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]

Investment Rating - The industry is rated as "Overweight," indicating that it is expected to outperform the overall market [12]. Core Insights - YETI's FY2024 revenue reached $1.839 billion, a year-on-year increase of 9.4%, with Q4 revenue of $555 million, up 7.4% year-on-year [6]. - The company reported a net profit of $234 million for FY2024, reflecting an 18.8% increase year-on-year, with Q4 net profit of $85 million, also up 7.4% year-on-year [6]. - The growth in revenue was driven by strong performance in various product categories, particularly in coolers and equipment, which saw a 16.5% increase in Q4 [6]. - The DTC channel accounted for 68% of Q4 revenue, with a year-on-year growth of 9.5%, while the wholesale channel grew by 3.2% [6]. - The international market showed robust growth, with non-U.S. revenue increasing by 27.1% in Q4, contributing to 19.6% of total revenue [6]. Summary by Sections Company Performance - YETI's Q4 revenue was $555 million, with a 7.4% year-on-year increase, and FY2024 revenue was $1.839 billion, up 9.4% year-on-year [6]. - The company achieved a net profit of $234 million for FY2024, an 18.8% increase year-on-year, with Q4 net profit of $85 million [6]. Product Categories - In Q4, revenue from coolers and equipment reached $189 million, a 16.5% increase year-on-year, while drinkware products generated $358 million, up 3.5% [6]. - The introduction of new products, such as the Rodie15 hard cooler, contributed to exceeding growth expectations in the cooler category [6]. Market Expansion - YETI plans to increase its international market revenue by 30% in 2024, with a focus on expanding its presence in Australia and Europe [6]. - The company is set to launch in the Japanese market in 2025, indicating further growth potential in non-U.S. markets [6]. Financial Guidance - For FY2025, YETI expects revenue growth of 5-7%, with cooler and equipment sales outpacing drinkware [6]. - The adjusted diluted EPS target for 2025 is projected to be between $2.90 and $2.95, reflecting a year-on-year growth of 6-8% [6]. Client Relationships - The primary client, Stanley, is expanding its global presence, which is expected to drive sustainable growth for YETI [6]. - The company is also focusing on new high-potential clients like Owala, which will contribute to growth in 2025 [6].