(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||
(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Exhibit Number | Description | |||||||
99.1 | ||||||||
99.2 | ||||||||
101 | Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
February 15, 2024 | HANESBRANDS INC. | |||||||||||||
By: | /s/ M. Scott Lewis | |||||||||||||
M. Scott Lewis | ||||||||||||||
Chief Financial Officer and Chief Accounting Officer |
Quarters Ended | Years Ended | ||||||||||||||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | % Change | December 30, 2023 | December 31, 2022 | % Change | ||||||||||||||||||||||||||||||
Net sales | $ | 1,296,827 | $ | 1,473,286 | (12.0) | % | $ | 5,636,523 | $ | 6,233,650 | (9.6) | % | |||||||||||||||||||||||
Cost of sales | 803,158 | 971,309 | 3,740,113 | 4,012,542 | |||||||||||||||||||||||||||||||
Gross profit | 493,669 | 501,977 | (1.7) | % | 1,896,410 | 2,221,108 | (14.6) | % | |||||||||||||||||||||||||||
As a % of net sales | 38.1 | % | 34.1 | % | 33.6 | % | 35.6 | % | |||||||||||||||||||||||||||
Selling, general and administrative expenses | 397,572 | 441,642 | (10.0) | % | 1,607,628 | 1,701,563 | (5.5) | % | |||||||||||||||||||||||||||
As a % of net sales | 30.7 | % | 30.0 | % | 28.5 | % | 27.3 | % | |||||||||||||||||||||||||||
Operating profit | 96,097 | 60,335 | 59.3 | % | 288,782 | 519,545 | (44.4) | % | |||||||||||||||||||||||||||
As a % of net sales | 7.4 | % | 4.1 | % | 5.1 | % | 8.3 | % | |||||||||||||||||||||||||||
Other expenses | 7,375 | 3,646 | 38,520 | 9,734 | |||||||||||||||||||||||||||||||
Interest expense, net | 69,688 | 49,665 | 275,354 | 157,073 | |||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 19,034 | 7,024 | (25,092) | 352,738 | |||||||||||||||||||||||||||||||
Income tax expense (benefit) | (58,907) | 425,132 | (7,366) | 483,907 | |||||||||||||||||||||||||||||||
Income (loss) from continuing operations | 77,941 | (418,108) | (118.6) | % | (17,726) | (131,169) | (86.5) | % | |||||||||||||||||||||||||||
Income from discontinued operations, net of tax | — | — | — | 3,965 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 77,941 | $ | (418,108) | $ | (17,726) | $ | (127,204) | |||||||||||||||||||||||||||
Earnings (loss) per share - basic: | |||||||||||||||||||||||||||||||||||
Continuing operations | $ | 0.22 | $ | (1.19) | $ | (0.05) | $ | (0.37) | |||||||||||||||||||||||||||
Discontinued operations | — | — | — | 0.01 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 0.22 | $ | (1.19) | $ | (0.05) | $ | (0.36) | |||||||||||||||||||||||||||
Earnings (loss) per share - diluted: | |||||||||||||||||||||||||||||||||||
Continuing operations | $ | 0.22 | $ | (1.19) | $ | (0.05) | $ | (0.37) | |||||||||||||||||||||||||||
Discontinued operations | — | — | — | 0.01 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 0.22 | $ | (1.19) | $ | (0.05) | $ | (0.36) | |||||||||||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||||||||||||||
Basic | 350,765 | 349,974 | 350,592 | 349,970 | |||||||||||||||||||||||||||||||
Diluted | 351,566 | 349,974 | 350,592 | 349,970 |
The following tables present a reconciliation of reported results on a constant currency basis for the quarter and year ended December 30, 2023 and a comparison to prior year: | ||
Quarter Ended December 30, 2023 | |||||||||||||||||||||||||||||||||||
As Reported | Impact from Foreign Currency1 | Constant Currency | Quarter Ended December 31, 2022 | % Change, As Reported | % Change, Constant Currency | ||||||||||||||||||||||||||||||
As reported under GAAP: | |||||||||||||||||||||||||||||||||||
Net sales | $ | 1,296,827 | $ | (5,619) | $ | 1,302,446 | $ | 1,473,286 | (12.0) | % | (11.6) | % | |||||||||||||||||||||||
Gross profit | 493,669 | (4,602) | 498,271 | 501,977 | (1.7) | (0.7) | |||||||||||||||||||||||||||||
Operating profit | 96,097 | (3,197) | 99,294 | 60,335 | 59.3 | 64.6 | |||||||||||||||||||||||||||||
Diluted earnings (loss) per share from continuing operations3 | $ | 0.22 | $ | (0.01) | $ | 0.23 | $ | (1.19) | (118.5) | % | (119.3) | % | |||||||||||||||||||||||
As adjusted:2 | |||||||||||||||||||||||||||||||||||
Net sales | $ | 1,296,827 | $ | (5,619) | $ | 1,302,446 | $ | 1,473,286 | (12.0) | % | (11.6) | % | |||||||||||||||||||||||
Gross profit | 495,400 | (4,602) | 500,002 | 504,869 | (1.9) | (1.0) | |||||||||||||||||||||||||||||
Operating profit | 110,748 | (3,197) | 113,945 | 82,560 | 34.1 | 38.0 | |||||||||||||||||||||||||||||
Diluted earnings per share from continuing operations3 | $ | 0.03 | $ | (0.01) | $ | 0.04 | $ | 0.07 | (57.1) | % | (42.9) | % |
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 ended December 30, 2023 and December 31, 2022 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6-A. | ||||
3 | Amounts may not be additive due to rounding. |
Year Ended December 30, 2023 | |||||||||||||||||||||||||||||||||||
As Reported | Impact from Foreign Currency1 | Constant Currency | Year Ended December 31, 2022 | % Change, As Reported | % Change, Constant Currency | ||||||||||||||||||||||||||||||
As reported under GAAP: | |||||||||||||||||||||||||||||||||||
Net sales | $ | 5,636,523 | $ | (58,642) | $ | 5,695,165 | $ | 6,233,650 | (9.6) | % | (8.6) | % | |||||||||||||||||||||||
Gross profit | 1,896,410 | (32,803) | 1,929,213 | 2,221,108 | (14.6) | (13.1) | |||||||||||||||||||||||||||||
Operating profit | 288,782 | (10,814) | 299,596 | 519,545 | (44.4) | (42.3) | |||||||||||||||||||||||||||||
Diluted loss per share from continuing operations3 | $ | (0.05) | $ | (0.02) | $ | (0.03) | $ | (0.37) | (86.5) | % | (91.9) | % | |||||||||||||||||||||||
As adjusted:2 | |||||||||||||||||||||||||||||||||||
Net sales | $ | 5,636,523 | $ | (58,642) | $ | 5,695,165 | $ | 6,233,650 | (9.6) | % | (8.6) | % | |||||||||||||||||||||||
Gross profit | 1,968,550 | (32,803) | 2,001,353 | 2,238,133 | (12.0) | (10.6) | |||||||||||||||||||||||||||||
Operating profit | 404,686 | (10,814) | 415,500 | 579,403 | (30.2) | (28.3) | |||||||||||||||||||||||||||||
Diluted earnings per share from continuing operations 3 | $ | 0.06 | $ | (0.02) | $ | 0.08 | $ | 0.98 | (93.9) | % | (91.8) | % |
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 years ended December 30, 2023 and December 31, 2022 reflect adjustments for restructuring and other action-related charges. See "Reconciliation of Select GAAP Measures to Non-GAAP Measures" in Table 6-A. | ||||
3 | Amounts may not be additive due to rounding. |
The following tables present a reconciliation of reported results on an organic constant currency basis for the quarter and year ended December 30, 2023 and a comparison to prior year: | ||
Quarter Ended December 30, 2023 | Quarter Ended December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As Reported | Impact from Foreign Currency1 | Less U.S. Hosiery Divestiture2 | Organic Constant Currency | As Reported | Less U.S. Hosiery Divestiture2 | Organic | % Change, As Reported | % Change, Organic Constant Currency | |||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 1,296,827 | $ | (5,619) | $ | — | $ | 1,302,446 | $ | 1,473,286 | $ | 19,202 | $ | 1,454,084 | (12.0) | % | (10.4) | % |
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 | The Company sold its U.S. Sheer Hosiery business on September 29, 2023. |
Year Ended December 30, 2023 | Year Ended December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As Reported | Impact from Foreign Currency1 | Less U.S. Hosiery Divestiture2 | Organic Constant Currency | As Reported | Less U.S. Hosiery Divestiture2 | Organic | % Change, As Reported | % Change, Organic Constant Currency | |||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 5,636,523 | $ | (58,642) | $ | 50,358 | $ | 5,644,807 | $ | 6,233,650 | $ | 55,162 | $ | 6,178,488 | (9.6) | % | (8.6) | % |
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 Company sold its U.S. Sheer Hosiery business on September 29, 2023. |
Quarters Ended | Years Ended | ||||||||||||||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | % Change | December 30, 2023 | December 31, 2022 | % Change | ||||||||||||||||||||||||||||||
Segment net sales: | |||||||||||||||||||||||||||||||||||
Innerwear | $ | 533,580 | $ | 540,159 | (1.2) | % | $ | 2,415,032 | $ | 2,429,966 | (0.6) | % | |||||||||||||||||||||||
Activewear | 285,824 | 376,682 | (24.1) | 1,251,913 | 1,555,062 | (19.5) | |||||||||||||||||||||||||||||
International | 436,919 | 477,884 | (8.6) | 1,748,428 | 1,914,268 | (8.7) | |||||||||||||||||||||||||||||
Other | 40,504 | 78,561 | (48.4) | 221,150 | 334,354 | (33.9) | |||||||||||||||||||||||||||||
Total net sales | $ | 1,296,827 | $ | 1,473,286 | (12.0) | % | $ | 5,636,523 | $ | 6,233,650 | (9.6) | % | |||||||||||||||||||||||
Segment operating profit: | |||||||||||||||||||||||||||||||||||
Innerwear | $ | 112,680 | $ | 44,984 | 150.5 | % | $ | 418,226 | $ | 388,586 | 7.6 | % | |||||||||||||||||||||||
Activewear | (11,223) | 28,378 | (139.5) | 20,517 | 153,710 | (86.7) | |||||||||||||||||||||||||||||
International | 70,591 | 67,755 | 4.2 | 210,651 | 283,036 | (25.6) | |||||||||||||||||||||||||||||
Other | (2,423) | 7,518 | (132.2) | (7,902) | 17,019 | (146.4) | |||||||||||||||||||||||||||||
General corporate expenses/other | (58,877) | (66,075) | (10.9) | (236,806) | (262,948) | (9.9) | |||||||||||||||||||||||||||||
Total operating profit before restructuring and other action-related charges | 110,748 | 82,560 | 34.1 | 404,686 | 579,403 | (30.2) | |||||||||||||||||||||||||||||
Restructuring and other action-related charges | (14,651) | (22,225) | (34.1) | (115,904) | (59,858) | 93.6 | |||||||||||||||||||||||||||||
Total operating profit | $ | 96,097 | $ | 60,335 | 59.3 | % | $ | 288,782 | $ | 519,545 | (44.4) | % |
Quarters Ended | Years Ended | ||||||||||||||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | Basis Points Change | December 30, 2023 | December 31, 2022 | Basis Points Change | ||||||||||||||||||||||||||||||
Segment operating margin: | |||||||||||||||||||||||||||||||||||
Innerwear | 21.1 | % | 8.3 | % | 1,279 | 17.3 | % | 16.0 | % | 133 | |||||||||||||||||||||||||
Activewear | (3.9) | 7.5 | (1,146) | 1.6 | 9.9 | (825) | |||||||||||||||||||||||||||||
International | 16.2 | 14.2 | 198 | 12.0 | 14.8 | (274) | |||||||||||||||||||||||||||||
Other | (6.0) | 9.6 | (1,555) | (3.6) | 5.1 | (866) | |||||||||||||||||||||||||||||
General corporate expenses/other | (4.5) | (4.5) | (6) | (4.2) | (4.2) | 2 | |||||||||||||||||||||||||||||
Total operating margin before restructuring and other action-related charges | 8.5 | 5.6 | 294 | 7.2 | 9.3 | (212) | |||||||||||||||||||||||||||||
Restructuring and other action-related charges | (1.1) | (1.5) | 38 | (2.1) | (1.0) | (110) | |||||||||||||||||||||||||||||
Total operating margin | 7.4 | % | 4.1 | % | 331 | 5.1 | % | 8.3 | % | (321) |
December 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 205,501 | $ | 238,413 | |||||||
Trade accounts receivable, net | 557,729 | 721,396 | |||||||||
Inventories | 1,368,018 | 1,979,672 | |||||||||
Other current assets | 144,967 | 178,946 | |||||||||
Current assets held for sale | — | 13,327 | |||||||||
Total current assets | 2,276,215 | 3,131,754 | |||||||||
Property, net | 414,366 | 442,404 | |||||||||
Right-of-use assets | 428,918 | 414,894 | |||||||||
Trademarks and other identifiable intangibles, net | 1,235,704 | 1,255,693 | |||||||||
Goodwill | 1,112,744 | 1,108,907 | |||||||||
Deferred tax assets | 21,954 | 20,162 | |||||||||
Other noncurrent assets | 150,413 | 130,062 | |||||||||
Total assets | $ | 5,640,314 | $ | 6,503,876 | |||||||
Liabilities | |||||||||||
Accounts payable | $ | 736,252 | $ | 917,481 | |||||||
Accrued liabilities | 478,676 | 498,028 | |||||||||
Lease liabilities | 110,640 | 114,794 | |||||||||
Accounts Receivable Securitization Facility | 6,000 | 209,500 | |||||||||
Current portion of long-term debt | 59,000 | 37,500 | |||||||||
Current liabilities held for sale | — | 13,327 | |||||||||
Total current liabilities | 1,390,568 | 1,790,630 | |||||||||
Long-term debt | 3,235,640 | 3,612,077 | |||||||||
Lease liabilities - noncurrent | 354,015 | 326,644 | |||||||||
Pension and postretirement benefits | 104,255 | 116,167 | |||||||||
Other noncurrent liabilities | 136,483 | 260,094 | |||||||||
Total liabilities | 5,220,961 | 6,105,612 | |||||||||
Stockholders’ equity | |||||||||||
Preferred stock | — | — | |||||||||
Common stock | 3,501 | 3,490 | |||||||||
Additional paid-in capital | 353,367 | 334,676 | |||||||||
Retained earnings | 554,796 | 572,106 | |||||||||
Accumulated other comprehensive loss | (492,311) | (512,008) | |||||||||
Total stockholders’ equity | 419,353 | 398,264 | |||||||||
Total liabilities and stockholders’ equity | $ | 5,640,314 | $ | 6,503,876 |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Operating activities: | |||||||||||||||||||||||
Net income (loss) | $ | 77,941 | $ | (418,108) | $ | (17,726) | $ | (127,204) | |||||||||||||||
Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||||||||||||||
Depreciation | 19,022 | 20,154 | 75,268 | 76,294 | |||||||||||||||||||
Amortization of acquisition intangibles | 4,091 | 4,159 | 16,569 | 18,204 | |||||||||||||||||||
Other amortization | 3,344 | 3,648 | 13,200 | 11,769 | |||||||||||||||||||
Loss on extinguishment of debt | — | — | 8,466 | — | |||||||||||||||||||
(Gain) loss on sale of business and classification of assets held for sale | — | 3,023 | 3,641 | (3,162) | |||||||||||||||||||
Amortization of debt issuance costs and debt discount | 2,362 | 1,817 | 8,939 | 7,300 | |||||||||||||||||||
Stock compensation expense | 4,527 | 6,271 | 20,546 | 23,457 | |||||||||||||||||||
Deferred taxes | (85,595) | 387,287 | (84,745) | 388,607 | |||||||||||||||||||
Other | 8,495 | 14,300 | 610 | 7,511 | |||||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||||||
Accounts receivable | 162,080 | 217,148 | 174,249 | 154,145 | |||||||||||||||||||
Inventories | 155,390 | 174,903 | 599,982 | (437,641) | |||||||||||||||||||
Other assets | 103,505 | (36,129) | 82,672 | (107,742) | |||||||||||||||||||
Accounts payable | (69,191) | (219,268) | (194,602) | (241,557) | |||||||||||||||||||
Accrued pension and postretirement benefits | 2,618 | (957) | 6,799 | (2,023) | |||||||||||||||||||
Accrued liabilities and other | (114,184) | (25,368) | (152,119) | (126,760) | |||||||||||||||||||
Net cash from operating activities | 274,405 | 132,880 | 561,749 | (358,802) | |||||||||||||||||||
Investing activities: | |||||||||||||||||||||||
Capital expenditures | (8,266) | (41,167) | (44,056) | (112,122) | |||||||||||||||||||
Purchase of trademarks | — | — | — | (103,000) | |||||||||||||||||||
Proceeds from sales of assets | 159 | (102) | 331 | 157 | |||||||||||||||||||
Other | 1 | 4,177 | 20,242 | (1,463) | |||||||||||||||||||
Net cash from investing activities | (8,106) | (37,092) | (23,483) | (216,428) | |||||||||||||||||||
Financing Activities: | |||||||||||||||||||||||
Borrowings on Term Loan Facilities | — | — | 891,000 | — | |||||||||||||||||||
Repayments on Term Loan Facilities | (14,750) | (6,250) | (44,250) | (25,000) | |||||||||||||||||||
Borrowings on Accounts Receivable Securitization Facility | 541,500 | 536,800 | 2,270,000 | 1,840,389 | |||||||||||||||||||
Repayments on Accounts Receivable Securitization Facility | (736,000) | (538,800) | (2,473,500) | (1,630,889) | |||||||||||||||||||
Borrowings on Revolving Loan Facilities | 306,500 | 454,500 | 1,923,000 | 1,792,000 | |||||||||||||||||||
Repayments on Revolving Loan Facilities | (367,000) | (531,000) | (2,275,500) | (1,439,500) | |||||||||||||||||||
Borrowings on Senior Notes | — | — | 600,000 | — | |||||||||||||||||||
Repayments on Senior Notes | — | — | (1,436,884) | — | |||||||||||||||||||
Borrowings on notes payable | — | — | — | 21,454 | |||||||||||||||||||
Repayments on notes payable | — | — | — | (21,713) | |||||||||||||||||||
Share repurchases | — | — | — | (25,018) | |||||||||||||||||||
Cash dividends paid | — | (52,350) | — | (209,312) | |||||||||||||||||||
Payments to amend and refinance credit facilities | (2,517) | (2,526) | (31,020) | (3,159) | |||||||||||||||||||
Other | (37) | 207 | (2,921) | (3,423) | |||||||||||||||||||
Net cash from financing activities | (272,304) | (139,419) | (580,075) | 295,829 | |||||||||||||||||||
Effect of changes in foreign exchange rates on cash | 20,415 | 28,913 | 8,897 | (42,815) | |||||||||||||||||||
Change in cash and cash equivalents | 14,410 | (14,718) | (32,912) | (322,216) | |||||||||||||||||||
Cash and cash equivalents at beginning of period | 191,091 | 253,131 | 238,413 | 560,629 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 205,501 | $ | 238,413 | $ | 205,501 | $ | 238,413 | |||||||||||||||
1 | The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities in the periods prior to the sale of the European Innerwear business on March 5, 2022. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations. |
The following tables present a reconciliation of results as reported under GAAP to the results as adjusted for the quarter and year ended December 30, 2023 and a comparison to prior year. The Company has chosen to present the following 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 global Champion performance plan, the Full Potential transformation plan and other actions that are deemed to be material stand-alone initiatives apart from the Company’s core operations. While these costs 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. Restructuring and other action-related charges in 2023 and 2022 include the following: | ||
Global Champion performance plan | The global Champion performance plan includes actions and related charges regarding the Company’s accelerated and enhanced strategic initiatives to further streamline the operations and position the brand for long term profitable growth and the evaluation of strategic alternatives for the global Champion business, which includes over $59 million of inventory write-downs related to the execution of its channel, mix and product segmentation strategy including the exit of discontinued programs, which are reflected in gross profit, and approximately $29 million of charges related to professional fees, supply chain segmentation, store closures, severance and other costs of which approximately $8 million are reflected in gross profit and approximately $21 million are reflected in selling, general and administrative expenses. | ||||
Supply chain segmentation | Represents charges related to the supply chain segmentation to restructure and position the Company’s manufacturing network to align with its Full Potential transformation plan demand trends. | ||||
Headcount actions and related severance | Represents charges related to operating model initiatives primarily headcount actions and related severance charges and adjustments as a result of the implementation of the Company’s Full Potential transformation plan. | ||||
Technology | Represents technology charges related to the implementation of the Company’s technology modernization initiative which includes a global enterprise resource planning platform under its Full Potential transformation plan. | ||||
Professional services | Represents professional fees, primarily including consulting and advisory services, related to the implementation of the Company’s Full Potential transformation plan. | ||||
Gain/loss on sale of business and classification of assets held for sale | Represents the gain/loss associated with the sale of the Company’s U.S. Sheer Hosiery business and adjustments to the related valuation allowance prior to the sale, primarily from the changes in carrying value due to changes in working capital. | ||||
Loss on extinguishment of debt | Represents charges related to the redemption of the Company’s 4.625% Senior Notes and 3.5% Senior Notes in the first quarter of 2023. | ||||
Gain on final settlement of cross currency swap contracts | Primarily represents the remaining gain related to cross-currency swap contracts previously designated as cash flow hedges in AOCI which was released into earnings as the Company unwound the cross-currency swap contracts in connection with the redemption of the 3.5% Senior Notes at the time of settlement in the first quarter of 2023. | ||||
Discrete tax benefits | Represents an adjustment to non-cash reserves established at December 31, 2022 related to deferred taxes established for Swiss statutory impairments, which are not indicative of the Company’s core business operations. | ||||
Tax effect on actions | Represents the applicable effective tax rate on the restructuring and other action-related charges based on the jurisdiction of where the charges were incurred. |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Gross profit, as reported under GAAP | $ | 493,669 | $ | 501,977 | $ | 1,896,410 | $ | 2,221,108 | |||||||||||||||
As a % of net sales | 38.1 | % | 34.1 | % | 33.6 | % | 35.6 | % | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Global Champion performance plan | 2,859 | — | 66,964 | — | |||||||||||||||||||
Full Potential transformation plan: | |||||||||||||||||||||||
Supply chain segmentation | (1,284) | 3,395 | 4,151 | 17,982 | |||||||||||||||||||
Headcount actions and related severance | 156 | (516) | 1,025 | (712) | |||||||||||||||||||
Other | — | 13 | — | (245) | |||||||||||||||||||
Gross profit, as adjusted | $ | 495,400 | $ | 504,869 | $ | 1,968,550 | $ | 2,238,133 | |||||||||||||||
As a % of net sales | 38.2 | % | 34.3 | % | 34.9 | % | 35.9 | % |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Selling, general and administrative expenses, as reported under GAAP | $ | 397,572 | $ | 441,642 | $ | 1,607,628 | $ | 1,701,563 | |||||||||||||||
As a % of net sales | 30.7 | % | 30.0 | % | 28.5 | % | 27.3 | % | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Global Champion performance plan | (11,451) | — | (21,081) | — | |||||||||||||||||||
Full Potential transformation plan: | |||||||||||||||||||||||
Technology | (657) | (2,870) | (8,953) | (11,922) | |||||||||||||||||||
Headcount actions and related severance | (573) | (9,849) | (5,080) | (8,933) | |||||||||||||||||||
Professional services | (6) | (2,980) | (3,819) | (23,994) | |||||||||||||||||||
Gain (loss) on sale of business and classification of assets held for sale | — | (3,023) | (3,641) | 3,535 | |||||||||||||||||||
Other | (233) | (611) | (1,190) | (1,519) | |||||||||||||||||||
Selling, general and administrative expenses, as adjusted | $ | 384,652 | $ | 422,309 | $ | 1,563,864 | $ | 1,658,730 | |||||||||||||||
As a % of net sales | 29.7 | % | 28.7 | % | 27.7 | % | 26.6 | % |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Operating profit, as reported under GAAP | $ | 96,097 | $ | 60,335 | $ | 288,782 | $ | 519,545 | |||||||||||||||
As a % of net sales | 7.4 | % | 4.1 | % | 5.1 | % | 8.3 | % | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Global Champion performance plan | 14,310 | — | 88,045 | — | |||||||||||||||||||
Full Potential transformation plan: | |||||||||||||||||||||||
Technology | 657 | 2,870 | 8,953 | 11,922 | |||||||||||||||||||
Headcount actions and related severance | 729 | 9,333 | 6,105 | 8,221 | |||||||||||||||||||
Supply chain segmentation | (1,284) | 3,395 | 4,151 | 17,982 | |||||||||||||||||||
Professional services | 6 | 2,980 | 3,819 | 23,994 | |||||||||||||||||||
(Gain) loss on sale of business and classification of assets held for sale | — | 3,023 | 3,641 | (3,535) | |||||||||||||||||||
Other | 233 | 624 | 1,190 | 1,274 | |||||||||||||||||||
Operating profit, as adjusted | $ | 110,748 | $ | 82,560 | $ | 404,686 | $ | 579,403 | |||||||||||||||
As a % of net sales | 8.5 | % | 5.6 | % | 7.2 | % | 9.3 | % |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Interest expense, net and other expenses, as reported under GAAP | $ | 77,063 | $ | 53,311 | $ | 313,874 | $ | 166,807 | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | (8,466) | — | |||||||||||||||||||
Gain on final settlement of cross currency swaps | — | — | 1,370 | — | |||||||||||||||||||
Interest expense, net and other expenses, as adjusted | $ | 77,063 | $ | 53,311 | $ | 306,778 | $ | 166,807 |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Income (loss) from continuing operations before income taxes, as reported under GAAP | $ | 19,034 | $ | 7,024 | $ | (25,092) | $ | 352,738 | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Global Champion performance plan | 14,310 | — | 88,045 | — | |||||||||||||||||||
Full Potential transformation plan: | |||||||||||||||||||||||
Technology | 657 | 2,870 | 8,953 | 11,922 | |||||||||||||||||||
Headcount actions and related severance | 729 | 9,333 | 6,105 | 8,221 | |||||||||||||||||||
Supply chain segmentation | (1,284) | 3,395 | 4,151 | 17,982 | |||||||||||||||||||
Professional services | 6 | 2,980 | 3,819 | 23,994 | |||||||||||||||||||
(Gain) loss on sale of business and classification of assets held for sale | — | 3,023 | 3,641 | (3,535) | |||||||||||||||||||
Other | 233 | 624 | 1,190 | 1,274 | |||||||||||||||||||
Loss on extinguishment of debt | — | — | 8,466 | — | |||||||||||||||||||
Gain on final settlement of cross currency swaps | — | — | (1,370) | — | |||||||||||||||||||
Income from continuing operations before income taxes, as adjusted | $ | 33,685 | $ | 29,249 | $ | 97,908 | $ | 412,596 |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Income tax expense (benefit), as reported under GAAP | $ | (58,907) | $ | 425,132 | $ | (7,366) | $ | 483,907 | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Discrete tax (expense) benefit | 80,859 | (422,918) | 85,122 | (422,918) | |||||||||||||||||||
Tax effect on actions | — | 2,758 | — | 9,152 | |||||||||||||||||||
Income tax expense, as adjusted | $ | 21,952 | $ | 4,972 | $ | 77,756 | $ | 70,141 |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Income (loss) from continuing operations, as reported under GAAP | $ | 77,941 | $ | (418,108) | $ | (17,726) | $ | (131,169) | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Global Champion performance plan | 14,310 | — | 88,045 | — | |||||||||||||||||||
Full Potential transformation plan: | |||||||||||||||||||||||
Technology | 657 | 2,870 | 8,953 | 11,922 | |||||||||||||||||||
Headcount actions and related severance | 729 | 9,333 | 6,105 | 8,221 | |||||||||||||||||||
Supply chain segmentation | (1,284) | 3,395 | 4,151 | 17,982 | |||||||||||||||||||
Professional services | 6 | 2,980 | 3,819 | 23,994 | |||||||||||||||||||
(Gain) loss on sale of business and classification of assets held for sale | — | 3,023 | 3,641 | (3,535) | |||||||||||||||||||
Other | 233 | 624 | 1,190 | 1,274 | |||||||||||||||||||
Loss on extinguishment of debt | — | — | 8,466 | — | |||||||||||||||||||
Gain on final settlement of cross currency swaps | — | — | (1,370) | — | |||||||||||||||||||
Discrete tax expense (benefit) | (80,859) | 422,918 | (85,122) | 422,918 | |||||||||||||||||||
Tax effect on actions | — | (2,758) | — | (9,152) | |||||||||||||||||||
Income from continuing operations, as adjusted | $ | 11,733 | $ | 24,277 | $ | 20,152 | $ | 342,455 |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Diluted earnings (loss) per share from continuing operations, as reported under GAAP1 | $ | 0.22 | $ | (1.19) | $ | (0.05) | $ | (0.37) | |||||||||||||||
Restructuring and other action-related charges: | |||||||||||||||||||||||
Global Champion performance plan | 0.04 | — | 0.25 | — | |||||||||||||||||||
Full Potential transformation plan: | |||||||||||||||||||||||
Technology | 0.00 | 0.01 | 0.03 | 0.03 | |||||||||||||||||||
Headcount actions and related severance | 0.00 | 0.03 | 0.02 | 0.02 | |||||||||||||||||||
Supply chain segmentation | 0.00 | 0.01 | 0.01 | 0.05 | |||||||||||||||||||
Professional services | — | 0.01 | 0.01 | 0.07 | |||||||||||||||||||
(Gain) loss on sale of business and classification of assets held for sale | 0.00 | 0.01 | 0.01 | (0.01) | |||||||||||||||||||
Other | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Loss on extinguishment of debt | — | — | 0.02 | — | |||||||||||||||||||
Gain on final settlement of cross currency swaps | — | — | 0.00 | — | |||||||||||||||||||
Discrete tax expense (benefit) | (0.23) | 1.21 | (0.24) | 1.21 | |||||||||||||||||||
Tax effect on actions | — | (0.01) | — | (0.03) | |||||||||||||||||||
Diluted earnings per share from continuing operations, as adjusted | $ | 0.03 | $ | 0.07 | $ | 0.06 | $ | 0.98 |
1 | Amounts may not be additive due to rounding. |
Including the favorable foreign currency impact of $2 million, global Champion sales excluding C9 Champion decreased approximately 23% in the fourth quarter of 2023 compared to the fourth quarter of 2022. On a constant currency basis, global Champion sales excluding C9 Champion decreased approximately 24% in the fourth quarter of 2023 compared to the fourth quarter of 2022. | ||
Last Twelve Months | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Leverage Ratio: | |||||||||||
EBITDA1: | |||||||||||
Loss from continuing operations | $ | (17,726) | $ | (131,169) | |||||||
Interest expense, net | 275,354 | 157,073 | |||||||||
Income tax expense (benefit) | (7,366) | 483,907 | |||||||||
Depreciation and amortization | 105,037 | 106,267 | |||||||||
Total EBITDA | 355,299 | 616,078 | |||||||||
Total restructuring and other action-related charges (excluding tax effect on actions)2 | 123,000 | 59,858 | |||||||||
Other net losses, charges and expenses3 | 123,856 | 118,240 | |||||||||
Total EBITDA, as adjusted | $ | 602,155 | $ | 794,176 | |||||||
Net debt: | |||||||||||
Debt (current and long-term debt and Accounts Receivable Securitization Facility excluding long term debt issuance costs and debt discount of $36,110 and $13,198, respectively) | $ | 3,336,750 | $ | 3,872,275 | |||||||
(Less) debt related to an unrestricted subsidiary4 | (6,000) | — | |||||||||
Other debt and cash adjustments5 | 4,185 | 4,955 | |||||||||
(Less) Cash and cash equivalents | (205,501) | (238,413) | |||||||||
Net debt | $ | 3,129,434 | $ | 3,638,817 | |||||||
Debt/Income (loss) from continuing operations6 | (188.2) | (29.5) | |||||||||
Net debt/EBITDA, as adjusted7 | 5.2 | 4.6 |
1 | Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. | ||||
2 | The last twelve months ended December 30, 2023 includes $88 million of global Champion performance plan charges, $9 million of technology charges, $8 million of a loss on extinguishment of debt, $6 million of headcount actions and related severance charges, $4 million of supply chain segmentation charges, $4 million of professional services, $4 million of a loss on the sale of business and classification of assets held for sale, $1 million related to other restructuring and other action-related charges and $(1) million of a gain on the final settlement of cross currency swap contracts. The last twelve months ended December 31, 2022 includes $24 million of professional services, $18 million of supply chain segmentation charges, $12 million of technology charges, $8 million of headcount actions and related severance charges, approximately $2 million related to other restructuring and other action-related charges and $(4) million of a gain on classification of assets held for sale. The items included in restructuring and other action-related charges are described in more detail in Table 6-A. | ||||
3 | Represents other net losses, charges and expenses that can be excluded from the Company’s leverage ratio as defined under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended. The last twelve months ended December 30, 2023, primarily includes $72 million of excess and obsolete inventory write-offs, $21 million in other compensation related items primarily stock compensation expense, $17 million of pension non-cash expense, $13 million in charges related to sales incentive amortization, $8 million of non-cash cloud computing expense, $3 million of bad debt expense, $2 million in charges related to the ransomware attack and extraordinary events, $(7) million of net unrealized gains due to hedging activities and $(5) million of interest expense on debt and amortization of debt issuance costs related to an unrestricted subsidiary. The last twelve months ended December 31, 2022, primarily includes $32 million of excess and obsolete inventory write-offs, $31 million in charges related to the ransomware attack and extraordinary events, $25 million in other compensation related items primarily stock compensation expense, $21 million of pension non-cash expense, $7 million of bad debt expense and $2 million of non-cash cloud computing expense. | ||||
4 | Represents amounts outstanding under an existing accounts receivable securitization facility entered into by an unrestricted subsidiary of the Company. | ||||
5 | Includes drawn letters of credit, financing leases and cash balances in certain geographies. | ||||
6 | Represents Debt divided by Income (loss) from continuing operations which is the most comparable GAAP financial measure to Net debt/EBITDA, as adjusted. | ||||
7 | Represents the Company’s leverage ratio defined as Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021, as amended, which excludes net other losses, charges and expenses in addition to restructuring and other action-related charges. |
Quarters Ended | Years Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Free cash flow1: | |||||||||||||||||||||||
Net cash from operating activities | $ | 274,405 | $ | 132,880 | $ | 561,749 | $ | (358,802) | |||||||||||||||
Capital expenditures | (8,266) | (41,167) | (44,056) | (112,122) | |||||||||||||||||||
Free cash flow | $ | 266,139 | $ | 91,713 | $ | 517,693 | $ | (470,924) |
1 | Free cash flow includes the results from continuing and discontinued operations in the periods prior to the sale of the European Innerwear business on March 5, 2022. |
Quarter Ended | Year Ended | ||||||||||
March 30, 2024 | December 28, 2024 | ||||||||||
Operating profit outlook, as calculated under GAAP | $45,000 to $65,000 | $430,000 to $450,000 | |||||||||
Restructuring and other action-related charges | 15,000 | 70,000 | |||||||||
Operating profit outlook, as adjusted | $60,000 to $80,000 | $500,000 to $520,000 | |||||||||
Diluted earnings (loss) per share from continuing operations, as calculated under GAAP1 | $(0.14) to $(0.08) | $0.22 to $0.28 | |||||||||
Restructuring and other action-related charges | 0.04 | 0.20 | |||||||||
Diluted earnings (loss) per share from continuing operations, as adjusted | $(0.10) to $(0.04) | $0.42 to $0.48 | |||||||||
Cash flow from operations outlook, as calculated under GAAP | $400,000 | ||||||||||
Capital expenditures outlook | 65,000 | ||||||||||
Free cash flow outlook | $335,000 |
1 | The company expects approximately 353 million diluted weighted average shares outstanding for the quarter ended March 30, 2024 and approximately 354 million diluted weighted average shares outstanding for the year ended December 28, 2024. |
1 |
2 |
3 |
4 |
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Cover Page |
Feb. 15, 2024 |
---|---|
Cover [Abstract] | |
Entity Central Index Key | 0001359841 |
Amendment Flag | false |
Document Type | 8-K |
Document Period End Date | Feb. 15, 2024 |
Entity Registrant Name | Hanesbrands Inc. |
Entity Incorporation, State or Country Code | MD |
Entity File Number | 001-32891 |
Entity Tax Identification Number | 20-3552316 |
Entity Address, Address Line One | 1000 East Hanes Mill Road |
Entity Address, City or Town | Winston-Salem, |
Entity Address, State or Province | NC |
Entity Address, Postal Zip Code | 27105 |
City Area Code | 336 |
Local Phone Number | 519-8080 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
Title of 12(b) Security | Common Stock, Par Value $0.01 |
Trading Symbol | HBI |
Security Exchange Name | NYSE |
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