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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Hanesbrands Inc | NYSE:HBI | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.74 | 0 | 09:00:14 |
From May 2024 to Nov 2024
HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the second-quarter 2024.
“We delivered solid second-quarter results in a challenging consumer and apparel market, including better-than-expected U.S. innerwear performance and margin expansion,” said Steve Bratspies, CEO. “We’ve taken several strategic actions that have fundamentally strengthened and simplified our business, better positioning the Company for consistent revenue growth, higher profit margins, and strong cash generation. We’ve also identified additional savings opportunities to drive a step-function change in our cost structure, which combined with our current margin improvement initiatives and lower interest expense gives us visibility to strong double-digit EPS growth over the next several years. We believe our earnings growth potential and continued debt pay down positions us to unlock significant shareholder value.”
Second Quarter 2024 Continuing Operations Results Summary
Second-Quarter 2024 Results
See the Note on Adjusted Measures and Reconciliation to GAAP Measures later in this news release for additional discussion and details of actions, which include restructuring and other action-related charges.
Second-Quarter 2024 Business Segment Summary
Beginning with second-quarter 2024, the Company realigned its reporting segments to U.S. and International given the reclassification of certain businesses to discontinued operations. Both segments include innerwear and non-innerwear products. The International segment reflects businesses in Australia, the Americas and Asia.
Cash Flow, Balance Sheet and Liquidity
Additional Information on Global Champion Business Sale
As announced on June 5, 2024, the Company has entered into a definitive agreement with Authentic Brands Group (ABG) to sell the global Champion business. As noted above, along with the U.S. outlet store business that was exited in July, the global Champion business has been reclassified to discontinued operations.
The Company is on-track to complete the sale of the global Champion business in the second half of 2024 and continues to expect net proceeds of approximately $900 million, including working capital adjustments and customary transaction costs and excluding an additional contingent cash consideration of up to $300 million. On the day of closing, Hanesbrands expects to receive approximately 90%, or over $800 million, of the net proceeds, and expects to transfer the Champion IP as well as the operations of the Collegiate and European businesses. Hanesbrands expects to transfer ownership of the remaining Champion businesses, excluding Japan, from the time of close through the end of January 2025, upon which it expects to receive the remaining 10%, or approximately $100 million, of net proceeds.
Hanesbrands expects to continue operating the Champion Japan business as a licensee for a temporary period of time after January 2025 until it is ultimately transitioned to ABG in accordance with the terms of the definitive agreement. While the Company expects this business to be classified as Discontinued Operations in the future, it is currently reported as part of the Company’s Continuing Operations results. The Champion Japan business is expected to generate approximately $120 million of sales at a low single-digit operating margin, which is consistent with prior year, and is reflected in the Company’s current 2024 Continuing Operations guidance.
Third-Quarter and Full-Year 2024 Financial Outlook
Current 2024 guidance metrics, which are based on continuing operations and reflect the global Champion and U.S. outlet store businesses being reported in discontinued operations, are not comparable to prior 2024 guidance metrics given on May 9, 2024. Financial results for prior periods have been recast for discontinued operations and are available in the supplemental section of the Company’s investor relations homepage (www.hanes.com/investors).
The Company is providing guidance on tax expense due to the expected fluctuation of its quarterly tax rate, stemming from the deferred tax reserve matter previously disclosed in fourth-quarter 2022. Importantly, the reserve does not impact cash taxes. Some portion of the reserve may reverse in future periods.
The Company closed the sale of its U.S. Sheer Hosiery business on September 29, 2023. For the full year 2023, its U.S. Sheer Hosiery business generated $50 million of net sales and an operating loss of $(2) million. For third-quarter 2023, its U.S. Sheer Hosiery business generated approximately $17 million of net sales and an operating loss of less than $(1) million.
For fiscal year 2024, which ends on December 28, 2024, the Company currently expects:
For third-quarter 2024, which ends on September 28, 2024, the Company currently expects:
HanesBrands has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/FAQ.
Note on Adjusted Measures and Reconciliation to GAAP Measures
To supplement financial results prepared in accordance with generally accepted accounting principles, the Company provides quarterly and full-year results concerning certain non‐GAAP financial measures, including adjusted diluted earnings (loss) per share from continuing operations, adjusted income (loss) from continuing operations, adjusted income tax expense, adjusted income (loss) from continuing operations before income taxes, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted interest expense and adjusted other expenses, net debt, leverage ratio and free cash flow.
Adjusted EPS is defined as diluted earnings (loss) per share from continuing operations excluding actions and the tax effect on actions. Adjusted income (loss) from continuing operations is defined as income (loss) from continuing operation excluding actions and the tax effect on actions. Adjusted income tax expense is defined as income tax expense excluding actions. Adjusted income (loss) from continuing operations before income taxes is defined as income (loss) from continuing operations before income tax excluding actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions. Adjusted gross profit is defined as gross profit excluding actions. Adjusted interest is defined as interest expense excluding actions. Adjusted other expenses is defined as other expenses excluding actions and adjusted effective tax rate is defined as adjusted income tax expense divided by adjusted income (loss) from continuing operations before income tax.
Charges for actions taken in 2024 and 2023, as applicable, include the supply chain restructuring and consolidation, corporate asset impairment, headcount actions and related severance charges, professional services, technology charges, gain/loss on classification of assets held for sale, loss on extinguishment of debt, gain on final settlement of cross currency swap contracts and the tax effects thereof.
While these costs are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.
HanesBrands has chosen to present these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of our supply chain restructuring and consolidation and other actions that are deemed to be material stand-alone initiatives apart from the Company’s core operations. HanesBrands believes these non-GAAP measures provide management and investors with valuable supplemental information for analyzing the operating performance of the Company’s ongoing business during each period presented without giving effect to costs associated with the execution of any of the aforementioned actions taken.
The Company has also chosen to present EBITDA and adjusted EBITDA to investors because it considers these measures to be an important supplemental means of evaluating operating performance. EBITDA is defined as net income (loss) before the impacts of discontinued operations, interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding (x) restructuring charges related to our supply chain restructuring and consolidation, and other action-related charges described in more detail in Table 6-A and (y) certain other losses, charges and expenses as defined in the Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended (the “Credit Agreement”) described in more detail in Table 6-B. HanesBrands believes that EBITDA and adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, and management uses EBITDA and adjusted EBITDA for planning purposes in connection with setting its capital allocation strategy. EBITDA and adjusted EBITDA should not, however, be considered as measures of discretionary cash available to invest in the growth of the business.
Net debt is defined as the total of current debt, long-term debt, and borrowings under the accounts receivable securitization facility (excluding long-term debt issuance costs and debt discount and borrowings of unrestricted subsidiaries under the accounts receivable securitization facility) less (x) other debt and cash adjustments and (y) cash and cash equivalents. Leverage ratio is the ratio of net debt to adjusted EBITDA as it is defined in our Credit Agreement.
The Company defines free cash flow as net cash from operating activities less capital expenditures. Management believes that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. The Company defines organic net sales as net sales excluding those derived from businesses acquired or divested within the previous 12 months of the reporting date.
HanesBrands is a global company that reports financial information in U.S. dollars in accordance with GAAP. As a supplement to the Company’s reported operating results, HanesBrands also presents constant-currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. The Company uses constant currency information to provide a framework to assess how the business performed excluding the effects of changes in the rates used to calculate foreign currency translation.
To calculate foreign currency translation on a constant currency basis, operating results for the current-year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).
HanesBrands believes constant currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in the Company’s businesses. The Company defines organic constant currency sales as net sales excluding those derived from businesses acquired or divested within the previous 12 months of the reporting date and also excluding the impact of translating foreign currencies into U.S. dollars as discussed above.
Non‐GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or substitute for, financial results prepared in accordance with GAAP. Further, the non-GAAP measures presented may be different from non-GAAP measures with similar or identical names presented by other companies.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are presented in the supplemental financial information included with this news release.
Cautionary Statement Concerning Forward-Looking Statements
This news release contains certain information that may constitute forward-looking statements, as defined under U.S. federal securities laws. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” believe,” “could,” “will,” “expect,” “outlook,” “potential,” “project,” “estimate,” “future,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements with respect to our intent, belief and current expectations about our strategic direction, prospects and future results are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those implied or expressed by such statements. These risks and uncertainties include, but are not limited to, with respect to the pending sale of the global Champion business, whether and when the required regulatory approvals will be obtained, whether and when the closing conditions will be satisfied, and whether and when the pending sale will close, if at all; our ability to execute, and realize benefits, successfully, or at all, from the pending sale of the global Champion business; our ability to successfully implement our strategic plans, including our supply chain restructuring and consolidation and other cost savings initiatives; trends associated with our business; the rapidly changing retail environment and the level of consumer demand; the effects of any geopolitical conflicts (including the ongoing Russia-Ukraine conflict and Middle East conflicts) or public health emergencies or severe global health crises, including effects on consumer spending, global supply chains, critical supply routes and the financial markets; our ability to deleverage on the anticipated time frame or at all, which could negatively impact our ability to satisfy the financial covenants in our Credit Agreement or other contractual arrangements; any inadequacy, interruption, integration failure or security failure with respect to our information technology; future intangible assets or goodwill impairment due to changes in our business, market conditions, or other factors, including significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex international tax structure; our future financial performance; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and HanesBrands undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.
About HanesBrands
HanesBrands (NYSE: HBI) makes everyday apparel that is known and loved by consumers around the world for comfort, quality and value. Among the Company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Bonds, which is setting new standards for design and sustainability; Maidenform, America’s number one shapewear brand; and Bali, America’s number one national bra brand. HBI employs 48,000 associates in approximately 30 countries and has built a strong reputation for workplace quality and ethical business practices. The Company, a longtime leader in sustainability, has set aggressive 2030 goals to improve the lives of people, protect the planet and produce sustainable products.
TABLE 1
HANESBRANDS INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
% Change
June 29, 2024
July 1, 2023
% Change
Net sales
$
995,393
$
1,035,004
(3.8
)%
$
1,773,606
$
1,919,034
(7.6
)%
Cost of sales
688,320
678,211
1,157,218
1,279,862
Gross profit
307,073
356,793
(13.9
)%
616,388
639,172
(3.6
)%
As a % of net sales
30.8
%
34.5
%
34.8
%
33.3
%
Selling, general and administrative expenses
370,202
286,860
29.1
%
640,409
543,695
17.8
%
As a % of net sales
37.2
%
27.7
%
36.1
%
28.3
%
Operating profit (loss)
(63,129
)
69,933
(190.3
)%
(24,021
)
95,477
(125.2
)%
As a % of net sales
(6.3
)%
6.8
%
(1.4
)%
5.0
%
Other expenses
10,785
7,239
20,014
21,977
Interest expense, net
50,299
58,718
100,905
103,938
Income (loss) from continuing operations before income taxes
(124,213
)
3,976
(144,940
)
(30,438
)
Income tax expense
12,332
12,826
22,215
29,006
Loss from continuing operations
(136,545
)
(8,850
)
(167,155
)
(59,444
)
Income (loss) from discontinued operations, net of tax
(161,835
)
(13,614
)
(170,347
)
2,576
Net loss
$
(298,380
)
$
(22,464
)
$
(337,502
)
$
(56,868
)
Earnings (loss) per share - basic:
Continuing operations
$
(0.39
)
$
(0.03
)
$
(0.48
)
$
(0.17
)
Discontinued operations
(0.46
)
(0.04
)
(0.48
)
0.01
Net loss
$
(0.85
)
$
(0.06
)
$
(0.96
)
$
(0.16
)
Earnings (loss) per share - diluted:
Continuing operations
$
(0.39
)
$
(0.03
)
$
(0.48
)
$
(0.17
)
Discontinued operations
(0.46
)
(0.04
)
(0.48
)
0.01
Net loss
$
(0.85
)
$
(0.06
)
$
(0.96
)
$
(0.16
)
Weighted average shares outstanding:
Basic
351,990
350,501
351,783
350,468
Diluted
351,990
350,501
351,783
350,468
TABLE 2-A
HANESBRANDS INC.
Supplemental Financial Information
Impact of Foreign Currency
(in thousands, except per share data)
(Unaudited)
The following tables present a reconciliation of reported results on a constant currency basis for the quarter and six months ended June 29, 2024 and a comparison to prior year:
Quarter Ended June 29, 2024
As Reported
Impact from Foreign Currency1
Constant Currency
Quarter Ended July 1, 2023
% Change, As Reported
% Change, Constant Currency
As reported under GAAP:
Net sales
$
995,393
$
(15,194
)
$
1,010,587
$
1,035,004
(3.8
)%
(2.4
)%
Gross profit
307,073
(9,082
)
316,155
356,793
(13.9
)
(11.4
)
Operating profit (loss)
(63,129
)
(3,596
)
(59,533
)
69,933
(190.3
)
(185.1
)
Diluted loss per share from continuing operations3
$
(0.39
)
$
(0.01
)
$
(0.38
)
$
(0.03
)
1,200.0
%
1,166.7
%
As adjusted:2
Net sales
$
995,393
$
(15,194
)
$
1,010,587
$
1,035,004
(3.8
)%
(2.4
)%
Gross profit
395,694
(9,082
)
404,776
357,029
10.8
13.4
Operating profit
126,126
(3,596
)
129,722
86,628
45.6
49.7
Diluted earnings per share from continuing operations3
$
0.15
$
(0.01
)
$
0.16
$
0.02
650.0
%
700.0
%
1
Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.
2
Results for the quarters ended June 29, 2024 and July 1, 2023 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6-A.
3
Amounts may not be additive due to rounding.
Six Months Ended June 29, 2024
As Reported
Impact from Foreign Currency1
Constant Currency
Six Months Ended July 1, 2023
% Change, As Reported
% Change, Constant Currency
As reported under GAAP:
Net sales
$
1,773,606
$
(30,558
)
$
1,804,164
$
1,919,034
(7.6
)%
(6.0
)%
Gross profit
616,388
(18,352
)
634,740
639,172
(3.6
)
(0.7
)
Operating profit (loss)
(24,021
)
(6,686
)
(17,335
)
95,477
(125.2
)
(118.2
)
Diluted loss per share from continuing operations3
$
(0.48
)
$
(0.01
)
$
(0.46
)
$
(0.17
)
182.4
%
170.6
%
As adjusted:2
Net sales
$
1,773,606
$
(30,558
)
$
1,804,164
$
1,919,034
(7.6
)%
(6.0
)%
Gross profit
705,212
(18,352
)
723,564
640,924
10.0
12.9
Operating profit
180,203
(6,686
)
186,889
115,181
56.5
62.3
Diluted earnings per share from continuing operations3
$
0.11
$
(0.01
)
$
0.12
$
(0.09
)
(222.2
)%
(233.3
)%
1
Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.
2
Results for the six months ended June 29, 2024 and July 1, 2023 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6-A.
3
Amounts may not be additive due to rounding.
TABLE 2-B
HANESBRANDS INC.
Supplemental Financial Information
Organic Constant Currency
(in thousands, except per share data)
(Unaudited)
The following tables present a reconciliation of reported results on an organic constant currency basis for the quarter and six months ended June 29, 2024 and a comparison to prior year:
Quarter Ended June 29, 2024
Quarter Ended July 1, 2023
As Reported
Impact from Foreign Currency1
Less U.S. Hosiery Divestiture2
Organic Constant Currency
As Reported
Less U.S. Hosiery Divestiture2
Organic
% Change, As Reported
% Change, Organic Constant Currency
Net sales
$
995,393
$
(15,194
)
$
—
$
1,010,587
$
1,035,004
$
13,470
$
1,021,534
(3.8
)%
(1.1
)%
1
Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.
2
The Company sold its U.S. Sheer Hosiery business on September 29, 2023.
Six Months Ended June 29, 2024
Six Months Ended July 1, 2023
As Reported
Impact from Foreign Currency1
Less U.S. Hosiery Divestiture2
Organic Constant Currency
As Reported
Less U.S. Hosiery Divestiture2
Organic
% Change, As Reported
% Change, Organic Constant Currency
Net sales
$
1,773,606
$
(30,558
)
$
—
$
1,804,164
$
1,919,034
$
33,055
$
1,885,979
(7.6
)%
(4.3
)%
1
Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.
2
The Company sold its U.S. Sheer Hosiery business on September 29, 2023.
TABLE 3
HANESBRANDS INC.
Supplemental Financial Information
By Business Segment
(in thousands)
(Unaudited)
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
% Change
June 29, 2024
July 1, 2023
% Change
Segment net sales:
U.S.
$
740,154
$
751,049
(1.5
)%
$
1,284,045
$
1,350,933
(5.0
)%
International
254,539
264,406
(3.7
)
488,088
520,745
(6.3
)
Other
700
19,549
(96.4
)
1,473
47,356
(96.9
)
Total net sales
$
995,393
$
1,035,004
(3.8
)%
$
1,773,606
$
1,919,034
(7.6
)%
Segment operating profit:
U.S.
$
158,214
$
125,154
26.4
%
$
256,477
$
191,761
33.7
%
International
30,542
21,701
40.7
51,040
44,245
15.4
Other
(130
)
(1,721
)
(92.4
)
551
(212
)
(359.9
)
General corporate expenses/other
(62,500
)
(58,506
)
6.8
(127,865
)
(120,613
)
6.0
Total operating profit before restructuring and other action-related charges
126,126
86,628
45.6
180,203
115,181
56.5
Restructuring and other action-related charges
(189,255
)
(16,695
)
1,033.6
(204,224
)
(19,704
)
936.5
Total operating profit (loss)
$
(63,129
)
$
69,933
(190.3
)%
$
(24,021
)
$
95,477
(125.2
)%
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
Basis Points Change
June 29, 2024
July 1, 2023
Basis Points Change
Segment operating margin:
U.S.
21.4
%
16.7
%
471
20.0
%
14.2
%
578
International
12.0
8.2
379
10.5
8.5
196
Other
(18.6
)
(8.8
)
(977
)
37.4
(0.4
)
3,785
General corporate expenses/other
(6.3
)
(5.7
)
(63
)
(7.2
)
(6.3
)
(92
)
Total operating margin before restructuring and other action-related charges
12.7
8.4
430
10.2
6.0
416
Restructuring and other action-related charges
(19.0
)
(1.6
)
(1,740
)
(11.5
)
(1.0
)
(1,049
)
Total operating margin
(6.3
)%
6.8
%
(1,310
)
(1.4
)%
5.0
%
(633
)
TABLE 4
HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 29, 2024
December 30, 2023
July 1, 2023
Assets
Cash and cash equivalents
$
213,767
$
185,717
$
173,415
Trade accounts receivable, net
483,951
451,052
558,165
Inventories
937,980
972,654
1,173,006
Other current assets
189,347
117,057
155,262
Current assets held for sale
460,863
549,735
831,849
Total current assets
2,285,908
2,276,215
2,891,697
Property, net
209,801
354,410
369,812
Right-of-use assets
240,219
281,898
297,820
Trademarks and other identifiable intangibles, net
936,294
959,851
955,786
Goodwill
658,736
664,805
658,864
Deferred tax assets
17,029
18,176
3,762
Other noncurrent assets
126,385
139,151
142,398
Noncurrent assets held for sale
905,472
945,808
958,892
Total assets
$
5,379,844
$
5,640,314
$
6,279,031
Liabilities
Accounts payable
$
704,114
$
580,285
$
791,531
Accrued liabilities
512,717
421,805
399,696
Lease liabilities
65,136
70,490
67,731
Accounts Receivable Securitization Facility
—
6,000
149,000
Current portion of long-term debt
44,250
59,000
59,000
Current liabilities held for sale
240,263
252,988
261,130
Total current liabilities
1,566,480
1,390,568
1,728,088
Long-term debt
3,224,155
3,235,640
3,504,275
Lease liabilities - noncurrent
217,483
239,686
252,944
Pension and postretirement benefits
95,067
103,456
109,708
Other noncurrent liabilities
93,705
123,918
206,534
Noncurrent liabilities held for sale
118,551
127,693
129,522
Total liabilities
5,315,441
5,220,961
5,931,071
Stockholders’ equity
Preferred stock
—
—
—
Common stock
3,516
3,501
3,498
Additional paid-in capital
363,078
353,367
343,042
Retained earnings
217,400
554,796
515,595
Accumulated other comprehensive loss
(519,591
)
(492,311
)
(514,175
)
Total stockholders’ equity
64,403
419,353
347,960
Total liabilities and stockholders’ equity
$
5,379,844
$
5,640,314
$
6,279,031
TABLE 5
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Quarters Ended
Six Months Ended
June 29, 2024(1)
July 1, 2023(1)
June 29, 2024(1)
July 1, 2023(1)
Operating Activities:
Net loss
$
(298,380
)
$
(22,464
)
$
(337,502
)
$
(56,868
)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation
22,304
18,343
39,978
35,703
Amortization of acquisition intangibles
4,100
4,159
8,203
8,345
Other amortization
2,899
3,593
6,198
6,398
Impairment of long-lived assets and goodwill
76,604
—
76,604
—
Inventory write-down charges
117,663
—
117,663
—
Loss on extinguishment of debt
—
—
—
8,466
Loss on classification of assets held for sale
51,071
7,338
51,071
5,199
Amortization of debt issuance costs and debt discount
2,561
2,266
5,105
4,239
Other
16,103
6,635
13,722
11,837
Changes in assets and liabilities:
Accounts receivable
(51,193
)
(4,972
)
(54,487
)
46,671
Inventories
17,529
125,095
(41,850
)
132,956
Other assets
7,088
(25,856
)
(466
)
(36,617
)
Accounts payable
30,964
(4,142
)
134,029
39,029
Accrued pension and postretirement benefits
80
1,461
261
2,940
Accrued liabilities and other
79,033
(23,760
)
86,068
(76,065
)
Net cash from operating activities
78,426
87,696
104,597
132,233
Investing Activities:
Capital expenditures
(7,834
)
(9,326
)
(28,091
)
(33,570
)
Other
3,625
103
3,653
19,047
Net cash from investing activities
(4,209
)
(9,223
)
(24,438
)
(14,523
)
Financing Activities:
Borrowings on Term Loan Facilities
—
—
—
891,000
Repayments on Term Loan Facilities
(14,750
)
(8,500
)
(29,500
)
(14,750
)
Borrowings on Accounts Receivable Securitization Facility
467,000
463,000
980,500
1,051,000
Repayments on Accounts Receivable Securitization Facility
(484,500
)
(480,000
)
(986,500
)
(1,111,500
)
Borrowings on Revolving Loan Facilities
293,000
556,000
609,000
977,500
Repayments on Revolving Loan Facilities
(293,000
)
(627,500
)
(609,000
)
(1,088,500
)
Borrowings on Senior Notes
—
—
—
600,000
Repayments on Senior Notes
—
—
—
(1,436,884
)
Payments to amend and refinance credit facilities
(501
)
(864
)
(679
)
(28,235
)
Other
214
(1,117
)
(3,817
)
(2,792
)
Net cash from financing activities
(32,537
)
(98,981
)
(39,996
)
(163,161
)
Effect of changes in foreign exchange rates on cash
(195
)
(869
)
(12,963
)
(1,130
)
Change in cash and cash equivalents
41,485
(21,377
)
27,200
(46,581
)
Cash and cash equivalents at beginning of period
191,216
213,209
205,501
238,413
Cash and cash equivalents at end of period
$
232,701
$
191,832
$
232,701
$
191,832
Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents
$
213,767
$
173,415
$
213,767
$
173,415
Cash and cash equivalents included in current assets held for sale
18,934
18,417
18,934
18,417
Cash and cash equivalents at end of period
$
232,701
$
191,832
$
232,701
$
191,832
1
The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.
TABLE 6-A
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
The following tables present a reconciliation of results from continuing operations as reported under GAAP to the results from continuing operations as adjusted for the quarter and six months ended June 29, 2024 and a comparison to prior year. The Company has chosen to present the following non-GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating continuing operations absent the effect of restructuring and other actions that are deemed to be material stand-alone initiatives apart from the Company’s core operations. While these costs are not expected to continue for any individual transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.
Restructuring and other action-related charges in 2024 and 2023 include the following:
Supply chain restructuring and consolidation
In 2024, represents charges as a result of the pending sale of the global Champion business and the completed exit of the U.S.-based outlet store business in July 2024 related to significant restructuring and consolidation efforts within the Company’s supply chain network, both manufacturing and distribution, to align the Company’s network to its continuing operations to drive stronger operating performance and margin expansion. In 2023, represents charges related to supply chain segmentation to restructure and position the Company’s distribution and manufacturing network to align with its demand trends, simplify operations and improve efficiencies.
Corporate asset impairment charges
Primarily represents charges related to a contract terminated in the second quarter of 2024 and impairment of the Company’s headquarters location that was classified as held for sale in the second quarter of 2024.
Headcount actions and related severance
Represents charges related to operating model initiatives primarily headcount actions and related severance charges and adjustments related to restructuring activities.
Professional services
Represents professional fees, primarily including consulting and advisory services, related to restructuring activities.
Technology
Represents technology charges related to the implementation of the Company’s technology modernization initiative which includes a global enterprise resource planning platform.
Gain/loss on classification of assets held for sale
Represents the gain/loss to adjust the valuation allowance related to the U.S. Sheer Hosiery business, prior to the sale on September 29, 2023, primarily from the changes in carrying value due to changes in working capital.
Loss on extinguishment of debt
Represents charges related to the redemption of the Company’s 4.625% Senior Notes and 3.5% Senior Notes in the first quarter of 2023.
Gain on final settlement of cross currency swap contracts
Primarily represents the remaining gain related to cross-currency swap contracts previously designated as cash flow hedges in accumulated other comprehensive loss which was released into earnings as the Company unwound the cross-currency swap contracts in connection with the redemption of the 3.5% Senior Notes at the time of settlement in the first quarter of 2023.
Tax effect on actions
Represents the applicable effective tax rate on the restructuring and other action-related charges based on the jurisdiction of where the charges were incurred.
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Gross profit, as reported under GAAP
$
307,073
$
356,793
$
616,388
$
639,172
As a % of net sales
30.8
%
34.5
%
34.8
%
33.3
%
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
78,226
236
78,393
1,752
Corporate asset impairment charges
10,395
—
10,395
—
Headcount actions and related severance
—
—
36
—
Gross profit, as adjusted
$
395,694
$
357,029
$
705,212
$
640,924
As a % of net sales
39.8
%
34.5
%
39.8
%
33.4
%
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Selling, general and administrative expenses, as reported under GAAP
$
370,202
$
286,860
$
640,409
$
543,695
As a % of net sales
37.2
%
27.7
%
36.1
%
28.3
%
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
(78,581
)
—
(80,521
)
—
Corporate asset impairment charges
(9,712
)
—
(9,712
)
—
Headcount actions and related severance
(6,911
)
(2,760
)
(19,062
)
(1,889
)
Professional services
(3,544
)
(3,608
)
(4,034
)
(3,648
)
Technology
(218
)
(2,881
)
(399
)
(7,102
)
Loss on classification of assets held for sale
—
(7,338
)
—
(5,199
)
Other
(1,668
)
128
(1,672
)
(114
)
Selling, general and administrative expenses, as adjusted
$
269,568
$
270,401
$
525,009
$
525,743
As a % of net sales
27.1
%
26.1
%
29.6
%
27.4
%
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Operating profit (loss), as reported under GAAP
$
(63,129
)
$
69,933
$
(24,021
)
$
95,477
As a % of net sales
(6.3
)%
6.8
%
(1.4
)%
5.0
%
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
156,807
236
158,914
1,752
Corporate asset impairment charges
20,107
—
20,107
—
Headcount actions and related severance
6,911
2,760
19,098
1,889
Professional services
3,544
3,608
4,034
3,648
Technology
218
2,881
399
7,102
Loss on classification of assets held for sale
—
7,338
—
5,199
Other
1,668
(128
)
1,672
114
Operating profit, as adjusted
$
126,126
$
86,628
$
180,203
$
115,181
As a % of net sales
12.7
%
8.4
%
10.2
%
6.0
%
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Interest expense, net and other expenses, as reported under GAAP
$
61,084
$
65,957
$
120,919
$
125,915
Restructuring and other action-related charges:
Loss on extinguishment of debt
—
—
—
(8,466
)
Gain on final settlement of cross currency swaps
—
—
—
1,370
Interest expense, net and other expenses, as adjusted
$
61,084
$
65,957
$
120,919
$
118,819
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Income (loss) from continuing operations before income taxes, as reported under GAAP
$
(124,213
)
$
3,976
$
(144,940
)
$
(30,438
)
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
156,807
236
158,914
1,752
Corporate asset impairment charges
20,107
—
20,107
—
Headcount actions and related severance
6,911
2,760
19,098
1,889
Professional services
3,544
3,608
4,034
3,648
Technology
218
2,881
399
7,102
Loss on classification of assets held for sale
—
7,338
—
5,199
Other
1,668
(128
)
1,672
114
Loss on extinguishment of debt
—
—
—
8,466
Gain on final settlement of cross currency swaps
—
—
—
(1,370
)
Income (loss) from continuing operations before income taxes, as adjusted
$
65,042
$
20,671
$
59,284
$
(3,638
)
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Loss from continuing operations, as reported under GAAP
$
(136,545
)
$
(8,850
)
$
(167,155
)
$
(59,444
)
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
156,807
236
158,914
1,752
Corporate asset impairment charges
20,107
—
20,107
—
Headcount actions and related severance
6,911
2,760
19,098
1,889
Professional services
3,544
3,608
4,034
3,648
Technology
218
2,881
399
7,102
Loss on classification of assets held for sale
—
7,338
—
5,199
Other
1,668
(128
)
1,672
114
Loss on extinguishment of debt
—
—
—
8,466
Gain on final settlement of cross currency swaps
—
—
—
(1,370
)
Tax effect on actions
—
—
—
—
Income (loss) from continuing operations, as adjusted
$
52,710
$
7,845
$
37,069
$
(32,644
)
Quarters Ended1
Six Months Ended1
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Diluted loss per share from continuing operations, as reported under GAAP
$
(0.39
)
$
(0.03
)
$
(0.48
)
$
(0.17
)
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
0.44
0.00
0.45
0.00
Corporate asset impairment charges
0.06
—
0.06
—
Headcount actions and related severance
0.02
0.01
0.05
0.01
Professional services
0.01
0.01
0.01
0.01
Technology
0.00
0.01
0.00
0.02
Loss on classification of assets held for sale
—
0.02
—
0.01
Other
0.00
0.00
0.00
0.00
Loss on extinguishment of debt
—
—
—
0.02
Gain on final settlement of cross currency swaps
—
—
—
0.00
Tax effect on actions
—
—
—
—
Diluted earnings (loss) per share from continuing operations, as adjusted
$
0.15
$
0.02
$
0.11
$
(0.09
)
1
Amounts may not be additive due to rounding.
TABLE 6-B
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
Last Twelve Months
June 29, 2024
July 1, 2023
Leverage Ratio:
EBITDA1:
Loss from continuing operations
$
(71,942
)
$
(512,826
)
Interest expense, net
211,260
177,737
Income tax expense (benefit)
(20,701
)
477,435
Depreciation and amortization
84,793
80,044
Total EBITDA
203,410
222,390
Total restructuring and other action-related charges (excluding tax effect on actions)2
207,319
70,311
Other net losses, charges and expenses3
96,060
118,533
Total EBITDA from discontinued operations, as adjusted4
165,532
223,822
Total EBITDA, as adjusted
$
672,321
$
635,056
Net debt:
Debt (current and long-term debt and Accounts Receivable Securitization Facility excluding long-term debt issuance costs and debt discount of $32,845 and $38,475, respectively)
$
3,301,250
$
3,750,750
(Less) debt related to an unrestricted subsidiary5
—
—
Other debt and cash adjustments6
3,957
3,587
(Less) Cash and cash equivalents of continuing operations
(213,767
)
(173,415
)
(Less) Cash and cash equivalents of discontinued operations
(18,934
)
(18,417
)
Net debt
$
3,072,506
$
3,562,505
Debt/Loss from continuing operations7
(45.9
)
(7.3
)
Net debt/EBITDA, as adjusted8
4.6
5.6
1
Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure.
2
The last twelve months ended June 29, 2024 includes $158 million of supply chain restructuring and consolidation charges, $22 million of headcount actions and related severance charges, $20 million of corporate asset impairment charges, $4 million of professional services, $2 million of technology charges, $3 million related to other restructuring and other action-related charges and $(2) million of a gain on the sale of business and classification of assets held for sale. The last twelve months ended July 1, 2023 includes $15 million of supply chain restructuring and consolidation charges, $13 million of a loss on classification of assets held for sale, $12 million of professional services, $12 million of technology charges, $10 million of headcount actions and related severance charges, $8 million of a loss on extinguishment of debt, $1 million related to other restructuring and other action-related charges and $(1) million of a gain on the final settlement of cross currency swap contracts. The items included in restructuring and other action-related charges are described in more detail in Table 6-A.
3
Represents other net losses, charges and expenses that can be excluded from the Company’s leverage ratio as defined under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended. The last twelve months ended June 29, 2024, primarily includes $50 million of excess and obsolete inventory write-offs, $18 million in other compensation related items primarily stock compensation expense, $16 million of pension non-cash expense, $13 million in charges related to sales incentive amortization, $11 million of non-cash cloud computing expense, $(3) million of recovery of bad debt expense, $(2) million of net unrealized gains due to hedging activities and a $(7) million adjustment for interest expense on debt and amortization of debt issuance costs related to an unrestricted subsidiary. The last twelve months ended July 1, 2023, primarily includes $32 million of excess and obsolete inventory write-offs, $20 million in other compensation related items primarily stock compensation expense, $20 million in charges related to the ransomware attack and extraordinary events, $19 million of pension non-cash expense, $12 million in charges related to sales incentive amortization, $6 million of bad debt expense, $5 million in charges related to unrealized losses due to hedging and $5 million of non-cash cloud computing expense.
4
Represents Total EBITDA from discontinued operations, as adjusted for all items that can be excluded from the Company’s leverage ratio as defined under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended.
5
Represents amounts outstanding under an existing accounts receivable securitization facility entered into by an unrestricted subsidiary of the Company.
6
Includes drawn and undrawn letters of credit, financing leases and cash balances in certain geographies.
7
Represents Debt divided by Loss from continuing operations, which is the most comparable GAAP financial measure to Net debt/EBITDA, as adjusted.
8
Represents the Company’s leverage ratio defined as Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended, which excludes other net losses, charges and expenses in addition to restructuring and other action-related charges.
Quarters Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Free cash flow1:
Net cash from operating activities
$
78,426
$
87,696
$
104,597
$
132,233
Capital expenditures
(7,834
)
(9,326
)
(28,091
)
(33,570
)
Free cash flow
$
70,592
$
78,370
$
76,506
$
98,663
1
Free cash flow includes the results from continuing and discontinued operations for all periods presented.
TABLE 7
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of GAAP Outlook to Adjusted Outlook
(in thousands, except per share data)
(Unaudited)
Quarter Ended
Year Ended
September 28, 2024
December 28, 2024
Operating profit outlook, as calculated under GAAP
$85,000 to $100,000
$151,000 to $171,000
Restructuring and other action-related charges outlook
20,000
244,000
Operating profit outlook, as adjusted
$105,000 to $120,000
$395,000 to $415,000
Interest expense, net outlook, as calculated under GAAP
$50,000
$210,000
Restructuring and other action-related charges outlook
—
10,000
Interest expense, net outlook, as adjusted
$50,000
$200,000
Diluted earnings (loss) per share from continuing operations outlook, as calculated under GAAP1
$0.03 to $0.08
$(0.41) to $(0.35)
Restructuring and other action-related charges outlook
0.06
0.72
Diluted earnings per share from continuing operations outlook, as adjusted
$0.09 to $0.14
$0.31 to $0.37
Cash flow from operations outlook, as calculated under GAAP
$200,000
Capital expenditures outlook
40,000
Free cash flow outlook
$160,000
1
The Company expects approximately 354 million diluted weighted average shares outstanding for the quarter ended September 28, 2024 and approximately 353 million diluted weighted average shares outstanding for the year ended December 28, 2024.
The Company is unable to reconcile projections of financial performance beyond 2024 without unreasonable efforts, because the Company cannot predict, with a reasonable degree of certainty, the type and extent of certain items that would be expected to impact these figures in 2024 and beyond, such as net sales, operating profit, tax rates and action related charges.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240808584772/en/
News Media contact: Nicole Ducouer (336) 986-7090 Analysts and Investors contact: T.C. Robillard (336) 519-2115
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