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Yahoo
14-05-2025
- Business
- Yahoo
Q1 2025 DoubleDown Interactive Co Ltd Earnings Call
Richard Land; Investor Relations; JCIR In Keuk Kim; Chief Executive Officer, Director; DoubleDown Interactive Co Ltd Joseph Sigrist; Chief Financial Officer, Director; DoubleDown Interactive Co Ltd Aaron Lee; Analyst; Macquarie Research Josh Nichols; Analyst; Financial Gregory Gibas; Analyst; Northland Securities Operator Good afternoon, and welcome to DoubleDown Interactive earnings conference call for the first quarter ended March 31, 2025. My name is Michelle, and I will be your operator this to this call, DoubleDown issued its financial results for the first quarter of 2025 in a press release, a copy of which is available in the Investor Relations section of the company's website at You can find the link to the Investor Relations section at the top of the home us on today's call are DoubleDown's CEO, Mr. In Keuk Kim and its CFO, Mr. Joe Sigrist, following their remarks, we will open the call for your questions. Before we begin, Richard Land, the company's Investor Relations adviser will make a brief introductory statement. Richard Land Thank you, Michelle. Before management begins their formal remarks, we need to remind everyone that some of management's comments today will be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and we hereby claim the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of statements or statements about future events and include expectations and projections, not present or historical facts and can be identified by the use of words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate, or other similar statements include and are not limited to those regarding the company's future plans, mergers and acquisition strategy, strategic and financial objectives, expected performance and financial outlook. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially and adversely from what the company you should exercise caution in interpreting and relying on them. We refer you to DoubleDown's annual report on Form 20-F filed with the SEC on April 21, 2025, and and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial forward-looking statements are made only as of the date of this call. The company does not undertake and expressly disclaims any obligation to update or alter the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by noted in this afternoon's press release, beginning with the 2024 fourth quarter, DoubleDown is reporting its financial results in accordance with IFRS. As such, the financial results for the 2024 first quarter reflect IFRS and as the comparable period for 2024. Previously, the company reported its financial results in accordance with GAAP accounting standards, the change to IFRS aligns DoubleDown's financial reporting with the financial reporting standards of its controlling shareholder in today's call, management will discuss non-IFRS financial measures, which are believed by management to be useful in evaluating the company's operating performance. These measures should not be considered superior to in isolation or as a substitute for the financial results prepared in accordance with IFRS. A full reconciliation of these measures to the most directly comparable IFRS measure is available in the earnings release issued this afternoon.I would like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section of DoubleDown's that, it's now my pleasure to turn the call over to DoubleDown CEO, In Keuk Kim? In Keuk Kim Thank you, Rich. Good afternoon, everyone. Thank you for joining us on our 2025 first quarter earnings call. This afternoon, we reported first quarter results with consolidated revenue of $83.5 million and adjusted EBITDA of $30.8 million. Q1 revenue was comprised of $17.3 million generated by our social casino free play games and $13.2 million generated by our iGaming business Q1, we again executed on our key operating priority of driving a high conversion of revenue to profit and cash flow as cash flow from operations were $41.1 million, up more than $5 million from Q1 2024. This strong conversion of revenue to cash flow is a hallmark for DoubleDown, and we will continue to focus on the year. Even as we comp against the strong social casino performance we had last year, and we also continue to expect strong cash flow conversion even as we continue to increase marketing to acquire new players at the decline in revenue from our social casino business, our reflected DoubleDown casino app continues to be the engine for profit and cash flow generation. In Q1, while average DAUs and MAUs were down from last year, we continue to have strong performance in our most important monetization including ARPDAU and payer conversion rate, which both increased compared to Q1 of 2024 and were in line with Q4 while average monthly revenue per payer was down slightly year-over-year and sequentially, it remains at the level we believe is at or near the top of the industry. The key driver of our strong monetization metrics continues to be our consistent focus on enhancing the entertainment value of DoubleDown Casino to drive player and payer we continue to invest in marketing activities focused on the retention of existing players and reactivation of left payers. We also continue to focus on increasing direct-to-consumer revenue in our social casino operations, which further enhances profitability as we offer players in different ways to make purchases. In Q1, direct-to-consumer revenue was over 10% of our social casino business as we work to achieve our target for 2025, which is to exceed 15%.Turning to SuperNation. Q1 revenues of $13.2 million represents the highest quarterly performance of the business since our acquisition in late 2023 and was up over $4 million from the first quarter of 2024. SuperNation continues to see success in both the UK and Sweden, driven by increases in our new player application success we have had to date with scaling SuperNation confirms our rationale for the acquisition, and we see additional significant opportunity to further scale in existing markets given as we look to expand in other regulated European iGaming experience in owning and operating SuperNation over the last 18 months, and our success with integrating the operations and more recently, driving very healthy results of top line growth makes us increasingly confident that we can leverage our core strengths, financial discipline and strong balance sheet to further diversify our company into new gaming categories that have highly addressable market those lines, we continue to engage in discussions regarding potential acquisitions that meet our criteria for expanding our operations into new markets while further diversifying our revenue and cash flow sources to create new value for our internal game development efforts, after extensive testing, we have decided to not move forward with the commercial launch of our new match-three-style game. Given our metro of focusing on ensuring we can deliver strong player engagement and monetization to ensure we drive cash flow will be very disciplined around the launch of new games in new categories and will do so only ran our extended testing provides the evidence that a new game it our broader business priorities. We continue to develop new game concepts and look forward to evaluating them in trials over the next several I will turn it over to our CFO, Joe Sigrist to walk us through our financial providing my closing remarks. Joe? Joseph Sigrist Thank you, Ike, and good afternoon, everyone. As Rich mentioned earlier, beginning with the fourth quarter of 2024, we are now reporting our financial results in accordance with IFRS and the comparisons of our 2025 first quarter results to 2024 first quarter results reflect that change for the prior year period under financial statement implications and switching to IFRS from GAAP are generally insignificant. With the biggest change being how our leases are treated as some amounts are now included in depreciation and amortization under IFRS. This generally makes our reported adjusted EBITDA slightly revenues for the first quarter of 2025, as IK mentioned, were $83.5 million and were comprised of $70.3 million in revenues from our social casino free-to-play games and $13.2 million of revenues from SuperNation. This compares to total company revenues of $88.1 million last year. On a year-over-year basis, as expected, given our strong social casino performance in Q1 last year, social casino revenues declined 12% and while our iGaming revenues increased 59%.As IK noted, we continue to generate strong monetization in the business with several KPI metrics for our social casino business, improving again compared to the year ago period, including average revenue per daily active user, or ARPDAU, increased to $1.29 in Q1 2025 from $1.26 and in Q1 2024. Payer conversion, which is the percentage of players who pay within the social casino apps, increased to 6.9% in Q1 2025 compared to 6.4% in Q1 2024. And average monthly revenue per payer continued to be strong at $276 in Q1 2025, which is down just slightly from $281 in the prior year noted on the fourth quarter call, industry revenues were forecast to decline in 2025. These industry forecasts, combined with our strong performance throughout 2024 and will make year-over-year social casino growth a challenge in we have the right strategies in place, including our focus on product development improvements, live operation enhancements and marketing initiatives to support player retention and monetization to help us maintain our industry position. And as is our hallmark, our operating priorities for the social casino business will emphasize our focus on generating attractive margins and strong free cash expenses were $53.9 million for the first quarter of 2025 compared to $67.0 million in the first quarter of 2024. We had lower research and development expenses for our social casino free-to-play operations and a decline in the cost of revenue reflecting the lower revenue in the period which were partially offset by higher general and administrative and marketing expenses for the first quarter of 2025 were $14.3 million, compared to $15.1 million in the first quarter of 2024. In Q1, we continue to focus on optimizing spending to acquire new players for our flagship social casino app, DoubleDown Casino. This focus helps us maintain margins in the business as the cost to acquire new players continues to rise due to, we believe, the large investments now being made by sweepstakes, games the same time, we continued to increase sales and marketing spending for super nation focused on the acquisition of new players, primarily in the UK and Sweden, and you can see the positive impact in the recent results we've seen with excluding noncontrolling interest for the first quarter of 2025 was $23.9 million or $9.65 per diluted share and $0.48 per ADS compared to profit excluding noncontrolling interest of $30.3 million or $12.24 per diluted share and $0.61 per ADS in the first quarter of EBITDA for the first quarter of 2025 was $30.8 million compared to $32.7 million for the prior year quarter. Adjusted EBITDA margin was 36.9% for Q1 2025 as compared to 37.1% in Q1 2024. Net cash flows provided by operating activities in Q1 2025 were $41.1 million compared to $35.7 million in Q1 finally, turning to our balance sheet. As of March 31, 2025, we had $455.7 million in cash, cash equivalents and short-term investments with a net cash position at quarter end of approximately $422 million or approximately $8.51 per ADS. That completes my financial I'll turn the call back to IK for closing remarks. In Keuk Kim Thank you, Joe. As highlighted in our Q1 results, our data plan in investing as appropriate in our two main business allows DoubleDown to continue generating strong profitability and free cash flow. We will maintain our capital efficiency discipline going forward as we focus on both product improvements and live-up enhancements in DoubleDown Casino to maintain its strong competitive SuperNation, we will continue to selectively increase our investments in new player acquisition as we target additional top line growth this year. It is important to note that at scale, iGaming businesses can be highly profitable and our execution today is moving us closer and closer towards achieving that needed level of closing, we expect to expand our track record of consistently generating attractive free cash flow this year. As we do so, we will further strengthen our balance sheet and the foundation we have established to pursue growth by exploring opportunities in adjacent gaming categories through our in-house development efforts and through potential M&A are now happy to take your questions. Michelle. Operator?Hi Michelle, are you there? Richard Land No, Michelle, we cannot hear you. Just ask if you want to stand by the operators just having trouble with her phone. So we'll just give her a minute to try and fix that and then we'll get to Q&A. In Keuk Kim Okay, thanks, Rich. Operator (Operator Instructions) Aaron Lee, Macquarie. Aaron Lee Hey, good afternoon, thanks for taking my question. Nice job on the SuperNation growth this quarter. Can you just speak to what trends you're seeing in SuperNations markets? And are there any major sporting events we should be mindful of that are important from either a handle or a customer acquisition standpoint? Joseph Sigrist Well, I mean the continued benefit of the quick ROI attributed to the investment in acquiring new players has been what's allowed us to continue to feel good about investing in marketing and to scale that. We spent quite a bit of money from a marketing perspective in Q1 on SuperNation. And you'll actually see that sequentially the sales and marketing spend for the company went up quite a bit. And the bulk of that increase from Q4 was in what we spent with again, the really good news is the very rapid payback that we've seen with that, and that includes both in Sweden and in the UK. And given that they're really a very small fishing in both those markets, gives them kind of room to run relative to growing market share from a very small current number. And so from that standpoint, I think we're just really, really pleased with the execution of the monetization of new players.I'm sorry, Aaron, could you repeat your question about sporting events? Aaron Lee Yes. Just wondering if there's any major events we should be mindful of that are coming up that are either important from a handle or a customer acquisition standpoint. Thanks. In Keuk Kim Actually, our revenue portion is lots of portion of the slots. Joseph Sigrist It's all iGaming. So yes, there's no event-based I don't know from a marketing promotion standpoint, there may be some time in from an advertising perspective, but this is all slots. So it's just really the engagement of our players and their excitement to be playing slot games. Aaron Lee Got you. Okay. That makes sense. And then just looking for an update from an M&A perspective, has anything changed in terms of the opportunities or your focus, especially given all the experience you have now growing SuperNation, and can you speak to the dynamics of the M&A environment? Has the current macro uncertainty changed anything there? Joseph Sigrist Yes. No, I think the flow of opportunities continues. And that is inclusive of both free-to-play or kind of mobile, call it, mobile gaming, if you will, as well as iGaming. And we've had a few iGaming opportunities across our desk recently, albeit small ones, but there's been interest. And I think as we get our name a SuperNation and DoubleDown gets its name more more well known in the iGaming space, I think we're going to see potentially even more opportunities on the iGaming as we've said in the past, we're not only looking at iGaming, although we do now have, I think, with SuperNation, a really nice platform to build from, especially in Western Europe. But we're also obviously looking at the casual games opportunities as well, and those continue. So I don't think anything has changed recently. I don't see a drop off in either interest or certainly in people pitching us, which I think is always a good thing. Aaron Lee Okay, thank you. Appreciate the color. Operator Josh Nichols, B. Riley. Josh Nichols Yeah, thanks for taking my question. Just to dig a little bit deeper on the SuperNation, iGaming piece of the business, again, pretty phenomenal growth of almost 60%. Do you feel that this level of north of $13 million for the quarter is kind of like a base, and you would expect to expand that and commensurate with that, you expect that this like elevated level of sales and marketing to kind of persist for the foreseeable future? Effectively, do you think that the SuperNationnation business is going to be growing throughout the rest of the year from this current base that you just hit in 1Q. That's a new record. Joseph Sigrist Well, as I said, we are excited about what the returns have been in our investment in acquiring new players. And and frankly, haven't seen a drop from that more recently. So we would expect, unless something changes, to continue to be investing at or even above this level and to be seeing the requisite revenue result from that investment. Josh Nichols And that's still running to your point, I think, like EBITDA breakeven this year and then looking to EBITDA positive? Or is this higher revenue base going to push you to EBITDA profitability a little bit earlier than previously anticipated? Joseph Sigrist Well, and as we said in our remarks, I mean, we know that iGaming businesses at some point can be quite profitable at scale. We're not there yet to your point on being kind of at or even at this point at least slightly below EBITDA breakeven, but the way to both grow revenue and get to EBITDA positive is to continue to scale the business, and that's what we're really excited about doing the rest of the year. Josh Nichols Yes. And then just touching on the social casino, I think you were pretty tough comp, right? Looking at this for like the first half of the year. They get a bit better in the second half. Any color on the expectations for what you're thinking in terms of like the rate of decline for that business? I know you said it would be difficult to grow, right, year-over-year given that it was expected to overall, is this 12% decline that you saw in 1Q expected to kind of abate a little bit and ultimately, in the back half gets to kind of like low single-digit decline or maybe even growth by the time we get to like 4Q? Joseph Sigrist Well, there's no doubt you've got it exactly right, Josh. There's no doubt that the first half of the year is the toughest comp for us and specifically the first quarter. And so I think that lends itself to the 12% compare with the most recently concluded quarter. The comps definitely do get easier in the second half of the year.I mean given what we've seen in the results of our peers even more recently. I think it's going to be a challenge to grow even in the second half of the year quarter-over-quarter. But I do think the compares do get better as we look to Q3 and certainly Q4. Josh Nichols And just last question for me. You mentioned it on the prepared remarks. The user acquisition cost has been getting a little bit more expensive on the social casino side, presumably because of elevated investments being made by some of the like six you seeing that -- is it really just impacting new user acquisition costs? Or are you seeing a little bit more churn of some of the existing legacy base that you guys have moving over to sweep stakes as opposed to social casino? Or is it just more on user acquisition costs, we're trying to bring new users into the funnel? Joseph Sigrist Well, it's really hard -- I mean, it's a really good question, Josh. I mean it's really hard for us to tell what we may be losing from a player perspective. to sweepstakes. We just know that there's been no abatement in the aggressiveness that advertisers are are using to price, especially for social casino companies because they know how well we monetize and they, frankly, use that to set their although it can't be scientifically confirmed, we do believe that part of that is because we are competing with those that are also doing sweepstakes. So that's really our theory around the impact of the sweepstakes apps on the pricing for new user acquisition. Josh Nichols Thank you. Operator (Operator Instructions) Greg Gibas, Northland Securities. Gregory Gibas Hey, good afternoon, IK and joe. Congrats on the strong SuperNation results. Thanks for taking the questions here. If I could just follow up on that, given that's nice strength, nice year-over-year growth, you spoke to liking the spend you say it's improving or kind of leveled out here? And I guess I would just ask, other than kind of the attractive return on your spend for player acquisition. Could you just maybe speak to any of the other drivers of the strength of SuperNation? Joseph Sigrist Sure. Yeah, listen, I think the marketing story is such a good story and such a short-term driver that I appreciate you asking about other things that are going well at SuperNation, including product and some of the continued good work the team in Malta are doing from a product development standpoint. We've also really benefited from the fact that the company has three brands. And I know when we acquired the company, we talked about duals, there's a lot -- there is and continues to be a lot of excitement around they have two other brands that have shown to be quite strong as well. They're kind of more -- I don't want to use the term legacy brands, but brands that have been around and associated with the company for a little longer. And that the life of those brands has not dissipated so we've been able to lean in as we apply additional marketing dollars lean into those brands as well as the Duals brand. And so we're continuing to do product improvements and of course, refreshes and the various things that we do from a live op standpoint to as I said, to lean into all three of those brands. Gregory Gibas Got it. Very helpful. If I could follow up to in your prepared remarks, you talked about not moving forward with the commercial launch of the new game. Maybe could you discuss what you're not happy with there? And do you have any other kind of in-house developments over the foreseeable future? And how should we maybe think about the time line of kind of new development? In Keuk Kim Yes, correct. We currently have several new game concepts in development, and we've been expanding our capabilities, particularly in casual downness by incorporating AI-assisted products and pipelines. These tools allow us to iterate better and tap more ideas, which is especially valuable in today's environment. where user acquisition costs remain said, we continue to take a very disciplined approach to greenlighting new titles. As we saw within recent Backstreet project, even well-developed concept may not meet our internal threshold for player engagement or monetization. We believe that long-term success in new categories is hire patients rigorous testing and our willingness to walk away when the data doesn't support a commercial while we are optimistic about the tools and things, we are building we remain cautious and metrics driven in our execution. Our goal is not just to launch games. It's two large games that can sell profitably. Thank you. Gregory Gibas Understood, thanks. Operator And this is going to conclude today's question-and-answer session. This is also going to conclude today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day. Joseph Sigrist Thank you, Michelle. Thanks, everyone. Sign in to access your portfolio
Yahoo
13-05-2025
- Business
- Yahoo
Q1 2025 Solo Brands Inc Earnings Call
Mark Anderson; Senior Director of Treasury & Investor Relations; Solo Brands Inc John Larson; Interim President and Chief Executive Officer; Solo Brands Inc Laura Coffey; Chief Financial Officer; Solo Brands Inc Operator Good morning, and welcome to the Solo Brands's fourth-quarter in fiscal year 2024 financial results conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Mark Anderson, Senior Director, Treasury, and Investor Relations. Please go ahead. Mark Anderson Thank you, and good morning, everyone. We appreciate you joining us for the Solo Brand's conference call to review fourth-quarter and full year results for 2024. Joining me on the call today are the company's Interim President and Chief Executive Officer, John Larson; and Chief Financial Officer, Laura call is being webcast and can be accessed through the Investors portion of our website at investors@ Today's conference call will be recorded. Please be advised that any time sensitive information may no longer be accurate as of any replay or transcript reading date.I would also like to remind you that the statements in today's discussion that are not historical facts, including statements about expectations, future events, financial performance, turnaround efforts, strategic transformation goals, and future growth, are forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of statements by their nature are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to today's earnings press release for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Brands assumes no obligation to publicly update or revise any forward-looking statements. Management will refer to non-GAAP measures and reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, the earnings release has been furnished to the SEC on Form I'd like to turn the call over to John Larson. John Larson Good morning, and thank you all for joining us to review Solo Brand's strategic plan and financial results. During today's call, we intend to level set everyone on recent news, review our 2024 financial results, and share our turnaround work for the fourth quarter, the board and management team engaged in developing an aggressive turnaround plan for 2025. As part of our transformation plan, we hired external financial advisors to help us go through every line item of the business. They have been an integral part of helping to develop and quantify 30-plus value accretive most of you know, Chris Metz notified the Board in mid-February of his decision to resign. Given that the board and management team were closely involved in the 2025 turnaround plan, we felt it was critical not to lose momentum. I was immediately appointed as Interim CEO and in the office the following Monday stepping into the role, I along with the leadership team and board, have taken actions to accelerate and amplify the company's transformation plan. I plan to continue serving on the board and remain interim leader on site until the right person to lead solo brands is believed that we lost no time or momentum with the management change. We are now aggressively working through 30+ value creative initiatives to return solo brands to profitable and sustainable growth. Notwithstanding challenging results, we believe Solo Brands has a solid foundation for success, including great enthusiast brands, a pipeline of new products, and highly loyal customers. I am encouraged by what I see board and management team are fully aligned and taking thoughtful steps to improve the near-term and long-term business trajectory. We do not plan to take questions after our prepared remarks. This decision was not taken lightly, but I hope that Laura and I answer most, if not all, of your immediate questions during these prepared Laura walks through the financial results, I will come back to discuss in more detail the key strategic initiatives. Laura? Laura Coffey Thank you, John, and good morning, everyone. We finished 2024 with total net sales of $455 million down 8% from the prior year. We strengthened our adjusted gross profit margin to 61.7%, and we ended the year with an adjusted EBITDA of $32.6 million or 7.2% of net recognize the challenges ahead, and we are committed to transforming our business by stabilizing operations, optimizing efficiencies, and building scalable processes and platforms to drive sustainable growth. Turning to our fourth quarter results, net sales were $143.5 million, down 13.2% from a year ago. This was driven by declines in retail and direct-to-consumer channels within the Solo Stove segment, partially offset by increased net sales in the Chubbies are carefully evaluating the effectiveness and return of our marketing spend. Although the Snoop ads created good brand awareness last year, we are working to better position spend to be more efficient and tied to the outcomes that align closer to our goals. Our gross profit for the quarter was $87.8 million compared to $96.4 million in the prior reported gross profit margin grew to 61.1%, up 280 basis points compared to 58.3% in the year ago quarter. Selling general and administrative expenses for $81.8 million in the quarter, down from $84.3 million in the prior improvement in SG&A expenses were mainly due to the early termination of a legacy advertising agreement. The fourth quarter's net loss was $58.2 million and adjusted net income, excluding after-tax restructuring charges and other non-recurring or non-cash charges resulted in positive earnings of $2.3 million and adjusted EPS of $0.03 per EBITDA for the quarter was $6.3 million with a margin of 4.4%. Turning to the full year results, 2024 net sales were $454.6 million, down 8.1% from the prior year. Our reported gross profit margin for the year was 57.3%, and excluding inventory charges related to restructuring and consolidation and other non-cash items, our adjusted gross profit margin was 61.7%, up 30 basis points from the prior company reported a GAAP net loss of $180.2 million, an improvement versus a net loss of $195.3 million in 2023. Adjusted net income was $11.4 million or EPS of $0.12, and our adjusted EBITDA was $32.6 million or 7.2% of net sales for the full year in refer to our earnings release for reconciliation tables to the most comparable GAAP measures. In early 2025, we continued implementing corporate restructuring and cost optimization initiatives to re-baseline expenses and right size of the business based on expected sales this have examined the company's marketing effectiveness and have a multi-step plan to improve efficiencies and address spend, which John will discuss in a few moments. We have begun creating better performance management metrics and are evaluating talent at every level. I want to give you a few examples of actions that we have taken thus far after careful consolidated two distribution centers and are looking to sublease those facilities. We believe this is necessary to maintain operating leverage across our fulfillment network. We are continuing to evaluate and make strategic decisions to lower costs and respond to business successfully renegotiated freight contracts for the organization in mid-2024 and are currently exploring other opportunities to reduce our spend in this area. After the holiday period, we decided to take an action on a reduction in force primarily to streamline our Solo Stove segment marketing and operational also rationalize certain operations, reduced overhead costs, and re-baseline cost to better align with the sales going forward. We have decided to pause, our financial guidance based on the challenging and uneven consumer environment anticipated this year, and uncertainty with we are targeting improving profitability compared to a year ago, especially as we expect our major initiatives to ramp up in the second half of the year. Regarding tariffs, we are actively addressing the impact on our some instances, we have proactively shifted production to alternative countries to avoid China-specific impacts while exploring mitigation tactics to even further reduce tariff headwinds. Although there continues to be uncertainty regarding the operation and duration of tariffs, we are currently estimating the impact to be significant to our operations before planned mitigation to the company's balance sheet and cash flow position, we ended the quarter with $12 million in cash and cash equivalents. We continued to manage working capital closely, and we ended the quarter with inventories of $108.6 million, down from a year ago and up $1.8 million from September company's cash provided by operating activities was $10.5 million for the year, and the full year capital expenditures were $14.5 million. We are working to maintain a disciplined and conservative capital allocation strategy, which includes careful cash management, and we have no M&A plan for in product innovation is essential, but we will be judicious with our cash. As of September 31, 2024, revolver borrowings were $69 million. The term loan outstanding was $83 million and our borrowing capacity on the revolver was $350 of December 31, we were in compliance with all financial and operational covenants. Subsequent to the end of the year, we drew down $277.3 million on the revolver, which matures next year on May 12, 2026. More information will be available on our 10-K filed this morning, but due to uncertainty in the business and our expected level of indebtedness, without the application of successful mitigating strategies, we expect to experience difficulty remaining in compliance with the financial covenants in our credit 10-K also includes disclosures about the company's ability to continue as a going concern. We are evaluating strategies to refinance our existing debt, and our plans are focused on improving our results in liquidity as we are discussing that, I would like to turn it back to John. John Larson Thank you, Laura. As I mentioned in the opening, I am laser focused on accelerating and amplifying the restructuring plan that was already underway and ensuring the company maintains the momentum of these critical initiatives. My focus is 100% on optimizing the bottom line and preserving cash. We have implemented surge teams to focus on the key areas of most critical initiatives for our strategic turnaround plan include Number one, resetting the organization's cost structure in line with our sales and profit profile. We are working closely with our financial advisors to walk through every line item on our income statement and balance sheet, and have developed an extensive list of initiatives to drive bottom line results starting this focusing on profitability by channel, by product for each division to drive the business to where we believe, we can provide stronger margins. Three, resetting our marketing approach, our single biggest line item of you may know, Liz Vanzura recently joined Solo Brand's Board and has now agreed to serve as the company's Interim CMO. This is a former colleague and highly awarded marketing rock star. She has a successful track record as CMO and Head of Brand strategy for companies like Cadillac and Hummer, and has worked at agencies for many also earned the Ad Age's Marketer of the Year award and was inducted into the AAF Advertising Hall of Achievement. We are excited to leverage your strategic ability to lead our marketing efforts, identify the appropriate partners and leading edge AI tools, with the potential to increase efficiency dramatically and reignite our four, executing a complete review of our product lineup, simplifying our current product offerings, and strategically repricing our portfolio of offerings. We believe there are significant pricing opportunities to provide clarity for our consumers and to achieve stronger are fortunate to have a cohesive collection of premium brands with deep customer following, and we expect that being less promotional will help avoid channel conflicts between our directed consumer and retail five, accelerating and amplifying new product launches to drive further momentum in the latter half of the year and identifying new product opportunities. Our team of entrepreneurs already has an innovative mindset, and we know that Solo Stove and Chubbies are exceptionally positioned with strong brand recognition and loyal customers to these that we consolidated ISLE paddle boards and Oru Kayak into a new water sports division to create a more profitable, scalable platform. We are actively working on a product roadmap for outdoor lifestyle spaces designed to positively impact people's lives as they enjoy leisure time outdoors. Finally, we are creating a metric focused culture and reporting system to track performance in real believe that tying key performance indicators to our actions and providing simple dashboard reporting will allow our culture to align, engage, and succeed. Also developing repeatable processes that enhance operational efficiency and consistency is plan to track our wins, collect feedback, and analyze failures and successes. Our strategic transformation plan initiatives are tracked and reviewed weekly, and we expect that our quarterly financial results will be the measure of our accomplishments. Regarding tariffs, as we are seeing in similar industries, we now have the impact of tariff Laura mentioned, we are proactively managing this dynamic situation with a broad range of mitigation plans. To summarize, the company is resetting the organization's cost structure, identifying the key performance drivers in our portfolio, revamping our marketing approach, overhauling our pricing and promotion strategies, accelerating and amplifying our new product launches, and creating a metric-based culture to track performance in real line, we have great brands and products with best in class reviews. We have the foundation. We are resetting our business approach to deliver and improve results. And as we execute our value accretive initiatives this year, we expect the performance upside will be more visible in the back half of the you for your continued interest in the company. We look forward to providing updates when we report first quarter results in May. Have a great day. Operator The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
