Net Sales Increased 12%
Gross Margin Expanded 140 Basis
Points
Diluted EPS increased by 14% to $0.26;
Diluted Adjusted EPS increased by 19% to $0.33
Raises 2019 Outlook
YETI Holdings, Inc. (“YETI”) (NYSE: YETI) today announced its
financial results for the second quarter ended June 29, 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” 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,
“YETI delivered strong second quarter results, highlighted by our
DTC business and demonstrating the brand’s growing reach and
relevance during the important gift giving period for moms, dads,
and grads. We made meaningful progress across our growth strategies
during the period including the integration of our e-commerce
platforms, the opening of our second retail store in Charleston,
and the successful launch of a new category with the LoadOut GoBox.
With an even stronger product lineup ahead, ongoing enhancements in
our ability to service the business, and further advancements
across our retail and international strategies, we are incredibly
excited about the second half of 2019 as well as the foundation we
are creating for long-term growth.”
For the Three Months Ended June 29, 2019
Net sales increased 12% to $231.7 million,
compared to $206.3 million during the same period last year.
- Direct-to-consumer (“DTC”) channel net sales increased 43% to
$82.5 million, compared to $57.5 million in the prior year quarter,
led by strong balanced performance in both product categories.
- Wholesale channel net sales were flat at $149.2 million,
compared to $148.8 million in the same period last year.
- Drinkware net sales increased 16% to $117.0 million, compared
to $100.9 million in the prior year quarter, primarily driven by
the continued expansion of our Drinkware product offerings,
including the introduction of new colorways, sizes, accessories,
and strong demand for customization.
- Coolers & Equipment net sales increased 9% to $109.1
million, compared to $99.6 million in the same period last year,
primarily driven by strong performance in bags, hard coolers,
outdoor living and cargo products.
Gross profit increased 16% to $116.3
million, or 50.2% of net sales, compared to $100.6 million, or
48.8% of net sales, in the second quarter of 2018. The 140 basis
point increase in gross margin was primarily driven by cost
improvements, particularly in our Drinkware category, a favorable
shift in our channel mix led by an increase in DTC channel net
sales, partially offset by higher tariff rates, and the unfavorable
impact of inventory reserve reductions in the prior year
quarter.
Selling, general, and administrative (“SG&A”)
expenses increased to $81.3 million, or 35.1% of net
sales, compared to $67.4 million, or 32.7% of net sales, in the
second quarter of 2018. SG&A as a percent of net sales
increased 240 basis points, and approximately 90 basis points of
the increase was attributable to costs incurred in our transition
to a public company. The balance of the basis point increase was
primarily due to higher selling expenses, increased personnel and
infrastructure to support long-term growth in our business, and
increased depreciation and amortization expense, partially offset
by lower third-party logistics fees, marketing expenses, and other
general and administrative cost savings.
Operating income increased 5% to $35.0
million, or 15.1% of net sales, compared to $33.2 million, or 16.1%
of net sales, during the prior year quarter.
Adjusted operating income increased 12% to
$43.4 million, or 18.8% of net sales, compared to $38.9 million, or
18.9% of net sales, during the same period last year.
Net income increased 18% to $22.2 million,
compared to $18.8 million in the prior year quarter; earnings per
diluted share increased 14% to $0.26, compared to $0.23 per diluted
share in the prior year quarter.
Adjusted net income increased 23% to $28.6
million, compared to $23.2 million in the prior year quarter;
adjusted earnings per diluted share increased 19% to $0.33,
compared to $0.28 per diluted share in the prior year quarter.
Adjusted EBITDA increased 13% to $50.8
million, or 21.9% of net sales, from $45.0 million, or 21.8% of net
sales, during the same period last year.
For the Six Months Ended June 29, 2019
Net sales increased 13% to $387.0 million,
compared with $341.5 million during the same period last year.
- Direct-to-consumer (“DTC”) channel net sales increased 36% to
$144.2 million, compared to $105.8 million in the prior year
period, led by strong performance in both primary product
categories.
- Wholesale channel net sales increased 3% to $242.8 million,
compared to $235.8 million in the same period last year, primarily
driven by Coolers & Equipment.
- Drinkware net sales increased 18% to $207.9 million, compared
to $176.7 million in the prior year period, primarily driven by the
continued expansion of our Drinkware product offerings, including
the introduction of new colorways, sizes, accessories, and strong
demand for customization.
- Coolers & Equipment net sales increased 10% to $168.7
million, compared to $153.3 million in the same period last year,
primarily driven by strong performance in bags, outdoor living,
hard coolers, and cargo, as well as the introduction of the Camino
Carryall to our wholesale channel during the first quarter of
2019.
Gross profit increased 22% to $192.9
million, or 49.8% of net sales, compared to $157.8 million, or
46.2% of net sales, in the prior year period. The 370 basis point
increase in gross margin was primarily driven by cost improvements,
particularly in our Drinkware category, and a favorable shift in
our channel mix led by an increase in DTC channel net sales, and
lower inbound freight, partially offset by higher tariff rates.
Selling, general, and administrative (“SG&A”)
expenses increased to $149.1 million, or 38.5% of net
sales, compared to $121.3 million, or 35.5% of net sales, in the
same period last year. SG&A as a percent of net sales increased
300 basis points, and approximately 90 basis points of the increase
was attributable to costs incurred in our transition to a public
company. The balance of the basis point increase was primarily due
to higher selling expenses, including increased marketing expenses,
increased headcount to support growth in our business, increased
depreciation and amortization expenses, partially offset by lower
third-party logistics fees and other general and administrative
cost savings.
Operating income increased 20% to $43.8
million, or 60 basis points, to 11.3% of net sales, compared to
$36.4 million, or 10.7% of net sales, during the prior year
period.
Adjusted operating income increased 25% to
$58.1 million, or 140 basis points, to 15.0% of net sales, compared
to $46.6 million, or 13.7% of net sales, during the same period
last year.
Net income increased 57% to $24.4 million,
compared to $15.6 million in the prior year quarter; earnings per
diluted share increased 51% to $0.28, compared to $0.19 per diluted
share in the prior year period.
Adjusted net income increased 50% to $35.2
million, compared to $23.5 million in the prior year quarter;
adjusted earnings per diluted share increased 45% to $0.41,
compared $0.28 per diluted share in the same period last year.
Adjusted EBITDA increased 23% to $72.0
million, or 18.6% of net sales, from $58.4 million, or 17.1% of net
sales, during the prior year period.
Balance Sheet and Cash Flow Highlights
Inventory increased 21% to $181.4 million,
compared to $149.4 million at the end of the second quarter of
2018. Inventory levels reflect the strategic buildup of Drinkware
in advance of potential additional tariffs as well as investments
to support anticipated sales growth, including new product
introductions planned for the second half of 2019. Excluding the
Drinkware buildup, inventory growth was in-line with our
expectations and less than our reported sales growth for the
quarter.
Total debt, excluding unamortized deferred
financing fees, was $309.1 million, compared to $435.4 million at
the end of the second quarter of 2018. During the first half of
2019, we made $23.8 million in mandatory debt payments. Our ratio
of net debt to adjusted EBITDA for the trailing twelve months (as
defined below) was 1.7 times at the end of the second quarter of
2019, compared to 3.0 times at the end of the same period last
year.
Cash flow provided by operating activities
was $9.8 million and capital expenditures were $16.8 million for
six months ended June 29, 2019.
Updated 2019 Outlook
- Net sales are now expected to increase between 13.5% and
14% compared to 2018, with growth across both channels and led by
the DTC channel (versus the previous outlook of between 11.5% and
13%);
- Operating income as a percentage of net sales is now
expected to be between 13.9% and 14.1%, reflecting margin expansion
of 80 to 100 basis points, primarily driven by higher gross margin,
partially offset by higher public company costs, including costs
related to our May 2019 secondary offering, as well as investments
to support our international expansion (versus the previous outlook
of 14.2% and 14.5%);
- Adjusted operating income as a percentage of net sales
is now expected to be between 16.3% and 16.6%, reflecting margin
expansion of 40 to 70 basis points, primarily driven by higher
gross margin (versus the previous outlook of 16.2% and 16.5%);
- An effective tax rate at a more normalized level of
approximately 24.5%, which remains unchanged from the previous
outlook;
- Net income per diluted share is now expected to be
between $0.88 and $0.90, reflecting 27% to 31% growth (versus the
previous outlook of $0.87 and $0.90); assuming a normalized tax
rate of 24.5% in 2018 (the effective tax rate for 2018 was 17%),
earnings growth would be between 40% to 43%;
- Adjusted net income per diluted share is now expected to
be between $1.07 and $1.09, reflecting 18% to 21% growth (versus
the previous outlook of $1.02 and $1.06, reflecting 13% to 17%
growth); assuming a normalized tax rate of 24.5% in 2018 (the
effective tax rate for 2018 was 17%), adjusted earnings growth
would be between 27% and 30% (versus the previous outlook of 21%
and 26%);
- Diluted weighted average shares outstanding of 86
million, which remains unchanged from the previous outlook;
- Adjusted EBITDA is now expected to be between $174.8
million and $177.7 million, or between 19.8% and 20.0% of net sales
reflecting 17% to 19% growth (versus the previous outlook of $171.9
million and $176.3 million, or between 19.8% and 20.0% of net
sales, and reflecting growth of 15% to 18%);
- Capital expenditures are expected to remain between $35
million and $40 million; and
- Debt repayments are expected to be approximately $80
million and the ratio of net debt to Adjusted EBITDA is expected to
be approximately 1.0 times at the end of 2019, which remains
unchanged from the previous outlook, compared to 1.7 times at the
end of 2018.
Ratio of Net Debt to Adjusted EBITDA Trailing Twelve
Months
Net debt as of June 29, 2019, which is total debt of $309.1
million less cash of $38.0 million, divided by adjusted EBITDA for
the trailing twelve months, was 1.7 times. Adjusted EBITDA for the
trailing twelve months ending June 29, 2019 was $162.7 million and
is calculated using the full year 2018 adjusted EBITDA of $149.0
million less adjusted EBITDA for the first six months of 2018 of
$58.4 million, plus adjusted EBITDA for the first six months of
2019 of $72.0 million.
Net debt as of June 30, 2018, which is total debt of $435.4
million less cash of $71.3 million, divided by adjusted EBITDA for
the trailing twelve months, was 3.0 times. Adjusted EBITDA for the
trailing twelve months ending June 30, 2018 was $122.0 million and
is calculated using the full year 2017 adjusted EBITDA of $97.5
million less adjusted EBITDA for the first six months of 2017 of
$33.8 million, plus adjusted EBITDA for the first six months of
2018 of $58.4 million.
Conference Call Details
A conference call to discuss the second quarter of 2019
financial results is scheduled for today, August 1, 2019, at 8:00
a.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial 877-451-6152
(international callers please dial 201-389-0879) 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 13692566. The replay will be available until August
15, 2019. A copy of this press release will be furnished to the
Securities and Exchange Commission on a Current Report on Form 8-K,
and will be posted to our investor relations web site, prior to the
conference call.
About YETI Holdings, Inc.
YETI is a designer, marketer, retailer, and distributor of a
variety of innovative, branded, premium products to a wide-ranging
customer base. Our mission is to ensure that each YETI product
delivers exceptional performance and durability in any environment,
whether in the remote wilderness, at the beach, or anywhere else
life takes our customers. By consistently delivering
high-performing products, we have built a following of engaged
brand loyalists throughout the United States, Canada, Japan,
Australia, and elsewhere, ranging from serious outdoor enthusiasts
to individuals who simply value products of uncompromising quality
and design. Our relationship with customers continues to thrive and
deepen as a result of our innovative new product introductions,
expansion and enhancement of existing product families, and
multifaceted branding activities.
Non-GAAP Financial Information
This press release includes financial measures that are not
defined by GAAP, including adjusted operating income, adjusted net
income, adjusted net income per diluted share, and adjusted EBITDA.
We define adjusted operating income and adjusted net income as
operating income and net income, respectively, adjusted for
non-cash stock-based compensation expense, asset impairment
charges, investments in new retail locations and international
market expansion, transition to Cortec Group Fund V, L.P. and its
affiliates (“Cortec”) majority ownership, transition to the ongoing
senior management team, and transition to a public company, and, in
the case of adjusted net income, also adjusted for accelerated
amortization of deferred financing fees and the loss from early
extinguishment of debt resulting from early prepayments of debt,
and the tax impact of all adjustments. Adjusted net income per
share is calculated using Adjusted net income, as defined above,
and diluted weighted average shares outstanding. We define adjusted
EBITDA as net income before interest expense, net, provision
(benefit) for income taxes and depreciation and amortization,
adjusted for the impact of certain other items, including: non-cash
stock-based compensation expense; asset impairment charges;
accelerated amortization of deferred financing fees and loss from
early extinguishment of debt resulting from the early prepayment of
debt; investments in new retail locations and international market
expansion; transition to Cortec majority ownership; transition to
the ongoing senior management team; and transition to a public
company. The expenses incurred related to these transitional events
include: management fees and contingent consideration related to
the transition to Cortec majority ownership; severance, recruiting,
and relocation costs related to the transition to our ongoing
senior management team; consulting fees, recruiting fees, salaries
and travel costs related to members of our Board of Directors, fees
associated with Sarbanes-Oxley Act compliance, incremental audit
and legal fees in connection with our transition to a public
company, and costs incurred in connection with our secondary
offering. All of these transitional costs are reported in SG&A
expenses.
Adjusted operating income, adjusted net income, adjusted net
income per diluted share, and adjusted EBITDA are not defined by
GAAP and may not be comparable to similarly titled measures
reported by other entities. We use these non-GAAP measures, along
with GAAP measures, as a measure of profitability. These measures
help us compare our performance to other companies by removing the
impact of our capital structure; the effect of operating in
different tax jurisdictions; the impact of our asset base, which
can vary depending on the book value of assets and methods used to
compute depreciation and amortization; the effect of non-cash
stock-based compensation expense, which can vary based on plan
design, share price, share price volatility, and the expected lives
of equity instruments granted; as well as certain expenses related
to what we believe are events of a transitional nature. We also
disclose adjusted operating income, adjusted net income, and
adjusted EBITDA as a percentage of net sales to provide a measure
of relative profitability.
We believe that these non-GAAP measures, when reviewed in
conjunction with GAAP financial measures, and not in isolation or
as substitutes for analysis of our results of operations under
GAAP, are useful to investors as they are widely used measures of
performance and the adjustments we make to these non-GAAP measures
provide investors further insight into our profitability and
additional perspectives in comparing our performance to other
companies and in comparing our performance over time on a
consistent basis. adjusted operating income, adjusted net income,
and adjusted EBITDA have limitations as profitability measures in
that they do not include the interest expense on our debts, our
provisions for income taxes, and the effect of our expenditures for
capital assets and certain intangible assets. In addition, all of
these non-GAAP measures have limitations as profitability measures
in that they do not include the effect of non-cash stock-based
compensation expense, the effect of asset impairments, the effect
of investments in new retail locations and international market
expansion, and the impact of certain expenses related to
transitional events that are settled in cash. Because of these
limitations, we rely primarily on our GAAP results.
In the future, we may incur expenses similar to those for which
adjustments are made in calculating adjusted operating income,
adjusted net income, and adjusted EBITDA. Our presentation of these
non-GAAP measures should not be construed as a basis to infer that
our future results will be unaffected by extraordinary, unusual or
non-recurring items.
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 made relating to our growth plans and
expectations and our expectations for annual growth, including
those set forth in the quote from YETI’s President and CEO, and the
2019 financial outlook provided herein. 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) our ability to
maintain and strengthen our brand and generate and maintain ongoing
demand for our products; (ii) our ability to successfully design
and develop new products; (iii) our ability to effectively manage
our growth; (iv) our ability to expand into additional consumer
markets, and our success in doing so; (v) the success of our
international expansion plans; (vi) our ability to compete
effectively in the outdoor and recreation market and protect our
brand; (vii) the level of customer spending for our products, which
is sensitive to general economic conditions and other factors;
(viii) problems with, or loss of, our third-party contract
manufacturers and suppliers, or an inability to obtain raw
materials; (ix) fluctuations in the cost and availability of raw
materials, equipment, labor, and transportation and subsequent
manufacturing delays or increased costs; (x) our ability to
accurately forecast demand for our products and our results of
operations; (xi) our relationships with our national, regional, and
independent retail partners, who account for a significant portion
of our sales; (xii) the impact of natural disasters and failures of
our information technology on our operations and the operations of
our manufacturing partners; (xiii) our ability to attract and
retain skilled personnel and senior management, and to maintain the
continued efforts of our management and key employees; and (xiv)
the impact of our indebtedness on our ability to invest in the
ongoing needs of our business. 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
December 30, 2018, for a more extensive list of factors, that may
be amended, supplemented or superseded from time to time by other
reports YETI files with the SEC, that could affect results. 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.
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per
share amounts)
Three Months
Ended
Six Months
Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
Net sales
$
231,654
$
206,288
$
387,007
$
341,545
Cost of goods sold
115,377
105,718
194,103
183,786
Gross profit
116,277
100,570
192,904
157,759
Selling, general, and administrative
expenses
81,277
67,384
149,120
121,329
Operating income
35,000
33,186
43,784
36,430
Interest expense
(5,695
)
(8,593
)
(11,762
)
(16,719
)
Other income (expense)
49
(93
)
112
(111
)
Income before income taxes
29,354
24,500
32,134
19,600
Income tax expense
(7,131
)
(5,675
)
(7,744
)
(4,036
)
Net income
$
22,223
$
18,825
$
24,390
$
15,564
Net income per
share
Basic
$
0.26
$
0.23
$
0.29
$
0.19
Diluted
$
0.26
$
0.23
$
0.28
$
0.19
Weighted average common shares
outstanding
Basic
84,577
81,147
84,387
81,283
Diluted
86,227
82,932
86,042
82,956
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except per
share amounts)
June 29,
December
29,
June 30,
2019
2018
2018
ASSETS
Current assets
Cash
$
38,023
$
80,051
$
71,342
Accounts receivable, net
75,856
59,328
65,429
Inventory
181,354
145,423
149,368
Prepaid expenses and other current
assets
17,762
12,211
11,119
Total current assets
312,995
297,013
297,258
Property and equipment, net
79,989
74,097
71,101
Goodwill
54,293
54,293
54,293
Intangible assets, net
90,375
80,019
79,441
Deferred income taxes
1,306
7,777
7,287
Deferred charges and other assets
1,478
1,014
1,017
Total assets
$
540,436
$
514,213
$
510,397
LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT)
Current liabilities
Accounts payable
$
101,538
$
68,737
$
73,503
Accrued expenses and other current
liabilities
44,575
53,022
41,473
Taxes payable
1,766
6,390
3,322
Accrued payroll and related costs
8,149
15,551
7,283
Current maturities of long-term debt
42,138
43,638
47,050
Total current liabilities
198,166
187,338
172,631
Long-term debt, net of current portion
263,258
284,376
380,813
Other liabilities
15,060
13,528
13,754
Total liabilities
476,484
485,242
567,198
Commitments and contingencies
Stockholders’ equity
Common stock, par value $0.01; 600,000
shares authorized; 84,820, 84,196, and 81,147 shares outstanding at
June 29, 2019, December 29, 2018, and June 30, 2018,
respectively
848
842
811
Preferred stock, par value $0.01; 30,000
shares authorized; no shares issued or outstanding
—
—
—
Additional paid-in capital
278,671
268,327
224,236
Accumulated deficit
(215,533
)
(240,104
)
(281,834
)
Accumulated other comprehensive loss
(34
)
(94
)
(14
)
Total stockholders’ equity (deficit)
63,952
28,971
(56,801
)
Total liabilities and stockholders’
equity
$
540,436
$
514,213
$
510,397
YETI HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
(In thousands, except per share
amounts)
Six Months Ended
June 29,
June 30,
2019
2018
Cash Flows from Operating
Activities:
Net income
$
24,390
$
15,564
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization
13,801
11,885
Amortization of deferred financing
fees
1,133
1,456
Stock-based compensation
8,286
7,108
Deferred income taxes
6,310
2,717
Impairment of long-lived assets
97
598
Gain on disposal of long-lived assets
—
(20
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(15,945
)
1,658
Inventory
(36,225
)
25,685
Other current assets
(5,516
)
(4,277
)
Accounts payable and accrued expenses
17,367
28,415
Taxes payable
(4,655
)
(8,956
)
Other
723
1,798
Net cash provided by operating
activities
9,766
83,631
Cash Flows from Investing
Activities:
Purchases of property and equipment
(16,786
)
(7,067
)
Purchases of intangibles, net
(13,214
)
(7,724
)
Proceeds from sale of long-lived
assets
—
165
Net cash used in investing activities
(30,000
)
(14,626
)
Cash Flows from Financing
Activities:
Repayments of long-term debt
(23,750
)
(49,275
)
Cash paid for repurchase of common
stock
—
(1,967
)
Proceeds from employee stock
transactions
2,064
53
Taxes paid in connection with exercise of
stock options
—
(57
)
Payments of dividends
—
(96
)
Net cash used in financing activities
(21,686
)
(51,342
)
Effect of exchange rate changes on
cash
(108
)
29
Net (decrease) increase in cash
(42,028
)
17,692
Cash, beginning of period
80,051
53,650
Cash, end of period
$
38,023
$
71,342
YETI HOLDINGS, INC.
SELECTED FINANCIAL DATA
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
(In thousands except per share
amounts)
Three Months
Ended
Six Months
Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
Operating income
$
35,000
$
33,186
$
43,784
$
36,430
Adjustments:
Non-cash stock-based compensation
expense(1)
4,281
4,098
8,286
7,108
Long-lived asset impairment(1)
3
—
97
—
Investments in new retail locations and
international market expansion(1)(2)
823
—
1,051
240
Transition to Cortec majority
ownership(1)(3)
—
—
—
750
Transition to the ongoing senior
management team(1)(4)
423
878
523
1,344
Transition to a public company(1)(5)
2,916
732
4,385
770
Adjusted operating
income
$
43,446
$
38,894
$
58,126
$
46,642
Net income
$
22,223
$
18,825
$
24,390
$
15,564
Adjustments:
Non-cash stock-based compensation
expense(1)
4,281
4,098
8,286
7,108
Long-lived asset impairment(1)
3
—
97
—
Investments in new retail locations and
international market expansion(1)(2)
823
—
1,051
240
Transition to Cortec majority
ownership(1)(3)
—
—
—
750
Transition to the ongoing senior
management team(1)(4)
423
878
523
1,344
Transition to a public company(1)(5)
2,916
732
4,385
770
Tax impact of adjusting items(6)
(2,070
)
(1,341
)
(3,514
)
(2,323
)
Adjusted net
income
$
28,599
$
23,192
$
35,218
$
23,453
Net income
$
22,223
$
18,825
$
24,390
$
15,564
Adjustments:
Interest expense
5,695
8,593
11,762
16,719
Income tax expense
7,131
5,675
7,744
4,036
Depreciation and amortization
expense(7)
7,262
6,182
13,801
11,885
Non-cash stock-based compensation
expense(1)
4,281
4,098
8,286
7,108
Long-lived asset impairment(1)
3
—
97
—
Investments in new retail locations and
international market expansion(1)(2)
823
—
1,051
240
Transition to Cortec majority
ownership(1)(3)
—
—
—
750
Transition to the ongoing senior
management team(1)(4)
423
878
523
1,344
Transition to a public company(1)(5)
2,916
732
4,385
770
Adjusted EBITDA
$
50,757
$
44,983
$
72,039
$
58,416
Net sales
$
231,654
$
206,288
$
387,007
$
341,545
Operating income as a % of net sales
15.1
%
16.1
%
11.3
%
10.7
%
Adjusted operating income as a % of net
sales
18.8
%
18.9
%
15.0
%
13.7
%
Net income as a % of net sales
9.6
%
9.1
%
6.3
%
4.6
%
Adjusted net income as a % of net
sales
12.3
%
11.2
%
9.1
%
6.9
%
Adjusted EBITDA as a % of net sales
21.9
%
21.8
%
18.6
%
17.1
%
Net income per diluted share
$
0.26
$
0.23
$
0.28
$
0.19
Adjusted net income per diluted share
$
0.33
$
0.28
$
0.41
$
0.28
Weighted average common shares outstanding
- diluted
86,227
82,932
86,042
82,956
_________________________
(1)
These costs are reported in SG&A
expenses.
(2)
Represents retail store pre-opening
expenses and costs for expansion into new international
markets.
(3)
Represents management service fees paid to
Cortec, our majority stockholder. The management services agreement
with Cortec was terminated immediately following the completion of
our IPO in October 2018.
(4)
Represents severance, recruiting, and
relocation costs related to the transition to our ongoing senior
management team.
(5)
Represents fees and expenses in connection
with our transition to a public company, including consulting fees,
recruiting fees, salaries, and travel costs related to members of
our Board of Directors, fees associated with Sarbanes-Oxley Act
compliance, incremental audit and legal fees associated with being
a public company, and $1.5 million of costs incurred in connection
with our secondary offering in May 2019.
(6)
Represents the tax impact of adjustments
calculated at an expected statutory tax rate of 24.5% and 23.5% for
the three months ended June 29, 2019 and June 30, 2018,
respectively. For the six months ended June 29, 2019 and June 30,
2018, the tax rate used to calculate the tax impact of adjustments
was 24.5% and 22.8%, respectively.
(7)
Depreciation and amortization expenses are
reported in SG&A expenses and cost of goods sold.
YETI HOLDINGS, INC.
UPDATED 2019 OUTLOOK
Reconciliation of GAAP to
Non-GAAP Financial Information
(Unaudited)
(In thousands except per share
amounts)
Updated 2019 Outlook
Low
High
Operating income
$
122,547
$
125,204
Adjustments:
Non-cash stock-based compensation
expense(1)
11,952
11,952
Long-lived asset impairment(1)
97
97
Investments in new retail locations and
international market expansion(1)(2)
2,580
2,580
Transition to the ongoing senior
management team(1)(3)
523
523
Transition to a public company(1)(4)
6,689
6,689
Adjusted operating income
$
144,388
$
147,045
Net income
$
75,593
$
77,596
Adjustments:
Non-cash stock-based compensation
expense(1)
11,952
11,952
Long-lived asset impairment(1)
97
97
Investments in new retail locations and
international market expansion(1)(2)
2,580
2,580
Transition to the ongoing senior
management team(1)(3)
523
523
Transition to a public company(1)(4)
6,689
6,689
Tax impact of adjusting items(5)
(5,349
)
(5,349
)
Adjusted net income
$
92,085
$
94,088
Net income
$
75,593
$
77,596
Adjustments:
Interest expense
22,386
22,386
Income tax expense
24,680
25,334
Depreciation and amortization
expense(6)
30,253
30,553
Non-cash stock-based compensation
expense(1)
11,952
11,952
Long-lived asset impairment(1)
97
97
Investments in new retail locations and
international market expansion(1)(2)
2,580
2,580
Transition to the ongoing senior
management team(1)(3)
523
523
Transition to a public company(1)(4)
6,689
6,689
Adjusted EBITDA
$
174,753
$
177,710
Net sales
$
883,976
$
887,870
Operating income as a % of net sales
13.9
%
14.1
%
Adjusted operating income as a % of net
sales
16.3
%
16.6
%
Adjusted EBITDA as a % of net sales
19.8
%
20.0
%
Net income per diluted share
$
0.88
$
0.90
Adjusted net income per diluted share
$
1.07
$
1.09
Weighted average common shares outstanding
- diluted
86,011
86,011
_________________________
(1)
These costs are reported in SG&A
expenses.
(2)
Represents retail store pre-opening
expenses and costs for expansion into new international
markets.
(3)
Represents severance, recruiting, and
relocation costs related to the transition to our ongoing senior
management team.
(4)
Represents fees and expenses in connection
with our transition to a public company, including consulting fees,
recruiting fees, salaries, and travel costs related to members of
our Board of Directors, fees associated with Sarbanes-Oxley Act
compliance, incremental audit and legal fees associated with being
a public company, and $1.5 million of costs incurred in connection
with our secondary offering in May 2019.
(5)
Represents tax impact of adjustments
calculated at an expected statutory tax rate of 24.5%.
(6)
These costs are reported in SG&A
expenses and cost of goods sold.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005237/en/
Investor Relations Contact: Tom Shaw, 512-271-6332
Investor.relations@yeti.com
Media Contact: YETI Holdings, Inc. Media Hotline
Media@yeti.com
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