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Dec 28, 2019
Hanesbrands Q4 2019 Earnings Report
Hanesbrands' fourth quarter results were inline with guidance, concluding a successful year with record operating cash flow and reduced debt.
Key Takeaways
Hanesbrands reported solid fourth-quarter results with net sales of $1.75 billion and GAAP EPS of $0.51. The company generated record net cash from operations and significantly reduced its debt leverage.
Net sales of $1.75 billion decreased 1%, while constant-currency organic sales increased slightly.
GAAP EPS and adjusted EPS were each $0.51, increases of 24% and 13%, respectively.
Net debt was reduced to 2.9 times adjusted EBITDA with debt reduction of $460 million.
The company expects to create meaningful shareholder value using its strong balance sheet.
Hanesbrands
Hanesbrands
Hanesbrands Revenue by Geographic Location
Revenue by Geographic Location
International Revenue
CapyFin.com Forward Guidance
Hanes has issued initial 2020 guidance for the fiscal year ending Jan. 2, 2021, which includes a 53rd week. The company expects 2020 net sales of $6.675 billion to $6.775 billion, GAAP operating profit of $850 million to $880 million, adjusted operating profit excluding actions of $900 million to $930 million, GAAP EPS of $1.60 to $1.68, adjusted EPS excluding actions of $1.72 to $1.80, and net cash from operations of $700 million to $800 million.
Positive Outlook
- The company continues to expect growth for its underlying business on a rebased basis when isolating program exits.
- Full-year net sales are expected to increase 3%.
- Adjusted operating profit is expected to increase 7%.
- Adjusted EPS is expected to increase 15%.
- Global Champion sales growth of approximately 10% for the year with growth in Asia, Australia, Europe and the United States is expected.
Challenges Ahead
- The company expects foreign currency exchange rates to reduce net sales by approximately $25 million for the full year compared with 2019.
- GAAP operating profit in 2020 is expected to be reduced by approximately $50 million for pretax charges for restructuring and other actions.
- Hanes expects interest expense and other expenses to be approximately $185 million combined for the year.
- The company expects capital expenditure investment of approximately $100 million.
- U.S. Activewear net sales, at the midpoint of 2020 guidance, are expected to decrease by approximately 17% for both the full year and the first quarter as a result of the C9 Champion program exit at mass retail.