Profits at Yeti Holdings surged 75.0 percent on an adjusted basis in the fourth quarter on a 26 percent sales gain. The company forecast sales growth of between 15 percent and 17 percent in 2021, with sales growth weighted to the first half of the year.

Matt Reintjes, president and chief executive officer, commented, “Our remarkable fourth quarter and full-year performance reflects the ongoing vitality and relevance of our brand with customers as well as the incredible dedication of and strong execution by our global employees. Our fourth-quarter results were highlighted by 26 percent net sales growth, a record gross margin of nearly 60 percent and over $250 million in cash following an additional $100 million voluntary debt payment at the end of the quarter. This strong quarter culminated a year that saw Yeti cross the $1 billion in net sales milestone, driven by 19 percent topline growth. Our revenue growth combined with expanding margins generated over 75 percent adjusted EPS growth – significantly ahead of our initial outlook during an unprecedented year of disruptions and challenges.”

For The Three Months Ended January 2, 2021 (14 Week Period)
Net sales increased 26 percent to $375.8 million, compared to $297.6 million during the same period last year. Results topped Wall Street’s consensus estimate of $353 million. 

  • Direct-to-consumer (DTC) channel net sales increased 46 percent to $217.8 million, compared to $149.0 million in the prior-year quarter, driven by strong performance in both Drinkware and Coolers & Equipment. The DTC channel grew to 58 percent of net sales, compared to 50 percent in the prior-year period.
  • Wholesale channel net sales increased 6 percent to $158.0 million, compared to $148.7 million in the same period last year, driven by Drinkware and Coolers & Equipment.
  • Drinkware net sales increased 23 percent to $235.7 million, compared to $192.0 million in the prior-year quarter, primarily driven by the continued expansion of our Drinkware product offerings, including introducing new colors and sizes and strong demand for customization.
  • Coolers & Equipment net sales increased 31 percent to $134.3 million, compared to $102.3 million in the same period last year, driven by strong performance in soft coolers, hard coolers, outdoor living products, and cargo.

Gross profit increased 39 percent to $224.8 million, or 59.8 percent of net sales, compared to $162.3 million, or 54.5 percent of net sales, in the fourth quarter of Fiscal 2019. The 530 basis point increase in gross margin is driven primarily by a favorable mix shift to its DTC channel and product cost improvements, decreased tariffs and lower inbound freight.

Selling, general and administrative (“SG&A”) expenses decreased 5 percent to $143.4 million, compared to $150.4 million in the fourth quarter of Fiscal 2019. Excluding the impact of the $40.7 million one-time non-cash stock-based compensation expense related to pre-IPO performance-based awards recognized in the prior period, SG&A expenses as a percentage of net sales increased 130 basis points. Variable costs increased 140 basis points, driven by our faster growing and higher gross margin DTC channel, which grew to 58 percent of net sales during the period. Excluding the impact of the aforementioned one-time non-cash stock-based compensation expense, non-variable expenses leveraged ten basis points on higher net sales, including leverage on higher expenditures in areas such as employee costs and distributions expenses, partially offset by deleverage on higher marketing expenses.

Operating income increased to $81.4 million, or 21.7 percent of net sales, compared to $12.0 million, or 4.0 percent of net sales, during the prior-year quarter, which included the impact of the aforementioned one-time stock-based compensation expense.

Adjusted operating income increased 57 percent to $84.5 million, or 22.5 percent of net sales, compared to $54.0 million, or 18.1 percent of net sales, during the same period last year.

Net income increased to $62.4 million, or 16.6 percent of net sales, compared to $4.7 million, or 1.6 percent of net sales, in the prior-year quarter, which included the impact of the aforementioned one-time stock-based compensation expense; Net income per diluted share increased to $0.71, compared to $0.05 per diluted share in the prior-year quarter.

Adjusted net income increased 73 percent to $65.2 million, or 17.4 percent of net sales, compared to $37.8 million, or 12.7 percent of net sales, in the prior-year quarter; Adjusted net income per diluted share increased 70 percent to 74 cents, compared to 43 cents per diluted share in the prior-year. Results were ahead of Wall Street’s consensus target of 62 cents.

Adjusted EBITDA increased 52 percent to $94.0 million, or 25.0 percent of net sales, from $61.8 million, or 20.8 percent of net sales, during the same period last year.

For The Twelve Months Ended January 2, 2021 (53 Weeks)
Net sales increased 19 percent to $1,091.7 million, compared to $913.7 million in the prior year.

  • DTC channel net sales increased 50 percent to $580.9 million, compared to $386.1 million in the prior-year period, driven by Coolers & Equipment and Drinkware. The DTC channel grew to 53 percent of net sales, compared to 42 percent in the prior year.
  • Wholesale channel net sales decreased 3 percent to $510.9 million, compared to $527.6 million in the same period last year, primarily driven by Coolers & Equipment. The decline in wholesale channel net sales was mainly driven by the effects of COVID-19 on temporary store closures during the first half of the year.
  • Drinkware net sales increased 19 percent to $628.6 million, compared to $526.2 million in the prior-year period, primarily driven by the continued expansion of our Drinkware product offerings, including introducing new colors and sizes and strong demand for customization.
  • Coolers & Equipment net sales increased 21 percent to $446.6 million, compared to $368.9 million in the same period last year. The strong performance was driven by growth in soft coolers, hard coolers, outdoor living products, and cargo.

Gross profit increased 32 percent to $628.8 million, or 57.6 percent of net sales, compared to $475.3 million, or 52.0 percent of net sales, in the prior year. The 560 basis point increase in gross margin was primarily driven by a favorable mix shift to our DTC channel and product cost improvements, lower inbound freight, and decreased tariffs.

Selling, general, and administrative (“SG&A”) expenses increased 8 percent to $414.6 million, compared to $385.5 million in the prior year. Excluding the impact of the $40.7 million one-time non-cash stock-based compensation expense related to pre-IPO performance-based awards recognized in the prior year, SG&A expenses as a percentage of net sales increased 30 basis points. Variable expenses increased 210 basis points, driven by our faster growing and higher margin DTC channel, which grew to 53 percent of net sales during the period. Excluding the impact of the aforementioned one-time non-cash stock-based compensation expense, non-variable expenses leveraged 180 basis points on higher net sales, including leverage on higher expenditures in areas such as employee costs, non-cash stock-based compensation expense, and marketing expenses, partially offset by deleverage on higher distribution costs.

Operating income increased 139 percent to $214.2 million, or 19.6 percent of net sales, compared to $89.8 million, or 9.8 percent of net sales, during the prior year, which included the impact of the aforementioned stock-based compensation expense.

Adjusted operating income increased 57 percent to $224.3 million, or 20.5 percent of net sales, compared to $142.7 million, or 15.6 percent of net sales, during the same period last year.

Net income increased 209 percent to $155.8 million, or 14.3 percent of net sales, compared to $50.4 million, or 5.5 percent of net sales, in the prior year, which included the impact of the aforementioned stock-based compensation expense; Net income per diluted share increased 204 percent to $1.77, compared to $0.58 per diluted share in the prior year.

Adjusted net income increased 79 percent to $164.2 million, or 15.0 percent of net sales, compared to $91.8 million, or 10.0 percent of net sales in the prior-year period; Adjusted net income per diluted share increased 76 percent to $1.87, compared to $1.06 per diluted share in the same period last year.

Adjusted EBITDA increased 49 percent to $256.0 million, or 23.5 percent of net sales, from $171.6 million, or 18.8 percent of net sales, during the prior year.

Balance Sheet and Cash Flow Highlights

  • Cash increased to $253.3 million, compared to $72.5 million at the end of Fiscal 2019.
  • Inventory decreased 25 percent to $140.1 million, compared to $185.7 million at the end of Fiscal 2019. During the final weeks of the first quarter of 2020, Yeti took decisive actions in response to government mandates and retail store closures due to the COVID-19 pandemic by reducing purchase orders to align with demand forecasts at the time and to provide enhanced financial flexibility. This disruption and the overall strong demand during 2020 contributed to the inventory decline during the fourth quarter. Yeti continues to work to replenish its distribution channels to meet customer demand throughout Fiscal 2021.
  • Total debt, excluding finance leases and unamortized deferred financing fees, was $135.0 million, compared to $300.0 million at the end of Fiscal 2019. During Fiscal 2020, Yeti made mandatory and voluntary debt payments of $15.0 million and $150.0 million, respectively, and fully repaid the precautionary first quarter borrowings of $50.0 million under its revolving credit facility. Accordingly, at the end of Fiscal 2020, we had no outstanding borrowings and $150.0 million available for borrowing under its revolving credit facility. At the end of the quarter, our cash balance exceeded total debt by $118.3 million.
  • Cash flow provided by operating activities was $366.4 million, compared to $86.9 million for the twelve months ended December 28, 2019. Capital expenditures were $15.6 million, compared to $32.1 million during the same period last year.

Reintjes added, “Demand for Yeti was strong before the onset of the pandemic and remained robust as global consumers adjusted to new work and life habits highlighted by interest in outdoor pursuits and behaviors that we expect will continue this year. Looking forward, we believe Yeti is uniquely positioned to capitalize as consumers begin to re-engage in pre-pandemic activities such as commuting, social gatherings, and sports activities at all levels. This confidence is reflected in our topline outlook of 15 percent to 17 percent growth for 2021 on top of our incredible performance in 2020 and above our long-term target. To further adapt to these consumer evolutions, we remain steadfast in investing across our strategic priorities to ensure we are driving our long-term sustainable global growth aspirations.”

Fiscal 2021 Outlook
For Fiscal 2021, a 52-week period, compared to a 53-week period in Fiscal 2020, Yeti expects:

  • Net sales to increase between 15 percent and 17 percent with sales growth weighted to the first half of the year; 
  • Operating income as a percentage of net sales of approximately 18.5 percent;
  • Adjusted operating income as a percentage of net sales of approximately 20.0 percent;
  • An effective tax rate of approximately 24.5 percent;
  • Net income per diluted share to be between $1.95 and $1.98, reflecting a 10 percent to 12 percent increase, with earnings growth heavily weighted to the first and fourth quarter;
  • Adjusted net income per diluted share between $2.11 and $2.14, reflecting a 13 percent to 15 percent increase, with earnings growth heavily weighted to the first and fourth quarter;
  • Diluted weighted average shares outstanding of approximately 88.6 million; and
  • Capital expenditures between $55 million and $60 million, primarily to support investments in technology and new product innovation and launches.

Photo courtesy Yeti