WINSTON-SALEM, N.C.--(BUSINESS WIRE)-- HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the first-quarter 2023.
“We delivered first-quarter results in-line with our outlook, generated positive cash flow and reiterated our full-year outlook,” said Steve Bratspies, CEO. “I want to thank all of our associates for their continued dedication and hard work as they once again delivered near-term results while implementing our transformation strategy. We continue to make progress on several of our Full Potential initiatives. We expanded our innerwear innovation globally, successfully completed a key technology milestone, progressed on our industry-leading sustainability initiatives and continued to generate cost savings across the organization. We’re confident in the progress we’re making to become a more consumer-centric, data-driven company that consistently generates higher sales and profit growth over time.”
Highlights
First-Quarter 2023 Results
See the Note on Adjusted Measures and Reconciliation to GAAP Measures later in this news release for additional discussion and details of actions, which include Full Potential plan charges.
First-Quarter 2023 Business Segment Summary
Cash Flow, Balance Sheet and Liquidity
Second-Quarter and Full-Year 2023 Financial Outlook
With respect to its 2023 guidance, the Company’s outlook continues to reflect, but is not limited to, the following assumptions: a muted consumer demand environment given the continued macroeconomic uncertainty; first-half margin pressure as it continues to sell through its higher-cost inventory; and year-over-year improvement in second-half margins, particularly the fourth quarter, as lower-cost inventory currently being produced is sold and it anniversaries last year’s manufacturing time-out costs related to its inventory reduction initiative in 2022.
The Company is providing guidance on tax expense due to the expected fluctuation of its quarterly tax rate, stemming from the deferred tax reserve matter previously disclosed in the fourth quarter of 2022. Importantly, the reserve does not impact cash taxes. Some portion of the reserve may reverse in future periods.
For fiscal-year 2023, which ends on December 30, 2023, the Company continues to expect:
For second-quarter 2023, which ends on July 1, 2023, the Company currently expects:
HanesBrands has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/FAQ.
Note on Adjusted Measures and Reconciliation to GAAP Measures
To supplement financial results prepared in accordance with generally accepted accounting principles, the Company provides quarterly and full-year results concerning certain non-GAAP financial measures, including adjusted EPS from continuing operations, adjusted income (loss) from continuing operations, adjusted income tax expense, adjusted income (loss) from continuing operations before income tax expense, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted interest and other expense, net debt, leverage ratio and free cash flow.
Adjusted EPS from continuing operations is defined as diluted EPS from continuing operations excluding actions and the tax effect on actions. Adjusted income (loss) from continuing operations is defined as income (loss) from continuing operations excluding actions and the tax effect on actions. Adjusted income tax expense is defined as income tax expense excluding actions. Adjusted income (loss) from continuing operations before income tax is defined as income (loss) from continuing operations before income tax excluding actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions. Adjusted gross profit is defined as gross profit excluding actions. Adjusted interest and other expenses is defined as interest and other expenses excluding actions and adjusted effective tax rate is defined as adjusted income tax expense divided by adjusted income (loss) from continuing operations before income tax.
Charges for actions taken in 2023 and 2022, as applicable, include professional fees, supply chain segmentation charges, technology charges, operating model charges, (gain)/loss on 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 the Full Potential plan and other actions. 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 and other action-related charges and (y) certain other losses, charges and expenses. Adjusted EBITDA is defined as EBITDA excluding actions and 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”). 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) less (x) other debt and cash adjustments and (y) cash and cash equivalents. Leverage ratio is the ratio of net debt to adjusted EBITDA. Beginning with the second quarter of 2022, we updated our definition of leverage ratio and our methods of calculating the underlying metrics (net debt and adjusted EBITDA) to align with the definition of Consolidated Net Total Leverage Ratio under our Credit Agreement. All adjusted EBITDA, net debt, and leverage ratio figures included in this press release are calculated consistent with the definition of Consolidated Net Total Leverage Ratio under the Credit Agreement. As a result, certain historical adjusted EBITDA, net debt, and leverage ratio figures included in this press release may differ from similar measures we have previously presented in prior fiscal periods.
The Company defines free cash flow as net cash from operating activities less capital expenditures. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance.
HanesBrands is a global company that reports financial information in 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.
Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or substitute for, financial results prepared in accordance with GAAP. Further, the non-GAAP measures presented may be different from non-GAAP measures with similar or identical names presented by other companies.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are presented in the supplemental financial information included with this news release.
Cautionary Statement Concerning Forward-Looking Statements
This news release contains certain forward-looking statements, as defined under U.S. federal securities laws, with respect to our plans, expectations, long-term goals and trends associated with our business, as well as guidance as to future performance. In particular, among others, guidance and predictions regarding expected operating results, including related to our Full Potential plan; statements made in the Second-Quarter and Full-Year 2023 Financial Outlook section of this news release; and statements regarding our future capital allocation strategy, are forward-looking statements. These forward-looking statements are based on our current intentions, beliefs, plans and expectations. Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements inherently involve risks and uncertainties, many of which are outside of our control, that could cause actual results to differ materially from such statements and from our historical results and experience. These risks and uncertainties include such things as: our ability to successfully execute our Full Potential plan to achieve the desired results; any potential ongoing effects of the COVID-19 pandemic, including on consumer spending, global supply chains and the financial markets; the highly competitive and evolving nature of the industry in which we compete; the rapidly changing retail environment and the level of consumer demand; our reliance on a relatively small number of customers for a significant portion of our sales; 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 (including the ransomware attack announced May 31, 2022); the impact of significant fluctuations and volatility in various input costs, such as cotton and oil-related materials, utilities, freight and wages; the availability of global supply chain resources; our ability to attract and retain a senior management team with the core competencies needed to support growth in global markets and ongoing labor shortages generally; significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex multinational tax structure; 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.
HanesBrands
HanesBrands (NYSE: HBI) makes everyday apparel that is known and loved by consumers around the world for comfort, quality and value. Among the Company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Champion, an innovator at the intersection of lifestyle and athletic apparel; and Bonds, which is setting new standards for design and sustainability. HBI employs 51,000 associates in 32 countries and has built a strong reputation for workplace quality and ethical business practices. The Company, a longtime leader in sustainability, launched aggressive 2030 goals to improve the lives of people, protect the planet and produce sustainable products. HBI is building on its unmatched strengths to unlock its #FullPotential and deliver long-term growth that benefits all of its stakeholders.
TABLE 1 | ||||||||||
HANESBRANDS INC. | ||||||||||
Condensed Consolidated Statements of Income | ||||||||||
(in thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
| Quarters Ended |
|
| |||||||
| April 1, 2023 |
| April 2, 2022 |
| % Change | |||||
Net sales | $ | 1,389,410 |
|
| $ | 1,576,156 |
|
| (11.8 | )% |
Cost of sales |
| 939,717 |
|
|
| 991,978 |
|
|
| |
Gross profit |
| 449,693 |
|
|
| 584,178 |
|
| (23.0 | )% |
As a % of net sales |
| 32.4 | % |
|
| 37.1 | % |
|
| |
Selling, general and administrative expenses |
| 392,374 |
|
|
| 413,666 |
|
|
| |
As a % of net sales |
| 28.2 | % |
|
| 26.2 | % |
|
| |
Operating profit |
| 57,319 |
|
|
| 170,512 |
|
| (66.4 | )% |
As a % of net sales |
| 4.1 | % |
|
| 10.8 | % |
|
| |
Other expenses |
| 14,771 |
|
|
| 987 |
|
|
| |
Interest expense, net |
| 58,452 |
|
|
| 31,963 |
|
|
| |
Income (loss) from continuing operations before income tax expense |
| (15,904 | ) |
|
| 137,562 |
|
|
| |
Income tax expense |
| 18,500 |
|
|
| 23,385 |
|
|
| |
Income (loss) from continuing operations |
| (34,404 | ) |
|
| 114,177 |
|
| (130.1 | )% |
Loss from discontinued operations, net of tax |
| — |
|
|
| 4,525 |
|
|
| |
Net income (loss) | $ | (34,404 | ) |
| $ | 118,702 |
|
|
| |
|
|
|
|
|
| |||||
Earnings (loss) per share - basic: |
|
|
|
|
| |||||
Continuing operations | $ | (0.10 | ) |
| $ | 0.33 |
|
|
| |
Discontinued operations |
| — |
|
|
| 0.01 |
|
|
| |
Net income (loss) | $ | (0.10 | ) |
| $ | 0.34 |
|
|
| |
|
|
|
|
|
| |||||
Earnings (loss) per share - diluted: |
|
|
|
|
| |||||
Continuing operations | $ | (0.10 | ) |
| $ | 0.32 |
|
|
| |
Discontinued operations |
| — |
|
|
| 0.01 |
|
|
| |
Net income (loss) | $ | (0.10 | ) |
| $ | 0.34 |
|
|
| |
|
|
|
|
|
| |||||
Weighted average shares outstanding: |
|
|
|
|
| |||||
Basic |
| 350,435 |
|
|
| 350,251 |
|
|
| |
Diluted |
| 350,435 |
|
|
| 351,453 |
|
|
|
TABLE 2 | ||||||||||||||||||||
HANESBRANDS INC. | ||||||||||||||||||||
Supplemental Financial Information | ||||||||||||||||||||
Impact of Foreign Currency | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
The following tables present a reconciliation of reported results on a constant currency basis for the quarter ended April 1, 2023 and a comparison to prior year: | ||||||||||||||||||||
| Quarter Ended April 1, 2023 |
|
|
|
|
|
| |||||||||||||
| As Reported |
| Impact from Foreign Currency1 |
| Constant Currency |
| Quarter Ended April 2, 2022 |
| % Change, As Reported |
| % Change, Constant Currency | |||||||||
As reported under GAAP: |
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net sales | $ | 1,389,410 |
|
| $ | (30,859 | ) |
| $ | 1,420,269 |
|
| $ | 1,576,156 |
| (11.8 | )% |
| (9.9 | )% |
Gross profit |
| 449,693 |
|
|
| (14,512 | ) |
|
| 464,205 |
|
|
| 584,178 |
| (23.0 | ) |
| (20.5 | ) |
Operating profit |
| 57,319 |
|
|
| (3,891 | ) |
|
| 61,210 |
|
|
| 170,512 |
| (66.4 | ) |
| (64.1 | ) |
Diluted earnings (loss) per share from continuing operations | $ | (0.10 | ) |
| $ | (0.01 | ) |
| $ | (0.09 | ) |
| $ | 0.32 |
| (131.3 | )% |
| (128.1 | )% |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As adjusted:2 |
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net sales | $ | 1,389,410 |
|
| $ | (30,859 | ) |
| $ | 1,420,269 |
|
| $ | 1,576,156 |
| (11.8 | )% |
| (9.9 | )% |
Gross profit |
| 454,216 |
|
|
| (14,512 | ) |
|
| 468,728 |
|
|
| 584,677 |
| (22.3 | ) |
| (19.8 | ) |
Operating profit |
| 63,440 |
|
|
| (3,891 | ) |
|
| 67,331 |
|
|
| 175,314 |
| (63.8 | ) |
| (61.6 | ) |
Diluted earnings (loss) per share from continuing operations | $ | (0.06 | ) |
| $ | (0.01 | ) |
| $ | (0.05 | ) |
| $ | 0.34 |
| (117.6 | )% |
| (114.7 | )% |
1 | Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results. | |
2 | Results for the quarters ended April 1, 2023 and April 2, 2022 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6. |
TABLE 3 | ||||||||||
HANESBRANDS INC. | ||||||||||
Supplemental Financial Information | ||||||||||
By Business Segment | ||||||||||
(in thousands) | ||||||||||
(Unaudited) | ||||||||||
| Quarters Ended |
|
| |||||||
| April 1, 2023 |
| April 2, 2022 |
| % Change | |||||
Segment net sales: |
|
|
|
|
| |||||
Innerwear | $ | 553,067 |
|
| $ | 578,947 |
|
| (4.5 | )% |
Activewear |
| 314,945 |
|
|
| 386,937 |
|
| (18.6 | ) |
International |
| 462,857 |
|
|
| 510,129 |
|
| (9.3 | ) |
Other |
| 58,541 |
|
|
| 100,143 |
|
| (41.5 | ) |
Total net sales | $ | 1,389,410 |
|
| $ | 1,576,156 |
|
| (11.8 | )% |
|
|
|
|
|
| |||||
Segment operating profit: |
|
|
|
|
| |||||
Innerwear | $ | 72,608 |
|
| $ | 102,146 |
|
| (28.9 | )% |
Activewear |
| 9,974 |
|
|
| 48,984 |
|
| (79.6 | ) |
International |
| 51,349 |
|
|
| 89,438 |
|
| (42.6 | ) |
Other |
| (4,874 | ) |
|
| (671 | ) |
| 626.4 |
|
General corporate expenses/other |
| (65,617 | ) |
|
| (64,583 | ) |
| 1.6 |
|
Total operating profit before restructuring and other action-related charges |
| 63,440 |
|
|
| 175,314 |
|
| (63.8 | ) |
Restructuring and other action-related charges |
| (6,121 | ) |
|
| (4,802 | ) |
| 27.5 |
|
Total operating profit | $ | 57,319 |
|
| $ | 170,512 |
|
| (66.4 | )% |
| Quarters Ended |
|
| |||||
| April 1, 2023 |
| April 2, 2022 |
| Basis Points Change | |||
Segment operating margin: |
|
|
|
|
| |||
Innerwear | 13.1 | % |
| 17.6 | % |
| (452 | ) |
Activewear | 3.2 |
|
| 12.7 |
|
| (949 | ) |
International | 11.1 |
|
| 17.5 |
|
| (644 | ) |
Other | (8.3 | ) |
| (0.7 | ) |
| (766 | ) |
General corporate expenses/other | (4.7 | ) |
| (4.1 | ) |
| (63 | ) |
Total operating margin before restructuring and other action-related charges | 4.6 |
|
| 11.1 |
|
| (656 | ) |
Restructuring and other action-related charges | (0.4 | ) |
| (0.3 | ) |
| (14 | ) |
Total operating margin | 4.1 | % |
| 10.8 | % |
| (669 | ) |
TABLE 4 | |||||||
HANESBRANDS INC. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(in thousands) | |||||||
(Unaudited) | |||||||
| April 1, 2023 |
| December 31, 2022 | ||||
Assets |
|
|
| ||||
Cash and cash equivalents | $ | 213,209 |
|
| $ | 238,413 |
|
Trade accounts receivable, net |
| 681,921 |
|
|
| 721,396 |
|
Inventories |
| 1,969,133 |
|
|
| 1,979,672 |
|
Other current assets |
| 159,724 |
|
|
| 178,946 |
|
Current assets held for sale |
| 4,986 |
|
|
| 13,327 |
|
Total current assets |
| 3,028,973 |
|
|
| 3,131,754 |
|
Property, net |
| 442,315 |
|
|
| 442,404 |
|
Right-of-use assets |
| 454,643 |
|
|
| 414,894 |
|
Trademarks and other identifiable intangibles, net |
| 1,241,624 |
|
|
| 1,255,693 |
|
Goodwill |
| 1,106,590 |
|
|
| 1,108,907 |
|
Deferred tax assets |
| 21,732 |
|
|
| 20,162 |
|
Other noncurrent assets |
| 136,803 |
|
|
| 130,062 |
|
Total assets | $ | 6,432,680 |
|
| $ | 6,503,876 |
|
|
|
|
| ||||
Liabilities |
|
|
| ||||
Accounts payable | $ | 965,630 |
|
| $ | 917,481 |
|
Accrued liabilities |
| 474,840 |
|
|
| 498,028 |
|
Lease liabilities |
| 100,266 |
|
|
| 114,794 |
|
Accounts Receivable Securitization Facility |
| 166,000 |
|
|
| 209,500 |
|
Current portion of long-term debt |
| 52,750 |
|
|
| 37,500 |
|
Current liabilities held for sale |
| 4,986 |
|
|
| 13,327 |
|
Total current liabilities |
| 1,764,472 |
|
|
| 1,790,630 |
|
Long-term debt |
| 3,588,945 |
|
|
| 3,612,077 |
|
Lease liabilities - noncurrent |
| 379,365 |
|
|
| 326,644 |
|
Pension and postretirement benefits |
| 113,649 |
|
|
| 116,167 |
|
Other noncurrent liabilities |
| 246,723 |
|
|
| 260,094 |
|
Total liabilities |
| 6,093,154 |
|
|
| 6,105,612 |
|
|
|
|
| ||||
Stockholders’ equity |
|
|
| ||||
Preferred stock |
| — |
|
|
| — |
|
Common stock |
| 3,495 |
|
|
| 3,490 |
|
Additional paid-in capital |
| 336,851 |
|
|
| 334,676 |
|
Retained earnings |
| 537,702 |
|
|
| 572,106 |
|
Accumulated other comprehensive loss |
| (538,522 | ) |
|
| (512,008 | ) |
Total stockholders’ equity |
| 339,526 |
|
|
| 398,264 |
|
Total liabilities and stockholders’ equity | $ | 6,432,680 |
|
| $ | 6,503,876 |
|
TABLE 5 | |||||||
HANESBRANDS INC. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(in thousands) | |||||||
(Unaudited) | |||||||
| Quarters Ended | ||||||
| April 1, 2023 |
| April 2, 20221 | ||||
Operating Activities: |
|
|
| ||||
Net income (loss) | $ | (34,404 | ) |
| $ | 118,702 |
|
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
| ||||
Depreciation |
| 17,360 |
|
|
| 18,931 |
|
Amortization of acquisition intangibles |
| 4,186 |
|
|
| 4,847 |
|
Other amortization |
| 2,805 |
|
|
| 2,508 |
|
Loss on extinguishment of debt |
| 8,466 |
|
|
| — |
|
Gain on sale of business and classification of assets held for sale |
| (2,139 | ) |
|
| (6,715 | ) |
Amortization of debt issuance costs and debt discount |
| 1,973 |
|
|
| 1,887 |
|
Other |
| 5,202 |
|
|
| 6,940 |
|
Changes in assets and liabilities: |
|
|
| ||||
Accounts receivable |
| 51,643 |
|
|
| (6,090 | ) |
Inventories |
| 7,861 |
|
|
| (247,567 | ) |
Other assets |
| (10,761 | ) |
|
| (489 | ) |
Accounts payable |
| 43,171 |
|
|
| (310 | ) |
Accrued pension and postretirement benefits |
| 1,479 |
|
|
| 24 |
|
Accrued liabilities and other |
| (52,305 | ) |
|
| (123,857 | ) |
Net cash from operating activities |
| 44,537 |
|
|
| (231,189 | ) |
|
|
|
| ||||
Investing Activities: |
|
|
| ||||
Capital expenditures |
| (24,244 | ) |
|
| (19,337 | ) |
Proceeds from sales of assets |
| 3 |
|
|
| 19 |
|
Other |
| 18,941 |
|
|
| (10,272 | ) |
Net cash from investing activities |
| (5,300 | ) |
|
| (29,590 | ) |
|
|
|
| ||||
Financing Activities: |
|
|
| ||||
Borrowings on Term Loan Facilities |
| 891,000 |
|
|
| — |
|
Repayments on Term Loan Facilities |
| (6,250 | ) |
|
| (6,250 | ) |
Borrowings on Accounts Receivable Securitization Facility |
| 588,000 |
|
|
| 290,000 |
|
Repayments on Accounts Receivable Securitization Facility |
| (631,500 | ) |
|
| (154,500 | ) |
Borrowings on Revolving Loan Facilities |
| 421,500 |
|
|
| 129,000 |
|
Repayments on Revolving Loan Facilities |
| (461,000 | ) |
|
| (109,000 | ) |
Borrowings on Senior Notes |
| 600,000 |
|
|
| — |
|
Repayments on Senior Notes |
| (1,436,884 | ) |
|
| — |
|
Borrowings on notes payable |
| — |
|
|
| 21,454 |
|
Repayments on notes payable |
| — |
|
|
| (21,713 | ) |
Share repurchases |
| — |
|
|
| (25,018 | ) |
Cash dividends paid |
| — |
|
|
| (52,297 | ) |
Payments to amend and refinance credit facilities |
| (27,371 | ) |
|
| (228 | ) |
Other |
| (1,675 | ) |
|
| (3,881 | ) |
Net cash from financing activities |
| (64,180 | ) |
|
| 67,567 |
|
Effect of changes in foreign exchange rates on cash |
| (261 | ) |
|
| 1,793 |
|
Change in cash and cash equivalents |
| (25,204 | ) |
|
| (191,419 | ) |
Cash and cash equivalents at beginning of period |
| 238,413 |
|
|
| 560,629 |
|
Cash and cash equivalents at end of period | $ | 213,209 |
|
| $ | 369,210 |
|
1 | The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities in the periods prior to the sale of the European Innerwear business on March 5, 2022. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations. |
TABLE 6-A | |||||||||||||||||||||||||||||||
HANESBRANDS INC. | |||||||||||||||||||||||||||||||
Supplemental Financial Information | |||||||||||||||||||||||||||||||
Reconciliation of Select GAAP Measures to Non-GAAP Measures | |||||||||||||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
| Quarter Ended April 1, 2023 | ||||||||||||||||||||||||||||||
| Gross Profit |
| Selling, General and Administrative Expenses |
| Operating Profit |
| Interest Expense, Net and Other Expenses |
| Loss From Continuing Operations Before Income Tax Expense |
| Income Tax Expense |
| Loss From Continuing Operations |
| Diluted Loss Per Share From Continuing Operations1 | ||||||||||||||||
As reported | $ | 449,693 |
|
| $ | (392,374 | ) |
| $ | 57,319 |
|
| $ | (73,223 | ) |
| $ | (15,904 | ) |
| $ | (18,500 | ) |
| $ | (34,404 | ) |
| $ | (0.10 | ) |
As a percentage of net sales |
| 32.4 | % |
|
| 28.2 | % |
|
| 4.1 | % |
|
|
|
|
|
|
|
|
|
| ||||||||||
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Full Potential Plan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Supply chain segmentation |
| 4,523 |
|
|
| — |
|
|
| 4,523 |
|
|
| — |
|
|
| 4,523 |
|
|
| — |
|
|
| 4,523 |
|
|
| 0.01 |
|
Technology |
| — |
|
|
| 3,684 |
|
|
| 3,684 |
|
|
| — |
|
|
| 3,684 |
|
|
| — |
|
|
| 3,684 |
|
|
| 0.01 |
|
Professional services |
| — |
|
|
| 40 |
|
|
| 40 |
|
|
| — |
|
|
| 40 |
|
|
| — |
|
|
| 40 |
|
|
| 0.00 |
|
Operating model |
| — |
|
|
| (1,091 | ) |
|
| (1,091 | ) |
|
| — |
|
|
| (1,091 | ) |
|
| — |
|
|
| (1,091 | ) |
|
| 0.00 |
|
Gain on classification of assets held for sale |
| — |
|
|
| (2,139 | ) |
|
| (2,139 | ) |
|
| — |
|
|
| (2,139 | ) |
|
| — |
|
|
| (2,139 | ) |
|
| (0.01 | ) |
Other |
| — |
|
|
| 1,104 |
|
|
| 1,104 |
|
|
| — |
|
|
| 1,104 |
|
|
| — |
|
|
| 1,104 |
|
|
| 0.00 |
|
Loss on extinguishment of debt |
| — |
|
|
| — |
|
|
| — |
|
|
| 8,466 |
|
|
| 8,466 |
|
|
| — |
|
|
| 8,466 |
|
|
| 0.02 |
|
Gain on final settlement of cross currency swap contracts |
| — |
|
|
| — |
|
|
| — |
|
|
| (1,370 | ) |
|
| (1,370 | ) |
|
| — |
|
|
| (1,370 | ) |
|
| 0.00 |
|
Tax effect on actions |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total restructuring and other action-related charges |
| 4,523 |
|
|
| 1,598 |
|
|
| 6,121 |
|
|
| 7,096 |
|
|
| 13,217 |
|
|
| — |
|
|
| 13,217 |
|
|
| 0.04 |
|
As adjusted | $ | 454,216 |
|
| $ | (390,776 | ) |
| $ | 63,440 |
|
| $ | (66,127 | ) |
| $ | (2,687 | ) |
| $ | (18,500 | ) |
| $ | (21,187 | ) |
| $ | (0.06 | ) |
As a percentage of net sales |
| 32.7 | % |
|
| 28.1 | % |
|
| 4.6 | % |
|
|
|
|
|
|
|
|
|
|
1 | Amounts may not be additive due to rounding. |
Including the unfavorable foreign currency impact of $13 million, global Champion sales excluding C9 Champion decreased approximately 17% in the first quarter of 2023 compared to the first quarter of 2022. On a constant currency basis, global Champion sales excluding C9 Champion decreased approximately 15% in the first quarter of 2023 compared to the first quarter of 2022. |
TABLE 6-B | ||||||||||||||||||||||||||||||
HANESBRANDS INC. | ||||||||||||||||||||||||||||||
Supplemental Financial Information | ||||||||||||||||||||||||||||||
Reconciliation of Select GAAP Measures to Non-GAAP Measures | ||||||||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
| Quarter Ended April 2, 2022 | |||||||||||||||||||||||||||||
| Gross Profit |
| Selling, General and Administrative Expenses |
| Operating Profit |
| Interest Expense, Net and Other Expenses |
| Income From Continuing Operations Before Income Tax Expense |
| Income Tax Expense |
| Income From Continuing Operations |
| Diluted Earnings Per Share From Continuing Operations1 | |||||||||||||||
As reported | $ | 584,178 |
|
| $ | (413,666 | ) |
| $ | 170,512 |
|
| $ | 32,950 |
| $ | 137,562 |
|
| $ | (23,385 | ) |
| $ | 114,177 |
|
| $ | 0.32 | |
As a percentage of net sales |
| 37.1 | % |
|
| 26.2 | % |
|
| 10.8 | % |
|
|
|
|
|
|
|
|
|
| |||||||||
Restructuring and other action-related charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Full Potential Plan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Supply chain segmentation |
| 1,020 |
|
|
| — |
|
|
| 1,020 |
|
|
| — |
|
| 1,020 |
|
|
| — |
|
|
| 1,020 |
|
|
| 0.00 |
|
Technology |
| — |
|
|
| 4,459 |
|
|
| 4,459 |
|
|
| — |
|
| 4,459 |
|
|
| — |
|
|
| 4,459 |
|
|
| 0.01 |
|
Professional services |
| — |
|
|
| 7,908 |
|
|
| 7,908 |
|
|
| — |
|
| 7,908 |
|
|
| — |
|
|
| 7,908 |
|
|
| 0.02 |
|
Operating model |
| (265 | ) |
|
| (1,654 | ) |
|
| (1,919 | ) |
|
| — |
|
| (1,919 | ) |
|
| — |
|
|
| (1,919 | ) |
|
| (0.01 | ) |
Gain on classification of assets held for sale |
| — |
|
|
| (6,528 | ) |
|
| (6,528 | ) |
|
| — |
|
| (6,528 | ) |
|
| — |
|
|
| (6,528 | ) |
|
| (0.02 | ) |
Other |
| (256 | ) |
|
| 118 |
|
|
| (138 | ) |
|
| — |
|
| (138 | ) |
|
| — |
|
|
| (138 | ) |
|
| 0.00 |
|
Tax effect on actions |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
| — |
|
|
| (816 | ) |
|
| (816 | ) |
|
| 0.00 |
|
Total restructuring and other action-related charges |
| 499 |
|
|
| 4,303 |
|
|
| 4,802 |
|
|
| — |
|
| 4,802 |
|
|
| (816 | ) |
|
| 3,986 |
|
|
| 0.01 |
|
As adjusted | $ | 584,677 |
|
| $ | (409,363 | ) |
| $ | 175,314 |
|
| $ | 32,950 |
| $ | 142,364 |
|
| $ | (24,201 | ) |
| $ | 118,163 |
|
| $ | 0.34 |
|
As a percentage of net sales |
| 37.1 | % |
|
| 26.0 | % |
|
| 11.1 | % |
|
|
|
|
|
|
|
|
|
|
1 | Amounts may not be additive due to rounding. |
TABLE 6-C | |||||||
HANESBRANDS INC. | |||||||
Supplemental Financial Information | |||||||
Reconciliation of Select GAAP Measures to Non-GAAP Measures | |||||||
(in thousands, except per share data) | |||||||
(Unaudited) | |||||||
| Last Twelve Months | ||||||
| April 1, 2023 |
| April 2, 2022 | ||||
Leverage Ratio: |
|
|
| ||||
|
|
|
| ||||
EBITDA1: |
|
|
| ||||
Income (loss) from continuing operations | $ | (279,750 | ) |
| $ | 506,741 |
|
Interest expense, net |
| 183,562 |
|
|
| 150,570 |
|
Income tax expense |
| 479,022 |
|
|
| 68,795 |
|
Depreciation and amortization |
| 104,332 |
|
|
| 107,143 |
|
Total EBITDA |
| 487,166 |
|
|
| 833,249 |
|
Total restructuring and other action-related charges (excluding tax effect on actions) |
| 68,273 |
|
|
| 162,818 |
|
Other losses, charges and expenses2 |
| 118,802 |
|
|
| 108,567 |
|
Total EBITDA, as adjusted | $ | 674,241 |
|
| $ | 1,104,634 |
|
|
|
|
| ||||
Net debt: |
|
|
| ||||
Debt (current and long-term debt and Accounts Receivable Securitization Facility excluding long term debt issuance costs and debt discount of $40,055 and $16,133, respectively) | $ | 3,847,750 |
|
| $ | 3,501,675 |
|
Other debt and cash adjustments3 |
| 4,640 |
|
|
| 6,568 |
|
(Less) Cash and cash equivalents |
| (213,209 | ) |
|
| (369,210 | ) |
Net debt | $ | 3,639,181 |
|
| $ | 3,139,033 |
|
|
|
|
| ||||
Debt/Income (loss) from continuing operations4 |
| (13.8 | ) |
|
| 6.9 |
|
|
|
|
| ||||
Net debt/EBITDA, as adjusted5 |
| 5.4 |
|
|
| 2.8 |
|
1 | Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. | |
2 | Primarily includes bad debt expense, excess and obsolete inventory write-offs, pension expense, other compensation related items and charges related to the Company’s ransomware attack. | |
3 | Includes drawn letters of credit and cash balances in certain geographies. | |
4 | Represents Debt divided by Income (loss) from continuing operations which is the most comparable GAAP financial measure to Net debt/EBITDA, as adjusted. | |
5 | Represents the Company’s leverage ratio defined as Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended, which excludes other losses, charges and expenses in addition to restructuring and other action-related charges. |
| Quarters Ended | ||||||
| April 1, 2023 |
| April 2, 20221 | ||||
Free cash flow1: |
|
|
| ||||
Net cash from operating activities | $ | 44,537 |
|
| $ | (231,189 | ) |
Capital expenditures |
| (24,244 | ) |
|
| (19,337 | ) |
Free cash flow | $ | 20,293 |
|
| $ | (250,526 | ) |
1 | Free cash flow includes the results from continuing and discontinued operations in the periods prior to the sale of the European Innerwear business on March 5, 2022. |
TABLE 7 | |||
HANESBRANDS INC. | |||
Supplemental Financial Information | |||
Reconciliation of GAAP Outlook to Adjusted Outlook | |||
(in thousands, except per share data) | |||
(Unaudited) | |||
| Quarter Ended |
| Year Ended |
| July 1, 2023 |
| December 30, 2023 |
Operating profit outlook, as calculated under GAAP | $55,000 to $75,000 |
| $446,000 to $496,000 |
Restructuring and other action-related charges | $15,000 |
| $54,000 |
Operating profit outlook, as adjusted | $70,000 to $90,000 |
| $500,000 to $550,000 |
|
|
|
|
Interest and other expense outlook, as calculated under GAAP | $80,000 |
| $307,000 |
Restructuring and other action-related charges | $— |
| $7,000 |
Interest and other expense outlook, as adjusted | $80,000 |
| $300,000 |
|
|
|
|
Diluted earnings per share from continuing operations, as calculated under GAAP1 | $(0.09) to $(0.04) |
| $0.14 to $0.25 |
Restructuring and other action-related charges | $0.04 |
| $0.17 |
Diluted earnings per share from continuing operations, as adjusted | $(0.05) to $0.00 |
| $0.31 to $0.42 |
|
|
|
|
Cash flow from operations outlook, as calculated under GAAP |
|
| $500,000 |
Capital expenditures outlook |
|
| $70,000 |
Free cash flow outlook |
|
| $430,000 |
1 | The company expects approximately 351 million diluted weighted average shares outstanding for the quarter ended July 1, 2023 and approximately 352 million diluted weighted average shares outstanding for the year ended December 30, 2023. |
HanesBrands is unable to reconcile projections of financial performance beyond 2023 without unreasonable efforts, because the Company cannot predict, with a reasonable degree of certainty, the type and extent of certain items that would be expected to impact these figures in 2023 and beyond, such as net sales, operating profit, tax rates and action related charges. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230503005200/en/
News Media contact: Kirk Saville (336) 979-7293 Analysts and Investors contact: T.C. Robillard (336) 519-2115
Source: HanesBrands