HanesBrands Announces Second-Quarter 2023 Results
- HanesBrands Inc. reduces total debt by nearly $100 million in the second quarter, generating positive operating cash flow and further reducing inventory. The company expects to exit the year with higher gross and operating margins and lower inventory. Full Potential strategy gaining traction with new product innovation, attracting new and younger consumers to the Hanes franchise.
- Net sales decreased 5% compared to last year, with a decline in U.S. Activewear and slowdown in consumer spending in Australia. Gross profit declined 16% and gross margin declined 430 basis points. Operating profit and margin decreased from prior year. Loss from continuing operations in second-quarter 2023.
- Reports second-quarter net sales, operating profit and EPS from continuing operations within its guidance range
-
Reduced total debt by nearly
in the quarter$100 million -
Further reduced inventory by
12% , or , as compared to prior year$255 million -
Generated cash flow from operations of
in the quarter and$88 million year-to-date$132 million -
Company continues to expect to exit the year with meaningfully higher gross and operating margins and lower inventory. Company also continues to expect to pay down more than
of debt in 2023. Provides third-quarter 2023 guidance, updates full-year outlook.$400 million
“We reported second-quarter results in line with our outlook. We also delivered sequential gross margin improvement, further reduced inventory, generated positive operating cash flow, and began paying down debt earlier than expected,” said Steve Bratspies, CEO. “We’re confident in our ability to exit the year with gross margin in the high
“Looking at our Full Potential strategy, we’re progressing on or ahead of plan in several areas, while other areas are not delivering results in the timeline we anticipated,” continued Bratspies. “We’re taking a number of actions, including additional cost saving initiatives, to improve performance as well as actively looking across the business at additional options to enhance shareholder value.”
Highlights
-
Began paying down debt earlier than anticipated. Due to positive first-half cash generation, the Company was able to begin its commitment to use free cash flow to pay down debt earlier than anticipated. For the quarter, the Company reduced total debt by nearly
.$100 million -
Generated positive operating cash flow and further reduced inventory. Through its working capital initiatives, which began in the second-half of last year, the Company continued to reduce inventory, both sequentially and year-over-year, and generated positive cash flow. Inventory declined
7% sequentially and12% year-over-year, which helped generate of operating cash flow in the quarter and$88 million in the first six months of 2023.$132 million -
Full Potential strategy gaining traction in
U.S. Innerwear as product innovation reaches consumers. Revenue from new product innovation increased approximately30% over prior year as the Company launched its Hanes Originals product line supported by a national media campaign. Its Originals product is attracting new and younger consumers to the Hanes franchise. The Company is also launching its next innovation, M by Maidenform, which is a collection of extremely soft-on-the-skin intimate apparel products focused on younger consumers. M by Maidenform is expected to be available in Fall 2023 in the mass and department store channels as well as the Company’s stores and website. Looking forward, the Company’s robust innovation pipeline provides it visibility to new product offerings through 2025.
Second-Quarter 2023 Results
-
Net sales from continuing operations were
, including an$1.44 billion unfavorable impact from foreign exchange rates, which decreased$18 million 5% compared to last year. On a constant currency basis, net sales decreased4% with growth inU.S. Innerwear and Champion inAsia more than offset by the decline inU.S. Activewear and the continued macro-driven slowdown in consumer spending impactingAustralia . -
Global Champion brand sales decreased
16% on a reported basis as compared to prior year, with a25% decline in theU.S. and a1% decline internationally. In constant currency, Global Champion brand sales decreased15% , with international consistent with prior year. The constant currency sales decline was driven primarily by challenging activewear market dynamics and the near-term impact from the Company’s strategic brand-related actions in theU.S. By region internationally, constant currency sales increased inAsia , were consistent with prior year inEurope , and declined inAustralia and theAmericas . -
Gross Profit of
declined$483 million 16% and gross margin declined 430 basis points to33.5% as compared to prior year. Adjusted Gross Profit, which excludes certain costs related to the Company’s Full Potential transformation plan, was also , while Adjusted Gross Margin of$483 million 33.6% increased approximately 90 basis points from first-quarter 2023 and declined approximately 425 basis points compared to second-quarter 2022. As expected, headwinds from commodity and ocean freight inflation represented approximately 245 basis points of year-over-year margin headwind in the quarter as the Company continues to sell through its higher-cost inventory. Additional headwinds in the quarter were business mix, including lower DTC mix, as well as higher labor rates. Partially offsetting the margin headwinds in the quarter were benefits from lower air freight expense as compared to last year and cost savings initiatives. -
Selling, General and Administrative (SG&A) expenses declined
3% to as compared to last year. Adjusted SG&A expenses, which exclude certain costs related to the Company’s Full Potential transformation plan, declined$413 million 6% , or more than , year-over-year to$23 million . The year-over-year decline in adjusted SG&A was driven by benefits from cost savings initiatives, particularly in distribution, disciplined expense management, as well as lower variable expenses, including selling and marketing. As a percent of net sales, adjusted SG&A expense of$396 million 27.5% decreased 20 basis points over prior year as cost controls and expense efficiencies more than offset the fixed cost deleverage from lower sales. -
Operating Profit and Operating Margin in the second-quarter of 2023 were
and$69 million 4.8% , respectively, which compared to and$147 million 9.7% , respectively, in the prior year. Adjusted Operating Profit of declined from$87 million in second-quarter 2022. Adjusted Operating Margin of$154 million 6.1% declined approximately 405 basis points from prior year. -
Interest and Other Expenses for the second-quarter of 2023 were
as compared to$82 million in the prior year. This increase was driven by higher interest rates on higher debt balances.$36 million -
Tax Expense for second-quarter 2023 was
. For the second-quarter 2022, the tax expense and adjusted tax expense were$10 million and$19 million , respectively. Effective Tax Rate for the second-quarter 2023 was (80.2)%. For the second-quarter 2022, the effective tax rate and the adjusted effective tax rate was$20 million 17.0% . The Company's effective tax rate for the second-quarter 2023 is not reflective of theU.S. statutory rate due to valuation allowances against certain net deferred tax assets. -
Loss from continuing operations totaled
, or$(22) million per diluted share in second-quarter 2023. This compares to income from continuing operations of$(0.06) , or$93 million per diluted share, last year. Adjusted loss from continuing operations totaled$0.26 , or$(4) million per diluted share. This compares to adjusted income from continuing operations of$(0.01) , or$98 million per diluted share, in second-quarter 2022.$0.28
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 Full Potential transformation plan charges.
Second-Quarter 2023 Business Segment Summary
-
Innerwear sales increased
3% compared to prior year and were ahead of the Company’s outlook as the Company is realizing the benefits of its Full Potential strategy. The year-over-year sales performance was driven by growth in its Basics business behind the launch of its Hanes Originals product, increased space for back-to-school, improved on-shelf availability through the use of data analytics and its consumer-centric pricing philosophy.
Operating margin of17.6% increased approximately 440 basis points sequentially. In comparison to second-quarter last year, the segment operating margin decreased approximately 310 basis points. The year-over-year decline was driven primarily by input cost inflation as the Company continues to sell through its higher-cost inventory, which more than offset the benefits from higher sales volume, ongoing cost savings initiatives and disciplined expense management.
-
Activewear sales declined
19% compared to prior year as ongoing headwinds within the activewear category, including soft consumer demand and excess channel inventory, combined with the Company’s strategic brand-related actions continued to impact Champion sales in theU.S. Continued growth in the collegiate channel was more than offset by declines in other channels.
Operating margin for the segment of (1.2)% decreased approximately 810 basis points compared to prior year. The decline was driven by the impact from lower sales volume, unfavorable mix, input cost inflation and higher reserves as compared to last year due to higher inventory levels at retail. These headwinds more than offset the benefit from cost savings initiatives as well as lower variable expenses.
-
International sales decreased
4% on a reported basis, including from unfavorable foreign exchange rates. International sales were consistent with prior year on a constant currency basis compared to prior year. Innerwear growth in the$18 million Americas and Champion growth inAsia essentially offset the decline inAustralia , which was driven by a very challenging macroeconomic environment.
Operating margin for the segment of8.0% decreased 520 basis points compared to prior year driven primarily by the impact from unfavorable business mix and input cost inflation.
Cash Flow, Balance Sheet and Liquidity
-
Total liquidity position at the end of second-quarter 2023 was approximately
, consisting of$965 million of cash and equivalents and approximately$192 million of available capacity under the Company’s credit facilities.$773 million - Based on the calculation as defined in the Company’s senior secured credit facility, the Leverage Ratio at the end of the second-quarter 2023 was 5.6 times on a net debt-to-adjusted EBITDA basis, which was below its second-quarter 2023 covenant of 7.25 times and compared to 3.5 times at the end of second-quarter 2022 (See Table 6-B).
-
Inventory at the end of second-quarter 2023 of
declined$1.84 billion 7% sequentially and declined12% , or , year-over-year. The year-over-year decline was driven by the continued sell-through of higher-cost inventory and the benefits from the Company’s SKU reduction initiatives.$255 million -
Cash flow from operations was approximately
in second-quarter 2023 as compared to a use of cash of approximately$88 million last year. The nearly$(210) million year-over-year increase in operating cash flow was driven by improved working capital. Free cash flow was$300 million in second-quarter 2023, a nearly$78 million increase from last year’s$310 million use of cash.$(229) million
Third-Quarter and Full-Year 2023 Financial Outlook
With respect to its 2023 guidance, the Company’s outlook reflects, but is not limited to, the following assumptions: a muted consumer demand environment given the continued macroeconomic uncertainty, including increased pressure in
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 the fourth quarter of 2022. Importantly, the reserve does not impact cash taxes. Some portion of the reserve may reverse in future periods.
For fiscal-year 2023, which ends on December 30, 2023, the Company currently expects:
-
Net sales from continuing operations of approximately
to$5.80 billion , which includes a projected headwind of approximately$5.90 billion from changes in foreign currency exchange rates. At the midpoint, this represents an approximate$37 million 6% decline as compared to prior year on both a constant currency and reported basis. -
GAAP operating profit from continuing operations to range from approximately
to$376 million .$426 million -
Adjusted operating profit from continuing operations to range from approximately
to$425 million , which includes a projected headwind of approximately$475 million from changes in foreign currency exchange rates.$5 million -
Charges for actions totaling approximately
including Full Potential transformation plan-related charges of approximately$56 million included in operating profit and refinancing-related charges of approximately$49 million included in interest and other expenses.$7 million -
GAAP and Adjusted Interest and other expenses of approximately
and$312 million , respectively.$305 million -
Tax expense of approximately
.$65 million -
GAAP earnings per share from continuing operations to range from approximately
to$0.00 .$0.14 -
Adjusted earnings per share from continuing operations to range from approximately
to$0.16 .$0.30 -
Cash flow from operations of approximately
.$500 million -
Capital investments of approximately
, consisting of approximately$100 million of capital expenditures and approximately$50 million of cloud computing arrangements. Per GAAP, capital expenditures are reflected in cash from investing activities and certain cloud computing arrangements are reflected in Other Assets within cash flow from operating activities. The approximate$50 million of cloud computing arrangements is factored into the full-year cash flow from operations guidance of approximately$50 million .$500 million -
Free cash flow of approximately
.$450 million - Fully diluted shares outstanding of approximately 351 million.
For third-quarter 2023, which ends on September 30, 2023, the Company currently expects:
-
Net sales from continuing operations of approximately
to$1.52 billion , which includes a projected tailwind of approximately$1.57 billion from changes in foreign currency exchange rates. At the midpoint, this represents a decline of less than$3 million 8% as compared to prior year on both a constant currency and reported basis. -
GAAP operating profit from continuing operations to range from approximately
to$120 million .$140 million -
Adjusted operating profit from continuing operations to range from approximately
to$130 million with essentially no impact from changes in foreign currency exchange rates.$150 million -
Charges for actions related to the Full Potential transformation plan and other items of approximately
.$10 million -
GAAP and Adjusted Interest and other expenses of approximately
.$80 million -
Tax expense of approximately
.$25 million -
GAAP earnings per share from continuing operations to range from approximately
to$0.04 .$0.10 -
Adjusted earnings per share from continuing operations to range from approximately
to$0.07 .$0.13 - Fully diluted shares outstanding of approximately 351 million.
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 EPS from continuing operations, adjusted income (loss) from continuing operations, adjusted income tax expense, adjusted income (loss) from continuing operations before income tax expense, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted interest and other expense, net debt, leverage ratio and free cash flow.
Adjusted EPS from continuing operations is defined as diluted EPS 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 income tax expense is defined as income tax expense excluding actions. Adjusted income (loss) from continuing operations before income tax 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 and other expenses is defined as interest and 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 2023 and 2022, as applicable, include supply chain segmentation, headcount actions and related severance charges, technology charges, gain/loss on classification of assets held for sale, professional services, 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 the Full Potential transformation plan 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 the Full Potential transformation plan 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) 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, however, 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.
HanesBrands is a global company that reports financial information in
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
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.
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 forward-looking statements, as defined under
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
TABLE 1 |
|||||||||||||||||||||
HANESBRANDS INC. |
|||||||||||||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||||||||||||
(in thousands, except per share data) |
|||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||
|
Quarters Ended |
|
|
|
Six Months Ended |
|
|
||||||||||||||
|
July 1,
|
|
July 2,
|
|
% Change |
|
July 1,
|
|
July 2,
|
|
% Change |
||||||||||
Net sales |
$ |
1,438,980 |
|
|
$ |
1,513,467 |
|
|
(4.9 |
)% |
|
$ |
2,828,390 |
|
|
$ |
3,089,623 |
|
|
(8.5 |
)% |
Cost of sales |
|
956,243 |
|
|
|
941,366 |
|
|
|
|
|
1,895,960 |
|
|
|
1,933,344 |
|
|
|
||
Gross profit |
|
482,737 |
|
|
|
572,101 |
|
|
(15.6 |
)% |
|
|
932,430 |
|
|
|
1,156,279 |
|
|
(19.4 |
)% |
As a % of net sales |
|
33.5 |
% |
|
|
37.8 |
% |
|
|
|
|
33.0 |
% |
|
|
37.4 |
% |
|
|
||
Selling, general and administrative expenses |
|
413,333 |
|
|
|
424,847 |
|
|
(2.7 |
)% |
|
|
805,707 |
|
|
|
838,513 |
|
|
(3.9 |
)% |
As a % of net sales |
|
28.7 |
% |
|
|
28.1 |
% |
|
|
|
|
28.5 |
% |
|
|
27.1 |
% |
|
|
||
Operating profit |
|
69,404 |
|
|
|
147,254 |
|
|
(52.9 |
)% |
|
|
126,723 |
|
|
|
317,766 |
|
|
(60.1 |
)% |
As a % of net sales |
|
4.8 |
% |
|
|
9.7 |
% |
|
|
|
|
4.5 |
% |
|
|
10.3 |
% |
|
|
||
Other expenses |
|
7,263 |
|
|
|
1,889 |
|
|
|
|
|
22,034 |
|
|
|
2,876 |
|
|
|
||
Interest expense, net |
|
74,605 |
|
|
|
33,724 |
|
|
|
|
|
133,057 |
|
|
|
65,687 |
|
|
|
||
Income (loss) from continuing operations before income tax expense |
|
(12,464 |
) |
|
|
111,641 |
|
|
|
|
|
(28,368 |
) |
|
|
249,203 |
|
|
|
||
Income tax expense |
|
10,000 |
|
|
|
18,980 |
|
|
|
|
|
28,500 |
|
|
|
42,365 |
|
|
|
||
Income (loss) from continuing operations |
|
(22,464 |
) |
|
|
92,661 |
|
|
(124.2 |
)% |
|
|
(56,868 |
) |
|
|
206,838 |
|
|
(127.5 |
)% |
Income (loss) from discontinued operations, net of tax |
|
— |
|
|
|
(560 |
) |
|
|
|
|
— |
|
|
|
3,965 |
|
|
|
||
Net income (loss) |
$ |
(22,464 |
) |
|
$ |
92,101 |
|
|
|
|
$ |
(56,868 |
) |
|
$ |
210,803 |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share - basic: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations |
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
|
|
$ |
(0.16 |
) |
|
$ |
0.59 |
|
|
|
||
Discontinued operations |
|
— |
|
|
|
0.00 |
|
|
|
|
|
0.00 |
|
|
|
0.01 |
|
|
|
||
Net income (loss) |
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
|
|
$ |
(0.16 |
) |
|
$ |
0.60 |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share - diluted: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations |
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
|
|
$ |
(0.16 |
) |
|
$ |
0.59 |
|
|
|
||
Discontinued operations |
|
— |
|
|
|
0.00 |
|
|
|
|
|
0.00 |
|
|
|
0.01 |
|
|
|
||
Net income (loss) |
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
|
|
$ |
(0.16 |
) |
|
$ |
0.60 |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
|
350,501 |
|
|
|
349,772 |
|
|
|
|
|
350,468 |
|
|
|
350,012 |
|
|
|
||
Diluted |
|
350,501 |
|
|
|
350,303 |
|
|
|
|
|
350,468 |
|
|
|
350,878 |
|
|
|
TABLE 2 |
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 July 1, 2023 and a comparison to prior year: |
|
Quarter Ended July 1, 2023 |
|
|
|
|
|
|
|||||||||||||
|
As Reported |
|
Impact from
|
|
Constant
|
|
Quarter
|
|
% Change,
|
|
% Change,
|
|||||||||
As reported under GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales |
$ |
1,438,980 |
|
|
$ |
(18,223 |
) |
|
$ |
1,457,203 |
|
|
$ |
1,513,467 |
|
(4.9 |
)% |
|
(3.7 |
)% |
Gross profit |
|
482,737 |
|
|
|
(9,612 |
) |
|
|
492,349 |
|
|
|
572,101 |
|
(15.6 |
) |
|
(13.9 |
) |
Operating profit |
|
69,404 |
|
|
|
(2,250 |
) |
|
|
71,654 |
|
|
|
147,254 |
|
(52.9 |
) |
|
(51.3 |
) |
Diluted earnings (loss) per share from continuing operations |
$ |
(0.06 |
) |
|
$ |
0.00 |
|
|
$ |
(0.06 |
) |
|
$ |
0.26 |
|
(123.1 |
)% |
|
(123.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As adjusted:2 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales |
$ |
1,438,980 |
|
|
$ |
(18,223 |
) |
|
$ |
1,457,203 |
|
|
$ |
1,513,467 |
|
(4.9 |
)% |
|
(3.7 |
)% |
Gross profit |
|
482,989 |
|
|
|
(9,612 |
) |
|
|
492,601 |
|
|
|
572,633 |
|
(15.7 |
) |
|
(14.0 |
) |
Operating profit |
|
87,465 |
|
|
|
(2,250 |
) |
|
|
89,715 |
|
|
|
153,634 |
|
(43.1 |
) |
|
(41.6 |
) |
Diluted earnings (loss) per share from continuing operations |
$ |
(0.01 |
) |
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
|
$ |
0.28 |
|
(103.6 |
)% |
|
(103.6 |
)% |
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 July 1, 2023 and July 2, 2022 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Tables 6-A. |
|
Six Months Ended July 1, 2023 |
|
|
|
|
|
|
|||||||||||||
|
As Reported |
|
Impact from
|
|
Constant
|
|
Six Months
|
|
% Change,
|
|
% Change,
|
|||||||||
As reported under GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales |
$ |
2,828,390 |
|
|
$ |
(49,082 |
) |
|
$ |
2,877,472 |
|
|
$ |
3,089,623 |
|
(8.5 |
)% |
|
(6.9 |
)% |
Gross profit |
|
932,430 |
|
|
|
(24,124 |
) |
|
|
956,554 |
|
|
|
1,156,279 |
|
(19.4 |
) |
|
(17.3 |
) |
Operating profit |
|
126,723 |
|
|
|
(6,141 |
) |
|
|
132,864 |
|
|
|
317,766 |
|
(60.1 |
) |
|
(58.2 |
) |
Diluted earnings per share from continuing operations |
$ |
(0.16 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.15 |
) |
|
$ |
0.59 |
|
(127.1 |
)% |
|
(125.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As adjusted:2 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales |
$ |
2,828,390 |
|
|
$ |
(49,082 |
) |
|
$ |
2,877,472 |
|
|
$ |
3,089,623 |
|
(8.5 |
)% |
|
(6.9 |
)% |
Gross profit |
|
937,205 |
|
|
|
(24,124 |
) |
|
|
961,329 |
|
|
|
1,157,310 |
|
(19.0 |
) |
|
(16.9 |
) |
Operating profit |
|
150,905 |
|
|
|
(6,141 |
) |
|
|
157,046 |
|
|
|
328,948 |
|
(54.1 |
) |
|
(52.3 |
) |
Diluted earnings per share from continuing operations |
$ |
(0.07 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.62 |
|
(111.3 |
)% |
|
(109.7 |
)% |
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 July 1, 2023 and July 2, 2022 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6-A. |
TABLE 3 |
|||||||||||||||||||||
HANESBRANDS INC. |
|||||||||||||||||||||
Supplemental Financial Information |
|||||||||||||||||||||
By Business Segment |
|||||||||||||||||||||
(in thousands) |
|||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||
|
Quarters Ended |
|
|
|
Six Months Ended |
|
|
||||||||||||||
|
July 1,
|
|
July 2,
|
|
% Change |
|
July 1,
|
|
July 2,
|
|
% Change |
||||||||||
Segment net sales: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Innerwear |
$ |
705,818 |
|
|
$ |
685,778 |
|
|
2.9 |
% |
|
$ |
1,258,885 |
|
|
$ |
1,264,725 |
|
|
(0.5 |
)% |
Activewear |
|
267,544 |
|
|
|
330,400 |
|
|
(19.0 |
) |
|
|
582,489 |
|
|
|
717,337 |
|
|
(18.8 |
) |
International |
|
407,729 |
|
|
|
424,189 |
|
|
(3.9 |
) |
|
|
870,586 |
|
|
|
934,318 |
|
|
(6.8 |
) |
Other |
|
57,889 |
|
|
|
73,100 |
|
|
(20.8 |
) |
|
|
116,430 |
|
|
|
173,243 |
|
|
(32.8 |
) |
Total net sales |
$ |
1,438,980 |
|
|
$ |
1,513,467 |
|
|
(4.9 |
)% |
|
$ |
2,828,390 |
|
|
$ |
3,089,623 |
|
|
(8.5 |
)% |
Segment operating profit: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Innerwear |
$ |
123,968 |
|
|
$ |
141,659 |
|
|
(12.5 |
)% |
|
$ |
196,576 |
|
|
$ |
243,805 |
|
|
(19.4 |
)% |
Activewear |
|
(3,087 |
) |
|
|
22,857 |
|
|
(113.5 |
) |
|
|
6,887 |
|
|
|
71,841 |
|
|
(90.4 |
) |
International |
|
32,581 |
|
|
|
55,953 |
|
|
(41.8 |
) |
|
|
83,930 |
|
|
|
145,391 |
|
|
(42.3 |
) |
Other |
|
(3,956 |
) |
|
|
5,333 |
|
|
(174.2 |
) |
|
|
(8,830 |
) |
|
|
4,662 |
|
|
(289.4 |
) |
General corporate expenses/other |
|
(62,041 |
) |
|
|
(72,168 |
) |
|
(14.0 |
) |
|
|
(127,658 |
) |
|
|
(136,751 |
) |
|
(6.6 |
) |
Total operating profit before restructuring and other action-related charges |
|
87,465 |
|
|
|
153,634 |
|
|
(43.1 |
) |
|
|
150,905 |
|
|
|
328,948 |
|
|
(54.1 |
) |
Restructuring and other action-related charges |
|
(18,061 |
) |
|
|
(6,380 |
) |
|
183.1 |
|
|
|
(24,182 |
) |
|
|
(11,182 |
) |
|
116.3 |
|
Total operating profit |
$ |
69,404 |
|
|
$ |
147,254 |
|
|
(52.9 |
)% |
|
$ |
126,723 |
|
|
$ |
317,766 |
|
|
(60.1 |
)% |
|
Quarters Ended |
|
|
|
Six Months Ended |
|
|
||||||||||
|
July 1,
|
|
July 2,
|
|
Basis
|
|
July 1,
|
|
July 2,
|
|
Basis
|
||||||
Segment operating margin: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Innerwear |
17.6 |
% |
|
20.7 |
% |
|
(309 |
) |
|
15.6 |
% |
|
19.3 |
% |
|
(366 |
) |
Activewear |
(1.2 |
) |
|
6.9 |
|
|
(807 |
) |
|
1.2 |
|
|
10.0 |
|
|
(883 |
) |
International |
8.0 |
|
|
13.2 |
|
|
(520 |
) |
|
9.6 |
|
|
15.6 |
|
|
(592 |
) |
Other |
(6.8 |
) |
|
7.3 |
|
|
(1,413 |
) |
|
(7.6 |
) |
|
2.7 |
|
|
(1,027 |
) |
General corporate expenses/other |
(4.3 |
) |
|
(4.8 |
) |
|
46 |
|
|
(4.5 |
) |
|
(4.4 |
) |
|
(9 |
) |
Total operating margin before restructuring and other action-related charges |
6.1 |
|
|
10.2 |
|
|
(407 |
) |
|
5.3 |
|
|
10.6 |
|
|
(531 |
) |
Restructuring and other action-related charges |
(1.3 |
) |
|
(0.4 |
) |
|
(83 |
) |
|
(0.9 |
) |
|
(0.4 |
) |
|
(49 |
) |
Total operating margin |
4.8 |
% |
|
9.7 |
% |
|
(491 |
) |
|
4.5 |
% |
|
10.3 |
% |
|
(580 |
) |
TABLE 4 |
|||||||
HANESBRANDS INC. |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(in thousands) |
|||||||
(Unaudited) |
|||||||
|
July 1,
|
|
December 31,
|
||||
Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
191,832 |
|
|
$ |
238,413 |
|
Trade accounts receivable, net |
|
686,040 |
|
|
|
721,396 |
|
Inventories |
|
1,836,021 |
|
|
|
1,979,672 |
|
Other current assets |
|
177,181 |
|
|
|
178,946 |
|
Current assets held for sale |
|
623 |
|
|
|
13,327 |
|
Total current assets |
|
2,891,697 |
|
|
|
3,131,754 |
|
Property, net |
|
431,714 |
|
|
|
442,404 |
|
Right-of-use assets |
|
440,479 |
|
|
|
414,894 |
|
Trademarks and other identifiable intangibles, net |
|
1,235,056 |
|
|
|
1,255,693 |
|
Goodwill |
|
1,105,378 |
|
|
|
1,108,907 |
|
Deferred tax assets |
|
19,818 |
|
|
|
20,162 |
|
Other noncurrent assets |
|
154,889 |
|
|
|
130,062 |
|
Total assets |
$ |
6,279,031 |
|
|
$ |
6,503,876 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Accounts payable |
$ |
958,540 |
|
|
$ |
917,481 |
|
Accrued liabilities |
|
459,384 |
|
|
|
498,028 |
|
Lease liabilities |
|
101,541 |
|
|
|
114,794 |
|
Accounts Receivable Securitization Facility |
|
149,000 |
|
|
|
209,500 |
|
Current portion of long-term debt |
|
59,000 |
|
|
|
37,500 |
|
Current liabilities held for sale |
|
623 |
|
|
|
13,327 |
|
Total current liabilities |
|
1,728,088 |
|
|
|
1,790,630 |
|
Long-term debt |
|
3,504,275 |
|
|
|
3,612,077 |
|
Lease liabilities - noncurrent |
|
365,580 |
|
|
|
326,644 |
|
Pension and postretirement benefits |
|
110,600 |
|
|
|
116,167 |
|
Other noncurrent liabilities |
|
222,528 |
|
|
|
260,094 |
|
Total liabilities |
|
5,931,071 |
|
|
|
6,105,612 |
|
|
|
|
|
||||
Stockholders’ equity |
|
|
|
||||
Preferred stock |
|
— |
|
|
|
— |
|
Common stock |
|
3,498 |
|
|
|
3,490 |
|
Additional paid-in capital |
|
343,042 |
|
|
|
334,676 |
|
Retained earnings |
|
515,595 |
|
|
|
572,106 |
|
Accumulated other comprehensive loss |
|
(514,175 |
) |
|
|
(512,008 |
) |
Total stockholders’ equity |
|
347,960 |
|
|
|
398,264 |
|
Total liabilities and stockholders’ equity |
$ |
6,279,031 |
|
|
$ |
6,503,876 |
|
TABLE 5 |
|||||||||||||||
HANESBRANDS INC. |
|||||||||||||||
Condensed Consolidated Statements of Cash Flows1 |
|||||||||||||||
(in thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2, 2022 |
|
July 1,
|
|
July 2,
|
||||||||
Operating Activities: |
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
(22,464 |
) |
|
$ |
92,101 |
|
|
$ |
(56,868 |
) |
|
$ |
210,803 |
|
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation |
|
18,343 |
|
|
|
17,624 |
|
|
|
35,703 |
|
|
|
36,555 |
|
Amortization of acquisition intangibles |
|
4,159 |
|
|
|
4,640 |
|
|
|
8,345 |
|
|
|
9,487 |
|
Other amortization |
|
3,593 |
|
|
|
2,688 |
|
|
|
6,398 |
|
|
|
5,196 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
8,466 |
|
|
|
— |
|
(Gain) loss on sale of business and classification of assets held for sale |
|
7,338 |
|
|
|
(3,780 |
) |
|
|
5,199 |
|
|
|
(10,495 |
) |
Amortization of debt issuance costs and debt discount |
|
2,266 |
|
|
|
1,869 |
|
|
|
4,239 |
|
|
|
3,756 |
|
Other |
|
6,635 |
|
|
|
(499 |
) |
|
|
11,837 |
|
|
|
6,441 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
||||||||
Accounts receivable |
|
(4,972 |
) |
|
|
(32,994 |
) |
|
|
46,671 |
|
|
|
(39,084 |
) |
Inventories |
|
125,095 |
|
|
|
(292,448 |
) |
|
|
132,956 |
|
|
|
(540,015 |
) |
Other assets |
|
(25,856 |
) |
|
|
(49,044 |
) |
|
|
(36,617 |
) |
|
|
(49,533 |
) |
Accounts payable |
|
(4,142 |
) |
|
|
52,073 |
|
|
|
39,029 |
|
|
|
51,763 |
|
Accrued pension and postretirement benefits |
|
1,461 |
|
|
|
(519 |
) |
|
|
2,940 |
|
|
|
(495 |
) |
Accrued liabilities and other |
|
(23,760 |
) |
|
|
(1,596 |
) |
|
|
(76,065 |
) |
|
|
(125,453 |
) |
Net cash from operating activities |
|
87,696 |
|
|
|
(209,885 |
) |
|
|
132,233 |
|
|
|
(441,074 |
) |
Investing Activities: |
|
|
|
|
|
|
|
||||||||
Capital expenditures |
|
(9,326 |
) |
|
|
(18,609 |
) |
|
|
(33,570 |
) |
|
|
(37,946 |
) |
Purchase of trademarks |
|
— |
|
|
|
(103,000 |
) |
|
|
— |
|
|
|
(103,000 |
) |
Proceeds from sales of assets |
|
103 |
|
|
|
203 |
|
|
|
106 |
|
|
|
222 |
|
Other |
|
— |
|
|
|
4,632 |
|
|
|
18,941 |
|
|
|
(5,640 |
) |
Net cash from investing activities |
|
(9,223 |
) |
|
|
(116,774 |
) |
|
|
(14,523 |
) |
|
|
(146,364 |
) |
Financing Activities: |
|
|
|
|
|
|
|
||||||||
Borrowings on Term Loan Facilities |
|
— |
|
|
|
— |
|
|
|
891,000 |
|
|
|
— |
|
Repayments on Term Loan Facilities |
|
(8,500 |
) |
|
|
(6,250 |
) |
|
|
(14,750 |
) |
|
|
(12,500 |
) |
Borrowings on Accounts Receivable Securitization Facility |
|
463,000 |
|
|
|
447,789 |
|
|
|
1,051,000 |
|
|
|
737,789 |
|
Repayments on Accounts Receivable Securitization Facility |
|
(480,000 |
) |
|
|
(478,589 |
) |
|
|
(1,111,500 |
) |
|
|
(633,089 |
) |
Borrowings on Revolving Loan Facilities |
|
556,000 |
|
|
|
598,500 |
|
|
|
977,500 |
|
|
|
727,500 |
|
Repayments on Revolving Loan Facilities |
|
(627,500 |
) |
|
|
(260,500 |
) |
|
|
(1,088,500 |
) |
|
|
(369,500 |
) |
Borrowings on Senior Notes |
|
— |
|
|
|
— |
|
|
|
600,000 |
|
|
|
— |
|
Repayments on Senior Notes |
|
— |
|
|
|
— |
|
|
|
(1,436,884 |
) |
|
|
— |
|
Borrowings on notes payable |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
21,454 |
|
Repayments on notes payable |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(21,713 |
) |
Share repurchases |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,018 |
) |
Cash dividends paid |
|
— |
|
|
|
(52,324 |
) |
|
|
— |
|
|
|
(104,621 |
) |
Payments to amend and refinance credit facilities |
|
(864 |
) |
|
|
(223 |
) |
|
|
(28,235 |
) |
|
|
(451 |
) |
Other |
|
(1,117 |
) |
|
|
336 |
|
|
|
(2,792 |
) |
|
|
(3,545 |
) |
Net cash from financing activities |
|
(98,981 |
) |
|
|
248,739 |
|
|
|
(163,161 |
) |
|
|
316,306 |
|
Effect of changes in foreign exchange rates on cash |
|
(869 |
) |
|
|
(43,368 |
) |
|
|
(1,130 |
) |
|
|
(41,575 |
) |
Change in cash and cash equivalents |
|
(21,377 |
) |
|
|
(121,288 |
) |
|
|
(46,581 |
) |
|
|
(312,707 |
) |
Cash and cash equivalents at beginning of period |
|
213,209 |
|
|
|
369,210 |
|
|
|
238,413 |
|
|
|
560,629 |
|
Cash and cash equivalents at end of period |
$ |
191,832 |
|
|
$ |
247,922 |
|
|
$ |
191,832 |
|
|
$ |
247,922 |
|
1 |
The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities in the periods prior to the sale of the European Innerwear business on March 5, 2022. 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 as reported under GAAP to the results as adjusted for the quarter and six months ended July 1, 2023 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 operations absent the effect of the Full Potential transformation plan 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 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.
Restructuring and other action-related charges in 2023 and 2022 include the following: |
Supply chain segmentation |
Represents charges related to the supply chain segmentation to restructure and position the Company’s manufacturing network to align with its Full Potential transformation plan demand trends. |
Headcount actions and related severance |
Represents charges related to operating model initiatives primarily headcount actions and related severance charges and adjustments as a result of the implementation of the Company’s Full Potential transformation plan. |
Technology |
Represents technology charges related to the implementation of the Company’s technology modernization initiative which includes a global enterprise resource planning platform under its Full Potential transformation plan. |
Gain/loss on classification of assets held for sale |
Represents the gain/loss to adjust the valuation allowance related to the |
Professional services |
Represents professional fees, primarily including consulting and advisory services, related to the implementation of the Company’s Full Potential transformation plan. |
Loss on extinguishment of debt |
Represents charges related to the redemption of the Company’s |
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 AOCI which was released into earnings as the Company unwound the cross-currency swap contracts in connection with the redemption of the |
Tax effect on restructuring and other action-related charges |
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 |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Gross profit, as reported under GAAP |
$ |
482,737 |
|
|
$ |
572,101 |
|
|
$ |
932,430 |
|
|
$ |
1,156,279 |
|
As a % of net sales |
|
33.5 |
% |
|
|
37.8 |
% |
|
|
33.0 |
% |
|
|
37.4 |
% |
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
||||||||
Full Potential transformation plan: |
|
|
|
|
|
|
|
||||||||
Supply chain segmentation |
|
252 |
|
|
|
269 |
|
|
|
4,775 |
|
|
|
1,289 |
|
Headcount actions and related severance |
|
— |
|
|
|
265 |
|
|
|
— |
|
|
|
— |
|
Other |
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(258 |
) |
Gross profit, as adjusted |
$ |
482,989 |
|
|
$ |
572,633 |
|
|
$ |
937,205 |
|
|
$ |
1,157,310 |
|
As a % of net sales |
|
33.6 |
% |
|
|
37.8 |
% |
|
|
33.1 |
% |
|
|
37.5 |
% |
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Selling, general and administrative expenses, as reported under GAAP |
$ |
413,333 |
|
|
$ |
424,847 |
|
|
$ |
805,707 |
|
|
$ |
838,513 |
|
As a % of net sales |
|
28.7 |
% |
|
|
28.1 |
% |
|
|
28.5 |
% |
|
|
27.1 |
% |
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
||||||||
Full Potential transformation plan: |
|
|
|
|
|
|
|
||||||||
Technology |
|
(3,062 |
) |
|
|
(1,971 |
) |
|
|
(7,283 |
) |
|
|
(6,430 |
) |
Gain (loss) on classification of assets held for sale |
|
(7,338 |
) |
|
|
4,340 |
|
|
|
(5,199 |
) |
|
|
10,868 |
|
Professional services |
|
(3,608 |
) |
|
|
(7,086 |
) |
|
|
(3,648 |
) |
|
|
(14,994 |
) |
Headcount actions and related severance |
|
(3,716 |
) |
|
|
(560 |
) |
|
|
(2,845 |
) |
|
|
1,094 |
|
Other |
|
(85 |
) |
|
|
(571 |
) |
|
|
(432 |
) |
|
|
(689 |
) |
Selling, general and administrative expenses, as adjusted |
$ |
395,524 |
|
|
$ |
418,999 |
|
|
$ |
786,300 |
|
|
$ |
828,362 |
|
As a % of net sales |
|
27.5 |
% |
|
|
27.7 |
% |
|
|
27.8 |
% |
|
|
26.8 |
% |
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Operating profit, as reported under GAAP |
$ |
69,404 |
|
|
$ |
147,254 |
|
|
$ |
126,723 |
|
|
$ |
317,766 |
|
As a % of net sales |
|
4.8 |
% |
|
|
9.7 |
% |
|
|
4.5 |
% |
|
|
10.3 |
% |
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
||||||||
Full Potential transformation plan: |
|
|
|
|
|
|
|
||||||||
Technology |
|
3,062 |
|
|
|
1,971 |
|
|
|
7,283 |
|
|
|
6,430 |
|
(Gain) loss on classification of assets held for sale |
|
7,338 |
|
|
|
(4,340 |
) |
|
|
5,199 |
|
|
|
(10,868 |
) |
Supply chain segmentation |
|
252 |
|
|
|
269 |
|
|
|
4,775 |
|
|
|
1,289 |
|
Professional services |
|
3,608 |
|
|
|
7,086 |
|
|
|
3,648 |
|
|
|
14,994 |
|
Headcount actions and related severance |
|
3,716 |
|
|
|
825 |
|
|
|
2,845 |
|
|
|
(1,094 |
) |
Other |
|
85 |
|
|
|
569 |
|
|
|
432 |
|
|
|
431 |
|
Operating profit, as adjusted |
$ |
87,465 |
|
|
$ |
153,634 |
|
|
$ |
150,905 |
|
|
$ |
328,948 |
|
As a % of net sales |
|
6.1 |
% |
|
|
10.2 |
% |
|
|
5.3 |
% |
|
|
10.6 |
% |
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Interest expense, net and other expenses, as reported under GAAP |
$ |
81,868 |
|
$ |
35,613 |
|
$ |
155,091 |
|
|
$ |
68,563 |
|||
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 |
$ |
81,868 |
|
$ |
35,613 |
|
$ |
147,995 |
|
|
$ |
68,563 |
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Income (loss) from continuing operations before income tax expense, as reported under GAAP |
$ |
(12,464 |
) |
|
$ |
111,641 |
|
|
$ |
(28,368 |
) |
|
$ |
249,203 |
|
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
||||||||
Full Potential transformation plan: |
|
|
|
|
|
|
|
||||||||
Technology |
|
3,062 |
|
|
|
1,971 |
|
|
|
7,283 |
|
|
|
6,430 |
|
(Gain) loss on classification of assets held for sale |
|
7,338 |
|
|
|
(4,340 |
) |
|
|
5,199 |
|
|
|
(10,868 |
) |
Supply chain segmentation |
|
252 |
|
|
|
269 |
|
|
|
4,775 |
|
|
|
1,289 |
|
Professional services |
|
3,608 |
|
|
|
7,086 |
|
|
|
3,648 |
|
|
|
14,994 |
|
Headcount actions and related severance |
|
3,716 |
|
|
|
825 |
|
|
|
2,845 |
|
|
|
(1,094 |
) |
Other |
|
85 |
|
|
|
569 |
|
|
|
432 |
|
|
|
431 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
8,466 |
|
|
|
— |
|
Gain on final settlement of cross currency swaps |
|
— |
|
|
|
— |
|
|
|
(1,370 |
) |
|
|
— |
|
Income from continuing operations before income tax expense, as adjusted |
$ |
5,597 |
|
|
$ |
118,021 |
|
|
$ |
2,910 |
|
|
$ |
260,385 |
|
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Income tax expense, as reported under GAAP |
$ |
10,000 |
|
$ |
18,980 |
|
$ |
28,500 |
|
$ |
42,365 |
||||
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
||||||||
Tax effect on restructuring and other action-related charges |
|
— |
|
|
1,085 |
|
|
— |
|
|
1,901 |
||||
Income tax expense, as adjusted |
$ |
10,000 |
|
$ |
20,065 |
|
$ |
28,500 |
|
$ |
44,266 |
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Income (loss) from continuing operations, as reported under GAAP |
$ |
(22,464 |
) |
|
$ |
92,661 |
|
|
$ |
(56,868 |
) |
|
$ |
206,838 |
|
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
||||||||
Full Potential transformation plan: |
|
|
|
|
|
|
|
||||||||
Technology |
|
3,062 |
|
|
|
1,971 |
|
|
|
7,283 |
|
|
|
6,430 |
|
(Gain) loss on classification of assets held for sale |
|
7,338 |
|
|
|
(4,340 |
) |
|
|
5,199 |
|
|
|
(10,868 |
) |
Supply chain segmentation |
|
252 |
|
|
|
269 |
|
|
|
4,775 |
|
|
|
1,289 |
|
Professional services |
|
3,608 |
|
|
|
7,086 |
|
|
|
3,648 |
|
|
|
14,994 |
|
Headcount actions and related severance |
|
3,716 |
|
|
|
825 |
|
|
|
2,845 |
|
|
|
(1,094 |
) |
Other |
|
85 |
|
|
|
569 |
|
|
|
432 |
|
|
|
431 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
8,466 |
|
|
|
— |
|
Gain on final settlement of cross currency swaps |
|
— |
|
|
|
— |
|
|
|
(1,370 |
) |
|
|
— |
|
Tax effect on restructuring and other action-related charges |
|
— |
|
|
|
(1,085 |
) |
|
|
— |
|
|
|
(1,901 |
) |
Income (loss) from continuing operations, as adjusted |
$ |
(4,403 |
) |
|
$ |
97,956 |
|
|
$ |
(25,590 |
) |
|
$ |
216,119 |
|
|
Quarters Ended1 |
|
Six Months Ended1 |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Diluted earnings (loss) per share from continuing operations, as reported under GAAP |
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
$ |
(0.16 |
) |
|
$ |
0.59 |
|
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
||||||||
Full Potential transformation plan: |
|
|
|
|
|
|
|
||||||||
Technology |
|
0.01 |
|
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.02 |
|
(Gain) loss on classification of assets held for sale |
|
0.02 |
|
|
|
(0.01 |
) |
|
|
0.01 |
|
|
|
(0.03 |
) |
Supply chain segmentation |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.01 |
|
|
|
0.00 |
|
Professional services |
|
0.01 |
|
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.04 |
|
Headcount actions and related severance |
|
0.01 |
|
|
|
0.00 |
|
|
|
0.01 |
|
|
|
0.00 |
|
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 restructuring and other action-related charges |
|
— |
|
|
|
0.00 |
|
|
|
— |
|
|
|
(0.01 |
) |
Diluted earnings (loss) per share from continuing operations, as adjusted |
$ |
(0.01 |
) |
|
$ |
0.28 |
|
|
$ |
(0.07 |
) |
|
$ |
0.62 |
|
1 |
Amounts may not be additive due to rounding. |
Including the unfavorable foreign currency impact of
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 |
||||||
|
July 1,
|
|
July 2,
|
||||
Leverage Ratio: |
|
|
|
||||
|
|
|
|
||||
EBITDA1: |
|
|
|
||||
Income (loss) from continuing operations |
$ |
(394,875 |
) |
|
$ |
451,539 |
|
Interest expense, net |
|
224,443 |
|
|
|
141,854 |
|
Income tax expense |
|
470,042 |
|
|
|
62,539 |
|
Depreciation and amortization |
|
105,475 |
|
|
|
105,079 |
|
Total EBITDA |
|
405,085 |
|
|
|
761,011 |
|
Total restructuring and other action-related charges (excluding tax effect on actions)2 |
|
79,954 |
|
|
|
150,534 |
|
Other losses, charges and expenses3 |
|
149,874 |
|
|
|
101,691 |
|
Total EBITDA, as adjusted |
$ |
634,913 |
|
|
$ |
1,013,236 |
|
|
|
|
|
||||
Net debt: |
|
|
|
||||
Debt (current and long-term debt and Accounts Receivable Securitization Facility excluding long term debt issuance costs and debt discount of |
$ |
3,750,750 |
|
|
$ |
3,771,576 |
|
Other debt and cash adjustments4 |
|
3,587 |
|
|
|
3,908 |
|
(Less) Cash and cash equivalents |
|
(191,832 |
) |
|
|
(247,922 |
) |
Net debt |
$ |
3,562,505 |
|
|
$ |
3,527,562 |
|
|
|
|
|
||||
Debt/Income (loss) from continuing operations5 |
|
(9.5 |
) |
|
|
8.4 |
|
|
|
|
|
||||
Net debt/EBITDA, as adjusted6 |
|
5.6 |
|
|
|
3.5 |
|
1 |
Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. |
|
2 |
The last twelve months ended July 1, 2023 includes |
|
3 |
Represents other 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 July 1, 2023, primarily includes |
|
4 |
Includes drawn letters of credit and cash balances in certain geographies. |
|
5 |
Represents Debt divided by Income (loss) from continuing operations which is the most comparable GAAP financial measure to Net debt/EBITDA, as adjusted. |
|
6 |
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 losses, charges and expenses in addition to restructuring and other action-related charges. |
|
Quarters Ended |
|
Six Months Ended |
||||||||||||
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
||||||||
Free cash flow1: |
|
|
|
|
|
|
|
||||||||
Net cash from operating activities |
$ |
87,696 |
|
|
$ |
(209,885 |
) |
|
$ |
132,233 |
|
|
$ |
(441,074 |
) |
Capital expenditures |
|
(9,326 |
) |
|
|
(18,609 |
) |
|
|
(33,570 |
) |
|
|
(37,946 |
) |
Free cash flow |
$ |
78,370 |
|
|
$ |
(228,494 |
) |
|
$ |
98,663 |
|
|
$ |
(479,020 |
) |
1 |
Free cash flow includes the results from continuing and discontinued operations in the periods prior to the sale of the European Innerwear business on March 5, 2022. |
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 30,
|
|
December 30,
|
Operating profit outlook, as calculated under GAAP |
|
|
|
Restructuring and other action-related charges |
|
|
|
Operating profit outlook, as adjusted |
|
|
|
|
|
|
|
Interest expense, net and other expenses outlook, as calculated under GAAP |
|
|
|
Restructuring and other action-related charges |
$— |
|
|
Interest expense, net and other expenses outlook, as adjusted |
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations, as calculated under GAAP1 |
|
|
|
Restructuring and other action-related charges |
|
|
|
Diluted earnings per share from continuing operations, as adjusted |
|
|
|
|
|
|
|
Cash flow from operations outlook, as calculated under GAAP |
|
|
|
Capital expenditures outlook |
|
|
|
Free cash flow outlook |
|
|
|
1 |
The company expects approximately 351 million diluted weighted average shares outstanding for the quarter ended September 30, 2023 and for the year ended December 30, 2023. |
The Company is unable to reconcile projections of financial performance beyond 2023 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 2023 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/20230810773659/en/
News Media contact: Nicole Ducouer (336) 986-7090
Analysts and Investors contact: T.C. Robillard (336) 519-2115
Source: HanesBrands
FAQ
What were the second-quarter results for HanesBrands Inc.?
Did HanesBrands Inc. reduce its debt?
What is HanesBrands Inc.'s Full Potential strategy?