The American supplier of coolers and other outdoor equipment is doing better than expected since its recent listing on the stock exchange. Yeti Holdings' shares jumped by 14 percent after it published its second quarterly earnings as a public company. The strong preliminary results led Yeti to raise its full-year guidance.
The operating margin is now expected to stand between 12.9 percent and 13.1 percent, versus the previously projected range of 12.8 percent to 13.1 percent. In addition, adjusted Ebitda is now expected to reach between $147 million and $149 million, up from the previous guidance of $141 million and $144 million.
In the fourth quarter, Yeti's sales jumped by 19 percent from the year-ago quarter to $241.2 million, including a 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. Margins were higher than expected, the company said.
Drinkware sales were up by 24 percent to $143.5 million, while sales of Coolers & Equipment improved by 10 percent to $91.2 million.
The company also released preliminary figures for the full financial year, which call for a rise in revenues of 22 percent over the previous year to $778.8 million, well above the company's previous guidance, which was calling for sales to go up by between 19 percent and 20 percent. The net profit should more than triple to an indicated level of around $56 million.
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 sales advanced by 6 percent to $331.2 million.
Pointing out that the strong growth was across all categories and geographies, the management said the company sees multiple opportunities ahead, including accelerating brand awareness, delivering product innovation, driving the direct-to-consumer business further and expanding its presence globally.
Yeti priced its initial public offering (IPO) of 16 million shares at $18 each on Oct. 24. The IPO brought in about $288 million, which the company plans to use to help pay down debt.
Yeti's international presence only accounts for 2 percent of turnover at the moment. It is not yet selling its products in Europe, but the management said last year that it is planning to enter the region as well as Asia, possibly as early as this year. In 2017, Yeti entered Canada and Australia, and is now in the process of entering Japan.
Going forward, Yeti is confident that it will maintain an annual growth rate of 10 to 15 percent thanks to stronger market penetration in the U.S. and the development of its international business. The company is also anticipating an increase in the gross margin from 48 percent now to 50-52 percent through the accelerating development of its DTC operations.
But these plans are made more difficult by the current international trade environment, marred by the trade tension between the U.S. and China. The company said it is looking to stop sourcing products in China by the end of this year, as it faces 10 percent tariffs on bags and soft coolers that will reach 25 percent in March if the trade dispute is not resolved by then.
The management told the ICR investors conference that it expects to see a negative $13 to $15 million impact from the trade dispute this year, but it will be able to completely offset that amount by the end of the year.
The group was founded in 2006 by two brothers, Roy and Ryan Seiders. In 2012, they sold majority ownership in Yeti to the Cortec Group Fund, which has retained control after the IPO with a majority of the voting rights.