YETI Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the Yeti Holdings Second Quarter 2025 Earnings Conference Call. At this time, all lines are in -the-mode. Following the presentation, we will conduct a -and-answer session. This call is being recorded on Thursday, August 7, 2025. I would now like to turn the conference over to Arvind Bhatia, Head of Investor Relations at Yeti. Please go ahead, sir.

Good morning, and thank you for joining us to discuss Yeti Holdings Second Quarter Fiscal 2025 results. Leading the call today will be Matt Righteous, President and CEO, and Mike McMullen, CFO. Following our prepared remarks, we will open the call for your questions. Before we begin, we would 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 and subsequent Form 10-Qs. 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. Reconciliation 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 the investor relations section of our website at yeti.com. I would now like to turn the call over to Matt.

Thanks, Arvin, and good morning. Before we discuss our second quarter results, I want to take a moment to acknowledge the devastating floods that recently hit our home state of Texas. Our hearts continue to go out to our central Texas community, the families and friends impacted by this tragedy. I specifically want to acknowledge and thank the first responders, volunteers, and our long-standing partners at Operation Barbecue Relief who deployed to provide meals to impacted communities all over the country during natural disasters. Give them a follow. Their simple act of a hot meal is incredibly impactful. We're also deeply grateful for the overwhelming support and generosity of the Yeti community across all 50 states who stepped up to purchase the special edition Texas Strong Tumbler. All sales generated from these 10,000 Ramblers went to support the long road to recovery in Curt County, Texas. Turning now to Yeti. I'm excited to share that we are making excellent progress on our long-term strategic priorities, driving innovation, expanding our global presence, and broadening our customer base. Plus, more near term, transforming our supply chain. These efforts are delivering results in several ways. We're seeing increased momentum in product innovation with notable strength in bags and packs. Our international expansion is thriving with outstanding performance in the UK and Europe and strong demand from our end consumers in Canada and Australia. Our brand continues to grow, resonating with audiences both at home and around the world. At the same time, we're executing a major transformation in our supply chain that is setting us up extremely well for 2026 and beyond. While top line demand in Q2 came in slightly below expectations, reflecting ongoing macroeconomic uncertainty and cautious behavior from consumers and our retail partners, we believe the actions we're taking position us extremely well for long-term sustainable growth in both revenue and earnings. I'd like to take a few minutes to outline how we plan to deliver on our growth ambitions beginning with product innovation. First, we were on track to open our Asia-based Innovation Center in Thailand later this month. I had the opportunity to visit and meet with our local team in July, and I came away energized by their talent, passion, and capabilities. This facility will complement our Austin Innovation Center, significantly increasing our speed and capacity for product development and further enhancing our innovation capabilities. Importantly, it marks a critical step toward establishing a 24-7 global innovation cycle, continuous product iteration, faster time to market, and greater agility in responding to market opportunities. Second, our teams continue to execute exceptionally well against a robust innovation pipeline. As a result of the up-tempo pace of innovation you have seen, we're now on track to exceed our prior target of launching 30 new products in a fiscal year, even while making strategic trade-offs to advance supply chain diversification. A large portion of these new launches are limited to initial releases, setting the stage for the full force of our innovation to power our growth in the quarters ahead. In drinkware, while the market remained highly promotional and, as we have discussed, continues to shift away from the recent trend-driven growth, we remain focused on broadening our portfolio in sustainable innovation while maintaining our discipline on high-quality, profitable growth. We are seeing this play out in response to our first food bowls, insulated food jars, updated Rambler jug, and travel bottle. We expect similar momentum later this year as we expand into our new half-gallon and 40-ounce sports jugs. Meanwhile, straw bottles and stackable cups continue to perform well for us. Our underlying innovation in drinkware is performing well and, as we have seen the market clean up, we are expecting to return to growth later this year driven by our innovation and stabilization in the overall drinkware category. Supporting our continued reach and relevance in health, wellness, sport, and lifestyle, we have recently acquired designs, tooling, and intellectual property to enable us to bring a patented, category-leading shaker bottle into the Yeti family. This innovation fits seamlessly with our commitment to delivering premium, high-performance products. Moreover, our accelerating innovation and launch of exciting new products under the powerful internal product development machine. In coolers and equipment, our new, smaller format but high-performance and appropriately named Daytrip soft coolers positions us well in the 50 to 150 price band and complements our 200 to $350 high-performance soft coolers. The Daytrip has demonstrated impressive early traction, even with limited inventory in the second quarter. Higher-priced soft coolers were more challenging in the quarter as we saw some evidence of consumer trade-down. While we expect the higher-end products to be staples of our portfolio long-term, we are pleased with our strategy to capture a consumer up and down the price and performance ladder. We also extended our highly regarded chairs with our first beach chair, launched just in time for the peak summer. In addition, our Rody 15 and wheeled Rody 32 hard coolers, which launched a strong reception more than a year ago, have continued to see great performance. In bags and packs, our momentum is unmistakable. Our rugged, all-weather Kayo backpack debuted in late Q2 to rave early reviews and exceeded our initial expectations. Meanwhile, the Ranchero backpack, introduced in Q1, continues its ascent, recently clinching the title of best outdoor daily pack by Men's Health. These wins not only underscore our relentless commitment to innovation but also cement our leadership in delivering performance-driven, highly sought-after gear supported by a broad brand umbrella. Equally exciting is the performance of our long-standing Camino totes and Crossroad backpacks. Camino has experienced a notable spike recently and is mostly sold out domestically across all channels, including Yeti.com and Wholesale. For context, Camino launched in 2018 and has garnered over 5,000 .8-star reviews. It's a great product, full stop. And as many of you have heard me say over the years, it might be Yeti's most versatile product and has been my personal favorite since launch. The broadening consumer interest highlights the product's incredible design and styling, backed by practical versatility and durability. With a large market opportunity in bags and Camino innovations on the horizon, we're well positioned to build on this momentum and deliver meaningful growth over the long term. This wave of enthusiasm for Camino is creating a halo effect, fueling elevated interest across our bags and packs lineup, including our everyday, travel, and dry bags, and amplifying our brand's momentum. What we are seeing with Camino underscores the enduring popularity and the lasting appeal and reliability of our innovation in the market. Speaking to the timeless nature of our brand and design, our product remains best-sellers after launch, reflecting not only the desirability but also the functionality. Overall, we expect our coolers and equipment business to perform well in the back half, as our bags category continues to build and inventory availability for our innovation improves. I'm very encouraged by how our product engine is gaining momentum and how well we're positioned to build on this strength in the second half of the year and into 2026. We continue to drive incremental investment towards product and R&D and are seeing the benefits of this investment. The second key growth pillar for us is international expansion. I'm pleased with how the Yeti brand continues to resonate strongly outside the U.S., supported by a growing, diversified product portfolio and disciplined execution of our -to-market strategies. Europe once again delivered very strong growth in the quarter. This reflects both rising brand awareness and the effectiveness of driving engagement with our localized approach. We believe our model is scalable and will support sustained growth across the European market. In Japan, late in the quarter, distribution rapidly expanded from 17 to over 270 doors and we're targeting more than 400 doors by year end. We've also established a digital presence and initiated localized marketing to build awareness and engagement. In early July, we hosted our second successful trade show in Tokyo, drawing nearly 400 buyers, media and influencers, highlighted by strong enthusiasm and pent-up demand. As we move into the second half of the year, we're focused on executing our -to-market, supported by strong alignment between the Yeti brand and Japanese consumers' appreciation for premium, well-crafted product. Against the large outdoor market and early investments in community engagement and partnerships, we're optimistic about Japan and the rest of Asia's long-term potential as a meaningful contributor to our international growth. In Canada, we're seeing sustained end consumer demand even as the wholesale selling environment is cautious. Localized marketing and strong performance from new innovation and color infusions have driven brand interest and momentum. Delta and Australia remain strong in our track channels supporting our positive international outlook. While certain retail partners slow their purchasing during Q2 against expanding consumer demand, we're encouraged by the rebound we have seen quarter to date in Q3. Our third key growth pillar is broadening our global customer base. We are relentlessly elevating brand awareness, deepening engagement and forging long-term loyalty for the brand. This commitment drives us to connect with more people, more meaningfully across the globe. To that end, I'm excited to announce today that we're launching a strategic partnership with Fanatics later this month. This collaboration significantly expands our presence in sports. Additionally, we're bringing team-colored drinkware and hard coolers to fans across all 32 NFL teams, mini MLB, NHL and over 50 NCAA programs. Our products will be available on Yeti.com, Yeti stores, certain wholesale partners, Fanatics.com, league and team sites and at live events. Further strengthening our connection with passionate fan bases and driving long-term growth in this vertical. As we continue to deepen engagement with our global communities, our recent events and partnerships exemplify Yeti's commitment to authentic connection and brand growth worldwide. During the second quarter, Yeti had a presence at over 70 events globally, connecting with diverse, enthusiast communities across sports, culinary, entertainment and beyond. In May, we hosted our inaugural Wild Private Dining Room experience at the Ecology Center in San Juan Capistrano, California. To celebrate the launch of our outdoor kitchen collection. This immersive event featured a five course live fire meal prepared by Yeti global chef ambassadors and served in Yeti cookware and tableware. Attended by media, creators and ambassadors, the event brought our culinary story to life. At the 2025 Calgary Stampede in early July, our long-standing partnership included direct sponsorship, consumer activation and meaningful engagement with media ambassadors and partners. Attendance was nearly 1.5 million and our on-site mobile customization machine drove strong sales performance. Importantly, we had Yeti ambassadors competing with our own Chad Mayfield delivering a winning run. This was a standout example of multifaceted engagement delivering both brand impact and commercial results. Our team in Australia proudly supported our ambassador and serving legend, Nick Fanning's charity golf day which raised over $700,000 for flood affected communities in northern New South Wales. The event reached an audience of over 11 million, amplifying the impact of this incredible organization. Last month, Yeti had a large presence at the game fair in the UK, an annual celebration of British countryside culture and a touchstone for Yeti's UK community engagement. The event had nearly 130,000 attendees and marked our highest grossing three-day selling event globally. It was awesome. Our media strategy continues to amplify brand visibility and product storytelling through original content like Yeti Presents, partner films, shorts and our new field test series. We're reaching audiences across platforms while showcasing the durability, performance and design of our products. This year marks the 10th anniversary of Yeti Presents with 85 films released to date, generating over 33 million views and 2.6 million hours of watch time. Our field test series pushes Yeti gear to the extreme. In the first episode, shown across YouTube, Instagram and TikTok, our new all-weather Kayo backpack was subjected to harsh real-world conditions, mud, water, impact and more, highlighting its rugged, water-resistant design and reinforcing our commitment to performance-driven innovation. Meanwhile, recognizing the breakout momentum behind the Camino, our team acted swiftly to amplifying the surge in consumer demand with a targeted campaign. By intensifying our social efforts and collaborating with key creators, we supported the product's position. Strategic digital activations and timely engagement with our community ensured that excitement translated into real business impact, solidifying the Camino's breakout status and laying the groundwork for sustained growth. Looking ahead, the momentum we're seeing across global communities underscores the significant opportunity to further penetrate new and existing markets. To that end, we're making incremental investments behind both brand and social campaigns to increase reach, frequency and engagement as we expand our customer base and strengthen brand equity worldwide. Turning to our omni-channel performance, as we expand our product portfolio, we continue to meet consumers where and how they prefer to shop. In wholesale, we saw some cautious ordering and tighter inventory management from partners. Despite this, demand remains strong for innovation and inventory levels remain healthy across the portfolio. We continue to monitor these dynamics closely while exploring new opportunities to expand our reach to underserved consumer segments. In our -to-consumer channels, performance on the Amazon marketplace remained robust as we capitalized on the diversity of our omni-channel approach to meet evolving shopping behaviors. Corporate sales also delivered outstanding results propelled by our deepening strategic partnerships, especially in the sports and hospitality sectors, as we continue to leverage our advanced customization capabilities. On Yeti.com, site traffic was up and we saw strong engagement with new product launches and a continuation of trends around increased customer value. However, conversion rates were below expectations amid less intentional shopping behavior. We're applying key learnings from our May Drop Days campaign to enhance account creation, engagement, and conversion, including early access designed to grow our customer base and build brand affinity. In retail, we opened our 27th store in early June and plan to open our 28th store next week, which will be our last store opening for the year. While we remain very excited about the long-term retail potential for us, as I've previously shared, we are intentionally slowing the pace of new store openings in the near term. Our focus is on optimizing the performance of our existing fleet as we continue to see the positive impact and lift in our wholesale and direct channels in locations where a Yeti retail store anchors the market. I fully expect future pace store expansion to be part of Yeti's complementary -to-market. Next, I want to switch gears and talk about one of our highest near term priorities, which is the transformation of our global supply chain. This year, I've had the opportunity to visit all of our key suppliers across Southeast Asia, see their factories, and witness firsthand the incredible progress being made. I was fired up by the momentum on the ground and a clear commitment from our partners to support this critical transition. I'm pleased to report that we remain firmly on track with our accelerated sales and growth diversification strategy. We continue to expect that by year end, on a go-forward basis, less than 5% of our total cost of goods sold will be exposed to U.S. tariffs on goods sourced from China. Importantly, we will have our multi-country sourcing strategy fully in place. This is a testament to outstanding vision and execution by our product and supply chain teams. They are some of the best in the business and I could not be more proud of the impact they are having on Yeti. This positions us exceptionally well to enter 2026 with a more resilient, agile, and diversified supply base. One that enhances our ability to scale globally while mitigating geopolitical and operational risk. Amid a dynamic environment, our fortress balance sheet and healthy free cash flow continue to support investments in growth and innovation while also advancing our capital allocation priorities, including share repurchases. Mike will provide a further update on capital allocation in his prepared remarks. As it relates to our full year 2025 outlook, we are modestly adjusting our top line expectations to reflect a slightly more prolonged recovery in the drinkware market in the U.S. At the same time, we're raising our EPS outlook thanks to our operating discipline and tariff relief on the China source goods, partially offset by new tariffs elsewhere. Given the unprecedented tariff uncertainty and shifting macroeconomic landscape since we announced a targeted late 2025 investor day, we've made the strategic decision to move our investor day to the first half of next year. This timing, importantly, will allow us to showcase the full impact of innovation acceleration and our broadening product pipeline, the capabilities of our diversified and resilient supply chain, and provide a clear view of our long-term growth and margin expansion. Looking ahead, with breakthrough innovation, surging brand momentum, and a world of global opportunity in front of us, we have a great setup, redefining what's possible for Yeti. Summarizing my thoughts a bit here, I recognize that ups and downs can be part of any great brand and growth story, and some innings are tougher than others, but all great franchises string together wins season after season. While I like our track record, the opportunity in front of our team is even greater. I remain highly confident in our strategy, direction of travel, and that this team will deliver on Yeti's potential. To emphasize the point, the strength of our brand is a key differentiator, resonating deeply with a growing base of loyal customers around the world. We're in the early phase of realizing the impact of product expansion and a significant global opportunity, providing substantial runway for growth. We have built a tested, proven, and resilient business model. I want to thank our Yeti team for their passion and unwavering commitment to our brand and long-term vision. We're well positioned to continue to break norms and reset expectations of what a product should be and what a brand can be. With that, I'll now turn the call over to Mike.