Net Sales Decreased 4%; Adjusted Net Sales
Increased 2% Gross Margin Continues to Expand Raises Low End of
Full Year 2023 Adjusted Net Sales Outlook Range Increases Full Year
2023 Adjusted EPS Outlook
YETI Holdings, Inc. (“YETI”) (NYSE: YETI) today announced its
financial results for the second quarter ended July 1, 2023.
With one full quarter of product recall activity, YETI is
providing an update on its product recalls and their impacts on its
financial performance. The results below should be read in
conjunction with the “Product Recall Updates” section of this press
release.
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. YETI’s
non-GAAP measures exclude the impact of the voluntary recalls, as
well as certain other items. 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,
“YETI continued to execute at a high level in the second quarter,
driven by brand strength, consideration and purchase in a dynamic
demand environment. We continue to see attractive trends in the
market with growing consumer demand for hydration solutions from
coolers to drinkware, broadening colorways and an increasing focus
on durable, reusable product. Our innovation continues to
successfully address these trends, and we are excited about the
pipeline of product we have in development across our product
families. In drinkware, we are seeing positive results from the
expansion of our bottle portfolio, our straw lid tumblers, the
growing range of our Yonder water bottles, and the successful
launch of our beverage bucket. In hard coolers, we saw strong
demand for our wheeled cooler offerings. On the soft cooler front,
we remain firmly on-track to not only bring our full lineup of soft
coolers and dry gear bags back to the market, but also expand some
of these offerings to new sizes as we move into the fourth
quarter.”
Mr. Reintjes continued, “As we look at our second quarter
performance, adjusted sales growth was above our expectations.
Importantly, our gross margin performance continues to strengthen
as we are now seeing greater benefit from lower container costs. We
continue to thoughtfully invest in the business to drive growth and
brand expansion, while maintaining a healthy level of
profitability. Finally, we have further strengthened our balance
sheet with a growing cash balance and an expanded credit facility,
providing increased flexibility across our capital allocation
priorities.”
Second Quarter 2023
Results
Sales decreased 4% to $402.6 million, compared to $420.0
million during the same period last year. Sales were unfavorably
impacted by $24.5 million due to a recall reserve adjustment. See
“Product Recall Updates” below for additional information on the
impact of the recalls referenced throughout this press release.
Adjusted sales, which exclude the unfavorable impact of
the recall reserve adjustment, increased 2% to $427.1 million.
Sales and adjusted sales for the second quarter of 2023 include
$12.5 million of sales related to gift card redemptions in
connection with recall remedies. Our 2023 results have also been
materially adversely impacted by the stop sale of the soft coolers
included in the recalls initiated during the first quarter of
2023.
- Direct-to-consumer (“DTC”) channel sales increased 1% to $226.4
million, compared to $224.8 million in the prior year quarter,
mainly due to growth in Drinkware, partially offset by an $8.1
million unfavorable impact related to the recall reserve
adjustment. Excluding the impact of the recall reserve adjustment,
DTC channel adjusted sales increased 4% to $234.5 million.
- Wholesale channel sales decreased 10% to $176.2 million,
compared to $195.2 million in the same period last year, and
include a $16.4 million unfavorable impact related to the recall
reserve adjustment. Excluding the unfavorable impact of the recall
reserve adjustment, wholesale channel adjusted sales decreased 1%
to $192.5 million. This decrease was primarily driven by a decline
in Coolers & Equipment due to the stop sale of the products
affected by the recalls, partially offset by Drinkware growth.
- Drinkware sales increased 8% to $233.4 million, compared to
$216.1 million in the prior year quarter, reflecting strong demand
for Rambler bottles, the introductions of our new Yonder bottles,
Rambler straw lid mugs, our new beverage bucket, and new seasonal
colorways.
- Coolers & Equipment sales decreased 19% to $156.6 million,
compared to $193.4 million in the same period last year, and
include a $24.5 million unfavorable impact related to the recall
reserve adjustment. Excluding the unfavorable impact of the recall
reserve adjustment, Coolers & Equipment adjusted sales
decreased 6% to $181.1 million. This decrease was primarily due to
the stop sale of the products affected by the recalls. These
impacts were partially offset by strong performance in hard
coolers, our soft coolers that were not impacted by the recalls,
and cargo.
Gross profit decreased 2% to $214.8 million, or 53.4% of
sales, compared to $219.1 million, or 52.2% of sales, in the second
quarter of 2022. Gross profit included a $19.4 million, or 150
basis points, unfavorable impact related to the recall reserve
adjustment. Gross profit was positively impacted by lower inbound
freight and lower product costs, partially offset by other costs,
including higher customization costs and the unfavorable impact of
foreign currency exchange rates.
Adjusted gross profit, which excludes the unfavorable
impact related to the recall reserve adjustment, increased $15.2
million to $234.3 million, or 54.9% of adjusted sales, compared to
$219.1 million, or 52.2% of adjusted sales, in the second quarter
of 2022.
Selling, general, and administrative (“SG&A”)
expenses increased 9% to $164.5 million, compared to $150.8
million in the second quarter of 2022. SG&A expenses included a
$10.7 million favorable impact related to the recall reserve
adjustment. As a percentage of sales, SG&A expenses increased
500 basis points to 40.9% from 35.9% in the prior year period. This
increase was primarily due to higher non-variable expenses driven
by higher employee costs, including incentive compensation and
investments in headcount to support future growth, marketing
expenses, and warehousing costs. Variable expenses increased
primarily due to the increased mix of our growing Amazon
Marketplace business.
Adjusted SG&A expenses, which exclude certain items
including the unfavorable impact related to the recall reserve
adjustment, increased 15% to $167.2 million, compared to $145.3
million in the second quarter of 2022. As a percentage of adjusted
sales, adjusted SG&A expenses increased 450 basis points to
39.1% from 34.6% in the prior year period.
Operating income decreased 26% to $50.3 million, or 12.5%
of sales, compared to $68.3 million, or 16.3% of sales during the
prior year quarter, and includes an $8.7 million unfavorable impact
primarily from the recall reserve adjustment.
Adjusted operating income decreased 9% to $67.1 million,
or 15.7% of adjusted sales, compared to $73.8 million, or 17.6% of
adjusted sales during the same period last year.
Net income, which includes the unfavorable impact from
the recall reserve adjustment, decreased 18% to $38.1 million, or
9.5% of sales, compared to $46.3 million, or 11.0% of sales in the
prior year quarter; Net income per diluted share decreased
17% to $0.44, compared to $0.53 in the prior year quarter.
Adjusted net income decreased 9% to $49.8 million, or
11.7% of adjusted sales, compared to $54.8 million, or 13.0% of
adjusted sales in the prior year quarter; Adjusted net income
per diluted share decreased 10% to $0.57, compared to $0.63 per
diluted share in the prior year quarter.
Six Months Results
Sales decreased 1% to $705.4 million, compared to $713.7
million in the prior year. Sales were unfavorably impacted by $24.5
million due to a recall reserve adjustment. See “Product Recall
Updates” below for additional information on the impact of the
recalls referenced throughout this press release.
Adjusted sales, which exclude the unfavorable impact of
the recall reserve adjustment, increased 2% to $729.9 million.
Sales and adjusted net sales for the first half of 2023 include
$12.5 million of sales related to gift card redemptions in
connection with recall remedies. Our 2023 sales have also been
materially adversely impacted by the stop sale of the soft coolers
included in the recalls initiated during the first quarter of
2023.
- DTC channel sales increased 3% to $393.4 million, compared to
$380.8 million in the prior year period, due to growth in both
Drinkware and Coolers & Equipment, partially offset by an $8.1
million unfavorable impact related to the recall reserve
adjustment. Excluding the impact of the recall reserve adjustment,
DTC channel adjusted sales increased 5% to $401.5 million.
- Wholesale channel sales decreased 6% to $312.0 million,
compared to $332.9 million in the same period last year, and
include a $16.4 million unfavorable impact related to the recall
reserve adjustment. Excluding the unfavorable impact of the recall
reserve adjustment, wholesale channel adjusted sales decreased 1%
to $328.4 million. This decrease was primarily driven by a decline
in Coolers & Equipment due to the stop sale of the products
affected by the recalls, partially offset by Drinkware growth.
- Drinkware sales increased 6% to $423.7 million, compared to
$400.1 million in the prior year period, reflecting strong demand
for Rambler bottles, the introductions of our new Yonder bottles,
Rambler straw lid mugs, our new beverage bucket, and new seasonal
colorways.
- Coolers & Equipment sales decreased 12% to $261.0 million,
compared to $296.4 million in the same period last year, and
include a $24.5 million unfavorable impact related to the recall
reserve adjustment. Excluding the unfavorable impact of the recall
reserve adjustment, Coolers & Equipment adjusted sales
decreased 4% to $285.5 million. This decrease was primarily due to
the stop sale of the products affected by the recalls. These
impacts were partially offset by strong performance in hard
coolers, our soft coolers that were not impacted by the recalls,
cargo, and bags.
Gross profit increased 1% to $376.7 million, or 53.4% of
sales, compared to $374.0 million, or 52.4% of sales in the prior
year. Gross profit included an $18.2 million, or 70 basis points,
unfavorable impact primarily related to the recall reserve
adjustment. Gross profit was positively impacted by lower inbound
freight and lower product costs, partially offset by other costs,
including higher customization costs and the unfavorable impact of
foreign currency exchange rates.
Adjusted gross profit, which excludes the unfavorable
impact primarily related to the recall reserve adjustment,
increased $21.0 million to $394.9 million, or 54.1% of adjusted
sales, compared to $374.0 million, or 52.4% of adjusted sales, in
the prior year.
SG&A expenses increased 14% to $311.3 million,
compared to $272.3 million in the prior year. SG&A expenses
included a $10.5 million favorable impact primarily related to the
recall reserve adjustment. As a percentage of sales, SG&A
expenses increased 590 basis points to 44.1% from 38.2% in the
prior year period. This increase was primarily due to higher
non-variable expenses driven by higher employee costs, including
incentive compensation and investments in headcount to support
future growth, warehousing costs, and marketing expenses. Variable
expenses increased primarily due to the increased mix of our
growing Amazon Marketplace business.
Adjusted SG&A expenses, which exclude certain items
including the unfavorable impact related to the recall reserve
adjustment, increased 17% to $306.1 million, compared to $262.1
million in the prior year. As a percentage of adjusted sales,
adjusted SG&A expenses increased 520 basis points to 41.9% from
36.7% in the prior year period.
Operating income decreased 36% to $65.4 million, or 9.3%
of sales, compared to $101.6 million, or 14.2% of sales during the
prior year, and includes a $7.7 million unfavorable impact
primarily from the recall reserve adjustment.
Adjusted operating income decreased 21% to $88.8 million,
or 12.2% of adjusted sales, compared to $111.9 million, or 15.7% of
adjusted sales during the same period last year.
Net income, which includes the unfavorable impact from
the recall reserve adjustment, decreased 32% to $48.6 million, or
6.9% of sales, compared to $71.9 million, or 10.1% of sales in the
prior year; Net income per diluted share decreased 32% to
$0.56, compared to $0.82 per diluted share in the prior year.
Adjusted net income decreased 22% to $65.3 million, or
8.9% of adjusted sales, compared to $83.3 million, or 11.7% of
adjusted sales in the prior year period; Adjusted net income per
diluted share decreased 21% to $0.75, compared to $0.95 per
diluted share in the same period last year.
Balance Sheet and Other
Highlights
Cash increased to $223.1 million, compared to $92.0
million at the end of the second quarter of 2022.
Inventory decreased 34% to $322.0 million, compared to
$490.0 million at the end of the prior year quarter. On a
sequential basis, inventory decreased $25.0 million, making this
the fourth consecutive quarter with a sequential decline in our
inventory balance.
Total debt, excluding finance leases and unamortized
deferred financing fees, was $84.4 million, compared to $101.3
million at the end of the second quarter of 2022. During the first
quarter of 2023, we made mandatory debt payments of $5.6 million.
During the second quarter of 2023, we amended our credit facility
to, among other matters, extend its maturity to June 2028, increase
the revolving credit facility from $150.0 million to $300.0 million
and refinance the term loan.
Product Recall Updates
As previously disclosed, in February 2023 we proposed a
voluntary recall of our Hopper® M30 Soft Cooler, Hopper® M20 Soft
Backpack Cooler, and SideKick Dry gear case (the “affected
products”). As a result, we established reserves for unsalable
inventory on-hand and estimated product recall expenses as of
December 31, 2022.
In March 2023, we initiated voluntary recalls of the affected
products. During the second quarter of 2023, we began processing
recall returns and claims, and based on such experience and trends,
we reevaluated our assumptions and adjusted our estimated recall
expense reserve. These trends included higher than anticipated
elections to receive gift cards in lieu of product replacement
remedies, variations in individual product participation rates, and
lower logistics costs than previously estimated. As a result, we
updated our prior recall reserve assumptions, which increased the
estimated recall expense reserve by $8.5 million. However, the
overall consumer recall participation rate has remained consistent
with our expectations.
During the first half of 2023, we recorded the following impacts
as a result of the recall reserve adjustment and other incurred
costs. These impacts are excluded from our non-GAAP results:
- Sales - a reduction to sales for higher estimated
future recall remedies (i.e., estimated gift card elections) of
$24.5 million for the three and six months ended July 1, 2023, of
which $8.1 million and $16.4 million was allocated to our DTC and
wholesale channels, respectively. These amounts were allocated
based on the historical channel sell-in basis of the affected
products;
- Cost of goods sold - a benefit of $5.1 million
and $5.0 million primarily related to lower estimated costs of
future product replacement remedy elections and logistics costs for
the three and six months ended July 1, 2023, respectively, and a
$1.3 million favorable impact from an inventory reserve adjustment
for the six months ended July 1, 2023; and
- SG&A - a benefit of $10.7 million and $10.5
million primarily related to lower estimated other recall-related
costs, including logistics costs, for the three and six months
ended July 1, 2023, respectively.
In addition, our sales have also been materially adversely
impacted by the stop sale of the affected products initiated during
the first quarter of 2023. We have developed solutions to address
the potential safety concern of the affected products and intend to
re-introduce and sell the redesigned products to consumers in the
fourth quarter of 2023.
Updated 2023 Outlook
Mr. Reintjes concluded, “We have narrowed our full year sales
outlook to the higher end of our prior range inclusive of the
favorable impact of recall-related gift card redemptions during the
second quarter. This outlook includes an expected return to
double-digit growth in the fourth quarter supported by the
reintroduction and expansion of the products impacted by the recall
and our continued success driving demand in newer product families
and line extensions. We have also increased our gross margin
outlook for the year driven by our first half performance,
supporting an increase in our bottom-line outlook. And finally, we
remain disciplined in our capital allocation approach as our cash
generation continues to strengthen our balance sheet.”
For 2023, YETI expects:
- Adjusted sales to increase between 4% and 5% (versus the
previous outlook of between 3% and 5%) with adjusted sales growth
weighted to the second half of the year. Expected adjusted sales
are inclusive of an approximate 500 basis points unfavorable impact
on our growth rate from the stop sale of the products affected by
the recalls. Expected adjusted sales also include $12.5 million of
sales from recall-related gift card redemptions in the second
quarter of 2023;
- Adjusted operating income as a percentage of adjusted
sales between 15.5% and 16.0% (versus the previous outlook of
between 15.0% and 15.5%). The benefit from the adjusted gross
margin expansion is expected to be more than offset by the
deleverage from increases in adjusted SG&A expenses due to
strategic investments and the unfavorable topline impact from the
stop sale of the products affected by the recalls;
- An effective tax rate of approximately 25.1% (versus the
previous outlook of 24.9%; compared to 22.8% in the prior year
period);
- Adjusted net income per diluted share between $2.23 and
$2.32 (versus the previous outlook of between $2.12 and $2.23),
reflecting a 2% to 6% decrease, with earnings growth beginning in
the fourth quarter of the year;
- Diluted weighted average shares outstanding of
approximately 87.3 million (versus the previous outlook of 87.2
million); and
- Capital expenditures of approximately $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 2023
financial results is scheduled for today, August 10, 2023, at 8:00
a.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial 833-816-1399
(international callers, please dial 412-317-0492) 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. A replay will be available through
August 24, 2023 by dialing 844-512-2921 (international callers,
412-317-6671). The accompanying access code for this call is
10180639.
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 bags and apparel, 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 you. 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 net sales, adjusted gross profit, adjusted
SG&A expenses, adjusted operating income, adjusted net income,
adjusted net income per diluted share as well as adjusted gross
profit and adjusted SG&A expenses, adjusted operating income
and adjusted net income as a percentage of adjusted 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 non-GAAP
financial measures provide meaningful supplemental information
regarding the underlying operating performance of our business and
are appropriate to enhance an overall understanding of our
financial performance. 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.
YETI does not provide a reconciliation of forward-looking
non-GAAP to GAAP financial measures because such reconciliations
are not available without unreasonable efforts. This is due to the
inherent difficulty in forecasting with reasonable certainty
certain amounts that are necessary for such reconciliation,
including in particular the impact of the voluntary recalls and
realized and unrealized foreign currency gains and losses reported
within other expense. For the same reasons, we are unable to
forecast with reasonable certainty all deductions and additions
needed in order to provide a forward-looking GAAP financial
measures at this time. The amount of these deductions and additions
may be material and, therefore, could result in forward-looking
GAAP financial measures being materially different or less than
forward-looking non-GAAP financial measures. See “Forward-looking
statements” 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 made
relating to our future expectations relating to our voluntary
recalls, demand and market conditions, pricing conditions, expected
sales, gross margin, operating expense and cash flow levels, and
our expectations for opportunity, growth, and new products,
including those set forth in the quotes from YETI’s President and
CEO, and the 2023 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) economic conditions or consumer
confidence in future economic conditions, including the ongoing
conflict in Ukraine, and inflationary conditions resulting in
rising prices; (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 Quarterly Report on Form 10-Q for the three months
ended April 1, 2023, 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 global business and economic environment,
including the ongoing conflict in Ukraine.
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended
Six Months Ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Net sales
$
402,563
$
420,042
$
705,359
$
713,670
Cost of goods sold
187,725
200,943
328,651
339,711
Gross profit
214,838
219,099
376,708
373,959
Selling, general, and administrative
expenses
164,507
150,753
311,279
272,323
Operating income
50,331
68,346
65,429
101,636
Interest expense, net
(731
)
(960
)
(1,325
)
(1,726
)
Other income (expense)
1,244
(5,823
)
1,250
(4,921
)
Income before income taxes
50,844
61,563
65,354
94,989
Income tax expense
(12,773
)
(15,311
)
(16,719
)
(23,078
)
Net income
$
38,071
$
46,252
$
48,635
$
71,911
Net income per share
Basic
$
0.44
$
0.54
$
0.56
$
0.83
Diluted
$
0.44
$
0.53
$
0.56
$
0.82
Weighted-average common shares
outstanding
Basic
86,677
86,165
86,603
86,766
Diluted
87,196
86,860
87,141
87,542
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except per
share amounts)
July 1, 2023
December 31,
2022
July 2, 2022
ASSETS
Current assets
Cash
$
223,136
$
234,741
$
91,994
Accounts receivable, net
131,599
79,446
94,251
Inventory
321,955
371,412
490,013
Prepaid expenses and other current
assets
45,234
33,321
40,767
Total current assets
721,924
718,920
717,025
Property and equipment, net
131,809
124,587
127,309
Operating lease right-of-use assets
57,659
55,406
56,460
Goodwill
54,293
54,293
54,293
Intangible assets, net
110,929
99,429
97,757
Other assets
8,825
24,130
2,514
Total assets
$
1,085,439
$
1,076,765
$
1,055,358
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
143,435
$
140,818
$
204,091
Accrued expenses and other current
liabilities
162,170
211,399
129,923
Taxes payable
6,199
15,289
17,038
Accrued payroll and related costs
15,170
4,847
4,275
Operating lease liabilities
11,775
12,076
11,494
Current maturities of long-term debt
6,167
24,611
24,587
Total current liabilities
344,916
409,040
391,408
Long-term debt, net of current portion
81,106
71,741
83,575
Operating lease liabilities,
non-current
57,269
55,649
56,269
Other liabilities
14,942
13,858
24,245
Total liabilities
498,233
550,288
555,497
Commitments and contingencies
Stockholders’ Equity
Common stock
884
881
878
Treasury stock, at cost
(100,025
)
(100,025
)
(100,025
)
Additional paid-in capital
371,348
357,490
346,675
Retained earnings
317,186
268,551
250,769
Accumulated other comprehensive (loss)
income
(2,187
)
(420
)
1,564
Total stockholders’ equity
587,206
526,477
499,861
Total liabilities and stockholders’
equity
$
1,085,439
$
1,076,765
$
1,055,358
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands, except per
share amounts)
Six Months Ended
July 1, 2023
July 2, 2022
Cash Flows from Operating
Activities:
Net income
$
48,635
$
71,911
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation and amortization
23,197
18,489
Amortization of deferred financing
fees
276
310
Stock-based compensation
14,113
10,221
Deferred income taxes
15,309
344
Loss on modification and extinguishment of
debt
330
—
Product recalls
8,538
—
Other
(2,792
)
3,723
Changes in operating assets and
liabilities:
Accounts receivable
(51,941
)
15,542
Inventory
48,830
(174,289
)
Other current assets
(11,468
)
(10,260
)
Accounts payable and accrued expenses
(54,109
)
(13,100
)
Taxes payable
(9,112
)
2,544
Other
(1,025
)
1
Net cash provided by (used in) operating
activities
28,781
(74,564
)
Cash Flows from Investing
Activities:
Purchases of property and equipment
(25,068
)
(26,022
)
Additions of intangibles, net
(6,849
)
(5,803
)
Net cash used in investing activities
(31,917
)
(31,825
)
Cash Flows from Financing
Activities:
Repayments of long-term debt
(5,625
)
(11,250
)
Payments of deferred financing fees
(2,824
)
—
Taxes paid in connection with employee
stock transactions
(1,825
)
(1,280
)
Proceeds from employee stock
transactions
1,573
—
Finance lease principal payment
(1,236
)
(1,212
)
Repurchase of common stock
—
(100,025
)
Net cash used in financing activities
(9,937
)
(113,767
)
Effect of exchange rate changes on
cash
1,468
(39
)
Net decrease in cash
(11,605
)
(220,195
)
Cash, beginning of period
234,741
312,189
Cash, end of period
$
223,136
$
91,994
YETI HOLDINGS, INC.
Supplemental Financial
Information
Reconciliation of GAAP to
Non-GAAP Financial Information
(Unaudited) (In thousands
except per share amounts)
Three Months Ended
Six Months Ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Net sales
$
402,563
$
420,042
$
705,359
$
713,670
Product recall(1)
24,490
—
24,506
—
Adjusted net sales
$
427,053
$
420,042
$
729,865
$
713,670
Gross profit
$
214,838
$
219,099
$
376,708
$
373,959
Product recall(1)
19,438
—
18,201
—
Adjusted gross profit
$
234,276
$
219,099
$
394,909
$
373,959
Selling, general, and administrative
expenses
$
164,507
$
150,753
$
311,279
$
272,323
Non-cash stock-based compensation
expense(2)
(7,338
)
(5,467
)
(14,113
)
(10,221
)
Product recall(1)
10,716
—
10,549
—
Organizational realignment costs(3)
(702
)
—
(1,582
)
—
Adjusted selling, general, and
administrative expenses
$
167,183
$
145,286
$
306,133
$
262,102
Gross margin
53.4
%
52.2
%
53.4
%
52.4
%
Adjusted gross margin
54.9
%
52.2
%
54.1
%
52.4
%
SG&A expenses as a % of net sales
40.9
%
35.9
%
44.1
%
38.2
%
Adjusted SG&A expenses as a % of
adjusted net sales
39.1
%
34.6
%
41.9
%
36.7
%
_________________________
(1)
Represents adjustments and charges
associated with recalls. These include a reduction to sales for
higher estimated future recall remedies (i.e., estimated gift card
elections) of $24.5 million for the three and six months ended July
1, 2023; a benefit of $5.1 million and $5.0 million primarily
related to lower estimated costs of future product replacement
remedy elections and logistics costs for the three and six months
ended July 1, 2023, respectively, and a $1.3 million favorable
impact from an inventory reserve adjustment for the six months
ended July 1, 2023; and a benefit of $10.7 million and $10.5
million primarily related to lower estimated other recall-related
costs, including logistics costs, for the three and six months
ended July 1, 2023, respectively.
(2)
These costs are reported in SG&A
expenses.
(3)
Represents employee severance costs in
connection with strategic organizational realignments.
YETI HOLDINGS, INC.
Supplemental Financial
Information
Reconciliation of GAAP to
Non-GAAP Financial Information
(Unaudited) (In thousands
except per share amounts)
Three Months Ended
Six Months Ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Operating income
$
50,331
$
68,346
$
65,429
$
101,636
Adjustments:
Non-cash stock-based compensation
expense(1)
7,338
5,467
14,113
10,221
Product recalls(2)
8,722
—
7,652
—
Organizational realignment costs(3)
702
—
1,582
—
Adjusted operating income
$
67,093
$
73,813
$
88,776
$
111,857
Net income
$
38,071
$
46,252
$
48,635
$
71,911
Adjustments:
Non-cash stock-based compensation
expense(1)
7,338
5,467
14,113
10,221
Product recalls(2)
8,722
—
7,652
—
Organizational realignment costs(3)
702
—
1,582
—
Other income(4)
(1,245
)
5,823
(1,251
)
4,921
Tax impact of adjusting items(5)
(3,802
)
(2,766
)
(5,414
)
(3,710
)
Adjusted net income
$
49,786
$
54,776
$
65,317
$
83,343
Net sales
$
402,563
$
420,042
$
705,359
$
713,670
Adjusted net sales
$
427,053
$
420,042
$
729,865
$
713,670
Operating income as a % of net sales
12.5
%
16.3
%
9.3
%
14.2
%
Adjusted operating income as a % of net
sales
15.7
%
17.6
%
12.2
%
15.7
%
Net income as a % of net sales
9.5
%
11.0
%
6.9
%
10.1
%
Adjusted net income as a % of net
sales
11.7
%
13.0
%
8.9
%
11.7
%
Net income per diluted share
$
0.44
$
0.53
$
0.56
$
0.82
Adjusted net income per diluted share
$
0.57
$
0.63
$
0.75
$
0.95
Weighted average common shares outstanding
- diluted
87,196
86,860
87,141
87,542
_________________________
(1)
These costs are reported in SG&A
expenses.
(2)
Represents adjustments and charges
associated with recalls. These include a reduction to sales for
higher estimated future recall remedies (i.e., estimated gift card
elections) of $24.5 million for the three and six months ended July
1, 2023; a benefit of $5.1 million and $5.0 million primarily
related to lower estimated costs of future product replacement
remedy elections and logistics costs for the three and six months
ended July 1, 2023, respectively, and a $1.3 million favorable
impact from an inventory reserve adjustment for the six months
ended July 1, 2023; and a benefit of $10.7 million and $10.5
million primarily related to lower estimated other recall-related
costs, including logistics costs, for the three and six months
ended July 1, 2023, respectively.
(3)
Represents employee severance costs in
connection with strategic organizational realignments.
(4)
Other income substantially consists of
realized and unrealized foreign currency gains and losses on
intercompany balances that arise in the ordinary course of
business. For the three and six months ended July 1, 2023, other
income includes the loss on modification and extinguishment of debt
of $0.3 million related to the amendment of our credit facility in
the second quarter of 2023.
(5)
Represents the tax impact of adjustments
calculated at an expected statutory tax rate of 24.5% for each of
the three and six months ended July 1, 2023 and July 2, 2022.
YETI HOLDINGS, INC.
Supplemental Financial
Information
Reconciliation of GAAP to
Non-GAAP Financial Measures
(Unaudited) (In
thousands)
Three Months Ended July 1,
2023
Three Months Ended July 2,
2022
Net Sales
Product Recalls(1)
Adjusted Net Sales
Net Sales
Product Recalls(1)
Adjusted Net Sales
Channel
Wholesale
$
176,175
$
16,358
$
192,533
$
195,195
$
—
$
195,195
Direct-to-consumer
226,388
8,132
234,520
224,847
—
224,847
Total
$
402,563
$
24,490
$
427,053
$
420,042
$
—
$
420,042
Category
Coolers & Equipment
$
156,610
$
24,490
$
181,100
$
193,415
$
—
$
193,415
Drinkware
233,417
—
233,417
216,070
—
216,070
Other
12,536
—
12,536
10,557
—
10,557
Total
$
402,563
$
24,490
$
427,053
$
420,042
$
—
$
420,042
Six Months Ended July 1,
2023
Six Months Ended July 2,
2022
Net Sales
Product Recalls(1)
Adjusted Net Sales
Net Sales
Product Recalls(1)
Adjusted Net Sales
Channel
Wholesale
$
312,004
$
16,374
$
328,378
$
332,861
$
—
$
332,861
Direct-to-consumer
393,355
8,132
401,487
380,809
—
380,809
Total
$
705,359
$
24,506
$
729,865
$
713,670
$
—
$
713,670
Category
Coolers & Equipment
$
260,964
$
24,506
$
285,470
$
296,373
$
—
$
296,373
Drinkware
423,704
—
423,704
400,068
—
400,068
Other
20,691
—
20,691
17,229
—
17,229
Total
$
705,359
$
24,506
$
729,865
$
713,670
$
—
$
713,670
_________________________
(1)
Represents adjustments and charges
associated with recalls. These include a reduction to sales for
higher estimated future recall remedies (i.e., estimated gift card
elections) of $24.5 million for the three and six months ended July
1, 2023, of which $8.1 million and $16.4 million was allocated to
our DTC and wholesale channels, respectively. These amounts were
allocated based on the historical channel sell-in basis of the
products affected by the recalls
YETI HOLDINGS, INC.
2023 Outlook
(Unaudited) (In thousands
except per share amounts)
2022
Updated 2023 Outlook
Low
High
Adjusted net sales
$
1,633,637
$
1,698,983
$
1,715,319
Adjusted operating income
$
274,297
$
263,342
$
274,451
Adjusted operating income as a % of net
sales
16.8
%
15.5
%
16.0
%
Adjusted net income
$
205,702
$
194,472
$
202,793
Adjusted net income as a % of net
sales
12.6
%
11.4
%
11.8
%
Adjusted net income per diluted share
$
2.36
$
2.23
$
2.32
Weighted average common shares outstanding
- diluted
87,195
87,337
87,337
YETI HOLDINGS, INC.
Supplemental Financial
Information
Reconciliation of GAAP to
Non-GAAP Financial Information
(Unaudited) (In
thousands)
Twelve Months Ended
December 31,
2022
Net sales
$
1,595,222
Product recall(1)
38,415
Adjusted net sales
$
1,633,637
Operating income
$
126,361
Adjustments:
Non-cash stock-based compensation
expense(2)
17,799
Long-lived asset impairment(2)
1,229
Product recalls(1)
128,908
Adjusted operating income
$
274,297
Net income
$
89,693
Adjustments:
Non-cash stock-based compensation
expense(2)
17,799
Long-lived asset impairment(2)
1,229
Product recalls(1)
128,908
Other expense(3)
5,718
Tax impact of adjusting items(4)
(37,645
)
Adjusted net income
$
205,702
Operating income as a % of net sales
7.9
%
Adjusted operating income as a % of net
sales
16.8
%
Net income as a % of net sales
5.6
%
Adjusted net income as a % of net
sales
12.6
%
Net income per diluted share
$
1.03
Adjusted net income per diluted share
$
2.36
Weighted average common shares outstanding
- diluted
87,195
_________________________
(1)
Represents adjustments and charges
associated with the proposed voluntary recalls. These include a
reduction to net sales for estimated future product returns and
recall remedies of $38.4 million; recorded costs in cost of goods
sold primarily related to inventory write-offs for unsalable
inventory on-hand and estimated costs of future product replacement
remedies and logistics costs of $58.6 million; and operating
expenses of $31.9 million associated with estimated other
recall-related costs.
(2)
These costs are reported in SG&A
expenses.
(3)
Other (income) expense substantially
consists of realized and unrealized foreign currency gains and
losses on intercompany balances that arise in the ordinary course
of business.
(4)
Represents the tax impact of adjustments
calculated at an expected statutory tax rate of 24.5%.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810451433/en/
Investor Relations Contact: Tom Shaw, 512-271-6332
Investor.relations@yeti.com
Media Contact: YETI Holdings, Inc. Media Hotline
Media@yeti.com
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