Episode Details

YETI Holdings (YETI) Q2 2026 — Q2 2026 (13 weeks ended July 4; 8-K accepted 6:04am ET Aug 13, before the open, so Aug 13 is the reaction session): sales $483.9M up 8.5%, GAAP EPS $0.94 up 54%, adjusted EPS $0.67 against a $0.54 bar, guidance raised. The stock fell 10.56% that day on 4.6x volume and closed Aug 14 at $44.56. YETI grew sales 8.5%, printed a 66.7% gross margin, raised guidance and reported EPS up 54%. The stock fell 10.6%. The reason is one line item: a $45.6M IEEPA tariff refund, about $0.40 a share, recognised in a single quarter. Strip it out and GAAP EPS is roughly $0.54 against $0.61 a year ago - and adjusted operating income FELL 6.8%. THE CALL: HOLD (3/5, MODERATE - REAL BRAND, BROKEN OPERATING LEVERAGE) — base-case value ~$42.05 vs ~$44.56 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value $41.28 against the $44.56 close on Aug 14, about 7% lower. Bear $32.40 ($2.70 at 12.0x), base $42.05 ($2.90 at 14.5x), bull $52.70 ($3.10 at 17.0x), weighted 30/50/20. Cross-checked on cash: durable free cash flow near $185M is $2.53 a share, a 6.1% yield at fair value and 5.7% at the close. The Street is Buy - 12 buy, 10 hold, 0 sell - with a $56.25 average target, 26% above the tape. - THE QUARTER (13 weeks ended Jul 4, 2026): sales $483.868M, up 8.5%, essentially level with the $483.8M consensus. GAAP diluted EPS $0.94 against $0.61, up 54%. Adjusted EPS $0.67 against a $0.54 bar - a 24% beat, but only about +2% year over year. Adjusted operating income FELL 6.8% to $68.240M from $73.197M. Adjusted net income fell 8.2% to $50.685M. Diluted shares fell 9.2%, 83.462M to 75.782M. - THE ANGLE - THE TARIFF REFUND IS THE HEADLINE: YETI concluded during the quarter that recovery of IEEPA tariffs was probable and booked a $45.6M net benefit - $42.6M as a reduction of cost of goods sold plus $2.9M of interest income. That is the whole of the 890 basis point gross margin gain (66.7% against 57.8%) and about $0.40 of GAAP EPS. Without it GAAP EPS is roughly $0.54 against $0.61 a year ago: down, not up 54%. - THE OPERATING LEVERAGE INVERTED: sales added $37.976M. Adjusted gross profit added $30.522M. Adjusted SG&A added $35.479M. So adjusted operating income fell $4.957M - 80 cents of new gross profit against 93 cents of new operating cost, an incremental adjusted operating margin of -13.1%. Over the first half it is -20%: sales up $67.3M, adjusted operating income down $13.5M, margin 13.6% to 11.0%. Adjusted gross margin still rose 170bps to 59.5%. - THE GUIDE AND WHAT IT REQUIRES: 2026 sales growth held at 7-8%; adjusted operating margin raised to 14.9% from 14.6%; adjusted EPS raised to $2.94-$3.00 from $2.83-$2.89; diluted shares cut to 75.4M from 76.6M; free cash flow held at $200M-$225M; capex $60M-$70M. That needs roughly $204M of second-half adjusted operating income against about $161M last year, up 27%, straight after a first half that fell 12.5%. The outlook assumes US tariffs return to about 20%. - THE BALANCE SHEET AND THE RISKS: cash fell to $59.8M from $188.3M at the year end. First-half operating cash flow was $29.8M against $40.0M of property and intangible additions, so H1 free cash flow was negative $10.2M. YETI still spent $130.0M repurchasing 2.8M shares at about $46.43 and drew a net $30M on its revolver. Inventory $359.1M, up 23.6% since December. Drinkware, half the company, grew 2%; Coolers and Equipment grew 16%. What to watch: UP: a September quarter where adjusted operating income grows rather than falls; free cash flow arriving on the guided path rather than through the tariff receivable; or a credible margin target at the September 17 Investor Day. DOWN: costs outrunning gross profit again, tariffs above the assumed 20%, or Drinkware stuck at 2%. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&r