YETI Holdings, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales increased 4% year-over-year to $509.4 million; adjusted net sales increased 6% to $517.9 million.
• Gross profit increased 8% to $293.8 million, with gross margin expanding 180 basis points to 57.7%.
• Adjusted gross profit increased 12% to $305.5 million, with adjusted gross margin expanding 310 basis points to 59.0%.
• Operating income increased 12% to $61.0 million (12.0% of sales); adjusted operating income increased 35% to $90.0 million (17.4% of adjusted sales).
• Net income increased 13% to $44.4 million; diluted EPS increased 25% to $0.60.
• Adjusted net income increased 35% to $67.2 million; adjusted diluted EPS increased 49% to $0.91.
• SG&A expenses increased 7% to $232.8 million (45.7% of sales); adjusted SG&A increased 5% to $215.5 million (41.6% of adjusted sales).
• Inventory increased 22% to $394.2 million.
• Cash exceeded total debt (excluding finance leases and unamortized deferred financing fees) with an undrawn revolving credit facility of $300 million.
• Free cash flow for the nine months ended October 3, 2026, was $71.7 million.

Guidance and Future Outlook:

• Updated 2026 adjusted sales growth outlook to approximately 6%, down from the previous 7% to 8% range.
• Updated 2026 adjusted operating income margin outlook to approximately 14.9%, unchanged from prior guidance.
• Updated 2026 adjusted EPS outlook to $2.90 to $2.95, reflecting 16% to 18% growth, down from the previous $2.94 to $3.00 range.
• Full-year 2026 adjusted operating income growth outlook revised to 7% to 9%, down from 10% to 12%.
• Full-year 2026 effective tax rate expected at approximately 24%.
• Full-year 2026 diluted weighted average shares outstanding expected at approximately 75.1 million.
• Full-year 2026 capital expenditures expected between $60 million and $70 million.
• Full-year 2026 free cash flow expected between $200 million and $225 million.
• Management anticipates a cautious consumer environment and potential pressure on demand in Q4, particularly in US and Canadian markets.

Business Segments and Product Lines:

• Drinkware sales increased 8% to $284.0 million, driven by international and US growth.
• Coolers & Equipment sales were flat at $215.6 million; adjusted sales for the category increased 4% to $224.1 million.
• Wholesale channel sales increased 19% to $237.3 million.
• Direct-to-consumer (DTC) channel sales decreased 6% to $272.2 million; adjusted DTC sales decreased 3% to $280.7 million.
• International sales increased 19% to $119.1 million.
• US sales increased 1% to $390.3 million; adjusted US sales increased 3% to $398.8 million.
• First brand stores opened in Japan and Korea; initial marketplace launch occurred in China.
• Corporate Sales grew, contributing to DTC performance.

Market and Competitive Landscape:

• International expansion continues with strong momentum in Europe and Australia.
• Product portfolio expansion includes cases & storage, hard coolers, and bags within the Coolers & Equipment category.
• Management notes a cautious consumer environment impacting discretionary purchases.
• Demand was uneven during the quarter, specifically in US and Canadian markets.

Risks and Challenges:

• Product recall reserves impacted gross margin by 130 basis points and SG&A expenses.
• Commodity inflation contributed to higher product costs, partially offsetting operational benefits.
• Potential pressure on demand in Q4 due to a cautious consumer environment.
• Declines in US owned e-commerce and US Amazon Marketplace contributed to DTC sales decreases.

Management Commentary and Tone:

• Matt Reintjes, Chair, President, and CEO, highlighted "increasing breadth and balance" of the global business and "strong operating discipline" driving margin expansion.
• Management emphasized that profits grew significantly faster than sales.
• Reintjes stated the company is "staying on offense" regarding brand, innovation, and go-to-market strategies despite near-term headwinds.
• The tone reflected confidence in the "Built for the Wild" strategy, brand durability, and long-term value creation capabilities.

Other Key Points:

• Repurchased approximately 0.5 million shares for $20.0 million in the third quarter.
• Total share repurchases in 2026 reached approximately $150 million.
• Approximately $350 million remained available for repurchases under the $500 million authorization as of October 3, 2026.
• Non-GAAP financial measures now exclude product recall reserve adjustments related to the 2023 voluntary recalls, a change from the Q4 2025 approach.
• Gross margin expansion included a 200 basis point favorable impact from lower net tariff costs and a 110 basis point benefit from operational drivers.
• IEEPA tariff refunds provided a net benefit of $4.7 million in Q3 2026 and $50.3 million for the nine months ended October 3, 2026.