8-K
false 0001359841 0001359841 2021-05-11 2021-05-11

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): May 11, 2021

 

 

Hanesbrands Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   001-32891   20-3552316

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

1000 East Hanes Mill Road

Winston-Salem, North Carolina

  27105
(Address of principal executive offices)   (Zip Code)

(336) 519-8080

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 204.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common stock, Par Value $0.01   HBI   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition

On May 11, 2021, Hanesbrands Inc. (the “Company” or “Hanesbrands”) issued a press release announcing its financial results for the first quarter ended April 3, 2021. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 7.01.

Regulation FD Disclosure

On May 11, 2021, the Company also issued a press release announcing its Full Potential three-year strategic growth plan. A copy of the press release is attached as Exhibit 99.2 to this Current Report on Form 8-K.

The Company will discuss its Full Potential plan and first quarter financial results during a virtual Investor Day, which is scheduled for 8:30 a.m. EDT on May 11, 2021. The Investor Day will include presentations by leaders on the Company’s Full Potential plan followed by a live question-and-answer session. The live video webcast may be accessed on the investors page of the Company’s corporate website, www.Hanes.com/investors. An archive of the webcast will be available for six months after the presentation.

The Company has made available on the investors page of its corporate website, www.Hanes.com/investors, certain supplemental materials regarding Hanesbrands’ financial results and Full Potential plan (the “Supplemental Materials”). The Supplemental Materials include an Investor Day handout and an updated frequently asked questions document, which are attached as Exhibits 99.3 and 99.4 to this Current Report on Form 8-K, respectively. All information in the Supplemental Materials is presented as of the particular date or dates referenced therein, and Hanesbrands does not undertake any obligation to, and disclaims any duty to, update any of the information provided.

 

Item 9.01.

Financial Statements and Exhibits

(d) Exhibits

 

Exhibit 99.1    Q1 Earnings Press Release dated May 11, 2021
Exhibit 99.2    Full Potential Press Release dated May 11, 2021
Exhibit 99.3    Investor Day Handout
Exhibit 99.4    Frequently Asked Questions
Exhibit 104    Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    HANESBRANDS INC.
Date: May 11, 2021     By:  

/s/ Michael P. Dastugue

    Name:   Michael P. Dastugue
    Title:   Chief Financial Officer
EX-99.1

Exhibit 99.1

news release

 

FOR IMMEDIATE RELEASE    LOGO

HanesBrands Announces Strong First-Quarter 2021 Results

Growth across all segments on strong brand performance and share gains

 

   

Net sales from continuing operations of $1.51 billion, up 25% over prior year

 

   

Growth driven by global Champion brand and U.S. Innerwear business

 

   

EPS from continuing operations of $0.37

 

   

Reports non-cash charge related to reclassifying European Innerwear business as discontinued operations

 

   

Provides second-quarter and full-year guidance

 

   

Declares 33rd consecutive regular quarterly dividend

 

   

Company to host virtual investor day today to unveil Full Potential strategic growth plan

WINSTON-SALEM, N.C. (May 11, 2021) – HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the first quarter of 2021, with continued sales momentum across the company’s global innerwear and activewear businesses driving strong adjusted operating profit and cash flow.

Net sales from continuing operations for the first quarter ended April 3, 2021, totaled $1.51 billion, an increase of 25% compared with $1.20 billion for the period ended March 28, 2020. Total constant currency first-quarter net sales increased 22%.

Double-digit growth in both global innerwear and activewear businesses was driven by strong point-of-sale performance across all major channels, led by 82% growth in online channels, and market share gains in key categories. First-quarter sales growth also benefited from a comparison with the initial pandemic shutdowns in the year ago period and certain one-time contributions, including government stimulus and retailer restocking.

“Our strong first-quarter results showed growth across all business segments,” said Chief Executive Officer Steve Bratspies. “Champion continued its rapid growth, driven by strong consumer demand. We gained share in U.S. Innerwear, and our Hanes Total Support Pouch launch shows how our brands can appeal to younger consumers with a combination of innovative products and compelling marketing. Our global online sales grew more than 80% as we focus on empowering consumers to shop when, where and how they want to shop.

“I want to thank our 61,000 associates who continue to meet consumer demand around the world as we continue to face COVID-related challenges. Our first-quarter results show the competitive advantages of our supply chain as well as the rapid progress we’re making on our Full Potential plan to generate long-term revenue and profit growth.”

The company previously announced its intention to seek strategic alternatives for its European Innerwear business as it focuses on other strategic growth opportunities. In the quarter, the company reclassified this business to discontinued operations. As a result, the company recorded a non-cash impairment charge of approximately $390 million to reflect an intangible asset impairment and net asset write down. With European Innerwear now reflected in discontinued operations, all year-over-year comparisons are based on continuing operations.


Additional information reflecting European Innerwear as discontinued operations in prior periods can be found on the investors section of the HanesBrands corporate website at www.Hanes.com/Investors.

First-quarter GAAP gross margin of 40.0% increased 520 basis points compared to the prior year period. Adjusted gross margin of 40.2% increased 360 basis points over the comparable prior year period. The year-over-year improvement in gross margin was driven predominantly by the leverage of higher sales volume from strong point-of-sale growth and the one-time items referenced above.

Also contributing to gross margin improvement in the quarter were favorable product mix, foreign exchange rates and a modest benefit from sales related to the company’s SKU reduction initiative. These were partially offset by higher transportation costs, which resulted from increased shipping rates globally as well as costs associated with expediting product to meet stronger-than-expected customer demand.

First-quarter GAAP operating profit increased 297% to $190 million from $48 million in the comparable prior year period. GAAP operating margin of 12.6% increased 860 basis points over prior year. Adjusted operating profit, which excludes $19 million of charges related to the Full Potential plan, increased 190% to $210 million from $72 million in the prior year period. Adjusted operating margin increased 790 basis points over prior year to 13.9%. The strong improvement in operating margin was driven by gross margin performance as well as SG&A leverage from higher sales, which more than offset increased investments in brand marketing in the quarter.

The GAAP and adjusted effective tax rate for the first quarter were 10% and 16%, respectively, which compares to a GAAP and adjusted effective tax rate of 12% and 14%, respectively, for the first quarter of 2020.

First-quarter GAAP income from continuing operations totaled $128 million, or $0.37 per diluted share, compared to income from continuing operations of $5 million, or $0.01 per diluted share, in the prior year period. Adjusted income from continuing operations excluding after-tax charges totaled $136 million, or $0.39 per diluted share, compared to adjusted income from continuing operations of $26 million, or $0.07 per diluted share in the prior year period.

(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 and Full Potential plan charges.)

Virtual Investor Day to Unveil Full Potential Strategic Growth Plan and Three-year Financial Framework

HanesBrands will host a virtual investor day at 8:30 a.m. EDT on Tuesday, May 11, 2021. The event, which will consist of prepared presentations followed by a live question-and-answer session, as well as an Investor Day Handout, may be accessed via the investors section of the HanesBrands corporate website, www.Hanes.com/Investors. The event is expected to conclude by 11:30 a.m. EDT. Replays of the event will be available on the investors section of the HanesBrands corporate website.


First-Quarter 2021 Business Segment Summaries (Comparisons to First-Quarter 2020, Unless Otherwise Noted)

Innerwear Segment. U.S. Innerwear sales of $570 million increased 35% over prior year. The strong year-over-year growth was driven by underlying point-of-sale growth and market share gains combined with the overlap of the initial pandemic shutdown as well as certain one-time benefits, including government stimulus and retailer restocking. For the quarter, basics revenue increased 39% with growth across all product categories. Intimates revenue increased 27% driven by double-digit growth in bras.

U.S. Innerwear segment operating profit of $127 million increased 56% over prior year period and the segment’s operating margin increased 300 basis points to 22.3%. The benefits from product mix and SG&A leverage from higher sales more than offset higher expedite costs from stronger-than-expected customer demand.

U.S. Innerwear results include approximately $4 million of revenue and no operating profit from the sale of personal protective garments (“PPE”) in the quarter.

Activewear Segment. U.S Activewear sales increased 26% over prior year to $364 million, driven by growth in the online channel, including both Champion.com as well as pure play and retail partner sites, and wholesale brick and mortar channels; the overlap of the initial pandemic shutdown and benefits from government stimulus. For the quarter, Champion sales increased 34% over prior year and revenue from the company’s other activewear brands increased 16%. While the rate of decline improved from the fourth quarter, the sports and college licensing business continued to be negatively impacted by campus shutdowns and limits on sports attendance due to the COVID-19 pandemic. The company also saw the effects of an earlier-than-anticipated rebound in the printwear channel.

U.S. Activewear segment operating profit increased 647% to $61 million compared to the prior year period and the segment’s operating margin increased 1,380 basis points to 16.6%. The improvement in profitability was driven predominantly by expense leverage from higher sales as well as the benefit from product mix.

International Segment. International revenue and operating profit increased 18% and 72%, respectively, over prior year. On a constant currency basis sales and profit increased 8% and 57%, respectively. On a constant currency basis, the company experienced growth in: the Americas, driven primarily by lapping last year’s COVID shutdown; Australia due to continued favorable consumer sentiment; and Europe, driven by growth of Champion despite continued COVID-related headwinds in the region. Constant currency sales in Asia Pacific declined over prior year as Japan continued to be negatively impacted by COVID-related restrictions, which more than offset growth in South Korea and China.

International segment operating profit increased 72% to $87 million compared to prior year period and the segment’s operating margin increased 540 basis points to 17.2%. The improvement in profitability was driven primarily by volume leverage from higher sales.

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 June 1, 2021, to stockholders of record at the close of business on May 21, 2021.


The declared cash dividend represents the 33rd consecutive quarterly return of cash to stockholders. The company has paid a cumulative $1.4 billion in quarterly cash dividends since initiating its program in April 2013.

Second Quarter and Full-year 2021 Financial Outlook

The following financial outlook is based on current market conditions and judgments of management and is subject to risks and uncertainties that may cause actual results to differ materially, many of which are further discussed in the company’s most recent annual report on Form 10-K available at www.sec.gov and in the investors section of the company’s website at www.Hanes.com/Investors.

For the second quarter of 2021 which ends on July 3, 2021, the company currently expects:

 

   

Net sales from continuing operations of approximately $1.56 billion to $1.59 billion, which represents approximately 2% growth at the midpoint and includes a projected benefit of approximately $35 million from changes in foreign currency exchange rates. This compares to net sales of $1.54 billion in second-quarter 2020, which included $614 million in PPE sales.

 

   

Excluding PPE, net sales at the midpoint of the guidance range are expected to increase 69% over prior year period.

 

   

While the company expects a modest amount of sales from one-time benefits, including retailer restocking and stimulus-related spending, to continue into the second quarter, the benefit is expected to be significantly lower than first-quarter levels. For the second half of 2021, the company’s guidance does not assume any additional stimulus or inventory restocking benefits.

 

   

GAAP operating profit from continuing operations to range from approximately $179 million to $189 million.

 

   

Adjusted operating profit from continuing operations to range from approximately $200 million to $210 million. The midpoint of adjusted operating profit implies an operating margin of approximately 13.0% and reflects the impact of inflation, particularly transportation, as well as increased brand investment. This compares to an adjusted operating margin of 15.2% in the second quarter of 2020, which benefited from significant fixed cost leverage due to PPE volume-driven efficiencies in the supply chain as well as temporary COVID-driven cost reductions.

 

   

Charges for actions related to Full Potential of approximately $21 million.

 

   

Interest and Other expenses of approximately $45 million.

 

   

An effective tax rate of approximately 15% on a GAAP and adjusted basis.

 

   

GAAP earnings per share from continuing operations to range from $0.32 to $0.35. Adjusted earnings per share from continuing operations to range from $0.37 to $0.40.

For fiscal year 2021, which ends on January 1, 2022, the company currently expects:

 

   

Net sales from continuing operations to total approximately $6.2 billion to $6.3 billion, which includes a projected benefit of approximately $100 million from changes in foreign currency exchange rates. At the midpoint, net sales guidance implies approximately 2% growth over prior year and 3% growth adjusted for the 53rd week in 2020. This compares to net sales of $6.13 billion in 2020, which included $820 million in sales of PPE.

 

   

Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 19% over prior year period.

 

   

GAAP operating profit from continuing operations to range from approximately $730 million to $760 million.


   

Adjusted operating profit from continuing operations to range from approximately $815 million to $845 million. The midpoint of adjusted operating profit suggests an operating margin of 13.3%, compared with an adjusted operating margin of 12.7% in 2020.

 

   

Incremental brand marketing investment of $50 million as compared to 2020.

 

   

As compared to 2019, at the midpoint of the company’s full-year 2021 guidance, which includes incremental brand investment and COVID-related expenses, net sales and adjusted operating profit are expected to be above 2019 levels.

 

   

Charges for actions related to Full Potential of approximately $85 million.

 

   

Interest and Other expenses of approximately $185 million.

 

   

An effective tax rate of approximately 14% on a GAAP basis and approximately 15% on an adjusted basis.

 

   

GAAP earnings per share from continuing operations to range from approximately $1.33 to $1.41.

 

   

Adjusted earnings per share from continuing operations to range from approximately $1.51 to $1.59.

 

   

Cash flow from operations to range from $500 million to $550 million.

 

   

Capital expenditures of approximately $140 million, which includes approximately $50 million related to Full Potential.

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 from continuing operations, adjusted income tax expense, adjusted income from continuing operations before income tax expense, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA and adjusted EBITDA.

Adjusted EPS from continuing operations is defined as diluted EPS from continuing operations excluding actions and the tax effect on actions. Adjusted income from continuing operations is defined as income 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 from continuing operations before income tax is defined as income 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.

Charges for actions 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. Charges for actions taken in 2021 include professional fees and first quarter’s intangible asset impairment charges related to our Full Potential plan.


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 income from continuing operations 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.

HanesBrands is a global company that reports financial information in U.S. dollars in accordance with GAAP. As a supplement to the company’s reported operating results, HanesBrands also presents constant-currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. The company uses constant-currency information to provide a framework to assess how the business performed excluding the effects of changes in the rates used to calculate foreign currency translation.

To calculate foreign currency translation on a constant currency basis, operating results for the current-year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).


HanesBrands believes constant-currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in the company’s businesses.

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or substitute for, financial results prepared in accordance with GAAP. Further, the non-GAAP measures presented may be different from non-GAAP measures with similar or identical names presented by other companies.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are presented in the supplemental financial information included with this news release.

Cautionary Statement Concerning Forward-Looking Statements

This 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 pandemic on our business and financial performance; guidance and predictions regarding expected operating results, including related to our Full Potential plan; the disposal of our European Innerwear business; and statements made in the Second Quarter and Full-year 2021 Financial Outlook 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: our ability to successfully executive our Full Potential plan to achieve the desired results; the potential effects of the COVID-19 pandemic, including on consumer spending, global supply chains and the financial markets; the highly competitive and evolving nature of the industry in which we compete; the rapidly changing retail environment; 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; significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex multinational tax structure; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward- looking statement speaks only as of the date on which such statement is made, and HanesBrands undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.


HanesBrands

HanesBrands (NYSE: HBI) makes everyday apparel that is known and loved by consumers around the world for comfort, quality and value. Among the company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Champion, an innovator at the intersection of lifestyle and athletic apparel; and Bonds, which is setting new standards for design and sustainability. HBI employs 61,000 associates in 47 countries and has built a strong reputation for workplace quality and ethical business practices. The company, a longtime leader in sustainability, launched aggressive 2030 goals to improve the lives of people, protect the planet and produce sustainable products. HBI is building on its unmatched strengths to unlock its #FullPotential and deliver long-term growth that benefits all of its stakeholders.

# # #


TABLE 1

HANESBRANDS INC.

Condensed Consolidated Statements of Income and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

 

     Quarters Ended        
     April 3,
2021
    March 28,
2020
    % Change  

Net sales

   $ 1,508,029   $ 1,203,070     25.3

Cost of sales

     905,348     784,902  
  

 

 

   

 

 

   

Gross profit

     602,681     418,168     44.1

As a % of net sales

     40.0     34.8  

Selling, general and administrative expenses

     412,559     370,215  

As a % of net sales

     27.4     30.8  
  

 

 

   

 

 

   

Operating profit

     190,122     47,953     296.5

As a % of net sales

     12.6     4.0  

Other expenses

     2,561     6,101  

Interest expense, net

     44,460     36,027  
  

 

 

   

 

 

   

Income from continuing operations before income tax expense

     143,101     5,825  

Income tax expense

     14,697     707  
  

 

 

   

 

 

   

Income from continuing operations

     128,404     5,118     2,408.9

Loss from discontinued operations, net of tax

     (391,666     (12,992  
  

 

 

   

 

 

   

Net loss

   $ (263,262   $ (7,874  
  

 

 

   

 

 

   

Earnings (loss) per share - basic:

      

Continuing operations

   $ 0.37   $ 0.01  

Discontinued operations

     (1.12     (0.04  
  

 

 

   

 

 

   

Net loss

   $ (0.75   $ (0.02  
  

 

 

   

 

 

   

Earnings (loss) per share - diluted:

      

Continuing operations

   $ 0.37   $ 0.01  

Discontinued operations

     (1.11     (0.04  
  

 

 

   

 

 

   

Net loss

   $ (0.75   $ (0.02  
  

 

 

   

 

 

   

Weighted average shares outstanding:

      

Basic

     351,003     359,017  

Diluted

     351,686     359,436  

The following tables present a reconciliation of reported results on a constant currency basis for the quarter ended April 3, 2021 and a comparison to prior year:

 

     Quarter Ended April 3, 2021                      
     As Reported      Impact from
Foreign
Currency1
     Constant
Currency
     Quarter Ended
March 28,
2020
     % Change,
As Reported
    % Change,
Constant
Currency
 

As reported under GAAP:

                

Net sales

   $ 1,508,029    $ 43,073    $ 1,464,956    $ 1,203,070      25.3     21.8

Gross profit

     602,681      24,182      578,499      418,168      44.1     38.3

Operating profit

     190,122      7,533      182,589      47,953      296.5     280.8

Diluted earnings per share from continuing operations

   $ 0.37    $ 0.02    $ 0.35    $ 0.01      3,600.0     3,400.0

As adjusted:2

                

Net sales

   $ 1,508,029    $ 43,073    $ 1,464,956    $ 1,203,070      25.3     21.8

Gross profit

     605,488      24,182      581,306      439,979      37.6     32.1

Operating profit

     209,515      7,533      201,982      72,277      189.9     179.5

Diluted earnings per share from continuing operations

   $ 0.39    $ 0.02    $ 0.37    $ 0.07      457.1     428.6

 

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 

Results for the quarters ended April 3, 2021 and March 28, 2020 reflect adjustments for restructuring and other action-related charges. 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        
     April 3,
2021
    March 28,
2020
    % Change  

Segment net sales:

      

Innerwear1

   $ 570,435   $ 422,402     35.0

Activewear

     364,003     288,000     26.4

International

     506,261     428,230     18.2

Other

     67,330     64,438     4.5
  

 

 

   

 

 

   

 

 

 

Total net sales

   $ 1,508,029   $ 1,203,070     25.3
  

 

 

   

 

 

   

 

 

 

Segment operating profit:

      

Innerwear1

   $ 127,417   $ 81,551     56.2

Activewear

     60,594     8,108     647.3

International

     87,180     50,745     71.8

Other

     1,886     (3,393     NM  

General corporate expenses/other

     (67,562     (64,734     4.4
  

 

 

   

 

 

   

 

 

 

Total operating profit before restructuring and other action-related charges

     209,515     72,277     189.9

Restructuring and other action-related charges

     (19,393     (24,324     (20.3
  

 

 

   

 

 

   

 

 

 

Total operating profit

   $ 190,122   $ 47,953     296.5
  

 

 

   

 

 

   

 

 

 

 

1 

The Innerwear segment includes approximately $4 million of net sales and no operating profit from the sale of personal protective equipment in the first quarter of 2021.

Including the favorable foreign currency impact of $16 million, global Champion sales excluding C9 Champion increased approximately 26% in the first quarter of 2021 compared to the first quarter of 2020. On a constant currency basis, global Champion sales increased approximately 22%.


TABLE 3

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

     April 3,
2021
    January 2,
2021
 

Assets

    

Cash and cash equivalents

   $ 530,403   $ 900,615

Trade accounts receivable, net

     807,738     768,221

Inventories

     1,489,565     1,367,758

Other current assets

     153,358     158,700

Current assets of discontinued operations

     303,045     234,086
  

 

 

   

 

 

 

Total current assets

     3,284,109     3,429,380

Property, net

     458,434     477,821

Right-of-use assets

     416,136     432,631

Trademarks and other identifiable intangibles, net

     1,269,932     1,293,847

Goodwill

     1,150,138     1,158,938

Deferred tax assets

     355,826     367,976

Other noncurrent assets

     54,678     64,773

Noncurrent assets of discontinued operations

     —         494,501
  

 

 

   

 

 

 

Total assets

   $ 6,989,253   $ 7,719,867
  

 

 

   

 

 

 

Liabilities

    

Accounts payable

   $ 976,887   $ 891,868

Accrued liabilities

     571,410     609,864

Lease liabilities

     132,127     136,510

Current portion of long-term debt

     34,375     263,936

Current liabilities of discontinued operations

     288,936     222,183
  

 

 

   

 

 

 

Total current liabilities

     2,003,735     2,124,361

Long-term debt

     3,649,631     3,739,434

Lease liabilities - noncurrent

     315,382     331,577

Pension and postretirement benefits

     333,460     381,457

Other noncurrent liabilities

     202,564     216,091

Noncurrent liabilities of discontinued operations

     —         112,989
  

 

 

   

 

 

 

Total liabilities

     6,504,772     6,905,909
  

 

 

   

 

 

 

Stockholders’ equity

    

Preferred stock

     —         —    

Common stock

     3,491     3,488

Additional paid-in capital

     304,090     307,883

Retained earnings

     753,785     1,069,546

Accumulated other comprehensive loss

     (576,885     (566,959
  

 

 

   

 

 

 

Total stockholders’ equity

     484,481     813,958
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 6,989,253   $ 7,719,867
  

 

 

   

 

 

 


TABLE 4

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

     Quarters Ended  
     April 3,
20211
    March 28,
20201
 

Operating Activities:

    

Net loss

   $ (263,262   $ (7,874

Adjustments to reconcile net loss to net cash from operating activities:

    

Depreciation

     24,142     22,781

Amortization of acquisition intangibles

     6,179     6,113

Other amortization

     3,020     2,477

Impairment of intangible assets and goodwill

     163,047     —    

Loss on classification of assets held for sale

     226,352     —    

Amortization of debt issuance costs

     4,580     2,123

Other

     (5,835     (5,258

Changes in assets and liabilities:

    

Accounts receivable

     (63,955     73,694

Inventories

     (122,781     (86,785

Other assets

     9,606     26,790

Accounts payable

     109,197     (13,605

Accrued pension and postretirement benefits

     (38,757     (21,481

Accrued liabilities and other

     (34,587     (82,191
  

 

 

   

 

 

 

Net cash from operating activities

     16,946     (83,216
  

 

 

   

 

 

 

Investing Activities:

    

Capital expenditures

     (17,804     (25,759

Proceeds from sales of assets

     2,406     66

Other

     1,794     1,216
  

 

 

   

 

 

 

Net cash from investing activities

     (13,604     (24,477
  

 

 

   

 

 

 

Financing Activities:

    

Repayments on Term Loan Facilities

     (300,000     —    

Borrowings on Accounts Receivable Securitization Facility

     —         227,061

Repayments on Accounts Receivable Securitization Facility

     —         (74,909

Borrowings on Revolving Loan Facilities

     —         1,638,000

Repayments on Revolving Loan Facilities

     —         (688,000

Borrowings on International Debt

     —         31,222

Borrowings on notes payable

     21,106     62,312

Repayments on notes payable

     (20,276     (64,352

Share repurchases

     —         (200,269

Cash dividends paid

     (52,351     (53,683

Other

     (2,902     132
  

 

 

   

 

 

 

Net cash from financing activities

     (354,423     877,514
  

 

 

   

 

 

 

Effect of changes in foreign exchange rates on cash

     (17,662     (15,061
  

 

 

   

 

 

 

Change in cash, cash equivalents and restricted cash

     (368,743     754,760

Cash, cash equivalents and restricted cash at beginning of year

     910,603     329,923
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

     541,860     1,084,683

Less restricted cash at end of period

     1,153     903
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 540,707   $ 1,083,780
  

 

 

   

 

 

 

Balances included in the Condensed Consolidated Balance Sheets:

    

Cash and cash equivalents

   $ 530,403   $ 1,069,490

Cash and cash equivalents included in current assets of discontinued operations

     10,304     14,290
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 540,707   $ 1,083,780
  

 

 

   

 

 

 

 

1 

The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.


TABLE 5

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

     Quarter Ended April 3, 2021  
     Gross Profit     Selling, General
and
Administrative
Expenses
    Operating
Profit
    Income
From
Continuing
Operations
Before
Income Tax
Expense
     Income Tax
Expense
    Income
From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

   $ 602,681   $ (412,559   $ 190,122   $ 143,101    $ (14,697   $ 128,404   $ 0.37

As a percentage of net sales

     40.0     27.4     12.6         

Restructuring and other action-related charges:

               

Full Potential Plan:

               

Professional services

     —         11,706     11,706     11,706      —         11,706     0.03

Impairment of intangible assets

     —         7,302     7,302     7,302      —         7,302     0.02

Other

     2,807     (2,422     385     385      —         385     —    

Discrete tax benefit

     —         —         —         —          (7,295     (7,295     (0.02

Tax effect on actions

     —         —         —         —          (4,007     (4,007     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

     2,807     16,586     19,393     19,393      (11,302     8,091     0.02
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As adjusted

   $ 605,488   $ (395,973   $ 209,515   $ 162,494    $ (25,999   $ 136,495   $ 0.39
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As a percentage of net sales

     40.2     26.3     13.9         

 

     Quarter Ended March 28, 2020  
     Gross Profit     Selling, General
and
Administrative
Expenses
    Operating
Profit
    Income
From
Continuing
Operations
Before
Income Tax
Expense
     Income Tax
Expense
    Income
From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

   $ 418,168   $ (370,215   $ 47,953   $ 5,825    $ (707   $ 5,118   $ 0.01

As a percentage of net sales

     34.8     30.8     4.0         

Restructuring and other action-related charges:

               

Supply chain actions

     14,065     —         14,065     14,065      —         14,065     0.04

Program exit costs

     7,746     467     8,213     8,213      —         8,213     0.02

Other restructuring costs

     —         2,046     2,046     2,046      —         2,046     0.01

Tax effect on actions

     —         —         —         —          (3,526     (3,526     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

     21,811     2,513     24,324     24,324      (3,526     20,798     0.06
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As adjusted

   $ 439,979   $ (367,702   $ 72,277   $ 30,149    $ (4,233   $ 25,916   $ 0.07
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As a percentage of net sales

     36.6     30.6     6.0         

 

1 

Amounts may not be additive due to rounding.


HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

     Last Twelve Months  
     April 3,
2021
    March 28,
2020
 

EBITDA1:

    

Income from continuing operations

   $ 90,999   $ 502,787

Interest expense, net

     172,671     165,148

Income tax expense (benefit)

     (95,950     61,959

Depreciation and amortization

     116,816     114,164
  

 

 

   

 

 

 

Total EBITDA

     284,536     844,058

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

     729,265     65,663

Stock compensation expense

     12,504     8,328
  

 

 

   

 

 

 

Total EBITDA, as adjusted

   $ 1,026,305   $ 918,049
  

 

 

   

 

 

 

Net debt:

    

Debt (current and long-term debt and Accounts Receivable Securitization Facility)

   $ 3,684,006   $ 4,391,641

Notes payable

     —         1,660

(Less) Cash and cash equivalents

     (530,403     (1,069,490
  

 

 

   

 

 

 

Net debt

   $ 3,153,603   $ 3,323,811
  

 

 

   

 

 

 

Net debt/EBITDA, as adjusted

     3.1     3.6
  

 

 

   

 

 

 

 

1 

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

 

     Quarters Ended  
     April 3, 20211     March 28,
20201
 

Free cash flow:

    

Net cash from operating activities

   $ 16,946   $ (83,216

Capital expenditures

     (17,804     (25,759
  

 

 

   

 

 

 

Free cash flow

   $ (858   $ (108,975
  

 

 

   

 

 

 

 

1 

Free cash flow includes the results from continuing and discontinued operations.


TABLE 6

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of GAAP Outlook to Adjusted Outlook

(in thousands, except per share data)

(Unaudited)

 

     Quarter Ended    Year Ended
     July 3,
2021
   January 1,
2022

Operating profit outlook, as calculated under GAAP

   $179,000 to $189,000    $730,000 to $760,000

Restructuring and other action-related charges

   $21,000    $85,000
  

 

  

 

Operating profit outlook, as adjusted

   $200,000 to $210,000    $815,000 to $845,000
  

 

  

 

Diluted earnings per share from continuing operations, as calculated under GAAP1

   $0.32 to $0.35    $1.33 to $1.41

Restructuring and other action-related charges

   $0.05    $0.18
  

 

  

 

Diluted earnings per share from continuing operations, as adjusted

   $0.37 to $0.40    $1.51 to $1.59
  

 

  

 

 

1 

The company expects approximately 352 million diluted weighted average shares outstanding for the quarter ended July 3, 2021 and approximately 353 million diluted weighted average shares outstanding for the year ended January 1, 2022.

EX-99.2

Exhibit 99.2

 

FOR IMMEDIATE RELEASE    LOGO

HanesBrands Announces Full Potential Plan to Drive Approximately

$1.2 Billion in Incremental Revenue and Operating Margins Above 14%

by 2024

Company to Host Virtual Investor Day Today to Provide Additional Details

 

   

Full Potential to drive global Champion growth of approximately $1 billion

 

   

Plan to re-ignite innerwear growth with $200 million in incremental sales

 

   

Revenue to increase from $6.25 billion in 2021 to approximately $7.4 billion by 2024, or 6% compound annual growth

 

   

Company will strategically invest in brands and e-commerce to deliver growth across owned channels and retail partnerships

 

   

Full Potential focuses portfolio on biggest growth opportunities in North America, China, Australia and Europe

 

   

Company to fully self-fund strategic investments

WINSTON-SALEM, N.C. (May 11, 2021) – HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today unveiled Full Potential, a three-year growth plan designed to drive approximately $1.2 billion in incremental revenue and expand operating margins to 14.3% by 2024.

Full Potential unlocks the enormous opportunities of HanesBrands, building on its iconic brands, world-class supply chain, deep consumer loyalty, broad channel distribution and global footprint. The plan drives rapid growth of the Champion brand by investing in key geographic markets, expanding into women’s and kids’ apparel and casual footwear, and creating a premiere online experience at Champion.com.

Full Potential also seeks to drive renewed innerwear growth by delivering innovation and breakthrough marketing that appeals to younger consumers. The company is investing in its portfolio of leading innerwear brands and expanding its e-commerce and digital capabilities to deliver a seamless consumer experience to drive growth with retail partners and in online channels.

“HanesBrands is an amazing company with a portfolio of strong, iconic brands and significant and sustainable competitive advantages,” said CEO Steve Bratspies. “Full Potential builds on these advantages to deliver approximately $1.2 billion in topline growth as well as improved profitability over the next three years. We are putting the consumer at the center of everything we do. We’ll do this by investing in innovation that delivers products that meet consumers’ needs and by creating a seamless experience that lets consumers shop for our products how, when and where they want to shop.”


Full Potential Plan

The Full Potential plan consists of four growth pillars:

 

   

Grow global Champion. The plan calls for Champion to become a $3 billion global brand by 2024, representing a 14% compound annual growth rate (CAGR) from projected 2021 sales of approximately $2 billion.

Consumers view Champion as uniquely able to meet the needs of both lifestyle and athletic apparel. The company is increasing investment behind the Champion brand platform, “Be Your Own Champion,” to tap into the significant growth opportunity at the intersection of sports and lifestyle.

Champion’s growth strategy is organized around four actions:

 

  1.

Forging deeper connections with consumers, focusing on three key consumer segments that represent approximately 70% of global activewear category spend.

 

  2.

Creating compelling product for each of these segments through globally coordinated design and innovation. In addition to expanding its strong share position in sweats, the company is focused on expanding Champion’s offerings in women’s and kids’ apparel, innerwear and casual athletic footwear.

 

  3.

Growing in key geographies: North America, China, Japan, South Korea and the Big 5 markets in Europe through a combination of digital, wholesale and distribution partners.

 

  4.

Expanding online channels, with a focus on making Champion.com a premier brand and shopping experience globally.

 

   

Re-ignite innerwear growth. The company expects global innerwear revenue growth of approximately $200 million through 2024, driven by sales in the United States and Australia. This growth represents a 2% compound annual growth rate on top of 2021 projected sales of nearly $3.7 billion.

In the U.S., the company is pivoting to accelerated and sustainable revenue and profit growth by revitalizing its core, with a focus on doubling its share with consumers under the age of 39. The company believes it can capture significant growth opportunities by leveraging its iconic brands such as Hanes, Maidenform and Bali and its leading share positions and route-to-market scale. HanesBrands is also applying a more consumer-centric, globally coordinated approach to product design and innovation, as well as increasing investments in brand marketing and e-commerce initiatives.


In Australia, Bonds has become the leading innerwear brand by delivering breakthrough product innovation and consumer marketing. The company plans to fuel continued growth through ongoing investment in the Bonds brand and its e-commerce infrastructure.

 

   

Drive consumer-centricity. The company is putting the consumer at the center of everything it does. This consumer-centric mindset is expected to drive growth by delivering innovative products consumers need; improving awareness through increased investments in brand marketing; and making focused investments in digital capabilities, including digital marketing, e-commerce and advanced analytics. The company believes these investments will better empower consumers to shop where, when and how they like to shop.

 

   

Focus the portfolio. The company will continue to simplify all aspects of its business – from global holdings to SKU counts – to enable investment in its key global brands, categories and growth markets.

To enable and unlock growth, the Full Potential plan includes a number of well-defined and well-resourced initiatives. These initiatives fall into five broad categories:

 

   

Win with brands and products. The company will enhance its global design and innovation capabilities to leverage its leading brand portfolio and to meet the needs of both current and new consumer segments.

 

   

Supply chain segmentation. The company is building on the competitive advantages of its world-class supply chain by adding capabilities to address the unique needs of each of its brands, increase speed-to-market and become more efficient in serving direct-to-consumer channels.

 

   

Simplicity. The company is simplifying its processes, organization and approaches to make decisions faster.

 

   

Technology modernization. The company is investing in data analytics and technologies to reduce costs, gain business insights as well as improve decision making, forecasting and planning. The company is also streamlining its systems and building capabilities to deliver a seamless online consumer experience.

 

   

Winning organization and culture. The company’s culture is a significant strength around the globe. The company is further investing in its people and next-generation talent to accelerate results and deliver sustainable, profitable growth.


Full Potential Three-Year Financial Outlook

HanesBrands expects the Full Potential plan to generate both higher and more consistent levels of revenue growth while increasing overall profitability.

Using the midpoint of the company’s 2021 guidance for continuing operations as the base year, the Full Potential plan calls for:

 

   

Revenue to increase from $6.25 billion to approximately $7.4 billion by 2024, representing an incremental $1.15 billion of revenue, or a 6% compound annual growth rate.

 

   

Approximately $1 billion of growth in its global activewear business, representing an 11% CAGR, to be driven predominantly by the Champion brand.

 

   

Approximately $200 million of growth in its global innerwear business, driven by renewed growth in the United States as a result of revitalizing its core. At the same time, the company will seek to double its share with younger consumers and to continue growing in Australia. This growth represents a 2% CAGR, which is well above projected global innerwear category growth.

 

   

Operating margins to expand 100 basis points to approximately 14.3% in 2024, compared to the midpoint of the company’s 2021 guidance of 13.3%.

 

   

Incremental investments of approximately $160 million over the three-year period ending 2024, including: $90 million in brand marketing, $40 million of depreciation related to growth-driving capital investments, and $30 million for technology and people. By 2024, the company expects its annual brand marketing investments to essentially double as compared to 2020, to 4% of sales.

 

   

Targeted cost savings of approximately $160 million are expected to fully offset the increased investments. Cost savings initiatives designed to drive efficiencies and accelerate revenue growth fall into three broad categories: sustainability initiatives, technology initiatives and everyday cost management.

 

   

An incremental $300 million of capital investment above the historical run-rate, over three years ending 2024, with the vast majority going to supply chain and technology initiatives. On average, this represents total annual capex spend of approximately $185 million per year, although the company anticipates higher than average spend levels in the first two years of the plan in order to realize projected growth and cost savings initiatives in 2024 and beyond.


   

An earnings per share CAGR of approximately 9% through 2024.

 

   

An average annual tax rate of approximately 18%.

 

   

Average annual cash flow from operations of approximately $700 million.

Virtual Investor Day

HanesBrands will host a virtual investor day at 8:30 a.m. EDT on Tuesday May 11, 2021. The event, which will consist of prepared presentations followed by a live question-and-answer session, as well as an Investor Day Handout, may be accessed via the investors section of the HanesBrands corporate website, www.Hanes.com/Investors. The event is expected to conclude by 11:30 a.m. EDT. Replays of the event will be available on the investors section of the HanesBrands corporate website.

HanesBrands

HanesBrands (NYSE: HBI) makes everyday apparel that is known and loved by consumers around the world for comfort, quality and value. Among the company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Champion, an innovator at the intersection of lifestyle and athletic apparel; and Bonds, which is setting new standards for design and sustainability. HBI employs 61,000 associates in 47 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.

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 our Full Potential plan and statements made in the Full Potential Three-Year Financial Outlook 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: our ability to successfully execute our Full Potential plan in order to achieve the desired results, the potential effects of the COVID-19 pandemic, including on consumer spending, global supply chains and the financial markets; the highly competitive and evolving nature of the industry in which we compete; the rapidly changing retail


environment; 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; 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.

EX-99.3

Exhibit 99.3

 

LOGO

Investor Day

Handout

May 11, 2021

 

 

LOGO

 

1


Table of Contents

 

     Page

Financial Tables

  

Table 1 - Condensed Consolidated Statements of Income - Including European Innerwear Business as Discontinued Operations - As REPORTED

   4

Table 2 - Condensed Consolidated Statements of Income - Including European Innerwear Business as Discontinued Operations - As ADJUSTED

   5

Table 3 - Reconciliation of Select GAAP Measures to Non-GAAP Measures and Supplemental Financial Information - Including European Innerwear Business as Discontinued Operations

   6

Table 4 - Reconciliation of GAAP Outlook to Adjusted Outlook - Q1, Q2 and Full Year 2021

   14

Appendix

  

Table 5 - Reconciliation of Select GAAP Measures to Non-GAAP Measures

   16

 

LOGO

 

2


 

Financial Tables

 

 

 

 

LOGO

 

3


TABLE 1

HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Condensed Consolidated Statements of Income - As REPORTED

(in thousands, except per share data)

(Unaudited)

 

    Quarters Ended     Year Ended     Quarters Ended     Year Ended  
    March 30,
2019
    June 29,
2019
    September 28,
2019
    December 28,
2019
    December 28,
2019
    March 28,
2020
    June 27,
2020
    September 26,
2020
    January 2,
2021
    January 2,
2021
 

Net sales

  $ 1,449,687     $ 1,636,709     $ 1,729,308     $ 1,610,012     $ 6,425,716     $ 1,203,070     $ 1,543,083     $ 1,691,863     $ 1,689,145     $ 6,127,161  

Cost of sales

    904,765       1,032,527       1,082,839       976,883       3,997,014       784,902       1,029,221       1,120,392       1,589,946       4,524,461  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    544,922       604,182       646,469       633,129       2,428,702       418,168       513,862       571,471       99,199       1,602,700  

As a % of net sales

    37.6     36.9     37.4     39.3     37.8     34.8     33.3     33.8     5.9     26.2

Selling, general and administrative expenses

    405,314       384,289       385,291       403,123       1,578,017       370,215       311,729       382,384       495,706       1,560,034  

As a % of net sales

    28.0     23.5     22.3     25.0     24.6     30.8     20.2     22.6     29.3     25.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

    139,608       219,893       261,178       230,006       850,685       47,953       202,133       189,087       (396,507     42,666  

As a % of net sales

    9.6     13.4     15.1     14.3     13.2     4.0     13.1     11.2     (23.5 )%      0.7

Other expenses

    7,166       7,952       7,772       7,311       30,201       6,101       4,653       4,898       5,003       20,655  

Interest expense, net

    47,803       46,296       42,272       40,553       176,924       36,027       41,075       43,500       43,636       164,238  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income tax expense

    84,639       165,645       211,134       182,142       643,560       5,825       156,405       140,689       (445,146     (142,227

Income tax expense (benefit)

    8,984       15,595       22,129       23,528       70,236       707       19,837       22,464       (152,948     (109,940
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

    75,655       150,050       189,005       158,614       573,324       5,118       136,568       118,225       (292,198     (32,287

Income (loss) from discontinued operations, net of tax

    5,433       (495     (3,914     26,372       27,396       (12,992     24,613       (14,947     (39,966     (43,292
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ 81,088     $ 149,555     $ 185,091     $ 184,986     $ 600,720     $ (7,874   $ 161,181     $ 103,278     $ (332,164   $ (75,579
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share - basic:

                       

Continuing operations

  $ 0.21     $ 0.41     $ 0.52     $ 0.43     $ 1.57     $ 0.01     $ 0.39     $ 0.34     $ (0.83   $ (0.09

Discontinued operations

    0.01       0.00       (0.01     0.07       0.08       (0.04     0.07       (0.04     (0.11     (0.12
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ 0.22     $ 0.41     $ 0.51     $ 0.51     $ 1.65     $ (0.02   $ 0.46     $ 0.29     $ (0.95   $ (0.21
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share - diluted:

                       

Continuing operations

  $ 0.21     $ 0.41     $ 0.52     $ 0.43     $ 1.57     $ 0.01     $ 0.39     $ 0.34     $ (0.83   $ (0.09

Discontinued operations

    0.01       0.00       (0.01     0.07       0.07       (0.04     0.07       (0.04     (0.11     (0.12
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ 0.22     $ 0.41     $ 0.51     $ 0.51     $ 1.64     $ (0.02   $ 0.46     $ 0.29     $ (0.95   $ (0.21
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

                       

Basic

    364,570       364,637       364,743       364,885       364,709       359,017       350,538       350,703       350,807       352,766  

Diluted

    365,299       365,537       365,597       365,644       365,519       359,436       350,829       351,604       350,807       352,766  

 

LOGO

 

4


TABLE 2

HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Condensed Consolidated Statements of Income - As ADJUSTED

(in thousands, except per share data)

(Unaudited)

 

    Quarters Ended     Year Ended     Quarters Ended     Year Ended  
    March 30,
20191
    June 29,
20191
    September 28,
20191
    December 28,
20191
    December 28,
20191
    March 28,
2020
    June 27,
2020
    September 26,
2020
    January 2,
2021
    January 2,
2021
 

Net sales, as adjusted

  $ 1,355,583     $ 1,517,999     $ 1,610,610     $ 1,522,077     $ 6,006,269     $ 1,203,070     $ 1,543,083     $ 1,691,863     $ 1,689,145     $ 6,127,161  

Cost of sales, as adjusted

    823,076       936,557       991,123       901,224       3,651,980       763,091       1,010,803       1,072,793       1,007,156       3,853,843  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit, as adjusted

    532,507       581,442       619,487       620,853       2,354,289       439,979       532,280       619,070       681,989       2,273,318  

As a % of net sales

    39.3     38.3     38.5     40.8     39.2     36.6     34.5     36.6     40.4     37.1

Selling, general and administrative expenses, as adjusted

    392,646       374,577       375,738       392,987       1,535,948       367,702       297,868       377,726       453,160       1,496,456  

As a % of net sales

    29.0     24.7     23.3     25.8     25.6     30.6     19.3     22.3     26.8     24.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit, as adjusted

    139,861       206,865       243,749       227,866       818,341       72,277       234,412       241,344       228,829       776,862  

As a % of net sales

    10.3     13.6     15.1     15.0     13.6     6.0     15.2     14.3     13.5     12.7

Other expenses

    7,166       7,952       7,772       7,311       30,201       6,101       4,653       4,898       5,003       20,655  

Interest expense, net

    47,803       46,296       42,272       40,553       176,924       36,027       41,075       43,500       43,636       164,238  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income tax expense, as adjusted

    84,892       152,617       193,705       180,002       611,216       30,149       188,684       192,946       180,190       591,969  

Income tax expense, as adjusted

    9,019       13,758       19,670       38,319       80,766       4,233       26,532       32,937       31,700       95,402  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations, as adjusted

  $ 75,873     $ 138,859     $ 174,035     $ 141,683     $ 530,450     $ 25,916     $ 162,152     $ 160,009     $ 148,490     $ 496,567  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share - basic:

                       

Continuing operations, as adjusted

  $ 0.21     $ 0.38     $ 0.48     $ 0.39     $ 1.45     $ 0.07     $ 0.46     $ 0.46     $ 0.42     $ 1.41  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share - diluted:

                       

Continuing operations, as adjusted

  $ 0.21     $ 0.38     $ 0.48     $ 0.39     $ 1.45     $ 0.07     $ 0.46     $ 0.46     $ 0.42     $ 1.40  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

                       

Basic

    364,570       364,637       364,743       364,885       364,709       359,017       350,538       350,703       350,807       352,766  

Diluted

    365,299       365,537       365,597       365,644       365,519       359,436       350,829       351,604       351,933       353,451  

 

1

Results for the quarters ended March 30, 2019, June 29, 2019, September 28, 2019, December 28, 2019 and year ended December 28, 2019 reflect adjustments for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

LOGO

 

5


TABLE 3

HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Reconciliation of Select GAAP Measures to Non-GAAP Measures and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

 

    Quarter Ended March 28, 2020  
    Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 418,168     $ (370,215   $ 47,953     $ 5,825     $ (707   $ 5,118     $ 0.01  

As a percentage of net sales

    34.8     30.8     4.0        

Restructuring and other action-related charges:

             

Supply chain actions

    14,065       —         14,065       14,065       —         14,065       0.04  

Program exit costs

    7,746       467       8,213       8,213       —         8,213       0.02  

Other restructuring costs

    —         2,046       2,046       2,046       —         2,046       0.01  

Tax effect on actions

    —         —         —         —         (3,526     (3,526     (0.01
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    21,811       2,513       24,324       24,324       (3,526     20,798       0.06  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 439,979     $ (367,702   $ 72,277     $ 30,149     $ (4,233   $ 25,916     $ 0.07  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

    36.6     30.6     6.0        

 

    Quarter Ended March 30, 2019  
    Net Sales     Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 1,449,687     $ 544,922     $ (405,314   $ 139,608     $ 84,639     $ (8,984   $ 75,655     $ 0.21  

Less exited programs2

    (94,104     (29,888     8,965       (20,923     (20,923     2,950       (17,973     (0.05
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As rebased

    1,355,583       515,034       (396,349     118,685       63,716       (6,034     57,682       0.16  

As a percentage of net sales

      38.0     29.2     8.8        

Restructuring and other action-related charges:

               

Supply chain actions

    —         17,473       —         17,473       17,473       —         17,473       0.05  

Other restructuring costs

    —         —         3,703       3,703       3,703       —         3,703       0.01  

Tax effect on actions

    —         —         —         —         —         (2,985     (2,985     (0.01
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    —         17,473       3,703       21,176       21,176       (2,985     18,191       0.05  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 1,355,583     $ 532,507     $ (392,646   $ 139,861     $ 84,892     $ (9,019   $ 75,873     $ 0.21  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

      39.3     29.0     10.3        

 

1 

Amounts may not be additive due to rounding.

2 

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

LOGO

 

6


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Reconciliation of Select GAAP Measures to Non-GAAP Measures and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

 

    Quarter Ended June 27, 2020  
    Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 513,862     $ (311,729   $ 202,133     $ 156,405     $ (19,837   $ 136,568     $ 0.39  

As a percentage of net sales

    33.3     20.2     13.1        

Restructuring and other action-related charges:

             

Supply chain actions

    2,637       —         2,637       2,637       —         2,637       0.01  

Program exit costs

    1,285       —         1,285       1,285       —         1,285       0.00  

Other restructuring costs

    (373     4,443       4,070       4,070       —         4,070       0.01  

COVID-19 related charges:

             

Bad debt

    —         9,418       9,418       9,418       —         9,418       0.03  

Inventory

    14,869       —         14,869       14,869       —         14,869       0.04  

Tax effect on actions

    —         —         —         —         (6,695     (6,695     (0.02
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    18,418       13,861       32,279       32,279       (6,695     25,584       0.07  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 532,280     $ (297,868   $ 234,412     $ 188,684     $ (26,532   $ 162,152     $ 0.46  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

    34.5     19.3     15.2        

 

    Quarter Ended June 29, 2019  
    Net Sales     Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 1,636,709     $ 604,182     $ (384,289   $ 219,893     $ 165,645     $ (15,595   $ 150,050     $ 0.41  

Less exited programs2

    (118,710     (35,169     9,712       (25,457     (25,457     3,590       (21,867     (0.06
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As rebased

    1,517,999       569,013       (374,577     194,436       140,188       (12,005     128,183       0.35  

As a percentage of net sales

      37.5     24.7     12.8        

Restructuring and other action-related charges:

               

Supply chain actions

    —         12,429       —         12,429       12,429       —         12,429       0.03  

Tax effect on actions

    —         —         —         —         —         (1,753     (1,753     0.00  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    —         12,429       —         12,429       12,429       (1,753     10,676       0.03  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 1,517,999     $ 581,442     $ (374,577   $ 206,865     $ 152,617     $ (13,758   $ 138,859     $ 0.38  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

      38.3     24.7     13.6        

 

1 

Amounts may not be additive due to rounding.

2 

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

LOGO

 

7


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Reconciliation of Select GAAP Measures to Non-GAAP Measures and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

 

    Quarter Ended September 26, 2020  
    Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 571,471     $ (382,384   $ 189,087     $ 140,689     $ (22,464   $ 118,225     $ 0.34  

As a percentage of net sales

    33.8     22.6     11.2        

Restructuring and other action-related charges:

             

Supply chain actions

    2,098       —         2,098       2,098       —         2,098       0.01  

Program exit costs

    356       —         356       356       —         356       0.00  

Other restructuring costs

    (4     1,199       1,195       1,195       —         1,195       0.00  

COVID-19 related charges:

             

Supply chain re-startup

    45,149       3,459       48,608       48,608       —         48,608       0.14  

Discrete tax benefits

    —         —         —         —         (3,113     (3,113     (0.01

Tax effect on actions

    —         —         —         —         (7,360     (7,360     (0.02
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    47,599       4,658       52,257       52,257       (10,473     41,784     $ 0.12  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 619,070     $ (377,726   $ 241,344     $ 192,946     $ (32,937   $ 160,009     $ 0.46  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

    36.6     22.3     14.3        

 

    Quarter Ended September 28, 2019  
    Net Sales     Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 1,729,308     $ 646,469     $ (385,291   $ 261,178     $ 211,134     $ (22,129   $ 189,005     $ 0.52  

Less exited programs2

    (118,698     (36,290     9,018       (27,272     (27,272     3,848       (23,424     (0.06
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As rebased

    1,610,610       610,179       (376,273     233,906       183,862       (18,281     165,581       0.45  

As a percentage of net sales

      37.9     23.4     14.5        

Restructuring and other action-related charges:

               

Supply chain actions

    —         9,308       —         9,308       9,308       —         9,308       0.03  

Other restructuring costs

    —         —         535       535       535       —         535       0.00  

Tax effect on actions

    —         —         —         —         —         (1,389     (1,389     0.00  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    —         9,308       535       9,843       9,843       (1,389     8,454       0.02  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 1,610,610     $ 619,487     $ (375,738   $ 243,749     $ 193,705     $ (19,670   $ 174,035     $ 0.48  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

      38.5     23.3     15.1        

 

1 

Amounts may not be additive due to rounding.

2 

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

LOGO

 

8


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Reconciliation of Select GAAP Measures to Non-GAAP Measures and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

 

    Quarter Ended January 2, 2021  
    Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit (Loss)
    Income (Loss)
From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Benefit
(Expense)
    Income (Loss)
From
Continuing
Operations
    Diluted
Earnings
(Loss) Per
Share From
Continuing
Operations1
 

As reported

  $ 99,199     $ (495,706   $ (396,507   $ (445,146   $ 152,948     $ (292,198   $ (0.83

As a percentage of net sales

    5.9     29.3     (23.5 )%         

Restructuring and other action-related charges:

             

Supply chain actions

    836       —         836       836       —         836       0.00  

Other restructuring costs

    (63     515       452       452       —         452       0.00  

COVID-19 related charges:

             

Intangibles assets and goodwill

    —         25,173       25,173       25,173       —         25,173       0.07  

Full Potential plan:

             

Inventory SKU rationalization

    192,704       —         192,704       192,704       —         192,704       0.55  

PPE inventory write-off

    362,913       —         362,913       362,913       —         362,913       1.03  

PPE vendor commitments

    26,400       —         26,400       26,400       —         26,400       0.08  

Write-off of acquisition tax asset

    —         16,858       16,858       16,858       —         16,858       0.05  

Discrete tax benefits

    —         —         —         —         (66,515     (66,515     (0.19

Tax effect on actions

    —         —         —         —         (118,133     (118,133     (0.34
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    582,790       42,546       625,336       625,336       (184,648     440,688       1.25  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 681,989     $ (453,160   $ 228,829     $ 180,190     $ (31,700   $ 148,490     $ 0.42  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

    40.4     26.8     13.5        

 

    Quarter Ended December 28, 2019  
    Net Sales     Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 1,610,012     $ 633,129     $ (403,123   $ 230,006     $ 182,142     $ (23,528   $ 158,614     $ 0.43  

Less exited programs2

    (87,935     (30,514     9,307       (21,207     (21,207     1,241       (19,966     (0.05
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As rebased

    1,522,077       602,615       (393,816     208,799       160,935       (22,287     138,648       0.38  

As a percentage of net sales

      39.6     25.9     13.7        

Restructuring and other action-related charges:

               

Supply chain actions

    —         13,622       —         13,622       13,622       —         13,622       0.04  

Program exit costs

    —         4,616       —         4,616       4,616       —         4,616       0.01  

Other restructuring costs

    —         —         829       829       829       —         829       0.00  

Tax effect on actions

    —         —         —         —         —         (16,032     (16,032     (0.04
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    —         18,238       829       19,067       19,067       (16,032     3,035       0.01  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 1,522,077     $ 620,853     $ (392,987   $ 227,866     $ 180,002     $ (38,319   $ 141,683     $ 0.39  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

      40.8     25.8     15.0        

 

1 

Amounts may not be additive due to rounding.

2 

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

LOGO

 

9


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Reconciliation of Select GAAP Measures to Non-GAAP Measures and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

 

    Year Ended January 2, 2021  
    Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income (Loss)
From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Benefit
(Expense)
    Income (Loss)
From
Continuing
Operations
    Diluted
Earnings
(Loss) Per
Share From
Continuing
Operations1
 

As reported

  $ 1,602,700     $ (1,560,034   $ 42,666     $ (142,227   $ 109,940     $ (32,287   $ (0.09

As a percentage of net sales

    26.2     25.5     0.7        

Restructuring and other action-related charges:

             

Supply chain actions

    19,636       —         19,636       19,636       —         19,636       0.06  

Program exit costs

    9,387       467       9,854       9,854       —         9,854       0.03  

Other restructuring costs

    (440     8,203       7,763       7,763       —         7,763       0.02  

COVID-19 related charges:

             

Supply chain re-startup

    45,149       3,459       48,608       48,608       —         48,608       0.14  

Bad debt

    —         9,418       9,418       9,418       —         9,418       0.03  

Inventory

    14,869       —         14,869       14,869       —         14,869       0.04  

Intangibles assets and goodwill

    —         25,173       25,173       25,173       —         25,173       0.07  

Full Potential plan:

             

Inventory SKU rationalization

    192,704       —         192,704       192,704       —         192,704       0.55  

PPE inventory write-off

    362,913       —         362,913       362,913       —         362,913       1.03  

PPE vendor commitments

    26,400       —         26,400       26,400       —         26,400       0.07  

Write-off of acquisition tax asset

    —         16,858       16,858       16,858       —         16,858       0.05  

Discrete tax benefits

    —         —         —         —         (69,628     (69,628     (0.20

Tax effect on actions

    —         —         —         —         (135,714     (135,714     (0.38
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    670,618       63,578       734,196       734,196       (205,342     528,854       1.50  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 2,273,318     $ (1,496,456   $ 776,862     $ 591,969     $ (95,402   $ 496,567     $ 1.40  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

    37.1     24.4     12.7        

 

    Year Ended December 28, 2019  
    Net Sales     Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before Income
Tax Expense
    Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

  $ 6,425,716     $ 2,428,702     $ (1,578,017   $ 850,685     $ 643,560     $ (70,236   $ 573,324     $ 1.57  

Less exited programs2

    (419,447     (131,861     37,002       (94,859     (94,859     11,629       (83,230     (0.23
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As rebased

    6,006,269       2,296,841       (1,541,015     755,826       548,701       (58,607     490,094       1.34  

As a percentage of net sales

      38.2     25.7     12.6        

Restructuring and other action-related charges:

               

Supply chain actions

    —         52,832       —         52,832       52,832       —         52,832       0.14  

Program exit costs

    —         4,616       —         4,616       4,616       —         4,616       0.01  

Other restructuring costs

    —         —         5,067       5,067       5,067       —         5,067       0.01  

Tax effect on actions

    —         —         —         —         —         (22,159     (22,159     (0.06
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

    —         57,448       5,067       62,515       62,515       (22,159     40,356       0.11  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As adjusted

  $ 6,006,269     $ 2,354,289     $ (1,535,948   $ 818,341     $ 611,216     $ (80,766   $ 530,450     $ 1.45  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As a percentage of net sales

      39.2     25.6     13.6        

 

1 

Amounts may not be additive due to rounding.

2 

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

LOGO

 

10


HANESBRANDS INC.

Reconciliation of Select GAAP Measures to Non-GAAP Measures and Supplemental Financial Information

(in thousands, except per share data)

(Unaudited)

The key components from discontinued operations related to the European Innerwear business are as follows:

 

    Quarters Ended     Year Ended     Quarters Ended     Year Ended  
    March 30,
2019
    June 29,
2019
    September 28,
2019
    December 28,
2019
    December 28,
2019
    March 28,
2020
    June 27,
2020
    September 26,
2020
    January 2,
2021
    January 2,
2021
 

Net sales

  $ 155,351     $ 138,044     $ 150,143     $ 155,010     $ 598,548     $ 127,671     $ 205,591     $ 125,913     $ 139,147     $ 598,322  
   

Operating profit (loss), as calculated under GAAP

  $ 10,036     $ 9,707     $ 5,893     $ 13,409     $ 39,045     $ (13,823   $ 39,403     $ (14,516   $ (47,229   $ (36,165

Restructuring and other action-related charges

    197       180       94       500       971       4,875       31,017       312       35,387       71,591  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss), as adjusted

  $ 10,233     $ 9,887     $ 5,987     $ 13,909     $ 40,016     $ (8,948   $ 70,420     $ (14,204   $ (11,842   $ 35,426  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from discontinued operations, net of tax, as reported

  $ 5,433     $ (495   $ (3,914   $ 26,372     $ 27,396     $ (12,992   $ 24,613     $ (14,947   $ (39,966   $ (43,292

Restructuring and other action-related charges

    197       180       94       500       971       4,875       31,017       312       35,387       71,591  

Tax effect on actions

    (28     (25     (13     (277     (343     (708     (5,720     1,736       (8,978     (13,670
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from discontinued operations, net of tax, as adjusted

  $ 5,602     $ (340   $ (3,833   $ 26,595     $ 28,024     $ (8,825   $ 49,910     $ (12,899   $ (13,557   $ 14,629  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share from discontinued operations, as reported1

  $ 0.01     $ 0.00     $ (0.01   $ 0.07     $ 0.07     $ (0.04   $ 0.07     $ (0.04   $ (0.11   $ (0.12

Restructuring and other action-related charges

    0.00     $ 0.00       0.00       0.00       0.00       0.01       0.07       0.01       0.08       0.16  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share from discontinued operations, as adjusted

  $ 0.02     $ 0.00     $ (0.01   $ 0.07     $ 0.08     $ (0.02   $ 0.14     $ (0.04   $ (0.04   $ 0.04  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1 

Amounts may not be additive due to rounding.

 

LOGO

 

11


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Supplemental Financial Information - As REPORTED

(in thousands)

(Unaudited)

 

     Quarters Ended     Year Ended  
     March 28,
2020
    June 27,
2020
    September 26,
2020
    January 2,
2021
    January 2,
2021
 

Segment net sales:

          

Innerwear

   $ 422,402     $ 1,094,814     $ 792,600     $ 668,193     $ 2,978,009  

Activewear

     288,000       168,379       324,921       403,113       1,184,413  

International

     428,230       251,285       506,203       525,714       1,711,432  

Other

     64,438       28,605       68,139       92,125       253,307  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

   $ 1,203,070     $ 1,543,083     $ 1,691,863     $ 1,689,145     $ 6,127,161  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit (loss):

          

Innerwear

   $ 81,551     $ 304,524     $ 172,000     $ 160,848     $ 718,923  

Activewear

     8,108       (5,751     29,568       35,718       67,643  

International

     50,745       5,162       101,029       92,782       249,718  

Other

     (3,393     (11,929     3,059       2,123       (10,140

General corporate expenses/other

     (64,734     (57,594     (64,312     (62,642     (249,282
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating profit before restructuring and other action-related charges

     72,277       234,412       241,344       228,829       776,862  

Restructuring and other action-related charges

     (24,324     (32,279     (52,257     (625,336     (734,196
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating profit (loss)

   $ 47,953     $ 202,133     $ 189,087     $ (396,507   $ 42,666  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     Quarters Ended     Year Ended  
     March 30,
2019
    June 29,
2019
    September 28,
2019
    December 28,
2019
    December 28,
2019
 

Segment net sales:

          

Innerwear

   $ 475,945     $ 678,604     $ 578,453     $ 569,630     $ 2,302,632  

Activewear

     405,340       448,277       548,117       452,970       1,854,704  

International

     490,829       430,819       513,382       495,798       1,930,828  

Other

     77,573       79,009       89,356       91,614       337,552  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

   $ 1,449,687     $ 1,636,709     $ 1,729,308     $ 1,610,012     $ 6,425,716  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit:

          

Innerwear

   $ 104,626     $ 149,530     $ 121,467     $ 140,368     $ 515,991  

Activewear

     43,593       68,779       97,314       71,633       281,319  

International

     84,776       66,490       94,908       85,148       331,322  

Other

     2,435       7,994       12,898       10,112       33,439  

General corporate expenses/other

     (74,646     (60,471     (55,566     (58,188     (248,871
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating profit before restructuring and other action related charges

     160,784       232,322       271,021       249,073       913,200  

Restructuring and other action-related charges

     (21,176     (12,429     (9,843     (19,067     (62,515
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating profit

   $ 139,608     $ 219,893     $ 261,178     $ 230,006     $ 850,685  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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12


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Supplemental Financial Information - As ADJUSTED

(in thousands)

(Unaudited)

 

     Quarters Ended     Year Ended  
     March 28,
2020
    June 27,
2020
    September 26,
2020
    January 2,
2021
    January 2,
2021
 

Segment net sales:

          

Innerwear

   $ 422,402     $ 1,094,814     $ 792,600     $ 668,193     $ 2,978,009  

Activewear

     288,000       168,379       324,921       403,113       1,184,413  

International

     428,230       251,285       506,203       525,714       1,711,432  

Other

     64,438       28,605       68,139       92,125       253,307  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

   $ 1,203,070     $ 1,543,083     $ 1,691,863     $ 1,689,145     $ 6,127,161  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit (loss):

          

Innerwear

   $ 81,551     $ 304,524     $ 172,000     $ 160,848     $ 718,923  

Activewear

     8,108       (5,751     29,568       35,718       67,643  

International

     50,745       5,162       101,029       92,782       249,718  

Other

     (3,393     (11,929     3,059       2,123       (10,140

General corporate expenses/other

     (64,734     (57,594     (64,312     (62,642     (249,282
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating profit, as adjusted

   $ 72,277     $ 234,412     $ 241,344     $ 228,829     $ 776,862  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Quarters Ended     Year Ended  
     March 30,
20191
    June 29,
20191
    September 28,
20191
    December 28,
20191
    December 28,
20191
 

Segment net sales:

          

Innerwear

   $ 466,414     $ 657,477     $ 562,285     $ 558,302     $ 2,244,478  

Activewear

     320,767       350,694       445,587       376,363       1,493,411  

International

     490,829       430,819       513,382       495,798       1,930,828  

Other

     77,573       79,009       89,356       91,614       337,552  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales, as adjusted

   $ 1,355,583     $ 1,517,999     $ 1,610,610     $ 1,522,077     $ 6,006,269  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit:

          

Innerwear

   $ 103,126     $ 146,997     $ 117,771     $ 137,945     $ 505,839  

Activewear

     24,170       45,855       73,738       52,849       196,612  

International

     84,776       66,490       94,908       85,148       331,322  

Other

     2,435       7,994       12,898       10,112       33,439  

General corporate expenses/other

     (74,646     (60,471     (55,566     (58,188     (248,871
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating profit, as adjusted

   $ 139,861     $ 206,865     $ 243,749     $ 227,866     $ 818,341  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1

Results for the quarters ended March 30, 2019, June 29, 2019, September 28, 2019, December 28, 2019 and year ended December 28, 2019 reflect adjustments for the exited C9 Champion mass program and the DKNY intimate apparel license.

 

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13


TABLE 4

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of GAAP Outlook to Adjusted Outlook

(in millions, except per share data)

(Unaudited)

 

First Quarter 2021

  HBI
Continuing
Operations -
Adjusted
    European
Innerwear -
Adjusted1
    HBI
Adjusted incl.
European
Innerwear2
    Company
Guidance
Adjusted3
  Charges -
Continuing
Operations
    European
Innerwear -
Discontinued
Operations
    HBI GAAP     Company
Guidance -
GAAP

Net sales

  $ 1,508     $ 125     $ 1,633     $1,485 to $1,515   $ —       $ (125   $ 1,508     $1,485 to $1,515

Operating profit (loss)

  $ 210     $ (7   $ 203     $150 to $160   $ (19   $ 7     $ 190     $140 to $150

Diluted earnings (loss) per share

  $ 0.39     $ (0.02   $ 0.37     $0.24 to $0.27   $ (0.02   $ (1.11   $ (0.75   $0.24 to $0.27

 

1 

Includes elimination of intercompany supply chain sales to the European Innerwear business of $ 11 million included in net sales from continuing operations.

2 

Comparable to February 9, 2021 guidance and May 10, 2021 consensus estimates.

3 

Provided February 9, 2021, first quarter 2021 only.

 

     Quarter Ended    Year Ended
     July 3,
2021
   January 1,
2022

Operating profit outlook, as calculated under GAAP

   $179 to $189    $730 to $760

Restructuring and other action-related charges

   $21    $85
  

 

  

 

Operating profit outlook, as adjusted

   $200 to $210    $815 to $845
  

 

  

 

Diluted earnings per share from continuing operations, as calculated under GAAP1

   $0.32 to $0.35    $1.33 to $1.41

Restructuring and other action-related charges

   $0.05    $0.18
  

 

  

 

Diluted earnings per share from continuing operations, as adjusted

   $0.37 to $0.40    $1.51 to $1.59
  

 

  

 

 

1

The company expects approximately 352 million diluted weighted average shares outstanding for the quarter ended July 3, 2021 and approximately 353 million diluted weighted average shares outstanding for the year ended January 1, 2022.

 

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14


 

Appendix

 

 

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15


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

TABLE 5

The following table presents a reconciliation of International reported net sales on a constant currency basis for the quarter ended April 3, 2021 and a comparison to prior year:

 

     Quarter Ended April 3, 2021      Quarter
Ended
March 28,
2020
     % Change,
As Reported
    % Change,
Constant

Currency
 
     As Reported      Impact from
Foreign
Currency1
     Constant
Currency
 

As reported under GAAP:

                

International segment net sales

   $ 506,261      $ 43,073      $ 463,188      $ 428,230        18.2     8.2

The following tables present a reconciliation of reported results to adjusted results for the quarters ended April 3, 2021 and March 28, 2020:

 

     Quarter Ended April 3, 2021  
     Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before
Income Tax
Expense
     Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

   $ 602,681     $ (412,559   $ 190,122     $ 143,101      $ (14,697   $ 128,404     $ 0.37  

As a percentage of net sales

     40.0     27.4     12.6         

Restructuring and other action-related charges:

               

Full Potential Plan:

               

Professional services

     —         11,706       11,706       11,706        —         11,706       0.03  

Impairment of intangible assets

     —         7,302       7,302       7,302        —         7,302       0.02  

Other

     2,807       (2,422     385       385        —         385       —    

Discrete tax benefit

     —         —         —         —          (7,295     (7,295     (0.02

Tax effect on actions

     —         —         —         —          (4,007     (4,007     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

     2,807       16,586       19,393       19,393        (11,302     8,091       0.02  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As adjusted

   $ 605,488     $ (395,973   $ 209,515     $ 162,494      $ (25,999   $ 136,495     $ 0.39  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As a percentage of net sales

     40.2     26.3     13.9         
     Quarter Ended March 28, 2020  
     Gross Profit     Selling,
General and
Administrative
Expenses
    Operating
Profit
    Income From
Continuing
Operations
Before
Income Tax
Expense
     Income Tax
Expense
    Income From
Continuing
Operations
    Diluted
Earnings Per
Share From
Continuing
Operations1
 

As reported

   $ 418,168     $ (370,215   $ 47,953     $ 5,825      $ (707   $ 5,118     $ 0.01  

As a percentage of net sales

     34.8     30.8     4.0         

Restructuring and other action-related charges:

               

Supply chain actions

     14,065       —         14,065       14,065        —         14,065       0.04  

Program exit costs

     7,746       467       8,213       8,213        —         8,213       0.02  

Other restructuring costs

     —         2,046       2,046       2,046        —         2,046       0.01  

Tax effect on actions

     —         —         —         —          (3,526     (3,526     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total restructuring and other action-related charges

     21,811       2,513       24,324       24,324        (3,526     20,798       0.06  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As adjusted

   $ 439,979     $ (367,702   $ 72,277     $ 30,149      $ (4,233   $ 25,916     $ 0.07  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

As a percentage of net sales

     36.6     30.6     6.0         

 

1 

Amounts may not be additive due to rounding.

 

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16


HANESBRANDS INC.

Including European Innerwear Business as Discontinued Operations

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

     Years Ended  
     January 2,
20211
     January 1,
20221,2
 

Free cash flow:

     

Net cash from operating activities

   $ 448,469      $ 525,000  

Capital expenditures

     (53,735      (140,000
  

 

 

    

 

 

 

Free cash flow

   $ 394,734      $ 385,000  
  

 

 

    

 

 

 

 

1 

Free cash flow includes the results from continuing and discontinued operations.

2

Represents the 2021 outlook for free cash flow.

Hanesbrands is unable to reconcile projections of financial performance beyond 2021 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 2022 and beyond, such as net sales, operating profit, tax rates and action related charges.

 

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17

EX-99.4

Exhibit 99.4

 

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Hanesbrands FAQs

Updated May 11, 2021New or updated information is in red

General and Current Period FAQs    (Guidance comments as of May 11, 2021)

 

      

Unless otherwise indicated, all guidance and related commentary as well as comparisons to prior periods reflect continuing operations.

 

(1)

Q:

What is factored into your full-year 2021 guidance?

 

  A:

Net Sales: Our full-year 2021 outlook reflects the continued uncertainty due to the COVID-19 pandemic. We expect total net sales from continuing operations of $6.2 billion to $6.3 billion. This includes an approximate $100 million tailwind from the effects of foreign exchange rates as compared to last year. The foreign exchange impact is reflected within the International segment. At the midpoint, our guidance implies net sales growth of approximately 2% over prior year on a reported basis. Adjusting for the 53rd week in 2020, the midpoint of our guidance implies net sales growth of approximately 3% on a reported basis.

Adjusting for the $820 million of PPE sales and the 53rd week in 2020, at the midpoint our full-year 2021 guidance implies net sales growth of approximately 19% over prior year on a reported basis.

Operating Profit (GAAP and Adjusted): Our guidance for GAAP Operating Profit from continuing operations is $730 million to $760 million. Our guidance for Adjusted Operating Profit from continuing operations, which excludes approximately $85 million of pretax Full Potential plan-related charges, is $815 million to $845 million. Our operating profit guidance includes an approximate $15 million tailwind from the effects of foreign exchange rates as compared to last year. At the midpoint, our guidance implies an Adjusted Operating Margin of 13.3%. The expected year-over-year margin increase reflects: (1) an incremental $50 million of brand marketing investment over 2020, most of which is in the second-half; (2) the benefits from cost savings initiatives; (3) higher inflation, particularly transportation, and higher SG&A expense due to temporary COVID-driven cost cuts in the second-quarter 2020; and, (4) expense leverage from higher sales.

As compared to re-based 2019, at the midpoint of our full-year 2021 guidance, which includes incremental brand investment and COVID-related expenses, net sales and adjusted operating profit are expected to be above 2019 levels.

Interest/Other Expenses and Tax Rate: Our guidance assumes Interest and Other expenses of approximately $185 million as well as GAAP and adjusted tax rates of approximately 14% and 15%, respectively.

EPS (GAAP and Adjusted): Our guidance for GAAP EPS from continuing operations is $1.33 to $1.41. Our guidance for Adjusted EPS from continuing operations, which excludes pretax Full Potential plan-related expenses (see above), is $1.51 to $1.59. Both ranges are based on diluted shares outstanding of approximately 353 million for the year.    

Cash flow from operations: Our full-year cash flow from operations guidance is $500 million to $550 million. Our capital expenditure guidance is approximately $140 million, which includes approximately $50 million related to our Full Potential plan.

Pretax expenses: Our guidance reflects approximately $85 million of pretax Full Potential plan-related charges.

Aside from $4 million of sales and no operating profit recorded in the first-quarter 2021, there are no sales or profit related to the selling of our PPE inventory included in our full-year 2021 guidance ranges (sales, operating profit and

 

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EPS ranges noted above). We will not include any sales or profit related to the potential selling of the PPE inventory in any future guidance. In the event we sell any of the PPE inventory in future periods, we will clearly disclose the amount of PPE sales/profits included in our reported results for those future periods. Donations of PPE inventory will have no impact to sales or profits in future periods as this inventory has been fully written down.

 

(2)

Q:

What is factored into your second-quarter 2021 guidance?

 

  A:

Our second-quarter 2021 outlook reflects the continued uncertainty due to the COVID-19 pandemic. We expect total net sales from continuing operations of $1.56 billion to $1.59 billion. This includes an approximate $35 million tailwind from the effects of foreign exchange rates as compared to last year. The foreign exchange impact is reflected within the International segment. At the midpoint, our guidance implies net sales growth of approximately 2% over prior year on a reported basis. Excluding the $614 million of PPE sales in the second-quarter of 2020, at the midpoint our second-quarter 2021 guidance implies net sales growth of approximately 69% over prior year. As compared to the re-based 2019, at the midpoint, our guidance implies net sales are approximately 4% above the second-quarter of 2019.

Our guidance for GAAP Operating Profit from continuing operations is $179 million to $189 million. Our guidance for Adjusted Operating Profit from continuing operations, which excludes approximately $21 million of pretax Full Potential plan-related charges, is $200 million to $210 million. Our operating profit guidance includes an approximate $5 million tailwind from the effects of foreign exchange rates as compared to last year. At the midpoint, our guidance implies an Adjusted Operating Margin of 13.0%. The expected year-over-year margin decline is due to: (1) the impact from inflation, particularly transportation, as well as higher levels of brand investment in the second-quarter of 2021; and (2) last year’s second-quarter benefited from significant fixed cost leverage from PPE volume-driven efficiencies in the supply chain as well as the temporary COVID-driven cost reductions in SG&A.    

Our guidance assumes Interest and Other expenses of approximately $45 million as well as both GAAP and adjusted tax rates of approximately 15%. Our guidance for GAAP EPS from continuing operations is $0.32 to $0.35. Our guidance for Adjusted EPS from continuing operations, which excludes pretax Full Potential plan-related expenses (see above), is $0.37 to $0.40. Both ranges are based on diluted shares outstanding of approximately 352 million for the quarter.    

No sales or profit related to the selling of our PPE inventory are included in our second-quarter 2021 guidance ranges (sales, operating profit and EPS ranges noted above). We will not include any sales or profit related to the potential selling of the PPE inventory in any future guidance. In the event we sell any of the PPE inventory in future periods, we will clearly disclose the amount of PPE sales/profits included in our reported results for those future periods. Donations of PPE inventory will have no impact to sales or profits in future periods as this inventory has been fully written down.

 

(3)

Q:

Can you provide any additional information regarding the reclassification of the European Innerwear business to Discontinued Operations?

 

  A:

Please see the Investor Day Handout, which can be found on our IR website at www.Hanes.com/Investors, or in the 8-K filing on May 11, 2021.

***For prior FAQs please see our prior Securities and Exchange Commission reports, including our Current Reports on Form 8-K.***

# # #

 

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Charges for Actions and Reconciliation to GAAP Measures

To supplement our financial guidance prepared in accordance with generally accepted accounting principles, we provide quarterly and full-year results and guidance 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), EBITDA, adjusted EBITDA and net debt.

Adjusted EPS is defined as diluted EPS from continuing operations excluding actions and the tax effect on actions. Adjusted net income is defined as net income 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 from continuing operations before income tax is defined as income from continuing operations before income tax excluding actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted gross profit is defined as gross profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions.

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. Charges for actions taken in 2021 include professional fees and first quarter’s intangible asset impairment charges related to our Full Potential plan. 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.

We have 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 acquisitions and other actions. We believe 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.

We have also chosen to present EBITDA, adjusted EBITDA and the ratio of net debt to adjusted EBITDA to investors because we consider these measures to be an important supplemental means of evaluating operating performance. EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding actions and stock compensation expense. Net debt is defined as total debt less cash and cash equivalents. We believe that these metrics are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, and management uses the ratio of net debt to adjusted EBITDA for planning purposes in connection with setting our capital allocation strategy. These metrics should not, however, be considered as measures of discretionary cash available to invest in the growth of the business.

We are a global company that reports financial information in U.S. dollars in accordance with GAAP. As a supplement to our reported operating results, we also present constant currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. We use 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. We believe this information is useful to management and investors to facilitate comparison of operating results and better identify trends in our businesses. 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).

Organic sales are net sales excluding those derived from businesses acquired within the previous 12 months of a reporting date.

 

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We believe constant currency and organic sales 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. See our press release dated May 11, 2021 to reconcile quarterly and full-year non-GAAP performance measures to the most directly comparable GAAP measure. A copy of the press release is available at www.Hanes.com/Investors.

Cautionary Statement Concerning Forward-Looking Statements

These FAQs include 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 pandemic on our business and financial performance, guidance and predictions regarding expected operating results, including related to our Full Potential plan, and the disposal of our European Innerwear business 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: our ability to successfully executive our Full Potential plan to achieve the desired results; the potential effects of the COVID-19 pandemic, including on consumer spending, global supply chains and the financial markets; the highly competitive and evolving nature of the industry in which we compete; the rapidly changing retail environment; 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 we undertake 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.

 

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