YETI Announces Preliminary Fourth Quarter and Fiscal Year 2018 Net Sales Results and Updated Fiscal Year 2018 Outlook

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AUSTIN, Texas–(BUSINESS WIRE)–YETI Holdings, Inc. (“YETI” or the “Company”) (NYSE: YETI) today
announced preliminary net sales results for the fourth quarter and
fiscal year ended December 29, 2018 and updated fiscal year 2018 outlook.

Preliminary Fourth Quarter Fiscal 2018 as Compared to Fourth
Quarter Fiscal 2017

  • Net sales increased 19% to $241.2 million. Net sales in the
    direct-to-consumer (“DTC”) channel increased 45% to $110.5 million,
    and net sales for the wholesale channel increased 4% to $130.7 million.
  • Drinkware net sales increased 24% to $143.5 million, and Coolers &
    Equipment net sales increased 10% to $91.2 million.

Preliminary Fiscal 2018 as Compared to Fiscal 2017

  • Net sales increased 22% to $778.8 million. Net sales in the DTC
    channel increased 48% to $287.4 million, and net sales for the
    wholesale channel increased 10% to $491.4 million.
  • Drinkware net sales increased 37% to $424.2 million, and Coolers &
    Equipment net sales increased 6% to $331.2 million.

Updated Fiscal 2018 Outlook

  • Operating income as a percentage of net sales is now expected
    to be 12.9% to 13.1% (versus the previous outlook of 12.8% to 13.1%),
    as compared to 10.0% last year.
  • Adjusted Operating Income as a percentage of net sales is now
    expected to be 15.7% to 15.9% (versus the previous outlook of 15.2% to
    15.5%), as compared to 11.9% last year.
  • Net income per diluted share is now expected to be $0.67 to
    $0.69 (versus the previous outlook of $0.60 to $0.64), as compared to
    $0.19 last year, representing an increase of 253% and 263%,
    respectively. This assumes an effective tax rate of approximately
    17.5% and approximately 83 million diluted weighted average number of
    shares outstanding.
  • Adjusted Net Income per diluted share is now expected to be
    $0.88 to $0.90 (versus the previous outlook of $0.79 to $0.82), as
    compared to $0.28 last year, representing an increase of 214% and
    221%, respectively.
  • Adjusted EBITDA is now expected to be $147 million to $149
    million (versus the previous outlook of $141 million to $144 million),
    as compared to $97.5 million last year, representing an increase of
    51% and 52%, respectively.
  • Capital expenditures are still expected to be $21 million to
    $24 million, as compared to $42.2 million last year.

Matt Reintjes, President and Chief Executive Officer of YETI Holdings,
Inc., commented, “We delivered outstanding performance in all aspects of
our business during the fourth quarter and fiscal year 2018. Sales and
operating margin soundly exceeded our expectations and as a result, we
are raising our fiscal 2018 outlook. We are excited about the strong
growth across categories and geographies and the multiple opportunities
that lie ahead, which include accelerating brand awareness, delivering
product innovation, driving our direct-to-consumer business and
expanding our presence globally. We believe these initiatives combined
with our operational excellence will continue to deliver strong and
consistently profitable growth.”

Reported results are unaudited, preliminary, and reflect management’s
estimates based on information available as of the date of this press
release and is not a comprehensive statement of the Company’s financial
results for the fourth quarter and year ended December 29, 2018. The
Company’s actual results for fourth quarter fiscal 2018 and fiscal 2018
may differ from these preliminary results due to the completion of the
Company’s financial closing procedures, final adjustments and audit
process.

As previously announced, the Company will be participating at the 21st
Annual ICR Conference held at the JW Marriott Orlando Grande Lakes in
Orlando, FL, on Monday, January 14, 2019, with a fireside chat
presentation at 1:00 pm Eastern Time. The audio portion of the fireside
chat presentation will be webcast live over the internet and can be
accessed at http://www.investors.yeti.com.
An online archive will be available for a period of 90 days following
the presentation.

Non-GAAP Financial Measures

We refer to certain financial measures that are not recognized under
accounting principles generally accepted in the United States of America
(“GAAP”). Please see “Note Regarding Non-GAAP Financial Information” and
“Reconciliation of GAAP to Non-GAAP Financial Information” below for
additional information and a reconciliation of the non-GAAP financial
measures to the most comparable GAAP financial measures.

About YETI Holdings, Inc.

YETI is a rapidly growing designer, marketer, retailer, and distributor
of a variety of innovative, branded, premium products to a wide-ranging
customer base. Our brand promise is to ensure each YETI product delivers
exceptional performance and durability in any environment, whether in
the remote wilderness, at the beach, or anywhere else life takes you. We
bring our products to market through a diverse and powerful omni-channel
strategy, comprised of our select group of national and independent
retail partners and our DTC channel. By consistently delivering
high-performing products, we have built a following of engaged brand
loyalists throughout the United States, Canada, 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.

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 expected financial results and
consistent profitable growth are forward-looking statements, including
those set forth in the quote from the Company’s President and CEO, and
the Fiscal 2018 preliminary results and 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: our ability to maintain and
strengthen our brand and generate and maintain ongoing demand for our
products; our ability to successfully design and develop new products;
our ability to effectively manage our growth; our ability to expand into
additional consumer markets, and our success in doing so; the success of
our international expansion plans; our ability to compete effectively in
the outdoor and recreation market and protect our brand; problems with,
or loss of, our third-party contract manufacturers and suppliers, or an
inability to obtain raw materials; fluctuations in the cost and
availability of raw materials, equipment, labor, and transportation and
subsequent manufacturing delays or increased costs; our ability to
accurately forecast demand for our products and our results of
operations; our relationships with our independent retail partners, who
account for a significant portion of our sales; the impact of natural
disasters and failures of our information technology on our operations
and the operations of our manufacturing partners; our ability to attract
and retain skilled personnel and senior management, and to maintain the
continued efforts of our management and key employees; the impact of our
indebtedness on our ability to invest in the ongoing needs of our
business; and other risks and uncertainties listed in YETI’s filings
with the United States Securities and Exchange Commission (the “SEC”),
including under Item 1A. Risk Factors and elsewhere in YETI’s quarterly
report on Form 10-Q for the quarter ended September 29, 2018 filed with
the SEC on December 6, 2018, as such risk factors may be amended,
supplemented or superseded from time to time by other reports the
Company 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.

Note Regarding Non-GAAP Financial Information

This press release includes financial measures that are not calculated
in accordance with GAAP, including Adjusted Operating Income, Adjusted
Net Income, Adjusted Net Income per diluted share, and Adjusted EBITDA.

Adjusted Operating Income and Adjusted Net Income are defined 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 early extinguishment 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;
early extinguishment 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
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, and incremental audit and legal fees in
connection with our transition to a public company. All of these
transitional costs are reported in selling, general, and administrative
(“SG&A”) expenses.

Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income per
diluted share, and Adjusted EBITDA are not defined under 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.

The Company believes 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, the Company relies primarily on its 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.

   
YETI Holdings, Inc.
Fiscal 2018 Expectations
Reconciliation of GAAP to Non-GAAP Financial Information
(In thousands except per share amounts)
(Unaudited)
 
Fiscal 2018 Expectations
Low High
Operating income $ 100,469 $ 102,027
Adjustments:
Non-cash stock-based compensation expense(1) 13,250 13,250
Long-lived asset impairment(1) 1,200 1,200
Investments in new retail locations and international market
expansion(1)(2)
800 800
Transition to Cortec majority ownership(1)(3) 800 800
Transition to the ongoing senior management team(1)(4) 1,800 1,800
Transition to a public company(1)(5)   4,200     4,200  
Adjusted Operating Income $ 122,519   $ 124,077  
 
Net income $ 55,543 $ 57,212
Adjustments:
Non-cash stock-based compensation expense(1) 13,250 13,250
Long-lived asset impairment(1) 1,200 1,200
Early extinguishment of debt(6) 1,300 1,300
Investments in new retail locations and international market
expansion(1)(2)
800 800
Transition to Cortec majority ownership(1)(3) 800 800
Transition to the ongoing senior management team(1)(4) 1,800 1,800
Transition to a public company(1)(5) 4,200 4,200
Tax impact of adjusting items(7)   (5,444 )   (5,444 )
Adjusted Net Income $ 73,449   $ 75,118  
 
Net income $ 55,543 $ 57,212
Adjustments:
Interest expense 31,000 31,000
Income tax expense 12,000 12,000
Depreciation and amortization expense(8) 25,000 25,000
Non-cash stock-based compensation expense(1) 13,250 13,250
Long-lived asset impairment(1) 1,200 1,200
Early extinguishment of debt(6) 1,300 1,300
Investments in new retail locations and international market
expansion(1)(2)
800 800
Transition to Cortec majority ownership(1)(3) 800 800
Transition to the ongoing senior management team(1)(4) 1,800 1,800
Transition to a public company(1)(5)   4,200     4,200  
Adjusted EBITDA $ 146,893   $ 148,562  
 
Net sales $ 778,833 $ 778,833
Operating income as a % of net sales 12.9

 %

 

13.1

 %

Adjusted operating income as a % of net sales 15.7

 %

 

15.9

 %

 
Net income per diluted share $ 0.67 $ 0.69
Adjusted Net Income per diluted share $ 0.88 $ 0.90
Weighted average common shares outstanding – diluted 83,465 83,465
 

_________________________

(1)   These costs are reported in SG&A expenses.
(2) Represents retail store pre-opening expenses and costs for expansion
into new international markets expected for fiscal 2018.
(3) Represents management service fees paid to Cortec, our majority
stockholder.
(4) Represents severance, recruiting, and relocation costs related to
the transition to our ongoing senior management team expected for
fiscal 2018.
(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, and
incremental audit and legal fees associated with being a public
company.
(6) Represents preliminary accelerated amortization of deferred
financing fees caused by early debt paydown of the Credit Facility.
(7) Represents tax impact of adjustments calculated at an expected
statutory tax rate of 23.3% for fiscal 2018.
(8) These costs are reported in SG&A expenses and cost of goods sold.
 

Contacts

Investor Relations:
Jean Fontana, 646-277-1214
jean.fontana@icrinc.com
Jennifer
Davis, 646-677-1813
jennifer.davis@icrinc.com

Media:
Alecia Pulman, 203-682-8224
alecia.pulman@icrinc.com
Brittany
Fraser, 646-277-1231
brittany.fraser@icrinc.com

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