YETI(US:YETI)2023-08-10 14:31Financial Data and Key Metrics Changes - Adjusted sales for Q2 2023 increased by 2% to $427 million compared to $420 million in the prior year period, with a 900 basis point impact from the stop sale of recalled products [14][21][24] - Gross margin improved by 270 basis points to approach 55%, driven by lower inbound freight costs and product costs [25][48] - SG&A expenses increased by 15% to $167 million, representing 39.1% of sales, compared to 34.6% in the same period last year [45][75] - Net income decreased by 9% to $50 million, or $0.57 per diluted share, compared to $0.63 in the prior year period [75] Business Line Data and Key Metrics Changes - Drinkware sales grew by 8% to $233 million, supported by strong demand in the DTC channel and product innovation [24][73] - Coolers & Equipment sales decreased by 6% to $181 million, with strength in hard coolers partially offsetting the decline in soft coolers [43][72] - Corporate sales remained roughly flat compared to a strong prior year, but total customer count continued to grow [4][24] Market Data and Key Metrics Changes - International sales grew nearly 20% to reach 13.4% of total sales, with strong growth in Europe and Australia, while Canada experienced slower growth [64][98] - DTC sales increased by 4% to $235 million, representing 55% of total sales, led by growth in Amazon [42][61] Company Strategy and Development Direction - The company is focused on expanding its product portfolio, particularly in Drinkware and Coolers, with new product launches planned for Q4 2023 and early 2024 [11][12][31] - YETI aims to enhance brand awareness and customer engagement through targeted marketing and partnerships, including collaborations with culinary influencers [26][56] - The company is investing in data analytics and international marketing to drive growth in global markets [13][36] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the fourth quarter, expecting significant acceleration in sales across product categories and channels [7][47] - The company anticipates a return to double-digit growth in Q4, following a low single-digit decline in Q3 due to the timing of product launches [47][101] - Management highlighted the importance of maintaining operating margins and driving future growth through strategic investments [8][78] Other Important Information - The company ended Q2 with $223 million in cash, a significant increase from $92 million in the prior year [15][55] - Inventory decreased by 34% year-over-year to $322 million, marking a cumulative reduction of over $168 million from peak levels in Q2 2022 [15][48] Q&A Session Summary Question: What is the company's perspective on building product breadth with existing customers versus acquiring new customers? - The company emphasizes the importance of both acquiring new customers and retaining existing ones, focusing on expanding product offerings and enhancing customer engagement [81][83] Question: Can you provide insights on the Drinkware segment's growth and underlying demand? - Management expressed confidence in the Drinkware segment, noting strong receptivity to innovation and new product launches, despite some inventory conservatism among retailers [90][92] Question: What are the expectations for international growth in the second half of the year? - International sales grew 19% in Q2, with expectations for continued growth in Europe and Australia, while Canada is anticipated to recover from recent challenges [92] Question: How does the company plan to leverage its financial strength moving forward? - The company plans to prioritize investments that support sustained growth and innovation, leveraging its strong cash position to drive future opportunities [114][115]