Maryland | 001-32891 | 20-3552316 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1000 East Hanes Mill Road Winston-Salem, NC | 27105 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit 99.1 | ||
Exhibit 99.2 |
May 1, 2018 | HANESBRANDS INC. | |||
By: | /s/ Barry A. Hytinen | |||
Barry A. Hytinen | ||||
Chief Financial Officer |
news release |
News Media, contact: | Matt Hall, (336) 519-3386 |
Analysts and Investors, contact: | T.C. Robillard, (336) 519-2115 |
• | Net Sales of $1.47 Billion Increased 7% with Constant-Currency Organic Sales Growth of 1% |
• | GAAP EPS of $0.22 increased 16% and Adjusted EPS of $0.26 decreased 10% |
• | Company Announces Investor Day Meeting to be held May 15, 2018, in Winston-Salem |
Quarter Ended | ||||||||||
March 31, 2018 | April 1, 2017 | % Change | ||||||||
Net sales | $ | 1,471,504 | $ | 1,380,355 | 6.6 | % | ||||
Cost of sales | 892,583 | 840,824 | ||||||||
Gross profit | 578,921 | 539,531 | 7.3 | % | ||||||
As a % of net sales | 39.3 | % | 39.1 | % | ||||||
Selling, general and administrative expenses | 432,863 | 413,102 | ||||||||
As a % of net sales | 29.4 | % | 29.9 | % | ||||||
Operating profit | 146,058 | 126,429 | 15.5 | % | ||||||
As a % of net sales | 9.9 | % | 9.2 | % | ||||||
Other expenses | 5,761 | 6,545 | ||||||||
Interest expense, net | 45,763 | 42,137 | ||||||||
Income from continuing operations before income tax expense | 94,534 | 77,747 | ||||||||
Income tax expense | 15,125 | 4,665 | ||||||||
Income from continuing operations | 79,409 | 73,082 | 8.7 | % | ||||||
Loss from discontinued operations, net of tax | — | (2,465 | ) | |||||||
Net income | $ | 79,409 | $ | 70,617 | 12.5 | % | ||||
Earnings (loss) per share - basic: | ||||||||||
Continuing operations | $ | 0.22 | $ | 0.20 | ||||||
Discontinued operations | — | (0.01 | ) | |||||||
Net income | $ | 0.22 | $ | 0.19 | 15.8 | % | ||||
Earnings (loss) per share - diluted: | ||||||||||
Continuing operations | $ | 0.22 | $ | 0.19 | ||||||
Discontinued operations | — | (0.01 | ) | |||||||
Net income | $ | 0.22 | $ | 0.19 | 15.8 | % | ||||
Weighted average shares outstanding: | ||||||||||
Basic | 361,882 | 373,218 | ||||||||
Diluted | 363,291 | 375,251 |
Quarter Ended | ||||||||||
March 31, 2018 | April 1, 2017 | % Change | ||||||||
Segment net sales: | ||||||||||
Innerwear | $ | 491,078 | $ | 505,190 | (2.8 | )% | ||||
Activewear | 346,125 | 327,343 | 5.7 | |||||||
International | 569,887 | 477,398 | 19.4 | |||||||
Other | 64,414 | 70,424 | (8.5 | ) | ||||||
Total net sales | $ | 1,471,504 | $ | 1,380,355 | 6.6 | % | ||||
Segment operating profit1: | ||||||||||
Innerwear | $ | 101,419 | $ | 116,622 | (13.0 | )% | ||||
Activewear | 38,287 | 43,350 | (11.7 | ) | ||||||
International | 77,061 | 52,662 | 46.3 | |||||||
Other | 2,627 | 2,628 | — | |||||||
General corporate expenses/other | (53,719 | ) | (50,466 | ) | 6.4 | |||||
Acquisition, integration and other action-related charges | (19,617 | ) | (38,367 | ) | (48.9 | ) | ||||
Total operating profit | $ | 146,058 | $ | 126,429 | 15.5 | % |
¹ | In the first quarter of 2018, HanesBrands eliminated the allocation of certain corporate overhead selling, general and administrative expenses related to the legal, human resources, information technology, finance and real estate departments to the segments, in order to reflect the manner in which the business is managed and results are reviewed by the chief executive officer, who is HanesBrands’ chief operating decision maker. Prior year segment operating profit disclosures have been revised to conform to the current year presentation. |
The following table presents a reconciliation of total reported net sales to organic constant currency net sales for the quarter ended March 31, 2018 and a comparison to prior year: |
Quarter Ended March 31, 2018 | ||||||||||||||||||
Reported Net Sales | Acquisitions1 | Impact from Foreign Currency2 | Organic Constant Currency | % Change | ||||||||||||||
Segment net sales: | ||||||||||||||||||
Innerwear | $ | 491,078 | $ | — | $ | — | $ | 491,078 | (2.8 | )% | ||||||||
Activewear | 346,125 | 15,630 | — | 330,495 | 1.0 | |||||||||||||
International | 569,887 | 16,137 | 44,859 | 508,891 | 6.6 | |||||||||||||
Other | 64,414 | — | — | 64,414 | (8.5 | ) | ||||||||||||
Total | $ | 1,471,504 | $ | 31,767 | $ | 44,859 | $ | 1,394,878 | 1.1 | % |
¹ | Net sales derived from businesses acquired within the past twelve months. |
2 | Effect of the change in foreign currency exchange rates year-over-year. Calculated by applying prior period exchange rates to the current year net sales. This calculation excludes entities acquired within the past twelve months. |
March 31, 2018 | December 30, 2017 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 373,662 | $ | 421,566 | |||
Trade accounts receivable, net | 874,684 | 903,318 | |||||
Inventories | 2,044,680 | 1,874,990 | |||||
Other current assets | 106,800 | 186,496 | |||||
Total current assets | 3,399,826 | 3,386,370 | |||||
Property, net | 630,669 | 623,991 | |||||
Trademarks and other identifiable intangibles, net | 1,668,876 | 1,402,857 | |||||
Goodwill | 1,282,504 | 1,167,007 | |||||
Deferred tax assets | 233,279 | 234,932 | |||||
Other noncurrent assets | 112,621 | 79,618 | |||||
Total assets | $ | 7,327,775 | $ | 6,894,775 | |||
Liabilities | |||||||
Accounts payable and accrued liabilities | $ | 1,337,147 | $ | 1,517,283 | |||
Notes payable | 17,830 | 11,873 | |||||
Accounts Receivable Securitization Facility | 157,081 | 125,209 | |||||
Current portion of long-term debt | 165,702 | 124,380 | |||||
Total current liabilities | 1,677,760 | 1,778,745 | |||||
Long-term debt | 4,185,252 | 3,702,054 | |||||
Pension and postretirement benefits | 408,787 | 405,238 | |||||
Other noncurrent liabilities | 350,281 | 322,536 | |||||
Total liabilities | 6,622,080 | 6,208,573 | |||||
Equity | 705,695 | 686,202 | |||||
Total liabilities and equity | $ | 7,327,775 | $ | 6,894,775 |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Operating Activities: | |||||||
Net income | $ | 79,409 | $ | 70,617 | |||
Depreciation and amortization | 31,925 | 28,765 | |||||
Stock compensation expense | 4,746 | 3,528 | |||||
Other noncash items | (452 | ) | 9,632 | ||||
Changes in assets and liabilities, net | (243,771 | ) | (135,340 | ) | |||
Net cash from operating activities | (128,143 | ) | (22,798 | ) | |||
Investing Activities: | |||||||
Purchases/sales of property and equipment, net, and other | (18,298 | ) | (11,446 | ) | |||
Acquisition of business, net of cash acquired | (334,915 | ) | (524 | ) | |||
Disposition of businesses | — | 37,434 | |||||
Net cash from investing activities | (353,213 | ) | 25,464 | ||||
Financing Activities: | |||||||
Cash dividends paid | (54,053 | ) | (55,875 | ) | |||
Share repurchases | — | (299,919 | ) | ||||
Net borrowings on notes payable, debt and other | 513,137 | 360,305 | |||||
Net cash from financing activities | 459,084 | 4,511 | |||||
Effect of changes in foreign currency exchange rates on cash | 1,186 | (3,799 | ) | ||||
Change in cash, cash equivalents and restricted cash | (21,086 | ) | 3,378 | ||||
Cash and cash equivalents at beginning of year | 421,566 | 460,245 | |||||
Cash, cash equivalents and restricted cash at end of period | 400,480 | 463,623 | |||||
Less restricted cash at end of period | 26,818 | — | |||||
Cash and cash equivalents per balance sheet at end of period | $ | 373,662 | $ | 463,623 |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Gross profit, as reported under GAAP | $ | 578,921 | $ | 539,531 | |||
Acquisition, integration and other action-related charges | 10,753 | 15,475 | |||||
Gross profit, as adjusted | $ | 589,674 | $ | 555,006 | |||
As a % of net sales | 40.1 | % | 40.2 | % | |||
Selling, general and administrative expenses, as reported under GAAP | $ | 432,863 | $ | 413,102 | |||
Acquisition, integration and other action-related charges | (8,864 | ) | (22,892 | ) | |||
Selling, general and administrative expenses, as adjusted | $ | 423,999 | $ | 390,210 | |||
As a % of net sales | 28.8 | % | 28.3 | % | |||
Operating profit, as reported under GAAP | $ | 146,058 | $ | 126,429 | |||
Acquisition, integration and other action-related charges included in gross profit | 10,753 | 15,475 | |||||
Acquisition, integration and other action-related charges included in SG&A | 8,864 | 22,892 | |||||
Operating profit, as adjusted | $ | 165,675 | $ | 164,796 | |||
As a % of net sales | 11.3 | % | 11.9 | % | |||
Net income from continuing operations, as reported under GAAP | $ | 79,409 | $ | 73,082 | |||
Acquisition, integration and other action-related charges included in gross profit | 10,753 | 15,475 | |||||
Acquisition, integration and other action-related charges included in SG&A | 8,864 | 22,892 | |||||
Debt refinance charges included in other expenses | (50 | ) | — | ||||
Tax effect on actions | (3,131 | ) | (2,302 | ) | |||
Net income from continuing operations, as adjusted | $ | 95,845 | $ | 109,147 | |||
Diluted earnings per share from continuing operations, as reported under GAAP | $ | 0.22 | $ | 0.19 | |||
Acquisition and other related charges | 0.05 | 0.10 | |||||
Diluted earnings per share from continuing operations, as adjusted | $ | 0.26 | $ | 0.29 | |||
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Action and other related charges by category: | |||||||
Hanes Europe Innerwear | $ | 8,576 | $ | 19,878 | |||
Hanes Australasia | 6,092 | 12,008 | |||||
Champion Europe | 1,880 | 1,168 | |||||
Bras N Things | 1,245 | — | |||||
Smaller acquisitions and other action-related costs | 1,824 | 5,313 | |||||
Debt refinance charges | (50 | ) | — | ||||
Tax effect on actions | (3,131 | ) | (2,302 | ) | |||
Total action and other related charges | $ | 16,436 | $ | 36,065 |
Last Twelve Months | |||||||
March 31, 2018 | April 1, 2017 | ||||||
EBITDA1: | |||||||
Net income from continuing operations | $ | 70,318 | $ | 529,740 | |||
Interest expense, net | 178,061 | 163,263 | |||||
Income tax expense | 483,739 | 29,016 | |||||
Depreciation and amortization | 125,647 | 109,120 | |||||
Total EBITDA | 857,765 | 831,139 | |||||
Total action and other related charges (excluding tax effect on actions) | 179,104 | 199,508 | |||||
Stock compensation expense | 24,800 | 27,800 | |||||
Total EBITDA, as adjusted | $ | 1,061,669 | $ | 1,058,447 | |||
Net debt: | |||||||
Debt (current and long term debt and Accounts Receivable Securitization Facility) | $ | 4,508,035 | $ | 4,096,525 | |||
Notes payable | 17,830 | 43,418 | |||||
(Less) Cash and cash equivalents | (373,662 | ) | (463,623 | ) | |||
Net debt | $ | 4,152,203 | $ | 3,676,320 | |||
Net debt/EBITDA, as adjusted | 3.9 | 3.5 |
1 | Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. |
Quarter Ended | Year Ended | ||
June 30, 2018 | December 29, 2018 | ||
Operating profit outlook, as calculated under GAAP | $215,000 to $225,000 | $870,000 to $905,000 | |
Acquisition, integration and other action-related charges | $25,000 | $80,000 | |
Operating profit outlook, as adjusted | $240,000 to $250,000 | $950,000 to $985,000 | |
Diluted earnings per share from continuing operations, as calculated under GAAP | $0.38 to $0.40 | $1.54 to $1.62 | |
Acquisition, integration and other action-related charges | $0.06 | $0.18 | |
Diluted earnings per share from continuing operations, as adjusted | $0.44 to $0.46 | $1.72 to $1.80 |
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