WINSTON-SALEM, N.C.--(BUSINESS WIRE)-- HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for fourth-quarter and full-year 2023.
“Our fourth quarter performance did not meet our expectations as the sales environment proved to be more challenging than expected. However, we saw several positive indicators that give us confidence margins and leverage have reached a positive inflection point and demonstrate progress on our strategy to simplify our business, reduce inventory, cut costs, and reignite Innerwear,” said Steve Bratspies, CEO. “Importantly, we exceeded our year-end goals in all four key 2023 performance metrics, including gross margin, inventory, operating cash flow and debt reduction. During the quarter, new products and permanent retail space gains drove increased market share in U.S. Innerwear, which we expect to build upon as we rollout another record year of innovation and increase our brand marketing investments. For 2024, we believe we’re well positioned for continued margin improvement, another year of strong cash generation and continued debt reduction.”
Highlights
Fourth-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 transformation plan and global Champion performance plan charges.
Fourth-Quarter 2023 Business Segment Summary
Cash Flow, Balance Sheet and Liquidity
First-Quarter and Full-Year 2024 Financial Outlook
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.
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 first-quarter 2023, its U.S. Sheer Hosiery business generated $20 million of net sales and $1 million of operating profit.
For fiscal year 2024, which ends on December 28, 2024, the Company currently expects:
For first-quarter 2024, which ends on March 30, 2024, 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 the global Champion performance plan, supply chain segmentation, headcount actions and related severance charges, technology charges, gain/loss on classification of assets held for sale, professional services, loss on extinguishment of debt, gain on final settlement of cross currency swap contracts and the tax effects thereof. The global Champion performance plan includes actions and related charges regarding the Company’s accelerated and enhanced strategic initiatives to further streamline the operations and position the brand for long term profitable growth and the evaluation of strategic alternatives for the global Champion business.
While these costs are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.
HanesBrands has chosen to present these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of the Full Potential transformation plan, the global Champion performance plan and other actions that are deemed to be material stand-alone initiatives apart from the Company’s core operations. HanesBrands believes these non-GAAP measures provide management and investors with valuable supplemental information for analyzing the operating performance of the Company’s ongoing business during each period presented without giving effect to costs associated with the execution of any of the aforementioned actions taken.
The Company has also chosen to present EBITDA and adjusted EBITDA to investors because it considers these measures to be an important supplemental means of evaluating operating performance. EBITDA is defined as net income (loss) before the impacts of discontinued operations, interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding (x) restructuring charges related to the Full Potential transformation plan, the global Champion performance plan, and other action-related charges described in more detail in Table 6-A and (y) certain other losses, charges and expenses as defined in the Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended (the “Credit Agreement”) described in more detail in Table 6-B. HanesBrands believes that EBITDA and adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, and management uses EBITDA and adjusted EBITDA for planning purposes in connection with setting its capital allocation strategy. EBITDA and adjusted EBITDA should not, however, be considered as measures of discretionary cash available to invest in the growth of the business.
Net debt is defined as the total of current debt, long-term debt, and borrowings under the accounts receivable securitization facility (excluding long-term debt issuance costs and debt discount 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 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 ability to successfully execute our Full Potential transformation plan, global Champion performance plan, and other strategic actions to achieve the desired results; statements made in the Fourth-Quarter and Full-Year 2023 Financial Outlook section of this 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, but are not limited to, such things as: trends associated with our business, our ability to identify, execute, and realize the benefits from, any potential strategic transaction involving Champion; our ability to successfully execute our Full Potential transformation plan, global Champion performance plan, or any modifications thereto to achieve the desired results; 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; 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; future intangible assets or goodwill impairment due to changes in our business, market conditions, or other factors, including any sale of the Champion business; 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, including regional and global military conflicts; our ability to effectively manage our complex multinational tax structure; public health emergencies or severe global health crises, including effects on consumer spending, global supply chains, critical supply routes and the financial markets; 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.
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; Maidenform, America’s number one shapewear brand; Bali, America’s number one bra brand; and Bonds, which is setting new standards for design and sustainability. HBI employs 48,000 associates in 29 countries and has built a strong reputation for workplace quality and ethical business practices. The company, a longtime leader in sustainability, has set 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. Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) | |||||||||||||||||||||
| Quarters Ended |
|
|
| Years Ended |
|
| ||||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| % Change |
| December 30, 2023 |
| December 31, 2022 |
| % Change | ||||||||||
Net sales | $ | 1,296,827 |
|
| $ | 1,473,286 |
|
| (12.0 | ) % |
| $ | 5,636,523 |
|
| $ | 6,233,650 |
|
| (9.6 | ) % |
Cost of sales |
| 803,158 |
|
|
| 971,309 |
|
|
|
|
| 3,740,113 |
|
|
| 4,012,542 |
|
|
| ||
Gross profit |
| 493,669 |
|
|
| 501,977 |
|
| (1.7 | ) % |
|
| 1,896,410 |
|
|
| 2,221,108 |
|
| (14.6 | ) % |
As a % of net sales |
| 38.1 | % |
|
| 34.1 | % |
|
|
|
| 33.6 | % |
|
| 35.6 | % |
|
| ||
Selling, general and administrative expenses |
| 397,572 |
|
|
| 441,642 |
|
| (10.0 | ) % |
|
| 1,607,628 |
|
|
| 1,701,563 |
|
| (5.5 | ) % |
As a % of net sales |
| 30.7 | % |
|
| 30.0 | % |
|
|
|
| 28.5 | % |
|
| 27.3 | % |
|
| ||
Operating profit |
| 96,097 |
|
|
| 60,335 |
|
| 59.3 | % |
|
| 288,782 |
|
|
| 519,545 |
|
| (44.4 | ) % |
As a % of net sales |
| 7.4 | % |
|
| 4.1 | % |
|
|
|
| 5.1 | % |
|
| 8.3 | % |
|
| ||
Other expenses |
| 7,375 |
|
|
| 3,646 |
|
|
|
|
| 38,520 |
|
|
| 9,734 |
|
|
| ||
Interest expense, net |
| 69,688 |
|
|
| 49,665 |
|
|
|
|
| 275,354 |
|
|
| 157,073 |
|
|
| ||
Income (loss) from continuing operations before income taxes |
| 19,034 |
|
|
| 7,024 |
|
|
|
|
| (25,092 | ) |
|
| 352,738 |
|
|
| ||
Income tax expense (benefit) |
| (58,907 | ) |
|
| 425,132 |
|
|
|
|
| (7,366 | ) |
|
| 483,907 |
|
|
| ||
Income (loss) from continuing operations |
| 77,941 |
|
|
| (418,108 | ) |
| (118.6 | ) % |
|
| (17,726 | ) |
|
| (131,169 | ) |
| (86.5 | ) % |
Income from discontinued operations, net of tax |
| — |
|
|
| — |
|
|
|
|
| — |
|
|
| 3,965 |
|
|
| ||
Net income (loss) | $ | 77,941 |
|
| $ | (418,108 | ) |
|
|
| $ | (17,726 | ) |
| $ | (127,204 | ) |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Earnings (loss) per share - basic: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Continuing operations | $ | 0.22 |
|
| $ | (1.19 | ) |
|
|
| $ | (0.05 | ) |
| $ | (0.37 | ) |
|
| ||
Discontinued operations |
| — |
|
|
| — |
|
|
|
|
| — |
|
|
| 0.01 |
|
|
| ||
Net income (loss) | $ | 0.22 |
|
| $ | (1.19 | ) |
|
|
| $ | (0.05 | ) |
| $ | (0.36 | ) |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Earnings (loss) per share - diluted: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Continuing operations | $ | 0.22 |
|
| $ | (1.19 | ) |
|
|
| $ | (0.05 | ) |
| $ | (0.37 | ) |
|
| ||
Discontinued operations |
| — |
|
|
| — |
|
|
|
|
| — |
|
|
| 0.01 |
|
|
| ||
Net income (loss) | $ | 0.22 |
|
| $ | (1.19 | ) |
|
|
| $ | (0.05 | ) |
| $ | (0.36 | ) |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Basic |
| 350,765 |
|
|
| 349,974 |
|
|
|
|
| 350,592 |
|
|
| 349,970 |
|
|
| ||
Diluted |
| 351,566 |
|
|
| 349,974 |
|
|
|
|
| 350,592 |
|
|
| 349,970 |
|
|
|
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 year ended December 30, 2023 and a comparison to prior year: | |||||||||||||||||||
| Quarter Ended December 30, 2023 |
|
|
|
|
|
| ||||||||||||
| As Reported |
| Impact from Foreign Currency1 |
| Constant Currency |
| Quarter Ended December 31, 2022 |
| % Change, As Reported |
| % Change, Constant Currency | ||||||||
As reported under GAAP: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net sales | $ | 1,296,827 |
| $ | (5,619 | ) |
| $ | 1,302,446 |
| $ | 1,473,286 |
|
| (12.0 | ) % |
| (11.6 | ) % |
Gross profit |
| 493,669 |
|
| (4,602 | ) |
|
| 498,271 |
|
| 501,977 |
|
| (1.7 | ) |
| (0.7 | ) |
Operating profit |
| 96,097 |
|
| (3,197 | ) |
|
| 99,294 |
|
| 60,335 |
|
| 59.3 |
|
| 64.6 |
|
Diluted earnings (loss) per share from continuing operations3 | $ | 0.22 |
| $ | (0.01 | ) |
| $ | 0.23 |
| $ | (1.19 | ) |
| (118.5 | ) % |
| (119.3 | ) % |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
As adjusted:2 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net sales | $ | 1,296,827 |
| $ | (5,619 | ) |
| $ | 1,302,446 |
| $ | 1,473,286 |
|
| (12.0 | ) % |
| (11.6 | ) % |
Gross profit |
| 495,400 |
|
| (4,602 | ) |
|
| 500,002 |
|
| 504,869 |
|
| (1.9 | ) |
| (1.0 | ) |
Operating profit |
| 110,748 |
|
| (3,197 | ) |
|
| 113,945 |
|
| 82,560 |
|
| 34.1 |
|
| 38.0 |
|
Diluted earnings per share from continuing operations3 | $ | 0.03 |
| $ | (0.01 | ) |
| $ | 0.04 |
| $ | 0.07 |
|
| (57.1 | ) % |
| (42.9 | ) % |
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 | Results for the quarters ended December 30, 2023 and December 31, 2022 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. | |
| Year Ended December 30, 2023 |
|
|
|
|
|
| ||||||||||||||
| As Reported |
| Impact from Foreign Currency1 |
| Constant Currency |
| Year Ended December 31, 2022 |
| % Change, As Reported |
| % Change, Constant Currency | ||||||||||
As reported under GAAP: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net sales | $ | 5,636,523 |
|
| $ | (58,642 | ) |
| $ | 5,695,165 |
|
| $ | 6,233,650 |
|
| (9.6 | ) % |
| (8.6 | ) % |
Gross profit |
| 1,896,410 |
|
|
| (32,803 | ) |
|
| 1,929,213 |
|
|
| 2,221,108 |
|
| (14.6 | ) |
| (13.1 | ) |
Operating profit |
| 288,782 |
|
|
| (10,814 | ) |
|
| 299,596 |
|
|
| 519,545 |
|
| (44.4 | ) |
| (42.3 | ) |
Diluted loss per share from continuing operations3 | $ | (0.05 | ) |
| $ | (0.02 | ) |
| $ | (0.03 | ) |
| $ | (0.37 | ) |
| (86.5 | ) % |
| (91.9 | ) % |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
As adjusted:2 |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net sales | $ | 5,636,523 |
|
| $ | (58,642 | ) |
| $ | 5,695,165 |
|
| $ | 6,233,650 |
|
| (9.6 | ) % |
| (8.6 | ) % |
Gross profit |
| 1,968,550 |
|
|
| (32,803 | ) |
|
| 2,001,353 |
|
|
| 2,238,133 |
|
| (12.0 | ) |
| (10.6 | ) |
Operating profit |
| 404,686 |
|
|
| (10,814 | ) |
|
| 415,500 |
|
|
| 579,403 |
|
| (30.2 | ) |
| (28.3 | ) |
Diluted earnings per share from continuing operations 3 | $ | 0.06 |
|
| $ | (0.02 | ) |
| $ | 0.08 |
|
| $ | 0.98 |
|
| (93.9 | ) % |
| (91.8 | ) % |
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 years ended December 30, 2023 and December 31, 2022 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 year ended December 30, 2023 and a comparison to prior year: | |||||||||||||||||||||||||||
| Quarter Ended December 30, 2023 |
| Quarter Ended December 31, 2022 |
|
|
|
| ||||||||||||||||||||
| 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 | $ | 1,296,827 |
| $ | (5,619 | ) |
| $ | — |
| $ | 1,302,446 |
| $ | 1,473,286 |
| $ | 19,202 |
| $ | 1,454,084 |
| (12.0 | ) % |
| (10.4 | ) % |
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 | The Company sold its U.S. Sheer Hosiery business on September 29, 2023. |
| Year Ended December 30, 2023 |
| Year Ended December 31, 2022 |
|
|
|
| ||||||||||||||||||||
| 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 | $ | 5,636,523 |
| $ | (58,642 | ) |
| $ | 50,358 |
| $ | 5,644,807 |
| $ | 6,233,650 |
| $ | 55,162 |
| $ | 6,178,488 |
| (9.6 | ) % |
| (8.6 | ) % |
1 | Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results. | |
2 | 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 |
|
|
| Years Ended |
|
| ||||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| % Change |
| December 30, 2023 |
| December 31, 2022 |
| % Change | ||||||||||
Segment net sales: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Innerwear | $ | 533,580 |
|
| $ | 540,159 |
|
| (1.2 | ) % |
| $ | 2,415,032 |
|
| $ | 2,429,966 |
|
| (0.6 | ) % |
Activewear |
| 285,824 |
|
|
| 376,682 |
|
| (24.1 | ) |
|
| 1,251,913 |
|
|
| 1,555,062 |
|
| (19.5 | ) |
International |
| 436,919 |
|
|
| 477,884 |
|
| (8.6 | ) |
|
| 1,748,428 |
|
|
| 1,914,268 |
|
| (8.7 | ) |
Other |
| 40,504 |
|
|
| 78,561 |
|
| (48.4 | ) |
|
| 221,150 |
|
|
| 334,354 |
|
| (33.9 | ) |
Total net sales | $ | 1,296,827 |
|
| $ | 1,473,286 |
|
| (12.0 | ) % |
| $ | 5,636,523 |
|
| $ | 6,233,650 |
|
| (9.6 | ) % |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Segment operating profit: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Innerwear | $ | 112,680 |
|
| $ | 44,984 |
|
| 150.5 | % |
| $ | 418,226 |
|
| $ | 388,586 |
|
| 7.6 | % |
Activewear |
| (11,223 | ) |
|
| 28,378 |
|
| (139.5 | ) |
|
| 20,517 |
|
|
| 153,710 |
|
| (86.7 | ) |
International |
| 70,591 |
|
|
| 67,755 |
|
| 4.2 |
|
|
| 210,651 |
|
|
| 283,036 |
|
| (25.6 | ) |
Other |
| (2,423 | ) |
|
| 7,518 |
|
| (132.2 | ) |
|
| (7,902 | ) |
|
| 17,019 |
|
| (146.4 | ) |
General corporate expenses/other |
| (58,877 | ) |
|
| (66,075 | ) |
| (10.9 | ) |
|
| (236,806 | ) |
|
| (262,948 | ) |
| (9.9 | ) |
Total operating profit before restructuring and other action-related charges |
| 110,748 |
|
|
| 82,560 |
|
| 34.1 |
|
|
| 404,686 |
|
|
| 579,403 |
|
| (30.2 | ) |
Restructuring and other action-related charges |
| (14,651 | ) |
|
| (22,225 | ) |
| (34.1 | ) |
|
| (115,904 | ) |
|
| (59,858 | ) |
| 93.6 |
|
Total operating profit | $ | 96,097 |
|
| $ | 60,335 |
|
| 59.3 | % |
| $ | 288,782 |
|
| $ | 519,545 |
|
| (44.4 | ) % |
| Quarters Ended |
|
|
| Years Ended |
|
| ||||||||||
| December 30, 2023 |
| December 31, 2022 |
| Basis Points Change |
| December 30, 2023 |
| December 31, 2022 |
| Basis Points Change | ||||||
Segment operating margin: |
|
|
|
|
|
|
|
|
|
|
| ||||||
Innerwear | 21.1 | % |
| 8.3 | % |
| 1,279 |
|
| 17.3 | % |
| 16.0 | % |
| 133 |
|
Activewear | (3.9 | ) |
| 7.5 |
|
| (1,146 | ) |
| 1.6 |
|
| 9.9 |
|
| (825 | ) |
International | 16.2 |
|
| 14.2 |
|
| 198 |
|
| 12.0 |
|
| 14.8 |
|
| (274 | ) |
Other | (6.0 | ) |
| 9.6 |
|
| (1,555 | ) |
| (3.6 | ) |
| 5.1 |
|
| (866 | ) |
General corporate expenses/other | (4.5 | ) |
| (4.5 | ) |
| (6 | ) |
| (4.2 | ) |
| (4.2 | ) |
| 2 |
|
Total operating margin before restructuring and other action-related charges | 8.5 |
|
| 5.6 |
|
| 294 |
|
| 7.2 |
|
| 9.3 |
|
| (212 | ) |
Restructuring and other action-related charges | (1.1 | ) |
| (1.5 | ) |
| 38 |
|
| (2.1 | ) |
| (1.0 | ) |
| (110 | ) |
Total operating margin | 7.4 | % |
| 4.1 | % |
| 331 |
|
| 5.1 | % |
| 8.3 | % |
| (321 | ) |
TABLE 4 | |||||||
HANESBRANDS INC. Condensed Consolidated Balance Sheets (in thousands) (Unaudited) | |||||||
| December 30, 2023 |
| December 31, 2022 | ||||
Assets |
|
|
| ||||
Cash and cash equivalents | $ | 205,501 |
|
| $ | 238,413 |
|
Trade accounts receivable, net |
| 557,729 |
|
|
| 721,396 |
|
Inventories |
| 1,368,018 |
|
|
| 1,979,672 |
|
Other current assets |
| 144,967 |
|
|
| 178,946 |
|
Current assets held for sale |
| — |
|
|
| 13,327 |
|
Total current assets |
| 2,276,215 |
|
|
| 3,131,754 |
|
Property, net |
| 414,366 |
|
|
| 442,404 |
|
Right-of-use assets |
| 428,918 |
|
|
| 414,894 |
|
Trademarks and other identifiable intangibles, net |
| 1,235,704 |
|
|
| 1,255,693 |
|
Goodwill |
| 1,112,744 |
|
|
| 1,108,907 |
|
Deferred tax assets |
| 21,954 |
|
|
| 20,162 |
|
Other noncurrent assets |
| 150,413 |
|
|
| 130,062 |
|
Total assets | $ | 5,640,314 |
|
| $ | 6,503,876 |
|
|
|
|
| ||||
Liabilities |
|
|
| ||||
Accounts payable | $ | 736,252 |
|
| $ | 917,481 |
|
Accrued liabilities |
| 478,676 |
|
|
| 498,028 |
|
Lease liabilities |
| 110,640 |
|
|
| 114,794 |
|
Accounts Receivable Securitization Facility |
| 6,000 |
|
|
| 209,500 |
|
Current portion of long-term debt |
| 59,000 |
|
|
| 37,500 |
|
Current liabilities held for sale |
| — |
|
|
| 13,327 |
|
Total current liabilities |
| 1,390,568 |
|
|
| 1,790,630 |
|
Long-term debt |
| 3,235,640 |
|
|
| 3,612,077 |
|
Lease liabilities - noncurrent |
| 354,015 |
|
|
| 326,644 |
|
Pension and postretirement benefits |
| 104,255 |
|
|
| 116,167 |
|
Other noncurrent liabilities |
| 136,483 |
|
|
| 260,094 |
|
Total liabilities |
| 5,220,961 |
|
|
| 6,105,612 |
|
|
|
|
| ||||
Stockholders’ equity |
|
|
| ||||
Preferred stock |
| — |
|
|
| — |
|
Common stock |
| 3,501 |
|
|
| 3,490 |
|
Additional paid-in capital |
| 353,367 |
|
|
| 334,676 |
|
Retained earnings |
| 554,796 |
|
|
| 572,106 |
|
Accumulated other comprehensive loss |
| (492,311 | ) |
|
| (512,008 | ) |
Total stockholders’ equity |
| 419,353 |
|
|
| 398,264 |
|
Total liabilities and stockholders’ equity | $ | 5,640,314 |
|
| $ | 6,503,876 |
|
TABLE 5 | |||||||||||||||
HANESBRANDS INC. Condensed Consolidated Statements of Cash Flows1 (in thousands) (Unaudited) | |||||||||||||||
| Quarters Ended |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Operating activities: |
|
|
|
|
|
|
| ||||||||
Net income (loss) | $ | 77,941 |
|
| $ | (418,108 | ) |
| $ | (17,726 | ) |
| $ | (127,204 | ) |
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
|
|
|
|
| ||||||||
Depreciation |
| 19,022 |
|
|
| 20,154 |
|
|
| 75,268 |
|
|
| 76,294 |
|
Amortization of acquisition intangibles |
| 4,091 |
|
|
| 4,159 |
|
|
| 16,569 |
|
|
| 18,204 |
|
Other amortization |
| 3,344 |
|
|
| 3,648 |
|
|
| 13,200 |
|
|
| 11,769 |
|
Loss on extinguishment of debt |
| — |
|
|
| — |
|
|
| 8,466 |
|
|
| — |
|
(Gain) loss on sale of business and classification of assets held for sale |
| — |
|
|
| 3,023 |
|
|
| 3,641 |
|
|
| (3,162 | ) |
Amortization of debt issuance costs and debt discount |
| 2,362 |
|
|
| 1,817 |
|
|
| 8,939 |
|
|
| 7,300 |
|
Stock compensation expense |
| 4,527 |
|
|
| 6,271 |
|
|
| 20,546 |
|
|
| 23,457 |
|
Deferred taxes |
| (85,595 | ) |
|
| 387,287 |
|
|
| (84,745 | ) |
|
| 388,607 |
|
Other |
| 8,495 |
|
|
| 14,300 |
|
|
| 610 |
|
|
| 7,511 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
| ||||||||
Accounts receivable |
| 162,080 |
|
|
| 217,148 |
|
|
| 174,249 |
|
|
| 154,145 |
|
Inventories |
| 155,390 |
|
|
| 174,903 |
|
|
| 599,982 |
|
|
| (437,641 | ) |
Other assets |
| 103,505 |
|
|
| (36,129 | ) |
|
| 82,672 |
|
|
| (107,742 | ) |
Accounts payable |
| (69,191 | ) |
|
| (219,268 | ) |
|
| (194,602 | ) |
|
| (241,557 | ) |
Accrued pension and postretirement benefits |
| 2,618 |
|
|
| (957 | ) |
|
| 6,799 |
|
|
| (2,023 | ) |
Accrued liabilities and other |
| (114,184 | ) |
|
| (25,368 | ) |
|
| (152,119 | ) |
|
| (126,760 | ) |
Net cash from operating activities |
| 274,405 |
|
|
| 132,880 |
|
|
| 561,749 |
|
|
| (358,802 | ) |
Investing activities: |
|
|
|
|
|
|
| ||||||||
Capital expenditures |
| (8,266 | ) |
|
| (41,167 | ) |
|
| (44,056 | ) |
|
| (112,122 | ) |
Purchase of trademarks |
| — |
|
|
| — |
|
|
| — |
|
|
| (103,000 | ) |
Proceeds from sales of assets |
| 159 |
|
|
| (102 | ) |
|
| 331 |
|
|
| 157 |
|
Other |
| 1 |
|
|
| 4,177 |
|
|
| 20,242 |
|
|
| (1,463 | ) |
Net cash from investing activities |
| (8,106 | ) |
|
| (37,092 | ) |
|
| (23,483 | ) |
|
| (216,428 | ) |
Financing Activities: |
|
|
|
|
|
|
| ||||||||
Borrowings on Term Loan Facilities |
| — |
|
|
| — |
|
|
| 891,000 |
|
|
| — |
|
Repayments on Term Loan Facilities |
| (14,750 | ) |
|
| (6,250 | ) |
|
| (44,250 | ) |
|
| (25,000 | ) |
Borrowings on Accounts Receivable Securitization Facility |
| 541,500 |
|
|
| 536,800 |
|
|
| 2,270,000 |
|
|
| 1,840,389 |
|
Repayments on Accounts Receivable Securitization Facility |
| (736,000 | ) |
|
| (538,800 | ) |
|
| (2,473,500 | ) |
|
| (1,630,889 | ) |
Borrowings on Revolving Loan Facilities |
| 306,500 |
|
|
| 454,500 |
|
|
| 1,923,000 |
|
|
| 1,792,000 |
|
Repayments on Revolving Loan Facilities |
| (367,000 | ) |
|
| (531,000 | ) |
|
| (2,275,500 | ) |
|
| (1,439,500 | ) |
Borrowings on Senior Notes |
| — |
|
|
| — |
|
|
| 600,000 |
|
|
| — |
|
Repayments on Senior Notes |
| — |
|
|
| — |
|
|
| (1,436,884 | ) |
|
| — |
|
Borrowings on notes payable |
| — |
|
|
| — |
|
|
| — |
|
|
| 21,454 |
|
Repayments on notes payable |
| — |
|
|
| — |
|
|
| — |
|
|
| (21,713 | ) |
Share repurchases |
| — |
|
|
| — |
|
|
| — |
|
|
| (25,018 | ) |
Cash dividends paid |
| — |
|
|
| (52,350 | ) |
|
| — |
|
|
| (209,312 | ) |
Payments to amend and refinance credit facilities |
| (2,517 | ) |
|
| (2,526 | ) |
|
| (31,020 | ) |
|
| (3,159 | ) |
Other |
| (37 | ) |
|
| 207 |
|
|
| (2,921 | ) |
|
| (3,423 | ) |
Net cash from financing activities |
| (272,304 | ) |
|
| (139,419 | ) |
|
| (580,075 | ) |
|
| 295,829 |
|
Effect of changes in foreign exchange rates on cash |
| 20,415 |
|
|
| 28,913 |
|
|
| 8,897 |
|
|
| (42,815 | ) |
Change in cash and cash equivalents |
| 14,410 |
|
|
| (14,718 | ) |
|
| (32,912 | ) |
|
| (322,216 | ) |
Cash and cash equivalents at beginning of period |
| 191,091 |
|
|
| 253,131 |
|
|
| 238,413 |
|
|
| 560,629 |
|
Cash and cash equivalents at end of period | $ | 205,501 |
|
| $ | 238,413 |
|
| $ | 205,501 |
|
| $ | 238,413 |
|
1 | The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities in the periods prior to the sale of the European Innerwear business on March 5, 2022. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations. |
TABLE 6-A |
HANESBRANDS INC. Supplemental Financial Information Reconciliation of Select GAAP Measures to Non-GAAP Measures (in thousands, except per share data) (Unaudited) |
The following tables present a reconciliation of results as reported under GAAP to the results as adjusted for the quarter and year ended December 30, 2023 and a comparison to prior year. The Company has chosen to present the following non-GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of the global Champion performance plan, the Full Potential transformation plan and other actions that are deemed to be material stand-alone initiatives apart from the Company’s core operations. While these costs are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.
Restructuring and other action-related charges in 2023 and 2022 include the following: |
Global Champion performance plan | The global Champion performance plan includes actions and related charges regarding the Company’s accelerated and enhanced strategic initiatives to further streamline the operations and position the brand for long term profitable growth and the evaluation of strategic alternatives for the global Champion business, which includes over $59 million of inventory write-downs related to the execution of its channel, mix and product segmentation strategy including the exit of discontinued programs, which are reflected in gross profit, and approximately $29 million of charges related to professional fees, supply chain segmentation, store closures, severance and other costs of which approximately $8 million are reflected in gross profit and approximately $21 million are reflected in selling, general and administrative expenses. |
Supply chain segmentation | Represents charges related to the supply chain segmentation to restructure and position the Company’s manufacturing network to align with its Full Potential transformation plan demand trends. |
Headcount actions and related severance | Represents charges related to operating model initiatives primarily headcount actions and related severance charges and adjustments as a result of the implementation of the Company’s Full Potential transformation plan. |
Technology | Represents technology charges related to the implementation of the Company’s technology modernization initiative which includes a global enterprise resource planning platform under its Full Potential transformation plan. |
Professional services | Represents professional fees, primarily including consulting and advisory services, related to the implementation of the Company’s Full Potential transformation plan. |
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, 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 AOCI 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 benefits | 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 |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Gross profit, as reported under GAAP | $ | 493,669 |
|
| $ | 501,977 |
|
| $ | 1,896,410 |
|
| $ | 2,221,108 |
|
As a % of net sales |
| 38.1 | % |
|
| 34.1 | % |
|
| 33.6 | % |
|
| 35.6 | % |
Restructuring and other action-related charges: |
|
|
|
|
|
|
| ||||||||
Global Champion performance plan |
| 2,859 |
|
|
| — |
|
|
| 66,964 |
|
|
| — |
|
Full Potential transformation plan: |
|
|
|
|
|
|
| ||||||||
Supply chain segmentation |
| (1,284 | ) |
|
| 3,395 |
|
|
| 4,151 |
|
|
| 17,982 |
|
Headcount actions and related severance |
| 156 |
|
|
| (516 | ) |
|
| 1,025 |
|
|
| (712 | ) |
Other |
| — |
|
|
| 13 |
|
|
| — |
|
|
| (245 | ) |
Gross profit, as adjusted | $ | 495,400 |
|
| $ | 504,869 |
|
| $ | 1,968,550 |
|
| $ | 2,238,133 |
|
As a % of net sales |
| 38.2 | % |
|
| 34.3 | % |
|
| 34.9 | % |
|
| 35.9 | % |
| Quarters Ended |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Selling, general and administrative expenses, as reported under GAAP | $ | 397,572 |
|
| $ | 441,642 |
|
| $ | 1,607,628 |
|
| $ | 1,701,563 |
|
As a % of net sales |
| 30.7 | % |
|
| 30.0 | % |
|
| 28.5 | % |
|
| 27.3 | % |
Restructuring and other action-related charges: |
|
|
|
|
|
|
| ||||||||
Global Champion performance plan |
| (11,451 | ) |
|
| — |
|
|
| (21,081 | ) |
|
| — |
|
Full Potential transformation plan: |
|
|
|
|
|
|
| ||||||||
Technology |
| (657 | ) |
|
| (2,870 | ) |
|
| (8,953 | ) |
|
| (11,922 | ) |
Headcount actions and related severance |
| (573 | ) |
|
| (9,849 | ) |
|
| (5,080 | ) |
|
| (8,933 | ) |
Professional services |
| (6 | ) |
|
| (2,980 | ) |
|
| (3,819 | ) |
|
| (23,994 | ) |
Gain (loss) on sale of business and classification of assets held for sale |
| — |
|
|
| (3,023 | ) |
|
| (3,641 | ) |
|
| 3,535 |
|
Other |
| (233 | ) |
|
| (611 | ) |
|
| (1,190 | ) |
|
| (1,519 | ) |
Selling, general and administrative expenses, as adjusted | $ | 384,652 |
|
| $ | 422,309 |
|
| $ | 1,563,864 |
|
| $ | 1,658,730 |
|
As a % of net sales |
| 29.7 | % |
|
| 28.7 | % |
|
| 27.7 | % |
|
| 26.6 | % |
| Quarters Ended |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Operating profit, as reported under GAAP | $ | 96,097 |
|
| $ | 60,335 |
|
| $ | 288,782 |
|
| $ | 519,545 |
|
As a % of net sales |
| 7.4 | % |
|
| 4.1 | % |
|
| 5.1 | % |
|
| 8.3 | % |
Restructuring and other action-related charges: |
|
|
|
|
|
|
| ||||||||
Global Champion performance plan |
| 14,310 |
|
|
| — |
|
|
| 88,045 |
|
|
| — |
|
Full Potential transformation plan: |
|
|
|
|
|
|
| ||||||||
Technology |
| 657 |
|
|
| 2,870 |
|
|
| 8,953 |
|
|
| 11,922 |
|
Headcount actions and related severance |
| 729 |
|
|
| 9,333 |
|
|
| 6,105 |
|
|
| 8,221 |
|
Supply chain segmentation |
| (1,284 | ) |
|
| 3,395 |
|
|
| 4,151 |
|
|
| 17,982 |
|
Professional services |
| 6 |
|
|
| 2,980 |
|
|
| 3,819 |
|
|
| 23,994 |
|
(Gain) loss on sale of business and classification of assets held for sale |
| — |
|
|
| 3,023 |
|
|
| 3,641 |
|
|
| (3,535 | ) |
Other |
| 233 |
|
|
| 624 |
|
|
| 1,190 |
|
|
| 1,274 |
|
Operating profit, as adjusted | $ | 110,748 |
|
| $ | 82,560 |
|
| $ | 404,686 |
|
| $ | 579,403 |
|
As a % of net sales |
| 8.5 | % |
|
| 5.6 | % |
|
| 7.2 | % |
|
| 9.3 | % |
| Quarters Ended |
| Years Ended | |||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | |||||
Interest expense, net and other expenses, as reported under GAAP | $ | 77,063 |
| $ | 53,311 |
| $ | 313,874 |
|
| $ | 166,807 |
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 | $ | 77,063 |
| $ | 53,311 |
| $ | 306,778 |
|
| $ | 166,807 |
| Quarters Ended |
| Years Ended | |||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | |||||||
Income (loss) from continuing operations before income taxes, as reported under GAAP | $ | 19,034 |
|
| $ | 7,024 |
| $ | (25,092 | ) |
| $ | 352,738 |
|
Restructuring and other action-related charges: |
|
|
|
|
|
|
| |||||||
Global Champion performance plan |
| 14,310 |
|
|
| — |
|
| 88,045 |
|
|
| — |
|
Full Potential transformation plan: |
|
|
|
|
|
|
| |||||||
Technology |
| 657 |
|
|
| 2,870 |
|
| 8,953 |
|
|
| 11,922 |
|
Headcount actions and related severance |
| 729 |
|
|
| 9,333 |
|
| 6,105 |
|
|
| 8,221 |
|
Supply chain segmentation |
| (1,284 | ) |
|
| 3,395 |
|
| 4,151 |
|
|
| 17,982 |
|
Professional services |
| 6 |
|
|
| 2,980 |
|
| 3,819 |
|
|
| 23,994 |
|
(Gain) loss on sale of business and classification of assets held for sale |
| — |
|
|
| 3,023 |
|
| 3,641 |
|
|
| (3,535 | ) |
Other |
| 233 |
|
|
| 624 |
|
| 1,190 |
|
|
| 1,274 |
|
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 | $ | 33,685 |
|
| $ | 29,249 |
| $ | 97,908 |
|
| $ | 412,596 |
|
| Quarters Ended |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Income tax expense (benefit), as reported under GAAP | $ | (58,907 | ) |
| $ | 425,132 |
|
| $ | (7,366 | ) |
| $ | 483,907 |
|
Restructuring and other action-related charges: |
|
|
|
|
|
|
| ||||||||
Discrete tax (expense) benefit |
| 80,859 |
|
|
| (422,918 | ) |
|
| 85,122 |
|
|
| (422,918 | ) |
Tax effect on actions |
| — |
|
|
| 2,758 |
|
|
| — |
|
|
| 9,152 |
|
Income tax expense, as adjusted | $ | 21,952 |
|
| $ | 4,972 |
|
| $ | 77,756 |
|
| $ | 70,141 |
|
| Quarters Ended |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Income (loss) from continuing operations, as reported under GAAP | $ | 77,941 |
|
| $ | (418,108 | ) |
| $ | (17,726 | ) |
| $ | (131,169 | ) |
Restructuring and other action-related charges: |
|
|
|
|
|
|
| ||||||||
Global Champion performance plan |
| 14,310 |
|
|
| — |
|
|
| 88,045 |
|
|
| — |
|
Full Potential transformation plan: |
|
|
|
|
|
|
| ||||||||
Technology |
| 657 |
|
|
| 2,870 |
|
|
| 8,953 |
|
|
| 11,922 |
|
Headcount actions and related severance |
| 729 |
|
|
| 9,333 |
|
|
| 6,105 |
|
|
| 8,221 |
|
Supply chain segmentation |
| (1,284 | ) |
|
| 3,395 |
|
|
| 4,151 |
|
|
| 17,982 |
|
Professional services |
| 6 |
|
|
| 2,980 |
|
|
| 3,819 |
|
|
| 23,994 |
|
(Gain) loss on sale of business and classification of assets held for sale |
| — |
|
|
| 3,023 |
|
|
| 3,641 |
|
|
| (3,535 | ) |
Other |
| 233 |
|
|
| 624 |
|
|
| 1,190 |
|
|
| 1,274 |
|
Loss on extinguishment of debt |
| — |
|
|
| — |
|
|
| 8,466 |
|
|
| — |
|
Gain on final settlement of cross currency swaps |
| — |
|
|
| — |
|
|
| (1,370 | ) |
|
| — |
|
Discrete tax expense (benefit) |
| (80,859 | ) |
|
| 422,918 |
|
|
| (85,122 | ) |
|
| 422,918 |
|
Tax effect on actions |
| — |
|
|
| (2,758 | ) |
|
| — |
|
|
| (9,152 | ) |
Income from continuing operations, as adjusted | $ | 11,733 |
|
| $ | 24,277 |
|
| $ | 20,152 |
|
| $ | 342,455 |
|
| Quarters Ended |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Diluted earnings (loss) per share from continuing operations, as reported under GAAP1 | $ | 0.22 |
|
| $ | (1.19 | ) |
| $ | (0.05 | ) |
| $ | (0.37 | ) |
Restructuring and other action-related charges: |
|
|
|
|
|
|
| ||||||||
Global Champion performance plan |
| 0.04 |
|
|
| — |
|
|
| 0.25 |
|
|
| — |
|
Full Potential transformation plan: |
|
|
|
|
|
|
| ||||||||
Technology |
| 0.00 |
|
|
| 0.01 |
|
|
| 0.03 |
|
|
| 0.03 |
|
Headcount actions and related severance |
| 0.00 |
|
|
| 0.03 |
|
|
| 0.02 |
|
|
| 0.02 |
|
Supply chain segmentation |
| 0.00 |
|
|
| 0.01 |
|
|
| 0.01 |
|
|
| 0.05 |
|
Professional services |
| — |
|
|
| 0.01 |
|
|
| 0.01 |
|
|
| 0.07 |
|
(Gain) loss on sale of business and classification of assets held for sale |
| 0.00 |
|
|
| 0.01 |
|
|
| 0.01 |
|
|
| (0.01 | ) |
Other |
| 0.00 |
|
|
| 0.00 |
|
|
| 0.00 |
|
|
| 0.00 |
|
Loss on extinguishment of debt |
| — |
|
|
| — |
|
|
| 0.02 |
|
|
| — |
|
Gain on final settlement of cross currency swaps |
| — |
|
|
| — |
|
|
| 0.00 |
|
|
| — |
|
Discrete tax expense (benefit) |
| (0.23 | ) |
|
| 1.21 |
|
|
| (0.24 | ) |
|
| 1.21 |
|
Tax effect on actions |
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.03 | ) |
Diluted earnings per share from continuing operations, as adjusted | $ | 0.03 |
|
| $ | 0.07 |
|
| $ | 0.06 |
|
| $ | 0.98 |
|
1 | Amounts may not be additive due to rounding. |
Including the favorable foreign currency impact of $2 million, global Champion sales excluding C9 Champion decreased approximately 23% in the fourth quarter of 2023 compared to the fourth quarter of 2022. On a constant currency basis, global Champion sales excluding C9 Champion decreased approximately 24% in the fourth quarter of 2023 compared to the fourth 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) | |||||||
| Last Twelve Months | ||||||
| December 30, 2023 |
| December 31, 2022 | ||||
Leverage Ratio: |
|
|
| ||||
|
|
|
| ||||
EBITDA1: |
|
|
| ||||
Loss from continuing operations | $ | (17,726 | ) |
| $ | (131,169 | ) |
Interest expense, net |
| 275,354 |
|
|
| 157,073 |
|
Income tax expense (benefit) |
| (7,366 | ) |
|
| 483,907 |
|
Depreciation and amortization |
| 105,037 |
|
|
| 106,267 |
|
Total EBITDA |
| 355,299 |
|
|
| 616,078 |
|
Total restructuring and other action-related charges (excluding tax effect on actions)2 |
| 123,000 |
|
|
| 59,858 |
|
Other net losses, charges and expenses3 |
| 123,856 |
|
|
| 118,240 |
|
Total EBITDA, as adjusted | $ | 602,155 |
|
| $ | 794,176 |
|
|
|
|
| ||||
Net debt: |
|
|
| ||||
Debt (current and long-term debt and Accounts Receivable Securitization Facility excluding long term debt issuance costs and debt discount of $36,110 and $13,198, respectively) | $ | 3,336,750 |
|
| $ | 3,872,275 |
|
(Less) debt related to an unrestricted subsidiary4 |
| (6,000 | ) |
|
| — |
|
Other debt and cash adjustments5 |
| 4,185 |
|
|
| 4,955 |
|
(Less) Cash and cash equivalents |
| (205,501 | ) |
|
| (238,413 | ) |
Net debt | $ | 3,129,434 |
|
| $ | 3,638,817 |
|
|
|
|
| ||||
Debt/Income (loss) from continuing operations6 |
| (188.2 | ) |
|
| (29.5 | ) |
|
|
|
| ||||
Net debt/EBITDA, as adjusted7 |
| 5.2 |
|
|
| 4.6 |
|
1 | Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. | |
2 | The last twelve months ended December 30, 2023 includes $88 million of global Champion performance plan charges, $9 million of technology charges, $8 million of a loss on extinguishment of debt, $6 million of headcount actions and related severance charges, $4 million of supply chain segmentation charges, $4 million of professional services, $4 million of a loss on the sale of business and classification of assets held for sale, $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 last twelve months ended December 31, 2022 includes $24 million of professional services, $18 million of supply chain segmentation charges, $12 million of technology charges, $8 million of headcount actions and related severance charges, approximately $2 million related to other restructuring and other action-related charges and $(4) million of a gain on classification of assets held for sale. 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 December 30, 2023, primarily includes $72 million of excess and obsolete inventory write-offs, $21 million in other compensation related items primarily stock compensation expense, $17 million of pension non-cash expense, $13 million in charges related to sales incentive amortization, $8 million of non-cash cloud computing expense, $3 million of bad debt expense, $2 million in charges related to the ransomware attack and extraordinary events, $(7) million of net unrealized gains due to hedging activities and $(5) million of interest expense on debt and amortization of debt issuance costs related to an unrestricted subsidiary. The last twelve months ended December 31, 2022, primarily includes $32 million of excess and obsolete inventory write-offs, $31 million in charges related to the ransomware attack and extraordinary events, $25 million in other compensation related items primarily stock compensation expense, $21 million of pension non-cash expense, $7 million of bad debt expense and $2 million of non-cash cloud computing expense. | |
4 | Represents amounts outstanding under an existing accounts receivable securitization facility entered into by an unrestricted subsidiary of the Company. | |
5 | Includes drawn letters of credit, financing leases and cash balances in certain geographies. | |
6 | Represents Debt divided by Income (loss) from continuing operations which is the most comparable GAAP financial measure to Net debt/EBITDA, as adjusted. | |
7 | 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 net other losses, charges and expenses in addition to restructuring and other action-related charges. |
| Quarters Ended |
| Years Ended | ||||||||||||
| December 30, 2023 |
| December 31, 2022 |
| December 30, 2023 |
| December 31, 2022 | ||||||||
Free cash flow1: |
|
|
|
|
|
|
| ||||||||
Net cash from operating activities | $ | 274,405 |
|
| $ | 132,880 |
|
| $ | 561,749 |
|
| $ | (358,802 | ) |
Capital expenditures |
| (8,266 | ) |
|
| (41,167 | ) |
|
| (44,056 | ) |
|
| (112,122 | ) |
Free cash flow | $ | 266,139 |
|
| $ | 91,713 |
|
| $ | 517,693 |
|
| $ | (470,924 | ) |
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 |
| March 30, 2024 |
| December 28, 2024 |
Operating profit outlook, as calculated under GAAP | $45,000 to $65,000 |
| $430,000 to $450,000 |
Restructuring and other action-related charges | 15,000 |
| 70,000 |
Operating profit outlook, as adjusted | $60,000 to $80,000 |
| $500,000 to $520,000 |
|
|
|
|
Diluted earnings (loss) per share from continuing operations, as calculated under GAAP1 | $(0.14) to $(0.08) |
| $0.22 to $0.28 |
Restructuring and other action-related charges | 0.04 |
| 0.20 |
Diluted earnings (loss) per share from continuing operations, as adjusted | $(0.10) to $(0.04) |
| $0.42 to $0.48 |
|
|
|
|
Cash flow from operations outlook, as calculated under GAAP |
|
| $400,000 |
Capital expenditures outlook |
|
| 65,000 |
Free cash flow outlook |
|
| $335,000 |
1 | The company expects approximately 353 million diluted weighted average shares outstanding for the quarter ended March 30, 2024 and approximately 354 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/20240215897519/en/
News Media contact: Nicole Ducouer (336) 986-7090 Analysts and Investors contact: T.C. Robillard (336) 519-2115
Source: HanesBrands