YETI Holdings, Inc. ($YETI)

I'm Peter Benedict, senior retail consumer products and services analyst. Really pleased to welcome the team from YETI back to the conference. YETI is a premium brand effectively, it's known, I think most for creating products that bring distinctive design, improved performance and really unmatched durability across several categories, drinkware, coolers and equipment bags and others. Their sales are expected to hit around $2 billion this year. They have a robust balance sheet with net cash, significant free cash flow generation. The stock carries a market cap of just under $4 billion. Here to talk with us today, CEO, Matt Reintjes, and then recently appointed CFO, Scott Bomar, and we have the Head of IR, Arvind Bhatia, who's out in the room. There will be a breakout session afterwards. So if you want to continue the conversation, the Astra One room.

We're going to kick straight into Q&A here. So guys, again, good morning. Thanks for making the trip. I want to start with maybe a look back here over the last few years, Matt. A lot has gone on. There's been some organizational redesign. There's obviously been supply chain changes. Maybe just talk a little bit about how you've positioned the company now for growth going forward from a leadership standpoint. We think about categories and we think about regions and then maybe we'll get into specific roles like the CFO.

Yes. Perfect. Thanks, Peter. Thanks for having us, and thanks, everyone for coming in this morning. The -- your intro is great. I think you kind of covered it for us. I was hoping we could sort of spike the ball with the intro. But the -- I'd say a couple of things. It has been a busy few years. I just wrapped my tenth year at YETI in September. And to think about where we've come from a U.S. really Texas-based to building a global brand has been pretty exciting. And I think over the last 3 years, the biggest change that we've evolved is how we think about our product organization and how we think about our market in our regions. And so really, what we've done is brought product groups up into 3 discrete groups. And with the idea and intent that with focus drives impact and it also drives speed to value. And so our 3 product groups, we have a drinkware group that wakes up every day and cares about drinkware. We've got a gear and equipment group that focuses on things like hard coolers, protective storage cases and boxes, which we've mentioned on the last couple of calls, we're excited about what we're seeing there. And then a soft cooler bags group, which you've seen over the last few quarters, the impact and result of what we're doing in soft coolers and bags with incredibly talented teams below each one of those, our soft coolers and bags business is run by a gentleman named Layne Rigney. Layne was a long time CEO of Osprey and prior to that, Layne and I had an overlap at CamelBak, our gear and equipment business. As we think about -- we'll talk about our TriCore business for a second. Our Drinkware business is run by Hannah Mara. She's been with us for a number of years, has really been leading the vision around the expansion, redefinition and growth of Drinkware. And if you look at what we've talked about through 2024 and 2025 was the strategy we were driving in Drinkware was relevant diversification. So you think about things that we've been powering that business, stackables, sports hydration, this early entrance into premium cookware, even with our most recent carbon steel has really been led by Hannah and team. And underneath gear and equipment, which goes to our legacy of hard coolers, Bill Harmon, who joined us from a company called Goal Zero but a long-time view into expansion of consumer products, outdoor, durable performance, all things that fit our brand has been great. And then you combine that with -- we've established 3 very clear regions, an Americas region, an EMEA region, an APAC region with a leader over each, deeply experienced leaders over each those 3 groups who are -- come from different backgrounds of scale and build up. So in the Asia Pac region, it's much more of a build an opportunity. In Europe, it's in Amplify and in the U.S., it's continuing to drive depth, growth, scale and opportunity. So we're incredibly excited about the structure we have to go support the strategy of where we're going with this brand.

That's great. And Scott, you joined earlier this year. So maybe give us a sense of where you came from? Why did you come to YETI? What you see is the opportunity?

Yes. I spent the last 20 years working at Home Depot in a variety of different roles, sort of half my time there was operational, half my time in a variety of different finance functions. When I looked at this opportunity, what I saw with YETI was, of course, first put your finance hat on, it's a strong, clean balance sheet, have the financial resources to invest, to do the things that are required to continue to grow the business. But mostly, I just saw several very clear actionable tangible growth vectors, opportunities that are right there for this brand with broad shoulders to go tackle and the resources and capabilities to tackle them. And so looking at those 2 things together, just felt like a terrific opportunity and in my 90-odd days there just has been nothing thing but reaffirmed that belief that I had from the initial onset. And you just see every day, we get a new opportunity comes across the desk about here's a particular application of the YETI brand in a different market or through a different product lens that's right there for us to go get. And it's just really exciting. I think there's just a terrific runway for this business for many years to come.

Yes. And it's interesting. I think as we look back over the last several years, I feel like some of those growth vectors have maybe been held back a little bit because of all what's been going on from a tariff perspective. I mean you had even a COVID and supply chain, all the disruptions -- maybe talk, Matt, a little bit about how you've now positioned the supply chain and the sourcing mix, which is now kind of going to allow you to go after those growth vectors and not just be focused on where are you making it, where you're getting it from and what's the cost, that kind of thing?

Yes, I think it's -- so we started our supply chain transformation over the last few years. And I would say that's partially complete from diversification and optionality. And importantly, the supply chain, we shifted through some of the tariff time really was focused around we want to be in the best place to make our product with the highest quality driving cost, driving availability and really driving speed to innovation. And so I would say the significant heavy lifting part of that is complete. We have a much more diverse supply chain today than we did 3 years ago and definitely 10 years ago. And so now it's about applying pressure and speed to chase that opportunity. But if I step a little bit further back, obviously, we went through COVID, we had strong -- the brand was really scaling the way we wanted going into COVID, we went through COVID and really accelerated that. So the growth performance was strong. The thing that during that COVID period that was most impacted was the innovation engine. It was a thing that was most disrupted. And so we were able to drive the business performance, but the innovation pipeline and execution was more challenged. We couldn't access our factories. The teams couldn't travel to it. And so really, that opened up for us in 2022. Well, if you look at what started to happen in 2024 and 2025 in the acceleration and the expansion and diversification in the Drinkware, the expansion of our soft coolers into our Daytrip, the expansion of our Camino totes driving further bags, portfolio expansion and driving further hard cooler. All those things happened coming out of our ability to get back on our supply chain, work with our partners. And so that pace really over the last 24 to 36 months has been a result really of being able to put our team back on the task and the opportunity we see in front us. And at the same time, we're expanding our global audience. We're expanding our global footprint, and that's why I talked about that 3x3 structure at the beginning.

Yes. So growth, obviously, the theme here, your recent results, I think, started to kind of get the attention of the market in the first quarter. I think sales were up 8% year-over-year. You had strength in wholesale, which was up close to 20%. Coolers and equipment, 11%, even drinkware was up 5%. And your profits beat by, I think, more than 40%. So maybe just talk about the performance in 1Q, the demand signals that you're seeing. I think you were seeing them last year, but they didn't really show up and so it was little frustrating, right? The stock didn't behave. But just talk about what you're seeing there on that front.

Yes, maybe I'll take that one, Matt. So look, I think you're right. We had been seeing strong demand signals for a number of quarters. It wasn't a brand new thing. But Q1 was an acceleration from Q4, which was an acceleration from the balance of 2025. Again, there's always going to be lumpiness. We have a reasonably sized wholesale business, sometimes you get orders around the edge of a quarter and they fall 1 quarter versus another. So you get a little bit up and down there. 2025 was characterized by increase demand signals. However, we had this imbalance between sell in and sell through where our wholesale partners were drawing down on inventory. And so we were seeing the customers' affinity for the products and the satisfaction they have with what we're putting in front of them. We just weren't seeing it in the financial results because the sell in was trailing what we were seeing from a true demand signal perspective. But we saw a breadth of performance in Q1, and we're really excited about that. A couple of little fits and starts there, where we had a little softness in corporate sales. We had some timing items that affected the international business. But even through all of that, when we looked where we see the customers' demand signals, they're really voting with their wallet. They're happy with the products we're putting out there, and we're seeing strength across our consumer base, so which is why we were able to deliver the quarter and also reaffirm and slightly increase the guidance for the balance of the year.

The growth pillars going forward. I mean I think one of the things that we're excited about is you're going to be an Investor Day in September down in Austin. I think a lot of investors are kind of waiting for that, looking to that as a way to kind of get some confidence in the growth algo. We see innovation. We see distribution opportunities. We see international, there are a lot of ways to go here. But I want to start kind of with the brand because at the end of the day, the brand is what's so critical here. And I think through all of the ups and downs, I guess, the last few years, it feels like the brand has been as relevant, if not stronger than ever. So maybe talk about what you think the brand stands for? What -- how do you measure the health of the brand? And what's kind of the permission structure you think the market is giving you in terms of where you can go with the division.

Yes. I mean there's a lot in there. So we have to pro me if I miss anything. I'll start with product, which is not what you said. But our product is all rooted in durability, performance and design. And I think product and brand for us are so inextricably kind of interrelated or interwound. Without great product, a brand can only work so hard, and it can only sustain for so long. And I think that's one of the things that YETI's done for 20 years now is drive great products, great desirability for product and then amplify a brand on Tube. . When I think about our brand and our definition of our brand, we have this idea that's built for the wild and the definition of the wild in 20 years ago was hunting, fishing in the Texas Gulf Coast. We were just talking before we came up here. The Division I Women's in the Cross Country Championship was pretty wild. And there were some athletes on that field that we've equipped with product that outfit the work they do, the grind, the kind of hard work that happens off the field. And so our definition of wild and what it could be has really evolved. While we still show up at fishing events or climbing events and we're at surfing events and skate events and equestrian events in Western lifestyle. But what's made this brand special is, I think we have an incredible discernment of who our audiences are, what's important to them, how our product can support what they're doing, and we show up for them. We don't buy our way into places, we don't hang banners. It's really a connected authenticity to use a word that probably gets overused too much, but it's really about our realness. Peter and I were talking a little bit earlier of the story, I mean you take something, Formula 1's commercial's commercial gets. And Oracle Red Bull racing is one of the flagship, if not the flagship brands within Formula 1. We have a partnership with the Oracle Red Bull racing team, but it started from a basis of they had a need. They had a need at Milton Keynes and they were trying to focus on their sustainability and eliminate single-use and we make incredible cups. And so there was a nice synergy there. Well, then that parlayed into a need within the garage with the Boltis. The Boltis need to keep the engines from overheating, the way they do that is with dry ice. They didn't have a great storage solution for dry ice to put into these blowers to blow through the engines. So they had a very practical need. YETI cooler, they fill with dry ice. We worked with our engineers, made a special scoop for them. Then we became part of the kit. We became part of the team. So it was much more than a sponsorship deal trying to draft off somebody else's brand or somebody trying to associate with our brand. It's really a purpose-driven thing. And I'd say all the time, we make our marketing dollars work really hard because we've got an incredibly nuanced way. It's why you've heard us talk about in the past about communities and pursuits in these audiences. And so we can show up at a surf event and we're welcomed in or a skateboarding or a climbing event or a backcountry skiing event or a cooking live fire. And I think that's really the stacking of what the brand has been built on, but it's not about evolution because evolution means you're sort of leaving behind where you are. For us, it's really about stacking these bricks on top of each other. And I want us to be as relevant to the audiences that we spoke to 20 years ago as we were then back in the day, and then the newer audiences and that's why we're talking about sport. I think what's happening in sport now is one of the most dynamic things about the money going into sport, the focus on sport at all levels, from youth up to professional. And we're making sure that we're not only invited in that our products are relevant and being used there, but that we can be deeply ingrained. And that's a global thing. So it's not -- we're not chasing big headline sponsorships where we want to show up on the ball field on the weekend. We want to show up on the sidelines. We want to be at collegiate locker rooms. We want to be on the sideline. I mean 2 recent ones, the NWSL. If you watch an NWSL match, we're on the sidelines and partner up with the NWSL. LOVB, Volleyball. If you watch any LOVB, we've been involved in LOVB early on because we see those things that not only have relevance, but they also have real influence that water falls down.

Yes. I mean it's really unique. There are probably a handful of brands that can really resonate with audiences across all those pursuits and feel kind of authentic. It's interesting, even within some of the newer categories, I remember a year ago, we were down in Austin speaking with you guys and Layne, who runs the Bags business was talking about one of the things he found so interesting about YETI was I guess within the bags world, there are specific kind of brands that fit, the bikers like a certain brand and the hikers like a certain brand. And it's hard to kind of play across, but he's like, they all like YETI. And so he sees a huge opportunity in the bags business. That's leading me to my next question, which is we know there's more innovation coming in hard coolers and we know there's more innovation coming in Drinkware. Well, what about these non-legacy categories. Talk a little bit more about bags and then where you see the portfolio going?

Yes. I'll bridge to -- I think 2 things. We continue to see growth opportunity in what people would define as our legacy. And if you really looked into take Drinkware. What drinkware in 2014 was 2 cups. Drinkware today covers the range of tumblers to something like I'm holding a stackable cup to food transportation all the way up to this kind of newer edge bus in cast iron and carbon steel skillets. So we see that opportunity. The other one is the U.S. for us, while we talk a lot about the international global growth opportunity, the penetration -- the continued penetration opportunity in the U.S. of use cases, consumers, places we can sell we think is really attractive, and you saw that on display in Q1. As you move into these newer categories, underdeveloped bags and I would include soft coolers in that, we think is significantly underpenetrated for what it can be. And if you heard us call out our Daytrip, which is our day thermal bags, have had an incredible run over 2025 and 2026. And I think it's the mix of use case price point, audience expansion that fits within that, the Camino tote has had a really a really nice pickup. It's been one of our -- frankly, it's been one of our best products for a really long time, and it gets found by audiences to find additional use cases for it. But when you think about the breadth of opportunities within bags and soft coolers, you can move up and down the price stack, you can move up and down the use case. And so earlier this year, we launched our Skala hiking backpack. It's a multi-day hiking pack. To what Peter said, it's a space where you need to break into the club, the product needs to back up. It's not just -- you don't buy your way in the brand as to push its way in. That's a little bit of Layne's point. And I think what we saw with the Skala reception from that audience was a validator that then sets a halo for things that we can do in broader applications. So we think about bags in terms of 3 big groups. I think about every day, things you commute with, things you move around with. If you go through the airport, 100% people have a bag of some sort, either a piece of luggage, backpack, duffel bag, multiples in many cases. So that environment is a really large TAM where we think there's an opportunity to continue to differentiate, but also own. So every day, then you go to travel, I just talked about. And the third one is adventure pursuit specific type packs like these day packs. And so we're attacking the market opportunity across all 3 of those, not just domestically, but the global opportunity that we see. And so I think there's a good long runway. And as you said, I think what we've seen are proof points of willingness, acceptance, realization of YETI taking its durability, performance and design and transitioning into that.

I think you've also seen some good acceptance internationally. It's about 20% of your sales right now, expected to grow 18% to 20% this year. I know the majority of that is Canada, Australia, but you're into the U.K., you're into Germany, Japan, some other things on the horizon. Maybe talk a minute about the international opportunity, how you go into these product, channel distributors, what's the playbook here internationally.

Yes. I mean we said before the playbook -- we've seen the playbook travel. And that doesn't mean a carbon copy of exactly what we did in the U.S. But the elements that we've seen, I'll start structurally and then I'll maybe move through the brand. Structurally, we've seen receptivity to e-commerce in the markets where it makes sense and it's relevant, marketplaces building out referential wholesale to the places where people go to find new things and find cool and then building into a broader-based wholesale. And we've seen that -- we saw that in Australia. We saw it in Canada. We have seen it and are continuing to see that opportunity in the U.K. as we started in surf shops and boat yards and now we're moving into broader sporting goods and then moving further into the urban cities. So from a go-to-market, the mix may look a little different. The way the markets develop may look a little different, but the relevance of how you intersect the consumer has stayed sound. The product portfolio, as we've transitioned the product portfolio to global, we're leveraging our same product portfolio that we've developed, but it's the assortment within that that's changed. Simple things, size, space and some markets are more important. So that leans towards and some just stylistic, 30-plus ounce drinkware, less a globally relevant product, something like I'm holding, which is 8-ounce and fits under an espresso machine, more relevant in some markets. And so we're finding that nuance, color is another thing. Different markets have different color needs and desires. So we look at that. But I would say, from a brand perspective, the brand playbook absolutely is working. We didn't take and export the brand as it was 10, 15 years ago at YETI, we exported the brand with the playbook we have where we can be relevant to what was mature and relevant in that market. So places like Central Europe, hiking, backcountry skiing, adventure sports, those things we push a little bit harder to. In the U.K., it could be equestrian, rural lifestyle, cooking, live fire. And so those sport, those have all been things that we have a broad enough playbook that fits underneath this brand that we can actually draw the right analogy. In Japan, food, beer, surf, hike, snow sports, all those play in Japan.

Yes. So I think one of the unlocks of the stock late last year starting to show this return to growth, but also you kind of teased out the Phase 1 of the long-term algo, which was a high single-digit to low double-digit revenue growth, which at the time, the stock was in the mid-30s, and I think it was reflecting low single digit at best. And so we're seeing another move in the stock right now. I think the September Investor Day has made a lot of interest in terms of, okay, what is that -- how do you get there? But more so also, what does that mean for margins? Is there a big investment cycle that has to maybe be laid out here in order to achieve that? Or are there productivity levers here that will allow you to kind of fund that growth. So maybe just -- you're not going to give us -- give it all away, but maybe some breadcrumbs here is how you're thinking about margins and profitability as part of this longer-term view.

We definitely want some people come and eat some barbeque in September. I shouldn't give it all away, right?

Yes, we definitely won't give it all away. But yes, look forward to seeing you all in September. Look, as we build the building blocks, I think one of the important parts of this business model, it is a diversified model, diversified product set, diversified go-to-market channels and geographies, which provides this foundation of multiple building blocks to help get us all the way to that high single, low double-digit algorithm. As we think about margins, look, Matt and I talk about this virtually every day. Yes, expansion globally requires investment. There's things we'd like to do from a marketing perspective. But we have to look for ways to continue to drive efficiency and productivity to fund that. We think opportunities to do that. And so we think we can have a balanced perspective. We don't expect some big investment cycle that's going to peel our profit profile in an adverse way. We intend to continue to find that those areas of productivity to fuel the investment. And we do think there's opportunity for upside margin expansion, and we'll lay that out more clearly in September.

That's great. Lastly, just around kind of maybe capital allocation, $130 million in net cash. $200 million plus of free cash flow. Let's talk about stock buybacks. You increased your authorization. How should we think about that. You've done ASRs in the past. I don't know if the plan is to be more just with that or those. And then M&A, I know we have 3 minutes left, but let's hit on the front.

Yes. Capital allocation, look, our principles are the same, right? We're going to continue to look for areas to drive the business forward. We like execution of returning capital to shareholders through the form of share repurchases, simply because we think it's a great return for our shareholders. And we see the prospects in this business and think that's a great way to return capital to those that invest in us. And Matt, do you want to handle the M&A question?

Yes, I would just say, I mean, obviously, start with buybacks because the ratio of what we've done in buybacks to anything related to inorganic innovation is obviously, buybacks are the priority. I think when you think about the idea of us doing something organically, I think we've got enough proof points out there of now you sort of get what we're trying to do. When we see something where there's something that's undersized, an underknown brand, has a technology capability, in some cases, talent that we can bring in to accelerate something that's on our road map. . Most things are doable with time and doable with resource, and we have an incredibly talented and capable engineering innovation product development team. But for us to go jump on something faster. So if you look at the shaker bottle, we closed that deal. We had a YETI version with a new material package, which allowed for it to be dishwasher safe. We had a new lid design back in the market late in 2025. We took some DNA from the backpack acquisition. That DNA is being pulled through wholly new YETI products and accelerating that. So we look at it more as a jump-start and accelerant versus a consistent ongoing strategy. I would say it's an opportunistic, but we see everything that's out there in the market. So we're really discerning about what we think is additive to what we're trying to do, right, which is build this brand.

Yes. All right. Great. Well, we're up on time. But again, Astra room for the breakout, but join me in thanking the team from YETI.