Executive Summary

Q3 was weak on the top line as Solo Stove retail partners continued to destock; net sales fell 43.7% to $53.0M, but gross margin held ~60% and the company delivered $11M of operating cash flow for a second consecutive quarter, underscoring tighter cost control and working capital discipline .
Management is accelerating structural cost reductions (SG&A down 35.4% YoY) to align with current demand; adjusted EBITDA turned to $(5.1)M as operating deleverage outweighed cost saves .
New products (Summit 24 and Infinity Flame propane fire pit) showed an encouraging initial response, improving YoY sales trends in October and bringing new customers, particularly in constrained markets like California; retail sell-in remains soft but sell-through more stable .
Liquidity stable: $16.3M cash, no revolver balance, $60.6M availability; term loan at $247.1M. Tariff risk mitigations include diversified sourcing, with pricing integrity (MAP) prioritized over promotions to rebuild retailer relationships—key narrative drivers into holiday/Q4 .

What Went Well and What Went Wrong

What Went Well
- “We maintained stable gross margins and generated $11 million in operating cash flow — our second consecutive quarter of positive cash generation,” reflecting tighter cost discipline and improved working capital .
- SG&A reduced 35.4% YoY on structural efficiency, with gross margin at 60.0% (adj. 60.6%); liquidity also improved with no revolver borrowings at quarter-end .
- Product innovation gaining traction: Summit 24 (Sept) and Infinity Flame (Oct) improved October YoY trends; “more than 70% of [new product] customers are new to us,” with California the top Infinity Flame state, expanding TAM in propane-constrained regions .
What Went Wrong
- Revenue down 43.7% to $53.0M on Solo Stove retail destocking and deliberate pullback in DTC discounting to restore pricing integrity with partners .
- Adjusted EBITDA declined to $(5.1)M (−9.6% margin) vs $6.5M a year ago, with operating deleverage from lower sales offsetting cost reductions; Chubbies also posted negative segment EBITDA in Q3 given timing of retail replenishment .
- Interest expense rose to $7.6M vs $3.7M last year on higher average debt balance/rates; while financing was refinanced in June, elevated interest is a headwind to earnings until volume recovers .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Net Sales ($M)	$94.1	$92.3	$53.0
Gross Profit ($M)	$39.3	$56.6	$31.8
Gross Margin (%)	41.8%	61.3%	60.0%
Adjusted Gross Margin (%)	61.9%	61.7%	60.6%
Net Income (Loss) ($M)	$(111.5)	$(20.8)	$(22.9)
GAAP Diluted EPS ($)	$(47.72)	$(8.93)	$(9.22)
Adjusted EPS ($)	$0.73	$0.02	$(4.33)
Adjusted EBITDA ($M)	$6.5	$10.5	$(5.1)
Adjusted EBITDA Margin (%)	6.9%	11.4%	(9.6)%

Segment breakdown (Q3):

Segment	Net Sales Q3 2024 ($M)	Net Sales Q3 2025 ($M)	Segment EBITDA Q3 2024 ($M, %)	Segment EBITDA Q3 2025 ($M, %)
Solo Stove	$59.4	$30.8	$14.6 (24.6%)	$1.4 (4.4%)
Chubbies	$19.6	$16.5	$(0.5) (−2.4%)	$(1.2) (−7.5%)

Balance sheet and liquidity KPIs:

KPI	Q2 2025	Q3 2025
Cash & Equivalents ($M)	$18.1	$16.3
Inventory ($M)	$84.1	$84.8
Term Loan Outstanding ($M)	$241.2 (net of PIK)	$247.1 (net of PIK)
Revolver Balance ($M)	$10.0	$0.0
Revolver Availability ($M)	$63.8	$60.6
Operating Cash Flow (Quarter)	“Nearly $11M” generated	$11M generated

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue / EPS / EBITDA	FY 2025	No formal guidance provided	No formal guidance provided	Maintained none
Investment in Product Innovation	Ongoing	N/A	~$2–$3M annually, disciplined within means	New disclosure (operating practice)
Promotional Cadence / Pricing	Q4 2025	Qualitative focus on MAP and coordination	Coordinated promos with retailers; MAP discipline maintained	Maintained strategy
Cost Structure	FY 2025–2026	Cost reductions underway	Accelerating structural cost reductions to align with demand	Raised cost actions

Note: Management did not issue quantitative ranges for revenue, margins, OpEx, OI&E, or tax rate for Q4/FY25 in Q3 materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Retail destocking & channel repair	Q1: Solo Stove down to realign DTC promos and rebuild retail; Chubbies +43.9% growth . Q2: Solo Stove DTC down; working through excess retailer inventory .	Retail sell-in soft; sell-through more stable; October coordinated promo with retailers “very successful”; expect more normal reordering cadence ahead .	Improving tone (sell-through stabilizing), but recovery ongoing.
Pricing integrity (MAP) vs promos	Q1: Eliminated heavy DTC discounting to align with retail . Q2: Prioritizing pricing integrity over promotions .	Continued MAP discipline; coordinated promotions with partners to rebuild trust .	Consistent execution.
Product innovation	Q1: Building product innovation culture/playbook . Q2: Investing in new products .	New Summit 24 and Infinity Flame launched; positive early response, >70% new customers; CA leading Infinity Flame sales .	Strengthening.
Liquidity and financing	Q2: Refinancing completed; going concern doubt removed; cash $18.1M; revolver $10M; term loan ~$241M .	Cash $16.3M; no revolver balance; term loan $247.1M; availability $60.6M; positive operating cash flow again .	Stable.
Tariffs & supply chain	Q1: Accelerate manufacturing diversification for tariffs . Q2: —	Diversifying supply chain to SE Asia, dual-sourcing to mitigate tariffs .	Proactive mitigation.
Chubbies performance	Q1: Strong growth and 26.5% segment EBITDA . Q2: +13.1% sales; 25.8% segment EBITDA .	Q3: DTC flat; retail replenishment earlier in 2025; segment EBITDA negative on timing .	Softer in Q3 on timing.

Management Commentary

CEO John Larson: “We maintained stable gross margins and generated $11 million of operating cash flow — our second consecutive quarter of positive cash generation… We recognize that we have work to do on the top line… current performance underscores the need to further accelerate structural cost reductions” .
Larson on outlook: “We’re encouraged by initial consumer response to the very recently launched Summit 24 and Infinity Flame fire pits, which have improved our year-over-year sales trends in October” .
CFO Laura Coffey: “Selling, general and administrative expenses were $39.5 million… down 35.4% year over year… Net interest expense was $7.6 million… reflecting both higher average debt balance and the higher average interest rate” .
CFO on tariffs/sourcing: transitioning to a “more balanced, diversified supply chain footprint, including Southeast Asia… dual sourcing where appropriate” to maintain flexibility as tariffs shift .

Q&A Highlights

Product rollout and TAM expansion: Management highlighted robust initial demand for Summit 24 and Infinity Flame; >70% of buyers are new-to-brand; California leads Infinity Flame sales given wood-burning constraints—validating propane entry and broadening addressable market .
Retail destocking cadence: Management believes Q3 was the “trough”; inventories now at “very normal levels” and a “more normal cadence of reordering” is expected; coordinated October promotion with retailers was “very successful” for both sides, reinforcing partnership repair .

Estimates Context

S&P Global consensus estimates for Q3 2025 were not available for EPS, revenue, or EBITDA at the time of this analysis; only actuals populated in the dataset. As a result, we cannot classify beat/miss vs Street for Q3 2025. Values retrieved from S&P Global.*

Metric	Q3 2025 Consensus	Q3 2025 Actual
Revenue	N/A*	$53.0M*
EBITDA	N/A*	$(8.1)M EBITDA; $(5.1)M Adjusted EBITDA*
Primary EPS	N/A*	$(9.22)*

*Values retrieved from S&P Global. Where “Actual” references also appear in company filings, the filing is cited.

Where estimates may need to adjust: given wholesale destocking persisted longer and DTC promos remained constrained by MAP, forward revenue/EPS models likely drift lower near term; however, improving sell-through, new-product traction, and accelerating cost actions could support higher gross margin and cash generation vs prior bearish assumptions .

Key Takeaways for Investors

Cost-first, cash-disciplined reset: Despite a 43.7% revenue decline, Solo held ~60% gross margin and delivered $11M operating cash—evidence the business can generate cash even at a structurally smaller scale .
Retail repair underway: Coordinated promos and MAP discipline aim to restore retailer trust; management believes Q3 represents the destocking “trough,” with a more normal reorder cadence ahead—critical for 2026 recovery .
Product pipeline is working: Early traction for Summit 24 and Infinity Flame (with >70% new customers; CA leadership) suggests category expansion and channel diversification potential into propane .
Balance sheet/liquidity stable post-refi: Cash $16.3M, no revolver balance, $60.6M availability; interest costs are elevated and a headwind, but maturities are termed out to 2028 .
Watch Q4 holiday: Execution on channel-coordinated promos and new products is a near-term stock catalyst; signs of sell-in recovery or further cash generation would be meaningful .
Medium-term thesis: A structurally smaller, higher-quality revenue base with MAP discipline and diversified sourcing could support durable margins; sustained innovation cadence and retail relationship repair are keys to re-accelerating growth .

Appendices

Additional context from prior quarters (trend analysis):

Q2 2025: Net sales $92.3M (−29.9% YoY); adjusted EBITDA $10.5M (11.4% margin); refinancing removed going concern, cash $18.1M, revolver $10M, term loan ~$241M .
Q1 2025: Net sales $77.3M (−9.5% YoY); Chubbies +43.9% with 26.5% segment EBITDA; Solo Stove down as promos curtailed to realign with retail; early cost traction cited .

New product and brand press releases in Q3:

Infinity Flame propane fire pit launch on Oct 24: push-button, 72,000 BTUs, first-of-its-kind execution of Solo’s Signature Flame on propane .
Signature Flame trademark announced Oct 21, reinforcing IP and brand differentiation .

Citations

Q3 2025 8-K/Press Release, financial statements, non-GAAP reconciliations, liquidity:
Q3 2025 earnings call transcript (DTC/SBDS):
Q2 2025 8-K/Press Release & statements:
Q1 2025 8-K highlights:
Q3 2025 product press releases: Infinity Flame (Oct 24) ; Signature Flame trademark (Oct 21)

Solo Brands, Inc. (SBDS)·Q3 2025 Earnings Summary