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Kontoor Brands Reports 2024 Third Quarter Results; Raises Full Year Outlook

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Kontoor Brands (KTB) reported strong Q3 2024 results with revenue increasing 2% to $670 million. Adjusted EPS grew 12% to $1.37, while adjusted gross margin expanded 150 basis points to 45.0%. The company demonstrated solid inventory management with a 24% reduction compared to prior year. Based on these results, KTB raised its full-year 2024 outlook, now expecting revenue of $2.60 billion, adjusted EPS of $4.83 (up 9% year-over-year), and cash from operations exceeding $360 million. The company returned $68 million to shareholders through dividends and share repurchases in Q3.

Kontoor Brands (KTB) ha riportato risultati solidi per il terzo trimestre del 2024, con un aumento del fatturato del 2% a $670 milioni. L'EPS rettificato è aumentato del 12% a $1,37, mentre il margine lordo rettificato è cresciuto di 150 punti base, raggiungendo il 45,0%. L'azienda ha dimostrato una gestione efficace dell'inventario, con una riduzione del 24% rispetto all'anno precedente. Sulla base di questi risultati, KTB ha rivisto al rialzo le previsioni per l'intero anno 2024, ora prevedendo un fatturato di $2,60 miliardi, un EPS rettificato di $4,83 (in aumento del 9% rispetto all'anno precedente) e un flusso di cassa dalle operazioni superiore a $360 milioni. L'azienda ha restituito $68 milioni agli azionisti tramite dividendi e riacquisti di azioni nel terzo trimestre.

Kontoor Brands (KTB) reportó resultados sólidos para el tercer trimestre de 2024, con un aumento del 2% en los ingresos que alcanzaron $670 millones. El EPS ajustado creció un 12% a $1.37, mientras que el margen bruto ajustado se expandió en 150 puntos básicos, alcanzando el 45.0%. La empresa demostró una sólida gestión del inventario, con una reducción del 24% en comparación con el año anterior. Basado en estos resultados, KTB elevó su perspectiva para el año completo 2024, ahora esperando ingresos de $2.60 mil millones, un EPS ajustado de $4.83 (un aumento del 9% interanual) y un flujo de caja de las operaciones que supera los $360 millones. La empresa devolvió $68 millones a los accionistas a través de dividendos y recompra de acciones en el tercer trimestre.

콘투어 브랜드 (KTB)는 2024년 3분기 강력한 실적을 발표했으며, 매출이 2% 증가한 $670 백만 달러에 도달했습니다. 조정 주당 순이익(EPS)은 12% 증가하여 $1.37를 기록하였고, 조정 총 마진은 150 베이시스를 확대하여 45.0%에 이르렀습니다. 회사는 이전 년도에 비해 24% 감소한 재고 관리에서 탄탄한 성과를 보였습니다. 이러한 결과를 바탕으로 KTB는 2024년 전체 전망을 상향 조정하였으며, 이제 $2.60 십억 달러의 매출, 조정된 EPS가 $4.83 (전년 대비 9% 증가) 및 운영 현금 흐름이 $360 백만 달러를 초과할 것으로 예상하고 있습니다. 회사는 3분기 동안 배당금과 자사주 매입을 통해 주주에게 $68 백만 달러를 반환했습니다.

Kontoor Brands (KTB) a annoncé de solides résultats pour le troisième trimestre 2024, avec une augmentation du chiffre d'affaires de 2% à 670 millions $. Le BPA ajusté a augmenté de 12% pour atteindre 1,37 $, tandis que la marge brute ajustée s'est élargie de 150 points de base à 45,0%. L'entreprise a démontré une gestion efficace des stocks avec une réduction de 24% par rapport à l'année précédente. Sur la base de ces résultats, KTB a relevé sa prévision pour l'ensemble de l'année 2024, s'attendant désormais à un chiffre d'affaires de 2,60 milliards $, un BPA ajusté de 4,83 $ (en hausse de 9% par rapport à l'année précédente) et un flux de trésorerie provenant des opérations dépassant 360 millions $. L'entreprise a restitué 68 millions $ aux actionnaires par le biais de dividendes et de rachats d'actions au troisième trimestre.

Kontoor Brands (KTB) hat für das dritte Quartal 2024 starke Ergebnisse erzielt, wobei der Umsatz um 2% auf 670 Millionen $ gestiegen ist. Der bereinigte Gewinn pro Aktie (EPS) wuchs um 12% auf $1,37, während die bereinigte Bruttomarge um 150 Basispunkte auf 45,0% anstieg. Das Unternehmen wies ein solides Bestandsmanagement mit einer Reduzierung von 24% im Vergleich zum Vorjahr nach. Basierend auf diesen Ergebnissen hat KTB seine Gesamtprognose für 2024 angehoben und erwartet jetzt einen Umsatz von 2,60 Milliarden $, einen bereinigten EPS von $4,83 (plus 9% im Jahresvergleich) und einen Cashflow aus laufenden Betrieben von über 360 Millionen $. Das Unternehmen gab im dritten Quartal 68 Millionen $ an die Aktionäre in Form von Dividenden und Aktienrückkäufen zurück.

Positive
  • Revenue increased 2% to $670 million in Q3
  • Adjusted EPS grew 12% to $1.37
  • Gross margin expanded 150 basis points to 45.0%
  • Inventory reduced by 24% year-over-year
  • Raised full-year revenue guidance to $2.60 billion
  • Increased quarterly dividend by 4%
  • Cash from operations outlook raised to exceed $360 million
Negative
  • International revenue declined 5%
  • Lee brand global revenue decreased 3%
  • SG&A expenses increased 5% year-over-year
  • Europe revenue decreased 6%

Insights

The Q3 2024 results demonstrate strong financial performance with several positive indicators. $670 million revenue increased 2%, while adjusted EPS grew 12% to $1.37. Notably, inventory decreased 24%, showing improved operational efficiency. The company's increased full-year guidance, including revenue projection of $2.60 billion and adjusted EPS of $4.83, reflects growing confidence in business fundamentals.

Key strengths include U.S. wholesale growth of 5%, digital sales expansion and improved gross margins. The $40 million share repurchase and 4% dividend increase signal strong cash flow management and commitment to shareholder returns. The $269 million cash position and reduced inventory levels provide financial flexibility for future growth initiatives.

Kontoor's brand performance shows divergent trends, with Wrangler outperforming Lee. Wrangler's 4% global revenue growth, particularly strong in U.S. direct-to-consumer (10% increase), demonstrates successful market positioning. The brand's expanded distribution and market share gains in wholesale suggest effective channel strategy execution.

Geographic performance varies significantly - U.S. market shows resilience with 5% growth, while international markets face challenges, particularly in Europe (6% decline) and Non-U.S. Americas (12% decrease). The preliminary 2025 outlook of 4% revenue growth indicates sustained momentum, supported by Project Jeanius transformation initiatives.

Third Quarter 2024 Highlights

  • Revenue of $670 million increased 2 percent compared to prior year
  • Reported gross margin was 44.7 percent. Adjusted gross margin was 45.0 percent and increased 150 basis points compared to prior year on a reported basis, excluding the out-of-period duty charge in that period
  • Reported EPS was $1.26. Adjusted EPS of $1.37 increased 12 percent compared to prior year on a reported basis, excluding the out-of-period duty charge in that period
  • Inventory decreased 24 percent compared to prior year
  • The Company repurchased $40 million of shares
  • As previously announced, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.52 per share, a 4 percent increase compared to Q2’24

Updated Full Year 2024 Financial Outlook

  • Revenue is now expected to be $2.60 billion ($2.57 to $2.63 billion prior outlook)
  • Adjusted gross margin is now expected to be 45.1 percent (44.8 percent prior outlook), representing an increase of 260 basis points compared to the prior year on an adjusted basis, excluding the out-of-period duty charge in that period
  • Adjusted operating income is expected to be $385 million (higher end of $377 to $387 million prior outlook), representing an increase of 11 percent (10 to 11 percent prior outlook) compared to the prior year on an adjusted basis, excluding the out-of-period duty charge in that period. Adjusted operating income includes a $6 million impact from supply chain and inventory management actions compared to the prior outlook
  • Adjusted EPS is now expected to be $4.83 (approximately $4.80 prior outlook), representing an increase of 9 percent (8 percent prior outlook) compared to the prior year on an adjusted basis, excluding the out-of-period duty charge in that period. Adjusted EPS includes an $0.08 impact from supply chain and inventory management actions compared to the prior outlook
  • Cash from operations is now expected to exceed $360 million (exceed $350 million prior outlook)

GREENSBORO, N.C.--(BUSINESS WIRE)-- Kontoor Brands, Inc. (NYSE: KTB), a global lifestyle apparel company, with a portfolio led by two of the world’s most iconic consumer brands, Wrangler® and Lee®, today reported financial results for its third quarter ended September 28, 2024.

“Our third quarter results exceeded expectations driven by strong execution and business fundamentals,” said Scott Baxter, President, Chief Executive Officer and Chair of Kontoor Brands. “The investments in our brands continue to drive market share gains, expanded distribution, category growth and new innovation platforms. Fueled by our Jeanius transformation program, momentum for the business is building, supported by increased investment capacity and capital allocation optionality that position us to deliver strong returns for stakeholders in the years ahead.”

Third Quarter 2024 Income Statement Review

Revenue was $670 million and increased 2 percent compared to the prior year. The increase was driven by growth in global direct-to-consumer and U.S. wholesale, partially offset by a decline in international wholesale revenue.

U.S. revenue was $530 million and increased 5 percent compared to the prior year. Wholesale revenue increased 5 percent driven by expanded distribution, market share gains and strength in point-of-sale, partially offset by retailer inventory management actions. Direct-to-consumer increased 5 percent driven by 9 percent growth in digital partially offset by a 2 percent decline in brick-and-mortar retail.

International revenue was $141 million, a 5 percent decrease compared to the prior year. International wholesale decreased 7 percent and direct-to-consumer was flat, with 11 percent growth in digital partially offset by a 6 percent decrease in owned brick-and-mortar retail. Europe decreased 6 percent (8 percent decrease in constant currency), with 9 percent growth in direct-to-consumer (7 percent growth in constant currency) more than offset by a 9 percent decline in wholesale (11 percent decline in constant currency). Asia increased 2 percent, with 5 percent growth in wholesale partially offset by a 7 percent decrease in direct-to-consumer. Non-U.S. Americas decreased 12 percent (6 percent decrease in constant currency).

Wrangler brand global revenue was $464 million, a 4 percent increase compared to the prior year. Wrangler U.S. revenue increased 5 percent, driven by 10 percent growth in direct-to-consumer and 5 percent growth in wholesale. Wrangler international revenue decreased 3 percent, driven by a decline in wholesale partially offset by growth in direct-to-consumer.

Lee brand global revenue was $202 million, a 3 percent decrease compared to the prior year. Lee U.S. revenue increased 1 percent driven by growth in the wholesale channel partially offset by a decline in direct-to-consumer. Lee international revenue decreased 7 percent driven by a decline in wholesale and brick-and-mortar retail, partially offset by growth in digital.

Gross margin increased 320 basis points to 44.7 percent on a reported basis and increased 150 basis points to 45.0 percent on an adjusted basis compared to prior year reported results, excluding the out-of-period duty charge in that period. Adjusted gross margin expansion was driven by the benefits from lower product costs and supply chain efficiencies, partially offset by lower pricing.

Selling, General & Administrative (SG&A) expenses were $201 million or 30.0 percent of revenue on a reported basis. On an adjusted basis, SG&A expenses were $195 million, or 29.1 percent of revenue, representing an increase of 5 percent compared to the prior year on a reported basis, driven by an increase in demand creation investments, product development and distribution expenses.

Operating income was $98 million on a reported basis. On an adjusted basis, operating income was $107 million and increased 8 percent compared to the prior year on a reported basis, excluding the out-of-period duty charge in that period. Adjusted operating margin of 15.9 percent increased 80 basis points compared to the prior year on a reported basis, excluding the out-of-period duty charge in that period.

Earnings per share (EPS) was $1.26 on a reported basis. On an adjusted basis, EPS was $1.37 compared to reported EPS of $1.22 in the prior year, excluding the out-of-period duty charge in that period, representing an increase of 12 percent.

Balance Sheet and Liquidity Review

The Company ended the third quarter with $269 million in cash and cash equivalents, and $745 million in long-term debt.

Inventory at the end of the third quarter was $462 million, down 24 percent compared to the prior year.

As of the end of the third quarter, the Company had no outstanding borrowings under the Revolving Credit Facility and $494 million available for borrowing against this facility.

As previously announced, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.52 per share, a 4 percent increase compared to the second quarter of 2024, payable on December 19, 2024, to shareholders of record at the close of business on December 9, 2024.

Consistent with a commitment to return cash to shareholders, the Company repurchased $40 million of common stock during the third quarter. When combined with the strong dividend, the Company returned a total of $68 million to shareholders during the third quarter and $168 million year-to-date. The Company has $215 million remaining under its authorized share repurchase program.

Updated 2024 Outlook

“We are raising our full year outlook driven by better-than-expected third quarter results, stronger profitability and cash generation,” said Scott Baxter, President, Chief Executive Officer and Chair of Kontoor Brands. “Our business is positioned to strengthen in the fourth quarter, as evidenced by accelerating revenue growth, gross margin expansion, stronger operating earnings growth and further reductions in inventory. We will continue to manage the business conservatively in light of the uncertain environment, but remain confident in our ability to drive strong returns for the balance of the year and into 2025.”

The Company’s updated 2024 outlook includes the following:

  • Revenue is now expected to be $2.60 billion ($2.57 to $2.63 billion prior outlook), including fourth quarter revenue of approximately $695 million, reflecting growth of approximately 4 percent. The Company continues to expect market share gains, growth from channel and category expansion, and expanded distribution to be offset by conservative retailer inventory management and macroeconomic pressures on consumer spending around the globe.
  • Adjusted gross margin is now expected to be 45.1 percent (44.8 percent prior outlook), representing an increase of 260 basis points compared to adjusted gross margin in the prior year, excluding the out-of-period duty expense in that period. Adjusted gross margin includes a 20 basis point impact from supply chain and inventory management actions compared to the prior outlook. In the fourth quarter, the Company expects adjusted gross margin to be 44.6 percent (44.3 percent prior outlook), representing an increase of 150 basis points compared to prior year adjusted gross margin, excluding the out-of-period duty expense in that period. Gross margin expansion is driven by the benefits of lower product costs, direct-to-consumer mix, and supply chain efficiencies.
  • Adjusted SG&A is expected to increase 4 percent compared to adjusted SG&A in the prior year, consistent with the prior outlook. The Company will continue to invest in its brands and capabilities in support of long-term profitable growth, including demand creation, direct-to-consumer and international expansion.
  • Adjusted operating income is expected to be $385 million (higher end of $377 to $387 million prior outlook), reflecting an increase of 11 percent (10 to 11 percent prior outlook) compared to adjusted operating income in the prior year, excluding the out-of-period duty expense in that period. Adjusted operating income includes a $6 million impact from supply chain and inventory management actions compared to the prior outlook. The supply chain actions, mainly expedited freight, are expected to secure inventory positions this year in support of fourth quarter and first half 2025 growth expectations. The inventory management actions are a result of the Company’s continued focus on improving the composition of its inventory and driving further reductions in inventory and increased cash flow while establishing an even stronger foundation for the business for 2025. Fourth quarter adjusted operating income is expected to be $105 million, reflecting growth of more than 20 percent.
  • Adjusted EPS is now expected to be $4.83 (approximately $4.80 prior outlook), including an incremental $0.08 impact from supply chain and inventory management actions compared to the prior outlook. Excluding the out-of-period duty expense in the prior year, adjusted EPS is expected to increase 9 percent (8 percent prior outlook). In the fourth quarter, the Company expects adjusted EPS of $1.31. Full year 2024 adjusted EPS includes an approximate 5-percentage point headwind from a higher tax rate, including an approximate 25-percentage point headwind in the fourth quarter.
  • Capital Expenditures are now expected to be $25 million ($35 million prior outlook).
  • For the full year, the Company expects an effective tax rate of approximately 20 percent. Interest expense is expected to approximate $32 million. Other Expense is expected to be in the range of $12 million to $14 million. Average shares outstanding are expected to be approximately 56 million, excluding the impact of any future share repurchases.
  • The Company now expects cash flow from operations to exceed $360 million ($350 million prior outlook) driven by the combination of accelerated earnings growth and further reductions in inventory.
  • The Company’s 2024 outlook does not reflect any material impacts from Project Jeanius.

Preliminary 2025 Outlook and Project Jeanius

  • The Company expects its growth momentum to continue into 2025 driven by continued market share gains, category expansion and new distribution. Based on current visibility, the Company expects revenue growth of approximately 4 percent in the first half of 2025.
  • Adjusted gross margin expansion is expected to be driven by the benefits of structural mix, supply chain initiatives, and Project Jeanius, partially offset by modest product cost inflation and the impact of ongoing supply chain volatility.
  • Adjusted operating income growth is expected to outpace revenue growth driven by gross margin expansion, SG&A leverage and the benefits of Project Jeanius. The Company expects to continue to increase the rate of investment behind its growth priorities such as demand creation, category expansion, international expansion and direct-to-consumer.
  • The benefits from Project Jeanius are expected to be weighted to the second half of 2025 as supply chain initiatives begin to scale. Project Jeanius is expected to provide modest SG&A benefits in the first half of 2025, with accelerating benefits in the second half driven by combined gross margin and SG&A initiatives.
  • The Company expects another year of robust cash generation driven by earnings growth and improved net working capital management, providing significant capital allocation optionality.

This release refers to “adjusted” amounts from 2024 and 2023 and “constant currency” amounts, which are further described in the Non-GAAP Financial Measures section below. Unless otherwise noted, “reported” and “constant currency” amounts are the same. As previously disclosed, third quarter 2023 results included a $13 million duty charge related to prior periods and full year 2023 results included a $14 million duty charge related to prior years. All per share amounts are presented on a diluted basis. Amounts as presented herein may not recalculate due to the use of unrounded numbers.

Webcast Information

Kontoor Brands will host its third quarter 2024 conference call beginning at 8:30 a.m. Eastern Time today, October 31, 2024. The conference will be broadcast live via the Internet, accessible at https://www.kontoorbrands.com/investors. For those unable to listen to the live broadcast, an archived version will be available at the same location.

Non-GAAP Financial Measures

Adjusted Amounts - This release refers to “adjusted” amounts. Adjustments during 2024 represent charges related to business optimization activities and actions to streamline and transfer select production within our internal manufacturing network. Adjustments during 2023 represent charges in the second quarter related to strategic actions taken by the Company to drive efficiencies in our operations, which included reducing our global workforce, streamlining and transferring select production within our internal manufacturing network and globalizing our operating model. Additional information regarding adjusted amounts is provided in notes to the supplemental financial information included with this release.

Constant Currency - This release refers to “reported” amounts in accordance with GAAP, which include translation and transactional impacts from changes in foreign currency exchange rates. This release also refers to “constant currency” amounts, which exclude the translation impact of changes in foreign currency exchange rates.

Reconciliations of these non-GAAP measures to the most comparable GAAP measures are presented in the supplemental financial information included with this release that identifies and quantifies all reconciling adjustments and provides management's view of why this non-GAAP information is useful to investors. While management believes that these non-GAAP measures are useful in evaluating the business, this information should be viewed in addition to, and not as an alternate for, reported results under GAAP. The non-GAAP measures used by the Company in this release may be different from similarly titled measures used by other companies.

For forward-looking non-GAAP measures included in this filing, the Company does not provide a reconciliation to the most comparable GAAP financial measures because the information needed to reconcile these measures is unavailable due to the inherent difficulty of forecasting the timing and/or amount of various items that have not yet occurred and have been excluded from adjusted measures. Additionally, estimating such GAAP measures and providing a meaningful reconciliation consistent with the Company’s accounting policies for future periods requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort.

About Kontoor Brands

Kontoor Brands, Inc. (NYSE: KTB) is a global lifestyle apparel company, with a portfolio led by two of the world’s most iconic consumer brands: Wrangler® and Lee®. Kontoor designs, manufactures, distributes, and licenses superior high-quality products that look good and fit right, giving people around the world the freedom and confidence to express themselves. Kontoor Brands is a purpose-led organization focused on leveraging its global platform, strategic sourcing model and best-in-class supply chain to drive brand growth and deliver long-term value for its stakeholders. For more information about Kontoor Brands, please visit www.KontoorBrands.com.

Forward-Looking Statements

Certain statements included in this release and attachments are “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve several risks and uncertainties. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” “may” and other words and terms of similar meaning or use of future dates. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as required under the U.S. federal securities laws. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this release include, but are not limited to: macroeconomic conditions, including elevated interest rates, inflation, recessionary concerns and fluctuating foreign currency exchange rates, as well as continuing global supply chain issues and geopolitical events, continue to adversely impact global economic conditions and have had, and may continue to have, a negative impact on the Company’s business, results of operations, financial condition and cash flows (including future uncertain impacts); the level of consumer demand for apparel; reliance on a small number of large customers; supply chain and shipping disruptions, which could continue to result in shipping delays, an increase in transportation costs and increased product costs or lost sales; intense industry competition; the ability to accurately forecast demand for products; the Company’s ability to gauge consumer preferences and product trends, and to respond to constantly changing markets; the Company’s ability to maintain the images of its brands; increasing pressure on margins; e-commerce operations through the Company’s direct-to-consumer business; the financial difficulty experienced by the retail industry; possible goodwill and other asset impairment; the ability to implement the Company’s business strategy; the stability of manufacturing facilities and foreign suppliers; fluctuations in wage rates and the price, availability and quality of raw materials and contracted products; the reliance on a limited number of suppliers for raw material sourcing and the ability to obtain raw materials on a timely basis or in sufficient quantity or quality; disruption to distribution systems; seasonality; unseasonal or severe weather conditions; the Company's and its vendors’ ability to maintain the strength and security of information technology systems; the risk that facilities and systems and those of third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss or maintain operational performance; ability to properly collect, use, manage and secure consumer and employee data; disruption and volatility in the global capital and credit markets and its impact on the Company's ability to obtain short-term or long-term financing on favorable terms; legal, regulatory, political and economic risks; changes to trade policy, including tariff and import/export regulations; the impact of climate change and related legislative and regulatory responses; compliance with anti-bribery, anti-corruption and anti-money laundering laws by the Company and third-party suppliers and manufacturers; changes in tax laws and liabilities; the costs of compliance with or the violation of national, state and local laws and regulations for environmental, consumer protection, employment, privacy, safety and other matters; continuity of members of management; labor relations; the ability to protect trademarks and other intellectual property rights; the ability of the Company’s licensees to generate expected sales and maintain the value of the Company’s brands; the Company maintaining satisfactory credit ratings; restrictions on the Company’s business relating to its debt obligations; volatility in the price and trading volume of the Company’s common stock; anti-takeover provisions in the Company’s organizational documents; and fluctuations in the amount and frequency of our share repurchases. Many of the foregoing risks and uncertainties will be exacerbated by any worsening of the global business and economic environment.

More information on potential factors that could affect the Company's financial results are described in detail in the Company’s most recent Annual Report on Form 10-K and in other reports and statements that the Company files with the SEC.

KONTOOR BRANDS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended
September

 

%

 

Nine Months Ended
September

 

%

(Dollars and shares in thousands, except per share amounts)

 

 

2024

 

 

 

2023

 

 

Change

 

 

2024

 

 

 

2023

 

 

Change

Net revenues

 

$

670,194

 

 

$

654,540

 

 

2%

 

$

1,908,294

 

 

$

1,937,672

 

 

(2)%

Costs and operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

370,684

 

 

 

383,075

 

 

(3)%

 

 

1,052,280

 

 

 

1,129,245

 

 

(7)%

Selling, general and administrative expenses

 

 

201,189

 

 

 

185,983

 

 

8%

 

 

598,020

 

 

 

564,599

 

 

6%

Total costs and operating expenses

 

 

571,873

 

 

 

569,058

 

 

—%

 

 

1,650,300

 

 

 

1,693,844

 

 

(3)%

Operating income

 

 

98,321

 

 

 

85,482

 

 

15%

 

 

257,994

 

 

 

243,828

 

 

6%

Interest expense

 

 

(11,178

)

 

 

(10,454

)

 

7%

 

 

(30,852

)

 

 

(30,390

)

 

2%

Interest income

 

 

2,965

 

 

 

964

 

 

208%

 

 

8,006

 

 

 

2,074

 

 

286%

Other expense, net

 

 

(3,335

)

 

 

(3,764

)

 

(11)%

 

 

(9,239

)

 

 

(9,142

)

 

1%

Income before income taxes

 

 

86,773

 

 

 

72,228

 

 

20%

 

 

225,909

 

 

 

206,370

 

 

9%

Income taxes

 

 

16,225

 

 

 

12,697

 

 

28%

 

 

44,085

 

 

 

44,147

 

 

—%

Net income

 

$

70,548

 

 

$

59,531

 

 

19%

 

$

181,824

 

 

$

162,223

 

 

12%

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.27

 

 

$

1.06

 

 

 

 

$

3.27

 

 

$

2.90

 

 

 

Diluted

 

$

1.26

 

 

$

1.05

 

 

 

 

$

3.22

 

 

$

2.85

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

55,421

 

 

 

56,151

 

 

 

 

 

55,655

 

 

 

55,962

 

 

 

Diluted

 

 

56,054

 

 

 

56,956

 

 

 

 

 

56,416

 

 

 

56,914

 

 

 

Basis of presentation for all financial tables within this release: The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 each year. For presentation purposes herein, all references to periods ended September 2024 and September 2023 correspond to the 13-week and 39-week fiscal periods ended September 28, 2024 and September 30, 2023, respectively. References to September 2024, December 2023 and September 2023 relate to the balance sheets as of September 28, 2024, December 30, 2023 and September 30, 2023, respectively. Amounts herein may not recalculate due to the use of unrounded numbers.

KONTOOR BRANDS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(In thousands)

 

September 2024

 

December 2023

 

September 2023

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

269,427

 

$

215,050

 

$

77,828

Accounts receivable, net

 

 

230,435

 

 

217,673

 

 

236,816

Inventories

 

 

461,510

 

 

500,353

 

 

605,234

Prepaid expenses and other current assets

 

 

104,855

 

 

110,808

 

 

113,186

Total current assets

 

 

1,066,227

 

 

1,043,884

 

 

1,033,064

Property, plant and equipment, net

 

 

106,842

 

 

112,045

 

 

110,399

Operating lease assets

 

 

54,638

 

 

54,812

 

 

63,114

Intangible assets, net

 

 

11,778

 

 

12,497

 

 

12,553

Goodwill

 

 

209,843

 

 

209,862

 

 

209,413

Other assets

 

 

203,795

 

 

212,339

 

 

197,387

TOTAL ASSETS

 

$

1,653,123

 

$

1,645,439

 

$

1,625,930

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short-term borrowings

 

$

 

$

 

$

Current portion of long-term debt

 

 

 

 

20,000

 

 

17,500

Accounts payable

 

 

201,863

 

 

180,220

 

 

182,448

Accrued and other current liabilities

 

 

204,375

 

 

171,414

 

 

168,356

Operating lease liabilities, current

 

 

21,050

 

 

21,003

 

 

20,975

Total current liabilities

 

 

427,288

 

 

392,637

 

 

389,279

Operating lease liabilities, noncurrent

 

 

36,572

 

 

36,753

 

 

41,348

Other liabilities

 

 

87,350

 

 

80,215

 

 

79,084

Long-term debt

 

 

744,986

 

 

763,921

 

 

768,595

Total liabilities

 

 

1,296,196

 

 

1,273,526

 

 

1,278,306

Commitments and contingencies

 

 

 

 

 

 

Total equity

 

 

356,927

 

 

371,913

 

 

347,624

TOTAL LIABILITIES AND EQUITY

 

$

1,653,123

 

$

1,645,439

 

$

1,625,930

KONTOOR BRANDS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended September

(In thousands)

 

 

2024

 

 

 

2023

 

OPERATING ACTIVITIES

 

 

 

 

Net income

 

$

181,824

 

 

$

162,223

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

29,052

 

 

 

27,405

 

Stock-based compensation

 

 

16,316

 

 

 

9,017

 

Other, including working capital changes

 

 

59,066

 

 

 

(51,119

)

Cash provided by operating activities

 

 

286,258

 

 

 

147,526

 

INVESTING ACTIVITIES

 

 

 

 

Property, plant and equipment expenditures

 

 

(11,841

)

 

 

(21,553

)

Capitalized computer software

 

 

(2,766

)

 

 

(8,940

)

Other

 

 

(1,858

)

 

 

(837

)

Cash used by investing activities

 

 

(16,465

)

 

 

(31,330

)

FINANCING ACTIVITIES

 

 

 

 

Borrowings under revolving credit facility

 

 

 

 

 

288,000

 

Repayments under revolving credit facility

 

 

 

 

 

(288,000

)

Repayments of term loan

 

 

(40,000

)

 

 

(7,500

)

Repurchases of Common Stock

 

 

(85,677

)

 

 

 

Dividends paid

 

 

(83,306

)

 

 

(80,719

)

Shares withheld for taxes, net of proceeds from issuance of Common Stock

 

 

(1,769

)

 

 

(2,506

)

Other

 

 

 

 

 

(7,297

)

Cash used by financing activities

 

 

(210,752

)

 

 

(98,022

)

Effect of foreign currency rate changes on cash and cash equivalents

 

 

(4,664

)

 

 

475

 

Net change in cash and cash equivalents

 

 

54,377

 

 

 

18,649

 

Cash and cash equivalents – beginning of period

 

 

215,050

 

 

 

59,179

 

Cash and cash equivalents – end of period

 

$

269,427

 

 

$

77,828

 

KONTOOR BRANDS, INC.

Supplemental Financial Information

Business Segment Information

(Unaudited)

 

 

Three Months Ended September

 

% Change

 

% Change Constant

Currency (a)

(Dollars in thousands)

 

 

2024

 

 

 

2023

 

 

 

Segment revenues:

 

 

 

 

 

 

 

 

Wrangler

 

$

464,107

 

 

$

444,539

 

 

4%

 

4%

Lee

 

 

202,343

 

 

 

208,027

 

 

(3)%

 

(3)%

Total reportable segment revenues

 

 

666,450

 

 

 

652,566

 

 

2%

 

2%

Other revenues (b)

 

 

3,744

 

 

 

1,974

 

 

90%

 

90%

Total net revenues

 

$

670,194

 

 

$

654,540

 

 

2%

 

2%

Segment profit:

 

 

 

 

 

 

 

 

Wrangler

 

$

97,753

 

 

$

81,556

 

 

20%

 

20%

Lee

 

 

23,355

 

 

 

20,735

 

 

13%

 

11%

Total reportable segment profit

 

$

121,108

 

 

$

102,291

 

 

18%

 

18%

Corporate and other expenses

 

 

(26,307

)

 

 

(20,091

)

 

31%

 

31%

Interest expense

 

 

(11,178

)

 

 

(10,454

)

 

7%

 

7%

Interest income

 

 

2,965

 

 

 

964

 

 

208%

 

211%

Profit (loss) related to other revenues (b)

 

 

185

 

 

 

(482

)

 

138%

 

139%

Income before income taxes

 

$

86,773

 

 

$

72,228

 

 

20%

 

20%

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September

 

% Change

 

% Change Constant

Currency (a)

(Dollars in thousands)

 

 

2024

 

 

 

2023

 

 

 

Segment revenues:

 

 

 

 

 

 

 

 

Wrangler

 

$

1,302,846

 

 

$

1,293,171

 

 

1%

 

1%

Lee

 

 

597,085

 

 

 

636,684

 

 

(6)%

 

(6)%

Total reportable segment revenues

 

 

1,899,931

 

 

 

1,929,855

 

 

(2)%

 

(2)%

Other revenues (b)

 

 

8,363

 

 

 

7,817

 

 

7%

 

7%

Total net revenues

 

$

1,908,294

 

 

$

1,937,672

 

 

(2)%

 

(2)%

Segment profit:

 

 

 

 

 

 

 

 

Wrangler

 

$

260,758

 

 

$

223,639

 

 

17%

 

16%

Lee

 

 

71,816

 

 

 

77,473

 

 

(7)%

 

(7)%

Total reportable segment profit

 

$

332,574

 

 

$

301,112

 

 

10%

 

10%

Corporate and other expenses

 

 

(82,745

)

 

 

(65,815

)

 

26%

 

26%

Interest expense

 

 

(30,852

)

 

 

(30,390

)

 

2%

 

2%

Interest income

 

 

8,006

 

 

 

2,074

 

 

286%

 

286%

Loss related to other revenues (b)

 

 

(1,074

)

 

 

(611

)

 

76%

 

76%

Income before income taxes

 

$

225,909

 

 

$

206,370

 

 

9%

 

9%

 

(a) Refer to constant currency definition on the following pages.

(b) We report an “Other” category to reconcile segment revenues and segment profit to the Company's operating results, but the Other category does not meet the criteria to be considered a reportable segment. Other includes sales and licensing of Rock & Republic®, other company-owned brands and private label apparel.

KONTOOR BRANDS, INC.

Supplemental Financial Information

Business Segment Information – Constant Currency Basis (Non-GAAP)

(Unaudited)

 

 

 

Three Months Ended September 2024

 

 

As Reported

 

Adjust for Foreign

 

 

(In thousands)

 

under GAAP

 

Currency Exchange

 

Constant Currency

Segment revenues:

 

 

 

 

 

 

Wrangler

 

$

464,107

 

 

$

220

 

 

$

464,327

 

Lee

 

 

202,343

 

 

 

(22

)

 

 

202,321

 

Total reportable segment revenues

 

 

666,450

 

 

 

198

 

 

 

666,648

 

Other revenues

 

 

3,744

 

 

 

 

 

 

3,744

 

Total net revenues

 

$

670,194

 

 

$

198

 

 

$

670,392

 

Segment profit:

 

 

 

 

 

 

Wrangler

 

$

97,753

 

 

$

61

 

 

$

97,814

 

Lee

 

 

23,355

 

 

 

(266

)

 

 

23,089

 

Total reportable segment profit

 

$

121,108

 

 

$

(205

)

 

$

120,903

 

Corporate and other expenses

 

 

(26,307

)

 

 

15

 

 

 

(26,292

)

Interest expense

 

 

(11,178

)

 

 

 

 

 

(11,178

)

Interest income

 

 

2,965

 

 

 

30

 

 

 

2,995

 

Profit (loss) related to other revenues

 

 

185

 

 

 

1

 

 

 

186

 

Income before income taxes

 

$

86,773

 

 

$

(159

)

 

$

86,614

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 2024

 

 

As Reported

 

Adjust for Foreign

 

 

(In thousands)

 

under GAAP

 

Currency Exchange

 

Constant Currency

Segment revenues:

 

 

 

 

 

 

Wrangler

 

$

1,302,846

 

 

$

(1,201

)

 

$

1,301,645

 

Lee

 

 

597,085

 

 

 

563

 

 

 

597,648

 

Total reportable segment revenues

 

 

1,899,931

 

 

 

(638

)

 

 

1,899,293

 

Other revenues

 

 

8,363

 

 

 

 

 

 

8,363

 

Total net revenues

 

$

1,908,294

 

 

$

(638

)

 

$

1,907,656

 

Segment profit:

 

 

 

 

 

 

Wrangler

 

$

260,758

 

 

$

(459

)

 

$

260,299

 

Lee

 

 

71,816

 

 

 

(93

)

 

 

71,723

 

Total reportable segment profit

 

$

332,574

 

 

$

(552

)

 

$

332,022

 

Corporate and other expenses

 

 

(82,745

)

 

 

(75

)

 

 

(82,820

)

Interest expense

 

 

(30,852

)

 

 

 

 

 

(30,852

)

Interest income

 

 

8,006

 

 

 

(6

)

 

 

8,000

 

Loss related to other revenues

 

 

(1,074

)

 

 

1

 

 

 

(1,073

)

Income before income taxes

 

$

225,909

 

 

$

(632

)

 

$

225,277

 

Constant Currency Financial Information

The Company is a global company that reports financial information in U.S. dollars in accordance with GAAP. Foreign currency exchange rate fluctuations affect the amounts reported by the Company from translating its foreign revenues and expenses into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results. As a supplement to our reported operating results, we present constant currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. We use constant currency information to provide a framework to assess how our business performed excluding the effects of changes in the rates used to calculate foreign currency translation. Management believes this information is useful to investors to facilitate comparison of operating results and better identify trends in our businesses.

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).

These constant currency performance measures should be viewed in addition to, and not as an alternative for, reported results under GAAP. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

KONTOOR BRANDS, INC.

Supplemental Financial Information

Reconciliation of Adjusted Financial Measures - Quarter-to-Date (Non-GAAP)

(Unaudited)

 

 

Three Months Ended September

(Dollars in thousands, except per share amounts)

 

2024

 

 

 

Cost of goods sold - as reported under GAAP

$

370,684

 

Restructuring and transformation costs (a)

 

(2,058

)

Adjusted cost of goods sold

$

368,626

 

 

 

 

 

Selling, general and administrative expenses - as reported under GAAP

$

201,189

 

Restructuring and transformation costs (a)

 

(6,382

)

Adjusted selling, general and administrative expenses

$

194,807

 

 

 

 

 

Diluted earnings per share - as reported under GAAP

$

1.26

 

Restructuring and transformation costs (a)

 

0.11

 

Adjusted diluted earnings per share

$

1.37

 

 

 

 

 

Net income - as reported under GAAP

$

70,548

 

Income taxes

 

16,225

 

Interest expense

 

11,178

 

Interest income

 

(2,965

)

EBIT

$

94,986

 

Depreciation and amortization

 

9,522

 

EBITDA

$

104,508

 

Restructuring and transformation costs (a)

 

8,440

 

Adjusted EBITDA

$

112,948

 

As a percentage of total net revenues

 

16.9

%

 

Non-GAAP Financial Information: The financial information above has been presented on a GAAP basis and on an adjusted basis. EBIT, EBITDA and adjusted presentations are non-GAAP measures. See “Notes to Supplemental Financial Information - Reconciliation of Adjusted Financial Measures” at the end of this document. Amounts herein may not recalculate due to the use of unrounded numbers.

 

(a) See Note 1 of “Notes to Supplemental Financial Information - Reconciliation of Adjusted Financial Measures” at the end of this document.

KONTOOR BRANDS, INC.

Supplemental Financial Information

Summary of Select GAAP and Non-GAAP Measures

(Unaudited)

 

 

 

Three Months Ended September

 

 

2024

 

2023

(Dollars in thousands, except per share amounts)

 

GAAP

 

Adjusted

 

GAAP

 

 

 

 

 

 

 

Net revenues

 

$

670,194

 

 

$

670,194

 

 

$

654,540

 

Gross margin

 

$

299,510

 

 

$

301,568

 

 

$

271,465

 

As a percentage of total net revenues

 

 

44.7

%

 

 

45.0

%

 

 

41.5

%

Selling, general and administrative expenses

 

$

201,189

 

 

$

194,807

 

 

$

185,983

 

As a percentage of total net revenues

 

 

30.0

%

 

 

29.1

%

 

 

28.4

%

Operating income

 

$

98,321

 

 

$

106,761

 

 

$

85,482

 

As a percentage of total net revenues

 

 

14.7

%

 

 

15.9

%

 

 

13.1

%

Earnings per share - diluted

 

$

1.26

 

 

$

1.37

 

 

$

1.05

 

 

Non-GAAP Financial Information: The financial information above has been presented on a GAAP basis and on an adjusted basis. These adjusted presentations are non-GAAP measures. See “Notes to Supplemental Financial Information - Reconciliation of Adjusted Financial Measures” at the end of this document.

KONTOOR BRANDS, INC.

Supplemental Financial Information

Disaggregation of Revenue

(Unaudited)

 

 

 

Three Months Ended September 2024

 

 

Revenues - As Reported

(In thousands)

 

Wrangler

 

Lee

 

Other

 

Total

Channel revenues

 

 

 

 

 

 

 

 

U.S. Wholesale

 

$

373,643

 

$

105,342

 

$

3,577

 

$

482,562

Non-U.S. Wholesale

 

 

51,599

 

 

65,268

 

 

 

 

116,867

Direct-to-Consumer

 

 

38,865

 

 

31,733

 

 

167

 

 

70,765

Total

 

$

464,107

 

$

202,343

 

$

3,744

 

$

670,194

 

 

 

 

 

 

 

 

 

Geographic revenues

 

 

 

 

 

 

 

 

U.S.

 

$

406,656

 

$

119,254

 

$

3,744

 

$

529,654

International

 

 

57,451

 

 

83,089

 

 

 

 

140,540

Total

 

$

464,107

 

$

202,343

 

$

3,744

 

$

670,194

 

Three Months Ended September 2023

 

 

Revenues - As Reported

(In thousands)

 

Wrangler

 

Lee

 

Other

 

Total

Channel revenues

 

 

 

 

 

 

 

 

U.S. Wholesale

 

$

355,608

 

$

103,564

 

$

1,799

 

$

460,971

Non-U.S. Wholesale

 

 

53,644

 

 

71,433

 

 

 

 

125,077

Direct-to-Consumer

 

 

35,287

 

 

33,030

 

 

175

 

 

68,492

Total

 

$

444,539

 

$

208,027

 

$

1,974

 

$

654,540

 

 

 

 

 

 

 

 

 

Geographic revenues

 

 

 

 

 

 

 

 

U.S.

 

$

385,501

 

$

118,352

 

$

1,974

 

$

505,827

International

 

 

59,038

 

 

89,675

 

 

 

 

148,713

Total

 

$

444,539

 

$

208,027

 

$

1,974

 

$

654,540

KONTOOR BRANDS, INC.

Supplemental Financial Information

Summary of Select Revenue Information

(Unaudited)

 
 

 

Three Months Ended September

 

 

 

 

 

 

2024

 

2023

 

2024 to 2023

(Dollars in thousands)

 

As Reported under GAAP

 

% Change Reported

 

% Change Constant Currency

Wrangler U.S.

 

$

406,656

 

$

385,501

 

5%

 

5%

Lee U.S.

 

 

119,254

 

 

118,352

 

1%

 

1%

Other

 

 

3,744

 

 

1,974

 

90%

 

90%

Total U.S. revenues

 

$

529,654

 

$

505,827

 

5%

 

5%

 

 

 

 

 

 

 

 

 

Wrangler International

 

$

57,451

 

$

59,038

 

(3)%

 

(2)%

Lee International

 

 

83,089

 

 

89,675

 

(7)%

 

(7)%

Total International revenues

 

$

140,540

 

$

148,713

 

(5)%

 

(5)%

 

 

 

 

 

 

 

 

 

Global Wrangler

 

$

464,107

 

$

444,539

 

4%

 

4%

Global Lee

 

 

202,343

 

 

208,027

 

(3)%

 

(3)%

Global Other

 

 

3,744

 

 

1,974

 

90%

 

90%

Total revenues

 

$

670,194

 

$

654,540

 

2%

 

2%

 

Non-GAAP Financial Information: The financial information above has been presented on a GAAP basis and on a constant currency basis, which is a non-GAAP financial measure. See “Business Segment Information – Constant Currency Basis (Non-GAAP)” for additional information on constant currency financial calculations.

KONTOOR BRANDS, INC.

Supplemental Financial Information

Adjusted Return on Invested Capital (Non-GAAP)

(Unaudited)

 

(Dollars in thousands)

 

Trailing Twelve Months Ended September

 

 

Numerator

 

 

2024

 

 

 

2023

 

 

 

Net Income

 

$

250,595

 

 

$

213,828

 

 

 

Plus: Income taxes

 

 

40,843

 

 

 

68,920

 

 

 

Plus: Interest income (expense), net

 

 

31,147

 

 

 

37,796

 

 

 

EBIT

 

$

322,585

 

 

$

320,544

 

 

 

Plus: Restructuring and transformation costs (a)

 

 

26,832

 

 

 

6,679

 

 

 

Plus: Operating lease interest (b)

 

 

1,213

 

 

 

1,009

 

 

 

Adjusted EBIT

 

$

350,630

 

 

$

328,232

 

 

 

Adjusted effective income tax rate (c)

 

 

15

%

 

 

24

%

 

 

Adjusted net operating profit after taxes

 

$

298,309

 

 

$

248,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

September 2024

 

September 2023

 

September 2022

Equity

 

$

356,927

 

 

$

347,624

 

 

$

208,099

 

Plus: Current portion of long-term debt and other borrowings

 

 

 

 

 

17,500

 

 

 

14,593

 

Plus: Noncurrent portion of long-term debt

 

 

744,986

 

 

 

768,595

 

 

 

824,793

 

Plus: Operating lease liabilities (d)

 

 

57,622

 

 

 

62,323

 

 

 

49,140

 

Less: Cash and cash equivalents

 

 

(269,427

)

 

 

(77,828

)

 

 

(58,053

)

Invested capital

 

$

890,108

 

 

$

1,118,214

 

 

$

1,038,572

 

Average invested capital (e)

 

$

1,004,161

 

 

$

1,078,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income to average debt and equity (f)

 

 

22.4

%

 

 

19.6

%

 

 

Adjusted return on invested capital

 

 

29.7

%

 

 

23.1

%

 

 

 

Non-GAAP Financial Information: Adjusted return on invested capital (“ROIC”) is a non-GAAP measure. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. ROIC may be different from similarly titled measures used by other companies. Amounts herein may not recalculate due to the use of unrounded numbers.

 

(a) See Note 2 of “Notes to Supplemental Financial Information - Reconciliation of Adjusted Financial Measures” at the end of this document.

(b) Operating lease interest is based upon the discount rate for each lease and recorded as a component of rent expense within “Selling, general and administrative expenses” in the Company's statements of operations. The adjustment for operating lease interest represents the add-back to earnings before interest and taxes (“EBIT”) based upon the assumption that properties under our operating leases were owned or accounted for as finance leases. Operating lease interest is added back to EBIT in the adjusted ROIC calculation to account for differences in capital structure between us and other companies.

(c) Effective income tax rate adjusted for restructuring and transformation costs and the corresponding tax impact. See Note 2 of “Notes to Supplemental Financial Information - Reconciliation of Adjusted Financial Measures” at the end of this document.

(d) Total of “Operating lease liabilities, current” and “Operating lease liabilities, noncurrent” in the Company's balance sheets.

(e) The average is based on the “Invested capital” at the end of the current period and at the end of the comparable prior period.

(f) Calculated as “Net income” divided by average “Debt” and “Equity.” “Debt” includes the current and noncurrent portion of long-term debt as well as other short-term borrowings. The average is based on the subtotal of “Debt” and “Equity” at the end of the current period and at the end of the comparable prior period.

 

KONTOOR BRANDS, INC.

Supplemental Financial Information

Reconciliation of Adjusted Financial Measures - Notes (Non-GAAP)

(Unaudited)

 

Notes to Supplemental Financial Information - Reconciliation of Adjusted Financial Measures

 

Management uses non-GAAP financial measures internally in its budgeting and review process and, in some cases, as a factor in determining compensation. In addition, adjusted EBITDA is a key financial measure for the Company's shareholders and financial leaders, as the Company's debt financing agreements require the measurement of adjusted EBITDA, along with other measures, in connection with the Company's compliance with debt covenants. While management believes that these non-GAAP measures are useful in evaluating the business, this information should be considered supplemental in nature and should be viewed in addition to, and not as an alternate for, reported results under GAAP. In addition, these non-GAAP measures may be different from similarly titled measures used by other companies.

 

(1) During the three months ended September 2024, restructuring and transformation costs included $6.3 million related to business optimization activities and $2.1 million related to streamlining and transferring select production within our internal manufacturing network. Total restructuring and transformation costs resulted in a corresponding tax impact of $2.0 million for the three months ended September 2024.

 

(2) During the trailing twelve months ended September 2024, restructuring and transformation costs were $26.8 million related to business optimization activities, streamlining and transferring select production within our internal manufacturing network, optimizing and globalizing our operating model and reductions in our global workforce. Total restructuring and transformation costs resulted in a corresponding tax impact of $6.6 million for the trailing twelve months ended September 2024.

 

During the trailing twelve months ended September 2023, restructuring and transformation costs were $6.7 million net, related to strategic actions taken by the Company to drive efficiencies in our operations, which included reducing our global workforce, streamlining and transferring select production within our internal manufacturing network and globalizing our operating model, a pension curtailment gain, other employee-related benefits and other costs. Total restructuring and transformation costs resulted in a corresponding tax impact of $1.1 million for the trailing twelve months ended September 2023.

 

Investors:

Michael Karapetian, (336) 332-4263

Vice President, Corporate Development, Strategy, and Investor Relations

Michael.Karapetian@kontoorbrands.com

or

Media:

Julia Burge, (336) 332-5122

Director, External Communications

Julia.Burge@kontoorbrands.com

Source: Kontoor Brands, Inc.

FAQ

What was Kontoor Brands (KTB) revenue in Q3 2024?

Kontoor Brands reported Q3 2024 revenue of $670 million, representing a 2% increase compared to the prior year.

How much did KTB's adjusted EPS grow in Q3 2024?

KTB's adjusted EPS grew 12% to $1.37 compared to the prior year.

What is Kontoor Brands' (KTB) updated revenue guidance for 2024?

KTB raised its full-year 2024 revenue guidance to $2.60 billion, up from its prior outlook of $2.57 to $2.63 billion.

How much did KTB reduce its inventory in Q3 2024?

KTB reduced its inventory by 24% compared to the prior year, ending Q3 2024 with $462 million in inventory.

Kontoor Brands, Inc.

NYSE:KTB

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Apparel Manufacturing
Men's & Boys' Furnishgs, Work Clothg, & Allied Garments
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United States of America
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