Kontoor Brands Reports 2024 Third Quarter Results; Raises Full Year Outlook
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.
- 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
- 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.
Key strengths include U.S. wholesale growth of
Kontoor's brand performance shows divergent trends, with Wrangler outperforming Lee. Wrangler's
Geographic performance varies significantly - U.S. market shows resilience with
Third Quarter 2024 Highlights
-
Revenue of
increased 2 percent compared to prior year$670 million - 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
. Adjusted EPS of$1.26 increased 12 percent compared to prior year on a reported basis, excluding the out-of-period duty charge in that period$1.37 - Inventory decreased 24 percent compared to prior year
-
The Company repurchased
of shares$40 million -
As previously announced, the Company’s Board of Directors declared a regular quarterly cash dividend of
per share, a 4 percent increase compared to Q2’24$0.52
Updated Full Year 2024 Financial Outlook
-
Revenue is now expected to be
($2.60 billion to$2.57 prior outlook)$2.63 billion - 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
(higher end of$385 million to$377 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$387 million impact from supply chain and inventory management actions compared to the prior outlook$6 million -
Adjusted EPS is now expected to be
(approximately$4.83 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$4.80 impact from supply chain and inventory management actions compared to the prior outlook$0.08 -
Cash from operations is now expected to exceed
(exceed$360 million prior outlook)$350 million
“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
International revenue was
Wrangler brand global revenue was
Lee brand global revenue was
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
Operating income was
Earnings per share (EPS) was
Balance Sheet and Liquidity Review
The Company ended the third quarter with
Inventory at the end of the third quarter was
As of the end of the third quarter, the Company had no outstanding borrowings under the Revolving Credit Facility and
As previously announced, the Company’s Board of Directors declared a regular quarterly cash dividend of
Consistent with a commitment to return cash to shareholders, the Company repurchased
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 to$2.57 prior outlook), including fourth quarter revenue of approximately$2.63 billion , 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.$695 million
- 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
(higher end of$385 million to$377 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$387 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$6 million , reflecting growth of more than 20 percent.$105 million
-
Adjusted EPS is now expected to be
(approximately$4.83 prior outlook), including an incremental$4.80 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$0.08 . 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.$1.31
-
Capital Expenditures are now expected to be
($25 million prior outlook).$35 million
-
For the full year, the Company expects an effective tax rate of approximately 20 percent. Interest expense is expected to approximate
. Other Expense is expected to be in the range of$32 million to$12 million . Average shares outstanding are expected to be approximately 56 million, excluding the impact of any future share repurchases.$14 million
-
The Company now expects cash flow from operations to exceed
($360 million prior outlook) driven by the combination of accelerated earnings growth and further reductions in inventory.$350 million
- 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
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
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
|
|
% |
|
Nine Months Ended
|
|
% |
||||||||||||
(Dollars and shares in thousands, except per share amounts) |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
2024 |
|
|
|
2023 |
|
|
Change |
Net revenues |
|
$ |
670,194 |
|
|
$ |
654,540 |
|
|
|
|
$ |
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 |
|
|
|
|
|
598,020 |
|
|
|
564,599 |
|
|
|
Total costs and operating expenses |
|
|
571,873 |
|
|
|
569,058 |
|
|
—% |
|
|
1,650,300 |
|
|
|
1,693,844 |
|
|
(3)% |
Operating income |
|
|
98,321 |
|
|
|
85,482 |
|
|
|
|
|
257,994 |
|
|
|
243,828 |
|
|
|
Interest expense |
|
|
(11,178 |
) |
|
|
(10,454 |
) |
|
|
|
|
(30,852 |
) |
|
|
(30,390 |
) |
|
|
Interest income |
|
|
2,965 |
|
|
|
964 |
|
|
|
|
|
8,006 |
|
|
|
2,074 |
|
|
|
Other expense, net |
|
|
(3,335 |
) |
|
|
(3,764 |
) |
|
(11)% |
|
|
(9,239 |
) |
|
|
(9,142 |
) |
|
|
Income before income taxes |
|
|
86,773 |
|
|
|
72,228 |
|
|
|
|
|
225,909 |
|
|
|
206,370 |
|
|
|
Income taxes |
|
|
16,225 |
|
|
|
12,697 |
|
|
|
|
|
44,085 |
|
|
|
44,147 |
|
|
—% |
Net income |
|
$ |
70,548 |
|
|
$ |
59,531 |
|
|
|
|
$ |
181,824 |
|
|
$ |
162,223 |
|
|
|
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 |
|
|
|
|
|
Lee |
|
|
202,343 |
|
|
|
208,027 |
|
|
(3)% |
|
(3)% |
Total reportable segment revenues |
|
|
666,450 |
|
|
|
652,566 |
|
|
|
|
|
Other revenues (b) |
|
|
3,744 |
|
|
|
1,974 |
|
|
|
|
|
Total net revenues |
|
$ |
670,194 |
|
|
$ |
654,540 |
|
|
|
|
|
Segment profit: |
|
|
|
|
|
|
|
|
||||
Wrangler |
|
$ |
97,753 |
|
|
$ |
81,556 |
|
|
|
|
|
Lee |
|
|
23,355 |
|
|
|
20,735 |
|
|
|
|
|
Total reportable segment profit |
|
$ |
121,108 |
|
|
$ |
102,291 |
|
|
|
|
|
Corporate and other expenses |
|
|
(26,307 |
) |
|
|
(20,091 |
) |
|
|
|
|
Interest expense |
|
|
(11,178 |
) |
|
|
(10,454 |
) |
|
|
|
|
Interest income |
|
|
2,965 |
|
|
|
964 |
|
|
|
|
|
Profit (loss) related to other revenues (b) |
|
|
185 |
|
|
|
(482 |
) |
|
|
|
|
Income before income taxes |
|
$ |
86,773 |
|
|
$ |
72,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Nine Months Ended September |
|
% Change |
|
% Change Constant Currency (a) |
||||||
(Dollars in thousands) |
|
|
2024 |
|
|
|
2023 |
|
|
|
||
Segment revenues: |
|
|
|
|
|
|
|
|
||||
Wrangler |
|
$ |
1,302,846 |
|
|
$ |
1,293,171 |
|
|
|
|
|
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 |
|
|
|
|
|
Total net revenues |
|
$ |
1,908,294 |
|
|
$ |
1,937,672 |
|
|
(2)% |
|
(2)% |
Segment profit: |
|
|
|
|
|
|
|
|
||||
Wrangler |
|
$ |
260,758 |
|
|
$ |
223,639 |
|
|
|
|
|
Lee |
|
|
71,816 |
|
|
|
77,473 |
|
|
(7)% |
|
(7)% |
Total reportable segment profit |
|
$ |
332,574 |
|
|
$ |
301,112 |
|
|
|
|
|
Corporate and other expenses |
|
|
(82,745 |
) |
|
|
(65,815 |
) |
|
|
|
|
Interest expense |
|
|
(30,852 |
) |
|
|
(30,390 |
) |
|
|
|
|
Interest income |
|
|
8,006 |
|
|
|
2,074 |
|
|
|
|
|
Loss related to other revenues (b) |
|
|
(1,074 |
) |
|
|
(611 |
) |
|
|
|
|
Income before income taxes |
|
$ |
225,909 |
|
|
$ |
206,370 |
|
|
|
|
|
(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
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
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 |
|
|
|
|
|
|
|
|
||||
|
|
$ |
373,643 |
|
$ |
105,342 |
|
$ |
3,577 |
|
$ |
482,562 |
Non- |
|
|
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 |
|
|
|
|
|
|
|
|
||||
|
|
$ |
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 |
|
|
|
|
|
|
|
|
||||
|
|
$ |
355,608 |
|
$ |
103,564 |
|
$ |
1,799 |
|
$ |
460,971 |
Non- |
|
|
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 |
|
|
|
|
|
|
|
|
||||
|
|
$ |
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 |
|
$ |
406,656 |
|
$ |
385,501 |
|
|
|
|
Lee |
|
|
119,254 |
|
|
118,352 |
|
|
|
|
Other |
|
|
3,744 |
|
|
1,974 |
|
|
|
|
Total |
|
$ |
529,654 |
|
$ |
505,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
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 |
|
|
|
|
Global Lee |
|
|
202,343 |
|
|
208,027 |
|
(3)% |
|
(3)% |
Global Other |
|
|
3,744 |
|
|
1,974 |
|
|
|
|
Total revenues |
|
$ |
670,194 |
|
$ |
654,540 |
|
|
|
|
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 |
(2) During the trailing twelve months ended September 2024, restructuring and transformation costs were |
During the trailing twelve months ended September 2023, restructuring and transformation costs were |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241031459571/en/
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?
How much did KTB's adjusted EPS grow in Q3 2024?
What is Kontoor Brands' (KTB) updated revenue guidance for 2024?