SBDS 10-K & 10-Q changes, risk factors and insider trading
Solo Brands, Inc. · OTC · Sporting & Athletic Goods, Nec · CIK 1870600 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “The markets in which we operate are subject to evolving, and increasingly stringent, consumer laws.”
New heading “Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could adversely affect our business and stock price.”
New heading “Sales of a substantial number of shares of our Class A common stock in the public market could cause our stock price to fall.”
Removed heading “Risk Factors Summary”
Removed heading “Our business relies on cooperation of our suppliers, but not all relationships include written exclusivity agreements, which means that they could produce similar products for our competitors. If they produce similar products for our competitors, it could harm our results of operations.”
Removed heading “Fluctuations in the cost and availability of raw materials, equipment, labor, and transportation could cause manufacturing delays or increase our costs.”
Removed heading “We have identified a material weakness in our internal control over financial reporting, which, if not corrected, could affect the reliability of our consolidated financial statements and have other adverse consequences.”
Removed heading “We are subject to credit risk.”
Removed heading “The Tax Receivable Agreement requires Solo Brands, Inc. to make cash payments to the Continuing LLC Owners in respect of certain tax benefits to which Solo Brands, Inc. may become entitled, and no such payments will be made to any holders of Solo Brands, Inc. Class A common stock unless such holders are also Continuing LLC Owners. The payments Solo Brands, Inc. will be required to make under the Tax Receivable Agreement may be substantial.”
Removed heading “In certain cases, future payments under the Tax Receivable Agreement to the Continuing LLC Owners may be accelerated or significantly exceed the actual benefits Solo Brands, Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement.”
Removed heading “Solo Brands, Inc. will not be reimbursed for any payments made to the Continuing LLC Owners under the Tax Receivable Agreement in the event that any tax benefits are disallowed.”
Removed heading “Substantial future sales, or the perception of future substantial sales, by us or our existing stockholders in the public markets could cause the market price of our Class A common stock to decline.”
Removed heading “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.”
Removed heading “We do not currently expect to pay any cash dividends.”
Removed heading “Stock repurchases undertaken by the Company could have adverse effects, including potentially increasing the volatility of the price of our Class A common stock and potentially diminishing our cash reserves while not producing hoped for stockholder value.”
Removed heading “Changes in applicable tax regulations or in their implementation could negatively affect our business and financial results.”
Removed heading “If our estimates or judgments relating to our critical accounting policies prove to be incorrect or change significantly, our results of operations could be harmed.”
Removed heading “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.”
Largest changes
“We incurred a net loss of $113.4 million during the year ended December 31, 2024 and had an accumulated deficit of $228.8 million. We had cash and cash equivalents of $12.0 million and total debt outstanding of $150.7 million as of December 31, 2024. In addition, subsequent to December 31, 2024, we drew an additional $277.3 million on our Revolving Credit Facility (as defined herein), which matures on May 12, 2026. …”see in full comparison
“If we seek the protection of the U.S. Bankruptcy Court, our operations and ability to develop and execute our business plan, and our ability to continue as a going concern, are subject to the risks and uncertainties associated with bankruptcy. As such, seeking U.S. Bankruptcy Court protection is likely to have a material adverse effect on our business, financial condition, results of operations and liquidity. …”see in full comparison
“Additional financing, strategic transactions or additional relief may not be available to us on acceptable terms, on a timely basis, or at all. If adequate funds are not available, or if the terms of potential funding sources or other strategic transactions are unfavorable, our business would be materially harmed. Furthermore, any new equity or equity-linked instruments we issue, similar to the issuance of shares in connection with the June 2025 refinancing transactions, will likely result in substantial dilution to our existing stockholders. …”see in full comparison
“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.”see in full comparison
“In recent years, diplomatic and trade relationships between the U.S. government and China have become increasingly frayed and the threat of a takeover of Taiwan by China has increased. Since much of our production occurs in China, our business, our operations and our supply chain could be materially and adversely impacted by political, economic or other actions from China, or changes in China-Taiwan relations that impact China and its economy. In addition, we continue to monitor any adverse impact that the war in Ukraine and the conflicts in the Middle East. …”see in full comparison
“In 2024, we announced restructuring plans and other cost savings initiatives, in order to operate more efficiently and control costs, which included re-balancing of products to align with our business strategy and workforce reductions. These plans were intended to generate, among other things, operating expense savings and improved margins and profitability. For example, in the third quarter of 2024, we implemented a strategic plan that involved activities related to restructuring, contract termination and related impairments, which was completed in the fourth quarter of 2024. …”see in full comparison
Full comparison: every changed paragraph (221)
Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K. The risks and uncertainties described below are not the only ones we face. Additional riskrisks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. The realization of any of these risks and uncertainties could have a material adverse effect on our results of operations and financial condition. In that event, the trading price and value of our Class A common stock could decline, and you may lose part or all of your investment.
Risk Factors Summary
The principal risks and uncertainties affecting our business include the following:
•Our financial condition raises substantial doubt as to our ability to continue as a going concern.
•We may be unable to realize expected benefits from our strategic plans, any restructuring and cost-reduction efforts, and operational improvements.
•Our limited liquidity poses additional risks to our business and operations.
•We depend on cash generated from our operations to support our business and our growth initiatives.
•Our indebtedness limits our ability to invest in the ongoing needs of our business.
•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.
•If we are unable to successfully design, develop, and introduce new products, our business will be harmed.
•Tariffs or other restrictions placed on foreign imports and any related counter-measures taken by other countries harm our business and results of operations.
•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.
•We rely on third-party manufacturers and problems with, or the loss of, our suppliers or an inability to obtain raw materials could harm our business and results of operations.
•Our historic growth rates have not been sustained and are not indicative of future growth.
•Our business could be harmed if we are unable to accurately forecast demand for our products or our results of operations.
•Our marketing strategy may not be successful with existing and future customers.
•If we fail to attract new customers in a cost-effective manner, our business may be harmed.
•Our net sales and profits depend on the level of customer spending for our products, which is sensitive to general economic conditions and other factors.
•The markets in which we compete are highly competitive and we could lose our market positions.
•Competitors have imitated and will likely continue to imitate our products. If we are unable to protect or preserve our brand image and proprietary rights, our business may be harmed.
•Our business relies on cooperation of our suppliers, but not all relationships include written exclusivity agreements. If they produce similar products for our competitors, it could harm our results of operations.
•Fluctuations in the cost and availability of raw materials, equipment, labor, and transportation could cause manufacturing delays or increase our costs.
•If we fail to timely and effectively obtain shipments of products from our manufacturers and deliver products to our retail partners and customers, our business and results of operations could be harmed.
•We may acquire or invest in other companies, which could divert our management’s attention, result in dilution to our stockholders, and otherwise disrupt our operations, harm our results of operations and negatively impact our financial condition.
•Our collection, use, storage, disclosure, transfer and other processing of personal information could give rise to significant costs and liabilities, including as a result of governmental regulation, uncertain or inconsistent interpretation and enforcement of legal requirements or differing views of personal privacy rights, which may have a material adverse effect on our reputation, business, financial condition and results of operations.
•We rely significantly on the use of information technology, as well as those of our third party service providers. Any significant failure, inadequacy, interruption or data security incident of our information technology systems, or those of our third-party service providers, could disrupt our business operations, which could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.
•Our business may be affected by the evolving regulatory framework for AI technologies.
•Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.
•Our results of operations are subject to seasonal and quarterly variations, which could cause the price of our common stock to decline.
•Our plans for continuing operations in international markets may not be successful.
•An adverse determination in any material product liability related claim against us could adversely affect our operating results or financial condition.
•Our business depends substantially on our ability to attract and retain experienced and qualified talent, including our senior management team.
•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.
•Our failure to regain compliance with the continued listing requirements of the New York Stock Exchange (the “NYSE”) or any future failure to meet such requirements could result in the delisting of our Class A common stock, which would have an adverse impact on the trading, liquidity and market price of our Class A common stock.
•We may become involved in legal or regulatory proceedings and audits.
•Our environmental, social and governance (“ESG”) and sustainability initiatives and the adoption of ESG regulatory frameworks may impose additional costs and expose us to emerging areas of risk.
•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.
Our financial condition raisespreviously raised and may in the future raise substantial doubt as to our ability to continue as a going concern.
In connection with the filing of this Annual Report on Form 10-K, we evaluated our ability to continue as a going concern for the twelve months following the issuance of the financial statements contained herein and determined that conditions and events, including the risk of variability in operating results that could affect future covenant compliance, raise substantial doubt about our ability to continue as a going concern within one year after the issuance of such financial statements. While management has developed plans intended to mitigate these conditions such that the plans are expected to alleviate such substantial doubt, the Company’s mitigating plans may not be successful. If the Company does not achieve the expected benefits from the planned operational initiatives to mitigate the going concern or if operating results or liquidity deteriorate, the Company may not have capital to finance its operations for the next twelve months. The Company could be required to seek further relief from lenders, additional capital through equity or debt financings or other sources or strategic alternatives.
Additional financing, strategic transactions or additional relief may not be available to us on acceptable terms, on a timely basis, or at all. If adequate funds are not available, or if the terms of potential funding sources or other strategic transactions are unfavorable, our business would be materially harmed. Furthermore, any new equity or equity-linked instruments we issue, similar to the issuance of shares in connection with the June 2025 refinancing transactions, will likely result in substantial dilution to our existing stockholders. If we cannot continue as a going concern, we could have to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, or commence proceedings under Chapter 11 of the U.S. Bankruptcy Code, and, in such cases, stockholders could lose all or part of their investment. If we were required to commence proceedings under Chapter 11 of the U.S. Bankruptcy Code, our operations and ability to develop and execute our business plan, and our ability to continue as a going concern, will be subject to the risks and uncertainties associated with bankruptcy. As such, filing for Chapter 11 would likely have a material adverse effect on our business, financial condition, results of operations and liquidity.
We incurred a net loss of $113.4 million during the year ended December 31, 2024 and had an accumulated deficit of $228.8 million. We had cash and cash equivalents of $12.0 million and total debt outstanding of $150.7 million as of December 31, 2024. In addition, subsequent to December 31, 2024, we drew an additional $277.3 million on our Revolving Credit Facility (as defined herein), which matures on May 12, 2026. As of December 31, 2024, we were in compliance with the financial and operational covenants under the credit agreement governing our Revolving Credit Facility, however, due primarily to uncertainty in our business and our expected levels of indebtedness, without the application of successful mitigating strategies, we expect to experience difficulty remaining in compliance with the quarterly financial covenants. Failure to satisfy either the interest coverage ratio or total net leverage ratio is an event of default under the credit agreement. If an event of default occurs, the lenders could elect to declare all amounts outstanding under the credit facility immediately due and payable and exercise other remedies as set forth in the credit agreement. In such case, we may need to liquidate or seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, which would materially harm our business, financial condition, and results of operations and could cause our stockholders to lose all or part of their investment.
We are evaluating strategies to refinance our existing debt. These strategies could include restructuring our debt, issuing new debt or entering into other financing arrangements. In addition, our plans are focused on improving our results and liquidity through a variety of operational improvements throughout 2025, including decreasing costs through a reduction in force and closures of select distribution centers. However, there can be no assurance that we will be able to refinance or restructure our debt or that we will be able to execute any operational improvements. As a result, there can be no assurance that we will be able to obtain or generate additional liquidity when needed or under acceptable terms, if at all.
Our recurring losses, negative cash flow, need for additional financing and the uncertainties surrounding our ability to obtain such financing, improve our results and liquidity, or execute specific initiatives, raise substantial doubt about our ability to continue to execute our operating plan as currently intended. Additional financing, whether in the form of equity or debt, may not be available to us on acceptable terms, on a timely basis, or at all. If adequate funds are not available, or if the terms of potential funding sources are unfavorable, our business would be materially harmed. Furthermore, any new equity we issue will likely result in substantial dilution to our existing stockholders.
If we are unable to obtain additional financing, improve our results or liquidity or execute any operational improvements, we will be unable to continue to fund our operations, continue to sell our products, realize value from our assets, or discharge our liabilities in the normal course of business. If we become unable to continue as a going concern, we could have to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and stockholders could lose all or part of their investment.
If we seek the protection of the U.S. Bankruptcy Court, our operations and ability to develop and execute our business plan, and our ability to continue as a going concern, are subject to the risks and uncertainties associated with bankruptcy. As such, seeking U.S. Bankruptcy Court protection is likely to have a material adverse effect on our business, financial condition, results of operations and liquidity. During any Chapter 11 cases, our senior management would be required to spend a significant amount of time and effort attending to the restructuring of the business instead of focusing exclusively on our business operations. Bankruptcy Court protection also might make it more difficult to retain management and other employees necessary to the success and growth of our business.
We may be unable to realize expected benefits from any ongoing strategic plans, restructuring and cost reduction efforts, and operational improvements.
Since 2024, we have effected restructuring plans and other cost savings initiatives, including re-balancing of products, workforce reductions, closure of distribution centers, and engagement of strategic consulting firms. We continue to execute on these efforts, and as a result, we may engage in discussions with our lenders, financial advisors, and other parties. For more detail regarding these activities, see Note 3 - Restructuring, Contract Termination and Impairment Charges.
In 2024, we announced restructuring plans and other cost savings initiatives, in order to operate more efficiently and control costs, which included re-balancing of products to align with our business strategy and workforce reductions. These plans were intended to generate, among other things, operating expense savings and improved margins and profitability. For example, in the third quarter of 2024, we implemented a strategic plan that involved activities related to restructuring, contract termination and related impairments, which was completed in the fourth quarter of 2024. In addition, as described above, our plans are focused on improving our results and liquidity through a variety of operational improvements throughout 2025, including decreasing costs through a reduction in force and closures of select distribution centers.
These types of restructuring and cost reduction activities are complex and costly and may result in unintended consequences and costs,consequences, such as unforeseen delays in thetheir implementation of our strategic initiatives,implementation, business and operational disruptions, decreased employee morale, loss of institutional knowledge and expertise, and potential impacts on financial reporting. Reductions in workforce also make it difficult for usus, toand pursue, or canmay prevent us fromfrom, pursuing,pursuing new business opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives. If we do not successfully manage our currentongoing or future initiatives and restructuring activities, expected efficiencies and benefits might be delayed or not realized, and our business, financial condition, and results of operations may be materially adversely affected.
Our limited liquidity has required and will continue to require a substantial portion of time and attention from our senior management team.team, Ourto management has spent considerable time participating in the development ofdevelop strategies and plans to address oursuch limited liquidity. This diversion of management’s attention may have a material adverse effect on the conduct of our business, and, as a result, on our financial condition and results of operations. On February 18, 2025, we announced that our Board appointed John Larson, a member of our Board, as Interim President and Chief Executive Officer. Failure to integrate Mr. Larson into his role could affect the execution of any refinancing, restructuring, revenue-generating or liquidity initiatives. Other risks related to our limited liquidity and any mitigating strategies include, but are not limited to, the high costs of negotiating agreements and seeking and executing liquidity initiatives; our ability to maintain our relationships with our suppliers, service providers, customers, and other third parties; our ability to retain and attract employees; and our ability to maintain contracts that are critical to our operations. These risks affect our business and operations and the price of our Class A common stock.
We depend on cash generated from our operations to support our business and our growth initiatives.business.
We primarily rely on cash flow generated from our sales to fund our current operations and our growth initiatives.operations. We require significant amounts of cash to purchase inventory, work on our product development, maintain our manufacturer and supplier relationships, pay personnel, pay forpublic the costs associated withcompany operating as a public company,costs, and to further invest in our sales and marketing efforts. As of December 31, 2024,2025, we had cash and cash equivalents of $12.0$20.0 million. If our business does not generate sufficient cash flow from operations to fund these activities and sufficient funds are not otherwise available from financing sources,sources or other strategic transactions, we will not be able to sustain and continue our operations. In such case, we could be required to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and stockholders could lose all or part of their investment.
Our substantial indebtedness limitsand the terms of our Amended Credit Agreement limit our ability to invest in the ongoing needs of our business.
On June 13, 2025, we entered into Amendment No. 4 to Credit Agreement and Limited Waiver and Amendment No. 1 to Security Agreement (the “2025 Refinancing Amendment”), which amended the credit agreement dated as of May 12, 2021 (as amended to date, the “Amended Credit Agreement”). The Amended Credit Agreement and our substantial indebtedness place conditions on us and restrict our business activities, including by:
On May 12, 2021, we entered into a Credit Agreement among Solo Brands, LLC, Solo Stove Intermediate, LLC, JPMorgan Chase Bank, N.A., and the Lenders and L/C Issuers party thereto (as subsequently amended on June 2, 2021, September 1, 2021 and May 22, 2023, the “Revolving Credit Facility”). The Revolving Credit Facility is jointly and severally guaranteed by Solo Stove Intermediate, LLC and any future subsidiaries that execute a joinder to the guaranty and related collateral agreements, or the Guarantors. The Revolving Credit Facility is also secured by a first priority lien on substantially all of our assets and the assets of the Guarantors, in each case subject to certain customary exceptions.
The Revolving Credit Facility places certain conditions on us, including that it:
•requiresrequiring 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;
•increasesincreasing our vulnerability to adverse economic or industry conditions;
•limitslimiting our flexibility in planning for, or reacting to, changes in our business or markets;
•makesmaking us more vulnerable to increases in interest rates, as borrowings under the 2025 Revolving Credit Facility bear interest at variable rates;
Management's Discussion & Analysis (MD&A)
New heading “Tax Legislation”
New heading “Macroeconomic Factors”
New heading “Other Key Factors Affecting Our Financial Condition and Results of Operations”
New heading “Trends in Seasonality”
New heading “2025 Restructuring Activity”
New heading “•Contract Terminations”
New heading “2024 Restructuring Activity”
New heading “Solo Stove Operating Expenses”
New heading “Chubbies Operating Expenses”
Removed heading “Key Factors Affecting Our Financial Condition and Results of Operations”
Removed heading “Solo Stove Gross Profit and Gross Margin”
Removed heading “Chubbies Gross Profit and Gross Margin”
Removed heading “Other Terms of the Revolving Credit Facility”
Largest changes
“Substantial doubt about our ability to continue as a going concern exists. We incurred a net loss of $113.4 million during the year ended December 31, 2024 and had an accumulated deficit of $228.8 million. We had cash and cash equivalents of $12.0 million and total debt outstanding of $150.7 million as of December 31, 2024. As discussed above, in addition, subsequent to December 31, 2024, we drew an additional $277.3 million on our Revolving Credit Facility (as defined herein), which matures on May 12, 2026. …”see in full comparison
“In addition, the Revolving Credit Facility contains customary financial and non-financial covenants limiting, among other things, mergers and acquisitions; investments, loans, and advances; affiliate transactions; changes to capital structure and the business; additional indebtedness; additional liens; the payment of dividends; and the sale of assets, in each case, subject to certain customary exceptions. …”see in full comparison
“On June 13, 2025, we entered into Amendment No. 4 to Credit Agreement and Limited Waiver and Amendment No. 1 to Security Agreement (the “2025 Refinancing Amendment”), which effected a reallocation and restructuring of all revolving loans and term loans then outstanding and the waiver of certain then existing events of default. …”see in full comparison
“If we fail to realize the expected benefits from our ongoing and future cost saving and operational improvement initiatives, if our liquidity condition deteriorates, or if we pursue potential opportunities that are not successful, our business, operating results and financial condition could be materially adversely impacted and could result in the breach of our financial and nonfinancial covenants. …”see in full comparison
“Restructuring, contract termination and impairment charges also experienced a significant decline for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily as a result of non-recurring goodwill impairment charges in the prior year and non-recurring terminations of underperforming marketing agreements, offset in part primarily by larger intangible asset impairment charges in 2025. See Note 3 - Restructuring, Contract Termination and Impairment Charges in our Notes to Consolidated Financial Statements for additional detail.”see in full comparison
The decrease in operating expenses for the year ended December 31,see in full comparison20242025 compared to the year ended December 31,20232024 was primarily driven by a decrease inrestructuring, contract termination and impairment charges,SG&A as a result offeweragoodwillsignificant decrease in advertising andlong-livedmarketingassetexpenses,impairmentcoupledcharges,withoffseta decrease inpartdistribution costs driven by theincreaselower net sales incontractSoloterminationStoveexpensesDTCwith the termination of a legacy marketing agreement with a former marketing barter partner.channel.
Full comparison: every changed paragraph (140)
WeSolo ownBrands operates four premium outdoor brands: Solo Stove, Chubbies, Oru Kayak (“Oru”) and operateInternational premiumSurf Ventures (“ISLE”), with Oru and ISLE regarded in aggregate as Watersports. Our brands withdevelop ingeniousinnovative products that weand market andthem deliverdirectly to customers primarily through our direct-to-consumer (“DTC”) platformchannel, which includes e-commerce and owned retail partnerships.stores, as well as partnerships with key retailers. 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. We operate as two reportable segments: Solo Stove, which includes the Solo Stove and TerraFlame brands and primarily offers indoor and outdoor firepits,fire pits, 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. In 2025, the Company completed the disposition of the manufacturing operations for the TerraFlame brand. However, we continue to own the intellectual property of TerraFlame, as well as sole distribution rights of TerraFlame branded products. 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, 2025, we experienced a decrease in our net sales from $454.6 million for the year ended December 31, 2024 to $316.6 million. The decline in net sales was primarily driven by the decline in DTC and retail channel net sales within the Solo Stove segment, offset in part by an increase in net sales across both channels within the Chubbies segment. While net sales for the year ended December 31, 2025 declined when compared to the prior year, loss from operations decreased from $174.6 million to $113.5 million, respectively. This decrease was primarily driven by a reduction in restructuring, contract termination and impairment charges and effective management of operating expenses to align with the decline in net sales, particularly advertising and marketing costs and distribution costs. Partially offsetting these expense declines was the reduction in gross profit realized from the lower net sales in the current year when compared to the prior year.
On December 17, 2025, as part of the Corporate Simplification transactions, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Holdings and Solo Merger Sub LLC (“Merger Sub”), a subsidiary of Solo Brands, Inc. and SP SS Blocker Purchaser, LLC (“Blocker”), formed for the sole purpose of merging with and into Holdings. Pursuant to the Merger Agreement, effective January 1, 2026 (the “Effective Time”), Merger Sub was merged with and into Holdings, with Holdings continuing as the surviving entity (the “Merger”) as our wholly owned subsidiary of Solo Brands, Inc.
Pursuant to the Merger Agreement, at the Effective Time, each of the common units of Holdings (“LLC Units”) beneficially owned by members of Holdings were cancelled and converted automatically into a right to receive one share of our Class A common stock, except for any LLC Units beneficially owned by either Solo Brands, Inc. or Blocker, which were cancelled for no consideration in accordance with the Merger Agreement and Holdings’ Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”). At the Effective Time, the limited liability company interests of Merger Sub were converted into LLC Units as the surviving entity, resulting in Holdings continuing as our wholly owned subsidiary. In addition, immediately following the Effective Time, all of the issued and outstanding shares of our Class B common stock were retired and cancelled in accordance with our Amended and Restated Certificate of Incorporation and the Holdings LLC Agreement. As a result, upon completion of the Merger, there were no LLC Units or shares of Class B common stock of the Company outstanding.
The Merger and related transactions did not terminate or otherwise accelerate our obligations under the Tax Receivable Agreement, dated as of October 27, 2021, by and among us, Holdings and the other parties from time to time party thereto. However, as a result of the Merger, the total future potential cash payments due under the Tax Receivable Agreement are generally limited.
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. 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. 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. 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.
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. 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.
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. 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. 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. 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. 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. 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.
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). The following table outlines the cash outlays and the period in which they occurred.
Tariffs
We sell our products in the U.S. as well as various foreign countries, primarily in Europe, Canada and Australia. We also have historically sourced and procured inventory primarily out of China and Vietnam, with some products sourced through Mexico. Tariffs on certain foreign origin goods, particularly from China, continue to put pressure on our input costs. As a result of higher tariffs and tariff uncertainty, in 2025, we began to diversify our supply base and shifted some purchase orders to Vietnam and Cambodia, reducing our reliance on sourcing from China for Solo Stove and eliminated our sourcing from China almost entirely for the Chubbies segment. In line with the decline in net sales in 2025, purchase order activity and inventory receipts from our international suppliers was lower for the year ended December 31, 2025 when compared to the same period in 2024, further limiting the overall impact of tariffs in 2025. Additionally, we closed and relocated the operations of a distribution center in Mexico to the U.S., in response to the repeal of the 321 Tariff Relief as of August 31, 2025. While these diversification and distribution center closure efforts as well as certain price increases reduced the impact of the higher tariffs, the impacts thereof were nonetheless meaningful to inventory reflected in the consolidated balance sheets and on cost of goods sold within the consolidated statements of operations and comprehensive income (loss). We expect inventory and costs of goods sold, on a per unit basis, to increase in future periods as a result of these and any additional tariffs in future periods, to the extent they remain effective. The strategies we have implemented and continue to implement to mitigate the impact of such tariffs or other trade actions may not be successful. For additional information, see Part I, Item 1A. Risk Factors, “Tariffs or other restrictions placed on foreign imports or any related counter-measures are 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.”
Our product lines involve production with steel manufactured outside the U.S., the target of recent tariff actions, impacting virtually all of our Solo Stove brand products. In addition, certain of our Oru brand products are manufactured in and distributed from Mexico. As such, they are subject to any applicable tariffs placed on goods imported from Mexico.
On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the incremental tariffs was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming a prior decision of the CIT that the U.S. President lacked authority to impose incremental tariffs. As a result, on February 20, 2026, the U.S. President issued an executive order stating that the incremental tariffs were no longer in effect and ending the collection of the incremental tariffs. However, the U.S. President then issued an additional executive order imposing tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective February 24, 2026. We continue to monitor the changing tariff and trade restrictions and are evaluating the potential impacts of these decisions for 2026 and any potential impacts on consumer demand and pricing expectations. We filed a lawsuit in the CIT challenging the legality of incremental tariffs and are seeking to recover the approximately $8 million in incremental tariffs that we paid in 2025 and 2026. See Part I, Item 3. Legal Proceedings for additional information.
Tax Legislation
On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective beginning in 2026. As the Company is in a loss position, the tax benefit was limited, with the expected cash tax benefit expected to be immaterial as well.
Macroeconomic Factors
We sell our products in the U.S. as well as various foreign countries, primarily Europe, Canada and Australia. 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. In addition, the U.S. presidential administration recently imposed an additional aggregate 20% tariffs on goods manufactured in China, 25% tariffs on all steel manufactured outside of the U.S. and 25% tariffs on almost all goods manufactured in Mexico and Canada. China, Canada and Mexico have retaliated or are expected to retaliate with tariffs on goods manufactured in, or exported by, the United States.
Tariffs on certain foreign origin goods continue to put pressure on input costs, for which we have been able to partially mitigate through the U.S. government’s duty draw-back mechanism, tariff exclusion process, footprint utilization, and prudent sourcing. Our product lines involve production with steel manufactured outside the U.S., including steel manufactured in Mexico that is subject to the new tariffs, including virtually all of our Solo Stove and TerraFlame brands’ products. Further, certain of our Solo Stove, Oru and TerraFlame brands’ products are produced in Mexico and are subject to the new tariffs on Mexico. These tariffs and retaliatory actions are expected to have a significant adverse effect on our results of operations and margins and sales of our products outside the U.S. Any strategies we implement to mitigate the impact of such tariffs or other trade actions may not be successful. In addition, there can be no assurances that we will be able to pass any increased costs from tariffs on to our customers, that demand or profitability will not be materially adversely impacted, or that we will be successful in implementing efforts to mitigate the effect of tariffs on our business. Sourcing materials from domestic suppliers and manufacturing vendors or transitioning production to the U.S. would be a costly and lengthy process with uncertain results. For additional information, see Part I, Item 1A, Risk Factors, “Tariffs or other restrictions placed on foreign imports or any related counter-measures are 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.”
Current macroeconomic factorsfactors, remainincluding veryoverall dynamic,economic such as greaterand political uncertainty, asfinancial welland ascapital financialmarkets instability, new or increasing tariffs, high interest rates and high inflation, allremain very dynamic and highly uncertain. The effects of whichthe macroeconomic environment could further reduce our net sales orand negatively impact our gross margin, net income (loss) and cash flows.
Other Key Factors Affecting Our Financial Condition and Results of Operations
Trends in Seasonality
In 2025, we have seen a shift in the seasonal demand within our retail channel with the first quarter far exceeding the third quarter. Historically, our net sales have been highest in our second and fourth quarters. We believe that this change in trend in 2025 could be indicative of a potential long-term change in our seasonality, which we will continue to monitor in future periods.
2025 Restructuring Activity
In 2025, management, along with our Board of Directors, engaged strategic consulting firms to assist with improving our financial results. This operational improvement involved the engagement of restructuring, legal and investment banking consultants to perform financial planning, forecasting and project management activities. Certain of these strategic consulting firms assisted and continue to assist in developing operational plans for the near- and long-term, as well as identifying cost saving initiatives to reduce our operational expenses and aid in the development of enhanced internal reporting to deliver timely insight to management.
The cost saving initiatives identified and executed upon during the year ended December 31, 2025 were designed to reduce operational expenditures over the long-term. The key cost saving initiatives and operational planning activities undertaken in 2025 were as follows:
•Restructuring
◦retention payments for key personnel to support the sustainment of operations and focus on cost saving and operational improvements;
◦reduction in force (“RIF”) of management and non-management personnel in an effort to align headcount with the operational needs of the business, resulting in a moderate decline in related expenses in the short term, with the significance of the savings anticipated to be recognized in future periods;
•Contract Terminations
◦termination of an underperforming licensing agreement in an effort to redeploy the allocated funds for operational purposes;
◦renegotiation of a settlement of a termination fee with a former advertising services vendor at a more favorable amount to the Company, to reduce cash outflow;
•closure of three distribution centers in 2025 to reduce fixed costs in the short term and in future periods, as well as eliminate unnecessary capacity;
•termination of a lease agreement for an owned retail store and impairment of a separate owned retail store as a result of underperformance, and in the case of the terminated owned retail store to reduce forward operating losses;
•revision of pricing structure throughout our brands in order to mitigate, in part, the expected impacts of tariffs in subsequent periods;
•reduction in marketing spend and promotional activity within the Solo Stove segment to better align product pricing with our retail partners; and
•effecting the Corporate Simplification.
While these activities are intended to provide future benefit to the Company, most of these activities required up-front cash outlays. In order to fund these cash outlays, the Company used cash from operations and borrowings under the 2021 Revolving Credit Facility (as defined below) and the 2025 Revolving Credit Facility (as defined below). The following table outlines the cash outlays and the period(s) in which they occurred.
The 2025 restructuring activity was concluded in the fourth quarter of 2025. The Company anticipates additional restructuring related activity in 2026, as it continues to optimize its operating platform in line with the focus on building a smaller, profitable company.
2024 Restructuring Activity
In 2024, the Company underwent significant changes to its management team, which brought about a change in strategic vision and evaluation of the Company’s initiatives and brands. The evaluation included analysis of the brand level financials, strengths of each of the brands, product design and customer service metrics, marketing campaign effectiveness and cost, efficiencies of brands on a standalone or aggregated basis, amongst other things. This evaluation led the Company to undertake the following activities during the second half of 2024:
•terminated underperforming marketing agreements with marketing barter partners that no longer aligned with the Company’s current marketing strategy;
•charges related to the IcyBreeze reporting unit stemming from underperformance and management’s determination to revise product designs under the Solo Stove segment; and
•reorganized the Oru and ISLE reporting units to eliminate costs and capitalize on potential synergies, through restructuring under a revised management structure.
In order to fund the cash outlays required for these initiatives, the Company leveraged income from operations and draws on the 2021 Revolving Credit Facility. The following table outlines the cash outlays and the period in which they occurred.
Discussion within the relevant comparative periods and sections have been included below.
Net sales are comprised of DTC and retail channel sales to retail partners. Net sales inwithin bothall 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. 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. In 2025, retail channel net sales were highest in the first and fourth quarters. We believe that this change in trend could indicate a potential long-term change in our seasonality, which we will continue to monitor in future periods. Additionally, we expect variances in our net sales throughout the year relative to the timing of new product launches.
The decrease in net sales for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily driven by a decline in net sales within the Solo Stove segment, offset in part by an increase in net sales across both channels within the Chubbies segment.
The decrease in net sales for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily driven by a decline in both DTC and retail channel net sales within the Solo Stove segment as a result of a lack of new product launches in the 2024 period, with the prior year benefiting from new products released in the fourth quarter of 2022, and a non-recurring transaction in 2023 with a marketing barter partner. The non-recurring transaction with a marketing barter partner in the third quarter of 2023 contributed $7.2 million of retail channel net sales to the 2023 period. Partially offsetting these declines, the Chubbies segment experienced increases in both DTC and retail channel net sales.
(1) Change in gross profit margin period over period in basis points In 2024, the Company wrote down $18.3 million of inventory and related purchase orders of the IcyBreeze reporting unit as part of the restructuring, contract termination and impairment charge activity. This write down was reflected in cost of goods sold, resulting in cost of goods sold for 2024 exceeding the respective prior year period amount and negatively impacting the gross margin in the 2024 period.
WhenGross excludingprofit and Cost of goods sold, when considered with or without the impacts of the write down of inventory and purchase orders described above, cost of goods sold decreased for the year ended December 31, 20242025 compared to the prior year period, in line with the decline in net sales. Similarly,while gross profit formargin increased when including the yearimpact ended December 31, 2024 compared toof the priorwrite yeardown periodand also declined in line with the decline in net sales,decreased when excluding the write down of IcyBreeze reporting unit.impact.
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.
What changed in the latest 10-Q
Risk Factors
You should carefully consider the risk factors set forth under Part I, Item 1A. "Risk Factors" in our 2025 Form 10-K and in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (“Q1 2026 Form 10-Q”), which risk factors are incorporated herein by reference. Such risks could materially affect our business, financial condition, and future results and are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes to the risk factors previously disclosed in our 2025 Form 10-K and Q1 2026 Form 10-Q.
Removed heading “Our Class A common stock is quoted on OTCQB, an over-the-counter market. There can be no assurance that our Class A common stock will continue to trade on the OTCQB or on another over-the-counter market or securities exchange.”
Largest changes
“Our Class A common stock is quoted on OTCQB, an over-the-counter market. There can be no assurance that our Class A common stock will continue to trade on the OTCQB or on another over-the-counter market or securities exchange.”see in full comparison
“Our Class A common stock began trading on the OTCQB, an over-the-counter market, in April 2026 under the symbol “SBDS.” The over-the-counter market is a significantly more limited market than a nationally recognized securities exchange such as NYSE, and the quotation of our Class A common stock on the over-the-counter market may result in a less liquid market available for existing and potential shareholders to trade shares of our Class A common stock. …”see in full comparison
You should carefully consider the risk factors set forth under Part I, Item 1A. "Risk Factors" in our 2025 Formsee in full comparison10-K,10-K and in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (“Q1 2026 Form 10-Q”), which risk factors are incorporated herein by reference. Such risks could materially affect our business, financial condition, and future results and are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes to the risk factors previously disclosed in our 2025 Form 10-KotherandthanQ1the2026below.Form 10-Q.
Full comparison: every changed paragraph (3)
You should carefully consider the risk factors set forth under Part I, Item 1A. "Risk Factors" in our 2025 Form 10-K,10-K and in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (“Q1 2026 Form 10-Q”), which risk factors are incorporated herein by reference. Such risks could materially affect our business, financial condition, and future results and are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes to the risk factors previously disclosed in our 2025 Form 10-K otherand thanQ1 the2026 below.Form 10-Q.
Our Class A common stock is quoted on OTCQB, an over-the-counter market. There can be no assurance that our Class A common stock will continue to trade on the OTCQB or on another over-the-counter market or securities exchange.
Our Class A common stock began trading on the OTCQB, an over-the-counter market, in April 2026 under the symbol “SBDS.” The over-the-counter market is a significantly more limited market than a nationally recognized securities exchange such as NYSE, and the quotation of our Class A common stock on the over-the-counter market may result in a less liquid market available for existing and potential shareholders to trade shares of our Class A common stock. Securities traded in the over-the-counter market generally have less liquidity due to factors such as the reduced number of investors that will consider investing in the securities, the reduced number of market makers in the securities, and the reduced number of securities analysts that follow such securities. In addition, as a result, holders of shares of our Class A common stock may find it difficult to resell their shares at prices quoted in the market or at all. This could have an adverse effect on our ability to raise capital and otherwise adversely affect the market price of our Class A common stock. We cannot provide any assurances as to if, or when, we may be in a position to relist our Class A common stock on a nationally recognized securities exchange.
Management's Discussion & Analysis (MD&A)
New heading “•Contract Termination”
New heading “•Facility Closure”
New heading “•Contract Terminations”
New heading “•Facility Closures”
New heading “Watersports Segment Results for the Three or Six Months Ended June 30, 2026 Compared to the Three or Six Months Ended June 30, 2025”
New heading “Watersports Net Sales”
New heading “Watersports Cost of Goods Sold”
New heading “Watersports Operating Expenses”
Largest changes
Thesee in full comparisondecreasedecreases in operating expenses for the three and six months endedMarchJune31,30, 2026 compared to the three and six months endedMarchJune31,30, 2025 was primarily driven bya decrease in SG&A as a result of a decrease in marketing and employee-related compensation. The decrease was also due to a declinedecreases in restructuring, contracttermination,termination and impairmentcharges,chargesasandaSG&Aresultexpenses.ofTheexpensesdecreaserelatedin restructuring, contract termination and impairment charges was primarily due tothe execution of cost savings initiatives, such as severance resulting from a reduction in force and thehigher costsincurredassociatedto exit two distribution centers and engagement ofwith strategic consulting firms for operational performanceimprovementsimprovements, restructuring-related employee costs, and the termination of an underperforming licensing agreement in the prior yearperiod.periods. The decrease in SG&A expenses was primarily due to a decrease in employee-related compensation, marketing, seller fees, and shipping costs.
“Watersports Segment Results for the Three or Six Months Ended June 30, 2026 Compared to the Three or Six Months Ended June 30, 2025”see in full comparison
see in full comparisonForWhile net sales declined for the three and six months endedMarchJune31,30,2026,2026wecomparedexperiencedtoathedecreasethreeinandoursixnetmonthssalesended June 30, 2025, income from$77.3operations was $3.5 million for the three months endedMarchJune31,30,20252026to $62.9 million. The decline in net sales was primarily driven by the decline in DTC and retail channel net sales within the Solo Stove segment and,compared to alesserlossextent,fromtheoperationsChubbiesofsegment.$9.8While net salesmillion forthree months ended March 31, 2026 declined when compared tothe three months endedMarchJune31,30, 2025, and loss from operations decreasedfromto$10.6$1.2 milliontofrom$4.7$20.5million.millionThisfordecreasethewassix months ended June 30, 2026 and 2025, respectively. These changes were primarily driven by effective management of operating expenses to align with the decline in net sales, particularly advertising and marketingcostscosts, but alsoincludesincluding payroll and distribution costs rightsizing,anda reduction in restructuring, contract termination and impairmentcharges.charges, and the benefit recognized from prior period IEEPA tariff refunds received during the current period.
“We began receiving refunds in May 2026 and we elected to recognize these tariff refunds in accordance with gain contingency accounting under ASC 450-30, Gain Contingencies. During the three and six months ended June 30, 2026, the Company received $9.9 million in IEEPA tariff refunds, of which $5.9 million was recorded as a reduction to cost of goods sold and $0.3 million was recorded as interest income within interest expense, net, on the unaudited consolidated statements of operations and comprehensive income (loss). …”see in full comparison
On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the incremental tariffs was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming a prior decision of the CIT that the U.S. President lacked authority to impose incremental tariffs.see in full comparisonAs a result, on February 20, 2026, the U.S. President issued an executive order stating that the incremental tariffs were no longer in effect and ending the collection of the incremental tariffs. However, the U.S. President then issued an additional executive order imposing tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective February 24, 2026. We continue to monitor the changing tariff and trade restrictions and are evaluating the potential impacts of these decisions for 2026 and any potential impacts on consumer demand and pricing expectations.We filed a lawsuit in the CIT challenging the legality of incremental tariffs andare seekingsought to recover theapproximately $10 million inincremental tariffsthat wepaid in 2025 and 2026.
Full comparison: every changed paragraph (77)
In the following discussion, references to “we,” “us,” “our,” the “Company,” and similar references mean Solo Brands, Inc. and its consolidated subsidiaries, unless the context otherwise requires. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report, as well as our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Form 10-K.10-K”). Some of the numbers included herein have been rounded for the convenience of the presentation. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under ItemPart I, PartItem 1A, “Risk Factors” of our 2025 Form 10-K10-K, Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, and elsewhere in this Quarterly Report.Report on Form 10-Q for the fiscal quarter ended June 30, 2026 (“Quarterly Report”). See further our “Forward-Looking Statements” in this Quarterly Report.
Solo Brands, Inc. is a branded outdoor lifestyle company that develops, markets, and sells products across outdoor cooking, outdoor recreation, casual apparel, and watersports categories. Our portfolio includes Solo Stove, which offers fire pits, griddles, coolers, and related accessories; Chubbies, which offers casual apparel, activewear, and swimwear; and our Watersports brands, including International Surf Ventures (“ISLE”), which offers inflatable and hard paddle boards and related accessories, and Oru Kayak (“Oru”), which offers folding kayaks and accessories. We are headquartered in Grapevine, Texas. Our products are sold through direct-to-consumer (“DTC”) channels, retail partners, and distributors in the United States and internationally.
During the three months ended June 30, 2026, the ISLE and Oru operating segments were revised into one operating and reportable segment, Watersports, to align with how separate financial information is evaluated by the CODM, and how that information is used to assess performance and allocate resources. Our revised reportable segments are: (i) Solo Stove, (ii) Chubbies, and (iii) Watersports.
IcyBreeze, which was wound down during the fourth quarter of 2024 and whose brand name has been discontinued, did not meet the criteria necessary to be considered a reportable segment. IcyBreeze’s trailing results are included within our consolidated results for the three and six months ended June 30, 2025. In 2025, the Company completed the disposition of the manufacturing operations for the TerraFlame brand. However, we continue to own the intellectual property of TerraFlame, as well as sole distribution rights of TerraFlame branded products.
Net sales decreased to $88.5 million and $151.3 million for the three and six months ended June 30, 2026, respectively, from $92.3 million and $169.5 million for the three and six months ended June 30, 2025, respectively. These decreases in net sales were primarily driven by the decline in net sales within the Solo Stove and Chubbies segments, and within the DTC channel at each segment. These decreases were offset by increases in net sales within the retail channel of the Watersports segment.
Solo Brands operates four premium outdoor brands: Solo Stove, Chubbies, Oru Kayak (“Oru”) and International Surf Ventures (“ISLE”), with Oru and ISLE regarded in aggregate as Watersports. Our brands develop innovative products and market them directly to customers primarily through our direct-to-consumer (“DTC”) channel, which includes e-commerce and owned retail stores, as well as partnerships with key retailers. We aim to help our customers enjoy meaningful 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. We operate as two reportable segments: Solo Stove, which includes the Solo Stove and TerraFlame brands and primarily offers indoor and outdoor fire pits, 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. In 2025, the Company completed the disposition of the manufacturing operations for the TerraFlame brand. However, we continue to own the intellectual property of TerraFlame, as well as sole distribution rights of TerraFlame branded products. The CODM makes operating decisions, assesses financial performance, and allocates resources based upon discrete financial information at the reportable segment level.
ForWhile net sales declined for the three and six months ended MarchJune 31,30, 2026,2026 wecompared experiencedto athe decreasethree inand oursix netmonths salesended June 30, 2025, income from $77.3operations was $3.5 million for the three months ended MarchJune 31,30, 20252026 to $62.9 million. The decline in net sales was primarily driven by the decline in DTC and retail channel net sales within the Solo Stove segment and,compared to a lesserloss extent,from theoperations Chubbiesof segment.$9.8 While net salesmillion for three months ended March 31, 2026 declined when compared to the three months ended MarchJune 31,30, 2025, and loss from operations decreased fromto $10.6$1.2 million tofrom $4.7$20.5 million.million Thisfor decreasethe wassix months ended June 30, 2026 and 2025, respectively. These changes were primarily driven by effective management of operating expenses to align with the decline in net sales, particularly advertising and marketing costscosts, but also includesincluding payroll and distribution costs rightsizing, and a reduction in restructuring, contract termination and impairment charges.charges, and the benefit recognized from prior period IEEPA tariff refunds received during the current period.
On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the incremental tariffs was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming a prior decision of the CIT that the U.S. President lacked authority to impose incremental tariffs. As a result, on February 20, 2026, the U.S. President issued an executive order stating that the incremental tariffs were no longer in effect and ending the collection of the incremental tariffs. However, the U.S. President then issued an additional executive order imposing tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective February 24, 2026. We continue to monitor the changing tariff and trade restrictions and are evaluating the potential impacts of these decisions for 2026 and any potential impacts on consumer demand and pricing expectations. We filed a lawsuit in the CIT challenging the legality of incremental tariffs and are seekingsought to recover the approximately $10 million in incremental tariffs that we paid in 2025 and 2026.
We began receiving refunds in May 2026 and we elected to recognize these tariff refunds in accordance with gain contingency accounting under ASC 450-30, Gain Contingencies. During the three and six months ended June 30, 2026, the Company received $9.9 million in IEEPA tariff refunds, of which $5.9 million was recorded as a reduction to cost of goods sold and $0.3 million was recorded as interest income within interest expense, net, on the unaudited consolidated statements of operations and comprehensive income (loss). As of June 30, 2026, $3.7 million was recorded as a reduction to inventory on the unaudited consolidated balance sheets.
We have filed for $10.5 million of IEEPA tariff refund claims in total and received the remaining $0.6 million of refunds subsequent to June 30, 2026. We continue to monitor the changing tariff and trade restrictions and are evaluating the potential impacts on consumer demand and pricing expectations and any potential impacts on our consolidated financial statements.
On April 20, 2026, the U.S. government opened the online portal for claiming refunds on IEEPA tariffs and, as of May 1, 2026, the Company has completed filing refund claims. All but a minor number of claims have been accepted by the Customs Border Protection agency and certain refunds have advanced to the United States Department of Treasury for processing. The Company plans to follow gain contingency accounting under ASC 450-30, Gain Contingencies, for recognition.
As of March 31, 2026, the Company had not received any refund payments, and uncertainty remains regarding timing, amount, and ultimate receipt of any refunds. Accordingly, no gain has been recognized in the unaudited consolidated financial statements for the three months ended March 31, 2026. We continue to monitor the impact of these tariffs as well as the future impacts of any additional tariffs or other trade actions.
Current macroeconomic factors, including overall economic and political uncertainty and unrest, financial and capital markets instability, new or increasing tariffs, high interest rates and high inflation, remain very dynamic and highly uncertain. The effects of the macroeconomic environment could further reduce our net sales andor negatively impact our gross profit margin, net income (loss) andor cash flows.
In the first quarter of 2026, some seasonal demand within our retail channel shifted to the second quarter with the timing of a number of large retail orders scheduledthat foroccurred in the second quarter of 2026. Historically, our net sales have been highest in our second and fourth quarters. In 2025, however, we experienced a shift in the seasonal demand within our retail channel with the first quarter of 2025 far exceeding the third quarter of 2025. We do not view the first quarter of 2025’s performance as indicative that the trends experienced in 2025 are likely to result in long-term changes in our seasonality.
The cost saving initiatives identified and executed upon during the six months ended June 30, 2026 were designed to reduce operational expenditures over the long-term. The key cost saving initiatives and operational planning activities undertaken during the six months ended June 30, 2026 were as follows:
•retention payments to key personnel to support the sustainment of operations and focus on cost saving and operational improvements; and
During the three months ended March 31, 2026, the Company executed a •reduction in force (“RIF”) of management and non-management personnel in an effort to align headcount with the operational needs of the business,business resulting in a moderate decline in related expenses in the short term, with the significance of the savings anticipated to be recognized in future periods.
•Contract Termination
•early termination of our Salt Lake City distribution center lease to reduce fixed costs in the short term and in future periods.
•Facility Closure
•closure of Oru’s manufacturing facility to reduce fixed costs in the short term and in future periods, as well as eliminate our only manufacturing operation.
While these activities were intended to provide future benefit to us, most of these activities required up-front cash outlays. In order to fund these cash outlays, we used cash from operations and borrowings under the current revolving credit facility. The following table outlines the cash outlays and the period in which they occurred (in thousands):
The cost saving initiatives identified and executed induring the threesix months ended MarchJune 31,30, 2025 were designed to reduce operational expenditures over the long-term. The key cost saving initiatives and operational planning activities undertaken during the threesix months ended MarchJune 31,30, 2025 were as follows:
•retention payments to key personnel to support the sustainment of operations and focus on cost saving and operational improvements;
•RIF of management and non-management personnel in an effort to align headcount with the operational needs of the business resultedresulting in a moderate decline in related expenses in the short term, with the significance of the savings anticipated to be recognized in future periods; and
•expenses related to the strategic consulting firms discussed above.
•Contract Terminations
•termination of an underperforming licensing agreement in an effort to redeploy the allocated funds for operational purposes; and
•settlement of a termination fee with a former advertising services vendor.
•Facility Closures
•closure of two distribution centers to reduce fixed costs in the short term and in future periods, as well as eliminate unnecessary capacity; andcapacity.
•reduction in marketing spend and promotional activity within the Solo Stove segment to better align product pricing with our retail partners.
While these activities were intended to provide future benefit to the Company,us, most of these activities required up-front cash outlays. In order to fund these cash outlays, the Companywe used cash from operations and borrowings under the prior revolving credit facility. The following table outlines the cash outlays and the period in which they occurred.occurred (in thousands):
Discussion within the relevant comparative periods and sections have been included below.
Consolidated Results for the Three or Six Months Ended MarchJune 31,30, 2026 Compared to the Three or Six Months Ended MarchJune 31,30, 2025
The decreasedecreases in net sales for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 was primarily driven by a decline in net sales within the Solo Stove and Chubbies segments, duemainly attributable to declines across boththe DTC and retail channelschannel at each segment. These decreases were offset by increases in net sales within the retail channel of the Watersports segment for the three and six months ended June 30, 2026.
Consolidated Gross Profit and Gross Profit Margin
(1) Change in gross profit margin period over period in basis points Gross profit decreased for the three and six months ended MarchJune 31,30, 2026 compared to the prior year period, largely as a result of the decrease in cost of sales in connection with the decline in net sales andand, to a lesser degree, the decline in gross profit margin,margin. whichThe decline in gross profit margin was driven by the impactchange in channel mix and a raw material inventory write-off related to the closure of tariffsOru’s inmanufacturing facility, partially offset by the benefit recognized from prior period IEEPA tariff refunds received during the current year period, and to a lesser degree, the channel mix shifting to more retail in the current year period compared to the prior year period, which generates lower gross margin.period.
Operating expenses consist of (1) selling, general & administrative (“SG&A”) expenses, (2) depreciation and amortization expenses, (3) restructuring, contract termination and impairment charges, (3) depreciation and amortization expenses and (4) other operating expenses, as defined below.
•Selling, General & 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.
The decreasedecreases in operating expenses for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 was primarily driven by a decrease in SG&A as a result of a decrease in marketing and employee-related compensation. The decrease was also due to a declinedecreases in restructuring, contract termination,termination and impairment charges,charges asand aSG&A resultexpenses. ofThe expensesdecrease relatedin restructuring, contract termination and impairment charges was primarily due to the execution of cost savings initiatives, such as severance resulting from a reduction in force and thehigher costs incurredassociated to exit two distribution centers and engagement ofwith strategic consulting firms for operational performance improvementsimprovements, restructuring-related employee costs, and the termination of an underperforming licensing agreement in the prior year period.periods. The decrease in SG&A expenses was primarily due to a decrease in employee-related compensation, marketing, seller fees, and shipping costs.
Additionally, depreciation and amortization expenses decreased for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 primarily due to the impairment of intangible assets during the prior year. A decrease was also realized in other operating expenses, as a result of increased strategic consulting engagements in the prior year period.period, and the loss recognized from the disposition of the TerraFlame manufacturing operations in the second quarter of 2025.
Interest expense, net consists primarily of interest expense on our revolving credit facilities and term loans.
Interest expense, net increased for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 primarily due to an increase in amortization of debt issuance costs, higher averageweighted-average interest rates, and decreased interest income, partially offset by lower average debtborrowings balance. Interest rates under the 2025 Credit Agreement are higher than those previously incurred, which has resulted in the weighted average interest rates on the 2025 Term Loan and 2025 Revolving Credit Facility to be in excess of prior periods.outstanding.
The change in the income tax expense (benefit) for the three and six months ended MarchJune 31,30, 2026 compared to the income tax expense for three and six months ended MarchJune 31,30, 2025 was primarily driven by the valuationeffects release due toof the Corporate Simplification whenand comparingrelated thevaluation current period to the prior year period.release.
Solo Stove Segment Results for the Three or Six Months Ended MarchJune 31,30, 2026 Compared to the Three or Six Months Ended MarchJune 31,30, 2025
The decreasedecreases in net sales for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 reflected lower unit volumes driven by our continued focus on pricing and promotional discipline within the DTC channel, as well as softness in the retail channel as partnerswe workrebuild throughour elevatedretail legacy inventory levels ahead of new product introductions.partnerships.
The decreases in cost of goods sold for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 was primarily in line with the decreases in net sales. The decrease in cost of goods sold for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 benefited from prior period IEEPA tariff refunds received during the current period and the impact of the incremental IEEPA tariffs that were repealed in February 2026 in the prior year period, partially offset by product mix.
The decrease in cost of goods sold for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily in line with the decrease in net sales.
Segment operating expenses consist of (1) marketing expenses, (2) employee-related expenses,compensation, such as wages and benefits, and (3) other segment operating expenses, which primarily consist of shipping and fulfillment-related expenses.
OperatingThe decreases in operating expenses decreased for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025,2025 was the result of a decrease in brand level marketing expenses, a decrease in other segment operating expenses driven by a decrease in seller fees and shipping expenses, each stemming from the decline in DTC channel net sales, coupled with a decrease in brand-level marketing expenses and employee-related compensation as we streamline operations to be more in line with reduced sales.
Chubbies Segment Results for the Three or Six Months Ended MarchJune 31,30, 2026 Compared to the Three or Six Months Ended MarchJune 31,30, 2025
The decreasedecreases in net sales for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 reflected variability in customer demand within both the DTC channel, and retail net sales declined primarily due to the timing of retail shipments.channels.
The decreases in cost of goods sold for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 was primarily in line with the decreases in net sales. The decrease in cost of goods sold for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 benefited from prior period IEEPA tariff refunds received during the current period and the impact of the incremental IEEPA tariffs that were repealed in February 2026 in the prior year period.
The decrease in cost of goods sold for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily the result of the decrease in net sales.
Operating expenses for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 declined,were primarilyrelatively asflat driven by a result of reductionsdecrease in employee-related compensation.compensation, offset by an increase in marketing expenses.
Watersports Segment Results for the Three or Six Months Ended June 30, 2026 Compared to the Three or Six Months Ended June 30, 2025
Watersports Net Sales
The increases in net sales for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 reflected an expanded partnership with a key customer within the retail channel, partially offset by variability in customer demand within the DTC channel.
Watersports Cost of Goods Sold
SBDS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Blevins Christopher |
Option exercise | 11 | — | — |
| 2026-10-01 | Blevins Christopher |
Shares withheld for tax | 4 | $2.79 | $11 |
| 2026-09-26 | Tarbox Andrea K |
Option exercise | 2,030 | — | — |
| 2026-09-26 | Powers David |
Option exercise | 2,030 | — | — |
| 2026-09-23 | Larson John P. |
Option exercise | 11,201 | — | — |
| 2026-09-23 | Larson John P. |
Shares withheld for tax | 3,221 | $3.06 | $9.9K |
| 2026-07-01 | Blevins Christopher |
Option exercise | 12 | — | — |
| 2026-07-01 | Blevins Christopher |
Shares withheld for tax | 5 | $3.46 | $17 |
| 2026-06-23 | Larson John P. |
Shares withheld for tax | 3,221 | $3.81 | $12.3K |
| 2026-06-23 | Larson John P. |
Option exercise | 11,201 | — | — |
Well-known investors holding SBDS (13F)
None of the 59 investors we track reported a position in their latest 13F.