YETI Holdings, Inc.

and welcome to the Yeti Holdings First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchstone phone. To withdraw your question, please press star then two. Please note this event is being recorded. And now, I would like to turn the conference over to Tom Shaw, the Vice President of Investor Relations. Please, go ahead.

Good morning, and thanks for joining us to discuss Yeti Holdings' first quarter fiscal 2024 results. Leading the call today will be Matt Reintjes, President and CEO, and Mike McMullen, CFO. Following our prepared remarks, we'll open the call for your questions. Before we begin, we'd like to remind you that some of the statements that we make today on this call 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, please refer to the risk factors detailed in our most recently filed Form 10-K. 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. Unless otherwise stated, our financial measures discussed on this call will be on a non-GAAP basis. We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to our investor relations section of our website at Yeti.com. And now I'd like to turn the call over to Matt.

Thanks, Tom, and good morning. Yeti delivered a great start to 2024, as evidenced by our strong first quarter results. We saw positive global demand for our brand and our broadening range of products, and we had great execution across multiple fronts, driving double-digit growth in both our wholesale and DTC channels coolers and equipment and drinkware categories. Our wholesale performance was supported by sell-in and sell-through relative to the year-ago period, while our DTC business showed continued growth across e-commerce, corporate sales, Amazon, and Yeti retail. In coolers, with our new innovation and expanded awareness campaign, we believe we are well-positioned for the upcoming seasonal demand. In drinkware, our range of bottles and tumblers continue to deliver strength within the category. By geography, international growth exceeded 30% year-over-year to reach a Yeti high of 19% of total sales, even as our domestic growth was nearly 10%. Behind the strength of the brand, the growing product portfolio, and global expansion, we are on track to deliver on our full-year top-line outlook. Given the combination of inbound freight recovery, product cost improvements driven by outstanding work by our supply chain and operations team, and strong price discipline, we're pleased to report profitability that builds upon our historical strength, delivering a 450 basis point improvement in gross margins. Following our top-line performance in gross margin strength, our adjusted operating margin also expanded by 440 basis points for the period. In the quarter, we also delivered on our capital allocation priorities, starting with the completion of our Mystery Ranch and Butter Pad acquisitions. Our integration of these businesses is on track as we accelerate our mid- and long-term opportunities in bags and cookware. Finally, we announced a $100 million accelerated share repurchase plan in late February, which was fully executed last month. From a top-line perspective, we remain optimistic on our demand drivers for the full year. We expect sales performance consistent with our original guidance as we balance performance against anticipated ongoing conservative purchasing at higher price points, balanced channel selling and demand, and our compare against headwinds as a result of last year's recall-related gift card redemptions. Looking at our bottom line, we are raising our outlook to reflect our margin strength and the execution of our ASR. As previously indicated, we will continue to evaluate thoughtful and strategic capital allocation opportunities in the quarters ahead. Turning to our growth strategy in 2024 and beyond, our priority remains to extend brand reach and engagement, drive product diversification across our portfolio, leverage our powerful omni-channel to reach customers, and build our global business. Shifting to our brand reach, Q1 highlighted the ongoing evolution of Yeti's breadth and depth brand strategy. In the early months of 2024, we have activated alongside some of our larger global partnerships. In the second year of our partnership with the World Surf League, we became the presenting partner for the first event of the season, the Yeti Pro Pipeline in Oahu. On the mountain, our activation included continued events such as natural selection. Finally, in Formula One racing, our partnership with Red Bull Racing is proving to find creative ways for Yeti to integrate and support the team. We also established a new partnership in the world of professional soccer with a club looking to disrupt the status quo. In March, the Kansas City Current debuted the world's first stadium built specifically for a women's pro sports team. We're incredibly proud to support the Current, their visionary ownership, and the team's efforts to elevate the profile of both the sport and these incredible professional athletes. We look forward to the many innovative ways we will connect our brands. Our community marketing efforts combined with the amazing work our team does on the brand side showed how we grow, develop, and connect our global audiences. Fitness was a natural place to start the year, highlighting the work our ambassadors put in before heading out to the wild and the Yeti gear that gets them through it all. We expanded our health and fitness efforts this year with brand placement in nearly 1,300 gyms across the country. Next, we focused on highlighting our expanded drinkware offerings in coffee, driving awareness, reach, and relevance for new and existing global customers. As you may have seen, this week we added to the portfolio a new Yeti French press that can double as a beverage pitcher, as we look to release the standalone pitcher later this summer. Yeti also received two incredible brand accolades during the quarter that speak to the passion, talent, and creativity of our team. AdAge's 2024 in-house agency of the year, and Fast Company's most innovative companies in PR and brand strategies. These affirmations, while not the goal, are a testament to the energy, realness, and humanity that the team puts into our brand. This is what creates the emotional connection and sustainable passion for what we do. This isn't about a moment. It's about growing a movement towards reconnection of people and community to the wild. I want to thank the entire Yeti team for their belief in pouring themselves into this against a market backdrop that at times is more focused on buzz. This brand has been built on consistently and sustainably engaging customers and communities, showing up in real ways and staying true to the spirit of what Yeti is, all while growing and evolving globally. To that end, in the current quarter and throughout 2024, we will find moments to engage new and existing customers from spring travel to gift-giving occasions to the start of summer. We have incredible stories to tell of people and places that support our expanding product assortment. As we shift to product, there are three key themes this year. A focus on growth in our cooler family, the evolution of Yeti into broader food and beverage, and the product expansion potential under the Yeti brand umbrella and brand building playbook. Across our product range, we're in a great position to capitalize on warmer weather in the beginning of summer travel and outdoor activities. We're leveraging a few key demand drivers as we head into this season, innovation, awareness, and conversion. We're excited about the next wave of hard cooler innovation in 2024, building upon our legacy dating back to our first hard cooler in 2006. Recently, we debuted our Rode 32 cooler, our smallest and most portable wheeled cooler to date. The roadie was designed to pull up to a campsite, move through a tailgate, or handle weekend tournaments. Later this summer, we plan to introduce a personal size hard cooler, which will anchor at the entry price point for Yeti hard coolers at $200. Think of this as a good day outside cooler that will work well in a side-by-side, on a golf cart, or on the job. On the drinkware side, we're seeing a great response to our deep portfolio of 50-plus offerings across our premium range of bottles and tumblers. This is part of our growth and expansion strategy as we support more moments in their day. We are evolving this category and building out solutions to address what we see as consumer needs and opportunities. For instance, the previously announced French press and pitcher complement last year's beverage bucket and wine chiller and are a sign of the evolution and the opportunity. Additionally, after years of requests from our customers, we will launch a couple of highly giftable barware items in limited supply in time for Father's Day. To round out the 2024 offerings, we also plan to introduce our first Yeti cast iron cookware later this summer. Outside of coolers and drinkware, we're excited by the prospects of what we see as possible in bags, cargo, and the expanding group of offerings under our coolers and equipment family. We expect to deliver innovation across its entire range, starting with our flagship dry bag expansion earlier this year, following last year's addition of new waterproof, dustproof cargo boxes. There's more to come around this. We continue to be focused on driving awareness and top of mind for Yeti. We're deploying a range of brand efforts across TV, digital, print, and out of home to keep the brand and product in front of the consumer. This includes an incredible partnership with our wholesalers to drive awareness during those important moments as we launch new products. Additionally, we're using a broad range of direct performance marketing programs focused on driving consumers towards conversion. Through these expanded efforts in innovation and marketing, we will continue to deliver integrated storytelling that connects people and products highlighted at times with color inspiration from the wild. As we see opportunities to reach more customers, engage them in impactful ways, and tell powerful brand and product stories, we also focus on strengthening our global go-to-market. Our strong and diverse channels to market are a key contributor to the balanced growth achieved in the first quarter and speak to the consistency and power of Yeti. Turning to our DTC performance, we saw the benefits of customer value in UPT against some more challenging traffic and customer count as we lap the start of last year's recall and our selective end-of-life transitions. Our Amazon marketplace remained consistently strong as we see that customer loyalty to the channel further supporting our strategy of diverse channels to market. Corporate sales delivered strong order volume and inbound demand. The addition of more efficient and cost-effective printing technology for hard coolers underscores our continuous improvement efforts, delivering value for the customer and Yeti. We open the newest locations of our Yeti retail stores in the woodlands outside of Houston and in New York City's Flatiron District. Our stores continue to provide a singularly unique opportunity to see the depth and breadth of Yeti's product offering, engage with product experts, learn, and shop. We are targeting to open six total locations this year, including the upcoming openings in Kansas City and Calgary which would bring our fleet total to 24. In our wholesale channel, we saw positive demand across categories, further supported by better sell-in compared to last year's period. Channel inventory is in good shape as our partners continue to lean into seasonal colors and remain bullish on product releases we have planned throughout 2024 and into 2025. As previously outlined, we are thoughtfully expanding our global wholesale reach, including the already announced partner in Tractor Supply in the US, combined with new partners in Canada, Australia, and Europe. In addition, we also continue to cultivate new wholesale partnerships that align with our increasingly diverse product assortment. As we shift to our non-US business, I'd like to provide some color on how we're building out our global leadership to support our focus and growth in these areas. Naoji Takeda joined Yeti recently as our new managing director of Asia. Naoji most recently comes from Keen, the outdoor football brand, where he held a variety of global and regional roles, including leading the brand's growth in Japan and throughout Asia Pacific. With his experience in passion-based and innovative brands, I'm excited to see him take on the immense opportunity we have in the region. Looking at the overall international business, we continue to see strong momentum for the brand and incredible opportunity in undeveloped markets. In addition to solidifying our regional structure, our near-term focus is on growing brand awareness and building our successful omnichannel approach. In Europe, overall brand traction is outstanding as we see strong results in the UK and Germany, as well as other markets throughout Europe. It has been increasingly fun to see Yeti show up from the countryside to the city streets as we activate the brand. Supporting this momentum, we're making key investments in our team, the brand, and processes to scale the business. This includes the transition of our UK 3PL this month, which will support future growth while also driving improved speed to market and operational efficiency. In Australia, we had another incredible quarter. Our team in Australia continues to show that the Yeti growth playbook travels, even as they contribute to making it stronger and nuanced to the market. We really like the balance we have in Australia with powerful independent retailers all the way up to our partnership with outdoor leader BCF. We will also begin testing a new partnership with a sporting goods retailer as we focus on reaching customers deeper into urban markets. From a product offering perspective, we see great traction across the portfolio with customization capabilities in demand, much like we have seen in North America. In Canada, growth was supported by strong wholesale sell-through, despite some of the same channel caution that we have seen domestically. Within wholesale, we're beginning to test several new targeted relationships that will complement our channels to market and allow us to reach new consumers in different buying moments. On the DTC side, we've seen strength in our emerging corporate sales business and are excited about the opportunity to scale customization to support both the customer and corporate demand. In closing, I want to take a quick moment and highlight a particularly important event for the company, our recent Yeti Roundup in April. Once a year, we bring together our global team at our Austin headquarters for a week of immersion, learning, and connection. It's a powerful way to stoke the brand and keep connected to our growing global team. I always come away from this week energized and with an incredible appreciation for our team and what they are creating here at Yeti. Importantly, it solidifies my unwavering conviction and the long-term untapped growth opportunities ahead for this brand. Before handing the call over to Mike to review our financials and outlook, I want to thank our outstanding customers, partners, and friends who show up for Yeti every day at every launch and in every new market we enter. This is what drives us forward. Now I will turn the call over to Mike.