• Revenue: Increased 10% to $478 million in the third quarter.
• Net Income: Increased 14% to $60 million.
• Earnings Per Share (EPS): Increased 18% to $0.71 per diluted share.
• Gross Margin: Increased to 58.2% from 57.8% in the prior year period.
• Coolers & Equipment Sales: Increased 12% to $193 million.
• Drinkware Sales: Increased 9% to $275 million.
• Wholesale Sales: Increased 14% to $198 million.
• Direct to Consumer Sales: Grew 8% to $281 million.
• International Sales: Grew 30% to $88 million.
• SG&A Expenses: Increased 11% to $199 million, or 41.7% of sales.
• Cash Position: Ended the quarter with $280 million in cash.
• Inventory: Increased 8% year over year to $370 million.
• Total Debt: Approximately $79 million.
• Full Year Sales Outlook: Expected to increase approximately 9%.
• Full Year Gross Margin Target: Approximately 58.5%.
• Full Year EPS Outlook: Approximately $2.65, representing 18% growth year over year.
• Capital Expenditures: Expected to be $50 million for the full year.
• Free Cash Flow: Expected between $130 million and $200 million for the full year.

• Warning! GuruFocus has detected 2 Warning Sign with YETI.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• YETI Holdings Inc (NYSE:YETI) reported a 10% increase in net sales for the third quarter, with growth across all channels and product categories.
• The company achieved over 30% growth in international markets for the fourth consecutive quarter, highlighting strong global expansion.
• YETI's product innovation continues to drive growth, with successful launches in Drinkware and barware, expanding their addressable market.
• The company is on track with its supply chain diversification, reducing reliance on China by expanding production facilities outside the country.
• YETI's strong brand engagement and strategic partnerships, such as those in sports and culinary events, are enhancing its market presence and consumer reach.

Negative Points

• The U.S. market remains challenging, with more disciplined consumer buying behavior impacting domestic growth.
• YETI faces potential risks from tariffs on China-sourced products, which could affect cost structures and margins.
• The company is experiencing weaker traffic trends in its direct-to-consumer channels, despite higher quality customer purchases.
• There are concerns about the impact of a shorter holiday shopping season on consumer spending and sales performance.
• YETI's SG&A expenses increased, driven by higher employee and marketing costs, which could pressure operating margins if not managed effectively.

Q & A Highlights

Q: Can you explain how the international supply chain works for Drinkware sourced from China and its impact on tariffs? A: Michael McMullen, CFO, explained that products made in China can be shipped directly to regions like Europe, Canada, and Australia, which helps offset potential cost risks associated with tariffs, as these are primarily a U.S. dynamic.

Q: How should we think about the pace of SG&A growth, especially the non-variable side, in the context of potential changes in gross margin tailwinds? A: Michael McMullen, CFO, stated that the company has been intentional in investing back into the business using gross margin tailwinds while still allowing operating margins to expand. They plan to continue managing gross and operating margins together to drive operating margins up over time.

Q: What are your expectations for the upcoming holiday season, and how are you positioned for potential promotional environments? A: Matthew Reintjes, CEO, expressed confidence in YETI's positioning for the holidays, highlighting strong plans with wholesale partners and the introduction of new products. He noted that the promotional environment has been consistent with past years.

Q: Can you provide insight into the composition of the 30% year-over-year international revenue growth? A: Matthew Reintjes, CEO, mentioned that while specific details aren't disclosed, the growth is driven by strong performance in established markets like Canada and Australia, as well as expanding e-commerce and corporate sales in Europe.

Q: How are you thinking about product evolution and innovation, particularly in new categories like barware and culinary? A: Matthew Reintjes, CEO, emphasized a thoughtful approach to product expansion, ensuring that new categories like barware and culinary connect with YETI's existing ecosystem. The focus is on surrounding consumers with more use cases in their daily lives.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.