HBI Hanesbrands Inc

Raises Full-Year and Fourth-Quarter Operating Profit, EPS, and Cash Flow Outlook

On Track to Pay Down $1 Billion of Debt in Second-Half 2024

• Reports net sales at the mid-point of expected range with operating profit and earnings per share (EPS) above the high-end of expected range.
• Raises full-year and fourth-quarter 2024 operating profit, earnings per share, and operating cash flow guidance due to year-to-date performance and strong visibility to continued margin improvement. Expects net sales at the mid-point of its prior guidance range.
• Net sales were $937 million; consistent with prior year on an organic constant currency basis.
• GAAP and Adjusted gross margins were 41.7% and 41.8%, respectively, an increase of 530 and 525 basis points, respectively, compared to prior year.
• GAAP and Adjusted operating margins were 11.0% and 13.0%, respectively, an increase of 255 and 435 basis points, respectively, compared to prior year.
• Increased GAAP and Adjusted EPS 550% and 850%, respectively, compared to prior year.
• Generated cash flow from operations of $92 million in the quarter and $197 million year-to-date.
• Further reduced leverage to 4.3 times net debt-to-adjusted EBITDA, 1.2 times lower than prior year.
• Completed sale of the global Champion business, subsequent to the third-quarter. On track to pay down approximately $1 billion of debt in the second-half of 2024, with approximately $870 million paid down as of the end of October.

HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the third-quarter 2024.

“We delivered another strong quarter with operating profit, earnings per share, and cash flow results that exceeded our expectations. In addition, we have further reduced our leverage, expect a return to revenue growth in the fourth quarter, and raised our full-year outlook for profit and cash flow,” said Steve Bratspies, CEO. “Our strategic actions to create a more focused, simplified business are working. We are driving a step-function change in our cost structure, increasing operational efficiencies, reducing inventory, and freeing up capital to invest in growth. We expect the benefits of these actions to ramp over the next several quarters, giving us visibility and confidence to deliver continued margin improvement, cash generation, and debt reduction through 2025.”

Third-Quarter 2024 Results

Net Sales from continuing operations were $937 million.

• Net sales decreased 2.5% compared to the prior year, with approximately 180 basis points due to the divestiture in the prior year of the U.S. Sheer Hosiery business and approximately 75 basis points due to the unfavorable impact from foreign exchange rates.
• On an organic constant currency basis, net sales were consistent with prior year (Table 2-B).

Gross Profit and Gross Margin increased year-over-year driven by lower input costs as the Company continues to anniversary the impact from peak inflation, the benefits from its cost savings initiatives, and the benefits from its assortment management initiative.

• In the quarter, the Company continued its consolidation and other optimization actions in its supply chain to lower fixed cost, increase efficiencies, and further improve customer service and in-stocks with lower levels of inventory. The Company expects these actions to drive continued benefits in the fourth quarter 2024 and through 2025.
• Gross Profit and Adjusted Gross Profit were $390 million and $392 million, respectively, an increase over prior year of 12% and 11%, respectively.
• Gross Margin and Adjusted Gross Margin increased approximately 530 and 525 basis points, respectively, to 41.7% and 41.8%, respectively.
• Adjusted Gross Profit and Adjusted Gross Margin exclude certain costs related to restructuring and other action-related charges (Table 6-A).

Selling, General and Administrative (SG&A) Expenses, as a percentage of net sales, increased over prior year driven primarily by a 150 basis point increase in brand investments, which was partially offset by benefits from cost savings initiatives and disciplined expense management.

• In the quarter, the Company accelerated strategic actions to improve its processes. These actions are driving a step-function change in the Company’s cost structure, including reducing corporate headcount and overhead, to lower fixed cost and fund growth-related investments in its brands. The Company expects the savings from these actions to continue to build over the next several quarters.
• SG&A Expenses were $287 million, or 30.7% of net sales, which represents an increase over prior year of 7% and 270 basis points, respectively.
• Adjusted SG&A Expenses were $269 million, or 28.7% of net sales, which represents an increase of nearly 1% and 90 basis points, respectively.
• Adjusted SG&A Expenses exclude certain costs related to restructuring and other action-related charges (Table 6-A).

Operating Profit and Operating Margin increased over prior year driven by gross margin improvement, which supported a 150 basis point increase in brand investments.

• Operating Profit increased 27% to $103 million and Operating Margin increased 255 basis points to 11.0% as compared to prior year.
• Adjusted Operating Profit increased 46% to $122 million and Adjusted Operating Margin increased 435 basis points to 13.0% as compared to prior year.
• Adjusted Operating Profit and Adjusted Operating Margin exclude certain costs related to restructuring and other action-related charges (Table 6-A).

Interest Expense and Other Expenses of $58 million decreased approximately $8 million as compared to prior year. The decrease was driven by lower interest expense as a result of lower debt balances.

Tax Expense was $13 million as compared to $21 million in the prior year period.

• Effective Tax Rate was 27.9% as compared to 139.1% in third-quarter 2023.
• Adjusted Tax Rate was 19.5% as compared to 141.8% last year.
• The Company's effective tax rate for 2024 and 2023 is not reflective of the U.S. statutory rate due to valuation allowances against certain net deferred tax assets.

Income from continuing operations totaled $32 million, or $0.09 per diluted share in third-quarter 2024. This compares to a loss from continuing operations of $(6) million, or $(0.02) per diluted share, in third-quarter 2023. Adjusted Income from continuing operations totaled $52 million, or $0.15 per diluted share. This compares to an adjusted loss from continuing operations of $(8) million, or $(0.02) per diluted share, in third-quarter 2023.

See the Note on Adjusted Measures and Reconciliation to GAAP Measures later in this news release for additional discussion and details of actions, which include restructuring and other action-related charges.

Third-Quarter 2024 Business Segment Summary

• U.S. net sales decreased 1% as compared to prior year. Despite the anticipated total market decline in the quarter, the Company’s strategy of consumer-centricity is working. The Company’s point-of-sale trends have outperformed the total market year-to-date as increased brand investments and product innovation in its Hanes, Maidenform and Bali brands are driving permanent retail space and market share gains, particularly with younger consumers. Operating margin of 22.1% increased approximately 665 basis points over prior year. The increase was driven by lower input costs, favorable product mix, and benefits from cost savings initiatives, which helped fund a 55% increase in brand investments to drive consumer demand behind new product innovation in both Men’s and Women’s.

• International net sales increased 1% on a reported basis, which included a $7 million headwind from unfavorable foreign exchange rates. International sales increased 4% on a constant currency basis compared to prior year as sales grew in the Americas and Asia and were consistent with prior year in Australia as the Company begins to anniversary the worst of Australia’s macroeconomic-driven headwinds. Operating margin of 14.2% increased approximately 465 basis points compared to prior year driven primarily by lower input costs and benefits from cost savings initiatives.

Cash Flow, Balance Sheet and Liquidity

• Total liquidity position at the end of third-quarter 2024 was more than $1.4 billion, consisting of $317 million of cash and equivalents and approximately $1.1 billion of available capacity under the Company’s credit facilities.
• Based on the calculation as defined in the Company’s senior secured credit facility, the Leverage Ratio at the end of third-quarter 2024 was 4.3 times on a net debt-to-adjusted EBITDA basis, which was below its third-quarter 2024 covenant of 6.63 times and below prior year’s 5.5 times (See Table 6-B). Subsequent to the end of third-quarter 2024, the Company paid down an additional approximately $870 million of debt in October 2024.
• Inventory at the end of third-quarter 2024 of $928 million decreased 13%, or $138 million, year-over-year. The year-over-year decrease was driven predominantly by the benefits of its inventory management capabilities, including SKU discipline and lifecycle management, lower input costs as the Company continued to anniversary the impact from peak inflation, and improving sales trends.
• Cash Flow from Operations was $197 million year-to-date at the end of the third-quarter 2024 as compared to $287 million last year. Free Cash Flow year-to-date was $165 million at the end of the third-quarter 2024 as compared to $252 million last year.

Closes Sale of Global Champion Business

Subsequent to the end of the third-quarter 2024 and as previously announced on September 30, 2024, the Company completed the sale of the intellectual property and certain operating assets of the global Champion business to Authentic Brands Group.

Fourth-Quarter and Full-Year 2024 Financial Outlook

Guidance metrics are based on continuing operations.

The Company is providing guidance on tax expense due to the expected fluctuation of its quarterly tax rate, stemming from the deferred tax reserve matter previously disclosed in fourth-quarter 2022. Importantly, the reserve does not impact cash taxes. Some portion of the reserve may reverse in future periods.

The Company closed the sale of its U.S. Sheer Hosiery business on September 29, 2023. For the full year 2023, its U.S. Sheer Hosiery business generated $50 million of net sales and an operating loss of $(2) million.

For fiscal year 2024, which ends on December 28, 2024, the Company currently expects:

• Net sales from continuing operations of approximately $3.61 billion, which includes projected headwinds of approximately $50 million from last year’s U.S. Sheer Hosiery divestiture and approximately $42 million from changes in foreign currency exchange rates. This represents an approximate 4% decrease as compared to prior year on a reported basis and an approximate 2% decrease on an organic constant currency basis.
• GAAP operating profit from continuing operations of approximately $174 million.
• Adjusted operating profit from continuing operations of approximately $417 million, which includes a projected headwind of approximately $8 million from changes in foreign currency exchange rates.
• Pretax charges for restructuring and other action-related charges of approximately $243 million.
• GAAP and Adjusted Interest expense of approximately $195 million, which reflects the pay down of debt from the use of net proceeds from the Champion sale and internal cash generation.
• GAAP Other expenses of approximately $53 million, which includes approximately $10 million of accelerated amortization of debt issuance costs. Adjusted Other expenses of approximately $43 million.
• GAAP and Adjusted Tax expense of approximately $40 million, which includes a net tax benefit primarily related to a release of certain tax reserves.
• GAAP loss per share from continuing operations of approximately $(0.32).
• Adjusted earnings per share from continuing operations of approximately $0.39.
• Cash flow from operations of approximately $250 million.
• Capital investments of approximately $50 million, consisting of approximately $40 million of capital expenditures and approximately $10 million of cloud computing arrangements. Per GAAP, capital expenditures are reflected in cash from investing activities and certain cloud computing arrangements are reflected in Other Assets within cash flow from operating activities. The approximate $10 million of cloud computing arrangements is factored into the full year cash flow from operations guidance of approximately $250 million.
• Free cash flow of approximately $210 million.
• Fully diluted shares outstanding of approximately 355 million.

For fourth-quarter 2024, which ends on December 28, 2024, the Company currently expects:

• Net sales from continuing operations of approximately $900 million, which includes projected headwind of approximately $4 million from changes in foreign currency exchange rates. This represents an approximate 2% increase as compared to prior year on a reported basis and an approximate 3% increase on an organic constant currency basis.
• GAAP operating profit from continuing operations of approximately $95 million.
• Adjusted operating profit from continuing operations of approximately $115 million, which includes a projected headwind of approximately $1 million from changes in foreign currency exchange rates.
• Pretax charges for restructuring and other action-related charges of approximately $20 million.
• GAAP and Adjusted Interest expense of approximately $45 million, which reflects the pay down of debt from the use of net proceeds from the Champion sale and internal cash generation.
• GAAP Other expenses of approximately $24 million, which includes approximately $10 million of accelerated amortization of debt issuance costs. Adjusted Other expenses of approximately $14 million.
• GAAP and Adjusted Tax expense of approximately $5 million, which includes a net tax benefit primarily related to a release of certain tax reserves.
• GAAP earnings per share from continuing operations of approximately $0.06.
• Adjusted earnings per share from continuing operations of approximately $0.14.
• Fully diluted shares outstanding of approximately 357 million.

HanesBrands has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/FAQ.

Note on Adjusted Measures and Reconciliation to GAAP Measures

To supplement financial results prepared in accordance with generally accepted accounting principles, the Company provides quarterly and full-year results concerning certain non‐GAAP financial measures, including adjusted diluted earnings (loss) per share from continuing operations, adjusted income (loss) from continuing operations, adjusted income tax expense, adjusted income (loss) from continuing operations before income taxes, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted interest expense and adjusted other expenses, net debt, leverage ratio and free cash flow.

Adjusted EPS is defined as diluted earnings (loss) per share from continuing operations excluding actions and the tax effect on actions. Adjusted income (loss) from continuing operations is defined as income (loss) from continuing operations excluding actions and the tax effect on actions. Adjusted tax expense is defined as income tax expense excluding actions. Adjusted income (loss) from continuing operations before income taxes is defined as income (loss) from continuing operations before income tax excluding actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions. Adjusted gross profit is defined as gross profit excluding actions. Adjusted interest expense is defined as interest expense excluding actions. Adjusted other expenses is defined as other expenses excluding actions and adjusted tax rate is defined as adjusted tax expense divided by adjusted income (loss) from continuing operations before income tax.

Charges for actions taken in 2024 and 2023, as applicable, include the supply chain restructuring and consolidation, corporate asset impairment, headcount actions and related severance charges, professional services, technology charges, gain/loss on sale of business and classification of assets held for sale, loss on extinguishment of debt, gain on final settlement of cross currency swap contracts and the tax effects thereof.

While these costs are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.

HanesBrands has chosen to present these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of our supply chain restructuring and consolidation and other actions that are deemed to be material stand-alone initiatives apart from the Company’s core operations. HanesBrands believes these non-GAAP measures provide management and investors with valuable supplemental information for analyzing the operating performance of the Company’s ongoing business during each period presented without giving effect to costs associated with the execution of any of the aforementioned actions taken.

The Company has also chosen to present EBITDA and adjusted EBITDA to investors because it considers these measures to be an important supplemental means of evaluating operating performance. EBITDA is defined as net income (loss) before the impacts of discontinued operations, interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding (x) restructuring charges related to our supply chain restructuring and consolidation, and other action-related charges described in more detail in Table 6-A and (y) certain other losses, charges and expenses as defined in the Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended (the “Credit Agreement”) described in more detail in Table 6-B. HanesBrands believes that EBITDA and adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, and management uses EBITDA and adjusted EBITDA for planning purposes in connection with setting its capital allocation strategy. EBITDA and adjusted EBITDA should not, however, be considered as measures of discretionary cash available to invest in the growth of the business.

Net debt is defined as the total of current debt, long-term debt, and borrowings under the accounts receivable securitization facility (excluding long-term debt issuance costs and debt discount and borrowings of unrestricted subsidiaries under the accounts receivable securitization facility) less (x) other debt and cash adjustments and (y) cash and cash equivalents. Leverage ratio is the ratio of net debt to adjusted EBITDA as it is defined in our Credit Agreement.

The Company defines free cash flow as net cash from operating activities less capital expenditures. Management believes that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. The Company defines organic net sales as net sales excluding those derived from businesses acquired or divested within the previous 12 months of the reporting date.

HanesBrands is a global company that reports financial information in U.S. dollars in accordance with GAAP. As a supplement to the Company’s reported operating results, HanesBrands also presents constant-currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. The Company uses constant currency information to provide a framework to assess how the business performed excluding the effects of changes in the rates used to calculate foreign currency translation.

To calculate foreign currency translation on a constant currency basis, operating results for the current-year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

HanesBrands believes constant currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in the Company’s businesses. The Company defines organic constant currency sales as net sales excluding those derived from businesses acquired or divested within the previous 12 months of the reporting date and also excluding the impact of translating foreign currencies into U.S. dollars as discussed above.

Non‐GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or substitute for, financial results prepared in accordance with GAAP. Further, the non-GAAP measures presented may be different from non-GAAP measures with similar or identical names presented by other companies.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are presented in the supplemental financial information included with this news release.

Cautionary Statement Concerning Forward-Looking Statements

This news release contains certain information that may constitute forward-looking statements, as defined under U.S. federal securities laws. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “could,” “will,” “expect,” “outlook,” “potential,” “project,” “estimate,” “future,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements with respect to our intent, belief and current expectations about our strategic direction, prospects and future results are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those implied or expressed by such statements. These risks and uncertainties include, but are not limited to, our ability to realize the expected benefits from the sale of the global Champion business, which was completed subsequent to our third quarter on September 30, 2024; our ability to successfully operate the Champion business in certain sectors and geographies through a transition period ending on January 31, 2025, and to execute, and realize the expected benefits, successfully, or at all, from the sale of certain remaining assets of the global Champion business at the end of this transition period; our ability to successfully implement our strategic plans, including our supply chain restructuring and consolidation and other cost savings initiatives; trends associated with our business; the rapidly changing retail environment and the level of consumer demand; the effects of any geopolitical conflicts (including the ongoing Russia-Ukraine conflict and Middle East conflicts) or public health emergencies or severe global health crises, including effects on consumer spending, global supply chains, critical supply routes and the financial markets; our ability to deleverage on the anticipated time frame or at all, which could negatively impact our ability to satisfy the financial covenants in our Credit Agreement or other contractual arrangements; any inadequacy, interruption, integration failure or security failure with respect to our information technology; future intangible assets or goodwill impairment due to changes in our business, market conditions, or other factors, including the sale of the global Champion business, significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex international tax structure; our future financial performance; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and HanesBrands undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.

About HanesBrands

HanesBrands (NYSE: HBI) is a global leader in manufacturing basics and Innerwear brands that are synonymous with comfort, quality, and value, and have been trusted by consumers around the world for generations. Among the company’s iconic brands are Hanes, the leading basic apparel brand in the U.S.; Bonds, an Australian staple since 1915 that is setting new standards for design and innovation; Maidenform, America’s number one shapewear brand; and Bali, America’s number one national bra brand in the U.S. Hanesbrands owns the majority of its worldwide manufacturing facilities and has built a strong reputation for workplace quality and ethical business practices.

TABLE 1

 

HANESBRANDS INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

September 28, 2024

 

September 30, 2023

 

% Change

 

September 28, 2024

 

September 30, 2023

 

% Change

Net sales

$

937,103

 

 

$

961,294

 

 

(2.5

)%

 

$

2,710,709

 

 

$

2,880,328

 

 

(5.9

)%

Cost of sales

 

546,663

 

 

 

611,513

 

 

 

 

 

1,703,881

 

 

 

1,891,375

 

 

 

Gross profit

 

390,440

 

 

 

349,781

 

 

11.6

%

 

 

1,006,828

 

 

 

988,953

 

 

1.8

%

As a % of net sales

 

41.7

%

 

 

36.4

%

 

 

 

 

37.1

%

 

 

34.3

%

 

 

Selling, general and administrative expenses

 

287,442

 

 

 

268,751

 

 

7.0

%

 

 

927,851

 

 

 

812,446

 

 

14.2

%

As a % of net sales

 

30.7

%

 

 

28.0

%

 

 

 

 

34.2

%

 

 

28.2

%

 

 

Operating profit

 

102,998

 

 

 

81,030

 

 

27.1

%

 

 

78,977

 

 

 

176,507

 

 

(55.3

)%

As a % of net sales

 

11.0

%

 

 

8.4

%

 

 

 

 

2.9

%

 

 

6.1

%

 

 

Other expenses

 

9,505

 

 

 

9,079

 

 

 

 

 

29,519

 

 

 

31,056

 

 

 

Interest expense, net

 

48,606

 

 

 

56,648

 

 

 

 

 

149,511

 

 

 

160,586

 

 

 

Income (loss) from continuing operations before income taxes

 

44,887

 

 

 

15,303

 

 

 

 

 

(100,053

)

 

 

(15,135

)

 

 

Income tax expense

 

12,508

 

 

 

21,280

 

 

 

 

 

34,723

 

 

 

50,286

 

 

 

Income (loss) from continuing operations

 

32,379

 

 

 

(5,977

)

 

 

 

 

(134,776

)

 

 

(65,421

)

 

 

Loss from discontinued operations, net of tax

 

(2,428

)

 

 

(32,822

)

 

 

 

 

(172,775

)

 

 

(30,246

)

 

 

Net income (loss)

$

29,951

 

 

$

(38,799

)

 

 

 

$

(307,551

)

 

$

(95,667

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.09

 

 

$

(0.02

)

 

 

 

$

(0.38

)

 

$

(0.19

)

 

 

Discontinued operations

 

(0.01

)

 

 

(0.09

)

 

 

 

 

(0.49

)

 

 

(0.09

)

 

 

Net income (loss)

$

0.09

 

 

$

(0.11

)

 

 

 

$

(0.87

)

 

$

(0.27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.09

 

 

$

(0.02

)

 

 

 

$

(0.38

)

 

$

(0.19

)

 

 

Discontinued operations

 

(0.01

)

 

 

(0.09

)

 

 

 

 

(0.49

)

 

 

(0.09

)

 

 

Net income (loss)

$

0.08

 

 

$

(0.11

)

 

 

 

$

(0.87

)

 

$

(0.27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

352,107

 

 

 

350,667

 

 

 

 

 

351,891

 

 

 

350,534

 

 

 

Diluted

 

354,839

 

 

 

350,667

 

 

 

 

 

351,891

 

 

 

350,534

 

 

 

TABLE 2-A

 

HANESBRANDS INC.

Supplemental Financial Information

Impact of Foreign Currency

(in thousands, except per share data)

(Unaudited)

 

The following tables present a reconciliation of reported results on a constant currency basis for the quarter and nine months ended September 28, 2024 and a comparison to prior year:

 

 

Quarter Ended September 28, 2024

 

 

 

 

 

 

 

As Reported

 

Impact from Foreign Currency1

 

Constant Currency

 

Quarter Ended

September 30, 2023

 

% Change,

As Reported

 

% Change,

Constant Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

937,103

 

$

(7,270

)

 

$

944,373

 

$

961,294

 

 

(2.5

)%

 

(1.8

)%

Gross profit

 

390,440

 

 

(1,556

)

 

 

391,996

 

 

349,781

 

 

11.6

 

 

12.1

 

Operating profit

 

102,998

 

 

(134

)

 

 

103,132

 

 

81,030

 

 

27.1

 

 

27.3

 

Diluted earnings (loss) per share from continuing operations3

$

0.09

 

$

0.00

 

 

$

0.09

 

$

(0.02

)

 

550.0

%

 

550.0

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

937,103

 

$

(7,270

)

 

$

944,373

 

$

961,294

 

 

(2.5

)%

 

(1.8

)%

Gross profit

 

391,557

 

 

(1,556

)

 

 

393,113

 

 

351,310

 

 

11.5

 

 

11.9

 

Operating profit

 

122,166

 

 

(134

)

 

 

122,300

 

 

83,740

 

 

45.9

 

 

46.0

 

Diluted earnings (loss) per share from continuing operations3

$

0.15

 

$

0.00

 

 

$

0.15

 

$

(0.02

)

 

850.0

%

 

850.0

%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.

2

Results for the quarters ended September 28, 2024 and September 30, 2023 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6-A.

3

Amounts may not be additive due to rounding.

 

Nine Months Ended September 28, 2024

 

 

 

 

 

 

 

As Reported

 

Impact from Foreign Currency1

 

Constant Currency

 

Nine Months Ended

September 30, 2023

 

% Change,

As Reported

 

% Change,

Constant Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

2,710,709

 

 

$

(37,828

)

 

$

2,748,537

 

 

$

2,880,328

 

 

(5.9

)%

 

(4.6

)%

Gross profit

 

1,006,828

 

 

 

(19,908

)

 

 

1,026,736

 

 

 

988,953

 

 

1.8

 

 

3.8

 

Operating profit

 

78,977

 

 

 

(6,820

)

 

 

85,797

 

 

 

176,507

 

 

(55.3

)

 

(51.4

)

Diluted loss per share from continuing operations3

$

(0.38

)

 

$

(0.01

)

 

$

(0.37

)

 

$

(0.19

)

 

(100.0

)%

 

(94.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

2,710,709

 

 

$

(37,828

)

 

$

2,748,537

 

 

$

2,880,328

 

 

(5.9

)%

 

(4.6

)%

Gross profit

 

1,096,769

 

 

 

(19,908

)

 

 

1,116,677

 

 

 

992,234

 

 

10.5

 

 

12.5

 

Operating profit

 

302,369

 

 

 

(6,820

)

 

 

309,189

 

 

 

198,921

 

 

52.0

 

 

55.4

 

Diluted earnings (loss) per share from continuing operations3

$

0.25

 

 

$

(0.01

)

 

$

0.26

 

 

$

(0.11

)

 

327.3

%

 

336.4

%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.

2

Results for the nine months ended September 28, 2024 and September 30, 2023 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6-A.

3

Amounts may not be additive due to rounding.

TABLE 2-B

 

HANESBRANDS INC.

Supplemental Financial Information

Organic Constant Currency

(in thousands, except per share data)

(Unaudited)

 

The following tables present a reconciliation of reported results on an organic constant currency basis for the quarter and nine months ended September 28, 2024 and a comparison to prior year:

 

 

Quarter Ended September 28, 2024

 

Quarter Ended September 30, 2023

 

 

 

 

 

As Reported

 

Impact from Foreign Currency1

 

Less U.S. Hosiery Divestiture2

 

Organic Constant Currency

 

As Reported

 

Less U.S. Hosiery Divestiture2

 

Organic

 

% Change,

As Reported

 

% Change,

Organic Constant Currency

Net sales

$

937,103

 

$

(7,270

)

 

$

—

 

$

944,373

 

$

961,294

 

$

17,303

 

$

943,991

 

(2.5

)%

 

0.0

%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.

2

The Company sold its U.S. Sheer Hosiery business on September 29, 2023.

 

Nine Months Ended September 28, 2024

 

Nine Months Ended September 30, 2023

 

 

 

 

 

As Reported

 

Impact from Foreign Currency1

 

Less U.S. Hosiery Divestiture2

 

Organic Constant Currency

 

As Reported

 

Less U.S. Hosiery Divestiture2

 

Organic

 

% Change,

As Reported

 

% Change,

Organic Constant Currency

Net sales

$

2,710,709

 

$

(37,828

)

 

$

—

 

$

2,748,537

 

$

2,880,328

 

$

50,358

 

$

2,829,970

 

(5.9

)%

 

(2.9

)%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.

2

The Company sold its U.S. Sheer Hosiery business on September 29, 2023.

TABLE 3

 

HANESBRANDS INC.

Supplemental Financial Information

By Business Segment

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

September 28, 2024

 

September 30, 2023

 

% Change

 

September 28, 2024

 

September 30, 2023

 

% Change

Segment net sales:

 

 

 

 

 

 

 

 

 

 

 

U.S.

$

678,345

 

 

$

684,990

 

 

(1.0

)%

 

$

1,962,390

 

 

$

2,035,923

 

 

(3.6

)%

International

 

259,146

 

 

 

255,784

 

 

1.3

 

 

 

747,234

 

 

 

776,529

 

 

(3.8

)

Other

 

(388

)

 

 

20,520

 

 

(101.9

)

 

 

1,085

 

 

 

67,876

 

 

(98.4

)

Total net sales

$

937,103

 

 

$

961,294

 

 

(2.5

)%

 

$

2,710,709

 

 

$

2,880,328

 

 

(5.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

U.S.

$

149,637

 

 

$

105,579

 

 

41.7

%

 

$

406,114

 

 

$

297,340

 

 

36.6

%

International

 

36,893

 

 

 

24,570

 

 

50.2

 

 

 

87,933

 

 

 

68,815

 

 

27.8

 

Other

 

(1,989

)

 

 

342

 

 

(681.6

)

 

 

(1,438

)

 

 

130

 

 

(1,206.2

)

General corporate expenses/other

 

(62,375

)

 

 

(46,751

)

 

33.4

 

 

 

(190,240

)

 

 

(167,364

)

 

13.7

 

Total operating profit before restructuring and other action-related charges

 

122,166

 

 

 

83,740

 

 

45.9

 

 

 

302,369

 

 

 

198,921

 

 

52.0

 

Restructuring and other action-related charges

 

(19,168

)

 

 

(2,710

)

 

607.3

 

 

 

(223,392

)

 

 

(22,414

)

 

896.7

 

Total operating profit

$

102,998

 

 

$

81,030

 

 

27.1

%

 

$

78,977

 

 

$

176,507

 

 

(55.3

)%

 

Quarters Ended

 

 

 

Nine Months Ended

 

 

 

September 28, 2024

 

September 30, 2023

 

Basis Points Change

 

September 28, 2024

 

September 30, 2023

 

Basis Points Change

Segment operating margin:

 

 

 

 

 

 

 

 

 

 

 

U.S.

22.1

%

 

15.4

%

 

665

 

 

20.7

%

 

14.6

%

 

609

 

International

14.2

 

 

9.6

 

 

463

 

 

11.8

 

 

8.9

 

 

291

 

Other

512.6

 

 

1.7

 

 

51,096

 

 

(132.5

)

 

0.2

 

 

(13,273

)

General corporate expenses/other

(6.7

)

 

(4.9

)

 

(179

)

 

(7.0

)

 

(5.8

)

 

(121

)

Total operating margin before restructuring and other action-related charges

13.0

 

 

8.7

 

 

433

 

 

11.2

 

 

6.9

 

 

425

 

Restructuring and other action-related charges

(2.0

)

 

(0.3

)

 

(176

)

 

(8.2

)

 

(0.8

)

 

(746

)

Total operating margin

11.0

%

 

8.4

%

 

256

 

 

2.9

%

 

6.1

%

 

(321

)

TABLE 4

 

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

 

September 28, 2024

 

December 30, 2023

 

September 30, 2023

Assets

 

 

 

 

 

Cash and cash equivalents

$

317,301

 

 

$

185,717

 

 

$

172,787

 

Trade accounts receivable, net

 

505,614

 

 

 

451,052

 

 

 

572,744

 

Inventories

 

927,754

 

 

 

972,654

 

 

 

1,066,161

 

Other current assets

 

187,541

 

 

 

117,057

 

 

 

155,289

 

Current assets held for sale

 

401,492

 

 

 

549,735

 

 

 

628,775

 

Total current assets

 

2,339,702

 

 

 

2,276,215

 

 

 

2,595,756

 

Property, net

 

198,006

 

 

 

354,410

 

 

 

356,474

 

Right-of-use assets

 

255,799

 

 

 

281,898

 

 

 

279,417

 

Trademarks and other identifiable intangibles, net

 

954,945

 

 

 

959,851

 

 

 

928,425

 

Goodwill

 

667,468

 

 

 

664,805

 

 

 

650,263

 

Deferred tax assets

 

19,740

 

 

 

18,176

 

 

 

5,267

 

Other noncurrent assets

 

120,333

 

 

 

139,151

 

 

 

148,464

 

Noncurrent assets held for sale

 

905,605

 

 

 

945,808

 

 

 

949,222

 

Total assets

$

5,461,598

 

 

$

5,640,314

 

 

$

5,913,288

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accounts payable

$

684,838

 

 

$

580,285

 

 

$

628,765

 

Accrued liabilities

 

544,071

 

 

 

421,805

 

 

 

432,553

 

Lease liabilities

 

71,604

 

 

 

70,490

 

 

 

70,701

 

Accounts Receivable Securitization Facility

 

—

 

 

 

6,000

 

 

 

200,500

 

Current portion of long-term debt

 

59,000

 

 

 

59,000

 

 

 

59,000

 

Current liabilities held for sale

 

215,949

 

 

 

252,988

 

 

 

263,759

 

Total current liabilities

 

1,575,462

 

 

 

1,390,568

 

 

 

1,655,278

 

Long-term debt

 

3,211,248

 

 

 

3,235,640

 

 

 

3,310,256

 

Lease liabilities - noncurrent

 

231,262

 

 

 

239,686

 

 

 

234,149

 

Pension and postretirement benefits

 

89,385

 

 

 

103,456

 

 

 

107,129

 

Other noncurrent liabilities

 

104,356

 

 

 

123,918

 

 

 

201,859

 

Noncurrent liabilities held for sale

 

100,541

 

 

 

127,693

 

 

 

130,581

 

Total liabilities

 

5,312,254

 

 

 

5,220,961

 

 

 

5,639,252

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock

 

—

 

 

 

—

 

 

 

—

 

Common stock

 

3,518

 

 

 

3,501

 

 

 

3,500

 

Additional paid-in capital

 

371,966

 

 

 

353,367

 

 

 

348,837

 

Retained earnings

 

247,365

 

 

 

554,796

 

 

 

476,796

 

Accumulated other comprehensive loss

 

(473,505

)

 

 

(492,311

)

 

 

(555,097

)

Total stockholders’ equity

 

149,344

 

 

 

419,353

 

 

 

274,036

 

Total liabilities and stockholders’ equity

$

5,461,598

 

 

$

5,640,314

 

 

$

5,913,288

 

TABLE 5

 

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

Nine Months Ended

 

September 28,

2024(1)

 

September 30,

2023(1)

 

September 28,

2024(1)

 

September 30,

2023(1)

Operating Activities:

 

 

 

 

 

 

 

Net income (loss)

$

29,951

 

 

$

(38,799

)

 

$

(307,551

)

 

$

(95,667

)

Adjustments to reconcile net income (loss) to net cash from operating activities:

 

 

 

 

 

 

 

Depreciation

 

18,528

 

 

 

20,543

 

 

 

58,506

 

 

 

56,246

 

Amortization of acquisition intangibles

 

1,924

 

 

 

4,133

 

 

 

10,127

 

 

 

12,478

 

Other amortization

 

1,997

 

 

 

3,458

 

 

 

8,195

 

 

 

9,856

 

Impairment of long-lived assets and goodwill

 

142

 

 

 

—

 

 

 

76,746

 

 

 

—

 

Inventory write-down charges (recoveries), net

 

(4,135

)

 

 

—

 

 

 

113,528

 

 

 

—

 

Loss on extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

8,466

 

(Gain) loss on sale of business and classification of assets held for sale

 

(741

)

 

 

(1,558

)

 

 

50,330

 

 

 

3,641

 

Amortization of debt issuance costs and debt discount

 

2,543

 

 

 

2,338

 

 

 

7,648

 

 

 

6,577

 

Other

 

11,559

 

 

 

(2,853

)

 

 

25,281

 

 

 

8,984

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(32,119

)

 

 

(34,502

)

 

 

(86,606

)

 

 

12,169

 

Inventories

 

97,686

 

 

 

311,636

 

 

 

55,836

 

 

 

444,592

 

Other assets

 

(12,420

)

 

 

15,784

 

 

 

(12,886

)

 

 

(20,833

)

Accounts payable

 

(48,972

)

 

 

(164,440

)

 

 

85,057

 

 

 

(125,411

)

Accrued pension and postretirement benefits

 

(2,878

)

 

 

1,241

 

 

 

(2,617

)

 

 

4,181

 

Accrued liabilities and other

 

29,150

 

 

 

38,130

 

 

 

115,218

 

 

 

(37,935

)

Net cash from operating activities

 

92,215

 

 

 

155,111

 

 

 

196,812

 

 

 

287,344

 

Investing Activities:

 

 

 

 

 

 

 

Capital expenditures

 

(4,088

)

 

 

(2,220

)

 

 

(32,179

)

 

 

(35,790

)

Proceeds from sales of assets

 

8,683

 

 

 

66

 

 

 

12,336

 

 

 

172

 

Proceeds from (payments for) disposition of business

 

(12,000

)

 

 

1,300

 

 

 

(12,000

)

 

 

1,300

 

Other

 

—

 

 

 

—

 

 

 

—

 

 

 

18,941

 

Net cash from investing activities

 

(7,405

)

 

 

(854

)

 

 

(31,843

)

 

 

(15,377

)

Financing Activities:

 

 

 

 

 

 

 

Borrowings on Term Loan Facilities

 

—

 

 

 

—

 

 

 

—

 

 

 

891,000

 

Repayments on Term Loan Facilities

 

—

 

 

 

(14,750

)

 

 

(29,500

)

 

 

(29,500

)

Borrowings on Accounts Receivable Securitization Facility

 

630,500

 

 

 

677,500

 

 

 

1,611,000

 

 

 

1,728,500

 

Repayments on Accounts Receivable Securitization Facility

 

(630,500

)

 

 

(626,000

)

 

 

(1,617,000

)

 

 

(1,737,500

)

Borrowings on Revolving Loan Facilities

 

4,500

 

 

 

639,000

 

 

 

613,500

 

 

 

1,616,500

 

Repayments on Revolving Loan Facilities

 

(4,500

)

 

 

(820,000

)

 

 

(613,500

)

 

 

(1,908,500

)

Borrowings on Senior Notes

 

—

 

 

 

—

 

 

 

—

 

 

 

600,000

 

Repayments on Senior Notes

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,436,884

)

Payments to amend and refinance credit facilities

 

(33

)

 

 

(268

)

 

 

(712

)

 

 

(28,503

)

Other

 

(132

)

 

 

(92

)

 

 

(3,949

)

 

 

(2,884

)

Net cash from financing activities

 

(165

)

 

 

(144,610

)

 

 

(40,161

)

 

 

(307,771

)

Effect of changes in foreign exchange rates on cash

 

9,565

 

 

 

(10,388

)

 

 

(3,398

)

 

 

(11,518

)

Change in cash and cash equivalents

 

94,210

 

 

 

(741

)

 

 

121,410

 

 

 

(47,322

)

Cash and cash equivalents at beginning of period

 

232,701

 

 

 

191,832

 

 

 

205,501

 

 

 

238,413

 

Cash and cash equivalents at end of period

$

326,911

 

 

$

191,091

 

 

$

326,911

 

 

$

191,091

 

 

 

 

 

 

 

 

 

Balances included in the Condensed Consolidated Balance Sheets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

317,301

 

 

$

172,787

 

 

$

317,301

 

 

$

172,787

 

Cash and cash equivalents included in current assets held for sale

 

9,610

 

 

 

18,304

 

 

 

9,610

 

 

 

18,304

 

Cash and cash equivalents at end of period

$

326,911

 

 

$

191,091

 

 

$

326,911

 

 

$

191,091

 

1

The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

TABLE 6-A

 

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

The following tables present a reconciliation of results from continuing operations as reported under GAAP to the results from continuing operations as adjusted for the quarter and nine months ended September 28, 2024 and a comparison to prior year. The Company has chosen to present the following non-GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating continuing operations absent the effect of restructuring and other actions that are deemed to be material stand-alone initiatives apart from the Company’s core operations. While these costs are not expected to continue for any individual transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.

 

Restructuring and other action-related charges in 2024 and 2023 include the following:

 

Supply chain restructuring and consolidation

In 2024, represents charges as a result of the sale of the global Champion business, which was completed subsequent to the Company’s third quarter on September 30, 2024, and the completed exit of the U.S.-based outlet store business in July 2024 related to significant restructuring and consolidation efforts within the Company’s supply chain network, both manufacturing and distribution, to align the Company’s network to its continuing operations to drive stronger operating performance and margin expansion. In 2023, represents charges related to supply chain segmentation to restructure and position the Company’s distribution and manufacturing network to align with its demand trends, simplify operations and improve efficiencies.

Corporate asset impairment charges

Primarily represents charges related to a contract terminated in the second quarter of 2024 and impairment of the Company’s headquarters location that was classified as held for sale in the second quarter of 2024.

Headcount actions and related severance

Represents charges related to operating model initiatives primarily headcount actions and related severance charges and adjustments related to restructuring activities.

Professional services

Represents professional fees, primarily including consulting and advisory services, related to restructuring activities.

Technology

Represents technology charges related to the implementation of the Company’s technology modernization initiative which includes a global enterprise resource planning platform.

Gain/loss on sale of business and classification of assets held for sale

Represents the gain/loss associated with the sale of the Company’s U.S. Sheer Hosiery business and adjustments to the related valuation allowance prior to the sale on September 29, 2023, primarily from the changes in carrying value due to changes in working capital.

Loss on extinguishment of debt

Represents charges related to the redemption of the Company’s 4.625% Senior Notes and 3.5% Senior Notes in the first quarter of 2023.

Gain on final settlement of cross currency swap contracts

Primarily represents the remaining gain related to cross-currency swap contracts previously designated as cash flow hedges in accumulated other comprehensive loss which was released into earnings as the Company unwound the cross-currency swap contracts in connection with the redemption of the 3.5% Senior Notes at the time of settlement in the first quarter of 2023.

Discrete tax benefit

Represents an adjustment to non-cash reserves established at December 31, 2022 related to deferred taxes established for Swiss statutory impairments, which are not indicative of the Company’s core business operations.

Tax effect on actions

Represents the applicable effective tax rate on the restructuring and other action-related charges based on the jurisdiction of where the charges were incurred.

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Gross profit, as reported under GAAP

$

390,440

 

 

$

349,781

 

 

$

1,006,828

 

 

$

988,953

 

As a % of net sales

 

41.7

%

 

 

36.4

%

 

 

37.1

%

 

 

34.3

%

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Supply chain restructuring and consolidation

 

1,117

 

 

 

660

 

 

 

79,510

 

 

 

2,412

 

Corporate asset impairment charges

 

—

 

 

 

—

 

 

 

10,395

 

 

 

—

 

Headcount actions and related severance

 

—

 

 

 

869

 

 

 

36

 

 

 

869

 

Gross profit, as adjusted

$

391,557

 

 

$

351,310

 

 

$

1,096,769

 

 

$

992,234

 

As a % of net sales

 

41.8

%

 

 

36.5

%

 

 

40.5

%

 

 

34.4

%

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Selling, general and administrative expenses, as reported under GAAP

$

287,442

 

 

$

268,751

 

 

$

927,851

 

 

$

812,446

 

As a % of net sales

 

30.7

%

 

 

28.0

%

 

 

34.2

%

 

 

28.2

%

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Supply chain restructuring and consolidation

 

(9,593

)

 

 

—

 

 

 

(90,114

)

 

 

—

 

Corporate asset impairment charges

 

—

 

 

 

—

 

 

 

(9,712

)

 

 

—

 

Headcount actions and related severance

 

1,245

 

 

 

(1,662

)

 

 

(17,817

)

 

 

(3,551

)

Professional services

 

(7,843

)

 

 

(165

)

 

 

(11,877

)

 

 

(3,813

)

Technology

 

(428

)

 

 

(588

)

 

 

(827

)

 

 

(7,690

)

Gain (loss) on sale of business and classification of assets held for sale

 

—

 

 

 

1,558

 

 

 

—

 

 

 

(3,641

)

Other

 

(1,432

)

 

 

(324

)

 

 

(3,104

)

 

 

(438

)

Selling, general and administrative expenses, as adjusted

$

269,391

 

 

$

267,570

 

 

$

794,400

 

 

$

793,313

 

As a % of net sales

 

28.7

%

 

 

27.8

%

 

 

29.3

%

 

 

27.5

%

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Operating profit, as reported under GAAP

$

102,998

 

 

$

81,030

 

 

$

78,977

 

 

$

176,507

 

As a % of net sales

 

11.0

%

 

 

8.4

%

 

 

2.9

%

 

 

6.1

%

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Supply chain restructuring and consolidation

 

10,710

 

 

 

660

 

 

 

169,624

 

 

 

2,412

 

Corporate asset impairment charges

 

—

 

 

 

—

 

 

 

20,107

 

 

 

—

 

Headcount actions and related severance

 

(1,245

)

 

 

2,531

 

 

 

17,853

 

 

 

4,420

 

Professional services

 

7,843

 

 

 

165

 

 

 

11,877

 

 

 

3,813

 

Technology

 

428

 

 

 

588

 

 

 

827

 

 

 

7,690

 

(Gain) loss on sale of business and classification of assets held for sale

 

—

 

 

 

(1,558

)

 

 

—

 

 

 

3,641

 

Other

 

1,432

 

 

 

324

 

 

 

3,104

 

 

 

438

 

Operating profit, as adjusted

$

122,166

 

 

$

83,740

 

 

$

302,369

 

 

$

198,921

 

As a % of net sales

 

13.0

%

 

 

8.7

%

 

 

11.2

%

 

 

6.9

%

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Interest expense, net and other expenses, as reported under GAAP

$

58,111

 

$

65,727

 

$

179,030

 

$

191,642

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

—

 

 

—

 

 

—

 

 

(8,466

)

Gain on final settlement of cross currency swaps

 

—

 

 

—

 

 

—

 

 

1,370

 

Interest expense, net and other expenses, as adjusted

$

58,111

 

$

65,727

 

$

179,030

 

$

184,546

 

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Income (loss) from continuing operations before income taxes, as reported under GAAP

$

44,887

 

 

$

15,303

 

 

$

(100,053

)

 

$

(15,135

)

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Supply chain restructuring and consolidation

 

10,710

 

 

 

660

 

 

 

169,624

 

 

 

2,412

 

Corporate asset impairment charges

 

—

 

 

 

—

 

 

 

20,107

 

 

 

—

 

Headcount actions and related severance

 

(1,245

)

 

 

2,531

 

 

 

17,853

 

 

 

4,420

 

Professional services

 

7,843

 

 

 

165

 

 

 

11,877

 

 

 

3,813

 

Technology

 

428

 

 

 

588

 

 

 

827

 

 

 

7,690

 

(Gain) loss on sale of business and classification of assets held for sale

 

—

 

 

 

(1,558

)

 

 

—

 

 

 

3,641

 

Other

 

1,432

 

 

 

324

 

 

 

3,104

 

 

 

438

 

Loss on extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

8,466

 

Gain on final settlement of cross currency swaps

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,370

)

Income from continuing operations before income taxes, as adjusted

$

64,055

 

 

$

18,013

 

 

$

123,339

 

 

$

14,375

 

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Income tax expense, as reported under GAAP

$

12,508

 

$

21,280

 

$

34,723

 

$

50,286

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Discrete tax benefit

 

—

 

 

4,263

 

 

—

 

 

4,263

Tax effect on actions

 

—

 

 

—

 

 

—

 

 

—

Total included in income tax (expense) benefit

 

—

 

 

4,263

 

 

—

 

 

4,263

Income tax expense, as adjusted

$

12,508

 

$

25,543

 

$

34,723

 

$

54,549

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Income (loss) from continuing operations, as reported under GAAP

$

32,379

 

 

$

(5,977

)

 

$

(134,776

)

 

$

(65,421

)

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Supply chain restructuring and consolidation

 

10,710

 

 

 

660

 

 

 

169,624

 

 

 

2,412

 

Corporate asset impairment charges

 

—

 

 

 

—

 

 

 

20,107

 

 

 

—

 

Headcount actions and related severance

 

(1,245

)

 

 

2,531

 

 

 

17,853

 

 

 

4,420

 

Professional services

 

7,843

 

 

 

165

 

 

 

11,877

 

 

 

3,813

 

Technology

 

428

 

 

 

588

 

 

 

827

 

 

 

7,690

 

(Gain) loss on sale of business and classification of assets held for sale

 

—

 

 

 

(1,558

)

 

 

—

 

 

 

3,641

 

Other

 

1,432

 

 

 

324

 

 

 

3,104

 

 

 

438

 

Loss on extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

8,466

 

Gain on final settlement of cross currency swaps

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,370

)

Discrete tax benefit

 

—

 

 

 

(4,263

)

 

 

—

 

 

 

(4,263

)

Tax effect on actions

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Income (loss) from continuing operations, as adjusted

$

51,547

 

 

$

(7,530

)

 

$

88,616

 

 

$

(40,174

)

 

Quarters Ended1

 

Nine Months Ended1

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Diluted earnings (loss) per share from continuing operations, as reported under GAAP

$

0.09

 

$

(0.02

)

 

$

(0.38

)

 

$

(0.19

)

Restructuring and other action-related charges:

 

 

 

 

 

 

 

Supply chain restructuring and consolidation

 

0.03

 

 

0.00

 

 

 

0.48

 

 

 

0.01

 

Corporate asset impairment charges

 

—

 

 

—

 

 

 

0.06

 

 

 

—

 

Headcount actions and related severance

 

0.00

 

 

0.01

 

 

 

0.05

 

 

 

0.01

 

Professional services

 

0.02

 

 

0.00

 

 

 

0.03

 

 

 

0.01

 

Technology

 

0.00

 

 

0.00

 

 

 

0.00

 

 

 

0.02

 

(Gain) loss on sale of business and classification of assets held for sale

 

—

 

 

0.00

 

 

 

—

 

 

 

0.01

 

Other

 

0.00

 

 

0.00

 

 

 

0.01

 

 

 

0.00

 

Loss on extinguishment of debt

 

—

 

 

—

 

 

 

—

 

 

 

0.02

 

Gain on final settlement of cross currency swaps

 

—

 

 

—

 

 

 

—

 

 

 

0.00

 

Discrete tax benefit

 

—

 

 

(0.01

)

 

 

—

 

 

 

(0.01

)

Tax effect on actions

 

—

 

 

—

 

 

 

—

 

 

 

—

 

Diluted earnings (loss) per share from continuing operations, as adjusted

$

0.15

 

$

(0.02

)

 

$

0.25

 

 

$

(0.11

)

1

Amounts may not be additive due to rounding.

TABLE 6-B

 

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Last Twelve Months

 

September 28, 2024

 

September 30, 2023

Leverage Ratio:

 

 

 

 

 

 

 

EBITDA1:

 

 

 

Loss from continuing operations

$

(33,586

)

 

$

(540,019

)

Interest expense, net

 

203,218

 

 

 

199,947

 

Income tax expense (benefit)

 

(29,473

)

 

 

498,712

 

Depreciation and amortization

 

85,131

 

 

 

81,867

 

Total EBITDA

 

225,290

 

 

 

240,507

 

Total restructuring and other action-related charges (excluding tax effect on actions)2

 

223,777

 

 

 

49,571

 

Other net losses, charges and expenses3

 

97,422

 

 

 

104,477

 

Total EBITDA from discontinued operations, as adjusted4

 

146,449

 

 

 

185,923

 

Total EBITDA, as adjusted

$

692,938

 

 

$

580,478

 

 

 

 

 

Net debt:

 

 

 

Debt (current and long-term debt and Accounts Receivable Securitization Facility excluding long-term debt issuance costs and debt discount of $31,002 and $36,744, respectively)

$

3,301,250

 

 

$

3,606,500

 

(Less) debt related to an unrestricted subsidiary5

 

—

 

 

 

(200,500

)

Other debt and cash adjustments6

 

3,659

 

 

 

3,992

 

(Less) Cash and cash equivalents of continuing operations

 

(317,301

)

 

 

(172,787

)

(Less) Cash and cash equivalents of discontinued operations

 

(9,610

)

 

 

(18,304

)

Net debt

$

2,977,998

 

 

$

3,218,901

 

 

 

 

 

Debt/Loss from continuing operations7

 

(98.3

)

 

 

(6.7

)

 

 

 

 

Net debt/EBITDA, as adjusted8

 

4.3

 

 

 

5.5

 

1

Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure.

2

The last twelve months ended September 28, 2024 includes $168 million of supply chain restructuring and consolidation charges, $20 million of corporate asset impairment charges, $19 million of headcount actions and related severance charges, $12 million of professional services, $3 million related to other restructuring and other action-related charges and $2 million of technology charges. The last twelve months ended September 30, 2023 includes $13 million of headcount actions and related severance charges, $10 million of technology charges, $8 million of a loss on extinguishment of debt, $7 million of professional services, $7 million of a loss on sale of business and classification of assets held for sale, $5 million of supply chain restructuring and consolidation charges, $1 million related to other restructuring and other action-related charges and $(1) million of a gain on the final settlement of cross currency swap contracts. The items included in restructuring and other action-related charges are described in more detail in Table 6-A.

3

Represents other net losses, charges and expenses that can be excluded from the Company’s leverage ratio as defined under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended. The last twelve months ended September 28, 2024, primarily includes $54 million of excess and obsolete inventory write-offs, $18 million in other compensation related items primarily stock compensation expense, $16 million of pension non-cash expense, $14 million in charges related to sales incentive amortization, $11 million of non-cash cloud computing expense, $(4) million of net unrealized gains due to hedging activities, $(6) million of recovery of bad debt expense and a $(6) million adjustment for interest expense on debt and amortization of debt issuance costs related to an unrestricted subsidiary. The last twelve months ended September 30, 2023, primarily includes $35 million of excess and obsolete inventory write-offs, $20 million in other compensation related items primarily stock compensation expense, $17 million of pension non-cash expense, $12 million in charges related to sales incentive amortization, $7 million of bad debt expense, $6 million in charges related to the ransomware attack and extraordinary events, $6 million of non-cash cloud computing expense, $3 million in charges related to unrealized losses due to hedging and a $(2) million adjustment for interest expense on debt and amortization of debt issuance costs related to an unrestricted subsidiary.

4

Represents Total EBITDA from discontinued operations, as adjusted for all items that can be excluded from the Company’s leverage ratio as defined under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended.

5

Represents amounts outstanding under an existing accounts receivable securitization facility entered into by an unrestricted subsidiary of the Company.

6

Includes drawn and undrawn letters of credit, financing leases and cash balances in certain geographies.

7

Represents Debt divided by Loss from continuing operations, which is the most comparable GAAP financial measure to Net debt/EBITDA, as adjusted.

8

Represents the Company’s leverage ratio defined as Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended, which excludes other net losses, charges and expenses in addition to restructuring and other action-related charges.

 

Quarters Ended

 

Nine Months Ended

 

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Free cash flow1:

 

 

 

 

 

 

 

Net cash from operating activities

$

92,215

 

 

$

155,111

 

 

$

196,812

 

 

$

287,344

 

Capital expenditures

 

(4,088

)

 

 

(2,220

)

 

 

(32,179

)

 

 

(35,790

)

Free cash flow

$

88,127

 

 

$

152,891

 

 

$

164,633

 

 

$

251,554

 

1

Free cash flow includes the results from continuing and discontinued operations for all periods presented.

TABLE 7

 

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of GAAP Outlook to Adjusted Outlook

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended

 

Year Ended

 

December 28, 2024

 

December 28, 2024

Operating profit outlook, as calculated under GAAP

$

95,000

 

$

174,000

 

Restructuring and other action-related charges outlook

 

20,000

 

 

243,000

 

Operating profit outlook, as adjusted

$

115,000

 

$

417,000

 

 

 

 

 

Other expenses outlook, as calculated under GAAP

$

24,000

 

$

53,000

 

Restructuring and other action-related charges outlook

 

10,000

 

 

10,000

 

Other expenses outlook, as adjusted

$

14,000

 

$

43,000

 

 

 

 

 

Diluted earnings (loss) per share from continuing operations outlook, as calculated under GAAP1

$

0.06

 

$

(0.32

)

Restructuring and other action-related charges outlook

 

0.08

 

 

0.71

 

Diluted earnings per share from continuing operations outlook, as adjusted

$

0.14

 

$

0.39

 

 

 

 

 

Cash flow from operations outlook, as calculated under GAAP

 

 

$

250,000

 

Capital expenditures outlook

 

 

 

40,000

 

Free cash flow outlook

 

 

$

210,000

 

1

The Company expects approximately 357 million diluted weighted average shares outstanding for the quarter ended December 28, 2024 and approximately 355 million diluted weighted average shares outstanding for the year ended December 28, 2024.

The Company is unable to reconcile projections of financial performance beyond 2024 without unreasonable efforts, because the Company cannot predict, with a reasonable degree of certainty, the type and extent of certain items that would be expected to impact these figures in 2024 and beyond, such as net sales, operating profit, tax rates and action related charges.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107569107/en/

News Media contact: Nicole Ducouer (336) 986-7090 Analysts and Investors contact: T.C. Robillard (336) 519-2115