Market Overview

HanesBrands Reports Second-Quarter 2018 Financial Results

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  • 2Q financial results, including 4% net sales growth, in line with
    company guidance
  • Company reaffirms full-year 2018 financial guidance
  • Company confirms long-term goal for Champion brand global
    sales

HanesBrands (NYSE:HBI), a leading global marketer of everyday basic
apparel under world-class brands, today announced second-quarter 2018
results that achieved the midpoint of company guidance.

For the quarter ended June 30, 2018, the company reported net sales
growth of 4 percent to $1.72 billion versus a guidance range of $1.7
billion to $1.725 billion. Organic sales in constant currency, which
exclude acquisition contributions, increased slightly.

GAAP operating profit of $220 million and adjusted operating profit
excluding actions of $245 million each decreased 6 percent, the midpoint
of guidance for each.

GAAP diluted earnings per share for continuing operations was $0.39
compared with guidance of $0.38 to $0.40, and adjusted EPS excluding
actions was $0.45, compared with guidance of $0.44 to $0.46. GAAP EPS
and adjusted EPS decreased 17 percent and 15 percent, respectively,
reflecting lower operating profit, a higher corporate tax rate for 2018
as a result of U.S. tax reform, and higher interest expense.

Hanes has reiterated its full-year guidance and issued net sales,
operating profit and EPS guidance for the third-quarter 2018. (See
financial guidance section for details. See Note on Adjusted Measures
and Reconciliation to GAAP Measures later in this news release for
additional discussion and details.)

"Our results for the second-quarter were consistent with our guidance
and the year is unfolding as we expected," said Hanes Chief Executive
Officer Gerald W. Evans Jr. "We achieved organic growth for the fourth
consecutive quarter with strong International and global Champion
sales growth. We continue to address the challenging environment for
intimate apparel and expect our turn-around plan to gain additional
traction by the end of the year. Our cash flow from operations of $64
million in the second quarter was ahead of our expectations and the
outlook is strong. We continue to expect margin expansion in the second
half, primarily driven by additional acquisition synergies and organic
sales growth."

Key Callouts for Second-Quarter 2018 Financial
Results

The diversification of Hanes' global business model continued to support
the company's execution of its Sell More, Spend Less and Generate Cash
strategies in the second quarter and is expected to contribute to
second-half improvement. Key callouts follow.

Growth, Initiatives Drive 4 Percent Net Sales Increase.
Contributors to net sales growth in the quarter included acquisition
contributions, widespread global Champion strength, and increased
consumer-directed sales.

Net sales for Bras N Things, acquired in February 2018, and Alternative
Apparel, acquired in October 2017, totaled nearly $52 million in the
quarter.

Champion sales increased in all geographies. Global Champion sales
increased 18 percent in the quarter and were up 16 percent in constant
currency.

Global consumer-directed sales, consisting of company retail and online
channel sales, increased 20 percent in the second quarter and
represented 22 percent of total sales.

Fourth-Consecutive Quarter of Organic Sales Growth.
Constant-currency organic sales, which exclude sales from acquisitions
under a year old and the effects of changes in currency exchange rates,
increased slightly, beating company projection of a slight decrease. In
addition to global Champion growth, organic growth benefited from
innerwear increases in U.S. basics, the Americas, and Australia.

The company expects to deliver higher levels of organic growth in the
second half as a result of continued execution of strategic growth
initiatives, continued product innovation success, back-to-school
alignment with key U.S. retailers, and action plans to stabilize the
Innerwear segment's U.S. intimate apparel business.

First-Half Operating Profit Affected by Inflation and Inefficiencies,
but Second-Half Margin Expansion Expected.
Similar to the first
quarter, second-quarter operating profit was affected by input-cost
inflation and expected increased expenses for investment in brand
building and temporary distribution inefficiencies. Those factors offset
benefits from acquisition synergies and strong International segment
operating profit growth.

The company expects a return to margin expansion in the second half as a
result of additional acquisition synergies and accelerated organic sales
growth.

Tax Reform Effect on EPS Comparisons. U.S. tax reform, which
resulted in a higher corporate tax rate for Hanes beginning in 2018,
affects the year-over-year comparisons for EPS. When applying the 2018
second-quarter tax rate to 2017 second-quarter results on a pro forma
basis, GAAP EPS decreased 7 percent and adjusted EPS decreased 6 percent.

Business Segment Summaries

Innerwear Segment's Mixed Results Consistent with Expectations. U.S.
Innerwear segment sales decreased 3 percent, while operating profit
decreased 10 percent as a result of raw material inflation and mix of
products sold.

Sales of Innerwear basics increased slightly as point-of-sale trends
improved, men's underwear sales increased, and women's underwear
returned to growth. Innovation continues to work, with strong
performance of the newly launched Hanes Comfort Flex Fit men's
boxer briefs.

Innerwear Intimates sales decreased in the quarter, although progress
was made on key aspects of the company's plan to stabilize the business
and then return to growth. As the company managed through retailer door
closures and market trends, it successfully gained traction with bra
space gains in the mass channel and new bra programs in the midtier
channel. The company continues to prepare for a relaunch of its
shapewear programs late in the third quarter.

Activewear Segment Sales Increase on Acquisition Benefits and Organic
Growth
. U.S. Activewear segment sales increased 7 percent,
including a 1.5 percent increase in organic sales fueled by growth of Champion
and the licensed sports apparel business. Segment operating profit
decreased 3 percent due to higher raw material costs, start-up
manufacturing inefficiencies, and temporary distribution costs.

The acquisition of Alternative Apparel contributed $20 million in sales. Champion
sales increased more than 70 percent outside the mass channel. Growth
was driven by strong consumer demand, specialty channel space gains, and
online penetration.

Strong International Segment Performance Drivers Include
Acquisitions, Organic Growth, and Synergies.
International segment
sales increased 15 percent and operating profit increased 27 percent. In
constant currency, sales increased 12 percent and operating profit
increased 24 percent.

Constant-currency organic sales increased 5 percent, primarily on the
strength of Champion growth in Europe and Asia. The acquisition
of Bras N Things in Australia contributed $31 million in sales.

The segment's operating margin of 14 percent increased nearly 140 basis
points over the year-ago quarter, benefitting from organic growth and
integration synergies from past acquisitions.

Long-Term Champion Outlook

HanesBrands announced today that the company and Target Corporation will
not renew their contract for an exclusive line of C9 by Champion
activewear apparel when the current contract expires at the end of
January 2020.

"The C9 by Champion program at Target is a mature program after
15 successful years," Evans said. "Overall, Champion has
significant momentum in all geographies globally, and we will continue
to focus on growth across our Champion portfolio through expanded
geographic penetration, product lines and distribution channels,
including online and retail. Our core Champion sales in constant
currency increased more than 30 percent globally in the first half of
2018."

The C9 program is fully booked for 2018 and the conclusion of the
contract is not expected to have a meaningful effect on the company's
outlook for 2019. In the past 12 months, the company generated
approximately $380 million in C9 by Champion activewear sales.

With the brand's forecasted growth rate, the company continues to expect
to achieve global Champion sales of more than $2 billion by 2022.
The company does not expect the end of the C9 by Champion program
at Target to affect that projection.

"Target is a great retail partner, and we look forward to continuing to
drive mutual growth with our leading national apparel brands across
multiple product categories," Evans said.

2018 Financial Guidance

Hanes has reiterated full-year financial guidance for 2018, despite a
strengthening U.S. dollar, and has issued third-quarter guidance for net
sales, operating profit and EPS.

The company continues to expect full-year 2018 net sales of $6.72
billion to $6.82 billion, GAAP operating profit of $870 million to $905
million, adjusted operating profit excluding actions of $950 million to
$985 million, GAAP EPS of $1.54 to $1.62, adjusted EPS excluding actions
of $1.72 to $1.80, and net cash from operations of $675 million to $750
million.

Compared with the previous outlook for foreign exchange rates in the
second half, the company now expects the strengthening dollar to reduce
net sales growth by $30 million and operating profit growth by $5
million in the second half. Previously, the company expected a neutral
impact on sales and profit from exchange rates in the second half.

With U.S. income tax reform, the company expects the 2018 full-year tax
rate to be approximately 16 percent.

Third-Quarter Guidance. The company expects a return to margin
expansion in the second half and an increase in the organic growth rate.

Third-quarter net sales are expected to be in the range of $1.85 billion
to $1.9 billion, representing approximately 4 percent growth at the
midpoint. Constant-currency organic sales are expected to increase
approximately 2 percent at the midpoint of guidance.

GAAP operating profit is expected to be $265 million to $280 million,
while adjusted operating profit excluding actions is expected to be $285
million to $300 million. GAAP EPS is expected to be $0.49 to $0.52, and
adjusted EPS excluding actions is expected to be $0.54 to $0.57.

The company expects pretax charges related to acquisition integration
and other actions in the third quarter of approximately $20 million.

Hanes 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 guidance prepared in accordance with generally
accepted accounting principles, the company provides quarterly and
full-year results and guidance concerning certain non‐GAAP financial
measures, including adjusted EPS, adjusted net income, adjusted
operating profit (and margin), adjusted SG&A, adjusted gross profit (and
margin), EBITDA and adjusted EBITDA.

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

Charges for actions taken year to date and for guidance for the full
year primarily represent acquisition and integration costs related to
Hanes Europe Innerwear, Hanes Australasia, Champion Europe, Alternative
Apparel and Bras N Things, and other costs related to supply chain
network changes. Acquisition and integration costs include legal fees,
consulting fees, bank fees, severance costs, certain purchase accounting
items, facility closures, inventory write-offs, information technology
integration costs and similar charges. 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 the future
depending upon acquisition activity.

Hanes 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 acquisitions and other actions. Hanes 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 and integration of any of
the aforementioned actions taken.

In addition, the company has 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 earnings before interest, taxes, depreciation and
amortization. Adjusted EBITDA is defined as EBITDA excluding actions and
stock compensation expense. Hanes 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.

Hanes 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, Hanes 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.

Hanes believes this information is useful to management and investors to
facilitate comparison of operating results and better identify trends in
the company's businesses.

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).

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.

In the first and second quarters of 2018, Hanes incurred $20 million and
$25 million, respectively, in pretax charges for acquisition-related and
integration actions. In the first and second quarters of 2017, Hanes
incurred $38 million and $26 million, respectively, and in charges for
acquisition-related and integration actions.

For 2018 guidance, Hanes expects full-year GAAP EPS of $1.54 to $1.62
with anticipated pretax charges for acquisition-related and integration
costs and other actions of approximately $80 million, which results in
adjusted EPS guidance of $1.72 to $1.80. For the third quarter, the
company expects GAAP EPS of $0.49 to $0.52 with anticipated pretax
charges for acquisition-related and integration costs and other actions
of approximately $20 million, which results in adjusted EPS guidance of
$0.54 to $0.57.

Webcast Conference Call

Hanes will host an Internet webcast of its second-quarter investor
conference call at 8:30 a.m. EDT today, Aug. 1, 2018. The broadcast,
which will consist of prepared remarks followed by a question-and-answer
session, may be accessed at www.Hanes.com/investors.
The call is expected to conclude by 9:30 a.m.

An archived replay of the conference call webcast will be available in
the investors section of the Hanes corporate website. A telephone
playback will be available from approximately noon EDT today through
midnight EDT Aug. 8, 2018. The replay will be available by calling
toll-free (855) 859-2056 or by toll call at (404) 537-3406. The replay
ID is 6296115.

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 following the heading 2018 Financial Guidance, 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: the highly competitive and evolving nature of
the industry in which we compete; the rapidly changing retail
environment; 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 properly manage strategic projects; significant fluctuations
in foreign exchange rates; our ability to attract and retain a senior
management team with the core competencies needed to support our growth
in global markets; legal, regulatory, political and economic risks
related to our international operations; our ability to successfully
integrate acquired businesses; our reliance on a relatively small number
of customers for a significant portion of our sales; 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, based in Winston-Salem, N.C., is a socially responsible
leading marketer of everyday basic innerwear and activewear apparel in
the Americas, Europe, Australia and Asia-Pacific. The company sells its
products under some of the world's strongest apparel brands, including Hanes,
Champion, Maidenform, DIM, Bali, Playtex,
Bonds, JMS/Just My Size
, Nur Die/Nur Der, L'eggs, Lovable,
Wonderbra, Berlei, Alternative, Bras N Things, and Gear for
Sports
. The company sells T-shirts, bras, panties, shapewear,
underwear, socks, hosiery, and activewear produced in the company's
low-cost global supply chain. A member of the S&P 500 stock index, Hanes
has approximately 68,000 employees in more than 40 countries and is
ranked No. 432 on the Fortune 500 list of America's largest companies by
sales. Hanes takes pride in its strong reputation for ethical business
practices. Connect with HanesBrands at www.Hanes.com/corporate
or via social media (Twitter: @hanesbrands,
and Facebook: www.facebook.com/hanesbrandsinc).

TABLE 1

               

HANESBRANDS INC.

Condensed Consolidated Statements of Income

(in thousands, except per-share amounts)

(Unaudited)

 
Quarter Ended Six Months Ended

June 30,
2018

    July 1,
2017
% Change June 30,
2018
    July 1,
2017
% Change
Net sales $ 1,715,443 $ 1,646,610 4.2 % $ 3,186,947 $ 3,026,965 5.3 %
Cost of sales 1,055,487   1,000,708   1,948,070   1,841,532  
Gross profit 659,956 645,902 2.2 % 1,238,877 1,185,433 4.5 %
As a % of net sales 38.5 % 39.2 % 38.9 % 39.2 %
Selling, general and administrative expenses 439,893 412,197 872,756 825,299
As a % of net sales 25.6 % 25.0 % 27.4 % 27.3 %
Operating profit 220,063 233,705 (5.8 )% 366,121 360,134 1.7 %
As a % of net sales 12.8 % 14.2 % 11.5 % 11.9 %
Other expenses 6,570 6,422 12,331 12,967
Interest expense, net 48,430   44,130   94,193   86,267  
Income from continuing operations before income tax expense 165,063 183,153 259,597 260,900
Income tax expense 24,430   10,989   39,555   15,654  
Income from continuing operations 140,633 172,164 (18.3 )% 220,042 245,246 (10.3 )%
Income (loss) from discontinued operations, net of tax   368       (2,097 )
Net income $ 140,633   $ 172,532   (18.5 )% $ 220,042   $ 243,149   (9.5 )%
 
Earnings (loss) per share - basic:
Continuing operations $ 0.39 $ 0.47 $ 0.61 $ 0.66
Discontinued operations       (0.01 )
Net income $ 0.39   $ 0.47   (17.0 )% $ 0.61   $ 0.66   (7.6 )%
 
Earnings (loss) per share - diluted:
Continuing operations $ 0.39 $ 0.47 $ 0.61 $ 0.66
Discontinued operations       (0.01 )
Net income $ 0.39   $ 0.47   (17.0 )% $ 0.61   $ 0.65   (6.2 )%
 
Weighted average shares outstanding:
Basic 362,011 365,911 361,944 370,075
Diluted 363,254 367,992 363,245 372,147
 

TABLE 2

               

HANESBRANDS INC.

Supplemental Financial Information

(in thousands)

(Unaudited)

 
Quarter Ended Six Months Ended
June 30,
2018
    July 1,
2017
% Change June 30,
2018
    July 1,
2017
% Change
Segment net sales:
Innerwear $ 694,694 $ 719,006 (3.4 )% $ 1,185,772 $ 1,224,196 (3.1 )%
Activewear 405,785 379,756 6.9 751,910 707,099 6.3
International 545,862 475,242 14.9 1,115,749 952,640 17.1
Other 69,102   72,606   (4.8 ) 133,516   143,030   (6.7 )
Total net sales $ 1,715,443   $ 1,646,610   4.2 % $ 3,186,947   $ 3,026,965   5.3 %
 
Segment operating profit1:
Innerwear $ 159,129 $ 177,628 (10.4 )% $ 260,548 $ 294,250 (11.5 )%
Activewear 57,508 58,972 (2.5 ) 95,795 102,322 (6.4 )
International 76,558 60,147 27.3 153,619 112,809 36.2
Other 7,160 7,716 (7.2 ) 9,787 10,344 (5.4 )
General corporate expenses/other (55,127 ) (44,696 ) 23.3 (108,846 ) (95,162 ) 14.4
Acquisition, integration and other action-related charges (25,165 ) (26,062 ) (3.4 ) (44,782 ) (64,429 ) (30.5 )
Total operating profit $ 220,063   $ 233,705   (5.8 )% $ 366,121   $ 360,134   1.7 %
 
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 tables present a reconciliation of total reported net
sales to organic constant currency net sales for the quarter and six
months ended June 30, 2018 and a comparison to prior year:
 
       
Quarter Ended June 30, 2018

Reported
Net Sales

    Acquisitions1    

Impact from
Foreign
Currency2

   

Organic
Constant
Currency

% Change

Segment net sales:
Innerwear $ 694,694 $ $ $ 694,694 (3.4 )%
Activewear 405,785 20,317 385,468 1.5
International 545,862 31,450 15,547 498,865 5.0
Other 69,102       69,102   (4.8 )
Total $ 1,715,443   $ 51,767   $ 15,547   $ 1,648,129   0.1 %
 
 
Six Months Ended June 30, 2018

Reported
Net Sales

Acquisitions1

Impact from
Foreign
Currency2

Organic
Constant
Currency

% Change

Segment net sales:
Innerwear $ 1,185,772 $ $ $ 1,185,772 (3.1 )%
Activewear 751,910 35,947 715,963 1.3
International 1,115,749 47,587 60,406 1,007,756 5.8
Other 133,516       133,516   (6.7 )
Total $ 3,186,947   $ 83,534   $ 60,406   $ 3,043,007   0.5 %
 

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.
 

TABLE 3

       

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

June 30,
2018

December 30,
2017

Assets
Cash and cash equivalents $ 397,971 $ 421,566
Trade accounts receivable, net 973,807 903,318
Inventories 2,112,211 1,874,990
Other current assets 132,757   186,496
Total current assets 3,616,746   3,386,370
 
Property, net 617,302 623,991
Trademarks and other identifiable intangibles, net 1,610,567 1,402,857
Goodwill 1,259,010 1,167,007
Deferred tax assets 218,269 234,932
Other noncurrent assets 105,992   79,618
Total assets $ 7,427,886   $ 6,894,775
 
Liabilities
Accounts payable and accrued liabilities $ 1,441,536 $ 1,517,283
Notes payable 14,540 11,873
Accounts Receivable Securitization Facility 153,386 125,209
Current portion of long-term debt 181,349   124,380
Total current liabilities 1,790,811   1,778,745
 
Long-term debt 4,149,201 3,702,054
Pension and postretirement benefits 388,256 405,238
Other noncurrent liabilities 332,427   322,536
Total liabilities 6,660,695   6,208,573
 
Equity 767,191   686,202
Total liabilities and equity $ 7,427,886   $ 6,894,775
 

TABLE 4

   

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 
Six Months Ended
June 30,
2018
    July 1,
2017
Operating Activities:
Net income $ 220,042 $ 243,149
Depreciation and amortization 65,493 58,095
Stock compensation expense 3,033 4,388
Other noncash items (2,082 ) 13,539
Changes in assets and liabilities, net (350,884 ) (284,921 )
Net cash from operating activities (64,398 ) 34,250  
 
Investing Activities:
Purchases/sales of property and equipment, net, and other (38,800 ) (26,460 )
Acquisition of business, net of cash acquired (334,916 ) (524 )
Disposition of businesses   40,285  
Net cash from investing activities (373,716 ) 13,301  
 
Financing Activities:
Cash dividends paid (108,115 ) (110,529 )
Share repurchases (299,919 )
Net borrowings on notes payable, debt and other 525,998   355,237  
Net cash from financing activities 417,883   (55,211 )
Effect of changes in foreign currency exchange rates on cash 20,176   (3,170 )
Change in cash, cash equivalents and restricted cash (55 ) (10,830 )
Cash and cash equivalents at beginning of year 421,566   460,245  
Cash, cash equivalents and restricted cash at end of period 421,511 449,415
Less restricted cash at end of period 23,540    
Cash and cash equivalents per balance sheet at end of period $ 397,971   $ 449,415  
 

TABLE 5

       

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per-share amounts)

(Unaudited)

 
Quarter Ended Six Months Ended

June 30,
2018

    July 1,
2017
June 30,
2018
    July 1,
2017
Gross profit, as reported under GAAP $ 659,956 $ 645,902 $ 1,238,877 $ 1,185,433
Acquisition, integration and other action-related charges 11,083   4,284   21,836   19,759  
Gross profit, as adjusted $ 671,039   $ 650,186   $ 1,260,713   $ 1,205,192  
As a % of net sales 39.1 % 39.5 % 39.6 % 39.8 %
 
Selling, general and administrative expenses, as reported under GAAP $ 439,893 $ 412,197 $ 872,756 $ 825,299
Acquisition, integration and other action-related charges (14,082 ) (21,778 ) (22,946 ) (44,670 )
Selling, general and administrative expenses, as adjusted $ 425,811   $ 390,419   $ 849,810   $ 780,629  
As a % of net sales 24.8 % 23.7 % 26.7 % 25.8 %
 
Operating profit, as reported under GAAP $ 220,063 $ 233,705 $ 366,121 $ 360,134
Acquisition, integration and other action-related charges included
in gross profit
11,083 4,284 21,836 19,759
Acquisition, integration and other action-related charges included
in SG&A
14,082   21,778   22,946   44,670  
Operating profit, as adjusted $ 245,228   $ 259,767   $ 410,903   $ 424,563  
As a % of net sales 14.3 % 15.8 % 12.9 % 14.0 %
 
Net income from continuing operations, as reported under GAAP $ 140,633 $ 172,164 $ 220,042 $ 245,246
Acquisition, integration and other action-related charges included
in gross profit
11,083 4,284 21,836 19,759
Acquisition, integration and other action-related charges included
in SG&A
14,082 21,778 22,946 44,670
Debt refinance charges included in other expenses 14 (36 )
Tax effect on actions (3,726 ) (1,564 ) (6,857 ) (3,866 )
Net income from continuing operations, as adjusted $ 162,086   $ 196,662   $ 257,931   $ 305,809  
 
Diluted earnings per share from continuing operations, as reported
under GAAP
$ 0.39 $ 0.47 $ 0.61 $ 0.66
Acquisition and other related charges 0.06   0.07   0.10   0.16  
Diluted earnings per share from continuing operations, as adjusted $ 0.45   $ 0.53   $ 0.71   $ 0.82  
 
 
 
 
Quarter Ended Six Months Ended
June 30,
2018
July 1,
2017
June 30,
2018
July 1,
2017
Action and other related charges by category:
Hanes Europe Innerwear $ 8,455 $ 10,514 $ 17,031 $ 30,392
Hanes Australasia 6,647 5,970 12,739 17,978
Champion Europe 1,078 4,399 2,958 5,567
Bras N Things 2,031 3,276
Smaller acquisitions and other action-related costs 6,954 5,179 8,778 10,492
Debt refinance charges 14 (36 )
Tax effect on actions (3,726 ) (1,564 ) (6,857 ) (3,866 )
Total action and other related charges $ 21,453   $ 24,498   $ 37,889   $ 60,563  
 
 
 
 
Last Twelve Months
June 30,
2018
July 1,
2017
EBITDA1:
Net income from continuing operations $ 38,787 $ 573,761
Interest expense, net 182,361 170,853
Income tax expense 497,180 31,803
Depreciation and amortization 129,885   114,443  
Total EBITDA 848,213 890,860
Total action and other related charges (excluding tax effect on
actions)
178,221 153,884
Stock compensation expense 22,227   28,186  
Total EBITDA, as adjusted $ 1,048,661   $ 1,072,930  
 
Net debt:
Debt (current and long term debt and Accounts Receivable
Securitization Facility)
$ 4,483,936 $ 4,153,573
Notes payable 14,540 72,157
(Less) Cash and cash equivalents (397,971 ) (449,415 )
Net debt $ 4,100,505   $ 3,776,315  
 
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.
 

TABLE 6

       

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of GAAP Outlook to Adjusted Outlook

(in thousands, except per-share amounts)

(Unaudited)

 
Quarter Ended Year Ended
September 29,
2018
December 29,
2018
Operating profit outlook, as calculated under GAAP $265,000 to $280,000 $870,000 to $905,000
Acquisition, integration and other action-related charges $20,000 $80,000
Operating profit outlook, as adjusted $285,000 to $300,000 $950,000 to $985,000
 
Diluted earnings per share from continuing operations, as calculated
under GAAP
$0.49 to $0.52 $1.54 to $1.62
Acquisition, integration and other action-related charges $0.05 $0.18
Diluted earnings per share from continuing operations, as adjusted $0.54 to $0.57 $1.72 to $1.80
 

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