HanesBrands Announces Strong Second-Quarter 2021 Results

HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced results for the second quarter of 2021, with increased sales, operating profit and cash flow driven by strong performance across its global innerwear and activewear businesses.

Net sales from continuing operations for the second quarter ended July 3, 2021, totaled $1.75 billion, an increase of $208 million, or 13%, compared with $1.54 billion for the quarter ended June 27, 2020, which included $614 million in sales of personal protective equipment (“PPE”) in response to the COVID-19 pandemic. Excluding PPE, net sales increased 88% over prior year. The growth was driven by strong point-of-sales trends, the overlap of last year’s COVID-related shutdowns and the benefit of transitory items such as government stimulus. Total constant currency second-quarter net sales increased 10%.

“Our iconic brands continue to resonate with consumers around the world, and I’m very encouraged by the progress on our Full Potential growth plan,” said Chief Executive Officer Steve Bratspies. “I’m extremely proud of the way our associates performed under challenging conditions, delivering sales, profit and earnings growth above our expectations and above the second quarter of both 2020 and 2019. We are seeing strong momentum across our business and have raised our outlook for the second half of the year.”

Due to the significant impact of the pandemic on prior year results, this release includes certain comparisons to the comparable 2019 periods for additional context. All 2019 results are rebased to reflect the European Innerwear business as discontinued operations as well as the exit of the C9 Champion mass program and the DKNY intimate apparel license.

Compared to second-quarter 2019, net sales from continuing operations increased $233 million, or 15%, and total constant currency net sales increased 14%. Double-digit growth in the global innerwear and activewear businesses was driven by strong point-of-sale performance as well as the benefit of several transitory items, including retailer inventory restocking, government stimulus and pent-up consumer demand.

For the second-quarter 2021, GAAP gross margin of 38.9% increased 560 basis points compared to prior year and 200 basis points compared to second-quarter 2019. Adjusted gross margin of 39.0% increased 450 basis points over last year and approximately 75 basis points over 2019. The expansion in both periods was driven by higher sales, product mix and the impact from foreign exchange rates, which more than offset higher expedite costs that resulted from stronger-than-expected demand.

Second-quarter GAAP operating profit increased 8% to $217 million compared to prior year and decreased 1% compared to second-quarter 2019. GAAP operating margin of 12.4% decreased 70 basis points and 100 basis points compared to the second quarter of 2020 and 2019, respectively. Adjusted operating profit of $236 million increased $2 million, or 1%, compared to prior year and $29 million, or 14% compared to 2019. Adjusted operating margin of 13.5% decreased 170 basis points compared to last year due to the overlap of last year’s PPE sales and temporary cost savings initiatives that were implemented to partially mitigate the impact of COVID-driven declines in apparel sales.

In the second quarter of 2020, the company implemented several temporary SG&A cost savings initiatives such as furloughs and salary reductions, which generated approximately 600 basis points of one-time operating margin benefit in the year-ago quarter. As compared to second-quarter 2019, adjusted operating margin decreased approximately 15 basis points as higher brand marketing investments essentially offset the fixed-cost leverage from higher sales.

The GAAP and adjusted effective tax rates for the second quarter were 14.6% and 14.2%, respectively, which compares to GAAP and adjusted effective tax rates of 12.7% and 14.1%, respectively, for the second quarter of 2020. For the second quarter of 2019, GAAP and adjusted effective tax rates were 9.4% and 9.0%, respectively.

On a GAAP basis, second-quarter income from continuing operations totaled $148 million, or $0.42 per diluted share. This compares to income from continuing operations of $137 million, or $0.39 per diluted share in the prior year period, and income from continuing operations of $150 million, or $0.41 per diluted share in second-quarter 2019.

Adjusted income from continuing operations totaled $165 million, or $0.47 per diluted share. This compares to adjusted income from continuing operations of $162 million, or $0.46 per diluted share, in the prior year period and adjusted income from continuing operations of $139 million, or $0.38 per diluted share, in second-quarter 2019.

(See the Note on Adjusted Measures and Reconciliation to GAAP Measures later in this news release for additional discussion and details of actions, which include pandemic-related and Full Potential plan charges.)

Second-Quarter 2021 Business Segment Summaries

Innerwear (vs 2020). Sales decreased $314 million, or 29% due to the overlap of last year’s $614 million of PPE sales. Basics revenue increased 48% with double-digit growth in each product category while intimates revenue increased 150% with triple-digit growth in both bras and shapewear. Excluding PPE, Innerwear sales increased 62% over last year driven by strong point-of-sale growth, the overlap of last year’s COVID-related shutdowns as well as the benefit of several transitory items, including retailer inventory restocking, government stimulus and pent-up consumer demand. Operating margin of 23.8% decreased 400 basis points compared to prior year due to fixed-cost deleverage from lower sales, higher expedite costs from stronger-than-expected demand in basics and intimates as well as increased investments in brand marketing.

(vs 2019). Sales increased $123 million, or 19%, compared to second-quarter 2019, with comparable double-digit growth in both basics and intimates. The growth was driven by strong underlying point-of-sale growth, yielding approximately 160 basis points of market share gains, as well as the benefit of certain transitory items, such as retailer inventory restocking and government stimulus, which drove category growth rates above historical levels. Operating margin expanded 150 basis points to 23.8% driven by volume leverage and sales mix, which more than offset higher expedite costs and increased investments in brand marketing.

Activewear (vs 2020). Activewear sales grew $236 million, or 140% over prior year driven by growth in both the Champion and Hanes brands. The company experienced strong point-of-sale trends across several channels in the quarter. Sales also increased in the sports and college licensing business. The segment benefited from strong pent-up consumer demand as pandemic restrictions were lifted, as well as from government stimulus payments. Segment operating margin of 10.2% increased 1,360 basis points over prior period driven by fixed-cost leverage from higher sales, which more than offset higher brand marketing investment.

(vs 2019). Activewear revenue increased $53 million, or 15%, driven by growth across the online, wholesale and distributor channels, which more than offset lower sales in the sports and college licensing business. By brand, sales increased in both the Champion and Hanes brands in the quarter, with Champion sales in the segment up 20%. Activewear’s operating margin decreased approximately 290 basis points compared to second-quarter 2019 as leverage from higher sales volume was more than offset by higher expedite and distribution costs due to stronger-than-expected demand as well as increased investments in brand marketing.

International (vs 2020). International segment revenue increased $228 million, or 91%, compared to prior year. On a constant currency basis, sales increased 70% with strong growth in Australia, the Americas, Europe and Asia Pacific driven by strong consumer demand and the overlap of last year’s COVID-related shutdowns. For the quarter, the International segment’s operating margin of 12.9% increased 1,090 basis points over prior year driven by higher sales, sales mix and foreign exchange rates.

(vs 2019). International segment revenue increased $48 million, or 11%, compared to second-quarter 2019. On a constant currency basis, sales increased 5%. Constant currency sales grew in Australia, Europe and the Americas while sales in Asia Pacific declined driven by ongoing COVID-related headwinds in Japan. For the quarter, the International segment’s operating margin decreased 250 basis points compared to second-quarter 2019 levels driven by increased brand marketing investments as well as de-leverage in Asia Pacific from lower sales.

Third-Quarter, Fourth-Quarter and Full-Year 2021 Financial Outlook

The following financial outlook is based on current market conditions and judgments of management and is subject to risks and uncertainties that may cause actual results to differ materially, many of which are further discussed in the company’s most recent annual report on Form 10-K available at www.sec.gov and in the investors section of the company’s website at www.Hanes.com/Investors.

For third-quarter 2021, which ends on October 2, 2021, the company currently expects:

  • Net sales from continuing operations of approximately $1.78 billion to $1.81 billion, which represents approximately 6% growth over prior year at the midpoint and includes a projected benefit of approximately $16 million from changes in foreign currency exchange rates. This compares to net sales of $1.69 billion in third-quarter 2020, which included $179 million in PPE sales.
  • Excluding PPE, net sales at the midpoint of the guidance range are expected to increase 19% over the prior year period.
  • As compared to rebased third-quarter 2019, net sales at the midpoint are expected to increase 11%.
  • GAAP operating profit from continuing operations to range from approximately $216 million to $226 million.
  • Adjusted operating profit from continuing operations to range from approximately $235 million to $245 million. The midpoint of adjusted operating profit implies an operating margin of approximately 13.4% and reflects the impact of cost inflation as well as increased brand investment. This compares to an adjusted operating margin of 14.3% in the third-quarter of 2020, which benefited from temporary COVID-driven cost reductions.
  • Charges for actions related to Full Potential of approximately $19 million.
  • Interest and Other expenses of approximately $45 million.
  • An effective tax rate of approximately 12% on a GAAP basis and approximately 15% on an adjusted basis.
  • GAAP earnings per share from continuing operations to range from $0.42 to $0.45. Adjusted earnings per share from continuing operations to range from $0.45 to $0.48.

For fourth-quarter 2021, which ends on January 1, 2022, the company currently expects:

  • Net sales from continuing operations of approximately $1.71 billion to $1.78 billion, which represents approximately 3% growth over prior year at the midpoint and includes a projected benefit of approximately $6 million from changes in foreign currency exchange rates. This compares to net sales of $1.69 billion in fourth-quarter 2020, which included $28 million in PPE sales and approximately $45 million from the 53rd week.
  • Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 8% over the prior year period.
  • As compared to rebased fourth-quarter 2019, net sales at the midpoint are expected to increase 15%.
  • GAAP operating profit from continuing operations to range from approximately $172 million to $192 million.
  • Adjusted operating profit from continuing operations to range from approximately $200 million to $220 million. The midpoint of adjusted operating profit implies an operating margin of approximately 12.0% and reflects the impact of cost inflation as well as increased brand investment. This compares to an adjusted operating margin of 13.5% in the fourth-quarter of 2020.
  • Charges for actions related to Full Potential of approximately $28 million.
  • Interest and Other expenses of approximately $46 million.
  • An effective tax rate of approximately 15% on a GAAP and adjusted basis.
  • GAAP earnings per share from continuing operations to range from $0.29 to $0.34. Adjusted earnings per share from continuing operations to range from $0.37 to $0.42.

For fiscal-year 2021, which ends on January 1, 2022, the company currently expects:

  • Net sales from continuing operations to total approximately $6.75 billion to $6.85 billion, which is $550 million above its prior range of $6.2 billion to $6.3 billion, and includes a projected benefit of approximately $116 million from changes in foreign currency exchange rates.
  • At the midpoint, net sales guidance implies approximately 11% growth over prior year and 12% growth adjusted for the 53rd week in 2020. This compares to net sales of $6.13 billion in 2020, which included $820 million in sales of PPE and approximately $45 million from the 53rd week.
  • Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 29% over the prior year period.
  • As compared to rebased 2019, net sales at the midpoint are expected to increase 13%.
  • GAAP operating profit from continuing operations to range from approximately $795 million to $825 million, versus the prior range of $730 million to $760 million.
  • Adjusted operating profit from continuing operations to range from approximately $880 million to $910 million, which is $65 million above its prior range of $815 million to $845 million. At the midpoint, adjusted operating profit guidance implies approximately 15% growth compared to prior year and 9% growth compared to 2019. The midpoint of adjusted operating profit guidance range suggests an operating margin of 13.2%.
  • Full-year outlook reflects higher levels of cost inflation as compared to 2020 and 2019. Incremental brand marketing investment of $50 million as compared to 2020.
  • Charges for actions related to Full Potential of approximately $85 million, which is unchanged from its prior outlook.
  • Interest and Other expenses of approximately $182 million.
  • An effective tax rate of approximately 13% on a GAAP basis and approximately 15% on an adjusted basis.
  • GAAP earnings per share from continuing operations to range from approximately $1.50 to $1.58.
  • Adjusted earnings per share from continuing operations to range from approximately $1.68 to $1.76, which compares to its prior outlook of $1.51 to $1.59.
  • Cash flow from operations of approximately $550 million, versus prior range of $500 million to $550 million.
  • Capital expenditures of approximately $100 million.

HanesBrands has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/FAQ.

Note on Adjusted Measures and Reconciliation to GAAP Measures

To supplement financial results prepared in accordance with generally accepted accounting principles, the company provides quarterly and full-year results concerning certain non‐GAAP financial measures, including adjusted EPS from continuing operations, adjusted income from continuing operations, adjusted income tax expense, adjusted income from continuing operations before income tax expense, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA and adjusted EBITDA.

Adjusted EPS from continuing operations is defined as diluted EPS from continuing operations excluding actions and the tax effect on actions. Adjusted income from continuing operations is defined as income from continuing operations excluding actions and the tax effect on actions. Adjusted income tax expense is defined as income tax expense excluding actions. Adjusted income from continuing operations before income tax is defined as income from continuing operations before income tax excluding actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions. Adjusted gross profit is defined as gross profit excluding actions.

Charges for actions taken in 2021 include professional fees and intangible asset impairment charges related to our Full Potential plan. While these costs are not operational in nature and are not expected to continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.

Charges for actions taken in 2020 include supply chain restructuring actions, program exit costs, COVID-19 related charges, Full Potential plan charges and the write-off of a discrete tax asset related to our Bras N Things acquisition. COVID-19 related charges include intangible asset and goodwill impairment charges, bad debt expense and supply chain re-startup costs. Full Potential plan charges for 2020 include inventory write-down charges related to our SKU reduction initiative and discontinuation of our PPE business.

Charges for actions taken in 2019 primarily represented supply chain network changes, program exit costs, and overhead reduction as well as completion of outstanding acquisition integration.

HanesBrands has chosen to present these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of the Full Potential plan and other actions, as well as the COVID-19 pandemic. HanesBrands believes these non-GAAP measures provide management and investors with valuable supplemental information for analyzing the operating performance of the company’s ongoing business during each period presented without giving effect to costs associated with the execution of any of the aforementioned actions taken.

The company has also chosen to present EBITDA and adjusted EBITDA to investors because it considers these measures to be an important supplemental means of evaluating operating performance. EBITDA is defined as income from continuing operations before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding actions and stock compensation expense. HanesBrands believes that EBITDA and adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, and management uses EBITDA and adjusted EBITDA for planning purposes in connection with setting its capital allocation strategy. EBITDA and adjusted EBITDA should not, however, be considered as measures of discretionary cash available to invest in the growth of the business.

In addition, the company has chosen to present certain year-over-year comparisons with respect to the company’s rebased 2019 business, which excludes the exited C9 Champion program and DKNY license. HanesBrands believes this information is useful to management and investors to facilitate a more meaningful comparison of the results of the company’s ongoing business.

HanesBrands is a global company that reports financial information in U.S. dollars in accordance with GAAP. As a supplement to the company’s reported operating results, HanesBrands also presents constant-currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. The company uses constant-currency information to provide a framework to assess how the business performed excluding the effects of changes in the rates used to calculate foreign currency translation.

To calculate foreign currency translation on a constant currency basis, operating results for the current-year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

HanesBrands believes constant-currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in the company’s businesses.

Non‐GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or substitute for, financial results prepared in accordance with GAAP. Further, the non-GAAP measures presented may be different from non-GAAP measures with similar or identical names presented by other companies.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are presented in the supplemental financial information included with this news release.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains certain forward-looking statements, as defined under U.S. federal securities laws, with respect to our long-term goals and trends associated with our business, as well as guidance as to future performance. In particular, among others, statements regarding the potential impact of the COVID-19 pandemic on our business and financial performance; guidance and predictions regarding expected operating results, including related to our Full Potential plan; and statements made in the Third Quarter and Full-year 2021 Financial Outlook section of this news release, are forward-looking statements. These forward-looking statements are based on our current intent, beliefs, plans and expectations. Readers are cautioned not to place any undue reliance on any forward-looking statements. Forward-looking statements necessarily involve risks and uncertainties, many of which are outside of our control, that could cause actual results to differ materially from such statements and from our historical results and experience. These risks and uncertainties include such things as: our ability to successfully executive our Full Potential plan to achieve the desired results; the potential effects of the COVID-19 pandemic, including on consumer spending, global supply chains and the financial markets; the highly competitive and evolving nature of the industry in which we compete; the rapidly changing retail environment; our reliance on a relatively small number of customers for a significant portion of our sales; any inadequacy, interruption, integration failure or security failure with respect to our information technology; the impact of significant fluctuations and volatility in various input costs, such as cotton and oil-related materials, utilities, freight and wages; our ability to attract and retain a senior management team with the core competencies needed to support growth in global markets; significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex multinational tax structure; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward- looking statement speaks only as of the date on which such statement is made, and HanesBrands undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.

HanesBrands

HanesBrands (NYSE: HBI) makes everyday apparel that is known and loved by consumers around the world for comfort, quality and value. Among the company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Champion, an innovator at the intersection of lifestyle and athletic apparel; and Bonds, which is setting new standards for design and sustainability. HBI employs 61,000 associates in 47 countries and has built a strong reputation for workplace quality and ethical business practices. The company, a longtime leader in sustainability, launched aggressive 2030 goals to improve the lives of people, protect the planet and produce sustainable products. HBI is building on its unmatched strengths to unlock its #FullPotential and deliver long-term growth that benefits all of its stakeholders.

TABLE 1

HANESBRANDS INC.

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(Unaudited)

 

 

Quarters Ended

 

 

 

Six Months Ended

 

 

 

July 3,
2021

 

June 27,
2020

 

% Change

 

July 3,
2021

 

June 27,
2020

 

% Change

Net sales

$

1,751,311

 

 

$

1,543,083

 

 

13.5

%

 

$

3,259,340

 

 

$

2,746,153

 

 

18.7

%

Cost of sales

1,069,682

 

 

1,029,221

 

 

 

 

1,975,030

 

 

1,814,123

 

 

 

Gross profit

681,629

 

 

513,862

 

 

32.6

%

 

1,284,310

 

 

932,030

 

 

37.8

%

As a % of net sales

38.9

%

 

33.3

%

 

 

 

39.4

%

 

33.9

%

 

 

Selling, general and administrative expenses

464,235

 

 

311,729

 

 

 

 

876,794

 

 

681,944

 

 

 

As a % of net sales

26.5

%

 

20.2

%

 

 

 

26.9

%

 

24.8

%

 

 

Operating profit

217,394

 

 

202,133

 

 

7.5

%

 

407,516

 

 

250,086

 

 

63.0

%

As a % of net sales

12.4

%

 

13.1

%

 

 

 

12.5

%

 

9.1

%

 

 

Other expenses

1,855

 

 

4,653

 

 

 

 

4,416

 

 

10,754

 

 

 

Interest expense, net

42,440

 

 

41,075

 

 

 

 

86,900

 

 

77,102

 

 

 

Income from continuing operations before income tax expense

173,099

 

 

156,405

 

 

 

 

316,200

 

 

162,230

 

 

 

Income tax expense

25,236

 

 

19,837

 

 

 

 

39,933

 

 

20,544

 

 

 

Income from continuing operations

147,863

 

 

136,568

 

 

8.3

%

 

276,267

 

 

141,686

 

 

95.0

%

Income (loss) from discontinued operations, net of tax

(19,187

)

 

24,613

(410,853

)

11,621

Net income (loss)

$

128,676

 

 

$

161,181

 

 

 

 

$

(134,586

)

 

$

153,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.42

 

 

$

0.39

 

 

 

 

$

0.79

 

 

$

0.40

 

 

 

Discontinued operations

(0.05

)

 

0.07

 

 

 

 

(1.17

)

 

0.03

 

 

 

Net income (loss)

$

0.37

 

 

$

0.46

 

 

 

 

$

(0.38

)

 

$

0.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.42

 

 

$

0.39

 

 

 

 

$

0.79

 

 

$

0.40

 

 

 

Discontinued operations

(0.05

)

 

0.07

 

 

 

 

(1.17

)

 

0.03

 

 

 

Net income (loss)

$

0.37

 

 

$

0.46

 

 

 

 

$

(0.38

)

 

$

0.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

350,987

 

 

350,538

 

 

 

 

350,995

 

 

354,778

 

 

 

Diluted

352,052

 

 

350,829

 

 

 

 

351,869

 

 

355,133

 

 

 

TABLE 2-A

HANESBRANDS INC.

Supplemental Financial Information

Impact of Foreign Currency

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended July 3, 2021

 

 

 

 

 

 

 

As Reported

 

Impact from
Foreign
Currency1

 

Constant
Currency

 

Quarter Ended
June 27, 2020

 

% Change,
As Reported

 

% Change,
Constant
Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,751,311

 

 

$

50,698

 

 

$

1,700,613

 

 

$

1,543,083

 

 

13.5

%

 

10.2

%

Gross profit

681,629

 

 

27,233

 

 

654,396

 

 

513,862

 

 

32.6

 

 

27.3

 

Operating profit

217,394

 

 

8,419

 

 

208,975

 

 

202,133

 

 

7.5

 

 

3.4

 

Diluted earnings per share from continuing operations

$

0.42

 

 

$

0.02

 

 

$

0.40

 

 

$

0.39

 

 

7.7

%

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,751,311

 

 

$

50,698

 

 

$

1,700,613

 

 

$

1,543,083

 

 

13.5

%

 

10.2

%

Gross profit

683,529

 

 

27,233

 

 

656,296

 

 

532,280

 

 

28.4

 

 

23.3

 

Operating profit

236,058

 

 

8,419

 

 

227,639

 

 

234,412

 

 

0.7

 

 

(2.9

)

Diluted earnings per share from continuing operations

$

0.47

 

 

$

0.02

 

 

$

0.45

 

 

$

0.46

 

 

2.2

%

 

(2.2

)%

 

Six Months Ended July 3, 2021

 

 

 

 

 

 

 

As Reported

 

Impact from
Foreign
Currency1

 

Constant
Currency

 

Six Months
Ended
June 27, 2020

 

% Change,
As Reported

 

% Change,
Constant
Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

3,259,340

 

 

$

93,771

 

 

$

3,165,569

 

 

$

2,746,153

 

 

18.7

%

 

15.3

%

Gross profit

1,284,310

 

 

51,415

 

 

1,232,895

 

 

932,030

 

 

37.8

 

 

32.3

 

Operating profit

407,516

 

 

15,952

 

 

391,564

 

 

250,086

 

 

63.0

 

 

56.6

 

Diluted earnings per share from continuing operations

$

0.79

 

 

$

0.04

 

 

$

0.75

 

 

$

0.40

 

 

97.5

%

 

87.5

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

3,259,340

 

 

$

93,771

 

 

$

3,165,569

 

 

$

2,746,153

 

 

18.7

%

 

15.3

%

Gross profit

1,289,017

 

 

51,415

 

 

1,237,602

 

 

972,259

 

 

32.6

 

 

27.3

 

Operating profit

445,573

 

 

15,952

 

 

429,621

 

 

306,689

 

 

45.3

 

 

40.1

 

Diluted earnings per share from continuing operations

$

0.86

 

 

$

0.04

 

 

$

0.82

 

 

$

0.53

 

 

62.3

%

 

54.7

%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results.

2

 

Results for the quarters and six months ended July 3, 2021 and June 27, 2020 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Tables 6-A through 6-E.

TABLE 2-B

HANESBRANDS INC.

Supplemental Financial Information

Impact of Foreign Currency

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended July 3, 2021

 

 

 

 

 

 

 

As Reported

 

Impact from
Foreign
Currency1

 

Constant
Currency

 

Quarter Ended
June 29, 2019

 

% Change,
As Reported

 

% Change,
Constant
Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,751,311

 

 

$

26,303

 

 

$

1,725,008

 

 

$

1,636,709

 

 

7.0

%

 

5.4

%

Gross profit

681,629

 

 

14,457

 

 

667,172

 

 

604,182

 

 

12.8

 

 

10.4

 

Operating profit

217,394

 

 

4,152

 

 

213,242

 

 

219,893

 

 

(1.1

)

 

(3.0

)

Diluted earnings per share from continuing operations

$

0.42

 

 

$

0.01

 

 

$

0.41

 

 

$

0.41

 

 

2.4

%

 

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,751,311

 

 

$

26,303

 

 

$

1,725,008

 

 

$

1,517,999

 

 

15.4

%

 

13.6

%

Gross profit

683,529

 

 

14,457

 

 

669,072

 

 

581,442

 

 

17.6

 

 

15.1

 

Operating profit

236,058

 

 

4,152

 

 

231,906

 

 

206,865

 

 

14.1

 

 

12.1

 

Diluted earnings per share from continuing operations

$

0.47

 

 

$

0.01

 

 

$

0.46

 

 

$

0.38

 

 

23.7

%

 

21.1

%

 

Six Months Ended July 3, 2021

 

 

 

 

 

 

 

As Reported

 

Impact from
Foreign
Currency1

 

Constant
Currency

 

Six Months
Ended
June 29, 2019

 

% Change,
As Reported

 

% Change,
Constant
Currency

As reported under GAAP:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

3,259,340

 

 

$

48,833

 

 

$

3,210,507

 

 

$

3,086,396

 

 

5.6

%

 

4.0

%

Gross profit

1,284,310

 

 

27,290

 

 

1,257,020

 

 

1,149,104

 

 

11.8

 

 

9.4

 

Operating profit

407,516

 

 

8,587

 

 

398,929

 

 

359,501

 

 

13.4

 

 

11.0

 

Diluted earnings per share from continuing operations

$

0.79

 

 

$

0.02

 

 

$

0.76

 

 

$

0.62

 

 

27.4

%

 

22.6

%

 

 

 

 

 

 

 

 

 

 

 

 

As adjusted:2

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

3,259,340

 

 

$

48,833

 

 

$

3,210,507

 

 

$

2,873,582

 

 

13.4

%

 

11.7

%

Gross profit

1,289,017

 

 

27,290

 

 

1,261,727

 

 

1,113,949

 

 

15.7

 

 

13.3

 

Operating profit

445,573

 

 

8,587

 

 

436,986

 

 

346,726

 

 

28.5

 

 

26.0

 

Diluted earnings per share from continuing operations

$

0.86

 

 

$

0.02

 

 

$

0.84

 

 

$

0.59

 

 

45.8

%

 

42.4

%

1

Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year financial results. 

2

Results for the quarters and six months ended July 3, 2021 and June 29, 2019 reflect adjustments for restructuring and other action-related charges. Results for the quarter and six months ended June 29, 2019 also reflect adjustments for the exited C9 Champion mass program and DKNY intimate apparel license. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Tables 6-A through 6-E.

 

TABLE 3-A

HANESBRANDS INC.

Supplemental Financial Information

By Business Segment

(in thousands)

(Unaudited)

 

Quarters Ended

Six Months Ended

 

July 3,
2021

 

June 27,
2020

 

% Change

 

July 3,
2021

 

June 27,
2020

 

% Change

Segment net sales:

 

 

 

 

 

 

 

 

 

 

 

Innerwear1

$

780,650

 

 

$

1,094,814

 

 

(28.7

)%

 

$

1,351,085

 

 

$

1,517,216

 

 

(10.9

)%

Activewear

404,189

 

 

168,379

 

 

140.0

 

 

768,192

 

 

456,379

 

 

68.3

 

International

478,923

 

 

251,285

 

 

90.6

 

 

985,184

 

 

679,515

 

 

45.0

 

Other

87,549

 

 

28,605

 

 

206.1

 

 

154,879

 

 

93,043

 

 

66.5

 

Total net sales

$

1,751,311

 

 

$

1,543,083

 

 

13.5

%

 

$

3,259,340

 

 

$

2,746,153

 

 

18.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

Innerwear1

$

186,169

 

 

$

304,524

 

 

(38.9

)%

 

$

313,586

 

 

$

386,075

 

 

(18.8

)%

Activewear

41,047

 

 

(5,751

)

 

NM

 

 

101,641

 

 

2,357

 

 

4,212.3

 

International

61,900

 

 

5,162

 

 

1,099.1

 

 

149,080

 

 

55,907

 

 

166.7

 

Other

9,220

 

 

(11,929

)

 

NM

 

 

11,106

 

 

(15,322

)

 

NM

 

General corporate expenses/other

(62,278

)

 

(57,594

)

 

8.1

 

 

(129,840

)

 

(122,328

)

 

6.1

 

Total operating profit before restructuring and other action-related charges

236,058

 

 

234,412

 

 

0.7

 

 

445,573

 

 

306,689

 

 

45.3

 

Restructuring and other action-related charges

(18,664

)

 

(32,279

)

 

(42.2

)

 

(38,057

)

 

(56,603

)

 

(32.8

)

Total operating profit

$

217,394

 

 

$

202,133

 

 

7.5

%

 

$

407,516

 

 

$

250,086

 

 

63.0

%

1

The Innerwear segment includes $614 million of net sales of personal protective equipment in the second quarter and six months of 2020.

 

Quarters Ended

 

 

 

Six Months Ended

 

 

 

July 3,
2021

 

June 27,
2020

 

Basis
Points Change

 

July 3,
2021

 

June 27,
2020

 

Basis
Points Change

Segment operating margin:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

23.8

%

 

27.8

%

 

(397

)

 

23.2

%

 

25.4

%

 

(220

)

Activewear

10.2

 

 

(3.4

)

 

1,357

 

 

13.2

 

 

0.5

 

 

1,270

 

International

12.9

 

 

2.1

 

 

1,087

 

 

15.1

 

 

8.2

 

 

690

 

Other

10.5

 

 

(41.7

)

 

5,223

 

 

7.2

 

 

(16.5

)

 

2,370

 

General corporate expenses/other

(3.6

)

 

(3.7

)

 

18

 

 

(4.0

)

 

(4.5

)

 

47

 

Total operating margin before restructuring and other action-related charges

13.5

 

 

15.2

 

 

(171

)

 

13.7

 

 

11.2

 

 

250

 

Restructuring and other action-related charges

(1.1

)

 

(2.1

)

 

103

 

 

(1.2

)

 

(2.1

)

 

89

 

Total operating margin

12.4

%

 

13.1

%

 

(69

)

 

12.5

%

 

9.1

%

 

340

 

TABLE 3-B

HANESBRANDS INC.

Supplemental Financial Information

By Business Segment

(in thousands)

(Unaudited)

 
 

 

Quarters Ended

 

 

 

Six Months Ended

 

 

 

July 3,
2021

 

June 29, 2019
Rebased1

 

% Change

 

July 3,
2021

 

June 29, 2019
Rebased1

 

% Change

Segment net sales:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

$

780,650

 

 

$

657,477

 

 

18.7

%

 

$

1,351,085

 

 

$

1,123,891

 

 

20.2

%

Activewear

404,189

 

 

350,694

 

 

15.3

 

 

768,192

 

 

671,461

 

 

14.4

 

International

478,923

 

 

430,819

 

 

11.2

 

 

985,184

 

 

921,648

 

 

6.9

 

Other

87,549

 

 

79,009

 

 

10.8

 

 

154,879

 

 

156,582

 

 

(1.1

)

Total net sales

$

1,751,311

 

 

$

1,517,999

 

 

15.4

%

 

$

3,259,340

 

 

$

2,873,582

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

$

186,169

 

 

$

146,997

 

 

26.6

%

 

$

313,586

 

 

$

250,123

 

 

25.4

%

Activewear

41,047

 

 

45,855

 

 

(10.5

)

 

101,641

 

 

70,025

 

 

45.1

 

International

61,900

 

 

66,490

 

 

(6.9

)

 

149,080

 

 

151,266

 

 

(1.4

)

Other

9,220

 

 

7,994

 

 

15.3

 

 

11,106

 

 

10,429

 

 

6.5

 

General corporate expenses/other

(62,278

)

 

(60,471

)

 

3.0

 

 

(129,840

)

 

(135,117

)

 

(3.9

)

Total operating profit before restructuring and other action-related charges

236,058

 

 

206,865

 

 

14.1

 

 

445,573

 

 

346,726

 

 

28.5

 

Restructuring and other action-related charges

(18,664

)

 

(12,429

)

 

50.2

 

 

(38,057

)

 

(33,605

)

 

13.2

 

Total operating profit

$

217,394

 

 

$

194,436

 

 

11.8

%

 

$

407,516

 

 

$

313,121

 

 

30.1

%

 

Quarters Ended

 

 

 

Six Months Ended

 

 

 

July 3,
2021

 

June 29, 2019
Rebased1

 

Basis
Points Change

 

July 3,
2021

 

June 29, 2019
Rebased1

 

Basis Points
Change

Segment operating margin:

 

 

 

 

 

 

 

 

 

 

 

Innerwear

23.8

%

 

22.4

%

 

149

 

 

23.2

%

 

22.3

%

 

94

 

Activewear

10.2

 

 

13.1

 

 

(292

)

 

13.2

 

 

10.4

 

 

277

 

International

12.9

 

 

15.4

 

 

(251

)

 

15.1

 

 

16.4

 

 

(131

)

Other

10.5

 

 

10.1

 

 

41

 

 

7.2

 

 

6.7

 

 

54

 

General corporate expenses/other

(3.6

)

 

(4.0

)

 

43

 

 

(4.0

)

 

(4.7

)

 

72

 

Total operating margin before restructuring and other action-related charges

13.5

 

 

13.6

 

 

(15

)

 

13.7

 

 

12.1

 

 

160

 

Restructuring and other action-related charges

(1.1

)

 

(0.8

)

 

(25

)

 

(1.2

)

 

(1.2

)

 

 

Total operating margin

12.4

%

 

12.8

%

 

(40

)

 

12.5

%

 

10.9

%

 

160

 

1

Results for the quarter and six months ended June 29, 2019 reflect adjustments for the exited C9 Champion mass program and DKNY intimate apparel license. See “Reconciliation of Select GAAP Measures to Non-GAAP Measures” in Tables 6-A through 6-E.

TABLE 4

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

 

July 3,
2021

 

January 2,
2021

 

June 27,
2020

Assets

 

 

 

 

 

Cash and cash equivalents

$

667,298

 

 

$

900,615

 

 

$

556,099

 

Trade accounts receivable, net

960,993

 

 

768,221

 

 

1,139,130

 

Inventories

1,530,622

 

 

1,367,758

 

 

1,774,139

 

Other current assets

159,715

 

 

158,700

 

 

171,435

 

Current assets of discontinued operations

301,986

 

 

234,086

 

 

401,347

 

Total current assets

3,620,614

 

 

3,429,380

 

 

4,042,150

 

Property, net

446,356

 

 

477,821

 

 

496,933

 

Right-of-use assets

398,526

 

 

432,631

 

 

438,683

 

Trademarks and other identifiable intangibles, net

1,258,783

 

 

1,293,847

 

 

1,196,359

 

Goodwill

1,148,021

 

 

1,158,938

 

 

1,144,739

 

Deferred tax assets

351,309

 

 

367,976

 

 

193,100

 

Other noncurrent assets

54,380

 

 

64,773

 

 

118,296

 

Noncurrent assets of discontinued operations

 

 

494,501

 

 

493,045

 

Total assets

$

7,277,989

 

 

$

7,719,867

 

 

$

8,123,305

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accounts payable

$

1,171,645

 

 

$

891,868

 

 

$

1,101,438

 

Accrued liabilities

628,007

 

 

609,864

 

 

452,763

 

Lease liabilities

129,053

 

 

136,510

 

 

147,406

 

Notes payable

 

 

 

 

13

 

Current portion of long-term debt

37,500

 

 

263,936

 

 

 

Current liabilities of discontinued operations

289,751

 

 

222,183

 

 

310,972

 

Total current liabilities

2,255,956

 

 

2,124,361

 

 

2,012,592

 

Long-term debt

3,647,482

 

 

3,739,434

 

 

3,985,631

 

Lease liabilities - noncurrent

299,380

 

 

331,577

 

 

330,599

 

Pension and postretirement benefits

327,597

 

 

381,457

 

 

328,647

 

Other noncurrent liabilities

185,384

 

 

216,091

 

 

270,152

 

Noncurrent liabilities of discontinued operations

 

 

112,989

 

 

116,364

 

Total liabilities

6,715,799

 

 

6,905,909

 

 

7,043,985

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock

 

 

 

 

 

Common stock

3,491

 

 

3,488

 

 

3,481

 

Additional paid-in capital

310,148

 

 

307,883

 

 

302,522

 

Retained earnings

829,479

 

 

1,069,546

 

 

1,404,326

 

Accumulated other comprehensive loss

(580,928

)

 

(566,959

)

 

(631,009

)

Total stockholders’ equity

562,190

 

 

813,958

 

 

1,079,320

 

Total liabilities and stockholders’ equity

$

7,277,989

 

 

$

7,719,867

 

 

$

8,123,305

 

TABLE 5

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows1

(in thousands)

(Unaudited)

 

 

Quarters Ended

 

Six Months Ended

 

July 3,
2021

 

June 27,
2020

 

July 3,
2021

 

June 27,
2020

Operating Activities:

 

 

 

 

 

 

 

Net income (loss)

$

128,676

 

 

$

161,181

 

 

 

$

(134,586

)

 

$

153,307

 

Adjustments to reconcile net income (loss) to net cash from operating activities:

 

 

 

 

 

 

 

Depreciation

19,423

 

 

22,618

 

 

 

43,565

 

 

45,399

 

Amortization of acquisition intangibles

4,799

 

 

6,086

 

 

 

10,978

 

 

12,199

 

Other amortization

2,794

 

 

2,630

 

 

 

5,814

 

 

5,107

 

Impairment of intangible assets and goodwill

 

 

20,319

 

 

 

163,047

 

 

20,319

 

Loss on classification of assets held for sale

9,828

 

 

 

 

 

236,180

 

 

 

Amortization of debt issuance costs

3,089

 

 

2,996

 

 

 

7,669

 

 

5,119

 

Other

(8,389

)

 

21,505

 

 

 

(14,224

)

 

16,247

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

(136,151

)

 

(465,828

)

 

 

(200,106

)

 

(392,134

)

Inventories

(52,368

)

 

25,376

 

 

 

(175,149

)

 

(61,409

)

Other assets

(5,155

)

 

(58,360

)

 

 

4,451

 

 

(31,570

)

Accounts payable

191,121

 

 

223,943

 

 

 

300,318

 

 

210,338

 

Accrued pension and postretirement benefits

(419

)

 

2,163

 

 

 

(39,176

)

 

(19,318

)

Accrued liabilities and other

38,062

 

 

100,794

 

 

 

3,475

 

 

18,603

 

Net cash from operating activities

195,310

 

 

65,423

 

 

 

212,256

 

 

(17,793

)

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

Capital expenditures

(7,527

)

 

(20,753

)

 

 

(25,331

)

 

(46,512

)

Proceeds from sales of assets

49

 

 

 

 

 

2,455

 

 

66

 

Other

5,143

 

 

4,607

 

 

 

6,937

 

 

5,823

 

Net cash from investing activities

(2,335

)

 

(16,146

)

 

 

(15,939

)

 

(40,623

)

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

Repayments on Term Loan Facilities

(6,250

)

 

 

 

 

(306,250

)

 

 

Borrowings on Accounts Receivable Securitization Facility

 

 

 

 

 

 

 

227,061

 

Repayments on Accounts Receivable Securitization Facility

 

 

(152,152

)

 

 

 

 

(227,061

)

Borrowings on Revolving Loan Facilities

 

 

 

 

 

 

 

1,638,000

 

Repayments on Revolving Loan Facilities

 

 

(950,000

)

 

 

 

 

(1,638,000

)

Borrowings on Senior Notes

 

 

700,000

 

 

 

 

 

700,000

 

Borrowings on International Debt

 

 

 

 

 

 

 

31,222

 

Borrowings on notes payable

21,532

 

 

54,357

 

 

 

42,638

 

 

116,669

 

Repayments on notes payable

(22,790

)

 

(48,021

)

 

 

(43,066

)

 

(112,373

)

Share repurchases

 

 

 

 

 

 

 

(200,269

)

Cash dividends paid

(52,368

)

 

(52,213

)

 

 

(104,719

)

 

(105,896

)

Other

378

 

 

(14,167

)

 

 

(2,524

)

 

(14,035

)

Net cash from financing activities

(59,498

)

 

(462,196

)

 

 

(413,921

)

 

415,318

 

Effect of changes in foreign exchange rates on cash

882

 

 

12,392

 

 

 

(16,780

)

 

(2,669

)

Change in cash, cash equivalents and restricted cash

134,359

 

 

(400,527

)

 

 

(234,384

)

 

354,233

 

Cash, cash equivalents and restricted cash at beginning of period

541,860

 

 

1,084,683

 

 

 

910,603

 

 

329,923

 

Cash, cash equivalents and restricted cash at end of period

676,219

 

 

684,156

 

 

 

676,219

 

 

684,156

 

Less restricted cash at end of period

 

 

1,042

 

 

 

 

 

1,042

 

Cash and cash equivalents at end of period

$

676,219

 

 

$

683,114

 

 

 

$

676,219

 

 

$

683,114

 

 

 

 

 

 

 

 

 

Balances included in the Condensed Consolidated Balance Sheets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

667,298

 

 

$

556,099

 

 

 

$

667,298

 

 

$

556,099

 

Cash and cash equivalents included in current assets of discontinued operations

8,921

 

 

127,015

 

 

 

8,921

 

 

127,015

 

Cash and cash equivalents at end of period

$

676,219

 

 

$

683,114

 

 

 

$

676,219

 

 

$

683,114

 

1

The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

TABLE 6-A

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended July 3, 2021

 

Gross Profit

 

Selling, General
and
Administrative
Expenses

 

Operating
Profit

 

Income From
Continuing
Operations
Before
Income Tax
Expense

 

Income Tax
Expense

 

Income From
Continuing
Operations

 

Diluted
Earnings Per
Share From
Continuing
Operations1

As reported

$

681,629

 

 

$

(464,235

)

 

$

217,394

 

 

$

173,099

 

 

$

(25,236

)

 

$

147,863

 

 

$

0.42

 

As a percentage of net sales

38.9

%

 

26.5

%

 

12.4

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Potential Plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional services

 

 

13,804

 

 

13,804

 

 

13,804

 

 

 

 

13,804

 

 

0.04

 

Other

1,900

 

 

2,960

 

 

4,860

 

 

4,860

 

 

 

 

4,860

 

 

0.01

 

Tax effect on actions

 

 

 

 

 

 

 

 

(1,903

)

 

(1,903

)

 

(0.01

)

Total restructuring and other action-related charges

1,900

 

 

16,764

 

 

18,664

 

 

18,664

 

 

(1,903

)

 

16,761

 

 

0.05

 

As adjusted

$

683,529

 

 

$

(447,471

)

 

$

236,058

 

 

$

191,763

 

 

$

(27,139

)

 

$

164,624

 

 

$

0.47

 

As a percentage of net sales

39.0

%

 

25.6

%

 

13.5

%

 

 

 

 

 

 

 

 

 

Six Months Ended July 3, 2021

 

Gross Profit

 

Selling, General
and
Administrative
Expenses

 

Operating
Profit

 

Income
From
Continuing
Operations
Before
Income Tax
Expense

 

Income Tax
Expense

 

Income
From
Continuing
Operations

 

Diluted
Earnings Per
Share From
Continuing
Operations1

As reported

$

1,284,310

 

$

(876,794

)

 

$

407,516

 

 

$

316,200

 

 

$

(39,933

)

 

$

276,267

 

 

$

0.79

 

As a percentage of net sales

39.4

%

 

26.9

%

 

12.5

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Potential Plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional services

 

 

25,510

 

 

25,510

 

 

25,510

 

 

 

 

25,510

 

 

0.07

 

Impairment of intangible assets

 

 

7,302

 

 

7,302

 

 

7,302

 

 

 

 

7,302

 

 

0.02

 

Other

4,707

 

 

538

 

 

5,245

 

 

5,245

 

 

 

 

5,245

 

 

0.01

 

Discrete tax benefit

 

 

 

 

 

 

 

 

(7,295

)

 

(7,295

)

 

(0.02

)

Tax effect on actions

 

 

 

 

 

 

 

 

(5,910

)

 

(5,910

)

 

(0.02

)

Total restructuring and other action-related charges

4,707

 

 

33,350

 

 

38,057

 

 

38,057

 

 

(13,205

)

 

24,852

 

 

0.07

 

As adjusted

$

1,289,017

 

 

$

(843,444

)

 

$

445,573

 

 

$

354,257

 

 

$

(53,138

)

 

$

301,119

 

 

$

0.86

 

As a percentage of net sales

39.5

%

 

25.9

%

 

13.7

%

 

 

 

 

 

 

 

 

 

1

Amounts may not be additive due to rounding.

Including the favorable foreign currency impact of $12 million, global Champion sales excluding C9 Champion increased approximately 122% in the second quarter of 2021 compared to the second quarter of 2020. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 116% in the second quarter of 2021 compared to the second quarter of 2020.

Including the favorable foreign currency impact of $10 million, global Champion sales excluding C9 Champion increased approximately 21% in the second quarter of 2021 compared to the second quarter of 2019. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 18% in the second quarter of 2021 compared to the second quarter of 2019.

TABLE 6-B

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended June 27, 2020

 

Gross Profit

 

Selling, General
and
Administrative
Expenses

 

Operating
Profit

 

Income
From
Continuing
Operations
Before
Income Tax
Expense

 

Income Tax
Expense

 

Income
From
Continuing
Operations

 

Diluted
Earnings Per
Share From
Continuing
Operations1

As reported

$

513,862

 

 

$

(311,729

)

 

$

202,133

 

 

$

156,405

 

 

$

(19,837

)

 

$

136,568

 

 

$

0.39

 

As a percentage of net sales

33.3

%

 

20.2

%

 

13.1

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

2,637

 

 

 

 

2,637

 

 

2,637

 

 

 

 

2,637

 

 

0.01

 

Program exit costs

1,285

 

 

 

 

1,285

 

 

1,285

 

 

 

 

1,285

 

 

0.00

 

Other

(373

)

 

4,443

 

 

4,070

 

 

4,070

 

 

 

 

4,070

 

 

0.01

 

COVID-19 related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Bad debt

 

 

9,418

 

 

9,418

 

 

9,418

 

 

 

 

9,418

 

 

0.03

 

Inventory

14,869

 

 

 

 

14,869

 

 

14,869

 

 

 

 

14,869

 

 

0.04

 

Tax effect on actions

 

 

 

 

 

 

 

 

(6,695

)

 

(6,695

)

 

(0.02

)

Total restructuring and other action-related charges

18,418

 

 

13,861

 

 

32,279

 

 

32,279

 

 

(6,695

)

 

25,584

 

 

0.07

 

As adjusted

$

532,280

 

 

$

(297,868

)

 

$

234,412

 

 

$

188,684

 

 

$

(26,532

)

 

$

162,152

 

 

$

0.46

 

As a percentage of net sales

34.5

%

 

19.3

%

 

15.2

%

 

 

 

 

 

 

 

 

 

Six Months Ended June 27, 2020

 

Gross Profit

 

Selling, General
and
Administrative
Expenses

 

Operating
Profit

 

Income
From
Continuing
Operations
Before
Income Tax
Expense

 

Income Tax
Expense

 

Income
From
Continuing
Operations

 

Diluted
Earnings Per
Share From
Continuing
Operations1

As reported

$

932,030

 

 

 

$

(681,944

)

 

$

250,086

 

 

$

162,230

 

 

$

(20,544

)

 

$

141,686

 

 

$

0.40

 

As a percentage of net sales

33.9

 

%

 

24.8

%

 

9.1

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

16,702

 

 

 

 

 

16,702

 

 

16,702

 

 

 

 

16,702

 

 

0.05

 

Program exit costs

9,031

 

 

 

467

 

 

9,498

 

 

9,498

 

 

 

 

9,498

 

 

0.03

 

Other

(373

)

 

 

6,489

 

 

6,116

 

 

6,116

 

 

 

 

6,116

 

 

0.02

 

COVID-19 related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Bad debt

 

 

 

9,418

 

 

9,418

 

 

9,418

 

 

 

 

9,418

 

 

0.03

 

Inventory

14,869

 

 

 

 

 

14,869

 

 

14,869

 

 

 

 

14,869

 

 

0.04

 

Tax effect on actions

 

 

 

 

 

 

 

 

 

(10,221

)

 

(10,221

)

 

(0.03

)

Total restructuring and other action-related charges

40,229

 

 

 

16,374

 

 

56,603

 

 

56,603

 

 

(10,221

)

 

46,382

 

 

0.13

 

As adjusted

$

972,259

 

 

 

$

(665,570

)

 

$

306,689

 

 

$

218,833

 

 

$

(30,765

)

 

$

188,068

 

 

$

0.53

 

As a percentage of net sales

35.4

 

%

 

24.2

%

 

11.2

%

 

 

 

 

 

 

 

 

1

Amounts may not be additive due to rounding.

TABLE 6-C

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended June 29, 2019

 

Net Sales

 

Gross Profit

 

Selling, General
and
Administrative
Expenses

 

Operating
Profit

Income
From
Continuing
Operations
Before
Income Tax
Expense

 

Income Tax
Expense

 

Income
From
Continuing
Operations

 

Diluted
Earnings
Per Share
From
Continuing
Operations1

As reported

$

1,636,709

 

 

$

604,182

 

 

$

(384,289

)

 

$

219,893

 

$

165,645

 

 

$

(15,595

)

 

 

$

150,050

 

 

$

0.41

 

Less exited programs2

(118,710

)

 

(35,169

)

 

9,712

 

 

(25,457

)

(25,457

)

 

3,590

 

 

 

(21,867

)

 

(0.06

)

As rebased

1,517,999

 

 

569,013

 

 

(374,577

)

 

194,436

 

140,188

 

 

(12,005

)

 

 

128,183

 

 

0.35

 

As a percentage of net sales

 

 

37.5

%

 

 

24.7

%

 

 

12.8

%

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

 

 

12,429

 

 

 

 

12,429

 

12,429

 

 

 

 

 

12,429

 

 

0.03

 

Tax effect on actions

 

 

 

 

 

 

 

 

 

(1,753

)

 

 

(1,753

)

 

0.00

 

Total restructuring and other action-related charges

 

 

12,429

 

 

 

 

12,429

 

12,429

 

 

(1,753

)

 

 

10,676

 

 

0.03

 

As adjusted

$

1,517,999

 

 

$

581,442

 

 

$

(374,577

)

 

$

206,865

 

$

152,617

 

 

$

(13,758

)

 

 

$

138,859

 

 

$

0.38

 

As a percentage of net sales

 

 

 

38.3

%

 

 

24.7

%

 

13.6

%

 

 

 

 

 

 

 

 

 

Six Months Ended June 29, 2019

 

Net Sales

 

Gross Profit

 

Selling, General
and
Administrative
Expenses

 

Operating
Profit

 

Income
From
Continuing
Operations
Before
Income Tax
Expense

 

Income Tax
Expense

 

Income
From
Continuing
Operations

 

Diluted
Earnings
Per Share
From Continuing
Operations1

As reported

$

3,086,396

 

 

 

$

1,149,104

 

$

(789,603

)

 

$

359,501

 

$

250,284

 

 

$

(24,579

)

 

$

225,705

 

 

$

0.62

 

Less exited programs2

(212,814

)

 

 

(65,057

)

 

18,677

 

(46,380

)

 

(46,380

)

 

6,540

 

 

(39,840

)

 

(0.11

)

As rebased

2,873,582

 

 

 

1,084,047

 

(770,926

)

 

313,121

 

203,904

 

 

(18,039

)

 

185,865

 

 

0.51

 

As a percentage of net sales

 

 

37.7

%

 

26.8

%

 

10.9

%

 

 

 

 

 

 

 

 

Restructuring and other action-related charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply chain actions

 

 

 

29,902

 

 

29,902

 

29,902

 

 

 

 

29,902

 

 

0.08

 

Other restructuring costs

 

 

 

 

3,703

 

3,703

 

3,703

 

 

 

 

3,703

 

 

0.01

 

Tax effect on actions

 

 

 

 

 

 

 

 

 

(4,738

)

 

(4,738

)

 

(0.01

)

Total restructuring and other action-related charges

 

 

 

29,902

 

3,703

 

33,605

 

33,605

 

 

(4,738

)

 

28,867

 

 

0.08

 

As adjusted

$

2,873,582

 

 

 

$

1,113,949

 

$

(767,223

)

 

$

346,726

 

$

237,509

 

 

$

(22,777

)

 

$

214,732

 

 

$

0.59

 

As a percentage of net sales

 

 

38.8

%

 

26.7

%

 

12.1

%

 

 

 

 

 

 

 

 

 

1

Amounts may not be additive due to rounding.

2

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

TABLE 6-D

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended June 29, 2019

 

As Reported

 

Less:Exited
Programs1

 

Adjusted for
Exited
Programs

 

Less:
Restructuring
and other
action-related
charges

 

Rebased

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

678,604

 

 

$

21,127

 

 

$

657,477

 

 

$

 

 

$

657,477

 

Activewear

448,277

 

 

97,583

 

 

350,694

 

 

 

 

350,694

 

International

430,819

 

 

 

 

430,819

 

 

 

 

430,819

 

Other

79,009

 

 

 

 

79,009

 

 

 

 

79,009

 

Total net sales

$

1,636,709

 

 

$

118,710

 

 

$

1,517,999

 

 

$

 

 

$

1,517,999

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

Innerwear

$

149,530

 

 

$

2,533

 

 

$

146,997

 

 

$

 

 

$

146,997

 

Activewear

68,779

 

 

22,924

 

 

45,855

 

 

 

 

45,855

 

International

66,490

 

 

 

 

66,490

 

 

 

 

66,490

 

Other

7,994

 

 

 

 

7,994

 

 

 

 

7,994

 

General corporate expenses/other

(60,471

)

 

 

 

(60,471

)

 

 

 

(60,471

)

Restructuring and other action-related charges

(12,429

)

 

 

 

(12,429

)

 

(12,429

)

 

 

Total operating profit

$

219,893

 

 

$

25,457

 

 

$

194,436

 

 

$

(12,429

)

 

$

206,865

 

 

Six Months Ended June 29, 2019

 

As Reported

 

Less: Exited
Programs1

 

Adjusted for
Exited
Programs

 

Less:
Restructuring
and other
action-related
charges

 

Rebased

Segment net sales:

 

 

 

 

 

 

 

 

 

Innerwear

$

1,154,549

 

 

$

30,658

 

 

$

1,123,891

 

 

$

 

 

$

1,123,891

 

Activewear

853,617

 

 

182,156

 

 

671,461

 

 

 

 

671,461

 

International

921,648

 

 

 

 

921,648

 

 

 

 

921,648

 

Other

156,582

 

 

 

 

156,582

 

 

 

 

156,582

 

Total net sales

$

3,086,396

 

 

$

212,814

 

 

$

2,873,582

 

 

$

 

 

$

2,873,582

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

Innerwear

$

254,156

 

 

$

4,033

 

 

$

250,123

 

 

$

 

 

$

250,123

 

Activewear

112,372

 

 

42,347

 

 

70,025

 

 

 

 

70,025

 

International

151,266

 

 

 

 

151,266

 

 

 

 

151,266

 

Other

10,429

 

 

 

 

10,429

 

 

 

 

10,429

 

General corporate expenses/other

(135,117

)

 

 

 

(135,117

)

 

 

 

(135,117

)

Restructuring and other action-related charges

(33,605

)

 

 

 

(33,605

)

 

(33,605

)

 

 

Total operating profit

$

359,501

 

 

$

46,380

 

 

$

313,121

 

 

$

(33,605

)

 

$

346,726

 

1

Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license.

TABLE 6-E

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

Last Twelve Months

 

July 3,
2021

 

June 27,
2020

EBITDA1:

 

 

 

Income from continuing operations

$

102,294

 

 

$

489,305

 

Interest expense, net

174,036

 

 

159,927

 

Income tax expense (benefit)

(90,551

)

 

66,201

 

Depreciation and amortization

116,442

 

 

113,251

 

Total EBITDA

302,221

 

 

828,684

 

Total restructuring and other action-related charges (excluding tax effect on actions)

715,650

 

 

85,513

 

Stock compensation expense

13,491

 

 

10,692

 

Total EBITDA, as adjusted

$

1,031,362

 

 

$

924,889

 

 

 

 

 

Net debt:

 

 

 

Debt (current and long-term debt)

$

3,684,982

 

 

$

3,985,631

 

Notes payable

 

 

13

 

(Less) Cash and cash equivalents

(667,298

)

 

(556,099

)

Net debt

$

3,017,684

 

 

$

3,429,545

 

 

 

 

 

Net debt/EBITDA, as adjusted

2.9

 

 

3.7

 

1

Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure.

 

Quarters Ended

 

Six Months Ended

 

July 3,
2021

 

June 27,
2020

 

July 3,
2021

 

June 27,
2020

Free cash flow1:

 

 

 

 

 

 

 

Net cash from operating activities

$

195,310

 

 

$

65,423

 

 

$

212,256

 

 

$

(17,793

)

Capital expenditures

(7,527

)

 

(20,753

)

 

(25,331

)

 

(46,512

)

Free cash flow

$

187,783

 

 

$

44,670

 

 

$

186,925

 

 

$

(64,305

)

1

Free cash flow includes the results from continuing and discontinued operations.

TABLE 7

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of GAAP Outlook to Adjusted Outlook

(in thousands, except per share data)

(Unaudited)

 

 

Quarter Ended

 

Quarter Ended

 

Year Ended

 

October 2,
2021

 

January 1,
2022

 

January 1,
2022

Operating profit outlook, as calculated under GAAP

$216,000 to $226,000

 

$172,000 to $192,000

 

$795,000 to $825,000

Restructuring and other action-related charges

$19,000

 

$28,000

 

$85,000

Operating profit outlook, as adjusted

$235,000 to $245,000

 

$200,000 to $220,000

 

$880,000 to $910,000

 

 

 

 

 

 

Diluted earnings per share from continuing operations, as calculated under GAAP1

$0.42 to $0.45

 

$0.29 to $0.34

 

$1.50 to $1.58

Restructuring and other action-related charges

$0.03

 

$0.08

 

$0.18

Diluted earnings per share from continuing operations, as adjusted

$0.45 to $0.48

 

$0.37 to $0.42

 

$1.68 to $1.76

1

The company expects approximately 353 million diluted weighted average shares outstanding for the quarters ended October 2, 2021 and January 1, 2022 and for the year ended January 1, 2022.