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HanesBrands Reports Solid Fourth-Quarter Results

February 9, 2021 at 6:30 AM EST

Launches “Full Potential” Plan

  • Net sales of $1.8 billion, driven by strong performance across biggest business segments
  • Continued momentum in global Champion and U.S. Innerwear
  • Full Potential plan to drive long-term growth and higher profitability
  • Company exploring strategic alternatives for European Innerwear business
  • GAAP loss per share of $0.95, includes $1.33 of charges primarily related to personal protective garment business and 20% SKU reduction effort across company
  • Adjusted EPS of $0.38 per share
  • Declares regular quarterly dividend
  • Virtual Investor Day planned for May

WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Feb. 9, 2021-- HanesBrands Inc. (NYSE: HBI), a leading global marketer of branded everyday basic apparel, today announced fourth-quarter results, reflecting continued momentum across the business with solid sales, adjusted operating profit and cash flow.

Net sales for the fourth quarter ended January 2, 2021, were $1.8 billion, compared with $1.75 billion for the comparable period ended December 28, 2019. The company recorded $28 million in revenue from personal protective garments (PPE) globally in the fourth quarter. Excluding net sales of $88 million from the exited C9 Champion mass program and DKNY intimate apparel license recorded in the prior year period, and the effect of changes in foreign exchange rates, total constant-currency fourth-quarter net sales increased 6%.

For the full year, net sales were $6.7 billion, including net sales of $959 million of PPE, compared to $6.97 billion in the prior year, which included net sales of $419 million from the C9 Champion mass program and DKNY intimate apparel license. Excluding the exited programs and the effect of changes in foreign exchange rates, total constant-currency net sales for full-year 2020 increased 2% over the prior year.

“I’m extremely proud of the HanesBrands team for all it accomplished in 2020 under very challenging conditions, and I thank our global associates for their hard work and dedication,” said HanesBrands Chief Executive Officer Steve Bratspies. “We delivered solid sales growth in the fourth quarter, with continued revenue momentum in our largest businesses and strong market share performance in our Innerwear and Activewear segments.”

During the fourth quarter, the company completed a comprehensive business assessment and began implementing its Full Potential plan. The Full Potential plan focuses the company on four pillars to drive growth and enhance long-term profitability:

  • grow the Champion brand globally
  • drive growth in Innerwear with brands and products that appeal to younger consumers
  • build e-commerce excellence across channels
  • streamline global portfolio

The company has identified 20 strategic initiatives under these four key pillars to unlock growth and has launched a multi-year cost savings program intended to substantially self-fund the investments necessary to achieve the Full Potential plan’s objectives. The company expects to provide a comprehensive overview of the Full Potential plan at its virtual Investor Day in May.

“We are implementing our Full Potential plan with the goal of creating a consumer-centric company that delivers long-term growth and higher profitability,” Bratspies said. “I’m encouraged by our rapid progress as we work to simplify our business and transform our organization to move faster, lower costs and focus on our highest-return growth opportunities.”

As part of the implementation of its Full Potential plan, the company determined that it no longer views PPE as a long-term growth opportunity. In addition, as the result of a comprehensive strategic inventory review, the company is reducing its SKUs by 20% to enable greater focus on its highest-volume, fastest-growing, and most profitable products.

As a result of these decisions, during the fourth quarter the company recorded $611 million (96% non- cash) in inventory charges consisting of a $400 million write-off of its entire PPE inventory-related balance and an inventory valuation write-down of approximately $211 million related to the company’s SKU reduction program.

In addition, the company announced plans to explore strategic alternatives for its European Innerwear business in order to further simplify its operations and focus resources on its strategic growth opportunities.

Fourth-quarter GAAP operating loss totaled $444 million, including the $611 million inventory charges referenced above, as well as a $25 million non-cash impairment charge on its U.S. hosiery business due to impacts of COVID-19, a $17 million non-cash tax asset write-off and an $8 million charge primarily related to a previously disclosed supply chain restructuring. Excluding these charges, fourth-quarter adjusted operating profit of $217 million decreased 10% as compared with the comparable period.

The GAAP and adjusted effective tax rate for the fourth quarter was 32.8% and 19.0%, respectively, with a GAAP and adjusted effective tax rate of 5.1% and 12.9% in the fourth quarter of 2019.

Fourth-quarter GAAP net loss totaled $332 million, or $0.95 per share, compared to net income of $185 million, or $0.51 per diluted share in the prior year period. Adjusted net income excluding after-tax charges of $467 million, or $1.33 per diluted share, totaled $135 million, or $0.38 per diluted share.

(See the Note on Reconciliation of Select GAAP Measures to Non-GAAP Measures later in this news release for additional discussion and details of actions, which include pandemic-related charges.)

Callouts for Fourth-Quarter Results and Ongoing Operations

Momentum across the business: Revenue growth continued across all three business segments as year-over-year trends improved sequentially, excluding PPE. The company gained share in U.S. Innerwear, and global Champion sales were up 11% in constant currency. Excluding the sports and college licensing business, which has been heavily impacted by campus shutdowns and limits on sports attendance due to the COVID-19 pandemic, global Champion sales increased 18% in constant currency.

Sustainability Leadership: HanesBrands was recognized by CDP for its leadership in addressing climate change for the third consecutive year. CDP included the company on its 2020 A List in recognition of HBI’s actions to cut emissions, mitigate climate risks and support the low-carbon economy. This year’s A score follows superior A- rankings in 2019 and 2018, placing HanesBrands among the top sustainable companies within its industry and worldwide.

COVID-related uncertainty: The company continues to operate in a highly uncertain environment due to ongoing concerns about the COVID-19 pandemic and related operating restrictions imposed by governments around the world.

Fourth-Quarter 2020 Business Segment Summaries (Comparisons to Fourth-Quarter 2019, Unless Otherwise Noted)

Innerwear Segment. U.S. Innerwear sales, excluding PPE, increased 13%, driven by strong point-of-sale trends, space gains in kids’ underwear, continued inventory re-stocking by retailers and the contribution from a 53rd week. The company grew its market share in U.S. basics and intimates.

When the year-ago quarter is rebased to reflect the exit of the C9 Champion mass program and the DKNY intimate apparel license, fourth-quarter 2020 sales grew 20% overall and excluding PPE, sales were up 16%.

Activewear Segment. U.S. Activewear marked its third consecutive quarter of sequential improvement, led by strong performance of the global Champion brand. Revenue increased 7% on a rebased basis, driven by growth in the online, wholesale and distributor channels.

International Segment. The company saw continued improvement in revenue trends in its international segment. International revenue increased 2%. Excluding $6 million in PPE sales, core international revenue increased 1%. Australia continued its strong performance with constant currency sales up 8% in the quarter, driven by growth in Bonds and Bras N Things. The company also saw growth in Canada and Latin America, while COVID-related disruptions continued to create challenges in Asia and Europe. On a constant currency basis, International sales declined approximately 3%.

Regular Quarterly Cash Dividend Declared

The company’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share to be paid on March 9, 2021, to stockholders of record at the close of business on February 19, 2021.

The declared cash dividend represents the 32nd consecutive quarterly return of cash to stockholders. The company has returned more than $1.3 billion in quarterly cash dividends to stockholders since initiating its program in April 2013.

First-Quarter 2021 Financial Guidance

The company is providing financial guidance for the first quarter of 2021 and plans to provide a full-year 2021 outlook as well as three-year financial targets as part of its detailed review of the Full Potential plan at its upcoming Investor Day in May.

First-quarter guidance reflects continued uncertainty related to the COVID-19 pandemic and its impact on the global consumer environment.

The company expects first-quarter 2021 net sales to total approximately $1.485 billion to $1.515 billion. The midpoint of guidance represents net sales growth of 14% over first-quarter 2020 and includes a projected benefit of $50 million from changes in foreign currency exchange rates and implies growth of 10% in constant currency.

The company expects first-quarter GAAP operating profit to range from $140 million to $150 million. Adjusted operating profit is expected to range from $150 million to $160 million.

The midpoint of adjusted operating profit suggests an operating margin of 10.3%, compared with adjusted operating margin of 4.8% in the first quarter of 2020. The expected year-over-year margin expansion is due to higher sales, positive manufacturing variances and the anniversary of last year’s COVID-driven volume de-leverage.

The company expects the first-quarter 2021 tax rate to be approximately 6% on a GAAP basis and approximately 16% on an adjusted basis.

GAAP and adjusted earnings per share are expected to range from $0.24 to $0.27.

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

Note on Adjusted Measures, Rebased 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, adjusted net income, adjusted income tax expense, adjusted income before income tax expense, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), adjusted net sales, EBITDA and adjusted EBITDA.

Adjusted EPS is defined as diluted EPS excluding actions and the tax effect on actions. Adjusted net income is defined as net income excluding actions and the tax effect on actions. Adjusted income tax expense is defined as income tax expense excluding actions. Adjusted income before income tax is defined as income 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 net sales are defined as net sales excluding actions.

Charges for actions taken in 2019 primarily represented supply chain network changes, program exit costs, and overhead reduction as well as completion of outstanding acquisition integration. Charges taken in 2020 include supply chain restructuring actions, program exit costs, COVID-19 related charges, Full Potential plan charges and the write-off of a discrete tax asset related to our Bras N Things acquisition. COVID-19 related charges include intangible asset and goodwill impairment charges, bad debt expense and supply chain re-startup costs. Full Potential plan charges include inventory write-down charges related to our SKU reduction initiative and discontinuation of our PPE business. While these costs are not operational in nature and 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 acquisition integration, the Full Potential plan and other actions, as well as the COVID-19 pandemic. 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 and integration 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 earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding actions and stock compensation expense. 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.

In addition, with respect to 2020 financial performance, Hanesbrands has chosen to present certain year- over-year comparisons with respect to the company’s rebased 2019 business, which excludes the exited C9 Champion program at mass retail and DKNY intimate apparel license. Hanes believes this information is useful to management and investors to facilitate a more meaningful comparison of the results of the company’s ongoing business between 2019 and 2020. The company has provided rebased 2019 quarterly income statements in Supplemental Table B dated February 7, 2020, which is available online at www.hanes.com/investors.

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, Hanes 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).

Hanes 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.

Webcast Conference Call

HanesBrands will host an internet audio webcast of its fourth-quarter 2020 investor conference call at 8:30 a.m. EST Tuesday, Feb. 9, 2021. The webcast of the conference call, which will consist of prepared comments followed by a question-and-answer session, may be accessed via the investors section of the Hanes corporate website, www.Hanes.com/Investors. The call is expected to conclude by 9:30 a.m. EST.

Replays of the conference call will be available via the internet and telephone. The archived online replay will be available after the call in the investors section of the Hanes corporate website. The telephone playback will be available from noon EST Feb. 9, 2021, through midnight EST Feb. 16, 2021. The replay will be available by calling toll-free (855) 859-2056 or by toll call at (404) 537-3406. The replay ID is 6783727.

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 regarding the potential impact of the COVID-19 outbreak on our business and financial performance; guidance and predictions regarding expected operating results, including related to our Full Potential plan; the exploration of strategic alternatives for our European Innerwear business; and statements made in the First-Quarter 2021 Financial Guidance section of this news release, 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 potential effects of the COVID-19 outbreak, 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; our reliance on a relatively small number of customers for a significant portion of our sales; 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; our ability to attract and retain a senior management team with the core competencies needed to support growth in global markets; our ability to properly manage strategic projects, such as our Full Potential plan, in order to achieve the desired results; 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, based in Winston-Salem, N.C., is a socially responsible leading marketer of everyday basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia-Pacific. The company sells its products under some of the world’s strongest apparel brands, including Hanes, Champion, Bonds, DIM, Bali, Maidenform, Playtex, Bras N Things, Nur Die/Nur Der, JMS/Just My Size, Wonderbra, Lovable, Alternative, Berlei, L’eggs, and Gear for Sports. The company sells T-shirts, bras, panties, shapewear, underwear, socks, hosiery, and activewear produced in the company’s low-cost global supply chain. A Fortune 500 company and member of the S&P 500 stock index (NYSE: HBI), Hanes has approximately 61,000 employees in more than 40 countries. For more information, visit the company’s corporate website at www.Hanes.com/corporate and newsroom at https://newsroom.hanesbrands.com/. Connect with the company via social media: Twitter (@hanesbrands), Facebook (www.facebook.com/hanesbrandsinc), Instagram (@hanesbrands), and LinkedIn (@Hanesbrandsinc).

 

TABLE 1

 

HANESBRANDS INC.

Condensed Consolidated Statements of Income and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

 

 

Quarters Ended

 

 

 

Years Ended

 

 

 

January 2,
2021

 

December 28,
2019

 

% Change

 

January 2,
2021

 

December 28,
2019

 

% Change

Net sales

$

1,800,843

 

 

$

1,751,005

 

 

2.8

%

 

$

6,664,350

 

 

$

6,966,923

 

 

(4.3

)%

Cost of sales

1,676,036

 

 

1,044,262

 

 

 

 

4,816,086

 

 

4,247,593

 

 

 

Gross profit

124,807

 

 

706,743

 

 

(82.3

)%

 

1,848,264

 

 

2,719,330

 

 

(32.0

)%

As a % of net sales

6.9

%

 

40.4

%

 

 

 

27.7

%

 

39.0

%

 

 

Selling, general and administrative expenses

568,543

 

 

463,328

 

 

 

 

1,841,763

 

 

1,829,600

 

 

 

As a % of net sales

31.6

%

 

26.5

%

 

 

 

27.6

%

 

26.3

%

 

 

Operating profit (loss)

(443,736

)

 

243,415

 

 

NM

 

 

6,501

 

 

889,730

 

 

(99.3

)%

As a % of net sales

(24.6

)%

 

13.9

%

 

 

 

0.1

%

 

12.8

%

 

 

Other expenses

6,283

 

 

7,658

 

 

 

 

23,132

 

 

31,424

 

 

 

Interest expense, net

44,115

 

 

40,907

 

 

 

 

166,491

 

 

178,579

 

 

 

Income (loss) before income tax expense

(494,134

)

 

194,850

 

 

 

 

(183,122

)

 

679,727

 

 

 

Income tax expense (benefit)

(161,970

)

 

9,864

 

 

 

 

(107,543

)

 

79,007

 

 

 

Net income (loss)

$

(332,164

)

 

$

184,986

 

 

NM

 

 

$

(75,579

)

 

$

600,720

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.95

)

 

$

0.51

 

 

 

 

$

(0.21

)

 

$

1.65

 

 

 

Diluted

$

(0.95

)

 

$

0.51

 

 

 

 

$

(0.21

)

 

$

1.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

350,807

 

 

364,885

 

 

 

 

352,766

 

 

364,709

 

 

 

Diluted

350,807

 

 

365,644

 

 

 

 

352,766

 

 

365,519

 

 

 

The following tables present a reconciliation of reported results on a constant currency basis for the quarter and year ended January 2, 2021 and a comparison to prior year:

 

 

Quarter Ended January 2, 2021

 

 

 

 

 

 

 

As Reported

 

Impact from
Foreign
Currency1

 

Constant
Currency

 

Quarter
Ended

December 28,
2019

 

% Change,
As Reported

 

% Change,
Constant
Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,800,843

 

 

$

31,924

 

 

$

1,768,919

 

 

$

1,751,005

 

 

2.8

%

 

1.0

%

Gross profit

124,807

 

 

16,965

 

 

107,842

 

 

706,743

 

 

(82.3

)

 

(84.7

)

Operating profit (loss)

(443,736

)

 

4,277

 

 

(448,013

)

 

243,415

 

 

NM

 

 

NM

 

Diluted earnings (loss) per share

$

(0.95

)

 

$

0.01

 

 

$

(0.96

)

 

$

0.51

 

 

NM

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,800,843

 

 

$

31,924

 

 

$

1,768,919

 

 

$

1,663,070

 

 

8.3

%

 

6.4

%

Gross profit

737,775

 

 

16,965

 

 

720,810

 

 

694,782

 

 

6.2

 

 

3.7

 

Operating profit

216,987

 

 

4,277

 

 

212,710

 

 

241,775

 

 

(10.3

)

 

(12.0

)

Diluted earnings per share

$

0.38

 

 

$

0.01

 

 

$

0.37

 

 

$

0.46

 

 

(17.4

)%

 

(19.6

)%

 

 

Year Ended January 2, 2021

 

 

 

 

 

 

 

As Reported

 

Impact from
Foreign
Currency1

 

Constant
Currency

 

Year
Ended
December 28,
2019

 

% Change,
As Reported

 

% Change,
Constant
Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

6,664,350

 

 

$

12,134

 

 

$

6,652,216

 

 

$

6,966,923

 

 

(4.3

)%

 

(4.5

)%

Gross profit

1,848,264

 

 

7,799

 

 

1,840,465

 

 

2,719,330

 

 

(32.0

)

 

(32.3

)

Operating profit

6,501

 

 

5,425

 

 

1,076

 

 

889,730

 

 

(99.3

)

 

(99.9

)

Diluted earnings (loss) per share

$

(0.21

)

 

$

0.01

 

 

$

(0.22

)

 

$

1.64

 

 

NM

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

6,664,350

 

 

$

12,134

 

 

$

6,652,216

 

 

$

6,547,476

 

 

1.8

%

 

1.6

%

Gross profit

2,557,215

 

 

7,799

 

 

2,549,416

 

 

2,645,736

 

 

(3.3

)

 

(3.6

)

Operating profit

812,288

 

 

5,425

 

 

806,863

 

 

858,357

 

 

(5.4

)

 

(6.0

)

Diluted earnings per share

$

1.45

 

 

$

0.01

 

 

$

1.44

 

 

$

1.53

 

 

(5.2

)%

 

(5.9

)%

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 and years ended January 2, 2021 and December 28, 2019 reflect adjustments for restructuring and other action-related charges. Results for the quarter and year ended December 28, 2019 also reflect adjustments for the exited C9 Champion mass program and the DKNY intimate apparel license. See “Reconciliation of Select GAAP Measures to Non-GAAP Measures” in Table 5. 

 

TABLE 2

 

HANESBRANDS INC.

Supplemental Financial Information

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

 

 

Years Ended

 

 

 

January 2,
2021

 

December 28,

2019

Rebased1

 

% Change

 

January 2,
2021

 

December 28,

2019

Rebased1

 

% Change

Segment net sales:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

$

668,193

 

 

$

558,302

 

 

19.7

%

 

$

2,978,009

 

 

$

2,244,478

 

 

32.7

%

Activewear

403,113

 

 

376,363

 

 

7.1

 

 

1,184,413

 

 

1,493,411

 

 

(20.7

)

International

664,861

 

 

650,807

 

 

2.2

 

 

2,309,754

 

 

2,529,375

 

 

(8.7

)

Other

64,676

 

 

77,598

 

 

(16.7

)

 

192,174

 

 

280,212

 

 

(31.4

)

Total net sales

$

1,800,843

 

 

$

1,663,070

 

 

8.3

%

 

$

6,664,350

 

 

$

6,547,476

 

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

$

160,848

 

 

$

137,945

 

 

16.6

%

 

$

718,923

 

 

$

505,839

 

 

42.1

%

Activewear

35,718

 

 

52,849

 

 

(32.4

)

 

67,643

 

 

196,612

 

 

(65.6

)

International

88,147

 

 

96,765

 

 

(8.9

)

 

315,365

 

 

384,784

 

 

(18.0

)

Other

3,364

 

 

8,400

 

 

(60.0

)

 

(14,025

)

 

24,829

 

 

NM

 

General corporate expenses/other

(71,090

)

 

(54,184

)

 

31.2

 

 

(275,618

)

 

(253,707

)

 

8.6

 

Total operating profit before restructuring and other action-related charges

216,987

 

 

241,775

 

 

(10.3

)

 

812,288

 

 

858,357

 

 

(5.4

)

Restructuring and other action-related charges

(660,723

)

 

(19,567

)

 

3,276.7

 

 

(805,787

)

 

(63,486

)

 

1,169.2

 

Total operating profit (loss)

$

(443,736

)

 

$

222,208

 

 

NM

 

 

$

6,501

 

 

$

794,871

 

 

(99.2

)%

1

Results for the quarter and year ended December 28, 2019 reflect adjustments for the exited C9 Champion mass program and the DKNY intimate apparel license. See “Reconciliation of Select GAAP Measures to Non-GAAP Measures” in Table 5.

 

The following tables present a reconciliation of reported net sales adjusted for personal protective equipment (“PPE”) sales for the quarter and year ended January 2, 2021 and a comparison to prior year.

 

Quarter Ended January 2, 2021

 

As Reported

 

 

% Change1

 

PPE

 

Adjusted for
PPE

 

 

% Change1

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

668,193

 

 

19.7

%

 

$

21,885

 

 

$

646,308

 

 

15.8

%

Activewear

403,113

 

 

7.1

 

 

 

 

403,113

 

 

7.1

 

International

664,861

 

 

2.2

 

 

6,121

 

 

658,740

 

 

1.2

 

Other

64,676

 

 

(16.7

)

 

 

 

64,676

 

 

(16.7

)

Total net sales

$

1,800,843

 

 

8.3

%

 

$

28,006

 

 

$

1,772,837

 

 

6.6

%

 

 

Year Ended January 2, 2021

 

As Reported

 

 

% Change1

 

PPE

 

Adjusted for
PPE

 

 

% Change1

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

2,978,009

 

 

32.7

%

 

$

800,919

 

 

$

2,177,090

 

 

(3.0

)%

Activewear

1,184,413

 

 

(20.7

)

 

 

 

1,184,413

 

 

(20.7

)

International

2,309,754

 

 

(8.7

)

 

157,936

 

 

2,151,818

 

 

(14.9

)

Other

192,174

 

 

(31.4

)

 

 

 

192,174

 

 

(31.4

)

Total net sales

$

6,664,350

 

 

1.8

%

 

$

958,855

 

 

$

5,705,495

 

 

(12.9

)%

1

The comparison to the quarter and year ended December 28, 2019 reflects adjustments for the exited C9 Champion mass program and the DKNY intimate apparel license. See “Reconciliation of Select GAAP Measures to Non-GAAP Measures” in Table 5.

Excluding the favorable foreign currency impact of $10 million, (i) global Champion sales outside the mass channel increased approximately 11% in the fourth quarter of 2020 and (ii) global Champion sales outside the mass channel and the sports and college licensing business increased approximately 18% in the fourth quarter of 2020, each as compared to the fourth quarter of 2019.

 

TABLE 3

 

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

 

January 2,
2021

 

December 28,
2019

Assets

 

 

 

Cash and cash equivalents

$

909,437

 

 

$

328,876

 

Trade accounts receivable, net

831,860

 

 

815,210

 

Inventories

1,491,095

 

 

1,905,845

 

Other current assets

175,995

 

 

174,634

 

Total current assets

3,408,387

 

 

3,224,565

 

Property, net

545,771

 

 

587,896

 

Right-of-use assets

467,268

 

 

487,787

 

Trademarks and other identifiable intangibles, net

1,578,017

 

 

1,520,800

 

Goodwill

1,255,630

 

 

1,235,711

 

Deferred tax assets

373,414

 

 

203,331

 

Other noncurrent assets

70,387

 

 

93,896

 

Total assets

$

7,698,874

 

 

$

7,353,986

 

 

 

 

 

Liabilities

 

 

 

Accounts payable

$

948,511

 

 

$

959,006

 

Accrued liabilities

743,295

 

 

531,184

 

Lease liabilities

146,842

 

 

166,091

 

Notes payable

784

 

 

4,244

 

Current portion of long-term debt

263,936

 

 

110,914

 

Total current liabilities

2,103,368

 

 

1,771,439

 

Long-term debt

3,739,434

 

 

3,256,870

 

Lease liabilities - noncurrent

360,352

 

 

358,281

 

Pension and postretirement benefits

428,026

 

 

403,458

 

Other noncurrent liabilities

253,736

 

 

327,343

 

Total liabilities

6,884,916

 

 

6,117,391

 

 

 

 

 

Stockholders’ equity

 

 

 

Preferred stock

 

 

 

Common stock

3,488

 

 

3,624

 

Additional paid-in capital

307,883

 

 

304,395

 

Retained earnings

1,069,546

 

 

1,546,224

 

Accumulated other comprehensive loss

(566,959

)

 

(617,648

)

Total stockholders’ equity

813,958

 

 

1,236,595

 

Total liabilities and stockholders’ equity

$

7,698,874

 

 

$

7,353,986

 

 

TABLE 4

 

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

Years Ended

 

January 2,
2021

 

December 28,
2019

 

January 2,
2021

 

December 28,
2019

Operating Activities:

 

 

 

 

 

 

 

Net income (loss)

$

(332,164

)

 

$

184,986

 

 

$

(75,579

)

 

$

600,720

 

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

 

 

 

 

 

 

 

Depreciation

28,083

 

 

24,418

 

 

95,759

 

 

96,030

 

Amortization of acquisition intangibles

6,215

 

 

6,159

 

 

24,718

 

 

24,868

 

Other amortization

3,878

 

 

2,548

 

 

11,969

 

 

10,069

 

Inventory write-down charges

584,671

 

 

 

 

584,671

 

 

 

Impairment of intangible assets and goodwill

25,173

 

 

 

 

45,492

 

 

 

Amortization of debt issuance costs

3,262

 

 

3,710

 

 

11,565

 

 

10,731

 

Stock compensation expense

5,168

 

 

483

 

 

18,969

 

 

9,277

 

Deferred taxes

(168,068

)

 

45,478

 

 

(161,215

)

 

41,817

 

Other

3,497

 

 

3,371

 

 

8,501

 

 

5,033

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

168,934

 

 

215,505

 

 

(6,945

)

 

45,157

 

Inventories

123,310

 

 

203,800

 

 

(136,057

)

 

147,330

 

Other assets

42,215

 

 

19,434

 

 

(1,144

)

 

(6,597

)

Accounts payable

(222,207

)

 

(55,421

)

 

(32,641

)

 

(67,390

)

Accrued pension and postretirement benefits

133

 

 

4,518

 

 

(18,832

)

 

(9,843

)

Accrued liabilities and other

(54,853

)

 

(100,257

)

 

79,238

 

 

(103,770

)

Net cash from operating activities

217,247

 

 

558,732

 

 

448,469

 

 

803,432

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

Capital expenditures

(4,702

)

 

(21,134

)

 

(53,735

)

 

(101,084

)

Proceeds from sales of assets

340

 

 

1,354

 

 

671

 

 

4,884

 

Acquisition of business

 

 

(3,872

)

 

 

 

(25,232

)

Other

4,364

 

 

11,772

 

 

11,982

 

 

11,772

 

Net cash from investing activities

2

 

 

(11,880

)

 

(41,082

)

 

(109,660

)

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

Borrowings on notes payable

68,124

 

 

90,405

 

 

234,682

 

 

341,117

 

Repayments on notes payable

(72,900

)

 

(90,492

)

 

(239,008

)

 

(342,576

)

Borrowings on Accounts Receivable Securitization Facility

 

 

39,312

 

 

227,061

 

 

246,417

 

Repayments on Accounts Receivable Securitization Facility

 

 

(247,915

)

 

(227,061

)

 

(408,025

)

Borrowings on Revolving Loan Facilities

 

 

614,000

 

 

1,638,000

 

 

3,198,277

 

Repayments on Revolving Loan Facilities

 

 

(614,000

)

 

(1,756,189

)

 

(3,199,592

)

Borrowings on Senior Notes

 

 

 

 

700,000

 

 

 

Repayments on Term Loan Facilities

 

 

(261,250

)

 

 

 

(413,498

)

Borrowings on International Debt

 

 

 

 

31,222

 

 

27,680

 

Repayments on International Debt

 

 

(6,903

)

 

(36,383

)

 

(48,327

)

Share repurchases

 

 

 

 

(200,269

)

 

 

Cash dividends paid

(52,253

)

 

(54,269

)

 

(210,385

)

 

(216,958

)

Payments of debt issuance costs

(80

)

 

(105

)

 

(15,018

)

 

(1,203

)

Other

(4,163

)

 

(7,177

)

 

(4,483

)

 

(7,322

)

Net cash from financing activities

(61,272

)

 

(538,394

)

 

142,169

 

 

(824,010

)

Effect of changes in foreign exchange rates on cash

22,072

 

 

3,421

 

 

31,124

 

 

4,429

 

Change in cash, cash equivalents and restricted cash

178,049

 

 

11,879

 

 

580,680

 

 

(125,809

)

Cash, cash equivalents and restricted cash at beginning of period

732,554

 

 

318,044

 

 

329,923

 

 

455,732

 

Cash, cash equivalents and restricted cash at end of year

910,603

 

 

329,923

 

 

910,603

 

 

329,923

 

Less restricted cash at end of year

1,166

 

 

1,047

 

 

1,166

 

 

1,047

 

Cash and cash equivalents per balance sheet at end of year

$

909,437

 

 

$

328,876

 

 

$

909,437

 

 

$

328,876

 

 

TABLE 5

 

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarters Ended

 

Years Ended

 

January 2,
2021

 

December 28,
2019

 

January 2,
2021

 

December 28,
2019

Net sales, as reported under GAAP

$

1,800,843

 

 

$

1,751,005

 

 

$

6,664,350

 

 

$

6,966,923

 

Net sales from exited programs

 

 

(87,935

)

 

 

 

(419,447

)

Net sales, rebased

$

1,800,843

 

 

$

1,663,070

 

 

$

6,664,350

 

 

$

6,547,476

 

 

 

 

 

 

 

 

 

Gross profit, as reported under GAAP

$

124,807

 

 

$

706,743

 

 

$

1,848,264

 

 

$

2,719,330

 

Restructuring and other action-related charges

612,968

 

 

18,553

 

 

708,951

 

 

58,267

 

Gross profit on exited programs

 

 

(30,514

)

 

 

 

(131,861

)

Adjusted gross profit, rebased

$

737,775

 

 

$

694,782

 

 

$

2,557,215

 

 

$

2,645,736

 

As a % of net sales, rebased

41.0

%

 

41.8

%

 

38.4

%

 

40.4

%

 

 

 

 

 

 

 

 

Selling, general and administrative expenses, as reported under GAAP

$

568,543

 

 

$

463,328

 

 

$

1,841,763

 

 

$

1,829,600

 

Restructuring and other action-related charges

(47,755

)

 

(1,014

)

 

(96,836

)

 

(5,219

)

Selling, general and administrative expenses related to exited programs

 

 

(9,307

)

 

 

 

(37,002

)

Adjusted selling, general and administrative expenses, rebased

$

520,788

 

 

$

453,007

 

 

$

1,744,927

 

 

$

1,787,379

 

As a % of net sales, rebased

28.9

%

 

27.2

%

 

26.2

%

 

27.3

%

 

 

 

 

 

 

 

 

Operating profit (loss), as reported under GAAP

$

(443,736

)

 

$

243,415

 

 

6,501

 

 

$

889,730

 

Restructuring and other action-related charges included in gross profit

612,968

 

 

18,553

 

 

708,951

 

 

58,267

 

Restructuring and other action-related charges included in SG&A

47,755

 

 

1,014

 

 

96,836

 

 

5,219

 

Gross profit on exited programs

 

 

(30,514

)

 

 

 

(131,861

)

Selling, general and administrative expenses related to exited programs

 

 

9,307

 

 

 

 

37,002

 

Adjusted operating profit, rebased

$

216,987

 

 

$

241,775

 

 

$

812,288

 

 

$

858,357

 

As a % of net sales, rebased

12.0

%

 

14.5

%

 

12.2

%

 

13.1

%

 

 

 

 

 

 

 

 

Income (loss) before income tax expense, as reported under GAAP

$

(494,134

)

 

$

194,850

 

 

$

(183,122

)

 

$

679,727

 

Restructuring and other action-related charges included in gross profit

612,968

 

 

18,553

 

 

708,951

 

 

58,267

 

Restructuring and other action-related charges included in SG&A

47,755

 

 

1,014

 

 

96,836

 

 

5,219

 

Gross profit on exited programs

 

 

(30,514

)

 

 

 

(131,861

)

Selling, general and administrative expenses related to exited programs

 

 

9,307

 

 

 

 

37,002

 

Adjusted income before income tax expense, rebased

$

166,589

 

 

$

193,210

 

 

$

622,665

 

 

$

648,354

 

 

 

 

 

 

 

 

 

Income tax expense (benefit), as reported under GAAP

$

(161,970

)

 

$

9,864

 

 

$

(107,543

)

 

$

79,007

 

Discrete tax benefits

66,515

 

 

 

 

69,628

 

 

 

Tax effect on actions

127,111

 

 

15,068

 

 

149,384

 

 

10,873

 

Adjusted income tax expense, rebased

$

31,656

 

 

$

24,932

 

 

$

111,469

 

 

$

89,880

 

 

 

 

 

 

 

 

 

Net income (loss), as reported under GAAP

$

(332,164

)

 

$

184,986

 

 

$

(75,579

)

 

$

600,720

 

Restructuring and other action-related charges included in gross profit

612,968

 

 

18,553

 

 

708,951

 

 

58,267

 

Restructuring and other action-related charges included in SG&A

47,755

 

 

1,014

 

 

96,836

 

 

5,219

 

Gross profit on exited programs

 

 

(30,514

)

 

 

 

(131,861

)

Selling, general and administrative expenses related to exited programs

 

 

9,307

 

 

 

 

37,002

 

Discrete tax benefits

(66,515

)

 

 

 

(69,628

)

 

 

Tax effect on actions

(127,111

)

 

(15,068

)

 

(149,384

)

 

(10,873

)

Adjusted net income, rebased

$

134,933

 

 

$

168,278

 

 

$

511,196

 

 

$

558,474

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share, as reported under GAAP1

$

(0.95

)

 

$

0.51

 

 

$

(0.21

)

 

$

1.64

 

Restructuring and other action-related charges

1.33

 

 

0.01

 

 

1.66

 

 

0.11

 

Exited programs

 

 

(0.05

)

 

 

 

(0.23

)

Adjusted diluted earnings per share, rebased

$

0.38

 

 

$

0.46

 

 

$

1.45

 

 

$

1.53

 

1

Amounts may not be additive due to rounding.

 

 

Quarter Ended December 28, 2019

 

As Reported

 

Less: Exited
Programs

 

Adjusted for
Exited
Programs

 

Less:
Restructuring
and other
action-related
charges

 

Rebased

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

569,630

 

 

$

11,328

 

 

$

558,302

 

 

$

 

 

$

558,302

 

Activewear

452,970

 

 

76,607

 

 

376,363

 

 

 

 

376,363

 

International

650,807

 

 

 

 

650,807

 

 

 

 

650,807

 

Other

77,598

 

 

 

 

77,598

 

 

 

 

77,598

 

Total net sales

$

1,751,005

 

 

$

87,935

 

 

$

1,663,070

 

 

$

 

 

$

1,663,070

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

Innerwear

$

140,368

 

 

$

2,423

 

 

$

137,945

 

 

$

 

 

$

137,945

 

Activewear

71,633

 

 

18,784

 

 

52,849

 

 

 

 

52,849

 

International

96,765

 

 

 

 

96,765

 

 

 

 

96,765

 

Other

8,400

 

 

 

 

8,400

 

 

 

 

8,400

 

General corporate expenses/other

(54,184

)

 

 

 

(54,184

)

 

 

 

(54,184

)

Restructuring and other action-related charges

(19,567

)

 

 

 

(19,567

)

 

(19,567

)

 

 

Total operating profit

$

243,415

 

 

$

21,207

 

 

$

222,208

 

 

$

(19,567

)

 

$

241,775

 

 

 

Year Ended December 28, 2019

 

As Reported

 

Less: Exited
Programs

 

Adjusted for
Exited
Programs

 

Less:
Restructuring
and other
action-related
charges

 

Rebased

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

2,302,632

 

 

$

58,154

 

 

$

2,244,478

 

 

$

 

 

$

2,244,478

 

Activewear

1,854,704

 

 

361,293

 

 

1,493,411

 

 

 

 

1,493,411

 

International

2,529,375

 

 

 

 

2,529,375

 

 

 

 

2,529,375

 

Other

280,212

 

 

 

 

280,212

 

 

 

 

280,212

 

Total net sales

$

6,966,923

 

 

$

419,447

 

 

$

6,547,476

 

 

$

 

 

$

6,547,476

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

Innerwear

$

515,991

 

 

$

10,152

 

 

$

505,839

 

 

$

 

 

$

505,839

 

Activewear

281,319

 

 

84,707

 

 

196,612

 

 

 

 

196,612

 

International

384,784

 

 

 

 

384,784

 

 

 

 

384,784

 

Other

24,829

 

 

 

 

24,829

 

 

 

 

24,829

 

General corporate expenses/other

(253,707

)

 

 

 

(253,707

)

 

 

 

(253,707

)

Restructuring and other action-related charges

(63,486

)

 

 

 

(63,486

)

 

(63,486

)

 

 

Total operating profit

$

889,730

 

 

$

94,859

 

 

$

794,871

 

 

$

(63,486

)

 

$

858,357

 

 

 

Quarters Ended

 

Years Ended

 

January 2,
2021

 

December 28,
2019

 

January 2,
2021

 

December 28,
2019

Restructuring and other action-related charges by category:

 

 

 

 

 

 

 

Supply chain actions

2,201

 

 

13,937

 

 

23,538

 

 

53,651

 

Program exit costs

 

 

4,616

 

 

9,856

 

 

4,616

 

Other restructuring costs

5,420

 

 

1,014

 

 

18,219

 

 

5,219

 

COVID-19 related charges:

 

 

 

 

 

 

 

Supply chain re-startup

 

 

 

 

48,893

 

 

 

Bad debt

 

 

 

 

11,375

 

 

 

Inventory

 

 

 

 

20,485

 

 

 

Intangible assets and goodwill

25,173

 

 

 

 

45,492

 

 

 

Full Potential plan:

 

 

 

 

 

 

 

Inventory SKU rationalization

210,904

 

 

 

 

210,904

 

 

 

PPE inventory write-off

373,767

 

 

 

 

373,767

 

 

 

PPE vendor commitments

26,400

 

 

 

 

26,400

 

 

 

Write-off of acquisition tax asset

16,858

 

 

 

 

16,858

 

 

 

Discrete tax benefits

(66,515

)

 

 

 

(69,628

)

 

 

Tax effect on actions

(127,111

)

 

(16,309

)

 

(149,384

)

 

(22,502

)

Total restructuring and other action-related charges

$

467,097

 

 

$

3,258

 

 

$

586,775

 

 

$

40,984

 

 

 

Last Twelve Months

 

January 2,
2021

 

December 28,
2019

EBITDA1:

 

 

 

Net income (loss)

$

(75,579

)

 

$

600,720

 

Interest expense, net

166,491

 

 

178,579

 

Income tax expense

(107,543

)

 

79,007

 

Depreciation and amortization

132,446

 

 

130,967

 

Total EBITDA

115,815

 

 

989,273

 

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

805,787

 

 

63,486

 

Stock compensation expense

18,969

 

 

9,277

 

Total EBITDA, as adjusted

$

940,571

 

 

$

1,062,036

 

 

 

 

 

Net debt:

 

 

 

Debt (current and long-term debt)

$

4,003,370

 

 

$

3,367,784

 

Notes payable

784

 

 

4,244

 

(Less) Cash and cash equivalents

(909,437

)

 

(328,876

)

Net debt

$

3,094,717

 

 

$

3,043,152

 

 

 

 

 

Net debt/EBITDA, as adjusted

3.3

 

 

2.9

 

1

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

 

 

Quarters Ended

 

Years Ended

 

January 2,
2021

 

December 28,
2019

 

January 2,
2021

 

December 28,
2019

Free cash flow:

 

 

 

 

 

 

 

Net cash from operating activities

$

217,247

 

 

$

558,732

 

 

$

448,469

 

 

$

803,432

 

Capital expenditures

(4,702

)

 

(21,134

)

 

(53,735

)

 

(101,084

)

Free cash flow

$

212,545

 

 

$

537,598

 

 

$

394,734

 

 

$

702,348

 

 

TABLE 6

 

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Outlook to Adjusted Outlook

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended

 

April 3,
2021

Operating profit outlook, as calculated under GAAP

$140,000 to $150,000

Full Potential plan-related charges

$10,000

Operating profit outlook, as adjusted

$150,000 to $160,000

 

 

Diluted earnings per share, as calculated under GAAP1

$0.24 to $0.27

Full Potential plan-related charges

$0.00

Diluted earnings per share, as adjusted

$0.24 to $0.27

1

The company expects approximately 353 million diluted weighted average shares outstanding for the quarter ended April 3, 2021.

 

News Media contact:
Kirk Saville (336) 519-6192

Analysts and Investors contact:
T.C. Robillard (336) 519-2115

Source: HanesBrands

Data Provided by Refinitiv. Minimum 15 minutes delayed.