Yeti’s Q1 Sales Rise 42%
Net Sales Increased 42%
Gross Margin Expanded 560 Basis Points
EPS Increased to $0.35 from $0.10
Adjusted EPS Increased to $0.38 from $0.11
Raises 2021 Outlook
AUSTIN, Texas–(BUSINESS WIRE)– YETI Holdings, Inc. (“YETI”) (NYSE: YETI) today announced its financial results for the first quarter ended April 3, 2021.
Matt Reintjes, President and Chief Executive Officer, commented, “YETI had an exceptional start to the year with first quarter net sales growth of 42% fueled by continued strong demand for the brand throughout the period. Significant gross margin expansion powered nearly a 700-basis point improvement in operating margin for the period, contributing to a more than three-fold increase in earnings per share.”
Mr. Reintjes added, “Building upon the outstanding financial performance in the first quarter, we are focused on investments that will accelerate our future growth through global product and channel expansion, innovative marketing, and growing digital capabilities including enhanced data analytics. We believe that these efforts will not only foster a deep connection between our brand and consumers both digitally and, as the world reopens more fully, in a direct, personal way but will also support our plans for long-term, sustainable growth.”
Mr. Reintjes concluded, “After the strong start to 2021, we are raising both our full year net sales and earnings per share outlooks to 20% and 22% growth, respectively, versus the prior year. The YETI momentum carried over from 2020 and on display to start 2021 showcases the passion for the brand and the relevance of our product portfolio as consumers continue to participate in the significant growth in active, outdoor lifestyles. We believe we are well-positioned to generate and build upon this customer enthusiasm for the brand now and into the future.”
For the Three Months Ended April 3, 2021
Net sales increased 42% to $247.6 million, compared to $174.4 million during the same period last year.
- Direct-to-consumer (“DTC”) channel net sales increased 59% to $126.8 million, compared to $79.6 million in the prior year quarter, driven by strong performance in both Coolers & Equipment and Drinkware. The DTC channel grew to 51% of net sales, compared to 46% in the prior year period.
- Wholesale channel net sales increased 27% to $120.8 million, compared to $94.8 million in the same period last year, driven by both Coolers & Equipment and Drinkware.
- Drinkware net sales increased 32% to $148.9 million, compared to $112.6 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 57% to $93.5 million, compared to $59.5 million in the same period last year, driven by strong performance in hard coolers, soft coolers, outdoor living products, bags, and cargo.
Gross profit increased 57% to $145.2 million, or 58.6% of net sales, compared to $92.5 million, or 53.0% of net sales, in the first quarter of 2020. The 560 basis point increase in gross margin was primarily driven by a favorable mix shift to our DTC channel, product cost improvements, lower inbound freight and decreased tariffs.
Selling, general, and administrative (“SG&A”) expenses increased 38% to $105.1 million, compared to $76.3 million in the first quarter of 2020. As a percentage of net sales, SG&A expenses decreased 130 basis points to 42.5% from 43.7% in the prior year period. This decrease included a 280 basis points of benefit from non-variable expense leverage on higher net sales. Variable expenses added 150 basis points, driven by the increased mix of our faster growing and higher gross margin DTC channel, which grew to 51% of net sales during the period.
Operating income increased 148% to $40.0 million, or 16.2% of net sales, compared to $16.2 million, or 9.3% of net sales, during the prior year quarter.
Adjusted operating income increased 143% to $43.8 million, or 17.7% of net sales, compared to $18.0 million, or 10.3% of net sales, during the same period last year.
Net income increased to $30.5 million, or 12.3% of net sales, compared to $8.5 million, or 4.9% of net sales, in the prior year quarter; Net income per diluted share increased to $0.35, compared to $0.10 per diluted share in the prior year quarter.
Adjusted net income increased to $33.3 million, or 13.5% of net sales, compared to $9.9 million, or 5.7% of net sales, in the prior year quarter; Adjusted net income per diluted share increased to $0.38, compared to $0.11 per diluted share in the prior year quarter.
Balance Sheet and Cash Flow Highlights
Cash increased to$190.3 million, compared to $118.2 million at the end of the first quarter of 2020.
Inventory decreased 9% to $183.9 million, compared to $202.4 million at the end of the prior year quarter. As YETI continues to rebuild inventory levels, YETI expects positive year-over-year inventory growth beginning in the second quarter and for the remainder of 2021.
Total debt, excluding finance leases and unamortized deferred financing fees, was $129.4 million, compared to $346.3 million at the end of the first quarter of 2020. During the first quarter of 2021, YETI made mandatory debt payments of $5.6 million. At the end of the first quarter of 2021, our cash balance exceeded total debt by $60.9 million.
Updated 2021 Outlook
For Fiscal 2021, a 52-week period, compared to a 53-week period in Fiscal 2020, YETI expects:
- Net sales are now expected to increase between 20% and 22% (versus the previous outlook of between 15% and 17%) with sales growth weighted to the first half of the year;
- Operating income as a percentage of net sales is now expected to be approximately 19% (versus the previous outlook of 18.5%);
- Adjusted operating income as a percentage of net sales is now expected to be approximately 20.5% (versus the previous outlook of 20.0%);
- An effective tax rate is now expected to be approximately 24.0%, (versus the previous outlook of 24.5%);
- Net income per diluted share is now expected to be between $2.12 and $2.16 (versus the previous outlook of $1.95 and $1.98), reflecting a 20% to 22% increase;
- Adjusted net income per diluted share is now expected to be between $2.28 and $2.32 (versus the previous outlook of $2.11 and $2.14), reflecting a 22% to 24% increase;
- Diluted weighted average shares outstanding is now expected to be approximately 88.5 million (versus the previous outlook of 88.6 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.
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.