Strong Sales Growth Year-Over-Year
Solo Brands, Inc. (NYSE: DTC) (“Solo Brands” or “the Company”),
a portfolio of rapidly growing direct-to-consumer lifestyle brands,
today announced its financial results for the three and six month
periods ended June 30, 2022.
Second Quarter 2022 Highlights Compared to Second Quarter
2021(1)
- Net sales of $136.0 million, up $47.3 million or 53.3%
- Net loss of $19.9 million, down $39.6 million
- Loss per Class A common stock - basic and diluted of $(0.19)
for the second quarter of 2022
- Adjusted net income(2) of $17.3 million, down $10.1 million, or
36.8%
- Adjusted EBITDA(2) of $23.7 million, down $7.4 million, or
23.8%
- Adjusted EPS2 of $0.40 for the second quarter of 2022
“We delivered solid top-line results with sales trends
strengthening as we moved through the quarter. Importantly, our
strong sales growth was achieved with healthy gross margin rates
despite worldwide supply chain headwinds. Our direct to consumer
(DTC) approach is highly-differentiated, allowing us to continue
delivering profit while simultaneously investing in innovation and
systems, which we believe will position us to deliver consistent,
long-term growth for our shareholders,” said John Merris, CEO of
Solo Brands. “We are excited about our opportunity to drive organic
growth led by a direct connection to our customers and a strong
pipeline of innovative products.”
Operating Results for the Three Months
Ended June 30, 2022(1)
Net sales increased 53.3% to $136.0 million, compared to
$88.7 million in the second quarter of 2021. The increase was
driven by activity from acquired businesses and improved demand in
both the wholesale and direct-to-consumer sales channels.
- Direct-to-consumer revenues increased 63.2% to $116.1 million
compared to $71.1 million in the second quarter of 2021.
- Wholesale revenues increased 13.1% to $19.9 million compared to
$17.6 million in the second quarter of 2021.
Gross profit increased 45.2% to $86.7 million, compared
to $59.7 million in the second quarter of 2021. Adjusted gross
profit2 increased 46.2% to $88.4 million compared to $60.4 million
in the same period of the prior year, reflecting the impact of
purchase accounting adjustments related to acquired businesses.
Gross margin decreased 3.5% to 63.7%. Adjusted gross margin2
decreased to 65.0% compared to 68.1% in the same period in 2021 due
to increased freight rates and higher logistics costs.
Selling, general and administrative (SG&A) expenses
increased to $69.2 million, compared to $29.7 million in the second
quarter of 2021. $17.3 million of the increase was due to activity
from acquired businesses. The remaining increases in SG&A was
primarily driven by the following: an $8.2 million increases in
employee costs as a result of equity-based compensation and
increased headcount, a $6.3 million increases in advertising and
marketing spend, a $4.1 million increases in distribution and
logistics costs, a $1.4 million increase in professional services,
and a $1.1 million increase in rent.
Depreciation and amortization expenses increased to $6.0
million compared to $4.3 million in the second quarter of 2021. The
increase in depreciation and amortization expenses was driven by a
$1.0 million increase in amortization primarily related to
increases in definite-lived intangible assets as a result of
acquisition activity and a $0.7 million increase in depreciation
primarily related to a new global headquarters facility.
Impairment Charges of $30.6 million were recorded in the
second quarter of 2022, of which $27.9 million related to goodwill
for the Company’s ISLE reporting unit and $2.7 million related to
the ISLE trademark intangible. No impairment charges were recorded
during the second quarter of 2021.
Loss per Class A common stock basic and diluted per share
was $0.19. A comparison to the same period last year is not
meaningful or comparable due to the reorganization transactions
which occurred in 2021. Refer to the footnote in the unaudited
consolidated statements of operations for more information.
Adjusted EPS2 for the second quarter of 2022 was $0.40.
Weighted average basic and diluted shares were 63,416,047.
Operating Results For the Six Months
Ended June 30, 2022(1)
Net sales increased 38.3% to $218.2 million, compared to
$157.8 million in the prior year period primarily driven by
activity from acquired businesses.
- Direct-to-consumer revenues increased 32.2% to $176.3 million
compared to $133.4 million in the prior year period.
- Wholesale revenues increased 71.7% to $41.9 million compared to
$24.4 million in the prior year period.
Gross profit increased 27.7% to $135.5 million, compared
to $106.2 million in the prior year and adjusted gross profit(1),
reflecting the impact of purchase accounting adjustments related to
the acquisitions, increased 33.3% to $143.3 million compared to
$107.6 million in the prior year period. Gross margin decreased
5.2% to 62.1%. Adjusted gross margin(1) decreased to 65.7% compared
to 68.2% in the prior year period, in line with expectations due to
increased freight rates and higher logistics costs.
Selling, general and administrative (SG&A) expenses
increased 137.2% to $114.8 million, compared to $48.4 million in
the prior year period. $27.5 million of the increase was due to
activity from acquired businesses. The remaining increases in
SG&A was primarily driven by the following: a $15.6 million
increase in employee costs as a result of equity-based compensation
and increased headcount, a $10.2 million increase in advertising
and marketing spend, a $4.1 million increase in distribution and
logistics costs, a $2.5 million increase in professional services
primarily as a result of the audit of the 2021 Form 10-K, a $2.1
million increase in rent as a result of a new global headquarters
facility, and a $1.7 million increase in insurance as a result of
becoming a public company.
Depreciation and amortization expenses increased to $12.0
million compared to $7.9 million in the prior year period. The
increase in depreciation and amortization expenses was driven by a
$2.7 million increase in amortization primarily related to
increases in definite-lived intangible assets as a result of
acquisition activity and a $1.3 million increase in depreciation
primarily related to a new global headquarters facility.
Impairment Charges of $30.6 million were recorded in
2022, of which $27.9 million related to goodwill for the Company’s
ISLE reporting unit and $2.7 million related to the ISLE trademark
intangible. No impairment charges were recorded during the prior
year.
Loss per Class A common stock basic and diluted per share
was $0.22. A comparison to the same period last year is not
meaningful or comparable due to the Reorganization Transactions
which occurred in 2021. Refer to the footnote on the unaudited
consolidated statements of operations for more information.
Adjusted EPS(1) for the six months ended June 30, 2022
was $0.59. Weighted average diluted shares were 63,408,451.
Balance Sheet
Cash and cash equivalents at the end of the second
quarter totaled $26.7 million, compared to $25.1 million at
December 31, 2021.
Outstanding borrowings were $57.5 million under the
Revolving Credit Facility, and $98.1 million under the Term Loan
Agreement as of June 30, 2022. The borrowing capacity on the
Revolving Credit Facility was $350 million as of June 30, 2022,
leaving $292.5 million of availability.
Inventory at the end of the second quarter was $128.2
million, compared to $102.3 million at December 31, 2021. Increases
in inventory were driven by a proactive approach for demand
planning in light of ongoing inflation and supply chain concerns
and preparation for new product launches.
Full Year 2022 Guidance
We are updating our outlook for the full year 2022 to reflect
current visibility into the global macroeconomic environment and
consumer trends as follows:
Total revenue is expected to grow in the mid-20%
range.
Adjusted gross margin* is planned to be above 60% of
total revenue.
Adjusted EBITDA margin* is forecasted to be in the
mid-teens as a percentage of total revenue.
The Company’s full year 2022 guidance is based on a number of
assumptions that are subject to change and many of which are
outside the Company’s control. If actual results vary from these
assumptions, the Company’s expectations may change. There can be no
assurance that the Company will achieve these results.
* The Company has not provided a quantitative reconciliation of
forecasted adjusted gross margin or adjusted EBITDA margin to
forecasted GAAP gross margin or net income (loss) as a percent of
net sales, respectively, within this press release because the
Company is unable, without making unreasonable efforts, to
calculate certain reconciling items with confidence. With respect
to GAAP gross margin, these items include, but are not limited to,
fair market value write-ups of inventory accounted for under ASC
805 related to future potential transactions, which could
materially affect the computation of forward-looking GAAP gross
margin, and are inherently uncertain and depend on various factors,
some of which are outside of the Company’s control. With respect to
GAAP net income (loss), these items include, but are not limited
to, equity-based compensation with respect to future grants and
forfeitures, which could materially affect the computation of
forward-looking GAAP net income, and are inherently uncertain and
depend on various factors, some of which are outside of the
Company’s control.
(1) The operating results in the three and six month periods
ended June 30, 2022 include the activity of Oru, ISLE, and Chubbies
post-acquisition. The operating results of ISLE and Chubbies were
not included in our financial results in the six month period ended
June 30, 2021.
(2) This release includes references to non-GAAP financial
measures. Refer to “Non-GAAP Financial Measures” later in this
release for the definitions of the non-GAAP financial measures
presented and a reconciliation of these measures to their closest
comparable GAAP measures.
Conference Call Details
A conference call to discuss the Company's second quarter
results is scheduled for August 11, 2022, at 8:30 a.m. ET. To
participate, please dial 844-200-6205 or +1 929-526-1599 for
international callers, conference ID 434344. The conference call
will also be webcast live at https://investors.solobrands.com. A recording will
be available shortly after the conclusion of the call. To access
the replay, please dial 866-813-9403 or +44 204-525-0658 for
international callers, conference ID 813602. A replay of the
webcast will also be available approximately two hours after the
conclusion of the call on the Company's website at https://investors.solobrands.com where it will
remain available for one year.
About Solo Brands, Inc.
Solo Brands, headquartered in Grapevine, TX, develops and
produces ingenious lifestyle products that help customers create
lasting memories. Through a disruptive and scaled
direct-to-consumer platform, Solo Brands offers innovative products
directly to consumers primarily online through four lifestyle
brands – Solo Stove firepits, stoves, and accessories, Chubbies
premium casual apparel and activewear, Oru Kayak, origami folding
kayaks that can be assembled in minutes, and ISLE paddleboards,
maker of inflatable paddle boards. Solo Brands is a
direct-to-consumer platform that offers innovative products
directly to consumers primarily through its owned websites.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including without limitation statements
regarding our anticipated GAAP and non-GAAP guidance for the fiscal
year ending December 31, 2022. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,”
“targets,” “projects,” “contemplates,” “believes,” “estimates,”
“forecasts,” “guidance,” “predicts,” “potential” or “continue” or
the negative of these terms or other similar expressions. These
statements are neither promises nor guarantees, and involve known
and unknown risks, uncertainties and other important factors that
may cause our actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements, including, but not limited to, the following: our
ability to manage our future growth effectively; our ability to
expand into additional markets; our ability to maintain and
strengthen our brand to generate and maintain ongoing demand for
our products; our ability to cost-effectively attract new customers
and retain our existing customers; our failure to maintain product
quality and product performance at an acceptable cost; the impact
of product liability and warranty claims and product recalls; the
highly competitive market in which we operate; business
interruptions resulting from geopolitical actions, natural
disasters, or impacts of the COVID-19 pandemic; risks associated
with our international operations; and problems with, or loss of,
our suppliers or an inability to obtain raw materials; and the
ability of our stockholders to influence corporate matters. These
and other important factors discussed under the caption "Risk
Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2021, and any subsequent Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, or other filings we make with
the Securities and Exchange Commission could cause actual results
to differ materially from those indicated by the forward-looking
statements made in this press release. Forward-looking statements
speak only as of the date the statements are made and are based on
information available to Solo Brands at the time those statements
are made and/or management's good faith belief as of that time with
respect to future events. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
Availability of Information on Solo Brands’ Website and
Social Media Profiles
Investors and others should note that Solo Brands routinely
announces material information to investors and the marketplace
using SEC filings, press releases, public conference calls,
webcasts and the Solo Brands investors website at https://investors.solobrands.com. We also intend
to use the social media profiles listed below as a means of
disclosing information about us to our customers, investors and the
public. While not all of the information that the Company posts to
the Solo Brands investors website or to social media profiles is of
a material nature, some information could be deemed to be material.
Accordingly, the Company encourages investors, the media, and
others interested in Solo Brands to review the information that it
shares at the “Investors” link located at the top of the page on
https://solobrands.com and to
regularly follow our social media profiles. Users may automatically
receive email alerts and other information about Solo Brands when
enrolling an email address by visiting "Investor Email Alerts" in
the "Resources" section of Solo Brands investor website at
https://investors.solobrands.com.
Social Media Profiles: https://linkedin.com/company/solo-brands/
https://instagram.com/solobrands/
SOLO BRANDS, INC.
Consolidated Statements of Operations and Comprehensive
Income (Unaudited)
Three Months Ended
Six Months Ended
(In thousands, except per unit
data)
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Net sales
$
136,019
$
88,745
$
218,222
$
157,816
Cost of goods sold
49,343
29,045
82,693
51,652
Gross profit
86,676
59,700
135,529
106,164
Operating expenses
Selling, general & administrative
expenses
69,166
29,662
114,810
48,396
Impairment charges
30,589
—
30,589
—
Depreciation and amortization expenses
6,043
4,312
11,978
7,905
Other operating expenses
820
2,488
1,320
2,610
Total operating expenses
106,618
36,462
158,697
58,911
(Loss) income from operations
(19,942
)
23,238
(23,168
)
47,253
Non-operating expenses
Interest expense
1,237
3,387
2,033
5,117
Other non-operating expenses
513
(5
)
604
2
Total non-operating expenses
1,750
3,382
2,637
5,119
(Loss) income before income taxes
(21,692
)
19,856
(25,805
)
42,134
Income tax (benefit) expense
(1,819
)
128
(2,697
)
172
Net (loss) income
(19,873
)
19,728
(23,108
)
41,962
Less: net (loss) income attributable to
noncontrolling interest
(7,834
)
229
(9,034
)
229
Net (loss) income attributable to Solo
Brands, Inc.
$
(12,039
)
$
19,499
$
(14,074
)
$
41,733
Other comprehensive (loss)
income
Foreign currency translation, net of
tax
$
46
$
—
$
70
$
—
Comprehensive (loss) income
(19,827
)
19,728
(23,038
)
41,962
Less: comprehensive income attributable to
noncontrolling interests
15
—
23
—
Less: net (loss) income attributable to
noncontrolling interests
(7,834
)
229
(9,034
)
229
Comprehensive (loss) income
attributable to Solo Brands, Inc.
$
(12,008
)
$
19,499
$
(14,027
)
$
41,733
Net (loss) income per share
Basic
$
(0.19
)
*
$
(0.22
)
*
Diluted
$
(0.19
)
*
$
(0.22
)
*
Weighted-average shares
outstanding
Basic
63,416
*
63,408
*
Diluted
63,416
*
63,408
*
*
The Company analyzed the calculation of
earnings per unit for the periods prior to the reorganization
transactions and determined that it resulted in values that would
not be meaningful to the users of these unaudited consolidated
financial statements. Therefore, earnings per unit information has
not been presented for the three and six month periods ended June
30, 2021.
SOLO BRANDS, INC.
Consolidated Balance Sheets (Unaudited)
(In thousands)
June 30, 2022
December 31, 2021
ASSETS
Current assets
Cash and cash equivalents
$
26,728
$
25,101
Accounts receivable, net
22,766
21,513
Inventory
128,238
102,335
Prepaid expenses and other current
assets
14,316
9,889
Total current assets
192,048
158,838
Non-current assets
Property and equipment, net
13,265
10,603
Intangible assets, net
244,745
257,234
Goodwill
382,658
410,559
Other non-current assets
26,447
506
Total non-current assets
667,115
678,902
Total assets
$
859,163
$
837,740
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
13,460
$
11,774
Accrued expenses and other current
liabilities
25,909
28,150
Deferred revenue
3,994
3,524
Current portion of long-term debt
4,375
3,125
Total current liabilities
47,738
46,573
Non-current liabilities
Long-term debt, net
147,953
125,023
Deferred tax liability
86,778
91,244
Other non-current liabilities
21,992
729
Total non-current liabilities
256,723
216,996
Commitments and contingencies (Note
13)
Shareholders’ equity
Class A common stock, par value $0.001 per
share; 475,000,000 shares authorized; 63,461,208 and 63,397,635
shares issued and outstanding
63
63
Class B common stock, par value $0.001 per
share; 50,000,000 shares authorized; 31,363,853 and 31,178,815
shares issued and outstanding
31
31
Additional paid-in capital
353,821
350,088
Accumulated other comprehensive income
53
6
Retained earnings (accumulated
deficit)
(3,383
)
10,691
Shareholders’ equity
350,585
360,879
Shareholders’ equity attributable to
non-controlling interests
204,117
213,292
Total shareholders’ equity
554,702
574,171
Total liabilities and shareholders’
equity
$
859,163
$
837,740
SOLO BRANDS, INC.
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
(In thousands)
June 30, 2022
June 30, 2021
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) income
$
(23,108
)
$
41,962
Adjustments to reconcile net (loss) income
to net cash and cash equivalents (used in) provided by operating
activities
Impairment charges
30,589
—
Amortization of intangible assets
10,478
7,749
Equity-based compensation
8,887
490
Deferred income taxes
(5,497
)
—
Operating lease right-of-use assets
expense
3,030
—
Depreciation
1,500
154
Changes in accounts receivable
reserves
433
104
Amortization of debt issuance costs
430
—
Loss on disposal of property and
equipment
(9
)
—
Non-cash interest expense
—
1,761
Changes in assets and liabilities
Accounts receivable
(1,879
)
(10,470
)
Inventory
(26,244
)
(30,084
)
Prepaid expenses and other current
assets
(4,487
)
(805
)
Accounts payable
2,059
2,517
Accrued expenses and other current
liabilities
(5,358
)
(3,106
)
Deferred revenue
477
(17,296
)
Other non-current assets and
liabilities
(3,213
)
93
Net cash (used in) provided by
operating activities
(11,912
)
(6,931
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures
(4,582
)
(1,811
)
Acquisitions, net of cash acquired
(774
)
(19,135
)
Net cash (used in) provided by
investing activities
(5,356
)
(20,946
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term debt
25,000
195,600
Repayments of long-term debt
(1,250
)
(54,600
)
Debt issuance costs paid
—
(3,334
)
Payment of contingent consideration
—
(100,000
)
Distributions to members before
Reorganization Transactions
—
(34,660
)
Distributions to non-controlling
interests
(4,984
)
—
Stock issued under employee stock purchase
plan
246
—
Net cash provided by financing
activities
19,012
3,006
Effect of exchange rate changes on
cash
(117
)
—
Net change in cash and cash
equivalents
1,627
(24,871
)
Cash and cash equivalents balance,
beginning of period
25,101
32,753
Cash and cash equivalents balance, end of
period
$
26,728
$
7,882
SUPPLEMENTAL DISCLOSURES:
Cash interest paid
$
1,374
$
4,489
Cash income taxes paid
$
8,546
$
—
Liabilities for capital expenditure
additions
$
479
$
145
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP;
however, management believes that certain non-GAAP financial
measures provide users of our financial information with useful
supplemental information that enables a better comparison of our
performance across periods. We use adjusted EBITDA, adjusted EBITDA
margin, adjusted net income, adjusted gross profit, adjusted gross
profit margin, and adjusted EPS non-GAAP financial measures,
because we believe they are useful indicators of our operating
performance. Our management uses these non-GAAP measures
principally as measures of our operating performance and believes
that these non-GAAP measures are useful to our investors because
they are frequently used by securities analysts, investors and
other interested parties in their evaluation of the operating
performance of companies in industries similar to ours. Our
management also uses these non-GAAP measures for planning purposes,
including the preparation of our annual operating budget and
financial projections.
None of these non-GAAP measures is a measurement of financial
performance under GAAP. These non-GAAP measures should not be
considered in isolation or as a substitute for a measure of our
liquidity or operating performance prepared in accordance with GAAP
and are not indicative of net income (loss) from continuing
operations as determined under U.S. GAAP. In addition, the
exclusion of certain gains or losses in the calculation of non-GAAP
financial measures should not be construed as an inference that
these items are unusual or infrequent as they may recur in the
future, nor should it be construed that our future results will be
unaffected by unusual or non-recurring items. These non-GAAP
financial measures have limitations that should be considered
before using these measures to evaluate our liquidity or financial
performance. Some of these limitations are as follows:
These non-GAAP measures exclude certain tax payments that may
require a reduction in cash available to us; do not reflect our
cash expenditures, or future requirements, for capital expenditures
(including capitalized software developmental costs) or contractual
commitments; do not reflect changes in, or cash requirements for,
our working capital needs; do not reflect the cash requirements
necessary to service interest or principal payments on our debt;
exclude certain purchase accounting adjustments related to
acquisitions; and exclude equity-based compensation expense, which
has recently been, and will continue to be for the foreseeable
future, a significant recurring expense for our business and an
important part of our compensation strategy.
In addition, other companies may define and calculate
similarly-titled non-GAAP financial measures differently than us,
thereby limiting the usefulness of these non-GAAP financial
measures as a comparative tool. Because of these and other
limitations, you should consider our non-GAAP measures only as
supplemental to other GAAP-based financial performance
measures.
Adjusted Gross Profit and Adjusted Gross Profit
Margin
We calculate adjusted gross profit as gross profit excluding the
fair value write-up of inventory as a result of the change in
control transaction in 2020 and the Oru, ISLE, and Chubbies
acquisitions. We calculate adjusted gross profit margin as adjusted
gross profit divided by net sales.
Adjusted Net Income
We calculate adjusted net income as net income (loss) excluding
impairment charges, inventory fair value write-up, amortization of
intangible assets, incentive unit and equity-based compensation
expense, acquisition related costs, business optimization expenses,
one-time transaction costs, business expansion expenses, management
transition costs, and the tax impact of these adjusting items.
Adjusted EBITDA and Adjusted EBITDA Margin
We calculate adjusted EBITDA as net income (loss) before
interest expense, income taxes, and depreciation and amortization
expenses, adjusted to exclude impairment charges, inventory fair
value write-up, incentive unit and equity-based compensation
expense, acquisition related costs, business optimization expenses,
one-time transaction costs, management transition costs, and
business expansion expenses. We calculate adjusted EBITDA margin as
adjusted EBITDA divided by net sales.
Adjusted EPS
We calculate adjusted EPS as adjusted net income, as defined
above, divided by weighted average diluted shares as calculated
under U.S. GAAP.
SOLO BRANDS, INC. Reconciliation of
Non-GAAP Financial Information to GAAP (Unaudited) (In
thousands except per share amounts)
The following table reconciles gross profit to adjusted gross
profit for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
(dollars in thousands)
2022
2021
2022
2021
Gross profit
$
86,676
$
59,700
$
135,529
$
106,164
Inventory fair value write-up(1)
1,708
746
7,813
1,405
Adjusted gross profit
$
88,384
$
60,446
$
143,342
$
107,569
Adjusted gross profit margin (Adjusted
gross profit as a % of net sales)
65.0
%
68.1
%
65.7
%
68.2
%
(1) Represents the fair market value write-up of inventory
accounted for under ASC 805 related to the acquisitions.
The following tables reconcile the non-GAAP financial measures
to their most comparable GAAP measure for the periods
presented:
Three Months Ended June
30,
Six Months Ended June
30,
(dollars in thousands)
2022
2021
2022
2021
Net (loss) income
$
(19,873
)
$
19,728
$
(23,108
)
$
41,962
Impairment charges(1)
30,589
—
30,589
—
Amortization expense
5,229
4,216
10,487
7,749
Equity based compensation expense(2)
4,450
261
8,887
490
Inventory fair value write-up(3)
1,708
746
7,813
1,405
Management transition costs(4)
541
—
664
—
Acquisition related costs(5)
480
1,261
901
1,303
Transaction costs(6)
95
1,119
221
1,147
Business optimization expense(7)
142
88
225
88
Business expansion expense(8)
73
20
148
72
Tax impact of adjusting items(9)
(6,085
)
—
(8,424
)
—
Adjusted net income
$
17,349
$
27,439
$
28,403
$
54,216
Adjusted EPS
$
0.40
*
$
0.59
*
(amounts per share)
Loss per Class A common stock - diluted
(GAAP)
$
(0.19
)
*
$
(0.22
)
*
Impairment charges(1)
0.48
*
0.48
*
Amortization expense
0.08
*
0.17
*
Equity based compensation expense(2)
0.07
*
0.14
*
Inventory fair value write-up(3)
0.03
*
0.12
*
Management transition costs(4)
0.01
*
0.01
*
Acquisition related costs(5)
0.01
*
0.01
*
Transaction costs(6)
—
*
—
*
Business optimization expense(7)
—
*
—
*
Business expansion expense(8)
—
*
—
*
Tax impact of adjusting items(9)
(0.10
)
*
(0.13
)
*
Adjusted EPS(10)
$
0.40
*
$
0.59
*
Weighted-average Class A common stock
outstanding - diluted
63,416
*
63,408
*
Net (loss) income
$
(19,873
)
$
19,728
$
(23,108
)
$
41,962
Interest expense
1,237
3,387
2,033
5,117
Income tax expense
(1,819
)
128
(2,697
)
172
Depreciation and amortization expense
6,043
4,312
11,978
7,905
Impairment charges(1)
30,589
—
30,589
—
Equity based compensation expense(2)
4,450
261
8,887
490
Inventory fair value write-up(3)
1,708
746
7,813
1,405
Management transition costs(4)
541
—
664
—
Acquisition related costs(5)
480
1,261
901
1,303
Transaction costs(6)
95
1,119
221
1,147
Business optimization expense(7)
142
88
225
88
Business expansion expense(8)
73
20
148
72
Adjusted EBITDA
$
23,666
$
31,050
$
37,654
$
59,661
Adjusted EBITDA margin (Adjusted EBITDA as
a % of net sales)
17.4
%
17.3
%
*
The Company analyzed the calculation of
earnings per unit for the periods prior to the 2021 reorganization
transactions and determined that it resulted in values that would
not be meaningful to the users of these consolidated financial
statements. Therefore, earnings per unit information has not been
presented for the periods ended June 30, 2021.
(1)
Represents trademark and goodwill
impairments recorded during the three months ended June 30,
2022.
(2)
Represents employee compensation expense
associated with equity-based awards. This includes expense
associated with the incentive unit awards as well as awards issued
on and subsequent to the IPO including options and restricted stock
units.
(3)
Represents the fair market value write-up
of inventory accounted for under ASC 805 related to the
acquisitions and the 2020 change in control transaction.
(4)
Represents costs primarily related to
recruiting senior level management including a new CFO.
(5)
Represents expenses that we do not believe
are reflective of our ongoing operations, primarily warehouse and
employee transition costs associated with the acquisitions.
(6)
Represents transaction costs primarily
related to professional service fees incurred in connection with
the IPO and professional service fees incurred for valuations
performed in connection with the impairment charges.
(7)
Represents various start-up and transition
costs, including warehouse optimization charges associated with new
global headquarters infrastructure with new and expanded
distribution facilities in Texas, Pennsylvania, and the
Netherlands.
(8)
Represents costs for expansion into new
international and domestic markets.
(9)
Represents the tax impact of adjustments
calculated at the federal statutory rate of 21% less the portion of
the tax impact of the adjustments attributable to noncontrolling
interests. We calculated the tax impact of the adjusting items in
the three and six month periods ended June 30, 2022, as we were a
limited liability company. We were not subject to corporate income
taxes in the three and six month periods ended June 30, 2021.
(10)
Adjusted Earnings Per Share (“Adjusted
EPS”) is calculated independently for each component and may not
sum to Adjusted EPS due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220811005200/en/
Bruce Williams Investors@solobrands.com 332-242-4303
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