AUSTIN, Texas--(BUSINESS WIRE)--YETI Holdings, Inc. (NYSE: YETI) today announced its financial results for the fourth quarter and fiscal year ended January 2, 2021. The 14-week fourth quarter and 53-week fiscal year ended January 2, 2021 are compared to the 13-week fourth quarter and 52-week fiscal year ended December 28, 2019.

YETI reports its financial performance in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and as adjusted on a non-GAAP basis. Please see “Non-GAAP Financial Information,” “Revised Non-GAAP Financial Measures Beginning in Fiscal 2020,” and “Reconciliation of GAAP to Non-GAAP Financial Information” below for additional information and reconciliations of the non-GAAP financial measures to the most comparable GAAP financial measures.

Matt Reintjes, President and Chief Executive Officer, commented, “Our remarkable fourth quarter and full year performance reflects the ongoing vitality and relevance of our brand with customers as well as the incredible dedication of and strong execution by our global employees. Our fourth quarter results were highlighted by 26% net sales growth, record gross margin of nearly 60% and over $250 million in cash following an additional $100 million voluntary debt payment at the end of the quarter. This strong quarter culminated a year that saw YETI cross the $1 billion in net sales milestone driven by 19% topline growth. Our revenue growth combined with expanding margins generated over 75% adjusted EPS growth – significantly ahead of our initial outlook during an unprecedented year of disruptions and challenges.”

For the Three Months Ended January 2, 2021 (14 Week Period)

Net sales increased 26% to $375.8 million, compared to $297.6 million during the same period last year.

• Direct-to-consumer (“DTC”) channel net sales increased 46% to $217.8 million, compared to $149.0 million in the prior year quarter, driven by strong performance in both Drinkware and Coolers & Equipment. The DTC channel grew to 58% of net sales, compared to 50% in the prior year period.

• Wholesale channel net sales increased 6% to $158.0 million, compared to $148.7 million in the same period last year, driven by both Drinkware and Coolers & Equipment.

• Drinkware net sales increased 23% to $235.7 million, compared to $192.0 million in the prior year quarter, primarily driven by the continued expansion of our Drinkware product offerings, including the introduction of new colorways and sizes, and strong demand for customization.

• Coolers & Equipment net sales increased 31% to $134.3 million, compared to $102.3 million in the same period last year, driven by strong performance in soft coolers, hard coolers, outdoor living products, and cargo.

Gross profit increased 39% to $224.8 million, or 59.8% of net sales, compared to $162.3 million, or 54.5% of net sales, in the fourth quarter of Fiscal 2019. The 530 basis point increase in gross margin was primarily driven by a favorable mix shift to our DTC channel, as well as product cost improvements, decreased tariffs, and lower inbound freight.

Selling, general, and administrative (“SG&A”) expenses decreased 5% to $143.4 million, compared to $150.4 million in the fourth quarter of Fiscal 2019. Excluding the impact of the $40.7 million one-time non-cash stock-based compensation expense related to pre-IPO performance-based awards recognized in the prior period, SG&A expenses as a percentage of net sales increased 130 basis points. Variable expenses increased 140 basis points, driven by our faster growing and higher gross margin DTC channel, which grew to 58% of net sales during the period. Excluding the impact of the aforementioned one-time non-cash stock-based compensation expense, non-variable expenses leveraged 10 basis points on higher net sales, including leverage on higher expenditures in areas such as employee costs and distributions expenses, partially offset by deleverage on higher marketing expenses.

Operating income increased to $81.4 million, or 21.7% of net sales, compared to $12.0 million, or 4.0% of net sales, during the prior year quarter, which included the impact of the aforementioned one-time stock-based compensation expense.

Adjusted operating income increased 57% to $84.5 million, or 22.5% of net sales, compared to $54.0 million, or 18.1% of net sales, during the same period last year.

Net income increased to $62.4 million, or 16.6% of net sales, compared to $4.7 million, or 1.6% of net sales, in the prior year quarter, which included the impact of the aforementioned one-time stock-based compensation expense; Net income per diluted share increased to $0.71, compared to $0.05 per diluted share in the prior year quarter.

Adjusted net income increased 73% to $65.2 million, or 17.4% of net sales, compared to $37.8 million, or 12.7% of net sales, in the prior year quarter; Adjusted net income per diluted share increased 70% to $0.74, compared to $0.43 per diluted share in the prior year quarter.

Adjusted EBITDA increased 52% to $94.0 million, or 25.0% of net sales, from $61.8 million, or 20.8% of net sales, during the same period last year.

For the Twelve Months Ended January 2, 2021 (53 Weeks)

Net sales increased 19% to $1,091.7 million, compared to $913.7 million in the prior year.

• DTC channel net sales increased 50% to $580.9 million, compared to $386.1 million in the prior year period, driven by both Coolers & Equipment and Drinkware. The DTC channel grew to 53% of net sales, compared to 42% in the prior year.

• Wholesale channel net sales decreased 3% to $510.9 million, compared to $527.6 million in the same period last year, primarily driven by Coolers & Equipment. The decline in wholesale channel net sales was mainly driven by the effects of the COVID-19 pandemic on temporary store closures during the first half of the year.

• Drinkware net sales increased 19% to $628.6 million, compared to $526.2 million in the prior year period, primarily driven by the continued expansion of our Drinkware product offerings, including the introduction of new colorways and sizes, and strong demand for customization.

• Coolers & Equipment net sales increased 21% to $446.6 million, compared to $368.9 million in the same period last year. The strong performance was driven by growth in soft coolers, hard coolers, outdoor living products, and cargo.

Gross profit increased 32% to $628.8 million, or 57.6% of net sales, compared to $475.3 million, or 52.0% of net sales, in the prior year. The 560 basis point increase in gross margin was primarily driven by a favorable mix shift to our DTC channel as well as product cost improvements, lower inbound freight, and decreased tariffs.

Selling, general, and administrative (“SG&A”) expenses increased 8% to $414.6 million, compared to $385.5 million in the prior year. Excluding the impact of the $40.7 million one-time non-cash stock-based compensation expense related to pre-IPO performance-based awards recognized in the prior year, SG&A expenses as a percentage of net sales increased 30 basis points. Variable expenses increased 210 basis points, driven by our faster growing and higher margin DTC channel, which grew to 53% of net sales during the period. Excluding the impact of the aforementioned one-time non-cash stock-based compensation expense, non-variable expenses leveraged 180 basis point on higher net sales, including leverage on higher expenditures in areas such as employee costs, non-cash stock-based compensation expense, and marketing expenses, partially offset by deleverage on higher distribution costs.

Operating income increased 139% to $214.2 million, or 19.6% of net sales, compared to $89.8 million, or 9.8% of net sales, during the prior year, which included the impact of the aforementioned stock-based compensation expense.

Adjusted operating income increased 57% to $224.3 million, or 20.5% of net sales, compared to $142.7 million, or 15.6% of net sales, during the same period last year.

Net income increased 209% to $155.8 million, or 14.3% of net sales, compared to $50.4 million, or 5.5% of net sales, in the prior year, which included the impact of the aforementioned stock-based compensation expense; Net income per diluted share increased 204% to $1.77, compared to $0.58 per diluted share in the prior year.

Adjusted net income increased 79% to $164.2 million, or 15.0% of net sales, compared to $91.8 million, or 10.0% of net sales in the prior year period; Adjusted net income per diluted share increased 76% to $1.87, compared to $1.06 per diluted share in the same period last year.

Adjusted EBITDA increased 49% to $256.0 million, or 23.5% of net sales, from $171.6 million, or 18.8% of net sales, during the prior year.

Balance Sheet and Cash Flow Highlights

Cash increased to$253.3 million, compared to $72.5 million at the end of Fiscal 2019.

Inventory decreased 25% to $140.1 million, compared to $185.7 million at the end of Fiscal 2019. During the final weeks of the first quarter of 2020, YETI took decisive actions in response to government mandates and retail store closures due to the COVID-19 pandemic by reducing purchase orders to align with demand forecasts at the time and to provide enhanced financial flexibility. This disruption and the overall strong demand during 2020 contributed to the inventory decline during the fourth quarter. YETI continues to work to replenish its distribution channels to meet customer demand throughout Fiscal 2021.

Total debt, excluding finance leases and unamortized deferred financing fees, was $135.0 million, compared to $300.0 million at the end of the Fiscal 2019. During Fiscal 2020, YETI made mandatory and voluntary debt payments of $15.0 million and $150.0 million, respectively, and fully repaid the precautionary first quarter borrowings of $50.0 million under its revolving credit facility. Accordingly, at the end of Fiscal 2020, we had no outstanding borrowings and $150.0 million available for borrowing under our revolving credit facility. At the end of the quarter, our cash balance exceeded total debt by $118.3 million.

Cash flow provided by operating activities was $366.4 million, compared to $86.9 million for the twelve months ended December 28, 2019. Capital expenditures were $15.6 million, compared to $32.1 million during the same period last year.

Mr. Reintjes added, “Demand for YETI was strong before the onset of the pandemic and remained robust as global consumers adjusted to new work and life habits highlighted by interest in outdoor pursuits, behaviors that we expect will continue this year. Looking forward, we believe YETI is uniquely positioned to capitalize as consumers begin to re-engage in pre-pandemic activities such as commuting, social gatherings, and sports activities at all levels. This confidence is reflected in our topline outlook of 15% to 17% growth for 2021 – on top of our incredible performance in 2020 and above our long-term target. To further adapt to these consumer evolutions, we remain steadfast in investing across our strategic priorities to ensure we are driving our long-term sustainable global growth aspirations.”

Fiscal 2021 Outlook

For Fiscal 2021, a 52-week period, compared to a 53-week period in Fiscal 2020, YETI expects:

• Net sales to increase between 15% and 17% with sales growth weighted to the first half of the year;
• Operating income as a percentage of net sales of approximately 18.5%;
• Adjusted operating income as a percentage of net sales of approximately 20.0%;
• An effective tax rate of approximately 24.5%;
• Net income per diluted share to be between $1.95 and $1.98, reflecting a 10% to 12% increase, with earnings growth heavily weighted to the first and fourth quarter;
• Adjusted net income per diluted share between $2.11 and $2.14, reflecting a 13% to 15% increase, with earnings growth heavily weighted to the first and fourth quarter;
• Diluted weighted average shares outstanding of approximately 88.6 million; and
• Capital expenditures between $55 million and $60 million, primarily to support investments in technology and new product innovation and launches.

About YETI Holdings, Inc.

Headquartered in Austin, Texas, YETI is a global designer, retailer, and distributor of innovative outdoor products. From coolers and drinkware to backpacks and bags, YETI products are built to meet the unique and varying needs of diverse outdoor pursuits, whether in the remote wilderness, at the beach, or anywhere life takes our customers. By consistently delivering high-performing, exceptional products, we have built a strong following of brand loyalists throughout the world, ranging from serious outdoor enthusiasts to individuals who simply value products of uncompromising quality and design. We have an unwavering commitment to outdoor and recreation communities, and we are relentless in our pursuit of building superior products for people to confidently enjoy life outdoors and beyond. For more information, please visit www.YETI.com.