WINSTON-SALEM, N.C.--(BUSINESS WIRE)--April 21, 2008--Hanesbrands
Inc. (NYSE: HBI), a leading marketer of innerwear, outerwear and
hosiery apparel, today reported first-quarter 2008 results.
Earnings per diluted share in the quarter more than tripled to
$0.38. Excluding actions, non-GAAP earnings per diluted share
increased by 56 percent to $0.42, up $0.15 as a result of reduced
long-term debt, lower base interest rates, and operating profit
growth. Total net sales decreased by 5.0 percent to $987.8 million,
reflective of conditions in the retail marketplace.
"We are very pleased with our profit results in a tough economic
climate. Our strong profit growth was driven by continued
cost-reduction initiatives and management of our debt structure in
spite of a sales decline," Hanesbrands Chief Executive Officer Richard
A. Noll said. "The key to our success is the continued execution of
our business strategies of investing in our brands, driving cost
reductions and globalizing our supply chain, and effectively investing
our cash flow."
Noteworthy Financial Highlights
Selected highlights for the quarter ended March 29, 2008, compared
with the year-ago quarter ended March 31, 2007, include:
- Earnings per diluted share in the quarter increased 217 percent to
$0.38, up from $0.12 a year ago. Non-GAAP diluted EPS, which
excludes actions, increased 56 percent to $0.42 per share, up from
$0.27 a share a year ago.
Non-GAAP net income, which excludes actions, increased by $14.2
million on the strength of cost reductions, supply chain
initiatives, and lower interest expense. This net income
improvement was a result of $4 million from higher operating
profit, $6 million in lower interest expense due to lower long-
term debt and implementing our accounts receivable securitization
program, as well as $6 million in savings from lower LIBOR rates.
Those improvements were partially offset by slightly higher income
tax expense.
Operating profit in the quarter increased to $87.8 million, from
$68.9 million a year ago.
Non-GAAP operating profit, which excludes actions, increased by 4.9
percent to $93.6 million for an operating margin on sales of 9.5
percent versus 8.6 percent a year ago.
Cost-reduction efforts resulted in an improved gross margin. As a
percent of sales, selling, general and administrative costs were
up, but the actual costs were flat, even though a timing shift
resulted in higher media spending in the first quarter to support
the launch of marketing initiatives for new Hanes products and the
revitalization plan for Playtex.
- Total net sales in the quarter decreased by $52 million to $987.8
million, from $1.04 billion in the year-ago quarter.
Sales decreased in the company's innerwear and outerwear segments,
with declines in most product categories across most customers.
The company's sales to retailers are consistent with broad-based
macroeconomic point-of-sale trends. International segment sales
increased by 15 percent, driven by favorable foreign currency
exchange rates and growth.
- Hanesbrands continued to have a strong cash position at the end of
the quarter. The company repurchased $8.3 million in company stock
in the quarter, or 334,980 shares at an average price of $24.69.
(Diluted EPS excluding actions, net income excluding actions and
operating profit excluding actions are non-GAAP measures used to
better assess underlying business performance because they exclude the
effect of unusual actions that are not directly related to operations.
The unusual actions in the current or year-ago quarter were
restructuring and related charges, amortization of gain on
postretirement benefits, nonrecurring spinoff and related charges, and
the tax effect on these items. See Table 4 for details and
reconciliation with reported operating results consistent with
generally accepted accounting principles.)
Other Quarter Comments
In March, Hanes launched its television, print and Internet
advertising and marketing campaign for Hanes No Ride Up Panties
featuring actress Sarah Chalke. The panties are the first products to
feature Hanes' new Comfort Fit consumer satisfaction guarantee.
"Our successful profit results in the quarter demonstrate that we
have several business levers to increase our EPS as we strive to
achieve our long-term growth goals," Noll said. "We are pleased with
our ability to execute cost reductions to deliver our solid profit
performance. We are now focused on executing sales and marketing plans
for the rest of the year, particularly for the important
back-to-school and year-end holiday periods, to best navigate a
challenging consumer environment."
Hanesbrands Policy on Guidance
Hanesbrands follows a policy of not providing quarterly or annual
EPS guidance. The company plans to communicate appropriately to
provide investors with an understanding of long-term goals, the trends
associated with its business and current financial performance.
Webcast Conference Call
Hanesbrands will host a live Internet webcast of its quarterly
investor conference call at 9 a.m. EDT today. The broadcast may be
accessed on the home page of the Hanesbrands corporate Web site,
www.hanesbrands.com. The call is expected to conclude by 10 a.m.
An archived replay of the conference call webcast will be
available in the investors section of the Hanesbrands Web site. A
telephone playback will be available from approximately noon EDT today
until midnight on April 28, 2008. The replay will be available by
calling toll-free (800) 642-1687, or by toll call at (706) 645-9291.
The replay pass code is 43163918.
Cautionary Statement Concerning Forward-Looking Statements
Statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including those regarding our launch
as an independent company and the benefits expected from that launch,
our long-term goals, and trends associated with our business. These
forward-looking statements are made only as of the date of this press
release and are based on our current intent, beliefs, plans and
expectations. They involve risks and uncertainties that could cause
actual future results, performance or developments to differ
materially from those described in or implied by such forward-looking
statements. These risks and uncertainties include the following: our
ability to migrate our production and manufacturing operations to
lower-cost countries around the world; our ability to effectively
implement other components of our business strategy; costs and adverse
publicity from violations of labor or environmental laws by us or our
suppliers; our ability to successfully manage adverse changes in
social, political, economic, legal and other conditions affecting our
foreign operations; retailer consolidation and other changes in the
apparel essentials industry; our ability to keep pace with changing
consumer preferences; loss of or reduction in sales to, or financial
difficulties experienced by, any of our top customers; fluctuations in
the price or availability of cotton or labor; our debt and
debt-service requirements that restrict our operating and financial
flexibility and impose interest and financing costs; and other risks
identified from time to time in our most recent Securities and
Exchange Commission reports, including the 2007 Annual Report on Form
10-K, 2007 quarterly reports on Form 10-Q and current reports on Form
8-K, registration statements, press releases and other communications.
The company undertakes no obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results over time.
Hanesbrands Inc.
Hanesbrands Inc. is a leading marketer of innerwear, outerwear and
hosiery apparel under strong consumer brands, including Hanes,
Champion, Playtex, Bali, Just My Size, barely there and Wonderbra. The
company designs, manufactures, sources and sells T-shirts, bras,
panties, men's underwear, children's underwear, socks, hosiery,
casualwear and activewear. Hanesbrands has approximately 50,000
employees in more than 25 countries. More information may be found on
the company's Web site at www.hanesbrands.com.
TABLE 1
HANESBRANDS INC.
Condensed Consolidated Statements of Income
(Amounts in thousands, except per-share amounts)
(Unaudited)
Quarter Ended
-------------------
March
29, March 31,
2008 2007 % Change
-------- ---------- --------
Net sales:
Innerwear $543,730 $ 590,447
Outerwear 272,205 283,635
Hosiery 66,741 73,693
International 104,636 90,777
Other 11,121 15,398
-------- ----------
Total segment net sales 998,433 1,053,950
Less: Intersegment 10,586 14,056
-------- ----------
Total net sales 987,847 1,039,894 -5.0%
Cost of sales 642,883 700,215
-------- ----------
Gross profit 344,964 339,679 1.6%
As a % of net sales 34.9% 32.7%
Selling, general and administrative
expenses 254,612 254,567
As a % of net sales 25.8% 24.5%
Restructuring 2,558 16,246
-------- ----------
Operating profit 87,794 68,866 27.5%
As a % of net sales 8.9% 6.6%
Interest expense, net 40,394 51,717
-------- ----------
Income before income tax expense 47,400 17,149
Income tax expense 11,376 5,145
-------- ----------
Net income $ 36,024 $ 12,004 200.1%
======== ==========
Earnings per share:
Basic $ 0.38 $ 0.12
Diluted $ 0.38 $ 0.12 216.7%
Weighted average shares outstanding:
Basic 94,344 96,475
Diluted 95,610 97,105
TABLE 2
HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
March 29, December 29,
2008 2007
------------- ---------------
Assets
Cash and cash equivalents $ 120,793 $ 174,236
Trade accounts receivable 541,900 575,069
Inventories 1,223,979 1,117,052
Other current assets 238,579 227,977
------------- ---------------
Total current assets 2,125,251 2,094,334
------------- ---------------
Property, net 526,498 534,286
Intangible assets and goodwill 467,980 461,691
Other noncurrent assets 350,410 349,172
------------- ---------------
Total assets $ 3,470,139 $ 3,439,483
============= ===============
Liabilities
Accounts payable and accrued liabilities $ 669,303 $ 669,405
Other current liabilities 14,562 19,577
------------- ---------------
Total current liabilities 683,865 688,982
------------- ---------------
Long-term debt 2,315,250 2,315,250
Other noncurrent liabilities 159,742 146,347
------------- ---------------
Total liabilities 3,158,857 3,150,579
------------- ---------------
Equity 311,282 288,904
------------- ---------------
Total liabilities and equity $ 3,470,139 $ 3,439,483
============= ===============
TABLE 3
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Quarter Ended
-------------------
March 29, March 31,
2008 2007
--------- ---------
Operating Activities:
Net income $ 36,024 $ 12,004
Depreciation and amortization 26,264 28,170
Other noncash items 4,434 6,723
Changes in assets and liabilities, net (86,203) (47,488)
--------- ---------
Net cash used in operating activities (19,481) (591)
--------- ---------
Investing Activities:
Purchases of property and equipment, net, and
other (20,510) (3,500)
--------- ---------
Financing Activities:
Net borrowings on notes payable, stock
repurchases, and other (13,740) (2,759)
--------- ---------
Effect of changes in foreign currency exchange
rates on cash 288 167
--------- ---------
Decrease in cash and cash equivalents (53,443) (6,683)
Cash and cash equivalents at beginning of year 174,236 155,973
--------- ---------
Cash and cash equivalents at end of period $ 120,793 $ 149,290
========= =========
TABLE 4
HANESBRANDS INC.
Supplemental Financial Information
(Dollars in thousands, except per-share amounts)
(Unaudited)
Reconciliation of Reported Operating Results with
Certain Information Excluding Actions Quarter Ended
-------------------
March 29, March 31,
2008 2007
-------------------
A. Excluding actions data
--------------------------------------------------
Gross profit $ 347,522 $ 344,946
SG&A 253,969 255,779
Operating profit 93,553 89,167
Net operating profit after taxes (NOPAT) 71,100 62,417
Net income 40,401 26,215
Earnings per diluted share 0.42 0.27
As a % of net sales
--------------------------------------------------
Gross profit 35.2% 33.2%
SG&A 25.7% 24.6%
Operating profit 9.5% 8.6%
Net income 4.1% 2.5%
B. Operating results excluding actions
--------------------------------------------------
Gross profit as reported $ 344,964 $ 339,679
Accelerated depreciation included in Cost of sales 2,558 5,267
-------------------
Gross profit excluding actions $ 347,522 $ 344,946
===================
SG&A as reported $ 254,612 $ 254,567
Amortization of gain on postretirement benefits
included in SG&A - 2,013
Spinoff and related charges included in SG&A - (801)
Accelerated depreciation included in SG&A (643) -
-------------------
SG&A excluding actions $ 253,969 $ 255,779
===================
Operating profit as reported $ 87,794 $ 68,866
Gross profit actions 2,558 5,267
SG&A actions 643 (1,212)
Restructuring 2,558 16,246
-------------------
Operating profit excluding actions 93,553 89,167
Income tax expense at effective rate (22,453) (26,750)
-------------------
NOPAT $ 71,100 $ 62,417
===================
C. Net income excluding actions
--------------------------------------------------
Net income as reported $ 36,024 $ 12,004
Gross profit actions 2,558 5,267
SG&A actions 643 (1,212)
Restructuring 2,558 16,246
Tax effect on actions (1,382) (6,090)
-------------------
Net income excluding actions $ 40,401 $ 26,215
===================
D. EBITDA
--------------------------------------------------
Net income $ 36,024 $ 12,004
Interest expense, net 40,394 51,717
Income tax expense 11,376 5,145
Depreciation and amortization 26,264 28,170
-------------------
Total EBITDA $ 114,058 $ 97,036
===================
CONTACT: Hanesbrands Inc.
News Media:
Matt Hall, 336-519-3386
or
Analysts and Investors:
Brian Lantz, 336-519-7130
SOURCE: Hanesbrands Inc.
