Financial Data and Key Metrics Changes - Sales increased by 3% to $351 million, driven by strong growth in coolers and equipment and continued momentum in international business [38][39] - Gross profit increased by 3% to $201.3 million, representing 57.3% of sales, a 20 basis point decrease year-over-year [45] - Net income decreased by 12% to $25.8 million, or $0.31 per diluted share, reflecting a decrease of 9% compared to the prior year [47][62] Business Line Data and Key Metrics Changes - Coolers and Equipment sales increased by 17% to $140.2 million, marking the fifth consecutive quarter of double-digit growth [39] - Drinkware sales decreased by 4% to $205.6 million, impacted by a challenging market and supply chain disruptions [40][41] - Direct-to-consumer sales grew by 4% to $196.2 million, representing 56% of total sales [42] Market Data and Key Metrics Changes - International sales grew by 22% to $79.9 million, despite a 500 basis point headwind from foreign exchange [44] - Strong performance noted in Europe, particularly in Germany, The Netherlands, and The U.K., with significant growth opportunities identified [31][32] - The U.S. market is expected to be flat to down low single digits year-over-year, while international business is projected to grow between 15% to 20% [56] Company Strategy and Development Direction - The company is focused on three key areas: product innovation, supply chain transformation, and operational discipline [5][11] - Plans to introduce over 30 new products in 2025, up from 24 in 2024, despite supply chain constraints [8][69] - A significant shift in Drinkware production out of China is underway, with expectations that less than 5% of total COGS will be related to products from China by the end of the year [12][65] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating 2025 despite macroeconomic uncertainties and projected headwinds from tariffs and cautious consumer behavior [6][50] - The company anticipates a challenging second quarter with flat to slightly down sales year-over-year, particularly in U.S. Drinkware [53] - Long-term growth potential remains strong, with a focus on brand resilience and product innovation [35][65] Other Important Information - The company ended Q1 with $259 million in cash and a substantial net cash position, reflecting strong liquidity [48] - Capital expenditures are expected to be approximately $60 million, with a focus on supply chain diversification efforts [62] - The company is closely monitoring tariff policies and implementing mitigation strategies to manage costs [64] Q&A Session Summary Question: Number of new product introductions expected for 2025 - The company expects about 30 new products in 2025, compared to 24 in 2024, with a focus on maintaining innovation despite supply chain disruptions [69] Question: Impact of tariffs and supply chain changes - Approximately 90% of the $100 million tariff impact is related to China, with expectations of a significant reduction in exposure to Chinese goods by 2026 [76] Question: Outlook for the Drinkware business - The company anticipates a durable demand in the Drinkware category, with ongoing diversification efforts to address various consumer needs [81] Question: Approach to pricing amid rising costs - The company is focused on targeted pricing strategies while shifting supply chains to mitigate tariff impacts, ensuring long-term stability [92] Question: Acceleration of international growth - The company sees significant growth opportunities in established international markets and plans to leverage the Japan launch to expand into the rest of Asia [95]

Company Performance - Yeti reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, but down from $0.34 per share a year ago, representing an earnings surprise of 14.81% [1] - The company achieved revenues of $351.13 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.39% and showing an increase from $341.39 million year-over-year [2] - Yeti has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Stock Performance and Outlook - Yeti shares have declined approximately 27.5% since the beginning of the year, in contrast to the S&P 500's decline of 4.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.73 on revenues of $482.9 million, and for the current fiscal year, it is $2.81 on revenues of $1.94 billion [7] - The estimate revisions trend for Yeti is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Leisure and Recreation Products industry, to which Yeti belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Yeti's stock performance [5]

Financial Performance - Adjusted net sales increased by 3% year-over-year to $351.1 million[17, 123] - Coolers & Equipment adjusted net sales decreased by 4% year-over-year[17] - Drinkware adjusted net sales increased by 3% year-over-year[17] - Direct-to-Consumer (DTC) sales grew by 4% year-over-year during Q1 2025[14] - International sales grew 22% year-over-year, representing 23% of total sales in the quarter[14] - Adjusted operating income was $35.2 million, representing 10% of adjusted net sales[17, 122] Strategic Initiatives - The company is expanding its customer base through partnerships and activations, such as becoming an official partner of the Chicago Cubs & Wrigley Field[13] - The company is introducing new products, including a new line of everyday bags and expanding the "Outdoor Kitchen" product assortment[13] - The company opened its 25th and 26th stores in Short Hills, NJ and King of Prussia, PA, respectively[14] Supply Chain - The company expects 90% of U S Drinkware capacity out of China by the end of 2025, with less than 5% of total COGS exposed to U S tariffs on Chinese imports[77]

[Financial & Operational Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) YETI reported a 3% increase in Q1 2025 net sales driven by international growth, while accelerating supply chain diversification efforts to reduce reliance on China [Q1 2025 Performance Summary](index=1&type=section&id=First%20Quarter%202025%20Highlights) YETI reported a 3% increase in net sales to $351.1 million for Q1 2025, despite a 100 basis point headwind from foreign exchange. Growth was driven by a strong 22% increase in international sales, which offset a 2% decline in the U.S. market. While GAAP EPS rose 11% to $0.20, adjusted EPS decreased by 9% to $0.31, reflecting FX impacts and strategic investments | Metric | Q1 2025 | Q1 2024 | Change | Note | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $351.1M | $341.4M | +3% | Includes ~100 bps FX headwind | | EPS (Diluted) | $0.20 | $0.18 | +11% | - | | Adjusted EPS | $0.31 | $0.34 | -9% | Includes ~$0.02 FX headwind | - Sales performance varied by region, with a **22% increase in International sales** (to **$79.9 million**) contrasting with a **2% decrease in U.S. sales** (to **$271.3 million**)[5](index=5&type=chunk) - The CEO noted a strong start to the year, on track with the full-year plan before the announcement of significant tariff disruptions in April[3](index=3&type=chunk) [Supply Chain Diversification](index=1&type=section&id=First%20Quarter%202025%20Highlights) YETI is aggressively accelerating its supply chain diversification efforts to move sourcing out of China. The company's strategic efforts are ahead of schedule, and it expects to have limited exposure to goods sourced from China by the end of 2025 - The company is aggressively diversifying its sourcing out of China and expects that by the end of 2025, less than **5% of its total cost of goods** for the U.S. market will be related to products from China[3](index=3&type=chunk) [Detailed Financial Performance (Q1 2025)](index=1&type=section&id=First%20Quarter%202025%20Results) YETI's Q1 2025 performance saw varied sales growth across channels and categories, improved gross margin offset by higher SG&A, and a strengthened balance sheet with increased cash and reduced inventory [Sales Performance Analysis](index=1&type=section&id=First%20Quarter%202025%20Results) Overall sales growth was supported by a 4% increase in the Direct-to-Consumer (DTC) channel and a 1% rise in the Wholesale channel. By product category, Coolers & Equipment sales surged 17%, driven by strong performance in bags and hard coolers. This growth successfully offset a 4% decline in Drinkware sales, which was impacted by a challenging prior-year comparison and a strategic decision to prioritize supply chain diversification over new product innovation during the quarter | Sales Channel | Q1 2025 Sales | Change vs. Q1 2024 | | :--- | :--- | :--- | | Direct-to-Consumer (DTC) | $196.2M | +4% | | Wholesale | $154.9M | +1% | | Product Category | Q1 2025 Sales | Change vs. Q1 2024 | | :--- | :--- | :--- | | Coolers & Equipment | $140.2M | +17% | | Drinkware | $205.6M | -4% | - The decline in Drinkware sales was attributed to a strong **13% growth in the prior year quarter** and a strategic shift to focus on supply chain diversification over new innovation in the current quarter[7](index=7&type=chunk) [Profitability Analysis](index=2&type=section&id=First%20Quarter%202025%20Results) Gross profit increased 4% to $201.7 million, with the gross margin expanding by 30 basis points to 57.4%, primarily due to lower product costs. However, this was offset by a 7% increase in SG&A expenses to $180.1 million, driven by investments in headcount and higher G&A costs. Consequently, operating income decreased by 16% to $21.7 million, and adjusted operating income fell 11% to $35.2 million | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | $201.7M | $194.8M | +4% | | Gross Margin | 57.4% | 57.1% | +30 bps | | Operating Income | $21.7M | $25.8M | -16% | | Adjusted Operating Income | $35.2M | $39.6M | -11% | | Net Income | $16.6M | $15.9M | +5% | - The increase in gross margin was mainly due to lower product costs, partially offset by an unfavorable product mix (lower Drinkware sales) and negative foreign currency impacts[8](index=8&type=chunk) - SG&A expenses increased primarily due to higher general and administrative expenses and increased employee costs, including investments in headcount to support future growth[10](index=10&type=chunk) [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Other%20Highlights) YETI ended the quarter with a strong balance sheet, highlighted by a significant increase in cash to $259.0 million compared to the prior year. The company effectively managed its working capital, with inventory decreasing by 9% year-over-year to $330.5 million. Total debt remained stable at $77.0 million | Balance Sheet Item | March 29, 2025 | March 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash | $259.0M | $173.9M | +49% | | Inventory | $330.5M | $363.9M | -9% | | Total Debt | $77.0M | $81.2M | -5% | [Updated 2025 Full-Year Outlook](index=2&type=section&id=Updating%202025%20Outlook%20In%20Response%20to%20Tariff%20Impacts) YETI significantly revised its 2025 full-year outlook downward due to tariff impacts and supply chain disruptions, while maintaining focus on strategic growth and diversification [Revised Guidance](index=2&type=section&id=Updating%202025%20Outlook%20In%20Response%20to%20Tariff%20Impacts) YETI has significantly revised its full-year 2025 outlook to account for higher tariff costs and supply chain disruptions. The company now projects adjusted sales growth between 1% and 4%, down from the previous 5% to 7%. The adjusted operating margin is expected to be approximately 12.0%, a sharp decrease from the prior outlook of 16.9%. Consequently, the adjusted EPS forecast has been lowered to a range of $1.96 to $2.02, from $2.90 to $2.95 previously | Metric | New 2025 Outlook | Previous 2025 Outlook | | :--- | :--- | :--- | | Adjusted Sales Growth | +1% to +4% | +5% to +7% | | Adjusted Operating Margin | ~12.0% | 16.9% | | Adjusted EPS | $1.96 - $2.02 | $2.90 - $2.95 | | Free Cash Flow | $100M - $125M | $200M | [Rationale for Outlook Update & Strategic Response](index=2&type=section&id=Updating%202025%20Outlook%20In%20Response%20to%20Tariff%20Impacts) The updated outlook incorporates an approximate 300 basis point negative impact on sales from supply chain disruptions and a 450 basis point impact on operating margin from higher tariff costs. Despite these headwinds, YETI remains focused on its strategic priorities, including brand growth, innovation, and accelerating its supply chain transformation to reduce reliance on China - The reduction in the adjusted sales outlook includes an approximately **300 basis point impact** from inventory supply disruptions related to accelerating supply chain diversification[22](index=22&type=chunk) - The adjusted operating income outlook reflects an approximate **450 basis point impact** from higher tariff costs, inclusive of mitigation efforts[22](index=22&type=chunk) - The company's focus remains on strategic priorities: growing the brand globally, driving innovation, and transforming the supply chain to reduce reliance on China, all while maintaining operating discipline[18](index=18&type=chunk)[19](index=19&type=chunk) [Consolidated Financial Statements (GAAP)](index=7&type=section&id=YETI%20HOLDINGS%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) YETI's Q1 2025 GAAP financial statements show increased net sales and net income, a stronger balance sheet with higher cash, and improved cash flow from operations compared to the prior year [Condensed Consolidated Statements of Operations](index=7&type=section&id=YETI%20HOLDINGS%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the first quarter ended March 29, 2025, YETI reported net sales of $351.1 million, a 3% increase from $341.4 million in the prior-year period. Gross profit rose to $201.7 million. However, due to a rise in SG&A expenses, operating income declined to $21.7 million from $25.8 million. Net income increased slightly to $16.6 million, resulting in diluted EPS of $0.20, up from $0.18 in Q1 2024 | (In thousands, except per share amounts) | Three Months Ended Mar 29, 2025 | Three Months Ended Mar 30, 2024 | | :--- | :--- | :--- | | Net sales | $351,128 | $341,394 | | Gross profit | $201,722 | $194,813 | | Operating income | $21,671 | $25,817 | | Net income | $16,609 | $15,855 | | Diluted EPS | $0.20 | $0.18 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=YETI%20HOLDINGS%2C%20INC.%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 29, 2025, YETI's total assets stood at $1.24 billion. The company's financial position shows $259.0 million in cash, a decrease in inventory to $330.5 million from $363.9 million a year prior, and total liabilities of $473.6 million. Total stockholders' equity increased to $764.3 million from $646.9 million in the prior-year quarter | (In thousands) | March 29, 2025 | March 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $259,042 | $173,911 | | Inventory | $330,515 | $363,919 | | Total assets | $1,237,866 | $1,119,804 | | **Liabilities & Equity** | | | | Total liabilities | $473,604 | $472,905 | | Total stockholders' equity | $764,262 | $646,899 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=YETI%20HOLDINGS%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the first three months of 2025, YETI experienced a net cash outflow from operating activities of $80.3 million, which is an improvement over the $103.7 million outflow in the same period of 2024. The primary uses of cash were an increase in inventory and payments of accounts payable. Cash used in investing activities was $15.5 million, mainly for property, equipment, and intangibles. The company ended the period with $259.0 million in cash | (In thousands) | Three Months Ended Mar 29, 2025 | Three Months Ended Mar 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(80,296) | $(103,674) | | Net cash used in investing activities | $(15,510) | $(58,005) | | Net cash used in financing activities | $(6,471) | $(102,815) | | **Net decrease in cash** | **$(99,753)** | **$(265,049)** | | Cash, end of period | $259,042 | $173,911 | [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Information) YETI provides non-GAAP adjustments to its Q1 2025 financial results, notably for operating income and net income, to offer a clearer view of underlying performance [Reconciliation of Key Metrics](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Information) To provide a clearer view of its underlying performance, YETI adjusts its GAAP results. For Q1 2025, GAAP operating income of $21.7 million was adjusted for items including $10.1 million in stock-based compensation and $2.8 million in stockholder matter fees, resulting in an adjusted operating income of $35.2 million. Similarly, GAAP net income of $16.6 million ($0.20 per share) was adjusted to $25.8 million ($0.31 per share) on a non-GAAP basis | Reconciliation (In thousands) | Q1 2025 | | :--- | :--- | | **Operating Income (GAAP)** | **$21,671** | | Non-cash stock-based compensation | $10,144 | | Organizational realignment costs | $994 | | Shareholder matters | $2,760 | | Other adjustments | $(395) | | **Adjusted Operating Income** | **$35,174** | | Reconciliation (In thousands, except per share) | Q1 2025 | | :--- | :--- | | **Net Income (GAAP)** | **$16,609** | | Total adjustments (pre-tax) | $13,503 | | Other (income) expense, net | $(1,376) | | Tax impact of adjustments | $(2,971) | | **Adjusted Net Income** | **$25,765** | | **Diluted EPS (GAAP)** | **$0.20** | | **Adjusted Diluted EPS** | **$0.31** |

Core Insights - The article emphasizes the importance of long-term wealth creation through value growth investing, value investing, and dividend investing [1] - The author aims to analyze companies from a fundamental value investing perspective, seeking to identify great companies at fair prices [1] Group 1 - The author has over 7 years of investing experience, focusing on long-term strategies [1] - The educational background is in Biology, specifically molecular cell biology, which informs the author's analytical approach to investing [1] - The intention is to write articles based on personal research and experiences related to building long-term wealth [1] Group 2 - The author has a beneficial long position in YETI shares, indicating a personal investment interest [2] - The article reflects the author's own opinions and is not influenced by compensation from any company mentioned [2] - There is no business relationship with any company whose stock is discussed in the article [2]

Core Insights - Value investing remains a preferred strategy for identifying strong stocks across various market conditions [2] - The Zacks Rank system emphasizes earnings estimates and revisions to identify winning stocks [1] Company Analysis: YETI - YETI currently holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential [4] - The stock's P/E ratio is 9.76, significantly lower than the industry average of 26.22, suggesting it may be undervalued [4] - YETI's P/B ratio stands at 3.26, compared to the industry's average of 7.60, further indicating attractive valuation [5] - The P/CF ratio for YETI is 11.01, which is also lower than the industry average of 23.75, reinforcing the notion of undervaluation [6] - Overall, YETI's key metrics suggest it is likely undervalued, supported by a strong earnings outlook [7]

Yeti (YETI) shares soared 13.9% in the last trading session to close at $30.90. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 20.1% loss over the past four weeks.Following President Trump's announcement to suspend U.S. tariffs on most countries for 90 days, YETI Holdings shares soared, reflecting renewed investor optimism.This maker of outdoor and recreational products is expected to post quarterly earnings of $0.28 per share i ...

Core Viewpoint - Engaged Capital has entered into a cooperation agreement with Yeti, aiming to enhance board governance and drive growth opportunities for the company, which has seen a slowdown in growth despite its strong brand and product offerings [2][9]. Company Overview - Yeti is a global designer, retailer, and distributor of premium outdoor products, known for high-quality insulated coolers and tumblers, with net sales in 2024 comprising 60% from Drinkware, 38% from Coolers & Equipment, and 2% from Other categories [3]. - The company employs a diverse omnichannel strategy, selling directly to consumers and through major outdoor retailers, focusing on innovative design and premium quality to maintain competitive advantage and consumer loyalty [3]. Financial Performance - Yeti had an initial public offering in October 2018 at $18 per share, achieving annual growth rates between 17% and 29% from 2018 to 2021, with a peak stock price of $108 in November 2021 [4]. - Growth has slowed to 3.98% in 2023, with the stock closing at $30.15, trading at eight-times EBITDA compared to over 20-times historically, indicating a perception of stability without growth prospects [4][6]. Growth Opportunities - There are three key opportunities for Yeti to create value: geographic expansion into Europe and Asia, product category diversification into luggage, bags, and camping equipment, and enhancing communication and execution strategies to boost investor confidence [4][5][6]. - The company has a strong cash position of $280 million and nearly $300 million in EBITDA, suggesting potential for significant stock buybacks, which could enhance shareholder value [6]. Board and Management Changes - The cooperation agreement includes increasing the board size to 10 directors and appointing Arne Arens and J. Magnus Welander, both with strong backgrounds in product and international expansion [2][7]. - The new directors are expected to help mitigate risks associated with market expansion and encourage more aggressive growth initiatives, addressing potential complacency in management [9]. Market Comparisons - Comparisons are drawn with SharkNinja, which successfully expanded its product lines and maintained strong investor relations, highlighting the need for Yeti to adopt similar strategies to enhance growth and market presence [5][8].

Company Overview - Yeti Holdings' shares increased by 5.7% to close at $34, following a notable trading volume, despite a 15.4% loss over the past four weeks [1] - The company announced the appointment of J. Magnus Welander and Arne Arens to its Board of Directors, effective March 24, 2025 [1] Earnings Expectations - Yeti is expected to report quarterly earnings of $0.28 per share, reflecting a year-over-year decline of 17.7%, with revenues projected at $348.66 million, a 2.1% increase from the previous year [2] - The consensus EPS estimate for Yeti has been revised down by 33.9% over the last 30 days, indicating a negative trend in earnings estimate revisions [3] Industry Context - Yeti operates within the Zacks Leisure and Recreation Products industry, where another company, OneWater Marine, closed 3.2% higher at $16.61, but has seen a return of -15.6% over the past month [3] - OneWater Marine's consensus EPS estimate remains unchanged at $0.36, representing a significant decline of 46.3% from the previous year [4]

Yeti (YETI 2.20%) and its up-and-coming lifestyle brand have had a wild existence on the publicly traded markets.Going public at $18 per share, Yeti skyrocketed to over $100 within three years. Since then, however, the stock has tumbled roughly 68% as a significant product recall, a slowdown in sales growth, more cautious consumers, and potential tariffs on Chinese goods weighed on Yeti's operations.Despite this, the company has grown its sales, operating income, and free cash flow by 152%, 189%, and 287%, ...