YETI Holdings, Inc. (YETI) Bundle
Understanding YETI Holdings, Inc. (YETI) Revenue Streams
Understanding YETI Holdings, Inc.’s Revenue Streams
Net Sales Analysis (2024)
| Period | Net Sales ($ millions) | Year-over-Year Growth (%) |
|---|---|---|
| Q3 2024 | 478.4 | 10 |
| Q3 2023 | 433.6 | - |
| 9 Months Ended Sep 28, 2024 | 1,283.3 | 13 |
| 9 Months Ended Sep 30, 2023 | 1,138.9 | - |
Revenue Contribution by Channel
| Channel | Net Sales ($ millions) | Year-over-Year Change ($ millions) | Percentage Change (%) |
|---|---|---|---|
| Direct-to-Consumer (DTC) | 280.8 | 21.3 | 8 |
| Wholesale | 197.6 | 23.6 | 14 |
Product Category Breakdown
| Category | Net Sales ($ millions) | Year-over-Year Change ($ millions) | Percentage Change (%) |
|---|---|---|---|
| Coolers & Equipment | 192.6 | 21.0 | 12 |
| Drinkware | 275.0 | 21.7 | 9 |
Geographic Revenue Distribution
| Region | Net Sales ($ millions) | Year-over-Year Change ($ millions) | Percentage Change (%) |
|---|---|---|---|
| United States | 390.2 | 24.5 | 7 |
| International | 88.3 | 20.4 | 30 |
Year-over-Year Revenue Growth Rate
- Q3 2024 net sales increased by $44.9 million, or 10%, from Q3 2023.
- For the nine months ended September 28, 2024, net sales rose by $144.4 million, or 13%, compared to the prior year.
Impact of Recalls on Revenue
- The nine months ended September 30, 2023, included an unfavorable impact of $24.5 million related to a recall reserve adjustment.
- Excluding this impact, net sales increased by $119.9 million, or 10%, for the nine-month period ending September 28, 2024.
A Deep Dive into YETI Holdings, Inc. (YETI) Profitability
Profitability Metrics
Gross Profit: For the three months ended September 28, 2024, gross profit was $277.7 million, representing a 11% increase from $251.3 million in the same period of 2023. The gross margin remained steady at 58.0%.
Net Sales: Net sales increased to $478.4 million from $433.6 million, marking a 10% increase year-over-year.
Operating Profit: Operating income for the third quarter of 2024 was $69.6 million, up from $61.9 million a year earlier, leading to an operating margin of 14.6% compared to 14.3% in the previous year.
Net Income: Net income for the three months ended September 28, 2024, was $56.3 million, which is a 32% increase compared to $42.7 million in the same quarter of 2023.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $478.4 million | $433.6 million | $44.8 million | 10% |
| Gross Profit | $277.7 million | $251.3 million | $26.4 million | 11% |
| Operating Income | $69.6 million | $61.9 million | $7.7 million | 12% |
| Net Income | $56.3 million | $42.7 million | $13.6 million | 32% |
Trends in Profitability: Over the nine-month period ending September 28, 2024, net sales increased by 13% to $1.283 billion from $1.139 billion in the same period of 2023. Gross profit for the nine months was $736.8 million, a 17% increase from $628.0 million. The gross margin improved to 57.4% from 55.1%.
Comparison with Industry Averages: The company's gross margin of 58.0% in Q3 2024 is favorable compared to the industry average of approximately 45%. Operating margins also exceed the industry average, which typically hovers around 10-12%.
Operational Efficiency Analysis: Selling, general, and administrative expenses (SG&A) for Q3 2024 were $208.1 million, representing 43.5% of net sales, a decrease from 43.7% in Q3 2023. This indicates improved cost management despite the increase in overall SG&A expenses. The company has focused on reducing inbound freight costs, contributing positively to gross margins.
Income Tax Expense: The income tax expense for the three months ended September 28, 2024, was $17.8 million, with an effective tax rate of 24%, down from 26% in the same period of 2023.
Debt vs. Equity: How YETI Holdings, Inc. (YETI) Finances Its Growth
Debt vs. Equity: How YETI Holdings, Inc. Finances Its Growth
The financial structure of YETI Holdings, Inc. reflects a balanced approach between debt and equity financing aimed at supporting its growth strategy. Below is an analysis of the company's debt levels, debt-to-equity ratio, recent debt activities, and the overall balance between its debt and equity funding.
Overview of the Company's Debt Levels
As of September 28, 2024, YETI Holdings, Inc. reported the following debt levels:
- Long-term Debt: $79.1 million under Term Loan A.
- Short-term Debt: No outstanding borrowings under the Revolving Credit Facility.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical measure of the company's financial leverage. For YETI, the debt-to-equity ratio as of September 28, 2024, is calculated as follows:
| Debt | Equity | Debt-to-Equity Ratio |
|---|---|---|
| $79.1 million | $769.981 million | 0.103 |
This ratio is significantly below the industry average of approximately 0.5, indicating a conservative use of debt relative to equity.
Recent Debt Issuances and Credit Ratings
In 2024, YETI amended its Credit Facility, maintaining its $300 million Revolving Credit Facility and the existing terms of its debt instruments, which include a Term Loan A of $84.4 million. The weighted-average interest rate for borrowings under the Term Loan A was reported at 7.10% during the three months ended September 28, 2024.
As of September 28, 2024, the company has not reported any downgrades in credit ratings, maintaining a stable outlook due to its strong operational performance and liquidity position.
Balancing Debt Financing and Equity Funding
YETI Holdings, Inc. effectively balances its financing strategies by leveraging both debt and equity. The company has engaged in a Share Repurchase Program, authorizing up to $300 million for stock buybacks, with $200 million remaining as of September 28, 2024. This indicates a strategic use of equity to enhance shareholder value while maintaining a manageable level of debt.
Additionally, the company reported a net income of $122.535 million for the nine months ended September 28, 2024, which supports its ability to service its debt obligations.
In conclusion, YETI Holdings, Inc. demonstrates a prudent approach to managing its debt and equity structure, allowing it to finance growth while maintaining financial stability.
Assessing YETI Holdings, Inc. (YETI) Liquidity
Assessing YETI Holdings, Inc.'s Liquidity
As of September 28, 2024, YETI Holdings, Inc. reported a cash balance of $280.5 million and working capital (excluding cash) of $237.7 million. Additionally, the company had $300 million of borrowings available under its Revolving Credit Facility.
Current and Quick Ratios
The current ratio is a measure of liquidity calculated by dividing current assets by current liabilities. For YETI, the current assets include cash, accounts receivable, and inventory. The quick ratio, which excludes inventory from current assets, is also a crucial indicator of liquidity. The specific calculated values for these ratios are:
- Current Ratio: 1.77 (calculated as current assets divided by current liabilities)
- Quick Ratio: 1.26 (calculated as liquid assets divided by current liabilities)
Analysis of Working Capital Trends
Working capital has shown a positive trend over the last fiscal quarters. The working capital (excluding cash) of $237.7 million as of September 28, 2024, indicates a strong ability to cover short-term liabilities. This figure reflects an increase from $215 million reported in the previous quarter.
Cash Flow Statements Overview
The cash flow statement provides insights into the operational, investing, and financing activities of YETI. Below is a summary of cash flow trends for the nine months ended September 28, 2024, compared to the same period in 2023.
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $35,806 | $114,769 |
| Net Cash Used in Investing Activities | ($87,047) | ($58,263) |
| Net Cash Used in Financing Activities | ($107,517) | ($11,931) |
| Cash at End of Period | $280,464 | $281,360 |
Potential Liquidity Concerns or Strengths
YETI's liquidity position appears strong, with a cash balance of $280.5 million and no outstanding borrowings under the Revolving Credit Facility. The company has a principal amount of $79.1 million outstanding under its term loan, which carries a weighted-average interest rate of 7.10%. The ability to access $300 million under the Revolving Credit Facility provides additional safety against unforeseen liquidity needs.
However, the significant cash outflows for investing and financing activities, particularly the $107.5 million used in financing activities, raises questions about future cash flow sustainability and the potential impact on liquidity.
Is YETI Holdings, Inc. (YETI) Overvalued or Undervalued?
Valuation Analysis
As of September 28, 2024, the company reported a price-to-earnings (P/E) ratio of 27.9, which is a significant indicator of its market valuation relative to its earnings. The earnings per share (EPS) for the trailing twelve months is $1.42 (diluted), reflecting a strong performance compared to the previous year.
The price-to-book (P/B) ratio stands at 4.3, indicating how much investors are willing to pay for each dollar of net assets. This ratio suggests that the company may be considered overvalued compared to its book value.
Additionally, the enterprise value-to-EBITDA (EV/EBITDA) ratio is 18.5, which provides insight into the company's overall valuation, factoring in its debt and cash levels.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 27.9 |
| P/B Ratio | 4.3 |
| EV/EBITDA Ratio | 18.5 |
Over the past 12 months, the stock price has experienced fluctuations, starting at a price of $36.50 and reaching a high of $45.00. The current stock price is approximately $39.50, indicating a moderate level of volatility.
The dividend yield is currently at 0%, as the company does not pay dividends, opting instead to reinvest profits back into the business. The payout ratio is not applicable in this case due to the absence of dividends.
Analyst consensus on the stock valuation is mixed, with recommendations as follows:
- Buy: 5 analysts
- Hold: 10 analysts
- Sell: 2 analysts
The overall sentiment reflects cautious optimism, suggesting that while the company shows growth potential, it may be trading at a premium compared to its historical valuation metrics.
Key Risks Facing YETI Holdings, Inc. (YETI)
Key Risks Facing YETI Holdings, Inc.
YETI Holdings, Inc. faces a variety of internal and external risks that could impact its financial health and operational performance.
Industry Competition
The competitive landscape in the outdoor and lifestyle products sector is intense. YETI competes with numerous established brands, as well as emerging companies that offer similar products. This competition can lead to pricing pressures and reduced market share.
Regulatory Changes
Changes in regulations, particularly regarding product safety and environmental standards, pose a significant risk. Compliance with these regulations can increase operational costs. For instance, the impact of the Organization for Economic Co-operation and Development's new global minimum tax framework could alter tax obligations and financial reporting.
Market Conditions
Fluctuations in consumer spending, economic downturns, and changes in market demand can adversely affect sales. For the nine months ended September 28, 2024, net sales increased by $144.4 million, or 13%, compared to the prior year, but this growth is contingent on sustained consumer interest.
Operational Risks
Operational risks include supply chain disruptions and increased costs for materials. The recent increase in inbound freight rates has negatively impacted gross margins. In the nine months ended September 28, 2024, gross profit was $736.8 million, with a gross margin of 57.4%, up from 55.1% the previous year.
Financial Risks
Financial risks include fluctuations in interest rates and the company’s ability to service its debt. As of September 28, 2024, the company had $79.1 million in outstanding debt under its Term Loan A, with a weighted-average interest rate of 7.10%. The company must comply with covenants related to its credit facilities, which could restrict operational flexibility.
Strategic Risks
Strategic risks involve the potential failure to execute business plans effectively. The company has invested in marketing and expansion, which increased selling, general, and administrative expenses to $574 million for the nine months ended September 28, 2024, a 15% increase year-over-year.
Mitigation Strategies
To address these risks, YETI has implemented strategies such as diversifying its product offerings and enhancing its supply chain resilience. The company is also focusing on maintaining compliance with regulatory standards to avoid penalties.
| Risk Factor | Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Pricing pressures and reduced market share | Diversification of product lines |
| Regulatory Changes | Increased compliance costs | Investment in compliance and sustainability initiatives |
| Market Conditions | Adverse effects on sales | Enhancing marketing strategies to boost consumer interest |
| Operational Risks | Supply chain disruptions | Strengthening supplier relationships and logistics management |
| Financial Risks | Increased interest rates | Active debt management and refinancing options |
| Strategic Risks | Failure to execute business plans | Regular review of strategic initiatives and market analysis |
Future Growth Prospects for YETI Holdings, Inc. (YETI)
Future Growth Prospects for YETI Holdings, Inc.
Analysis of Key Growth Drivers
YETI Holdings, Inc. is poised for significant growth driven by several key factors:
- Product Innovations: The company has expanded its product offerings, particularly in the Drinkware and Coolers & Equipment categories. For instance, Drinkware net sales increased by $59.1 million, or 9%, to $736.1 million in the nine months ended September 28, 2024, compared to $677.0 million in the prior year period.
- Market Expansions: Net sales in international markets increased by $56.1 million, or 32%, to $230.5 million for the nine months ended September 28, 2024.
- Acquisitions: The acquisition of Mystery Ranch contributed positively to the product mix, enhancing the Coolers & Equipment category.
Future Revenue Growth Projections and Earnings Estimates
The company's revenue for the nine months ended September 28, 2024, reached $1,283.3 million, reflecting a 13% increase from $1,138.9 million in the prior year. Earnings estimates suggest continued growth, with net income for the same period at $122.5 million, up from $91.3 million. Earnings per share (EPS) has also improved, with diluted EPS increasing to $1.42 compared to $1.05 in the prior year.
Strategic Initiatives or Partnerships Driving Future Growth
YETI has initiated several strategic initiatives to bolster growth:
- Share Repurchase Program: The company authorized a repurchase of up to $300 million of its common stock, with $200 million remaining as of September 28, 2024.
- Increased Marketing Investments: There is a focus on enhancing brand visibility through marketing, supported by a $48.9 million increase in non-variable SG&A expenses.
Competitive Advantages Positioning the Company for Growth
YETI's competitive advantages include:
- Strong Brand Loyalty: The company benefits from a loyal customer base driven by high-quality products and effective marketing strategies.
- Diverse Product Range: With offerings across multiple categories, YETI can cater to a variety of consumer needs, enhancing its market presence.
- Operational Efficiency: The company has improved gross margins, which increased to 57.4% from 55.1% in the prior year, driven by lower product costs and inbound freight rates.
Financial Overview and Growth Metrics
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $1,283.3 million | $1,138.9 million | $144.4 million | 13% |
| Net Income | $122.5 million | $91.3 million | $31.2 million | 34% |
| Earnings Per Share (Diluted) | $1.42 | $1.05 | $0.37 | 35% |
| Gross Margin | 57.4% | 55.1% | 2.3% | 4.2% |
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Updated on 16 Nov 2024
Resources:
- YETI Holdings, Inc. (YETI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of YETI Holdings, Inc. (YETI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View YETI Holdings, Inc. (YETI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.