YETI Holdings Reports Q1 2026 Results: Full Earnings Call Transcript

YETI Holdings (NYSE:YETI) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more. The full earnings call is available at https://events.q4inc.com/attendee/323652074 Summary YETI Holdings reported Q1 2026 sales of $380.4 million, an 8.3% increase year-over-year, driven by strong demand across categories and channels. The company highlighted resilience and diversification in demand, particularly in drinkware and coolers, with drinkware achieving a second consecutive quarter of growth. International sales grew 9%, with strong demand despite some softness in corporate sales; international expansion remains a key priority. Wholesale sales surged by 19%, showcasing strong consumer demand and successful partnerships with retailers. YETI Holdings raised the lower end of its full-year sales growth expectation to 7-8%, with adjusted EPS guidance now reflecting a 14-17% increase. Operational highlights include robust innovation in product offerings and strategic international market entries, such as China and Korea planned for the second half of 2026. The company emphasized its brand strength, scalable product platforms, and a disciplined omnichannel model as durable competitive advantages. Full Transcript OPERATOR Good morning ladies and gentlemen and welcome to The YETI holdings first quarter 2026 earnings conference call. At this time, all lines are in a listen only mode. Following the presentation, we'll conduct a question and answer session. If you'd like to ask a question at that time, please press star 1 on your telephone keypad. If you'd like to withdraw your question, press star 2. Please limit yourself to one question and one follow up. This call is being recorded on Thursday, May 14, 2026. I would now like to turn the conference over to Arvind Bhatia, Head of Investor Relations at yeti. Please go ahead. Arvind Bhatia (Head of Investor Relations) Good morning and thank you for joining us to Discuss Yeti holdings first quarter fiscal 2026 results. Leading the call today will be Matt Reiches, President and CEO and Scott Bomar, CFO. Following our prepared remarks, we will open the call for your questions. Before we begin, we would like to remind you that some of the statements that we make today on this call may be considered forward looking and such forward looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. For more information, please refer to the risk factors detailed in our Most recently filed Form 10-K. We undertake no obligation to revise or update any forward looking statements made today as a result of new information, future events or otherwise, except as required by law. During our call today we will be discussing certain non-GAAP measures. We use non-GAAP measures in certain contexts as we believe they more accurately represent the true operational performance and underlying results of our business. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release or in the presentation posted this morning to the Investor Relations section of our website@yeti.com. I would now like to turn the call over to Matt. Matt Reiches (President and CEO) Thanks Arvind and good morning everyone. We appreciate you joining us today. Looking at our first quarter, we're very pleased with our performance, but Q1 reinforced something more fundamental about YETI: the earnings power of the model. Demand is more diversified, our platforms are scaling more efficiently, and our operating system continues to execute with discipline in a dynamic and often unpredictable environment. Importantly, we've entered the second quarter with global demand trends showing strength, continuing momentum from the last two quarters. Scott will walk through the financials and outlook in detail. So I'm going to focus my time on what matters most from an investor perspective. What is getting structurally better in the business, why our advantages are durable and defensible, and why we believe YETI is positioned to deliver sustained growth and compound value over time. I'll start with four key takeaways from Q1. First, demand for Yeti is resilient, diversified and increasingly repeatable. In the quarter we saw broad based strength across categories and channels. That diversification matters because it reduces reliance on any single product cycle or channel dynamic and allows us to invest consistently behind innovation, brand and capabilities without chasing short term volatility. Across our core product platforms of Drinkware and coolers and equipment, performance was driven by the right assortment, augmented by innovation and amplified by our omnichannel model. That combination continues to be a strategic advantage. Second, our business is delivering strong growth as we are moving past some of the market dynamics and supply disruptions that we faced last year. Importantly, we're broadening our customer base while building upon our core innovation continues to attract customers, particularly in newer categories like bags, soft coolers in sports, hydration drinkware. While repeat purchasing and retention remain strong@yeti.com 12 month retention held steady while lifetime value continued to grow. Our consumer metrics reinforce this strength. In the US Brand awareness, consideration and preference increased across coolers, drinkware and bags, with bags reaching their highest levels since Tracking began in 2022. Brand NPS remains healthy across demographic groups. Product satisfaction is approximately 98% and nearly 2/3 of our surveyed customers now own products across multiple categories. Taken together, these indicators point to a brand that is expanding its reach while maintaining its promise, which is exactly what we aim to deliver. Globally, we continue to accelerate to scale with strong economics. This remains a compelling and addressable long term growth opportunity and we are still early in unlocking it. Even with international trending towards 23 plus percent of full year sales in 2026. As Scott will discuss, we expect to deliver at our guided growth levels for International in 2026 with strong gross margins and overall contribution to YETI. Our approach internationally is deliberate and repeatable. Right assortment, right distribution, localized activation and disciplined investment. In Europe, we continue to expand doors and invest in awareness with improving productivity in our top accounts. In Asia, Japan is in the ramp phase while Southeast Asia continues its rollout and China and Korea remain targeted for the second half of the year. Canada and Australia remain our largest international markets and despite macroeconomic pressures, we expect solid full year performance from both. Third, drinkware is proving it remains a scalable, durable platform. We delivered a second consecutive quarter of drinkware growth with global drinkware up 5% year over year including growth in sell in and sell through. In the US this performance was not driven by a single hero skew. The key point is that growth is broadening across the platform supported by refreshed core products, targeted extensions and disciplined pricing and promotional posture reflecting innovation and newness including stackable cups, chug bottles, ceramic mugs and the yonder shaker bottle. Drinkware today is about platform health, cadence and discipline and those are the drivers of durability. Drinkware not only has a solid foundational CAS generative base but also drives incremental upside from proven adjacencies. We see additional Runway deepening our presence in sport and fitness hydration which continues to attract younger consumers and new use cases, making it additive to the platform and expanding the addressable market over time. Shifting to coolers and equipment in coolers and equipment we delivered double digit growth led by soft coolers and bags. Daytrip and Camino continue to outperform extending YETI further into everyday use while remaining true to our heritage of toughness and reliability. Where supply has been constrained, demand remains strong. Fill rates in certain soft cooler and bag programs ran short through 2025 and into Q1 2026 with demand carrying through into the current year. Additional capacity coming in the back half of the year should allow us to better capture that demand. That matters for two reasons. It's a near term growth lever as availability improves and it reinforces the long term opportunity in our ecosystem of bags, soft coolers and carry solutions used repeatedly across everyday occasions in hard coolers. Seasonal color innovation supported the category as we lapped prior year product transitions. Cargo performed well across platforms with particular strength in the go box. One protective case establishing a foundation for future expansion coming in 2026. Fourth wholesale momentum is validating brand strength and product relevance. Global Wholesale grew 19% year over year, our strongest wholesale quarter in more than three years driven by consumer pull across both US and international markets. The headline growth is notable, but what matters most is what's underneath it. Double digit sell through growth in the US Balanced inventory positions and strong partner confidence in our expanding innovation pipeline. U.S. wholesale inventories remain well managed and aligned with demand across major categories. Our approach to the channel remains disciplined and consistent. Protect brand presentation, maintain premium positioning and prioritize long term shelf productivity, not short term volume. Within D2C, demand was strong across E Commerce, Amazon and YETI stores offset by softer corporate sales. Importantly, underlying consumer demand across our owned and marketplace channels tracked well with our overall growth. Performance was driven by seasonal color launches, expanded customization and meaningful enhancements to our U.S. and Canadian websites. Improving conversion add to cart rates and average order value. We also continue to invest in digital capabilities like our AI driven shopping assistant Ranger. Ranger enhances consumer experience, improves conversion and scales efficiently as our assortment grows. We view it as a long term capability, not a short term tactic. We recently launched our TikTok shop and are approaching it deliberately as a channel for authentic storytelling and reaching younger consumers. We'll scale based on performance, repeat behavior and brand standards. While corporate sales was softer due to order timing and a slower global corporate environment, we are managing this channel pragmatically. It is attractive, but we will not chase volume at the expense of brand integrity or pricing discipline. The bottom Line the year over year performance in D2C was driven by corporate sales timing in a more cautious global corporate environment, not a change in consumer engagement with the brand. As we think about our P and L resilience and opportunity, the discipline with which we are executing is especially important in the current environment. As Scott will walk through in more detail, we're navigating peak tariff impact in the first half with second half gross margins recovering most of the year over year pressure. The structural margin drivers of mix sourcing and pricing are counterbalancing cyclical inputs including tariffs and costs related to global energy pricing. We believe these are known and transient headwinds, not long term structural issues. Our diversified supply chain and pricing discipline gives us flexibility and as we move through the year and lap some of these impacts, we expect margin performance to improve while continuing to invest behind the brand and innovation. Turning to why yeti's advantages are durable and defensible, we believe yeti's moat rests on three reinforcing pillars. First, brand trust and authenticity. Yeti is not a logo, it's a broad reputation earned over time. As you may have seen in our recent four letter brand campaign and platform released last week, consumers choose YETI because they believe it will perform, it will last, and it will be designed with purpose. That trust drives consumer pull, supports premium positioning, increases repeat behavior and lowers marketing friction. It also makes innovation more efficient because consumers are willing to adopt what we build next. When a brand owns trust in its categories, it creates a durable advantage that is difficult to replicate. Second, scalable product platforms we build platforms, not one off products. Platforms like drinkware and coolers and equipment allow us to reuse design, DNA, supply chain expertise and brand credibility while expanding usage occasions and deepening consumer relationships. As we look at product launch in the last 24 months, these generally represent approximately 25 to 30% of sales in key categories. As we continue to shorten development cycles and improve speed to market driving innovation. While innovation plays a key role, this also displays the power and impact of legacy products as these continue to capture a long tail benefit, reinforcing the product development stacking effect. This is how we generate compounding returns, strong base, meaningful improvements, thoughtful extensions and new use cases that fit the brand and strengthen the ecosystem. Third, a disciplined global omnichannel model wholesale expands reach and discovery owned DTC deepens engagement and loyalty. Marketplaces add access and convenience and corporate sales drives engagement. When managed with discipline, these channels reinforce each other and reduce reliance on any single source of demand, increasing resilience across cycles. Overall, YETI is built for upside and for durability against positive brand momentum and global demand. We have a differentiated brand with loyal consumers, scalable product platforms that refresh demand, a diversified omnichannel model and a flexible diversified supply chain. And we pair that with a fortress balance sheet, more than 425 million in liquidity and approximately 70 million in debt and a strong free cash flow with roughly 500 million returned to shareholders through share repurchases over the past two years and an upsized $500 million share repurchase authorization, all while maintaining the ability to invest through cycles and allocate capital opportunistically. Let me close by being explicit about why we believe YETI can deliver sustained growth and compound value over time. First, brand power compounds. As YETI shows up in more everyday moments, brand meaning deepens supporting pricing integrity, repeat purchase and lifetime value. Second, platform scalability improves efficiency and reduces risk. Extending platforms allow us to grow with discipline while maintaining premium standards. Third, international Runway is real and still early. Premium performance oriented brands can travel when built with authenticity and executed with discipline. Fourth, omnichannel diversification increases resilience. Discovery, loyalty and access work together to reduce volatility. Fifth, operational discipline supports per share value creation. Strong cash generation funds innovation, expansion and disciplined capital returns. This is a company with durable advantages and a clear path to compounding cross cycles and taken together, these drivers support a long term top line growth algorithm in the high single to low double digit range driven by core platform performance, new category adjacencies and international expansion. When combined with margin expansion and buybacks, we have a model with the potential to drive earnings and free cash flow faster than top line growth over time. Our guidance implies we'll be within that growth algorithm. Starting in 2026, we'll go deeper on our long term growth algorithm, margin framework, innovation roadmap and capital allocation priorities at our Investor Day now targeted for September. Stepping back, YETI is not a single product story, a single channel story, or a single geography story. We're a brand led platform business with multiple engines, driven by authentic consumer demand, enabled by scalable innovation platforms and strengthened by a diversified global omnichannel model. In a market that continues to shift, whether due to consumer behavior, promotional intensity, tariffs or geopolitical uncertainty, durability is the point we built YETI to endure, to protect brand equity and to play offense when opportunities present themselves. That mindset has guided us for more than 20 years and it continues to shape how we run the business today as we celebrate Yeti's 20th anniversary this year. The first quarter reinforced our confidence in the strength of the brand, the sustainability of demand and the operating system we've built. We are seeing continued momentum in Q2 and are excited about what's ahead as we continue to innovate, broaden the brand thoughtfully and build a scalable global growth engine while maintaining discipline and compounding value over time. As always, I want to close with a thank you to our partners around the world and especially to the YETI team. Before I turn the call over to Scott, I'll close by acknowledging what a pleasure it has been to have Scott join us during this incredible moment in time for yeti. He's off and running, helping drive our strategy and support our execution against yeti's potential. With that, I'll turn the call over to Scott. OPERATOR Thanks Matt and good morning everyone and thank you for joining us. As many of you know, I joined YETI earlier this year and I'm extremely excited about the opportunity ahead for this amazing company. YETI is built on the strong foundation of an authentic premium global brand supported by disciplined execution that results in a compelling growth algorithm. From YETI's IPO through 2025, sales have increased at a 13 percent, compounded annual growth rate and adjusted EPS has grown at a 15 percent CAGR. Over that same period, Yeti has generated nearly $1.4 billion dollars in free cash flow and reduced shares outstanding by 11 percent. International revenue mix has grown from 2 percent to 21 percent, resulting in a truly global company with a diversified omnichannel model. Our key growth initiatives of reaching new audiences, core category expansion and global expansion are each contributing in a meaningful way, working together to sustain a long term growth rate in the high single to low double digit range. With that, let's dive into our performance for the quarter, following which I'll provide an update on our outlook for 2026 after my prepared remarks. We look forward to your questions. Our first quarter performance reinforces the strength of the brand and the durability of our long term growth Strategy. We began 2026 on a strong footing with an increasing momentum across key business segments. Coming out of Q4 starting with our overall top line performance in the first quarter we delivered sales of $380.4 million or growth of 8.3% year over year. Growth was broad based across categories and channels and came in at the top end of our initial full year outlook range of 6 to 8%. Turning to our performance by category in Drinkware, sales grew 5% to $217 million, our second consecutive quarter of mid single digit growth in the category overall and a return to growth in the US Drinkware business. These results reflect the durability of our drinkware business and our ability to drive sustained growth through innovation and audience expansion. Coolers and equipment sales grew 11% to $156 million with strong performance across soft coolers, bags, hard coolers, cases and storage. Innovation in the category continues to drive our business as we bring new products to market and infuse color to support our core platforms. Daytrip and Camino remain standout performers and consumer engagement for these products continues to be strong. While demand for these products is currently outpacing supply, our inventory position is improving and should support sustained growth in the category. Looking at our performance by channel, wholesale sales increased 19% to $184 million. Our best quarterly performance in more than three years during Q1 sell in trends were better aligned with sell through trends which have remained strong. Channel inventory remains healthy which bodes well for performance in the wholesale channel in the upcoming quarters. Our teams are working closely with retail partners as they thoughtfully replenish inventory to support strong consumer demand across categories. Direct to consumer sales were flat at $197 million. Consumer demand was strong across our owned E Commerce, Amazon Marketplace and Yeti retail stores, with performance in these channels coming in line with our overall sales growth for the quarter. However, sales in our corporate sales channel declined year over year, driven by caution from corporate buyers, challenging comparisons to last year's strong results and some order timing dynamics. As we look ahead, we're encouraged by the improvement we've seen in the trajectory of corporate sales thus far. In the second quarter, moving to our performance by region in the U.S. sales increased 8% to $293 million, supported by growth across coolers and equipment and drinkware demand remained strong across wholesale, E Commerce, Amazon and retail, partially offset by softness in corporate sales. International sales grew 9% to $87 million including FX favorability of approximately 800 basis points. Underlying consumer demand in our international markets remains strong. However, growth during Q1 was impacted by a decline in corporate sales. As you saw in 2025, international growth can fluctuate quarter to quarter, but the long term growth trajectory is as strong as ever and we continue to estimate our international sales growth for the full year to be in the high teens to 20% range. Our international focus remains on driving underlying consumer demand, strengthening brand equity and the significant Runway ahead as we expand consumer reach, deepen market penetration and scale in priority markets, we continue to build a scalable multi market growth engine looking at our key international regions. In Europe, consumer demand across categories and channels remains very strong supported by rising brand awareness, expanding wholesale distribution and deepening engagement across markets. In Australia, while macro pressures weigh on discretionary spending, brand strength remains intact and we continue to see a meaningful opportunity to expand yeti's presence over time. Performance in Canada was supported by customization, corporate sales and wholesale. In Japan, momentum continues to build driven by expanded wholesale partnerships, the recent launch of our E Commerce platform and growing enthusiasm from consumers. Now moving down the P and L Adjusted gross profit was $210 million or 55.3% of sales, a decrease of 200 basis points versus last year. This included a 280 basis point headwind from higher tariff costs year over year as well as the unfavorable impact from a lower mix of our D2C channel. This is partially offset by lower product costs and the favorable impact of foreign currency exchange rates. Adjusted SGA was $184 million, up 10% year over year. As a percentage of sales, Adjusted SGA grew 100 basis points to 48.3% reflecting continued growth, investments in facilities including two new stores, sales and product development headcount to support our international expansion and technology to support our digital businesses. Adjusted operating income declined 24% to $26.6 million or 7% of sales. Adjusted net income decreased 23% to $19.8 million or 5.2% of sales and adjusted EPS declined to $0.26 from $0.31. This year's results reflect an incremental unfavorable net tariff impact of approximately $0.09. Turning to our balance sheet, we ended the first quarter with $127.8 million in cash as compared to $259 million in the prior year. Quarter this year over year decline in cash is primarily related to the elevated level of share repurchases executed through 2025. We continue to manage our inventory effectively as inventory decreased 4% to $318 million. Total debt, excluding finance leases and unamortized deferred financing FEES was approximately $73 million compared to $77 million at the end of last year's first quarter. We remain committed to investing in the business to drive sustainable growth and long term shareholder value with strong free cash flow, generation and share repurchases. Now turning to our fiscal 2026 outlook, with strong Q1 performance, our confidence in the full year outlook is even Greater. That said, Q1 is seasonally our smallest quarter of the year and we recognize it is still early in the year and we're cognizant of the macroeconomic uncertainty that still exists. Based on the Q1 sales momentum, we are raising the low end of our full year sales growth rate expectation. We now expect full year sales growth of 7 to 8% from the previous outlook of 6 to 8%. From a phasing perspective, we anticipate the total sales growth rate will be relatively consistent throughout the rest of the year. We are also reiterating our growth expectations across channels, categories and geographies. By category. We continue to expect high single digit to low double digit growth in coolers and equipment supported by the momentum we see across soft coolers, bags, hard coolers cases and storage in drinkware. We continue to expect mid single digit pacing for the year and driven by increased innovation, the continued broadening of our portfolio and global expansion by channel As a result of strong customer traffic and merchandising innovations at our wholesale partners, we expect wholesale channel to grow at a slightly faster rate than the direct to consumer channel this year by region. In the US we anticipate low to mid single digit growth for the full year. As I mentioned earlier, we continue to project international growth in the high teens to 20% for the full year. With respect to gross margins, we are raising the lower end of our gross margin expectation for the year. We now expect full year gross margins at 56.5 to 57% compared to prior year guidance of 56 to 57% at the midpoint. This is a 60 basis points decline year over year compared to our prior guidance of a 90 basis point decline. The increase reflects the benefit from lower realized tariff rates partially offset by higher commodity and inbound transportation costs. Please note that our outlook does not include an assumption for the recovery of any potential IEIPA refunds given the significant uncertainty on the amount and timing around it. From a phasing perspective, we expect year over year gross margins to Decline by roughly 200 basis points in the first half of the year followed by year over year expansion of approximately 50 basis points in the second half. As we lap the tariff impacts from the second half of 2025 as it relates to OpEx, we expect full year growth of between 4 and 7% relative to 2025 reflecting operating leverage and ongoing cost discipline. From a phasing standpoint, we continue to expect higher OPEX growth in the first half moderating in the back half driven by the timing of our brand marketing spend and a return to a more normalized incentive compensation accrual pattern in 2026. We now expect 2026 adjusted operating income margin to be approximately 14.6% up 20 basis points compared to 2025 and compared to our prior guidance, we now expect adjusted operating income growth of 8 to 10% for the full year compared to prior guidance of 6 to 8% growth. Due to the year over year impact of tariffs, the shift of brand marketing timing and incentive compensation expenses in the first half of the year, we expect first half operating margins to decline by roughly 450 basis points, offset by an approximate 350 basis point improvement in the second half. Turning to the remaining P and L items in our guidance, we continue to expect an effective tax rate of approximately 24% and diluted shares outstanding of approximately 76.6 million compared to 81.6 million in 2025. This reflects the full year impact of nearly $300 million in share repurchases during 2025 as well as an additional $100 million in share repurchases planned for 2026. We expect adjusted earnings per diluted share of between $2.83 to $2.89, reflecting growth of 14 to 17% compared to prior year guidance of $2.77 to $2.83 or growth of 12 to 14%. This increase in EPS relative to our prior guidance reflects slightly higher operating margins of approximately 14.6% for the year versus our prior expectation of 14.4. Capital expenditure expectations are unchanged and expected to be between $60 and $70 million for the year. We remain focused on investing in advancing our technology, launching innovative products and strengthening our supply chain. We continue to expect free cash flow of between 200 and $225 million in 2026. As it relates to our share repurchase program, our Board recently increased our share repurchase authorization by approximately $350 million, bringing our total remaining outstanding authorization to $500 million. The first quarter marked a strong start to the year and reinforced the momentum we are seeing in the business, our performance speaks to the durability and strength of our brand and we are incredibly grateful for the continued operational excellence of our global teams. With that, I'll turn the call back to the operator for Q and A. Thank you. At this time, if you would like to ask a question, please press Star 1 on your telephone keypad. To withdraw your question, press Star 2. As a reminder, please limit yourself to one question and one follow up. One moment please, for your first question. Your first question comes from Randy Koenig from Jefferies. Please go ahead. Randy Koenig (Equity Analyst) Yeah, thanks a lot guys and thanks for taking my questions, I guess. Matt, I want to get a feel for your confidence in the, you know, the high single digit kind of revenue guidance for the year. You came in with a better than expected top line for the first quarter and yet you talked about some holdbacks in the numbers with corporate sales down, bag demand outstripping supply and then some international, I guess some volatility there. So if we assume that corporate sales, I think you said we're starting to improve, bag supply will start to improve relative to demand later in the year and I'm sure international doors are being opened. You know, you feel pretty firm about this revenue guidance on the top line and then kind of how does that inform your view of what you said on the call of a high single digit, low double digit type of growth in the medium to long term? Matt Reiches (President and CEO) Good morning Randy. Thanks for the question. I'll start with incredibly pleased with how the years started, including the comments we made on the call about the start to Q2. I think it shows both the durability and the potential of the model, our portfolio, our go to market and our growth engine. And so we feel really good about the way the year's shaping up and really, really on the back of the continued US strength, the drinkware strength that we called out on the call, the acceleration in growth in coolers and equipment driven by the diversification of the product portfolio, in particular the soft coolers and bags. So we feel really good about the model coming into the year and that it's intact, You know the things the Corporate sales in Q1 Corporate sales can be, they can be episodic. We saw some orders that didn't repeat this year that were in last year's number, but you roll over those and we feel good about how the full year and we feel good about the trend that we're seeing in corporate sales. I think international continues to be an incredible opportunity. We have as strong a team as we've ever had. We're opening and accessing new markets, we're getting new placement, we're opening wholesale doors, we're continuing to drive the Direct-to-Consumer business. So the feedback we continue to get is kind of all forward progress and feel good about the year, as you heard from Scott's comments. So you know, coming out of Q1, going into Q2, the biggest part of our year is coming up, but that's really where YETI has shown it can excel. So we feel like the model, the model is intact, We feel like the guide for the year with the, with the raise today is solid and intact and we continue to see the long term growth algorithm and the build up to it and the potential and chasing the possible. Randy Koenig (Equity Analyst) And then just to elaborate on the comments around being able to grow EPS and free cash flow faster than the sales commentary, you've shown remarkable resilience in kind of managing through different kind of headwinds around that would impact margin structure to kind of give us some things that you've kind of implemented over the last few years to kind of help you manage through different little hiccups that kind of pop up, let's say tariffs or as you pointed out, some rising input costs, what have you that impact margins. But you're offsetting that with some sourcing flexibility, pricing and mix and the channels just kind of walk through what you've been doing and what we, you know, you're doing going forward to kind of give continued confidence in the margins where they are today. And you know, it sounds like margins are going to continue to move a little bit higher in the years ahead. Matt Reiches (President and CEO) Yeah, thanks. Thanks, Randy. There's a lot in there I would start with. When you look at our model, the diversification of our channels to market and our go to market and the replication that globally gives us a lot of flexibility, resilience and opportunity. The second one is over the last number of years we've been talking about the broadening, strengthening diversification of our product portfolio, which again gives us different price points, different use cases, different purchase occasions with a broadening consumer audience. And so from a commercial go to market front end, a lot of levers for growth and durability. I think what you've seen over time is the incredible talent and flexibility we have in our supply chain. Whether it was tariffs in the 2018, 2019 transition, the more recent tariff increases, the container cost evolution, we've been able to manage through those because we have built a nimble supply chain that can flex and that's really on the backs of an incredibly talented team around the globe that drive that focus. What that allows us to do is have flexibility to support our go to market, to support our product portfolios. It allows us the ability to generate the free cash flow that we've been able to generate while also except what we would consider transient shocks or transient costs, drive continued margin strength and all those lead to EPS compounding EPS growth and then the ability to leverage our free cash flow to return value to shareholders. And we've done that through buybacks as we've shown the last couple of years and as we signaled for this year. So we feel like the model top to bottom is more resilient, stronger,, more leverageable and lots of potential in front of it. Randy Koenig (Equity Analyst) Very helpful. Thanks guys. OPERATOR Thank you. Your next question comes from Peter Benedict from Baird. Please go ahead. Peter Benedict (Equity Analyst) Hey, good morning guys. Thanks for taking the questions first. Just wanted to see are there any other action plans in the strategy around Corporate. You can understand that that can be an episodic business, Matt, as you said. But just curious if there's anything else going on beneath the surface in terms of how you're approaching it, how you're viewing it over the balance of the year. And if you can just give us a sense for the size of Corporate. I think historically it's been in the 20 to 25% of your DTC sales. I'm not sure if that's still the case and if there's any difference between the US penetration and the international penetration. That's my first question. Matt Reiches (President and CEO) Hey Peter, thanks for the question. I'll take the front end of the corporate sales potential and then, and then Scott can step in. What I would say is we continue to believe in the untapped potential in corporate sales. We see opportunity all over the place and that's not just in the US but around the globe. You know, our corporate sales is made up of some big partnerships that we do that we talked about some larger corporate orders. But then there's just an underlying hum to that business and I think we attack that in three different ways from an action plan and operational perspective. We have an active base team that's out generating the opportunities that are, that are in that kind of third bucket. That's really an action oriented business. The second, the bigger corporate orders, we're judicious about how many of those we want to take on because they can be lumpy. Both of those groups are really a sign of brand strength, demand, desirability of our products for a premium good. And in the partnerships bucket. As you've seen over the last couple of years, we've gone out and built globally some really powerful partnerships that work in a couple of different ways. They have a corporate sales component. They also have a brand, brand building, brand awareness, exposure component to it. And so we really think about our corporate sales in those three buckets of, you know, run-rate corporate sales, large corporate orders and then and then partnerships. And we have active teams that focus on all that. And that's really what we've turned on in Q2, after the slower start in Q1, and we'll continue to do it. Scott Bomar (Chief Financial Officer) It's just part of our operating rhythm. So just to add a little more color to that, the corporate sales business is approximately 25% of our D2C business overall. And while we haven't broken out the Peter Benedict (Equity Analyst) specific impact of corporate sales to D2C, now I just leave you with the other pieces of that particular channel. Our retail stores, getty.com and our marketplace partners all grew high single digits for the quarter. So it gives you a sense for the impact that we saw from corporate sale to D2C. Scott Bomar (Chief Financial Officer) All right, great. Thanks for that. My follow up is just on the International and the growth outlook for the year. Still high teens to 20%. I'm curious what the FX assumption. Is there any view on constant currency growth as you start to, I guess ramp up things like Korea and China in the back half of the year and other things. Thank you. Yeah, sure. A couple comments on International Just as a reminder, the first quarter is less than 20% of our overall revenue for the year. So it's the smallest quarter by a meaningful margin. And so there is quarter to quarter noise that happens. We saw some of this in 2025. So we do get lumpiness of, you know, demand patterns from wholesale partners, overlapping large sales and corporate sales. So some of those things do weigh on the quarter. And we saw that There was an FX tailwind that we saw in Q1 of approximately 800 basis points to total international international growth. If you play that forward and you take that and quantify that impact for the full year, it mutes. And we don't, you know, of course we don't know where FX rates will land for the balance of the year. So we don't view that as a huge driver for the balance of the year. We expect the 18 to 20% includes a little bit of FX benefit of the observed amount from Q1, but we're not building in a lot as it relates to second, third and fourth quarters. So we feel really good about the underlying demand we're seeing across the international business. And it is again, some of the breadth of the power of the YETI model of having diverse channels, diverse markets. And we're seeing that strength and we feel good about the trends that we've observed so far in Q2 for international. Peter Benedict (Equity Analyst) All right, that's helpful. Color, thanks so much. Philip Glee (Equity Analyst) Your next question comes from Philip Glee from William Blair. Please go ahead. Good morning, Matt Scott, Arvin, thanks for the question. So there's a lot of puts and takes with gross margin right now between tariff changes, higher transportation costs, rising product input costs like resin. So can you maybe just walk through your exposure to these pressures and then your level of confidence in being able to offset and then what role, if any, any additional price increases play? And then is there any reason we should assume that the gross margin decline year over year will get a little bit better in Q2 than where we were in Q1? Scott Bomar (Chief Financial Officer) Great. So, so let me, let me give you a little background on this. When we set the guide for 2026, we did so under the assumption that the IPA tarif of approximately 20% would persist throughout the year. Obviously, that's a very fluid environment and we've seen lots of changes there. In late February, those tariffs were overturned and replaced the Section 122 tariffs at roughly half the rate. And so that change was not contemplated in our guide. Now, our base assumption at the moment is that those tariffs, when the expiration of 122 occurs, they will resume back to the 20% range in July. Again, fluid situation. We'll see how that actually transpires. The net benefit from a tariff perspective of that change relative to our original guide was approximately $15 million. And then roughly 2/3 of that $15 million was offset by pressures that we've seen related to fuel prices and transportation and other commodity inputs affecting our cost of goods. So the net benefit of that is about $5 million. But you see, that's what we flew through in our new outlook and increased EPS by that, plus a little bit of a benefit for the demand lifting the bottom of the revenue guide as well. So in aggregate, we feel like the changes that have happened reflect the net positive to the business and then time will tell what happens in the back half as it relates to tariff rates, and we'll see if there's further upside from here. Philip Glee (Equity Analyst) Excellent. That's super helpful. And then just want to touch a little bit more on drinkware then. So notably reflected here in the first quarter in the US Market. Can you talk about the drivers here? You know, has inventory normalized for the large volume straw formats that have been under pressure? How's shelf space trending at retailers? And then what's the contribution been from some of the newer product innovation that you've launched? And then do you think growth is sustainable here? Should or should we expect US drinkware to be up for the remainder of the year? Thank you guys. Matt Reiches (President and CEO) Phil, thanks for the question. We're really pleased with Drinkware and really looking back over the last couple years, I think one of the things that was underappreciated over the last couple years is the resilience of our drinkware business and the execution of the strategy of diversifying our drinkware to being something much bigger and broader and more durable than I think the market that really had driven the last couple of years. And so it gets to the point where we talked over the last number of quarters about inventory correction but good consumer demand signals. And when was sell-in going to catch up to sell-through? What we saw this quarter was the continued consumer demand and the sell-through but sell-in coming back, which is really fill in from a shelf perspective, but also the execution of the innovation. So I think largely for our business, largely that large format straw type thing has really settled, has really settled out. But I think the more interesting is the execution of the strategy we've had which is to diversify that business. Our stackable cups, our sports hydration jugs, all really showing our chug bottles, really all showing the strength in demand for YETI in the variety of use cases that we can target consumers. And that to me is really the proof point of the execution of the strategy, but also the potential as we go forward. Philip Glee (Equity Analyst) Excellent, very helpful. Thank you guys. Best of luck. Joe Altobello (Equity Analyst) Your next question comes from Joe Altobello from Raymond James. Please go ahead. Thanks. Hey guys, good morning. I guess I'll follow up on Drinkware. It sounds like you guys have sort of turn the corner here. I'm curious how much of that is execution, as you called out and how much of that is any easing in the promotional environment in that category? Matt Reiches (President and CEO) Hey, Joe. I would call it, I don't think it's an easing of the promotional environment. I think you're going to continue to see the broader cleanup. Continue. I think there's a, there's a tale to that as we talked about all last year. I think there's a long tail to some of that cleanup. I think for us it's execution, innovation, incredible wholesale partnerships, innovation, resonating with new and existing consumers. And so it's really the combination of those things. And when I think about you look at YETI and how YETI is presented at wholesale now, you really see YETI as an ecosystem. So it's the soft coolers, it's the bags, it's the hard coolers, it's the storage cases and storage boxes, and it's the drinkware. And that is the platform that we're building. So it's not a categorical concentration. And really our wholesale partners have been incredible. And what I would say is those who have leaned into merchandising, those who've leaned into assortment, those who found making sure YETI intersects when consumers are shopping have found incredible success. And that's, that's really our drive. And so we feel great about the portfolio and the role that drinkware is playing in that in the US and internationally still, for the majority of the portfolio, still all discovery mode. Joe Altobello (Equity Analyst) Very helpful. Thank you. And just shifting gears over the innovation pipeline. I think last year you guys had kind of delayed some product launches, at least in the US until the supply chain situation kind of resolved itself. Matt Reiches (President and CEO) Should we expect to see more new products this year versus the last two or three years? You know, I think there's a couple things there. You're going to continue to see a strong cadence of new products this year across the portfolio. You've already seen it in on the soft coolers and bags side, you've seen it on the drinkware side. We've indicated that in the storage in cases, building off the success of the go box one, you're going to see more of that in absolute numbers. Joe Altobello (Equity Analyst) As we go through the year, as we work with our partners, as we look at what's productive on the shelf and what the opportunities are, we move some of those launches around, but the things that we talked about last year, those will be filtered into the launches this year, some of which we had put out in limited release. We'll put out more fully some of the ceramic items and drinkware that we talked about. So there's more to come. But I would say you won't see a significant change in our innovation cadence this year. I would call it kind of consistent plus, but we think that's the right rhythm for absorption into the market and delivering the results that support our guide for the year. Okay, thank you. OPERATOR Your next question comes from Molly Bob from Morgan Stanley. Please go ahead. Hi. Molly Bob (Equity Analyst) Thanks for taking our questions. I just actually had two follow ups from some prior questions that were asked. The first one is A follow up on Peter's question on international. So is corporate sales a bigger, I know it was a smaller quarter overall for the year, but is corporate sales a bigger portion of international than it is domestic or is it not really big enough to kind of call out the difference there? And then I guess as we think about the acceleration through the remainder of the year, does that hinge on, you know, the introduction to China and Korea or are you expecting improvement in maybe some of these existing international markets as well? Matt Reiches (President and CEO) Hi Molly, thanks for the questions and thanks for the clarifying. What I would say. Corporate sales internationally, you know, our mix is they're largely consistent but international is more sensitive to those orders. And so what what we had internationally a little bit different than the US was there were some significant year over year comp type orders that were last year that we knew weren't going to repeat this year or they have a timing that didn't happen in Q1 again. But these partnerships have continued forward and so we expect that those will play out later in the year. And so the sensitivity is greater internationally just based on the absolute scale of our international business to the China and Korea thing, you know, that we talked about that later this year. I would not expect that to be a material driver in 2026. What we wanted to call out was these are the building blocks of long term growth opportunity that support the algorithm. And so as we establish further, establish the UK and Europe, as we build up Japan, as we get some of our Southeast Asian markets kind of turning to scale, we want more markets in the pipeline for expansion and that's why we call out China and Korea. Molly Bob (Equity Analyst) Thanks so much, that was really helpful. And then another, you know, just follow up on wholesale. Can you help us kind of reconcile the comments about the cautious or the continued cautious ordering environment from, you know, your corporate partners with the, you know, strong double digit wholesale growth in the quarter and double digit sell through, you know, are you seeing really, you know, strong new channel partners and can you talk about some of those? And then maybe you know, what you're hearing from your corporate partners in terms of when maybe the strong sell through may then flow through to stronger sell in as we go through the year? Thanks. Matt Reiches (President and CEO) Yeah. I'll start with Ian. I mean I think we're, I think you're starting to see this sell in as a result of the strong consumer demand. That's been a number of quarters that we've talked about. And so I think you're, you're seeing that and I would say our conversations with Our wholesale partners where they've seen into our product pipeline for the next 12 to 18 months, they know what's coming. We're collaboratively planning shelf space and merchandising and assortment and launch and we've been doing that. Obviously that's been part of our playbook and I think it's part of the reason you've continued to hear us talk about strong consumer demand and the sell through. We expected the sell into catch up or come towards the sell through. And I think you start to see that in our Q1 results. I think when we think about kind of reconciling strong consumer demand and corporate sales, I think they're just different. They're different consumer or they're different buyers, they're different buying occasions, they have different sensitivities. We've been very pleased with the durability of the consumer demand and the elevated consumer demand and the, through all of our channels, our direct to consumer, as Scott pointed out and our wholesale and on the corporate sales side, some of that is it's the beginning of the year. You know, new budget cycles for a lot of companies, they go into that. I think the year is something that we're now very active in how we drive that corporate sales business. But the biggest takeaway is the way the model works and the diversification of our channels to market give us the ability to go kind of win overall as yeti, even if each of the individual pieces and parts isn't kind of hitting its full stride. So we're excited about the rest of the year. Molly Bob (Equity Analyst) Got it. Thanks so much. OPERATOR Your next question comes from Peter Keith from Piper Sandler. Please go ahead. Hi, this is, this is Sarah Moorenheim for Peter Keith. Congratulations on the great quarter. Sarah Moorenheim (Equity Analyst) First, as it relates to the higher Matt Reiches (President and CEO) input costs, are there any situations where we could see shortages for resin and then just any color around the incremental pricing actions that you guys could take to help offset? Sarah Moorenheim (Equity Analyst) Yeah, we've not seen, we've not seen Matt Reiches (President and CEO) any restrictions on the availability of materials at this point. Obviously it's something that we're watching, but we've not seen that as a, as a concern for the quarter, for the balance of the year. So that's not something we've contemplated in our financial algorithm here. I think, Sarah, what I would add on the pricing topic, just maybe as a reminder and how we think about pricing, we think about pricing very strategically on how does the pricing fit within our product portfolio. We use pricing when we're trying to create gaps for innovation to slide into our stack. And so we tend to think about pricing as it relates to our portfolio, our fit. And we tend to talk about pricing as a no regrets type action versus a reactive action. So we're always thoughtful about pricing, we're thoughtful about the pricing of our innovation in our inline pricing. But there's kind of a more strategic lens. We look at it versus a reaction to kind of a moment in time. Okay, very helpful. And then just going back to international and then the softness in Q1 just what changed in Q1 as it relates to softer demand backdrop without that FX benefit. And then can you talk a little bit more about the changes expected for the remainder of the year to hit the full year guide? So look again, you know, as we mentioned earlier, the international business, you know, Q1 is absolutely the smallest quarter so it just makes it more subject to volatility. And we saw this last year as well where you know, wholesale partner lumpiness, purchasing or corporate sales one time effects that Matt mentioned a moment ago can weigh heavier in the quarter underneath that. And I recognize it's difficult for you to see underneath that. We still see strong demand signals from our customers and the affinity for the brand continues to expand, you know, across, across the globe. So you know, we see the demand signals, we see the energy that we're garnering at the new markets that we're entering and feel confident in the expectation of delivering high sing high high teens to 20% range for the year. So we think we're in a good position. We think the international teams are operating effectively and are delivering against their goals. Anna Gleschen (Equity Analyst) Okay, thank you. Your next question comes from Anna Gleschen from B. Riley. Please go ahead. Matt Reiches (President and CEO) Hi, good morning. Thanks for taking my question. Just one for me. Want to follow up on the wholesale commentary from a prior question. You know, the 19% growth in the quarter, really strong supported by double digit POS growth. Was there any particular sub channel that was particularly strong? I think in a prior question or answer you said something to the effect of retailers who are merchandising the whole ecosystem are essentially doing better. Is that to be taken as if, you know, there's one particular couple of particular retailers that were driving the strength. Anything more there would be super helpful. Thanks. Good morning Anna. Thanks for the question and the clarification. I would say, you know, wholesale broadly, obviously to drive that kind of sell in and the commentary we had around sell through, you know, broadly strength. So it's not what the point I was trying to make is what we have found and this is just a Truism is the retailers that merchandise assort broadly that get YETI in good position in their stores, they see the results and they see the impact of that. So it's less a comment about that was the one that drove Q1. Those are the ones that are seeing further elevated success. And we have incredible partners in great relationships and conversations around that. And we bring our learnings, our, our in house team brings those learnings to our wholesale partners and they give us feedback. So it's an incredibly collaborative partnership and the results are, you know, trackable and obvious. And so it's really the, when YETI gets presented right, it sells. And I think you saw that in Q1 and that's why we feel good about the year. Anna Gleschen (Equity Analyst) Great, thanks. OPERATOR Your next question comes from Noah Zetskin from Keybanc Capital Markets. Please go ahead. Noah Zetskin (Equity Analyst) Thanks for taking my questions. I guess first on the new ad campaign. I know we're maybe kind of 10 days in, but just any color on early reception there who you're hoping the campaign resonates with as well as maybe any color on timing of ad buys and format of ads. Matt Reiches (President and CEO) Yeah, I know. Thanks for asking that. So the campaign I'll start with, the campaign really is as we talked about when we talked about the OPEX shift from Q4 to Q2, it's really a Q2 focused campaign. So I think you'll see it build through Q2 and that was a significant shift of moving the expense of the campaign. We did the bad idea campaign during the holidays to Q2 and the reason we did that was what we liked about this campaign and what we have seen in the early reception is the broad resonance of it. And it's really a brand campaign, not a transactional kind of end of year type campaign. And so what we, if you kind of watch it and you pay attention to the out of home, we're gonna, we're gonna be running of which we started some of the cut down we're doing in on the, the various digital channels. It's really about resonating with a wide audience and the consumer seeing themselves in Yeti. And so that that long form 62nd or 32nd is really a reflection of the complexion of what YETI is today and where YETI is going. And so we saw this campaign as a way to come out and talk about the breadth and depth of our audience. It's not about the product we have, it's about the people that are attracted to this brand and supporting the amazing things that they do. And so we've been very pleased with the reception. It's been fun to watch the consumer engagement and them wanting to identify what their four letter word is and what's meaningful to them because I think that's how great brands are built. Great brands are built on connection and relationship and emotion supported by incredible product. I think that's what Yeti's done for 20 years. Noah Zetskin (Equity Analyst) Really helpful. And then, and then maybe just any color on how you're thinking about the bags business, how it kind of performed in the quarter and how you're thinking about it for the rest of the year. Thanks. Matt Reiches (President and CEO) Yeah, so no, really, really pleased and excited about the bags business. Probably as excited about the possible and potential built on the momentum we're seeing in the reception. And there's you've got this moment of some legacy Yeti bags like the Camino having an incredible moment combined with the momentum we're seeing in our day trip. Soft coolers which have some bag elements to it and then the Pinnacle type Scala backpacks. And the roadmap is incredibly exciting on where we can go. The reception and relevance to us playing along that spectrum and the Yeti brand being welcome, accepted and respected in a very short period of time along that spectrum of bags and packs and luggage. I think that opportunity in front of us, not just in 2026. We expect 2026 to be a very good bags year, but it's really what 27, 28, 29 holds for that business. OPERATOR and there are no further questions at this time. I will turn the call back over to the CEO Matt for closing remarks. Matt Reiches (President and CEO) Thanks everyone for joining us today. We look forward to catching up with you on our Q2 call. OPERATOR Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you. Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.