Q3 2024 Solo Brands Inc Earnings Call

November 7, 2024

As for today.

Speakers for today.

Good morning, everyone and thank you for joining our call to discuss solar brands third quarter results, which we released this morning can be found on the Investor Relations section of our website at investor adopt solar brands Dot com.

Speaker Change: Good morning, everyone and thank you for joining our call to discuss solar brands third quarter results, which we released this morning can be found on the Investor Relations section of our website at Investor adopt solar brands Dot Com today's call will be hosted by Chief Executive Officer, Chris Smith, and Chief Financial Officer, Laura Coffey.

Today's call will be hosted by Chief Executive Officer, Chris Smith, and Chief Financial Officer, Laura Coffey.

Before we get started I wanted to remind everyone that management's remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act 1995 and are based on current management expectations.

Before we get started I wanted to remind everyone that management's remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and are based on current management expectations.

This may include without limitation predictions expectations targets or estimates, including regarding our anticipated financial performance business plans and objectives future events and developments actual future results could differ materially from those mentioned these forward looking statements also involve substantial risks and uncertainties.

Speaker Change: These may include without limitation predictions expectations targets or estimates, including regarding our anticipated financial performance business plans and objectives future events and developments.

Actual future results.

Could differ materially from those mentioned these forward looking statements also involve substantial risks and uncertainties some of which may be outside of our control that could cause actual results to differ materially from those expressed or implied by such statements.

Some of which may be outside of our control that could cause actual results to differ materially from those expressed or implied by such statements.

These risks and uncertainties among others are discussed in our filings with the SEC.

Speaker Change: These risks and uncertainties among others are discussed in our filings with the SEC.

We encourage you to review these filings for a discussion of these risks, including our soon to be filed quarterly reports on Form 10-Q.

It will be available on the investors portion of our website at investors <unk>. So what's your <unk> dot com.

Speaker Change: Will be available on the investors portion of our website at investors got so what's your <unk> dot com.

You should not place undue reliance on these forward looking statements. These statements are made only as of today and we undertake no obligation to update or revise them for any new information, except as required by law.

You should not place undue reliance on these forward looking statements. These statements are made only as of today we own.

<unk> no obligation to update or revise them for any new information, except as required by law.

This call also contains certain non-GAAP financial measures, including net income as adjusted diluted earnings per share as adjusted gross margin as adjusted adjusted EBITDA and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings.

Speaker Change: This call also contains certain non-GAAP financial measures, including net income as adjusted diluted earnings per share as adjusted gross margin as adjusted adjusted EBITDA and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings.

That consistency and comparability with our past performance and facilitate period to period comparisons of our core operating results and the results of peer companies.

Speaker Change: That consistency and comparability with our past performance and facilitate period to period comparisons of our core operating results and the results of peer companies.

Reconciliation of these non-GAAP measures to the most comparable GAAP measures definitions of these indicators are included in our earnings release, which will be available in the investor portion of our website at investors got solo brand's dotcom.

Speaker Change: Reconciliation of these non-GAAP measures to the most comparable GAAP measures definitions of these indicators are included in our earnings release, which will be available in the investor portion of our website at investors got solo brand's dotcom.

Chris Smith: Now I would like to turn the call over to Chris.

Chris: I would like to turn the call over to Chris.

Chris Smith: Thank you Mark and thank you all for joining us today I'll begin by discussing our third quarter performance and then update you on our strategic vision for our brands.

Chris Smith: Next I'll highlight how our strong balance sheet and cash flow provided the flexibility to invest in our business building the foundation for long term growth.

Chris: I'll highlight how our strong balance sheet and cash flow provided the flexibility to invest in our business and building the foundation for long term growth.

I'll turn the call over to Laura to discuss our financial results in more detail and our outlook for the year.

Speaker Change: Turn the call over to Laura to discuss our financial results in more detail and our outlook for the year.

Laura Coffey: Our third quarter results were in line with our expectations. Despite a continued challenging macroeconomic backdrop for big ticket consumer durable items, we delivered total revenues of $94 1 million and adjusted EBITDA of $6 5 million.

Laura: Our third quarter results were in line with our expectations. Despite a continued challenging macroeconomic backdrop for big ticket consumer durable items, we delivered total revenues of $94 1 million.

Laura: Adjusted EBITDA of $6 5 million.

Sales in our direct to consumer channel declined 16% Theres, a lack of product newness and unseasonably warmer weather impacted traffic during the quarter.

Laura: Sales in our direct to consumer channel declined 16% as a law.

Laura: Lack of product newness and unseasonably warmer weather impacted traffic during the quarter.

However, we continue to see strong momentum and excitement from our retail partners sales in our retail segment increased 10%, excluding a onetime BARDA agreement of $7 2 million in 2023 that we did not anniversary.

Laura: However, we continue to see strong momentum and excitement from our retail partners.

Laura: Sales in our retail segment increased 10%, excluding a onetime BARDA agreement of $7 2 million in 2023 that we did not anniversary.

Laura Coffey: Despite the topline challenges I am pleased that our brands remain strong with leading market share positions and healthy gross margins our customers continue to exhibit a strong affinity and loyalty for our brands.

Laura: Despite the topline challenges I am pleased that our brands remain strong with leading market share positions and healthy gross margins our customers continue to exhibit a strong affinity and loyalty for our brands.

Laura Coffey: As we move into our largest volume quarter of the year, our fourth quarter. We are encouraged by early sales trends, while we recognize the majority of the season is in front of US we feel good about how we're positioned and are reaffirming our full year guidance.

Laura: As we move into our largest volume quarter of the year, our fourth quarter. We are encouraged by early sales trends, while we recognize the majority of the season is in front of US we feel good about how we're positioned and are reaffirming our full year guidance.

When I arrived at solo my strategic imperative was to clean up the business and put us on a path to return to growth.

Speaker Change: When I arrived the solo my strategic imperative was to clean up the business and put us on a path to return to growth.

Laura Coffey: We identified five key priorities that would return us to our winning ways.

Laura: We've identified five key priorities that would return us to our winning ways.

Laura Coffey: Our first key priority for 2024 was to develop a comprehensive strategic plan, we embarked on a new strategic plan and are now focused on executing against that plan in order to remove obstacles and friction and lay the foundation to enable long term sustainable growth.

Laura: Our first key priority for 2024 was to develop a comprehensive strategic plan, we embarked on a new strategic plan and are now focused on executing against that plan in order to remove obstacles and friction and lay the foundation to enable long term sustainable growth.

Laura Coffey: As such we are focused and driven to transform a company that will be built on the new on new product innovation getting closer to our customers through integrated full funnel marketing campaigns, optimizing our channel distribution and implementing operating discipline across the organization.

Laura: As such we are focused and driven to transform a company that will be built on the new on new product innovation getting closer to our customers through integrated full funnel marketing campaigns, optimizing our channel distribution and implementing operating discipline across the organization.

Laura Coffey: A part of this was evaluating the performance of the portfolio and determining which brands to invest and where to allocate our capital and fixing our baseline systems and processes. While it has been a heavy lift I am pleased with the progress our teams have made in a relatively short period of time.

Laura: A part of this was evaluating the performance of the portfolio and determining which brands to invest and where to allocate our capital and fixing our baseline systems and processes.

Laura: <unk> has been a heavy lift I am pleased with the progress our teams have made in a relatively short period of time.

Laura Coffey: Our second key priority was to recruit a talented team and build our capabilities. We now have an entirely new leadership team in place and the next level down comes with been there done that experience.

Laura: Our second key priority was to recruit a talented team and build our capabilities. We now have an entirely new leadership team in place and the next level down comes with been there done that experience.

Laura Coffey: Additionally, we are jettisoning poor performing partners and agencies and replace them with industry, leading firms, which we expect will contribute significantly to our brand marketing and product innovation, leading to a return to growth in 2025.

Laura: Not only we are jettison poor performing partners and agencies and replace them with industry, leading firms, which we expect will contribute significantly to our brand marketing and product innovation, leading to a return and growth in 2025.

Laura Coffey: I'm confident we now have the right team and partners in place to execute our strategic plan.

Laura: I'm confident we now have the right team and partners in place to execute our strategic plan.

Laura Coffey: Our third key priority is to develop an innovative new product pipeline. We know that innovation is important to our customers and we have a few small launches planned for the fourth quarter.

Laura: Our third key priority is to develop an innovative new product pipeline. We know that innovation is important to our customers and we have a few small launches planned for the fourth quarter. We recently rolled out surround like a portable version of our successful surround accessories that was introduced last year and.

We recently rolled out surround like a portable version of our successful surround accessories that was introduced last year. In addition, we have also rolled out a new cookout kit the transformed your fire pit into a grill or griddle and enables you to cook out on the go whether it's tailgating at the football game, where having affordable grill.

Laura: In addition, we have also rolled out a new cookout kit the transforms your fire pit into a grill or griddle and enables you to cook out on the go whether it's tailgating at the football game, where having affordable grill for picnics.

we're to allocate our capital and fixing our baseline systems and processes. While it has been a heavy lift, I am pleased with the progress our teams have made in a relatively short period of time.

Laura Coffey: For picnics.

Laura Coffey: We're proud of our partnership with the NFL to introduce solar stove and chubby NFL branded products at solo Stow, our fire pits and the new surround light offer the ability to customize with an NFL logo of your favorite team at.

Laura: We're proud of our partnership with the NFL to introduce solar stove and chubby NFL branded products at.

Our second key priority was to recruit a talented team and build our capabilities. We now have an entirely new leadership team in place, and the next level down comes with been there, done that experience.

Laura: So those so our fire pits and the new surround light offer the ability to customize with an NFL logo of your favorite team.

Laura Coffey: At <unk>, we rolled out the Chubb is unique spin to NFL team logo to apparel, we began with a 12 team rollout and the initial customer response has been fantastic. In fact, we sold about our initial shipment of product within the first 48 hours of launching online.

Laura: Chubby, we rolled out the Chubb is unique spin to NFL team logo to apparel, we began with a 12 team rollout and the initial customer response has been fantastic.

Additionally, we have jettisoned poor-performing partners and agencies and have replaced them with industry-leading firms, which we expect will contribute significantly to our brand marketing and product innovation, leading to a return in growth in 2025.

Laura: Fact, we sold out our initial shipment of product within the first 48 hours of launching online.

Laura Coffey: We'll be rolling we will be rolling out NFL by Chubby logo to apparel to all 32 teams over the coming quarters.

Laura: We'd be rolling we will be rolling out NFL by Chubb is logo to apparel to all 32 teams over the coming quarters.

I'm confident we now have the right team and partners in place to execute our strategic plan.

Laura Coffey: Our retail partners have told us that they love our brands and want more innovation from solo and we were taking a much more strategic and in some cases collaborative approach to product development with our retail partners that we believe will be well received in the marketplace. As we look into 2025, we're actively filling.

Laura: Our retail partners have told us that they love our brands and want more innovation from solo and we were taking a much more strategic and in some cases collaborative approach to product development with our retail partners that we believe will be well received in the marketplace. As we look into 2025, we're actively filling our.

Our third key priority is to develop an innovative new product pipeline. We know that innovation is important to our customers, and we have a few small launches planned for the fourth quarter.

We recently rolled out Surround Lite, a portable version of our successful Surround accessory that was introduced last year.

Laura Coffey: Our product development pipeline with new and exciting products that will enhance and expand our core.

Laura: Product development pipeline with new and exciting products that will enhance and expand our core.

In addition, we have also rolled out a new cookout kit that transforms your fire pit into a grill or griddle and enables you to cook out on the go, whether it's tailgating at the football game or having an affordable grill for picnics.

Laura Coffey: We also plan to enter into three new near adjacent categories that will significantly expand our Tam when.

Laura: We also plan to enter into three new near adjacent categories that will significantly expand our Tam when.

Speaker Change: When I started earlier this year, we began a thorough consumer consumer research study to inform us of this opportunity we surveyed thousands of our customers and we believe they have given us permission to enter into these new categories with products that will be very innovative with unique features.

We're proud of our partnership with the NFL to introduce Solo Stove and Chubby's NFL branded products.

At Solostow, our fire pits and the new surround light offer the ability to customize with an NFL logo of your favorite team.

At Chubby's, we rolled out the Chubby's unique spin to NFL team logoed apparel. We began with a 12-team rollout, and the initial customer response has been fantastic. In fact, we sold out our initial shipment of product within the first 48 hours of launching online.

Speaker Change: Our fourth key priority is to develop a more comprehensive and balanced omni channel strategy. We continue to see strong momentum in our retail channel moving forward. We are in discussions with and plan to open up new doors with several key retailers. In fact, we have 130 store test with a significant national retailer.

Laura: Our fourth key priority is to develop a more comprehensive imbalanced omnichannel strategy, we continue to see strong momentum in our retail channel moving forward. We are in discussions with and plan to open up new doors with several key retailers. In fact, we have 130 store test with a significant national retailer.

We will be rolling out NFL by Chubby's Logo to Peril to all 32 teams over the coming quarters.

Speaker Change: For Soma, so that will begin in Q4.

Laura: For solar so that will begin in Q4.

Our retail partners have told us that they love our brands and want more innovation from Solo and we are taking a much more strategic and in some cases collaborative approach to the product development with our retail partners that we believe will be well received in the marketplace.

Speaker Change: We're also bringing a much more strategic go to market approach to our retail partners. We have brought in talent to build out our retail organization that can go after opportunities by retail segment, such as marketplaces like Amazon The club channel and Big box specialty, which should help maximize our opportunities in retail.

Laura: We're also bringing a much more strategic go to market approach to our retail partners. We have brought in talent to build out our retail organization that can go after opportunities by retail segment, such as marketplaces like Amazon The club channel and Big box specialty, which should help maximize our opportunities in retail.

Matt: As we look into 2025, we are actively filling our product development pipeline with new and exciting products that will enhance and expand our core.

Speaker Change: We are underpenetrated in this channel and believe we have a long runway of growth ahead of us I'm pleased our retailers are valuing our partnership which is bringing newness and excitement to the product assortment.

Laura: We are underpenetrated in this channel and believe we have a long runway of growth ahead of us I'm pleased our retailers are valuing our partnership which is bringing newness and excitement to the product assortment.

Matt: We also plan to enter into three new near-adjacent categories that will significantly expand our TAM.

Matt: When I started earlier this year, we began a thorough consumer research study to inform us of this opportunity.

Speaker Change: As I stated previously our consumer research has informed us that about 50% of shoppers look to purchase their products in store as such we are underpenetrated in retail today and this is a key reason for building out a more robust retail go to market capability.

Laura: As I stated previously our consumer research has informed us that about 50% of shoppers look to purchase their products in store as such we are underpenetrated in retail today and this is a key reason for building out a more robust retail go to market capability.

Matt: We surveyed thousands of our customers, and we believe they have given us permission to enter into these new categories with products that will be very innovative with unique features.

While we want to be selective with our retailers, we partner with we want a balanced omni channel approach that allows for consumers to shop, when where and how they want.

Matt: Our fourth key priority is to develop a more comprehensive and balanced omni-channel strategy.

Laura: While we want to be selective with the retailers, we partner with we want a balanced omni channel approach that allows for consumers to shop, when where and how they want.

Matt: We continue to see strong momentum in our retail channel. Moving forward, we are in discussions with and plan to open up new doors with several key retailers. In fact, we have 130 store tests with a significant national retailer for Solo Stove that will begin in Q4.

And our last key priority. This year is to stabilize our D to C channel within D. C. We continue to experience challenges due to a lack of product newness, our overreliance on performance marketing spend a suboptimal web experience and some cannibalization due to our growth of retail.

Laura: And our last key priority. This year is to stabilize our D to C channel.

Laura: Within D. C. We continue to experience challenges due to our lack of product newness, our overreliance on performance marketing spend.

Matt: We're also bringing a much more strategic go-to-market approach to our retail partners.

Laura: Suboptimal web experience and some cannibalization due to our growth of retail.

Matt: We have brought in talent to build out a retail organization that can go after opportunities by retail segment, such as marketplaces like Amazon, The Club Channel, and Big Box Specialty. It should help maximize our opportunities in retail.

Speaker Change: We are actively putting the pieces in place to stabilize and eventually return our D to C business back to growth led by product innovation and our new website.

Laura: We are actively putting the pieces in place to stabilize and eventually return our D to C business back to growth led by product innovation and a new website.

Speaker Change: Next year, we will completely relaunch our solo website in conjunction with a world class sales force platform, Don will have more capabilities for us to showcase our products in a different way to curate a better shopping experience and enable us to deliver more relevant content to our consumers.

Laura: Next year, we will completely relaunch our solo website in conjunction with a world class sales force platform, Don will have more capabilities for us to showcase our products in a different way to curate a better shopping experience and enable us to deliver more relevant content to our consumers.

Matt: We are underpenetrated in this channel and believe we have a long runway of growth ahead of us. I'm pleased that retailers are valuing our partnership, which is bringing newness and excitement to their product assortment.

As I stated previously, our consumer research has informed us

Speaker Change: As we execute against our strategic plan to be a leader in the outdoor entertainment segment. We will continue to lead with innovation. We have raised the standards of product quality that reflect the brand attributes of solo brands, having said that we made the decision this quarter to wind down our IC Breeze reporting unit, while we believe in the market.

Matt: that about 50% of shoppers look to purchase their products in-store.

Laura: As we execute against our strategic plan to be a leader in the outdoor entertainment segment. We will continue to lead with innovation. We have raised the standards of product quality that reflect the brand attributes of solo brands, having said that we made the decision this quarter to wind down our IC breezed reporting unit, while we believed in the market.

Matt: As such, we are underpenetrated in retail today, and this is a key reason for building out a more robust retail go-to-market capability.

Matt: While we want to be selective with the retailers we partner with, we want a balanced, omni-channel approach that allows for consumers to shop when, where, and how they want.

Speaker Change: <unk> for outdoor portable cooling the new products launched under IC breach. This year did not meet our standards and therefore, we have decided to move quickly and decisively to take a noncash charge to write down the inventory and related goodwill and intangible assets this quarter.

Laura: Fertility for outdoor portable cooling the new products launched under IC briefs. This year did not meet our standards and therefore, we have decided to move quickly and decisively to take a noncash charge to write down the inventory and related goodwill and intangible assets this quarter.

Matt: And our last key priority this year is to stabilize our D2C channel. Within D2C, we continue to experience challenges due to our lack of product newness, our over-reliance on performance marketing spend,

Matt: a suboptimal web experience, and some cannibalization due to our growth of retail.

Speaker Change: While we are disappointed with our performance and execution of icy Breeze, we still own the patents and plan to relaunch cooling products under the solo umbrella brand starting in 2025.

Laura: While we are disappointed with our performance and execution of icy Breeze, we still own the patents and plan to relaunch cooling products under the solo umbrella brand starting in 2025.

Matt: We are actively putting the pieces in place to stabilize and eventually return our D2C business back to growth, led by product innovation and a new website.

Speaker Change: During the quarter. We also took additional aggressive and decisive measures to address factors that were hindering our growth, including a charge for terminating our contract with an underperforming legacy marketing arrangement.

Laura: During the quarter. We also took additional aggressive and decisive measures to address factors that were hindering our growth, including a charge for terminating our contract with an underperforming legacy marketing arrangement.

Matt: Next year we will completely relaunch our solo website in conjunction with a world-class Salesforce platform that will have more capabilities for us to showcase our products in a different way to curate a better shopping experience and enable us to deliver more relevant content to our consumers.

Speaker Change: Laura we'll take you through the specifics of the write downs and charges, but we've made a lot of progress over the past nine months and as a result of these actions are in a much better position as we move into next year.

Laura: Laura we'll take you through the specifics of the write downs and charges, but we've made a lot of progress over the past nine months and as a result of these actions are in a much better position as we move into next year.

Matt: As we execute against our strategic plan to be a leader in the outdoor entertainment segment, we will continue to lead with innovation. We have raised the standards of product quality that reflect the brand attributes of solo brands.

Speaker Change: Next I would like to discuss our decision to consolidate I'll paddle boards in Oreo kayaks into a new water Sports Division.

Laura: Next I would like to discuss our decision to consolidate I'll paddle boards in Oreo kayaks into a new water Sports Division.

Matt: Having said that, we made the decision this quarter to wind down our Icy Breeze reporting unit. While we believe in the market opportunity for outdoor portable cooling, the new products launched under Icy Breeze this year did not meet our standards.

Speaker Change: While developing our strategic plan, we came to the conclusion that consolidating the divisions will realize synergies and results in a more profitable water sports platform and keeping them as two standalone businesses.

Laura: While developing our strategic plan, we came to the conclusion that consolidating the divisions, we will realize synergies and results in a more profitable water sports platform and keeping them as two standalone businesses.

Matt: Therefore, we have decided to move quickly and decisively to take a non-cash charge to write down the inventory and related goodwill and intangible assets this quarter.

Speaker Change: While category growth has been soft over the last few years post COVID-19, we're beginning to see signs of growth product innovation has been key and we're gaining good traction with our new Tommy Bahama branded paddle boards in our or fishing kayaks that are selling out.

Laura: While category growth has been soft over the last few years post COVID-19, we're beginning to see signs of growth product innovation has been key and we're gaining good traction with our new Tommy Bahama branded paddle boards in our or fishing kayaks that are selling out.

Matt: While we are disappointed with the performance and execution of Icy Breeze, we still own the patents and plan to relaunch cooling products under the Solo Umbrella brand starting in 2025.

Speaker Change: We believe that under this reorganization, we have the right team in place to drive long term growth and profitability and distribution.

Laura: We believe that under this reorganization, we have the right team in place to drive long term growth and profitability and distribution.

Matt: During the quarter, we also took additional aggressive and decisive measures to address factors that were hindering our growth, including a charge for terminating our contract with an underperforming legacy marketing arrangement.

Speaker Change: Moving on to marketing our focus in Q4 is bringing more balance between top of funnel brand building in bottom bottom of funnel conversion. Our soup campaign. This year is a representation of a full funnel marketing approach that has been great for increasing brand awareness, but also driving a call to act.

Laura: Moving on to marketing our focus in Q4 is bringing more balance between top of funnel brand building in bottom bottom of funnel conversion. Our soup campaign. This year is a representation of a full funnel marketing approach that has been great for increasing brand awareness, but also driving a call to act.

Matt: Laura will take you through the specifics of the write-downs and charges but we've made a lot of progress over the past nine months and as a result of these actions are in a much better position as we move into next year.

Speaker Change: <unk>.

Laura: <unk>.

Speaker Change: Youre seeing a continuation of this marketing balanced with our partnership with the New York Islanders, which started in Q4, and we expect to realize additional benefits throughout next year.

Laura: Youre seeing a continuation of this marketing balance with our partnership with the New York Islanders, which started in Q4, and we expect to realize additional benefits throughout next year.

Matt: Next, I would like to discuss our decision to consolidate isle paddle bores and Oroo kayaks into a new water sports division.

Speaker Change: Although Q4 is a heavily promotional time of year for us our focus of remaking our marketing strategy is to be less reliant on promotions and performance marketing and rather leaning into full funnel brand building. As a reminder, we're just getting started on our new marketing strategies, but we are excited about all of the new initiatives that we have.

Laura: Although Q4 is a heavily promotional time of year for us our focus of remaking our marketing strategy is to be less reliant on promotions and performance marketing and rather leaning into full funnel brand building. As a reminder, we're just getting started on our new marketing strategies, but we are excited about all of the new initiatives that we have.

Matt: While developing our strategic plan, we came to the conclusion that consolidating the divisions will realize synergies and result in a more profitable water sports platform than keeping them as two stand-alone businesses.

Matt: While category growth has been soft over the last few years post-COVID, we're beginning to see signs of growth.

Speaker Change: Coming in 2025.

Laura: Coming in 2025.

Speaker Change: This year, it's been a heavy lift to clean up the business and this quarter, we had to take write downs to shore up our foundation.

Laura: This year, it's been a heavy lift to clean up the business and this quarter, we had to take write downs to shore up our foundation.

Matt: Product innovation has been key and we're gaining good traction with our new Tommy Bahama branded paddle boards and our Oru fishing kit kayaks that are selling out.

Speaker Change: I'm excited about our progress and look forward to entering 2025 with momentum and a stronger foundation.

Laura: I'm excited about our progress and look forward to entering 2025 with momentum and a stronger foundation.

Matt: We believe that under this reorganization, we have the right team in place to drive long-term growth and profitability in this division.

Speaker Change: The organization is working hard behind the scenes implementing our strategy work around product marketing distribution and talent, we're developing a long term strategic product roadmap implementing new marketing strategies that would be more balanced and we're working closely with our retail partners to open up new doors and gained share of shelf.

Laura: The organization is working hard behind the scenes implementing our strategy work around product marketing distribution and talent, we're developing a long term strategic product roadmap implementing new marketing strategies that would be more balanced and we're working closely with our retail partners to open up new doors and gained share of shelf.

Matt: Moving on to marketing. Our focus in Q4 is bringing more balance between top of funnel brand building and bottom of funnel conversion. Our Snoop campaign this year is a representation of a full funnel marketing approach that has been great for increasing brand awareness but also driving a call to action.

Speaker Change: We believe that our strategic initiatives around product and marketing will help stabilize and grow our D to C business, our strong balance sheet and healthy gross margins give us the ability to reinvest in the business to position us for growth in 2025 and beyond.

Laura: We believe that our strategic initiatives around product and marketing will help stabilize and grow our D to C business, our strong balance sheet and healthy gross margins give us the ability to reinvest in the business to position us for growth in 2025 and beyond.

Matt: You're seeing a continuation of this marketing balance with our partnership with the New York Islanders, which started in Q4, and we expect to realize additional benefits throughout next year.

Speaker Change: This effort to transform the business and our culture could not be possible without the hard work of the people within this organization and the contributions from the talent and capabilities that we're bringing on board I will now turn the call over to Laura Laura.

Matt: Although Q4 is a heavily promotional time of year for us, a focus of remaking our marketing strategy is to be less reliant on promotions and performance marketing, and rather leaning into full funnel brand building.

Matt: As a reminder, we're just getting started on our new marketing strategies, but we're excited about all of the new initiatives that we have coming in 2025.

Speaker Change: Yeah.

Laura Coffey: Thank you Chris and good.

Laura Coffey: Morning, everyone.

Laura: Morning, everyone.

Speaker Change: Today I'll walk you through our third quarter results and provide you an outlet for the remainder of fiscal 'twenty 'twenty four.

Matt: This year has been a heavy lift to clean up the business, and this quarter we had to take write-downs to shore up our foundation. I'm excited about our progress and look forward to entering 2025 with momentum and a stronger foundation.

During the quarter, we made significant progress on our strategic initiatives as a part of this effort. We took several one time charges primarily related to cleaning up our business Park. We are confident that the actions taken and position the company for improved profitability in 2025 and beyond.

Laura: During the quarter, we made significant progress on our strategic initiatives as a part of this effort. We took several one time charges primarily related to cleaning up our business. This quarter. We are confident that the actions taken to position the company for improved profitability in 2025 and beyond.

Matt: The organization is working hard behind the scenes implementing our strategy work around product, marketing, distribution, and talent.

Matt: We're developing a long-term strategic product roadmap, implementing new marketing strategies that will be more balanced, and we're working closely with our retail partners to open up new doors and gain a share of shelves.

Speaker Change: Turning to our quarterly results.

Laura: Turning to our quarterly results.

Speaker Change: Third quarter sales were $94 1 million decreasing 14, 7% compared to two a year ago as sales growth was impacted by a lack of product newness and continued macroeconomic challenges and it put pressure on discretionary spending for big ticket.

Laura: Third quarter sales were $94 1 million decreasing 14, 7% compared to two a year ago as self growth was impacted by a lack of product newness and continued macroeconomic challenges and it puts pressure on discretionary spending for big ticket.

Matt: We believe that our strategic initiatives around product and marketing will help stabilize and grow our D2C business. Our strong balance sheet and healthy gross margins give us the ability to reinvest in the business to position us for growth in 2025 and beyond.

Speaker Change: Or durable.

Laura: Or durable.

And the direct channel revenues declined 15, 5% to $64 5 million in the third quarter, primarily due to lower sac traffic that we have experienced throughout the year.

Laura: In the direct channel revenues declined 15, 5% to $64 5 million in the third quarter, primarily due to lower sac traffic that we have experienced throughout the year.

Matt: This effort to transform the business and our culture could not be possible without the hard work of the people within this organization and the contributions from the talent and capabilities that we're bringing on board. I will now turn the call over to Laura. Laura?

Speaker Change: Retail revenues were $29 7 million decreasing $12, 7%.

Laura: Retail revenues were $29 7 million decreasing 12, 7%.

Speaker Change: Last year's retail sales of 34 million included a one time fiber agreement of $7 2 million, we did not anniversary this year.

Laura: Last year's retail sales of 34 million included a one time fiber agreement of $7 2 million, we did not anniversary this year.

Thank you, Chris and good morning. Everyone.

Speaker Change: Excluding this one time BARDA agreement sales in our retail segment increased 10%.

Laura: Excluding this one time BARDA agreement sales in our retail segment increased 10%.

Laura: Today I'll walk you through our third quarter results and provide you an atlas for the remainder of fiscal 2024.

Speaker Change: Turning to gross profit.

Laura: Turning to gross profit.

Matt: During the quarter, we made significant progress on our strategic initiatives.

Our gross profit was $39 3 million for the quarter compared to $68 3 million a year of gap.

Laura: Our gross profit was $39 3 million for the quarter compared to $68 3 million a year ago.

Matt: As a part of this effort, we took several one-time charges primarily related to cleaning up our business before. We are confident that the actions taken position the company for improved profitability in 2025 and beyond.

Speaker Change: Gross margin was 41, 8% for the quarter compared to 61, 9% I think your account.

Laura: Gross margin was 41, 8% for the quarter compared to 61, 9% I think your account.

Speaker Change: During the quarter, we took an $18 7 million dollar write down inventory and related purchase orders charge related to the wind down of our IC breach reporting unit as a part of our restructuring contract termination and impairment activity.

Laura: During the quarter, we took an $18 7 million dollar write down inventory and related purchase smokers charge related to the wind down of our IC breach reporting unit as a part of our restructuring contract termination and impairment activity.

Train to our quarterly results.

Matt: Third quarter sales were $94.1 million, decreasing 14.7% compared to a year ago as sales growth was impacted by a lack of product newness and continued macroeconomic challenges that have put pressure on discretionary spending for big-ticket sales.

Speaker Change: Adjusted gross profit, which excludes these charges decreased 14, 8% $58 3 million and adjusted gross margin was $61 nine compared to 62 a year ago.

Laura: Adjusted gross profit, which excludes these charges decreased 14, 8% at $58 3 million and adjusted gross margin was 61.9 compared to 62 a year ago.

Consumer Durables.

Matt: In the direct channels, revenue declined 15.5% to $64.5 million in the third quarter, primarily due to lower site traffic that we have experienced throughout the year.

Speaker Change: Selling general and administrative expenses for the quarter increased to $61 1 million compared to $57 million a year ago.

Laura: Selling general and administrative expenses for the quarter increased to $61 1 million compared to 57 million a year ago.

Speaker Change: As a percentage of sales SG&A expense increased to 64, 9% of sales compared to 51, 7%.

Laura: As a percentage of sales SG&A expense increased to 64, 9% of sales compared to 51, 7%.

Matt: Last year's retail sales of $34 million included a one-time barter agreement of $7.2 million that we did not anniversary this year.

Speaker Change: A year ago.

Laura: A year ago.

Speaker Change: The increase in SG&A expenses, primarily due to a change in fair value of contingent consideration related to certain of our 2023 acquisitions.

Laura: The increase in SG&A expenses, primarily due to a change in fair value of contingent consideration related to certain of our 2023 acquisitions.

Matt: Excluding this one-time barter agreement, sales in our retail segment increased 10%.

Speaker Change: This was offset by reduced distribution costs associated with the decline in revenue.

Laura: This was offset by reduced distribution costs associated with the decline in revenue.

Turning to gross profit.

Matt: Our gross profit was $39.3 million for the quarter compared to $68.3 million a year ago.

Speaker Change: And a reduction in certain employee related benefit such as performance bonus expense.

Laura: And a reduction in certain employee related benefit such as performance bonus expense.

Matt: Gross margin was 41.8% for the quarter compared to 61.9% a year ago.

During the quarter, we recognized $83 6 million in one time charges associated with restructuring contract termination and impairment charges.

Laura: During the quarter, we recognized $83 6 million in one time charges associated with restructuring contract termination and impairment charges.

Matt: During the quarter, we took an $18.7 million write-down of inventory and related purchase orders charged related to the rindown of our Icy Breeze reporting unit as a part of our restructuring, contract termination, and impairment activities.

Speaker Change: Approximately $43 million related to the impairment charges as a result of the wind down of the IC breach reporting unit and in parent marketing credit associated with an underperforming legacy marketing contract.

Laura: Approximately 43 million is related to the impairment charges as a result of the wind down of the IC breach reporting unit and in parent marketing credit associated with an underperforming legacy marketing contracts.

Matt: Adjusted gross profit, which excludes these charges, decreased 14.8% to $58.3 million and adjusted gross margin was $61.9 compared to $62 a year ago.

We also recorded a $25 million goodwill impairment charge at our seventh reporting unit.

Laura: We also recorded a $25 million goodwill impairment charge at our seventh reporting unit.

Speaker Change: <unk> decline in the share price.

Laura: Stained decline in the share price.

Speaker Change: There were approximately $15 million of contract termination charges, primarily related to charges to exit the legacy marketing contracts and nearly $1 million and restructuring charges.

Laura: There were approximately $15 million of contract termination charges, primarily related to charges to exit the legacy marketing contracts and nearly $1 million a restructuring charges.

Matt: Selling general and administrative expenses for the quarter increased to $61.1 million compared to $57 million a year ago.

Matt: As a percentage of sales, SG&A expense increased to 64.9% of sales compared to 51.7%.

Speaker Change: These charges approximately 74 million are noncash.

Laura: As these charges approximately 74 million are noncash.

Speaker Change: Third quarter net loss was $111 5 million adjusted net income was $1 4 million and adjusted EBITDA was $6 5 million.

Laura: Third quarter net loss was $111 5 million adjusted net income was $1.4 million and adjusted EBITDA was $6 5 million.

a year ago.

Matt: The increase in SG&A access was primarily due to a change in fair value of contingent consideration related to certain of our 2023 acquisitions.

Speaker Change: <unk> EBITDA margin was six 9%.

Laura: EBITDA margin was six 9%.

Matt: This was offset by reduced distribution costs associated with the decline in revenues and a reduction in certain employee-related benefits such as performance bonds expense.

Speaker Change: Turning to the balance sheet at the end of the period, we had $12 5 million in cash and cash equivalents.

Laura: Turning to the balance sheet at the end of the period, we had $12 5 million in cash and cash equivalents.

As of September 30th we have $75 million in outstanding borrowings under the revolving credit facility and $87 $5 million under the term loan agreement.

Laura: As of September 30, we had $75 million in outstanding borrowings under the revolving credit facility and $87 5 million under the term loan agreement.

Matt: During the quarter, we recognized 83.6 million in one-time charges associated with restructuring, contract termination, and impairment charges.

The borrowing capacity on our revolving credit facility was $350 million as of September 30th, leaving $274 4 million of availability and we are in compliance with all of our debt.

Laura: The borrowing capacity on our revolving credit facility was $350 million as of September 30th, leaving $274 4 million of availability and we are in compliance with all of our debt.

Matt: Approximately 43 million is related to the impairment charges as a result of the wind-down of the Icy Breeze reporting unit and impaired marketing credit associated with an underperforming legacy marketing contract.

Speaker Change: We continue to be disciplined with our inventory and are pleased with the composition of our current inventory levels.

Laura: We continue to be disciplined with our inventory and are pleased with the composition of our current inventory levels.

Matt: We also recorded a $25 million goodwill impairment charge at our SOAP reporting unit due to the sustained decline in the share price.

Speaker Change: Inventory at the end of the quarter was $106 8 million down six 4% from a year ago.

Laura: Inventory at the end of the quarter was $106 8 million down six 4% from a year ago.

Speaker Change: Netting to our outlook.

Laura: Netting to our outlook.

Speaker Change: We are reaffirming our fiscal 'twenty 'twenty four outlook.

Laura: We are reaffirming our fiscal 'twenty 'twenty four outlook.

Speaker Change: Continue to expect.

Laura: Continue to expect.

Speaker Change: Fiscal 'twenty 'twenty four revenue to be in the range.

Laura: It's about 2020 for revenue to be in the range at 470 million to $498 million.

Of these charges, approximately $74 million are non-cash.

Speaker Change: 470 million to $498 million. We also expect adjusted EBITDA margin be in the range of 9% to 10% as we make the necessary investments to position the company for long term brand.

Matt: Third quarter net loss was $111.5 million, adjusted net income was $1.4 million, and adjusted EBITDA was $6.5 million.

Laura: We also expect adjusted EBITDA margin be in the range of 9% to 10% as we make the necessary investments to position the company for long term brand.

In closing we have embarked on a new strategic plan and are now focused on executing it to remove obstacles and establish a foundation for long term sustainable success.

adjusted EBITDA margin was 6.9%.

Laura: In closing we have embarked on a new strategic plan and are now focused on executing it to remove obstacles and establish a foundation for long term sustainable success.

Speaker Change: As such we are focused and driven to transform the company that will be built on innovation getting closer to our customers through an integrated full funnel marketing campaign opt.

Laura: As such we are focused and driven to transform the company that will be built on innovation getting closer to our customers through an integrated full funnel marketing campaign opt.

Speaker Change: Optimizing our channel distribution network and implementing operating discipline across the organization.

Laura: Optimizing our channel distribution network and implementing operating discipline across the organization.

Speaker Change: While it has been a heavy lift we are pleased with the progress. The teams have made in a relatively short period of time.

Laura: While it has been a heavy lift we are pleased with the progress. The teams have made in a relatively short period of time.

Speaker Change: Now with that I'll turn the call over to the operator to begin Q&A.

Speaker Change: Thank you and everyone feels like kind of state question. Please press star one on your telecom keypad. Once again that is star one ask a question today.

Speaker Change: Thank you everyone. If he would like to ask a question. Please press star one on your telephone keypad. Once again that is star one ask a question today.

Speaker Change: And we'll go first to Anna and go see them finally.

Speaker Change: And we'll go first to Anna N go Steve Riley.

Speaker Change: That'd be battling.

Speaker Change: It would be bad.

Speaker Change: Oh, Hey, guys are antibodies.

Speaker Change: Hey, guys are antibodies.

Speaker Change: Taking my question and.

Speaker Change: My question on this line.

Speaker Change: I think I'd like to start.

Speaker Change: I'd like to start.

Through the balance of DTC and wholesale.

Speaker Change: Going through the balance of.

Speaker Change: With me in wholesale and let's say the.

Speaker Change: At the end of the year and I think they're claiming.

Speaker Change: At the end of the year and I see that cleaning up 2025 expectation.

Speaker Change: Framing up 2025 expectation.

Speaker Change: And I totally appreciate your commentary Chris around you know wanting to find him do can see and I understand that the brand or the website.

Speaker Change: And I totally appreciate your commentary around you know wanting to find him.

Speaker Change: And I understand that the brand or the website.

Speaker Change: We launched in 2025.

Speaker Change: Launched in 2025, but how should we be thinking about kind of the key milestone to get to the inflection.

Speaker Change: How should we be thinking about kind of the key milestone to get too deep to see inflection in our rep online and pick up there.

Speaker Change: Blackstone and a rep online and pick up there.

Speaker Change: Yes.

Speaker Change: So and it's a it's a really good question, it's something that as you might imagine started back when I first walked in the door as we laid out our strategic plan and much of our strategic plan is focused on how do we simultaneously continue to lean into the growth that we're seeing at retail while we.

Speaker Change: So and it's a it's a really good question, it's something that as you might imagine started back when I first walked in the door as we laid out our strategic plan.

Speaker Change: And much of our strategic plan is focused on how do we simultaneously continue to lean into the growth that we're seeing at retail while we also stabilized our D to C channel and so all of our research has been informed by deep deep consumer market.

Speaker Change: We also stabilized our D to C channel and so all of our research has been informed by deep deep consumer market research, where we literally talk to five to 10000 different consumers across all of our brands, but over 5000 on the stove brand in particular and so what they told us.

Speaker Change: Research, where we literally talk to five to 10000 different consumers across all of our brands, but over 5000 on the stove brand in particular and so what they told US what is the.

Speaker Change: Is it.

Speaker Change: 50% of the market is shopping at retail so we know the importance of this channel and we're building out capabilities against this channel.

Speaker Change: As evidenced by the growth that you see and we think it will only accelerate into 2025, we just now signed a deal with a large national chain that we're going to just going to represent the brand really really well. We've got 130 store tests that will be rolling out here in Q4.

Speaker Change: As evidenced by the growth that you see and we think it will only accelerate into 2025, we've just now signed a deal with a large national chain that we're going to this could represent the brand really really well. We've got 130 store tests that will be rolling out here in Q4.

And we think we're going to expand further with strategic customers. In this channel in 2025 now D to C. We know what the anecdote is four D to C.

Speaker Change: And we think we're going to expand further with strategic customers. In this channel in 2025 now D to C. We know what the anecdote is for D C.

Speaker Change: First and foremost we have to develop a new.

Speaker Change: First and foremost we have to develop a.

Speaker Change: Innovation pipeline that increases the interest and increases the excitement of our user base as we mentioned our call ago. Our net promoter score is in the top one percentile of all outdoor brands with the solo brand. So we know consumers are looking for more from us.

Speaker Change: New product innovation pipeline that increases the interest and increases the excitement of our user base as we mentioned our call ago. Our net promoter score is in the top one percentile of all outdoor brands with the solo brand. So we know consumers are looking for more from us.

Speaker Change: You know when we move into near Adjacencies like we did with the pizza oven inside of three years, we've gone from zero share to number two in the marketplace. So we know as we increase.

Speaker Change: Our innovation and we're able to feed it through an effective pipeline with our website. We know it will be effective so a lot of efforts over the past 910 months is setting up not just the product innovation pipeline, but also the new website that we'll be bringing on stream.

Speaker Change: The early part of 2025, this will give us UX UI capabilities that will allow us to story to tell in a really really rich manner with.

Speaker Change: The early part of 2025, this will give us UX UI capabilities that will allow us to storytelling in a really really rich manner with.

Speaker Change: With new content, and new products and be able to curate a consumer shopping experience. It has.

Speaker Change: It will remove much of the friction and time to transact online today. So we can see the traffic that we generate online assessment that that we're generating online and we can see the friction before our consumers transact. So we know where the problem areas lie and where we're where we're at.

Speaker Change: It will remove much of the friction and time to transact online today. So we can see the traffic that we generate online necessities that that we're generating online and we can see the friction before our consumers transact. So we know where the problem areas lie and where we're where we're at.

Fixed sing them as quickly as we can so when you all think of the cadence of next year, you should see an acceleration of our retail business. I think you should look to a stabilization of our D to C business in the first half and we would hope this would return to more normalized D to C growth.

Speaker Change: Fixing them as quickly as we can so when you all think of the cadence of next year, you should see an acceleration of our retail business. I think you should look to a stabilization of our D to C business in the first half and we would hope this would return to more normalized D to C growth.

Speaker Change: In the second half as we have a new platform online as we have innovation online and there's frankly, we've got the impact from the capabilities and the talent that we've been recruiting in over the past nine months.

Speaker Change: You know I didn't even mention that and probably should have started with that that the talent that we're bringing in is incredible world class talent.

Speaker Change: From my leadership team to the next level down we've got been there done that talent with folks that really understand how to build a highly coveted brand consumer durables products company. So we like the progress.

Speaker Change: We know we're still in the early innings of our turnaround but.

Speaker Change: Everything we're doing is pointing to a.

Speaker Change: We are doing is pointing to a recovery.

Recovery here as we move into 2020 five.

Speaker Change: Our recovery here as we move into 2025.

Great I'm, putting all that crap.

Speaker Change: Great I'm paying for all that crap.

Speaker Change: I think I'd like to follow up on that last.

Speaker Change: I'd like to follow up on the last line.

A lot of commentary there about the pilot.

Speaker Change: A lot of commentary there about the pilot I think when we spoke last quarter you referenced.

Speaker Change: I think when we spoke last quarter you referenced.

Speaker Change: Oversight or you know the extent or the size of the department, that's overseeing wholesale needed to be expanded and where are we in terms of their satisfaction with the team that I spoke about and overseeing retail.

Speaker Change: Oversight or you know the extent of or the size of the department, that's overseeing wholesale needed to be.

Speaker Change: Where are we in terms of their satisfaction with the team that's doing that.

Speaker Change: So and overseeing retail partnership.

Speaker Change: Putting yourself.

Speaker Change: And another great question, because it's such an important growth channel for us So I I've been calling on retail wholesale for the 35 years of my career I was with a birdie Marcus and Arthur Blank back when home depot started and we're rolling out stores back in the late eighties and early nineties and so understanding.

Speaker Change: And another great question, because it's such an important growth channel for us So I I've been calling on retail wholesale for the 35 years of my career I was with Bernie Marcus and Arthur Blank back when home depot started and we're rolling out stores.

Speaker Change: It can be late eighties, and early nineties, and so understanding the capabilities there is paramount and when I walked in the door here, we had one person running the entire sales organization one person and so what we've done is we brought in a a head of sales who.

Speaker Change: The capabilities, there is paramount and when I walked in the door here, we had one person running the entire <unk>.

Speaker Change: Sales organization, one person and so what we've done is we brought in a a head of sales who has worked.

Speaker Change: Who has worked.

Speaker Change: For me previously understands our multi channel retail selling environment and he's now gradually built up a national account manager teams and now we've got three national account managers, calling on different areas of distribution. So that we're building those partnerships we are building the.

Speaker Change: For me previously understands our multi channel retail selling environment and he's now gradually built up a national account manager team. So now we've got three national account managers, calling on different areas of distribution. So that we're building those partnerships we are building the.

Speaker Change: Framework to be able to not only get into these stores, but importantly be able to merchandise the stores properly and then in parallel with that this gentleman Jon has hired analytics to help us analyze how much we should be selling how much the sell through is how do we read.

Plenish at a point of sale rate to that are the batches and so we're building the capability really really quickly and you see it in our numbers I mean were not only selling into retail and growing but importantly, we are selling through and a lot of the work internally here from new <unk>.

Speaker Change: Plenish at a point of sale rate to that are the batches and so we're building the capability really really quickly and you see it in our numbers I mean were not only selling into retail and growing but importantly, we're selling through and a lot of the work internally here from new.

Speaker Change: Products and merchandising and everything else will only enhance the shopping experience that frankly as I walk through retail with our key partners are we can be doing better we can be showcasing and curating, our product and storytelling at in the showroom floors of our retailers in a better way so I'm.

Speaker Change: Products and merchandising and everything else will only enhance the shopping experience that frankly as I walked through retail with our key partners are we.

Speaker Change: We can be doing better we can be showcasing and curating, our product and storytelling at in the showroom floors of our retailers in a better way. So I'm excited with where we're at and the progress we've made but more importantly, I'm encouraged by where we're headed with this team.

Speaker Change: Excited with where we're at and the progress we've made but more importantly, I'm encouraged by where we're headed with this team.

Speaker Change: Okay.

Speaker Change: Mhm.

Speaker Change: Okay.

Speaker Change: Okay. Thanks, Adam.

Speaker Change: And a reminder, everyone. It is star one if you have a question well go to Ryan <unk> Craig Hallum.

Speaker Change: And a reminder, everyone. It is star one if you have a question well go to Brian Big Bell Craig Hallum.

Speaker Change: Yeah morning, guys. This is Matthew Rob on for Ryan.

Speaker Change: Yeah morning, guys. This is Matthew Rob on for Ryan I, just want to kind of circle back to the trends into Q4, it seems to be encouraging them to kind of sounds like wholesale is driving that strength with 140, some doors opening up.

Speaker Change: I just wanted to kind of circle back to the trends into Q4, it seems to be encouraging them to kind of sounds like wholesale is driving that strength with 140. Some doors opening up I'm just kind of talk more about what the trends you are seeing maybe on promo intensity.

Speaker Change: I'm just kind of talk more about what the trends you are seeing maybe on promo intensity.

Speaker Change: You can see are you continuing to see a bundle strength into the next quarter.

Speaker Change: Yeah, So Matthew first of all I'll jump back to kind of the close of Q3. So the trends we saw towards the end of Q3 were frankly, a little bit discouraging for us right where September typically the start of our the height of our season. After labor day. It was a warm fall and so it affected the interest in the cat.

Speaker Change: Yeah, So Matthew first of all I'll jump back to kind of the close of Q3. So the trends we saw towards the end of Q3 were frankly, a little bit discouraging for us right where September typically the start of our or the height of our season. After labor day. It was a warm fall and so it affected the interest in the cat.

Speaker Change: <unk> and it affected the sell through as we closed down in Q3 now as we moved into Q4, we start seeing more seasonal weather, we're start getting into really the heights of our period. So we're seeing increased traffic. We're seeing increased interest in the category and this is both online and at retail so it there's no question that.

The most important time of the year for US is the next 60 days and so we are focused on.

Speaker Change: The most important time of the year for US is the next 60 days and so we are focused on.

Speaker Change: This season, and we certainly like the start to Q4 that we've seen so far but we recognize it's still early days.

Speaker Change: Okay got it.

Speaker Change: And then I guess sort of with that on the on the Snoop AD that came out it was.

Speaker Change: In August it was certainly blunt unintended any metrics you're willing to share on maybe the sales uplift viewership impressions conversion just anything there.

Speaker Change: Yeah. So we're again, we're encouraged by what we're seeing from Snoop I mean, we we saw the viral interested it created last year, but as I alluded to in previous calls we didn't really have a full funnel attack against the Snoop median impressions that were being built this.

Speaker Change: This year, we've got a much more thoughtful approach built by our marketing team and we just really started leaning into it so you'll see Snoop if you haven't seen them already you'll see him in a variety of different places all very thoughtfully done against the personas and user groups that we know are strong followers of our brand.

And so the early days of what we're seeing so far is we're seeing an increase in traffic. We're seeing our Oh. These are increase and we're also seeing stronger ROE as is as we are as we start to convert people with the spend that are that we're spending so we're encouraged and again I'll I'll you know.

Speaker Change: And so the early days of what we're seeing so far is we're seeing an increase in traffic. We're seeing our Oh. These are increase and we're also seeing stronger ROE as is as we are as we start to convert people with the spend that are that we're spending so we're encouraged and again I'll I'll you know.

Speaker Change: I'll hold off by saying, we really like our setup for the next 60 days, but it's a big 60 days for US and so you know we've got all hands on deck are ready to deliver them the Q4 and the guidance that we've given.

Speaker Change: Okay got it that's it for me thank you.

Right.

Speaker Change: Right.

Speaker Change: And everyone. At this time there are no further questions I'll hand, the conference back to our speakers for any additional or closing remarks.

Speaker Change: Actually I think they just got a question it's kind of Anna.

Speaker Change: B Riley.

Speaker Change: Hey, guys I, just figured I'd hop back in here I wanted to touch on the comments about kind of defining the promotional strategy you know as I opened the website today.

Speaker Change: Hey, guys.

Speaker Change: Got back in here I wanted to touch on the comments about kind of defining the promotional strategy you know as I opened the website today on fill it out.

Speaker Change: You know at a fire pit.

Speaker Change: At a fire pit.

Speaker Change: They take a bit of a soft from the legacy approach when you talk about maybe some of it.

Speaker Change: They take a bit of a salt from the legacy approach when you talk about maybe in consumer.

Speaker Change: So that's a mouthful right.

Speaker Change: Selling approach as well as the impact to gross margin as they contemplate the.

Speaker Change: Selling approach as well as claims the M class.

Speaker Change: Again, I think contemplate.

Speaker Change: Nationality and the go forward period.

Speaker Change: But what's the nationality and the go forward period.

Speaker Change: Well, yeah. So it's a good question and thanks for noticing that you know one of the issues that we've uncovered since the day I walked in the door is that we've just been too reliant on performance marketing and it's no secret that performance marketing has only increased the cost per transaction.

Speaker Change: Action and with a brand like ours, we we want to be less promotional long term, we want to be less on sale every day and so that is a big concerted effort of ours, but it it doesn't happen overnight, it's a quarters and potentially years in the making so what's you're going to see from.

Speaker Change: And with a brand like ours, we we want to be less promotional long term, we want to be less on sale every day and so that is a big concerted effort of ours, but it it doesn't happen overnight, it's a quarters and potentially years in the making so what's you're going to see from us over.

Speaker Change: In the next 60 days as we're gonna be much more promotional and we're gonna make them special promotions curated towards the personas that are that we know are attracted to our brand. So don't take what youre seeing right now is an indication of anything other than one we do want to be less promotional during periods of time.

Speaker Change: Over the next 60 days as we're gonna be much more promotional and we're gonna make them special promotions curated towards the personas that are that we know are attracted to our brand. So don't take what youre seeing right now is an indication of anything other than one we do want to be less promotional during periods.

Speaker Change: Where into.

Speaker Change: At a time where intra.

Speaker Change: Interest isn't as heightened as it will be during other times of the year. So as we start to move through November here, you'll see us get more promotional so as we get to cyber and we get to a black Friday and cyber Monday and that are really really important time of year, you're going to see us be very promotional we anticipate given the pinch that we.

Speaker Change: We've seen in the consumer pulling back on high ticket items that are discretionary like ours. We know we're gonna have to be more promotional so that's built into our gross margin margin guidance that we've given for the full year and so you know we like the setup that we've got to be as promotional as we need to do.

Speaker Change: Yes, we need to be to drive sales.

Speaker Change: Great and just one more.

Speaker Change: Great and just one more for me, let me touch on that.

Speaker Change: For me touched on Uh Huh.

It's performed in the quarter.

Speaker Change: He has performed in the quarter.

Speaker Change: Any update on how big that is.

Speaker Change: Today.

Yeah. So we're very pleased with the performance of Chubby. Chubb is is is a mature team it's and in many respects. It. It has some of the the muscles build that we're building in stove in a smaller way break cause stove is still a much bigger platform, but chubby.

Speaker Change: Yeah. So we're very pleased with the performance of Chubby. Chubb is is is a mature team it's and in many respects. It. It has some of the the muscles build that we're building and stove in a smaller way break cause stove is still a much bigger platform, but chubby.

Continues to grow it continues to expand its product assortment. It it continues to generate interest with.

Speaker Change: <unk> to grow it continues to expand its product assortment. It it continues to generate interest with.

Speaker Change: With leagues like the NFL, which has just been fantastic I mean, so you know owning the weekender is a is a critical piece for the Chubb is team and so they're selling well online, they're selling well through retail and so we see a lot of growth ahead for this.

Speaker Change: With leagues like the NFL, which has just been fantastic I mean, so you know owning the weekender is a is a critical piece for the Chubb is team.

Speaker Change: And so they're selling well online, they're selling well through retail and so we see a lot of growth ahead for this chubb is brand and couldn't be more excited about you know builds.

Speaker Change: Chubb is brand and couldn't be more excited about you know builds.

Speaker Change: Building that dual platform approach, where we've got a an apparel platform and we got a hard goods platform with our so business in our fishing platform and so we have discovered some synergies between the platforms as it relates to distribution and fulfillment and some of our corporate G&A and so.

Speaker Change: Building that dual platform approach, where we've got a an apparel platform and we've got a hard goods platform with our so business in our fishing platform and so we have discovered some synergies between the platforms as it relates to distribution and fulfillment and some of our corporate G&A and so.

Getting closer to that business I couldn't I couldn't honestly be more excited about the prospects of the of that business for us.

Speaker Change: Getting closer to that business I couldn't I couldn't honestly be more excited about the prospects of the of that business for us.

Speaker Change: Oh, that's a welcome Cork yet.

Kim: Oh, that's a welcome call Kim.

Ana: Okay. Thanks Ana.

Ana: Yes.

Ana: And everyone. There are no further questions.

Ana: Alrighty, well listen I'll close down by saying, Thank you for everybody's attention and continued support and we've got a big next couple of months ahead of us and we're poised to deliver so thank you.

Speaker Change: Ladies and gentlemen that does conclude today's conference I would like to thank you all for your participation you may now disconnect.

Q3 2024 Solo Brands Inc Earnings Call

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