– Strong revenue and profit trends disrupted by late-quarter
effects of COVID-19
– Employees rise to meet challenges, including continuing to
serve open channels of trade and pivoting to manufacture
much-needed face coverings
– 1Q results include net sales of $1.32 billion; GAAP and
adjusted operating profit of $34 million and $63 million,
respectively; and GAAP and adjusted EPS of $(0.02) and $0.05,
respectively
– COVID-19 estimated to have reduced GAAP and adjusted results
by $181 million in net sales, $86 million in operating profit, and
$0.20 in EPS
– Despite pandemic, operating cash flow improved by more than
$100 million
– Actions taken to assure cash preservation and balance sheet
flexibility and liquidity
HanesBrands (NYSE: HBI), a leading global marketer of branded
everyday basic apparel, today announced first-quarter results that
were significantly affected by the COVID-19 pandemic.
Prior to the pandemic’s late-quarter disruption of economies
around the world, the company experienced strong revenue and profit
trends. In the last two weeks of the quarter, the company
experienced an unprecedented drop in sales and profit.
Due to disruptions to retailer operations and the
unpredictability of consumer confidence, HanesBrands’ pandemic
response is focused on several initiatives: serving channels of
trade that are generating sales, preserving cash and enhancing
liquidity, and developing a product line of personal protective
garments, including face masks, to meet emerging commercial and
consumer demand.
“We were on a pace to deliver a strong first quarter above our
expectations until the late quarter impact of the COVID-19
pandemic,” said Hanes Chief Executive Officer Gerald W. Evans Jr.
“Prior to the pandemic impact, sales for our U.S. Innerwear
business were significantly better than our expectations. Champion
was a driver of better-than-planned U.S. Activewear growth, and our
International businesses were in line with expectations.
“The effects of the pandemic changed those trajectories. In
response, we prioritized operational protocols for the safety of
our employees, consumers and communities. I am proud of the
terrific effort and achievements of our global teams. We quickly
pivoted to preserve cash, create balance sheet flexibility, and
build strong liquidity. We used our large-scale global supply chain
to manage inventory, continue to serve key channels, including mass
retail and online, and seize the opportunity to expand our
manufacturing capability to include cotton face masks.
“The COVID-19 pandemic is proving to be a significant challenge
for every aspect of society to navigate. As a 120-year-old business
enterprise, we feel confident that we have the right plans, the
consumer-trusted brands and products, and a superior workforce to
not only overcome these short-term business challenges but to
thrive over the long term.”
For the first-quarter ended March 28, 2020, the effects of the
COVID-19 pandemic are reflected in both GAAP and adjusted measures
that exclude actions. The company estimates the late-quarter impact
of the pandemic reduced revenue by approximately $181 million,
operating profit by approximately $86 million, and EPS by
approximately $0.20.
First-quarter net sales were $1.32 billion compared with $1.59
billion a year ago. The year-ago quarter included net sales of $94
million from the now exited C9 Champion mass program and the DKNY
intimate apparel license. Excluding the exited programs, the impact
of COVID-19, and foreign exchange rates, total constant-currency
net sales for the first-quarter 2020 would have increased 1.6%.
First-quarter GAAP operating profit and adjusted operating
profit excluding actions were $34 million and $63 million,
respectively, compared with $150 million and $171 million a year
ago, respectively. GAAP and adjusted EPS excluding actions were
$(0.02) and $0.05, respectively, compared with $0.22 and $0.27 a
year ago, respectively.
(See the Note on Reconciliation of Select GAAP Measures to
Non-GAAP Measures later in this news release for additional
discussion and details.)
Callouts for First-Quarter 2020 Results
and Ongoing Operations During the Pandemic
Global Online Sales and Pre-Pandemic Champion Sales
Increase. The company continues to generate sales through
channels of trade that have remained open during the pandemic,
including online, mass retail, dollar store, and food and drug. The
company generates online sales through its own e-commerce websites,
retailer websites, large Internet pure-plays, and
business-to-business customers. Total online sales increased 5%
globally in the first quarter. Online growth rates accelerated in
the last two weeks of the quarter and have continued to accelerate
in April.
Operating Cash Flow and Inventory Improve, Despite COVID-19
Impact. Operating cash flow was a use of $83 million in the
first quarter compared with a use of $194 million in the year-ago
quarter. Working capital management and a 12% reduction of
inventory drove the $111 million improvement despite a reduction in
GAAP net income.
HanesBrands Producing Face Coverings and Gowns and Expects to
Build an Ongoing Personal Protective Garments Business. The
company is making more than 320 million cloth face coverings and
more than 20 million medical gowns for the U.S. government.
In addition, the company is also ramping up production to launch
a cotton face mask business for consumers and business-to-business
customers, including large employers seeking to reopen business
operations.
The company expects to create an ongoing product line of basic
personal protective garments to serve the consumer, commercial and
governmental markets. Sales in 2020 are expected to be more than
$300 million, and the company believes the business has the
potential to expand further in future years.
Actions to Preserve Cash, Increase Liquidity and Strengthen
Balance Sheet. To navigate the current economic environment,
the company is limiting discretionary spending and capital
expenditures, has temporarily reduced salaries and furloughed
select employee groups, is managing inventory and supply chain
production, and is adding liquidity to its balance sheet.
The temporary pay reductions and furloughs, as well as
reductions in discretionary spending such as media and marketing,
are expected to save approximately $200 million in 2020. The
company is operating production and distribution facilities on a
demand-adjusted basis.
The company ended the first quarter with nearly $1.1 billion of
cash on hand and is adding additional liquidity and flexibility to
its balance sheet.
To be prudent, the company intends to secure approximately $500
million in debt financing, subject to market conditions, with the
proceeds used to repay the company’s revolver and further enhance
liquidity. More bond offering details will be issued in separate
news releases, as appropriate.
The company has stress tested its balance sheet under various
scenarios and believes its liquidity plans provide significant
operating flexibility during the pandemic, strengthens the
company’s long-term business model, and positions the company to
take advantage of opportunities as the world economy emerges from
the pandemic.
As an added precaution, the company proactively negotiated a
15-month covenant amendment to its Senior Secured Credit Facility,
which includes the suspension of its leverage covenant until the
end of the second-quarter 2021.
First-Quarter 2020 Business Segment
Summaries
International Segment. International segment sales
declined 14% while operating profit decreased 48%. On a
constant-currency basis, net sales decreased 11% and operating
profit decreased 47%.
Sales and profit were affected by the global COVID-19 pandemic.
In addition to wholesale business declines, approximately 1,000 of
the company’s 1,200 brand stores, which closed in March, are
located in international geographies. Prior to the impact of the
pandemic, International segment constant-currency sales were in
line with expectations.
Innerwear Segment. Prior to mid-March, U.S. Innerwear
segment sales and profit were trending significantly better than
expected with net sales down less than a percentage point. Strong
performance for both basics and intimates in that period, including
market share gains, highlighted strong underlying fundamentals for
the ongoing Innerwear revitalization.
As reported for the full quarter, net sales decreased 11% while
operating profit decreased 22%, both affected by the pandemic and
exit of the C9 Champion mass retail program. When year-ago results
are rebased for program exits, segment net sales decreased 9% and
operating profit decreased 21%.
Activewear Segment. U.S. Activewear segment first-quarter
sales decreased 29%, or $117 million, as a result of the COVID-19
impact and $85 million of C9 Champion sales in mass retail in the
year-ago quarter. When the year-ago quarter is rebased for the C9
Champion program exit, net sales decreased 10%.
Prior to mid-March, the segment had higher-than-expected
performance with continued consumer demand for Champion brand
products and increases for other activewear brands in the sports
licensing business’ mass and midtier channels and seasonal
activewear in the online channel.
Operating profit decreased 81% as reported and decreased 66% on
a rebased basis.
2020 Financial Guidance
Due to the uncertainty and unpredictability of the COVID-19
pandemic, HanesBrands withdrew its first-quarter and full-year
guidance on March 25, 2020. Until visibility of the pandemic’s
effect on global economies improves, the company will not provide
quarterly and full-year guidance and expectations.
The fiscal year ending Jan. 2, 2021, includes a 53rd week in the
fourth quarter. The company has exited the C9 Champion mass program
and DKNY license for intimate apparel. The company expects foreign
currency exchange rates to reduce net sales and operating profit in
2020.
The company repurchased approximately 14.5 million shares in the
first quarter and has suspended share repurchases for the remainder
of the year. The average diluted shares outstanding for the first
quarter were 359 million. The expected average diluted shares
outstanding for second, third and fourth quarters is expected to be
approximately 353 million.
Hanes has updated its quarterly frequently-asked-questions
document, which is available at www.Hanes.com/faq.
Note on Adjusted Measures, Rebased
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, adjusted net income,
adjusted operating profit (and margin), adjusted SG&A, adjusted
gross profit (and margin), adjusted net sales, EBITDA and adjusted
EBITDA.
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 SG&A is defined as selling, general and
administrative expenses excluding actions. Adjusted gross profit is
defined as gross profit excluding actions. Adjusted net sales is
defined as net sales 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. Acquisition and integration
costs include legal fees, consulting fees, bank fees, severance
costs, certain purchase accounting items, facility closures,
inventory write-offs, information technology integration costs and
similar charges. 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 acquisition activity.
Hanes 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 acquisitions and other actions. Hanes believes
these non-GAAP measures provide management and investors with
valuable supplemental information for analyzing the operating
performance of the company’s ongoing business during each period
presented without giving effect to costs associated with the
execution and integration of any of the aforementioned actions
taken.
The company has also chosen to present EBITDA and adjusted
EBITDA to investors because it considers these measures to be an
important supplemental means of evaluating operating performance.
EBITDA is defined as earnings before interest, taxes, depreciation
and amortization. Adjusted EBITDA is defined as EBITDA excluding
actions and stock compensation expense. Hanes 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, with respect to 2020 financial performance, Hanes
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. Hanes believes this
information is useful to management and investors to facilitate a
more meaningful comparison of the results of the company’s ongoing
business between 2019 and 2020. The company has provided rebased
2018 and 2019 quarterly income statements in Supplemental Table B
dated Feb. 7, 2020, which is available online at
www.hanes.com/investors.
Hanes 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, Hanes 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).
Hanes 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 non-GAAP to the most directly comparable GAAP
financial measures are presented in the supplemental financial
information included with this news release.
Webcast Conference Call
Hanes will host an Internet webcast of its first-quarter
investor conference call at 8:30 a.m. EDT today, April 30, 2020.
The webcast of the call, which will consist of prepared remarks
followed by a question-and-answer session, may be accessed at
www.Hanes.com/investors. The call is expected to conclude by 9:30
a.m.
An archived replay of the conference call webcast will be
available in the investors section of the Hanes corporate website.
A telephone playback will be available from approximately noon EDT
today through midnight EDT May 7, 2020. The replay will be
available by calling toll-free (855) 859-2056 or by toll call at
(404) 537-3406. The replay ID is 4683026.
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 outbreak
on our business and financial performance; guidance and predictions
regarding expected operating results, including related to our new
business line for cotton face masks and other personal protection
garments; our plans to secure additional debt financing, subject to
market conditions; our belief that we have sufficient liquidity to
fund our ongoing business operations;, and statements following the
heading 2020 Financial Guidance, 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: the potential effects of the
COVID-19 outbreak, including on consumer spending, global supply
chains and the financial markets; our ability to successfully
integrate acquired businesses, the highly competitive and evolving
nature of the industry in which we compete; the rapidly changing
retail environment; 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 in order to achieve the desired results; significant
fluctuations in foreign exchange rates; our reliance on a
relatively small number of customers for a significant portion of
our sales; legal, regulatory, political and economic risks related
to our international operations; our ability to effectively manage
our complex multinational tax structure; the existence of a
material weakness in our internal control over financial reporting;
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, based in Winston-Salem, N.C., is a socially
responsible leading marketer of everyday basic innerwear and
activewear apparel in the Americas, Europe, Australia and
Asia-Pacific. The company sells its products under some of the
world’s strongest apparel brands, including Hanes, Champion, Bonds,
DIM, Maidenform, Bali, Playtex, Lovable, Bras N Things, Nur Die/Nur
Der, Alternative, L’eggs, JMS/Just My Size, Wonderbra, Berlei, and
Gear for Sports. The company sells T-shirts, bras, panties,
shapewear, underwear, socks, hosiery, and activewear produced in
the company’s low-cost global supply chain. A Fortune 500 company
and member of the S&P 500 stock index (NYSE: HBI), Hanes has
approximately 63,000 employees in more than 40 countries. For more
information, visit the company’s corporate website at
www.Hanes.com/corporate and newsroom at
https://newsroom.hanesbrands.com/. Connect with the company via
social media: Twitter (@hanesbrands), Facebook
(www.facebook.com/hanesbrandsinc), Instagram
(@hanesbrands_careers), and LinkedIn (@Hanesbrandsinc).
TABLE 1
HANESBRANDS INC.
Condensed Consolidated
Statements of Income and Supplemental Financial Information
(in thousands, except
per-share amounts)
(Unaudited)
Quarters Ended
March 28, 2020
March 30, 2019
% Change
Net sales
$
1,316,462
$
1,588,024
(17.1
)%
Cost of sales
842,730
967,993
Gross profit
473,732
620,031
(23.6
)%
As a % of net sales
36.0
%
39.0
%
Selling, general and administrative
expenses
439,602
470,387
As a % of net sales
33.4
%
29.6
%
Operating profit
34,130
149,644
(77.2
)%
As a % of net sales
2.6
%
9.4
%
Other expenses
6,490
7,451
Interest expense, net
36,849
48,059
Income (loss) before income tax
expense
(9,209
)
94,134
Income tax expense (benefit)
(1,335
)
13,046
Net income (loss)
$
(7,874
)
$
81,088
(109.7
)%
Earnings (loss) per share:
Basic
$
(0.02
)
$
0.22
Diluted
$
(0.02
)
$
0.22
Weighted average shares outstanding:
Basic
359,017
364,570
Diluted
359,017
365,299
The following table presents a
reconciliation of reported results on a constant currency basis for
the quarter ended March 28, 2020 and a comparison to prior
year:
Quarter Ended March 28,
2020
As Reported
Impact from Foreign
Currency1
Constant Currency
Quarter Ended March 30,
2019
% Change, As Reported
% Change, Constant
Currency
As reported under GAAP:
Net sales
$
1,316,462
$
(20,201
)
$
1,336,663
$
1,588,024
(17.1
)%
(15.8
)%
Gross profit
473,732
(10,262
)
483,994
620,031
(23.6
)
(21.9
)
Operating profit
34,130
(885
)
35,015
149,644
(77.2
)
(76.6
)
Diluted earnings (loss) per share
$
(0.02
)
$
0.00
$
(0.02
)
$
0.22
(109.1
)%
(109.1
)%
As adjusted:2
Net sales
$
1,316,462
$
(20,201
)
$
1,336,663
$
1,493,920
(11.9
)%
(10.5
)%
Gross profit
495,545
(10,262
)
505,807
607,835
(18.5
)
(16.8
)
Operating profit
63,329
(885
)
64,214
150,094
(57.8
)
(57.2
)
Diluted earnings per share
$
0.05
$
0.00
$
0.05
$
0.22
(77.3
)%
(77.3
)%
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 ending March 28,
2020 and March 30, 2019 reflect adjustments for restructuring and
other action-related charges. Results for the quarter ended March
30, 2019 also reflect adjustments for the exited C9 Champion
program at Target and DKNY Intimates license. See “Reconciliation
of Select GAAP Measures to Non-GAAP Measures” in Table 5.
TABLE 2
HANESBRANDS INC.
Supplemental Financial
Information
(in thousands, except
per-share amounts)
(Unaudited)
Quarters Ended
March 28, 2020
March 30, 2019
Rebased1
% Change
Segment net sales:
Innerwear
$
422,402
$
466,414
(9.4
)%
Activewear
288,000
320,767
(10.2
)
International
555,901
646,180
(14.0
)
Other
50,159
60,559
(17.2
)
Total net sales
$
1,316,462
$
1,493,920
(11.9
)%
Segment operating profit:
Innerwear
$
81,551
$
103,126
(20.9
)%
Activewear
8,108
24,170
(66.5
)
International
52,018
99,773
(47.9
)
Other
(6,125
)
754
(912.3
)
General corporate expenses/other
(72,223
)
(77,729
)
(7.1
)
Total operating profit before
restructuring and other action-related charges
63,329
150,094
(57.8
)
Restructuring and other action-related
charges
(29,199
)
(21,373
)
36.6
Total operating profit
$
34,130
$
128,721
(73.5
)%
1
Results for the quarter ended March 30,
2019 reflect adjustments for the exited C9 Champion program at
Target and DKNY Intimates license. See “Reconciliation of Select
GAAP Measures to Non-GAAP Measures” in Table 5.
The following table presents a
reconciliation of reported results on a constant currency basis
adjusted for restructuring and other action-related charges and the
impact of COVID-19 for the quarter ended March 28, 2020.
Quarter Ended March 28,
2020
As Reported
Impact from Foreign
Currency1
Impact of Restructuring and
Other Action- Related Charges
Constant Currency Adjusted for
Restructuring and Other Action- Related Charges
% Change2
Impact of COVID-19
Constant Currency Adjusted for
Restructuring and Other Action- Related Charges and
COVID-19
% Change2
Net sales
$
1,316,462
$
(20,201
)
$
—
$
1,336,663
(10.5
)%
$
(180,835
)
$
1,517,498
1.6
%
Operating profit
$
34,130
$
(885
)
$
(29,199
)
$
64,214
(57.2
)%
$
(85,724
)
$
149,938
(0.1
)%
Diluted earnings (loss) per share
$
(0.02
)
$
0.00
$
(0.07
)
$
0.05
(77.3
)%
$
(0.20
)
$
0.25
13.6
%
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 comparison to the quarter ended March
30, 2019 reflects adjustments for restructuring and other
action-related charges and the exited C9 Champion program at Target
and DKNY Intimates license. See “Reconciliation of Select GAAP
Measures to Non-GAAP Measures” in Table 5.
Including the unfavorable foreign currency
impact of $3.9 million, global Champion sales outside the mass
channel decreased approximately 12% in the first quarter of 2020
compared to the first quarter of 2019. On a constant currency
basis, global Champion sales decreased approximately 11%. On a
constant currency basis and adjusted for the impact of COVID-19 of
approximately $84.3 million, global Champion sales would have
increased approximately 7%.
TABLE 3
HANESBRANDS INC.
Condensed Consolidated Balance
Sheets
(in thousands)
(Unaudited)
March 28, 2020
December 28, 2019
Assets
Cash and cash equivalents
$
1,083,780
$
328,876
Trade accounts receivable, net
725,092
815,210
Inventories
1,963,757
1,905,845
Other current assets
178,244
174,634
Total current assets
3,950,873
3,224,565
Property, net
571,005
587,896
Right-of-use assets
473,936
487,787
Trademarks and other identifiable
intangibles, net
1,435,356
1,520,800
Goodwill
1,205,195
1,235,711
Deferred tax assets
188,004
203,331
Other noncurrent assets
118,890
93,896
Total assets
$
7,943,259
$
7,353,986
Liabilities
Accounts payable
$
925,417
$
959,006
Accrued liabilities
447,401
531,184
Lease liabilities
150,568
166,091
Notes payable
2,170
4,244
Accounts Receivable Securitization
Facility
152,153
—
Current portion of long-term debt
111,359
110,914
Total current liabilities
1,789,068
1,771,439
Long-term debt
4,236,955
3,256,870
Lease liabilities - noncurrent
358,848
358,281
Pension and postretirement benefits
375,511
403,458
Other noncurrent liabilities
309,306
327,343
Total liabilities
7,069,688
6,117,391
Stockholders’ equity
Preferred stock
—
—
Common stock
3,480
3,624
Additional paid-in capital
297,456
304,395
Retained earnings
1,296,060
1,546,224
Accumulated other comprehensive loss
(723,425
)
(617,648
)
Total stockholders’ equity
873,571
1,236,595
Total liabilities and stockholders’
equity
$
7,943,259
$
7,353,986
TABLE 4
HANESBRANDS INC.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(Unaudited)
Quarters Ended
March 28, 2020
March 30, 2019
Operating Activities:
Net income (loss)
$
(7,874
)
$
81,088
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation
22,781
22,854
Amortization of acquisition
intangibles
6,113
6,290
Other amortization
2,477
3,090
Amortization of debt issuance costs
2,123
2,440
Stock compensation expense
4,723
5,178
Deferred taxes
(461
)
(3,854
)
Other
(9,520
)
4,247
Changes in assets and liabilities:
Accounts receivable
73,694
(62,278
)
Inventories
(86,785
)
(178,405
)
Other assets
26,790
(32,372
)
Accounts payable
(13,605
)
(18,213
)
Accrued pension and postretirement
benefits
(21,481
)
(21,978
)
Accrued liabilities and other
(82,191
)
(2,378
)
Net cash from operating activities
(83,216
)
(194,291
)
Investing Activities:
Capital expenditures
(25,759
)
(25,269
)
Proceeds from sales of assets
66
136
Other
1,216
—
Net cash from investing activities
(24,477
)
(25,133
)
Financing Activities:
Borrowings on notes payable
62,312
82,774
Repayments on notes payable
(64,352
)
(82,759
)
Borrowings on Accounts Receivable
Securitization Facility
227,061
106,942
Repayments on Accounts Receivable
Securitization Facility
(74,909
)
(68,550
)
Borrowings on Revolving Loan
Facilities
1,638,000
772,500
Repayments on Revolving Loan
Facilities
(688,000
)
(680,500
)
Repayments on Term Loan Facilities
—
(10,625
)
Borrowings on International Debt
31,222
7,141
Share repurchases
(200,269
)
—
Cash dividends paid
(53,683
)
(54,221
)
Payments to amend and refinance credit
facilities
(232
)
(662
)
Taxes paid related to net shares
settlement of equity awards
(62
)
(906
)
Other
426
573
Net cash from financing activities
877,514
71,707
Effect of changes in foreign exchange
rates on cash
(15,061
)
2,104
Change in cash, cash equivalents and
restricted cash
754,760
(145,613
)
Cash, cash equivalents and restricted cash
at beginning of year
329,923
455,732
Cash, cash equivalents and restricted cash
at end of period
1,084,683
310,119
Less restricted cash at end of period
903
23,039
Cash and cash equivalents per balance
sheet at end of period
$
1,083,780
$
287,080
TABLE 5
HANESBRANDS INC.
Supplemental Financial
Information
Reconciliation of Select GAAP
Measures to Non-GAAP Measures
(in thousands, except
per-share amounts)
(Unaudited)
Quarters Ended
March 28, 2020
March 30, 2019
Net sales, as reported under GAAP
$
1,316,462
$
1,588,024
Net sales from exited programs
—
(94,104
)
Net sales, rebased
$
1,316,462
$
1,493,920
Gross profit, as reported under GAAP
$
473,732
$
620,031
Restructuring and other action-related
charges
21,813
17,692
Gross profit on exited programs
—
(29,888
)
Adjusted gross profit, rebased
$
495,545
$
607,835
As a % of net sales, rebased
37.6
%
40.7
%
Selling, general and administrative
expenses, as reported under GAAP
$
439,602
$
470,387
Restructuring and other action-related
charges
(7,386
)
(3,681
)
Selling, general and administrative
expenses related to exited programs
—
(8,965
)
Adjusted selling, general and
administrative expenses, rebased
$
432,216
$
457,741
As a % of net sales, rebased
32.8
%
30.6
%
Operating profit, as reported under
GAAP
$
34,130
$
149,644
Restructuring and other action-related
charges included in gross profit
21,813
17,692
Restructuring and other action-related
charges included in SG&A
7,386
3,681
Gross profit on exited programs
—
(29,888
)
Selling, general and administrative
expenses related to exited programs
—
8,965
Adjusted operating profit, rebased
$
63,329
$
150,094
As a % of net sales, rebased
4.8
%
10.0
%
Net income (loss), as reported under
GAAP
$
(7,874
)
$
81,088
Restructuring and other action-related
charges included in gross profit
21,813
17,692
Restructuring and other action-related
charges included in SG&A
7,386
3,681
Gross profit on exited programs
—
(29,888
)
Selling, general and administrative
expenses related to exited programs
—
8,965
Tax effect on actions
(4,234
)
(63
)
Adjusted net income, rebased
$
17,091
$
81,475
Diluted earnings (loss) per share, as
reported under GAAP
$
(0.02
)
$
0.22
Restructuring and other action-related
charges
0.07
0.05
Exited programs
—
(0.05
)
Adjusted diluted earnings per share,
rebased
$
0.05
$
0.22
Quarter Ended March 30,
2019
As Reported
Less: Exited Programs
Adjusted for Exited
Programs
Less: Restructuring and other
action-related charges
Rebased
Segment net sales:
Innerwear
$
475,945
$
9,531
$
466,414
$
—
$
466,414
Activewear
405,340
84,573
320,767
—
320,767
International
646,180
—
646,180
—
646,180
Other
60,559
—
60,559
—
60,559
Total net sales
$
1,588,024
$
94,104
$
1,493,920
$
—
$
1,493,920
Segment operating profit:
Innerwear
$
104,626
$
1,500
$
103,126
$
—
$
103,126
Activewear
43,593
19,423
24,170
—
24,170
International
99,773
—
99,773
—
99,773
Other
754
—
754
—
754
General corporate expenses/other
(77,729
)
—
(77,729
)
—
(77,729
)
Restructuring and other action-related
charges
(21,373
)
—
(21,373
)
(21,373
)
—
Total operating profit
$
149,644
$
20,923
$
128,721
$
(21,373
)
$
150,094
Quarters Ended
March 28, 2020
March 30, 2019
Restructuring and other action-related
charges by category:
Supply chain actions
$
14,065
$
17,692
Program exit costs
8,215
—
Other restructuring costs
6,919
3,681
Tax effect on actions
(4,234
)
(3,013
)
Total restructuring and other
action-related charges
$
24,965
$
18,360
Last Twelve Months
March 28, 2020
March 30, 2019
EBITDA1:
Net income
$
511,758
$
541,952
Interest expense, net
167,369
196,971
Income tax expense
64,626
102,054
Depreciation and amortization
130,104
132,105
Total EBITDA
873,857
973,082
Total restructuring and other
action-related charges (excluding tax effect on actions)
71,312
81,968
Stock compensation expense
8,822
21,848
Total EBITDA, as adjusted
$
953,991
$
1,076,898
Net debt:
Debt (current and long-term debt and
Accounts Receivable Securitization Facility)
$
4,500,467
$
4,092,308
Notes payable
2,170
5,753
(Less) Cash and cash equivalents
(1,083,780
)
(287,080
)
Net debt
$
3,418,857
$
3,810,981
Net debt/EBITDA, as adjusted
3.6
3.5
1
Earnings before interest, taxes,
depreciation and amortization (EBITDA) is a non-GAAP financial
measure.
Quarters Ended
March 28, 2020
March 30, 2019
Free cash flow:
Net cash from operating activities
$
(83,216
)
$
(194,291
)
Capital expenditures
(25,759
)
(25,269
)
Free cash flow
$
(108,975
)
$
(219,560
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005399/en/
News Media, contact: Matt Hall, (336) 519-3386 Analysts and
Investors, contact: T.C. Robillard, (336) 519-2115
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