While it has yet to make a dent in the yet unexploited European market, the American supplier of coolers and other outdoor equipment is recording stellar results after its listing on the stock exchange in the autumn of last year. Net income soared to $25.2 million in the fourth quarter of 2018 from $4 million for the last quarter of 2017.
The gross margin surged by 6.9 percentage points to 53.0 percent, which the management attributed to cost improvements across its product portfolio, the non-recurrence of inventory reserves taken last year, and an increased mix of direct-to-consumer channel sales. These positive factors were partially offset by price cuts taken earlier in 2018 on select hard and soft coolers in anticipation of new product introductions as well as higher U.S. import tariffs.
Aided by strong marketing and the introduction of new cooler products as well as new bags and other outdoor living items, Yeti's sales jumped by 19 percent from the year-ago quarter to $241.2 million, including growth of 45 percent in the direct-to-consumer (DTC) channel to $110.5 million, and of 4 percent in the wholesale channel to $130.7 million. Drinkware sales were up by 24 percent to $143.5 million, while sales of Coolers & Equipment improved by 10 percent to $91.2 million.
For the full financial year, revenues climbed by 22 percent to $778.8 million, well above the company's previous guidance. The net profit for the year jumped by 275 percent to $57.8 million, reflecting an unusually low effective tax rate of 17 percent for 2018 stemming from a significant tax benefit from the exercise of stock options in connection with its initial public offering and the reduction of the U.S federal income tax as a result of the U.S. Tax Cuts and Jobs Act.
In the DTC channel, revenues progressed by 48 percent to $287.4 million, and in the wholesale channel they gained 10 percent to $491.4 million. Drinkware sales increased by 37 percent to $424.2 million, while sales of Coolers & Equipment advanced by 6 percent to $331.2 million.
The operating margin gained 3.1 percentage points to 13.1 percent, driven by gross margin expansion of 3.1 percentage points to 49.2 percent. Adjusted Ebitda went up by 53 percent to $149.0 million.
Pointing out that the strong growth was across all categories, the management said the company sees multiple opportunities ahead, such as accelerating brand awareness, delivering product innovation, driving the direct-to-consumer business further and expanding its presence globally.
Most of Yeti's sales are still generated in the U.S. market. Last year, the company signed a distribution deal in Japan, adding to its presence in Canada and Australia. As it was going public last year, the company said that it wanted to internationalize its business further.
Overall, Yeti expects sales to increase between 11.5 percent and 13 percent in 2019, with higher growth in the DTC channel than at wholesale. The operating margin is expected to expand by 0.8 to 1.3 percentage points, thanks primarily to a further increase in the gross margin.