From Nasdaq: 2024-11-07 13:45:11

Yeti Holdings had a strong third quarter in 2024, with net sales up 10% across all channels. The company saw growth in its international business, despite a challenging U.S. market. Yeti’s brand strength and innovative product launches position it well for continued success. The company is on track to meet its full-year financial targets. Yeti is also investing in expanding its global supply chain, with plans to move 50% of its drinkware capacity outside of China by the end of 2025. The company remains focused on long-term growth and brand engagement. YETI experienced success with their game fair being the highest sales volume event globally in 2024. The brand showcased their reach through culinary activations at various events in Europe and sports partnerships that included skateboarding and surfing events. YETI also launched new products in drinkware, hard coolers, and bags, with positive feedback from consumers. The brand’s expansion into cookware with a cast iron skillet received praise from culinary media. YETI saw growth in wholesale and direct-to-consumer channels, focusing on connecting with loyal customers through innovative strategies. YETI launched the YETI ID program, offering a unique and personalized experience to account holders on YETI.com. Strong demand was seen in the Amazon Marketplace, with growth in corporate sales across all regions. YETI opened its 23rd store in Virginia, seeing strong traffic and drinkware performance. International markets are showing momentum, particularly in Europe, the U.K., and Germany. Despite consumer headwinds, YETI continues to focus on merchandising and brand presence. The company sees growth opportunities in customization, e-commerce, and corporate sales. YETI’s long-term outlook remains strong, driven by innovation, expansion, and execution.

Third-quarter financial results for YETI showed strong performance, with revenue and EPS more than doubling since going public in 2018. YETI remains enthusiastic about future growth opportunities, driven by innovation and expansion into new product categories. The company sees potential growth in the food storage, premium cookware, bags, packs, and luggage segments, with a focus on sustainability and design. YETI continues to prioritize premium, durable, and high-performance products, catering to a global audience with a passion for outdoor lifestyles. Despite near-term market challenges, YETI remains focused on long-term growth and profitability. YETI announced third-quarter sales of $478 million, a 10% increase driven by growth in all categories, channels, and geographies. Sales are up 10% year-to-date, demonstrating the brand’s momentum and growth potential. Coolers and equipment sales increased 12%, with strong performance in hard coolers and bags. Drinkware sales rose 9%, supported by new product launches. Wholesale sales increased 14%, while direct-to-consumer sales grew 8%. International sales saw a 30% increase, with exceptional growth in Europe and Australia. Gross profit increased 11% to $278 million, with gross margins at 58.2% of sales. SG&A expenses increased 11% to $199 million. Non-variable expenses increased by 170 basis points as a percent of sales, driven by higher employee costs and marketing expenses. Variable expenses decreased by 130 basis points due to a higher mix of wholesale sales. Operating income increased by 11% to $79 million. Net income increased by 14% to $60 million, with earnings per diluted share at $0.71. Inventory increased by 8% year over year to $370 million. Sales are expected to increase by approximately 9% for the full year compared to the prior year. Gross margin target remains at approximately 58.5%. Operating margins are expected to be 16.5%. Adjusted earnings per diluted share are expected to be approximately $2.65, an increase of 18% year-over-year. Free cash flow outlook remains consistent at between $150 million and $200 million. The company aims to continue investing in the business while pursuing strategic acquisitions and share repurchases. The company is shifting focus away from China for its products, aiming to target Europe, Canada, and Australia. The growth in international business is seen as a way to offset potential cost risks. Gross margins have increased by 240 basis points this year, with 70 basis points reinvested back into the business. The company plans to manage gross margin and operating margins together to drive operating margins up over time. The impact of tariffs on gross margins is uncertain, but the company is working closely with suppliers to find solutions and may consider price adjustments. Strong wholesale sales were reported in Q3, with good sell-in and sell-through dynamics in the US market, setting the company up for a successful Q4. YETI’s international business continues to see strong growth, with Australia leading the way in execution and growth. Europe and the UK are also showing promise, with early infrastructure development and significant growth potential. Asia, particularly Japan and Korea, is still in the early stages of investment. The company is strategically expanding its product portfolio, focusing on drinkware, culinary, coolers, bags, and storage to create a cohesive brand ecosystem. Q4 is historically a strong quarter for YETI, with the holiday season driving high demand for its products as a popular gifting solution. The company is confident in their holiday plans, with a focus on innovation and driving demand. Gross margins have shown improvement in 2024, with a flat outlook for Q4 due to various factors like freight surcharges. The goal is to continue managing costs and driving growth to strengthen financials. The CEO sees strong potential for growth domestically, especially with expanding product offerings. While not giving specific numbers, the company is optimistic about the future due to market opportunities and product expansion. YETI is optimistic about brand growth, product expansion, and international expansion, with a strong balance sheet and free cash flow. They are open to leveraging their balance sheet to accelerate growth and manage tariffs. Q4 results are consistent with sales, gross margin, and operating expenses, with a focus on investing in the business. YETI’s market share remains strong, with no significant changes in the competitive landscape. The company continues to deliver quarter to quarter, maintain partnerships, and grow domestically and globally. YETI reported 30% year-over-year international revenue growth. The focus is on dealer growth and existing customer gains. Europe has strong e-commerce sales and growing wholesale partnerships. Drinkware is expected to perform well in Q4, with wholesale outpacing DTC and new giftable products released. YETI plans to launch expanded bags in 2022, aiming for growth in various bag categories. The company is excited about the potential in bags, packs, and luggage. The bags planned for next year will expand consumer choices without significant transitions. YETI looks forward to its Q4 and full-year call. 1. The stock market reached record highs today, with the S&P 500 closing at an all-time high of 4,356. The surge was driven by strong corporate earnings reports and positive economic data.

2. In other news, the Federal Reserve announced that it would maintain its current interest rates, citing continued economic growth and low inflation. The decision was widely expected by analysts and investors.

3. On the international front, tensions between the US and China escalated as the US imposed new sanctions on Chinese officials over human rights abuses in Xinjiang. China responded by condemning the move and vowing to retaliate.

4. Meanwhile, tech giant Apple reported better-than-expected quarterly earnings, with revenue topping $81 billion. The strong performance was driven by robust iPhone sales and growth in its services segment.

5. Lastly, in sports news, the Tokyo Olympics kicked off with the opening ceremony, featuring a scaled-down event due to the ongoing pandemic. Athletes from around the world paraded in the stadium, marking the official start of the games.



Read more at Nasdaq: Yeti (YETI) Q3 2024 Earnings Call Transcript