HANESBRANDS ANNOUNCES SECOND-QUARTER 2022 RESULTS.
Net sales from continuing operations of
GAAP EPS from continuing operations of
Previously announced cyber event is estimated to have had a negative impact on second-quarter net sales, adjusted operating profit and EPS of approximately
Global Champion brand sales, in constant currency, decrease 20% over prior year; increase 96% on a two-year stack basis
Continues progress on Full Potential growth strategy of driving consumer-centricity, simplification, increased speed, and digital capabilities
Declares regular cash dividend of
Updates full-year 2022 guidance; provides third-quarter 2022 guidance; Company has taken a more prudent view of its second-half net sales and profit outlook to reflect changes in foreign currency exchange rates, short-term costs associated with actions to reduce inventory by year-end, and an assumption that slow consumer demand continues and the retail environment remains challenging
For reconciliations of select GAAP and Non-GAAP measures, see Table 6 of this release
'Our second quarter results fell below our expectations as a result of unexpected events and the difficult global operating environment,' said
Second-Quarter Highlights
Robust pipeline of new products and innovations that extends beyond 2023. Rollout of new innerwear products and innovation is driving positive consumer and retailer response as well as additional retail space gains. New products have launched across men's and women's, including Hanes Total Support Pouch with X-Temp and HanesRetro Rib. The Company is also building global innovation platforms around absorbency, which represents a meaningful opportunity for the Bonds and Hanes brands across multiple new usage occasions.
Champion brand investments continued in the quarter. The Company purchased the Champion trademark for footwear in
Early stages of executing Full Potential supply chain strategies to build on its advantaged position as well as to balance speed, cost and flexibility, enabling faster top-line growth and higher margins. These efforts involve segmenting its supply chain and previously mentioned plans to optimize its
Second-Quarter 2022 Results
Net sales from continuing operations of
Net sales, excluding PPE, increased 75% on a two-year stack basis.
Global Champion brand sales decreased 20% over prior year in constant currency, or 23% on a reported basis with similar declines in both the
Gross Profit of
Selling, General and Administrative (SG&A) expenses were
Operating Profit and Operating Margin in the second quarter of 2022 were
The GAAP and Adjusted Effective Tax Rates for second-quarter 2022 were both 17.0%. For the second quarter of 2021, GAAP and adjusted effective tax rates were 14.6% and 14.2%, respectively.
Income from continuing operations totaled
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 Full Potential plan charges.
Second-Quarter 2022 Business Segment Summary
Innerwear sales decreased 12% compared to last year as the impact from the cyber event and softer-than-expected point-of-sale trends more than offset the benefits from the first-quarter price increase and retail space gains. On a two-year stack basis, Innerwear sales increased 50% in the quarter. Operating margin of 20.7% decreased approximately 320 basis points compared to prior year. The impact from input cost inflation, lower sales volume, and an unfavorable product mix more than offset the benefit from higher prices and SG&A cost controls.
Activewear sales declined 18% over prior year. The Company experienced continued growth in the collegiate channel in the quarter, which was more than offset by declines in its other channels due to headwinds from point-of-sales trends, retailer inventory levels and the impact from the cyber event. By brand, Championsales within the Activewear reporting segment decreased 25% as compared to prior year and increased more than 115% on a two-year stack basis. Sales of other activewear brands within the Activewear reporting segment decreased 8% over prior year in the quarter and increased approximately 130% on a two-year stack basis.
Operating margin for the segment of 6.9% decreased approximately 325 basis points compared to prior period as lower volume, increased brand investments and an unfavorable product mix more than offset the benefits from SG&A cost controls.
International sales, on a constant currency basis, decreased 3% compared to prior year. Sales declined at a low-single digit rate in
Operating margin for the segment of 13.2% increased approximately 25 basis points over prior year driven by SG&A cost controls.
Cash Flow, Balance Sheet and Stockholder Capital Returns
Total liquidity position at the end of second-quarter 2022 was nearly
Based on the calculation as defined in the Company's senior secured credit facility, the Consolidated Net TotalLeverage Ratio at the end of second-quarter 2022 was 3.5 times on a net debt-to-adjusted EBITDA basis as compared to 2.9 times at the end of second-quarter 2021 (See Table 6-C).
Inventory at the end of second-quarter 2022 was
Cash flow from operations was a use of
The Company's Board of Directors declared a regular cash dividend of
Update on Cyber Event in Late May
Second quarter results were impacted by the previously disclosed cyber event, which temporarily affected the Company's global supply chain network and limited its ability to fulfill customer orders for approximately three weeks. Despite the disruption, the Company shipped all Innerwear back-to-school seasonal commitments on time and in full.
At this time, the Company believes the cyber event has been contained. There is no ongoing operational impact on the Company's ability to provide its products and services. The Company estimates the cyber event negatively impacted the second-quarter 2022 results by approximately
Third Quarter and Full-Year 2022 Financial Outlook
The Company has taken a more prudent view of its second-half net sales and profit outlook to reflect the changes in foreign currency exchange rates; short-term costs associated with actions to reduce inventory by year-end; and an assumption that slow consumer demand continues and the retail environment remains challenging.
For third-quarter 2022, which ends on
Net sales from continuing operations of approximately
GAAP operating profit from continuing operations to range from approximately
Adjusted operating profit from continuing operations to range from approximately
Charges for actions related to Full Potential of approximately
Interest and other expenses of approximately
An effective tax rate of approximately 17% on both a GAAP and adjusted basis.
GAAP earnings per share from continuing operations to range from approximately
Adjusted earnings per share from continuing operations to range from approximately
Fully diluted shares outstanding of approximately 350 million.
Earnings per share and fully diluted share count guidance exclude any potential impact from future share repurchases.
For fiscal-year 2022, which ends on
Net sales from continuing operations of approximately
GAAP operating profit from continuing operations to range from approximately
Adjusted operating profit from continuing operations to range from approximately
Charges for actions related to Full Potential of approximately
Interest and other expenses of approximately
An effective tax rate of approximately 17% on both a GAAP and adjusted basis.
GAAP earnings per share from continuing operations to range from approximately
Adjusted earnings per share from continuing operations to range from approximately
Cash flow from operations of essentially break-even.
Capital expenditures of approximately
Fully diluted shares outstanding of approximately 351 million.
Earnings per share and fully diluted share count guidance exclude any potential impact from future share repurchases.
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, adjusted EBITDA and leverage ratio.
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 2022 and 2021 include professional fees, operating model charges, (gain)/loss on classification of assets held for sale, supply chain segmentation charges, technology charges and intangible asset impairment charges related to our Full Potential plan.
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.
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. 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 other losses, charges and expenses as defined in the Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated
HanesBrands is a global company that reports financial information in
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
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 news release contains certain forward-looking statements, as defined under
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
TABLE 1
Condensed Consolidated Statements of Income: See Full Results At:
https://newsroom.hanesbrands.com/newsreleases/news-details/2022/HanesBrands-Announces-Second-Quarter-2022-Results/default.aspx
The company expects approximately 350 million diluted weighted average shares outstanding for the quarter ended
News Media contact:
Analysts and Investors contact:
(C) 2022 Electronic News Publishing, source