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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 | |
|---|---|---|---|---|---|---|---|---|
| -0.11 | -1.31% | 8.28 | 8.35 | 8.17 | 8.31 | 2,694,747 | 22:19:02 |
From Oct 2024 to Dec 2024
Raises Full-Year and Fourth-Quarter Operating Profit, EPS, and Cash Flow Outlook
On Track to Pay Down $1 Billion of Debt in Second-Half 2024
HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the third-quarter 2024.
“We delivered another strong quarter with operating profit, earnings per share, and cash flow results that exceeded our expectations. In addition, we have further reduced our leverage, expect a return to revenue growth in the fourth quarter, and raised our full-year outlook for profit and cash flow,” said Steve Bratspies, CEO. “Our strategic actions to create a more focused, simplified business are working. We are driving a step-function change in our cost structure, increasing operational efficiencies, reducing inventory, and freeing up capital to invest in growth. We expect the benefits of these actions to ramp over the next several quarters, giving us visibility and confidence to deliver continued margin improvement, cash generation, and debt reduction through 2025.”
Third-Quarter 2024 Results
Net Sales from continuing operations were $937 million.
Gross Profit and Gross Margin increased year-over-year driven by lower input costs as the Company continues to anniversary the impact from peak inflation, the benefits from its cost savings initiatives, and the benefits from its assortment management initiative.
Selling, General and Administrative (SG&A) Expenses, as a percentage of net sales, increased over prior year driven primarily by a 150 basis point increase in brand investments, which was partially offset by benefits from cost savings initiatives and disciplined expense management.
Operating Profit and Operating Margin increased over prior year driven by gross margin improvement, which supported a 150 basis point increase in brand investments.
Interest Expense and Other Expenses of $58 million decreased approximately $8 million as compared to prior year. The decrease was driven by lower interest expense as a result of lower debt balances.
Tax Expense was $13 million as compared to $21 million in the prior year period.
Income from continuing operations totaled $32 million, or $0.09 per diluted share in third-quarter 2024. This compares to a loss from continuing operations of $(6) million, or $(0.02) per diluted share, in third-quarter 2023. Adjusted Income from continuing operations totaled $52 million, or $0.15 per diluted share. This compares to an adjusted loss from continuing operations of $(8) million, or $(0.02) per diluted share, in third-quarter 2023.
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.
Third-Quarter 2024 Business Segment Summary
Cash Flow, Balance Sheet and Liquidity
Closes Sale of Global Champion Business
Subsequent to the end of the third-quarter 2024 and as previously announced on September 30, 2024, the Company completed the sale of the intellectual property and certain operating assets of the global Champion business to Authentic Brands Group.
Fourth-Quarter and Full-Year 2024 Financial Outlook
Guidance metrics are based on continuing operations.
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 fiscal year 2024, which ends on December 28, 2024, the Company currently expects:
For fourth-quarter 2024, which ends on December 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 operations excluding actions and the tax effect on actions. Adjusted 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 expense is defined as interest expense excluding actions. Adjusted other expenses is defined as other expenses excluding actions and adjusted tax rate is defined as adjusted 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 sale of business and 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, our ability to realize the expected benefits from the sale of the global Champion business, which was completed subsequent to our third quarter on September 30, 2024; our ability to successfully operate the Champion business in certain sectors and geographies through a transition period ending on January 31, 2025, and to execute, and realize the expected benefits, successfully, or at all, from the sale of certain remaining assets of the global Champion business at the end of this transition period; 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 the sale of the global Champion business, 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) is a global leader in manufacturing basics and Innerwear brands that are synonymous with comfort, quality, and value, and have been trusted by consumers around the world for generations. Among the company’s iconic brands are Hanes, the leading basic apparel brand in the U.S.; Bonds, an Australian staple since 1915 that is setting new standards for design and innovation; Maidenform, America’s number one shapewear brand; and Bali, America’s number one national bra brand in the U.S. Hanesbrands owns the majority of its worldwide manufacturing facilities and has built a strong reputation for workplace quality and ethical business practices.
TABLE 1
HANESBRANDS INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
% Change
September 28, 2024
September 30, 2023
% Change
Net sales
$
937,103
$
961,294
(2.5
)%
$
2,710,709
$
2,880,328
(5.9
)%
Cost of sales
546,663
611,513
1,703,881
1,891,375
Gross profit
390,440
349,781
11.6
%
1,006,828
988,953
1.8
%
As a % of net sales
41.7
%
36.4
%
37.1
%
34.3
%
Selling, general and administrative expenses
287,442
268,751
7.0
%
927,851
812,446
14.2
%
As a % of net sales
30.7
%
28.0
%
34.2
%
28.2
%
Operating profit
102,998
81,030
27.1
%
78,977
176,507
(55.3
)%
As a % of net sales
11.0
%
8.4
%
2.9
%
6.1
%
Other expenses
9,505
9,079
29,519
31,056
Interest expense, net
48,606
56,648
149,511
160,586
Income (loss) from continuing operations before income taxes
44,887
15,303
(100,053
)
(15,135
)
Income tax expense
12,508
21,280
34,723
50,286
Income (loss) from continuing operations
32,379
(5,977
)
(134,776
)
(65,421
)
Loss from discontinued operations, net of tax
(2,428
)
(32,822
)
(172,775
)
(30,246
)
Net income (loss)
$
29,951
$
(38,799
)
$
(307,551
)
$
(95,667
)
Earnings (loss) per share - basic:
Continuing operations
$
0.09
$
(0.02
)
$
(0.38
)
$
(0.19
)
Discontinued operations
(0.01
)
(0.09
)
(0.49
)
(0.09
)
Net income (loss)
$
0.09
$
(0.11
)
$
(0.87
)
$
(0.27
)
Earnings (loss) per share - diluted:
Continuing operations
$
0.09
$
(0.02
)
$
(0.38
)
$
(0.19
)
Discontinued operations
(0.01
)
(0.09
)
(0.49
)
(0.09
)
Net income (loss)
$
0.08
$
(0.11
)
$
(0.87
)
$
(0.27
)
Weighted average shares outstanding:
Basic
352,107
350,667
351,891
350,534
Diluted
354,839
350,667
351,891
350,534
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 nine months ended September 28, 2024 and a comparison to prior year:
Quarter Ended September 28, 2024
As Reported
Impact from Foreign Currency1
Constant Currency
Quarter Ended
September 30, 2023
% Change,
As Reported
% Change,
Constant Currency
As reported under GAAP:
Net sales
$
937,103
$
(7,270
)
$
944,373
$
961,294
(2.5
)%
(1.8
)%
Gross profit
390,440
(1,556
)
391,996
349,781
11.6
12.1
Operating profit
102,998
(134
)
103,132
81,030
27.1
27.3
Diluted earnings (loss) per share from continuing operations3
$
0.09
$
0.00
$
0.09
$
(0.02
)
550.0
%
550.0
%
As adjusted:2
Net sales
$
937,103
$
(7,270
)
$
944,373
$
961,294
(2.5
)%
(1.8
)%
Gross profit
391,557
(1,556
)
393,113
351,310
11.5
11.9
Operating profit
122,166
(134
)
122,300
83,740
45.9
46.0
Diluted earnings (loss) per share from continuing operations3
$
0.15
$
0.00
$
0.15
$
(0.02
)
850.0
%
850.0
%
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 September 28, 2024 and September 30, 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.
Nine Months Ended September 28, 2024
As Reported
Impact from Foreign Currency1
Constant Currency
Nine Months Ended
September 30, 2023
% Change,
As Reported
% Change,
Constant Currency
As reported under GAAP:
Net sales
$
2,710,709
$
(37,828
)
$
2,748,537
$
2,880,328
(5.9
)%
(4.6
)%
Gross profit
1,006,828
(19,908
)
1,026,736
988,953
1.8
3.8
Operating profit
78,977
(6,820
)
85,797
176,507
(55.3
)
(51.4
)
Diluted loss per share from continuing operations3
$
(0.38
)
$
(0.01
)
$
(0.37
)
$
(0.19
)
(100.0
)%
(94.7
)%
As adjusted:2
Net sales
$
2,710,709
$
(37,828
)
$
2,748,537
$
2,880,328
(5.9
)%
(4.6
)%
Gross profit
1,096,769
(19,908
)
1,116,677
992,234
10.5
12.5
Operating profit
302,369
(6,820
)
309,189
198,921
52.0
55.4
Diluted earnings (loss) per share from continuing operations3
$
0.25
$
(0.01
)
$
0.26
$
(0.11
)
327.3
%
336.4
%
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 nine months ended September 28, 2024 and September 30, 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 nine months ended September 28, 2024 and a comparison to prior year:
Quarter Ended September 28, 2024
Quarter Ended September 30, 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
$
937,103
$
(7,270
)
$
—
$
944,373
$
961,294
$
17,303
$
943,991
(2.5
)%
0.0
%
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
The Company sold its U.S. Sheer Hosiery business on September 29, 2023.
Nine Months Ended September 28, 2024
Nine Months Ended September 30, 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
$
2,710,709
$
(37,828
)
$
—
$
2,748,537
$
2,880,328
$
50,358
$
2,829,970
(5.9
)%
(2.9
)%
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
Nine Months Ended
September 28, 2024
September 30, 2023
% Change
September 28, 2024
September 30, 2023
% Change
Segment net sales:
U.S.
$
678,345
$
684,990
(1.0
)%
$
1,962,390
$
2,035,923
(3.6
)%
International
259,146
255,784
1.3
747,234
776,529
(3.8
)
Other
(388
)
20,520
(101.9
)
1,085
67,876
(98.4
)
Total net sales
$
937,103
$
961,294
(2.5
)%
$
2,710,709
$
2,880,328
(5.9
)%
Segment operating profit:
U.S.
$
149,637
$
105,579
41.7
%
$
406,114
$
297,340
36.6
%
International
36,893
24,570
50.2
87,933
68,815
27.8
Other
(1,989
)
342
(681.6
)
(1,438
)
130
(1,206.2
)
General corporate expenses/other
(62,375
)
(46,751
)
33.4
(190,240
)
(167,364
)
13.7
Total operating profit before restructuring and other action-related charges
122,166
83,740
45.9
302,369
198,921
52.0
Restructuring and other action-related charges
(19,168
)
(2,710
)
607.3
(223,392
)
(22,414
)
896.7
Total operating profit
$
102,998
$
81,030
27.1
%
$
78,977
$
176,507
(55.3
)%
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
Basis Points Change
September 28, 2024
September 30, 2023
Basis Points Change
Segment operating margin:
U.S.
22.1
%
15.4
%
665
20.7
%
14.6
%
609
International
14.2
9.6
463
11.8
8.9
291
Other
512.6
1.7
51,096
(132.5
)
0.2
(13,273
)
General corporate expenses/other
(6.7
)
(4.9
)
(179
)
(7.0
)
(5.8
)
(121
)
Total operating margin before restructuring and other action-related charges
13.0
8.7
433
11.2
6.9
425
Restructuring and other action-related charges
(2.0
)
(0.3
)
(176
)
(8.2
)
(0.8
)
(746
)
Total operating margin
11.0
%
8.4
%
256
2.9
%
6.1
%
(321
)
TABLE 4
HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
September 28, 2024
December 30, 2023
September 30, 2023
Assets
Cash and cash equivalents
$
317,301
$
185,717
$
172,787
Trade accounts receivable, net
505,614
451,052
572,744
Inventories
927,754
972,654
1,066,161
Other current assets
187,541
117,057
155,289
Current assets held for sale
401,492
549,735
628,775
Total current assets
2,339,702
2,276,215
2,595,756
Property, net
198,006
354,410
356,474
Right-of-use assets
255,799
281,898
279,417
Trademarks and other identifiable intangibles, net
954,945
959,851
928,425
Goodwill
667,468
664,805
650,263
Deferred tax assets
19,740
18,176
5,267
Other noncurrent assets
120,333
139,151
148,464
Noncurrent assets held for sale
905,605
945,808
949,222
Total assets
$
5,461,598
$
5,640,314
$
5,913,288
Liabilities
Accounts payable
$
684,838
$
580,285
$
628,765
Accrued liabilities
544,071
421,805
432,553
Lease liabilities
71,604
70,490
70,701
Accounts Receivable Securitization Facility
—
6,000
200,500
Current portion of long-term debt
59,000
59,000
59,000
Current liabilities held for sale
215,949
252,988
263,759
Total current liabilities
1,575,462
1,390,568
1,655,278
Long-term debt
3,211,248
3,235,640
3,310,256
Lease liabilities - noncurrent
231,262
239,686
234,149
Pension and postretirement benefits
89,385
103,456
107,129
Other noncurrent liabilities
104,356
123,918
201,859
Noncurrent liabilities held for sale
100,541
127,693
130,581
Total liabilities
5,312,254
5,220,961
5,639,252
Stockholders’ equity
Preferred stock
—
—
—
Common stock
3,518
3,501
3,500
Additional paid-in capital
371,966
353,367
348,837
Retained earnings
247,365
554,796
476,796
Accumulated other comprehensive loss
(473,505
)
(492,311
)
(555,097
)
Total stockholders’ equity
149,344
419,353
274,036
Total liabilities and stockholders’ equity
$
5,461,598
$
5,640,314
$
5,913,288
TABLE 5
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Quarters Ended
Nine Months Ended
September 28,
2024(1)
September 30,
2023(1)
September 28,
2024(1)
September 30,
2023(1)
Operating Activities:
Net income (loss)
$
29,951
$
(38,799
)
$
(307,551
)
$
(95,667
)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation
18,528
20,543
58,506
56,246
Amortization of acquisition intangibles
1,924
4,133
10,127
12,478
Other amortization
1,997
3,458
8,195
9,856
Impairment of long-lived assets and goodwill
142
—
76,746
—
Inventory write-down charges (recoveries), net
(4,135
)
—
113,528
—
Loss on extinguishment of debt
—
—
—
8,466
(Gain) loss on sale of business and classification of assets held for sale
(741
)
(1,558
)
50,330
3,641
Amortization of debt issuance costs and debt discount
2,543
2,338
7,648
6,577
Other
11,559
(2,853
)
25,281
8,984
Changes in assets and liabilities:
Accounts receivable
(32,119
)
(34,502
)
(86,606
)
12,169
Inventories
97,686
311,636
55,836
444,592
Other assets
(12,420
)
15,784
(12,886
)
(20,833
)
Accounts payable
(48,972
)
(164,440
)
85,057
(125,411
)
Accrued pension and postretirement benefits
(2,878
)
1,241
(2,617
)
4,181
Accrued liabilities and other
29,150
38,130
115,218
(37,935
)
Net cash from operating activities
92,215
155,111
196,812
287,344
Investing Activities:
Capital expenditures
(4,088
)
(2,220
)
(32,179
)
(35,790
)
Proceeds from sales of assets
8,683
66
12,336
172
Proceeds from (payments for) disposition of business
(12,000
)
1,300
(12,000
)
1,300
Other
—
—
—
18,941
Net cash from investing activities
(7,405
)
(854
)
(31,843
)
(15,377
)
Financing Activities:
Borrowings on Term Loan Facilities
—
—
—
891,000
Repayments on Term Loan Facilities
—
(14,750
)
(29,500
)
(29,500
)
Borrowings on Accounts Receivable Securitization Facility
630,500
677,500
1,611,000
1,728,500
Repayments on Accounts Receivable Securitization Facility
(630,500
)
(626,000
)
(1,617,000
)
(1,737,500
)
Borrowings on Revolving Loan Facilities
4,500
639,000
613,500
1,616,500
Repayments on Revolving Loan Facilities
(4,500
)
(820,000
)
(613,500
)
(1,908,500
)
Borrowings on Senior Notes
—
—
—
600,000
Repayments on Senior Notes
—
—
—
(1,436,884
)
Payments to amend and refinance credit facilities
(33
)
(268
)
(712
)
(28,503
)
Other
(132
)
(92
)
(3,949
)
(2,884
)
Net cash from financing activities
(165
)
(144,610
)
(40,161
)
(307,771
)
Effect of changes in foreign exchange rates on cash
9,565
(10,388
)
(3,398
)
(11,518
)
Change in cash and cash equivalents
94,210
(741
)
121,410
(47,322
)
Cash and cash equivalents at beginning of period
232,701
191,832
205,501
238,413
Cash and cash equivalents at end of period
$
326,911
$
191,091
$
326,911
$
191,091
Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents
$
317,301
$
172,787
$
317,301
$
172,787
Cash and cash equivalents included in current assets held for sale
9,610
18,304
9,610
18,304
Cash and cash equivalents at end of period
$
326,911
$
191,091
$
326,911
$
191,091
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 nine months ended September 28, 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 sale of the global Champion business, which was completed subsequent to the Company’s third quarter on September 30, 2024, 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 sale of business and classification of assets held for sale
Represents the gain/loss associated with the sale of the Company’s U.S. Sheer Hosiery business and adjustments to the related valuation allowance 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.
Discrete tax benefit
Represents an adjustment to non-cash reserves established at December 31, 2022 related to deferred taxes established for Swiss statutory impairments, which are not indicative of the Company’s core business operations.
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
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Gross profit, as reported under GAAP
$
390,440
$
349,781
$
1,006,828
$
988,953
As a % of net sales
41.7
%
36.4
%
37.1
%
34.3
%
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
1,117
660
79,510
2,412
Corporate asset impairment charges
—
—
10,395
—
Headcount actions and related severance
—
869
36
869
Gross profit, as adjusted
$
391,557
$
351,310
$
1,096,769
$
992,234
As a % of net sales
41.8
%
36.5
%
40.5
%
34.4
%
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Selling, general and administrative expenses, as reported under GAAP
$
287,442
$
268,751
$
927,851
$
812,446
As a % of net sales
30.7
%
28.0
%
34.2
%
28.2
%
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
(9,593
)
—
(90,114
)
—
Corporate asset impairment charges
—
—
(9,712
)
—
Headcount actions and related severance
1,245
(1,662
)
(17,817
)
(3,551
)
Professional services
(7,843
)
(165
)
(11,877
)
(3,813
)
Technology
(428
)
(588
)
(827
)
(7,690
)
Gain (loss) on sale of business and classification of assets held for sale
—
1,558
—
(3,641
)
Other
(1,432
)
(324
)
(3,104
)
(438
)
Selling, general and administrative expenses, as adjusted
$
269,391
$
267,570
$
794,400
$
793,313
As a % of net sales
28.7
%
27.8
%
29.3
%
27.5
%
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Operating profit, as reported under GAAP
$
102,998
$
81,030
$
78,977
$
176,507
As a % of net sales
11.0
%
8.4
%
2.9
%
6.1
%
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
10,710
660
169,624
2,412
Corporate asset impairment charges
—
—
20,107
—
Headcount actions and related severance
(1,245
)
2,531
17,853
4,420
Professional services
7,843
165
11,877
3,813
Technology
428
588
827
7,690
(Gain) loss on sale of business and classification of assets held for sale
—
(1,558
)
—
3,641
Other
1,432
324
3,104
438
Operating profit, as adjusted
$
122,166
$
83,740
$
302,369
$
198,921
As a % of net sales
13.0
%
8.7
%
11.2
%
6.9
%
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Interest expense, net and other expenses, as reported under GAAP
$
58,111
$
65,727
$
179,030
$
191,642
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
$
58,111
$
65,727
$
179,030
$
184,546
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Income (loss) from continuing operations before income taxes, as reported under GAAP
$
44,887
$
15,303
$
(100,053
)
$
(15,135
)
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
10,710
660
169,624
2,412
Corporate asset impairment charges
—
—
20,107
—
Headcount actions and related severance
(1,245
)
2,531
17,853
4,420
Professional services
7,843
165
11,877
3,813
Technology
428
588
827
7,690
(Gain) loss on sale of business and classification of assets held for sale
—
(1,558
)
—
3,641
Other
1,432
324
3,104
438
Loss on extinguishment of debt
—
—
—
8,466
Gain on final settlement of cross currency swaps
—
—
—
(1,370
)
Income from continuing operations before income taxes, as adjusted
$
64,055
$
18,013
$
123,339
$
14,375
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Income tax expense, as reported under GAAP
$
12,508
$
21,280
$
34,723
$
50,286
Restructuring and other action-related charges:
Discrete tax benefit
—
4,263
—
4,263
Tax effect on actions
—
—
—
—
Total included in income tax (expense) benefit
—
4,263
—
4,263
Income tax expense, as adjusted
$
12,508
$
25,543
$
34,723
$
54,549
Quarters Ended
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Income (loss) from continuing operations, as reported under GAAP
$
32,379
$
(5,977
)
$
(134,776
)
$
(65,421
)
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
10,710
660
169,624
2,412
Corporate asset impairment charges
—
—
20,107
—
Headcount actions and related severance
(1,245
)
2,531
17,853
4,420
Professional services
7,843
165
11,877
3,813
Technology
428
588
827
7,690
(Gain) loss on sale of business and classification of assets held for sale
—
(1,558
)
—
3,641
Other
1,432
324
3,104
438
Loss on extinguishment of debt
—
—
—
8,466
Gain on final settlement of cross currency swaps
—
—
—
(1,370
)
Discrete tax benefit
—
(4,263
)
—
(4,263
)
Tax effect on actions
—
—
—
—
Income (loss) from continuing operations, as adjusted
$
51,547
$
(7,530
)
$
88,616
$
(40,174
)
Quarters Ended1
Nine Months Ended1
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Diluted earnings (loss) per share from continuing operations, as reported under GAAP
$
0.09
$
(0.02
)
$
(0.38
)
$
(0.19
)
Restructuring and other action-related charges:
Supply chain restructuring and consolidation
0.03
0.00
0.48
0.01
Corporate asset impairment charges
—
—
0.06
—
Headcount actions and related severance
0.00
0.01
0.05
0.01
Professional services
0.02
0.00
0.03
0.01
Technology
0.00
0.00
0.00
0.02
(Gain) loss on sale of business and classification of assets held for sale
—
0.00
—
0.01
Other
0.00
0.00
0.01
0.00
Loss on extinguishment of debt
—
—
—
0.02
Gain on final settlement of cross currency swaps
—
—
—
0.00
Discrete tax benefit
—
(0.01
)
—
(0.01
)
Tax effect on actions
—
—
—
—
Diluted earnings (loss) per share from continuing operations, as adjusted
$
0.15
$
(0.02
)
$
0.25
$
(0.11
)
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
September 28, 2024
September 30, 2023
Leverage Ratio:
EBITDA1:
Loss from continuing operations
$
(33,586
)
$
(540,019
)
Interest expense, net
203,218
199,947
Income tax expense (benefit)
(29,473
)
498,712
Depreciation and amortization
85,131
81,867
Total EBITDA
225,290
240,507
Total restructuring and other action-related charges (excluding tax effect on actions)2
223,777
49,571
Other net losses, charges and expenses3
97,422
104,477
Total EBITDA from discontinued operations, as adjusted4
146,449
185,923
Total EBITDA, as adjusted
$
692,938
$
580,478
Net debt:
Debt (current and long-term debt and Accounts Receivable Securitization Facility excluding long-term debt issuance costs and debt discount of $31,002 and $36,744, respectively)
$
3,301,250
$
3,606,500
(Less) debt related to an unrestricted subsidiary5
—
(200,500
)
Other debt and cash adjustments6
3,659
3,992
(Less) Cash and cash equivalents of continuing operations
(317,301
)
(172,787
)
(Less) Cash and cash equivalents of discontinued operations
(9,610
)
(18,304
)
Net debt
$
2,977,998
$
3,218,901
Debt/Loss from continuing operations7
(98.3
)
(6.7
)
Net debt/EBITDA, as adjusted8
4.3
5.5
1
Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure.
2
The last twelve months ended September 28, 2024 includes $168 million of supply chain restructuring and consolidation charges, $20 million of corporate asset impairment charges, $19 million of headcount actions and related severance charges, $12 million of professional services, $3 million related to other restructuring and other action-related charges and $2 million of technology charges. The last twelve months ended September 30, 2023 includes $13 million of headcount actions and related severance charges, $10 million of technology charges, $8 million of a loss on extinguishment of debt, $7 million of professional services, $7 million of a loss on sale of business and classification of assets held for sale, $5 million of supply chain restructuring and consolidation charges, $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 September 28, 2024, primarily includes $54 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, $14 million in charges related to sales incentive amortization, $11 million of non-cash cloud computing expense, $(4) million of net unrealized gains due to hedging activities, $(6) million of recovery of bad debt expense and a $(6) million adjustment for interest expense on debt and amortization of debt issuance costs related to an unrestricted subsidiary. The last twelve months ended September 30, 2023, primarily includes $35 million of excess and obsolete inventory write-offs, $20 million in other compensation related items primarily stock compensation expense, $17 million of pension non-cash expense, $12 million in charges related to sales incentive amortization, $7 million of bad debt expense, $6 million in charges related to the ransomware attack and extraordinary events, $6 million of non-cash cloud computing expense, $3 million in charges related to unrealized losses due to hedging and a $(2) million adjustment for interest expense on debt and amortization of debt issuance costs related to an unrestricted subsidiary.
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
Nine Months Ended
September 28, 2024
September 30, 2023
September 28, 2024
September 30, 2023
Free cash flow1:
Net cash from operating activities
$
92,215
$
155,111
$
196,812
$
287,344
Capital expenditures
(4,088
)
(2,220
)
(32,179
)
(35,790
)
Free cash flow
$
88,127
$
152,891
$
164,633
$
251,554
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
December 28, 2024
December 28, 2024
Operating profit outlook, as calculated under GAAP
$
95,000
$
174,000
Restructuring and other action-related charges outlook
20,000
243,000
Operating profit outlook, as adjusted
$
115,000
$
417,000
Other expenses outlook, as calculated under GAAP
$
24,000
$
53,000
Restructuring and other action-related charges outlook
10,000
10,000
Other expenses outlook, as adjusted
$
14,000
$
43,000
Diluted earnings (loss) per share from continuing operations outlook, as calculated under GAAP1
$
0.06
$
(0.32
)
Restructuring and other action-related charges outlook
0.08
0.71
Diluted earnings per share from continuing operations outlook, as adjusted
$
0.14
$
0.39
Cash flow from operations outlook, as calculated under GAAP
$
250,000
Capital expenditures outlook
40,000
Free cash flow outlook
$
210,000
1
The Company expects approximately 357 million diluted weighted average shares outstanding for the quarter ended December 28, 2024 and approximately 355 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/20241107569107/en/
News Media contact: Nicole Ducouer (336) 986-7090 Analysts and Investors contact: T.C. Robillard (336) 519-2115
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