YETI Q1 2025 Earnings Summary: Resilient Results Amid Tariff Challenges, Full-Year Outlook Lowered

• Net sales: $351.1M (up 3%; FX headwind ~100 bps)
• Net income: $16.6M (up 5%)
• EPS (GAAP): $0.20 (up 11%)
• Adjusted EPS: $0.31 (down 9%)
• Adjusted net income: $25.8M (down 12%)
• Adjusted operating margin: 10.0% (vs. 11.6% last year)
• Free cash flow: ($89.2M) (vs. ($114.3M) last year)

Sales by Channel:
• Direct-to-consumer (DTC): $196.2M (up 4%)
• Wholesale: $154.9M (up 1%)

Sales by Category:
• Coolers & Equipment: $140.2M (up 17%) – led by strong performance in bags and hard coolers
• Drinkware: $205.6M (down 4%) – pressured by lower U.S. sales and limited new product launches due to supply chain focus

Geography:
• U.S. sales: $271.3M (down 2%)
• International sales: $79.9M (up 22%; FX headwind ~500 bps)

Margins and Costs:
• Gross margin: 57.4% (vs. 57.1%)
• Adjusted gross margin: 57.3% (vs. 57.5%)
• SG&A expenses: $180.1M (up 7%)
• Adjusted SG&A as % of sales: 47.3% (up 140 bps)

Balance Sheet Highlights:
• Cash: $259.0M (vs. $173.9M in Q1 2024)
• Inventory: $330.5M (down 9%)
• Debt: $77.0M (down from $81.2M)

2025 Full-Year Outlook (Updated as of May 8):
• Adjusted sales growth: 1%–4% (previously 5%–7%)
o Includes 300 bps negative impact from inventory/supply disruptions
• Adjusted operating margin: ~12% (previously ~16.9%)
o Includes ~450 bps headwind from higher tariffs
• Adjusted EPS: $1.96–$2.02 (previously $2.90–$2.95)
• Free cash flow: $100M–$125M (previously $200M)
• Effective tax rate: ~26% (up from 24.5%)
• CapEx: ~$60M (unchanged)

Strategic Update:
• Tariffs: Higher costs from new tariffs are expected to weigh significantly on 2025 margins.
• Supply Chain: Accelerating diversification away from China; expect <5% of U.S. cost of goods to be sourced from China by end of 2025.
• Brand & Innovation Focus: Despite headwinds, YETI remains focused on international growth, product innovation, and maintaining a strong balance sheet.

YETI Holdings, Inc. has entered into a Cooperation Agreement with Engaged Capital, LLC, which includes the appointment of two new independent directors, Arne Arens and J. Magnus Welander, to its Board of Directors. Their appointments will be effective by March 24, 2025, with Arens serving in Class II until the 2026 Annual Meeting and Welander in Class III until the 2027 Annual Meeting.

As part of the agreement, Engaged Capital has withdrawn its prior director nominations and agreed to certain voting and standstill provisions, including restrictions on acquiring more than 9.9% of YETI’s outstanding shares and limitations on proxy solicitations or shareholder proposals. Both new directors will also be appointed to one of YETI’s board committees by May 1, 2025.

Additionally, YETI will enter into standard indemnification agreements with the new directors, and they will receive compensation consistent with other non-employee board members. The company has filed the Cooperation Agreement and an official press release with the U.S. Securities and Exchange Commission.