Yeti Holdings, Inc. raised its guidance for earnings and sales for the year as second-quarter results topped analyst targets. Adjusted earnings rose 36 percent on a 15 percent revenue gain in the quarter.

Sales reached $463.5 million against analysts’ consensus target of $456.69 million. Adjusted EPS was 70 cents a share, up from consensus estimates of 64 cents.

Second Quarter 2024 Highlights

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

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 percent 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.

Adjusted sales, which exclude the unfavorable impact of the recall reserve adjustment in the second quarter of 2023, increased 9 percent 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 of sales related to gift card redemptions in connection with recall remedies.

DTC channel sales increased 11 percent to $250.4 million, compared to $226.4 million in the prior year quarter, due to growth in Coolers & Equipment and Drinkware. Excluding the impact related to the recall reserves, DTC channel-adjusted sales increased 7 percent to $250.4 million.

Wholesale channel sales increased 21 percent to $213.1 million, compared to $176.2 million in the same period last year, due to growth in Coolers & Equipment and Drinkware. Excluding the impact of the recall reserves, wholesale channel-adjusted sales increased 11 percent to $213.1 million.

Drinkware sales increased 6 percent to $246.5 million, compared to $233.4 million in the prior year quarter, driven by the continued expansion and innovation in Drinkware products and new seasonal colorways.

Coolers & Equipment sales increased 31 percent 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 percent to $205.9 million.

Gross profit increased 23 percent to $264.3 million, or 57.0 percent of sales, compared to $214.8 million, or 53.4 percent 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 percent to $267.5 million, or 57.7 percent of adjusted sales, compared to $234.3 million, or 54.9 percent 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.

SG&A expenses increased 20 percent 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 percent from 40.9 percent in the prior year period. Excluding the impact of the recall reserves, SG&A expenses increased by $21.7 million primarily due to higher employee costs, higher variable expenses on higher sales, and marketing expenses.

Adjusted SG&A expenses increased 12 percent 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 percent from 39.1 percent in the prior year period. This increase was primarily due to higher employee costs.

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

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

Net income increased 32 percent to $50.4 million, or 10.9 percent of sales, compared to $38.1 million, or 9.5 percent 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 percent to $59.6 million, or 12.9 percent of adjusted sales, compared to $49.8 million, or 11.7 percent of adjusted sales in the prior year quarter; Adjusted net income per diluted share increased 23 percent 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 percent 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.

Adjusted sales, which exclude the unfavorable impact of the recall reserve adjustment in the first half of 2023, increased 10 percent 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 of sales related to gift card redemptions in connection with recall remedies.

DTC channel sales increased 11 percent 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 percent to $438.2 million.

Wholesale channel sales increased 18 percent to $366.7 million, compared to $312.0 million in the same period last year, due to growth in Coolers & Equipment and Drinkware. Excluding the impact related to the recall reserves, wholesale channel-adjusted sales increased 12 percent to $366.7 million.

Drinkware sales increased 9 percent 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 percent 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 percent to $325.8 million.

Gross profit increased 22 percent to $459.1 million, or 57.0 percent of sales, compared to $376.7 million, or 53.4 percent of sales, in the prior year period. The recall reserves unfavorably impacted gross profit by $18.2 million in the 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 percent to $463.9 million, or 57.6 percent of adjusted sales, compared to $394.9 million, or 54.1 percent 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.

SG&A expenses increased 18 percent 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 percent from 44.1 percent in the prior year period. Excluding the impact of the recall reserves, SG&A expenses increased by $44.1 million primarily due to higher employee costs, higher variable expenses on higher sales and marketing expenses.

Adjusted SG&A expenses increased 12 percent 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 percent from 41.9 percent in the prior year period. This increase was primarily due to higher employee costs.

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

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

Net income increased 36 percent to $66.3 million, or 8.2 percent of sales, compared to $48.6 million, or 6.9 percent 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 percent to $88.9 million, or 11.0 percent of adjusted sales, compared to $65.3 million, or 8.9 percent of adjusted sales in the prior year period. Adjusted net income per diluted share increased 37 percent to $1.03, compared to $0.75 per diluted share in the prior year.

Balance Sheet and Other Highlights
Cash decreased by $10.2 million to $212.9 million, compared to $223.1 million at the end of the second quarter of 2023. Inventory increased 17 percent to $378.3 million, compared to $322.0 million at the end of the prior year quarter. The increase was driven primarily by restocking its full line of soft coolers and 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, the company made mandatory debt payments of $1.1 million.

Updated 2024 Outlook
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 percent and 10 percent (versus the previous outlook of between 7 percent and 9 percent);
  • Adjusted operating income, as a percentage of adjusted sales, of approximately 16.5 percent (versus the previous outlook of between 16.0 percent and 16.5 percent);
  • An effective tax rate of approximately 25.2 percent (compared to 24.8 percent in the prior year period);
  • Adjusted net income per diluted share between $2.61 and $2.65 (versus the previous outlook of between $2.49 and $2.62), reflecting a 16 percent to 18 percent increase;
  • Diluted weighted average shares outstanding of approximately 86.0 million (versus the previous outlook of 86.1 million); and
  • Capital expenditures between $50 million and $60 million (versus the previous outlook of approximately $60 million) primarily to support investments in technology and new product innovation.

Image courtesy Yeti