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 core innerwear brands.

• Completed the sale/agreement to sell Global Champion for up to $1.5 billion, with $900 million in expected net proceeds to pay down debt and deleverage the balance sheet.

• Exited remaining U.S. outlet stores in July 2024, strengthening the business focus on higher-margin, core operations.

• Delivered strong Q2 2024 results, with innerwear outperforming expectations and margin expansion despite a challenging market.

• Strategic actions aim to simplify operations, drive consistent revenue growth, higher margins, and strong cash generation post-divestiture.

Financial highlights

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

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

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

• Adjusted gross margin expanded 525 bps to 39.8%; adjusted operating margin up 430 bps to 12.7%.

• Generated $78 million in operating cash flow in Q2 2024; 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.

• Plan to pay down ~$1 billion in debt in H2 2024 using Champion sale proceeds and internal cash, targeting ~3x net debt/EBITDA by end of 2025.

• FY 2024 free cash flow projected at $160 million; capital expenditures expected at $50 million.

• Company expects robust profit growth and further margin expansion in 2025.