YETI Holdings Inc
For the period ended Dec 28, 2024. Filed Feb 24, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 24, 2025
YETI$44.97-4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-30; filed 2024-02-26.
0001670592-24-000007
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-28; filed 2025-02-24.
0001670592-25-000008
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 127 current paragraphs.
66 unchanged; 36 reworded; 25 added; 16 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
During the first quarter of 2024, we expanded our Drinkware offerings with the launch of the new Yonder Bottle with Straw Cap in two sizes, and expanded the Rambler Stackable cup family with the addition of three new sizes. In our Coolers and Equipment category, we expanded our bag offerings with two new sizes of the SideKick Dry. We also introduced new seasonal colorways.
Current report
During the second quarter of 2024, we continued the expansion of our Drinkware offerings with the launch of our new Rambler French Press in two sizes, the limited release of our Flask and Shot Glasses. In our Coolers and Equipment category, we expanded our hard cooler offerings with two new sizes within our Roadie cooler family. We also introduced new seasonal colorways.
Current report
During the third quarter of 2024, we expanded our Drinkware category with the launch of our new Cast Iron Skillet in three sizes, our new Rambler Pitcher in two sizes, as well as the full release of our Flask and Shot Glasses. We also introduced new seasonal colorways.
Current report
During the fourth quarter of 2024, we continued the expansion of our Drinkware category with the launch of our new Rambler Pour Over and Food Storage containers in three sizes, and introduced new seasonal colorways. In our Coolers and Equipment category, we launched the LoadOut Swivel Seat and a limited release of the first Mystery Ranch-inspired Bozeman pack.
Current report
Acquisitions
Current report
During the fourth quarter of 2024, we acquired powered cooling technology patents to develop a unique powered cooler platform. See Note 2- Acquisitions of the Notes to Consolidated Financial Statements included herein for additional information about these acquisitions.
Current report
During 2024, we experienced higher than anticipated consumer recall participation rates. Based on such experience and trends, we reevaluated our prior assumptions and adjusted our estimated product recall reserve. As a result, we increased the estimated recall expense reserve by $9.9 million during 2024. As a result of the net unfavorable recall reserve adjustment for the year ended December 28, 2024, we recorded a reduction to net sales of $8.8 million related to higher estimated future customer recall participation rates; recorded a benefit in cost of goods sold of $0.7 million related to lower recall-related costs; and recorded an unfavorable adjustment in SG&A expenses related to higher estimated other recall-related costs of $1.8 million.
Current report
Our operations and financial results are impacted by global economic conditions such as geopolitical conflicts, tariffs, and foreign currency exchange rate fluctuations. For example, the ongoing disruptions of container shipping traffic through the Red Sea and surrounding waterways have continued to negatively affect transit times and freight costs for goods manufactured in Asia and destined to Europe, and to a smaller extent the Americas. In addition, there is significant uncertainty regarding the actions that the Trump Administration will take with respect to tariffs and trade agreements. Additional tariffs or altered trade agreements could impact our cost of sales. We also expect for our 2025 financial results to be adversely impacted by foreign currency headwinds as a result of the strengthening of the U.S. dollar. Although such conditions have not materially impacted our business to date, the continuation or worsening of these conditions may materially impact our operations and financial results in 2025.
Current report
•Coolers & Equipment net sales increased $101.1 million, or 17%, to $698.6 million in 2024 from $597.5 million in 2023. Coolers & Equipment net sales included an unfavorable impact of $8.8 million in 2024 and $21.7 million in 2023 primarily related to recall reserve adjustments. The increase in Coolers & Equipment net sales was primarily driven by strong performance in bags, soft coolers, and hard coolers.
Current report
Net sales in the U.S. increased $91.5 million, or 7%, to $1,490.5 million for 2024. Net sales in international locations increased $79.6 million, or 31%, to $339.4 million for 2024. For 2024 and 2023, net sales in the U.S. included an unfavorable impact of $8.8 million and $20.8 million, respectively, related to the recall reserve adjustments. For 2023, net sales in international locations included an unfavorable adjustment of $0.9 million related to a recall reserve adjustment. Net sales in international locations represented 19% and 16% of total net sales in 2024 and 2023, respectively.
Current report
•strategic price decreases on certain hard cooler products implemented during the first quarter of 2024, which unfavorably impacted gross margin by 30 basis points;
Current report
•the amortization of inventory fair value step-up in connection with the Mystery Ranch acquisition, which unfavorably impacted gross margin by 30 basis points;
Current report
•other impacts, which unfavorably impacted gross margin by 90 basis points.
Current report
•an increase in general and administrative expenses of $20.4 million (increasing SG&A as a percent of sales by 50 basis points) mainly due to higher technology expenses, asset impairments, occupancy costs, and professional fees;
Current report
•an increase in marketing and advertising expenses of $14.6 million (increasing SG&A as a percent of sales by 10 basis points);
Current report
•an increase in distribution and fulfillment expenses of $12.8 million (decreasing SG&A as a percent of sales by 110 basis points) primarily due to higher online marketplace fees and third-party logistics fees associated with higher net sales, partially offset by lower outbound freight.
Current report
The increase in SG&A expenses were partially offset by lower depreciation and amortization expense of $0.7 million (decreasing SG&A as a percent of sales by 20 basis points).
Current report
Interest income, net was $0.7 million in 2024. Interest expense, net was $0.9 million in 2023. The change versus the prior year period was primarily due to an increase in interest income.
Current report
On February 26, 2024, we further amended the Credit Facility, leaving the material terms of the Credit Facility substantially unchanged, with the exception of a definitional update and a change to permit a Hedging Agreement (as defined in the Credit Facility) entered into in connection with an accelerated share purchase program under the Credit Facility.
Current report
As part of the Share Repurchase Program, on February 27, 2024, we entered into an accelerated share repurchase agreement (the “February ASR Agreement”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to repurchase $100.0 million of YETI’s common stock. Pursuant to the February ASR Agreement, we made a payment of $100.0 million to Goldman Sachs and received an initial delivery of 1,998,501 shares of our common stock. We received a final delivery of an additional 642,674 shares on April 25, 2024. The February ASR Agreement resulted in the total repurchase of 2,641,175 shares.
Current report
In addition, as part of the Share Repurchase Program, on November 12, 2024, we entered into a second accelerated share repurchase agreement (the “November ASR Agreement”) with Goldman Sachs to repurchase an additional $100.0 million of YETI’s common stock. Pursuant to the November ASR Agreement, we made a payment of $100.0 million to Goldman Sachs and received an initial delivery of 1,933,301 shares of YETI’s common stock. We received a final delivery of an additional 551,955 shares on January 6, 2025. The November ASR resulted in the total repurchase of 2,485,256 shares.
Current report
During the first quarter of 2025, our Board of Directors approved a $350.0 million increase to the Share Repurchase Program authorization, excluding fees, commissions, and excise tax due under the Inflation Reduction Act of 2022. As of February 24, 2025, $450.0 million remained available under the Share Repurchase Program.
Current report
See Note 11-Stockholders’ Equity of the Consolidated Financial Statements for additional information about the Share Repurchase Program.
Current report
Business Combinations
Current report
We account for business combinations using the acquisition method of accounting. We allocate the purchase consideration to the identifiable assets acquired and liabilities assumed in a business combination based on their acquisition-date fair values. We use our best estimates and assumptions to determine the fair value of tangible and intangible assets acquired and liabilities assumed, as well as the uncertain tax positions and tax-related valuation allowances that are initially recorded in connection with a business combination. These estimates are reevaluated and adjusted, if needed, during the measurement period of up to one year from the acquisition date, and are recorded as adjustments to goodwill. Any adjustments to the acquired assets and liabilities assumed that are identified subsequent to the measurement period are recorded in earnings.
Removed paragraphs (16)
Previous report
During the first quarter of 2023, we expanded our cargo offerings with the launch of the new LoadOut GoBox in three sizes, introduced the new stackable Rambler Lowball, built new customization capabilities for our Yonder bottles, and introduced new seasonal colorways.
Previous report
During the second quarter of 2023, we expanded our drinkware offerings with the launch of the new Rambler beverage bucket, introduced new color-matched straw lid Rambler bottles and our first ever cast iron skillet, and continued to expand our seasonal colorways.
Previous report
During the fourth quarter of 2023, we introduced our redesigned and improved SideKick Dry gear case as well as our Hopper M30 Soft Cooler and Hopper M20 Soft Backpack Cooler, and also launched two new sizes with the Hopper M15 Soft Cooler and the Hopper M12 Soft Backpack Cooler (collectively, the “Hopper M Series Soft Cooler line”). We believe the improved design of the SideKick Dry gear case and Hopper M Series Soft Cooler line adequately addresses the potential safety concerns caused by the magnet-lined closures of the previous-generation products, which were affected by the product recalls discussed below.
Previous report
We also continued the expansion of our drinkware offerings with the launch of specialty coffee Rambler cups and mugs, introduced a third size of our Rambler Straw Mugs, a new stackable Rambler mug, and our first ever wine chiller and cocktail shaker as part of our tabletop solutions.
Previous report
2024 Acquisitions
Previous report
Credit Facility Amendment
Previous report
On June 22, 2023, we amended our Credit Facility to, among other matters, extend its maturity to June 22, 2028 and increase the commitments under the revolving credit facility (the “Revolving Credit Facility”) from $150.0 million to $300.0 million. For additional information on the Credit Facility, see “Liquidity and Capital Resources - Credit Facility” below.
Previous report
During 2021 and 2022, we experienced challenges associated with the complex and uncertain macroeconomic environment in which we operate. Consistent across many industries, we experienced inflationary pressures and supply chain challenges, including port congestion, container and labor shortages, which resulted in longer transit times, higher distribution, logistics, and product input costs. As a result, we experienced decreased profitability and delayed product availability for certain products in 2022. However, in the second half of 2022, these inflationary pressures and supply chain challenges, including inbound freight rates, began improving. In 2023, freight rates stabilized at near pre-pandemic levels. The reduction in freight rates resulted in an improvement to our gross margin during 2023 compared to 2022.
Previous report
In addition to the trends discussed above, foreign exchange rate fluctuations and geopolitical issues add to significant uncertainty in the macroeconomic environment. The recent conflict in the Red Sea has disrupted shipping routes, which has caused us to begin experiencing shipping delays and increased freight costs. Although such effects have not materially impacted our business to date, such conditions could worsen.
Previous report
(1) Includes $6.4 million of inbound freight expense related to an out-of-period adjustment for year ended December 31, 2022. See Note 1 - Organization and Significant Accounting Policies of the Unaudited Condensed Consolidated Financial Statements for additional information.
Previous report
•Coolers & Equipment net sales decreased $15.0 million, or 2%, to $597.5 million in 2023 from $612.5 million in 2022. Coolers & Equipment net sales included an unfavorable impact of $21.7 million in 2023 primarily related to recall reserve adjustments, and an unfavorable impact of $38.4 million in 2022 in connection with the initial recognition of the recall reserves. The decrease in Coolers & Equipment net sales was primarily due to the stop sale of the products affected by the recalls, partially offset by the introduction of our new Hopper M12 Soft Backpack Cooler and M15 Soft Cooler, and strong performance in our Hopper Flip soft cooler line, cargo, and bags. Coolers & Equipment net sales were also favorably impacted by $16.7 million due to lower recall reserves in 2023.
Previous report
•the lower impact of the recall reserves, which favorably impacted gross margin by 480 basis points;
Previous report
•an increase in the mix of DTC channel net sales, including our growing Amazon Marketplace business, which favorably impacted gross margin by 50 basis points.
Previous report
•higher promotions in our DTC channel, including Amazon Prime Day promotions, which unfavorably impacted gross margin by 30 basis points;
Previous report
•an increase in variable expenses of $39.7 million (increasing SG&A as a percent of sales by 190 basis points) primarily associated with higher DTC channel sales, and comprised of higher distribution costs including higher outbound freight rates, online marketplace fees, third-party logistics fees, and credit card processing fees;
Previous report
Interest expense was $0.9 million in 2023, compared to $4.5 million in 2022. The decrease was primarily driven by higher interest income, partially offset by an increase in interest expense due to higher interest rates on our outstanding long-term debt.
Reworded paragraphs (36)
Previous wording
We distribute our products through a balanced omni-channel platform, consisting of our wholesale and direct-to-consumer (“DTC”) channels. In our wholesale channel, we sell our products through select national and regional accounts and an assemblage of independent retail partners throughout the United States, Canada, Australia, New Zealand, Europe, and Japan, among others. We carefully evaluate and select retail partners that have an image and approach that are consistent with our premium brand and pricing. Our domestic national and regional specialty retailers include Dick’s Sporting Goods, REI, Academy Sports + Outdoors, Bass Pro Shops, Ace Hardware, Scheels, and Tractor Supply Company. We sell our products in our DTC channel to customers on YETI.com, country and region-specific YETI websites, and YETI Authorized on the Amazon Marketplace, as well as in our retail stores. Additionally, we offer customized products with licensed trademarks and original artwork through our corporate sales program, at YETI.com and certain country-specific YETI websites. Our corporate sales program offers customized products to corporate customers for a wide-range of events and activities, and in certain instances may also offer products to re-sell.
Current wording
We distribute our products through a balanced omni-channel platform, consisting of our wholesale and direct-to-consumer (“DTC”) channels. In our wholesale channel, we sell our products through select national and regional accounts and an assemblage of independent retail partners throughout the United States, Canada, Australia, New Zealand, Europe, and Japan, among others. We carefully evaluate and select retail partners that have an image and approach that are consistent with our premium brand and pricing. Our domestic national and regional specialty retailers include Dick’s Sporting Goods, REI, Academy Sports + Outdoors, Bass Pro Shops, Ace Hardware, Scheels, and Tractor Supply Company. We sell our products in our DTC channel to customers through our websites and YETI Authorized on the Amazon Marketplace, as well as in our retail stores. Additionally, we offer customized products with licensed marks and original artwork primarily through our DTC channel, including our corporate sales channel, on our websites, and at select retail stores. Our corporate sales program offers customized products to corporate customers for a wide-range of events and activities, and in certain instances may also offer products to re-sell.
Previous wording
During the first quarter of 2024, we completed the acquisitions of Mystery Ranch, Ltd. (“Mystery Ranch”), a designer and manufacturer of durable load-bearing backpacks, bags, and pack accessories, and Butter Pat Industries, LLC (“Butter Pat”), a designer and manufacturer of cast iron cookware. We plan to integrate Mystery Ranch and Butter Pat operations and products into our business to further expand our capabilities in the cookware and bags categories. See Note 14—Subsequent Events of the Notes to Consolidated Financial Statements included herein for additional information about these acquisitions.
Current wording
During the first quarter of 2024, we completed the acquisitions of Mystery Ranch, a designer and manufacturer of durable load-bearing backpacks, bags, and pack accessories, and Butter Pat Industries, LLC (“Butter Pat”), a designer and manufacturer of cast iron cookware. During 2024, we integrated Butter Pat, expanding the cookware offerings in our Drinkware category. We also integrated Mystery Ranch operations and products into our business, expanding the bags offerings in our Coolers & Equipment category.
Previous wording
In January 2023, we notified the Consumer Products Safety Commission (“CPSC”) of a potential safety concern regarding the magnet-lined closures of our Hopper M30 Soft Cooler, Hopper M20 Soft Backpack Cooler, and SideKick Dry gear case (the “affected products”) and initiated a global stop sale of the affected products. In February 2023, we proposed a voluntary recall of the affected products to the CPSC and other relevant global regulatory authorities. Accordingly, we established reserves for unsalable inventory on-hand, as well as expected future returns and the estimated cost of recall remedies for consumers with affected products as of December 31, 2022.
Current wording
In January 2023, we notified the U.S. Consumer Product Safety Commission (“CPSC”) of a potential safety concern regarding the magnet-lined closures of our Hopper M30 Soft Cooler, Hopper M20 Soft Backpack Cooler, and SideKick Dry gear case (the “affected products”) and initiated a global stop sale of the affected products. In February 2023, we proposed a voluntary recall of the affected products to the CPSC and other relevant global regulatory authorities. Accordingly, we established reserves for unsalable inventory on-hand, as well as expected future returns and the estimated cost of recall remedies for consumers with affected products as of December 31, 2022.
Previous wording
In addition, our 2023 sales were materially adversely impacted by the stop sale of the affected products. We have developed solutions to address the potential safety concern of the affected products. In the fourth quarter of 2023, we introduced our redesigned and improved versions of the affected products.
Current wording
In addition, our sales from the first to the third quarter of 2023 were materially adversely impacted by the stop sales of the affected products. In the fourth quarter of 2023, we introduced our redesigned and improved versions of the affected products.
Previous wording
As of December 30, 2023 and December 31, 2022, our reserve for estimated recall expenses was $13.1 million and $94.8 million, respectively.
Current wording
As of December 28, 2024 and December 30, 2023, our reserve for estimated recall expenses was $12.1 million and $13.1 million, respectively.
Previous wording
There is significant uncertainty regarding how macroeconomic trends, including sustained high levels of inflation and higher interest rates, will impact consumer demand. While some of these conditions have negatively impacted consumer discretionary spending behavior, we continue to see strong consumer demand for our products.
Current wording
There remains significant uncertainty regarding how macroeconomic conditions, including sustained high levels of inflation and higher interest rates, will impact consumer demand. While some of these conditions have negatively impacted consumer discretionary spending behavior, we continue to see strong overall demand for our products.
Previous wording
A worsening of any of the macroeconomic trends discussed herein may adversely impact our business, operations, and financial results in the future. We will continue to monitor and, if necessary, mitigate the effects of the macroeconomic environment on our business.
Current wording
A worsening of any of the macroeconomic trends or uncertainties discussed herein may adversely impact our business, operations, and financial results in the future. We will continue to monitor and, if necessary, strive to mitigate the effects of the macroeconomic environment on our business.
Previous wording
Gross profit. Gross profit reflects net sales less cost of goods sold, which primarily includes the purchase cost of our products from our third-party contract manufacturers, inbound freight and duties, product quality testing and inspection costs, depreciation expense of our molds, tooling, and equipment, and the cost of customizing products. We calculate gross margin as gross profit divided by net sales. Our DTC channel generally generates higher gross margin than our wholesale channel due to differentiated pricing between these channels.
Current wording
Gross profit. Gross profit reflects net sales less cost of goods sold, which primarily includes the purchase cost of our products from our third-party contract manufacturers, inbound freight and duties, product receiving testing and inspection costs, depreciation expense of our molds, tooling, and equipment, and the cost of customizing products. We calculate gross margin as gross profit divided by net sales. Our DTC channel generally generates higher gross margin than our wholesale channel due to differentiated pricing between these channels.
Previous wording
Selling, general, and administrative expenses. Selling, general, and administrative (“SG&A”) expenses consist primarily of marketing costs, employee compensation and benefits costs, costs of our outsourced warehousing and logistics operations, costs of operating on third-party DTC marketplaces, professional fees and services, non-cash stock-based compensation, cost of product shipment to our customers, depreciation and amortization expense, and general corporate infrastructure expenses. Our variable expenses, including outbound freight, online marketplace fees, third-party logistics fees, and credit card processing fees, will vary as they are dependent on our sales volume and our channel mix. Our DTC channel variable SG&A costs are generally higher as a percentage of net sales than our wholesale channel distribution costs.
Current wording
Selling, general, and administrative expenses. Selling, general, and administrative (“SG&A”) expenses consist primarily of marketing costs, employee compensation and benefits costs, including non-cash stock-based compensation, distribution and fulfillment costs, depreciation and amortization expense, and general corporate infrastructure expenses. Our distribution and fulfillment costs include costs of our third-party warehousing and logistics operations, outbound freight costs, costs of operating on third-party DTC marketplaces, and credit card processing fees. Certain distribution and fulfillment costs will vary as they are dependent on our sales volume and our channel mix. Our DTC channel variable SG&A costs are generally higher as a percentage of net sales than our wholesale channel distribution costs.
Previous wording
Net sales increased $63.5 million, or 4%, to $1,658.7 million in 2023 from $1,595.2 million in 2022. Net sales included an unfavorable impact of $21.7 million in 2023 primarily related to recall reserve adjustments, and an unfavorable impact of $38.4 million in 2022 in connection with the initial recognition of the recall reserves, as discussed above. Excluding these recall-related impacts, sales increased 3% primarily due to volume growth in our DTC channel.
Current wording
Net sales increased $171.2 million, or 10%, to $1,829.9 million in 2024 from $1,658.7 million in 2023. Net sales included an unfavorable impact of $8.8 million in 2024 and $21.7 million in 2023 primarily related to recall reserve adjustments, as discussed above. Excluding these recall-related impacts, sales increased 9% primarily due to volume growth in both our DTC and Wholesale channels.
Previous wording
Net sales for 2023 were materially adversely impacted by the stop sale of the soft coolers included in the recalls initiated during the first quarter of 2023. In addition, net sales for 2023 include $25.3 million of sales related to gift card redemptions in connection with recall remedies.
Current wording
Net sales for 2023 were materially adversely impacted by the stop sale of the soft coolers included in the recalls initiated during the first quarter of 2023. In addition, net sales for 2024 and 2023 include $8.8 million and $25.3 million, respectively, of sales related to gift card redemptions in connection with recall remedies.
Previous wording
•DTC channel net sales increased $80.0 million, or 9%, to $997.7 million in 2023 from $917.7 million in 2022, driven by both Drinkware and Coolers & Equipment categories. DTC channel net sales included an unfavorable impact of $7.3 million in 2023 primarily related to recall reserve adjustments, and an unfavorable impact of $6.2 million in 2022 in connection with the initial recognition of the recall reserves. Our DTC channel represented 60% and 58% of total net sales in 2023 and 2022, respectively.
Current wording
•DTC channel net sales increased $89.9 million, or 9%, to $1,087.6 million in 2024 from $997.7 million in 2023, primarily driven by growth in both Coolers & Equipment and Drinkware categories. DTC channel net sales included an unfavorable impact of $8.3 million in 2024 and $7.3 million in 2023 primarily related to recall reserve adjustments. Our DTC channel represented 59% and 60% of total net sales in 2024 and 2023, respectively.
Previous wording
•Net sales in our wholesale channel decreased $16.5 million, or 2%, to $661.0 million in 2023 from $677.5 million in 2022. Wholesale channel net sales included an unfavorable impact of $14.4 million in 2023 primarily related to recall reserve adjustments, and an unfavorable impact of $32.2 million in 2022 in connection with the initial recognition of the recall reserves. The decrease in our wholesale channel sales was primarily due to a decline in Coolers & Equipment, partially offset by growth in Drinkware and a favorable impact of $17.9 million related to the recall reserves. Our wholesale channel represented 40% and 42% of total net sales in 2023 and 2022, respectively.
Current wording
•Net sales in our wholesale channel increased $81.3 million, or 12%, to $742.3 million in 2024 from $661.0 million in 2023. Wholesale channel net sales included an unfavorable impact of $0.6 million in 2024 and $14.4 million in 2023 related to recall reserve adjustments. The increase in our wholesale channel sales was primarily driven by both Coolers & Equipment and Drinkware categories, as well as a net favorable impact of $13.8 million related to the recall reserves. Our wholesale channel represented 41% and 40% of total net sales in 2024 and 2023, respectively.
Previous wording
•Drinkware net sales increased $75.8 million, or 8%, to $1,023.0 million in 2023 from $947.2 million in 2022, primarily driven by strong demand for the continued expansion and innovation of our Drinkware product offerings, including Rambler straw lid mugs, Rambler and Yonder bottles, specialty coffee cups and tabletop solutions, as well as new seasonal colorways.
Current wording
•Drinkware net sales increased $71.2 million, or 7%, to $1,094.2 million in 2024 from $1,023.0 million in 2023, primarily driven by demand for the continued expansion and innovation of our Drinkware product offerings and new seasonal colorways.
Previous wording
Gross profit increased $179.8 million, or 24%, to $943.2 million in 2023 from $763.4 million in 2022. Gross margin increased 900 basis points to 56.9% in 2023 from 47.9% in 2022. Gross profit included an unfavorable impact of $13.3 million in 2023 primarily related to recall reserve adjustments, and an unfavorable impact of $97.0 million in 2022 in connection with the initial recognition of the recall reserves, as discussed above. The increase in gross margin was primarily driven by:
Current wording
Gross profit increased $120.1 million, or 13%, to $1,063.3 million in 2024 from $943.2 million in 2023. Gross margin increased 120 basis points to 58.1% in 2024 from 56.9% in 2023. Gross profit included an unfavorable impact of $8.1 million in 2024 and $13.3 million in 2023 primarily related to recall reserve adjustments, as discussed above. The increase in gross margin was primarily driven by:
Previous wording
•lower inbound freight, including lower rates, which favorably impacted gross margin by 370 basis points;
Current wording
•lower inbound freight rates, which favorably impacted gross margin by 220 basis points; and
Previous wording
•lower product costs, which favorably impacted gross margin by 110 basis points; and
Current wording
•lower product costs, which favorably impacted gross margin by 110 basis points;
Previous wording
•other impacts, including higher depreciation and amortization expense and customization costs, which unfavorably impacted gross margin by 60 basis points.
Current wording
•higher customization costs, which unfavorably impacted gross margin by 40 basis points;
Previous wording
•the unfavorable impact of foreign currency exchange rates, which unfavorably impacted gross margin by 20 basis points; and
Current wording
•the net impact of the recall reserves adjustments, which unfavorably impacted gross margin by 20 basis points; and
Previous wording
SG&A expenses increased by $80.7 million, or 13%, to $717.7 million in 2023 from $637.0 million in 2022. As a percentage of net sales, SG&A expenses increased 340 basis points to 43.3% in 2023 from 39.9% in 2022. SG&A expenses included a favorable impact of $11.4 million in 2023 primarily related to recall reserve adjustments, and an unfavorable impact of $31.9 million in 2022 in connection with the initial recognition of the recall reserves, as discussed above. The increase in SG&A expenses resulted from:
Current wording
SG&A expenses increased by $100.2 million, or 14%, to $817.9 million in 2024 from $717.7 million in 2023. As a percentage of net sales, SG&A expenses increased 140 basis points to 44.7% in 2024 from 43.3% in 2023. SG&A expenses included an unfavorable impact of $1.8 million in 2024 and a favorable impact of $11.4 million in 2023 primarily related to recall reserve adjustments, as discussed above. The increase in SG&A expenses resulted from:
Previous wording
•an increase in non-variable expenses of $84.3 million (increasing SG&A as a percent of sales by 420 basis points) comprised of higher employee costs, mainly due to incentive compensation, investments in headcount to support future growth, and non-cash stock-based compensation expense, as well as investments in marketing expenses, warehousing costs, facility costs, and other operating expenses; which were partially offset by
Current wording
•an increase in employee compensation and benefits of $39.9 million (increasing SG&A as a percent of sales by 130 basis points) mainly due to investments in headcount to support future growth and non-cash stock-based compensation expense;
Previous wording
•the lower impact of the recall reserves, which favorably impacted SG&A expenses by $43.3 million (decreasing SG&A as a percent of sales by 270 basis points).
Current wording
•the net impact of the recall reserves adjustments, which unfavorably impacted SG&A expenses by $13.2 million (increasing SG&A as a percent of sales by 80 basis points); and
Previous wording
Other income, net was $1.4 million in 2023, compared to other expense of $5.7 million in 2022. The increase in other income, net was due to foreign currency gains on intercompany balances.
Current wording
Other expense, net was $13.2 million in 2024. Other income, net was $1.4 million in 2023. The change versus the prior year period was primarily due to unrealized foreign currency losses on intercompany balances in the current period versus unrealized foreign currency gains on intercompany balances in the prior year.
Previous wording
Income tax expense was $56.1 million in 2023, compared to $26.5 million in 2022. Our effective tax rate for 2023 was 25% compared to 23% for 2022. The increase in income tax expense was primarily due to an increase in earnings before taxes in 2023. The increase in the effective tax rate was primarily due to a lower tax benefit from our export sales deductions and an unfavorable tax impact related to stock-based compensation in 2023.
Current wording
Income tax expense was $57.2 million in 2024, compared to $56.1 million in 2023. Our effective tax rate was 25% for both 2024 and 2023. The increase in income tax expense was primarily due to higher income before income taxes.
Previous wording
Our cash requirements have principally been for working capital purposes, long-term debt repayments, and capital expenditures. We fund our working capital, which primarily consists of inventory and accounts receivable, and our capital investments from cash flows from operating activities, cash on hand, and borrowings available under our Revolving Credit Facility. Pursuant to our new share repurchase plan described below, we also plan to use cash to repurchase shares of our common stock. We believe that our current operating performance, operating plan, our strong cash position, and borrowings available under our Revolving Credit Facility will be sufficient to satisfy our foreseeable liquidity needs and capital expenditure requirements, including for at least the next twelve months.
Current wording
Our cash requirements have principally been for working capital purposes, long-term debt repayments, and capital expenditures. We fund our working capital and our capital investments from cash flows from operating activities, cash on hand, and borrowings available under our Revolving Credit Facility. Pursuant to our Share Repurchase Program described below, we use cash to repurchase shares of our common stock. We believe that our current operating performance, operating plan, our strong cash position, and borrowings available under our Revolving Credit Facility will be sufficient to satisfy our liquidity needs and capital expenditure requirements for at least the next twelve months and the foreseeable future.
Previous wording
As of December 30, 2023, we had a cash balance of $439.0 million, $77.1 million of working capital (excluding cash), and $300.0 million of borrowings available under the Revolving Credit Facility.
Current wording
As of December 28, 2024, we had a cash balance of $358.8 million, $88.5 million of working capital (excluding cash), and $300.0 million of borrowings available under the Revolving Credit Facility.
Previous wording
At December 30, 2023, we had $82.3 million principal amount of indebtedness outstanding under the Term Loan A and no outstanding borrowings under the Revolving Credit Facility. The weighted average interest rate for borrowings under Term Loan A was 6.83% during the year ended December 30, 2023.
Current wording
At December 28, 2024, we had $78.0 million principal amount of indebtedness outstanding under the Term Loan A and no outstanding borrowings under the Revolving Credit Facility. The weighted average interest rate for borrowings under Term Loan A was 7.09% during the year ended December 28, 2024.
Previous wording
On February 1, 2024, our Board of Directors authorized the repurchase of up to $300 million (exclusive of fees and commissions) of YETI’s common stock. The common stock may be repurchased from time to time at prevailing prices in the open market, through various methods, including, but not limited to, open market, privately negotiated, or accelerated share repurchase transactions. Repurchases under the share repurchase program may also be made pursuant to a plan adopted under Rule 10b5-1 promulgated under the Exchange Act. The timing, manner, price, and actual amount of share repurchases will be determined by management based on various factors, including, but not limited to, stock price, economic and market conditions, other capital allocation needs and opportunities, and corporate and regulatory considerations. YETI has no obligation to repurchase any amount of our common stock, and such repurchases may be suspended or discontinued at any time.
Current wording
On February 1, 2024, our Board of Directors authorized the repurchase of up to $300.0 million (exclusive of fees and commissions) of YETI’s common stock (the “Share Repurchase Program”), excluding fees, commissions, and excise tax due under the Inflation Reduction Act of 2022. The common stock may be repurchased from time to time at prevailing prices in the open market, through various methods, including, but not limited to, open market, privately negotiated, or accelerated share repurchase transactions. Repurchases under the share repurchase program may also be made pursuant to a plan adopted under Rule 10b5-1 promulgated under the Exchange Act. The timing, manner, price, and actual amount of share repurchases will be determined by management based on various factors, including, but not limited to, stock price, economic and market conditions, other capital allocation needs and opportunities, and corporate and regulatory considerations. YETI has no obligation to repurchase any amount of our common stock, and such repurchases may be suspended or discontinued at any time. As of December 28, 2024, $100.0 million remained available under the Share Repurchase Program.
Previous wording
For 2024, we expect capital expenditures for property and equipment to be approximately $60 million, primarily to support investments in technology, new product innovation, expansion of our custom portfolio and capacity, and retail stores investments.
Current wording
For 2025, we expect capital expenditures for property and equipment to be between $60.0 million and $70.0 million, primarily to support investments in technology, new product innovation, and our supply chain.
Previous wording
The table of our material cash requirements above excludes unrecognized tax benefits as we are unable to reasonably predict the timing of settlement of liabilities, if any, related to unrecognized tax benefits. As of December 30, 2023, we had unrecognized tax benefits of $17.6 million.
Current wording
The table of our material cash requirements above excludes unrecognized tax benefits as we are unable to reasonably predict the timing of settlement of liabilities, if any, related to unrecognized tax benefits. As of December 28, 2024, we had unrecognized tax benefits of $21.2 million.
Previous wording
As of December 30, 2023, our reserve for estimated recall expenses, including the expected cost of returns, was $13.1 million. The ultimate costs from the approved voluntary recalls could differ materially from this estimate, and as such, changes in the estimate may have a material impact on our financial condition, results of operations, and cash flows.
Current wording
As of December 28, 2024, our reserve for estimated recall expenses, including the expected cost of returns, was $12.1 million. The ultimate costs from the approved voluntary recalls could differ materially from this estimate, and as such, changes in the estimate may have a material impact on our financial condition, results of operations, and cash flows.
Previous wording
The increase in cash provided by operating activities in 2023 was primarily due to an increase in cash received for working capital, and to a smaller extent, net income, adjusted for non-cash items, including the impact of our voluntary recalls, for the periods compared. The increase in cash received for working capital was primarily due to a decrease in inventory and an increase in accounts payable and other accrued expenses, partially offset by an increase in accounts receivable.
Current wording
Cash flows related to operating activities are dependent on net income, non-cash adjustments to net income, and changes in working capital. The decrease in cash provided by operating activities in 2024 compared to 2023 was primarily due to an increase in cash used by working capital driven by lower accounts payable and accrued expenses balances and higher account receivable balances in 2024. The increase in cash provided by operating activities was partially offset by an increase in net income and the impact of non-cash items.
Previous wording
The increase in cash used in investing activities in 2023 compared to 2022 was primarily related to increased purchases of intangible assets.
Current wording
The increase in cash used in investing activities in 2024 compared to 2023 was primarily related to the acquisition of Mystery Ranch and higher purchases of intangible assets, including the acquisition of powered cooling technology patents to develop a unique powered cooler platform. These increases were partially offset by decreased purchases of property and equipment.
Previous wording
The decrease in cash used in financing activities in 2023 compared to 2022 was primarily driven by repurchases of common stock in the prior year period.
Current wording
The increase in cash used in financing activities in 2024 compared to 2023 was primarily due to repurchases of common stock.
Previous wording
Revenue transactions associated with the sale of YETI branded coolers, equipment, drinkware, apparel and accessories comprise a single performance obligation, which consists of the sale of products to customers either through our wholesale or DTC channels. Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods to the customers, based on the terms of sale. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the goods, and physical possession of, legal title to, and the risks and rewards of ownership of the goods has been transferred, and the customer has accepted the goods. Revenue from wholesale transactions is generally recognized at the time products are shipped based on contractual terms with the customer. Revenue from our DTC channel is generally recognized at the point of sale in our retail stores and at the time products are shipped for e-commerce transactions and corporate sales based on contractual terms with the customer.
Current wording
Revenue transactions associated with the sale of YETI coolers, equipment, drinkware, apparel and accessories comprise a single performance obligation, which consists of the sale of products to customers either through our wholesale or DTC channels. Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods to the customers, based on the terms of sale. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the goods, and physical possession of, legal title to, and the risks and rewards of ownership of the goods has been transferred, and the customer has accepted the goods. Revenue from wholesale transactions is generally recognized at the time products are shipped based on contractual terms with the customer. Revenue from our DTC channel is generally recognized at the point of sale in our retail stores and at the time products are shipped for e-commerce transactions and corporate sales based on contractual terms with the customer.
Previous wording
We establish reserves for the estimated costs of a product recall when circumstances giving rise to the recall become known and when such costs are probable and estimable. As a result of the voluntary recalls, we established a reserve for expected future returns and the estimated cost of recall remedies for consumers with affected products. Estimating the cost of recall remedies required significant judgment and is primarily based on i) expected consumer participation rates; and ii) the estimated costs of the consumer’s elected remedy in the proposed voluntary recall, including estimated cost of offered product replacements, logistics costs and other recall-related costs. We will reevaluate these assumptions each period, and the related reserves may be adjusted when factors indicate that the reserve is either not sufficient to cover or exceeds the estimated product recall expenses. The ultimate impact from the approved voluntary recalls could differ materially from these estimates. The reserve for the estimated product recall expenses of $13.1 million and $94.8 million is included within accrued expenses and other current liabilities on our consolidated balance sheet as of December 30, 2023 and December 31, 2022, respectively.
Current wording
We establish reserves for the estimated costs of a product recall when circumstances giving rise to the recall become known and when such costs are probable and estimable. As a result of the voluntary recalls, we established a reserve for expected future returns and the estimated cost of recall remedies for consumers with affected products. Estimating the cost of recall remedies required significant judgment and is primarily based on (i) expected consumer participation rates; and (ii) the estimated costs of the consumer’s elected remedy in the proposed voluntary recall, including estimated cost of offered product replacements, logistics costs and other recall-related costs. We reevaluate these assumptions each period, and the related reserves may be adjusted when factors indicate that the reserve is either not sufficient to cover or exceeds the estimated product recall expenses. The ultimate impact from the approved voluntary recalls could differ materially from these estimates. The reserve for the estimated product recall expenses of $12.1 million and $13.1 million is included within accrued expenses and other current liabilities on our consolidated balance sheet as of December 28, 2024 and December 30, 2023, respectively.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On March 31, 2023, we amended our senior secured credit agreement (the “Credit Facility”), leaving the material terms of the Credit Facility substantially unchanged, with the exception of certain changes to implement the replacement of LIBOR with SOFR.
Previous report — wording carried elsewhere
Cash flows related to operating activities are dependent on net income, non-cash adjustments to net income, and changes in working capital.