yeti-20211002

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________________________________

FORM 10-Q

____________________________________________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 02, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38713

_____________________________________________________

YETI Holdings, Inc.

(Exact name of registrant as specified in its charter)

______________________________________________________


Delaware						45-5297111
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

7601 Southwest Parkway

Austin, Texas 78735

(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code) (512) 394-9384

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01

YETI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 87,641,906 shares of Common Stock ($0.01 par value) outstanding as of October 28, 2021.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains ‘‘forward-looking statements’’ within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements include statements containing words such as “anticipate,” “assume,” “believe,” “can,” “have,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events. For example, all statements made relating to growth strategies, the estimated and projected costs, expenditures, and growth rates, plans and objectives for future operations, growth, or initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that are expected and, therefore, you should not unduly rely on such statements. The risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include but are not limited to the risks and uncertainties listed below under “Risk Factors Summary” and further described under the heading "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the United States Securities and Exchange Commission.

These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While we believe that these assumptions underlying the forward-looking statements are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect actual results.

The forward-looking statements included herein are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

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Risk Factors Summary

Investing in our securities involves a high degree of risk. The following is a summary of the principal factors that make an investment in our securities speculative or risky, all of which are more fully described below in the section titled “Risk Factors” in Part I, Item 1A of this Report. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing our business. In addition to the following summary, you should consider the information set forth in the “Risk Factors” section and the other information contained in this Report before investing in our securities.

Risks Related to Our Business, Operations and Industry

•A significant reduction in demand for our products could harm our results of operations.

•If we are unable to successfully design, develop and market new products, our business may be harmed.

•Our business could be harmed if we are unable to accurately forecast our results of operations and growth rate.

•We may not be able to effectively manage our growth.

•Our marketing strategy may not be successful with existing and future customers.

•If we fail to attract new customers, or fail to do so in a cost-effective manner, we may not be able to increase sales.

•We may not be successful in expanding into additional markets.

•If we fail to compete effectively, we could lose our market position.

•If we are unable to protect or preserve our brand image and proprietary rights, our business may be harmed.

•Problems with, or loss of, our suppliers or an inability to obtain raw materials could harm our business and results of operations.

•If we fail to timely and effectively obtain shipments of products from our manufacturers and deliver products to our retail partners and customers, our business and results of operations could be harmed.

•Our business is subject to the risk of manufacturer concentrations.

•Our results of operations could be materially harmed if we are unable to accurately forecast demand for our products.

•Our business could be harmed if we fail to execute our internal plans to transition our supply chain and certain other business processes to a global scale.

•Our profitability may decline as a result of increasing pressure on pricing.

•Some of our manufacturing relationships are not exclusive, which means that these manufacturers could produce similar products for our competitors.

•Fluctuations in the cost and availability of raw materials, equipment, labor, and transportation could cause manufacturing delays or increase our costs.

•Many of our products are manufactured by third parties outside of the United States, and our business may be harmed by legal, regulatory, economic, political and public health risks associated with international trade and those markets.

•As current tariffs are implemented, or if additional tariffs or other restrictions are placed on foreign imports or any related counter-measures are taken by other countries, our business and results of operations could be harmed.

•A significant portion of our sales are to independent retail partners, and if they cease to carry our current products or choose not to carry new products that we develop, our brand as well as our results of operations and financial condition could be harmed.

•We depend on our retail partners to display and present our products to customers, and our failure to maintain and further develop our relationships with our retail partners could harm our business.

•If our plans to increase sales through our direct-to-consumer channel are not successful, our business and results of operations could be harmed.

•If we do not successfully implement our future retail store expansion, our growth and profitability could be harmed.

•Insolvency, credit problems or other financial difficulties that could confront our retail partners could expose us to financial risk.

•If our independent suppliers and manufacturing partners do not comply with ethical business practices or with applicable laws and regulations, our reputation, business, and results of operations could be harmed.

•We are subject to payment-related risks that may result in higher operating costs or the inability to process payments, either of which could harm our business, financial condition and results of operations.

•Our limited operating experience and limited brand recognition in new markets may make it more difficult to execute our international expansion plan and cause our business and growth to suffer.

•Our financial results and future growth could be harmed by currency exchange rate fluctuations.

•We may become involved in legal or regulatory proceedings and audits.

•Our business involves the potential for product recalls, product liability, and other claims against us, which could adversely affect our reputation, earnings and financial condition.

•Our business is subject to the risk of catastrophic events, and to interruption by problems such as terrorism, public health crises, cyberattacks, or failure of key information technology systems.

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•Our results of operations are subject to seasonal and quarterly variations, which could cause the price of our common stock to decline.

•We are subject to many hazards and operational risks that can disrupt our business, some of which may not be insured or fully covered by insurance.

Risks Related to Market and Global Economic Conditions

•The COVID-19 pandemic and its effects could result in declines in consumer discretionary spending or continue to adversely affect the global supply chain, which could negatively impact our business, sales, financial condition, results of operations and cash flows, and our ability to access current or obtain new lending facilities.

•During a downturn in the economy, consumer purchases of discretionary items are affected, which could materially harm our sales, profitability, and financial condition.

Risks Related to Information Technology and Security

•We rely significantly on information technology and any failure, inadequacy or interruption of that technology could harm our ability to effectively operate our business.

•We collect, store, process, and use personal and payment information and other customer data, which subjects us to regulation and other legal obligations related to privacy, information security, and data protection.

•Any material disruption or breach of our information technology systems or those of third-party partners could materially damage our customer and business partner relationships, and subject us to significant reputational, financial, legal, and operational consequences.

Risks Related to our Financial Condition and Tax Matters

•We depend on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not be available on terms acceptable to us or at all.

•Our indebtedness may limit our ability to invest in the ongoing needs of our business and if we are unable to comply with the covenants in our current Credit Facility, our liquidity and results of operations could be harmed.

•If our goodwill, other intangible assets, or fixed assets become impaired, we may be required to record a charge to our earnings.

•Changes in tax laws or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.

•The uncertainty regarding the phase-out of LIBOR may negatively impact our operating results.

•Our results of operations could be harmed if a material number of our retail partners were not able to meet their payment obligations.

Risks Related to Ownership of Our Common Stock

•Any future failure to maintain effective internal control over financial reporting could harm us.

•Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of the Company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.

•Our Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

•YETI Holdings, Inc. is a holding company with no operations of its own and, as such, it depends on its subsidiaries for cash to fund its operations and expenses, including future dividend payments, if any.

General Risk Factors

•Our future success depends on the continuing efforts of our management and key employees, and on our ability to attract and retain highly skilled personnel and senior management.

•If our estimates or judgments relating to our critical accounting policies prove to be incorrect or change significantly, our results of operations could be harmed.

•We may be the target of strategic transactions, which could divert our management's attention and otherwise disrupt our operations and adversely affect our business.

•We may acquire or invest in other companies, which could divert our management’s attention, result in dilution to our stockholders, and otherwise disrupt our operations and harm our results of operations.

•We may be subject to liability if we infringe upon the intellectual property rights of third parties.

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Table of Contents


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Equity			4
Condensed Consolidated Statements of Cash Flows			6
Notes To Unaudited Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures About Market Risk			22
Item 4. Controls and Procedures			23
PART II. OTHER INFORMATION			24
Item 1. Legal Proceedings			24
Item 1A. Risk Factors			24
Item 6. Exhibits			44
Signatures			45

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)


	October 2, 2021		January 2, 2021
ASSETS
Current assets
Cash	$	259,317	$	253,283
Accounts receivable, net	83,267		65,417
Inventory	265,974		140,111
Prepaid expenses and other current assets	23,640		17,686
Total current assets	632,198		476,497
Property and equipment, net	108,739		78,075
Operating lease right-of-use assets	54,270		34,090
Goodwill	54,293		54,293
Intangible assets, net	94,074		92,078

Other assets	1,934		2,034
Total assets	$	945,508	$	737,067

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	166,080	$	123,621
Accrued expenses and other current liabilities	96,857		89,068
Taxes payable	6,869		18,316
Accrued payroll and related costs	24,513		25,810
Current operating lease liabilities	11,008		8,247
Current maturities of long-term debt	24,548		22,697
Total current liabilities	329,875		287,759
Long-term debt, net of current portion	101,723		111,017
Operating lease liabilities, non-current	54,043		36,546
Other liabilities	20,227		13,327
Total liabilities	505,868		448,649

Commitments and contingencies (Note 8)

Stockholders’ Equity
Common stock, par value $0.01; 600,000 shares authorized; 87,598 and 87,128 shares issued and outstanding at October 2, 2021 and January 2, 2021, respectively	876		871
Preferred stock, par value $0.01; 30,000 shares authorized; no shares issued or outstanding	—		—
Additional paid-in capital	332,299		321,678
Retained earnings (accumulated deficit)	105,977		(33,744)
Accumulated other comprehensive income (loss)	488		(387)
Total stockholders’ equity	439,640		288,418
Total liabilities and stockholders’ equity	$	945,508	$	737,067

See Notes to Unaudited Condensed Consolidated Financial Statements

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YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales	$	362,643	$	294,603	$	967,864	$	715,953
Cost of goods sold	155,640		120,627		406,560		311,994
Gross profit	207,003		173,976		561,304		403,959
Selling, general, and administrative expenses	138,274		103,864		380,101		271,152
Operating income	68,729		70,112		181,203		132,807
Interest expense	(833)		(1,963)		(2,519)		(7,730)
Other expense	(1,239)		(82)		(2,492)		(1,020)
Income before income taxes	66,657		68,067		176,192		124,057
Income tax expense	(13,690)		(16,622)		(36,471)		(30,650)
Net income	$	52,967	$	51,445	$	139,721	$	93,407

Net income per share
Basic	$	0.61	$	0.59	$	1.60	$	1.07
Diluted	$	0.60	$	0.58	$	1.58	$	1.07

Weighted-average common shares outstanding
Basic	87,526		87,032		87,343		86,933
Diluted	88,750		88,094		88,636		87,677

See Notes to Unaudited Condensed Consolidated Financial Statements

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YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


	Three Months Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net income	$	52,967	$	51,445	$	139,721	$	93,407
Other comprehensive income (loss)
Foreign currency translation adjustments	(84)		(433)		875		(100)
Total comprehensive income	$	52,883	$	51,012	$	140,596	$	93,307

See Notes to Unaudited Condensed Consolidated Financial Statements

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YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)


	Three Months Ended October 2, 2021
	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance, July 3, 2021	87,441	$	874	$	329,638	$	53,010	$	572	$	384,094
Stock-based compensation	—	—		3,824		—		—		3,824
Common stock issued under employee benefit plans	175	2		643		—		—		645
Common stock withheld related to net share settlement of stock-based compensation	(18)	—		(1,806)		—		—		(1,806)
Other comprehensive loss	—	—		—		—		(84)		(84)
Net income	—	—		—		52,967		—		52,967
Balance, October 2, 2021	87,598	$	876	$	332,299	$	105,977	$	488	$	439,640

	Three Months Ended September 26, 2020
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance, June 27, 2020	87,004	$	870	$	315,405	$	(147,583)	$	337	$	169,029
Stock-based compensation	—	—		2,279		—		—		2,279
Common stock issued under employee benefit plans	67	1		635		—		—		636
Common stock withheld related to net share settlement of stock-based compensation	(7)	—		(323)				—		(323)

Other comprehensive loss	—	—		—		—		(433)		(433)
Net income	—	—		—		51,445		—		51,445
Balance, September 26, 2020	87,064	$	871	$	317,996	$	(96,138)	$	(96)	$	222,633

See Notes to Unaudited Condensed Consolidated Financial Statements

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YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

Nine Months Ended October 2, 2021

Common Stock

Additional
Paid-In
Capital

Retained Earnings
(Accumulated Deficit)

Accumulated
Other
Comprehensive
Income (Loss)

Total
Stockholders’
Equity

Amount

Balance, January 2, 2021

87,128

SEC Form 10-Q filed by YETI Holdings, Inc.