KONR BRAN : Latest Current Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 7, 2019

KONTOOR BRANDS, INC.

(Exact name of registrant as specified in charter)

North Carolina	001-38854	83-2680248
(State or other jurisdiction	(Commission file number)	(I.R.S. employer
of incorporation)		identification number)
	400 N. Elm Street
	Greensboro, North Carolina 27401
	(Address of principal executive offices)
	[phone]
	(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o 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-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
• Pre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Stock, No Par Value	KTB	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02. Results of Operations and Financial Condition.

On November 7, 2019, Kontoor Brands, Inc. issued a press release announcing financial results for thethird quarter of fiscal 2019. A copy of the press release is furnished as Exhibit 99.1 and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

Description

99.1Press release issued by Kontoor Brands, Inc., dated November 7, 2019, announcing financial results for the third quarter of fiscal 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KONTOOR BRANDS, INC.

Date: November 7, 2019	By:	/s/ Laurel Krueger
	Name:	Laurel Krueger
	Title:	Vice President, General Counsel & Corporate Secretary

Exhibit 99.1

KONTOOR BRANDS ANNOUNCES THIRD QUARTER 2019 RESULTS

Third Quarter 2019 GAAP EPS of $0.25, Adjusted EPS of $0.95

Restructuring and cost-savings initiatives on track, fueling gross margin gains

GREENSBORO, N.C. - November 7, 2019 - Kontoor Brands, Inc. (NYSE: KTB), a global lifestyle apparel company, with a portfolio led by two of the world's most iconic consumer brands, Wrangler® and Lee®, today reported financial results for its third quarter ended September 28, 2019.

"Third quarter 2019 results were in line with our expectations, as we continued to execute on our strategy of setting the foundation for long-term operational success," said Scott Baxter, President and Chief Executive Officer, Kontoor Brands. "We're beginning to realize the benefits of the previously announced restructuring and cost-savings initiatives, while we continue to stabilize and globalize our organization. And, we're improving the quality of our sales, including exiting unprofitable points of distribution, changing business models and rationalizing underperforming SKUs. These actions create the building blocks for healthy, sustainable future growth."

Third Quarter 2019 Income Statement Review

This release refers to "adjusted" amounts that exclude the impact of restructuring and separation costs, changes in our business model, a non-cash impairment charge related to our Rock & Republic® trademark and other adjustments. This release also refers to "constant currency" amounts. These adjustments are further described in the Non-GAAP Financial Measures paragraph below. All per share amounts are presented on a diluted basis.

Revenue decreased 9 percent year-over-year to$638 million on a reported basis in thethird quarter of 2019 and was down 8 percent in constant currency. Compared to third quarter 2018 adjusted revenue, revenue declined 6 percent in the quarter.

Revenue declines during the quarter, compared with third quarter 2018 adjusted revenues, were primarily driven by three factors:

• Proactive strategic quality-of-sales initiatives contributed 3 points to the decline, reflecting actions taken to exit an underperforming country and other global points of distribution, including select channels in India;
• Impacts of a major U.S. retailer bankruptcy in the fourth quarter of 2018, which represented about2 points of the decline; and,
• Foreign currency headwinds that impacted revenues by approximately1 point.

During the third quarter, U.S. revenue was $457 million, down 9 percent on a reported basis. U.S. revenue declined 6 percent compared with 2018 adjusted revenues, including the impact of a major U.S. retailer bankruptcy, which was approximately 3 points of the decline. Our strategic actions, including exiting less profitable points of distribution and select programs also weighed on U.S.

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revenues. International revenue was $181 million, down 11 percent on a reported basis and down 8 percent in constant currency, driven primarily by exiting unprofitable points of distribution in India and other planned country exits and business model changes. These factors were partially offset by growth in China and favorable timing of shipments in Europe. International revenues declined 8 percent compared with third quarter 2018 adjusted revenues, sequentially improving from second quarter results.

Wrangler® brand global revenue decreased 7 percent to $367 million on a reported basis and in constant currency. Global revenues declined 6 percent and U.S. revenue declined 4 percent compared with third quarter 2018 adjusted revenue, with approximately 2 points of the decline due to the customer bankruptcy. Of note, the Wrangler® brand's U.S. wholesale performance is down 2 percent year-to-date compared with 2018 adjusted revenue, driven by the customer bankruptcy. We anticipate global revenues of the brand to improve in the fourth quarter of 2019.

As expected, Lee® brand global revenues sequentially moderated in the third quarter,decreasing 8 percent to $232 million on a reported basis, down 6 percent in constant currency. The customer bankruptcy impacted the results by 3 points, while quality-of- sales actions tempered revenues, as well. Of note, on a constant currency basis, Lee® brand revenue increased 8 percent in China during the third quarter, with broad-based strength across all channels of distribution, including a 10 percent comp store increase and 41 percent increase in our Digital business.

Other global revenue (including non-brandedVF Outlet™ and Rock & Republic®) decreased to $39 million.

Gross margin increased 30 basis points to 40.1 percent on a reported basis. On an adjusted basis, gross margin was up 20 basis points to 40.9 percent. Increases were primarily due to the impacts of restructuring and quality-of-sales initiatives, as well as favorable channel mix, which more than offset the negative impact of strategic actions taken in India and the pressure from foreign currency. As anticipated, we've seen year-over-year comparison improvements in gross margin in each of the past three quarters.

Selling, General & Administrative (SG&A) expenses were $192 million on a reported basis. On an adjusted basis, SG&A was $178 million, up 80 basis points to27.9 percent of revenues, driven primarily by higher demand creation, higher bad debt expense in India and fixed cost de-leverage due to revenue declines. These increases were partially offset by tight expense control and restructuring benefits.

Non-cashimpairment of intangible assetrepresents a $33 million charge related to the Rock & Republic® trademark.

Operating income on a reported basis was $31 million. On an adjusted basis, operating income was$83 million, down 11 percent. Operating margin on a reported basis declined to 4.9 percent of revenues. Adjusted operating margin decreased 60 basis points to 13.0 percent.

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)on a reported basis was $37 million. Adjusted EBITDA was $90 million, down 10 percent. EBITDA margin on a reported basis declined to 5.7 percent of revenues. Adjusted EBITDA margin decreased 50 basis points to 14.1 percent. Actions taken in India drove an approximate $8 million unfavorable adjusted EBITDA impact in the quarter.

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