Margin Outlook
Q: Where do you see long-term operating margins trending?
A: Management believes they can expand operating margins over time through gross margin improvements and SG&A leverage. As they have recaptured a lot of the inbound freight costs that peaked in 2021 and 2022, they expect to build back operating margins. They also anticipate that as international markets like Europe scale, operating margins will improve, contributing to overall margin expansion. New product expansions are expected to maintain margins in line with past performance.

International Growth
Q: What's driving international growth, and can it exceed targets?
A: International growth is propelled by strong performance in Australia and New Zealand, increased brand awareness in Europe, and expansion efforts in Asia with the addition of a new leader for the region. This quarter, international sales grew over 30% and now represent 19% of the business. Management is investing in building teams, brand awareness, and infrastructure globally. While they maintain a guidance of 20–25% growth for international sales this year, they acknowledge the potential for continued momentum and have not capped international contribution to the business.

Demand Trends
Q: How are demand trends for hard coolers?
A: Management is pleased to see a return to growth in both soft and hard coolers. In hard coolers, there was an element of sell-in compare in wholesale, but they believe they're in a strong position as they enter the seasonally higher period. With the entire soft cooler assortment back in the market and new innovations coming in hard coolers, they are confident in winning in the cooler category despite some sensitivity to higher price point items.

Pricing Actions
Q: Have price cuts on certain products helped demand?
A: The targeted price reductions in Q1 on select SKUs were in line with expectations and delivered the anticipated unit elasticity. These adjustments were made to ensure the pricing stack made sense with new innovations coming in, not as a response to market conditions. Management was pleased with the results and does not anticipate additional pricing actions purely to combat affordability.

Drinkware Growth
Q: What's driving Drinkware business growth amid competition?
A: Drinkware growth is driven by continuous innovation in form factor changes that meet more consumer needs throughout the day. Despite competition, YETI focuses on putting relevant products in front of consumers and expanding the product portfolio thoughtfully. They expect to grow Drinkware at a similar rate as last year and are off to a good start based on Q1 results.

Mystery Ranch Acquisition
Q: What's the long-term vision for Mystery Ranch and cookware?
A: Management views bags and cookware as large, fragmented, and global categories that fit well under the YETI brand. With the Mystery Ranch acquisition, they are combining talents and materials to build out their bags portfolio, focusing on active, everyday, and travel segments. For cookware, they plan to introduce their first entry—cast-iron products—later this year, aiming to drive further consumer engagement and ownership of YETI products.

Reinvestment Priorities
Q: What are the key priorities for reinvesting in the brand?
A: Key investment priorities include expanding internationally by building out teams, enhancing brand awareness, and developing supply chain infrastructure. They're also investing in capabilities to support inorganic growth opportunities and focusing on driving brand awareness in new product categories and consumer communities domestically.

Partners DICK's and Amazon
Q: Discuss growth and potential with DICK's and Amazon.
A: Management is pleased with their wholesale footprint, including partners like DICK's Sporting Goods. They focus on productivity and performance, with shelf space remaining strong and wholesale partners supporting YETI's innovation. On Amazon, they experienced strong growth last year and continue to see it as an important channel, expecting balanced growth across all DTC subchannels this year.

Bags Innovation Timing
Q: When will we see acceleration in bags innovation?
A: They are actively integrating the teams from Mystery Ranch and YETI to bring together the best of both companies. They expect to introduce new products resulting from this collaboration as they go into 2025, indicating that acceleration in bags innovation is not years away.

New Customer Engagement
Q: Are new customers engaging and making repeat purchases?
A: Management notes that as they expand their product portfolio, they've diversified their consumer base. The value of their customers continues to increase, with both new and returning customers buying more and making repeat purchases. They focus on offering the right opportunities at the right time to keep customers emotionally engaged with the brand.