Hanes(US:HBI)2024-05-09 11:02Financial Performance - Net sales for Q1 2024 were $1.16 billion, a decrease of approximately 17% year-over-year, impacted by the U.S. Sheer Hosiery divestiture and unfavorable foreign exchange rates[6]. - Adjusted operating profit for Q1 2024 was $84 million, exceeding expectations and representing a 32% increase compared to the prior year[6]. - Net sales for the quarter ended March 30, 2024, were approximately $1.156 billion, representing a 16.8% decrease compared to $1.389 billion in the prior year[35]. - The company reported a net loss of approximately $39.1 million for the quarter, compared to a net loss of $34.4 million in the prior year[35]. - Total operating profit for the quarter was $52,106, down 9.1% from $57,319 in the prior year[43]. - The net loss for the quarter ended March 30, 2024, was $39.1 million, compared to a net loss of $34.4 million in the same quarter of 2023[52]. - Free cash flow for the period was approximately $335 million[18]. - Free cash flow for the quarter ended March 30, 2024, was $5,914 thousand, a decrease of 70.8% compared to $20,293 thousand for the same quarter in 2023[59]. Guidance and Projections - For Q2 2024, the company expects net sales between $1.335 billion and $1.375 billion, with GAAP operating profit guidance of $96 million to $111 million[4]. - Full-year 2024 guidance includes net sales of approximately $5.35 billion to $5.47 billion, reflecting a projected 4% decrease compared to the prior year[15]. - The company anticipates paying down more than $300 million of debt in 2024[4]. - Adjusted operating profit for the same quarter is projected to be between $115 million and $130 million, with a headwind of approximately $3 million from foreign currency exchange rates[18]. - Operating profit outlook for the quarter ending June 29, 2024, is projected to be between $96,000 thousand and $111,000 thousand, with an adjusted outlook of $115,000 thousand to $130,000 thousand[61]. - Diluted earnings per share outlook for the quarter ending June 29, 2024, is estimated to be between $0.02 and $0.06 under GAAP, and between $0.07 and $0.11 when adjusted[61]. - The company expects cash flow from operations for the year ending December 28, 2024, to be approximately $400,000 thousand[61]. - Capital expenditures outlook for the year ending December 28, 2024, is projected at $65,000 thousand[61]. - Free cash flow outlook for the year ending December 28, 2024, is estimated to be $335,000 thousand[61]. - The company is unable to provide financial performance projections beyond 2024 due to uncertainties regarding net sales and operating profit[62]. Cost and Margin Analysis - GAAP gross margin was 39.9%, an increase of 750 basis points year-over-year, driven by lower input costs and cost savings initiatives[6]. - Gross profit margin increased to 39.9% for the quarter, up from 32.4% in the previous year[35]. - Selling, general and administrative expenses for the quarter ended March 30, 2024, were $408.8 million, or 35.4% of net sales, up from $392.4 million and 28.2% in the prior year[51]. - The Innerwear segment operating margin improved to 21.9%, up from 13.1% in the previous year, reflecting a 878 basis point increase[43]. Inventory and Debt Management - The company reduced inventory by 28% year-over-year, resulting in $26 million of cash flow from operations[6]. - The company's net debt as of March 30, 2024, was $3.1 billion, compared to $3.6 billion as of April 1, 2023[56]. - The leverage ratio improved to 5.0 times net debt-to-adjusted EBITDA, down from 5.4 times in Q1 2023[12]. - The leverage ratio, defined as net debt/EBITDA, as adjusted, was 5.0 for the last twelve months ended March 30, 2024, compared to 5.4 for the same period ended April 1, 2023[56]. Segment Performance - Innerwear segment net sales decreased by 8.4% to $506,843, while Activewear segment net sales fell by 30.9% to $217,749[43]. - International sales decreased by 12% on a reported basis, with growth in Japan, China, and Latin America offset by declines in Europe and Australia[10]. - Global Champion sales excluding C9 Champion decreased approximately 26% in the first quarter of 2024 compared to the first quarter of 2023, with a $3 million unfavorable foreign currency impact[53]. Strategic Initiatives - The company is implementing the Full Potential transformation plan and the global Champion performance plan, incurring pretax charges of approximately $19 million related to these initiatives[18]. - The company incurred approximately $17 million in charges related to the Global Champion performance plan for the quarter ended March 30, 2024[50]. - HanesBrands is focusing on sustainability with aggressive goals set for 2030 to improve lives and protect the planet[33]. Other Financial Metrics - The fully diluted shares outstanding were approximately 354 million[18]. - Cash and cash equivalents at the end of the period were $191,216, down from $213,209 at the end of the previous year[47]. - Total assets decreased to $5,589,676 from $6,432,680 year-over-year[45]. - The company incurred restructuring and other action-related charges of $31,721, an increase of 418.2% compared to $6,121 in the prior year[43].