HanesBrands (HBI) Q2 2024 earnings summary

Executive summary

• Reclassified Global Champion and U.S. Outlet store businesses to discontinued operations, realigning segment reporting and focusing on a simplified, higher-margin core business.

• Announced and entered agreement to sell the global Champion business, expecting $900 million in net proceeds to pay down debt and deleverage the balance sheet.

• Completed exit of U.S. outlet stores in July 2024, further streamlining operations and focusing on core innerwear brands.

• Strategic actions aim to simplify operations, drive consistent revenue growth, higher margins, and strong cash generation, with a robust innovation pipeline and leading market share in core categories.

• Delivered solid Q2 2024 results, outperforming expectations in U.S. innerwear and expanding margins.

Financial highlights

• Q2 2024 net sales from continuing operations were $995 million, down 4% year-over-year; organic constant currency sales down 1%.

• Adjusted operating profit rose 46% to $126 million; GAAP operating loss was $(63) million due to $189 million in restructuring and other charges.

• Adjusted gross margin improved 525 bps to 39.8% year-over-year, driven by lower input costs and cost savings initiatives.

• Adjusted EPS from continuing operations was $0.15, up 650% from $0.02 last year; GAAP loss per share was $(0.39).

• Generated $78 million in operating cash flow in Q2 2024, with cash and equivalents at $214 million as of June 29, 2024.

Outlook and guidance

• FY 2024 net sales from continuing operations expected at $3.59–$3.63 billion, down ~4% year-over-year; organic constant currency sales down ~2%.

• FY 2024 adjusted operating profit expected at $395–$415 million; adjusted EPS at $0.31–$0.37.

• FY 2024 free cash flow projected at $160 million; $1 billion debt paydown expected in H2 2024 from Champion sale and internal cash generation.

• Q3 2024 net sales guidance of $920–$950 million; adjusted EPS of $0.09–$0.14.

• Plan to pay down $1 billion in debt in the second half of 2024, targeting a year-end leverage ratio decline of 1.5 turns and ending 2025 at approximately 3x net debt to adjusted EBITDA.