10q10k10q10k.net

What changed in Solo Brands, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Solo Brands, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+491 added−426 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-14)

Top changes in Solo Brands, Inc.'s 2024 10-K

491 paragraphs added · 426 removed · 298 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

53 edited+19 added−11 removed25 unchanged
Biggest changeOur infrastructure is cloud-first, as we believe it provides the most flexibility, scalability, and is inherently resilient with platform level redundancy in networking and computer hardware. We leverage third-party components and software to enhance our platform capabilities and ERP and e-commerce systems to improve our operations and manage our growing company.
Biggest changeInformation Technology Information technology, or IT, systems are integral to our ability to operate, analyze and manage our business, research and develop new products, enhance our customers’ experience, and optimize our operating costs. Our infrastructure is cloud-first, as we believe it provides the most flexibility, scalability, and is inherently resilient with platform level redundancy in networking and computer hardware.
With loyal customers already rooted with each of our brands, we also believe a large opportunity exists for effective cross-marketing. Sales Channels We are an omni-channel company that leverages the power of both e-commerce as well as physical retail stores.
With loyal customers already rooted with each of our brands, we also believe a large opportunity exists for effective cross-marketing. Sales Channels We are an omni-channel company that leverages the power of e-commerce as well as physical retail stores.
We aggressively pursue and defend intellectual property rights to protect our distinctive brand, designs, and inventions. We use third-party enforcement agencies, and have processes and procedures in place to identify, protect, and optimize our IP assets on a global basis.
We aggressively pursue and defend intellectual property rights to protect our distinctive brand, designs, and inventions. We use third-party enforcement agencies, and have processes and procedures in place to identify, protect, and optimize our intellectual property assets on a global basis.
In addition to our strong DTC execution, we are strategically expanding our wholesale channel through retail partners that support our brand image and share our passion and dedication for innovative, best-in-class products of uncompromising design and performance. Our net sales are concentrated in the United States, though we have a growing international presence. Direct-to-Consumer (“DTC”).
In addition to our DTC execution, we are strategically expanding our retail channel through retail partners that support our brand image and share our passion and dedication for innovative, best-in-class products of uncompromising design and performance. Our net sales are concentrated in the United States, though we have a growing international presence. Direct-to-Consumer (“DTC”).
We own and operate premium authentic outdoor brands with ingenious products influenced by customer feedback. We consistently deliver innovative, high-quality products that are loved by our customers and revolutionize the outdoor experience, build community and help everyday people reconnect with what matters most. Who We Are Solo Brands operates six premium outdoor brands: Solo Stove, Oru Kayak, Inc.
We own and operate premium authentic outdoor brands with ingenious products influenced by customer feedback. We consistently deliver innovative, high-quality products that are loved by our customers and revolutionize the outdoor experience, build community and help everyday people reconnect with what matters most. Who We Are Solo Brands operates five premium outdoor brands: Solo Stove, Oru Kayak, Inc.
As an added benefit to our strategic retail partners, we provide the opportunity to leverage a variety of our products, including specialized items specific to certain of these partners, further demonstrating our desire to operate as a value adding partner. This team serves our retail partner base and identifies potential new wholesalers to expand our geographic footprint.
As an added benefit to our strategic retail partners, we provide the opportunity to leverage a variety of our products, including specialized items specific to certain of these partners, further demonstrating our desire to operate as a value adding partner. This team serves our retail partner base and identifies potential new retailers to expand our geographic footprint.
Built with durable, corrugated OruPlast™ technology, our kayaks offer premium quality, exceptional control and stability, and starting at just 20 pounds, they are highly portable and can be transported in the trunk of a small car or carried on public transportation.
Built with durable, corrugated OruPlast™ technology, our kayaks offer premium quality, exceptional control and stability, and starting at just 17 pounds, they are highly portable and can be transported in the trunk of a small car or carried on public transportation.
Our engineering and industrial design teams collaborate at our Grapevine, Texas headquarters to create new products, and are supported by individual product design teams at the various brand levels. As part of this process, all product designs, specifications, and performance characteristics are developed and designed.
Our engineering and industrial design teams collaborate at our Grapevine, Texas headquarters to create new products, and are supported by individual product design teams at the various brand levels. As part of this process, product designs, specifications, and performance characteristics are developed.
Through our owned brand websites, we offer our entire product portfolio and create a unique experience for our customers that reflects some of the same design principles that we incorporate into our products—simple, elegant and high performance.
Through our owned brand websites, we offer our entire product portfolio and create a differentiated experience for our customers that reflects some of the same design principles that we incorporate into our products—simple, elegant and high performance.
At Solo Brands, not only are our products innovative, but we believe our approach to innovation stands apart from the competition. We don’t believe in behind-the-curtain intuition-driven design, but rather customer-driven product development.
At Solo Brands, not only are our products innovative, but we believe our approach to innovation stands apart from the competition. We do not believe in behind-the-curtain intuition-driven design, but rather customer-driven product development.
While employing the same approach that led to the success of our stoves, we have successfully broadened our product line to include virtually smokeless fire pits, cooking systems, pizza ovens, patio heaters, and storage units, and added portable kayaks and paddle boards, lifestyle apparel, portable a/c coolers and other accessories.
While employing the same approach that led to the success of our stoves, we have successfully broadened our product line to include virtually smokeless fire pits, cooking systems, pizza ovens, patio heaters, and storage units, and added portable kayaks and paddle boards, lifestyle apparel, and other accessories.
We also operate seven Chubbies retail stores with plans to continue expanding, and one ISLE surf pro-shop, which provide additional opportunities to interact directly with our customers in person and strengthen customer relationships. Wholesale. We have built relationships with well-known outdoor products and sporting goods retailers.
We also operate twelve Chubbies retail stores with plans to continue expanding, and one ISLE surf pro-shop, which provide additional opportunities to interact directly with our customers in person and strengthen customer relationships. Retail. We have built relationships with well-known outdoor products and sporting goods retailers.
After these aspects of the process are complete, we seek intellectual property protection, including applying for patents and for registration of trademarks for new classes where applicable. We own the patents, trademarks, copyrights, trade dress, and other intellectual property rights that relate to our brands and to key aspects of certain of our products.
After these aspects of the process are complete, we seek intellectual property protection, including applying for patents and for registration of trademarks for new classes where applicable. 4 Table of Contents We own the patents, trademarks, copyrights, trade dress, and other intellectual property rights that relate to our brands and to key aspects of certain of our products.
In 2023, we have continued to make meaningful investments in our e-commerce and digital platform to drive growth, including the implementation of cutting-edge technology, marketing, and analytics to increase speed and ease of use on both our desktop and mobile sites.
In 2024, we continued to make meaningful investments in our e-commerce and digital platform to drive growth, including the implementation of cutting-edge technology, marketing, and analytics to increase speed and ease of use on both our desktop and mobile sites.
Our increasingly well-known portfolio of brands and our culture of innovation, collaboration and personal development enables us to recruit top talent in all areas of our business. We are focused on recruitment, retention, diversity and training, all areas where we see significant opportunity as we scale and bring on new team members.
Our increasingly well-known portfolio of brands and our culture of innovation, collaboration and personal development has enabled us to recruit top talent in all areas of our business. We are focused on recruitment, retention, and training, all areas where we see significant opportunity as we scale and bring on new team members.
(“Oru”), International Surf Ventures, Inc. (“ISLE”), Chubbies, Inc. (“Chubbies”), Sconberg, LLC (“TerraFlame”) and IcyBreeze Cooling, LLC (“IcyBreeze”). Our brands develop innovative products and market them directly to customers primarily through e-commerce channels, as well as wholesale partnerships with key retailers.
(“Oru”), International Surf Ventures, Inc. (“ISLE”), Chubbies, Inc. (“Chubbies”), and Sconberg, LLC (“TerraFlame”). Our brands develop innovative products and market them directly to customers primarily through e-commerce channels, as well as partnerships with key retailers.
We currently have a number of manufacturing partners located in various countries including the United States, India, Vietnam, Cambodia , and Mexico, with the majority of our manufacturing concentrated with a single manufacturer in China.
We currently have a number of manufacturing partners located in various countries including the United States, India, Vietnam, Cambodia, and Mexico, with the majority of our manufacturing concentrated with two manufacturers in China.
Since its inception in 2011, Solo Stove’s growth and free cash flow allowed us to make significant investments in our global supply chain and bring fulfillment, research and development, sales and marketing, and customer service in-house. This infrastructure provides an authentic end-to-end customer experience, expedited delivery, greater cost efficiencies, and redundancy in manufacturing.
Solo Stove’s historical growth and free cash flow allowed us to make significant investments in our global supply chain and bring fulfillment, research and development, sales and marketing, and customer service in-house. This infrastructure aims to provide an authentic end-to-end customer experience, expedited delivery, greater cost efficiencies, and redundancy in manufacturing.
We believe these sales channels provide incremental sales reach for our business and opportunities to increase awareness for our brands. In fiscal year 2023, DTC sales accounted for 72.4% of Solo Brands sales.
We believe these sales channels provide incremental sales reach for our business and opportunities to increase awareness for our brands. In fiscal year 2024, DTC sales accounted for 70.2% of Solo Brands sales.
While our in-house marketing team remains the primary focus, we have leveraged the expertise and enhanced penetration available through external marketing agencies, which led to increased brand awareness from campaigns in 2023, such as Snoop Dogg and the Macy’s Day Parade.
While our in-house marketing team remains the primary focus, we continue to leverage the expertise and enhanced penetration available through industry leading external marketing agencies, which led to increased brand awareness from campaigns in 2023 and 2024, such as the Snoop Dogg campaigns.
From time to time, we source new suppliers and manufacturers to support our ongoing innovation and growth, particularly in our more recently introduced product categories, and we carefully evaluate all new suppliers and manufacturers to ensure they share our standards for quality of manufacturing, ethical working conditions and environmental sustainability practices.
From time to time, we source new suppliers and manufacturers to support our ongoing innovation and growth, particularly in our more recently introduced product categories, and we evaluate all new suppliers and manufacturers to assess if their standards for quality of manufacturing, ethical working conditions and environmental sustainability practices are shared with ours.
Customers can access blogs through our websites, where we publish premium digital content, share customer stories and information on products, and further cultivate our community. With continuous improvement of our existing websites and a shift to increasingly scalable platforms, enhancement of the customer experience is ever evolving in a positive direction.
Customers can access blogs through our websites, where we publish premium digital content, share customer stories and information on products, and further cultivate our community. With ongoing improvement of our existing websites and a shift to increasingly scalable platforms, we believe we are continually enhancing the customer experience.
The Solo Brands product design teams control every aspect of our innovation, including design, construction, material performance requirements, manufacturing protocols, supplier selection, packaging specifications, and quality plans. Utilizing our state-of-the-art research and development center at our headquarters, the product development team is able to ensure continued design, testing, and quality control while optimizing speed-to-market.
The Solo Brands product design teams control every aspect of our innovation, including design, construction, material performance requirements, manufacturing protocols, supplier selection, packaging specifications, and quality plans. Utilizing our in house research and development center at our headquarters, as well as industry leading partners, the product development team is able to apply continued design, testing, and quality control.
Intellectual Property and Brand Protection We take the protection of our intellectual property very seriously and have taken a variety of operational and legal measures to protect our distinctive brand, designs, and inventions.
We believe our domestic capacity and the capacity of international providers is sufficient to meet our future needs. Intellectual Property and Brand Protection We take the protection of our intellectual property very seriously and have taken a variety of operational and legal measures to protect our distinctive brand, designs, and inventions.
We continue to see opportunity for expansion in the cooking category, have teamed with prominent influencers in the social media space and offer ingredients for one-time delivery or subscription. Outdoor Heating. In 2022, we disrupted the outdoor heating market by launching a wood-pellet burning patio heater.
To further support our end users and enhance the cooking experience, we have teamed with prominent influencers in the social media space and offer ingredients for one-time delivery or subscription. Outdoor Heating. In 2022, we challenged the outdoor heating market norms by launching a wood-pellet burning patio heater.
We employ a data-driven approach to portfolio expansion opportunities and a product development process that is guided by direct customer feedback and is designed to allow for exceptionally fast development time from idea to product delivery.
We employ a data-driven approach to portfolio expansion opportunities and a product development process that is guided by direct customer feedback and market data, which allows for a reduction in the time from ideation to product delivery.
Each of our brands has established deep relationships with trusted third-party manufacturers—predominantly in China and Southeast Asia, as well as in Mexico through a dedicated facility operated by a manufacturing labor outsourcing company. 1 Table of Contents We have recently upgraded Oru’s manufacturing operations in Mexico by moving to a newer and more sophisticated facility.
Each of our brands has established deep relationships with trusted third-party manufacturers—predominantly in China and Southeast Asia, as well as in Mexico through a dedicated facility operated by a manufacturing labor outsourcing company. 1 Table of Contents Products We offer wide-ranging and high-quality products directly to our customers through our platform.
It also laid the groundwork for the creation of Solo Brands, Inc. and acquisition of additional brands. Our business provides distinct competitive advantages, including an attractive financial profile and a unique ability to acquire and operate outdoor brands that broaden our product assortment and share our values of authenticity, product quality, and community.
It also laid the groundwork for the creation of Solo Brands, Inc. and acquisition of additional brands. We believe our business has distinct competitive advantages, including our ability to acquire and operate outdoor brands that have broadened our product assortment, while sharing our values of authenticity, product quality, and community.
We expect that this seasonality will continue to be a factor in our results of operations and sales. 3 Table of Contents Segment Information We operate as one reportable segment composed of five reporting units, comprised of our six brands.
We expect that this seasonality will continue to be a factor in our results of operations and sales. 3 Table of Contents Segment Information Historically, we have operated as a single reportable segment.
Our in-house marketing team actively utilizes a combination of digital, social media, traditional, and grass-roots initiatives to support our brand. Our in-house marketing team is a major differentiator and strength for the Company as it allows us to execute quickly, pivot when needed, and do both at a cost far below what it would cost to outsource to marketing agencies.
Our marketing team actively utilizes a combination of digital, social media, traditional, and grass-roots initiatives to support our brand. Our marketing team is a major differentiator and strength for the Company, as it allows us to execute quickly, pivot when needed, and deliver creative content that drives customer engagement.
Our experienced legal and brand protection teams initiate claims against those offering infringing products to protect our intellectual property assets, including our distinctive designs, copyrights, and trade dress.
Our experienced legal and brand protection teams initiate claims against those offering infringing products to protect our intellectual property assets, including our distinctive designs, copyrights, and trade dress. In the future, we intend to continue to seek intellectual property protection for our new products and prosecute those who infringe against these valuable assets.
Certain of our products are distributed directly from our manufacturing facilities in Mexicali, Mexico and Baja California, Mexico. The remaining portion of our products are shipped directly to one of our National Retail Partners or one of our distributors. We manage inventory by analyzing product sell-through, forecasting demand, and working with our supply chain to ensure sufficient availability.
The remaining portion of our products are shipped directly to one of our national retail partners or one of our distributors. We manage inventory by analyzing product sell-through, forecasting demand, and working with our supply chain to ensure sufficient availability. Additionally, we lease a 20,000 square foot facility in Canada and a 72,000 square foot facility in Rotterdam, Netherlands.
We carefully design and engineer every product for immediate enjoyment, free of complexity and intimidating learning curves often found in engineered outdoor and lifestyle products.
The Lite set the standard, and we have continued to design and develop groundbreaking, high-performance products engineered with purposeful simplicity. We carefully design and engineer every product for immediate enjoyment, free of complexity and intimidating learning curves often found in engineered outdoor and lifestyle products.
We have continued to expand our product lines by designing solutions grounded in customer insights and requests, including new products and accessories and additional sizes of existing product lines, and through strategic acquisitions that complement the Solo Brands platform.
Through this approach, we have expanded our product lines by designing solutions around consumer demand, including new products and accessories and additional sizes of existing product lines, as well as through strategic acquisitions that complement the Solo Brands platform.
The Chief Executive Officer (“CEO”) is the chief operating decision maker of the Company and makes operating decisions, assesses financial performance, and allocates resources based upon discrete financial information at a consolidated level. Supply Chain and Quality Assurance We manage a supply chain of third-party manufacturing and logistics partners to produce and distribute our products.
The remaining operating segments are included within the Corporate and All Other category. The CODM makes operating decisions, assesses financial performance, and allocates resources based upon discrete financial information at the reportable segment level. Supply Chain and Quality Assurance We manage a supply chain of third-party manufacturing and logistics partners to produce and distribute our products.
Today, our Stoves include the Lite, Titan, and Campfire, each of which is wood burning and incorporates our secondary burn technology, creating a hotter flame great for cooking. Each Stove also has a variety of cooking pots and accessories. Fire Pits. We created a new fire pit category in late 2016 with our portable, low smoke product offerings.
Each Stove also has a variety of cooking pots and accessories. Fire Pits. We created a new fire pit category in late 2016 with our portable, low smoke product offerings.
Product Design and Development Solo Brands and its products are driven by the “create good” philosophy and are designed to get you in touch with whatever “good” is for you. We create good products that foster good moments and memories, so our customers can create a good life.
For more information, see “Where You Can Find More Information; Available Information” above. Product Design and Development Solo Brands and its products are driven by the “create good” philosophy and are designed to get you in touch with whatever “good” is for you.
Quality is critically important to us and we work closely with our manufacturing partners with respect to product quality and manufacturing process efficiency. As part of our quality assurance program, we have developed and implemented comprehensive product inspection and facility oversight processes that are performed by our employees and third-party resources.
As part of our quality assurance program, we have developed and implemented comprehensive product inspection and facility oversight processes that are performed by our employees and third-party resources, who work with our suppliers to assist them in meeting our quality standards, as well as improving their production yields and throughput.
Competition in our markets is based on a number of factors including product quality, performance, durability, styling, ease-of-use, and price, as well as brand image and recognition. We believe that we have been able to compete successfully on the basis of our superior design capabilities and product development, brands, customer service, and our DTC capabilities.
Competition We compete in the large outdoor, leisure, recreation, and lifestyle apparel markets and may compete in other addressable lifestyle markets. Competition in our markets is based on a number of factors including product quality, performance, durability, styling, ease-of-use, and price, as well as brand image and recognition.
We continue to invest in our people, adding key management personnel to our platform with the goal to accelerate our profitable growth, strengthen and complement our existing leadership team, and leverage the sharing of best practices across the platform.
Human Capital Management The Solo Brands management team has a dedicated focus on developing a strong, intentional company culture. We continue to invest in our people, adding key management personnel to our platform with the goal of accelerating growth, strengthening and complementing our existing leadership team, and leveraging the sharing of best practices across the platform.
With an emphasis on form and function, ISLE’s products are intended to help users reconnect with the simple joy of getting outside, and their innovative portable designs allow users take them anywhere they can find floatable water. Lifestyle Apparel. Chubbies is a fun-loving, premium apparel brand that offers well-fitted comfortable clothing with unique style.
With an emphasis on form and function, ISLE’s products are intended to help users reconnect with the simple joy of getting outside, and their innovative portable designs allow users take them anywhere they can find floatable water. 2 Table of Contents Marketing Our multifaceted marketing strategy engages existing and new customers to promote sales generation and to build brand awareness and affinity.
Oru offers premier kayaks that require minimal storage space, are portable, and easy-to-use. The Oru brand includes five kayak models, the Inlet, Beach LT, Bay ST, Coast XT, and Haven.
Oru offers premier kayaks that require minimal storage space, are portable, and easy-to-use. The Oru brand includes models and sizes to fit the customers’ needs, including the Inlet, Lake, Beach, Bay, Coast and Haven, along with the edgier and eye-pleasing sport versions of the Beach and Inlet that come exclusively in black.
Distribution and Inventory Management A majority of our products are shipped from our manufacturers to one of our three United States distribution centers in Grapevine, Texas; Manchester, Pennsylvania; and Salt Lake City, Utah. These distribution centers, which we operate, are strategically located across the United States, allowing us to provide faster delivery throughout the United States.
These distribution centers, which we operate, are strategically located across the United States, allowing us to provide faster delivery throughout the United States. Certain of our products are distributed directly from our manufacturing facilities in Mexicali, Mexico and Baja California, Mexico.
We use a warehouse management system at these distribution centers that interfaces with our ERP system so that we can maintain visibility and control over inventory levels and customer shipments. We believe our domestic capacity and the capacity of international providers is sufficient to meet our future needs.
Our domestic and international warehouses position Solo Brands to reach customers quickly and position us to realize immediate cost savings. We use a warehouse management system at these distribution centers that interfaces with our enterprise resource planning (“ERP”) system so that we can maintain visibility and control over inventory levels and customer shipments.
Through our DTC and wholesale channels, we develop connections with our customers, receive real-time feedback that informs our product development roadmap and digital marketing decisions, and enhance our brands. This deep connection with our customers helps to drive favorable return on marketing spend and positions us to capitalize on a significant runway of future expansion.
Through our direct to consumer (“DTC”) and retail channels, we develop connections with our customers, receive real-time feedback that informs our product development roadmap and marketing decisions, and enhance our brands. This connection with our customers helps to drive favorability within the communities in which we operate, including with our retail partners, and positions us for future growth.
Our products undergo a rigorous development process designed to maximize performance while minimizing complexity, delivering a superior degree of quality, functionality, portability, style, and ease-of-use. The Solo Stove Lite set the standard, and we have continued to design and develop groundbreaking, high-performance products engineered with purposeful simplicity.
We create good products that foster good moments and memories, so our customers can create a good life. Our products undergo a rigorous development process designed to maximize performance while minimizing complexity, delivering a superior degree of quality, functionality, portability, style, and ease-of-use.
ISLE produces high-quality stand-up paddle boards and a hybrid kayak with colorful designs that are engineered to accommodate every skill level, style, and interest. ISLE offers ten models across seven product categories—Inflatables, Yoga, Fishing, All Around, Touring, Surf, and Epoxy.
ISLE produces high-quality stand-up paddle boards and a hybrid kayak with colorful designs that are engineered to accommodate every skill level, style, and interest. ISLE offers an extensive array of paddleboards, kayak hybrids, surfboards, floats and accessories with bold and award winning designs.
Camping Stoves. We revolutionized the camp stove category with the launch of our Solo Stove Lite in 2011. This ultralight and portable product does not require synthetic fuel and can boil water in under 10 minutes using just twigs, sticks, and leaves found outside.
This ultralight and portable product does not require synthetic fuel and can boil water in under 10 minutes using just twigs, sticks, and leaves found outside. Today, our Stoves include the Lite, Titan, and Campfire, each of which is wood burning and incorporates our secondary burn technology, creating a hotter flame great for cooking.
We utilize leading software solutions for key aspects of our information systems. We believe our planned systems infrastructure will be sufficient to support our expected growth for the foreseeable future. Competition We compete in the large outdoor, leisure, recreation, and lifestyle apparel markets and may compete in other addressable lifestyle markets.
We leverage third-party components and software to enhance our platform capabilities and ERP and e-commerce systems to improve our operations and manage our growth potential. We utilize leading software solutions for key aspects of our information systems. We believe our planned systems infrastructure will be sufficient to support our business for the foreseeable future.
Utilizing our proprietary fire burning gel and bioethanol, multi-hour burns with the familiar crackle and flame of a traditional wood fire can now be enjoyed anywhere. Recreation. Oru Kayak is the original origami kayak that allows users to go from box to boat in a matter of minutes.
Utilizing our proprietary fire burning gel and bioethanol, multi-hour burns with the familiar crackle and flame of a traditional wood fire can now be enjoyed anywhere. The following products are produced by our Chubbies segment: Lifestyle Apparel. Chubbies is a fun-loving, premium apparel brand that offers well-fitted comfortable clothing with unique style.
We operate in a category of one and believe that our value proposition and unique branded digital strategy creates a competitive moat which sets us apart from competition in the broader fragmented outdoor, leisure, recreation, and lifestyle apparel markets.
We believe that we have been able to compete successfully on the basis of our superior design capabilities and product development, brands, customer service, and our omni-channel approach. We believe that our value proposition and brand strategy create competitive advantages that set us apart from competition in the broader fragmented outdoor, leisure, recreation, and lifestyle apparel markets.
They work closely with our suppliers to assist them in meeting our quality standards, as well as improving their production yields and throughput. While we do not directly source significant amounts of raw materials and components for most of our products, we control the specifications for key raw materials used in our products.
While we do not directly source significant amounts of raw materials and components for most of our products, we control the specifications for key raw materials used in our products. The U.S. presidential administration recently imposed new or increased tariffs on goods manufactured in China, Mexico and Canada.
Additionally, through the acquisition activity undertaken in 2023, we added manufacturing capabilities in Mexico for indoor fire features and outdoor fixtures. Products We offer wide-ranging and high-quality products directly to our customers through our platform. Our products are carefully designed to maximize performance while minimizing complexity. We create highly functional, yet simple products that are both durable and easy-to-use.
Our products are carefully designed to maximize performance while minimizing complexity. We create highly functional, yet simple products that are both durable and easy-to-use. The following products are produced by our Solo Stove segment: Camping Stoves. We revolutionized the camp stove category with the launch of our Lite in 2011.
Removed
We believe that our model creates a flywheel effect of rapid growth, scalability, and robust free cash flow generation which, in turn, enables us to re-invest in product innovation, strategic acquisitions, marketing and global infrastructure.
Added
The Chubbies brand has historically had five main product lines—Swim Trunks, Casual Shorts, Sport, Polos + Shirts, and Lounge. Chubbies has continued to challenge the men’s and kids apparel worlds, with bold patterns, innovative products designed with customer insights in mind and collaborations our customers love, such as the NFL line launched in 2024.
Removed
Our approach includes digesting data our customers share with us and incrementally enhancing our offerings to drive customer satisfaction and love of our products and brands.
Added
Created with high performance stretch fabric, Chubbies offers premium quality with a lightweight and breathable design that can be worn anywhere and anytime. The following products are produced by our All Other segment: Recreation. Oru Kayak is the original origami kayak that allows users to go from box to boat in a matter of minutes.
Removed
The Chubbies brand has historically had five main product lines—Swim Trunks, Casual Shorts, Sport, Polos + Shirts, and Lounge. In 2022, Chubbies launched multiple pant styles ranging from business performance pants to joggers and sweats. Created with high performance stretch fabric, Chubbies offers premium quality with a lightweight and breathable design that can be worn anywhere and anytime. Accessories.
Added
In 2024, as a result of the change in the way our new Chief Executive Officer (“CEO”), who we have determined to be the chief operating decision maker (“CODM”), began assessing financial performance and allocating resources, we now operate as two reportable segments: Solo Stove, which includes the Solo Stove and TerraFlame brands and primarily offers indoor and outdoor firepits, stoves, and accessories, and Chubbies, which offers premium casual apparel and activewear.
Removed
Our Accessories are designed to make the Solo Brands experience easier and more memorable. Many accessories are the product of direct customer feedback, satisfying a specific need our community has highlighted. They deepen our relationship with customers, increase order values, and support repeat engagement.
Added
Quality is critically important to us and we work closely with our manufacturing partners with respect to product quality and manufacturing process efficiency.
Removed
The Accessories category spans the Solo Stove, Oru, and ISLE brands and includes products such as the Shelter, Shield, Roasting Sticks, Tools, Paddles, and Pumps. Portable Air Conditioning Cooler . Through our acquisition activity in 2023, we added the next level of consumer comfort to our already strong portfolio of products with the addition of portable air conditioning units.
Added
During 2024, the majority of our products that were imported into the United States from China were already subject to tariffs that were as high as 25%, which adversely impacted our expenses. In addition, our product lines involve production with steel manufactured outside the U.S., including steel manufactured in Mexico, that is also subject to new tariffs.
Removed
Easily transportable and able to be powered by multiple sources, including a long-lived battery, the portable air conditioner allows our customers to experience another level of comfort in the outdoors when the weather conditions do not favor a fire. 2 Table of Contents Marketing Our multifaceted marketing strategy engages existing and new customers and has proven instrumental in driving sales and building brand awareness and affinity.
Added
These new tariffs and retaliatory actions by foreign governments are expected to have a significant adverse effect on our results of operations and margins and sales of our products outside the U.S.
Removed
Additionally, we leased a 20,000 square foot facility in Canada and a 72,000 square foot facility in Rotterdam, Netherlands. Our domestic and international warehouses position Solo Brands to reach customers quickly and position us to realize immediate cost savings.
Added
For additional information, see Part I, Item 1A, Risk Factors, “Tariffs or other restrictions placed on foreign imports and any related counter-measures taken by other countries harm our business and results of operations” and “Our products are manufactured by third parties outside of the United States, and our business may be harmed by legal, regulatory, economic, societal, and political risks associated with those markets.” Distribution and Inventory Management A majority of our products are shipped from our manufacturers to one of our three United States distribution centers in Grapevine, Texas; Manchester, Pennsylvania; and Salt Lake City, Utah.
Removed
In the future, we intend to continue to seek intellectual property protection for our new products and prosecute those who infringe against these valuable assets. 4 Table of Contents Information Technology Information technology, or IT, systems are integral to our ability to operate, analyze and manage our business, research and develop new products, enhance our customers’ experience, and optimize our operating costs.
Added
As of December 31, 2024, we had approximately 526 employees.
Removed
Human Capital Management Solo Brands has a seasoned management team with extensive industry experience and a dedicated focus on developing a strong, intentional company culture.
Added
Government Regulation Our products sold in the United States are subject to the provisions of multiple statutes, including, but not limited to, the Consumer Product Safety Act (“CPSA”), the Federal Hazardous Substances Act (“FHSA”), the Consumer Product Safety Improvement Act of 2008 (“CPSIA”) and the Flammable Fabrics Act (“FFA”), and the regulations promulgated pursuant to such statutes.
Removed
As of December 31, 2023, we had approximately 400 employees. Environmental, Social, and Governance Solo Brands believes in creating good and giving back to the communities that have supported our growth.
Added
These statutes and the related regulations ban from the market any consumer products that fail to comply with applicable product safety laws, regulations, and standards.
Removed
We are committed to making a long-term impact through our initiatives which cover a broad range of ESG-related topics, including: environmental sustainability, water conservation, diversity, equity, inclusion, and mental health.
Added
The Consumer Product Safety Commission may require the recall, repurchase, replacement, or repair of any such banned products or products that otherwise create a substantial risk of injury and may seek penalties for regulatory noncompliance under certain circumstances.
Added
Similar laws exist in some U.S. states and our products sold worldwide are subject to the provisions of similar laws and regulations in many jurisdictions, including Canada, Australia, and Europe. We maintain a quality control program to help maintain compliance with applicable product safety requirements.
Added
We use independent third-party laboratories that employ testing and other procedures intended to maintain compliance with the CPSA, the FHSA, the CPSIA, the FFA, other applicable domestic and international product standards, as well as our own standards and those of some of our larger retail customers.
Added
Nonetheless, there can be no assurance that our products are or will be hazard free, and we may in the future experience issues in products that result in recalls, withdrawals, or replacements of products.
Added
A product recall could have a material adverse effect on our results of operations and financial condition, depending on the product affected by the recall and the extent of the recall efforts required. A product recall could also negatively affect our reputation and the sales of other products.
Added
See Item 1A, “Risk Factors.” In relation to our sales and marketing activities, we are subject to various consumer protection rules and regulations promulgated and/or enforced by various federal and state regulators such as the U.S. Federal Trade Commission, and state attorneys general as well as non-U.S. regulatory authorities that relate to advertising, product delivery and other consumer-facing practices.

… 3 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

170 edited+98 added−43 removed307 unchanged
Biggest changeThe Tax Receivable Agreement provides that if (i) Solo Brands, Inc. materially breaches any of its material obligations under the Tax Receivable Agreement, (ii) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, or (iii) Solo Brands, Inc. elects an early termination of the Tax Receivable Agreement, then Solo Brands, Inc.’s future obligations, or its successor’s future obligations, under the Tax Receivable Agreement to make payments thereunder would accelerate and become due and payable, based on certain assumptions, including an assumption that Solo Brands, Inc. would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement, and an assumption that, as of the effective date of the acceleration, any Continuing LLC Owner that has LLC Interests not yet exchanged shall be deemed to have exchanged such LLC Interests on such date, even if Solo Brands, Inc. does not receive the corresponding tax benefits until a later date when the LLC Interests are actually exchanged. 22 Table of Contents As a result of the foregoing, Solo Brands, Inc. would be required to make an immediate cash payment equal to the estimated present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, based on certain assumptions, which payment may be made significantly in advance of the actual realization, if any, of those future tax benefits and, therefore, Solo Brands, Inc. could be required to make payments under the Tax Receivable Agreement that are greater than the specified percentage of the actual tax benefits it ultimately realizes.
Biggest changeThe Tax Receivable Agreement provides that if (i) Solo Brands, Inc. materially breaches any of its material obligations under the Tax Receivable Agreement, (ii) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, or (iii) Solo Brands, Inc. elects an early termination of the Tax Receivable Agreement, then Solo Brands, Inc.’s future obligations, or its successor’s future obligations, under the Tax Receivable Agreement to make payments thereunder would accelerate and become due and payable, based on certain assumptions, including an assumption that Solo Brands, Inc. would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement, and an assumption that, as of the effective date of the acceleration, any Continuing LLC Owner that has LLC Interests not yet exchanged shall be deemed to have exchanged such LLC Interests on such date, even if Solo Brands, Inc. does not receive the corresponding tax benefits until a later date when the LLC Interests are actually exchanged.
Our future success depends on the continuing efforts of our management and key employees, and on our ability to attract and retain highly skilled personnel and senior management. We depend on the talents and continued efforts of our senior management and key employees.
Our future success depends on the continuing efforts of our management and key employees, and on our ability to attract and retain highly skilled personnel and senior management. We depend on the talents and continued efforts of our senior management, key employees and skilled personnel.
Our information technology systems, and those of our third-party service providers, strategic partners, and other contractors or consultants, may be subject to damage or interruption from telecommunications problems, data corruption, software errors, fire, flood, global pandemics and natural disasters, power outages, systems disruptions, system conversions, and/or human error.
Our information technology systems, and those of our third-party service providers, strategic partners, and other contractors or consultants, may be subject to damage or interruption from telecommunications problems, data corruption, software errors, fire, flood, global pandemics and other natural disasters, power outages, systems disruptions, system conversions, and/or human error.
If the debt under the Revolving Credit Facility were to be accelerated, we may not have sufficient cash or be able to sell sufficient collateral to repay this debt, which would immediately and materially harm our business, results of operations, and financial condition.
If the debt under the Revolving Credit Facility were to be accelerated, we would not have sufficient cash or may not be able to sell sufficient collateral to repay this debt, which would immediately and materially harm our business, results of operations, and financial condition.
Solo Brands, Inc.’s failure to make any payment required under the Tax Receivable Agreement (including any accrued and unpaid interest) within 60 calendar days of the date on which the payment is required to be made will constitute a material breach of a material obligation under the Tax Receivable Agreement, which will terminate the Tax Receivable Agreement and accelerate future payments thereunder, unless the applicable payment is not made because (i) Holdings is prohibited from making such payment under the terms of the Tax Receivable Agreement or the terms governing certain of its indebtedness or (ii) Holdings does not have, and despite using commercially reasonable efforts cannot obtain, sufficient funds to make such payment.
Solo Brands, Inc.’s failure to make any payment required under the Tax Receivable Agreement (including any accrued and unpaid interest) within 60 calendar days of the date on which the payment is required to be made will constitute a material breach of a material obligation under the Tax Receivable Agreement, which will terminate the Tax Receivable Agreement and accelerate future payments thereunder, unless the applicable payment is not made because (i) Holdings is prohibited from making such payment under the terms of the Tax Receivable Agreement or the terms governing certain of its indebtedness or (ii) Holdings does not have, and despite using commercially reasonable efforts cannot obtain, sufficient funds to make such payment.
There are a number of factors that influence consumer spending, including actual and perceived economic conditions, consumer confidence, disposable consumer income, consumer credit availability, unemployment, inflation, and tax rates in the markets where we sell our products. Consumers also have discretion as to where to spend their disposable income and may choose to purchase other items or services.
There are a number of factors that influence consumer spending, including actual and perceived economic conditions, consumer confidence, disposable consumer income, consumer credit availability, interest rates, unemployment, inflation, and tax rates in the markets where we sell our products. Consumers also have discretion as to where to spend their disposable income and may choose to purchase other items or services.
We also may not achieve the anticipated benefits from either past or future acquisitions due to a number of factors, including: • risks associated with conducting due diligence; • problems integrating the purchased businesses, products or technologies; • anticipated and unanticipated costs or liabilities associated with the acquisition; • inability to achieve anticipated synergies; • issues maintaining uniform standards, procedures, controls and policies across our brands; • the diversion of management’s attention from other business concerns; • the loss of our or the acquired business’s key employees; • adverse effects on existing business relationships with suppliers, distributors, retail partners and customers; 12 Table of Contents • risks associated with entering new markets in which we have limited or no experience; • increased legal, accounting and compliance costs; or • the issuance of dilutive equity securities, the incurrence of debt, or the use of cash to fund such acquisitions.
We also may not achieve the anticipated benefits from either past or future acquisitions due to a number of factors, including: • risks associated with conducting due diligence; • problems integrating the purchased businesses, products or technologies; • anticipated and unanticipated costs or liabilities associated with the acquisition; • inability to achieve anticipated synergies; • issues maintaining uniform standards, procedures, controls and policies across our brands; 17 Table of Contents • the diversion of management’s attention from other business concerns; • the loss of our or the acquired business’s key employees; • adverse effects on existing business relationships with suppliers, distributors, retail partners and customers; • risks associated with entering new markets in which we have limited or no experience; • increased legal, accounting and compliance costs; or • the issuance of dilutive equity securities, the incurrence of debt, or the use of cash to fund such acquisitions.
Under the Holdings LLC Agreement, Holdings will, from time to time, make distributions in cash to its equity holders (including Solo Brands, Inc.) pro rata , in amounts at least sufficient to cover the taxes on their allocable share of taxable income of Holdings (subject to the limitations and restrictions described above, including under the Revolving Credit Facility).
Under the Holdings LLC Agreement, Holdings will, from time to time, make distributions in cash to its equity holders (including Solo Brands, Inc.) pro rata , in amounts at least sufficient to cover the taxes on their allocable share of taxable income of Holdings (subject to the limitations and restrictions described above, including under the Credit Facility).
As we develop new products and seek to expand internationally, we will continue to incur greater costs in connection with securing the issuance or registration of patents, trademarks, copyrights, and other intellectual property rights. This increased intellectual property activity will also increase our costs to monitor and enforce our intellectual property rights.
As we develop new products and seek to expand internationally, we expect we will continue to incur greater costs in connection with securing the issuance or registration of patents, trademarks, copyrights, and other intellectual property rights. This increased intellectual property activity will also increase our costs to monitor and enforce our intellectual property rights.
Our success depends in large part on our brand image and, in particular, on the strength of our Solo Stove, ISLE, Oru, Chubbies, TerraFlame and IcyBreeze trademarks. We rely on trademark protection to protect our brands, and we have registered or applied to register many of these trademarks.
Our success depends in large part on our brand image and, in particular, on the strength of our Solo Stove, ISLE, Oru, Chubbies, and TerraFlame trademarks. We rely on trademark protection to protect our brands, and we have registered or applied to register many of these trademarks.
There are significant costs and risks inherent in selling our products in international markets, including: (a) failure to effectively establish our core brand identity; (b) increased employment costs; (c) increased shipping and distribution costs, which could increase our expenses and reduce our margins; (d) potentially lower margins in some regions; (e) longer collection cycles in some regions; (f) increased competition from local providers of similar products; (g) compliance with foreign laws and regulations, including taxes and duties, laws governing the marketing and use of e-commerce websites and enhanced data privacy laws and security, rules, and regulations; (h) establishing and maintaining effective internal controls at foreign locations and the associated increased costs; (i) increased counterfeiting and the uncertainty of protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad; (j) compliance with anti-bribery, anti-corruption, sanctions and anti-money laundering laws, such as the FCPA, the Bribery Act, and OFAC regulations, by us, our employees, and our business partners; (k) currency exchange rate fluctuations and related effects on our results of operations; (l) economic weakness, including inflation, or political instability in foreign economies and markets; (m) compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; (n) workforce uncertainty in countries where labor unrest is more common than in the United States; (o) business interruptions resulting from geopolitical actions, including war and terrorism, such as the recent war between Russia and Ukraine, or natural disasters, including earthquakes, typhoons, floods, fires, and public health issues, including the outbreak of a pandemic or contagious disease, such as COVID-19, or xenophobia resulting therefrom; (p) the imposition of tariffs on products that we import into international markets that could make such products more expensive compared to those of our competitors; (q) that our ability to expand internationally could be impacted by the intellectual property rights of third parties that conflict with or are superior to ours; (r) difficulty developing retail relationships; and (s) other costs and risks of doing business internationally.
There are significant costs and risks inherent in selling our products in international markets, including: (a) failure to effectively establish our core brand identity; (b) increased employment costs; (c) increased shipping and distribution costs, which could increase our expenses and reduce our margins; (d) potentially lower margins in some regions; (e) longer collection cycles in some regions; (f) increased competition from local providers of similar products; (g) compliance with foreign laws and regulations, including taxes and duties, laws governing the marketing and use of e-commerce websites and enhanced data privacy laws and security, rules, and regulations; (h) establishing and maintaining effective internal controls at foreign locations and the associated increased costs; (i) increased counterfeiting and the uncertainty of protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad; (j) compliance with anti-bribery, anti-corruption, sanctions and anti-money laundering laws, such as the FCPA, the Bribery Act, and OFAC regulations, by us, our employees, and our business partners; (k) currency exchange rate fluctuations and related effects on our results of operations; (l) economic weakness, including inflation, or political instability in foreign economies and markets; (m) compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; (n) workforce uncertainty in countries where labor unrest is more common than in the United States; (o) business interruptions resulting from geopolitical actions, including war and terrorism, such as the recent wars between Russia and Ukraine and between Israel and surrounding areas, or natural disasters, including earthquakes, typhoons, floods, fires, and public health issues, including the outbreak of a pandemic or contagious disease, or xenophobia resulting therefrom; (p) the imposition of tariffs on products that we import into international markets that could make such products more expensive compared to those of our competitors; (q) our ability to expand internationally could be impacted by the intellectual property rights of third parties that conflict with or are superior to ours; (r) difficulty developing retail relationships; and (s) other costs and risks of doing business internationally.
The threat of our debt being accelerated in connection with a change of control could make it more difficult for us to attract potential buyers or to consummate a change of control transaction that would otherwise be beneficial to our stockholders.
The threat of our debt being accelerated in connection with a change of control could also make it more difficult for us to attract potential buyers or to consummate a change of control transaction that would otherwise be beneficial to our stockholders.
Under the terms of the Holdings LLC Agreement, Holdings will be obligated, subject to various limitations and restrictions, including with respect to any debt agreements (including the Revolving Credit Facility), to make tax distributions to holders of LLC Interests, including Solo Brands, Inc.
Under the terms of the Holdings LLC Agreement, Holdings will be obligated, subject to various limitations and restrictions, including with respect to any debt agreements (including the Credit Facility), to make tax distributions to holders of LLC Interests, including Solo Brands, Inc.
Continued growth may increase the strain on our resources, and we could experience operating difficulties, including difficulties in sourcing, logistics, recruiting, maintaining internal controls, marketing, designing innovative products, and meeting consumer needs.
Growth may increase the strain on our resources, and we could experience operating difficulties, including difficulties in sourcing, logistics, recruiting, maintaining internal controls, marketing, designing innovative products, and meeting consumer needs.
As a result, these arrangements could adversely affect our business, results of operations, financial condition or prospects if attractive business opportunities are allocated to any of the Original LLC Owners instead of to us. 26 Table of Contents We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.
As a result, these arrangements could adversely affect our business, results of operations, financial condition or prospects if attractive business opportunities are allocated to any of the Original LLC Owners instead of to us. 31 Table of Contents We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.
Accordingly, because of the inherent limitations in our control system, misstatements in our public reports due to error or fraud may occur and not be detected. 28 Table of Contents Our business is subject to the risk of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by problems such as terrorism, cyberattacks, or failure of key information technology systems.
Accordingly, because of the inherent limitations in our control system, misstatements in our public reports due to error or fraud may occur and not be detected. 33 Table of Contents Our business is subject to the risk of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by problems such as terrorism, cyberattacks, or failure of key information technology systems.
In addition, the Inflation Reduction Act of 2022 imposes a non-deductible 1% excise tax on the fair market value of stock repurchases, net of stock issuances, that exceed $1 million in a taxable year, which will make any potential stock repurchases more expensive to us. General Risk Factors We may become involved in legal or regulatory proceedings and audits.
In addition, the Inflation Reduction Act of 2022 imposed a non-deductible 1% excise tax on the fair market value of stock repurchases, net of stock issuances, that exceed $1 million in a taxable year, which will make any potential stock repurchases more expensive to us. General Risk Factors We may become involved in legal or regulatory proceedings and audits.
For example, a significant natural disaster, such as an earthquake, fire, or flood, could harm our business, results of operations, and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur. Our corporate offices and primary distribution center is located in Texas, a state that frequently experiences floods and storms.
For example, a significant natural disaster, such as an earthquake, fire, or flood, could harm our business, results of operations, and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur. Our corporate offices and primary distribution center are located in Texas, a state that frequently experiences floods and storms.
The smaller screen size, functionality, and memory associated with some alternative devices may make the use of our sites and purchasing our products more difficult. The versions of our sites developed for these devices may not be compelling to consumers. In addition, it is time consuming and costly to keep pace with rapidly changing and continuously evolving technology.
The smaller screen size, functionality, and memory associated with some alternative devices may make the use of our sites and purchasing our products more difficult. The versions of our e-commerce sites developed for these devices may not be compelling to consumers. In addition, it is time consuming and costly to keep pace with rapidly changing and continuously evolving technology.
Further, there is an increased focus by governmental and nongovernmental organizations on climate change matters, including increased pressure to expand disclosures related to the physical and transition risks related to climate change or to establish sustainability goals, such as the reduction of greenhouse gas emissions, which could expose us to market, operational and execution costs or risks.
Further, there is an increased focus, and changing expectations, by governmental and nongovernmental organizations on climate change matters, including increased pressure to expand disclosures related to the physical and transition risks related to climate change or to establish sustainability goals, such as the reduction of greenhouse gas emissions, which could expose us to market, operational and execution costs or risks.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and 28 Table of Contents cash items) on an unconsolidated basis.
As supervisory authorities issue further guidance on 15 Table of Contents personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
Labor disputes or disruptions of shipping lanes, such as the Suez Canal blockage in 2021 or increased or continued delays at ports, our common carriers, or our suppliers or manufacturers could create significant risks for our business, particularly if these disputes result in work slowdowns, lockouts, strikes, or other disruptions during periods of significant importing or manufacturing, potentially resulting in delayed or cancelled orders by customers, unanticipated inventory accumulation or shortages, and harm to our business, results of operations, and financial condition.
Labor disputes or disruptions of shipping lanes, such as the Suez Canal blockage in 2021 or any issues at the Panama Canal or increased or continued delays at ports, our common carriers, or our suppliers or manufacturers could create significant risks for our business, particularly if these disputes result in work slowdowns, lockouts, strikes, or other disruptions during periods of significant importing or manufacturing, potentially resulting in delayed or cancelled orders by customers, unanticipated inventory accumulation or shortages, and harm to our business, results of operations, and financial condition.
We note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. 27 Table of Contents Any person purchasing or otherwise acquiring or holding any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provisions.
We note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. 32 Table of Contents Any person purchasing or otherwise acquiring or holding any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provisions.
As a result, we could experience cancellations of orders, refusals to accept deliveries, or reductions in our prices and margins, any of which could harm our financial performance, reputation, and results of operations. We also depend on a limited number of third-party manufacturers for the sourcing of our products.
As a result, we could experience cancellations of orders, refusals to accept deliveries, increased costs, or reductions in our prices and margins, any of which could harm our financial performance, reputation, and results of operations. We also depend on a limited number of third-party manufacturers for the sourcing of our products.
The Revolving Credit Facility places certain conditions on us, including that it: • requires us to utilize a portion of our cash flow from operations and dispositions of assets to make payments on our indebtedness, reducing the availability of our cash flow to fund working capital, capital expenditures, development activity, return capital to our stockholders, and other general corporate purposes; • increases our vulnerability to adverse economic or industry conditions; • limits our flexibility in planning for, or reacting to, changes in our business or markets; • makes us more vulnerable to increases in interest rates, as borrowings under the Revolving Credit Facility bear interest at variable rates; • limits our ability to obtain additional financing in the future for working capital or other purposes; and • could place us at a competitive disadvantage compared to our competitors that have less indebtedness.
The Revolving Credit Facility places certain conditions on us, including that it: • requires us to utilize a portion of our cash flow from operations and dispositions of assets to make repayments of our indebtedness, reducing the availability of our cash flow to fund working capital, capital expenditures, development activity, return capital to our stockholders, and other general corporate purposes; • increases our vulnerability to adverse economic or industry conditions; • limits our flexibility in planning for, or reacting to, changes in our business or markets; • makes us more vulnerable to increases in interest rates, as borrowings under the Revolving Credit Facility bear interest at variable rates; • limits our ability to obtain additional financing in the future for working capital or other purposes; and • places us at a competitive disadvantage compared to our competitors that have less indebtedness.
If we or our third party service providers suffer, or are believed to have suffered, a material loss or disclosure of personal or confidential information as a result of an actual or potential breach of our information technology systems, we may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which could have a material adverse effect on our business, prospects, results 17 Table of Contents of operations, financial condition and/or cash flows.
If we or our third party service providers suffer, or are believed to have suffered, a material loss or disclosure of personal or confidential information as a result of an actual or potential breach of our information technology systems, we may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.
For example, consumer perception could be influenced by negative media attention regarding any consumer complaints about our 5 Table of Contents products, our management team, ownership structure, sourcing practices and supply chain partners, employment practices, ability to execute against our mission and values, and our products or brand, such as any advertising campaigns or media allegations that challenge the sustainability of our products and our supply chain, or that challenge our marketing efforts regarding the quality of our products, which could have an adverse effect on our business, brand and reputation.
For example, consumer perception could be influenced by negative media attention regarding any consumer complaints about our products, our management team, ownership structure, sourcing practices and supply chain partners, employment practices, ability to execute against our mission and values, and our products or brand, such as any advertising campaigns or media allegations that challenge the sustainability of our products and our supply chain, or that challenge our marketing efforts regarding the quality of our products, which could have an adverse effect on our business, brand and reputation.
If we are unable to attract consumers to our websites through these devices or are slow to develop a version of our websites that is more compatible with alternative devices or a mobile application, we may fail to capture a significant share of consumers, which could materially and adversely affect our business.
If we are unable to attract consumers to our e-commerce websites through these devices or are slow to develop a version of our websites that is more compatible with alternative devices or a mobile application, we may fail to capture a significant share of consumers, which could materially and adversely affect our business.
As existing mobile devices and platforms evolve and new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in adjusting and developing applications for changed and alternative devices and platforms, and we may need to devote significant resources to the creation, support and maintenance of such applications.
As existing mobile devices and e-commerce platforms evolve and new mobile devices and e-commerce platforms are released, it is difficult to predict the problems we may encounter in adjusting and developing applications for changed and alternative devices and platforms, and we may need to devote significant resources to the creation, support and maintenance of such applications.
Any failure on the part of us or our third party service providers to maintain the security of this confidential data and personal information, including via the penetration of our network security (or those of our third party service providers) and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation, any or all of which could result in the Company incurring potentially substantial costs.
Any failure on the part of us or our third party service providers 22 Table of Contents to maintain the security of this confidential data and personal information, including via the penetration of our network security (or those of our third party service providers) and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation, any or all of which could result in the Company incurring potentially substantial costs.
To the extent that continuing political tensions between China and Taiwan or the war in Ukraine may adversely affect our business, it may also have the effect of heightening many of the other risks described in our risk factors, such as those relating to data security, supply chain, volatility in prices of inputs, and market conditions, any of which could negatively affect our business and financial condition.
To the extent that continuing political tensions between China and Taiwan or the war in Ukraine or the conflicts in the Middle East may adversely affect our business, it may also have the effect of heightening many of the other risks described in our risk factors, such as those relating to data security, supply chain, volatility in prices of inputs, and market conditions, any of which could negatively affect our business and financial condition.
Furthermore, if the U.S. government imposes new sanctions against certain countries or entities, such sanctions could sufficiently restrict our ability to market and sell our products and may materially adversely affect our results of operations.
Furthermore, if the U.S. government imposes new sanctions against certain countries or entities, such sanctions could sufficiently restrict our ability to market and sell our products and may materially adversely affect our results of operation.
Also, as a result of our intention to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us as long as we qualify as an “emerging growth company,” our financial statements may not be comparable to those of companies that fully comply with regulatory and reporting requirements upon the public company effective dates.
Also, as a result of our intention to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us as long as we qualify as an “emerging growth company” or as a “smaller reporting company” our financial statements may not be comparable to those of companies that fully comply with regulatory and reporting requirements upon the public company effective dates.
Violations of the FCPA, the Bribery Act, OFAC restrictions, or other export control, anti-corruption, anti-money laundering, and anti-terrorism laws, or allegations of such acts, could damage our reputation and subject us to civil or criminal investigations in the United States and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and nonmonetary penalties and could cause us to incur significant legal and investigatory fees, which could harm our business, financial condition, cash flows, and results of operations.
Violations of the FCPA, the Bribery Act, OFAC restrictions, or other sanctions, export control, anti-corruption, anti-money laundering, and anti-terrorism laws, or allegations of such acts, could damage our reputation and subject us to civil or criminal investigations in the United States and in 11 Table of Contents other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and nonmonetary penalties and could cause us to incur significant legal and investigatory fees, which could harm our business, financial condition, cash flows, and results of operations.
If our retail partners reduce or terminate those activities, we may experience reduced sales of our products, resulting in lower gross margins, which would harm our results of operations. In addition, any store 11 Table of Contents closures, decreased foot traffic and recession may adversely affect the performance and the financial condition of many of these customers.
If our retail partners reduce or terminate those activities, we may experience reduced sales of our products, resulting in lower gross margins, which would harm our results of operations. In addition, any store closures, decreased foot traffic and recession may adversely affect the performance and the financial condition of many of these customers.
Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis.
Case law from the Court of Justice of the European Union, or CJEU, states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis.
The Original LLC Owners are able to, subject to applicable law, and the voting arrangements described in the Prospectus, elect a majority of the members of our board of directors and control actions to be taken by us and our board of directors, including amendments to our certificate of incorporation and bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets.
The Original LLC Owners are able to, subject to applicable law, and the voting arrangements described in our stockholders agreement, elect a majority of the members of our board of directors and control actions to be taken by us and our board of directors, including amendments to our certificate of incorporation and bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets.
We believe that revenue growth will depend upon, among other factors: • Increasing U.S. brand awareness; • Our ability to obtain adequate protections for our intellectual property; and • Product innovation to expand our total addressable market. We have a limited history operating our business at its current scale.
We believe that revenue growth will depend upon, among other factors: • Improving and managing our current limited liquidity; • Increasing U.S. brand awareness; • Our ability to obtain adequate protections for our intellectual property; and • Product innovation to expand our total addressable market. We have a limited history operating our business at its current scale.
As we continue to expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business. Third Party Data Processing and Transfers We depend on a number of third parties in relation to the operation of our business, a number of which process personal data on our behalf.
As we continue to expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business. 20 Table of Contents Third Party Data Processing and Transfers We depend on a number of third parties in relation to the operation of our business, a number of which process personal data on our behalf.
If our information technology systems suffer damage, disruption 16 Table of Contents or shutdown and we do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial results. E-commerce is central to our business.
If our information technology systems suffer damage, disruption or shutdown and we do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial results. E-commerce is central to our business.
As a result, they could produce similar products for our competitors, some of which could potentially purchase products in significantly greater volume. Further, while certain of our contracts stipulate contractual exclusivity against production of similar products to ours, those suppliers or manufacturers could choose to breach our 9 Table of Contents agreements and work with our competitors.
As a result, they could produce similar products for our competitors, some of which could potentially purchase products in significantly greater volume. Further, while certain of our contracts stipulate contractual exclusivity against production of similar products to ours, those suppliers or manufacturers could choose to breach our agreements and work with our competitors.
Under certain circumstances, the Consumer Products Safety Commission or a comparable foreign agency could require us to repurchase or recall one or more of our products. Additionally, other laws and agencies regulate certain consumer products we sell in the United States and abroad, and more restrictive laws and regulations may be adopted in the 13 Table of Contents future.
Under certain circumstances, the Consumer Products Safety Commission or a comparable foreign agency could require us to repurchase or recall one or more of our products. Additionally, other laws and agencies regulate certain consumer products we sell in the United States and abroad, and more restrictive laws and regulations may be adopted in the future.
Privacy Laws In Canada, the Personal Information Protection and Electronic Documents Act, or PIPEDA, and various provincial laws require that companies give detailed privacy notices to consumers, obtain consent to use personal information, with limited exceptions, allow individuals to access and correct their personal information, and report certain data breaches.
Non-U.S. Privacy Laws In Canada, the Personal Information Protection and Electronic Documents Act, or PIPEDA, and various provincial laws require that companies give detailed privacy notices to consumers, obtain consent to use personal information, with limited exceptions, allow individuals to access and correct their personal information, and report certain data breaches.
Maintaining, promoting and positioning our brand and reputation will depend on, among other factors, the success of our product offerings, quality assurance, marketing and merchandising efforts, the reliability and reputation of our supply chain, our ability to grow and capture share of the outdoor lifestyle category, and our ability to provide a consistent, high-quality consumer experience.
Maintaining, promoting and positioning our brand and reputation depends on, among other factors, the success of our product offerings, quality assurance, marketing and merchandising efforts, the reliability and reputation of our supply chain, our ability to grow and capture share of the outdoor lifestyle category, and our ability to provide a consistent, high-quality consumer experience.
In these situations, Solo Brands, Inc.’s obligations under the Tax Receivable Agreement could have a substantial negative impact on Solo Brands, Inc.’s liquidity and could have the effect of delaying, deferring, or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control.
In these situations, Solo Brands, Inc.’s obligations under the Tax Receivable Agreement could have a substantial negative impact on Solo Brands, Inc.’s liquidity and could have the effect of delaying, deferring, or preventing 27 Table of Contents certain mergers, asset sales, other forms of business combinations, or other changes of control.
In 2023, the majority of orders were placed from a mobile device. However, we cannot be certain that our mobile applications or our mobile-optimized sites will be successful in the future.
In 2024, the majority of orders were placed from a mobile device. However, we cannot be certain that our mobile applications or our mobile-optimized sites will be successful in the future.
If our sales do not increase at a sufficient rate to offset these increases in our operating expenses, our profitability may decline in future periods. Our business could be harmed if we are unable to accurately forecast demand for our products or our results of operations.
If our sales do not increase at a sufficient rate to offset these increases in our operating expenses, our profitability may continue to decline. Our business could be harmed if we are unable to accurately forecast demand for our products or our results of operations.
Many of our competitors and potential competitors have significant competitive advantages, including learning from our experiences 7 Table of Contents and taking advantage of new product popularity, greater financial strength, larger research and development teams, larger marketing budgets, and more distribution and other resources than we do.
Many of our competitors and potential competitors have significant competitive advantages, including learning from our experiences and taking advantage of new product popularity, greater financial strength, larger research and development teams, larger marketing budgets, and more distribution and other resources than we do.
Our failure to establish sustainability targets or targets that are perceived to be appropriate, as well as to achieve progress on those targets on a timely basis, or at all, could adversely affect the reputation of our brands and sales of and demand for our products.
Our failure to establish, or decision to modify or terminate sustainability targets or targets that are perceived to be appropriate, as well as to achieve progress on those targets on a timely basis, or at all, could adversely affect the reputation of our brands and sales of and demand for our products.
The GDPR and the UK GDPR imposes substantial fines for breaches and violations (up to the greater of €20 million (or £17.5 million) or 4% of global annual turnover).
The GDPR and the UK GDPR impose substantial fines for breaches and violations (up to the greater of €20 million (or £17.5 million) or 4% of global annual turnover).
Class A common stock increasing in value relative to the value of LLC 21 Table of Contents Interests. The Continuing LLC Owners may benefit from any value attributable to such cash balances if they acquire shares of Solo Brands, Inc.
Class A common stock increasing in value relative to the value of LLC Interests. The Continuing LLC Owners may benefit from any value attributable to such cash balances if they acquire shares of Solo Brands, Inc.
In the event that our trademarks are successfully challenged and we lose the rights to use those trademarks, we could be forced to rebrand our products, requiring us to devote resources to advertising and marketing new brands. In addition, we rely on design patents, as well as registered designs, to protect our products and designs.
In the event 13 Table of Contents that our trademarks are successfully challenged and we lose the rights to use those trademarks, we could be forced to rebrand our products, requiring us to devote resources to advertising and marketing new brands. In addition, we rely on design patents, as well as registered designs, to protect our products and designs.
Failure to comply with these laws and regulations could subject us to lawsuits and other proceedings, and could also lead to damage awards, fines, and penalties. We may become involved in a number of legal proceedings and audits, including government and agency investigations, and consumer, employment, tort, and other litigation.
Failure to comply with these laws and regulations could subject us to lawsuits and other proceedings, and could also lead to damage awards, fines, and penalties. We have in the past and may become in the future involved in a number of legal proceedings and audits, including government and agency investigations, and consumer, employment, tort, and other litigation.
We currently have a number of manufacturing partners located in various locations, including China, India, Vietnam, Cambodia, United States and Mexico. The majority of our fire pits, our highest grossing product, are currently made by a single manufacturer in China, with additional limited production in China, India and Vietnam.
We currently have a number of manufacturing partners located in various locations, including China, India, Vietnam, Cambodia, United States and Mexico. The majority of our fire pits, our highest grossing product, are currently made by two manufacturers in China, with additional limited production in China, India and Vietnam.
We have acquired, and intend in the future to acquire or invest in, other businesses, products, or technologies that we believe could complement or expand our business, enhance our capabilities, or otherwise offer growth opportunities.
We have acquired, and may in the future acquire or invest in, other businesses, products, or technologies that we believe could complement or expand our business, enhance our capabilities, or otherwise offer growth opportunities.
In connection with the completion of our IPO, Holdings entered into the Holdings LLC Agreement and, subject to certain restrictions set forth therein and as described elsewhere in the Prospectus, the Continuing LLC Owners are entitled to have their LLC Interests redeemed for shares of our Class A common stock.
In connection with the completion of our IPO, Holdings entered into the Holdings LLC Agreement and, subject to certain restrictions set forth therein, the Continuing LLC Owners are entitled to have their LLC Interests redeemed for shares of our Class A common stock.
Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, none of the Original LLC Owners or any director who is not employed by us or his or her affiliates will have any duty to refrain from engaging in a corporate opportunity in the same or similar lines of business as us.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, none of the Original LLC Owners or any director who is not employed by us or his or her affiliates has any duty to refrain from engaging in a corporate opportunity in the same or similar lines of business as us.
Among others, our amended and restated certificate of incorporation and amended and restated bylaws include the following provisions: • authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; • establishing a classified board of directors so that not all members of our board of directors are elected at one time; • the removal of directors only for cause; • prohibiting the use of cumulative voting for the election of directors; • limiting the ability of stockholders to call special meetings or amend our bylaws; • requiring all stockholder actions to be taken at a meeting of our stockholders; and • establishing advance notice and duration of ownership requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Among others, our amended and restated certificate of incorporation and amended and restated bylaws include the following provisions: • authorizes the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; • a classified board of directors so that not all members of our board of directors are elected at one time; • the removal of directors only for cause; • prohibits the use of cumulative voting for the election of directors; • limits the ability of stockholders to call special meetings or amend our bylaws; • requires all stockholder actions to be taken at a meeting of our stockholders; and • advance notice and duration of ownership requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
We have made substantial investments in these areas in order to maintain and enhance our brand and these experiences, but such investments may not be successful. Any negative publicity, regardless of its accuracy, could materially adversely affect our business.
We have made substantial investments in these areas in order to maintain and enhance our brand and these experiences, but such investments are not always successful. Any negative publicity, regardless of its accuracy, could materially adversely affect our business.
If we fail to successfully market and sell our products to our existing customers or expand our customer base, our sales could decline or we may be unable to grow our business. If we fail to attract new customers in a cost-effective manner, our business may be harmed.
If we fail to successfully market and sell our products to our existing customers or expand our customer base, our sales could decline or we may be unable to grow our business. 12 Table of Contents If we fail to attract new customers in a cost-effective manner, our business may be harmed.
Upon the completion of the IPO, we entered into the Registration Rights Agreement with the Original LLC Owners, certain of our other stockholders and Holdings pursuant to which the shares of Class A common stock issued upon redemption or exchange of LLC Interests held by the Continuing LLC Owners and the shares of Class A common stock issued to the Former LLC Owners in connection with the Reorganization Transactions will be eligible for resale, subject to certain limitations set forth therein.
We have entered into the Registration Rights Agreement with the Original LLC Owners, certain of our other stockholders and Holdings pursuant to which the shares of Class A common stock issued upon redemption or exchange of LLC Interests held by the Continuing LLC Owners and the shares of Class A common stock issued to the Former LLC Owners in connection with the Reorganization Transactions are eligible for resale, subject to certain limitations set forth therein.
The failure of any manufacturer to perform to our expectations could result in supply shortages or delays for certain products and harm our business.
The failure of any manufacturer to perform to our expectations could result in 14 Table of Contents supply shortages or delays for certain products and harm our business.
The foregoing could have a material adverse effect on our business and financial condition. Insolvency, credit problems or other financial difficulties that could confront our retail partners could expose us to financial risk.
The foregoing could have a material adverse effect on our business and financial condition. 16 Table of Contents Insolvency, credit problems or other financial difficulties that could confront our retail partners expose us to financial risk.
The price of our Class A common stock has and will likely continue to fluctuate and you may not be able to sell the shares you purchase at or above your purchase price.
Risks Related to Ownership of our Class A Common Stock The price of our Class A common stock has fluctuated and will likely continue to fluctuate and you may not be able to sell the shares you purchase at or above your purchase price.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, and related notes included elsewhere in this prospectus.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section of this Annual Report on Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, and related notes included elsewhere in this report.
The impacts of risks associated with international geopolitical conflicts, including continued tensions between Taiwan and China and the Russian invasion of Ukraine, on the global economy, energy supplies and raw materials are uncertain, but may prove to negatively impact our business and operations.
The impacts of risks associated with international geopolitical conflicts, including continued tensions between Taiwan and China, the war in Ukraine and the conflicts in the Middle East, on the global economy, energy supplies and raw materials are uncertain, but may prove to negatively impact our business and operations.
Foreign Corrupt Practices Act, or FCPA, the UK Bribery Act 2010, or the Bribery Act, and other applicable anti-corruption laws, which generally prohibit companies from making improper payments to government officials (or in some cases commercial counterparties) for the purpose of obtaining or retaining business or securing an improper business advantage; (d) compliance with the U.S.
Foreign Corrupt Practices Act, or FCPA, the UK Bribery Act 2010, or the Bribery Act, and other applicable anti-corruption laws, which generally prohibit companies from making improper payments to government officials (or in some cases commercial counterparties) for the purpose of obtaining or retaining business or securing an improper business advantage; (d) compliance with applicable trade sanctions and embargoes, such as those issued by the U.S.
The market price of our Class A common stock has fluctuated and may be highly volatile and may fluctuate substantially due to many factors, including: • the volume and timing of sales of our products; • the introduction of new products or product enhancements by us or our competitors; • disputes or other developments with respect to our or others’ intellectual property rights; • our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis; • product liability claims or other litigation; • quarterly variations in our growth, profitability or results of operations, or those of our competitors; • media exposure of our products or our competitors; • announcement or expectation of additional equity or debt financing efforts; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; • changes in governmental regulations or in reimbursement; • changes in earnings estimates or recommendations by securities analysts; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
The market price of our Class A common stock has fluctuated significantly and is highly volatile and may continue to fluctuate substantially due to many factors, including: • our ability to continue as a going concern; • our ability to satisfy the covenants under our Revolving Credit Facility; • the execution of liquidity, cost-saving and restructuring initiatives; • the volume and timing of sales of our products; • the introduction of new products or product enhancements by us or our competitors; • disputes or other developments with respect to our or others’ intellectual property rights; • our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis; • product liability claims or other litigation; • quarterly variations in our growth, profitability or results of operations, or those of our competitors; • media exposure of our products or our competitors; • announcement or expectation of additional equity or debt financing efforts; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; • changes in governmental regulations or in reimbursement; • changes in earnings estimates or recommendations by securities analysts; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
For as long as we continue to be an emerging growth company, we may choose to take advantage of certain exemptions from various reporting requirements, as well as the cost savings as a result of such exemptions, which are applicable to other public companies that do not qualify as an emerging growth company.
Similar exceptions apply for “smaller reporting companies.” For as long as we continue to be an emerging growth company or a smaller reporting company, we may choose to take advantage of certain exemptions from various reporting requirements, as well as the cost savings as a result of such exemptions, which are applicable to other public companies that do not qualify as an emerging growth company or a smaller reporting company.
A variety of state, federal, and foreign laws, regulations and industry standards apply to the collection, use, retention, protection, disclosure, transfer and other processing of certain types of data, including the California Consumer Privacy Act (the “CCPA”), as amended by the California Privacy Rights Act, the “CPRA”), Canada’s Personal Information Protection and Electronic Documents Act, the General Data Protection Regulation, or GDPR, the UK General Data Protection Regulation, or UK GDPR, and the UK Data Protection Act 2018, or the UK DPA.
A variety of state, federal, and foreign laws, regulations and industry standards apply to the collection, use, retention, protection, disclosure, transfer and other processing of certain types of data, including the California Consumer Privacy Act, as amended by the California Privacy Rights Act, (collectively, the “CCPA”), Canada’s Personal Information Protection and Electronic Documents Act, the General Data Protection Regulation (the “GDPR”), and the UK General Data Protection Regulation and the UK Data Protection Act 2018 (collectively the “UK GDPR”).
Risks Related to Ownership of our Class A Common Stock The Continuing LLC Owners have the right to have their LLC Interests redeemed pursuant to the terms of the Holdings LLC Agreement, which may dilute the owners of the Class A common stock.
The Continuing LLC Owners have the right to have their LLC Interests redeemed pursuant to the terms of the Holdings LLC Agreement, which may dilute the owners of the Class A common stock.
If not properly handled, the fire our products involve poses significant danger for a number of reasons, including the possibility of burns, death, and significant property damage, including as a result of wildfires.
Our Solo Stove products are designed to involve fire. If not properly handled, the fire our products involve poses significant danger for a number of reasons, including the possibility of burns, death, and significant property damage, including as a result of wildfires.
As a result of our growth to date, our employee headcount and the scope and complexity of our business have increased substantially, and we are continuing to implement policies and procedures that we believe are appropriate for a company of our size and operating as a public company.
As a result of our historic growth, our employee headcount and the scope and complexity of our business increased substantially in recent years, and we are continuing to implement policies and procedures that we believe are appropriate for a company of our size and operating as a public company.
On October 12, 2023, the UK Extension to the DPF came into effect (as approved by the UK Government), as a UK GDPR data transfer mechanism to U.S. entities self-certified under the UK Extension to the DPF.
On October 12, 2023, the UK Extension to the Data Privacy Framework came into effect (as approved by the UK Government), as a data transfer mechanism from the UK to U.S. entities self-certified under the Data Privacy Framework.
For example, if the United States government withdraws or materially modifies existing or proposed trade agreements, places greater restriction on free trade generally or imposes increases on tariffs on goods imported into the United States, particularly from China, our business, financial condition and results of operations could be adversely affected.
If the United States government withdraws or materially modifies existing or proposed trade agreements, places greater restriction on free trade generally or imposes additional increases on tariffs on specified commodities and goods imported into the United States, particularly from China or Mexico, our business, financial condition and results of operations will be adversely affected.
If we do not meet our stakeholders’ expectations or we are not effective in addressing social and environmental responsibility matters or achieving relevant sustainability goals, trust in our brand may suffer and our business and/or our ability to access capital could be harmed.
If we do not meet our stakeholders’ expectations or we are not effective in addressing social and environmental responsibility matters or achieving relevant sustainability goals, or choose to modify or terminate certain sustainability goals or other ESG practices, trust in our brand may suffer and our business and/or our ability to access capital could be harmed.
Moreover, while we maintain cyber insurance that may help provide coverage for these types of incidents, we cannot assure you that our insurance will be adequate to cover costs and liabilities related to these incidents.
Moreover, while we maintain cyber insurance that may help provide coverage for these types of incidents, we cannot assure you that our insurance will be adequate to cover financial, legal, business, or reputational losses, costs, and liabilities related to these incidents.
If we overestimate the demand for our products, we could face inventory levels in excess of demand, which could result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would harm our gross margins.
If we overestimate the demand for our products, we could face inventory levels in excess of demand, which has resulted and could in the future result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which harms our gross margins.
Risks Related to our Business and Industry Our business depends on maintaining and strengthening our brand and generating and maintaining ongoing demand for our products, and a significant reduction in such demand could harm our results of operations.
Risks Related to our Business and Industry Our business depends on maintaining and strengthening our brand and generating and maintaining ongoing demand for our products, and reductions in such demand harm our results of operations.

… 231 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+7 added−2 removed4 unchanged
Biggest changeThe Company regularly assesses and updates its processes, procedures and management techniques in light of ongoing cybersecurity developments. Recognizing the complexity and evolving nature of cybersecurity threats, the Company also engages with a range of external experts, including cybersecurity assessors and consultants in evaluating and testing its cybersecurity management systems and IRP.
Biggest changeThe Company aims to regularly assess and update its processes, procedures and management techniques in light of ongoing cybersecurity developments. 35 Table of Contents Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal IRT personnel; threat intelligence and other information obtained from governmental, public or private sources; and alerts and reports produced by security tools deployed in our internal IT environment Recognizing the complexity and evolving nature of cybersecurity threats, the Company also engages with a range of external experts, including cybersecurity assessors and consultants in evaluating and testing its cybersecurity management systems and IRP, including its use of third-party service providers.
These partnerships enable the Company to leverage specialized knowledge and insights, to assist in updating its cybersecurity strategies and processes to align with industry best practices. The Company’s collaboration with these third parties includes consultation and review of security enhancements.
These partnerships enable the Company to leverage specialized knowledge and insights and to assist in updating its cybersecurity strategies and processes to align with industry best practices. The Company’s collaboration with these third parties includes consultation and review of security enhancements.
To date, we have not identified risks from cybersecurity threats or incidents, including as a result of any previous cybersecurity incidents, that have materially affected the Company or are reasonably likely to materially affect our operations, business strategy, results of operations, of financial condition.
To date, we have not identified risks from cybersecurity threats or incidents, including as a result of any previous cybersecurity incidents, that have materially affected the Company or are reasonably likely to materially affect our operations, business strategy, results of operations or financial condition.
The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our ISC’s expertise includes a combined 20 plus years of experience in managing security technologies; designing and implementing security strategies; and risk management and incident response across various industries.
The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our ISOC’s expertise includes a combined 20 plus years of experience in managing security technologies; designing and implementing security strategies; and risk management and incident response across various industries.
The Company will assess the materiality of the cybersecurity threat or incident to determine if any public disclosures are required under the SEC’s cybersecurity disclosure rule. If deemed necessary, third-party consultants, legal counsel, and assessors will be engaged to evaluate the materiality assessment.
The Company then would assess the materiality of the cybersecurity threat or incident to determine if any public disclosures are required under the SEC’s cybersecurity disclosure rule. If deemed necessary, third-party consultants, legal counsel and assessors would be engaged to evaluate the materiality assessment.
Our ISC supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
Our ISOC takes steps to stay informed about and monitor efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment .
Board members receive presentations on cybersecurity topics from our CIO, internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies. The ISC, is responsible for assessing and managing our material risks from cybersecurity threats.
The Board also receives briefings from the CISO and ISOC members on our cyber risk management program. Board members receive presentations on cybersecurity topics from our CISO, internal security staff, or external experts as part of the Board’s continuing education on topics that impact public companies. The ISOC, is responsible for assessing and managing our material risks from cybersecurity threats.
These objectives are designed to maximize the effectiveness of the Company’s response through an established plan of action and assigning responsibilities to appropriate personnel and/or third-party contractors. If a cybersecurity threat or incident is identified, the IRT will communicate the cybersecurity threat or incident and any damages to the CIO and other members of senior management of the Company.
The IRP is designed to maximize the effectiveness of the Company’s response through an established plan of action and assigning responsibilities to appropriate personnel and/or third-party contractors.
As part of its overall enterprise risk management framework, the Company maintains both an Information Security Committee (“ISC”) and an Incident Response Plan (“IRP”). The Company’s ISC is managed by its Chief Information Officer (the “CIO”) whose team (the Incident Response Team, or “IRT”) is responsible for leading company-wide cybersecurity strategy, policy, standards, architecture, and processes.
As part of its overall risk management framework, the Company maintains an Information Security Oversight Committee (“ISOC”) which is responsible for overseeing company-wide cybersecurity strategy, architecture and policies. The Company’s ISOC is chaired by its Chief Information Security Officer (the “CISO”), who reports to our Chief Information Officer, who is also a member of ISOC.
The Board oversees management’s implementation of our cybersecurity risk management program. The Board receives regular reports from the ISC on our cybersecurity risks. In addition, ISC updates the Board, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The Board also receives briefings from ISC on our cyber risk management program.
The Board oversees management’s implementation of our cybersecurity risk management program. The Board receives periodic reports from the CISO on our cybersecurity risks. In addition, the CISO and ISOC members update the Board, where it deems appropriate, regarding any cybersecurity incidents it considers to be significant or potentially significant.
Removed
The purpose of the IRP is to define procedures for reporting and responding to cybersecurity incidents. It creates objectives for actionable procedures that can be measured, evaluated, scaled and revised as necessary for each specific cybersecurity incident.
Added
The Company has developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. The Company designs and assesses the program based on the National Institute of Standards and Technology Cybersecurity Framework, or NIST CSF.
Removed
However, the sophistication of and risks from cybersecurity threats and incidents continues to increase, and there can be no assurance that 30 Table of Contents our cybersecurity risk management program and processes, including our IRP, and other preventative actions the Company has taken and continues to take to reduce the risk of cybersecurity threats and incidents and protect its systems and information, will be fully implemented, complied with or successful in protecting against all cybersecurity threats and incidents.
Added
This means that the Company uses the NIST CSF as a guide to help it identify, assess, and manage cybersecurity risks relevant to our business. It does not, however, mean that the Company meets any technical standards, specifications, or requirements.
Added
The Company has also established an Incident Response Team (“IRT”), which is a subset of the ISOC, and maintains an Incident Response Plan (“IRP”), the purpose of which is to respond to cybersecurity incidents. The IRT assesses the risks and impacts of cybersecurity incidents and creates and manages action plans for each specific cybersecurity incident.
Added
The IRP contemplates that if a cybersecurity threat or incident is identified, the IRT would communicate the cybersecurity threat or incident and any damages to the CISO and other members of senior management of the Company.
Added
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Added
Mike Murray has served as our Chief Information Officer since April 2024. Mr. Murray brings with him a wealth of experience in technology leadership, including in the area of cybersecurity. Before joining the Company, Mr. Murray championed technology initiatives at The Container Store, overseeing critical areas such as IT governance, infrastructure, PMO, operations and support.
Added
Prior to The Container Store, he worked at Pier 1 Imports, Inc., which saw him in diverse senior leadership positions, notably as VP of Technology with a strategic focus on IT, Ecommerce, and Business Development.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeWe believe that our facilities are in good condition and are adequate to support our current needs.
Biggest changeThe Chubbies segment also maintains a lease in Texas for office space as well as leases specific to owned retail store operations in Texas, Georgia, Florida, Minnesota, Nevada, North Carolina and South Carolina. We believe that our facilities are in good condition and are adequate to support our current needs.
Item 2. Properties Our corporate headquarters are located in a 430,000 square foot leased facility in Grapevine, Texas. In addition to our corporate headquarters we maintain leases in Texas, Utah, Pennsylvania, Mexico, Canada, Australia and the Netherlands for warehousing, distribution and office space. We also maintain leases specific to retail operations in Texas, Georgia, Florida and South Carolina.
Item 2. Properties Our corporate headquarters are located in a 430,000 square foot leased facility in Grapevine, Texas, which is used by both of our reportable segments. In addition to our corporate headquarters, the Solo Stove segment maintains leases in Texas, Utah, Pennsylvania, Mexico, Canada, and the Netherlands for warehousing, distribution and office space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed1 unchanged
Biggest changeItem 3. Legal Proceedings From time to time, we are, have been, and may become subject to arbitration, litigation or claims arising in the ordinary course of business.
Biggest changeItem 3. Legal Proceedings From time to time, we are, have been, and may become subject to arbitration, litigation or claims.
Item 4. Mine Safety Disclosures Not applicable. 31 Table of Contents PART II
Item 4. Mine Safety Disclosures Not applicable. 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed5 unchanged
Biggest changeBase Period Company/Index 10/28/2021 12/31/2021 12/31/2022 12/31/2023 Solo Brands, Inc. $ 100.00 $ 91.94 $ 23.80 $ 36.24 S&P 500 Index 100.00 103.69 80.56 103.77 S&P 500 Apparel, Accessories & Luxury Goods Index $ 100.00 $ 99.33 $ 54.64 $ 52.44 The performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act. 32 Table of Contents Unregistered Sales of Equity Securities None.
Biggest changeBase Period Company/Index 10/28/2021 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Solo Brands, Inc. $ 100.00 $ 91.94 $ 23.80 $ 36.24 $ 6.71 S&P 500 Index 100.00 103.69 80.56 103.77 127.96 S&P 500 Apparel, Accessories & Luxury Goods Index $ 100.00 $ 99.33 $ 54.64 $ 52.44 $ 48.58 The performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act. 37 Table of Contents Unregistered Sales of Equity Securities None.
There is no established trading market for our Class B common stock. As of March 11, 2024, other than shares offered to the public, there were approximately 9 shareholders of record for our Class A common stock and approximately 54 shareholders of record for our Class B common stock.
There is no established trading market for our Class B common stock. As of March 10, 2025, other than shares offered to the public, there were approximately 9 shareholders of record for our Class A common stock and approximately 54 shareholders of record for our Class B common stock.
Purchases of Equity Securities by the Issuer or Affiliated Purchasers We did not repurchase any of our equity securities during the quarter ended December 31, 2023. Item 6. [Reserved] 33 Table of Contents
Purchases of Equity Securities by the Issuer or Affiliated Purchasers We did not repurchase any of our equity securities during the quarter ended December 31, 2024. Item 6. [Reserved] 38 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

49 edited+66 added−72 removed24 unchanged
Biggest changeSelling, General, and Administrative Expenses Selling, general and administrative (“SG&A”) expenses consist primarily of marketing costs, wages, equity-based compensation expense, benefits costs, costs of our warehousing and logistics operations, costs of operating on third-party DTC marketplaces, professional fees and services, costs of shipping product to our customers, net one-time advertising contract termination fees and general corporate expenses.
Biggest changeConsolidated Operating Expenses Operating expenses consist of (1) selling, general and administrative (“SG&A”) expenses, (2) restructuring, contract termination and impairment charges, (3) depreciation and amortization expenses and (4) other operating expenses, as defined below. • Selling, General and Administrative (“SG&A”) Expenses - SG&A expenses consist primarily of marketing costs, wages, equity-based compensation expense, benefits costs, costs of our warehousing and logistics operations, costs of operating on third-party DTC marketplaces, professional fees and services, costs of shipping product to our customers and general corporate expenses. • Restructuring, Contract Termination and Impairment Charges - Restructuring, contract termination and impairment charges consist of severance and employee-related benefits, contract termination fees and asset impairment charges. • Depreciation and Amortization Expenses - Depreciation and amortization expenses consist of depreciation of property and equipment and amortization of definite-lived intangible assets. • Other Operating Expenses - Other operating expenses include certain costs incurred as a result of being a public company, secondary offering completed in May 2023, acquisition-related expenses, business optimization and expansion expenses and management transition costs.
Revenue is recognized for the amount of consideration to which we expect to be entitled in exchange for transferring promised goods to a customer. The consideration promised in a contract with a customer includes fixed and variable amounts. The fixed amount of consideration is the standalone selling price of the goods sold.
Revenue Recognition Revenue is recognized for the amount of consideration to which we expect to be entitled in exchange for transferring promised goods to a customer. The consideration promised in a contract with a customer includes fixed and variable amounts. The fixed amount of consideration is the standalone selling price of the goods sold.
Contractual Obligations Our material cash commitments from known contractual and other obligations primarily consist of obligations for long-term debt and related interest, leases for properties and equipment and purchase obligations as part of normal operations. See Note 11, Long-Term Debt, in Item 8 of this Annual Report for more information regarding scheduled maturities of our long-term debt.
Contractual Obligations Our material cash commitments from known contractual and other obligations primarily consist of obligations for long-term debt and related interest, leases for properties and equipment and purchase obligations as part of normal operations. See Note 12, Long-Term Debt, in Item 8 of this Annual Report for more information regarding scheduled maturities of our long-term debt.
Principal under the Revolving Credit Facility is not due until maturity. In addition to the above, the amendment on September 1, 2021 included a provision to borrow up to $100.0 million under a term loan (the “Term Loan”). The proceeds from the Term Loan were used to fund the Chubbies acquisition.
Principal under the Revolving Credit Facility is not due until maturity. In addition to the above, the amendment on September 1, 2021 included a provision to borrow up to $100.0 million under the Term Loan. The proceeds from the Term Loan were used to fund the Chubbies acquisition.
Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions. 39 Table of Contents See Note 2, Significant Accounting Policies, to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information about our significant accounting policies, including our critical accounting policies.
Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions. See Note 2, Significant Accounting Policies, to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information about our significant accounting policies, including our critical accounting policies.
Interest Expense, Net Interest expense, net consists primarily of interest on our Revolving Credit Facility and Term Loan.
Consolidated Interest Expense Interest expense, net consists primarily of interest on our Revolving Credit Facility and Term Loan.
These purchase obligations include all enforceable, legally binding agreements to purchase goods or services that specify all significant terms, regardless of the duration of the agreement, and exclude agreements with variable terms for which we are unable to estimate the minimum amounts.
These purchase obligations include all enforceable, legally binding agreements to purchase goods or services or pay consideration due that specify all significant terms, regardless of the duration of the agreement, and exclude agreements with variable terms for which we are unable to estimate the minimum amounts.
Income Taxes In determining the provision for income taxes for financial statement purposes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. We evaluate the carrying value of our deferred tax assets on a quarterly basis.
Income Taxes In determining the provision for income taxes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. We evaluate the carrying value of our deferred tax assets on a quarterly basis.
The Revolving Credit Facility matures on May 12, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an 37 Table of Contents applicable margin, which as of December 31, 2023, was based on SOFR. Interest is due on the last business day of each March, June, September and December.
The Revolving Credit Facility matures on May 12, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an applicable margin, which as of December 31, 2024, was based on SOFR. Interest is due on the last business day of each March, June, September and December.
Other Terms of the Revolving Credit Facility We may request incremental term loans, incremental equivalent debt, or revolving commitment increases (we refer to each as an Incremental Increase) in amounts such that, after giving pro forma effect to such Incremental Increase, our total secured net leverage ratio (as defined in the Revolving Credit Facility) would not exceed the then-applicable cap under the Revolving Credit Facility.
Other Terms of the Revolving Credit Facility The Revolving Credit Facility provides for incremental term loans, incremental equivalent debt, or revolving commitment increases (we refer to each as an “Incremental Increase”) in amounts such that, after giving pro forma effect to such Incremental Increase, our total secured net leverage ratio (as defined in the Revolving Credit Facility) would not exceed the then-applicable cap under the Revolving Credit Facility.
At December 31, 2023, we had $91.3 million outstanding on the Term Loan. All required principal payments were made on time and with available cash through the year ended December 31, 2023. Interest payments are due on a quarterly basis under the Term Loan, with the same due dates as noted for the Revolving Credit Facility above.
At December 31, 2024, we had $83.0 million outstanding on the Term Loan. All required principal payments were made on time and with available cash through the year ended December 31, 2024. Interest payments are due on a quarterly basis under the Term Loan, with the same due dates as noted for the Revolving Credit Facility above.
The Term Loan matures on September 1, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an applicable margin, which as of December 31, 2023, was based on SOFR.. We were required to make quarterly principal payments on the Term Loan beginning on December 31, 2021.
The Term Loan matures on May 12, 2026 and bears interest at a rate equal to the base rate as defined in the agreement plus an applicable margin, which as of December 31, 2024, was based on SOFR. We were required to make quarterly principal payments on the Term Loan beginning on December 31, 2021.
Our cash flows from operating activities are our principal sources of liquidity and result primarily from the sales of our portfolio of products as described in Part I, Item 1, Business, of this Annual Report.
Our cash flows from operating activities and borrowings under the Revolving Credit Facility are our principal sources of liquidity and result primarily from the sales of our portfolio of products as described in Part I, Item 1, Business, of this Annual Report.
As so amended, the Revolving Credit Facility allows us to borrow up to $350.0 million of revolving loans, including the ability to issue up to $20.0 million in letters of credit, with $0.6 million of letters of credit issued and outstanding as of December 31, 2023.
As so amended, the Revolving Credit Facility allows us to borrow up to $350.0 million of revolving loans, including the ability to issue up to $20.0 million in letters of credit, with $1.4 million of letters of credit issued and outstanding as of December 31, 2024.
If actual market conditions are more favorable than anticipated, inventory previously written down may be sold to customers, resulting in lower cost of sales and higher income from operations than expected in that period.
If actual market conditions are less favorable than those projected by management, additional write-downs are recorded. If actual market conditions are more favorable than anticipated, inventory previously written down may be sold to customers, resulting in lower cost of sales and higher income from operations than expected in that period.
Market conditions can impact the viability of these institutions, and any inability to access or delay in accessing these funds could adversely affect our business and financial position. The table below reflects our sources, facilities and availability of liquidity as of December 31, 2023. See Note 11, Long-Term Debt, to the consolidated financial statements included elsewhere in this Annual Report.
Market conditions can impact the viability of these institutions, and any inability to access or delay in accessing these funds could adversely affect our business and financial position. The table below reflects our sources, facilities and availability of liquidity as of December 31, 2024. See Note 12, Long-Term Debt in Item 8 of this Annual Report for additional information.
We expect these needs to continue as we develop and grow our business. We fund our working capital, which is primarily comprised of inventory, accounts payable, and accounts receivable, net, and other cash requirements from cash flows from operating activities, cash on hand, and borrowings under our Revolving Credit Facility.
We fund our working capital, which is primarily comprised of inventory, accounts payable, and accounts receivable, net, and other cash requirements from cash flows from operating activities, cash on hand, and borrowings under our Revolving Credit Facility.
Financing activities The $10.7 million increase in cash provided by financing activities, as shown in the table above, was primarily due to a $50.6 million increase in cash provided by net debt activities, partially offset by a $37.0 million increase in cash used in the repurchase of the Company’s Class A common stock, of which $31.2 million was subsequently retired and the remainder utilized as a portion of the contingent consideration payments related to the 2023 acquisitions, and a $2.2 million increase in cash used in distributions to non-controlling interests.
Financing activities The $9.2 million decrease in cash used in financing activities, was primarily due to a $34.4 million decrease in cash used in net drawdowns and payments on our debt and a $6.2 million decrease in cash used in distributions to non-controlling interests, partially offset by a $37.0 million decrease in cash used for the repurchase of the Company’s Class A common stock as compared to 2023, of which $31.2 million was subsequently retired and the remainder utilized as a portion of the contingent consideration payments related to the 2023 acquisitions.
Cost of Goods Sold and Gross Profit Gross profit reflects net sales less cost of goods sold, which primarily includes the purchase cost of our products from our third-party manufacturers, inbound freight and duties, costs related to manufacturing of certain of our products, product quality testing and inspection costs and depreciation on molds and equipment that we own.
Partially offsetting these declines, the Chubbies segment experienced increases in both DTC and retail channel net sales. 40 Table of Contents Consolidated Gross Profit and Gross Margin Gross profit reflects net sales less cost of goods sold, which primarily includes the purchase cost of our products from our third-party manufacturers, inbound freight and duties, costs related to manufacturing of certain of our products, product quality testing and inspection costs and depreciation on molds and equipment that we own.
This change does not have a material impact to amortization expense in any future year. Recent Accounting Pronouncements For a description of recent accounting pronouncements, see “Recently Adopted Accounting Pronouncements” and “Recently Issued Accounting Standards—Not Yet Adopted” in Note 2, Significant Accounting Policies, of this Annual Report on Form 10-K.
Recent Accounting Pronouncements For a description of recent accounting pronouncements, see “Recently Adopted Accounting Pronouncements” and “Recently Issued Accounting Standards—Not Yet Adopted” in Note 2, Significant Accounting Policies, in Item 8 of this Annual Report on Form 10-K.
We maintain the majority of our cash and cash equivalents in bank deposit and overnight sweep accounts with major highly rated multi-national and local financial institutions, and our deposits at these institutions exceed insured limits.
Our future product sales and our cash flows are difficult to predict, and actual sales may not be in line with our forecasts. We maintain the majority of our cash and cash equivalents in bank deposit and overnight sweep accounts with major highly rated multi-national and local financial institutions, and our deposits at these institutions exceed insured limits.
We are the sole managing member of Holdings, and as a result, consolidate the financial results of Holdings. Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Holdings is not subject to U.S. federal and certain state and local income taxes.
Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Holdings is not subject to U.S. federal and certain state and local income taxes.
If these assets were for sale, our estimates of their values could be significantly different because of market conditions, specific transaction terms and a buyer's perspective on future cash flows.
If these assets were for sale, our estimates of their values could be significantly different because of market conditions, specific transaction terms and a buyer's perspective on future cash flows. Impairment charges related to intangible assets are recorded to restructuring, contract termination and impairment charges on the consolidated statements of operations and comprehensive income (loss).
However, growth opportunities, such as continued expansion into international markets, may significantly increase our expenses (including our capital expenditures) and cash requirements. Furthermore, we will continue to seek possible brand and mission consistent acquisition opportunities that would require additional capital.
In the longer-term, growth opportunities, such as continued expansion into international markets and possible brand and mission consistent acquisition opportunities, may significantly increase our expenses (including our capital expenditures) and cash requirements.
Variable considerations, including cash discounts, rebates and sales incentives programs, are deducted from gross sales in determining net sales at the time revenues are recorded. Variable considerations also include the portion of goods that are expected to be returned and refunded. Any consideration received (or receivable) that we expect to refund to the customer is recognized as a refund liability.
Variable considerations, including cash discounts, rebates and sales incentives programs, are deducted from gross sales in determining net sales at the time revenues are recorded. Variable considerations also include the portion of goods that are expected to be returned and refunded. We determine these estimates based on historical experience and trends.
Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net Sales Net sales are comprised of DTC and wholesale channel sales to retail partners. Net sales in both channels reflect the impact of partial shipments, product returns, and discounts for certain sales programs or promotions. Our net sales have historically included a seasonal component.
Net sales in both channels reflect the impact of partial shipments, product returns, and discounts for certain sales programs or promotions. Our net sales have historically included a seasonal component.
If we determine in the future that we will not be able to fully utilize all or part of these deferred tax assets, we would record a valuation allowance through earnings in the period the determination was made, which would have an adverse effect on our results of operations and earnings in future periods. 40 Table of Contents Goodwill Goodwill is determined based upon the excess enterprise value over the estimated fair value of assets and liabilities assumed at acquisition date and is recorded at its estimated fair value at the date of acquisition.
If we determine in the future that we will be able to fully utilize all or part of these deferred tax assets, we would record a reversal of our valuation allowance through earnings in the period the determination was made, which would have a positive effect on our results of operations and earnings in future periods.
In the DTC channel, our historical net sales tend to be highest in our second and fourth quarters, while our wholesale channel has generated higher sales in the first and third quarters.
In the DTC channel, our historical net sales tend to be highest in our second and fourth quarters, while our retail channel has generated higher sales in the first and third quarters. Additionally, we expect variances in our net sales throughout the year relative to the timing of new product launches.
Overview We own and operate premium brands with ingenious products that we market and deliver through our direct-to-consumer (“DTC”) platform and wholesale partnerships. We aim to help our customers enjoy good moments that create lasting memories.
In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Overview We own and operate premium brands with ingenious products that we market and deliver through our direct-to-consumer (“DTC”) platform and retail partnerships. We aim to help our customers enjoy good moments that create lasting memories.
We consistently deliver innovative, high-quality products that are loved by our customers and revolutionize the outdoor experience, build community and help everyday people reconnect with what matters most. For the year ended December 31, 2023, we experienced a decrease in our net sales from $517.6 million for the year ended December 31, 2022 to $494.8 million for the current year.
We consistently deliver innovative, high-quality products that are loved by our customers and revolutionize the outdoor experience, build community and help everyday people reconnect with what matters most.
We have recorded a valuation allowance against Oru’s deferred tax assets resulting from the impairment of Oru's book goodwill and intangible assets, as discussed below, resulting in a net deferred tax asset for the Oru consolidated group.
We have recorded a valuation allowance against Solo Brands, Inc. and Oru’s deferred tax assets resulting from current losses, as discussed below, resulting in a net deferred tax asset the consolidated group. Solo Brands, Inc. evaluated and concluded that as of December 31, 2024, we had $19.1 million of valuation allowances.
We determine these estimates based on historical experience and trends. The actual amount of customer returns and refunds may differ from our estimates. We elected to account for shipping costs as fulfillment activities, and not as separate performance obligations.
The actual amount of customer returns and rebates may differ from our estimates. We elected to account for shipping costs as fulfillment activities, and not as separate performance obligations. Net sales include shipping costs charged to the customer with the related shipping expense recognized in selling, general and administrative expenses when the revenue is recognized.
Year Ended December 31, Change (dollars in thousands) 2023 2022 $ % Interest expense, net $ 11,004 $ 6,271 $ 4,733 75.5 % Interest expense, net increased for the year ended December 31, 2023 compared to the year ended December 31, 2022 due to an increase in the weighted average interest rate on our total debt balance, as well as a higher average debt balance in the current year when compared to the prior year. 36 Table of Contents Income Taxes Income taxes represents federal, state, and local income taxes on the Company's allocable share of taxable income of Holdings, as well as Oru's and Chubbies' federal, state and foreign tax expense related to international subsidiaries.
Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Interest expense, net $ 14,004 $ 11,004 $ 3,000 27.3 % Interest expense, net increased for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to an increase in the weighted average interest rate on our total debt balance, as well as a higher average debt balance in 2024 when compared to the prior year.
See Note 8, Intangible Assets, net in Item 8 of this Annual Report, for further details regarding intangible asset balances and related accumulated amortization and impairment losses. We evaluate the carrying value of definite-lived intangible assets whenever a change in circumstances indicates that the net carrying value may not be recoverable from the undiscounted future cash flows from operations.
See Note 9, Intangible Assets, net in Item 8 of this Annual Report, for further details regarding intangible asset balances and related accumulated amortization and impairment losses.
The impairment charges were recorded to impairment charges on the consolidated statements of operations and comprehensive income (loss). The fair value determination of our reporting units and our goodwill is judgmental in nature and requires the use of estimates and assumptions that are sensitive to changes.
Future changes in the judgments, assumptions and estimates that are used in the impairment testing for goodwill could result in significantly different estimates of fair value. Impairment charges related to goodwill are recorded to restructuring, contract termination and impairment charges on the consolidated statements of operations and comprehensive income (loss).
Net sales include shipping costs charged to the customer with the related shipping expense recognized in selling, general and administrative expenses when the revenue is recognized. Sales taxes collected from customers are excluded from net sales, which are remitted to government authorities. Inventory Inventories, consisting primarily of finished goods are recorded at the lower of cost or net realizable value.
Sales taxes collected from customers are excluded from net sales, which are subsequently remitted to government authorities. 46 Table of Contents Inventory Inventories, consisting primarily of finished goods are recorded at the lower of cost or net realizable value. Cost is determined using an average costing method, calculated using the weighted average cost of historical purchases.
Based on the results of the quantitative interim goodwill impairment test in the third quarter of 2023, the calculated fair values of the Solo Stove, Chubbies and ISLE reporting units exceeded their book values by more than 10% and no additional testing was necessary. For the Oru reporting unit, the fair value exceeded the book value by less than 5%.
Based on the results of the quantitative interim goodwill impairment test, the calculated fair value of the Chubbies reporting unit exceeded its book value by less than 10% as of September 30, 2024.
Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand and market conditions.
Our inventory balances include all costs incurred to deliver inventory to our distribution facilities in its finished state, such as inbound freight, import duties and tariffs. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
The decline in net sales was primarily the result of the lack of significant new product launches in the current year when compared to the prior year, in which the Mesa and Pi pizza oven were launched.
The decline in net sales was primarily driven by the Solo Stove segment, as a result of a lack of significant new product launches in 2024 when compared to the prior year, with the prior year continuing to benefit from the release of new products in the fourth quarter of 2022.
Liquidity Sources and Facilities Availability Cash and cash equivalents $ 19,842 $ 19,842 Working capital (excluding cash and cash equivalents) 87,670 87,670 Revolving Credit Facility 60,000 289,400 Term Loan 91,250 — Revolving Credit Facility and Term Loan On May 12, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., the Lenders and L/C Issuers party thereto (each as defined therein) and the other parties thereto (as subsequently amended on June 2, 2021, and September 1, 2021, the “Revolving Credit Facility”).
Although we cannot predict with certainty all of our particular short-term cash uses or the timing or amount of cash requirements, or the effects of our plan to refinance or restructure our debt or enter into other financing arrangements as described above, there is uncertainty about our ability to meet our cash obligations for the next twelve months. 44 Table of Contents Revolving Credit Facility and Term Loan On May 12, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., the Lenders and L/C Issuers party thereto (each as defined therein) and the other parties thereto (as subsequently amended on June 2, 2021, September 1, 2021 and May 22, 2023, the “Revolving Credit Facility”).
We were in compliance with all covenants under the Revolving Credit Facility as of December 31, 2023. 38 Table of Contents Cash Flows Year Ended December 31, Change (dollars in thousands) 2023 2022 $ % Cash flows provided by (used in): Operating activities $ 62,423 $ 32,395 $ 30,028 92.7 % Investing activities (53,079) (10,015) (43,064) 430.0 % Financing activities $ (12,866) $ (23,542) $ 10,676 (45.3) % Operating activities The $30.0 million increase in cash provided by operating activities period over period, as shown in the table above, was due to a $44.1 million decline in cash usage from changes in operating assets and liabilities (“working capital”), partially offset by an increase in cash usage of $14.1 million from changes in net income (loss) after non-cash adjustments, primarily driven by the impacts related to the goodwill and intangible asset impairments and the related impacts to deferred income taxes.
Cash Flows Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Cash flows provided by (used in): Operating activities $ 10,517 $ 62,423 $ (51,906) (83.2) % Investing activities (14,512) (53,079) 38,567 72.7 % Financing activities $ (3,657) $ (12,866) $ 9,209 71.6 % Operating activities The $51.9 million decrease in cash provided by operating activities period over period, was due to a $13.7 million increase in cash usage from changes in operating assets and liabilities (“working capital”), which was primarily driven by increased cash usage in inventory replenishment, as the 45 Table of Contents prior year benefited from a higher beginning inventory balance that required less replenishment throughout the year.
As a result of the quantitative goodwill impairment test performed as of December 31, 2023, we determined that the carrying amounts of the Solo Stove, Oru and ISLE reporting units exceeded their fair values and goodwill impairment charges were recognized at each. The remaining reporting units were determined to have fair values exceeding their book values by more than 10%.
Through performance of this test, we determined that the carrying amounts of the IcyBreeze and Solo Stove reporting units exceeded their respective fair values and goodwill impairment charges of $19.9 million and $25.0 million, respectively, were recognized.
As a result, we have not recorded any write-downs to inventory below cost, except as it relates to obsolete or slow-moving inventory. If actual market conditions are less favorable than those projected by management, additional write-downs may be required.
We make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand, market conditions and product obsolescence. As a result, we have not recorded any write-downs to inventory below cost, except as it relates to obsolete or slow-moving inventory.
Solo Brands, Inc. evaluated and concluded that as of December 31, 2023, we had $1.4 million of deferred tax assets, net of $0.8 million of valuation allowances. We expect to realize future tax benefits related to the utilization of these assets. However, since future financial results may differ from previous estimates, periodic adjustments to our valuation allowances may be necessary.
However, since future financial results may differ from previous estimates, periodic adjustments to our valuation allowances may be necessary.
The fair value of both the Oru and ISLE reporting units and determined to be at or below the carrying value of the goodwill and intangible asset(s) recorded at each reporting unit. As such, the Company fully impaired the intangible asset(s) of the Oru and ISLE reporting units as of December 31, 2023.
The Chubbies reporting unit was determined to have a fair value exceeding its book value by more than 5% as of September 30, 2024. Goodwill at the remaining reporting units of the Company were fully impaired as of December 31, 2023.
See Note 13, Leases, in Item 8 of this Annual Report for additional information on leases. Interest payable on our long-term debt is expected to be $6.4 million due in the twelve months following December 31, 2023 and $7.8 million due thereafter.
See Note 14, Leases, in Item 8 of this Annual Report for additional information on leases. As of December 31, 2024, we executed a termination agreement for advertising services, resulting in a remaining commitment of $5.4 million that is due in the first quarter of 2025.
Investing activities The $43.1 million increase in cash used in investing activities, as shown in the table above, was primarily due to a $33.8 million increase in cash used in acquisition activity in 2023 compared to the prior year related to the 2023 acquisitions.
Investing activities The $38.6 million decrease in cash used in investing activities, was primarily driven by the $34.6 million decrease in cash used in acquisition activity in 2024, compared to the prior year with the 2023 acquisitions, partially offset by an increase in capital expenditures in 2024, primarily related to the addition of seven owned retail stores within our Chubbies segment in 2024.
Year Ended December 31, Change (dollars in thousands) 2023 2022 $ % Cost of goods sold $ 192,624 $ 199,452 $ (6,828) (3.4) % Gross profit 302,152 318,175 (16,023) (5.0) % Gross margin (Gross profit as a % of net sales) 61.1 % 61.5 % (0.40) The decrease in cost of goods sold for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily driven by reduction in freight costs, with a lower average container cost in 2023 when compared to the prior year, as well as the decline in net sales.
Chubbies Gross Profit and Gross Margin Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % (1) Gross profit 67,006 61,595 5,411 8.8 % Gross margin (Gross profit as a % of net sales) 59.4 % 60.6 % (120) (1) Change in gross margin period over period in basis points The increase in gross profit for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily the result of the increase in net sales.
Year Ended December 31, Change (dollars in thousands) 2023 2022 $ % Income tax expense $ (36,225) $ 1,001 $ (37,226) (3718.9) % Income tax expense decreased for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to the current year goodwill and intangible asset impairments, as well as the current year decrease in the valuation allowance.
Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Income tax expense (benefit) $ (8,958) $ (36,225) $ 27,267 (75.3) % Income tax benefit decreased for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by the book losses in the prior year due to the restructuring, contract termination and impairment charges (see Note 3, Restructuring, Contract Termination and Impairment Charges for more information) which exceeded those recognized in 2024, as well as by the increase in the Company’s valuation allowance, as compared to the prior year which included a net release of the Company’s valuation allowance.
Removed
In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our discussion and analysis of the year ended December 31, 2023 compared to the year ended December 31, 2022 is included herein.
Added
We operate as two reportable segments: Solo Stove, which includes the Solo Stove and TerraFlame brands and primarily offers indoor and outdoor firepits, stoves, and accessories, and Chubbies, which offers premium casual apparel and activewear. The remaining operating segments are included within the Corporate and All Other category.
Removed
Our discussion and analysis of the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 9, 2023.
Added
The CODM makes operating decisions, assesses financial performance, and allocates resources based upon discrete financial information at the reportable segment level. For the year ended December 31, 2024, we experienced a decrease in our net sales from $494.8 million for the year ended December 31, 2023 to $454.6 million.
Removed
Similar to the prior year, we continued to see net sales channel mix shift from direct to consumer to wholesale, with wholesale net sales growing 45.1%.
Added
This resulted in a decline in DTC channel net sales of 10.9% in 2024 when compared to the prior year. The retail channel net sales similarly experienced a decline, of a lesser magnitude, in 2024 when compared to the prior year, further driven by a non-recurring transaction with a marketing barter partner in the third quarter of 2023.
Removed
Due in part to this shift, within our direct to consumer net sales channel we have seen an increase in the number of customers purchasing accessories for our products that were purchased through our wholesale net sales channel.
Added
These declines driven by the Solo Stove segment were offset in part by increases within the Chubbies segment in both the retail and DTC net sales channels, primarily driven by continued growth within our retail strategic partnerships.
Removed
Further, we experienced a decline in direct to consumer net sales which can be attributed to inefficient marketing spend in the current year as we invested in marketing mediums that did not yield the anticipated returns, in contrasts to the more successful marketing investments made last year.
Added
Key Factors Affecting Our Financial Condition and Results of Operations In 2024, the Company refined its strategic vision and conducted a comprehensive evaluation of its initiatives and brands. The evaluation included analysis of the brand level financials, product design, customer metrics, marketing campaign effectiveness and potential synergies, amongst other items.
Removed
Additionally, we expect variance in our net sales throughout the year relative to the timing of new product launches. 34 Table of Contents Year Ended December 31, Change (dollars in thousands) 2023 2022 $ % Net sales $ 494,776 $ 517,627 $ (22,851) (4.4) % Direct-to-consumer net sales 358,052 423,412 (65,360) (15.4) % Wholesale net sales 136,724 94,215 42,509 45.1 % The decrease in net sales for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily driven by the lack of significant new product launches in the current year when compared to the prior year.
Added
This evaluation, undertaken over the course of 2024, led the Company to undertake the following activities during the second half of 2024: • termination of underperforming marketing agreements with marketing barter partners that no longer aligned with the Company’s current marketing strategy; • winding up of the IcyBreeze reporting unit stemming from underperformance and management’s determination to revise product designs; and • reorganizing the Oru and ISLE reporting units to eliminate costs and capitalize on potential synergies, through restructuring under a revised management structure.
Removed
Within the DTC channel, total orders and average order value decreased 8.1% and 12.4%, respectively, for the year ended December 31, 2023. Partially offsetting the decrease, DTC channel net sales included $11.0 million of activity related to the businesses acquired in 2023, for which the comparative periods did not include such activity.
Added
Management undertook these activities with the intent of enhancing the foundation of the Company as part of the strategic initiative to return the Company to growth.
Removed
Growth within the wholesale net sales channel is mainly attributed to the expansion of our strategic partnerships.
Added
The items noted above had the following purposes: • Through the termination of the underperforming marketing agreements, management could be able to repurpose the funds previously allocated to these marketing contracts, towards increased investment in direct response marketing. Marketing spend under a certain marketing agreement was $16.9 million in 2023 and $3.7 million in 2024.
Removed
Partially offsetting the decreases, cost of goods sold included $6.4 million of activity related to the businesses acquired in 2023, for which the comparative periods did not include such activity, as well as increases in product costs unrelated to the 2023 acquisitions.
Added
Redirection of these marketing funds to direct response marketing may generate more favorable returns on the marketing dollars spent in future periods, as direct response marketing is better aligned to how our target market consumes their media. • IcyBreeze was acquired in 2023 to enter the portable cooler market and expand our product offering.
Removed
The decrease in gross profit for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily the result of the decrease in net sales, which simultaneously drove the decrease in cost of goods sold.
Added
Through the course of ownership, IcyBreeze underperformed projections. Management made the decision to wind-down the operations of IcyBreeze in the third quarter of 2024, with sell through of remaining legacy products.
Removed
Gross margin decreased for the year ended December 31, 2023 compared to the year ended December 31, 2022, the result of the shift in sales channel mix with growth in wholesale sales, which typically have lower gross margins than DTC sales, whereas the DTC sales declined.
Added
This wind-down of operations, while resulting in a direct reduction to revenue attributable to the Company, is also anticipated to benefit net income (loss) in future periods. • The reorganization of the Oru and ISLE reporting units under a single brand president and leadership team was designed to be strategically beneficial, as both brands operate within the same outdoor watersports space.
Removed
Year Ended December 31, Change (dollars in thousands) 2023 2022 $ % Selling, general, and administrative expenses $ 249,432 $ 259,048 $ (9,616) (3.7) % SG&A as a % of net sales 50.4 % 50.0 % 0.40 The decrease in SG&A for the year ended December 31, 2023 compared to the year ended December 31, 2022 was driven by $0.3 million of fixed cost decreases and $9.3 million of variable cost decreases.
Added
The Company expects to benefit from improved margins through the consolidation of overhead and exploration of manufacturing and logistics synergies. In addition, the Company expects to be able to better leverage the combined scale of the Oru and ISLE reporting units as we seek to scale and achieve growth.
Removed
The fixed cost decreases for the year ended December 31, 2023 compared to the year ended December 31, 2022 were primarily the result of a $3.1 million decrease in employee costs, primarily attributable to a $3.8 million decrease in equity-based compensation, offset in part by an increase in rent of $2.7 million due to warehouse and retail store additions and an increase of $0.5 million in information technology expenses. 35 Table of Contents The variable cost decreases for the year ended December 31, 2023 compared to the year ended December 31, 2022 were primarily the result of a $7.5 million decrease in distribution costs primarily due to decreased shipping costs and lower total orders, a $1.6 million decrease in the fair value of contingent consideration related to the current year acquisitions, a $1.6 million decrease in warehouse transition expenses due to completing the transition of the 2021 acquisitions in the prior year and a $1.0 million decrease in bad debt expenses.
Added
While these activities are intended to provide future benefit to the Company, the majority of these activities required cash outlays in 2024. In order to fund these cash outlays, the Company leveraged cash from operations and draws on the Revolving Credit Facility (as defined below).
Removed
These variable expense decreases were offset in part by an increase of $3.5 million in advertising and marketing expense. Depreciation and Amortization Expenses Depreciation and amortization expenses consist of depreciation of property and equipment and amortization of definite-lived intangible assets.
Added
The following table outlines the cash outlays and the period in which they occurred. 39 Table of Contents Activity Cash Outlay (dollars in thousands) Period Termination of marketing agreements $ 9,000 Q4 2024 Reorganization of the Oru and ISLE reporting units 349 Q4 2024 Wind-down of the operations of the IcyBreeze reporting unit 205 Q3 - Q4 2024 Economic Factors Affecting our Performance We sell our products in the U.S. as well as various foreign countries, primarily Europe, Canada and Australia.
Removed
Year Ended December 31, Change (dollars in thousands) 2023 2022 $ % Depreciation and amortization expenses $ 26,593 $ 24,592 $ 2,001 8.1 % Amortization 22,396 21,019 1,377 6.6 % Depreciation 4,197 3,573 624 17.5 % The increase in amortization and the increase in depreciation for the year ended December 31, 2023 compared to the year ended December 31, 2022, was primarily related to increases in definite-lived intangible assets and additional property and equipment as a result of acquisition activity in 2023.
Added
We also source and procure inventory, primarily out of China, with some products sourced through Mexico. As such, we are exposed to and impacted by global macroeconomic factors. In recent years, tariffs on goods manufactured in China have increased significantly.
Removed
Impairment Charges Impairment charges consist of impairments recorded to definite-lived intangible assets and goodwill.

… 107 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+3 added−0 removed3 unchanged
Biggest changeHowever, we do not believe there is a significant direct correlation between petroleum or natural gas prices and the costs of our products. 43 Table of Contents Foreign Currency Risk Our international sales are primarily denominated in local currencies. During 2023 and 2022, net sales in international markets accounted for 6.0% and 7.1% of our consolidated revenues, respectively.
Biggest changeDuring 2024 and 2023, net sales in international markets accounted for 6.9% and 6.0% of our consolidated revenues, respectively. Therefore, we do not believe exposure to foreign currency fluctuations has had a material impact on our net sales.
We may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations, but as of December 31, 2023, we have not entered into any such contracts. A 100 bps increase in SOFR would increase our interest expense by approximately $1.5 million in any given year.
We may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations, but as of December 31, 2024, we have not entered into any such contracts. A 100 bps increase in SOFR would increase our interest expense by approximately $1.5 million in any given year.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.
A 100 bps unfavorable change in foreign currency exchange rates to which we are exposed would increase our operating expenses by approximately $0.3 million for the year ended December 31, 2023. 44 Table of Contents
A 100 bps unfavorable change in foreign currency exchange rates to which we are exposed would increase our operating expenses by approximately $0.3 million and decrease our net sales by approximately $0.3 million for the year ended December 31, 2024. 49 Table of Contents
Interest Rate Risk In order to maintain liquidity and fund business operations, we have a long-term credit facility and separate term loan that bear variable interest rates based on prime, federal funds, or SOFR plus an applicable margin based on our total net leverage ratio.
Our market risk exposure is primarily the result of fluctuations in interest rates. 48 Table of Contents Interest Rate Risk In order to maintain liquidity and fund business operations, we have a long-term credit facility and separate term loan that bear variable interest rates based on prime, federal funds, or SOFR plus an applicable margin based on our total net leverage ratio.
As of December 31, 2023, we had indebtedness of $60.0 million and $91.3 million, with annualized rates of interest of 6.59% and 6.49%, under our Revolving Credit Facility and Term Loan, respectively. The nature and amount of our long-term debt can be expected to vary as a result of future business requirements, market conditions, and other factors.
As of December 31, 2024, we had indebtedness of $69.0 million and $83.0 million, with annualized rates of interest of 7.03% and 7.08%, under our Revolving Credit Facility and Term Loan, respectively. The nature and amount of our long-term debt varies as a result of business requirements, market conditions, and other factors.
In addition, our suppliers may incur many costs, including labor costs, in other currencies. To the extent that exchange rates move unfavorably for our suppliers, they may seek to pass these additional costs on to us, which could have a material impact on our gross margin.
To the extent that exchange rates move unfavorably for our suppliers, they may seek to pass these additional costs on to us, which could have a material impact on our gross margin. In addition, a strengthening of the U.S. dollar may increase the cost of our products to our customers outside of the United States.
Therefore, we do not believe exposure to foreign currency fluctuations has had a material impact on our net sales. A portion of our operating expenses are incurred outside the Unites States and are denominated in foreign currencies, which are also subject to fluctuations due to changes in foreign currency exchange rates.
A portion of our operating expenses are incurred outside the Unites States and are denominated in foreign currencies, which are also subject to fluctuations due to changes in foreign currency exchange rates. In addition, our suppliers may incur many costs, including labor costs, in other currencies.
In addition, a strengthening of the U.S. dollar may increase the cost of our products to our customers outside of the United States. Our operating results and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
Our operating results and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
Added
However, we do not believe there is a significant direct correlation between petroleum or natural gas prices and the costs of our products. The U.S. government has imposed tariffs on certain foreign goods from a variety of countries and regions that it perceives as engaging in unfair trade practices.
Added
If we become unable to recover a substantial portion of any increased tariff related costs from our customers, manufacturers, or other available avenues, the imposition of the new or increased international tariffs could materially and adversely affect our business, financial condition and results of operations.
Added
We will continue to monitor international trade policy and will make adjustments to our supply base where possible to mitigate the impact on our costs. We do not currently hedge commodity price risk. Foreign Currency Risk Our international sales are primarily denominated in local currencies.

Other SBDS 10-K year-over-year comparisons