- Exceeds year-end goals with respect to its four key 2023
performance metrics, despite a challenging sales environment. Sees
positive inflection with respect to margins and leverage.
- Fourth quarter gross margin of 38.1% increased 400 basis points
compared to prior year. Adjusted gross margin of 38.2% increased
approximately 395 basis points over prior year, ahead of
expectations.
- Unlocked tied-up working capital, ending the year with
inventory below $1.4 billion, ahead of expectations. For full-year
2023, inventory improved 31% year-over-year, or $612 million.
- Generated $562 million of cash flow from operations, ahead of
expectations.
- With stronger-than-expected operating cash flow, the Company
accelerated debt paydown to more than $500 million in 2023, ahead
of expectations.
- Year-end leverage of 5.2 times net debt-to-adjusted EBITDA was
0.4 times lower than its peak in second-quarter 2023. Company ended
2023 with more than $1.3 billion of liquidity.
- Company reported fourth-quarter 2023 sales of $1.3 billion,
operating profit of $96 million, adjusted operating profit of $111
million, as well as GAAP and adjusted earnings per share from
continuing ops of $0.22 and $0.03, respectively.
- Provides 2024 guidance, including visibility for strong profit
and EPS growth despite a continued cautious view of consumer
demand. Company expects to pay down more than $300 million of debt
in 2024. Provides first-quarter guidance.
HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel
brands, today announced results for fourth-quarter and full-year
2023.
“Our fourth quarter performance did not meet our expectations as
the sales environment proved to be more challenging than expected.
However, we saw several positive indicators that give us confidence
margins and leverage have reached a positive inflection point and
demonstrate progress on our strategy to simplify our business,
reduce inventory, cut costs, and reignite Innerwear,” said Steve
Bratspies, CEO. “Importantly, we exceeded our year-end goals in all
four key 2023 performance metrics, including gross margin,
inventory, operating cash flow and debt reduction. During the
quarter, new products and permanent retail space gains drove
increased market share in U.S. Innerwear, which we expect to build
upon as we rollout another record year of innovation and increase
our brand marketing investments. For 2024, we believe we’re well
positioned for continued margin improvement, another year of strong
cash generation and continued debt reduction.”
Highlights
- Gross margin returned to pre-inflation levels, as
expected. As compared to prior year, fourth quarter GAAP gross
margin of 38.1% increased 400 basis points and adjusted gross
margin of 38.2% increased approximately 395 basis points,
reflecting the expected benefits from the Company’s inventory and
cost savings initiatives as well as lower input costs from
commodities and ocean freight.
- Exceeded 2023 inventory and operating cash flow goals.
Year-end inventory of less than $1.4 billion was better than the
Company’s $1.5 billion target. The 31% year-over-year improvement
in inventory was driven predominantly by the benefits of the
Company’s inventory management capabilities, including SKU
discipline and lifecycle management, as well as lower input costs
from commodities and ocean freight. The improvement in inventory
helped generate $562 million of operating cash flow for full-year
2023, which exceeded its $500 million target.
- Strengthened balance sheet and increased liquidity position
in 2023. Through strong positive cash generation, the Company
accelerated debt reduction by paying down more than $500 million of
debt for full-year 2023, exceeding its target of $400 million. The
Company also further strengthened its liquidity position to more
than $1.3 billion as of the end of 2023.
- U.S. Innerwear market share gains continued in the fourth
quarter. Despite a mid-single digit market decline in the
fourth quarter, the Company’s U.S. Innerwear business gained market
share with both Men and Women. The strongest share gains in the
quarter were with younger consumers. Market share gains were driven
by key consumer-led innovations, including Hanes Originals and M by
Maidenform, permanent retail space gains, increased brand marketing
investments, as well as improved on-shelf product availability.
Revenue from new product innovation was up 60% over prior year in
the fourth quarter and up more than 40% for full-year 2023. For
2024, the Company has a robust pipeline of innovation launches
spanning its global brand portfolio, including new products within
Hanes and Bali in the U.S.
Fourth-Quarter 2023
Results
- Net Sales from continuing operations of $1.3 billion
decreased 12% compared to last year, with approximately 130 basis
points due to the U.S. Hosiery divestiture and approximately 40
basis points due to the unfavorable impact from foreign exchange
rates. On an organic constant currency basis, net sales decreased
approximately 10% compared to last year as the global consumer
environment was more challenging than expected, particularly in the
U.S. activewear market and in Australia.
- Global Champion brand sales decreased 23% on a reported
basis, and 24% on a constant currency basis, as compared to prior
year. U.S. sales decreased 30% driven by the combination of
challenging activewear apparel market dynamics and the expected
topline headwinds from the strategic actions the Company is taking
to strengthen the brand and position Champion for long-term
profitable growth. These actions include disciplined product and
channel segmentation, shifting its mix, and assortment changes.
Internationally, sales decreased 14% on a reported basis and 15% on
a constant currency basis. Constant currency sales increased in
China and Latin America, which was more than offset by decreases in
Europe, Japan, and Canada.
- Gross Profit of $494 million decreased approximately 2%
while gross margin increased 400 basis points to 38.1% as compared
to prior year. Adjusted Gross Profit, which excludes certain
costs related to the Company’s Full Potential transformation plan
and its global Champion performance plan, was $495 million.
Adjusted Gross Margin of 38.2% increased approximately 395
basis points as compared to fourth-quarter 2022, ahead of the
Company’s outlook. The improvement was driven primarily by the
expected benefits from the Company’s inventory actions, namely the
overlap of last year’s manufacturing timeout actions, and cost
savings initiatives, as well as lower input costs, which more than
offset the impact from wage inflation. As expected, the previous
headwinds from commodity and ocean freight inflation shifted to a
year-over-year benefit of approximately 200 basis points in the
fourth quarter as the Company began selling lower-cost inventory,
particularly in its Innerwear business.
- Selling, General and Administrative (SG&A) expenses
decreased 10% to $398 million as compared to last year. Adjusted
SG&A expenses of $385 million, which excludes certain costs
related to the Company’s Full Potential transformation plan and its
global Champion performance plan, decreased 9% year-over-year, or
approximately $38 million. The decrease in adjusted SG&A was
driven by benefits from cost savings initiatives, particularly in
distribution, as well as disciplined expense management and lower
variable expenses, which more than offset increased brand marketing
investments. As a percent of net sales, adjusted SG&A expense
of 29.7% increased 100 basis points over prior year. Despite the
overall reduction in SG&A expense in the quarter, the
deleverage, as a percent of net sales, was driven primarily by the
impact from lower sales and higher brand marketing
investments.
- Operating Profit and Operating Margin in fourth-quarter
2023 were $96 million and 7.4%, respectively, compared to $60
million and 4.1%, respectively, in the prior year. Adjusted
Operating Profit of $111 million increased from $83 million in
fourth-quarter 2022. Adjusted Operating Margin of 8.5%
increased approximately 295 basis points over prior year.
- Interest and Other Expenses for fourth-quarter 2023 were
approximately $77 million as compared to approximately $53 million
in the prior year. The increase was driven primarily by higher
average interest rates.
- Tax Benefit for fourth-quarter 2023 was $(59) million.
Adjusted Tax Expense, which excludes an approximate $(81)
million discrete tax benefit in the quarter, was approximately $22
million. The non-cash discrete tax benefit in the quarter reflects
an adjustment to prior year’s non-cash reserves related to deferred
taxes. For fourth-quarter 2022, tax expense was $425 million, which
included a $423 million non-cash reserve related to deferred taxes,
and the adjusted tax expense was $5 million.
- Income from Continuing Operations totaled approximately
$78 million, or $0.22 per diluted share in fourth-quarter 2023,
compared to a loss from continuing operations of $(418) million, or
$(1.19) per diluted share, last year. Adjusted Income from
Continuing Operations totaled $12 million, or $0.03 per diluted
share, compared to adjusted income from continuing operations of
$24 million, or $0.07 per diluted share, in fourth-quarter
2022.
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 Full Potential transformation
plan and global Champion performance plan charges.
Fourth-Quarter 2023 Business Segment
Summary
- Innerwear sales decreased approximately 1%, or
approximately $7 million, as compared to prior year. The Company
gained additional market share with both Men and Women during the
quarter despite a 5% decrease in the market. The strongest share
gains in the quarter were with younger consumers. Market share
gains were driven by key consumer-led innovations, including Hanes
Originals and M by Maidenform, permanent retail space gains,
increased brand marketing investments, as well as improved on-shelf
product availability. Operating margin of 21.1% increased
approximately 1,280 basis points over prior year driven by lower
input costs, the expected benefits from its inventory and cost
savings initiatives, favorable business mix and SG&A cost
savings initiatives, which more than offset increased brand
marketing investments.
- Activewear sales decreased 24% compared to prior year
with decreases across channels and brands in the quarter. The
decrease was driven by the ongoing combination of challenging
activewear apparel market dynamics, including soft consumer demand
and cautious ordering from retailers, and the expected topline
headwinds from the strategic actions the Company is taking to
strengthen the brand and position Champion for long-term profitable
growth. These actions include disciplined product and channel
segmentation, shifting its mix, and assortment changes. Operating
margin for the segment of (3.9)% decreased approximately 1,145
basis points compared to the fourth quarter of last year. The
year-over-year decrease was driven predominantly by lower sales
volume, the lingering impact from higher input costs due to slower
inventory turns, and unfavorable business mix, which more than
offset disciplined SG&A expense management.
- International sales decreased 9% on a reported basis,
including approximately $6 million from unfavorable foreign
exchange rates. International sales decreased approximately 7% on a
constant currency basis compared to prior year. In constant
currency, innerwear growth in the Americas and Champion growth in
China were more than offset by a decrease in Australia, which was
driven by a very challenging macroeconomic environment, as well as
Champion decreases in Europe, Japan and Canada. Operating margin
for the segment of 16.2% increased approximately 200 basis points
compared to prior year driven by favorable business mix and
disciplined SG&A expense management, which more than offset the
impact from lower sales volume.
Cash Flow, Balance Sheet and
Liquidity
- Total Liquidity Position at the end of fourth-quarter
2023 was more than $1.3 billion, consisting of approximately $206
million of cash and equivalents and approximately $1.1 billion of
available capacity under the Company’s credit facilities.
- Leverage Ratio, based on the calculation as defined in
the Company’s senior secured credit facility, was 5.2 times on a
net debt-to-adjusted EBITDA basis at the end of fourth-quarter
2023, which was below its fourth-quarter 2023 covenant of 6.75
times and its peak of 5.6 times in second-quarter 2023. Leverage
Ratio at the end of fourth-quarter 2022 was 4.6 times (See Table
6-B).
- Inventory at the end of fourth-quarter 2023 of $1.37
billion decreased 10% sequentially and decreased 31%, or $612
million, year-over-year. The year-over-year improvement was driven
predominantly by the benefits of the Company’s inventory management
capabilities, including SKU discipline and lifecycle management, as
well as lower input costs.
- Cash Flow from Operations was $274 million in
fourth-quarter 2023 as compared to $133 million in fourth-quarter
2022. For full-year 2023, cash flow from operations was $562
million as compared to a use of $(359) million last year. During
2023, the Company executed several initiatives to unlock working
capital that was tied up due to the increased input cost inflation
and supply chain disruptions in 2022. These working capital
initiatives were the primary driver of the $921 million
year-over-year increase in full-year operating cash flow. Free
Cash Flow was $266 million in fourth-quarter 2023, as compared
with $92 million in the prior year. For full-year 2023, free cash
flow was $518 million, an increase of $989 million from last year’s
$(471) million use of cash.
First-Quarter and Full-Year 2024
Financial Outlook
The Company is providing guidance on tax expense due to the
expected fluctuation of its quarterly tax rate, stemming from the
deferred tax reserve matter previously disclosed in the fourth
quarter of 2022. Importantly, the reserve does not impact cash
taxes. Some portion of the reserve may reverse in future
periods.
The Company closed the sale of its U.S. Sheer Hosiery business
on September 29, 2023. For the full year 2023, its U.S. Sheer
Hosiery business generated $50 million of net sales and an
operating loss of $(2)million. For first-quarter 2023, its U.S.
Sheer Hosiery business generated $20 million of net sales and $1
million of operating profit.
For fiscal year 2024, which ends on December 28, 2024, the
Company currently expects:
- Net sales from continuing operations of approximately $5.35
billion to $5.47 billion, which includes projected headwinds of
approximately $50 million from the U.S. Hosiery divestiture and
approximately $35 million from changes in foreign currency exchange
rates. At the midpoint, this represents an approximate 4% decrease
as compared to prior year on a reported basis and an approximate 2%
decrease on an organic constant currency basis.
- GAAP operating profit from continuing operations of
approximately $430 million to $450 million.
- Adjusted operating profit from continuing operations of
approximately $500 million to $520 million, which includes a
projected headwind of approximately $5 million from changes in
foreign currency exchange rates.
- Pretax charges for actions related to the Full Potential
transformation plan and the global Champion performance plan of
approximately $70 million.
- GAAP and Adjusted Interest expense of approximately $260
million.
- GAAP and Adjusted Other expenses of approximately $36
million.
- GAAP and Adjusted Tax expense of approximately $55
million.
- GAAP earnings per share from continuing operations of
approximately $0.22 to $0.28.
- Adjusted earnings per share from continuing operations of
approximately $0.42 to $0.48.
- Cash flow from operations of approximately $400 million.
- Capital investments of approximately $75 million, consisting of
approximately $65 million of capital expenditures and approximately
$10 million of cloud computing arrangements. Per GAAP, capital
expenditures are reflected in cash from investing activities and
certain cloud computing arrangements are reflected in Other Assets
within cash flow from operating activities. The approximate $10
million of cloud computing arrangements is factored into the full
year cash flow from operations guidance of approximately $400
million.
- Free cash flow of approximately $335 million.
- Fully diluted shares outstanding of approximately 354
million.
For first-quarter 2024, which ends on March 30, 2024, the
Company currently expects:
- Net sales from continuing operations of approximately $1.13
billion to $1.19 billion, which includes projected headwinds of
approximately $20 million from the U.S. Hosiery divestiture and
approximately $13 million from changes in foreign currency exchange
rates. At the midpoint, this represents an approximate 16% decrease
as compared to prior year on a reported basis and an approximate
14% decrease on an organic constant currency basis.
- GAAP operating profit from continuing operations of
approximately $45 million to $65 million.
- Adjusted operating profit from continuing operations of
approximately $60 million to $80 million, which includes a
projected headwind of approximately $1 million from changes in
foreign currency exchange rates.
- Pretax charges for actions related to the Full Potential
transformation plan and the global Champion performance plan of
approximately $15 million.
- GAAP and Adjusted Interest expense of approximately $70
million.
- GAAP and Adjusted Other expenses of approximately $9
million.
- GAAP and Adjusted Tax expense of approximately $15
million.
- GAAP loss per share from continuing operations of approximately
$(0.14) to $(0.08).
- Adjusted loss per share from continuing operations of
approximately $(0.10) to $(0.04).
- Fully diluted shares outstanding of approximately 353
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 (loss) from continuing operations,
adjusted income tax expense, adjusted income (loss) from continuing
operations before income tax expense, adjusted operating profit
(and margin), adjusted SG&A, adjusted gross profit (and
margin), EBITDA, adjusted EBITDA, adjusted effective tax rate,
adjusted interest and other expense, net debt, leverage ratio and
free cash flow.
Adjusted EPS from continuing operations is defined as diluted
EPS from continuing operations excluding actions and the tax effect
on actions. Adjusted income (loss) from continuing operations is
defined as income (loss) 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
(loss) from continuing operations before income tax is defined as
income (loss) 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.
Adjusted interest and other expenses is defined as interest and
other expenses excluding actions and adjusted effective tax rate is
defined as adjusted income tax expense divided by adjusted income
(loss) from continuing operations before income tax.
Charges for actions taken in 2023 and 2022, as applicable,
include the global Champion performance plan, supply chain
segmentation, headcount actions and related severance charges,
technology charges, gain/loss on classification of assets held for
sale, professional services, loss on extinguishment of debt, gain
on final settlement of cross currency swap contracts and the tax
effects thereof. The global Champion performance plan includes
actions and related charges regarding the Company’s accelerated and
enhanced strategic initiatives to further streamline the operations
and position the brand for long term profitable growth and the
evaluation of strategic alternatives for the global Champion
business.
While these costs 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 the Full Potential transformation
plan, the global Champion performance plan and other actions that
are deemed to be material stand-alone initiatives apart from the
Company’s core operations. 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 net income (loss) before the impacts of
discontinued operations, interest, taxes, depreciation and
amortization. Adjusted EBITDA is defined as EBITDA excluding (x)
restructuring charges related to the Full Potential transformation
plan, the global Champion performance plan, and other
action-related charges described in more detail in Table 6-A and
(y) certain other losses, charges and expenses as defined in the
Consolidated Net Total Leverage Ratio under its Fifth Amended and
Restated Credit Agreement, dated November 19, 2021, as amended (the
“Credit Agreement”) described in more detail in Table 6-B.
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.
Net debt is defined as the total of current debt, long-term
debt, and borrowings under the accounts receivable securitization
facility (excluding long-term debt issuance costs and debt discount
and borrowings of unrestricted subsidiaries under the accounts
receivable securitization facility) less (x) other debt and cash
adjustments and (y) cash and cash equivalents. Leverage ratio is
the ratio of net debt to adjusted EBITDA as it is defined in our
Credit Agreement.
The Company defines free cash flow as net cash from operating
activities less capital expenditures. Management believes that free
cash flow, which measures our ability to generate additional cash
from our business operations, is an important financial measure for
use in evaluating the Company's financial performance. The Company
defines organic net sales as net sales excluding those derived from
businesses acquired or divested within the previous 12 months of
the reporting date.
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. The
company defines organic constant currency sales as net sales
excluding those derived from businesses acquired or divested within
the previous 12 months of the reporting date and also excluding the
impact of translating foreign currencies into U.S. dollars as
discussed above.
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 news release contains certain forward-looking statements,
as defined under U.S. federal securities laws, with respect to our
plans, expectations, long-term goals and trends associated with our
business, as well as guidance as to future performance. In
particular, among others, guidance and predictions regarding
expected operating results, including related to our ability to
successfully execute our Full Potential transformation plan, global
Champion performance plan, and other strategic actions to achieve
the desired results; statements made in the Fourth-Quarter and
Full-Year 2023 Financial Outlook section of this release; and
statements regarding our future capital allocation strategy, are
forward-looking statements. These forward-looking statements are
based on our current intentions, beliefs, plans and expectations.
Readers are cautioned not to place undue reliance on any
forward-looking statements. Forward-looking statements inherently
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, but are not limited to, such
things as: trends associated with our business, our ability to
identify, execute, and realize the benefits from, any potential
strategic transaction involving Champion; our ability to
successfully execute our Full Potential transformation plan, global
Champion performance plan, or any modifications thereto to achieve
the desired results; the rapidly changing retail environment and
the level of consumer demand; our reliance on a relatively small
number of customers for a significant portion of our sales; our
ability to deleverage on the anticipated time frame or at all,
which could negatively impact our ability to satisfy the financial
covenants in our Credit Agreement or other contractual
arrangements; 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; the availability of global supply chain resources;
future intangible assets or goodwill impairment due to changes in
our business, market conditions, or other factors, including any
sale of the Champion business; our ability to attract and retain a
senior management team with the core competencies needed to support
growth in global markets and ongoing labor shortages generally;
significant fluctuations in foreign exchange rates; legal,
regulatory, political and economic risks related to our
international operations, including regional and global military
conflicts; our ability to effectively manage our complex
multinational tax structure; public health emergencies or severe
global health crises, including effects on consumer spending,
global supply chains, critical supply routes and the financial
markets; our future financial performance; 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; Maidenform,
America’s number one shapewear brand; Bali, America’s number one
bra brand; and Bonds, which is setting new standards for design and
sustainability. HBI employs 48,000 associates in 29 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.
TABLE 1
HANESBRANDS INC.
Consolidated Statements of
Operations
(in thousands, except per
share data)
(Unaudited)
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
% Change
December 30,
2023
December 31,
2022
% Change
Net sales
$
1,296,827
$
1,473,286
(12.0
) %
$
5,636,523
$
6,233,650
(9.6
) %
Cost of sales
803,158
971,309
3,740,113
4,012,542
Gross profit
493,669
501,977
(1.7
) %
1,896,410
2,221,108
(14.6
) %
As a % of net sales
38.1
%
34.1
%
33.6
%
35.6
%
Selling, general and administrative
expenses
397,572
441,642
(10.0
) %
1,607,628
1,701,563
(5.5
) %
As a % of net sales
30.7
%
30.0
%
28.5
%
27.3
%
Operating profit
96,097
60,335
59.3
%
288,782
519,545
(44.4
) %
As a % of net sales
7.4
%
4.1
%
5.1
%
8.3
%
Other expenses
7,375
3,646
38,520
9,734
Interest expense, net
69,688
49,665
275,354
157,073
Income (loss) from continuing operations
before income taxes
19,034
7,024
(25,092
)
352,738
Income tax expense (benefit)
(58,907
)
425,132
(7,366
)
483,907
Income (loss) from continuing
operations
77,941
(418,108
)
(118.6
) %
(17,726
)
(131,169
)
(86.5
) %
Income from discontinued operations, net
of tax
—
—
—
3,965
Net income (loss)
$
77,941
$
(418,108
)
$
(17,726
)
$
(127,204
)
Earnings (loss) per share - basic:
Continuing operations
$
0.22
$
(1.19
)
$
(0.05
)
$
(0.37
)
Discontinued operations
—
—
—
0.01
Net income (loss)
$
0.22
$
(1.19
)
$
(0.05
)
$
(0.36
)
Earnings (loss) per share - diluted:
Continuing operations
$
0.22
$
(1.19
)
$
(0.05
)
$
(0.37
)
Discontinued operations
—
—
—
0.01
Net income (loss)
$
0.22
$
(1.19
)
$
(0.05
)
$
(0.36
)
Weighted average shares outstanding:
Basic
350,765
349,974
350,592
349,970
Diluted
351,566
349,974
350,592
349,970
TABLE 2-A
HANESBRANDS INC.
Supplemental Financial
Information
Impact of Foreign
Currency
(in thousands, except per
share data)
(Unaudited)
The following tables present a
reconciliation of reported results on a constant currency basis for
the quarter and year ended December 30, 2023 and a comparison to
prior year:
Quarter Ended December 30,
2023
As Reported
Impact from Foreign
Currency1
Constant Currency
Quarter Ended December 31,
2022
% Change,
As Reported
% Change,
Constant Currency
As reported under GAAP:
Net sales
$
1,296,827
$
(5,619
)
$
1,302,446
$
1,473,286
(12.0
) %
(11.6
) %
Gross profit
493,669
(4,602
)
498,271
501,977
(1.7
)
(0.7
)
Operating profit
96,097
(3,197
)
99,294
60,335
59.3
64.6
Diluted earnings (loss) per share from
continuing operations3
$
0.22
$
(0.01
)
$
0.23
$
(1.19
)
(118.5
) %
(119.3
) %
As adjusted:2
Net sales
$
1,296,827
$
(5,619
)
$
1,302,446
$
1,473,286
(12.0
) %
(11.6
) %
Gross profit
495,400
(4,602
)
500,002
504,869
(1.9
)
(1.0
)
Operating profit
110,748
(3,197
)
113,945
82,560
34.1
38.0
Diluted earnings per share from continuing
operations3
$
0.03
$
(0.01
)
$
0.04
$
0.07
(57.1
) %
(42.9
) %
1
Effect of the change in foreign currency
exchange rates year-over-year. Calculated by applying prior period
exchange rates to the current year financial results.
2
Results for the quarters ended December
30, 2023 and December 31, 2022 reflect adjustments for
restructuring and other action-related charges. See "Reconciliation
of Select GAAP Measures to Non-GAAP Measures" in Table 6-A.
3
Amounts may not be additive due to
rounding.
Year Ended December 30,
2023
As Reported
Impact from Foreign
Currency1
Constant Currency
Year Ended December 31,
2022
% Change,
As Reported
% Change,
Constant Currency
As reported under GAAP:
Net sales
$
5,636,523
$
(58,642
)
$
5,695,165
$
6,233,650
(9.6
) %
(8.6
) %
Gross profit
1,896,410
(32,803
)
1,929,213
2,221,108
(14.6
)
(13.1
)
Operating profit
288,782
(10,814
)
299,596
519,545
(44.4
)
(42.3
)
Diluted loss per share from continuing
operations3
$
(0.05
)
$
(0.02
)
$
(0.03
)
$
(0.37
)
(86.5
) %
(91.9
) %
As adjusted:2
Net sales
$
5,636,523
$
(58,642
)
$
5,695,165
$
6,233,650
(9.6
) %
(8.6
) %
Gross profit
1,968,550
(32,803
)
2,001,353
2,238,133
(12.0
)
(10.6
)
Operating profit
404,686
(10,814
)
415,500
579,403
(30.2
)
(28.3
)
Diluted earnings per share from continuing
operations 3
$
0.06
$
(0.02
)
$
0.08
$
0.98
(93.9
) %
(91.8
) %
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 years ended December 30,
2023 and December 31, 2022 reflect adjustments for restructuring
and other action-related charges. See "Reconciliation of Select
GAAP Measures to Non-GAAP Measures" in Table 6-A.
3
Amounts may not be additive due to
rounding.
TABLE 2-B
HANESBRANDS INC.
Supplemental Financial
Information
Organic Constant
Currency
(in thousands, except per
share data)
(Unaudited)
The following tables present a reconciliation of reported results
on an organic constant currency basis for the quarter and year
ended December 30, 2023 and a comparison to prior year:
Quarter Ended December 30,
2023
Quarter Ended December 31,
2022
As Reported
Impact from Foreign
Currency1
Less U.S. Hosiery
Divestiture2
Organic Constant
Currency
As Reported
Less U.S. Hosiery
Divestiture2
Organic
% Change,
As Reported
% Change,
Organic Constant
Currency
Net sales
$
1,296,827
$
(5,619
)
$
—
$
1,302,446
$
1,473,286
$
19,202
$
1,454,084
(12.0
) %
(10.4
) %
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
The Company sold its U.S. Sheer Hosiery
business on September 29, 2023.
Year Ended December 30,
2023
Year Ended December 31,
2022
As Reported
Impact from Foreign
Currency1
Less U.S. Hosiery
Divestiture2
Organic Constant
Currency
As Reported
Less U.S. Hosiery
Divestiture2
Organic
% Change,
As Reported
% Change,
Organic Constant
Currency
Net sales
$
5,636,523
$
(58,642
)
$
50,358
$
5,644,807
$
6,233,650
$
55,162
$
6,178,488
(9.6
) %
(8.6
) %
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
The Company sold its U.S. Sheer Hosiery
business on September 29, 2023.
TABLE 3
HANESBRANDS INC.
Supplemental Financial
Information
By Business Segment
(in thousands)
(Unaudited)
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
% Change
December 30,
2023
December 31,
2022
% Change
Segment net sales:
Innerwear
$
533,580
$
540,159
(1.2
) %
$
2,415,032
$
2,429,966
(0.6
) %
Activewear
285,824
376,682
(24.1
)
1,251,913
1,555,062
(19.5
)
International
436,919
477,884
(8.6
)
1,748,428
1,914,268
(8.7
)
Other
40,504
78,561
(48.4
)
221,150
334,354
(33.9
)
Total net sales
$
1,296,827
$
1,473,286
(12.0
) %
$
5,636,523
$
6,233,650
(9.6
) %
Segment operating profit:
Innerwear
$
112,680
$
44,984
150.5
%
$
418,226
$
388,586
7.6
%
Activewear
(11,223
)
28,378
(139.5
)
20,517
153,710
(86.7
)
International
70,591
67,755
4.2
210,651
283,036
(25.6
)
Other
(2,423
)
7,518
(132.2
)
(7,902
)
17,019
(146.4
)
General corporate expenses/other
(58,877
)
(66,075
)
(10.9
)
(236,806
)
(262,948
)
(9.9
)
Total operating profit before
restructuring and other action-related charges
110,748
82,560
34.1
404,686
579,403
(30.2
)
Restructuring and other action-related
charges
(14,651
)
(22,225
)
(34.1
)
(115,904
)
(59,858
)
93.6
Total operating profit
$
96,097
$
60,335
59.3
%
$
288,782
$
519,545
(44.4
) %
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
Basis Points Change
December 30,
2023
December 31,
2022
Basis Points Change
Segment operating margin:
Innerwear
21.1
%
8.3
%
1,279
17.3
%
16.0
%
133
Activewear
(3.9
)
7.5
(1,146
)
1.6
9.9
(825
)
International
16.2
14.2
198
12.0
14.8
(274
)
Other
(6.0
)
9.6
(1,555
)
(3.6
)
5.1
(866
)
General corporate expenses/other
(4.5
)
(4.5
)
(6
)
(4.2
)
(4.2
)
2
Total operating margin before
restructuring and other action-related charges
8.5
5.6
294
7.2
9.3
(212
)
Restructuring and other action-related
charges
(1.1
)
(1.5
)
38
(2.1
)
(1.0
)
(110
)
Total operating margin
7.4
%
4.1
%
331
5.1
%
8.3
%
(321
)
TABLE 4
HANESBRANDS INC.
Condensed Consolidated Balance
Sheets
(in thousands)
(Unaudited)
December 30,
2023
December 31,
2022
Assets
Cash and cash equivalents
$
205,501
$
238,413
Trade accounts receivable, net
557,729
721,396
Inventories
1,368,018
1,979,672
Other current assets
144,967
178,946
Current assets held for sale
—
13,327
Total current assets
2,276,215
3,131,754
Property, net
414,366
442,404
Right-of-use assets
428,918
414,894
Trademarks and other identifiable
intangibles, net
1,235,704
1,255,693
Goodwill
1,112,744
1,108,907
Deferred tax assets
21,954
20,162
Other noncurrent assets
150,413
130,062
Total assets
$
5,640,314
$
6,503,876
Liabilities
Accounts payable
$
736,252
$
917,481
Accrued liabilities
478,676
498,028
Lease liabilities
110,640
114,794
Accounts Receivable Securitization
Facility
6,000
209,500
Current portion of long-term debt
59,000
37,500
Current liabilities held for sale
—
13,327
Total current liabilities
1,390,568
1,790,630
Long-term debt
3,235,640
3,612,077
Lease liabilities - noncurrent
354,015
326,644
Pension and postretirement benefits
104,255
116,167
Other noncurrent liabilities
136,483
260,094
Total liabilities
5,220,961
6,105,612
Stockholders’ equity
Preferred stock
—
—
Common stock
3,501
3,490
Additional paid-in capital
353,367
334,676
Retained earnings
554,796
572,106
Accumulated other comprehensive loss
(492,311
)
(512,008
)
Total stockholders’ equity
419,353
398,264
Total liabilities and stockholders’
equity
$
5,640,314
$
6,503,876
TABLE 5
HANESBRANDS INC.
Condensed Consolidated
Statements of Cash Flows1
(in thousands)
(Unaudited)
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Operating activities:
Net income (loss)
$
77,941
$
(418,108
)
$
(17,726
)
$
(127,204
)
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation
19,022
20,154
75,268
76,294
Amortization of acquisition
intangibles
4,091
4,159
16,569
18,204
Other amortization
3,344
3,648
13,200
11,769
Loss on extinguishment of debt
—
—
8,466
—
(Gain) loss on sale of business and
classification of assets held for sale
—
3,023
3,641
(3,162
)
Amortization of debt issuance costs and
debt discount
2,362
1,817
8,939
7,300
Stock compensation expense
4,527
6,271
20,546
23,457
Deferred taxes
(85,595
)
387,287
(84,745
)
388,607
Other
8,495
14,300
610
7,511
Changes in assets and liabilities:
Accounts receivable
162,080
217,148
174,249
154,145
Inventories
155,390
174,903
599,982
(437,641
)
Other assets
103,505
(36,129
)
82,672
(107,742
)
Accounts payable
(69,191
)
(219,268
)
(194,602
)
(241,557
)
Accrued pension and postretirement
benefits
2,618
(957
)
6,799
(2,023
)
Accrued liabilities and other
(114,184
)
(25,368
)
(152,119
)
(126,760
)
Net cash from operating activities
274,405
132,880
561,749
(358,802
)
Investing activities:
Capital expenditures
(8,266
)
(41,167
)
(44,056
)
(112,122
)
Purchase of trademarks
—
—
—
(103,000
)
Proceeds from sales of assets
159
(102
)
331
157
Other
1
4,177
20,242
(1,463
)
Net cash from investing activities
(8,106
)
(37,092
)
(23,483
)
(216,428
)
Financing Activities:
Borrowings on Term Loan Facilities
—
—
891,000
—
Repayments on Term Loan Facilities
(14,750
)
(6,250
)
(44,250
)
(25,000
)
Borrowings on Accounts Receivable
Securitization Facility
541,500
536,800
2,270,000
1,840,389
Repayments on Accounts Receivable
Securitization Facility
(736,000
)
(538,800
)
(2,473,500
)
(1,630,889
)
Borrowings on Revolving Loan
Facilities
306,500
454,500
1,923,000
1,792,000
Repayments on Revolving Loan
Facilities
(367,000
)
(531,000
)
(2,275,500
)
(1,439,500
)
Borrowings on Senior Notes
—
—
600,000
—
Repayments on Senior Notes
—
—
(1,436,884
)
—
Borrowings on notes payable
—
—
—
21,454
Repayments on notes payable
—
—
—
(21,713
)
Share repurchases
—
—
—
(25,018
)
Cash dividends paid
—
(52,350
)
—
(209,312
)
Payments to amend and refinance credit
facilities
(2,517
)
(2,526
)
(31,020
)
(3,159
)
Other
(37
)
207
(2,921
)
(3,423
)
Net cash from financing activities
(272,304
)
(139,419
)
(580,075
)
295,829
Effect of changes in foreign exchange
rates on cash
20,415
28,913
8,897
(42,815
)
Change in cash and cash equivalents
14,410
(14,718
)
(32,912
)
(322,216
)
Cash and cash equivalents at beginning of
period
191,091
253,131
238,413
560,629
Cash and cash equivalents at end of
period
$
205,501
$
238,413
$
205,501
$
238,413
1
The cash flows related to discontinued
operations have not been segregated and remain included in the
major classes of assets and liabilities in the periods prior to the
sale of the European Innerwear business on March 5, 2022.
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)
The following tables present a
reconciliation of results as reported under GAAP to the results as
adjusted for the quarter and year ended December 30, 2023 and a
comparison to prior year. The Company has chosen to present the
following 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 global Champion performance plan, the Full Potential
transformation plan and other actions that are deemed to be
material stand-alone initiatives apart from the Company’s core
operations. While these costs 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.
Restructuring and other action-related
charges in 2023 and 2022 include the following:
Global Champion performance plan
The global Champion performance plan
includes actions and related charges regarding the Company’s
accelerated and enhanced strategic initiatives to further
streamline the operations and position the brand for long term
profitable growth and the evaluation of strategic alternatives for
the global Champion business, which includes over $59 million of
inventory write-downs related to the execution of its channel, mix
and product segmentation strategy including the exit of
discontinued programs, which are reflected in gross profit, and
approximately $29 million of charges related to professional fees,
supply chain segmentation, store closures, severance and other
costs of which approximately $8 million are reflected in gross
profit and approximately $21 million are reflected in selling,
general and administrative expenses.
Supply chain segmentation
Represents charges related to the supply
chain segmentation to restructure and position the Company’s
manufacturing network to align with its Full Potential
transformation plan demand trends.
Headcount actions and related
severance
Represents charges related to operating
model initiatives primarily headcount actions and related severance
charges and adjustments as a result of the implementation of the
Company’s Full Potential transformation plan.
Technology
Represents technology charges related to
the implementation of the Company’s technology modernization
initiative which includes a global enterprise resource planning
platform under its Full Potential transformation plan.
Professional services
Represents professional fees, primarily
including consulting and advisory services, related to the
implementation of the Company’s Full Potential transformation
plan.
Gain/loss on sale of business and
classification of assets held for sale
Represents the gain/loss associated with
the sale of the Company’s U.S. Sheer Hosiery business and
adjustments to the related valuation allowance prior to the sale,
primarily from the changes in carrying value due to changes in
working capital.
Loss on extinguishment of debt
Represents charges related to the
redemption of the Company’s 4.625% Senior Notes and 3.5% Senior
Notes in the first quarter of 2023.
Gain on final settlement of cross currency
swap contracts
Primarily represents the remaining gain
related to cross-currency swap contracts previously designated as
cash flow hedges in AOCI which was released into earnings as the
Company unwound the cross-currency swap contracts in connection
with the redemption of the 3.5% Senior Notes at the time of
settlement in the first quarter of 2023.
Discrete tax benefits
Represents an adjustment to non-cash
reserves established at December 31, 2022 related to deferred taxes
established for Swiss statutory impairments, which are not
indicative of the Company’s core business operations.
Tax effect on actions
Represents the applicable effective tax
rate on the restructuring and other action-related charges based on
the jurisdiction of where the charges were incurred.
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Gross profit, as reported under
GAAP
$
493,669
$
501,977
$
1,896,410
$
2,221,108
As a % of net sales
38.1
%
34.1
%
33.6
%
35.6
%
Restructuring and other action-related
charges:
Global Champion performance plan
2,859
—
66,964
—
Full Potential transformation plan:
Supply chain segmentation
(1,284
)
3,395
4,151
17,982
Headcount actions and related
severance
156
(516
)
1,025
(712
)
Other
—
13
—
(245
)
Gross profit, as adjusted
$
495,400
$
504,869
$
1,968,550
$
2,238,133
As a % of net sales
38.2
%
34.3
%
34.9
%
35.9
%
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Selling, general and administrative
expenses, as reported under GAAP
$
397,572
$
441,642
$
1,607,628
$
1,701,563
As a % of net sales
30.7
%
30.0
%
28.5
%
27.3
%
Restructuring and other action-related
charges:
Global Champion performance plan
(11,451
)
—
(21,081
)
—
Full Potential transformation plan:
Technology
(657
)
(2,870
)
(8,953
)
(11,922
)
Headcount actions and related
severance
(573
)
(9,849
)
(5,080
)
(8,933
)
Professional services
(6
)
(2,980
)
(3,819
)
(23,994
)
Gain (loss) on sale of business and
classification of assets held for sale
—
(3,023
)
(3,641
)
3,535
Other
(233
)
(611
)
(1,190
)
(1,519
)
Selling, general and administrative
expenses, as adjusted
$
384,652
$
422,309
$
1,563,864
$
1,658,730
As a % of net sales
29.7
%
28.7
%
27.7
%
26.6
%
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Operating profit, as reported under
GAAP
$
96,097
$
60,335
$
288,782
$
519,545
As a % of net sales
7.4
%
4.1
%
5.1
%
8.3
%
Restructuring and other action-related
charges:
Global Champion performance plan
14,310
—
88,045
—
Full Potential transformation plan:
Technology
657
2,870
8,953
11,922
Headcount actions and related
severance
729
9,333
6,105
8,221
Supply chain segmentation
(1,284
)
3,395
4,151
17,982
Professional services
6
2,980
3,819
23,994
(Gain) loss on sale of business and
classification of assets held for sale
—
3,023
3,641
(3,535
)
Other
233
624
1,190
1,274
Operating profit, as adjusted
$
110,748
$
82,560
$
404,686
$
579,403
As a % of net sales
8.5
%
5.6
%
7.2
%
9.3
%
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Interest expense, net and other
expenses, as reported under GAAP
$
77,063
$
53,311
$
313,874
$
166,807
Restructuring and other action-related
charges:
Loss on extinguishment of debt
—
—
(8,466
)
—
Gain on final settlement of cross currency
swaps
—
—
1,370
—
Interest expense, net and other expenses,
as adjusted
$
77,063
$
53,311
$
306,778
$
166,807
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Income (loss) from continuing
operations before income taxes, as reported under GAAP
$
19,034
$
7,024
$
(25,092
)
$
352,738
Restructuring and other action-related
charges:
Global Champion performance plan
14,310
—
88,045
—
Full Potential transformation plan:
Technology
657
2,870
8,953
11,922
Headcount actions and related
severance
729
9,333
6,105
8,221
Supply chain segmentation
(1,284
)
3,395
4,151
17,982
Professional services
6
2,980
3,819
23,994
(Gain) loss on sale of business and
classification of assets held for sale
—
3,023
3,641
(3,535
)
Other
233
624
1,190
1,274
Loss on extinguishment of debt
—
—
8,466
—
Gain on final settlement of cross currency
swaps
—
—
(1,370
)
—
Income from continuing operations before
income taxes, as adjusted
$
33,685
$
29,249
$
97,908
$
412,596
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Income tax expense (benefit), as
reported under GAAP
$
(58,907
)
$
425,132
$
(7,366
)
$
483,907
Restructuring and other action-related
charges:
Discrete tax (expense) benefit
80,859
(422,918
)
85,122
(422,918
)
Tax effect on actions
—
2,758
—
9,152
Income tax expense, as adjusted
$
21,952
$
4,972
$
77,756
$
70,141
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Income (loss) from continuing
operations, as reported under GAAP
$
77,941
$
(418,108
)
$
(17,726
)
$
(131,169
)
Restructuring and other action-related
charges:
Global Champion performance plan
14,310
—
88,045
—
Full Potential transformation plan:
Technology
657
2,870
8,953
11,922
Headcount actions and related
severance
729
9,333
6,105
8,221
Supply chain segmentation
(1,284
)
3,395
4,151
17,982
Professional services
6
2,980
3,819
23,994
(Gain) loss on sale of business and
classification of assets held for sale
—
3,023
3,641
(3,535
)
Other
233
624
1,190
1,274
Loss on extinguishment of debt
—
—
8,466
—
Gain on final settlement of cross currency
swaps
—
—
(1,370
)
—
Discrete tax expense (benefit)
(80,859
)
422,918
(85,122
)
422,918
Tax effect on actions
—
(2,758
)
—
(9,152
)
Income from continuing operations, as
adjusted
$
11,733
$
24,277
$
20,152
$
342,455
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Diluted earnings (loss) per share from
continuing operations, as reported under GAAP1
$
0.22
$
(1.19
)
$
(0.05
)
$
(0.37
)
Restructuring and other action-related
charges:
Global Champion performance plan
0.04
—
0.25
—
Full Potential transformation plan:
Technology
0.00
0.01
0.03
0.03
Headcount actions and related
severance
0.00
0.03
0.02
0.02
Supply chain segmentation
0.00
0.01
0.01
0.05
Professional services
—
0.01
0.01
0.07
(Gain) loss on sale of business and
classification of assets held for sale
0.00
0.01
0.01
(0.01
)
Other
0.00
0.00
0.00
0.00
Loss on extinguishment of debt
—
—
0.02
—
Gain on final settlement of cross currency
swaps
—
—
0.00
—
Discrete tax expense (benefit)
(0.23
)
1.21
(0.24
)
1.21
Tax effect on actions
—
(0.01
)
—
(0.03
)
Diluted earnings per share from continuing
operations, as adjusted
$
0.03
$
0.07
$
0.06
$
0.98
1
Amounts may not be additive due to
rounding.
Including the favorable foreign currency
impact of $2 million, global Champion sales excluding C9 Champion
decreased approximately 23% in the fourth quarter of 2023 compared
to the fourth quarter of 2022. On a constant currency basis, global
Champion sales excluding C9 Champion decreased approximately 24% in
the fourth quarter of 2023 compared to the fourth quarter of
2022.
TABLE 6-B
HANESBRANDS INC.
Supplemental Financial
Information
Reconciliation of Select GAAP
Measures to Non-GAAP Measures
(in thousands, except per
share data)
(Unaudited)
Last Twelve Months
December 30,
2023
December 31,
2022
Leverage Ratio:
EBITDA1:
Loss from continuing operations
$
(17,726
)
$
(131,169
)
Interest expense, net
275,354
157,073
Income tax expense (benefit)
(7,366
)
483,907
Depreciation and amortization
105,037
106,267
Total EBITDA
355,299
616,078
Total restructuring and other
action-related charges (excluding tax effect on actions)2
123,000
59,858
Other net losses, charges and
expenses3
123,856
118,240
Total EBITDA, as adjusted
$
602,155
$
794,176
Net debt:
Debt (current and long-term debt and
Accounts Receivable Securitization Facility excluding long term
debt issuance costs and debt discount of $36,110 and $13,198,
respectively)
$
3,336,750
$
3,872,275
(Less) debt related to an unrestricted
subsidiary4
(6,000
)
—
Other debt and cash adjustments5
4,185
4,955
(Less) Cash and cash equivalents
(205,501
)
(238,413
)
Net debt
$
3,129,434
$
3,638,817
Debt/Income (loss) from continuing
operations6
(188.2
)
(29.5
)
Net debt/EBITDA, as adjusted7
5.2
4.6
1
Earnings from continuing operations before
interest, taxes, depreciation and amortization (EBITDA) is a
non-GAAP financial measure.
2
The last twelve months ended December 30,
2023 includes $88 million of global Champion performance plan
charges, $9 million of technology charges, $8 million of a loss on
extinguishment of debt, $6 million of headcount actions and related
severance charges, $4 million of supply chain segmentation charges,
$4 million of professional services, $4 million of a loss on the
sale of business and classification of assets held for sale, $1
million related to other restructuring and other action-related
charges and $(1) million of a gain on the final settlement of cross
currency swap contracts. The last twelve months ended December 31,
2022 includes $24 million of professional services, $18 million of
supply chain segmentation charges, $12 million of technology
charges, $8 million of headcount actions and related severance
charges, approximately $2 million related to other restructuring
and other action-related charges and $(4) million of a gain on
classification of assets held for sale. The items included in
restructuring and other action-related charges are described in
more detail in Table 6-A.
3
Represents other net losses, charges and
expenses that can be excluded from the Company’s leverage ratio as
defined under its Fifth Amended and Restated Credit Agreement,
dated November 19, 2021, as amended. The last twelve months ended
December 30, 2023, primarily includes $72 million of excess and
obsolete inventory write-offs, $21 million in other compensation
related items primarily stock compensation expense, $17 million of
pension non-cash expense, $13 million in charges related to sales
incentive amortization, $8 million of non-cash cloud computing
expense, $3 million of bad debt expense, $2 million in charges
related to the ransomware attack and extraordinary events, $(7)
million of net unrealized gains due to hedging activities and $(5)
million of interest expense on debt and amortization of debt
issuance costs related to an unrestricted subsidiary. The last
twelve months ended December 31, 2022, primarily includes $32
million of excess and obsolete inventory write-offs, $31 million in
charges related to the ransomware attack and extraordinary events,
$25 million in other compensation related items primarily stock
compensation expense, $21 million of pension non-cash expense, $7
million of bad debt expense and $2 million of non-cash cloud
computing expense.
4
Represents amounts outstanding under an
existing accounts receivable securitization facility entered into
by an unrestricted subsidiary of the Company.
5
Includes drawn letters of credit,
financing leases and cash balances in certain geographies.
6
Represents Debt divided by Income (loss)
from continuing operations which is the most comparable GAAP
financial measure to Net debt/EBITDA, as adjusted.
7
Represents the Company’s leverage ratio
defined as Consolidated Net Total Leverage Ratio under its Fifth
Amended and Restated Credit Agreement, dated November 19, 2021, as
amended, which excludes net other losses, charges and expenses in
addition to restructuring and other action-related charges.
Quarters Ended
Years Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Free cash flow1:
Net cash from operating activities
$
274,405
$
132,880
$
561,749
$
(358,802
)
Capital expenditures
(8,266
)
(41,167
)
(44,056
)
(112,122
)
Free cash flow
$
266,139
$
91,713
$
517,693
$
(470,924
)
1
Free cash flow includes the results from
continuing and discontinued operations in the periods prior to the
sale of the European Innerwear business on March 5, 2022.
TABLE 7
HANESBRANDS INC.
Supplemental Financial
Information
Reconciliation of GAAP Outlook
to Adjusted Outlook
(in thousands, except per
share data)
(Unaudited)
Quarter Ended
Year Ended
March 30, 2024
December 28,
2024
Operating profit outlook, as calculated
under GAAP
$45,000 to $65,000
$430,000 to $450,000
Restructuring and other action-related
charges
15,000
70,000
Operating profit outlook, as adjusted
$60,000 to $80,000
$500,000 to $520,000
Diluted earnings (loss) per share from
continuing operations, as calculated under GAAP1
$(0.14) to $(0.08)
$0.22 to $0.28
Restructuring and other action-related
charges
0.04
0.20
Diluted earnings (loss) per share from
continuing operations, as adjusted
$(0.10) to $(0.04)
$0.42 to $0.48
Cash flow from operations outlook, as
calculated under GAAP
$400,000
Capital expenditures outlook
65,000
Free cash flow outlook
$335,000
1
The company expects approximately 353
million diluted weighted average shares outstanding for the quarter
ended March 30, 2024 and approximately 354 million diluted weighted
average shares outstanding for the year ended December 28,
2024.
The Company is unable to reconcile projections of financial
performance beyond 2024 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 2024 and beyond, such as net sales, operating
profit, tax rates and action related charges.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240215897519/en/
News Media contact: Nicole Ducouer (336) 986-7090 Analysts and
Investors contact: T.C. Robillard (336) 519-2115
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