Yeti Inc. raised its earnings guidance for the year after reporting first-quarter earnings easily topped analysts’ expectations. Earnings on an adjusted basis surged 89 percent while sales grew 13 percent, boosted by a re-acceleration in domestic growth with balanced growth across drinkware and cooler segments.

First Quarter 2024 Highlights

  • Net sales increased 13 percent to $341.39 million, topping analysts’ consensus estimate of $333.81 million.
  • Coolers & Equipment net sales increased 15 percent; Drinkware net sales increased 13 percent
  • Wholesale net sales increased 13 percent; Direct-to-consumer net sales increased 12 percent
  • International net sales increased 32 percent; U.S. net sales increased 9 percent
  • Gross margin expansion of 360 basis points to 57.1 percent; Adjusted gross margin expansion of 450 basis points to 57.5 percent
  • Operating margin expansion of 260 basis points to 7.6 percent; Adjusted operating margin expansion of 440 basis points to 11.6 percent
  • EPS increased 50 percent to 18 cents per share; Adjusted EPS increased 89 percent to 34 cents, topping analysts’ consensus estimate of 24 cents.
  • Entered into a $100 million accelerated share repurchase agreement

Matt Reintjes, president and chief executive officer, commented, “First quarter results were highlighted by balanced, double-digit growth across both our wholesale and direct-to-consumer channels, as well as our Drinkware and Coolers & Equipment categories. This performance was punctuated by our international sales mix reaching a record 19 percent coupled with re-acceleration in domestic growth. Profitability continued to show strength with both adjusted gross margin and adjusted operating margin expanding nearly 450 basis points during the period. Additionally, we completed our previously announced acquisitions, and entered into a $100 million accelerated share repurchase agreement.”

Reintjes continued, “We remain confident as we move into the second quarter and second half of the year. We are well positioned in Coolers & Equipment to leverage new innovation, expanded color options, and impactful product marketing. On top of that, we continue to see strong demand for our diverse range of Drinkware, as our brand continues to grow both domestically and internationally.”

First Quarter 2024 Results

  • Sales and adjusted sales both increased 13 percent to $341.4 million, compared to $302.8 million during the same period last year.
  • Direct-to-consumer (“DTC”) channel sales increased 12 percent to $187.8 million, compared to $167.0 million in the prior year quarter, due to growth in both Drinkware and Coolers & Equipment.
  • Wholesale channel sales increased 13 percent to $153.6 million, compared to $135.8 million in the same period last year, due to growth in both Coolers & Equipment and Drinkware.
  • Drinkware sales increased 13 percent to $214.6 million, compared to $190.3 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 15 percent to $119.9 million, compared to $104.4 million in the same period last year, driven by strong performance in bags, soft coolers, and hard coolers.
  • Gross profit increased 20 percent to $194.8 million, or 57.1 percent of sales, compared to $161.9 million, or 53.5 percent of sales, in the first quarter of 2023. The 360 basis point increase in gross margin was primarily due to lower inbound freight costs and lower product costs.
  • Adjusted gross profit increased $35.7 million to $196.4 million, or 57.5 percent of adjusted sales, compared to $160.6 million, or 53.0 percent of adjusted sales, in the first quarter of 2023. The 450 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 15 percent to $169.0 million, compared to $146.8 million in the first quarter of 2023. As a percentage of sales, SG&A expenses increased 100 basis points to 49.5 percent from 48.5 percent in the prior year period. This increase was primarily due to higher employee costs and marketing expenses, partially offset by lower warehousing costs.
  • Adjusted SG&A expenses increased 13 percent to $156.8 million, compared to $139.0 million in the first quarter of 2023. As a percentage of adjusted sales, adjusted SG&A expenses were flat at 45.9 percent compared to the prior year period, as higher employee costs and marketing expenses were offset by lower warehousing costs.
  • Operating income increased 71.0 percent to $25.8 million, or 7.6 percent of sales, compared to $15.1 million, or 5.0 percent of sales during the prior year quarter.
  • Adjusted operating income increased 82 percent to $39.6 million, or 11.6 percent of adjusted sales, compared to $21.7 million, or 7.2 percent of adjusted sales during the same period last year.
  • Net income increased 50 percent to $15.9 million, or 4.6 percent of sales, compared to $10.6 million, or 3.5 percent of sales in the prior year quarter; Net income per diluted share was $0.18, compared to $0.12 in the prior year quarter.
  • Adjusted net income increased 89 percent to $29.3 million, or 8.6 percent of adjusted sales, compared to $15.5 million, or 5.1 percent of adjusted sales in the prior year quarter; Adjusted net income per diluted share increased 89 percent to $0.34, compared to $0.18 per diluted share in the prior year quarter.

Balance Sheet and Other Highlights

  • Cash increased $6.1 million to $173.9 million, compared to $167.8 million at the end of the first quarter of 2023.
  • Inventory increased 5 percent to $363.9 million, compared to $347.0 million at the end of the prior year quarter.
  • Total debt, excluding finance leases and unamortized deferred financing fees, was $81.2 million, compared to $84.4 million at the end of the first quarter of 2023. During the first quarter of 2024, we made mandatory debt payments of $1.1 million.

Updated 2024 Outlook

Reintjes concluded, “With the bulk of the year ahead of us, we are maintaining our topline outlook as we weigh our strong first quarter execution with the ongoing uncertainties that persist in the market. However, with the continued momentum in our gross margin improvement and the execution of our accelerated share repurchase, we have raised our full year bottom line range. We remain focused on strategic investments to drive the Yeti brand, product innovation, channel growth and global expansion.”

For Fiscal 2024, Yeti expects:

  • Adjusted sales to increase between 7 percent and 9 percent (consistent with previous outlook);
  • Adjusted operating income as a percentage of adjusted sales between 16.0 percent and 16.5 percent (versus previous outlook of approximately 16.0 percent);
  • An effective tax rate of approximately 25.3 percent (compared to 24.8 percent in the prior year period);
  • Adjusted net income per diluted share between $2.49 and $2.62 (versus previous outlook of between $2.45 and $2.50), reflecting an 11 percent to 16 percent increase;
  • Diluted weighted average shares outstanding of approximately 86.1 million (versus previous outlook of 87.4 million); and
  • Capital expenditures of approximately $60 million primarily to support investments in technology and new product innovation.

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 March 30, 2024, $200 million remained available under the Share Repurchase Program.