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YETI Reports Second Quarter 2019 Results

August 1, 2019 6:00 AM

Net Sales Increased 12%

Gross Margin Expanded 140 Basis Points

Diluted EPS increased by 14% to $0.26; Diluted Adjusted EPS increased by 19% to $0.33

Raises 2019 Outlook

AUSTIN, Texas--(BUSINESS WIRE)-- YETI Holdings, Inc. (“YETI”) (NYSE: YETI) today announced its financial results for the second quarter ended June 29, 2019.

YETI reports its financial performance in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and as adjusted on a non-GAAP basis. Please see “Non-GAAP Financial Information” and “Reconciliation of GAAP to Non-GAAP Financial Information” below for additional information and reconciliations of the non-GAAP financial measures to the most comparable GAAP financial measures.

Matt Reintjes, President and Chief Executive Officer, commented, “YETI delivered strong second quarter results, highlighted by our DTC business and demonstrating the brand’s growing reach and relevance during the important gift giving period for moms, dads, and grads. We made meaningful progress across our growth strategies during the period including the integration of our e-commerce platforms, the opening of our second retail store in Charleston, and the successful launch of a new category with the LoadOut GoBox. With an even stronger product lineup ahead, ongoing enhancements in our ability to service the business, and further advancements across our retail and international strategies, we are incredibly excited about the second half of 2019 as well as the foundation we are creating for long-term growth.”

For the Three Months Ended June 29, 2019

Net sales increased 12% to $231.7 million, compared to $206.3 million during the same period last year.

Gross profit increased 16% to $116.3 million, or 50.2% of net sales, compared to $100.6 million, or 48.8% of net sales, in the second quarter of 2018. The 140 basis point increase in gross margin was primarily driven by cost improvements, particularly in our Drinkware category, a favorable shift in our channel mix led by an increase in DTC channel net sales, partially offset by higher tariff rates, and the unfavorable impact of inventory reserve reductions in the prior year quarter.

Selling, general, and administrative (“SG&A”) expenses increased to $81.3 million, or 35.1% of net sales, compared to $67.4 million, or 32.7% of net sales, in the second quarter of 2018. SG&A as a percent of net sales increased 240 basis points, and approximately 90 basis points of the increase was attributable to costs incurred in our transition to a public company. The balance of the basis point increase was primarily due to higher selling expenses, increased personnel and infrastructure to support long-term growth in our business, and increased depreciation and amortization expense, partially offset by lower third-party logistics fees, marketing expenses, and other general and administrative cost savings.

Operating income increased 5% to $35.0 million, or 15.1% of net sales, compared to $33.2 million, or 16.1% of net sales, during the prior year quarter.

Adjusted operating income increased 12% to $43.4 million, or 18.8% of net sales, compared to $38.9 million, or 18.9% of net sales, during the same period last year.

Net income increased 18% to $22.2 million, compared to $18.8 million in the prior year quarter; earnings per diluted share increased 14% to $0.26, compared to $0.23 per diluted share in the prior year quarter.

Adjusted net income increased 23% to $28.6 million, compared to $23.2 million in the prior year quarter; adjusted earnings per diluted share increased 19% to $0.33, compared to $0.28 per diluted share in the prior year quarter.

Adjusted EBITDA increased 13% to $50.8 million, or 21.9% of net sales, from $45.0 million, or 21.8% of net sales, during the same period last year.

For the Six Months Ended June 29, 2019

Net sales increased 13% to $387.0 million, compared with $341.5 million during the same period last year.

Gross profit increased 22% to $192.9 million, or 49.8% of net sales, compared to $157.8 million, or 46.2% of net sales, in the prior year period. The 370 basis point increase in gross margin was primarily driven by cost improvements, particularly in our Drinkware category, and a favorable shift in our channel mix led by an increase in DTC channel net sales, and lower inbound freight, partially offset by higher tariff rates.

Selling, general, and administrative (“SG&A”) expenses increased to $149.1 million, or 38.5% of net sales, compared to $121.3 million, or 35.5% of net sales, in the same period last year. SG&A as a percent of net sales increased 300 basis points, and approximately 90 basis points of the increase was attributable to costs incurred in our transition to a public company. The balance of the basis point increase was primarily due to higher selling expenses, including increased marketing expenses, increased headcount to support growth in our business, increased depreciation and amortization expenses, partially offset by lower third-party logistics fees and other general and administrative cost savings.

Operating income increased 20% to $43.8 million, or 60 basis points, to 11.3% of net sales, compared to $36.4 million, or 10.7% of net sales, during the prior year period.

Adjusted operating income increased 25% to $58.1 million, or 140 basis points, to 15.0% of net sales, compared to $46.6 million, or 13.7% of net sales, during the same period last year.

Net income increased 57% to $24.4 million, compared to $15.6 million in the prior year quarter; earnings per diluted share increased 51% to $0.28, compared to $0.19 per diluted share in the prior year period.

Adjusted net income increased 50% to $35.2 million, compared to $23.5 million in the prior year quarter; adjusted earnings per diluted share increased 45% to $0.41, compared $0.28 per diluted share in the same period last year.

Adjusted EBITDA increased 23% to $72.0 million, or 18.6% of net sales, from $58.4 million, or 17.1% of net sales, during the prior year period.

Balance Sheet and Cash Flow Highlights

Inventory increased 21% to $181.4 million, compared to $149.4 million at the end of the second quarter of 2018. Inventory levels reflect the strategic buildup of Drinkware in advance of potential additional tariffs as well as investments to support anticipated sales growth, including new product introductions planned for the second half of 2019. Excluding the Drinkware buildup, inventory growth was in-line with our expectations and less than our reported sales growth for the quarter.

Total debt, excluding unamortized deferred financing fees, was $309.1 million, compared to $435.4 million at the end of the second quarter of 2018. During the first half of 2019, we made $23.8 million in mandatory debt payments. Our ratio of net debt to adjusted EBITDA for the trailing twelve months (as defined below) was 1.7 times at the end of the second quarter of 2019, compared to 3.0 times at the end of the same period last year.

Cash flow provided by operating activities was $9.8 million and capital expenditures were $16.8 million for six months ended June 29, 2019.

Updated 2019 Outlook

Ratio of Net Debt to Adjusted EBITDA Trailing Twelve Months

Net debt as of June 29, 2019, which is total debt of $309.1 million less cash of $38.0 million, divided by adjusted EBITDA for the trailing twelve months, was 1.7 times. Adjusted EBITDA for the trailing twelve months ending June 29, 2019 was $162.7 million and is calculated using the full year 2018 adjusted EBITDA of $149.0 million less adjusted EBITDA for the first six months of 2018 of $58.4 million, plus adjusted EBITDA for the first six months of 2019 of $72.0 million.

Net debt as of June 30, 2018, which is total debt of $435.4 million less cash of $71.3 million, divided by adjusted EBITDA for the trailing twelve months, was 3.0 times. Adjusted EBITDA for the trailing twelve months ending June 30, 2018 was $122.0 million and is calculated using the full year 2017 adjusted EBITDA of $97.5 million less adjusted EBITDA for the first six months of 2017 of $33.8 million, plus adjusted EBITDA for the first six months of 2018 of $58.4 million.

Conference Call Details

A conference call to discuss the second quarter of 2019 financial results is scheduled for today, August 1, 2019, at 8:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-451-6152 (international callers please dial 201-389-0879) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at http://investors.yeti.com and by dialing 844-512-2921 and entering the access code 13692566. The replay will be available until August 15, 2019. A copy of this press release will be furnished to the Securities and Exchange Commission on a Current Report on Form 8-K, and will be posted to our investor relations web site, prior to the conference call.

About YETI Holdings, Inc.

YETI is a designer, marketer, retailer, and distributor of a variety of innovative, branded, premium products to a wide-ranging customer base. Our mission is to ensure that each YETI product delivers exceptional performance and durability in any environment, whether in the remote wilderness, at the beach, or anywhere else life takes our customers. By consistently delivering high-performing products, we have built a following of engaged brand loyalists throughout the United States, Canada, Japan, Australia, and elsewhere, ranging from serious outdoor enthusiasts to individuals who simply value products of uncompromising quality and design. Our relationship with customers continues to thrive and deepen as a result of our innovative new product introductions, expansion and enhancement of existing product families, and multifaceted branding activities.

Non-GAAP Financial Information

This press release includes financial measures that are not defined by GAAP, including adjusted operating income, adjusted net income, adjusted net income per diluted share, and adjusted EBITDA. We define adjusted operating income and adjusted net income as operating income and net income, respectively, adjusted for non-cash stock-based compensation expense, asset impairment charges, investments in new retail locations and international market expansion, transition to Cortec Group Fund V, L.P. and its affiliates (“Cortec”) majority ownership, transition to the ongoing senior management team, and transition to a public company, and, in the case of adjusted net income, also adjusted for accelerated amortization of deferred financing fees and the loss from early extinguishment of debt resulting from early prepayments of debt, and the tax impact of all adjustments. Adjusted net income per share is calculated using Adjusted net income, as defined above, and diluted weighted average shares outstanding. We define adjusted EBITDA as net income before interest expense, net, provision (benefit) for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including: non-cash stock-based compensation expense; asset impairment charges; accelerated amortization of deferred financing fees and loss from early extinguishment of debt resulting from the early prepayment of debt; investments in new retail locations and international market expansion; transition to Cortec majority ownership; transition to the ongoing senior management team; and transition to a public company. The expenses incurred related to these transitional events include: management fees and contingent consideration related to the transition to Cortec majority ownership; severance, recruiting, and relocation costs related to the transition to our ongoing senior management team; consulting fees, recruiting fees, salaries and travel costs related to members of our Board of Directors, fees associated with Sarbanes-Oxley Act compliance, incremental audit and legal fees in connection with our transition to a public company, and costs incurred in connection with our secondary offering. All of these transitional costs are reported in SG&A expenses.

Adjusted operating income, adjusted net income, adjusted net income per diluted share, and adjusted EBITDA are not defined by GAAP and may not be comparable to similarly titled measures reported by other entities. We use these non-GAAP measures, along with GAAP measures, as a measure of profitability. These measures help us compare our performance to other companies by removing the impact of our capital structure; the effect of operating in different tax jurisdictions; the impact of our asset base, which can vary depending on the book value of assets and methods used to compute depreciation and amortization; the effect of non-cash stock-based compensation expense, which can vary based on plan design, share price, share price volatility, and the expected lives of equity instruments granted; as well as certain expenses related to what we believe are events of a transitional nature. We also disclose adjusted operating income, adjusted net income, and adjusted EBITDA as a percentage of net sales to provide a measure of relative profitability.

We believe that these non-GAAP measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, are useful to investors as they are widely used measures of performance and the adjustments we make to these non-GAAP measures provide investors further insight into our profitability and additional perspectives in comparing our performance to other companies and in comparing our performance over time on a consistent basis. adjusted operating income, adjusted net income, and adjusted EBITDA have limitations as profitability measures in that they do not include the interest expense on our debts, our provisions for income taxes, and the effect of our expenditures for capital assets and certain intangible assets. In addition, all of these non-GAAP measures have limitations as profitability measures in that they do not include the effect of non-cash stock-based compensation expense, the effect of asset impairments, the effect of investments in new retail locations and international market expansion, and the impact of certain expenses related to transitional events that are settled in cash. Because of these limitations, we rely primarily on our GAAP results.

In the future, we may incur expenses similar to those for which adjustments are made in calculating adjusted operating income, adjusted net income, and adjusted EBITDA. Our presentation of these non-GAAP measures should not be construed as a basis to infer that our future results will be unaffected by extraordinary, unusual or non-recurring items.

Forward-looking statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements. Forward-looking statements include statements containing words such as “anticipate,” “assume,” “believe,” “can have,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events. For example, all statements made relating to our growth plans and expectations and our expectations for annual growth, including those set forth in the quote from YETI’s President and CEO, and the 2019 financial outlook provided herein. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that are expected and, therefore, you should not unduly rely on such statements. The risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include but are not limited to: (i) our ability to maintain and strengthen our brand and generate and maintain ongoing demand for our products; (ii) our ability to successfully design and develop new products; (iii) our ability to effectively manage our growth; (iv) our ability to expand into additional consumer markets, and our success in doing so; (v) the success of our international expansion plans; (vi) our ability to compete effectively in the outdoor and recreation market and protect our brand; (vii) the level of customer spending for our products, which is sensitive to general economic conditions and other factors; (viii) problems with, or loss of, our third-party contract manufacturers and suppliers, or an inability to obtain raw materials; (ix) fluctuations in the cost and availability of raw materials, equipment, labor, and transportation and subsequent manufacturing delays or increased costs; (x) our ability to accurately forecast demand for our products and our results of operations; (xi) our relationships with our national, regional, and independent retail partners, who account for a significant portion of our sales; (xii) the impact of natural disasters and failures of our information technology on our operations and the operations of our manufacturing partners; (xiii) our ability to attract and retain skilled personnel and senior management, and to maintain the continued efforts of our management and key employees; and (xiv) the impact of our indebtedness on our ability to invest in the ongoing needs of our business. You should read our filings with the United States Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 30, 2018, for a more extensive list of factors, that may be amended, supplemented or superseded from time to time by other reports YETI files with the SEC, that could affect results. These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While YETI believes that these assumptions underlying the forward-looking statements are reasonable, YETI cautions that it is very difficult to predict the impact of known factors, and it is impossible for YETI to anticipate all factors that could affect actual results.

The forward-looking statements included here are made only as of the date hereof. YETI undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 29,

June 30,

June 29,

June 30,

2019

2018

2019

2018

Net sales

$

231,654

$

206,288

$

387,007

$

341,545

Cost of goods sold

115,377

105,718

194,103

183,786

Gross profit

116,277

100,570

192,904

157,759

Selling, general, and administrative expenses

81,277

67,384

149,120

121,329

Operating income

35,000

33,186

43,784

36,430

Interest expense

(5,695

)

(8,593

)

(11,762

)

(16,719

)

Other income (expense)

49

(93

)

112

(111

)

Income before income taxes

29,354

24,500

32,134

19,600

Income tax expense

(7,131

)

(5,675

)

(7,744

)

(4,036

)

Net income

$

22,223

$

18,825

$

24,390

$

15,564

Net income per share

Basic

$

0.26

$

0.23

$

0.29

$

0.19

Diluted

$

0.26

$

0.23

$

0.28

$

0.19

Weighted average common shares outstanding

Basic

84,577

81,147

84,387

81,283

Diluted

86,227

82,932

86,042

82,956

YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

June 29,

December 29,

June 30,

2019

2018

2018

ASSETS

Current assets

Cash

$

38,023

$

80,051

$

71,342

Accounts receivable, net

75,856

59,328

65,429

Inventory

181,354

145,423

149,368

Prepaid expenses and other current assets

17,762

12,211

11,119

Total current assets

312,995

297,013

297,258

Property and equipment, net

79,989

74,097

71,101

Goodwill

54,293

54,293

54,293

Intangible assets, net

90,375

80,019

79,441

Deferred income taxes

1,306

7,777

7,287

Deferred charges and other assets

1,478

1,014

1,017

Total assets

$

540,436

$

514,213

$

510,397

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

Accounts payable

$

101,538

$

68,737

$

73,503

Accrued expenses and other current liabilities

44,575

53,022

41,473

Taxes payable

1,766

6,390

3,322

Accrued payroll and related costs

8,149

15,551

7,283

Current maturities of long-term debt

42,138

43,638

47,050

Total current liabilities

198,166

187,338

172,631

Long-term debt, net of current portion

263,258

284,376

380,813

Other liabilities

15,060

13,528

13,754

Total liabilities

476,484

485,242

567,198

Commitments and contingencies

Stockholders’ equity

Common stock, par value $0.01; 600,000 shares authorized; 84,820, 84,196, and 81,147 shares outstanding at June 29, 2019, December 29, 2018, and June 30, 2018, respectively

848

842

811

Preferred stock, par value $0.01; 30,000 shares authorized; no shares issued or outstanding

—

—

—

Additional paid-in capital

278,671

268,327

224,236

Accumulated deficit

(215,533

)

(240,104

)

(281,834

)

Accumulated other comprehensive loss

(34

)

(94

)

(14

)

Total stockholders’ equity (deficit)

63,952

28,971

(56,801

)

Total liabilities and stockholders’ equity

$

540,436

$

514,213

$

510,397

YETI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands, except per share amounts)

Six Months Ended

June 29,

June 30,

2019

2018

Cash Flows from Operating Activities:

Net income

$

24,390

$

15,564

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

13,801

11,885

Amortization of deferred financing fees

1,133

1,456

Stock-based compensation

8,286

7,108

Deferred income taxes

6,310

2,717

Impairment of long-lived assets

97

598

Gain on disposal of long-lived assets

—

(20

)

Changes in operating assets and liabilities:

Accounts receivable, net

(15,945

)

1,658

Inventory

(36,225

)

25,685

Other current assets

(5,516

)

(4,277

)

Accounts payable and accrued expenses

17,367

28,415

Taxes payable

(4,655

)

(8,956

)

Other

723

1,798

Net cash provided by operating activities

9,766

83,631

Cash Flows from Investing Activities:

Purchases of property and equipment

(16,786

)

(7,067

)

Purchases of intangibles, net

(13,214

)

(7,724

)

Proceeds from sale of long-lived assets

—

165

Net cash used in investing activities

(30,000

)

(14,626

)

Cash Flows from Financing Activities:

Repayments of long-term debt

(23,750

)

(49,275

)

Cash paid for repurchase of common stock

—

(1,967

)

Proceeds from employee stock transactions

2,064

53

Taxes paid in connection with exercise of stock options

—

(57

)

Payments of dividends

—

(96

)

Net cash used in financing activities

(21,686

)

(51,342

)

Effect of exchange rate changes on cash

(108

)

29

Net (decrease) increase in cash

(42,028

)

17,692

Cash, beginning of period

80,051

53,650

Cash, end of period

$

38,023

$

71,342

YETI HOLDINGS, INC.

SELECTED FINANCIAL DATA

Reconciliation of GAAP to Non-GAAP Financial Information

(Unaudited)

(In thousands except per share amounts)

Three Months Ended

Six Months Ended

June 29,

June 30,

June 29,

June 30,

2019

2018

2019

2018

Operating income

$

35,000

$

33,186

$

43,784

$

36,430

Adjustments:

Non-cash stock-based compensation expense(1)

4,281

4,098

8,286

7,108

Long-lived asset impairment(1)

3

—

97

—

Investments in new retail locations and international market expansion(1)(2)

823

—

1,051

240

Transition to Cortec majority ownership(1)(3)

—

—

—

750

Transition to the ongoing senior management team(1)(4)

423

878

523

1,344

Transition to a public company(1)(5)

2,916

732

4,385

770

Adjusted operating income

$

43,446

$

38,894

$

58,126

$

46,642

Net income

$

22,223

$

18,825

$

24,390

$

15,564

Adjustments:

Non-cash stock-based compensation expense(1)

4,281

4,098

8,286

7,108

Long-lived asset impairment(1)

3

—

97

—

Investments in new retail locations and international market expansion(1)(2)

823

—

1,051

240

Transition to Cortec majority ownership(1)(3)

—

—

—

750

Transition to the ongoing senior management team(1)(4)

423

878

523

1,344

Transition to a public company(1)(5)

2,916

732

4,385

770

Tax impact of adjusting items(6)

(2,070

)

(1,341

)

(3,514

)

(2,323

)

Adjusted net income

$

28,599

$

23,192

$

35,218

$

23,453

Net income

$

22,223

$

18,825

$

24,390

$

15,564

Adjustments:

Interest expense

5,695

8,593

11,762

16,719

Income tax expense

7,131

5,675

7,744

4,036

Depreciation and amortization expense(7)

7,262

6,182

13,801

11,885

Non-cash stock-based compensation expense(1)

4,281

4,098

8,286

7,108

Long-lived asset impairment(1)

3

—

97

—

Investments in new retail locations and international market expansion(1)(2)

823

—

1,051

240

Transition to Cortec majority ownership(1)(3)

—

—

—

750

Transition to the ongoing senior management team(1)(4)

423

878

523

1,344

Transition to a public company(1)(5)

2,916

732

4,385

770

Adjusted EBITDA

$

50,757

$

44,983

$

72,039

$

58,416

Net sales

$

231,654

$

206,288

$

387,007

$

341,545

Operating income as a % of net sales

15.1

%

16.1

%

11.3

%

10.7

%

Adjusted operating income as a % of net sales

18.8

%

18.9

%

15.0

%

13.7

%

Net income as a % of net sales

9.6

%

9.1

%

6.3

%

4.6

%

Adjusted net income as a % of net sales

12.3

%

11.2

%

9.1

%

6.9

%

Adjusted EBITDA as a % of net sales

21.9

%

21.8

%

18.6

%

17.1

%

Net income per diluted share

$

0.26

$

0.23

$

0.28

$

0.19

Adjusted net income per diluted share

$

0.33

$

0.28

$

0.41

$

0.28

Weighted average common shares outstanding - diluted

86,227

82,932

86,042

82,956

_________________________

(1)

These costs are reported in SG&A expenses.

(2)

Represents retail store pre-opening expenses and costs for expansion into new international markets.

(3)

Represents management service fees paid to Cortec, our majority stockholder. The management services agreement with Cortec was terminated immediately following the completion of our IPO in October 2018.

(4)

Represents severance, recruiting, and relocation costs related to the transition to our ongoing senior management team.

(5)

Represents fees and expenses in connection with our transition to a public company, including consulting fees, recruiting fees, salaries, and travel costs related to members of our Board of Directors, fees associated with Sarbanes-Oxley Act compliance, incremental audit and legal fees associated with being a public company, and $1.5 million of costs incurred in connection with our secondary offering in May 2019.

(6)

Represents the tax impact of adjustments calculated at an expected statutory tax rate of 24.5% and 23.5% for the three months ended June 29, 2019 and June 30, 2018, respectively. For the six months ended June 29, 2019 and June 30, 2018, the tax rate used to calculate the tax impact of adjustments was 24.5% and 22.8%, respectively.

(7)

Depreciation and amortization expenses are reported in SG&A expenses and cost of goods sold.

YETI HOLDINGS, INC.

UPDATED 2019 OUTLOOK

Reconciliation of GAAP to Non-GAAP Financial Information

(Unaudited)

(In thousands except per share amounts)

Updated 2019 Outlook

Low

High

Operating income

$

122,547

$

125,204

Adjustments:

Non-cash stock-based compensation expense(1)

11,952

11,952

Long-lived asset impairment(1)

97

97

Investments in new retail locations and international market expansion(1)(2)

2,580

2,580

Transition to the ongoing senior management team(1)(3)

523

523

Transition to a public company(1)(4)

6,689

6,689

Adjusted operating income

$

144,388

$

147,045

Net income

$

75,593

$

77,596

Adjustments:

Non-cash stock-based compensation expense(1)

11,952

11,952

Long-lived asset impairment(1)

97

97

Investments in new retail locations and international market expansion(1)(2)

2,580

2,580

Transition to the ongoing senior management team(1)(3)

523

523

Transition to a public company(1)(4)

6,689

6,689

Tax impact of adjusting items(5)

(5,349

)

(5,349

)

Adjusted net income

$

92,085

$

94,088

Net income

$

75,593

$

77,596

Adjustments:

Interest expense

22,386

22,386

Income tax expense

24,680

25,334

Depreciation and amortization expense(6)

30,253

30,553

Non-cash stock-based compensation expense(1)

11,952

11,952

Long-lived asset impairment(1)

97

97

Investments in new retail locations and international market expansion(1)(2)

2,580

2,580

Transition to the ongoing senior management team(1)(3)

523

523

Transition to a public company(1)(4)

6,689

6,689

Adjusted EBITDA

$

174,753

$

177,710

Net sales

$

883,976

$

887,870

Operating income as a % of net sales

13.9

%

14.1

%

Adjusted operating income as a % of net sales

16.3

%

16.6

%

Adjusted EBITDA as a % of net sales

19.8

%

20.0

%

Net income per diluted share

$

0.88

$

0.90

Adjusted net income per diluted share

$

1.07

$

1.09

Weighted average common shares outstanding - diluted

86,011

86,011

_________________________

(1)

These costs are reported in SG&A expenses.

(2)

Represents retail store pre-opening expenses and costs for expansion into new international markets.

(3)

Represents severance, recruiting, and relocation costs related to the transition to our ongoing senior management team.

(4)

Represents fees and expenses in connection with our transition to a public company, including consulting fees, recruiting fees, salaries, and travel costs related to members of our Board of Directors, fees associated with Sarbanes-Oxley Act compliance, incremental audit and legal fees associated with being a public company, and $1.5 million of costs incurred in connection with our secondary offering in May 2019.

(5)

Represents tax impact of adjustments calculated at an expected statutory tax rate of 24.5%.

(6)

These costs are reported in SG&A expenses and cost of goods sold.

Investor Relations Contact:

Tom Shaw, 512-271-6332

[email protected]

Media Contact:

YETI Holdings, Inc. Media Hotline

[email protected]

Source: YETI Holdings, Inc.

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