At the end of the day, we believe that what's good for our customer is good for our shareholders.

For our shareholders.

Speaker 2: The current environment remains uncertain, dynamic, and hard to predict. We are focused on what we can control, which is to deliver the best experiences through great products. We provide a wide range of price points and an offering that meets the needs of our ever growing customer base.

The current environment remains uncertain and dynamic and hard to predict we are focused on what we can control which is to deliver the best experiences for our great products, we provide a wide range of price points and an offering that meets the needs of our ever growing customer base as.

Speaker 2: As we look into the all-important fourth quarter, we have a lot of exciting things planned to reach new customers through unique and compelling marketing programs, which we believe will stand out from the crowd and drive enthusiastic as a thorough brand.

As we look into the all important fourth quarter, we have a lot of exciting things planned to reach new customers through unique and compelling marketing programs, which we believe will stand out from the crowd and drive enthusiasm for our brand.

Speaker 2: Before I turn the call over to Summer, I'd like to take a moment to thank her for all she has done for Silver Ant. She's been a great partner to me and leader of our finance team. We will miss her and wish her all the best. I will now turn the call over to Summer to discuss the financials.

Before I turn the call over to summer I'd like to take a moment to thank her for all she has done for solo brands She's been a great partner to me and leader of our finance team, we will Miss her and wish her all the best I will now turn the call over to summer to discuss the financials summer.

Speaker 3: Thanks, John and good morning everyone today. We'll walk you through our 3rd quarter results and then provide our outlook for the remainder of 2023.

Thanks, Sean and good morning, everyone. Today I'll walk you through our third quarter results and then provide our outlook for the remainder of 2023.

Speaker 3: We are pleased with our results for the third quarter, delivering year over year growth on both the top and bottom line.

We are pleased with our results for the third quarter delivering year over year growth on both the top and bottom line.

Speaker 3: Our sales growth was driven by strong sales and our wholesale channel. Our focus on generating profitable growth enabled us to deliver 15 million in EBITDA a 33% increase over the prior year.

Our sales growth was driven by strong sales in our wholesale channel our focus on generating profitable growth enabled us to deliver $15 million EBITDA at 33% increase over the prior year.

Speaker 3: Net cells increased 8% to 110.3 million compared to 102.2 million in the prior year period.

Net sales increased 8% to $110 3 million compared to $102 2 million in the prior year period.

Speaker 3: Sales were driven by strong demand in the wholesale channel, which were partially offset by softer trends in our direct consumer business.

Sales were driven by strong demand in our wholesale channel, which were partially offset by softer trends in our direct to consumer business.

Yeah.

Speaker 3: Whole cell net cells increased 114.3% to 34 million for the third quarter compared to 15.9 million in the prior year driven by continued expansion of our whole cell network as well as increased shelf space within our existing partners.

Wholesale net sales increased to 114, 3% to $34 million in the third quarter compared to $15 9 million in the prior year driven by continued expansion of our wholesale network and you only to increase shelf space within our existing partners.

Speaker 3: We did experience some benefit in the quarter due to the timing of shipments as we shipped some wholesale orders early in preparation for the holiday.

We did experience some benefit in the quarter. It gets you to the timing of shipments as we shipped some wholesale orders early in preparation for the holiday.

Speaker 3: In addition, better partnerships with our retailers has led to a more normal seasonal cell in cycle, which also impacted the timing of shipments compared to our more replenishment at once orders that the company experienced last year.

In addition, better partnerships with our retailers have led to a more normal seasonal selling cycle, which also impacted the timing of shipments compared to our more of a 'twenty shrink at once orders that the company experienced last year.

Speaker 3: Our direct consumer net sales decreased 11.6% to 76.3 million, but at third quarter compared to 86.3 million in the same period in the prior year to provide products mix combined with reduced digital marketing spend.

Our direct to consumer net sales decreased 11, 6% to $76 3 million for the third quarter compared to $86 3 million in the same period in the prior year driven by product mix combined with digital marketing spend.

Speaker 3: Moving to gross margin, gross margin decrease to 61.9% compared to 63.3% in the third quarter of 2022.

Moving to gross margin gross margin decreased to 61, 9% compared to 63, 3% in the third quarter of 2022.

Speaker 3: Our margin rate was impacted by higher wholesale channel mix compared to a year ago, slightly offset by lower and bound free to.

Our margin rate was impacted by higher wholesale channel mix compared to a year ago slightly offset by lower inbound freight expense.

Speaker 3: Although our wholesale channel carries a lower gross margin than e-commerce, both channels generate similar contribution margins.

Although our wholesale channel and carries a lower gross margin in e-commerce, both channels generate similar contribution margin.

Speaker 3: Selling in general an administrative expenses for the third quarter increased to 61.3 million compared to 59.5 million.

Selling general and administrative expenses for the third quarter increased to $61 3 million compared to $59 5 million.

Speaker 3: However, as a percentage of net sales, SDNA expenses decreased to 55.6%, compared to 58.2% in the same period last year.

However, as a percentage of net sales <unk>.

SG&A expenses decreased to 55, 6% compared to 58, 2% in the same period last year.

Our third quarter net income was $3 1 million and net income per diluted share was <unk>.

Speaker 3: Third quarter adjusted net income was 15.2 million, and our adjusted EPS was 28 cents per diluted share.

Third quarter adjusted net income was $15 2 million and our adjusted EPS was <unk> 28.

Sure.

Speaker 3: Adjusted EBITDA increased to 33% to 15 million. And adjusted EBITDA margin increased 250 basis points to 13.6%.

Adjusted EBITDA increased 33% to $15 million and adjusted EBITDA margin increased 250 basis points to 13, 6%.

Speaker 3: Now turning to the balance sheet, at the end of the period, we had 16.6 million in cash and cash equivalent.

Now turning to the balance sheet at the end of the period, we had $16 6 million in cash and cash equivalents.

Speaker 3: As of September 30th, we had 75 million and outstanding borrowing under the Revolving Credit Facility and 92.5 million under the Turnloan Agreement.

As of September 30th we had $75 million in outstanding borrowings under the revolving credit facility and $92 5 million against the term loan agreement.

Speaker 3: The borrowing capacity on the revolving credit facility was $350 million as of September 30th, leaving $275 million of availability.

The borrowing capacity on our revolving credit facility was $350 million as of September 30th, leaving $275 million of availability.

Speaker 3: We have a strong liquidity position and we believe we are able to take advantage of strategic opportunities with the net leverage of roughly 1.6 times.

We have a strong liquidity position and we believe we are able to take advantage of strategic opportunities with the net leverage roughly one six times.

Speaker 3: Inventory at the end of the third quarter was 114.1 million roughly in line with the year ago. We are comfortable with our inventory levels as we move into the holiday season.

Inventory at the end of the third quarter was $114 1 million roughly in line with a year ago, we are comfortable with our inventory levels as we move into the holiday season.

Speaker 3: Turning to our outlook. I am pleased with how we've navigated a more difficult environment as demonstrated in our two, three results.

Turning to our outlook I am pleased with how we've navigated a more difficult environment as demonstrated in our Q3 results.

Speaker 3: As we move into the fourth quarter, we recognize that the macro environment and consumer spending remains unknown.

As we move into the fourth quarter, we recognize that the macro environment and consumer spending remains unknown.

Speaker 3: Nevertheless, we are excited about the pipeline of new products and the unique in compilating marketing plan we plan to roll out in the next few weeks.

Nevertheless, we are excited about the pipeline of new products and a unique and compelling marketing plan, we plan to rollout in the next few weeks.

Speaker 3: With a significant part of our business in front of us, we are optimistic that we can continue to generate revenue and earnings growth.

With a significant part of our business in front of US. We are optimistic that we can continue to generate revenue and earnings growth.

Speaker 3: For fiscal 2023, we continue to expect revenue to be in the range of $520 to $540 million, with the most likely outcome at the midpoint of that range of $530 million, which reflects the pressure from the macro environment, as well as the timing of shipments that pulled forward some revenue from Q4 into Q3.

For fiscal 2023, we continues to expect revenue to be in the range of $520 million to $540 million with the most likely outcome at the midpoint of that range of $530 million, which reflects the pressure from the macro environment as well as the timing of shipments.

Forward some revenue from Q4 into Q3.

Speaker 3: We also continue to expect to deliver adjusted EBITDA margin of between 17 and 18% for the

We also continue to expect to deliver adjusted EBITDA margin of between 17 and 18% for the full year.

Speaker 3: Before I turn the call over to the operator, I would like to thank the amazing team here at Solar Brands for the time together over the last year and a half.

Before I turn the call over to the operator I would like to thank the amazing team here at solar brands for the time together over the last year and a half.

Speaker 3: I have enjoyed being a part of the evolution and growth of this business, and I'm excited to see where it goes in the future.

I have enjoyed being a part of the evolution and growth of this business and I'm excited to see where it goes in the future.

Speaker 3: I will now turn the call over to the operator to begin Q&A.

I'll now turn the call over to the operator to begin Q&A.

Speaker 4: If you would like to ask a question, please press starthload by one and you're telethink you've had now. If you do change your mind, please press starthload by two. One depends whilst your question, please ensure that your line is unmuted locally.

Thank you if you would like to ask a question. Please press star followed by one key partner if you changed your mind. Please press star followed by team.

One last question. Please ensure that your line is I mean, you said Michael.

Our first question today comes from Peter Keith from Piper Sandler. Please go ahead. Your line is now open.

Yeah.

Speaker 5: Hey, good morning, everyone. Thanks for taking my questions. I, well, first of all, congratulate you on the wholesale revenue, which looks great. But I wanted to just pivot, of course, to where the revenue is negative on the on the DTC side.

Hey, good morning, everyone. Thanks for taking my questions.

Aye.

Well first of all congratulate you on the wholesale revenue, which looks great, but I wanted to just pivot of course to where the revenue is negative on the on the DTC side seems like it's kind of trending in line with how you were talking about it last quarter.

Speaker 5: Seems like it's kind of trending in line with how you were talking about it last quarter, um, kind of in that down, uh, low double digit range and you pulled back on some of the marketing, but what's really the outlook and when could we think about DTC is starting to pivot to, to seeing some year on year sales growth.

And that down low double digit range and you've pulled back on some of the marketing, but whats really the outlook and when could we think about DTC starting to pivot to seeing some year on year sales growth.

Speaker 2: Thanks Peter, good morning everyone. That's, you know, something that we're very focused on. We talked about at the beginning of this year, as we leaned into the whole so we expected pressure on direct to consumer that has played out very much as we anticipated.

Thanks, Peter and good morning, everyone.

Something that we're very focused on and we've talked about at the beginning of this year as we leaned into the wholesale we expected pressure on direct to consumer that has played out very much as we anticipated and what we talked about.

Speaker 2: And what we talked about, which I'll reiterate is, I think that we roll out to Q2 next year.

I'll reiterate as I think as we rollout the Q2 next year and we get through you know really back to our next high season. After we've anniversaried. This lean into wholesale strategy. That's what we're expecting for the tailwind of the brand exposure that wholesale is bringing to us to play out and direct to consumer So we're still seeing in <unk>.

Speaker 2: and we get through really to our next high season after we've anniversaried this lean into wholesale strategy, that's when we're expecting for the tailwind of the brand exposure that wholesale is bringing to us to play out in direct to consumer. So we're still seeing an increase.

Increased year on year year to date on order counts online so.

Speaker 2: Year on year, year to date on order counts online.

Speaker 2: Stove is seeing an increase in order counts. We are driving customers back to our site. It's just a matter of getting those customers into that life cycle of the rest of the product categories that Solastove has to offer. So we do see that playing out. I think it's the middle of next year and then through the back half of next year that we start seeing that on the D2C front.

<unk> is seeing an increase in order counts, we are driving customers back to our site. It's just a matter of getting those customers into that lifecycle of the rest of the product categories that <unk> has to offer. So we do see that playing out I think it's the middle of next year and then through the back half of next year, then that we start seeing that on the DTC front.

Speaker 5: Okay, that sounds good. And then, John , you've made some public comments around the EBITDA margin approaching 20% by the end of next year. I mean, I guess as you stand here today, does that still seem like a reasonable goal? And maybe you or Summer could just help us understand the drivers to the EBITDA margin expansion.

Okay that sounds good and then.

John you've made some public comments around the EBITDA margin approaching 20% by the end of next year.

And then I guess as you stand here today is that still seem like a reasonable goal and maybe your summer could you just help us understand the drivers to the EBITDA margin expansion.

Speaker 2: Yeah, I'll kick in and then or kick off and then have summer later on if I miss anything.

Yes, I'll kick in and then our kickoff and then how summer layer on it but if I Miss anything.

Speaker 2: I think if we were to just continue to operate the business as is, you know, independent of leaning into additional investment.

If we were to just continue to operate the business as is.

Independent of leaning into additional investments, we do see a line of sight to 20% EBITDA margins I will say that lately, we started seeing opportunities to lean in and make additional investments as we think about those and we're thinking about obviously, we're in heavy 24 planning right now.

Speaker 2: We do see a line of sight to 20% even the margin.

Speaker 6: I will say that lately we've started seeing opportunities to lean in and make additional investments. As we think about those and we're thinking about, obviously we're in heavy 24 planning right now, we think that there may be opportunities in places we want to invest, which may impact getting to 20% next year, but it's all gonna depend on whether or not we decide to lean into those investments and how soon. i'll see you then.

We think that there may be opportunities in places, we want to invest which may impact getting to 20% next year, but it's all going to depend on whether or not we decide to lean into those investments and how soon.

Okay. Thank you very much.

Thank you. The next question comes from Jason Zander, an extra T. Please go ahead. Your line is now open.

Speaker 1: Morning, thanks for taking the question. John , I was hoping to start on the comment about Target. I was wondering if you could just expand on the expansion there. Specifically, is that just Teraflame or is that other brands as well? And then maybe just kind of comment on how many stores you're going in and is there any load-in expected in this 4Q?

Good morning, Thanks for taking the question John I was hoping to start on the comment about target I was wondering if you could just expand on the.

The expansion there specifically is that just tariff flame or is that other brands as well and then maybe just kind of comment on.

How many stores youre going in.

Are there any loading expected in this at this <unk>.

Speaker 2: Yeah, great. This Jason, so that target expansion.

Yeah, great. Thanks, Jason So the target expansion.

Speaker 2: So, we've announced prior that Teraflame already had a relationship with Target. That does continue.

So we've announced prior that tariff plan already had a relationship with target that does continue.

What we're leaning into here and announcing is actually still also have now also.

Launching our relationship with target. So we know we'll have solo self product as of this quarter going into a roughly 2000 target stores for a black Friday through cyber Monday type promotion, we're super excited about that.

Speaker 1: We'll have solo self product as of this quarter going into roughly 2000 target stores for a black Friday through cyber Monday type promotion. We're super excited about that. There is again, it's, it's in our, it's in our guidance and already kind of baked in, but something we've been planning on and excited to roll out this quarter. So, you will see that product on the shelves the week of Thanksgiving. We're really excited about that. Got it and then just more high level, you know, obviously, you alluded to the fact that customers continue to come back.

There is again, it's in our it's in our guidance and already kind of baked in.

But something we've been planning on and excited to rollout. This quarter. So you will see that product on the shelves. The week of Thanksgiving, We're really excited about that.

Speaker 1: Got it. And then just more high level, you know, obviously you alluded to the fact that customers continue to come back to your own website after having purchased product at retail. But I guess more, you know, kind of fundamentally, as you continue to expand at retail, both these retailers and door space, do you expect that you'll begin to sell a broader range of the product portfolio, including accessories?

Got it and then just more high level, obviously, you alluded to the fact that customers continue to come back to your own website. After having purchased product at retail, but I guess more fundamentally as you continue to expand.

At retail both with retailers and door space do you expect that you'll begin to sell a broader range of the product portfolio, including accessories.

Speaker 1: You know, at retail, or will there always be some product that you kind of hold back to be able to, you know, move customers from retail back to your own BTC channel and kind of retain that direct customer relationship?

At retailer will there always be some product that you kind of hold back to be able to move customers from retail back to your own DTC channel and kind of retain that direct customer relationships.

Speaker 2: Yeah, I think that that's right. The way you just stated that I think it's the right way to think about it and part of it.

Yes, I think that that's right there. The way you just stated that I think is the right way to think about it and part of its strategic on our part, but truthfully, there's limited shelf space in physical stores.

Speaker 2: strategic on our part. But truthfully, there's limited shelf space and physical stores. You know, at the end of the day, retailers are looking to carry products that have the highest sell through that are going to help them move volume as well through their stores. So the reality is, is that we have found a strategy that's working really well for retailers. It's getting

End of the day retailers are looking to carry products that have the highest sell through.

To help them move volume as well through their stores. So the reality is is that we have found a strategy that's working really well for retailers it's getting.

Speaker 2: popular skews on their shelves that are moving. And then it's leaving some space for customers to come back to our site and continue to participate with us. So every retailer is a little bit different. The strives, he doesn't look exactly the same or props every retailer. And they all carry different lines. But on an overarching basis, what you said is accurate that we believe that there will always be room for and maybe careful with the word always. But generally we're believing.

Popular skus on their shelves that are moving and then its leaving some space for customers to come back to our site and continue to participate with us. So every retailers a little bit different the strides he doesn't look exactly the same across every retailer and they all carry different different lines, but on an overarching basis. What you said is accurate that we believe that there will.

Please be room for and maybe careful with the word always but generally we are believing that there will be room for.

Speaker 2: that there will be room for some products to be available only on solosil.com or in large part on solosil.com.

Some some products to be available only on solar stove dot com or in large part on <unk> Dot com and that's our retail partners are carrying you know your kind of core baseline products that are driving the majority of customers into the brand for the first time.

Speaker 2: and that the retail partners are carrying, you know, your kind of core baseline products that are driving the majority of customers into the brand for the first time.

Got it I appreciate that color I'll pass it on.

Thank you. The next question comes from Kenneth Lee from William Blair. Please go ahead Philip Your line is now open.

Speaker 4: Philip Lee from William Blair, please go ahead, Philip, you're live.

Speaker 7: Good morning, this is Sabrina on for Philip. Thanks for taking my question. Could you provide further color on the upcoming marketing initiatives in the 4th quarter? And that puts and takes there any efficiency on the lower DTC DTC?

Good morning. This is sabrina on for Phil Thanks for taking my question could.

Could you provide further color on the upcoming marketing initiatives in the fourth quarter and the puts and takes there any efficiency on the lower DTC.

DTC mix.

Speaker 2: Yeah, for sure. And just as a reminder, Q4 tends to be the highest BTC mix. So, you know, we'll see how it plays out. Obviously, a lot of the quarters still in front of us and the most important part of the quarter of a generally Q4 is where we see the highest direct to consumer mix in that channel mix between wholesale and direct to consumer. You know, in terms of the marketing initiatives, you may have seen we actually did a press release. So, you know, we have...

Yes for sure and just as a reminder, Q4 tends to be the highest D to C mix. So we'll see how it plays out obviously a lot of the quarter is still in front of us. The most important part of the quarter of a generally Q4 is where we see the highest direct to consumer mix and that channel mix between.

So and in direct to consumer.

In terms of the marketing initiatives.

You may have seen we actually did a press release, so we have three.

Speaker 2: three particularly significant marketing campaigns, two of which

<unk>, particularly significant marketing campaigns, two of which we have not released color on yet one of them is coming up which is the Macy's day parade.

Speaker 2: We have not released color on yet one of them is is coming up, which is the Macy's day parade and overall Macy's day promotion that we're running. So we're super excited about that coming in right ahead of our biggest selling day of the year. Black Friday.

And overall Macys day promotion that we're running so we're super excited about that are coming in right ahead of our biggest selling data to your black Friday.

Speaker 2: But here in the next week, you're going to hear and see something significant from us on the marketing front that we're excited about. Again, we haven't launched that yet. And then the following couple of weeks after that, again, another marketing campaign that we're pretty excited about. So we've been saying all year, the back half of the year, particularly Q4, is where you're going to see us.

But here in the next week Youre going to hear and see something significant from us on the marketing front that we're excited about again, we havent, we havent launched that yet and then and then the following couple of weeks after that again, another marketing campaign that we're pretty excited about so we've been saying all year.

The back half of the year, particularly Q4 was where you were going to see us taking some of the EBITDA preservation that we had the discipline that we had exhibited throughout the beginning of the year. The first three quarters and we're going to lean into investments in Q4 and that is playing out we've actually got our hands on some.

Speaker 2: taking some of the even the preservation that we had.

Speaker 2: the discipline that we had exhibited throughout the beginning of the year, the first three quarters, and we were going to lean into investments in Q4. And that is playing out.

Speaker 2: We've actually gotten our hands on

Speaker 2: Some marketing initiatives that we were not initially anticipating, which is allowing us to lean in maybe even a little bit more than we were. So we're very excited about the quarter. We've been in this position before. And you guys have heard this that have been following.

The marketing initiatives that we were not initially anticipating which is allowing us to lean and maybe even a little bit more than we were so we're very excited about the quarter. We've been in this position before and you guys have heard this that have been following us for the last several years and this is not an uncommon thing you know at the beginning of November we wish that we could.

Speaker 2: us for the last several years. This is not an uncommon thing, you know, at the beginning of November , we wish that we could...

Speaker 2: We could give pure line of sights in the quarter based on what we've seen, but so much of the quarter is still out in front of us. And those last five weeks of the year are so critical for this quarter.

We could give pure line of sight to the quarter based on what we've seen but so much of the quarter is still out in front of us and those last five weeks of the year. So critical for this quarter for us.

Speaker 7: Thank you. That's helpful. And then following up to that, could you provide some color on what your team has been doing to ignite more crossover demand between the portfolio brands?

Thank you that's helpful. And then following up to that could you provide some color on what your team has been doing to ignite more crossover demand between the portfolio of brands.

Speaker 2: Yeah, we announced last quarter that we were going to be doing inserts in every package across the different brands, cross-marketing. We have seen slight lift across the brands, not as significant as we had hoped, but we're continuing to introduce the brand.

Yes, we announced last quarter that we were going to be doing in search and every package across the different brands Cross marketing, we have seen slight lift across the brands not as significant as we had hoped but we're continuing to introduce the brand to the.

Speaker 2: To the different cohorts of customers within the individual brand. So that's an ongoing initiative. We'll continue to execute on again. It's having slight positive impact, but nothing meaningful enough to really report on.

Different cohorts of customers within the individual brands. So that's an ongoing initiative will continue to execute on again, it's having slight positive impact, but nothing meaningful enough to really report on.

Got it thanks that's helpful.

Speaker 4: Thank you as a reminder if you would like to ask a question, please press star for the by one in the telethinky pad now.

Thank you as a reminder, if you would like to ask a question. Please press star followed by one and I kind of think he Padma.

Speaker 4: Our next question comes from Ryan, Sigdal, from Craig, Hallam, and Papua Group. You go ahead, Ryan, your line is now...

Our next question comes from Ryan has picked out from Craig Hallum Capital. Please go ahead, Brian Your line is now open.

Speaker 8: Good morning, congrats on all the positive business updates. Wanna start with Target? So is this a trial or is this an ongoing relationship where you're gonna continue to have permanent shelf space beyond the holiday selling season? I guess dependent on performance, obviously, but is this a trial or permanent?

Good morning, Congrats on all the positive business updates.

One is that with target. So is this a trial or is this a and <unk>.

Ongoing a relationship where youre going to continue to have permanent shelf space beyond the holiday selling season, I guess dependent on performance, obviously, but is this a trial or permanent.

Speaker 2: Yes, it's a bit of a hybrid. You kind of nailed it, right? I mean, they're anxious to lean into the relationship. They're excited for what we can do with them going into next year. Obviously, all eyes right now are on this first campaign and...

Yes, it's a bit of a hybrid and you kind of nailed it right I mean, they are anxious to lean into the relationship. They are excited for what we can do with them going into next year, obviously all eyes right now are on this.

Campaign.

Speaker 2: you know, the success of this Q4 campaign that we're running with them is gonna be a critical driver to how we think about and look at the 2024 relationship. So it's not being, you know, called a test or a trial, but any new relationship is always in test or trial but from our perspective. So.

The success of this this Q4 campaign that we're running with Tim is going to be a critical driver to how we how we think about and look at the 2024 relationships. So it's not it's not being called a test or a trial, but any new relationship as always and test the trial, but from our perspective so.

Speaker 2: We're focused on execution right now and excited to see that play out.

Where we're focused on execution right now and excited to see that play out.

Speaker 8: And then are you able to share which solo-stove product you'll be selling or which product you'll be selling and then 2,000 stores appears to be all their US stores is that correct?

And then are you able to share which saw a stope products, you'll be selling or which products you'll be selling and then 2000 stores appears to be all of their U S stores is that correct.

Speaker 2: I don't know if I can say all of their stores. That was just the number that I that I heard. So I'll just stick with the 2000 stores. That's what I'm familiar with.

I don't know if I can say all of their stores that was just the number.

That I that I heard so I'll just I'll just stick with the 2000 stores, that's what I'm familiar with I'm pretty sure, it's domestic only but I'm not 100% sure on that.

Speaker 2: pretty sure it's domestic only, but I'm not 100% sure on that.

Speaker 2: The product is I won't speak to it is

Product is I won't speak to it it is a target.

Speaker 2: I target exclusive so it's something we're excited about. It is the Mesa product.

Target exclusive so it's something we're excited about it as the base of product.

Speaker 2: but it's something unique for targets and that's only going to be found in the target store so you'll have to go check it out on Black Friday to see what it

But if it's something unique for target that's only going to be found in the target stores. So you'll have to go check it out on Black Friday.

Let's see what it what it looks like.

Speaker 8: Good, then one question for some, or just can you update us on the free cash flow expectations, puts takes in the quarter, how you think will the year, and then you still expect to pay off the revolver debt by year end.

Good and then one question for summer just can you update us on the free cash flow expectations put stakes in the quarter. How you think about the year and then do you still expect to pay off the revolver debt by year end.

Speaker 3: Yes, thanks for the question. So as we move into the fourth quarter, the fourth quarter is obviously when we generate a light cash, it's our biggest quarter. So we typically, going in, we are going to lean into some marketing spend. So I'd say from what we've guided kind of earlier.

Yes. Thanks for the question so as we move into the fourth quarter. The fourth quarter is obviously, when we generate a lot of cash it's our biggest quarter.

And so we typically going in we are going to lean into marketing spend so I would tell you from what we've guided kind of earlier.

Speaker 3: being over EBITDA, it's probably going to be slightly less than EBITDA that we come in from a free cash flow perspective.

Being over EBITDA, it's probably going to be slightly less in EBITDA that would come in from a free cash flow perspective.

Speaker 3: but still very healthy cash flow generation. And our expectation is to pay down the revolver or the majority of the revolver by the end of the year. Again, we're seeing the opportunity to lean in to marketing spend and we're gonna take advantage of that. But we also, we expect to pay down the majority of the revolver by the end of the year. If not early in the first year or first of 2024.

But still very healthy cash flow generation and our expectation is to pay down the revolver.

Or the majority of the revolver by the end of the year again, we're seeing the opportunity to lean into marketing spend that we're going to take advantage of that but we also.

We expect to pay down the majority of the revolver by the end of the year if not early in the first year first in 2024.

Great. Thanks, Good luck guys.

Speaker 4: Thank you. At the final reminder, if you would like to ask a question, please press starflow by one, and I was going to think you'd pad now.

Thanks, Rocky at the sign a reminder, if you would like to ask a question. Please press star followed by one slipping keypad now.

Speaker 4: Our next question comes from Brian McNamara from Canacool Genuine P. Please go ahead, you'll understand.

Our next question comes from Brian Mcnamara from Canaccord Genuity. Please go ahead. Your line is now open.

Okay.

Speaker 8: Good morning guys, thanks for taking the questions and some are we enjoyed working with you best of luck in your new endeavors. First off, could you provide or give us an idea how much in wholesale sales were pulled forward to Q3 from Q4, where they're qualitatively or quantitatively, if you can?

Good morning, guys. Thanks for taking the questions and summer we enjoyed working with your best of luck in your new endeavors.

First off could you provide a R.

Give us an idea of how much in wholesale sales were pulled forward to Q3 Q3 from Q4, whether qualitatively or quantitatively it's Ken.

Okay.

Speaker 3: Sure, we believe roughly about 6 million was pulled forward. And you know, on our last call, I mentioned that I thought that timing between Q3, you know, telling the Q3 early Q4 was gonna be dependent on when some of the wholesalers are gonna wanna receive their holiday product. As you can imagine, with the sales starting earlier, we ended up shipping out more products than we expected at the end of Q3, and it was roughly 6 million.

Sure, we believe roughly about $6 million, which pulled forward.

On our last call I mentioned that I thought that timing between Q3 calendar Q3 early Q4.

What is going to be dependent on when some of the wholesalers are going to want to receive their holiday product as you can imagine with the sale of <unk> starting earlier on we ended up shipping out more product than we expected at the end of Q3.

And it was roughly $6 million.

Speaker 8: got it. And then is that is the strength driven by more replenishment or more kind of, you know, starting out relationships for back of a better term in terms of your recent wholesale strength?

Got it and then is that strength driven by more replenishment or more kind of starting out relationships for back of a better term in terms of your recent wholesale strength.

Yeah.

Speaker 8: Sorry, can you say that again, Brian ? I miss that. Yeah. Yeah, so your whole sales, your recent whole sales strength is that driven more from replenishment or more from potentially starting new relationships or gaining new shelf space with your current partners.

Sorry could you did you say that again, Brian I missed that.

Yes. So your wholesale your recent wholesale strength is that driven more from replenishment or more from potentially starting new relationships or are gaining new shelf space with your current partners.

Speaker 2: It's a pretty healthy combination. I mean, obviously this target kickoff is a meaningful one, but if I had to lean one towards another, I'd say that it's more shelf-based. It's bigger relationships with existing partners.

It's a it's a pretty healthy combination I mean, obviously this target kickoff.

It is a meaningful one but it's if I had to lean one towards another I'd say that it's more shelf space, it's bigger relationships with existing partners. We do have obviously the target relationship kicking up.

Speaker 2: We do have, you know, obviously the target relationship kicking off.

Speaker 2: But as we look at the rest of our wholesale partners, it's definitely been them leaning in.

But as we look at our the rest of our wholesale partners has definitely been leaning in and either giving us more prominent real estate in the store and more robust displays or just giving us increased shelf space or carrying carrying additional skus.

Speaker 2: and either giving us more prominent real estate in the store and more robust displays or just giving us increased shelf space or carrying addition.

Speaker 8: And then one just one quick last one. Can you provide a bit more color specifically on your digital marketing strategy for Q4? You save what appears to be a good, a good bit of dry powder year today. Will you lean into digital marketing more on Q4 or will continue to be based on the perceived efficacy of that spend even if you kind of potentially sacrifice sales? Thanks.

Got it and then just one quick last one can you provide a bit more color specifically around new digital marketing strategy for Q4, you save what appears to be a good bit of dry powder year to date, where you lean into digital marketing more in Q4 or will it continue to be based on the perceived efficacy of that spend even if you kind of potentially sacrifice sales. Thanks.

Speaker 2: Yeah, listen, it's always, it's always being driven to an extent by the efficacy of the, of the spend, right? If it's not, if it's not pulling through, we're not just going to spend the spend. We don't approach digital marketing that way at all. So we're going to continue to be disciplined. How?

Yes, listen there's always it's always being driven to an extent by the efficacy of the spend right. If it's not if it's not pulling through we're not just going to spend to spend.

We don't approach digital marketing that way at all.

So we're going to continue to be disciplined however.

Speaker 2: We have preserved EBITDA throughout the year for this quarter. You know, it's a tough consumer environment out there. Today, year to date, we're roughly 25% down in digital marketing spend on a year over your basis.

We have preserved EBITDA throughout the year for this quarter.

It's a tough consumer environment out there.

Date year to date, we're roughly 25% down in digital marketing spend on a year over year basis.

Speaker 2: And this is the quarter where we want to make up a lot of that ground. This is the time where consumers are especially apt to spend. We obviously have a lot of fun initiatives and new products that we're launching in conjunction with the quarter. So we're going to lean in. We're going to continue to watch marketing efficiency. We're not going to spend just to spend, but we are going to lean in and take advantage of this opportunity. We've been preparing for it all year.

And this is the quarter, where we want to make up a lot of that ground. This is this is the time, where consumers are especially after the spin and we obviously have a lot of fun initiatives and new products that we're launching in conjunction with the quarter. So we're going to lean in and we're going to continue to watch marketing efficiency, we're not going to spend just to spend but we are we are going to <unk>.

In and take advantage of this opportunity we've been preparing for it all year so that I'd.

Speaker 2: I think you're thinking about it the right way, but we're going to lean in.

I think youre thinking about it the right way, but we're going to we're going to we're going to lean in.

Great Best of luck guys.

Thanks.

Speaker 4: Thank you, that does complete our Q&A session for today, so I'll hand back over to John for any closing remarks.

Thank you that does conclude our Q&A session for today, so I'll hand back over to Jonathan and taking the Max.

Speaker 2: Yeah, I really appreciate everybody jumping on today. Thanks for the thoughtful questions. We're looking forward to going out and executing this quarter and obviously we'll be back in touch when the quarter ends and excited to report on the results of these marketing initiatives and the lean into digital marketing stand. So I have a great rest of the quarter guys and we'll talk to you soon.

Yes, really appreciate everybody jumping on today, thanks for the thoughtful questions and we're looking forward to going out and executing this quarter.

Obviously, we'll be back in touch.

You know when when the quarter ends and excited to report on the results of these marketing initiatives and the lean into digital marketing expense. So have a great rest of the quarter guys and we'll talk to you soon.

Speaker 4: Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your line.

Thank you ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.

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