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HanesBrands Reports First-Quarter Financial Results
HanesBrands Reports First-Quarter Financial Results
April 21, 2016 at 4:05 PM EDT
-
Net Sales of
$1.22 Billion Increased 1%, Adjusted Operating Profit of$147 Million
Increased 10% and Adjusted EPS$0.26 Increased 18% - Company Reaffirms 2016 Full-Year Financial Guidance
Net sales increased 1 percent to
On a GAAP basis, operating profit increased 36 percent to
“We are off to a very good start and tracking to our plan to deliver
another year of double-digit EPS growth,” Hanes Chairman and Chief
Executive Officer
Key Callouts for First-Quarter 2016 Financial Results
Acquisition Contributions. Record first-quarter results benefited
from acquisitions. Knights Apparel, the collegiate licensed activewear
business acquired in
Innerwear and Activewear Sales Increase. Innerwear sales increased 1 percent, and Activewear sales increased 3 percent, benefiting from the acquisition of Knights Apparel while being negatively affected by the bankruptcy of a sporting goods retailer. International sales decreased 1 percent as a result of adverse currency exchange rates.
Margin Growth. In addition to adjusted operating profit growth, the adjusted operating profit margin increased 110 basis points in the first quarter to 12.1 percent of sales. On a GAAP basis, operating profit margin for the first quarter was 10 percent, up from 7.4 percent in the year-ago quarter.
2016 Financial Guidance
Hanes has reaffirmed its financial guidance for full-year 2016. The
company’s guidance does not reflect the planned acquisition of Champion
For 2016, the company continues to expect net sales of
The guidance reflects benefits from the acquisitions of Maidenform,
Knights Apparel and Hanes Europe Innerwear, which are expected to add
The company expects net capital expenditures to be approximately
The company repurchased 14.2 million shares of stock in the first
quarter for
Hanes has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/faq.
Change in Segment Reporting
As a result of a shift in management responsibilities, the company decided in the first quarter of 2016 to move its wholesale e-commerce business from the Direct to Consumer segment to the respective Innerwear and Activewear segments. In addition, revisions were made to the manner in which certain selling, general and administrative expenses are allocated. Prior-year segment sales and operating profit results have been revised to conform to the current year.
Charges for Actions and Reconciliation to GAAP Measures
In the first quarter of 2016, Hanes incurred approximately
Adjusted EPS, adjusted net income, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin) and EBITDA are not generally accepted accounting principle measures. Adjusted EPS is defined as diluted EPS excluding actions and the tax effect on actions. Adjusted net income is defined as net income excluding actions and the tax effect on actions. Adjusted 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. EBITDA is defined as earnings before interest, taxes, depreciation and amortization.
Hanes has chosen to provide these non-GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating company operations absent the effect of acquisition-related charges and other actions. Non-GAAP measures should not be considered a substitute for financial information presented in accordance with GAAP and may be different from non-GAAP or other pro forma measures used by other companies. See Table 2 and Table 5 attached to this press release to reconcile these non-GAAP financial measures to the most directly comparable GAAP measure.
For 2016 guidance, which also excludes the pending Champion Europe
acquisition, Hanes’ current estimate for pretax charges related to
acquisitions and integration is approximately
On a GAAP basis, full-year 2016 diluted EPS will vary depending on
actual performance, pretax charges and tax rate. GAAP diluted EPS could
be in the range of
Webcast Conference Call
Hanes will host an internet webcast of its quarterly investor conference
call at
An archived replay of the conference call webcast will be available at www.Hanes.com/investors.
A telephone playback will be available from approximately
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 following the heading “2016 Financial Guidance,” as well as
statements about the benefits anticipated from the Hanes Europe
Innerwear, Knights Apparel, Champion Japan licensee, and Champion Europe
acquisitions, 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 achieve
expected synergies and successfully complete the integration of Champion
TABLE 1 |
||||||||||
HANESBRANDS INC. | ||||||||||
Condensed Consolidated Statements of Income | ||||||||||
(Amounts in thousands, except per-share amounts) | ||||||||||
(Unaudited) | ||||||||||
Quarter Ended | ||||||||||
April 2, 2016 | April 4, 2015 | % Change | ||||||||
Net sales | $ | 1,219,140 | $ | 1,208,921 | 0.8 | % | ||||
Cost of sales | 761,884 | 762,690 | ||||||||
Gross profit | 457,256 | 446,231 | 2.5 | % | ||||||
As a % of net sales | 37.5 | % | 36.9 | % | ||||||
Selling, general and administrative expenses | 334,851 | 356,300 | ||||||||
As a % of net sales | 27.5 | % | 29.5 | % | ||||||
Operating profit | 122,405 | 89,931 | 36.1 | % | ||||||
As a % of net sales | 10.0 | % | 7.4 | % | ||||||
Other expenses | 649 | 382 | ||||||||
Interest expense, net | 31,566 | 26,887 | ||||||||
Income before income tax expense | 90,190 | 62,662 | ||||||||
Income tax expense | 9,921 | 10,026 | ||||||||
Net income | $ | 80,269 | $ | 52,636 | 52.5 | % | ||||
Earnings per share: | ||||||||||
Basic | $ | 0.21 | $ | 0.13 | 61.5 | % | ||||
Diluted | $ | 0.21 | $ | 0.13 | 61.5 | % | ||||
Weighted average shares outstanding: | ||||||||||
Basic | 386,598 | 403,578 | ||||||||
Diluted | 389,043 | 408,260 |
TABLE 2 | ||||||||||
HANESBRANDS INC. | ||||||||||
Supplemental Financial Information | ||||||||||
(Dollars in thousands) | ||||||||||
(Unaudited) | ||||||||||
Quarters Ended | ||||||||||
April 2, 2016 | April 4, 2015 | % Change | ||||||||
Segment net sales1: | ||||||||||
Innerwear | $ | 560,726 | $ | 553,604 | 1.3 |
% |
||||
Activewear | 309,525 | 301,010 | 2.8 |
% |
||||||
Direct to Consumer | 69,802 | 71,157 | (1.9 |
) % |
||||||
International | 279,087 | 283,150 | (1.4 |
) % |
||||||
Total net sales | $ | 1,219,140 | $ | 1,208,921 | 0.8 |
% |
||||
Segment operating profit1: | ||||||||||
Innerwear | $ | 117,972 | $ | 116,063 | 1.6 |
% |
||||
Activewear | 32,569 | 31,170 | 4.5 |
% |
||||||
Direct to Consumer | (3,022 | ) | (4,530 | ) | (33.3 |
) % |
||||
International | 24,719 | 21,495 | 15.0 |
% |
||||||
General corporate expenses/other | (25,164 | ) | (31,039 | ) | (18.9 |
) % |
||||
Acquisition, integration and other action related charges | (24,669 | ) | (43,228 | ) | (42.9 |
) % |
||||
Total operating profit | $ | 122,405 | $ | 89,931 | 36.1 |
% |
||||
EBITDA2: | ||||||||||
Net income | $ | 80,269 | $ | 52,636 | ||||||
Interest expense, net | 31,566 | 26,887 | ||||||||
Income tax expense | 9,921 | 10,026 | ||||||||
Depreciation and amortization | 22,820 | 24,573 | ||||||||
Total EBITDA | $ | 144,576 | $ | 114,122 | 26.7 |
% |
1 |
As a result of a shift in management responsibilities, the Company decided in the first quarter of 2016 to move its wholesale e-commerce business from the Direct to Consumer segment to the Innerwear and Activewear segments. In addition, revisions were made to the manner in which certain selling, general and administrative expenses are allocated. Prior-year segment sales and operating profit results have been revised to conform to the current year presentation. | |
2 |
Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. |
TABLE 3 | ||||||
HANESBRANDS INC. | ||||||
Condensed Consolidated Balance Sheets | ||||||
(Dollars in thousands) | ||||||
(Unaudited) | ||||||
April 2, 2016 | January 2, 2016 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 332,422 | $ | 319,169 | ||
Trade accounts receivable, net | 722,103 | 680,417 | ||||
Inventories | 1,969,872 | 1,814,602 | ||||
Other current assets | 93,283 | 103,679 | ||||
Total current assets | 3,117,680 | 2,917,867 | ||||
Property, net | 652,126 | 650,462 | ||||
Intangible assets and goodwill | 1,550,934 | 1,534,830 | ||||
Other noncurrent assets | 501,321 | 494,431 | ||||
Total assets | $ | 5,822,061 | $ | 5,597,590 | ||
Liabilities | ||||||
Accounts payable and accrued liabilities | $ | 990,950 | $ | 1,133,305 | ||
Notes payable | 115,237 | 117,785 | ||||
Accounts Receivable Securitization Facility | 200,000 | 195,163 | ||||
Current portion of long-term debt | 62,325 | 57,656 | ||||
Total current liabilities | 1,368,512 | 1,503,909 | ||||
Long-term debt | 2,963,424 | 2,232,712 | ||||
Other noncurrent liabilities | 538,084 | 585,078 | ||||
Total liabilities | 4,870,020 | 4,321,699 | ||||
Equity | 952,041 | 1,275,891 | ||||
Total liabilities and equity | $ | 5,822,061 | $ | 5,597,590 |
TABLE 4 | |||||||
HANESBRANDS INC. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(Dollars in thousands) | |||||||
(Unaudited) | |||||||
Quarter ended | |||||||
April 2, 2016 | April 4, 2015 | ||||||
Operating Activities: | |||||||
Net income | $ | 80,269 | $ | 52,636 | |||
Depreciation and amortization | 22,820 | 24,573 | |||||
Other noncash items | 926 | 7,288 | |||||
Changes in assets and liabilities, net | (388,821 | ) | (343,842 | ) | |||
Net cash from operating activities | (284,806 | ) | (259,345 | ) | |||
Investing Activities: | |||||||
Purchases/sales of property and equipment, net, and other | (12,573 | ) | (31,633 | ) | |||
Acquisition of business, net of cash acquired | (7,062 | ) | — | ||||
Net cash from investing activities | (19,635 | ) | (31,633 | ) | |||
Financing Activities: | |||||||
Cash dividends paid | (42,683 | ) | (40,083 | ) | |||
Share repurchases | (379,901 | ) | — | ||||
Net borrowings on notes payable, debt and other | 737,268 | 373,837 | |||||
Net cash from financing activities | 314,684 | 333,754 | |||||
Effect of changes in foreign currency exchange rates on cash | 3,010 | (5,564 | ) | ||||
Change in cash and cash equivalents | 13,253 | 37,212 | |||||
Cash and cash equivalents at beginning of year | 319,169 | 239,855 | |||||
Cash and cash equivalents at end of period | $ | 332,422 | $ | 277,067 |
TABLE 5 | |||||||
HANESBRANDS INC. | |||||||
Supplemental Financial Information | |||||||
Reconciliation of Select GAAP Measures to Non-GAAP Measures | |||||||
(Amounts in thousands, except per-share amounts) | |||||||
(Unaudited) | |||||||
Quarter Ended | |||||||
April 2, 2016 | April 4, 2015 | ||||||
Gross profit, as reported under GAAP | $ | 457,256 | $ | 446,231 | |||
Acquisition, integration and other action related charges | 4,869 | 14,068 | |||||
Gross profit, as adjusted | $ | 462,125 | $ | 460,299 | |||
As a % of net sales | 37.9 | % | 38.1 | % | |||
Selling, general and administrative expenses, as reported under GAAP | $ | 334,851 | $ | 356,300 | |||
Acquisition, integration and other action related charges | (19,800 | ) | (29,160 | ) | |||
Selling, general and administrative expenses, as adjusted | $ | 315,051 | $ | 327,140 | |||
As a % of net sales | 25.8 | % | 27.1 | % | |||
Operating profit, as reported under GAAP | $ | 122,405 | $ | 89,931 | |||
Acquisition, integration and other action related charges included in gross profit | 4,869 | 14,068 | |||||
Acquisition, integration and other action related charges included in SG&A | 19,800 | 29,160 | |||||
Operating profit, as adjusted | $ | 147,074 | $ | 133,159 | |||
As a % of net sales | 12.1 | % | 11.0 | % | |||
Net income, as reported under GAAP | $ | 80,269 | $ | 52,636 | |||
Acquisition, integration and other action related charges included in gross profit | 4,869 | 14,068 | |||||
Acquisition, integration and other action related charges included in SG&A | 19,800 | 29,160 | |||||
Tax effect on actions | (2,713 | ) | (6,916 | ) | |||
Net income, as adjusted | $ | 102,225 | $ | 88,948 | |||
Diluted earnings per share, as reported under GAAP | $ | 0.21 | $ | 0.13 | |||
Acquisition, integration and other action related charges | 0.06 | 0.09 | |||||
Diluted earnings per share, as adjusted | $ | 0.26 | $ | 0.22 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160421006443/en/
Source:
HanesBrands
News Media:
Matt Hall, 336-519-3386
or
Analysts
and Investors:
T.C. Robillard, 336-519-2115
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