YETI (YETI) 9 Nov 232023 Q3 Earnings call transcript

Good morning, and welcome to the YETI Holdings Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Tom Shaw, Vice President of Investor Relations. Please go ahead.

Good morning, and thanks for joining us to discuss YETI Holdings' Third Quarter 2023 results. will CFO. Reintjes, today and and call McMullen, Mike the be President Matt CEO; Leading

prepared we'll our Following remarks, questions. for your open the call

of be considered we'd you make Before to forward-looking. on the some today may begin, we statements call we this that like that remind

cause these forward-looking could statements. are uncertainties statements to results such to various actual As and differ risks subject that our materially from

filed refer our and any information, as please revise to the X-K most the except information, new filed more factors to in result events the a We For detailed forward-looking today. or as XX-Q recently Form Form obligation today undertake otherwise, with SEC by risk required of future statements no made update or law.

disclosed a measures be measures of measures underlying call comparable Unless our included represent of use our more non-GAAP and to posted now our over section Reconciliations our on Relations most non-GAAP non-GAAP we to We true in of otherwise on the in Investor turn believe this they the results business. as at morning Matt. accurately financial measures yeti.com. will basis. performance this operational stated, presentation to or release directly I'd website And the their call press to the GAAP like are these

good included our with demand well that products, reported when reported results, we strength period of compared our brand of the particularly as benefit another Thanks, sales. wholesale our strong point-of-sale consumer very cooler highlighting also our momentum strong data and brand year quarter soft outpacing lineup and replenishment. full meaningfully morning, ago posted as saw Further our and everyone. YETI build to Tom, our and continues with to the strong a

existing been be success seen we highly has they While the of into consumers key expansion in signs cargo business year-to-date. we to customers. positive to we've have both driver the that and particular, Drinkware, seen In this our receptive new are and dynamic to a Leaning of reaching more discerning products. spin, continue new with category expect

with Power Pink, Camp this the showed Color, Lilac well new quarter, combined product green Cosmic colorways. and in our

and acquisition growth would of the have and retention groups. continue launches across female we our age genders, the of demographic seen across range consumers Our indicate incomes the that analytics and household in positive Complementing of of makeup data insights these balanced regions. YETI trend a

points, ongoing line, gross remarkably of Beyond gross power delivered and margin positive recovery a this We of the the costs. our was margin inbound clear strong story quarter, freight product of the showcasing highlighted brand. by XXX basis costs expansion top nearly the favorable

investments to of This result offense also brand the further supports care our and with bottom growth line. while on efforts stay taking

financial we our during key soft MXX beginning the of the backpack at As MXX the the return MXX reintroduced we smaller the the of plan executed coolers quarter, successfully To were and tote. on focused as our and well initiatives. new quarter. MXX start, tote several as we fourth M-Series included backpack This

end the voluntary by our at The recall, third returned the Dry, DTC October. of impacted to the SideKick channel product

ahead more Importantly, continue these colorways inventory we the fully will in product families sizes. add and quarters build to new position channels, expand across as

the release our black planned many bags additional colorway, introduced and early Dry coolers while all are limited we example, next across sizes in X For a of quarter, SideKick current year.

global including have consumer-facing offering. been our in more in the offerings recently, customization of of third capabilities quarter, debut to a our Australia omnichannel site reach These upon the We and Canada. similar U.S. long through and e-commerce our Drinkware also part core capabilities business built in in our

had openings most total period, stores retail stores XX. bringing during in quarter, also have our the to a We the U.S.-based opened X we single

an began their initial a the at of fusion starting Supply doors. we with October, focus partnership on Tractor Finally, end new with

reach as see our heritage highly channel. unique complementary distribution TSC's & national to we existing in Farm what provide strong Ranch and

a let strategic reach to the around fishing with continues deeper our connections to to show concert golf the the Now we X globe around give prominent food on making. Starting strength look YETI's growth festivals, channel across cambios me From brand. priorities diverse tours. races, and brand, geography. courses to of Netflix, Formula product, are tournaments

and and part and performance, in story and Our retention tradition design the brand word mouth tie durability, and are our strong. of global these and powerful the top product to functionality YETI keeping is global communities connections broad efforts, of backbone Continuing mind of our customer and the product were acquisition integrated our QX. brand, that diverse an of of

XX communities real, product to connected, enthusiast deepening meaningful the ties. audiences grow innovation XXX-plus brand way active continued in ambassadors These also while continue relationships our in investment for ways pave Our unique our YETI. top-tier to and

ambassadors partners from Japan culinary. added Canada we and global and quarter, to This Europe from fishing to to

such names Outside & Food Wine, connected Last the product and brands Fast upon fit Parade, the contrasting YETI in as and GQ Variety, Our durability debut product varied in the being ways which and showcasing diverse Showcasing our single-use to campaign. every without coverage naturally Company, into alternatives. culture quarter, discussed we included use and media of disposable our consumer. forced single seamlessly

both awareness a across college internationally. walk new Providing to received, we metropolitan The and campuses we and in example reach from nuanced X repeat. and campaign This major XX areas consideration purchase to well as of platform was consumers, consumers is domestically well impactful way the to abroad. which so and as across expanded

in mug our strong a diversity of products X Straw of bottle offerings outperform key to discerning and of sizes continue theme meeting standouts to wellness on continuing Yonder QX, to Looking fall expectations in In the at more the product bottles, even water year. consumer hydration, accessories more been and colorways, cap I year-to-date. Drinkware, and the growth and pipeline. Rambler our today's our our portfolio is of were Response heightened mentioned new health engage. importance the awareness our marketplace. this importance taking has earlier with driving This reason to importance a

the Also, trend the remains individual into addition continues of of has of move beverage expansion example This brand how to great successful drinkware. beyond the QX. continued highly bucket use a

have to stackable more the mugs providing We tumbler YETI X and durability use reasons to Rambler quality built standards and and YETI throughout launched smaller capacity of the day.

use we millions as officially of classic or that packaged XXXX. Additionally, fits YETI separately our launched great YETI on Ramblers cocktail together shaker sold accessory with our XX-ounce top Rambler in since of a

insulated ahead, and with keep the a the messaging YETI of we top we into the go to week, the number the of another evolution We buying. Drinkware offerings Particularly show for mind in intention our the of works consumer. also time debuted of our year In weeks have providing wine last family. with example crowded of as product

This return garage In the mug our X next size gear of business, of the in would in our will later the quarter family. our specials week include this and Straw introduction underscore I annual cooler the points.

increases First, we saw and coolers consumer soft the demand hard our in double-digit recall. by not both strong with impacted in coolers

be well cases ongoing successful holiday the and month, period positioned competitive to and our options last unmatched will product for we we Second, are consumer spend. of global our of portfolio, our an introduction expand portability attention redesigned audiences. a for what focus With believe and use coolers and size adding soft third,

and remains this business potential. of assortment GoBox highly highlighted Beyond by our with of family cases, was a extended tons tight productive This side year. protective family the and coolers, storage launched the equipment which earlier product a of

sidekick energizing Similar continued deliver bags to dry with our of reintroduction range to cargo our and of the our lineup. waterproof discrete products, everyday carry waterproof

impactful As differentiated ever at and XX% third omnichannel terms DTC. and strength driving retention. go-to-market, quarter The experiences. our on higher Starting customer with we in acquisition quarter of highlighted look sequentially was growth increasingly achieving our the focused by total sales largest of of we're

While to believe to and customer values across see order our against consumers new partially at value. through gaining UPT are we weaker continue very Drinkware this attractive we entering we strong due and is acquisition demographics, lower retention, order

channel range end-of-life e-commerce particularly execution. July, Day As our supported colors products. the a we successful with older on by seasonal and and in was quarter Drinkware the Amazon business, performance outstanding product color previously of In a new Prime strong saw in focused indicated,

experience. the results the on this buying from site to are approach, cold use global enhanced these yeti.com the flow expanded yeti.com to and Drinkware positive all cases, and recently We have and coolers. enhance launched reengineered our to category buy in also we've showcase day simplify experience the quarter of distinct more decisions. first efforts to consumer effectively with bags elevate took to these Packed sites. seen suite e-commerce We've products continued in align steps a enhancements Using carrying our now standard and Adventure the premium We of value the

sales improved Corporate enhancements Moreover, to build these we upon in XXXX. plan quarter-over-quarter.

is signs following success corporate year experienced some more of So we tremendous last performance to remain inconsistent spending. expected conservative and the

stores. We the impactful unique are for we on global and remains all the YETI exciting XXXX stores opportunity our continue of to an a focused experience base. we debuted brands, product our In XX brand on grow the and across what pipeline our in for customer of diversify We're strong evolved commerce first set an we San Jose, a and in day of California the Honolu X store location, first similar is record store our leveraging operation. balance new hours just format, a sales believe and focused in partnerships some brand. new design as creating

original our Texas store, expand We we store also to Drinkware piloted in actively which to Austin, additional looking locations. customization in-store are several

look drive YETI With as unique product consideration channel. showcase into good play omnichannel. and years tight our will not second portfolio ahead. However, all efforts awareness, year execution results sell-through half in continue drive to our and inventory and creation supported would acquisition management entire These our to customer overall. strong saw of suggest to evolving we demand awareness, the across stores remain on but data diversity We of and continue going only drive Shifting our to the store varied wholesale, the role the for purchase range the opportunities importantly, to of benefits innovation channels. accelerate education stores and some that our a continued

existing to also previously build we partners, month, [ Tractor announced wholesale As we Supply. ] began last PACE continue the with late with launch our

approximately customers, our equipment coolers TSE our heritage ranch Supply's remodeled new reach unique over time great has scale we [ and in of Tractor dealers, be on out strategy. enhance mix long-standing on this website. A a fit their ] fusion create here will existing all strong available when a and buying their Drinkware occasions X and dealers. new portfolio in new YETI of given the of as space, of considering doors see XXX criteria farm life delivers and and and and

the and further work XX% well. also at team we and International building of gains in with very XXXX double-digit brand while reached We to sales our We very again in deliver look opportunities and performed localized approximately will pleased regions closely were team beyond. as awareness scale. the sales our as TSC once our all

had performance Zealand quarter. New this a and Australia tremendous

first market Drinkware As mentioned, to international Australia offer the became customization. e-commerce

We sports also professional of across rugby, drove number brand diverse activations and on fishing. mountain snow a

actively are at and broader August, new flexibility we team range opportunity see and our a the the and team to efforts. efforts, to Germany a life. awareness, awareness travel and distribution as growth during of look market relatively region. I local come customization Europe, are signs transition we executed the center the a partners highly the our and and with to early-stage addition, encouraging our In quarter, DAC U.K., seeing our as importantly, had provide dealers for will Even successful brand more in particularly brand In with accelerating meet which with

Operationally, our the to this efficiency. our and see continues growth support softer Canada, ramped Netherlands quarter in independent in larger center we In new our accounts, by distribution offset wholesale strength business to trends.

on execute building customization yeti.ca performed quarter added and across channel increasingly long-term while well U.S. growth. of in sales. to remains on to of corporate This last as strong reach experience e-commerce leveraging and for tools and Drinkware ahead. positioned DTC YETI week's functionality is quarters in and debut the we same the included expect many drive QX third is Overall, and Our the the

quarter fourth growing to an on beyond, the our brand of cadence global will as we and For further elevated our focus innovation extend and portfolio. we continue audience

and will we in The in means road allocating building environment, this brand product capabilities, thoughtfully our map, on driving investing strength of capital. also offense our financial flexibility global remain

their ongoing want with thank amazing all global and call our I approaching. our I'll commitment now team the to year-end discuss and our results acknowledge over turn detail. Finally, for execution the fast to year. outlook more the and Mike and and partners to holidays in support, throughout

an updated review performance, a followed third with for the begin by outlook year. of I'll Matt. quarter Thanks, our full

our costs GAAP includes and the our release was charges product actual slightly the results We press reserve. with in with not recall. reported to generally primarily adjustments today's voluntary recall our make reserve what line during we adjustments trends of lower associated second recall-related Our This did inclusive which quarter. claim the minor any assumptions, recall further are in quarter updated in as are some assumed in versus

will that adjusted metrics. As is our of are non-GAAP all the discuss normal I call today's financial practice, details on

our Now on to results.

Third were offering $XXX quarter million. recall. customers of redemptions product $X.X to remedies we sales the at year-over-year gift included The flat card quarter impacted are million by related

fulfill card supply, Excluding single-digit similar versus line channels. of gift were period the incremental results customers redemptions last top to with products a these redemptions, our card are results. gift prior purchase of our card not orders But to in to redemptions a we to of year. low amount used the Thus, from gift outlook believe with for quarter, these line portion do ability decline which that impacted other our and full were constrained the

Overall, with we were that our sales growth. top given several in impacted factors QX performance our line pleased

products we product soft due without of top-selling during including the of cooler the recall, key summer quarter, several most were for First, the months. to our

year drove channel a faced wholesale rate And with discussed the posted shipping wholesale we prior Second, our fall compare QX, seasonal XX% as in growth QX. did we we the rate a growth total accelerate a of the last which as you in all into strong colors quarter. we product in our third, challenging a start to for need and quarter, XX% launch

to a year, supply. as constrained levels optimal from a back channel As of get restocking number stock of reminder, benefited last product periods able to the a after channel by we wholesale our was the of

are $XXX though consistently DTC Equipment aspect we rate basis on channel a saw positive to This product sell-through within with successful in Coolers representing million, quarter-to-quarter But of the with demand Drinkware that impact across perspective, have be wholesale in we pleased number hard From categories. sales of both clearly In this across to major that X quarter, equipment. third growth our our seen most significant Coolers growth XX% had our continue a both a strong and across channel There have and the U.S. direct-to-consumer year. highly and of business, business rates by impacted sequentially and consumer & of total dynamics other to channels impact we XX% our we higher led an Drinkware a is the saw also our coolers. reported DTC Growth our each growth Amazon sales. was including Prime Day, businesses. that grew

overall customers we returning growth transactions. In saw as growth Matt business, our of number as exceptional new as well said, e-commerce and in the in strong

which hard coolers. level than $XXX prior more by XX% drinkware offset value and in in sales category recall Coolers At order partially soft lower versus year QX & was DTC, Wholesale this impact of coolers million, cargo, declines Equipment in decreased with saw a both and in the product performance to the strong However, a average the in we quarter. Drinkware. offset

by was of decline the recall soft sell-in year. the the discussed, a impact in versus driven coolers and significant As prior comparison the

that as sell-through we Equipment $XXX million, basis. by I cooler on However, very soft By that impacted the decreased I factors and & outlined sales a Coolers driven with category, cooler mentioned, our pleased hard to X% were sales. growth have

Bags contributing shipments of soft Green Crossroads of order important by coolers, last since mentioned, having the that expansion as coolers full Our yet, to products. were Cosmic the Lilac with Despite to we excited we across assortment into growth This our during QX. launch, the initial newly channel first designed outlook a also the late results these expectations M-Series launch, of a we help did quarter. color to have to supported reintroduced Matt GoBoxes communicated were color early these support are and the we collection. all see both our we our not In the launch In soft from the market and both with contemplated line Camp to was early their and quarter outperformed products distribution wholesale in in begin you pleased of portion in QX. quarter.

X% put $XXX DTC and market. Drinkware on in increased and growth our with us Drinkware in with million, to position innovation the sales consumers to capitalize -- in resonate a trends

line. color-matched For instance, product launch and our sizes we bottle new and Rambler expanded lids lines stainless our Yonder offerings with lid new in

In fall Power addition, successful in we Lilac Cosmic color Pink. incredibly Camp launches had Green, and

beyond sharing success vessels some move We also drinking group encouraged are use as seeing we by entertaining we into to individual the initial options. remain look of and more

smaller earlier, trends products of our sized extensive mugs, mug and of straw we can designed cups outlined great in think range entertaining with a coffee expanded chiller. and YETI solution X for of XX-ounce innovation. with the lineup the Wine QX and new Cocktail This these Matt we an hydration on new new further As Shaker with options occasions capitalize includes with introductions the Rambler

XXX incentive sales freight, Internationally, XXX XXX gains compared million, basis same points sales year. our last million These from or such other Amazon basis areas rebuild to this expenses associated of in total double-digit and to our quarter XX% from our and support period XX.X% Day. line. creation compensation points the of points the the to employees, drivers $XXX basis for by channel gains from across inbound XX% mix for points of lower increased increased same on increased included $XX basis XX.X% of partially investments impacts. from impact XX.X% expenses all sales, Positive in points our product regions: demand driven with X sales to sustained as Europe, the growth to or a as XXX by Gross year. Non-variable of costs all last favorable percent promotions were headcount from higher and quarter sales Canada. points period representing of the and basis Prime XX basis costs, offset in future SG&A XXX a compared grew lower XX% $XXX XX.X% successful profit top recall nearly million to XX% with Australia

this primarily a the Variable One, expenses channel. had basis sales, by higher as fees XXX growth factors: we of given marketplace Amazon percent X in increased points driven higher

expenses in of the we freight or which to XX.X% the of million DTC million mentioned growth period Net decreased higher share period. year. the Second, income or outbound sales X% increase overall Operating compared X% $XX year business to our given sales I compared had same during in mix diluted QX corresponding XX.X% $X.XX and the earlier. to $XX per in also to $X.XX last prior decreased income

our Inventory the third sheet. in our quarter. ended $XXX $XX million compared X with $XXX as to million cash period. by to decreased year straight of did quarters year-over-year seasonally million balance Turning quarter increase QX sales we the to We XX% QX ago declines, from sequential After million. enter to highest $XX in inventory

and excluding end leases, $XX Total $XX was at unamortized deferred finance financing year's debt, quarter. third fees the million million compared last of to

we payment made $X quarter, recently term loan. on the our of During million amended a principal

approximately billion, expect updated representing full We turning adjusted growth fiscal XXXX sales. net Now to our now XXXX X% fiscal to compared $X.X sales of approximately year outlook. of

reflects updated of factors. the of a in our range prior While estimate outlook, remaining our number

the time, process corporate the expect and see the recent our do was same strong a Tractor average and cautious our channel, the been the across in reflects of channels. ordering thus work order sales earlier since and somewhat in our Notably, we lower e-commerce. and several values Supply in wholesale overall partnership it our to year establish strong continuation prior following has benefits in First, in At growth trends, outlook. contemplated to tempered of patterns demand very XXXX

our Looking and by we in Coolers the while growth XX% growth back specifically mix the for new the more products puts includes DTC at cooler expect approximately into innovation long-term of to between fourth at sales impacted quarter, us in balanced back This Drinkware double-digit approximately range of we wholesale. implies mix By growth which and algorithm. channel, our by updated this Drinkware in DTC soft and growth, equipment, growth category of expect maintain the the recall the outlook a year. supported still to XX% returning launch From sales market. perspective,

quarter, final last sales As gift our with outlook in the not fourth of point does a impact any card the quarter. consistent outlook, include on redemptions this

we Our impact year strength costs combined from gross favorable of to XX.X% more are as margins to gross somewhat costs. XX.X% by lower QX full and to quarter is in is gross the XXXX. to margin expected freight continue third thus, as moderate to fiscal driven inbound margin our product quarter due approximately outlook Year-over-year This the of compared and the improve, mix expansion well gross benefits fourth margins. the to normalized overall increasing

year growth to On the SG&A dollar line, approach full we SG&A expect level. teens the high

variable As driven have XXXX incentive our expenses and to throughout year, DTC our future being support outlined in SG&A is compensation our fiscal to we by businesses. support growth the growth, investments

growth in in year-to-date the is Our fourth expected rate range to our results. be of quarter SG&A

updates, the With expect of an for high range. we operating margin at our approximately XX% prior of the these end year now

of outlook. and to end approximately year XX% of quarter, of operating share per be approximately margins, expect $X expected fourth our which our $X.XX, is high is to the interest prior over continue diluted XX.X%, expense inclusive an in a to now For earnings tax rate million we return the full effective

free outlook. from capital now at our $X million of we our expect approximately expenditures cash, For flow approximately prior of prior end with million, $XXX $XX million high cash of the outlook down

our far Overall, enter year. pleased we fourth thus as we the quarter, are this with execution

beginning not of forward, at do the the out is the what of impact set the we is expect where in of given year recall. it growth to range we it going be year our While the rate this to

inbound freight cash a recover be our generate to margins gross costs. flow levels the sheet continues ability along continue good to with run-up And strength. balance to we Our to the saw in our before

remain the have in ever. as ongoing uncertainties and certainly believe consumer incredibly environment, an the as optimistic brand products We new closer market, to are the we we with macro we of YETI move powerful lineup mindful the we and the holidays. we believe as of While is exciting

like call the to I take to over Now turn would operator questions. the back to your

Our Peter comes Piper from Sandler. question Keith first from Instructions] [Operator

to guess you the overall But encouraging in that -- I the it's of on quarter. wholesale some some kind see guess about positive sell-through out called at and slowdown was everyone consumer maybe worried is I for nervous September and October.

a guide. You how progressed the sense bit little give sell-through us the are sales lowering overall on maybe sales on in Could a they months. you and trends, recent

and on I strength acquire would both to only posted. ability very quarter bring attention. say sell-through a feel not innovation, the we for continue strength we And portfolio have, products we continue -- mix We that just the and commented think that I but about retain the to in consumers the the talked Mike I of competitive of good brand, we that's consumer we the the environment out. of a strength. our The product

we into into season. those driving important are we're mind dynamics this as customer same customer sure that retention, on and top focused people QX, go acquisition the As look holiday we're of making

following quarter. that seen in that's has a fourth you've while, YETI the As consistently for story done something the

prominent the during the consumer, we expect season. with QX QX holiday and to even a be data as what in saw in we discerning think it will that more I continue that

great. That's Okay.

you X with that floated I year, think the lapping the even pivot XXXX various XXXX guiding year. is you that's Just just guess to all know and we takes do XXXX around next the have last to don't though as but look being trends -- happened compare next underlying as to I really that the and easy puts thesis about an that's in recall? not recall from you're you're how out we

Peter. Yes,

for the I'd say is Number the look So really a like the of as XXXX on strength we'll year, to what have level, Matt high next it next just brand to call, us, say. expansion at one, our and but on we more earnings said, of encouraging a things overall couple brand. of

the new believe get that we what that We an for growth see them typically customers new value time. over Matt acquired have And and that the opportunities for those talked other consumer to increase to SideKick with that in about to back at the coming our second annualize half we able customers back we've for us able outside with with and we've portfolio us, opportunity then that or look in continue M-Series -- seeing, that, the been despite believe the is this to we've that the kind opportunity we we strength of the launched with grow year Dry opportunity if we think even to U.S. there those the back innovation market, to demand of levels growth to an that just look full getting us. traditionally compare, the is targeted. and As coming the at you us the being just the we

I Yes, it is. apologize.

space? color or that through And would first you as the agreement I and but move tractors about my the farm that of provide you impact clearly, should think been from Any question. How So distribution be helpful. can you've about details standpoint. think already question kind in on do maybe you year. that ranch, in with new we just Tractor That's around is incrementality leader Supply. an that my mean, how first next

and community in Peter, Tractor those the the then think ranch job wonderful build-out strategy. as do and for farm connecting we've We Supply, evolution Fusion watched thanks store they come known we and question. while, watch to for consumers a up. and names their and that a their we've of

our as thought we with around, opportunities consumer do were a And footprint or that includes can distribution new reach e-commerce the in kind saw of and distribution reach expand of footprint chance fits is the looking it reach, new we a selectively complementary always consistent the think our our with people and at our about to a or we One rest with opportunities and that It's taking to looked we've we buying footprint. partnerships. intersect distribution, Amazon we occasion our at wholesale of us whether our affords footprint. our mapping always down and incremental how of

different that play And there Supply map all when those where across a business and really can our and think points, where nice we is touch today analytics looked Tractor located out role for we that us. at overlay was with a

about excited partnership. we're the So

seen right we that right and As for the benefit way sure the in with us days that we the how we do slow stores, that there. parties the long-term the you've with very, and in see potential of both get in the we're we're it and roll right Supply, partnerships very out assortment, the of right in past, these paced making the early Tractor merchandising but

That's it. helpful. you. Mike, maybe for Got guess, And X I then,

growth, think on into and the we cadence the about there. line, I your a as of obviously talked think how of the you've XXXX portion? components But a I maybe should high mean the within top but about forged the investment slower teens. we within of been How we variable into next P&L about kind do lot How year move nonvariable year? kind SG&A. the as about ahead we with SG&A? know You get SG&A this has that moving

a say I'd so Peter, things. couple Yes. of

consistent. incentive dynamics really has making. we the there's the our in some nonvariable you the about three, talked of drivers of tick the X stop by that piece for been been same. mean, like versus comments SG&A and a But driven largely piece nonvariable looked variable year, the as has big And compensation; hire said at quarters, we're we in some prior primary the been our One, business. really been -- the I really the impact So sale; the What's two that. investments of is piece

we to to to going not basis. that As to X year. those, line. are of top business factors sale look year, an The largely the we going go we stop on ongoing of do compensation believe, invest next our And continue the plan next our incentive and be in to the and always we're on and recall impact to

earnings that several QX that not specifically on year. call. there get is OpEx. our have time, year when believe leverage believe But impacts as discrete do It's over our on on get into we OpEx into just were we get go more we where intent it But our continue over we can say time, we to, this to will XXXX our leverage next we'll

from Megan Alexander comes Morgan question next Stanley. The from

a a up changing math earlier could correct, follow-up XQ you double digits help is digits maybe us wholesale think what's is prior. just on bit little but versus my unpack low implies maybe implied single guess if question, the of the guide? I I it wholesale in

from to is And how much of early a and terms it what patterns? seeing conservative So it of how order load-in? third to benefit the maybe of ordering retail you're that much quarter is possible contextualize was retail replenishment in

to all led the agree dealers we're So to Drinkware we across seeing why challenging reason across quarter. we available the year normalized dealers, communicated in of more look big growth with look some sell-through for as C&E, doing ordering as the environment. We get at do the we grew those -- At of believe kind believe kind to we leads a part I'd levels as that our complement same of with QX time, couple that, M-Series both this what to growth But really is that to coming quarter. we of where and how we prior seeing us. inventory things performing, the is is that fourth believe we wanted consistent It's said full well the at we of had we that QX. are more that off we the back us we're would now having results coming positive to look being are pretty compare I levels wholesale back. -- cautious a say a That's QX. a that which a products implied in not XX% QX where

expect different the their the as at most we continue. just and the was we important that environment dealers think of what I what is to at seeing like for it's be But quarter. to and that kind thing we're continue by we are fourth the kind But level encouraged the at looking look of for consumer, how a sell-through outlook felt see we

perhaps should freight you very to promotion just XQ more think partners? a in and expect despite the of 'XX? Amazon Prime would presumably about into Amazon from given the your how helpful. build we headwind line broadly? performance margin. the there bridge promotions That's and away, you're 'XX goes And piece, gross promotion then to but to how product even then guess Day. pretty I what that a an is into And Obviously, and follow-up promotion impressive I on guess maybe Prime continue then the earnest Day, a And on large to in lean think opportunity cost from headwind should XQ we Okay. some seeing to about retail more

obviously I'd we gross results that Yes. QX. we with in were posted the say margins, thrilled on

QX, quarter do for has approximately outlook last of in gross QX QX led really, really to in expected strength itself. As changed we've margins the that. XX the the QX for -- what our by again few XX.X is line what nothing quarters. is us took on this to to in kind year we We look with up largely

prior COGS look line last to of lower we to we the negative would were because of year, been to expect be QX down if not inbound peak freight kind impact and in through And expect provided that of of to generally a at QX to impact the product in rates drivers see of from the we went that our side, expect continue from QX of what the when build would on the we've some started I year, roll posting. whereas in benefit On see year. the the year basis, I those with prior QX quarter-to-quarter the benefits of you the you that that results QX rates. higher saw can last

that line expect not would I So specifically to continue to build.

values X the do is consistent would the Megan, that's at the price behind would And The to been of to across the our primarily promotion add And very the a X consistent promotion think promotional demand as behind all thing YETI we've we of brand market. cadence. be that channels drive we way we in product. attention about just in And looked inventory to selective at quarters and consistent be seller management with drive kind has largely forward in the transitions, I'd really full and and approach you're our drive value selective on the about way selective it the on of use and and future we going where as then think trying busy is traffic think the And same optimizing will year the Amazon. how if product time to margin. you stays -- things will we of of think inclusive stay I demand, consistent and the consistent, with past that the and it brand. the

And is Day. we we so and had Prime approach how out, for how a we consistent as successful the was accomplished objectives I of number brand called we us, we approach think It with successful it and a and promotion. think

into got total we're basis into [ year, We recapture directly only in ] inbound And thing that would gave about more on say as asked go to you 'XX. to up be we we points able or XXX as the imply this benefit We to of is somewhere to back XXXX. go we've look Megan, from in gross other freight, going do recapture gross neighborhood more XXX the continue related to operations I'd margin to 'XX. expect margin so

The from next Sharon comes William from question Zackfia Blair.

out the it's your the and year. you you operating questions can I over if that recall and hard I with growth, on outside still guess of I expected to recapture long think Drinkware from of time is longer-term the that? outlook of revenue Equipment been to come a time term. And And kind business? the an the for kind because kind then you stop guess, of Coolers XX% wanted double-digit had achievable over this do to number idea ask of the margin kind both from historically, and on line so, figure what's X sale things secondarily, I know

achieve from Just digit and kind maybe disproportionate wanted the you still of given what embedded international the expect Or do time, need to check impact in just that's case? a to U.S. growing. or double over you if is business how in either that

about, updating kind there XXXX talked shown that this we're while this with margin us not of margin -- that XXXX. to area through on our really gross say, really affected and shown we as and in mature top affecting end YETI. and operating growth continue on long-range our think as as based recall opportunity think updating even of internationally is internationally, we be drive long-term for call, are growth demand operations we that prove see and is we a would we as just opportunity period have outsized unique to continue challenging front there What guide. I to continues and things I improvement some a line to opportunity The Mike we've we the of the interesting that

market. As I being it talk sell-through like from well-established the business, in-demand market, and strong, we about think have when things comes we relates very U.S. to a obviously U.S. data while sell-through the our

that have don't of We the same level visibility on sell-through. globally

that for us receptive U.S. really new color a which within that, innovation, be within and expansion, Drinkware, us, the the to ways market means opportunity hard So very extrapolate can for that market continues vibrant coolers, coolers the from there's U.S. soft the coolers, you the in within

those in piece talk long think into about as looks start elements So talking from what what original And as a when about we will I XXXX to public. we that. our is went like be is and all of update we back an get in term XXXX our XXXX guide then

that. of just guess kind up talked think about categories. I don't you I a follow on

pace. kind both think Drinkware Do historically, long-term supposed categories? still were growth to that's rate for both a right know So you grow coolers at of the I double-digit and

that, X catching say those time, think in faster. opportunity broadly Thanks, my the will Sharon I over anything there's think would say, about go naturally naturally don't I for or grow that categories -- would And miss. it's defined slower I

to down comes it definition really, how think Drinkware. I continue we do expand of to the

with do success seen called this as year that we us and You've out.

coolers and I are take umbrella a continues assortment coolers, we growth. the that and outstanding an longest limited and performer. on also cargo the continue would our to think in have what gearboxes be and performer, equipment, things, we we like coolers be in I under outstanding I out category And lot if out hard called call as call that standing called of to really we there's equipment, that an this very

say to think a the portfolios. will predicated acceleration I on here awareness be we and the those other of X be lot and versus it sit the X would tough that innovation and within So because bring the

question next from Stifel. Jim The from comes Duffy

are years. about future I'm Great for strategic of are execution, the to What's take of guys. to for allocation of where questions improvement. -- what some you strengthen business are you room the a to you how objectives be on of you I'm the hoping areas areas that organization where your objectives prioritized thinking some want have What going different capital? believe speak competencies, Matt, XXXX. in the approach going you're organizational to to the can for operational are

consumers brand, the think do and you marketing in-house followed of creative believe you And And But channels YETI is out with we to the geographies. domestically think continue this investment a that of year, saw as that's the think really take The things: this I what in is in we investment think of do. well without really of what I I of but we've answer investments us bit the rhythm us XXXX. refer the places the you'll go done products, us in elements you'll and you Jim, see I'll sounds done putting audience. of of simplistic, a team growing I'd of key ways, rhythm and remarks, just if my X and brand in that connecting to quarter. up introduced those X. things But thanks take in little that prepared that has made the diverse and I showing way what X hear those more sort is it question. and we're X of couple of that elements if into for is a and I we and and outsized which part about heard language, we're the back new talk there of front globally I greatest we and us

how really do directed it nuanced We're really really smart spend. a dollars in with way. the We're we in impactful we

asset-light I going design an product adding on YETI. incredibly see smartly us innovation, in have That's team business. you're and within and and talent continue the capacity think capabilities invest to and as that to to and talented that's side, R&D sourcing product an we

think YETI out amplifying rounding I what skills second worthy would out is and get and really that I'll that And innovation areas. be rounding piece the then the into more so capacity allow the within and business have capabilities call us we more that to

market brand incredibly international reach it last into when about innovation receptive we As the the U.S. opportunity. think but I think strong product question, relates to geography, and geography, think remains for to our expanding Sharon's about really I

the in markets kind effective we in the in and maturation days, are and early we the further seen have haven't hit can and Asia. an in where scale, in we select are very the Australia attractive And opportunities way out In Europe, efficient to like then and Canada. looking U.K. what in and markets do of we large that

grow would expansion then continue opportunity And the and it think inherent if And we and proof to advantage smartly way, expansion portfolios the we geographic product the the equipment. acceleration to the coolers thoughtful put positive expansion that innovation see I the of the of the of redefinition Drinkware about the pressure be our and all of points think take OpEx the for. X of would and third kind say, so up, brand of right as round I I our and into SG&A

Bank America. Next from Ohmes comes from question Robbie of

was hard want really just actually is -- to the coolers. I on question It the clarify

coolers well were there's of get it coolers pressure like is hard did from the sounds against but that the down sell-through trying on in just they're weaker it that's retail quarter. at and right comparisons, an the order hard understanding now, average performer size? what because to shipment outstanding really I'm some or tough So an doing DXC, DTC

growth as well of as a wholesale a DXC. is So on hard which strong where encompasses sell-through hard on really did what within saw did would say both coolers I -- basis, well basis sell-through coolers we it consumer demand

what So sell-through coolers our when essentially see growth referring kind as we and DXC. consumer did demand, hard we're U.S.-based of talk to about channels we within of that's DXC and major

Drinkware coming AOV Drinkware comments are the and kind a into customers of of around brand and quarter. not I by And of UPT well. the the for having One, think driven number a coolers more I things. Drinkware strength new soft question via coming as new customers couple of into think within the growth of full in DTC two,

performed your real as was of the level really question, we a within wholesale around feel that DTC. well point-of-sale hard original But kind So AOV. the coolers as the within how to good story at about

question. do, follow-up you merchandise curious of the changes any price if That competition there just is the are seeing really just of helpful. of what any and into you're the given doing. they're a out challenges sort I'm And just lower And partners the looking for in to point consumer. versions what guys

I'll would point of I trade say price seeing couple a that. not things that Thanks, one. down. take Robbie. to lower We're

done is in when for I not category, And premium as in to want successfully quarter recent products past, a category. desire. years. I category. a think think our it the have is and drive most want think We kind And be tend a I we've talked you of we a I that job, the need think in that

would that have there's our in we I XX results, the over the interest entrants significant lot seen into is the of in come success I'd competitive say we're I down. a from partners, what business. that when environment, haven't at that of we in last that a number it in voice or seeing wholesale look months our I There's So space. But have XX a kind call Drinkware driven, share category. we of of trade think our the think with that to DXC particularly partnerships

category thoughtfully a different Drinkware which expand is our and tact, taking We're business. continuing to

there make also to You've redefine we which of in have relevant in consumers is products trend, seen but make just front I is more Drinkware. chase us trend in and continue do we're game broadly it that defined the a hydration, this not sure year, but important we what sure think an

mid long I our think from of only sale, seeing from it's the us seeing do We also that. a And we're that the wholesale the a sell-through that's But near receptivity you'll strategy. winning see winning continue our think to term. we're in and not and the receptivity in term. strategy point partners. think welcome We and

question next Sachs. Brooke from The comes Goldman from Roach

potential could plans hoping was your for elaborate on for YETI brand you do that about the currently functionality from to contribution How core current are innovation you know-how into if new I And you you or categories? categories the that versus of you growth expansions thinking adjacent as look of categories And have the your the ahead. in-house? require move beyond any don't think targeted new innovation

I and question, great -- a I'll Brooke, would of a things. couple mix

cases, colorways Drinkware, proven a I is but competence have hard and innovation, coolers, really our think in the with, all capabilities coolers, new say the think it there's use -- opportunity call things would I significant base but start We I like I that soft you new use cargo customer extend within definitional is would in for it's we which early and -- of if and what including days base competence form cargo, would bags. new that, factors. expansion, also environments, call to

think plus in our and sourcing design engineering we the and in in-house significant have and all between core, teams. supplier I the So confidence incredible talent that opportunity capabilities there's the within our relationships world procurement and

believe, about customers, we where beyond demand us we where As borderline it. map road into move we explicit almost and given think the YETI would that could have go, permission

do we to those things. after many those of think in-house capabilities of I some have go

other adding made into only chair soft cooler are be we some a out mentioned of we things mighty drinkware, additional The all being incredible them, to our and capacity that XXXX percolating as I capability, talent We adding evolution adding of earlier, small coolers, chairs to to company think business no business than in that bags. would to sort these different bring blankets there. I but back and the may that's have. adding hard but cargo, from

that's so to a something think that the X going that investment don't that is earlier, continue I line wouldn't what So of to -- with area feel of doing. make. epic part that's we're part think we're shift But the is I it there questions in to of

comes Riley. question our Glaessgen Anna B. And last from from

season. historically, just end-of-season just think, understand that you Did the the colors, the it for more yellow Prime one. I colors understanding was My offer I left well to bit recent guys. have Amazon period the Amazon more year? for you versus dynamic, discounts like, purple that better I product allocated are or want a on you great have over little those selling and after Prime from the was most of the prior just this key there Day did

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e-commerce Day, Prime on were less we did a year. than promotional have While we were big this we last year

available demand the make Prime question, at have. the a participate We did quarter answer and really Day. or chose to specifically were was a brand. X to we we we're the volume There July, with but this results. greater of overall We results. the with Day. of assortment the And with larger of that And didn't good it sign thrilled thrilled was participate thought a product Prime just thrilled in. We another results in for we were level your So really obviously, of than we

to any over closing conference This concludes Reintjes remarks. the turn our back question-and-answer would like I Matt to session. for

at for YETI. today. all our update on QX forward joining Look you Thank continued on us speaking and you the progress call to

concluded. now presentation. you today's for Thank attending has Conference

may You now disconnect.