COVER PAGE
COVER PAGE - shares | 9 Months Ended | |
Oct. 01, 2022 | Oct. 27, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 01, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-38713 | |
Entity Registrant Name | YETI Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-5297111 | |
Entity Address, Address Line One | 7601 Southwest Parkway | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78735 | |
City Area Code | 512 | |
Local Phone Number | 394-9384 | |
Title of 12(b) Security | Common stock, par value $0.01 | |
Trading Symbol | YETI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 86,248,108 | |
Entity Central Index Key | 0001670592 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Current assets | ||
Cash | $ 77,763 | $ 312,189 |
Accounts receivable, net | 93,898 | 109,530 |
Inventory | 439,443 | 318,864 |
Prepaid expenses and other current assets | 33,564 | 29,584 |
Total current assets | 644,668 | 770,167 |
Property and equipment, net | 128,361 | 119,044 |
Operating lease right-of-use assets | 55,348 | 54,971 |
Goodwill | 54,293 | 54,293 |
Intangible assets, net | 98,142 | 95,314 |
Other assets | 2,414 | 2,575 |
Total assets | 983,226 | 1,096,364 |
Current liabilities | ||
Accounts payable | 122,813 | 191,319 |
Accrued expenses and other current liabilities | 107,003 | 132,309 |
Taxes payable | 7,584 | 14,514 |
Accrued payroll and related costs | 3,240 | 30,844 |
Current operating lease liabilities | 10,580 | 10,167 |
Current maturities of long-term debt | 24,411 | 24,560 |
Total current liabilities | 275,631 | 403,713 |
Long-term debt, net of current portion | 77,756 | 95,741 |
Operating lease liabilities, non-current | 55,764 | 55,940 |
Other liabilities | 23,414 | 23,147 |
Total liabilities | 432,565 | 578,541 |
Commitments and contingencies (Note 7) | ||
Stockholders’ Equity | ||
Common stock, par value $0.01; 600,000 shares authorized; 87,924 and 86,248 shares issued and outstanding at October 1, 2022, respectively, and 87,727 shares issued and outstanding at January 2, 2021, respectively | 879 | 877 |
Treasury stock, at cost; 1,677 shares at October 1, 2022 | (100,025) | 0 |
Preferred stock, par value $0.01; 30,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Additional paid-in capital | 351,033 | 337,735 |
Retained earnings | 296,289 | 178,858 |
Accumulated other comprehensive income | 2,485 | 353 |
Total stockholders’ equity | 550,661 | 517,823 |
Total liabilities and stockholders’ equity | $ 983,226 | $ 1,096,364 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Oct. 01, 2022 | Jan. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock issued (in shares) | 87,924,000 | 87,727,000 |
Common stock, outstanding (in shares) | 86,248,000 | 87,727,000 |
Treasury stock, shares (in shares) | 1,677 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Statement [Abstract] | ||||
Net sales | $ 433,556 | $ 362,643 | $ 1,147,226 | $ 967,864 |
Cost of goods sold | 211,149 | 155,640 | 550,860 | 406,560 |
Gross profit | 222,407 | 207,003 | 596,366 | 561,304 |
Selling, general, and administrative expenses | 153,940 | 138,274 | 426,263 | 380,101 |
Operating income | 68,467 | 68,729 | 170,103 | 181,203 |
Interest expense | (1,495) | (833) | (3,221) | (2,519) |
Other expense | (7,281) | (1,239) | (12,202) | (2,492) |
Income before income taxes | 59,691 | 66,657 | 154,680 | 176,192 |
Income tax expense | (14,171) | (13,690) | (37,249) | (36,471) |
Net income | $ 45,520 | $ 52,967 | $ 117,431 | $ 139,721 |
Net income per share | ||||
Basic (in dollars per share) | $ 0.53 | $ 0.61 | $ 1.36 | $ 1.60 |
Diluted (in dollars per share) | $ 0.52 | $ 0.60 | $ 1.35 | $ 1.58 |
Weighted-average common shares outstanding | ||||
Basic (in shares) | 86,208 | 87,526 | 86,580 | 87,343 |
Diluted (in shares) | 86,831 | 88,750 | 87,305 | 88,636 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 45,520 | $ 52,967 | $ 117,431 | $ 139,721 |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | 921 | (84) | 2,132 | 875 |
Total comprehensive income | $ 46,441 | $ 52,883 | $ 119,563 | $ 140,596 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income |
Balance at beginning of the period (shares) at Jan. 02, 2021 | 87,128,000 | |||||
Balance at beginning of the period (shares) at Jan. 02, 2021 | 0 | |||||
Balance at beginning of the period at Jan. 02, 2021 | $ 288,418 | $ 871 | $ 321,678 | $ 0 | $ (33,744) | $ (387) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 11,339 | 11,339 | ||||
Common stock issued under employee benefit plans (in shares) | 512,000 | |||||
Common stock issued under employee benefit plans | 2,793 | $ 5 | 2,788 | |||
Common stock withheld related to net share settlement of stock-based compensation (in shares) | (42,000) | |||||
Common stock withheld related to net share settlement of stock-based compensation | (3,506) | (3,506) | ||||
Other comprehensive income (loss) | 875 | 875 | ||||
Net income | 139,721 | 139,721 | ||||
Balance at end of the period (shares) at Oct. 02, 2021 | 87,598,000 | |||||
Balance at end of the period (shares) at Oct. 02, 2021 | 0 | |||||
Balance at end of the period at Oct. 02, 2021 | 439,640 | $ 876 | 332,299 | $ 0 | 105,977 | 488 |
Balance at beginning of the period (shares) at Jul. 03, 2021 | 87,441,000 | |||||
Balance at beginning of the period (shares) at Jul. 03, 2021 | 0 | |||||
Balance at beginning of the period at Jul. 03, 2021 | 384,094 | $ 874 | 329,638 | $ 0 | 53,010 | 572 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 3,824 | 3,824 | ||||
Common stock issued under employee benefit plans (in shares) | 175,000 | |||||
Common stock issued under employee benefit plans | 645 | $ 2 | 643 | |||
Common stock withheld related to net share settlement of stock-based compensation (in shares) | (18,000) | |||||
Common stock withheld related to net share settlement of stock-based compensation | (1,806) | (1,806) | ||||
Other comprehensive income (loss) | (84) | (84) | ||||
Net income | 52,967 | 52,967 | ||||
Balance at end of the period (shares) at Oct. 02, 2021 | 87,598,000 | |||||
Balance at end of the period (shares) at Oct. 02, 2021 | 0 | |||||
Balance at end of the period at Oct. 02, 2021 | 439,640 | $ 876 | 332,299 | $ 0 | 105,977 | 488 |
Balance at beginning of the period (shares) at Jan. 01, 2022 | 87,727,000 | |||||
Balance at beginning of the period (shares) at Jan. 01, 2022 | 0 | |||||
Balance at beginning of the period at Jan. 01, 2022 | 517,823 | $ 877 | 337,735 | $ 0 | 178,858 | 353 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 14,883 | 14,883 | ||||
Common stock issued under employee benefit plans (in shares) | 229,000 | |||||
Common stock issued under employee benefit plans | 278 | $ 2 | 276 | |||
Common stock withheld related to net share settlement of stock-based compensation (in shares) | (32,000) | |||||
Common stock withheld related to net share settlement of stock-based compensation | (1,861) | (1,861) | ||||
Repurchase of common stock (in shares) | (1,677,000) | |||||
Repurchase of common stock | (100,025) | $ (100,025) | ||||
Other comprehensive income (loss) | 2,132 | 2,132 | ||||
Net income | $ 117,431 | 117,431 | ||||
Balance at end of the period (shares) at Oct. 01, 2022 | 87,924,000 | |||||
Balance at end of the period (shares) at Oct. 01, 2022 | (1,677) | (1,677,000) | ||||
Balance at end of the period at Oct. 01, 2022 | $ 550,661 | $ 879 | 351,033 | $ (100,025) | 296,289 | 2,485 |
Balance at beginning of the period (shares) at Jul. 02, 2022 | 87,851,000 | |||||
Balance at beginning of the period (shares) at Jul. 02, 2022 | (1,677,000) | |||||
Balance at beginning of the period at Jul. 02, 2022 | 499,861 | $ 878 | 346,675 | $ (100,025) | 250,769 | 1,564 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 4,662 | 4,662 | ||||
Common stock issued under employee benefit plans (in shares) | 86,000 | |||||
Common stock issued under employee benefit plans | 278 | $ 1 | 277 | |||
Common stock withheld related to net share settlement of stock-based compensation (in shares) | (13,000) | |||||
Common stock withheld related to net share settlement of stock-based compensation | (581) | (581) | ||||
Other comprehensive income (loss) | 921 | 921 | ||||
Net income | $ 45,520 | 45,520 | ||||
Balance at end of the period (shares) at Oct. 01, 2022 | 87,924,000 | |||||
Balance at end of the period (shares) at Oct. 01, 2022 | (1,677) | (1,677,000) | ||||
Balance at end of the period at Oct. 01, 2022 | $ 550,661 | $ 879 | $ 351,033 | $ (100,025) | $ 296,289 | $ 2,485 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Cash Flows from Operating Activities: | ||
Net income | $ 117,431 | $ 139,721 |
Adjustments to reconcile net income to cash (used in) provided by operating activities: | ||
Depreciation and amortization | 28,504 | 23,440 |
Amortization of deferred financing fees | 458 | 516 |
Stock-based compensation | 14,883 | 11,339 |
Deferred income taxes | (1,138) | 3,764 |
Impairment of long-lived assets | 181 | 2,331 |
Other | 10,215 | 3,213 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 14,679 | (18,769) |
Inventory | (127,362) | (126,381) |
Other current assets | (2,944) | (5,206) |
Accounts payable and accrued expenses | (121,515) | 48,184 |
Taxes payable | (6,773) | (11,441) |
Other | 1,166 | 2,488 |
Net cash (used in) provided by operating activities | (72,215) | 73,199 |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (32,493) | (41,159) |
Additions of intangibles, net | (7,924) | (6,749) |
Net cash used in investing activities | (40,417) | (47,908) |
Cash Flows from Financing Activities: | ||
Repayments of long-term debt | (16,875) | (16,875) |
Taxes paid in connection with employee stock transactions | (1,861) | (3,507) |
Proceeds from employee stock transactions | 278 | 2,794 |
Finance lease principal payment | (1,730) | (600) |
Repurchase of common stock | (100,025) | 0 |
Net cash used in financing activities | (120,213) | (18,188) |
Effect of exchange rate changes on cash | (1,581) | (1,069) |
Net (decrease) increase in cash | (234,426) | 6,034 |
Cash, beginning of period | 312,189 | 253,283 |
Cash, end of period | $ 77,763 | $ 259,317 |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Oct. 01, 2022 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization and Business Headquartered in Austin, Texas, YETI Holdings, Inc. is a global designer, retailer, and distributor of innovative outdoor products. From coolers and drinkware to bags and apparel, YETI products are built to meet the unique and varying needs of diverse outdoor pursuits, whether in the remote wilderness, at the beach, or anywhere life takes you. We sell our products through our wholesale channel, including independent retailers, national, and regional accounts across a wide variety of end user markets, as well as through our direct-to-consumer (“DTC”) channel, primarily on YETI.com, country and region-specific YETI websites, YETI Authorized on the Amazon Marketplace, our corporate sales program, and our retail stores. We operate in the U.S., Canada, Australia, New Zealand, Europe, Hong Kong, China, Singapore, and Japan. The terms “we,” “us,” “our,” and “the Company” as used herein and unless otherwise stated or indicated by context, refer to YETI Holdings, Inc. and its subsidiaries. Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, our financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of our results of operations for the interim periods. Intercompany transactions are eliminated in consolidation. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations of the SEC. Certain prior period amounts have been reclassified to conform to the current period presentation. The consolidated balance sheet as of January 1, 2022 is derived from the audited financial statements included in our Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022, which should be read in conjunction with these unaudited consolidated financial statements and notes thereto. Out-of-Period Adjustment During the first quarter of 2022, we recognized $6.4 million in cost of goods sold for inbound freight expense recorded as an out-of-period adjustment. The adjustment was not considered material to the interim or annual consolidated financial statements for the year ended January 1, 2022 or the financial statements of any previously filed interim or annual periods. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses during the reporting period and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Estimates and assumptions about future events and their effects cannot be made with certainty. Estimates may change as new events occur, when additional information becomes available and if our operating environment changes. Actual results could differ from our estimates. Fiscal Year End We have a 52- to 53-week fiscal year that ends on the Saturday closest in proximity to December 31, such that each quarterly period will be 13 weeks in length, except during a 53-week year when the fourth quarter will be 14 weeks. Our fiscal year ending December 31, 2022 (“2022”) is a 52-week period. The first quarter of our fiscal year 2022 ended on April 2, 2022, the second quarter ended on July 2, 2022, and the third quarter ended on October 1, 2022. Our fiscal year ended January 1, 2022 (“2021”) was a 52-week period. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years and the associated quarters, months, and periods of those fiscal years. The unaudited condensed consolidated financial results presented herein represent the three and nine months ended October 1, 2022 and October 2, 2021. Accounts Receivable Accounts receivable are carried at original invoice amount less estimated credit losses. Upon initial recognition of a receivable, we estimate credit losses over the contractual term of the receivable and establish an allowance for credit losses based on historical experience, current available information, and expectations of future economic conditions. We mitigate credit loss risk from accounts receivable by assessing customers for credit worthiness, including ongoing credit evaluations and their payment trends. Credit risk is limited due to ongoing monitoring, high geographic customer distribution, and low concentration of risk. As the risk of loss is determined to be similar based on the credit risk factors, we aggregate receivables on a collective basis when assessing credit losses. Accounts receivable are uncollateralized customer obligations due under normal trade terms typically requiring payment within 30 to 90 days of sale. Receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded to income when received. Our allowance for credit losses was $1.0 million as of October 1, 2022 and $1.6 million as of January 1, 2022, respectively. Inventory Inventories are comprised primarily of finished goods and are carried at the lower of cost (weighted-average cost method) or market (net realizable value). Fair Value of Financial Instruments For financial assets and liabilities recorded at fair value on a recurring or non-recurring basis, fair value is the price we would receive to sell an asset, or pay to transfer a liability, in an orderly transaction with a market participant at the measurement date. In the absence of such data, fair value is estimated using internal information consistent with what market participants would use in a hypothetical transaction. In determining fair value, observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions; preference is given to observable inputs. These two types of inputs create the following fair value hierarchy: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Significant inputs to the valuation model are unobservable. Our financial instruments consist principally of cash, accounts receivable, accounts payable, and bank indebtedness. The carrying amount of cash, accounts receivable, and accounts payable, approximates fair value due to the short-term maturity of these instruments. The carrying amount of our long-term bank indebtedness approximates fair value based on Level 2 inputs since our senior secured credit facility (“Credit Facility”) carries a variable interest rate that is based on LIBOR, the London Interbank Offered Rate. Recent Accounting Guidance Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The ASU is intended to ease the potential accounting and financial reporting burden of reference rate reform, including the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. The guidance provides optional expedients and scope exceptions for transactions if certain criteria are met. These transactions include contract modifications, hedge accounting, and the sale or transfer of debt securities classified as held-to-maturity. The ASU can be adopted no later than December 31, 2022 with early adoption permitted. We are evaluating the effect of adopting this new accounting guidance. The impact of this guidance on our financial statements and related disclosures will continue to be evaluated through the application period and is not expected to be material. In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations , which requires disclosures intended to enhance the transparency of supplier finance programs. The ASU requires buyers in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our disclosures. |
REVENUE
REVENUE | 9 Months Ended |
Oct. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Contract Balances Accounts receivable represent an unconditional right to receive consideration from a customer and are recorded at net invoiced amounts, less an estimated allowance for doubtful accounts. Contract liabilities are recorded when the customer pays consideration before the transfer of a good to the customer and thus represent our obligation to transfer the good to the customer at a future date. Our contract liabilities relate to advance cash deposits received from customers for certain customized product orders. As products are shipped and control transfers, we recognize contract liabilities as revenue. The following table provides information about accounts receivable and contract liabilities at the periods indicated (in thousands): October 1, January 1, Accounts receivable, net $ 93,898 $ 109,530 Contract liabilities $ (9,136) $ (20,761) For the nine months ended October 1, 2022, we recognized $20.8 million of revenue that was previously included in the contract liability balance at the beginning of the period. Disaggregation of Revenue The following table disaggregates our net sales by channel, product category, and geography (based on end-consumer location) for the periods indicated (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Net Sales by Channel Wholesale $ 206,153 $ 165,504 $ 539,014 $ 447,068 Direct-to-consumer 227,403 197,139 608,212 520,796 Total net sales $ 433,556 $ 362,643 $ 1,147,226 $ 967,864 Net Sales by Category Coolers & Equipment $ 185,657 $ 149,002 $ 482,030 $ 400,261 Drinkware 238,987 205,035 639,055 546,796 Other 8,912 8,606 26,141 20,807 Total net sales $ 433,556 $ 362,643 $ 1,147,226 $ 967,864 Net Sales by Geographic Region (1) United States $ 377,067 $ 327,413 $ 1,005,238 $ 871,194 International 56,489 35,230 141,988 96,670 Total net sales $ 433,556 $ 362,643 $ 1,147,226 $ 967,864 _________________________________ (1) Prior period net sales by geographic region have been reclassified to align with current year presentation which is based on end-consumer location. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Oct. 01, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax expense was $14.2 million and $13.7 million for the three months ended October 1, 2022 and October 2, 2021, respectively. The effective tax rate for the three months ended October 1, 2022 was 24%, compared to 21% for the three months ended October 2, 2021. The increase in both the income tax expense and the effective tax rate are primarily due to a lower tax benefit related to stock compensation in the three months ended October 1, 2022. Income tax expense was $37.2 million and $36.5 million for the nine months ended October 1, 2022 and October 2, 2021, respectively. The effective tax rate for the nine months ended October 1, 2022 was 24%, compared to 21% for the nine months ended October 2, 2021. The increase in both the income tax expense and the effective tax rate are primarily due to a lower tax benefit related to stock compensation in the nine months ended October 1, 2022. Deferred tax liabilities were $9.7 million as of October 1, 2022 and $10.9 million as of January 1, 2022, which is presented in other liabilities on our unaudited condensed consolidated balance sheet. For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions, and other items. |
STOCK -BASED COMPENSATION
STOCK -BASED COMPENSATION | 9 Months Ended |
Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION We award stock-based compensation to employees and directors under the 2018 Equity and Incentive Compensation Plan (“2018 Plan”), which was adopted by our Board of Directors and became effective upon the completion of our initial public offering in October 2018. The 2018 Plan replaced the 2012 Equity and Performance Incentive Plan (“2012 Plan”), as amended and restated on June 20, 2018. Any remaining shares available for issuance under the 2012 Plan as the date of our initial public offering in October 2018 are not available for future issuance. However, shares subject to stock awards granted under the 2012 Plan (a) that expire or terminate without being exercised or (b) that are forfeited under an award, return to the 2018 Plan. We recognized non-cash stock-based compensation expense of $4.7 million and $3.8 million for the three months ended October 1, 2022 and October 2, 2021, respectively. For the nine months ended October 1, 2022 and October 2, 2021, we recognized non-cash stock-based compensation expense of $14.9 million and $11.3 million, respectively. At October 1, 2022, total unrecognized non-cash stock-based compensation expense of $35.5 million for all stock-based compensation plans is expected to be recognized over a weighted-average period of 2.1 years. Stock-based activity for the nine months ended October 1, 2022 is summarized below (in thousands, except per share data): Stock Options Performance-Based Restricted Stock Awards and Units (1) Restricted Stock Units, Restricted Stock Awards, and Deferred Stock Units Number of Options Weighted Number of PBRSs and PRSUs Weighted Number of RSUs, RSAs, and DSUs Weighted Balance, January 1, 2022 846 $ 20.05 210 $ 48.64 433 $ 55.54 Granted — — 113 64.48 469 54.44 Exercised/released (12) 22.84 — — (217) 51.24 Forfeited/expired (13) 18.00 (30) 57.50 (68) 62.88 Balance, October 1, 2022 821 $ 20.04 293 $ 53.84 617 $ 55.41 _________________________________ (1) Includes performance-based restricted unit awards (“PRSU”) granted during the nine months ended October 1, 2022. The PRSUs have the same terms as our performance-based restricted stock awards and are treated the same. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Oct. 01, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted income per share includes the effect of all potentially dilutive securities, which include dilutive stock options and other stock-based awards. The following table sets forth the calculation of earnings per share and weighted-average common shares outstanding at the dates indicated (in thousands, except per share data): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Net income $ 45,520 $ 52,967 $ 117,431 $ 139,721 Weighted-average common shares outstanding—basic 86,208 87,526 86,580 87,343 Effect of dilutive securities 623 1,224 725 1,293 Weighted-average common shares outstanding—diluted 86,831 88,750 87,305 88,636 Earnings per share Basic $ 0.53 $ 0.61 $ 1.36 $ 1.60 Diluted $ 0.52 $ 0.60 $ 1.35 $ 1.58 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Oct. 01, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITYOn February 27, 2022, the Board of Directors authorized a common stock repurchase program of up to $100.0 million. During the three months ended April 2, 2022, we repurchased 1,676,551 shares for an aggregate purchase price of $100.0 million, including fees and commissions, at an average repurchase price of $59.66 per share. Following the repurchases, no shares remained available for future repurchases under the share repurchase program and all of the common stock repurchased is held as treasury stock. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Oct. 01, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Claims and Legal Proceedings We are involved in various claims and legal proceedings, some of which are covered by insurance. We believe that our existing claims and proceedings, and the potential losses relating to such contingencies, will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows. |
ORGANIZATION AND SIGNIFICANT _2
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Oct. 01, 2022 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of ConsolidationThe unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, our financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of our results of operations for the interim periods. Intercompany transactions are eliminated in consolidation. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations of the SEC. Certain prior period amounts have been reclassified to conform to the current period presentation. The consolidated balance sheet as of January 1, 2022 is derived from the audited financial statements included in our Annual Report on Form 10-K filed with the SEC for the year ended January 1, 2022, which should be read in conjunction with these unaudited consolidated financial statements and notes thereto. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses during the reporting period and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Estimates and assumptions about future events and their effects cannot be made with certainty. Estimates may change as new events occur, when additional information becomes available and if our operating environment changes. Actual results could differ from our estimates. |
Accounts Receivable | Accounts ReceivableAccounts receivable are carried at original invoice amount less estimated credit losses. Upon initial recognition of a receivable, we estimate credit losses over the contractual term of the receivable and establish an allowance for credit losses based on historical experience, current available information, and expectations of future economic conditions. We mitigate credit loss risk from accounts receivable by assessing customers for credit worthiness, including ongoing credit evaluations and their payment trends. Credit risk is limited due to ongoing monitoring, high geographic customer distribution, and low concentration of risk. As the risk of loss is determined to be similar based on the credit risk factors, we aggregate receivables on a collective basis when assessing credit losses. Accounts receivable are uncollateralized customer obligations due under normal trade terms typically requiring payment within 30 to 90 days of sale. Receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded to income when received. |
Inventory | Inventory Inventories are comprised primarily of finished goods and are carried at the lower of cost (weighted-average cost method) or market (net realizable value). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For financial assets and liabilities recorded at fair value on a recurring or non-recurring basis, fair value is the price we would receive to sell an asset, or pay to transfer a liability, in an orderly transaction with a market participant at the measurement date. In the absence of such data, fair value is estimated using internal information consistent with what market participants would use in a hypothetical transaction. In determining fair value, observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions; preference is given to observable inputs. These two types of inputs create the following fair value hierarchy: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Significant inputs to the valuation model are unobservable. Our financial instruments consist principally of cash, accounts receivable, accounts payable, and bank indebtedness. The carrying amount of cash, accounts receivable, and accounts payable, approximates fair value due to the short-term maturity of these instruments. The carrying amount of our long-term bank indebtedness approximates fair value based on Level 2 inputs since our senior secured credit facility (“Credit Facility”) carries a variable interest rate that is based on LIBOR, the London Interbank Offered Rate. |
Recent Accounting Guidance Not Yet Adopted | Recent Accounting Guidance Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The ASU is intended to ease the potential accounting and financial reporting burden of reference rate reform, including the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. The guidance provides optional expedients and scope exceptions for transactions if certain criteria are met. These transactions include contract modifications, hedge accounting, and the sale or transfer of debt securities classified as held-to-maturity. The ASU can be adopted no later than December 31, 2022 with early adoption permitted. We are evaluating the effect of adopting this new accounting guidance. The impact of this guidance on our financial statements and related disclosures will continue to be evaluated through the application period and is not expected to be material. In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations , which requires disclosures intended to enhance the transparency of supplier finance programs. The ASU requires buyers in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our disclosures. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Accounts Receivable and Contract Liabilities | The following table provides information about accounts receivable and contract liabilities at the periods indicated (in thousands): October 1, January 1, Accounts receivable, net $ 93,898 $ 109,530 Contract liabilities $ (9,136) $ (20,761) |
Schedule of Disaggregated Net Sales | The following table disaggregates our net sales by channel, product category, and geography (based on end-consumer location) for the periods indicated (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Net Sales by Channel Wholesale $ 206,153 $ 165,504 $ 539,014 $ 447,068 Direct-to-consumer 227,403 197,139 608,212 520,796 Total net sales $ 433,556 $ 362,643 $ 1,147,226 $ 967,864 Net Sales by Category Coolers & Equipment $ 185,657 $ 149,002 $ 482,030 $ 400,261 Drinkware 238,987 205,035 639,055 546,796 Other 8,912 8,606 26,141 20,807 Total net sales $ 433,556 $ 362,643 $ 1,147,226 $ 967,864 Net Sales by Geographic Region (1) United States $ 377,067 $ 327,413 $ 1,005,238 $ 871,194 International 56,489 35,230 141,988 96,670 Total net sales $ 433,556 $ 362,643 $ 1,147,226 $ 967,864 _________________________________ (1) Prior period net sales by geographic region have been reclassified to align with current year presentation which is based on end-consumer location. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock-based Activity | Stock-based activity for the nine months ended October 1, 2022 is summarized below (in thousands, except per share data): Stock Options Performance-Based Restricted Stock Awards and Units (1) Restricted Stock Units, Restricted Stock Awards, and Deferred Stock Units Number of Options Weighted Number of PBRSs and PRSUs Weighted Number of RSUs, RSAs, and DSUs Weighted Balance, January 1, 2022 846 $ 20.05 210 $ 48.64 433 $ 55.54 Granted — — 113 64.48 469 54.44 Exercised/released (12) 22.84 — — (217) 51.24 Forfeited/expired (13) 18.00 (30) 57.50 (68) 62.88 Balance, October 1, 2022 821 $ 20.04 293 $ 53.84 617 $ 55.41 _________________________________ (1) Includes performance-based restricted unit awards (“PRSU”) granted during the nine months ended October 1, 2022. The PRSUs have the same terms as our performance-based restricted stock awards and are treated the same. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Shares for Basic and Diluted Net Income Per Share | The following table sets forth the calculation of earnings per share and weighted-average common shares outstanding at the dates indicated (in thousands, except per share data): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Net income $ 45,520 $ 52,967 $ 117,431 $ 139,721 Weighted-average common shares outstanding—basic 86,208 87,526 86,580 87,343 Effect of dilutive securities 623 1,224 725 1,293 Weighted-average common shares outstanding—diluted 86,831 88,750 87,305 88,636 Earnings per share Basic $ 0.53 $ 0.61 $ 1.36 $ 1.60 Diluted $ 0.52 $ 0.60 $ 1.35 $ 1.58 |
ORGANIZATION AND SIGNIFICANT _3
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Oct. 01, 2022 | Apr. 02, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | Jan. 01, 2022 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cost of goods sold | $ 211,149 | $ 155,640 | $ 550,860 | $ 406,560 | ||
Allowance for credit losses | $ 1,000 | $ 1,000 | $ 1,600 | |||
Revision of Prior Period, Adjustment | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cost of goods sold | $ 6,400 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Jan. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 93,898 | $ 109,530 |
Contract liabilities | (9,136) | $ (20,761) |
Contract with customer liability revenue recognized | $ (20,800) |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 433,556 | $ 362,643 | $ 1,147,226 | $ 967,864 |
Customer Concentration Risk | Sales Revenue | Largest Customer | ||||
Disaggregation of Revenue [Line Items] | ||||
Customer concentration percentage | 12% | 11% | 12% | 10% |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 377,067 | $ 327,413 | $ 1,005,238 | $ 871,194 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 56,489 | 35,230 | 141,988 | 96,670 |
Coolers & Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 185,657 | 149,002 | 482,030 | 400,261 |
Drinkware | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 238,987 | 205,035 | 639,055 | 546,796 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,912 | 8,606 | 26,141 | 20,807 |
Wholesale | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 206,153 | 165,504 | 539,014 | 447,068 |
Direct-to-consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 227,403 | $ 197,139 | $ 608,212 | $ 520,796 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | Jan. 01, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 14,171 | $ 13,690 | $ 37,249 | $ 36,471 | |
Effective Income tax rate | (24.00%) | (21.00%) | (24.00%) | (21.00%) | |
Deferred tax liabilities | $ 9,700 | $ 9,700 | $ 10,900 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||||
Recognized non-cash stock-based compensation expense | $ 4.7 | $ 3.8 | $ 14.9 | $ 11.3 |
Unrecognized non-cash stock-based compensation expense | $ 35.5 | $ 35.5 | ||
Weighted average period for recognition | 2 years 1 month 6 days |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock-based Activity (Details) shares in Thousands | 9 Months Ended |
Oct. 01, 2022 $ / shares shares | |
Stock Options | |
Number of Options | |
Balance at the beginning (in shares) | shares | 846 |
Granted (in shares) | shares | 0 |
Exercised/released (in shares) | shares | (12) |
Forfeited/expired (in shares) | shares | (13) |
Balance at the end (in shares) | shares | 821 |
Weighted Average Exercise Price | |
Balance at the beginning (in dollars per share) | $ / shares | $ 20.05 |
Granted (in dollars per share) | $ / shares | 0 |
Exercised/released (in dollars per share) | $ / shares | 22.84 |
Forfeited/expired (in dollars per share) | $ / shares | 18 |
Balance at the end (in dollars per share) | $ / shares | $ 20.04 |
Performance-Based Restricted Stock Awards and Units | |
Number of Shares | |
Balance at the beginning (in shares) | shares | 210 |
Granted (in shares) | shares | 113 |
Exercised/released (in shares) | shares | 0 |
Forfeited/expired (in shares) | shares | (30) |
Balance at the end (in shares) | shares | 293 |
Weighted Average Grant Date Fair Value | |
Balance at the beginning (in dollars per share) | $ / shares | $ 48.64 |
Granted (in dollars per share) | $ / shares | 64.48 |
Exercised/released (in dollars per share) | $ / shares | 0 |
Forfeited/expired (in dollars per share) | $ / shares | 57.50 |
Balance at the end (in dollars per share) | $ / shares | $ 53.84 |
Restricted Stock Units, Restricted Stock Awards, and Deferred Stock Units | |
Number of Shares | |
Balance at the beginning (in shares) | shares | 433 |
Granted (in shares) | shares | 469 |
Exercised/released (in shares) | shares | (217) |
Forfeited/expired (in shares) | shares | (68) |
Balance at the end (in shares) | shares | 617 |
Weighted Average Grant Date Fair Value | |
Balance at the beginning (in dollars per share) | $ / shares | $ 55.54 |
Granted (in dollars per share) | $ / shares | 54.44 |
Exercised/released (in dollars per share) | $ / shares | 51.24 |
Forfeited/expired (in dollars per share) | $ / shares | 62.88 |
Balance at the end (in dollars per share) | $ / shares | $ 55.41 |
EARNINGS PER SHARE - Earnings P
EARNINGS PER SHARE - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 45,520 | $ 52,967 | $ 117,431 | $ 139,721 |
Weighted-average common shares outstanding—basic | 86,208 | 87,526 | 86,580 | 87,343 |
Effect of dilutive securities (in shares) | 623 | 1,224 | 725 | 1,293 |
Weighted-average common shares outstanding—diluted | 86,831 | 88,750 | 87,305 | 88,636 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.53 | $ 0.61 | $ 1.36 | $ 1.60 |
Diluted (in dollars per share) | $ 0.52 | $ 0.60 | $ 1.35 | $ 1.58 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from computation of diluted earnings per share (less than) | 0.5 | 0 | 0.4 | 0.1 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 02, 2022 | Oct. 01, 2022 | Oct. 02, 2021 | Feb. 27, 2022 | |
Equity [Abstract] | ||||
Stock repurchase program, authorized amount | $ 100,000,000 | |||
Shares repurchased (in shares) | 1,676,551 | |||
Cash paid for repurchase of common stock | $ 100,000,000 | $ 100,025,000 | $ 0 | |
Treasury stock acquired, average cost per share (in dollars per share) | $ 59.66 |