02/15/24
8:30 am EST
Most Recent
Press Release
HanesBrands Reports Fourth-Quarter 2014 Financial Results
HanesBrands Reports Fourth-Quarter 2014 Financial Results
January 29, 2015 at 4:05 PM EST
– Second Consecutive Year of Record Sales, Operating Profit and Adjusted EPS
– For Full-Year 2014, Net Sales of
– 2015 Full-Year Adjusted EPS Guidance is
For full-year 2014, net sales increased 15 percent, adjusted operating
profit increased 28 percent, and adjusted EPS increased 45 percent. The
company’s record results and strong fourth-quarter performance were
driven by superb supply chain manufacturing performance, benefits from
the acquisitions of
Hanes has issued 2015 full-year guidance, including expectations for net
sales growth of approximately 9 percent (approximately
Net sales for the fourth quarter increased 18 percent to
Adjusted EPS in the fourth quarter increased 49 percent to
(All adjusted consolidated measures and comparisons in this news release
exclude pretax acquisition, integration and other action-related charges
of
“We had another outstanding year in 2014, generating significant
shareholder value and again achieving record results for sales,
operating profit and EPS,” Hanes Chairman and Chief Executive Officer
Fourth-Quarter and Full-Year 2014 Financial Highlights and Business Segment Summary
Key accomplishments for 2014 include:
Sales Growth in Each Business Segment. Net sales growth was at least high single digits for each business segment in 2014. Innovate-to-Elevate product platforms continue to perform well, including Hanes ComfortBlend underwear, Hanes X-Temp and Champion Vapor fabrics, and ComfortFlex Fit bras. With the exception of Activewear, each segment benefitted from acquisition contributions to sales growth.
Supply Chain Performance, Acquisitions and Innovation Drive Adjusted Operating Profit and Margin Growth. The company’s adjusted operating profit margin for the year increased 140 basis points to 14.3 percent of sales. Supply chain performance, including continued efficiency initiatives and internalization of production into the company’s self-owned facilities, contributed significantly to operating profit and margin performance.
For the fourth quarter, adjusted operating profit increased 31
percent to
Strong Balance Sheet and Cash from Operations. Hanes generated
“Our strong balance sheet and cash flow supports our value-creating
business model of innovation, supply chain leverage and acquisitions,”
said Hanes Chief Financial Officer
Successful Acquisitions and Integrations. Hanes completed the
integration of Maidenform within one year of the acquisition closing in
fall 2013. The first Maidenform products developed wholly within the
Hanes product development process are scheduled to debut in 2015. For
2014, the Maidenform acquisition contributed
Hanes closed on the acquisition of DBApparel, a leading marketer of
intimate apparel and underwear in
Key segment highlights include:
Innerwear Segment. Innerwear net sales were comparable in the fourth quarter to a year ago and increased 11 percent for the full year. Operating profit increased 17 percent in the fourth quarter and the full year.
- Profitability Improvement from Innovation and Supply Chain. The company’s innovation platforms continue to perform well, and the company’s primarily company-owned supply chain continues to drive benefits from increased scale and improvement initiatives. Hanes ComfortBlend and X-Temp underwear and socks and ComfortFlex Fit bras across multiple brands continue to do well.
Innerwear’s operating profit margin of 21 percent in the fourth quarter increased 310 basis points, and for the full year the margin increased 130 basis points to 20.4 percent.
Activewear Segment. Activewear net sales increased 10 percent in the fourth quarter and 8 percent for the full year. Champion sales, excluding those at mass retail, increased by more than 20 percent. Operating profit increased 10 percent in the quarter and 14 percent for the full year. The segment delivered record full-year profitability for the second consecutive year – a 13.7 operating margin, up 70 basis points.
International Segment. International sales and operating profit increased significantly as a result of acquisitions, but currency had a significant impact on results. On a constant-currency basis, International net sales increased 157 percent in the fourth quarter and 68 percent for the full year. Operating profit on a constant-currency basis increased 236 percent in the fourth quarter and 118 percent for the full year.
Direct to Consumer Segment. The Direct to Consumer segment achieved significantly improved profitability for the second consecutive year. Net sales increased 1 percent in the fourth quarter and operating profit increased 29 percent. For the full year, net sales increased 8 percent with an operating profit increase of 17 percent.
2015 Financial Guidance
Hanes has issued full-year 2015 growth expectations and financial
guidance. Incorporated into the company’s outlook are the expected
negative effects of foreign currency exchange rates and Target Canada
Co.’s announced plans to liquidate. In addition, the company has
approved a 4-for-1 stock split to be executed through a stock dividend
to be issued to stockholders
For 2015, Hanes expects net sales of approximately
The guidance reflects growth over 2014 of approximately 9 percent for
net sales, approximately 9 percent to 12 percent for adjusted operating
profit, and approximately 11 percent to 15 percent for adjusted EPS,
even with the stronger dollar and the Target Canada liquidation. The
combined effect of the stronger dollar since August and the
The company expects the acquisition of DBA to contribute approximately
€630 million of net sales in 2015 versus €230 million in 2014 and
approximately €30 million of operating profit in 2015 versus €21 in
2014. For 2015, the company has fully hedged its euro-based cost of
goods exposure for European operations. Integration planning for DBA has
proceeded on schedule and the company expects to begin meeting with
works councils in
Interest expense and other expense are expected to be approximately
The company’s 2015 pension contribution will be
Hanes has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/faq.
Charges for Actions and Reconciliation to GAAP Measures
Adjusted EPS, adjusted operating profit (and margin), 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 EPS is defined as diluted EPS excluding actions and the tax effect on actions. The company believes that adjusted EPS provides investors with an additional means of analyzing the company’s performance absent the effect of acquisition-related expenses and other actions. See Table 5 attached to this press release to reconcile adjusted diluted EPS to GAAP diluted EPS.
Adjusted operating profit is defined as operating profit excluding actions, a measure the company believes provides investors with an additional means of analyzing the company’s performance absent the effect of acquisition-related expenses and other actions. See Table 5 attached to this press release to reconcile adjusted operating profit to GAAP operating profit.
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 may measure financial performance. See Table 2 attached to this press release to reconcile EBITDA with the GAAP measure of net income.
For 2015 guidance, adjusted EPS is defined as diluted EPS excluding
actions and the tax effect on actions, and adjusted operating profit is
defined as operating profit excluding actions. Hanes’ current estimate
for pretax charges in 2015 for acquisition, integration and other
actions is approximately
On a GAAP basis, full-year 2015 diluted EPS will vary depending on
actual performance, charges and tax rate. On a pre-split basis, GAAP
diluted EPS could be in the range of
Webcast Conference Call
Hanes will host an Internet webcast of its quarterly investor conference
call at
An archived replay of the conference call webcast will be available at www.Hanes.com/investors.
A telephone playback will be available from approximately
Cautionary Statement Concerning Forward-Looking Statements
This press release contains certain “forward-looking statements,” as
defined under U.S. federal securities laws, with respect to our
long-term goals and trends associated with our business, as well as
guidance as to future performance. In particular, among others,
statements following the heading “2015 Financial Guidance,” as well as
statements about the benefits anticipated from the DBApparel
acquisition, are forward-looking statements. These forward-looking
statements are based on our current intent, beliefs, plans and
expectations. Readers are cautioned not to place any undue reliance on
any forward-looking statements. Forward-looking statements necessarily
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: the highly competitive and
evolving nature of the industry in which we compete; the failure of
businesses we acquire to perform to expectations; legal, regulatory,
political and economic risks associated with our operations in
international markets, including the risk of significant fluctuations in
foreign exchange rates; the loss or interruption of services of a member
of our senior management team; the accuracy of the estimates and
assumptions on which our financial statement projections are based; 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; current economic
conditions, including consumer spending levels and the price elasticity
of our products; unanticipated business disruptions or the loss of one
or more suppliers in our global supply chain; and other risks identified
from time to time in our most recent
HANESBRANDS INC. Condensed Consolidated Statements of Income (Amounts in thousands, except per-share amounts) (Unaudited) |
|||||||||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||||||||
January 3, 2015 | December 28, 2013 | % Change | January 3, 2015 | December 28, 2013 | % Change | ||||||||||||||||
Net sales | $ | 1,522,596 | $ | 1,285,790 | 18.4 | % | $ | 5,324,746 | $ | 4,627,802 | 15.1 | % | |||||||||
Cost of sales | 977,035 | 858,558 | 3,420,339 | 3,016,109 | |||||||||||||||||
Gross profit | 545,561 | 427,232 | 27.7 | % | 1,904,407 | 1,611,693 | 18.2 | % | |||||||||||||
As a % of net sales | 35.8 | % | 33.2 | % | 35.8 | % | 34.8 | % | |||||||||||||
Selling, general and administrative expenses | 414,411 | 355,534 | 1,340,453 | 1,096,507 | |||||||||||||||||
As a % of net sales | 27.2 | % | 27.7 | % | 25.2 | % | 23.7 | % | |||||||||||||
Operating profit | 131,150 | 71,698 | 82.9 | % | 563,954 | 515,186 | 9.5 | % | |||||||||||||
As a % of net sales | 8.6 | % | 5.6 | % | 10.6 | % | 11.1 | % | |||||||||||||
Other expenses | 709 | 15,491 | 2,599 | 17,501 | |||||||||||||||||
Interest expense, net | 29,922 | 26,038 | 96,387 | 101,884 | |||||||||||||||||
Income before income tax expense | 100,519 | 30,169 | 464,968 | 395,801 | |||||||||||||||||
Income tax expense | 11,082 | (2,097 | ) | 60,449 | 65,307 | ||||||||||||||||
Net income | $ | 89,437 | $ | 32,266 | 177.2 | % | $ | 404,519 | $ | 330,494 | 22.4 | % | |||||||||
Earnings per share: | |||||||||||||||||||||
Basic | $ | 0.89 | $ | 0.32 | 178.1 | % | $ | 4.02 | $ | 3.31 | 21.5 | % | |||||||||
Diluted | $ | 0.88 | $ | 0.32 | 175.0 | % | $ | 3.97 | $ | 3.25 | 22.2 | % | |||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 100,829 | 100,159 | 100,575 | 99,859 | |||||||||||||||||
Diluted | 102,100 | 101,881 | 102,011 | 101,823 |
HANESBRANDS INC. Supplemental Financial Information (Dollars in thousands) (Unaudited) |
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Quarter Ended | Year Ended | |||||||||||||||||||||
January 3, 2015 | December 28, 2013 | % Change | January 3, 2015 | December 28, 2013 | % Change | |||||||||||||||||
Segment net sales: | ||||||||||||||||||||||
Innerwear | $ | 699,680 | $ | 700,464 | (0.1 | )% | $ | 2,707,474 | $ | 2,444,935 | 10.7 | % | ||||||||||
Activewear | 372,973 | 340,428 | 9.6 | % | 1,410,036 | 1,306,936 | 7.9 | % | ||||||||||||||
Direct to Consumer | 108,299 | 107,360 | 0.9 | % | 409,028 | 380,079 | 7.6 | % | ||||||||||||||
International | 341,644 | 137,538 | 148.4 | % | 798,208 | 495,852 | 61.0 | % | ||||||||||||||
Total net sales | $ | 1,522,596 | $ | 1,285,790 | 18.4 | % | $ | 5,324,746 | $ | 4,627,802 | 15.1 | % | ||||||||||
Segment operating profit: | ||||||||||||||||||||||
Innerwear | $ | 146,742 | $ | 125,067 | 17.3 | % | $ | 552,507 | $ | 467,398 | 18.2 | % | ||||||||||
Activewear | 48,024 | 43,729 | 9.8 | % | 193,952 | 170,749 | 13.6 | % | ||||||||||||||
Direct to Consumer | 11,966 | 9,296 | 28.7 | % | 40,367 | 34,737 | 16.2 | % | ||||||||||||||
International | 36,658 | 11,188 | 227.7 | % | 89,979 | 42,850 | 110.0 | % | ||||||||||||||
General corporate expenses/other | (43,124 | ) | (36,792 | ) | 17.2 | % | (113,918 | ) | (119,758 | ) | (4.9 | )% | ||||||||||
Acquisition, integration and other action related |
(69,116 | ) | (80,790 | ) | (14.4 | )% | (198,933 | ) | (80,790 | ) | 146.2 | % | ||||||||||
Total operating profit | $ | 131,150 | $ | 71,698 | 82.9 | % | $ | 563,954 | $ | 515,186 | 9.5 | % | ||||||||||
EBITDA1: | ||||||||||||||||||||||
Net income | $ | 89,437 | $ | 32,266 | $ | 404,519 | $ | 330,494 | ||||||||||||||
Interest expense, net | 29,922 | 26,038 | 96,387 | 101,884 | ||||||||||||||||||
Income tax expense | 11,082 | (2,097 | ) | 60,449 | 65,307 | |||||||||||||||||
Depreciation and amortization | 28,662 | 23,689 | 98,202 | 90,890 | ||||||||||||||||||
Total EBITDA | $ | 159,103 | $ | 79,896 | 99.1 | % | $ | 659,557 | $ | 588,575 | 12.1 | % |
¹ | Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. |
HANESBRANDS INC. Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited) |
||||||
January 3, 2015 | December 28, 2013 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 239,855 | $ | 115,863 | ||
Trade accounts receivable, net | 672,048 | 578,558 | ||||
Inventories | 1,537,200 | 1,283,331 | ||||
Other current assets | 316,129 | 265,914 | ||||
Total current assets | 2,765,232 | 2,243,666 | ||||
Property, net | 674,379 | 579,883 | ||||
Intangible assets and goodwill | 1,414,321 | 1,004,143 | ||||
Other noncurrent assets | 367,849 | 262,356 | ||||
Total assets | $ | 5,221,781 | $ | 4,090,048 | ||
Liabilities | ||||||
Accounts payable and accrued liabilities | $ | 1,116,847 | $ | 781,296 | ||
Notes payable | 144,438 | 36,192 | ||||
Accounts Receivable Securitization Facility | 210,963 | 181,790 | ||||
Current portion of long-term debt | 14,354 | — | ||||
Total current liabilities | 1,486,602 | 999,278 | ||||
Long-term debt | 1,613,997 | 1,467,000 | ||||
Other noncurrent liabilities | 734,410 | 393,147 | ||||
Total liabilities | 3,835,009 | 2,859,425 | ||||
Equity | 1,386,772 | 1,230,623 | ||||
Total liabilities and equity | $ | 5,221,781 | $ | 4,090,048 |
HANESBRANDS INC. Condensed Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) |
||||||||
Year Ended | ||||||||
January 3, 2015 | December 28, 2013 | |||||||
Operating Activities: | ||||||||
Net income | $ | 404,519 | $ | 330,494 | ||||
Depreciation and amortization | 98,202 | 90,890 | ||||||
Other noncash items | 26,159 | 47,553 | ||||||
Changes in assets and liabilities, net | (20,790 | ) | 122,344 | |||||
Net cash from operating activities | 508,090 | 591,281 | ||||||
Investing Activities: | ||||||||
Capital expenditures | (57,191 | ) | (37,538 | ) | ||||
Acquisition of business | (360,439 | ) | (559,855 | ) | ||||
Proceeds from sale of investments and other | 59,315 | — | ||||||
Net cash from investing activities | (358,315 | ) | (597,393 | ) | ||||
Financing Activities: | ||||||||
Cash dividends paid | (119,607 | ) | (59,442 | ) | ||||
Net borrowings on notes payable, debt and other | 95,842 | 153,199 | ||||||
Net cash from financing activities | (23,765 | ) | 93,757 | |||||
Effect of changes in foreign currency exchange rates on cash | (2,018 | ) | (14,578 | ) | ||||
Change in cash and cash equivalents | 123,992 | 73,067 | ||||||
Cash and cash equivalents at beginning of year | 115,863 | 42,796 | ||||||
Cash and cash equivalents at end of year | $ | 239,855 | $ | 115,863 |
HANESBRANDS INC. Supplemental Financial Information Reconciliation of Select GAAP Measures to Non-GAAP Measures (Amounts in thousands, except per-share amounts) (Unaudited) |
||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||
January 3, |
December 28, |
January 3, |
December 28, |
|||||||||||||
Gross profit, as reported under GAAP | $ | 545,561 | $ | 427,232 | $ | 1,904,407 | $ | 1,611,693 | ||||||||
Acquisition, integration and other action related charges | 31,899 | 16,221 | 73,126 | 16,221 | ||||||||||||
Gross profit, as adjusted | $ | 577,460 | $ | 443,453 | $ | 1,977,533 | $ | 1,627,914 | ||||||||
As a % of net sales | 37.9 | % | 34.5 | % | 37.1 | % | 35.2 | % | ||||||||
Selling, general and administrative expenses, as reported under GAAP | $ | 414,411 | $ | 355,534 | $ | 1,340,453 | $ | 1,096,507 | ||||||||
Acquisition, integration and other action related charges | (37,217 | ) | (64,569 | ) | (125,807 | ) | (64,569 | ) | ||||||||
Selling, general and administrative expenses, as adjusted | $ | 377,194 | $ | 290,965 | $ | 1,214,646 | $ | 1,031,938 | ||||||||
As a % of net sales | 24.8 | % | 22.6 | % | 22.8 | % | 22.3 | % | ||||||||
Operating profit, as reported under GAAP | $ | 131,150 | $ | 71,698 | $ | 563,954 | $ | 515,186 | ||||||||
Acquisition, integration and other action related charges included in gross profit | 31,899 | 16,221 | 73,126 | 16,221 | ||||||||||||
Acquisition, integration and other action related charges included in SG&A | 37,217 | 64,569 | 125,807 | 64,569 | ||||||||||||
Operating profit, as adjusted | $ | 200,266 | $ | 152,488 | $ | 762,887 | $ | 595,976 | ||||||||
As a % of net sales | 13.2 | % | 11.9 | % | 14.3 | % | 12.9 | % | ||||||||
Net income, as reported under GAAP | $ | 89,437 | $ | 32,266 | $ | 404,519 | $ | 330,494 | ||||||||
Acquisition, integration and other action related charges included in gross profit | 31,899 | 16,221 | 73,126 | 16,221 | ||||||||||||
Acquisition, integration and other action related charges included in SG&A | 37,217 | 64,569 | 125,807 | 64,569 | ||||||||||||
Tax effect on actions | (9,829 | ) | (13,331 | ) | (25,862 | ) | (13,331 | ) | ||||||||
Net income, as adjusted | $ | 148,724 | $ | 99,725 | $ | 577,590 | $ | 397,953 | ||||||||
Diluted earnings per share, as reported under GAAP | $ | 0.88 | $ | 0.32 | $ | 3.97 | $ | 3.25 | ||||||||
Acquisition, integration and other action related charges | 0.58 | 0.66 | 1.70 | 0.66 | ||||||||||||
Diluted earnings per share, as adjusted | $ | 1.46 | $ | 0.98 | $ | 5.66 | $ | 3.91 |
Source:
HanesBrands
News Media:
Matt Hall, 336-519-3386
or
Analysts
and Investors:
T.C. Robillard, 336-519-2115
Data Provided by Refinitiv. Minimum 15 minutes delayed.