Yeti Holdings (NYSE:YETI) is rallying at Thursday’s open as the company’s better-than-expected Q2 results coupled with raised guidance launched shares almost 14% higher before the open.
Strong demand for the company’s coolers and equipment drove a 15% increase in overall sales to $463.5M in the current quarter, while the company’s profitability was bolstered by lower product costs and lower inbound freight costs, which offset losses attributed to a recall of certain soft coolers negatively impacting gross profit by $19.4M. The net result gave the company a profit of $0.70 per share, up from $0.57 in the same quarter last year and seven cents better than expected. Adjusted gross margin expanded by 360 basis points to 14.5%, while adjusted operating margin improved by 160 basis points to 17.3%.
By category, sales for coolers and equipment were up 31%, drinkware sales increased 6%, wholesale sales gained 21%, and DTC sales were up 11%. International sales rose 35% compared to a more modest 12% increase in U.S. sales.
On the balance sheet, cash was down a little over $10M to $212.9M, inventory increased by 17% due to the re-stock of soft coolers, and total debt was cut by $4M.
For FY24, Yeti (YETI) now expects adjusted sales to increase by 8%-10% versus previous guidance of +7%-9%, adjusted operating income as a percentage of adjusted sales is now pegged for 16.5% versus prior guidance of 16% to 16.5%, and adjusted net income was raised to $2.61 and $2.65 per share compared to prior guidance of $2.49 to $2.62. This beats the street’s consensus estimate of $2.58.
