Yeti fell short of analyst estimates for its fourth quarter despite gains in the drinkware and international businesses.
Net income, including impacts from the recall reserves, was $78.6 million, or 90 cents per diluted share, versus a net loss of $27.7 million, or 32 cents per diluted share, in the year-previous quarter, the company maintained. Adjusted for one-time events, net income was $78.8 million, or 90 cents per diluted share, compared to $67.7 million, or 78 cents per diluted share, in the year-before period.
Yeti fell short of a 96 cents per adjusted diluted share analyst consensus estimate published by Yahoo Finance and a sales estimate of $535.95.
Sales were $519.8 million versus $448 million in the year-earlier period. The recall reserves favorably impacted sales by $2.8 million in the fourth quarter and unfavorably impacted sales by $38.4 million in the year-past period, Yeti reported. Adjusted sales, which exclude the impacts of the recall reserves in both the current and prior year period, increased 6% to $517 million.
Operating income advanced to $98.2 million from an operating loss of $43.7 million in the quarter year over year. Operating income included a $4.9 million favorable impact related to the recall reserves in the fourth quarter and a $128.9 million unfavorable impact related to the recall reserves in the year-past period, Yeti indicated, noting that adjusted operating income was $102.6 million versus $89.1 million in the fiscal 2022 quarter.
Fourth quarter 2023 results for the company’s operating segments were, according to Yeti:
- Direct-to-Consumer. Sales increased 11% year over year to $344.9 million because of growth in drinkware. With impacts related to the recall reserves, DTC adjusted sales increased 9% to $344.1 million from fiscal 2022.
- Wholesale. Sales increased 26% year over year to $174.9 million. With the impacts of the recall reserves excluded, adjusted sales increased 1% to $172.9 million from fiscal 2022.
- Drinkware. Sales increased 12% to $346 million year over year, driven by continued expansion and innovation, such as with the Rambler straw lid mugs, Rambler and Yonder bottles, new specialty coffee cups and tabletop solutions, and new seasonal colorways.
- Coolers and Equipment. Sales increased 26% to $165 million year over year. With the impacts of the recall reserves excluded, coolers and equipment adjusted sales decreased 4% to $162.2 million from fiscal 2022. The decrease was primarily because of a decline in hard cooler sales, hit by more cautious and inconsistent spending for higher-priced items, partially offset by strong performance for the new Hopper M12 Soft Backpack Cooler and M15 Soft Cooler, cargo and bags.
For the full 2023 fiscal year, net income was $169.9 million, or $1.94 per share, versus $89.7 million, or $1.03 per diluted share, in the year previous, while adjusted net income was $197 million, or $2.25 per diluted share, versus $205.7 million, or $2.36 per diluted share.
Sales increased 4% to $1.66 billion from the year earlier as the recall reserves unfavorably impacted sales by $21.7 million in 2023 and $38.4 million in 2022, and adjusted sales gained 3% to $1,680.4 billion.
Operating income increased 78% to $225.5 million year over year, while adjusted operating income decreased 4% to $262.8 million.
In announcing the financial results, Matt Reintjes, Yeti president and CEO said, “In the fourth quarter, we saw strength in a number of key areas of our business. Our Drinkware business grew 12%, pushing the category to over $1 billion in annual sales. Also, our international expansion continued in the fourth quarter, with our business outside the U.S. growing 39%. Despite strong topline performance in these areas, our fourth quarter results were below our guidance, primarily as a result of more cautious and inconsistent spending on high-priced ticket items in our Coolers and Equipment category. Gross margins continued to expand in the fourth quarter, reaching an all-time high of over 60%, which supported a return of adjusted operating margin expansion. And we exited the year with our strongest balance sheet to-date, including a record cash position of nearly $440 million.”
Reintjes pointed out that, in 2023, Yeti “continued to show the strength of our customer base, the success of our product expansion, and the momentum behind our global brand. During the year, we evolved our diverse commercial channels to market through existing and new wholesale partners, continued to make investments in our DTC channels and further developed our international markets. We delivered a robust lineup of new product innovation while maintaining our focus on durability, performance and design. Importantly, we broadened and extended the reach of Yeti drinkware with new offerings in hydration, coffee, barware and tabletop, which resonated with both new and existing customers. Additionally, we made foundational international investments across brand awareness, logistics and DTC to support international growth into 2024 and beyond.”
