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): August 5, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||
| (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 240.13e-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 | ||||||
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 August 5, 2021, Hanesbrands Inc. (the “Company” or “Hanesbrands”) issued a press release announcing its financial results for the second quarter ended July 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
The Company has made available on the investors section of its corporate website, www.Hanes.com/investors, certain supplemental materials regarding Hanesbrands’ financial results and business operations (the “Supplemental Information”). The Supplemental Information is furnished herewith as Exhibit 99.2 and is incorporated by reference. All information in the Supplemental Information 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.
Exhibits 99.1 and 99.2 to this Current Report on Form 8-K include forward-looking financial information that is expected to be discussed on Hanesbrands’ previously announced conference call with investors and analysts to be held at 10:00 a.m., Eastern time on August 5, 2021. The call may be accessed at www.Hanes.com/investors. Replays of the call will be available at www.Hanes.com/investors and via telephone. The telephone playback will be available from approximately1:00 p.m., Eastern time, on August 5, 2021, until 1:00 p.m., Eastern time, on August 12, 2021. The replay will be available by calling toll-free (855) 859-2056, or by toll call at (404) 537-3406. The replay pass code is 6856545.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit 99.1 | ||||||||
| Exhibit 99.2 | ||||||||
| 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.
| August 5, 2021 | HANESBRANDS INC. | |||||||||||||
| By: | /s/ Michael P. Dastugue | |||||||||||||
| Michael P. Dastugue | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
news release
| FOR IMMEDIATE RELEASE |  | |||||||
News Media contact: Kirk Saville (336) 979-7293
Analysts and Investors contact: T.C. Robillard (336) 519-2115
HanesBrands Announces Strong Second-Quarter 2021 Results
Revenue, operating profit, operating margin and EPS from continuing operations exceed
guidance
•Net sales from continuing operations of $1.75 billion, up 13% over prior year; up 15% over second-quarter 2019
•GAAP EPS from continuing operations of $0.42; adjusted EPS from continuing operations of $0.47
•Growth driven by global Champion brand and U.S. Innerwear
•Global Champion sales up more than 120% over prior year and 21% over second-quarter 2019
•Raises second-half and full-year 2021 guidance for net sales, operating profit, and EPS from continuing operations
•Issues third-quarter 2021 guidance, including net sales from continuing operations of $1.78 billion to $1.81 billion, GAAP EPS from continuing operations of $0.42 to $0.45 and Adjusted EPS from continuing operations of $0.45 to $0.48
•For reconciliations of select GAAP and Non-GAAP measures, see Table 6 of this release
WINSTON-SALEM, N.C. (Aug. 5, 2021) – HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the second quarter of 2021, with increased sales, operating profit and cash flow driven by strong performance across its global innerwear and activewear businesses.
Net sales from continuing operations for the second quarter ended July 3, 2021, totaled $1.75 billion, an increase of $208 million, or 13%, compared with $1.54 billion for the quarter ended June 27, 2020, which included $614 million in sales of personal protective equipment (“PPE”) in response to the COVID-19 pandemic. Excluding PPE, net sales increased 88% over prior year. The growth was driven by strong point-of-sales trends, the overlap of last year’s COVID-related shutdowns and the benefit of transitory items such as government stimulus. Total constant currency second-quarter net sales increased 10%.
“Our iconic brands continue to resonate with consumers around the world, and I’m very encouraged by the progress on our Full Potential growth plan,” said Chief Executive Officer Steve Bratspies. “I’m extremely proud of the way our associates performed under challenging conditions, delivering sales, profit and earnings growth above our expectations and above the second quarter of both 2020 and 2019. We are seeing strong momentum across our business and have raised our outlook for the second half of the year.”
Due to the significant impact of the pandemic on prior year results, this release includes certain comparisons to the comparable 2019 periods for additional context. All 2019 results are rebased to reflect the European Innerwear business as discontinued operations as well as the exit of the C9 Champion mass program and the DKNY intimate apparel license.
Compared to second-quarter 2019, net sales from continuing operations increased $233 million, or 15%, and total constant currency net sales increased 14%. Double-digit growth in the global innerwear and activewear businesses was driven by strong point-of-sale performance as well as the benefit of several transitory items, including retailer inventory restocking, government stimulus and pent-up consumer demand.
For the second-quarter 2021, GAAP gross margin of 38.9% increased 560 basis points compared to prior year and 200 basis points compared to second-quarter 2019. Adjusted gross margin of 39.0% increased 450 basis points over last year and approximately 75 basis points over 2019. The expansion in both periods was driven by higher sales, product mix and the impact from foreign exchange rates, which more than offset higher expedite costs that resulted from stronger-than-expected demand.
Second-quarter GAAP operating profit increased 8% to $217 million compared to prior year and decreased 1% compared to second-quarter 2019. GAAP operating margin of 12.4% decreased 70 basis points and 100 basis points compared to the second quarter of 2020 and 2019, respectively. Adjusted operating profit of $236 million increased $2 million, or 1%, compared to prior year and $29 million, or 14% compared to 2019. Adjusted operating margin of 13.5% decreased 170 basis points compared to last year due to the overlap of last year’s PPE sales and temporary cost savings initiatives that were implemented to partially mitigate the impact of COVID-driven declines in apparel sales.
In the second quarter of 2020, the company implemented several temporary SG&A cost savings initiatives such as furloughs and salary reductions, which generated approximately 600 basis points of one-time operating margin benefit in the year-ago quarter. As compared to second-quarter 2019, adjusted operating margin decreased approximately 15 basis points as higher brand marketing investments essentially offset the fixed-cost leverage from higher sales.
The GAAP and adjusted effective tax rates for the second quarter were 14.6% and 14.2%, respectively, which compares to GAAP and adjusted effective tax rates of 12.7% and 14.1%, respectively, for the second quarter of 2020. For the second quarter of 2019, GAAP and adjusted effective tax rates were 9.4% and 9.0%, respectively.
On a GAAP basis, second-quarter income from continuing operations totaled $148 million, or $0.42 per diluted share. This compares to income from continuing operations of $137 million, or $0.39 per diluted share in the prior year period, and income from continuing operations of $150 million, or $0.41 per diluted share in second-quarter 2019.
Adjusted income from continuing operations totaled $165 million, or $0.47 per diluted share. This compares to adjusted income from continuing operations of $162 million, or $0.46 per diluted share, in the prior year period and adjusted income from continuing operations of $139 million, or $0.38 per diluted share, in second-quarter 2019.
(See the Note on Adjusted Measures and Reconciliation to GAAP Measures later in this news release for additional discussion and details of actions, which include pandemic-related and Full Potential plan charges.)
Second-Quarter 2021 Business Segment Summaries
Innerwear (vs 2020). Sales decreased $314 million, or 29% due to the overlap of last year’s $614 million of PPE sales. Basics revenue increased 48% with double-digit growth in each product category while intimates revenue increased 150% with triple-digit growth in both bras and shapewear. Excluding PPE, Innerwear sales increased 62% over last year driven by strong point-of-sale growth, the overlap of last year’s COVID-related shutdowns as well as the benefit of several transitory items, including retailer inventory restocking, government stimulus and pent-up consumer demand. Operating margin of 23.8% decreased 400 basis points compared to prior year due to fixed-cost deleverage from lower sales, higher expedite costs from stronger-than-expected demand in basics and intimates as well as increased investments in brand marketing.
(vs 2019). Sales increased $123 million, or 19%, compared to second-quarter 2019, with comparable double-digit growth in both basics and intimates. The growth was driven by strong underlying point-of-sale growth, yielding approximately 160 basis points of market share gains, as well as the benefit of certain transitory items, such as retailer inventory restocking and government stimulus, which drove category growth rates above historical levels. Operating margin expanded 150 basis points to 23.8% driven by volume leverage and sales mix, which more than offset higher expedite costs and increased investments in brand marketing.
Activewear (vs 2020). Activewear sales grew $236 million, or 140% over prior year driven by growth in both the Champion and Hanes brands. The company experienced strong point-of-sale trends across several channels in the quarter. Sales also increased in the sports and college licensing business. The segment benefited from strong pent-up consumer demand as pandemic restrictions were lifted, as well as from government stimulus payments. Segment operating margin of 10.2% increased 1,360 basis points over prior period driven by fixed-cost leverage from higher sales, which more than offset higher brand marketing investment.
(vs 2019). Activewear revenue increased $53 million, or 15%, driven by growth across the online, wholesale and distributor channels, which more than offset lower sales in the sports and college licensing business. By brand, sales increased in both the Champion and Hanes brands in the quarter, with Champion sales in the segment up 20%. Activewear’s operating margin decreased approximately 290 basis points compared to second-quarter 2019 as leverage from higher sales volume was more than offset by higher expedite and distribution costs due to stronger-than-expected demand as well as increased investments in brand marketing.
International (vs 2020). International segment revenue increased $228 million, or 91%, compared to prior year. On a constant currency basis, sales increased 70% with strong growth in Australia, the Americas, Europe and Asia Pacific driven by strong consumer demand and the overlap of last year’s COVID-related shutdowns. For the quarter, the International segment’s operating margin of 12.9% increased 1,090 basis points over prior year driven by higher sales, sales mix and foreign exchange rates.
(vs 2019). International segment revenue increased $48 million, or 11%, compared to second-quarter 2019. On a constant currency basis, sales increased 5%. Constant currency sales grew in Australia, Europe and the Americas while sales in Asia Pacific declined driven by ongoing COVID-related headwinds in Japan. For the quarter, the International segment’s operating margin decreased 250 basis points compared to second-quarter 2019 levels driven by increased brand marketing investments as well as de-leverage in Asia Pacific from lower sales.
Third-Quarter, Fourth-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 third-quarter 2021, which ends on October 2, 2021, the company currently expects:
•Net sales from continuing operations of approximately $1.78 billion to $1.81 billion, which represents approximately 6% growth over prior year at the midpoint and includes a projected benefit of approximately $16 million from changes in foreign currency exchange rates. This compares to net sales of $1.69 billion in third-quarter 2020, which included $179 million in PPE sales.
•Excluding PPE, net sales at the midpoint of the guidance range are expected to increase 19% over the prior year period.
•As compared to rebased third-quarter 2019, net sales at the midpoint are expected to increase 11%.
•GAAP operating profit from continuing operations to range from approximately $216 million to $226 million.
•Adjusted operating profit from continuing operations to range from approximately $235 million to $245 million. The midpoint of adjusted operating profit implies an operating margin of approximately 13.4% and reflects the impact of cost inflation as well as increased brand investment. This compares to an adjusted operating margin of 14.3% in the third-quarter of 2020, which benefited from temporary COVID-driven cost reductions.
•Charges for actions related to Full Potential of approximately $19 million.
•Interest and Other expenses of approximately $45 million.
•An effective tax rate of approximately 12% on a GAAP basis and approximately 15% on an adjusted basis.
•GAAP earnings per share from continuing operations to range from $0.42 to $0.45. Adjusted earnings per share from continuing operations to range from $0.45 to $0.48.
For fourth-quarter 2021, which ends on January 1, 2022, the company currently expects:
•Net sales from continuing operations of approximately $1.71 billion to $1.78 billion, which represents approximately 3% growth over prior year at the midpoint and includes a projected benefit of approximately $6 million from changes in foreign currency exchange rates. This compares to net sales of $1.69 billion in fourth-quarter 2020, which included $28 million in PPE sales and approximately $45 million from the 53rd week.
•Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 8% over the prior year period.
•As compared to rebased fourth-quarter 2019, net sales at the midpoint are expected to increase 15%.
•GAAP operating profit from continuing operations to range from approximately $172 million to $192 million.
•Adjusted operating profit from continuing operations to range from approximately $200 million to $220 million. The midpoint of adjusted operating profit implies an operating margin of approximately 12.0% and reflects the impact of cost inflation as well as increased brand investment. This compares to an adjusted operating margin of 13.5% in the fourth-quarter of 2020.
•Charges for actions related to Full Potential of approximately $28 million.
•Interest and Other expenses of approximately $46 million.
•An effective tax rate of approximately 15% on a GAAP and adjusted basis.
•GAAP earnings per share from continuing operations to range from $0.29 to $0.34. Adjusted earnings per share from continuing operations to range from $0.37 to $0.42.
For fiscal-year 2021, which ends on January 1, 2022, the company currently expects:
•Net sales from continuing operations to total approximately $6.75 billion to $6.85 billion, which is $550 million above its prior range of $6.2 billion to $6.3 billion, and includes a projected benefit of approximately $116 million from changes in foreign currency exchange rates.
•At the midpoint, net sales guidance implies approximately 11% growth over prior year and 12% 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 and approximately $45 million from the 53rd week.
•Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 29% over the prior year period.
•As compared to rebased 2019, net sales at the midpoint are expected to increase 13%.
•GAAP operating profit from continuing operations to range from approximately $795 million to $825 million, versus the prior range of $730 million to $760 million.
•Adjusted operating profit from continuing operations to range from approximately $880 million to $910 million, which is $65 million above its prior range of $815 million to $845 million. At the midpoint, adjusted operating profit guidance implies approximately 15% growth compared to prior year and 9% growth compared to 2019. The midpoint of adjusted operating profit guidance range suggests an operating margin of 13.2%.
•Full-year outlook reflects higher levels of cost inflation as compared to 2020 and 2019. Incremental brand marketing investment of $50 million as compared to 2020.
•Charges for actions related to Full Potential of approximately $85 million, which is unchanged from its prior outlook.
•Interest and Other expenses of approximately $182 million.
•An effective tax rate of approximately 13% on a GAAP basis and approximately 15% on an adjusted basis.
•GAAP earnings per share from continuing operations to range from approximately $1.50 to $1.58.
•Adjusted earnings per share from continuing operations to range from approximately $1.68 to $1.76, which compares to its prior outlook of $1.51 to $1.59.
•Cash flow from operations of approximately $550 million, versus prior range of $500 million to $550 million.
•Capital expenditures of approximately $100 million
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 2021 include professional fees and 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.
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 for 2020 include inventory write-down charges related to our SKU reduction initiative and discontinuation of our PPE business.
Charges for actions taken in 2019 primarily represented supply chain network changes, program exit costs, and overhead reduction as well as completion of outstanding acquisition integration.
HanesBrands has chosen to present these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of the Full Potential 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 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.
In addition, the company has chosen to present certain year-over-year comparisons with respect to the company’s rebased 2019 business, which excludes the exited C9 Champion program and DKNY license. HanesBrands believes this information is useful to management and investors to facilitate a more meaningful comparison of the results of the company’s ongoing 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; and statements made in the Third 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
(in thousands, except per share data)
(Unaudited)
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 3, 2021 | June 27, 2020 | % Change | July 3, 2021 | June 27, 2020 | % Change | ||||||||||||||||||||||||||||||
| Net sales | $ | 1,751,311 | $ | 1,543,083 | 13.5 | % | $ | 3,259,340 | $ | 2,746,153 | 18.7 | % | |||||||||||||||||||||||
| Cost of sales | 1,069,682 | 1,029,221 | 1,975,030 | 1,814,123 | |||||||||||||||||||||||||||||||
| Gross profit | 681,629 | 513,862 | 32.6 | % | 1,284,310 | 932,030 | 37.8 | % | |||||||||||||||||||||||||||
| As a % of net sales | 38.9 | % | 33.3 | % | 39.4 | % | 33.9 | % | |||||||||||||||||||||||||||
| Selling, general and administrative expenses | 464,235 | 311,729 | 876,794 | 681,944 | |||||||||||||||||||||||||||||||
| As a % of net sales | 26.5 | % | 20.2 | % | 26.9 | % | 24.8 | % | |||||||||||||||||||||||||||
| Operating profit | 217,394 | 202,133 | 7.5 | % | 407,516 | 250,086 | 63.0 | % | |||||||||||||||||||||||||||
| As a % of net sales | 12.4 | % | 13.1 | % | 12.5 | % | 9.1 | % | |||||||||||||||||||||||||||
| Other expenses | 1,855 | 4,653 | 4,416 | 10,754 | |||||||||||||||||||||||||||||||
| Interest expense, net | 42,440 | 41,075 | 86,900 | 77,102 | |||||||||||||||||||||||||||||||
| Income from continuing operations before income tax expense | 173,099 | 156,405 | 316,200 | 162,230 | |||||||||||||||||||||||||||||||
| Income tax expense | 25,236 | 19,837 | 39,933 | 20,544 | |||||||||||||||||||||||||||||||
| Income from continuing operations | 147,863 | 136,568 | 8.3 | % | 276,267 | 141,686 | 95.0 | % | |||||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | (19,187) | 24,613 | (410,853) | 11,621 | |||||||||||||||||||||||||||||||
| Net income (loss) | $ | 128,676 | $ | 161,181 | $ | (134,586) | $ | 153,307 | |||||||||||||||||||||||||||
| Earnings (loss) per share - basic: | |||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.42 | $ | 0.39 | $ | 0.79 | $ | 0.40 | |||||||||||||||||||||||||||
| Discontinued operations | (0.05) | 0.07 | (1.17) | 0.03 | |||||||||||||||||||||||||||||||
| Net income (loss) | $ | 0.37 | $ | 0.46 | $ | (0.38) | $ | 0.43 | |||||||||||||||||||||||||||
| Earnings (loss) per share - diluted: | |||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.42 | $ | 0.39 | $ | 0.79 | $ | 0.40 | |||||||||||||||||||||||||||
| Discontinued operations | (0.05) | 0.07 | (1.17) | 0.03 | |||||||||||||||||||||||||||||||
| Net income (loss) | $ | 0.37 | $ | 0.46 | $ | (0.38) | $ | 0.43 | |||||||||||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||||||||||
| Basic | 350,987 | 350,538 | 350,995 | 354,778 | |||||||||||||||||||||||||||||||
| Diluted | 352,052 | 350,829 | 351,869 | 355,133 | |||||||||||||||||||||||||||||||
TABLE 2-A
HANESBRANDS INC.
Supplemental Financial Information
Impact of Foreign Currency
(in thousands, except per share data)
(Unaudited)
| Quarter Ended July 3, 2021 | |||||||||||||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency1 | Constant Currency | Quarter Ended June 27, 2020 | % Change, As Reported | % Change, Constant Currency | ||||||||||||||||||||||||||||||
| As reported under GAAP: | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,751,311 | $ | 50,698 | $ | 1,700,613 | $ | 1,543,083 | 13.5 | % | 10.2 | % | |||||||||||||||||||||||
| Gross profit | 681,629 | 27,233 | 654,396 | 513,862 | 32.6 | 27.3 | |||||||||||||||||||||||||||||
| Operating profit | 217,394 | 8,419 | 208,975 | 202,133 | 7.5 | 3.4 | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.42 | $ | 0.02 | $ | 0.40 | $ | 0.39 | 7.7 | % | 2.6 | % | |||||||||||||||||||||||
As adjusted:2 | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,751,311 | $ | 50,698 | $ | 1,700,613 | $ | 1,543,083 | 13.5 | % | 10.2 | % | |||||||||||||||||||||||
| Gross profit | 683,529 | 27,233 | 656,296 | 532,280 | 28.4 | 23.3 | |||||||||||||||||||||||||||||
| Operating profit | 236,058 | 8,419 | 227,639 | 234,412 | 0.7 | (2.9) | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.47 | $ | 0.02 | $ | 0.45 | $ | 0.46 | 2.2 | % | (2.2) | % | |||||||||||||||||||||||
| Six Months Ended July 3, 2021 | |||||||||||||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency1 | Constant Currency | Six Months Ended June 27, 2020 | % Change, As Reported | % Change, Constant Currency | ||||||||||||||||||||||||||||||
| As reported under GAAP: | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 3,259,340 | $ | 93,771 | $ | 3,165,569 | $ | 2,746,153 | 18.7 | % | 15.3 | % | |||||||||||||||||||||||
| Gross profit | 1,284,310 | 51,415 | 1,232,895 | 932,030 | 37.8 | 32.3 | |||||||||||||||||||||||||||||
| Operating profit | 407,516 | 15,952 | 391,564 | 250,086 | 63.0 | 56.6 | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.79 | $ | 0.04 | $ | 0.75 | $ | 0.40 | 97.5 | % | 87.5 | % | |||||||||||||||||||||||
As adjusted:2 | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 3,259,340 | $ | 93,771 | $ | 3,165,569 | $ | 2,746,153 | 18.7 | % | 15.3 | % | |||||||||||||||||||||||
| Gross profit | 1,289,017 | 51,415 | 1,237,602 | 972,259 | 32.6 | 27.3 | |||||||||||||||||||||||||||||
| Operating profit | 445,573 | 15,952 | 429,621 | 306,689 | 45.3 | 40.1 | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.86 | $ | 0.04 | $ | 0.82 | $ | 0.53 | 62.3 | % | 54.7 | % | |||||||||||||||||||||||
| 1 | Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results. | ||||
| 2 | Results for the quarters and six months ended July 3, 2021 and June 27, 2020 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Tables 6-A through 6-E. | ||||
TABLE 2-B
HANESBRANDS INC.
Supplemental Financial Information
Impact of Foreign Currency
(in thousands, except per share data)
(Unaudited)
| Quarter Ended July 3, 2021 | |||||||||||||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency1 | Constant Currency | Quarter Ended June 29, 2019 | % Change, As Reported | % Change, Constant Currency | ||||||||||||||||||||||||||||||
| As reported under GAAP: | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,751,311 | $ | 26,303 | $ | 1,725,008 | $ | 1,636,709 | 7.0 | % | 5.4 | % | |||||||||||||||||||||||
| Gross profit | 681,629 | 14,457 | 667,172 | 604,182 | 12.8 | 10.4 | |||||||||||||||||||||||||||||
| Operating profit | 217,394 | 4,152 | 213,242 | 219,893 | (1.1) | (3.0) | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.42 | $ | 0.01 | $ | 0.41 | $ | 0.41 | 2.4 | % | — | % | |||||||||||||||||||||||
As adjusted:2 | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,751,311 | $ | 26,303 | $ | 1,725,008 | $ | 1,517,999 | 15.4 | % | 13.6 | % | |||||||||||||||||||||||
| Gross profit | 683,529 | 14,457 | 669,072 | 581,442 | 17.6 | 15.1 | |||||||||||||||||||||||||||||
| Operating profit | 236,058 | 4,152 | 231,906 | 206,865 | 14.1 | 12.1 | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.47 | $ | 0.01 | $ | 0.46 | $ | 0.38 | 23.7 | % | 21.1 | % | |||||||||||||||||||||||
| Six Months Ended July 3, 2021 | |||||||||||||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency1 | Constant Currency | Six Months Ended June 29, 2019 | % Change, As Reported | % Change, Constant Currency | ||||||||||||||||||||||||||||||
| As reported under GAAP: | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 3,259,340 | $ | 48,833 | $ | 3,210,507 | $ | 3,086,396 | 5.6 | % | 4.0 | % | |||||||||||||||||||||||
| Gross profit | 1,284,310 | 27,290 | 1,257,020 | 1,149,104 | 11.8 | 9.4 | |||||||||||||||||||||||||||||
| Operating profit | 407,516 | 8,587 | 398,929 | 359,501 | 13.4 | 11.0 | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.79 | $ | 0.02 | $ | 0.76 | $ | 0.62 | 27.4 | % | 22.6 | % | |||||||||||||||||||||||
As adjusted:2 | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 3,259,340 | $ | 48,833 | $ | 3,210,507 | $ | 2,873,582 | 13.4 | % | 11.7 | % | |||||||||||||||||||||||
| Gross profit | 1,289,017 | 27,290 | 1,261,727 | 1,113,949 | 15.7 | 13.3 | |||||||||||||||||||||||||||||
| Operating profit | 445,573 | 8,587 | 436,986 | 346,726 | 28.5 | 26.0 | |||||||||||||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.86 | $ | 0.02 | $ | 0.84 | $ | 0.59 | 45.8 | % | 42.4 | % | |||||||||||||||||||||||
| 1 | Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results. | ||||
| 2 | Results for the quarters and six months ended July 3, 2021 and June 29, 2019 reflect adjustments for restructuring and other action-related charges. Results for the quarter and six months ended June 29, 2019 also reflect adjustments for the exited C9 Champion mass program and DKNY intimate apparel license. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Tables 6-A through 6-E. | ||||
TABLE 3-A
HANESBRANDS INC.
Supplemental Financial Information
By Business Segment
(in thousands)
(Unaudited)
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 3, 2021 | June 27, 2020 | % Change | July 3, 2021 | June 27, 2020 | % Change | ||||||||||||||||||||||||||||||
| Segment net sales: | |||||||||||||||||||||||||||||||||||
Innerwear1 | $ | 780,650 | $ | 1,094,814 | (28.7) | % | $ | 1,351,085 | $ | 1,517,216 | (10.9) | % | |||||||||||||||||||||||
Activewear | 404,189 | 168,379 | 140.0 | 768,192 | 456,379 | 68.3 | |||||||||||||||||||||||||||||
International | 478,923 | 251,285 | 90.6 | 985,184 | 679,515 | 45.0 | |||||||||||||||||||||||||||||
Other | 87,549 | 28,605 | 206.1 | 154,879 | 93,043 | 66.5 | |||||||||||||||||||||||||||||
| Total net sales | $ | 1,751,311 | $ | 1,543,083 | 13.5 | % | $ | 3,259,340 | $ | 2,746,153 | 18.7 | % | |||||||||||||||||||||||
| Segment operating profit: | |||||||||||||||||||||||||||||||||||
Innerwear1 | $ | 186,169 | $ | 304,524 | (38.9) | % | $ | 313,586 | $ | 386,075 | (18.8) | % | |||||||||||||||||||||||
Activewear | 41,047 | (5,751) | NM | 101,641 | 2,357 | 4,212.3 | |||||||||||||||||||||||||||||
International | 61,900 | 5,162 | 1,099.1 | 149,080 | 55,907 | 166.7 | |||||||||||||||||||||||||||||
Other | 9,220 | (11,929) | NM | 11,106 | (15,322) | NM | |||||||||||||||||||||||||||||
| General corporate expenses/other | (62,278) | (57,594) | 8.1 | (129,840) | (122,328) | 6.1 | |||||||||||||||||||||||||||||
Total operating profit before restructuring and other action-related charges | 236,058 | 234,412 | 0.7 | 445,573 | 306,689 | 45.3 | |||||||||||||||||||||||||||||
| Restructuring and other action-related charges | (18,664) | (32,279) | (42.2) | (38,057) | (56,603) | (32.8) | |||||||||||||||||||||||||||||
| Total operating profit | $ | 217,394 | $ | 202,133 | 7.5 | % | $ | 407,516 | $ | 250,086 | 63.0 | % | |||||||||||||||||||||||
| 1 | The Innerwear segment includes $614 million of net sales of personal protective equipment in the second quarter and six months of 2020. | ||||
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 3, 2021 | June 27, 2020 | Basis Points Change | July 3, 2021 | June 27, 2020 | Basis Points Change | ||||||||||||||||||||||||||||||
| Segment operating margin: | |||||||||||||||||||||||||||||||||||
| Innerwear | 23.8 | % | 27.8 | % | (397) | 23.2 | % | 25.4 | % | (220) | |||||||||||||||||||||||||
Activewear | 10.2 | (3.4) | 1,357 | 13.2 | 0.5 | 1,270 | |||||||||||||||||||||||||||||
International | 12.9 | 2.1 | 1,087 | 15.1 | 8.2 | 690 | |||||||||||||||||||||||||||||
Other | 10.5 | (41.7) | 5,223 | 7.2 | (16.5) | 2,370 | |||||||||||||||||||||||||||||
| General corporate expenses/other | (3.6) | (3.7) | 18 | (4.0) | (4.5) | 47 | |||||||||||||||||||||||||||||
| Total operating margin before restructuring and other action-related charges | 13.5 | 15.2 | (171) | 13.7 | 11.2 | 250 | |||||||||||||||||||||||||||||
| Restructuring and other action-related charges | (1.1) | (2.1) | 103 | (1.2) | (2.1) | 89 | |||||||||||||||||||||||||||||
| Total operating margin | 12.4 | % | 13.1 | % | (69) | 12.5 | % | 9.1 | % | 340 | |||||||||||||||||||||||||
TABLE 3-B
HANESBRANDS INC.
Supplemental Financial Information
By Business Segment
(in thousands)
(Unaudited)
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 3, 2021 | June 29, 2019 Rebased1 | % Change | July 3, 2021 | June 29, 2019 Rebased1 | % Change | ||||||||||||||||||||||||||||||
| Segment net sales: | |||||||||||||||||||||||||||||||||||
| Innerwear | $ | 780,650 | $ | 657,477 | 18.7 | % | $ | 1,351,085 | $ | 1,123,891 | 20.2 | % | |||||||||||||||||||||||
Activewear | 404,189 | 350,694 | 15.3 | 768,192 | 671,461 | 14.4 | |||||||||||||||||||||||||||||
International | 478,923 | 430,819 | 11.2 | 985,184 | 921,648 | 6.9 | |||||||||||||||||||||||||||||
Other | 87,549 | 79,009 | 10.8 | 154,879 | 156,582 | (1.1) | |||||||||||||||||||||||||||||
| Total net sales | $ | 1,751,311 | $ | 1,517,999 | 15.4 | % | $ | 3,259,340 | $ | 2,873,582 | 13.4 | % | |||||||||||||||||||||||
| Segment operating profit: | |||||||||||||||||||||||||||||||||||
| Innerwear | $ | 186,169 | $ | 146,997 | 26.6 | % | $ | 313,586 | $ | 250,123 | 25.4 | % | |||||||||||||||||||||||
Activewear | 41,047 | 45,855 | (10.5) | 101,641 | 70,025 | 45.1 | |||||||||||||||||||||||||||||
International | 61,900 | 66,490 | (6.9) | 149,080 | 151,266 | (1.4) | |||||||||||||||||||||||||||||
Other | 9,220 | 7,994 | 15.3 | 11,106 | 10,429 | 6.5 | |||||||||||||||||||||||||||||
| General corporate expenses/other | (62,278) | (60,471) | 3.0 | (129,840) | (135,117) | (3.9) | |||||||||||||||||||||||||||||
Total operating profit before restructuring and other action-related charges | 236,058 | 206,865 | 14.1 | 445,573 | 346,726 | 28.5 | |||||||||||||||||||||||||||||
| Restructuring and other action-related charges | (18,664) | (12,429) | 50.2 | (38,057) | (33,605) | 13.2 | |||||||||||||||||||||||||||||
| Total operating profit | $ | 217,394 | $ | 194,436 | 11.8 | % | $ | 407,516 | $ | 313,121 | 30.1 | % | |||||||||||||||||||||||
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 3, 2021 | June 29, 2019 Rebased1 | Basis Points Change | July 3, 2021 | June 29, 2019 Rebased1 | Basis Points Change | ||||||||||||||||||||||||||||||
| Segment operating margin: | |||||||||||||||||||||||||||||||||||
| Innerwear | 23.8 | % | 22.4 | % | 149 | 23.2 | % | 22.3 | % | 94 | |||||||||||||||||||||||||
Activewear | 10.2 | 13.1 | (292) | 13.2 | 10.4 | 277 | |||||||||||||||||||||||||||||
International | 12.9 | 15.4 | (251) | 15.1 | 16.4 | (131) | |||||||||||||||||||||||||||||
Other | 10.5 | 10.1 | 41 | 7.2 | 6.7 | 54 | |||||||||||||||||||||||||||||
| General corporate expenses/other | (3.6) | (4.0) | 43 | (4.0) | (4.7) | 72 | |||||||||||||||||||||||||||||
| Total operating margin before restructuring and other action-related charges | 13.5 | 13.6 | (15) | 13.7 | 12.1 | 160 | |||||||||||||||||||||||||||||
| Restructuring and other action-related charges | (1.1) | (0.8) | (25) | (1.2) | (1.2) | — | |||||||||||||||||||||||||||||
| Total operating margin | 12.4 | % | 12.8 | % | (40) | 12.5 | % | 10.9 | % | 160 | |||||||||||||||||||||||||
| 1 | Results for the quarter and six months ended June 29, 2019 reflect adjustments for the exited C9 Champion mass program and DKNY intimate apparel license. See “Reconciliation of Select GAAP Measures to Non-GAAP Measures” in Tables 6-A through 6-E. | ||||
TABLE 4
HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| July 3, 2021 | January 2, 2021 | June 27, 2020 | |||||||||||||||
| Assets | |||||||||||||||||
| Cash and cash equivalents | $ | 667,298 | $ | 900,615 | $ | 556,099 | |||||||||||
| Trade accounts receivable, net | 960,993 | 768,221 | 1,139,130 | ||||||||||||||
| Inventories | 1,530,622 | 1,367,758 | 1,774,139 | ||||||||||||||
| Other current assets | 159,715 | 158,700 | 171,435 | ||||||||||||||
| Current assets of discontinued operations | 301,986 | 234,086 | 401,347 | ||||||||||||||
| Total current assets | 3,620,614 | 3,429,380 | 4,042,150 | ||||||||||||||
| Property, net | 446,356 | 477,821 | 496,933 | ||||||||||||||
| Right-of-use assets | 398,526 | 432,631 | 438,683 | ||||||||||||||
| Trademarks and other identifiable intangibles, net | 1,258,783 | 1,293,847 | 1,196,359 | ||||||||||||||
| Goodwill | 1,148,021 | 1,158,938 | 1,144,739 | ||||||||||||||
| Deferred tax assets | 351,309 | 367,976 | 193,100 | ||||||||||||||
| Other noncurrent assets | 54,380 | 64,773 | 118,296 | ||||||||||||||
| Noncurrent assets of discontinued operations | — | 494,501 | 493,045 | ||||||||||||||
| Total assets | $ | 7,277,989 | $ | 7,719,867 | $ | 8,123,305 | |||||||||||
| Liabilities | |||||||||||||||||
| Accounts payable | $ | 1,171,645 | $ | 891,868 | $ | 1,101,438 | |||||||||||
| Accrued liabilities | 628,007 | 609,864 | 452,763 | ||||||||||||||
| Lease liabilities | 129,053 | 136,510 | 147,406 | ||||||||||||||
| Notes payable | — | — | 13 | ||||||||||||||
| Current portion of long-term debt | 37,500 | 263,936 | — | ||||||||||||||
| Current liabilities of discontinued operations | 289,751 | 222,183 | 310,972 | ||||||||||||||
| Total current liabilities | 2,255,956 | 2,124,361 | 2,012,592 | ||||||||||||||
| Long-term debt | 3,647,482 | 3,739,434 | 3,985,631 | ||||||||||||||
| Lease liabilities - noncurrent | 299,380 | 331,577 | 330,599 | ||||||||||||||
| Pension and postretirement benefits | 327,597 | 381,457 | 328,647 | ||||||||||||||
| Other noncurrent liabilities | 185,384 | 216,091 | 270,152 | ||||||||||||||
| Noncurrent liabilities of discontinued operations | — | 112,989 | 116,364 | ||||||||||||||
| Total liabilities | 6,715,799 | 6,905,909 | 7,043,985 | ||||||||||||||
| Stockholders’ equity | |||||||||||||||||
| Preferred stock | — | — | — | ||||||||||||||
| Common stock | 3,491 | 3,488 | 3,481 | ||||||||||||||
| Additional paid-in capital | 310,148 | 307,883 | 302,522 | ||||||||||||||
| Retained earnings | 829,479 | 1,069,546 | 1,404,326 | ||||||||||||||
| Accumulated other comprehensive loss | (580,928) | (566,959) | (631,009) | ||||||||||||||
| Total stockholders’ equity | 562,190 | 813,958 | 1,079,320 | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | 7,277,989 | $ | 7,719,867 | $ | 8,123,305 | |||||||||||
TABLE 5
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows1
(in thousands)
(Unaudited)
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | ||||||||||||||||||||
| Operating Activities: | |||||||||||||||||||||||
| Net income (loss) | $ | 128,676 | $ | 161,181 | $ | (134,586) | $ | 153,307 | |||||||||||||||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||||||||||||||
| Depreciation | 19,423 | 22,618 | 43,565 | 45,399 | |||||||||||||||||||
| Amortization of acquisition intangibles | 4,799 | 6,086 | 10,978 | 12,199 | |||||||||||||||||||
| Other amortization | 2,794 | 2,630 | 5,814 | 5,107 | |||||||||||||||||||
| Impairment of intangible assets and goodwill | — | 20,319 | 163,047 | 20,319 | |||||||||||||||||||
| Loss on classification of assets held for sale | 9,828 | — | 236,180 | — | |||||||||||||||||||
| Amortization of debt issuance costs | 3,089 | 2,996 | 7,669 | 5,119 | |||||||||||||||||||
| Other | (8,389) | 21,505 | (14,224) | 16,247 | |||||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | (136,151) | (465,828) | (200,106) | (392,134) | |||||||||||||||||||
| Inventories | (52,368) | 25,376 | (175,149) | (61,409) | |||||||||||||||||||
| Other assets | (5,155) | (58,360) | 4,451 | (31,570) | |||||||||||||||||||
| Accounts payable | 191,121 | 223,943 | 300,318 | 210,338 | |||||||||||||||||||
| Accrued pension and postretirement benefits | (419) | 2,163 | (39,176) | (19,318) | |||||||||||||||||||
| Accrued liabilities and other | 38,062 | 100,794 | 3,475 | 18,603 | |||||||||||||||||||
| Net cash from operating activities | 195,310 | 65,423 | 212,256 | (17,793) | |||||||||||||||||||
| Investing Activities: | |||||||||||||||||||||||
| Capital expenditures | (7,527) | (20,753) | (25,331) | (46,512) | |||||||||||||||||||
| Proceeds from sales of assets | 49 | — | 2,455 | 66 | |||||||||||||||||||
| Other | 5,143 | 4,607 | 6,937 | 5,823 | |||||||||||||||||||
| Net cash from investing activities | (2,335) | (16,146) | (15,939) | (40,623) | |||||||||||||||||||
| Financing Activities: | |||||||||||||||||||||||
| Repayments on Term Loan Facilities | (6,250) | — | (306,250) | — | |||||||||||||||||||
| Borrowings on Accounts Receivable Securitization Facility | — | — | — | 227,061 | |||||||||||||||||||
| Repayments on Accounts Receivable Securitization Facility | — | (152,152) | — | (227,061) | |||||||||||||||||||
| Borrowings on Revolving Loan Facilities | — | — | — | 1,638,000 | |||||||||||||||||||
| Repayments on Revolving Loan Facilities | — | (950,000) | — | (1,638,000) | |||||||||||||||||||
| Borrowings on Senior Notes | — | 700,000 | — | 700,000 | |||||||||||||||||||
| Borrowings on International Debt | — | — | — | 31,222 | |||||||||||||||||||
| Borrowings on notes payable | 21,532 | 54,357 | 42,638 | 116,669 | |||||||||||||||||||
| Repayments on notes payable | (22,790) | (48,021) | (43,066) | (112,373) | |||||||||||||||||||
| Share repurchases | — | — | — | (200,269) | |||||||||||||||||||
| Cash dividends paid | (52,368) | (52,213) | (104,719) | (105,896) | |||||||||||||||||||
| Other | 378 | (14,167) | (2,524) | (14,035) | |||||||||||||||||||
| Net cash from financing activities | (59,498) | (462,196) | (413,921) | 415,318 | |||||||||||||||||||
| Effect of changes in foreign exchange rates on cash | 882 | 12,392 | (16,780) | (2,669) | |||||||||||||||||||
Change in cash, cash equivalents and restricted cash | 134,359 | (400,527) | (234,384) | 354,233 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 541,860 | 1,084,683 | 910,603 | 329,923 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | 676,219 | 684,156 | 676,219 | 684,156 | |||||||||||||||||||
| Less restricted cash at end of period | — | 1,042 | — | 1,042 | |||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 676,219 | $ | 683,114 | $ | 676,219 | $ | 683,114 | |||||||||||||||
| Balances included in the Condensed Consolidated Balance Sheets: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 667,298 | $ | 556,099 | $ | 667,298 | $ | 556,099 | |||||||||||||||
| Cash and cash equivalents included in current assets of discontinued operations | 8,921 | 127,015 | 8,921 | 127,015 | |||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 676,219 | $ | 683,114 | $ | 676,219 | $ | 683,114 | |||||||||||||||
| 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 6-A
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Quarter Ended July 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 | $ | 681,629 | $ | (464,235) | $ | 217,394 | $ | 173,099 | $ | (25,236) | $ | 147,863 | $ | 0.42 | |||||||||||||||||||||||||||
| As a percentage of net sales | 38.9 | % | 26.5 | % | 12.4 | % | |||||||||||||||||||||||||||||||||||
| Restructuring and other action-related charges: | |||||||||||||||||||||||||||||||||||||||||
| Full Potential Plan: | |||||||||||||||||||||||||||||||||||||||||
| Professional services | — | 13,804 | 13,804 | 13,804 | — | 13,804 | 0.04 | ||||||||||||||||||||||||||||||||||
| Other | 1,900 | 2,960 | 4,860 | 4,860 | — | 4,860 | 0.01 | ||||||||||||||||||||||||||||||||||
| Tax effect on actions | — | — | — | — | (1,903) | (1,903) | (0.01) | ||||||||||||||||||||||||||||||||||
| Total restructuring and other action-related charges | 1,900 | 16,764 | 18,664 | 18,664 | (1,903) | 16,761 | 0.05 | ||||||||||||||||||||||||||||||||||
| As adjusted | $ | 683,529 | $ | (447,471) | $ | 236,058 | $ | 191,763 | $ | (27,139) | $ | 164,624 | $ | 0.47 | |||||||||||||||||||||||||||
| As a percentage of net sales | 39.0 | % | 25.6 | % | 13.5 | % | |||||||||||||||||||||||||||||||||||
| Six Months Ended July 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 | $ | 1,284,310 | $ | (876,794) | $ | 407,516 | $ | 316,200 | $ | (39,933) | $ | 276,267 | $ | 0.79 | |||||||||||||||||||||||||||
| As a percentage of net sales | 39.4 | % | 26.9 | % | 12.5 | % | |||||||||||||||||||||||||||||||||||
| Restructuring and other action-related charges: | |||||||||||||||||||||||||||||||||||||||||
| Full Potential Plan: | |||||||||||||||||||||||||||||||||||||||||
| Professional services | — | 25,510 | 25,510 | 25,510 | — | 25,510 | 0.07 | ||||||||||||||||||||||||||||||||||
| Impairment of intangible assets | — | 7,302 | 7,302 | 7,302 | — | 7,302 | 0.02 | ||||||||||||||||||||||||||||||||||
| Other | 4,707 | 538 | 5,245 | 5,245 | — | 5,245 | 0.01 | ||||||||||||||||||||||||||||||||||
| Discrete tax benefit | — | — | — | — | (7,295) | (7,295) | (0.02) | ||||||||||||||||||||||||||||||||||
| Tax effect on actions | — | — | — | — | (5,910) | (5,910) | (0.02) | ||||||||||||||||||||||||||||||||||
| Total restructuring and other action-related charges | 4,707 | 33,350 | 38,057 | 38,057 | (13,205) | 24,852 | 0.07 | ||||||||||||||||||||||||||||||||||
| As adjusted | $ | 1,289,017 | $ | (843,444) | $ | 445,573 | $ | 354,257 | $ | (53,138) | $ | 301,119 | $ | 0.86 | |||||||||||||||||||||||||||
| As a percentage of net sales | 39.5 | % | 25.9 | % | 13.7 | % | |||||||||||||||||||||||||||||||||||
| 1 | Amounts may not be additive due to rounding. | ||||
Including the favorable foreign currency impact of $12 million, global Champion sales excluding C9 Champion increased approximately 122% in the second quarter of 2021 compared to the second quarter of 2020. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 116% in the second quarter of 2021 compared to the second quarter of 2020. | ||
Including the favorable foreign currency impact of $10 million, global Champion sales excluding C9 Champion increased approximately 21% in the second quarter of 2021 compared to the second quarter of 2019. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 18% in the second quarter of 2021 compared to the second quarter of 2019. | ||
TABLE 6-B
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(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 | (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 | % | |||||||||||||||||||||||||||||||||||
| Six Months 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 | $ | 932,030 | $ | (681,944) | $ | 250,086 | $ | 162,230 | $ | (20,544) | $ | 141,686 | $ | 0.40 | |||||||||||||||||||||||||||
| As a percentage of net sales | 33.9 | % | 24.8 | % | 9.1 | % | |||||||||||||||||||||||||||||||||||
| Restructuring and other action-related charges: | |||||||||||||||||||||||||||||||||||||||||
| Supply chain actions | 16,702 | — | 16,702 | 16,702 | — | 16,702 | 0.05 | ||||||||||||||||||||||||||||||||||
| Program exit costs | 9,031 | 467 | 9,498 | 9,498 | — | 9,498 | 0.03 | ||||||||||||||||||||||||||||||||||
| Other | (373) | 6,489 | 6,116 | 6,116 | — | 6,116 | 0.02 | ||||||||||||||||||||||||||||||||||
| 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 | — | — | — | — | (10,221) | (10,221) | (0.03) | ||||||||||||||||||||||||||||||||||
| Total restructuring and other action-related charges | 40,229 | 16,374 | 56,603 | 56,603 | (10,221) | 46,382 | 0.13 | ||||||||||||||||||||||||||||||||||
| As adjusted | $ | 972,259 | $ | (665,570) | $ | 306,689 | $ | 218,833 | $ | (30,765) | $ | 188,068 | $ | 0.53 | |||||||||||||||||||||||||||
| As a percentage of net sales | 35.4 | % | 24.2 | % | 11.2 | % | |||||||||||||||||||||||||||||||||||
| 1 | Amounts may not be additive due to rounding. | ||||
TABLE 6-C
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| 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 | % | |||||||||||||||||||||||||||||||||||||||||
| Six Months 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 | $ | 3,086,396 | $ | 1,149,104 | $ | (789,603) | $ | 359,501 | $ | 250,284 | $ | (24,579) | $ | 225,705 | $ | 0.62 | |||||||||||||||||||||||||||||||
Less exited programs2 | (212,814) | (65,057) | 18,677 | (46,380) | (46,380) | 6,540 | (39,840) | (0.11) | |||||||||||||||||||||||||||||||||||||||
| As rebased | 2,873,582 | 1,084,047 | (770,926) | 313,121 | 203,904 | (18,039) | 185,865 | 0.51 | |||||||||||||||||||||||||||||||||||||||
| As a percentage of net sales | 37.7 | % | 26.8 | % | 10.9 | % | |||||||||||||||||||||||||||||||||||||||||
| Restructuring and other action-related charges: | |||||||||||||||||||||||||||||||||||||||||||||||
| Supply chain actions | — | 29,902 | — | 29,902 | 29,902 | — | 29,902 | 0.08 | |||||||||||||||||||||||||||||||||||||||
| Other restructuring costs | — | — | 3,703 | 3,703 | 3,703 | — | 3,703 | 0.01 | |||||||||||||||||||||||||||||||||||||||
| Tax effect on actions | — | — | — | — | — | (4,738) | (4,738) | (0.01) | |||||||||||||||||||||||||||||||||||||||
| Total restructuring and other action-related charges | — | 29,902 | 3,703 | 33,605 | 33,605 | (4,738) | 28,867 | 0.08 | |||||||||||||||||||||||||||||||||||||||
| As adjusted | $ | 2,873,582 | $ | 1,113,949 | $ | (767,223) | $ | 346,726 | $ | 237,509 | $ | (22,777) | $ | 214,732 | $ | 0.59 | |||||||||||||||||||||||||||||||
| As a percentage of net sales | 38.8 | % | 26.7 | % | 12.1 | % | |||||||||||||||||||||||||||||||||||||||||
| 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. | ||||
TABLE 6-D
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Quarter Ended June 29, 2019 | |||||||||||||||||||||||||||||
| As Reported | Less: Exited Programs1 | Adjusted for Exited Programs | Less: Restructuring and other action-related charges | Rebased | |||||||||||||||||||||||||
| Segment net sales: | |||||||||||||||||||||||||||||
Innerwear | $ | 678,604 | $ | 21,127 | $ | 657,477 | $ | — | $ | 657,477 | |||||||||||||||||||
Activewear | 448,277 | 97,583 | 350,694 | — | 350,694 | ||||||||||||||||||||||||
International | 430,819 | — | 430,819 | — | 430,819 | ||||||||||||||||||||||||
Other | 79,009 | — | 79,009 | — | 79,009 | ||||||||||||||||||||||||
| Total net sales | $ | 1,636,709 | $ | 118,710 | $ | 1,517,999 | $ | — | $ | 1,517,999 | |||||||||||||||||||
| Segment operating profit: | |||||||||||||||||||||||||||||
Innerwear | $ | 149,530 | $ | 2,533 | $ | 146,997 | $ | — | $ | 146,997 | |||||||||||||||||||
Activewear | 68,779 | 22,924 | 45,855 | — | 45,855 | ||||||||||||||||||||||||
International | 66,490 | — | 66,490 | — | 66,490 | ||||||||||||||||||||||||
Other | 7,994 | — | 7,994 | — | 7,994 | ||||||||||||||||||||||||
| General corporate expenses/other | (60,471) | — | (60,471) | — | (60,471) | ||||||||||||||||||||||||
| Restructuring and other action-related charges | (12,429) | — | (12,429) | (12,429) | — | ||||||||||||||||||||||||
| Total operating profit | $ | 219,893 | $ | 25,457 | $ | 194,436 | $ | (12,429) | $ | 206,865 | |||||||||||||||||||
| Six Months Ended June 29, 2019 | |||||||||||||||||||||||||||||
| As Reported | Less: Exited Programs1 | Adjusted for Exited Programs | Less: Restructuring and other action-related charges | Rebased | |||||||||||||||||||||||||
| Segment net sales: | |||||||||||||||||||||||||||||
Innerwear | $ | 1,154,549 | $ | 30,658 | $ | 1,123,891 | $ | — | $ | 1,123,891 | |||||||||||||||||||
Activewear | 853,617 | 182,156 | 671,461 | — | 671,461 | ||||||||||||||||||||||||
International | 921,648 | — | 921,648 | — | 921,648 | ||||||||||||||||||||||||
Other | 156,582 | — | 156,582 | — | 156,582 | ||||||||||||||||||||||||
| Total net sales | $ | 3,086,396 | $ | 212,814 | $ | 2,873,582 | $ | — | $ | 2,873,582 | |||||||||||||||||||
| Segment operating profit: | |||||||||||||||||||||||||||||
Innerwear | $ | 254,156 | $ | 4,033 | $ | 250,123 | $ | — | $ | 250,123 | |||||||||||||||||||
Activewear | 112,372 | 42,347 | 70,025 | — | 70,025 | ||||||||||||||||||||||||
International | 151,266 | — | 151,266 | — | 151,266 | ||||||||||||||||||||||||
Other | 10,429 | — | 10,429 | — | 10,429 | ||||||||||||||||||||||||
| General corporate expenses/other | (135,117) | — | (135,117) | — | (135,117) | ||||||||||||||||||||||||
| Restructuring and other action-related charges | (33,605) | — | (33,605) | (33,605) | — | ||||||||||||||||||||||||
| Total operating profit | $ | 359,501 | $ | 46,380 | $ | 313,121 | $ | (33,605) | $ | 346,726 | |||||||||||||||||||
| 1 | Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license. | ||||
TABLE 6-E
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Last Twelve Months | |||||||||||
| July 3, 2021 | June 27, 2020 | ||||||||||
EBITDA1: | |||||||||||
| Income from continuing operations | $ | 102,294 | $ | 489,305 | |||||||
Interest expense, net | 174,036 | 159,927 | |||||||||
| Income tax expense (benefit) | (90,551) | 66,201 | |||||||||
Depreciation and amortization | 116,442 | 113,251 | |||||||||
Total EBITDA | 302,221 | 828,684 | |||||||||
Total restructuring and other action-related charges (excluding tax effect on actions) | 715,650 | 85,513 | |||||||||
Stock compensation expense | 13,491 | 10,692 | |||||||||
Total EBITDA, as adjusted | $ | 1,031,362 | $ | 924,889 | |||||||
| Net debt: | |||||||||||
| Debt (current and long-term debt) | $ | 3,684,982 | $ | 3,985,631 | |||||||
Notes payable | — | 13 | |||||||||
(Less) Cash and cash equivalents | (667,298) | (556,099) | |||||||||
Net debt | $ | 3,017,684 | $ | 3,429,545 | |||||||
| Net debt/EBITDA, as adjusted | 2.9 | 3.7 | |||||||||
| 1 | Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. | ||||
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | ||||||||||||||||||||
Free cash flow1: | |||||||||||||||||||||||
| Net cash from operating activities | $ | 195,310 | $ | 65,423 | $ | 212,256 | $ | (17,793) | |||||||||||||||
| Capital expenditures | (7,527) | (20,753) | (25,331) | (46,512) | |||||||||||||||||||
| Free cash flow | $ | 187,783 | $ | 44,670 | $ | 186,925 | $ | (64,305) | |||||||||||||||
| 1 | Free cash flow includes the results from continuing and discontinued operations. | ||||
TABLE 7
HANESBRANDS INC.
Supplemental Financial Information
Reconciliation of GAAP Outlook to Adjusted Outlook
(in thousands, except per share data)
(Unaudited)
| Quarter Ended | Quarter Ended | Year Ended | |||||||||||||||
| October 2, 2021 | January 1, 2022 | January 1, 2022 | |||||||||||||||
| Operating profit outlook, as calculated under GAAP | $216,000 to $226,000 | $172,000 to $192,000 | $795,000 to $825,000 | ||||||||||||||
| Restructuring and other action-related charges | $19,000 | $28,000 | $85,000 | ||||||||||||||
| Operating profit outlook, as adjusted | $235,000 to $245,000 | $200,000 to $220,000 | $880,000 to $910,000 | ||||||||||||||
Diluted earnings per share from continuing operations, as calculated under GAAP1 | $0.42 to $0.45 | $0.29 to $0.34 | $1.50 to $1.58 | ||||||||||||||
| Restructuring and other action-related charges | $0.03 | $0.08 | $0.18 | ||||||||||||||
| Diluted earnings per share from continuing operations, as adjusted | $0.45 to $0.48 | $0.37 to $0.42 | $1.68 to $1.76 | ||||||||||||||
| 1 | The company expects approximately 353 million diluted weighted average shares outstanding for the quarters ended October 2, 2021 and January 1, 2022 and for the year ended January 1, 2022. | ||||
Hanesbrands FAQs
Updated August 5, 2021 – New or updated information is in red
General and Current Period FAQs (Guidance comments as of August 5, 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: Our full-year 2021 outlook reflects various puts and takes within the current environment, including, but not limited to: (1) the continued uncertainty due to the COVID-19 pandemic; (2) rising COVID cases around the world, which are creating headwinds from additional lockdowns, most recently in Japan and Australia, as well as incremental disruptions to global supply chains around the world that are driving cost pressure and higher levels of inflation, relative to our prior outlook; (3) stronger-than-expected demand in both our Innerwear and Activewear businesses, which is being further fueled by the benefits from the recent child tax credit payments in the U.S.; and, (4) maintaining our commitment to increase investment in our brands as part of our Full Potential strategy.
Net Sales: We expect total net sales from continuing operations of $6.75 billion to $6.85 billion as compared to the prior range of $6.2 billion to $6.3 billion. This includes an approximate $116 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 11% over prior year on a reported basis as compared to the prior outlook of 2%.
Adjusting for the $820 million of PPE sales and $45 million of sales from the 53rd week in 2020, at the midpoint our full-year 2021 guidance implies net sales growth of approximately 29% over prior year on a reported basis as compared to the prior outlook of 19%.
Operating Profit (GAAP and Adjusted): Our guidance for GAAP Operating Profit from continuing operations is $795 million to $825 million, which compares to the prior range of $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 $880 million to $910 million, which compares to the prior range of $815 million to $845 million. Our operating profit guidance includes an approximate $20 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 13.2%, which compares to the previous guidance 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 cost and inflation pressure as well as higher SG&A expense due to temporary COVID-driven cost cuts in the second and third-quarters of 2020; and, (4) expense leverage from higher sales.
As compared to rebased 2019, at the midpoint of our full-year 2021 guidance, which includes higher levels of brand marketing investment as well as higher cost and inflation pressures, net sales are expected to increase 13% and adjusted operating profit is expected to increase 9%. This compares to the prior outlook for sales and adjusted operating profit growth of 4% and 1%, respectively.
Interest/Other Expenses and Tax Rate: Our guidance assumes Interest and Other expenses of approximately $182 million as well as GAAP and adjusted tax rates of approximately 13% and 15%, respectively.
1
EPS (GAAP and Adjusted): Our guidance for GAAP EPS from continuing operations is $1.50 to $1.58 as compared to the prior outlook of $1.33 to $1.41. Our guidance for Adjusted EPS from continuing operations, which excludes pretax Full Potential plan-related expenses (see below), is $1.68 to $1.76 and compares to the prior outlook of $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 approximately $550 million and compares to the prior outlook of $500 million to $550 million. Our capital expenditure guidance is approximately $100 million.
Pretax expenses: Our guidance reflects approximately $85 million of pretax Full Potential plan-related charges, which is unchanged from the prior outlook.
There were no sales or profit from PPE in the second-quarter of 2021. Our full-year 2021 guidance ranges (sales, operating profit and EPS ranges noted above) assume no sales or profit related to the selling of our PPE inventory in the second-half. 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 third-quarter 2021 guidance?
A: Our third-quarter 2021 outlook reflects the various puts and takes within the current environment that are listed above in question 1. At our investor day in May, we highlighted our expectation for both cost/inflation pressures and brand marketing investments to build through the year in 2021, creating margin headwinds as the year progressed. We also highlighted our focus on cost savings initiatives and additional supply chain efficiencies to partially mitigate the cost pressures and higher levels of brand marketing investment.
We expect total net sales from continuing operations of $1.78 billion to $1.81 billion. This includes an approximate $16 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 6% over prior year on a reported basis. Excluding the $179 million of PPE sales in the third-quarter of 2020, the midpoint our third-quarter 2021 guidance implies net sales growth of approximately 19% over prior year. As compared to rebased 2019, at the midpoint, our guidance implies net sales are 11% above the third-quarter of 2019.
Our guidance for GAAP Operating Profit from continuing operations is $216 million to $226 million. Our guidance for Adjusted Operating Profit from continuing operations, which excludes approximately $19 million of pretax Full Potential plan-related charges, is $235 million to $245 million. Our operating profit guidance includes an approximate $3 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 13.4%. The expected year-over-year margin decline is driven by: (1) higher cost and inflation pressure; (2) higher levels of brand marketing investment; and (3) the overlap of temporary COVID-driven cost reductions in SG&A in the third-quarter of 2020.
Our guidance assumes Interest and Other expenses of approximately $45 million, a GAAP tax rate of approximately 12% and adjusted tax rate of approximately 15%. Our guidance for GAAP EPS from continuing operations is $0.42 to $0.45. Our guidance for Adjusted EPS from continuing operations, which excludes pretax Full Potential plan-related expenses (see above), is $0.45 to $0.48. Both ranges are based on diluted shares outstanding of approximately 353 million for the quarter.
No sales or profit related to the selling of our PPE inventory are included in our third-quarter 2021 guidance ranges (sales, operating profit and EPS ranges noted above). We will not include any sales or profit related to the potential
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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 for actions taken in 2019 primarily represented supply chain network changes, program exit costs, and overhead reduction as well as completion of outstanding acquisition integration. Charges taken in 2020 include supply chain restructuring actions, program exit costs, COVID-19 related charges, Full Potential plan charges and the write-off of a discrete tax asset related to our Bras N Things acquisition. COVID-19 related charges include intangible asset and goodwill impairment charges, bad debt expense and supply chain re-startup costs. Full Potential plan charges include inventory write-down charges related to our SKU reduction initiative and discontinuation of our PPE business. 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
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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.
In addition, we have chosen to present certain year-over-year comparisons with respect to our rebased 2019 business, which excludes the exited C9 Champion program and DKNY license. We believe this information is useful to management and investors to facilitate a more meaningful comparison of the results of our ongoing 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.
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 August 5, 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
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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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