Solo Brands, Inc. (NYSE:DTC) Q3 2023 Earnings Call Transcript

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Ryan Sigdahl: Great, thanks. Good luck, guys.

Operator: [Operator Instructions] Our next question comes from Brian McNamara from Canaccord Genuity. Please go ahead. Your line is now open.

Brian McNamara: Good morning, guys. Thanks for taking the questions. Somer, we enjoyed working with you, best of luck in your new endeavors. First off, could you provide or give us an idea how much in wholesale sales were pulled forward to Q3 — to Q3 from Q4, whether qualitatively or quantitatively, if you can?

Somer Webb: Sure. We believe roughly $6 million was pulled forward. And on our last call, I mentioned that I thought the timing between Q3 — tail end of Q3, early Q4, which going to be dependent on when some of the wholesalers are going to want to receive their holiday product. As you can imagine, with the sales starting earlier, we ended up shipping out more products than we expected at the end of Q3 and it was roughly $6 million.

Brian McNamara: Got it. And then is that — is the strength driven by more replenishment or more kind of starting out relationships for a better term in terms of your recent wholesale strength?

John Merris: Sorry, could you say that again, Brian? I missed that.

Brian McNamara: Yes. So your wholesale — your recent wholesale strength, is that driven more from replenishment or more from potentially starting new relationships are gaining new shelf space with your current partners?

John Merris: It’s a pretty healthy combination. I mean obviously, this Target kickoff is a meaningful one, but if I had to lean one towards another, I’d say that it’s more shelf space, it’s bigger relationships with existing partners. We do have, obviously, the Target relationship kicking off. But as we look at the rest of our wholesale partners, it’s definitely been them leaning in and either giving us more prominent real estate in the store and more robust displays or just giving us increased shelf space or carrying additional SKUs.

Brian McNamara: And then just one quick last one. Can you provide a bit more color specifically on your digital marketing strategy for Q4? You say what appears to be a good bit of dry powder year-to-date. Will you lean into digital marketing more in Q4? Or will it continue to be based on the perceived efficacy, less spend even if you kind of potentially sacrifice sales? Thanks.

John Merris: Yes. Listen, it’s always been driven to an extent by the efficacy of those spends, right? If it’s not pulling through, we’re not just going to spend to spend. We don’t approach digital marketing that way at all. So we’re going to continue to be disciplined. However, we have preserved EBITDA throughout the year for this quarter. It’s a tough consumer environment out there. Today, year-to-date, we’re roughly 25% down in digital marketing spend on a year-to-year basis. And this is the quarter where we want to make up a lot of that ground. This is the time where consumers are especially at the spend. And we obviously have a lot of fun initiatives and new products that we’re launching in conjunction with the quarter.

So we’re going to lean in. We’re going to continue to watch marketing efficiency. We’re not going to spend just the spend, but we are going to lean in and take advantage of this opportunity. We’ve been prepared for it all year. So that — I think you’re thinking about it the right way, but we’re going to lean in.

Brian McNamara: Great, best of luck guys.

John Merris: Thanks.

Operator: Thank you. That does conclude our Q&A session for today. So I’ll hand back over to John for any closing remarks.

John Merris: Yes. I really appreciate everybody jumping on today. Thanks for the thoughtful questions. We’re looking forward to going out and executing this quarter, and obviously, we’ll be back in touch when the quarter ends and excited to report on the results of these marketing initiatives and to lean into digital marketing spend. So have a great rest of the quarter, guys, and we’ll talk to you soon.

Operator: Thank you. Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines.

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