YETI Holdings, Inc. (“YETI” or the “Company”) (NYSE: YETI) today
announced preliminary net sales results for the fourth quarter and
fiscal year ended December 29, 2018 and updated fiscal year 2018
outlook.
Preliminary Fourth Quarter Fiscal 2018 as Compared to Fourth
Quarter Fiscal 2017
- Net sales increased 19% to $241.2
million. Net sales in the direct-to-consumer (“DTC”) channel
increased 45% to $110.5 million, and net sales for the
wholesale channel increased 4% to $130.7 million.
- Drinkware net sales increased 24% to
$143.5 million, and Coolers & Equipment net sales
increased 10% to $91.2 million.
Preliminary Fiscal 2018 as Compared to Fiscal 2017
- Net sales increased 22% to $778.8
million. Net sales in the DTC channel increased 48% to $287.4
million, and net sales for the wholesale channel increased 10% to
$491.4 million.
- Drinkware net sales increased 37% to
$424.2 million, and Coolers & Equipment net sales increased 6%
to $331.2 million.
Updated Fiscal 2018 Outlook
- Operating income as a percentage of
net sales is now expected to be 12.9% to 13.1% (versus the
previous outlook of 12.8% to 13.1%), as compared to 10.0% last
year.
- Adjusted Operating Income as a
percentage of net sales is now expected to be 15.7% to 15.9%
(versus the previous outlook of 15.2% to 15.5%), as compared to
11.9% last year.
- Net income per diluted share is
now expected to be $0.67 to $0.69 (versus the previous outlook of
$0.60 to $0.64), as compared to $0.19 last year, representing an
increase of 253% and 263%, respectively. This assumes an effective
tax rate of approximately 17.5% and approximately 83 million
diluted weighted average number of shares outstanding.
- Adjusted Net Income per diluted
share is now expected to be $0.88 to $0.90 (versus the previous
outlook of $0.79 to $0.82), as compared to $0.28 last year,
representing an increase of 214% and 221%, respectively.
- Adjusted EBITDA is now expected
to be $147 million to $149 million (versus the previous outlook of
$141 million to $144 million), as compared to $97.5
million last year, representing an increase of 51% and 52%,
respectively.
- Capital expenditures are still
expected to be $21 million to $24 million, as compared to $42.2
million last year.
Matt Reintjes, President and Chief Executive Officer of YETI
Holdings, Inc., commented, “We delivered outstanding
performance in all aspects of our business during the fourth
quarter and fiscal year 2018. Sales and operating margin
soundly exceeded our expectations and as a
result, we are raising our fiscal 2018 outlook. We
are excited about the strong growth across categories and
geographies and the multiple opportunities that lie ahead,
which include accelerating brand awareness, delivering
product innovation, driving our direct-to-consumer
business and expanding our presence globally. We believe
these initiatives combined with our operational excellence
will continue to deliver strong and
consistently profitable growth.”
Reported results are unaudited, preliminary, and reflect
management’s estimates based on information available as of the
date of this press release and is not a comprehensive statement of
the Company’s financial results for the fourth quarter and year
ended December 29, 2018. The Company’s actual results for fourth
quarter fiscal 2018 and fiscal 2018 may differ from these
preliminary results due to the completion of the Company’s
financial closing procedures, final adjustments and audit
process.
As previously announced, the Company will be participating at
the 21st Annual ICR Conference held at the JW Marriott Orlando
Grande Lakes in Orlando, FL, on Monday, January 14, 2019, with a
fireside chat presentation at 1:00 pm Eastern Time. The audio
portion of the fireside chat presentation will be webcast live over
the internet and can be accessed at http://www.investors.yeti.com.
An online archive will be available for a period of 90 days
following the presentation.
Non-GAAP Financial Measures
We refer to certain financial measures that are not recognized
under accounting principles generally accepted in the United States
of America (“GAAP”). Please see “Note Regarding Non-GAAP Financial
Information” and “Reconciliation of GAAP to Non-GAAP Financial
Information” below for additional information and a reconciliation
of the non-GAAP financial measures to the most comparable GAAP
financial measures.
About YETI Holdings, Inc.
YETI is a rapidly growing designer, marketer, retailer, and
distributor of a variety of innovative, branded, premium products
to a wide-ranging customer base. Our brand promise is to ensure
each YETI product delivers exceptional performance and durability
in any environment, whether in the remote wilderness, at the beach,
or anywhere else life takes you. We bring our products to market
through a diverse and powerful omni-channel strategy, comprised of
our select group of national and independent retail partners and
our DTC channel. By consistently delivering high-performing
products, we have built a following of engaged brand loyalists
throughout the United States, Canada, Australia, and elsewhere,
ranging from serious outdoor enthusiasts to individuals who simply
value products of uncompromising quality and design. Our
relationship with customers continues to thrive and deepen as a
result of our innovative new product introductions, expansion and
enhancement of existing product families, and multifaceted branding
activities.
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 expected financial
results and consistent profitable growth are forward-looking
statements, including those set forth in the quote from the
Company’s President and CEO, and the Fiscal 2018 preliminary
results and outlook provided herein. 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: our ability to maintain
and strengthen our brand and generate and maintain ongoing demand
for our products; our ability to successfully design and develop
new products; our ability to effectively manage our growth; our
ability to expand into additional consumer markets, and our success
in doing so; the success of our international expansion plans; our
ability to compete effectively in the outdoor and recreation market
and protect our brand; problems with, or loss of, our third-party
contract manufacturers and suppliers, or an inability to obtain raw
materials; fluctuations in the cost and availability of raw
materials, equipment, labor, and transportation and subsequent
manufacturing delays or increased costs; our ability to accurately
forecast demand for our products and our results of operations; our
relationships with our independent retail partners, who account for
a significant portion of our sales; the impact of natural disasters
and failures of our information technology on our operations and
the operations of our manufacturing partners; our ability to
attract and retain skilled personnel and senior management, and to
maintain the continued efforts of our management and key employees;
the impact of our indebtedness on our ability to invest in the
ongoing needs of our business; and other risks and uncertainties
listed in YETI’s filings with the United States Securities and
Exchange Commission (the “SEC”), including under Item 1A. Risk
Factors and elsewhere in YETI’s quarterly report on Form 10-Q for
the quarter ended September 29, 2018 filed with the SEC on December
6, 2018, as such risk factors may be amended, supplemented or
superseded from time to time by other reports the Company 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.
Note Regarding Non-GAAP Financial Information
This press release includes financial measures that are not
calculated in accordance with GAAP, including Adjusted Operating
Income, Adjusted Net Income, Adjusted Net Income per diluted share,
and Adjusted EBITDA.
Adjusted Operating Income and Adjusted Net Income are defined as
operating income and net income, respectively, adjusted for
non-cash stock-based compensation expense, asset impairment
charges, investments in new retail locations and international
market expansion, transition to Cortec Group Fund V, L.P. and its
affiliates (“Cortec”) majority ownership, transition to the ongoing
senior management team, and transition to a public company, and, in
the case of Adjusted Net Income, also adjusted for early
extinguishment of debt and the tax impact of all adjustments.
Adjusted Net Income per share is calculated using Adjusted Net
Income, as defined above, and diluted weighted average shares
outstanding. We define Adjusted EBITDA as net income before
interest expense, net, provision (benefit) for income taxes and
depreciation and amortization, adjusted for the impact of certain
other items, including: non-cash stock-based compensation expense;
asset impairment charges; early extinguishment of debt; investments
in new retail locations and international market expansion;
transition to Cortec majority ownership; transition to the ongoing
senior management team; and transition to public company. The
expenses incurred related to these transitional events include:
management fees and contingent consideration related to the
transition to Cortec majority ownership; severance, recruiting, and
relocation costs related to the transition to our ongoing senior
management team; consulting fees, recruiting fees, salaries and
travel costs related to members of our Board of Directors, fees
associated with Sarbanes-Oxley Act compliance, and incremental
audit and legal fees in connection with our transition to a public
company. All of these transitional costs are reported in selling,
general, and administrative (“SG&A”) expenses.
Adjusted Operating Income, Adjusted Net Income, Adjusted Net
Income per diluted share, and Adjusted EBITDA are not defined under
GAAP and may not be comparable to similarly titled measures
reported by other entities. We use these non-GAAP measures, along
with GAAP measures, as a measure of profitability. These measures
help us compare our performance to other companies by removing the
impact of our capital structure; the effect of operating in
different tax jurisdictions; the impact of our asset base, which
can vary depending on the book value of assets and methods used to
compute depreciation and amortization; the effect of non-cash
stock-based compensation expense, which can vary based on plan
design, share price, share price volatility, and the expected lives
of equity instruments granted; as well as certain expenses related
to what we believe are events of a transitional nature. We also
disclose Adjusted Operating Income, Adjusted Net Income, and
Adjusted EBITDA as a percentage of net sales to provide a measure
of relative profitability.
The Company believes that these non-GAAP measures, when reviewed
in conjunction with GAAP financial measures, and not in isolation
or as substitutes for analysis of our results of operations under
GAAP, are useful to investors as they are widely used measures of
performance and the adjustments we make to these non-GAAP measures
provide investors further insight into our profitability and
additional perspectives in comparing our performance to other
companies and in comparing our performance over time on a
consistent basis. Adjusted Operating Income, Adjusted Net Income,
and Adjusted EBITDA have limitations as profitability measures in
that they do not include the interest expense on our debts, our
provisions for income taxes, and the effect of our expenditures for
capital assets and certain intangible assets. In addition, all of
these non-GAAP measures have limitations as profitability measures
in that they do not include the effect of non-cash stock-based
compensation expense, the effect of asset impairments, the effect
of investments in new retail locations and international market
expansion, and the impact of certain expenses related to
transitional events that are settled in cash. Because of these
limitations, the Company relies primarily on its GAAP results.
In the future, we may incur expenses similar to those for which
adjustments are made in calculating Adjusted Operating Income,
Adjusted Net Income, and Adjusted EBITDA. Our presentation of these
non-GAAP measures should not be construed as a basis to infer that
our future results will be unaffected by extraordinary, unusual or
non-recurring items.
YETI Holdings, Inc. Fiscal 2018
Expectations Reconciliation of GAAP to Non-GAAP Financial
Information (In thousands except per share amounts)
(Unaudited) Fiscal 2018 Expectations
Low High Operating income $
100,469 $ 102,027 Adjustments: Non-cash
stock-based compensation expense(1) 13,250 13,250 Long-lived asset
impairment(1) 1,200 1,200 Investments in new retail locations and
international market expansion(1)(2) 800 800 Transition to Cortec
majority ownership(1)(3) 800 800 Transition to the ongoing senior
management team(1)(4) 1,800 1,800 Transition to a public
company(1)(5) 4,200 4,200
Adjusted
Operating Income $ 122,519 $
124,077 Net income $
55,543 $ 57,212 Adjustments: Non-cash
stock-based compensation expense(1) 13,250 13,250 Long-lived asset
impairment(1) 1,200 1,200 Early extinguishment of debt(6) 1,300
1,300 Investments in new retail locations and international market
expansion(1)(2) 800 800 Transition to Cortec majority
ownership(1)(3) 800 800 Transition to the ongoing senior management
team(1)(4) 1,800 1,800 Transition to a public company(1)(5) 4,200
4,200 Tax impact of adjusting items(7) (5,444 )
(5,444 )
Adjusted Net Income $ 73,449
$ 75,118 Net income $
55,543 $ 57,212 Adjustments: Interest expense
31,000 31,000 Income tax expense 12,000 12,000 Depreciation and
amortization expense(8) 25,000 25,000 Non-cash stock-based
compensation expense(1) 13,250 13,250 Long-lived asset
impairment(1) 1,200 1,200 Early extinguishment of debt(6) 1,300
1,300 Investments in new retail locations and international market
expansion(1)(2) 800 800 Transition to Cortec majority
ownership(1)(3) 800 800 Transition to the ongoing senior management
team(1)(4) 1,800 1,800 Transition to a public company(1)(5)
4,200 4,200
Adjusted EBITDA $
146,893 $ 148,562 Net
sales $ 778,833 $ 778,833 Operating income as a % of net sales 12.9
%
13.1
%
Adjusted operating income as a % of net sales 15.7
%
15.9
%
Net income per diluted share $ 0.67 $ 0.69 Adjusted Net
Income per diluted share $ 0.88 $ 0.90 Weighted average common
shares outstanding - diluted 83,465 83,465
_________________________
(1) These costs are reported in SG&A expenses. (2)
Represents retail store pre-opening expenses and costs for
expansion into new international markets expected for fiscal 2018.
(3) Represents management service fees paid to Cortec, our majority
stockholder. (4) Represents severance, recruiting, and relocation
costs related to the transition to our ongoing senior management
team expected for fiscal 2018. (5) Represents fees and expenses in
connection with our transition to a public company, including
consulting fees, recruiting fees, salaries, and travel costs
related to members of our Board of Directors, fees associated with
Sarbanes-Oxley Act compliance, and incremental audit and legal fees
associated with being a public company. (6) Represents preliminary
accelerated amortization of deferred financing fees caused by early
debt paydown of the Credit Facility. (7) Represents tax impact of
adjustments calculated at an expected statutory tax rate of 23.3%
for fiscal 2018. (8) These costs are reported in SG&A expenses
and cost of goods sold.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190111005319/en/
Investor Relations:Jean Fontana,
646-277-1214jean.fontana@icrinc.comJennifer Davis,
646-677-1813jennifer.davis@icrinc.com
Media:Alecia Pulman,
203-682-8224alecia.pulman@icrinc.comBrittany Fraser,
646-277-1231brittany.fraser@icrinc.com
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