COVER PAGE
COVER PAGE - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 02, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 $0.01 | |
Trading Symbol | YETI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 86,852,881 | |
Entity Central Index Key | 0001670592 | |
Current Fiscal Year End Date | --12-30 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 281,360 | $ 234,741 |
Accounts receivable, net | 127,896 | 79,446 |
Inventory | 341,348 | 371,412 |
Prepaid expenses and other current assets | 40,728 | 33,321 |
Total current assets | 791,332 | 718,920 |
Property and equipment, net | 132,215 | 124,587 |
Operating lease right-of-use assets | 60,376 | 55,406 |
Goodwill | 54,293 | 54,293 |
Intangible assets, net | 114,140 | 99,429 |
Other assets | 3,526 | 24,130 |
Total assets | 1,155,882 | 1,076,765 |
Current liabilities | ||
Accounts payable | 179,086 | 140,818 |
Accrued expenses and other current liabilities | 130,333 | 211,399 |
Taxes payable | 11,962 | 15,289 |
Accrued payroll and related costs | 19,570 | 4,847 |
Current operating lease liabilities | 13,366 | 12,076 |
Current maturities of long-term debt | 6,512 | 24,611 |
Total current liabilities | 360,829 | 409,040 |
Long-term debt, net of current portion | 79,529 | 71,741 |
Operating lease liabilities, non-current | 60,212 | 55,649 |
Other liabilities | 16,527 | 13,858 |
Total liabilities | 517,097 | 550,288 |
Commitments and contingencies (Note 10) | ||
Stockholders’ Equity | ||
Common stock, par value $0.01; 600,000,000 shares authorized; 88,523,065 and 86,846,514 shares issued and outstanding at September 30, 2023, respectively, and 88,107,787 and 86,431,236 shares issued and outstanding at December 31, 2022, respectively | 885 | 881 |
Treasury stock, at cost; 1,676,551 shares | (100,025) | (100,025) |
Preferred stock, par value $0.01; 30,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Additional paid-in capital | 378,556 | 357,490 |
Retained earnings | 359,843 | 268,551 |
Accumulated other comprehensive loss | (474) | (420) |
Total stockholders’ equity | 638,785 | 526,477 |
Total liabilities and stockholders’ equity | $ 1,155,882 | $ 1,076,765 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 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) | 88,523,065 | 88,107,787 |
Common stock, outstanding (in shares) | 86,846,514 | 86,431,236 |
Treasury stock, shares (in shares) | 1,676,551 | 1,676,551 |
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 | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Income Statement [Abstract] | ||||
Net sales | $ 433,561 | $ 433,556 | $ 1,138,920 | $ 1,147,226 |
Cost of goods sold | 182,310 | 211,149 | 510,961 | 550,860 |
Gross profit | 251,251 | 222,407 | 627,959 | 596,366 |
Selling, general, and administrative expenses | 189,374 | 153,940 | 500,653 | 426,263 |
Operating income | 61,877 | 68,467 | 127,306 | 170,103 |
Interest expense, net | (285) | (1,495) | (1,610) | (3,221) |
Other expense | (4,032) | (7,281) | (2,782) | (12,202) |
Income before income taxes | 57,560 | 59,691 | 122,914 | 154,680 |
Income tax expense | (14,903) | (14,171) | (31,622) | (37,249) |
Net income | $ 42,657 | $ 45,520 | $ 91,292 | $ 117,431 |
Net income per share | ||||
Basic (in dollars per share) | $ 0.49 | $ 0.53 | $ 1.05 | $ 1.36 |
Diluted (in dollars per share) | $ 0.49 | $ 0.52 | $ 1.05 | $ 1.35 |
Weighted-average common shares outstanding | ||||
Basic (in shares) | 86,783 | 86,208 | 86,663 | 86,580 |
Diluted (in shares) | 87,589 | 86,831 | 87,290 | 87,305 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 42,657 | $ 45,520 | $ 91,292 | $ 117,431 |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | 1,713 | 921 | (54) | 2,132 |
Total comprehensive income | $ 44,370 | $ 46,441 | $ 91,238 | $ 119,563 |
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 Loss |
Balance at beginning of the period (shares) at Jan. 01, 2022 | 87,727,000 | |||||
Balance at beginning of the period at Jan. 01, 2022 | $ 517,823 | $ 877 | $ 337,735 | $ 0 | $ 178,858 | $ 353 |
Balance at beginning of the period (shares) at Jan. 01, 2022 | 0 | |||||
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 at Oct. 01, 2022 | 550,661 | $ 879 | 351,033 | $ (100,025) | 296,289 | 2,485 |
Balance at end of the period (shares) at Oct. 01, 2022 | (1,677,000) | |||||
Balance at beginning of the period (shares) at Jul. 02, 2022 | 87,851,000 | |||||
Balance at beginning of the period at Jul. 02, 2022 | 499,861 | $ 878 | 346,675 | $ (100,025) | 250,769 | 1,564 |
Balance at beginning of the period (shares) at Jul. 02, 2022 | (1,677,000) | |||||
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 at Oct. 01, 2022 | 550,661 | $ 879 | 351,033 | $ (100,025) | 296,289 | 2,485 |
Balance at end of the period (shares) at Oct. 01, 2022 | (1,677,000) | |||||
Balance at beginning of the period (shares) at Dec. 31, 2022 | 88,108,000 | |||||
Balance at beginning of the period at Dec. 31, 2022 | $ 526,477 | $ 881 | 357,490 | $ (100,025) | 268,551 | (420) |
Balance at beginning of the period (shares) at Dec. 31, 2022 | (1,676,551) | (1,677,000) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | $ 21,918 | 21,918 | ||||
Common stock issued under employee benefit plans (in shares) | 475,000 | |||||
Common stock issued under employee benefit plans | 1,573 | $ 4 | 1,569 | |||
Common stock withheld related to net share settlement of stock-based compensation (in shares) | (60,000) | |||||
Common stock withheld related to net share settlement of stock-based compensation | (2,421) | (2,421) | ||||
Other comprehensive income (loss) | (54) | (54) | ||||
Net income | 91,292 | 91,292 | ||||
Balance at end of the period (shares) at Sep. 30, 2023 | 88,523,000 | |||||
Balance at end of the period at Sep. 30, 2023 | $ 638,785 | $ 885 | 378,556 | $ (100,025) | 359,843 | (474) |
Balance at end of the period (shares) at Sep. 30, 2023 | (1,676,551) | (1,677,000) | ||||
Balance at beginning of the period (shares) at Jul. 01, 2023 | 88,407,000 | |||||
Balance at beginning of the period at Jul. 01, 2023 | $ 587,206 | $ 884 | 371,348 | $ (100,025) | 317,186 | (2,187) |
Balance at beginning of the period (shares) at Jul. 01, 2023 | (1,677,000) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 7,805 | 7,805 | ||||
Common stock issued under employee benefit plans (in shares) | 129,000 | |||||
Common stock issued under employee benefit plans | 0 | $ 1 | (1) | |||
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 | (596) | (596) | ||||
Other comprehensive income (loss) | 1,713 | 1,713 | ||||
Net income | 42,657 | 42,657 | ||||
Balance at end of the period (shares) at Sep. 30, 2023 | 88,523,000 | |||||
Balance at end of the period at Sep. 30, 2023 | $ 638,785 | $ 885 | $ 378,556 | $ (100,025) | $ 359,843 | $ (474) |
Balance at end of the period (shares) at Sep. 30, 2023 | (1,676,551) | (1,677,000) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Cash Flows from Operating Activities: | ||
Net income | $ 91,292 | $ 117,431 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 34,391 | 28,504 |
Amortization of deferred financing fees | 441 | 458 |
Stock-based compensation | 21,918 | 14,883 |
Deferred income taxes | 20,699 | (1,138) |
Impairment of long-lived assets | 1,963 | 181 |
Loss on modification and extinguishment of debt | 330 | 0 |
Product recalls | 8,538 | 0 |
Other | 239 | 10,215 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (48,836) | 14,679 |
Inventory | 28,180 | (127,362) |
Other current assets | (6,505) | (2,944) |
Accounts payable and accrued expenses | (36,288) | (121,515) |
Taxes payable | (3,323) | (6,773) |
Other | 1,730 | 1,166 |
Net cash provided by (used in) operating activities | 114,769 | (72,215) |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (38,983) | (32,493) |
Additions of intangibles, net | (19,280) | (7,924) |
Net cash used in investing activities | (58,263) | (40,417) |
Cash Flows from Financing Activities: | ||
Repayments of long-term debt | (6,680) | (16,875) |
Payments of deferred financing fees | (2,824) | 0 |
Taxes paid in connection with employee stock transactions | (2,421) | (1,861) |
Proceeds from employee stock transactions | 1,573 | 278 |
Finance lease principal payment | (1,579) | (1,730) |
Repurchase of common stock | 0 | (100,025) |
Net cash used in financing activities | (11,931) | (120,213) |
Effect of exchange rate changes on cash | 2,044 | (1,581) |
Net increase (decrease) in cash | 46,619 | (234,426) |
Cash, beginning of period | 234,741 | 312,189 |
Cash, end of period | $ 281,360 | $ 77,763 |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
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,” “YETI,” 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 balances and 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. The consolidated balance sheet as of December 31, 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 December 31, 2022, which should be read in conjunction with these unaudited consolidated financial statements and notes thereto. 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- or 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 30, 2023 (“2023”) is a 52-week period. The first quarter of our fiscal year 2023 ended on April 1, 2023, the second quarter ended on July 1, 2023, and the third quarter ended on September 30, 2023. Our fiscal year ended December 31, 2022 (“2022”) 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 September 30, 2023 and October 1, 2022. 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 $0.5 million as of September 30, 2023 and $0.7 million as of December 31, 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). At September 30, 2023 and December 31, 2022, inventory reserves were $2.9 million and $37.3 million, respectively. The balance at December 31, 2022 primarily consisted of reserves related to unsalable inventory on-hand in connection with our voluntary recalls. The decrease in the inventory reserve is primarily related to the physical scrapping of the unsalable inventory. See Note 10 for further discussion of our voluntary recalls. 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 the Secured Overnight Financing Rate (“SOFR”). Supplier Finance Program Obligations We have a supplier finance program (“SFP”) with a financial institution which provides certain suppliers the option, at their sole discretion, to participate in the program and sell their receivables due from us for early payment. Participating eligible suppliers negotiate the terms directly with the financial institution and we have no involvement in establishing those terms nor are we a party to these agreements. Our payments associated with the invoices from the suppliers participating in the SFP are made to the financial institution according to the original invoice. The outstanding payment obligations under the SFP program recorded within accounts payable in our condensed consolidated balance sheets at September 30, 2023 and December 31, 2022 were $60.9 million and $70.7 million, respectively. Recently Adopted Accounting Pronouncements 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 London Interbank Offering Rate (“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. We adopted this ASU in the first quarter of 2023. Adoption of this new standard did not have a material impact on our consolidated financial statements. 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. We adopted provisions of this ASU in the first quarter of 2023, with the exception of the amendment on rollforward information, which will be adopted in the first quarter of 2024. Adoption of the new standard did not have a material impact on our consolidated financial statements. In July 2023, the FASB issued ASU 2023-03 to amend various SEC paragraphs in the Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC. The ASU does not provide any new guidance so there is no transition or effective dates associated with it, resulting in the ASU being effective upon issuance. Consequently, the adoption of this ASU did not have a material impact on our consolidated financial statements. Recent Accounting Guidance Not Yet Adopted No other new accounting pronouncements issued or effective as of September 30, 2023 have had, or are expected to have, a material impact on our consolidated financial statements. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2023 | |
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 credit losses. 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 include advance cash deposits received from customers for certain customized product orders and unredeemed gift card liabilities. As products are shipped and control transfers, we recognize contract liabilities as revenue. During the second quarter of 2023, we began issuing gift cards as remedies in connection with our voluntary recalls. We recognize sales from gift cards as they are redeemed for products. As of September 30, 2023, $7.8 million of our contract liabilities represented unredeemed gift card liabilities. See Note 10 for further discussion of our recalls. The following table provides information about accounts receivable and contract liabilities at the periods indicated (in thousands): September 30, December 31, Accounts receivable, net $ 127,896 $ 79,446 Contract liabilities $ (17,004) $ (7,702) For the nine months ended September 30, 2023, we recognized $7.7 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 September 30, 2023 (1) October 1, September 30, 2023 (1) October 1, Net Sales by Channel Wholesale $ 174,062 $ 206,153 $ 486,066 $ 539,014 Direct-to-consumer 259,499 227,403 652,854 608,212 Total net sales $ 433,561 $ 433,556 $ 1,138,920 $ 1,147,226 Net Sales by Category Coolers & Equipment $ 171,547 $ 185,657 $ 432,511 $ 482,030 Drinkware 253,274 238,987 676,978 639,055 Other 8,740 8,912 29,431 26,141 Total net sales $ 433,561 $ 433,556 $ 1,138,920 $ 1,147,226 Net Sales by Geographic Region United States $ 365,695 $ 377,067 $ 964,569 $ 1,005,238 International 67,866 56,489 174,351 141,988 Total net sales $ 433,561 $ 433,556 $ 1,138,920 $ 1,147,226 _________________________ (1) Includes an unfavorable impact from the recall reserve adjustment. See Note 10 for further discussion of our recalls. For the three and nine months ended September 30, 2023, no single customer represented over 10% of gross sales. For both the three and nine months ended October 1, 2022, our largest single customer represented approximately 12% of gross sales. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets include the following (in thousands): September 30, December 31, Prepaid expenses $ 20,767 $ 18,149 Prepaid taxes 14,807 10,222 Other 5,154 4,950 Total prepaid expenses and other current assets $ 40,728 $ 33,321 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following at the dates indicated (in thousands): September 30, 2023 December 31, 2022 Product recall reserves (1) $ 25,930 $ 94,807 Accrued freight and other operating expenses 33,868 56,354 Contract liabilities 17,004 7,702 Customer discounts, allowances, and returns 13,631 9,948 Advertising and marketing 11,505 11,547 Warranty reserve 9,783 9,996 Interest payable 164 941 Accrued capital expenditures 844 895 Other 17,604 19,209 Total accrued expenses and other current liabilities $ 130,333 $ 211,399 ___________________ (1) See Note 10 for further discussion of our product recall reserves. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following at the dates indicated (in thousands): September 30, December 31, Term Loan A, due 2028 $ 83,320 $ 90,000 Finance lease debt 5,731 7,309 Total debt 89,051 97,309 Current maturities of long-term debt (4,219) (22,500) Current maturities of finance lease debt (2,293) (2,111) Total long-term debt 82,539 72,698 Unamortized deferred financing fees (3,010) (957) Total long-term debt, net $ 79,529 $ 71,741 At September 30, 2023, the future maturities of principal amounts of our debt obligations, excluding finance lease obligations, for the next five years and in total consisted of the following (in thousands): Amount 2023 1,054 2024 4,219 2025 4,219 2026 4,219 2027 4,219 2028 65,390 Total $ 83,320 Credit Facility On March 31, 2023, we amended the Credit Facility, leaving the material terms of the Credit Facility substantially unchanged, with the exception of certain changes to implement the replacement of LIBOR with SOFR. On June 22, 2023, we further amended the Credit Facility, which extended the maturity date of both the term loan (the “Term Loan A”) and the revolving credit facility (the “Revolving Credit Facility”) from December 17, 2024 to June 22, 2028; refinanced and replaced the existing Term Loan A in full with a new $84.4 million Term Loan A; and increased the commitments under the Revolving Credit Facility from $150.0 million to $300.0 million. As a result of the amendment, we recognized a $0.3 million loss on modification and extinguishment of debt and we capitalized $2.8 million of new lender and third-party fees in the second quarter of 2023. Pursuant to the agreement governing the Credit Facility (the “Credit Agreement”), we are required to make quarterly principal payments equal to 1.25% of the then-outstanding aggregate principal amount of the Term Loan A. As amended, the scheduled quarterly principal payments begin on September 30, 2023 and are due each December 31, March 31, June 30 and September 30 thereafter, with the remaining principal balance due on the maturity date. Borrowings under the Term Loan A and the Revolving Credit Facility bear interest at Term SOFR or the Alternate Base Rate (each as defined in the Credit Agreement) plus an applicable rate ranging from 1.75% to 2.50% for Term SOFR-based loans and from 0.75% to 1.50% for Alternate Base Rate-based loans, depending upon our total Net Leverage Ratio (as defined in the Credit Agreement). |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax expense was $14.9 million and $14.2 million for the three months ended September 30, 2023 and October 1, 2022, respectively. The effective tax rate for the three months ended September 30, 2023 was 26% compared to 24% for the three months ended October 1, 2022. The increase in both the income tax expense and the effective tax rate was primarily due to a discrete tax expense related to a change in the reserve estimate for an uncertain tax position in the three months ended September 30, 2023. Income tax expense was $31.6 million and $37.2 million for the nine months ended September 30, 2023 and October 1, 2022, respectively. The decrease in income tax expense was due to lower income before income taxes. The effective tax rate for the nine months ended September 30, 2023 was 26%, compared to 24% for the nine months ended October 1, 2022. The higher effective tax rate was primarily due to discrete tax expenses related to the vesting of certain stock-based compensation and a change in the reserve estimate for an uncertain tax position in the nine months ended September 30, 2023. Deferred tax assets were $2.6 million as of September 30, 2023 and $23.2 million as of December 31, 2022, which is presented in other assets 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 |
Sep. 30, 2023 | |
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 of 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 $7.8 million and $4.7 million for the three months ended September 30, 2023 and October 1, 2022, respectively. For the nine months ended September 30, 2023 and October 1, 2022, we recognized stock-based compensation expense of $21.9 million and $14.9 million, respectively. At September 30, 2023, total unrecognized stock-based compensation expense of $56.7 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 September 30, 2023 is summarized below (in thousands, except per share data): Stock Options Performance-Based 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, December 31, 2022 642 $ 20.10 233 $ 53.63 812 $ 51.28 Granted — — 279 38.59 962 38.50 Exercised/released (64) 24.41 (99) 32.84 (312) 52.90 Forfeited/expired — — (15) 64.98 (112) 46.45 Balance, September 30, 2023 578 $ 19.64 398 $ 48.14 1,350 $ 42.22 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, October 1, September 30, October 1, Net income $ 42,657 $ 45,520 $ 91,292 $ 117,431 Weighted-average common shares outstanding—basic 86,783 86,208 86,663 86,580 Effect of dilutive securities 806 623 627 725 Weighted-average common shares outstanding—diluted 87,589 86,831 87,290 87,305 Earnings per share Basic $ 0.49 $ 0.53 $ 1.05 $ 1.36 Diluted $ 0.49 $ 0.52 $ 1.05 $ 1.35 Effects of potentially dilutive securities are presented only in periods in which they are dilutive. For the three and nine months ended September 30, 2023, outstanding stock-based awards representing 0.1 million and 0.2 million shares of common stock, respectively, were excluded from the calculation of diluted earnings per share, because their effect would be anti-dilutive. For the three and nine months ended October 1, 2022, outstanding stock-based awards representing 0.5 million and 0.4 million shares of common stock, respectively, were excluded from the calculation of diluted earnings per share, because their effect would be anti-dilutive. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
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 under the program. All of the common stock repurchased is held as treasury stock. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
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. Product Recall Reserves In January 2023, we notified the U.S. Consumer Product Safety Commission (“CPSC”) of a potential safety concern regarding the magnet-lined closures of our Hopper® M30 Soft Cooler, Hopper® M20 Soft Backpack Cooler, and SideKick Dry® gear case (the “affected products”) and initiated a global stop sale of the affected products. In February 2023, we proposed a voluntary recall of the affected products to the CPSC, and other relevant global regulatory authorities. Accordingly, we established a reserve for expected future returns and the estimated cost of recall remedies for consumers with affected products on our consolidated balance sheet as of December 31, 2022. In March 2023, we announced separate, voluntary recalls of the affected products in collaboration with the CPSC. During the second quarter of 2023, we began processing claims and returns, and based on such experience and observed trends, we reevaluated our prior assumptions and adjusted our estimated product recall reserve. These trends included higher than anticipated elections by consumers to receive gift cards in lieu of product replacement remedies, variations in individual product participation rates, and lower logistics costs than previously estimated. As a result, we updated our initial recall reserve assumptions, which increased the estimated recall expense reserve by $8.5 million during the three months ended July 1, 2023. However, the overall consumer recall participation rate has remained consistent with our expectations. The product recalls, which includes the recall reserve adjustment and other incurred costs, had the following effect on our income before income taxes (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2023 Decrease to net sales (1) $ (18) $ (24,524) Decrease to cost of goods sold (2) 843 7,148 Increase (decrease) to gross profit 825 (17,376) Decrease to selling, general and administrative expenses (3) — 10,549 Increase (decrease) to income before income taxes $ 825 $ (6,827) _________________________ (1) Primarily reflects the unfavorable impact of the recall reserve adjustment related to higher estimated future recall remedies (i.e., estimated gift card elections). Of the total net sales impact, $8.1 million and $16.4 million was allocated to our DTC and wholesale channels, respectively, for the nine months ended September 30, 2023. These amounts were allocated based on the historical channel sell-in basis of the affected products. (2) For the three months ended September 30, 2023, reflects a benefit of $0.8 million related to lower than anticipated recall-related costs. For the nine months ended September 30, 2023, reflects favorable impacts of $5.0 million primarily due to the favorable impact of the recall reserve adjustment related to lower estimated costs of future product replacement remedy elections and logistics costs, $1.3 million from an inventory reserve adjustment, and $0.8 million related to lower recall-related costs. (3) Primarily reflects the favorable impact of the recall reserve adjustment related to lower estimated other recall-related costs, including logistics costs. The reserve for the estimated product recall expenses is included within accrued expenses and other current liabilities on our consolidated balance sheets. Estimating the cost of recall remedies required significant judgment and is primarily based on i) expected consumer participation rates; and ii) the estimated costs of the consumer’s elected remedy in the recalls, including either the estimated cost of offered product replacements or the elections to receive gift cards, logistics costs, and other recall-related costs. We will reevaluate these assumptions each period, and the related reserves may be adjusted when factors indicate that the reserve is either not sufficient to cover or exceeds the estimated product recall costs. The following table summarizes the activity of the reserve for the estimated product recall expenses (in thousands): September 30, 2023 Balance, January 1, 2023 $ 94,807 Actual product refunds, replacements and recall-related costs (50,707) Gift card issuances (1) (26,685) Reserve adjustment 8,515 Balance, September 30, 2023 $ 25,930 _________________________ (1) For the three and nine months ended September 30, 2023, we recognized net sales of $6.3 million and $18.8 million, respectively, from redeemed recall-related gift cards. As of September 30, 2023, we had $7.8 million in unredeemed recall-related gift card liabilities, which are included in contract liabilities within accrued expenses and other current liabilities on our consolidated balance sheet. The ultimate impact from the recalls may differ materially from our estimates, and may harm our business, financial condition, and results of operations. See Part I, Item 1A “Risk Factors - Risks Related to Our Business, Operations and Industry.” |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Pay vs Performance Disclosure | ||||
Net income | $ 42,657 | $ 45,520 | $ 91,292 | $ 117,431 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
ORGANIZATION AND SIGNIFICANT _2
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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 balances and 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. The consolidated balance sheet as of December 31, 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 December 31, 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 | InventoryInventories 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 the Secured Overnight Financing Rate (“SOFR”). |
Recently Adopted Accounting Pronouncements and Recent Accounting Guidance Not Yet Adopted | Recently Adopted Accounting Pronouncements 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 London Interbank Offering Rate (“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. We adopted this ASU in the first quarter of 2023. Adoption of this new standard did not have a material impact on our consolidated financial statements. 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. We adopted provisions of this ASU in the first quarter of 2023, with the exception of the amendment on rollforward information, which will be adopted in the first quarter of 2024. Adoption of the new standard did not have a material impact on our consolidated financial statements. In July 2023, the FASB issued ASU 2023-03 to amend various SEC paragraphs in the Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC. The ASU does not provide any new guidance so there is no transition or effective dates associated with it, resulting in the ASU being effective upon issuance. Consequently, the adoption of this ASU did not have a material impact on our consolidated financial statements. Recent Accounting Guidance Not Yet Adopted No other new accounting pronouncements issued or effective as of September 30, 2023 have had, or are expected to have, a material impact on our consolidated financial statements. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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): September 30, December 31, Accounts receivable, net $ 127,896 $ 79,446 Contract liabilities $ (17,004) $ (7,702) |
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 September 30, 2023 (1) October 1, September 30, 2023 (1) October 1, Net Sales by Channel Wholesale $ 174,062 $ 206,153 $ 486,066 $ 539,014 Direct-to-consumer 259,499 227,403 652,854 608,212 Total net sales $ 433,561 $ 433,556 $ 1,138,920 $ 1,147,226 Net Sales by Category Coolers & Equipment $ 171,547 $ 185,657 $ 432,511 $ 482,030 Drinkware 253,274 238,987 676,978 639,055 Other 8,740 8,912 29,431 26,141 Total net sales $ 433,561 $ 433,556 $ 1,138,920 $ 1,147,226 Net Sales by Geographic Region United States $ 365,695 $ 377,067 $ 964,569 $ 1,005,238 International 67,866 56,489 174,351 141,988 Total net sales $ 433,561 $ 433,556 $ 1,138,920 $ 1,147,226 _________________________ (1) Includes an unfavorable impact from the recall reserve adjustment. See Note 10 for further discussion of our recalls. |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets include the following (in thousands): September 30, December 31, Prepaid expenses $ 20,767 $ 18,149 Prepaid taxes 14,807 10,222 Other 5,154 4,950 Total prepaid expenses and other current assets $ 40,728 $ 33,321 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following at the dates indicated (in thousands): September 30, 2023 December 31, 2022 Product recall reserves (1) $ 25,930 $ 94,807 Accrued freight and other operating expenses 33,868 56,354 Contract liabilities 17,004 7,702 Customer discounts, allowances, and returns 13,631 9,948 Advertising and marketing 11,505 11,547 Warranty reserve 9,783 9,996 Interest payable 164 941 Accrued capital expenditures 844 895 Other 17,604 19,209 Total accrued expenses and other current liabilities $ 130,333 $ 211,399 ___________________ (1) See Note 10 for further discussion of our product recall reserves. |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | Long-term debt consisted of the following at the dates indicated (in thousands): September 30, December 31, Term Loan A, due 2028 $ 83,320 $ 90,000 Finance lease debt 5,731 7,309 Total debt 89,051 97,309 Current maturities of long-term debt (4,219) (22,500) Current maturities of finance lease debt (2,293) (2,111) Total long-term debt 82,539 72,698 Unamortized deferred financing fees (3,010) (957) Total long-term debt, net $ 79,529 $ 71,741 |
Schedule of Maturities of Long-Term Debt | At September 30, 2023, the future maturities of principal amounts of our debt obligations, excluding finance lease obligations, for the next five years and in total consisted of the following (in thousands): Amount 2023 1,054 2024 4,219 2025 4,219 2026 4,219 2027 4,219 2028 65,390 Total $ 83,320 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Activity | Stock-based activity for the nine months ended September 30, 2023 is summarized below (in thousands, except per share data): Stock Options Performance-Based 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, December 31, 2022 642 $ 20.10 233 $ 53.63 812 $ 51.28 Granted — — 279 38.59 962 38.50 Exercised/released (64) 24.41 (99) 32.84 (312) 52.90 Forfeited/expired — — (15) 64.98 (112) 46.45 Balance, September 30, 2023 578 $ 19.64 398 $ 48.14 1,350 $ 42.22 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, October 1, September 30, October 1, Net income $ 42,657 $ 45,520 $ 91,292 $ 117,431 Weighted-average common shares outstanding—basic 86,783 86,208 86,663 86,580 Effect of dilutive securities 806 623 627 725 Weighted-average common shares outstanding—diluted 87,589 86,831 87,290 87,305 Earnings per share Basic $ 0.49 $ 0.53 $ 1.05 $ 1.36 Diluted $ 0.49 $ 0.52 $ 1.05 $ 1.35 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Recall Reserve Adjustment of Estimated Product Recall Expenses | The product recalls, which includes the recall reserve adjustment and other incurred costs, had the following effect on our income before income taxes (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2023 Decrease to net sales (1) $ (18) $ (24,524) Decrease to cost of goods sold (2) 843 7,148 Increase (decrease) to gross profit 825 (17,376) Decrease to selling, general and administrative expenses (3) — 10,549 Increase (decrease) to income before income taxes $ 825 $ (6,827) _________________________ (1) Primarily reflects the unfavorable impact of the recall reserve adjustment related to higher estimated future recall remedies (i.e., estimated gift card elections). Of the total net sales impact, $8.1 million and $16.4 million was allocated to our DTC and wholesale channels, respectively, for the nine months ended September 30, 2023. These amounts were allocated based on the historical channel sell-in basis of the affected products. (2) For the three months ended September 30, 2023, reflects a benefit of $0.8 million related to lower than anticipated recall-related costs. For the nine months ended September 30, 2023, reflects favorable impacts of $5.0 million primarily due to the favorable impact of the recall reserve adjustment related to lower estimated costs of future product replacement remedy elections and logistics costs, $1.3 million from an inventory reserve adjustment, and $0.8 million related to lower recall-related costs. |
Summary of Reserve for the Estimated Product Recall Expenses | The following table summarizes the activity of the reserve for the estimated product recall expenses (in thousands): September 30, 2023 Balance, January 1, 2023 $ 94,807 Actual product refunds, replacements and recall-related costs (50,707) Gift card issuances (1) (26,685) Reserve adjustment 8,515 Balance, September 30, 2023 $ 25,930 _________________________ (1) For the three and nine months ended September 30, 2023, we recognized net sales of $6.3 million and $18.8 million, respectively, from redeemed recall-related gift cards. As of September 30, 2023, we had $7.8 million in unredeemed recall-related gift card liabilities, which are included in contract liabilities within accrued expenses and other current liabilities on our consolidated balance sheet. |
ORGANIZATION AND SIGNIFICANT _3
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Allowance for credit losses | $ 0.5 | $ 0.7 |
Inventory reserves | 2.9 | 37.3 |
Payment obligations | $ 60.9 | $ 70.7 |
Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable uncollateralized customer obligations trading days | 30 days | |
Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable uncollateralized customer obligations trading days | 90 days |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Contract with customer, liability | $ 17,004 | $ 7,702 | ||
Contract with customer liability revenue recognized | (7,700) | |||
Largest Customer | Sales Revenue | Customer Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Customer concentration percentage | 12% | 12% | ||
Unredeemed Gift Cards | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract with customer, liability | $ 7,800 |
REVENUE - Schedule of Accounts
REVENUE - Schedule of Accounts Receivable and Contract Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 127,896 | $ 79,446 |
Contract liabilities | $ (17,004) | $ (7,702) |
REVENUE - Schedule of Disaggreg
REVENUE - Schedule of Disaggregated Net Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 433,561 | $ 433,556 | $ 1,138,920 | $ 1,147,226 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 365,695 | 377,067 | 964,569 | 1,005,238 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 67,866 | 56,489 | 174,351 | 141,988 |
Coolers & Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 171,547 | 185,657 | 432,511 | 482,030 |
Drinkware | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 253,274 | 238,987 | 676,978 | 639,055 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,740 | 8,912 | 29,431 | 26,141 |
Wholesale | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 174,062 | 206,153 | 486,066 | 539,014 |
Direct-to-consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 259,499 | $ 227,403 | $ 652,854 | $ 608,212 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 20,767 | $ 18,149 |
Prepaid taxes | 14,807 | 10,222 |
Other | 5,154 | 4,950 |
Total prepaid expenses and other current assets | $ 40,728 | $ 33,321 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Product recall reserves | $ 25,930 | $ 94,807 |
Accrued freight and other operating expenses | 33,868 | 56,354 |
Contract liabilities | 17,004 | 7,702 |
Customer discounts, allowances, and returns | 13,631 | 9,948 |
Advertising and marketing | 11,505 | 11,547 |
Warranty reserve | 9,783 | 9,996 |
Interest payable | 164 | 941 |
Accrued capital expenditures | 844 | 895 |
Other | 17,604 | 19,209 |
Total accrued expenses and other current liabilities | $ 130,333 | $ 211,399 |
LONG-TERM DEBT - Schedule of Lo
LONG-TERM DEBT - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Term Loan | ||
Term Loan A, due 2028 | $ 83,320 | |
Finance lease debt | 5,731 | $ 7,309 |
Total debt | 89,051 | 97,309 |
Current maturities of long-term debt | (4,219) | (22,500) |
Current maturities of finance lease debt | (2,293) | (2,111) |
Total long-term debt | 82,539 | 72,698 |
Unamortized deferred financing fees | (3,010) | (957) |
Total long-term debt, net | 79,529 | 71,741 |
Term Loan A, due 2028 | Loans Payable | ||
Term Loan | ||
Term Loan A, due 2028 | $ 83,320 | $ 90,000 |
LONG-TERM DEBT - Schedule of Ma
LONG-TERM DEBT - Schedule of Maturities of Long-Term Debt (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 1,054 |
2024 | 4,219 |
2025 | 4,219 |
2026 | 4,219 |
2027 | 4,219 |
2028 | 65,390 |
Total | $ 83,320 |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Jun. 22, 2023 | Sep. 30, 2023 | Oct. 01, 2022 | Jun. 21, 2023 | |
Debt Instrument [Line Items] | ||||
Loss on modification, or extinguishment of debt | $ 330 | $ 0 | ||
Term Loan A | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 84,400 | |||
Loss on modification, or extinguishment of debt | 300 | |||
Capitalized costs of new lender and third-party fees | $ 2,800 | |||
Term Loan A | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Periodic payment interest (as a percent) | 1.25% | |||
Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 300,000 | $ 150,000 | ||
Revolving Credit Facility | Line of Credit | Credit Agreement | Secured Overnight Financing Rate (SOFR) | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.75% | |||
Revolving Credit Facility | Line of Credit | Credit Agreement | Secured Overnight Financing Rate (SOFR) | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 2.50% | |||
Revolving Credit Facility | Line of Credit | Credit Agreement | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 0.75% | |||
Revolving Credit Facility | Line of Credit | Credit Agreement | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.50% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ 14,903 | $ 14,171 | $ 31,622 | $ 37,249 | |
Effective income tax rate | 26% | 24% | (26.00%) | (24.00%) | |
Deferred tax liabilities | $ 2,600 | $ 2,600 | $ 23,200 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||||
Recognized non-cash stock-based compensation expense | $ 7.8 | $ 4.7 | $ 21.9 | $ 14.9 |
Unrecognized non-cash stock-based compensation expense | $ 56.7 | $ 56.7 | ||
Weighted average period for recognition | 2 years 1 month 6 days |
STOCK-BASED COMPENSATION - Sche
STOCK-BASED COMPENSATION - Schedule of Stock-based Activity (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Stock Options | |
Number of Options | |
Balance at the beginning (in shares) | shares | 642 |
Granted (in shares) | shares | 0 |
Exercised/released (in shares) | shares | (64) |
Forfeited/expired (in shares) | shares | 0 |
Balance at the end (in shares) | shares | 578 |
Weighted Average Exercise Price | |
Balance at the beginning (in dollars per share) | $ / shares | $ 20.10 |
Granted (in dollars per share) | $ / shares | 0 |
Exercised/released (in dollars per share) | $ / shares | 24.41 |
Forfeited/expired (in dollars per share) | $ / shares | 0 |
Balance at the end (in dollars per share) | $ / shares | $ 19.64 |
Performance-Based Restricted Stock Awards and Units | |
Number of Shares | |
Balance at the beginning (in shares) | shares | 233 |
Granted (in shares) | shares | 279 |
Exercised/released (in shares) | shares | (99) |
Forfeited/expired (in shares) | shares | (15) |
Balance at the end (in shares) | shares | 398 |
Weighted Average Grant Date Fair Value | |
Balance at the beginning (in dollars per share) | $ / shares | $ 53.63 |
Granted (in dollars per share) | $ / shares | 38.59 |
Exercised/released (in dollars per share) | $ / shares | 32.84 |
Forfeited/expired (in dollars per share) | $ / shares | 64.98 |
Balance at the end (in dollars per share) | $ / shares | $ 48.14 |
Restricted Stock Units, Restricted Stock Awards, and Deferred Stock Units | |
Number of Shares | |
Balance at the beginning (in shares) | shares | 812 |
Granted (in shares) | shares | 962 |
Exercised/released (in shares) | shares | (312) |
Forfeited/expired (in shares) | shares | (112) |
Balance at the end (in shares) | shares | 1,350 |
Weighted Average Grant Date Fair Value | |
Balance at the beginning (in dollars per share) | $ / shares | $ 51.28 |
Granted (in dollars per share) | $ / shares | 38.50 |
Exercised/released (in dollars per share) | $ / shares | 52.90 |
Forfeited/expired (in dollars per share) | $ / shares | 46.45 |
Balance at the end (in dollars per share) | $ / shares | $ 42.22 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Reconciliation of Shares for Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 42,657 | $ 45,520 | $ 91,292 | $ 117,431 |
Weighted-average common shares outstanding—basic (in shares) | 86,783 | 86,208 | 86,663 | 86,580 |
Effect of dilutive securities (in shares) | 806 | 623 | 627 | 725 |
Weighted-average common shares outstanding—diluted (in shares) | 87,589 | 86,831 | 87,290 | 87,305 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.49 | $ 0.53 | $ 1.05 | $ 1.36 |
Diluted (in dollars per share) | $ 0.49 | $ 0.52 | $ 1.05 | $ 1.35 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from computation of diluted earnings per share (less than) | 0.1 | 0.5 | 0.2 | 0.4 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Apr. 02, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | 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 | $ 0 | $ 100,025,000 | |
Treasury stock acquired, average cost per share (in dollars per share) | $ 59.66 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Millions | 3 Months Ended |
Jul. 01, 2023 USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Increase of estimated recall expense reserve | $ 8.5 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Summary Of Recall Reserve Adjustment Of Estimated Product Recall Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | Dec. 31, 2022 | |
Other Commitments [Line Items] | |||||
Decrease to net sales | $ 433,561 | $ 433,556 | $ 1,138,920 | $ 1,147,226 | |
Decrease to cost of goods sold | (182,310) | (211,149) | (510,961) | (550,860) | |
Gross profit | 251,251 | 222,407 | 627,959 | 596,366 | |
Decrease to selling, general and administrative expenses | (189,374) | (153,940) | (500,653) | (426,263) | |
Income before income taxes | 57,560 | 59,691 | 122,914 | 154,680 | |
Inventory adjustment | (28,180) | 127,362 | |||
Inventory reserves | 2,900 | 2,900 | $ 37,300 | ||
Direct-to-consumer | |||||
Other Commitments [Line Items] | |||||
Decrease to net sales | 259,499 | 227,403 | 652,854 | 608,212 | |
Wholesale | |||||
Other Commitments [Line Items] | |||||
Decrease to net sales | 174,062 | $ 206,153 | 486,066 | $ 539,014 | |
Product Recall Adjustments | |||||
Other Commitments [Line Items] | |||||
Decrease to net sales | (18) | (24,524) | |||
Decrease to cost of goods sold | 843 | 7,148 | |||
Gross profit | 825 | (17,376) | |||
Decrease to selling, general and administrative expenses | 0 | 10,549 | |||
Income before income taxes | 825 | (6,827) | |||
Inventory adjustment | 800 | 5,000 | |||
Inventory reserves | $ 1,300 | 1,300 | |||
Product Recall Adjustments | Direct-to-consumer | |||||
Other Commitments [Line Items] | |||||
Decrease to net sales | (8,100) | ||||
Product Recall Adjustments | Wholesale | |||||
Other Commitments [Line Items] | |||||
Decrease to net sales | $ (16,400) |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Summary Of Reserve For The Estimated Product Recall Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Reserve For Product Returns [Roll Forward] | ||||
Beginning Balance | $ 94,807 | |||
Actual product refunds, replacements and recall-related costs | (50,707) | |||
Gift card issuances | (26,685) | |||
Reserve adjustment | 8,515 | |||
Ending Balance | $ 25,930 | 25,930 | ||
Other Commitments [Line Items] | ||||
Net sales | 433,561 | $ 433,556 | 1,138,920 | $ 1,147,226 |
Redeemed Gift Cards | ||||
Other Commitments [Line Items] | ||||
Net sales | $ 6,300 | 18,800 | ||
Unredeemed Gift Cards | ||||
Other Commitments [Line Items] | ||||
Net sales | $ 7,800 |