– Knights Apparel Sells Licensed Logo Apparel to Mass Merchant
Retailers Representing 400 U.S. Colleges and Universities
– Acquisition Expected to Add Approximately $0.10 of Presplit
Adjusted EPS in 2015 and Approximately $0.30 of Presplit Adjusted EPS
Annually in 2 to 3 Years
– Investor Conference Call and Webcast to be Held at 4:30 p.m. EST
Today
WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Feb. 24, 2015--
HanesBrands (NYSE: HBI), a leading marketer of everyday basic apparel
with world-class brands and a global low-cost supply chain, today
announced that it has entered into a definitive purchase agreement to
acquire Knights Apparel, a leading seller of licensed collegiate logo
apparel in the mass retail channel.
Knights Apparel sells T-shirts, sweatshirts and other sports apparel
with college logos and graphics primarily to mass merchant retailers.
Knights sells apparel representing 400 of the largest U.S. colleges and
universities, while Hanes’ Gear for Sports division is already a leading
seller of licensed collegiate apparel in university bookstores,
utilizing the company’s strong brands, company-owned apparel production,
and company-owned graphic attribution and embellishment facilities.
Hanes is purchasing Knights, which is forecast to have sales of
approximately $180 million for the full-year 2015, from affiliates of
Merit Capital Partners. The all-cash transaction values Knights at
approximately $200 million on an enterprise-value basis, or
approximately 8 times expected full-year 2015 EBITDA. The post-synergy
multiple is expected to be approximately 4½ times EBITDA. Hanes intends
to fund the acquisition with cash on hand and short-term borrowings on
its revolving credit facility.
The acquisition, which is subject to antitrust review and other
customary closing conditions, is expected to close early in the
second-quarter 2015. Assuming an early second-quarter close, the
acquisition is expected to add to the company’s previously stated
presplit 2015 financial guidance by approximately $160 million in net
sales, approximately $18 million in adjusted operating profit excluding
actions, and approximately $0.10 to presplit adjusted earnings per share
excluding actions. Within two to three years when full synergies and
benefits are realized, the purchase of Knights is expected to contribute
approximately $0.30 of presplit annual adjusted EPS.
“This is an exciting acquisition opportunity to leverage our existing
Gear for Sports licensed collegiate apparel business, our expertise and
size in the mass retail channel, and our low-cost global supply chain,”
Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said.
“Combining the two companies is a great way to create value.”
With the addition of Knights, Hanes expects to be an even stronger
growth partner for licensed and graphic apparel with more than $450
million in combined annualized sales. The combination will create a
best-in-class supplier of licensed collegiate apparel that has both
low-cost and quick-turn supply capability and is primarily supported by
company-owned garment production and graphic embellishment facilities.
Founded in 2001, Knights has approximately 210 employees with primary
offices and a distribution center located in Spartanburg, S.C. The
company buys all of its apparel from outsourced contractors and sends
those garments to outsourced embellishment facilities. The integration
of the Knights business into Hanes’ supply chain should yield
significant savings and efficiencies.
“Knights Apparel has a tremendous business model and a highly talented
team of employees,” said John T. Marsh, HanesBrands group president,
global activewear. “With Knights Apparel added to our existing Gear for
Sports collegiate bookstore business, we are building a powerful
licensed college apparel business that we can leverage with our
substantial capabilities in apparel production, graphic design and
graphic printing.”
When the acquisition is closed, Knights Apparel Chief Executive Officer
Joe Bozich will join Hanesbrands.
“HanesBrands is the perfect partner and owner for Knights Apparel,”
Bozich said. “The company understands our business and will make us more
valuable to our licensor and retail partners, allowing us to provide
best-in-class products, brand management and service.”
Advisors
Goldman, Sachs & Co. is serving as exclusive financial advisor to Hanes.
King & Spalding LLP is serving as legal counsel to Hanes.
Webcast Conference Call
Hanes will host a live Internet webcast of its investor conference call
to discuss the acquisition announcement at 4:30 p.m. EST today. The
webcast may be accessed on the investor page the Hanes corporate
website, www.Hanes.com/investors.
The call is expected to conclude by 5 p.m.
An archived replay of the conference call webcast will be available in
the investors section of the Hanes corporate website. A telephone
playback will be available from approximately midnight EST today through
midnight EST March 3, 2015. The replay will be available by calling
toll-free (855) 859-2056, or by toll call at (404) 537-3406. The replay
pass code is 83461274.
Note on Non-GAAP Terms and Definitions
Adjusted operating profit excluding actions, adjusted EPS excluding
actions, and EBITDA are not generally accepted accounting principle
measures. Hanes has chosen to provide these non-GAAP measures to
investors to enable additional analyses of past, present and future
operating performance and as a supplemental means of evaluating company
operations. Non-GAAP measures should not be considered a substitute for
financial information presented in accordance with GAAP and may be
different from non-GAAP or other pro forma measures used by other
companies.
Adjusted operating profit excluding actions is defined as operating
profit excluding acquisition, integration and other action-related
charges. The company believes that the measure provides investors with
an additional means of analyzing the company’s performance absent the
effect of the charges.
Adjusted EPS is defined as diluted EPS excluding acquisition,
integration and other action-related charges and the tax effect on them.
The company believes that adjusted EPS provides investors with an
additional means of analyzing the company’s performance absent the
charges.
EBITDA is defined as earnings before interest, taxes, depreciation, and
amortization. Although the company does not use EBITDA to manage its
business, it believes that EBITDA is another way that investors measure
financial performance.
Cautionary Statement Concerning Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. 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,” “will,” “expect,” “project,” “estimate,” “intend,”
“anticipate,” “plan,” “continue” or similar expressions. In particular,
among others, statements about the HanesBrands acquisition of Knights
Holdco, Inc. (the “acquisition”), including the expected impact on
HanesBrands’ sales, earnings and operating profit, the anticipated
funding of the acquisition and the expected timing for closing the
acquisition are forward-looking statements. Forward-looking statements
inherently involve many risks and uncertainties that could cause actual
results to differ materially from those projected in these statements.
Where, in any forward-looking statement, we express an expectation or
belief as to future results or events, such expectation or belief is
based on the current plans and expectations of our management, expressed
in good faith. However, there can be no assurance that the expectation
or belief will result or will be achieved or accomplished, and actual
results may differ materially from those contemplated by the
forward-looking statements. A number of important factors could cause
actual results to differ materially from those contemplated by the
forward-looking statements, including, but not limited to our ability to
achieve expected synergies and successfully complete the integration of
Knights Holdco, Inc., events that could give rise to a termination of
the acquisition agreement or failure to receive necessary approvals or
funding for the acquisition, the outcome of any litigation related to
the acquisition, and the level of expenses and other charges related to
the acquisition and the funding thereof. There can be no assurance that
the acquisition will be completed, or if it is completed, that it will
close within the anticipated time period or that the expected benefits
of the acquisition will be realized. We believe these forward-looking
statements are reasonable; however, undue reliance should not be placed
on any forward-looking statements, which are based on current
expectations. All forward-looking statements speak only as of the date
hereof. We undertake no obligation to update or revise forward-looking
statements that may be made to reflect events or circumstances that
arise after the date made or to reflect the occurrence of unanticipated
events, other than as required by law.
HanesBrands
HanesBrands, based in Winston-Salem, N.C., is a socially responsible
leading marketer of everyday basic apparel under some of the world’s
strongest apparel brands in the Americas, Asia and Europe, including Hanes,
Champion, Playtex, DIM, Bali, Maidenform,
Flexees, JMS/Just My Size, Wonderbra, Nur Die, Lovable
and Gear for Sports. The company sells T-shirts, bras, panties,
shapewear, men’s underwear, children’s underwear, socks, hosiery, and
activewear produced in the company’s low-cost global supply chain.
Ranked No. 530 on the Fortune 1000 list, Hanes has approximately 59,500
employees in more than 35 countries and takes pride in its strong
reputation for ethical business practices. Hanes is a U.S. Environmental
Protection Agency Energy Star 2014, 2013 and 2012 Sustained Excellence
Award winner and 2011 and 2010 Partner of the Year award winner. The
company has been ranked on Newsweek magazine’s list of Top 500 greenest
U.S. companies. More information about the company and its corporate
social responsibility initiatives, including environmental, social
compliance and community improvement achievements, may be found at www.Hanes.com/corporate.
Source: HanesBrands
HanesBrands
News Media
Matt Hall, 336-519-3386
or
Analysts
and Investors
T.C. Robillard, 336-519-2115