YETI outlines $300M share buyback target and accelerates international growth amid product innovation

Earnings Call Insights: YETI Holdings, Inc. (YETI) Q3 2025

MANAGEMENT VIEW

* Matthew Reintjes, President and CEO, emphasized YETI's momentum, highlighting "growing momentum from consistent and strong execution against our long-standing strategic priorities, driving product innovation, broadening our brand and addressable market and expanding our global presence." Reintjes pointed to a robust pipeline, noting, "we are on track to launch more than 30 new products in 2025 even as we navigate strategic trade-offs to advance supply chain diversification," and described the upcoming launch of the YETI Shaker Bottle as targeting a $2.5 billion market. He announced expanded global innovation capabilities, with a Thailand innovation center now fully operational and a new development office in Vietnam to open in early 2026. Reintjes stated, "Our AI strategy spans high-impact applications from automated custom image moderation, reducing the necessity for manual processes, customer support, site search, advanced marketing analytics and back-office automation tests."
* Michael McMullen, Senior VP, CFO & Treasurer, reported, "In the third quarter, we delivered sales growth of 2%, reaching $487.8 million, which was above our expectations. This performance was driven by double-digit growth in both our Coolers & Equipment category and in our international business."

OUTLOOK

* McMullen shared, "We now expect full year sales to increase between 1% and 2% versus fiscal 2024's adjusted net sales and as compared to our prior outlook of flat to up 2%."
* The company expects Coolers & Equipment to be up mid-single digits and Drinkware to be down slightly for fiscal 2025. For Q4, positive growth in Drinkware is anticipated. International business is expected to grow between 15% and 20% for the year, with an acceleration in Q4. McMullen said, "We continue to expect gross margins for the year to be between 56.5% and 57%."
* The share repurchase target was increased to $300 million by year-end 2025.
* Adjusted earnings per diluted share for 2025 are now expected to be between $2.38 and $2.49, including an approximately $0.40 net unfavorable impact from higher tariff costs.

FINANCIAL RESULTS

* Sales for Q3 reached $487.8 million, marking 2% growth. Drinkware sales declined 4% to $263.8 million, while Coolers & Equipment rose 12% to $215.4 million.
* Direct-to-consumer sales increased 3% to $288.7 million. Wholesale sales were $199 million, up 1%.
* International sales grew 14% to $100.4 million, now comprising 21% of total sales. Europe led international growth, and Japan's early contributions were highlighted.
* Adjusted gross profit was $272.5 million (55.9% of adjusted sales), with a 230 basis point margin decline year-over-year, mainly due to higher tariff costs. Adjusted operating income was $66.6 million, and adjusted net income per share decreased to $0.61. Cash ended at $164.5 million, and inventory decreased 12% year-over-year.

Q&A

* Randal Konik, Jefferies: Asked about the building blocks behind the long-term growth algorithm and sell-in versus sell-through dynamics. Reintjes explained growth will be based on "innovation, both the performance of the products we have today and the expansion," brand relevance, and global opportunity, adding, "the sell-in dynamic is sensitive to what's happening from an inventory position...we believe, categorical destocking happening around Drinkware."
* Brooke Roach, Goldman Sachs: Inquired about the scaling opportunity of new sport-focused launches. Reintjes expressed confidence in the Drinkware portfolio's innovation, with McMullen noting, "it's all just part of that overall innovation story" supporting Drinkware's return to growth in Q4.
* Peter Benedict, Baird: Focused on promotional activity and conversion. Reintjes said, "We've been talking for a number of quarters that not only did we expect Drinkware in the U.S., in particular, to be promotional in nature, but it's been consistent."
* Phillip Blee, William Blair: Asked about the sales acceleration implied in Q4 and potential for U.S. Drinkware growth. McMullen stated, "we expect to see a stabilization of the Drinkware market in the U.S."
* Alexia Morgan, Piper Sandler: Probed international growth and sustainability. McMullen responded that "the step-up is in and around the levels that -- of growth that we have seen over the last 6 quarters or so last year and in the first quarter of this year."
* Joseph Altobello, Raymond James: Asked about tariff impacts. McMullen explained, "given how we've diversified our supply chain...we now have the opportunity to look at where we produce and optimize our sourcing based on where tariff rate sits."

SENTIMENT ANALYSIS

* Analysts exhibited a neutral to slightly positive tone, focusing on growth sustainability, innovation, and margin impacts, with questions often seeking clarification on outlook and strategic execution.
* Management maintained a confident tone in both prepared remarks and Q&A, frequently referencing strong innovation, brand momentum, and international opportunity. Reintjes repeatedly expressed excitement about the "pipeline stronger than ever" and the "incredible potential in front of us."
* Compared to the previous quarter, management's tone remained confident, with increased emphasis on execution and international momentum, while analysts showed steady interest in underlying growth drivers and risk management.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full-year sales narrowed to 1%-2% growth from flat to 2% previously. The EPS range was slightly increased from $2.34-$2.48 to $2.38-$2.49.
* International sales growth accelerated to 14% in Q3 from 2% in Q2, with management reiterating a 15%-20% full-year growth target.
* Inventory management improved, with a 12% year-over-year decrease compared to 10% in the prior quarter.
* Management increased the share repurchase target for 2025 to $300 million, up from $200 million. The Q3 call featured more detail on AI initiatives and new global innovation centers.
* Both quarters highlighted cautious U.S. Drinkware dynamics and ongoing promotional intensity, but Q3 emphasized a return to growth for Drinkware in Q4.
* Analysts' questions continued to focus on innovation scaling, margin impacts, and sustainability of international growth, with a consistent tone across both periods.

RISKS AND CONCERNS

* Management cited ongoing tariff costs as a headwind, with a $0.40 per share net unfavorable impact baked into guidance.
* There was continued mention of cautious U.S. wholesale ordering and a challenging promotional environment in Drinkware.
* International wholesale order timing and supply chain transformation were flagged as potential sources of disruption.
* Management is monitoring macroeconomic uncertainty and evolving consumer demand, with a focus on inventory discipline and cost control.

FINAL TAKEAWAY

YETI management emphasized the company's focus on global expansion, innovation, and operational discipline, spotlighting strong international growth, a robust product pipeline, and increasing investment in technology and share repurchases. The company reiterated confidence in its long-term growth strategy and its ability to deliver value through execution on strategic priorities, with an outlook for continued momentum into year-end and 2026.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/yeti/earnings/transcripts]

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