yeti-20230930

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 September 30, 2023


☐			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 86,852,881 shares of Common Stock ($0.01 par value) outstanding as of November 2, 2023.

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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 our future expectations relating to our voluntary recalls, expected market or macroeconomic environment, 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 further 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

•If we fail to attract new customers and maintain our brand image, we may be unable to maintain demand for our products, which 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 or our growth rate and demand for our products.

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

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

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

•Unauthorized use or invalidation of our intellectual property or proprietary rights could damage our brand and harm our results of operations.

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

•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 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.

•If we cannot maintain prices or effectively implement price increases, our margins may decrease.

•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.

•If we fail to appropriately address emerging environmental, social and governance matters, or if we fail, or are perceived to fail, to meet our goals regarding environmental, social and governance matters, our reputation and our business could be harmed.

•Climate change, and related legislative and regulatory responses to climate change, may adversely impact our business.

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

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

•If we do not successfully implement our retail store expansion plans, 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, warranty liability, product liability, and other claims against us, which could adversely affect our reputation, earnings and financial condition.

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•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.

•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

•Public health crises could negatively impact our business, sales, financial condition, results of operations and cash flows.

•Adverse economic conditions, such as a downturn in the economy or inflationary conditions resulting in rising prices, could adversely affect consumer purchases of discretionary items, 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 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.

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.

•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 be the target of stockholder activism, an unsolicited takeover proposal, a proxy contest, or short sellers, which could negatively impact 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.

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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			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			25
Item 4. Controls and Procedures			26
PART II. OTHER INFORMATION			27
Item 1. Legal Proceedings			27
Item 1A. Risk Factors			27
Item 5. Other Information			47
Item 6. Exhibits			47
Signatures			48

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except shares and par value)


	September 30, 2023		December 31, 2022
ASSETS
Current assets
Cash	$	281,360	$	234,741
Accounts receivable, net	127,896		79,446
Inventory	341,348		371,412
Prepaid expenses and other current assets	40,728		33,321
Total current assets	791,332		718,920
Property and equipment, net	132,215		124,587
Operating lease right-of-use assets	60,376		55,406
Goodwill	54,293		54,293
Intangible assets, net	114,140		99,429

Other assets	3,526		24,130
Total assets	$	1,155,882	$	1,076,765

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	179,086	$	140,818
Accrued expenses and other current liabilities	130,333		211,399
Taxes payable	11,962		15,289
Accrued payroll and related costs	19,570		4,847
Current operating lease liabilities	13,366		12,076
Current maturities of long-term debt	6,512		24,611
Total current liabilities	360,829		409,040
Long-term debt, net of current portion	79,529		71,741
Operating lease liabilities, non-current	60,212		55,649
Other liabilities	16,527		13,858
Total liabilities	517,097		550,288

Commitments and contingencies (Note 10)

Stockholders’ Equity
Common stock, par value $0.01; 600,000,000 shares authorized; 88,523,065 and 86,846,514 shares issued and outstanding at September 30, 2023, respectively, and 88,107,787 and 86,431,236 shares issued and outstanding at December 31, 2022, respectively	885		881
Treasury stock, at cost; 1,676,551 shares	(100,025)		(100,025)
Preferred stock, par value $0.01; 30,000,000 shares authorized; no shares issued or outstanding	—		—
Additional paid-in capital	378,556		357,490
Retained earnings	359,843		268,551
Accumulated other comprehensive loss	(474)		(420)
Total stockholders’ equity	638,785		526,477
Total liabilities and stockholders’ equity	$	1,155,882	$	1,076,765

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
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Net sales	$	433,561	$	433,556	$	1,138,920	$	1,147,226
Cost of goods sold	182,310		211,149		510,961		550,860
Gross profit	251,251		222,407		627,959		596,366
Selling, general, and administrative expenses	189,374		153,940		500,653		426,263
Operating income	61,877		68,467		127,306		170,103
Interest expense, net	(285)		(1,495)		(1,610)		(3,221)
Other expense	(4,032)		(7,281)		(2,782)		(12,202)
Income before income taxes	57,560		59,691		122,914		154,680
Income tax expense	(14,903)		(14,171)		(31,622)		(37,249)
Net income	$	42,657	$	45,520	$	91,292	$	117,431

Net income per share
Basic	$	0.49	$	0.53	$	1.05	$	1.36
Diluted	$	0.49	$	0.52	$	1.05	$	1.35

Weighted-average common shares outstanding
Basic	86,783		86,208		86,663		86,580
Diluted	87,589		86,831		87,290		87,305

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
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Net income	$	42,657	$	45,520	$	91,292	$	117,431
Other comprehensive income (loss)
Foreign currency translation adjustments	1,713		921		(54)		2,132
Total comprehensive income	$	44,370	$	46,441	$	91,238	$	119,563

See Notes to Unaudited Condensed Consolidated Financial Statements

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YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands, including shares)


	Three Months Ended September 30, 2023
	Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balance, July 1, 2023	88,407	$	884	$	371,348	(1,677)	$	(100,025)	$	317,186	$	(2,187)	$	587,206
Stock-based compensation	—	—		7,805		—	—		—		—		7,805
Common stock issued under employee benefit plans	129	1		(1)		—	—		—		—		—
Common stock withheld related to net share settlement of stock-based compensation	(13)	—		(596)		—	—		—		—		(596)

Other comprehensive income	—	—		—		—	—		—		1,713		1,713
Net income	—	—		—		—	—		42,657		—		42,657
Balance, September 30, 2023	88,523	$	885	$	378,556	(1,677)	$	(100,025)	$	359,843	$	(474)	$	638,785

	Three Months Ended October 1, 2022
	Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balance, July 2, 2022	87,851	$	878	$	346,675	(1,677)	$	(100,025)	$	250,769	$	1,564	$	499,861
Stock-based compensation	—	—		4,662		—	—		—		—		4,662
Common stock issued under employee benefit plans	86	1		277		—	—		—		—		278
Common stock withheld related to net share settlement of stock-based compensation	(13)	—		(581)		—	—		—		—		(581)

Other comprehensive income	—	—		—		—	—		—		921		921
Net income	—	—		—		—	—		45,520		—		45,520
Balance, October 1, 2022	87,924	$	879	$	351,033	(1,677)	$	(100,025)	$	296,289	$	2,485	$	550,661

See Notes to Unaudited Condensed Consolidated Financial Statements

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YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands, including shares)


	Nine Months Ended September 30, 2023
	Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balance, December 31, 2022	88,108	$	881	$	357,490	(1,677)	(100,025)		$	268,551	$	(420)	$	526,477
Stock-based compensation	—	—		21,918		—	—		—		—		21,918
Common stock issued under employee benefit plans	475	4		1,569		—	—		—		—		1,573
Common stock withheld related to net share settlement of stock-based compensation	(60)	—		(2,421)		—	—		—		—		(2,421)

Other comprehensive loss	—	—		—		—	—		—		(54)		(54)
Net income	—	—		—		—	—		91,292		—		91,292
Balance, September 30, 2023	88,523	$	885	$	378,556	(1,677)	$	(100,025)	$	359,843	$	(474)	$	638,785

	Nine Months Ended October 1, 2022
	Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balance, January 1, 2022	87,727	$	877	$	337,735	—	—		$	178,858	$	353	$	517,823
Stock-based compensation	—	—		14,883		—	—		—		—		14,883
Common stock issued under employee benefit plans	229	2		276		—	—		—		—		278
Common stock withheld related to net share settlement of stock-based compensation	(32)	—		(1,861)		—	—		—		—		(1,861)
Repurchase of common stock	—	—		—		(1,677)	(100,025)		—		—		(100,025)

Other comprehensive income	—	—		—		—	—		—		2,132		2,132
Net income	—	—		—		—	—		117,431		—		117,431
Balance, October 1, 2022	87,924	$	879	$	351,033	(1,677)	$	(100,025)	$	296,289	$	2,485	$	550,661

See Notes to Unaudited Condensed Consolidated Financial Statements

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YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Nine Months Ended
	September 30, 2023		October 1, 2022
Cash Flows from Operating Activities:
Net income	$	91,292	$	117,431
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	34,391		28,504
Amortization of deferred financing fees	441		458
Stock-based compensation	21,918		14,883
Deferred income taxes	20,699		(1,138)
Impairment of long-lived assets	1,963		181
Loss on modification and extinguishment of debt	330		—
Product recalls	8,538		—
Other	239		10,215

Changes in operating assets and liabilities:
Accounts receivable	(48,836)		14,679
Inventory	28,180		(127,362)
Other current assets	(6,505)		(2,944)
Accounts payable and accrued expenses	(36,288)		(121,515)
Taxes payable	(3,323)		(6,773)
Other	1,730		1,166
Net cash provided by (used in) operating activities	114,769		(72,215)
Cash Flows from Investing Activities:
Purchases of property and equipment	(38,983)		(32,493)
Additions of intangibles, net	(19,280)		(7,924)

Net cash used in investing activities	(58,263)		(40,417)
Cash Flows from Financing Activities:
Repayments of long-term debt	(6,680)		(16,875)
Payments of deferred financing fees	(2,824)		—
Taxes paid in connection with employee stock transactions	(2,421)		(1,861)
Proceeds from employee stock transactions	1,573		278
Finance lease principal payment	(1,579)		(1,730)



Repurchase of common stock	—		(100,025)






Net cash used in financing activities	(11,931)		(120,213)
Effect of exchange rate changes on cash	2,044		(1,581)
Net increase (decrease) in cash	46,619		(234,426)
Cash, beginning of period	234,741		312,189
Cash, end of period	$

SEC Form 10-Q filed by YETI Holdings Inc.