Solo Brands Delivers Q4 Beat; Shares Up 10.2%

Solo Brands (NYSE: DTC) reported stronger-than-expected Q4 results, topping both earnings and revenue estimates driven by robust demand and performance across all segments, and further aided by recent acquisitions.

Shares of the Direct-To-Consumer (DTC) platform, which operates four premium outdoor lifestyle brands, Solo Stove, Oru, ISLE, and Chubbies apparel, gained 10.2% on March 29 to close at $9.51.

Q4 Beat

Q4 adjusted earnings of $0.45 per share impressively beat analysts’ expectations of $0.32 per share.

During the Q4 quarter, revenues totaled $176.5 million, up a whopping 164% year-over-year. It easily outperformed analysts’ estimates of $174.37 million.

The increase in revenues reflects a surge in DTC revenues, which increased 161.9% to $164.2 billion, and a 197% growth in Wholesale revenues to $12.3 million.

However, adjusted gross margin declined by 440 bps to 66.4% due to increased freight rates and higher logistics costs.

Notably, the results include contributions from the Oru, ISLE, and Chubbies acquisitions, which were not included for the prior-year period.

FY2022 Outlook

Based on robust Q4 results and current business momentum, management issued financial guidance for FY2022.

The company forecasts FY22 revenues to be in the range of $540 million to $570 million, versus the consensus estimate of $554.3 million. Further, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is projected to be in the range of $121 million to` $132 million.

For the first quarter, revenues are projected to be in the range of $82 million to $85 million, versus the consensus estimate of $92.3 million. Adjusted EBITDA is likely to range between $12 million and $14 million.

CEO Comments

Solo Brands CEO, John Merris, commented, “We had an extremely profitable year, and while we are navigating varying challenges like world events, supply chain, and inflation, we continue to see tremendous opportunity for growth across our platform and are excited about the brand performance.”

Wall Street’s Take

Despite the Q4 beat, Citigroup analyst Wendy Nicholson decreased the price target on Solo Brands to $16 (68.24% upside potential) from $20, and reiterated a Buy rating.

The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on one Buy and one Hold. The average Solo Brands price forecast of $24.50 implies 150.51% upside potential to current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 100% Bullish on DTC stock, compared to a sector average of 68%.

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