Kontoor-KTB Q3 Earnings Beat Estimates, Raised Guidance Propel Stock Higher

Core Insights - Kontoor Brands, Inc. (KTB) reported third-quarter 2024 results with revenues of $670.2 million and adjusted earnings of$ 1.37 per share, both exceeding Zacks Consensus Estimates [1][3][4] - The stock surged 11.9% on October 31 due to better-than-expected results and a positive earnings forecast for 2024 [1][2] - Management anticipates continued stabilization in the industry for the remainder of the year [1] Financial Performance - Adjusted earnings per share of $1.37 surpassed the Zacks Consensus Estimate of$ 1.25, while GAAP earnings were $1.26, up from$ 1.05 year-over-year [3] - Net revenues increased by 2% from $654.5 million in the prior year quarter, exceeding the Zacks Consensus Estimate of$ 660 million [4] - Adjusted gross margin improved by 150 basis points year-over-year to 45% [4] Operating Expenses - Adjusted SG&A expenses rose by 5% year-over-year to $194.8 million due to investments in demand creation, product development, and distribution [5] - Adjusted operating income increased by 8% year-over-year to$ 107 million, with an adjusted operating margin of 15.9%, up 80 basis points [5] Segment Performance - U.S. revenues of $530 million improved by 5% year-over-year, driven by expanded distribution and market share gains [6] - International revenues fell by 5% to$ 141 million, primarily due to a 7% drop in international wholesale [7] - Wrangler brand revenues increased by 3% year-over-year to $464 million, while Lee brand revenues declined by 3% to$ 202 million [8][9] Future Guidance - Kontoor Brands updated its 2024 revenue forecast to $2.60 billion, with an expected 4% year-over-year increase in Q4 revenues [12] - Adjusted gross margin is anticipated to expand to 45.1%, reflecting a 260 basis point increase from the prior year [12] - Adjusted earnings per share are now expected to be$ 4.83, up from the previous forecast of $4.80, indicating a 9% improvement year-over-year [14]