Kontoor Brands (KTB) Q2 2024 earnings summary

Executive summary

• Second quarter revenue was $607 million, down 1% year-over-year, with gross margin expansion and strong cash flow generation.

• Net income for Q2 was $51.8 million, up 42% year-over-year, and adjusted EPS rose 27% to $0.98.

• Gross margin improved by 420 basis points to 45.2%, driven by lower product costs and favorable mix.

• Shareholder returns exceeded $100 million year-to-date, including dividends and share repurchases.

• The company continued executing its strategic vision, including Project Jeanius, a multi-year transformation initiative.

Financial highlights

• Q2 revenue declined 1% year-over-year to $606.9 million; DTC grew 4%, while wholesale declined 2%.

• Adjusted operating income was $80 million, up 10% year-over-year, with adjusted operating margin at 13.1%.

• Adjusted EBITDA for Q2 was $86.7 million, up from $78.1 million in Q2 2023.

• Inventory reduced by 22% to $488 million, supporting strong cash generation.

• Net debt at $525 million, with a net leverage ratio of 1.4x.

Outlook and guidance

• Full-year revenue expected between $2.57B and $2.63B, ranging from -1% to +1% growth.

• Adjusted gross margin now expected at 44.8% for 2024, up from prior 44.6% guidance.

• Adjusted operating income forecasted at the high end of $377M–$387M, up 10–11% year-over-year.

• Adjusted EPS expected to approximate $4.80, up 8% year-over-year.

• Cash from operations projected to exceed $350 million for the year.