YETI Holdings, Inc.

Tom Shaw, Vice President of Investor Relations Thank you. You may begin.

Good morning, and thanks for joining us to discuss Yeti Holdings' first quarter 2020 results. Before we begin, we would like to remind you that some of the statements that we make today on this call, including those statements related to the impact of the COVID-19 outbreak on our business, may be considered forward-looking, and such forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. For more information regarding these forward-looking statements, please refer to the risk and uncertainties detailed in this morning's press release, as well as the risk factors discussed in our Form 10-Q for the quarter ended March 28, 2020, filed with the SEC earlier this morning. We undertake no obligation to revise or update any forward-looking statements made today as a result of new information, future events, or otherwise, except as required by law. During our call today, we'll be discussing Yeti's adjusted EBITDA and certain other non-GAAP measures pertaining to completed fiscal periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release issued this morning, as well as in the supplemental reconciliation, both of which are available in the investor relations section of the Yeti website. We use non-GAAP measures as the lead in some of our financial discussions. as we believe they more accurately represent the true operational performance and underlying results of our business. Today's call will be led by Matt Reintjes, President and CEO of Yeti, and Paul Carboni, CFO. Following our prepared remarks, we'll open the call up for your questions. With that, I'll turn the call over to Matt.

Thanks, Tom. Good morning, everyone. We appreciate you joining us. I'd like to start by speaking directly to our employees, their families, our customers, partners, and vendors. to say thank you for all you have and continue to do for Yeti. We will be here for you as the world gets back outside and back to chasing new adventures. In this time of incredible uncertainty, our full focus remains steadfast on addressing the things we can control, acting with the same tenacity, adaptability, and resilience that has been the hallmark of Yeti since our inception. Regardless of the external threats, we believe what matters most are a powerful, innovative, and lasting brand Financial strength and flexibility and making a positive impact on our customers and the Yeti community. That's our focus. But let me first step back and give you a little perspective on the first quarter. We entered 2020 with incredible momentum and a clear operating plan. Through mid-March, quarter-to-date sales were up 21% year-over-year with low double-digit gains in wholesale and 31% growth in direct-to-consumer. Even with the disruption that began in March, Yeti ended Q1 with 12% top-line growth and B2C at plus 29%. In mid-March, as the COVID-19 pandemic began to significantly and directly impact consumer behavior and business operations, we quickly turned to executing a number of discrete and impactful decisions to position Yeti for this new and uncertain environment and ensure we are playing for the long run. To actively address unknowns in demand, we started tightening our cost structure. After we closed our retail locations on March 16th and saw the potential extent of the closures, we furloughed a portion of retail staff and reallocated the balance of our retail to support customers in our growing e-commerce business. We aggressively tightened operating costs in CapEx, reducing non-critical spend, but also continued investment in demand creation, product innovation, and our e-commerce and digital technology. In a moment, Paul will discuss our cost efforts in more detail, including the withdrawal of our 2020 outlook and additional proactive moves we have taken to support our liquidity position through this period. Today, we also announced that Yeti's senior leadership team and its board of directors have agreed to voluntary compensation reductions to support the company's plans through this period of disruption. In addition, following a thorough review of our organizational structure, we've also made several moves to adapt to the near-term realities and to build the structure to position Yeti for the future. We have stopped all non-critical hiring and as part of this transformation, taken the difficult decision to eliminate certain positions through all levels in the company. These are very tough calls to make and I cannot thank those Yeti employees impacted by these changes enough for all their contributions. Through these changes, we are transforming many parts of Yeti's organization, allowing us to put heavy focus on our continued digital transition expanding our innovation pipeline and driving thoughtful global expansion. We unequivocally believe this mindset and focus on the future will allow us to emerge strong from the current global crisis with full alignment behind our growth trajectory as we move into 2021. As part of this hyper-focus on executing against what we can control, starting in March, we pivoted our brand, marketing, and product launches to fully digital in a work-from-home world. We believe the investment we are making in talent and capabilities resulting in powerful digital engagement and meaningful connections with our customers will continue the acceleration of our digital transformation. When the pandemic hit, for the first time, we knew exactly where our entire audience was. Home. And we knew they were looking for a positive distraction. Online content has become more important and relevant than ever, so we went to work with our internal digital and creative teams and key partners to win digitally. What was a well curated social channel rapidly shifted into a media house almost overnight. We began releasing multiple unique pieces of content through our digital channels and have continued to do so over the past 10 weeks. First, we released 15 classic Yeti Presents films over 15 days. We translated our former in-person events into unique digital experiences for our fans and followers, included was a series of lunch and learns and how-tos with our ambassadors, allowing them to share their passions and pursuits virtually. On social and Yeti.com, we introduced a free Yeti streaming service of actual streams to offer serenity and levity during a chaotic time, plus to provide a small taste of the outdoors to our fans while we're all stuck inside. We continued highlighting product stories and gave our Yeti community a voice and a way to express through user-generated content, launching Hashtag Yeti WFH. We house all this new content within our social channel and in the process have seen a roughly eightfold increase in video views when comparing the six weeks prior to mid-March and the six weeks post, as well as an approximately 50% increase in impressions. Our blend of depth within our communities and breadth with our storytelling is a unique and powerful combination that has allowed us to engage and entertain our fans, impact the communities who have given so much to us, and allowed us to successfully introduce new product throughout the COVID-19 crisis. Outside of providing a welcome distraction during these very uncertain times, we also asked ourselves, how do we help? Yeti has always provided product as relief during natural disasters. From hurricanes to fires, we've donated thousands of coolers to support communities when basic needs were unmet. Our breakthrough point for this pandemic was when we received a heartfelt direct message from an exhausted nurse in Boston who wanted to simply thank us for making a product that kept our coffee warm. We saw this as our inspiration to support those on the front lines. So, we began asking the heroes who sent us messages to tell us who else needed a pick-me-up. To date, we have donated roughly 25,000 bottles and tumblers directly to healthcare workers, first responders, and others impacted directly by this pandemic. We also know there are a lot of food and beverage workers who are in need of direct support. Our food, beverage, barbecue, and beer partners, at a time when they themselves are under duress, have made the effort to do what they do best, provide a free hot meal and a little reprieve. We have stood with a number of these incredibly talented people by helping support meal outreach efforts in their communities in the U.S. and in Canada. Today and into the future, we will continue to find ways to make a meaningful and broad contribution to the people that are central to who we are as a brand. Before providing additional detail on our four strategic drivers, I wanted to provide a few thoughts on the current quarter. While we expect overall results in the second quarter to be significantly below the prior year due to wholesale and corporate sales disruption, we are seeing very strong quarter-to-date traction with our online businesses. This includes extraordinary year-over-year growth on Yeti.com in coolers and equipment and drinkware so far in the quarter, as well as positive year-on-year trends on our Amazon Marketplace, and Sellthru via our wholesale partners e-commerce. The momentum we are seeing from our brand efforts, excellent new product receptivity and its outstanding e-commerce performance gives us confidence about the opportunity that will be there as the wholesale and corporate market dislocation corrects. Paul will discuss in more detail the trend we saw through the end of March and the extension into April. Now turning to our strategic drivers. Keeping hyper-focused on our customers has never been more important. As I alluded to earlier, we began to shift more of our resources and focus to digital in March as we positioned our social platform to be a positive distraction for consumers. Of note, we launched Vela, a four-part series highlighting surfer and sailor John John Florence and his trans-Pacific voyage, and short films such as Canary of the Prairie, showcasing Dale Robbins' mission to protect the future of bobwhite quail in West Texas. I would be remiss not to mention one of our films, Navajo Sun, featuring Ambassador Derek Begay, is up for two brand film awards at tonight's virtual event in New York City. We also developed a series of showcases of our ambassadors on topics from fly fishing setups to life at home to sustainability practices at Carter Country Meats. Thriving this connectivity within our community has never been more relevant as we highlighted how these pros pros were adjusting to quarantine life. Enhancing our breadth and depth strategy We remain proud of our diverse portfolio of ambassadors and partnerships. As highlighted in our most recent Yeti Dispatch Magalog, we partnered with Keith Rose Innes, one of the world's most respected and high-profile fishermen, and his Alphonse Fishing Company out of the Seychelles Islands. We also added to our ambassador roster with Jose Vitor Lemi, a PBR rider currently ranked number one in the world. We added two fantastic female ambassadors to our team with Alex Brittingham, a Texas-based professional dog trainer, and Jesse Young, a hunting guide in the Yukon. On the product side, let me first recap how our early 2020 introductions are resonating before providing a framework of how we are adapting our rollout cadence to help maximize the success of our category expansions. In Q1, we successfully executed two key product evolutions with our Rambler bottles and Kolstra can cooler both performing very well. We introduced three new colors with Coral, Chartreuse, and Pacific Blue, and we also debuted a great new portable chair with our Trailhead Camp Chair. Our second quarter product plans are largely unchanged, highlighted by the end of life of our Rhody 20 Hard Cooler and the introduction of the Rhody 24 Cooler. We took our best in class, best selling Rhody 20 and made it even better. The 24 is 10% lighter, 20% more capacity and 30% better thermal performance. In late April, we also introduced our Rambler Elements Collection, which adds a new coating process to create a premium brushed metal finish to our Drinkware portfolio. As we look at the demand unknowns for the balance of the year, we are laser focused on building the brand and driving the success of key products. This includes a strong product and color assortment in the second half, as well as shifting certain product expansions into 2021. We do believe the alignment of new category expansion opportunities and optimal customer receptivity will be stronger as we move further from the current environment. From an investment and innovation standpoint, we are not slowing down. Nurturing the power of the Yeti brand and the connection with customers holds firm. A great example of this came last month when Yeti was named the 2020 Harris-Pole Equitrend Cooler Brand of the Year and Insulated Drinkware Brand of the Year. For the past 32 years, this poll measures and compares brand equity, consumer connection, brand momentum, and other indicators across a multitude of brands and categories. We're proud our customers provide us with such trust and confidence. As we think about distribution, some of our near-term focus will naturally shift to winning where consumers can access the brands. With direct-to-consumer becoming more important than ever, we've seen incredible work behind our social, digital, and e-commerce teams around brand, This will serve us well as we emerge from this time. As part of our changes, we have increased the frequency of our customer communications, balancing storytelling and product. With the importance around mom's, grad's, and dad's timeframe, we've introduced focused, creative, and product stories for each. At wholesale, the disruptions in business have created unprecedented challenges. Many have endured reduced operations, low foot traffic, and extended store closures. Our focus will remain on supporting these retailers with the right product for both their online and brick-and-mortar strategies today and as the business begins to return. Clearly, our Yeti retail efforts have been stalled with store closures commencing on March 16th. We were able to hold a soft opening of our new Fort Lauderdale location, though our decision to close all of our store's limited operations there to just two days. Construction of our Denver location is complete, awaiting final permitting and when we deem ready to open. Given current conditions, we have paused further retail expansion in 2020 and will focus on optimizing our existing stores as each reopens. For the first quarter, international sales increased just over 40%, but like the U.S., the business was not immune to the pandemic. While the crisis is having varying degrees of impact to our existing international markets, we continue to make meaningful progress, particularly in e-commerce in Canada, Australia, and the U.K. Looking ahead, we will be thoughtful and disciplined in how we approach future international opportunities and pacing. We believe this approach allows for optimal brand control, relevant distribution choices, and localized customer engagement, which is more important than ever right now as the world adjusts and recovers from this pandemic. Yeti has always been a brand that focuses on people and pursuits. While we're faced with a near-term uncertainty, we are certain that the innate desire to come together, whether in the backyard or the backcountry, will return as important and cherished as ever as we emerge from this moment. By making decisions now with a focus on our customers and on the future of our brand and innovation, we are positioning Yeti to be there as strong as ever. I would now like to turn the call over to Paul.