Net Sales Increased 45%

Gross Margin Expanded 280 Basis Points

EPS Increased to $0.63 from $0.38

Adjusted EPS Increased to $0.68 from $0.41

Raises 2021 Outlook

YETI Holdings, Inc. (“YETI”) (NYSE: YETI) today announced its financial results for the second quarter ended July 3, 2021.

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 Measures,” 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, “Demand and passion for the YETI brand remained robust during the second quarter. Net sales surged 45% during the period, driven by strong direct-to-consumer performance throughout the quarter including Mother’s Day and Father’s Day, significant year-over-year recoveries in channels such as wholesale that experienced outsized impacts during the pandemic, and a more than three-fold gain in our international business. This topline performance combined with better-than-planned operating margins fueled 66% earnings per share growth for the quarter.”

Mr. Reintjes concluded, “The ongoing momentum in the business continues to be supported by the incredible execution of our team and many brand partners. We remain diligent and thoughtful as we contain and mitigate global supply chain volatility and cost pressures, with a focus on what we directly control – driving brand passion, consideration, and demand. Our conviction and discipline in these areas support our increased full year net sales and earnings per share outlooks for the year.”

For the Three Months Ended July 3, 2021

Net sales increased 45% to $357.7 million, compared to $246.9 million during the same period last year.

• Direct-to-consumer (“DTC”) channel net sales increased 48% to $196.9 million, compared to $133.0 million in the prior year quarter, driven by strong performance in both Drinkware and Coolers & Equipment. The DTC channel grew to 55% of net sales, compared to 54% in the prior year period.
• Wholesale channel net sales increased 41% to $160.8 million, compared to $113.9 million in the same period last year, driven by both Drinkware and Coolers & Equipment. In the second quarter of 2020, wholesale channel net sales were adversely impacted by the temporary store closures due to COVID-19.
• Drinkware net sales increased 69% to $192.9 million, compared to $114.3 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 23% to $157.8 million, compared to $128.6 million in the same period last year, driven by strong performance in soft coolers, bags, outdoor living products, cargo and hard coolers.

Gross profit increased 52% to $209.1 million, or 58.5% of net sales, compared to $137.5 million, or 55.7% of net sales, in the second quarter of 2020. The 280 basis point increase in gross margin was primarily driven by a favorable mix shift to our DTC channel, product cost improvements, and lower inventory reserves, partially offset by the unfavorable impact of the non-renewal of the Global System of Preferences program on import duties and higher inbound freight.

Selling, general, and administrative (“SG&A”) expenses increased 50% to $136.7 million, compared to $91.0 million in the second quarter of 2020. The 2020 period included the benefit of cost reduction initiatives implemented in response to COVID-19. As a percentage of net sales, SG&A expenses increased 140 basis points to 38.2% from 36.8% in the prior year period. This increase included 220 basis points increase in non-variable expenses, primarily driven by higher marketing expenses. Variable expense leverage of 80 basis points on higher net sales positively impacted the quarter.

Operating income increased 56% to $72.4 million, or 20.2% of net sales, compared to $46.5 million, or 18.8% of net sales, during the prior year quarter.

Adjusted operating income increased 57% to $77.4 million, or 21.6% of net sales, compared to $49.3 million, or 20.0% of net sales, during the same period last year.

Net income increased 68% to $56.2 million, or 15.7% of net sales, compared to $33.5 million, or 13.6% of net sales, in the prior year quarter; Net income per diluted share increased 66% to $0.63, compared to $0.38 per diluted share in the prior year quarter.

Adjusted net income increased 68% to $60.0 million, or 16.8% of net sales, compared to $35.6 million, or 14.4% of net sales, in the prior year quarter; Adjusted net income per diluted share increased 66% to $0.68, compared to $0.41 per diluted share in the prior year quarter.

For the Six Months Ended July 3, 2021

Net sales increased 44% to $605.2 million, compared to $421.4 million in the prior year.

• DTC channel net sales increased 52% to $323.7 million, compared to $212.6 million in the prior year period, driven by both Drinkware and Coolers & Equipment. The DTC channel grew to 53% of net sales, compared to 50% in the prior year.
• Wholesale channel net sales increased 35% to $281.6 million, compared to $208.7 million in the same period last year, primarily driven by both Drinkware and Coolers & Equipment. In the second quarter of 2020, wholesale channel net sales were adversely impacted by the temporary store closures due to COVID-19.
• Drinkware net sales increased 51% to $341.8 million, compared to $226.9 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 34% to $251.3 million, compared to $188.1 million in the same period last year. The strong performance was driven by growth in outdoor living products, soft coolers, bags, hard coolers, and cargo.

Gross profit increased 54% to $354.3 million, or 58.5% of net sales, compared to $230.0 million, or 54.6% of net sales, in the prior year. The 390 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 inventory reserves and lower inbound freight.

Selling, general, and administrative expenses increased 45% to $241.8 million, compared to $167.3 million in the prior year, which included the benefit of cost reduction initiatives implemented in response to COVID-19. As a percentage of net sales, SG&A expenses increased 30 basis points to 40.0% from 39.7% in the prior year period. This increase was due to an increase of 20 basis points in variable expenses, driven by the increased mix of our faster growing and higher gross margin DTC channel, which grew to 53% of net sales during the period, and an increase of 10 basis points in non-variable expenses.

Operating income increased 79% to $112.5 million, or 18.6% of net sales, compared to $62.7 million, or 14.9% of net sales, during the prior year.

Adjusted operating income increased 80% to $121.1 million, or 20.0% of net sales, compared to $67.4 million, or 16.0% of net sales, during the same period last year.

Net income increased 107% to $86.8 million, or 14.3% of net sales, compared to $42.0 million, or 10.0% of net sales, in the prior year; Net income per diluted share increased 104% to $0.98, compared to $0.48 per diluted share in the prior year.

Adjusted net income increased 105% to $93.3 million, or 15.4% of net sales, compared to $45.5 million, or 10.8% of net sales in the prior year period; Adjusted net income per diluted share increased 102% to $1.05, compared to $0.52 per diluted share in the same period last year.

Balance Sheet and Cash Flow Highlights

Cash increased to $233.8 million, compared to $127.5 million at the end of the second quarter of 2020.

Inventory increased 60% to $221.7 million, compared to $138.8 million at the end of the prior year quarter, primarily due to the inventory purchase order reductions taken in response to COVID-19 in 2020. The inventory increase represents a CAGR of 11% since the same period in 2019.

Total debt, excluding finance leases and unamortized deferred financing fees, was $123.8 million, compared to $292.5 million at the end of the second quarter of 2020. During the first half of 2021, YETI made mandatory debt payments of $11.3 million. At the end of the second quarter of 2021, our cash balance exceeded total debt by $110.0 million.

Updated 2021 Outlook

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

• Net sales are now expected to increase between 26% and 28% (versus the previous outlook of between 20% and 22%);
• Operating income as a percentage of net sales is expected to be approximately 19%, which remains unchanged from the previous outlook;
• Adjusted operating income as a percentage of net sales is expected to be approximately 20.5%, which remains unchanged from the previous outlook;
• The effective tax rate is now expected to be approximately 23%, (versus the previous outlook of 24.0%);
• Net income per diluted share is now expected to be between $2.25 and $2.29 (versus the previous outlook of $2.12 and $2.16), reflecting a 27% to 29% increase;
• Adjusted net income per diluted share is now expected to be between $2.42 and $2.46 (versus the previous outlook of $2.28 and $2.32), reflecting a 29% to 32% increase;
• Diluted weighted average shares outstanding is now expected to be approximately 88.6 million (versus the previous outlook of 88.5 million); and
• Capital expenditures are expected to remain between $55 million and $60 million, primarily to support investments in technology and new product innovation and launches.

Conference Call Details

A conference call to discuss the second quarter of 2021 financial results is scheduled for today, August 5, 2021, at 8:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 631-891-4304 (international callers, please dial 631-891-4304) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at http://investors.yeti.com and by dialing 844-512-2921 and entering the access code 10015594. A replay will be available through August 19, 2021.

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.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we supplement our results with non-GAAP financial measures, including adjusted operating income, adjusted net income, adjusted net income per diluted share as well as adjusted operating income and adjusted net income as a percentage of net sales. Our management uses these non-GAAP financial measures in conjunction with GAAP financial measures to measure our profitability and to evaluate our financial performance. We believe that these measures are useful to investors as they are widely used measures of performance and to facilitate comparisons to other companies. These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with GAAP financial performance measures. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found below.

Forward-looking statements

This press release 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 press release 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 relating to demand conditions and expected sales levels, including those set forth in the quote from YETI’s President and CEO, and the updated 2021 financial outlook provided herein, constitute 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: (i) uncertainty regarding global economic conditions, particularly the uncertainty related to the duration and impact of the rapidly evolving COVID-19 pandemic, including its impact on global economic conditions; (ii) our ability to maintain and strengthen our brand and generate and maintain ongoing demand for our products; (iii) our ability to successfully design, develop and market new products; (iv) our ability to effectively manage our growth; (v) our ability to expand into additional consumer markets, and our success in doing so; (vi) the success of our international expansion plans; (vii) our ability to compete effectively in the outdoor and recreation market and protect our brand; (viii) the level of customer spending for our products, which is sensitive to general economic conditions and other factors; (ix) problems with, or loss of, our third-party contract manufacturers and suppliers, or an inability to obtain raw materials; (x) fluctuations in the cost and availability of raw materials, equipment, labor, and transportation and subsequent manufacturing delays or increased costs; (xi) our ability to accurately forecast demand for our products and our results of operations; (xii) our relationships with our national, regional, and independent retail partners, who account for a significant portion of our sales; (xiii) the impact of natural disasters and failures of our information technology on our operations and the operations of our manufacturing partners; (xiv) our ability to attract and retain skilled personnel and senior management, and to maintain the continued efforts of our management and key employees; and (xv) the impact of our indebtedness on our ability to invest in the ongoing needs of our business. For a more extensive list of factors that could materially affect our results, you should read our filings with the United States Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended January 2, 2021 and the Quarterly Report on Form 10-Q for the three months ended April 3, 2021, as such filings may be amended, supplemented or superseded from time to time by other reports YETI files with the SEC. These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While YETI believes that these assumptions underlying the forward-looking statements are reasonable, YETI cautions that it is very difficult to predict the impact of known factors, and it is impossible for YETI to anticipate all factors that could affect actual results.

The forward-looking statements included here are made only as of the date hereof. YETI undertakes 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. Many of the foregoing risks and uncertainties may be exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result.

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