Solo Brands Inc.
11/12/2026 | Press release | Distributed by Public on 11/12/2026 06:40
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
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"). 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 Part I, Item 1A, "Risk Factors" of our 2025 Form 10-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 on Form 10-Q for the fiscal quarter ended September 30, 2026 ("Quarterly Report"). See further our "Forward-Looking Statements" in this Quarterly Report.
Overview
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 nine months ended September 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 $43.7 million and $195.1 million for the three and nine months ended September 30, 2026, respectively, from $53.0 million and $222.5 million for the three and nine months ended September 30, 2025, respectively. These decreases in net sales were driven by the decline in net sales within the Solo Stove and Chubbies segments, which were primarily within the DTC channel at each segment. For the nine month period, these decreases were partially offset by higher retail net sales in the Watersports segment.
While net sales decreased for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025, loss from operations improved to $14.4 million and $15.6 million for the three and nine months ended September 30, 2026, respectively, compared to $16.2 million and $36.7 million for the three and nine months ended September 30, 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 costs, but also including payroll and distribution costs rightsizing.
Corporate Simplification
On December 17, 2025, as part of the Corporate Simplification transactions, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Solo Stove Holdings, LLC ("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 merged with and into Holdings, with Holdings continuing as the surviving entity (the "Merger") as a 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 of 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 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, we expect the total future potential cash payments due under the Tax Receivable Agreement to be generally limited.
Economic Factors Affecting our Performance
Tariffs
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. We filed a lawsuit in the CIT challenging the legality of incremental tariffs and sought to recover the incremental tariffs paid in 2025 and 2026.
We began receiving refunds in May 2026 and elected to recognize these tariff refunds in accordance with gain contingency accounting under ASC 450-30, Gain Contingencies. Refunds are initially recorded as a reduction to the carrying value of inventory to the extent the related goods remain on hand, and are recognized as a reduction to cost of goods sold as that inventory is sold. Interest received is recorded as interest income within interest expense, net.
During the three and nine months ended September 30, 2026, we received $0.6 million and $10.5 million, respectively, in IEEPA tariff refunds. Of the total IEEPA refund amounts, during the three and nine months ended September 30, 2026, $3.0 million and $8.9 million were recorded as a reduction to cost of goods sold, respectively, and $0.0 million and $0.3 million were recorded as interest income within interest expense, net, respectively, on the unaudited consolidated statements of operations and comprehensive income (loss). As of September 30, 2026, $1.3 million was recorded as a reduction to inventory on the unaudited consolidated balance sheets.
We filed for $10.5 million of IEEPA tariff refunds and, as of September 30, 2026, we have received the full amount. We continue to monitor developments related to these IEEPA tariff refunds and assess the potential impact on our consolidated financial statements.
Macroeconomic Factors
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 or negatively impact our gross profit margin, net income (loss), or cash flows.
Other Key Factors Affecting Our Financial Condition and Results of Operations
Trends in Seasonality
Our business is affected by the general seasonal trends reflecting our portfolio of outdoor lifestyle products, and our net sales have historically been highest in the second quarter and the fourth quarter. The timing of net sales within our retail channel can fluctuate depending on the seasonal needs of our retail customers.
2026 Restructuring Activity
The cost saving initiatives identified and executed upon during the nine months ended September 30, 2026 were designed to reduce operational expenditures over the long-term. The key cost saving initiatives and operational planning activities undertaken during the nine months ended September 30, 2026 were as follows:
•Restructuring
•expenses related to strategic consulting firms assisting in financial planning and project management activities;
•retention payments to key personnel to support the sustainment of operations and focus on cost saving and operational improvements; and
•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.
•Impairment Charges
•impairment of an underperforming retail store
•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 Closures
•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.
•closure of two distribution centers to reduce fixed costs in the short term and in future periods
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):
| Activity | Cash Outlay | Period | ||||||||||||
| Retention payments to key personnel | $ | 2,231 | Q2 2026 | |||||||||||
| Reduction in force | 344 | Q1 and Q2 2026 | ||||||||||||
| Contract termination | 73 | Q2 2026 | ||||||||||||
| Engagement of strategic consulting firms | 1,991 | Q1 - Q3 2026 | ||||||||||||
| Facility closures | 792 | Q2 and Q3 2026 | ||||||||||||
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 continued to assist in developing operational plans for the near- and long-term throughout 2025, as well as identified 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 during the nine months ended September 30, 2025 were designed to reduce operational expenditures over the long-term. The key cost saving initiatives and operational planning activities undertaken during the nine months ended September 30, 2025 were as follows:
•Restructuring
•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 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; 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.
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 prior revolving credit facility. The following table outlines the cash outlays and the period in which they occurred (in thousands):
| Activity | Cash Outlay | Period | ||||||||||||
| Retention payments to key personnel | $ | 5,655 | Q2 2025 | |||||||||||
| Reduction in force | 914 | Fiscal year 2025 | ||||||||||||
| Engagement of strategic consulting firms | 7,187 | Fiscal year 2025 | ||||||||||||
| Facility closures | 976 | Q1 & Q3 2025 | ||||||||||||
The 2025 restructuring activity was concluded in the fourth quarter of 2025.
Components of Our Results of Operations
Net Sales
Net sales are comprised of DTC and retail channel sales to retail partners. Net sales within all channels reflect the impact of partial shipments, product returns, and discounts for certain sales programs or promotions.
Gross Profit and Gross Profit 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, net of IEEPA tariff refunds, costs related to manufacturing of certain of our products (prior to the closure of our remaining manufacturing facility), product quality testing and inspection costs, and depreciation on molds and equipment that we own.
Operating Expenses
Operating expenses consist of the following items:
•Selling, General & Administrative Expenses - Selling, general & administrative 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.
•Depreciation and Amortization Expenses - Depreciation and amortization expenses consist of depreciation of property and equipment and amortization of definite-lived intangible assets.
•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.
•Other Operating Expenses - Other operating expenses include certain costs incurred as a result of being a public company, acquisition-related expenses, business optimization and expansion expenses and management transition costs, including severance.
Interest Expense, Net
Interest expense, net consists primarily of interest expense on our revolving credit facilities and term loans.
Consolidated Income Taxes
Effective as of January 1, 2026 and subsequent to the Corporate Simplification, income taxes represent the federal, foreign, state and local income taxes of the consolidated filing group of Solo Brands, Inc. and its subsidiaries. The Corporate Simplification allows us to net the tax benefit (loss) generated by Solo Brands, Inc. and our wholly owned subsidiaries, Chubbies and Oru, whereas prior to the effective date separate returns were required for each respective brand. As a result, we expect that future periods will incur lower income tax expense in periods in which any of these brands generate a loss which would offset income generated by other brands.
Prior to the Corporate Simplification, income taxes represented federal, state, and local income taxes on our allocable share of taxable income of Holdings, as well as Oru's and Chubbies' federal and state taxable income, and our foreign tax expense related to international subsidiaries. Prior to the Corporate Simplification described above, we were the sole managing member of Holdings and, as a result, consolidated the financial results of Holdings. Holdings was treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Holdings was not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Holdings was passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. We have been subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to our allocable share of any taxable income or loss of Holdings, as well as any stand-alone income or loss generated by Solo Brands, Inc.
Segment Operating Expenses
Segment operating expenses consist of (1) marketing expenses, (2) employee-related compensation, such as wages and benefits, and (3) other segment operating expenses, which primarily consist of shipping and fulfillment-related expenses.
Consolidated Results for the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
Consolidated Net Sales, Cost of Goods Sold, Gross Profit, and Gross Profit Margin
| Three Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 43,719 | $ | 53,038 | $ | (9,319) | (17.6) | % | |||||||||||||||
| Direct-to-consumer net sales | 33,205 | 42,027 | (8,822) | (21.0) | % | ||||||||||||||||||
| Retail net sales | 10,514 | 11,011 | (497) | (4.5) | % | ||||||||||||||||||
| Cost of goods sold | 16,003 | 21,192 | (5,189) | (24.5) | % | ||||||||||||||||||
|
Gross profit
|
$ | 27,716 | $ | 31,846 | $ | (4,130) | (13.0) | % | |||||||||||||||
|
Gross profit margin (Gross profit as a % of net sales)(1)
|
63.4 | % | 60.0 | % | 340 | ||||||||||||||||||
(1)Change in gross profit margin period over period in basis points
Net sales decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily driven by a decrease in net sales across the DTC channel within the Solo Stove segment, as well as the Chubbies and Watersports segments, to a lesser extent.
Cost of goods sold decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily driven by lower net sales.
Gross profit decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, as a result of the decrease in net sales, partially offset by the increase in gross profit margin. The increase in gross profit margin was primarily driven by reduced promotional activity and, to a lesser extent, the benefit recognized from prior period IEEPA tariff refunds received during the current period.
Consolidated Operating Expenses
| Three Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
| Selling, general & administrative expenses | $ | 31,596 | $ | 39,495 | $ | (7,899) | (20.0) | % | |||||||||||||||
| Depreciation and amortization expenses | 4,180 | 5,824 | (1,644) | (28.2) | % | ||||||||||||||||||
|
Restructuring, contract termination and impairment charges
|
6,041 | 1,940 | 4,101 | 211.4 | % | ||||||||||||||||||
| Other operating expenses | 320 | 764 | (444) | (58.1) | % | ||||||||||||||||||
|
Total operating expenses
|
$ | 42,137 | $ | 48,023 | $ | (5,886) | (12.3) | % | |||||||||||||||
Selling, general & administrative expenses decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily reflective of our leaner operations, which resulted in decreases in payroll, marketing, seller fees, fulfillment, and shipping costs.
Depreciation and amortization expenses decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to the impairment of intangible assets during the prior year.
Restructuring, contract termination and impairment charges increased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to impairments of long-lived assets related to a distribution center closure and an underperforming retail store, as well as increases in costs for strategic consulting firms engaged for operational and financial performance improvements, restructuring-related employee costs, and one-time expenses related to distribution center closures.
Consolidated Interest Expense, Net
| Three Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Interest expense, net
|
$ | 7,504 | $ | 7,556 | $ | (52) | (0.7) | % | |||||||||||||||
Interest expense, net decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to lower weighted-average interest rates, partially offset by higher average borrowings outstanding.
Consolidated Income Taxes
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Income tax expense (benefit) | $ | (1,118) | $ | (552) | $ | (566) | 102.5 | % | |||||||||||||||
Income tax benefit increased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily driven by a prior period tax refund received and recorded in the current period.
Consolidated Results for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Consolidated Net Sales, Cost of Goods Sold, Gross Profit, and Gross Profit Margin
| Nine Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 195,060 | $ | 222,547 | $ | (27,487) | (12.4) | % | |||||||||||||||
| Direct-to-consumer net sales | 107,226 | 135,493 | (28,267) | (20.9) | % | ||||||||||||||||||
| Retail net sales | 87,834 | 87,054 | 780 | 0.9 | % | ||||||||||||||||||
| Cost of goods sold | 81,422 | 91,497 | (10,075) | (11.0) | % | ||||||||||||||||||
|
Gross profit
|
113,638 | 131,050 | (17,412) | (13.3) | % | ||||||||||||||||||
|
Gross profit margin (Gross profit as a % of net sales)(1)
|
58.3 | % | 58.9 | % | (60) | ||||||||||||||||||
(1)Change in gross profit margin period over period in basis points
Net sales decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily the result of the decrease in both DTC and retail channel net sales within the Solo Stove segment, and, to a lesser extent, declines in both channels within the Chubbies segment, partially offset by an increase in retail channel sales within the Watersports segment.
Cost of goods sold decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by lower net sales, reduced promotional activity and the benefit recognized from prior period IEEPA tariff refunds received during the current period, partially offset by change in channel mix and a raw material inventory write-off related to the closure of Oru's manufacturing facility.
Gross profit decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, largely as a result of the decrease in net sales and, to a lesser degree, the decrease in gross profit margin. The decrease in gross profit margin was driven by change in channel mix and a raw material inventory write-off related to the closure of Oru's manufacturing facility, partially offset by lower promotional activity and the benefit recognized from prior period IEEPA tariff refunds received during the current period.
Consolidated Operating Expenses
| Nine Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
| Selling, general and administrative expenses | $ | 107,410 | $ | 126,171 | $ | (18,761) | (14.9) | % | |||||||||||||||
| Depreciation and amortization expenses | 12,622 | 19,107 | (6,485) | (33.9) | % | ||||||||||||||||||
|
Restructuring, contract termination and impairment charges
|
8,241 | 18,030 | (9,789) | (54.3) | % | ||||||||||||||||||
| Other operating expenses | 1,010 | 4,397 | (3,387) | (77.0) | % | ||||||||||||||||||
|
Total operating expenses
|
$ | 129,283 | $ | 167,705 | $ | (38,422) | (22.9) | % | |||||||||||||||
Selling, general & administrative expenses decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily reflective of our leaner operations, which resulted in decreases in payroll, marketing, seller fees, and shipping costs.
Depreciation and amortization expenses decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to the impairment of intangible assets during the prior year.
Restructuring, contract termination and impairment charges decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to decreased costs associated with strategic consulting firms for operational performance improvements, restructuring-related employee costs, and the termination of an underperforming licensing agreement compared to the prior year period. These decreases were partially offset by impairments of long-lived assets related to a distribution center closure, an underperforming retail store, and the closure of Oru's manufacturing facility in the current period.
Other operating expenses decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to higher strategic consulting engagements in the prior year period, and the loss recognized from the disposition of the TerraFlame manufacturing operations in the second quarter of 2025.
Consolidated Interest Expense, Net
| Nine Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Interest expense, net
|
$ | 22,884 | $ | 19,115 | $ | 3,769 | 19.7 | % | |||||||||||||||
Interest expense, net increased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to an increase in amortization of debt issuance costs, higher weighted-average interest rates, and decreased interest income, partially offset by lower average borrowings outstanding.
Consolidated Income Taxes
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Income tax expense (benefit) | $ | (7,598) | $ | 4,068 | $ | (11,666) | * | ||||||||||||||||
*not meaningful
Income tax benefit for the nine months ended September 30, 2026 compared to income tax expense for the nine months ended September 30, 2025, was primarily driven by the effects of the Corporate Simplification and related valuation release, as well as a prior period tax refund received and recorded in the current period.
Segment Results
The discussion below is presented for Solo Stove, Chubbies, and Watersports reporting segments.
Solo Stove Segment Results for the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
| Three Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 24,673 | $ | 30,792 | $ | (6,119) | (19.9) | % | |||||||||||||||
| Direct-to-consumer net sales | 18,615 | 23,787 | (5,172) | (21.7) | % | ||||||||||||||||||
| Retail net sales | 6,058 | 7,005 | (947) | (13.5) | % | ||||||||||||||||||
|
Cost of goods sold
|
9,457 | 11,958 | (2,501) | (20.9) | % | ||||||||||||||||||
|
Segment operating expenses
|
12,885 | 17,471 | (4,586) | (26.2) | % | ||||||||||||||||||
| Marketing expenses | 4,377 | 6,676 | (2,299) | (34.4) | % | ||||||||||||||||||
| Employee-related compensation | 1,902 | 2,348 | (446) | (19.0) | % | ||||||||||||||||||
| Other segment operating expenses | 6,606 | 8,447 | (1,841) | (21.8) | % | ||||||||||||||||||
Net sales decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, reflecting lower unit volumes in core fire pits partially mitigated by new product introductions, as well as softness in the retail channel.
Cost of goods sold decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily in line with the decrease in net sales..
Segment operating expenses decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily the result of a decrease in brand-level marketing expenses and payroll as we streamline operations to be more in line with reduced sales and a decrease in other segment operating expenses driven by a decrease in seller fees and shipping expenses, both stemming from the decline in DTC channel net sales.
Solo Stove Segment Results for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
| Nine Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 73,383 | $ | 95,218 | $ | (21,835) | (22.9) | % | |||||||||||||||
| Direct-to-consumer net sales | 55,937 | 70,940 | (15,003) | (21.1) | % | ||||||||||||||||||
| Retail net sales | 17,446 | 24,278 | (6,832) | (28.1) | % | ||||||||||||||||||
|
Cost of goods sold
|
28,001 | 37,158 | (9,157) | (24.6) | % | ||||||||||||||||||
|
Segment operating expenses
|
41,089 | 54,789 | (13,700) | (25.0) | % | ||||||||||||||||||
| Marketing expenses | 15,456 | 21,476 | (6,020) | (28.0) | % | ||||||||||||||||||
| Employee-related compensation | 5,882 | 8,471 | (2,589) | (30.6) | % | ||||||||||||||||||
| Other segment operating expenses | 19,751 | 24,842 | (5,091) | (20.5) | % | ||||||||||||||||||
Net sales decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, reflecting lower unit volumes in core fire pits partially mitigated by new product introductions, as well as softness in the retail channel.
Cost of goods sold decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily in line with the decrease in net sales and benefited from prior period IEEPA tariff refunds received during the current period.
Segment operating expenses decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily the result of a decrease in brand-level marketing expenses and payroll as we streamline operations to be more in line with reduced sales and a decrease in other segment operating expenses driven by a decrease in seller fees and shipping expenses, both stemming from the decline in DTC channel net sales.
Chubbies Segment Results for the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
| Three Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 13,705 | $ | 16,478 | $ | (2,773) | (16.8) | % | |||||||||||||||
| Direct-to-consumer net sales | 10,608 | 12,272 | (1,664) | (13.6) | % | ||||||||||||||||||
| Retail net sales | 3,097 | 4,206 | (1,109) | (26.4) | % | ||||||||||||||||||
|
Cost of goods sold
|
4,031 | 6,592 | (2,561) | (38.9) | % | ||||||||||||||||||
|
Segment operating expenses
|
9,512 | 11,117 | (1,605) | (14.4) | % | ||||||||||||||||||
| Marketing expenses | 2,957 | 2,928 | 29 | 1.0 | % | ||||||||||||||||||
| Employee-related compensation | 2,123 | 3,210 | (1,087) | (33.9) | % | ||||||||||||||||||
| Other segment operating expenses | 4,432 | 4,979 | (547) | (11.0) | % | ||||||||||||||||||
Net sales decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, reflecting variability in customer demand within both the DTC and retail channels.
Cost of goods sold decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to lower sales and the benefit from prior period IEEPA tariff refunds received during the current period.
Segment operating expenses decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily driven by a decrease in payroll.
Chubbies Segment Results for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
| Nine Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 91,028 | $ | 103,622 | $ | (12,594) | (12.2) | % | |||||||||||||||
| Direct-to-consumer net sales | 40,470 | 49,206 | (8,736) | (17.8) | % | ||||||||||||||||||
| Retail net sales | 50,558 | 54,416 | (3,858) | (7.1) | % | ||||||||||||||||||
|
Cost of goods sold
|
33,421 | 42,591 | (9,170) | (21.5) | % | ||||||||||||||||||
|
Segment operating expenses
|
37,360 | 39,490 | (2,130) | (5.4) | % | ||||||||||||||||||
| Marketing expenses | 11,709 | 10,453 | 1,256 | 12.0 | % | ||||||||||||||||||
| Employee-related compensation | 7,385 | 10,054 | (2,669) | (26.5) | % | ||||||||||||||||||
| Other segment operating expenses | 18,266 | 18,983 | (717) | (3.8) | % | ||||||||||||||||||
Net sales decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, reflecting variability in customer demand within both the DTC and retail channels.
Cost of goods sold decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to lower sales and the benefit from prior period IEEPA tariff refunds received during the current period.
Segment operating expenses decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by a decrease in payroll, partially offset by an increase in marketing expenses.
Watersports Segment Results for the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
| Three Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 5,341 | $ | 5,768 | $ | (427) | (7.4) | % | |||||||||||||||
| Direct-to-consumer net sales | 3,982 | 5,968 | (1,986) | (33.3) | % | ||||||||||||||||||
| Retail net sales | 1,359 | (200) | 1,559 | * | |||||||||||||||||||
|
Cost of goods sold
|
2,344 | 2,642 | (298) | (11.3) | % | ||||||||||||||||||
|
Segment operating expenses
|
2,519 | 2,646 | (127) | (4.8) | % | ||||||||||||||||||
| Marketing expenses | 826 | 824 | 2 | 0.2 | % | ||||||||||||||||||
| Employee-related compensation | 253 | 491 | (238) | (48.5) | % | ||||||||||||||||||
| Other segment operating expenses | 1,440 | 1,331 | 109 | 8.2 | % | ||||||||||||||||||
*not meaningful
Net sales decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, reflecting softer sales on less promotional activity within the DTC channel, partially offset by increased customer demand within the retail channel.
Cost of goods sold decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily the result of the decrease in net sales and change in channel mix.
Segment operating expenses decreased for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to a decrease in payroll.
Watersports Segment Results for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
| Nine Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Net sales
|
$ | 30,649 | $ | 23,141 | $ | 7,508 | 32.4 | % | |||||||||||||||
| Direct-to-consumer net sales | 10,819 | 15,347 | (4,528) | (29.5) | % | ||||||||||||||||||
| Retail net sales | 19,830 | 7,794 | 12,036 | 154.4 | % | ||||||||||||||||||
|
Cost of goods sold
|
18,405 | 11,189 | 7,216 | 64.5 | % | ||||||||||||||||||
|
Segment operating expenses
|
6,915 | 9,111 | (2,196) | (24.1) | % | ||||||||||||||||||
| Marketing expenses | 2,389 | 2,776 | (387) | (13.9) | % | ||||||||||||||||||
| Employee-related compensation | 915 | 1,993 | (1,078) | (54.1) | % | ||||||||||||||||||
| Other segment operating expenses | 3,611 | 4,342 | (731) | (16.8) | % | ||||||||||||||||||
Net sales increased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, reflecting an expanded partnership with a key customer within the retail channel, partially offset by softer sales on less promotional activity within the DTC channel.
Cost of goods sold increased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily the result of the increase in net sales and change in channel mix.
Segment operating expenses decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to a decrease in payroll, coupled with a decrease in other segment operating expenses driven by a decrease in seller fees and shipping expenses, stemming from the decline in DTC channel net sales.
Liquidity and Capital Resources
Our cash requirements are primarily for working capital, payment of restructuring and other fees, and repayment of our current and long-term debt obligations. We expect these and other cash needs to continue as we seek to improve, develop and transform our business. We fund our working capital, which is primarily comprised of inventory and accounts payable, and other cash requirements from cash flows from operating activities, cash on hand, and borrowings under our 2025 Revolving Credit Facility. Our cash flows from operating activities and borrowings under the 2025 Revolving Credit Facility are our principal sources of liquidity. Cash flows from operating activities result primarily from the sales of our portfolio of products. Our future product sales and our cash flows are difficult to predict, and actual sales may not be in line with our forecasts.
The Corporate Simplification discussed within the Overview section was intended to limit material liability for cash payments that might otherwise be due in 2026 and beyond, under the terms of the Tax Receivable Agreement, as well as future distributions. For more information on the Corporate Simplification, see the Overview section above.
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. 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 September 30, 2026. See below for details on our outstanding debt balance as of September 30, 2026.
| (in thousands) | Utilized | Availability | |||||||||
| Cash and cash equivalents | $ | 40,197 | |||||||||
|
2025 Revolving Credit Facility
|
$ | - | 50,261 | ||||||||
|
2025 Term Loan
|
264,438 | - | |||||||||
We must comply with financial covenants under the 2025 Credit Agreement (as defined below), including a minimum fixed charge coverage ratio, a maximum leverage ratio, and a minimum liquidity amount, as well as other non-financial covenants, as described in further detail below and in Note 10, Debt, Net. As of September 30, 2026, we were in compliance with such covenants applicable as of such date under the 2025 Credit Agreement.
Going Concern
In evaluating our ability to continue as a going concern for the twelve months following the issuance of these unaudited consolidated financial statements, management projects compliance with these financial covenants. However, the risks associated with variability in our operating performance could affect management's forecast and whether we are able to maintain compliance with the maximum total leverage ratio covenant over the next year. Accordingly, there is substantial doubt about our ability to continue as a going concern within one year after the issuance of these unaudited consolidated financial statements.
Management has developed plans intended to mitigate these downside risk conditions, including optimization of the Company's distribution and fulfillment network, reductions in cost of goods sold, reductions in marketing spend and other fixed operating costs, and prioritization of available cash towards debt and other obligations. Certain of these cost savings and operational initiatives are discussed in Note 2, Restructuring, Contract Termination and Impairment Charges. However, these plans are not entirely within the Company's control and cannot be assessed as being probable of occurring or of mitigating noncompliance with the maximum total leverage ratio covenant. Accordingly, the plans to mitigate these downside risk conditions do not fully alleviate the substantial doubt about our ability to continue as a going concern for at least the twelve months following the issuance of these unaudited consolidated financial statements.
If we do not achieve the expected benefits from these operational initiatives or if operating results or liquidity deteriorate, we could be required to seek additional capital through equity or debt financing or other sources. We are evaluating strategies to address the possible covenant noncompliance, which includes seeking an amendment or waiver of the maximum total leverage ratio covenant from the lenders under the 2025 Credit Agreement, refinancing or restructuring the debt, issuing new debt or equity, or entering into other financing arrangements. There can be no assurance that such financing, amendment, waiver or other relief from the lenders would be available on acceptable terms, or at all. Similarly, there can be no assurance that we will be able to refinance or restructure its debt, or execute any further cost savings or operational improvements.
If we are not in compliance with the maximum total leverage ratio covenant as of the end of any such test period and the failure is not cured or waived, an event of default would occur under the 2025 Credit Agreement. Upon the determination of an event of default under the 2025 Credit Agreement, the lenders could elect to declare all amounts outstanding under the 2025 Credit Agreement immediately due and payable and exercise other remedies as set forth in the 2025 Credit Agreement. If the maturity of the debt were accelerated, we would not have sufficient liquidity to repay it.
Revolving Credit Facilities and Term Loans
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 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. The 2025 Credit Agreement consists of the following: (i) revolving commitments under the Revolving Credit Facility in an aggregate amount equal to $90 million (the "2025 Revolving Credit Facility"), subject to availability under the borrowing base set forth in the 2025 Credit Agreement; and (ii) refinancing term loans, including our prior term loan (the "2025 Term Loan") in an aggregate principal amount equal to $240 million. The 2025 Revolving Credit Facility also includes the ability to issue up to $20 million in letters of credit, with $5.8 million of letters of credit issued and outstanding as of September 30, 2026. While our issuance of letters of credit does not increase our borrowings outstanding under the 2025 Revolving Credit Facility, it does reduce the amounts available under the 2025 Revolving Credit Facility.
Under the 2025 Credit Agreement, the maturity date of the 2025 Revolving Credit Facility and the 2025 Term Loan is June 30, 2028. We commenced mandatory quarterly principal payments on the 2025 Term Loan during the fiscal quarter ending on June 30, 2026, based on the aggregate outstanding principal amount of the 2025 Term Loan as of June 13, 2025 multiplied by 0.25%. We are required to make increased quarterly principal payments beginning with the fiscal quarter ending on June 30, 2027, based on the aggregate outstanding principal amount of the 2025 Term Loan as of June 13, 2025 multiplied by 1.00%.
Each of the 2025 Revolving Credit Facility and the 2025 Term Loan bears interest at (depending on our election from time to time) either an adjusted term rate defined in the agreement based on SOFR or the base rate defined in the 2025 Credit Agreement, each plus an applicable margin. The interest was payable in kind ("PIK"), and thus capitalized thereon and increasing the principal balance thereof, on a quarterly basis through March 31, 2026. The interest is PIK (i) for the period beginning on April 1, 2026 and ending on March 31, 2027, upon our election, and (ii) after March 31, 2027, it is only payable in cash. We elected not to PIK interest for the period beginning April 1, 2026 through June 30, 2026 and elected to PIK interest for the period beginning July 1, 2026 through September 30, 2026. The unfunded portion of the commitments under the 2025 Revolving Credit Facility will accrue an annual commitment fee.
The 2025 Credit Agreement also requires us to comply with additional reporting requirements, including, among others, (i) delivering on the date that is twenty (20) days after the end of the previous calendar month (a) a borrowing base certificate calculating the borrowing base and availability under the 2025 Revolving Credit Facility, (b) a 13-week cash flow forecast for us and our subsidiaries, (c) a liquidity report, and (d) an accounts and inventory report; and (ii) delivering no later than thirty (30) days after the end of the previous calendar month, a key performance indicator report and certain additional reports on our operating plan and other measures, such as Credit Agreement Adjusted EBITDA. In addition, the 2025 Credit Agreement extends the delivery dates for quarterly financial statement deliverables to sixty (60) days after the end of the applicable fiscal quarter.
In addition, pursuant to the 2025 Credit Agreement, we are required to comply with the following financial covenants:
•a maximum debt-to-EBITDA ratio, defined in the 2025 Credit Agreement as the Total Leverage Ratio and determined as of the last day of each fiscal quarter with EBITDA annualized for the most recent fiscal quarter, of 9.50 for the fiscal quarter ended September 30, 2026; 9.00 for the fiscal quarters ending December 31, 2026 and March 31, 2027; 8.25 for the fiscal quarters ending June 30, 2027 and September 30, 2027; 7.50 for the fiscal quarters ending December 31, 2027 and March 31, 2028; and 7.00 for the fiscal quarters ending June 30, 2028 and thereafter;
•a minimum EBITDA-to-fixed charges ratio, defined in the 2025 Credit Agreement as the Fixed Charge Coverage Ratio, and determined as of the last day of each fiscal quarter with EBITDA annualized for the most recent fiscal quarter, of 0.70 for the fiscal quarters ending September 30, 2026, December 31, 2026, and March 31, 2027; 0.75 for the fiscal quarters ending June 30, 2027 and September 30, 2027; 0.80 for the fiscal quarters ending December 31, 2027 and March 31, 2028; and 1.00 for the fiscal quarters ending June 30, 2028 and thereafter; and
•a minimum unrestricted cash plus undrawn availability on the 2025 Revolving Credit Facility amount, defined in the 2025 Credit Agreement as Minimum Liquidity, of $10 million average minimum liquidity covenant for the first three calendar months of each fiscal year and a $20 million average minimum liquidity covenant for the last nine calendar months of each fiscal year, which in each case as applicable, is tested on a monthly basis.
For purposes of the above covenants, EBITDA is calculated as set forth in the 2025 Credit Agreement.
Cash Flows
| Nine Months Ended September 30, |
Change
|
||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 |
$
|
%
|
|||||||||||||||||||
|
Cash flows provided by (used in):
|
|||||||||||||||||||||||
|
Operating activities
|
$ | 26,021 | $ | (53,019) | $ | 79,040 | 149.1 | % | |||||||||||||||
|
Investing activities
|
(5,040) | (9,590) | 4,550 | 47.4 | % | ||||||||||||||||||
|
Financing activities
|
(728) | 66,775 | (67,503) | (101.1) | % | ||||||||||||||||||
Operating activities
The $79.0 million increase in cash provided by operating activities period over period, was primarily due to a $48.1 million decline in cash usage from changes in operating assets and liabilities ("working capital"), which was driven by accounts payable reductions in the prior year period, and a $30.9 million increase in net income (loss) after non-cash adjustments, primarily driven by a reduction in net loss.
Investing activities
The $4.6 million decrease in cash used in investing activities in the current period when compared to the prior period was due to a decrease in capital expenditures, primarily driven by the implementation of Solo Stove's web site relaunch in the prior year period.
Financing activities
The $67.5 million increase in cash used in financing activities in the current period when compared to the prior year period was primarily driven by a $70.1 million decrease in cash provided by net debt activity, inclusive of borrowings, repayments and debt issuance costs in relation to the 2025 Credit Agreement in the prior year period.
Contractual Obligations
For information regarding our contractual obligations, see above under "Revolving Credit Facilities and Term Loans," Note 1, Organization and Basis of Presentation, Note 10, Debt, Net and Note 15, Variable Interest Entities in this Quarterly Report and Note 15, Leases and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our 2025 Form 10-K.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosure of contingent assets and liabilities. We re-evaluate our estimates on an ongoing basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. 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 audited consolidated financial statements included in our 2025 Form 10-K for more information about our significant accounting policies, including our critical accounting policies. The critical accounting estimates that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements are described in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our 2025 Form 10-K. During the nine months ended September 30, 2026, there were no material changes to our critical accounting policies and estimates from those discussed in our 2025 Form 10-K. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see "Recently Issued Accounting Pronouncements-Not Yet Adopted" in Note 1 - Organization and Basis of Presentation, to the unaudited consolidated financial statements included elsewhere in this Quarterly Report.
JOBS Act
We currently qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Accordingly, we are provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We have elected to adopt new or revised accounting guidance within the same time period as private companies, unless management determines it is preferable to take advantage of early adoption provisions offered within the applicable guidance. Our utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act. We expect that we will no longer qualify as an emerging growth company as of December 31, 2026.
Solo Brands Inc. published this content on November 12, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 12, 2026 at 12:50 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]