YETI Reports Second Quarter 2024 Results

Net Sales Increased 15%; Adjusted Net Sales Increased 9%

EPS Increased 23%; Adjusted EPS Increased 34%

Raises Full Year 2024 Sales and EPS Outlook

YETI Holdings, Inc. (“YETI”) (NYSE: YETI) today announced its financial results for the second quarter ended June 29, 2024. YETI reports its financial performance in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and as adjusted on a non-GAAP basis. Please see “Non-GAAP Financial Measures,” and “Reconciliation of GAAP to Non-GAAP Financial Information” below for additional information and reconciliations of the non-GAAP financial measures to the most comparable GAAP financial measures.

Second Quarter 2024 Highlights

• Net sales increased 15%, inclusive of the recall reserve adjustment in the second quarter of 2023 that reduced sales by $24.5 million; Adjusted net sales, which exclude the recall reserve adjustment, increased 9%
  • Coolers & Equipment net sales increased 31%; Coolers & Equipment adjusted net sales increased 14%
  • Drinkware net sales and adjusted net sales both increased 6%
  • Wholesale net sales increased 21%; Wholesale adjusted net sales increased 11%
  • Direct-to-consumer net sales increased 11%; Direct-to-consumer adjusted net sales increased 7%
  • International net sales increased 35%; International adjusted net sales increased 34%
  • U.S. net sales increased 12%; U.S. adjusted net sales increased 5%
• Gross margin expanded 360 basis points to 57.0%; Adjusted gross margin expanded 280 basis points to 57.7%
• Operating margin expanded 200 basis points to 14.5%; Adjusted operating margin expanded 160 basis points to 17.3%
• EPS increased 34% to $0.59; Adjusted EPS increased 23% to $0.70

Matt Reintjes, President and Chief Executive Officer, commented, “YETI delivered another great quarter, highlighted by our Coolers & Equipment category and continued growth of our business outside the United States. Supported by a strong lineup of new innovation, we were well positioned to capitalize on cooler demand, which we saw steadily build throughout the quarter. Additionally, our Drinkware category performance was punctuated by strong sell-through in the Wholesale channel and the continued successful expansion and broadening of our product portfolio. This product portfolio, combined with our uniquely relevant brand across broad communities of users, not only supported our domestic growth but also drove a third consecutive quarter of over 30% growth in our international business. Finally, we continued to realize excellent gross margin expansion, which enabled us to deliver operating margin improvement while continuing to invest across our strategic priorities.”

Mr. Reintjes continued, “The brand continues to build from a place of strength and has great momentum heading into the second half of the year. We continue to stoke brand engagement, executing on our breadth and depth strategy across our expansive range of communities, events, and partnerships. From a product standpoint, we are focused on driving awareness around our recent launches while also delivering new innovation in the second half of the year, including our first formal entry into the premium cookware market. From an execution standpoint, we are building the foundation needed to support our future growth on a global basis, including making progress towards broadening our global supply footprint.”

Second Quarter 2024 Results

Sales increased 15% to $463.5 million, compared to $402.6 million during the same period last year. The recall reserves unfavorably impacted sales by $24.5 million in the prior year quarter. See “Product Recall Reserves” below for additional information on the impact of the product recalls referenced throughout this press release.

Adjusted sales, which exclude the unfavorable impact of the recall reserve adjustment in the second quarter of 2023, increased 9% to $463.5 million.

Sales and adjusted net sales for the second quarter of 2024 and 2023 include $2.3 million and $12.5 million, respectively, of sales related to gift card redemptions in connection with recall remedies.

• Direct-to-consumer (“DTC”) channel sales increased 11% to $250.4 million, compared to $226.4 million in the prior year quarter, due to growth in both Coolers & Equipment and Drinkware. Excluding the impact related to the recall reserves, DTC channel adjusted sales increased 7% to $250.4 million.
• Wholesale channel sales increased 21% to $213.1 million, compared to $176.2 million in the same period last year, due to growth in both Coolers & Equipment and Drinkware. Excluding the impact of the recall reserves, wholesale channel adjusted sales increased 11% to $213.1 million.
• Drinkware sales increased 6% to $246.5 million, compared to $233.4 million in the prior year quarter, driven by the continued expansion and innovation of our Drinkware product offerings and new seasonal colorways.
• Coolers & Equipment sales increased 31% to $205.9 million, compared to $156.6 million in the same period last year, driven by strong performance in soft coolers and bags. Excluding the impact of the recall reserves, Coolers & Equipment adjusted sales increased 14% to $205.9 million.

Gross profit increased 23% to $264.3 million, or 57.0% of sales, compared to $214.8 million, or 53.4% of sales, in the second quarter of 2023. The recall reserves unfavorably impacted gross profit by $19.4 million in the second quarter of 2023, and had a favorable 150 basis point impact on the increase in gross margin compared to the prior year quarter. The remaining increase in gross margin was primarily due to lower inbound freight costs and lower product costs.

Adjusted gross profit increased 14% to $267.5 million, or 57.7% of adjusted sales, compared to $234.3 million, or 54.9% of adjusted sales, in the second quarter of 2023. The 280 basis point increase in gross margin was primarily due to lower inbound freight costs and lower product costs.

Selling, general, and administrative (“SG&A”) expenses increased 20% to $196.9 million, compared to $164.5 million in the second quarter of 2023. The recall reserves unfavorably impacted SG&A expenses by $10.7 million in the second quarter of 2023. As a percentage of sales, SG&A expenses increased 160 basis points to 42.5% from 40.9% in the prior year period. Excluding the impact of the recall reserves, SG&A expenses increased $21.7 million primarily due to higher employee costs, higher variable expenses on higher sales, and marketing expenses.

Adjusted SG&A expenses increased 12% to $187.5 million, compared to $167.2 million in the second quarter of 2023. As a percentage of adjusted sales, adjusted SG&A expenses increased 140 basis points to 40.5% from 39.1% in the prior year period. This increase was primarily due to higher employee costs.

Operating income increased 34.0% to $67.4 million, or 14.5% of sales, compared to $50.3 million, or 12.5% of sales during the prior year quarter.

Adjusted operating income increased 19% to $80.0 million, or 17.3% of adjusted sales, compared to $67.1 million, or 15.7% of adjusted sales during the same period last year.

Net income increased 32% to $50.4 million, or 10.9% of sales, compared to $38.1 million, or 9.5% of sales in the prior year quarter; Net income per diluted share was $0.59, compared to $0.44 in the prior year quarter.

Adjusted net income increased 20% to $59.6 million, or 12.9% of adjusted sales, compared to $49.8 million, or 11.7% of adjusted sales in the prior year quarter; Adjusted net income per diluted share increased 23% to $0.70, compared to $0.57 per diluted share in the prior year quarter.

Six Months Ended June 29, 2024 Results

Sales increased 14% to $804.9 million, compared to $705.4 million in the prior year. The recall reserves unfavorably impacted sales by $24.5 million in the prior year period. See “Product Recall Reserves” below for additional information on the impact of the product recalls referenced throughout this press release.

Adjusted sales, which exclude the unfavorable impact of the recall reserve adjustment in the first half of 2023, increased 10% to $804.9 million.

Sales and adjusted net sales for the first six months of 2024 and 2023 include $4.3 million and $12.5 million, respectively, of sales related to gift card redemptions in connection with recall remedies.

• DTC channel sales increased 11% to $438.2 million, compared to $393.4 million in the prior year period, due to growth in both Coolers & Equipment and Drinkware. Excluding the impact related to the recall reserves, DTC channel adjusted sales increased 9% to $438.2 million.
• Wholesale channel sales increased 18% to $366.7 million, compared to $312.0 million in the same period last year, due to growth in both Coolers & Equipment and Drinkware. Excluding the impact related to the recall reserves, wholesale channel adjusted sales increased 12% to $366.7 million.
• Drinkware sales increased 9% to $461.1 million, compared to $423.7 million in the prior year period, driven by the continued expansion and innovation of our Drinkware product offerings and new seasonal colorways.
• Coolers & Equipment sales increased 25% to $325.8 million, compared to $261.0 million in the same period last year, driven by strong performance in soft coolers and bags. Excluding the impact related to the recall reserves, Coolers & Equipment adjusted sales increased 14% to $325.8 million.

Gross profit increased 22% to $459.1 million, or 57.0% of sales, compared to $376.7 million, or 53.4% of sales, in the prior year period. The recall reserves unfavorably impacted gross profit by $18.2 million in first six months of 2023 and had a favorable 70 basis point impact on the increase in gross margin compared to the prior year. The remaining increase was primarily due to lower inbound freight costs and lower product costs.

Adjusted gross profit increased 17% to $463.9 million, or 57.6% of adjusted sales, compared to $394.9 million, or 54.1% of adjusted sales, in the prior year period. The 350 basis point increase in gross margin was primarily due to lower inbound freight costs and lower product costs.

Selling, general, and administrative (“SG&A”) expenses increased 18% to $365.9 million, compared to $311.3 million in the prior year period. The recall reserves unfavorably impacted SG&A expenses by $10.5 million in the first half of 2023. As a percentage of sales, SG&A expenses increased 140 basis points to 45.5% from 44.1% in the prior year period. Excluding the impact of the recall reserves, SG&A expenses increased $44.1 million primarily due to higher employee costs, higher variable expenses on higher sales, and marketing expenses.

Adjusted SG&A expenses increased 12% to $344.3 million, compared to $306.1 million in the prior year period. As a percentage of adjusted sales, adjusted SG&A expenses increased by 90 basis points to 42.8% from 41.9% in the prior year period. This increase was primarily due to higher employee costs.

Operating income increased 43% to $93.2 million, or 11.6% of sales, compared to $65.4 million, or 9.3% of sales during the prior year period.

Adjusted operating income increased 35% to $119.6 million, or 14.9% of adjusted sales, compared to $88.8 million, or 12.2% of adjusted sales during the same period last year.

Net income increased 36% to $66.3 million, or 8.2% of sales, compared to $48.6 million, or 6.9% of sales in the prior year period; Net income per diluted share was $0.77, compared to $0.56 in the prior year.

Adjusted net income increased 36% to $88.9 million, or 11.0% of adjusted sales, compared to $65.3 million, or 8.9% of adjusted sales in the prior year period; Adjusted net income per diluted share increased 37% to $1.03, compared to $0.75 per diluted share in the prior year.

Balance Sheet and Other Highlights

Cash decreased $10.2 million to $212.9 million, compared to $223.1 million at the end of the second quarter of 2023.

Inventory increased 17% to $378.3 million, compared to $322.0 million at the end of the prior year quarter. This increase was primarily driven by the re-stock of the full line up of our soft coolers as well as bags inventory in connection with the Mystery Ranch acquisition.

Total debt, excluding finance leases and unamortized deferred financing fees, was $80.2 million, compared to $84.4 million at the end of the second quarter of 2023. During the second quarter of 2024, we made mandatory debt payments of $1.1 million.

Updated 2024 Outlook

Mr. Reintjes concluded, “Supported by our execution in the front half of the year, we are increasing both our top line and bottom line outlooks. This reflects our strong second quarter results and continued confidence in our ability to deliver the second half of the year despite an uncertain macro environment. Finally, given our strong cash position, we will continue to actively pursue and evaluate strategic opportunities for capital deployment.”

For Fiscal 2024, YETI expects:

• Adjusted sales to increase between 8% and 10% (versus previous outlook of between 7% and 9%);
• Adjusted operating income as a percentage of adjusted sales of approximately 16.5% (versus previous outlook of between 16.0% and 16.5%);
• An effective tax rate of approximately 25.2% (compared to 24.8% in the prior year period);
• Adjusted net income per diluted share between $2.61 and $2.65 (versus previous outlook of between $2.49 and $2.62), reflecting a 16% to 18% increase;
• Diluted weighted average shares outstanding of approximately 86.0 million (versus previous outlook of 86.1 million); and
• Capital expenditures between $50 million and $60 million (versus previous outlook of approximately $60 million) primarily to support investments in technology and new product innovation.

Product Recall Reserves

The results of Fiscal 2023 included in this press release include the impact of product recalls on certain soft coolers, which we refer to as the “product recalls” herein unless otherwise indicated. We recorded the following impacts as a result of recall reserve adjustments. These impacts are excluded from our non-GAAP results:

2024 Accelerated Share Repurchase

As previously announced, during the first quarter of 2024, our Board of Directors approved a share repurchase program of up to $300 million of YETI’s common stock (the “Share Repurchase Program”). On February 27, 2024, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to repurchase $100 million of YETI’s common stock. Pursuant to the ASR Agreement, we made a payment of $100 million to Goldman Sachs and received an initial delivery of approximately 2.0 million shares of YETI’s common stock. In the second quarter of 2024, the ASR Agreement was completed, and we received approximately 0.6 million additional shares of YETI’s common stock. The ASR Agreement resulted in the total repurchase of approximately 2.6 million shares. As of June 29, 2024, $200 million remained available under the Share Repurchase Program.

Conference Call Details

A conference call to discuss the second quarter of 2024 financial results is scheduled for today, August 8, 2024, at 8:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 800-717-1738 (international callers, please dial 646-307-1865) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at http://investors.yeti.com. A replay will be available through August 22, 2024 by dialing 844-512-2921 (international callers, 412-317-6671). The accompanying access code for this call is 1160266.

About YETI Holdings, Inc.

Headquartered in Austin, Texas, YETI is a global designer, retailer, and distributor of innovative outdoor products. From coolers and drinkware to bags and apparel, YETI products are built to meet the unique and varying needs of diverse outdoor pursuits, whether in the remote wilderness, at the beach, or anywhere life takes you. By consistently delivering high-performing, exceptional products, we have built a strong following of brand loyalists throughout the world, ranging from serious outdoor enthusiasts to individuals who simply value products of uncompromising quality and design. We have an unwavering commitment to outdoor and recreation communities, and we are relentless in our pursuit of building superior products for people to confidently enjoy life outdoors and beyond. For more information, please visit www.YETI.com.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we supplement our results with non-GAAP financial measures, including adjusted net sales, adjusted gross profit, adjusted SG&A expenses, adjusted operating income, adjusted net income, adjusted net income per diluted share (which we also refer to as adjusted EPS) as well as adjusted gross profit and adjusted SG&A expenses, adjusted operating income and adjusted net income as a percentage of adjusted net sales. Our management uses these non-GAAP financial measures in conjunction with GAAP financial measures to measure our profitability and to evaluate our financial performance. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding the underlying operating performance of our business and are appropriate to enhance an overall understanding of our financial performance. These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with GAAP financial performance measures. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found below.

YETI does not provide a reconciliation of forward-looking non-GAAP to GAAP financial measures because such reconciliations are not available without unreasonable efforts. This is due to the inherent difficulty in forecasting with reasonable certainty certain amounts that are necessary for such reconciliation, including in particular the impact of the product recalls and realized and unrealized foreign currency gains and losses reported within other expense. For the same reasons, we are unable to forecast with reasonable certainty all deductions and additions needed in order to provide a forward-looking GAAP financial measures at this time. The amount of these deductions and additions may be material and, therefore, could result in forward-looking GAAP financial measures being materially different or less than forward-looking non-GAAP financial measures. See “Forward-looking statements” below.

Forward-looking statements

This press release contains ‘‘forward-looking statements’’ within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements. Forward-looking statements include statements containing words such as “anticipate,” “assume,” “believe,” “can have,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events. For example, all statements made relating to our future expectations relating to our share repurchase program, demand and market conditions, pricing conditions, expected sales, gross margin, operating expense and cash flow levels, and our expectations for opportunity, growth, investments, and new products, including those set forth in the quotes from YETI’s President and CEO, and the 2024 financial outlook provided herein, constitute forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that are expected and, therefore, you should not unduly rely on such statements. The risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include but are not limited to: (i) economic conditions or consumer confidence in future economic conditions; (ii) our ability to maintain and strengthen our brand and generate and maintain ongoing demand for our products; (iii) our ability to successfully design, develop and market new products; (iv) our ability to effectively manage our growth; (v) our ability to expand into additional consumer markets, and our success in doing so; (vi) the success of our international expansion plans; (vii) our ability to compete effectively in the outdoor and recreation market and protect our brand; (viii) the level of customer spending for our products, which is sensitive to general economic conditions and other factors; (ix) problems with, or loss of, our third-party contract manufacturers and suppliers, or an inability to obtain raw materials; (x) fluctuations in the cost and availability of raw materials, equipment, labor, and transportation and subsequent manufacturing delays or increased costs; (xi) our ability to accurately forecast demand for our products and our results of operations; (xii) our relationships with our national, regional, and independent retail partners, who account for a significant portion of our sales; (xiii) the impact of natural disasters and failures of our information technology on our operations and the operations of our manufacturing partners; (xiv) our ability to attract and retain skilled personnel and senior management, and to maintain the continued efforts of our management and key employees; (xv) the impact of our indebtedness on our ability to invest in the ongoing needs of our business, and (xvi) our ability to successfully execute our share repurchase program and its impact on stockholder value and the volatility of the price of our common stock. For a more extensive list of factors that could materially affect our results, you should read our filings with the United States Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 30, 2023, as such filings may be amended, supplemented or superseded from time to time by other reports YETI files with the SEC.

These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While YETI believes that these assumptions underlying the forward-looking statements are reasonable, YETI cautions that it is very difficult to predict the impact of known factors, and it is impossible for YETI to anticipate all factors that could affect actual results.

The forward-looking statements included here are made only as of the date hereof. YETI undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law. Many of the foregoing risks and uncertainties may be exacerbated by the global business and economic environment, including ongoing geopolitical conflicts. Solely for convenience, certain trademark and service marks referred to in this press release appear without the ® or ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and service marks.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808764506/en/