Yeti Holdings, Inc. profits rose 18 percent on an adjusted basis, driven by improving margins and a 10 percent sales gain. The maker of Drinkware and Coolers saw balanced growth across product categories and channels while updating its FY EPS outlook to the high end of its previous range.

Third Quarter 2024 Highlights

  • Net sales increased 10 percent.
    • Coolers & Equipment net sales increased 12 percent.
    • Drinkware net sales increased 9 percent.
    • Wholesale net sales increased 14 percent.
    • Direct-to-consumer net sales increased 8 percent.
    • International net sales increased 30 percent.
    • U.S. net sales increased 7 percent.
  • Gross margin was flat at 58.0 percent; Adjusted gross margin expanded 40 basis points to 58.2 percent.
  • Operating margin expanded 30 basis points to 14.6 percent. Adjusted operating margin expanded 10 basis points to 16.6 percent.
  • EPS increased 35 percent to $0.66; Adjusted EPS increased 18 percent to $0.71.

Adjusted earnings of 71 cents topped analysts’ consensus estimate of 67 cents. Revenues of $478.4 million exceeded analysts’ consensus estimate of $471.3 million.

Matt Reintjes, president and chief executive officer, commented, “Our positive momentum continued in the third quarter, with strong performance across our product portfolio and robust growth in our international business. We saw healthy demand across our major sales channels, driven by the continued successful execution of our strategic priorities. Our gross margins continued to expand despite a choppy macro environment, enabling us to continue to invest in our business while delivering strong earnings growth. Our supply chain diversification efforts remain on track, with production commencing at our second drinkware facility outside of China during the quarter. Finally, we continue to build on our strong cash position, which provides us the opportunity to further invest in the business while also pursuing a combination of strategic acquisitions and share repurchases.”

Reintjes continued, “As it relates to the Yeti brand, we drove strong brand engagement in the quarter, with over 100 global events across our broad and growing enthusiast communities. These are exciting programs and partnerships that are uniquely Yeti and showcase our product breadth and brand reach. On the product side, we continued to release new innovations with several highly anticipated launches that reinforced our commitment to our drinkware category through our expansion in bar and tableware as well as our entry into the premium cookware market. In regards to our global business, our brand and customer base continues to grow, leading to a fourth consecutive quarter of over 30 percent sales growth outside the United States.”

Third Quarter 2024 Results
Sales increased 10 percent to $478.4 million, compared to $433.6 million during the same period last year.

Sales for the third quarters of 2024 and 2023 include $2.7 million and $6.3 million, respectively, of gift card redemptions related to recall remedies.

  • Direct-to-consumer (DTC) channel sales increased 8 percent to $280.8 million, compared to $259.5 million in the prior year quarter, due to Coolers & Equipment and Drinkware growth.
  • Wholesale channel sales increased 14 percent to $197.6 million, compared to $174.1 million in the same period last year, due to growth in both Drinkware and Coolers & Equipment.
  • Drinkware sales increased 9 percent to $275.0 million, compared to $253.3 million in the prior year quarter, driven by the continued expansion and innovation of Drinkware product offerings and new seasonal colorways.
  • Coolers & Equipment sales increased 12 percent to $192.6 million, compared to $171.5 million in the same period last year, driven by strong performance in bags, hard coolers, and outdoor living products.

Gross profit increased 11 percent to $277.7 million, compared to $251.3 million in the third quarter of 2023. Gross margin was flat at 58.0 percent compared to the prior-year quarter. Higher customization and other costs offset lower inbound freight costs and lower product costs.

Adjusted gross profit increased 11 percent to $278.5 million, or 58.2 percent of adjusted sales, compared to $250.4 million, or 57.8 percent of adjusted sales, in the third quarter of 2023. The 40 basis point increase in adjusted gross margin was primarily due to lower inbound freight costs and lower product costs, partially offset by higher customization costs and other costs.

SG&A expenses increased 10 percent to $208.1 million, compared to $189.4 million in the third quarter of 2023. As a percentage of sales, SG&A expenses decreased 20 basis points to 43.5 percent from 43.7 percent in the prior year period. The increase in SG&A expenses was primarily due to higher employee costs and marketing expenses.

Adjusted SG&A expenses increased 11 percent to $199.3 million, compared to $179.0 million in the third quarter of 2023. As a percentage of adjusted sales, adjusted SG&A expenses increased 40 basis points to 41.7 percent from 41.3 percent in the prior year period. This increase was primarily due to higher employee costs.

Operating income increased 13 percent to $69.6 million, or 14.6 percent of sales, compared to $61.9 million, or 14.3 percent of sales during the prior-year quarter.

Adjusted operating income increased 11 percent to $79.2 million, or 16.6 percent of adjusted sales, compared to $71.4 million, or 16.5 percent of adjusted sales during the same period last year.

Net income increased 32 percent to $56.3 million, or 11.8 percent of sales, compared to $42.7 million, or 9.8 percent of sales in the prior-year quarter. Net income per diluted share was $0.66, compared to $0.49 in the prior year quarter.

Adjusted net income increased 14 percent to $60.4 million, or 12.6 percent of adjusted sales, compared to $52.9 million, or 12.2 percent of adjusted sales in the prior-year quarter. Adjusted net income per diluted share increased 18 percent to $0.71, compared to $0.60 per diluted share in the prior year quarter.

Nine Months Ended September 28, 2024 Results
Sales increased 13 percent to $1,283.3 million, compared to $1,138.9 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 nine months of 2023, increased 10 percent to $1,283.3 million.

Sales and adjusted net sales for the first nine months of 2024 and 2023 include $7.1 million and $18.8 million of sales related to gift card redemptions in connection with recall remedies.

  • DTC channel sales increased 10 percent to $719.0 million, compared to $652.9 million in the prior year, due to Coolers & Equipment and Drinkware growth. Excluding the impact related to the recall reserves, DTC channel-adjusted sales increased 9 percent to $719.0 million.
  • Wholesale channel sales increased 16 percent to $564.3 million, compared to $486.1 million in the same period last year, due to Coolers & Equipment and Drinkware growth. Excluding the impact related to the recall reserves, wholesale channel-adjusted sales increased 12 percent to $564.3 million.
  • Drinkware sales increased 9 percent to $736.1 million, compared to $677.0 million in the prior year period, driven by the continued expansion and innovation of Drinkware product offerings and new seasonal colorways.
  • Coolers & Equipment sales increased 20 percent to $518.4 million, compared to $432.5 million in the same period last year, driven by strong performance in bags and soft coolers. Excluding the impact related to the recall reserves, Coolers & Equipment adjusted sales increased 13 percent to $518.4 million.

Gross profit increased 17 percent to $736.8 million, or 57.4 percent of sales, compared to $628.0 million, or 55.1 percent of sales, in the prior year period. The recall reserved unfavorably impacted gross profit by $17.4 million in the first nine months of 2023 and had a favorable 40 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 15 percent to $742.4 million, or 57.8 percent of adjusted sales, compared to $645.3 million, or 55.5 percent of adjusted sales, in the prior year period. The 230 basis point increase in adjusted gross margin was primarily due to lower inbound freight costs and lower product costs.

SG&A expenses increased 15 percent to $574.0 million, compared to $500.7 million in the prior year period. As a percentage of sales, SG&A expenses increased 70 basis points to 44.7 percent from 44.0 percent in the prior year period. Excluding the impact of the recall reserves, SG&A expenses increased $62.8 million primarily due to higher employee costs, higher variable expenses on higher sales, and marketing expenses.

Adjusted SG&A expenses increased 12 percent to $543.6 million, compared to $485.2 million in the prior year period. As a percentage of adjusted sales, adjusted SG&A expenses increased by 70 basis points to 42.4 percent from 41.7 percent in the prior year period. This increase was primarily due to higher employee costs.

Operating income increased 28 percent to $162.9 million, or 12.7 percent of sales, compared to $127.3 million, or 11.2 percent of sales during the prior year period.

Adjusted operating income increased 24 percent to $198.8 million, or 15.5 percent of adjusted sales, compared to $160.2 million, or 13.8 percent of adjusted sales during the same period last year.

Net income increased 34 percent to $122.5 million, or 9.5 percent of sales, compared to $91.3 million, or 8.0 percent of sales in the prior year period; Net income per diluted share was $1.42, compared to $1.05 in the prior year.

Adjusted net income increased 26 percent to $149.4 million, or 11.6 percent of adjusted sales, compared to $118.2 million, or 10.2 percent of adjusted sales in the prior year period; Adjusted net income per diluted share increased 29 percent to $1.74, compared to $1.35 per diluted share in the prior year.

Balance Sheet and Other Highlights
Cash was $280.5 million, compared to $281.4 million at the end of the third quarter of 2023.

Inventory increased 8 percent to $370.2 million, compared to $341.3 million at the end of the prior-year quarter.

Total debt, excluding finance leases and unamortized deferred financing fees, was $79.1 million, compared to $83.3 million at the end of the third quarter of 2023. During the third quarter of 2024, the company made mandatory debt payments of $1.1 million.

Updated 2024 Outlook
Reintjes concluded, “Our strong execution in the third quarter gives us confidence in our full-year outlook. Despite some uncertainty in the macroeconomic backdrop, we believe we are well positioned as we head into the holiday season, and we continue to expect to end 2024 with strong topline and earnings growth, as well as exceptional cash flow generation, which will further strengthen our balance sheet and enable us to continue to return value to shareholders.”

For Fiscal 2024, Yeti expects:

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

Image courtesy Yeti