Net Sales Increased 45% Gross Margin
Expanded 280 Basis Points EPS Increased to $0.63 from $0.38
Adjusted EPS Increased to $0.68 from $0.41 Raises 2021
Outlook
YETI Holdings, Inc. (“YETI”) (NYSE: YETI) today announced its
financial results for the second quarter ended July 3, 2021.
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.
Matt Reintjes, President and Chief Executive Officer, commented,
“Demand and passion for the YETI brand remained robust during the
second quarter. Net sales surged 45% during the period, driven by
strong direct-to-consumer performance throughout the quarter
including Mother’s Day and Father’s Day, significant year-over-year
recoveries in channels such as wholesale that experienced outsized
impacts during the pandemic, and a more than three-fold gain in our
international business. This topline performance combined with
better-than-planned operating margins fueled 66% earnings per share
growth for the quarter.”
Mr. Reintjes concluded, “The ongoing momentum in the business
continues to be supported by the incredible execution of our team
and many brand partners. We remain diligent and thoughtful as we
contain and mitigate global supply chain volatility and cost
pressures, with a focus on what we directly control – driving brand
passion, consideration, and demand. Our conviction and discipline
in these areas support our increased full year net sales and
earnings per share outlooks for the year.”
For the Three Months Ended July 3,
2021
Net sales increased 45% to $357.7 million, compared to
$246.9 million during the same period last year.
- Direct-to-consumer (“DTC”) channel net sales increased 48% to
$196.9 million, compared to $133.0 million in the prior year
quarter, driven by strong performance in both Drinkware and Coolers
& Equipment. The DTC channel grew to 55% of net sales, compared
to 54% in the prior year period.
- Wholesale channel net sales increased 41% to $160.8 million,
compared to $113.9 million in the same period last year, driven by
both Drinkware and Coolers & Equipment. In the second quarter
of 2020, wholesale channel net sales were adversely impacted by the
temporary store closures due to COVID-19.
- Drinkware net sales increased 69% to $192.9 million, compared
to $114.3 million in the prior year quarter, primarily driven by
the continued expansion of our Drinkware product offerings,
including the introduction of new colorways and sizes, and strong
demand for customization.
- Coolers & Equipment net sales increased 23% to $157.8
million, compared to $128.6 million in the same period last year,
driven by strong performance in soft coolers, bags, outdoor living
products, cargo and hard coolers.
Gross profit increased 52% to $209.1 million, or 58.5% of
net sales, compared to $137.5 million, or 55.7% of net sales, in
the second quarter of 2020. The 280 basis point increase in gross
margin was primarily driven by a favorable mix shift to our DTC
channel, product cost improvements, and lower inventory reserves,
partially offset by the unfavorable impact of the non-renewal of
the Global System of Preferences program on import duties and
higher inbound freight.
Selling, general, and administrative (“SG&A”)
expenses increased 50% to $136.7 million, compared to $91.0
million in the second quarter of 2020. The 2020 period included the
benefit of cost reduction initiatives implemented in response to
COVID-19. As a percentage of net sales, SG&A expenses increased
140 basis points to 38.2% from 36.8% in the prior year period. This
increase included 220 basis points increase in non-variable
expenses, primarily driven by higher marketing expenses. Variable
expense leverage of 80 basis points on higher net sales positively
impacted the quarter.
Operating income increased 56% to $72.4 million, or 20.2%
of net sales, compared to $46.5 million, or 18.8% of net sales,
during the prior year quarter.
Adjusted operating income increased 57% to $77.4 million,
or 21.6% of net sales, compared to $49.3 million, or 20.0% of net
sales, during the same period last year.
Net income increased 68% to $56.2 million, or 15.7% of
net sales, compared to $33.5 million, or 13.6% of net sales, in the
prior year quarter; Net income per diluted share increased
66% to $0.63, compared to $0.38 per diluted share in the prior year
quarter.
Adjusted net income increased 68% to $60.0 million, or
16.8% of net sales, compared to $35.6 million, or 14.4% of net
sales, in the prior year quarter; Adjusted net income per
diluted share increased 66% to $0.68, compared to $0.41 per
diluted share in the prior year quarter.
For the Six Months Ended July 3,
2021
Net sales increased 44% to $605.2 million, compared to
$421.4 million in the prior year.
- DTC channel net sales increased 52% to $323.7 million, compared
to $212.6 million in the prior year period, driven by both
Drinkware and Coolers & Equipment. The DTC channel grew to 53%
of net sales, compared to 50% in the prior year.
- Wholesale channel net sales increased 35% to $281.6 million,
compared to $208.7 million in the same period last year, primarily
driven by both Drinkware and Coolers & Equipment. In the second
quarter of 2020, wholesale channel net sales were adversely
impacted by the temporary store closures due to COVID-19.
- Drinkware net sales increased 51% to $341.8 million, compared
to $226.9 million in the prior year period, primarily driven by the
continued expansion of our Drinkware product offerings, including
the introduction of new colorways and sizes, and strong demand for
customization.
- Coolers & Equipment net sales increased 34% to $251.3
million, compared to $188.1 million in the same period last year.
The strong performance was driven by growth in outdoor living
products, soft coolers, bags, hard coolers, and cargo.
Gross profit increased 54% to $354.3 million, or 58.5% of
net sales, compared to $230.0 million, or 54.6% of net sales, in
the prior year. The 390 basis point increase in gross margin was
primarily driven by a favorable mix shift to our DTC channel as
well as product cost improvements, lower inventory reserves and
lower inbound freight.
Selling, general, and administrative expenses increased
45% to $241.8 million, compared to $167.3 million in the prior
year, which included the benefit of cost reduction initiatives
implemented in response to COVID-19. As a percentage of net sales,
SG&A expenses increased 30 basis points to 40.0% from 39.7% in
the prior year period. This increase was due to an increase of 20
basis points in variable expenses, driven by the increased mix of
our faster growing and higher gross margin DTC channel, which grew
to 53% of net sales during the period, and an increase of 10 basis
points in non-variable expenses.
Operating income increased 79% to $112.5 million, or
18.6% of net sales, compared to $62.7 million, or 14.9% of net
sales, during the prior year.
Adjusted operating income increased 80% to $121.1
million, or 20.0% of net sales, compared to $67.4 million, or 16.0%
of net sales, during the same period last year.
Net income increased 107% to $86.8 million, or 14.3% of
net sales, compared to $42.0 million, or 10.0% of net sales, in the
prior year; Net income per diluted share increased 104% to
$0.98, compared to $0.48 per diluted share in the prior year.
Adjusted net income increased 105% to $93.3 million, or
15.4% of net sales, compared to $45.5 million, or 10.8% of net
sales in the prior year period; Adjusted net income per diluted
share increased 102% to $1.05, compared to $0.52 per diluted
share in the same period last year.
Balance Sheet and Cash Flow
Highlights
Cash increased to $233.8 million, compared to $127.5
million at the end of the second quarter of 2020.
Inventory increased 60% to $221.7 million, compared to
$138.8 million at the end of the prior year quarter, primarily due
to the inventory purchase order reductions taken in response to
COVID-19 in 2020. The inventory increase represents a CAGR of 11%
since the same period in 2019.
Total debt, excluding finance leases and unamortized
deferred financing fees, was $123.8 million, compared to $292.5
million at the end of the second quarter of 2020. During the first
half of 2021, YETI made mandatory debt payments of $11.3 million.
At the end of the second quarter of 2021, our cash balance exceeded
total debt by $110.0 million.
Updated 2021 Outlook
For Fiscal 2021, a 52-week period, compared to a 53-week period
in Fiscal 2020:
- Net sales are now expected to increase between 26% and
28% (versus the previous outlook of between 20% and 22%);
- Operating income as a percentage of net sales is
expected to be approximately 19%, which remains unchanged from the
previous outlook;
- Adjusted operating income as a percentage of net
sales is expected to be approximately 20.5%, which remains
unchanged from the previous outlook;
- The effective tax rate is now expected to be
approximately 23%, (versus the previous outlook of 24.0%);
- Net income per diluted share is now expected to be
between $2.25 and $2.29 (versus the previous outlook of $2.12 and
$2.16), reflecting a 27% to 29% increase;
- Adjusted net income per diluted share is now expected to
be between $2.42 and $2.46 (versus the previous outlook of $2.28
and $2.32), reflecting a 29% to 32% increase;
- Diluted weighted average shares outstanding is now
expected to be approximately 88.6 million (versus the previous
outlook of 88.5 million); and
- Capital expenditures are expected to remain between $55
million and $60 million, primarily to support investments in
technology and new product innovation and launches.
Conference Call Details
A conference call to discuss the second quarter of 2021
financial results is scheduled for today, August 5, 2021, at 8:00
a.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial 631-891-4304
(international callers, please dial 631-891-4304) 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 and by dialing 844-512-2921 and entering
the access code 10015594. A replay will be available through August
19, 2021.
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 backpacks and bags, 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 our customers. 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 operating income, adjusted net income, adjusted
net income per diluted share as well as adjusted operating income
and adjusted net income as a percentage of 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 measures
are useful to investors as they are widely used measures of
performance and to facilitate comparisons to other companies. 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.
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 relating
to demand conditions and expected sales levels, including those set
forth in the quote from YETI’s President and CEO, and the updated
2021 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) uncertainty regarding global economic conditions,
particularly the uncertainty related to the duration and impact of
the rapidly evolving COVID-19 pandemic, including its impact on
global 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; and (xv) the impact of our
indebtedness on our ability to invest in the ongoing needs of our
business. 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 January
2, 2021 and the Quarterly Report on Form 10-Q for the three months
ended April 3, 2021, 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 COVID-19 pandemic and any worsening of the
global business and economic environment as a result.
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended
Six Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net sales
$
357,667
$
246,938
$
605,221
$
421,350
Cost of goods sold
148,550
109,413
250,920
191,367
Gross profit
209,117
137,525
354,301
229,983
Selling, general, and administrative
expenses
136,692
90,992
241,827
167,288
Operating income
72,425
46,533
112,474
62,695
Interest expense
(832
)
(2,657
)
(1,686
)
(5,767
)
Other (expense) income
(955
)
900
(1,253
)
(938
)
Income before income taxes
70,638
44,776
109,535
55,990
Income tax expense
(14,407
)
(11,294
)
(22,781
)
(14,028
)
Net income
$
56,231
$
33,482
$
86,754
$
41,962
Net income per share
Basic
$
0.64
$
0.39
$
0.99
$
0.48
Diluted
$
0.63
$
0.38
$
0.98
$
0.48
Weighted-average common shares
outstanding
Basic
87,327
86,937
87,253
86,883
Diluted
88,652
87,477
88,561
87,469
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except per
share amounts)
July 3, 2021
January 2, 2021
June 27, 2020
ASSETS
Current assets
Cash
$
233,773
$
253,283
$
127,467
Accounts receivable, net
81,893
65,417
85,886
Inventory
221,663
140,111
138,782
Prepaid expenses and other current
assets
23,832
17,686
15,279
Total current assets
561,161
476,497
367,414
Property and equipment, net
102,005
78,075
77,379
Operating lease right-of-use assets
51,672
34,090
34,963
Goodwill
54,293
54,293
54,293
Intangible assets, net
92,857
92,078
91,467
Other assets
1,987
2,034
1,936
Total assets
$
863,975
$
737,067
$
627,452
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
145,683
$
123,621
$
41,447
Accrued expenses and other current
liabilities
86,808
89,068
42,003
Taxes payable
15,928
18,316
12,687
Accrued payroll and related costs
19,966
25,810
8,002
Operating lease liabilities
11,142
8,247
8,086
Current maturities of long-term debt
24,478
22,697
18,941
Total current liabilities
304,005
287,759
131,166
Long-term debt, net of current portion
107,756
111,017
270,846
Operating lease liabilities,
non-current
50,881
36,546
38,589
Other liabilities
17,239
13,327
17,822
Total liabilities
479,881
448,649
458,423
Commitments and contingencies
Stockholders’ Equity
Common stock, par value $0.01; 600,000
shares authorized; 87,441, 87,128, and 87,004 shares outstanding at
July 3, 2021, January 2, 2021, and June 27, 2020, respectively
874
871
870
Preferred stock, par value $0.01; 30,000
shares authorized; no shares issued or outstanding
—
—
—
Additional paid-in capital
329,638
321,678
315,405
Retained earnings (accumulated
deficit)
53,010
(33,744
)
(147,583
)
Accumulated other comprehensive income
(loss)
572
(387
)
337
Total stockholders’ equity
384,094
288,418
169,029
Total liabilities and stockholders’
equity
$
863,975
$
737,067
$
627,452
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands, except per
share amounts)
Six Months Ended
July 3, 2021
June 27, 2020
Cash Flows from Operating
Activities:
Net income
$
86,754
$
41,962
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization
14,941
15,359
Amortization of deferred financing
fees
349
478
Stock-based compensation
7,515
4,036
Deferred income taxes
1,801
3,511
Impairment of long-lived assets
1,142
632
Other
1,971
1,239
Changes in operating assets and
liabilities:
Accounts receivable
(16,797
)
(4,433
)
Inventory
(81,188
)
46,723
Other current assets
(6,133
)
4,351
Accounts payable and accrued expenses
12,535
(52,781
)
Taxes payable
(2,401
)
9,393
Other
1,703
1,881
Net cash provided by operating
activities
22,192
72,351
Cash Flows from Investing
Activities:
Purchases of property and equipment
(25,894
)
(7,160
)
Additions of intangibles, net
(3,915
)
(3,769
)
Net cash used in investing activities
(29,809
)
(10,929
)
Cash Flows from Financing
Activities:
Repayments of long-term debt
(11,250
)
(7,500
)
Taxes paid in connection with employee
stock transactions
(1,700
)
(704
)
Proceeds from employee stock
transactions
2,149
1,397
Finance lease principal payment
(96
)
(91
)
Borrowings under revolving line of
credit
—
50,000
Repayments under revolving line of
credit
—
(50,000
)
Net cash used in financing activities
(10,897
)
(6,898
)
Effect of exchange rate changes on
cash
(996
)
428
Net (decrease) increase in cash
(19,510
)
54,952
Cash, beginning of period
253,283
72,515
Cash, end of period
$
233,773
$
127,467
YETI HOLDINGS, INC.
SELECTED FINANCIAL
DATA
Reconciliation of GAAP to
Non-GAAP Financial Information
(Unaudited) (In thousands
except per share amounts)
Three Months Ended
Six Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Operating income
$
72,425
$
46,533
$
112,474
$
62,695
Adjustments:
Non-cash stock-based compensation
expense(1)
4,097
2,181
7,515
4,036
Long-lived asset impairment(1)
851
632
1,142
632
Adjusted operating income
$
77,373
$
49,346
$
121,131
$
67,363
Net income
$
56,231
$
33,482
$
86,754
$
41,962
Adjustments:
Non-cash stock-based compensation
expense(1)
4,097
2,181
7,515
4,036
Long-lived asset impairment(1)
851
632
1,142
632
Tax impact of adjusting items(2)
(1,212
)
(688
)
(2,121
)
(1,143
)
Adjusted net income
$
59,967
$
35,607
$
93,290
$
45,487
Net sales
$
357,667
$
246,938
$
605,221
$
421,350
Operating income as a % of net sales
20.2
%
18.8
%
18.6
%
14.9
%
Adjusted operating income as a % of net
sales
21.6
%
20.0
%
20.0
%
16.0
%
Net income as a % of net sales
15.7
%
13.6
%
14.3
%
10.0
%
Adjusted net income as a % of net
sales
16.8
%
14.4
%
15.4
%
10.8
%
Net income per diluted share
$
0.63
$
0.38
$
0.98
$
0.48
Adjusted net income per diluted share
$
0.68
$
0.41
$
1.05
$
0.52
Weighted average common shares outstanding
- diluted
88,652
87,477
88,561
87,469
_________________________
(1)
These costs are reported in
SG&A expenses.
(2)
Represents the tax impact of
adjustments calculated at an expected statutory tax rate of 24.5%
for both the three months ended July 3, 2021 and June 27, 2020,
respectively. For both the six months ended July 3, 2021 and June
27, 2021, the tax rate used to calculate the tax impact of
adjustments was 24.5%.
(3)
Depreciation and amortization
expenses are reported in SG&A expenses and cost of goods
sold.
Fiscal 2021 OUTLOOK
Reconciliation of GAAP to
Non-GAAP Financial Information
(Unaudited)
(In thousands except per share
amounts)
Twelve Months Ended
Updated Fiscal 2021
Outlook
January 2, 2021
Low
High
Operating income
$
214,233
$
263,263
$
267,748
Adjustments:
Non-cash stock-based compensation
expense(1)
9,009
16,022
16,022
Long-lived asset impairment(1)
1,051
1,142
1,142
Business optimization expense(1)(2)
—
2,115
2,115
Adjusted operating income
$
224,293
$
282,542
$
287,027
Net income
$
155,801
$
199,686
$
203,148
Adjustments:
Non-cash stock-based compensation
expense(1)
9,009
16,022
16,022
Business optimization expense(1)(2)
—
2,115
2,115
Long-lived asset impairment(1)
1,051
1,142
1,142
Loss on prepayment of debt(3)
1,064
—
—
Tax impact of adjusting items(4)
(2,725
)
(4,723
)
(4,723
)
Adjusted net income
$
164,200
$
214,242
$
217,704
Net sales
$
1,091,721
$
1,375,568
$
1,397,403
Operating income as a % of net sales
19.6
%
19.1
%
19.2
%
Adjusted operating income as a % of net
sales
20.5
%
20.5
%
20.5
%
Net income as a % of net sales
14.3
%
14.5
%
14.5
%
Adjusted net income as a % of net
sales
15.0
%
15.6
%
15.6
%
Net income per diluted share
$
1.77
$
2.25
$
2.29
Adjusted net income per diluted share
$
1.87
$
2.42
$
2.46
Weighted average common shares outstanding
- diluted
87,847
88,649
88,649
_________________________
(1)
These costs are reported in SG&A
expenses.
(2)
Represents start-up costs, transition and
integration charges associated with our new distribution facility
in Memphis, Tennessee, and costs to exit our distribution facility
in Dallas, Texas.
(3)
Represents the accelerated amortization of
deferred financing fees resulting from the voluntary prepayments of
our term loan in Fiscal 2020.
(4)
Represents tax impact of adjustments
calculated at an expected statutory tax rate of 24.5% and 24.5% for
Fiscal 2020 and Fiscal 2021, respectively.
(5)
Depreciation and amortization expenses are
reported in SG&A expenses and cost of goods sold.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805005186/en/
Investor Relations Contact: Tom Shaw, 512-271-6332
Investor.relations@yeti.com Media Contact: YETI Holdings,
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