https://assets.capyfin.com/instruments/678fdc13234e27009c5d5f06.png avatar
Kontoor Brands
🇺🇸 NYSE:KTB
View Company
OverviewEarningsDividends
•
Jul 01, 2023

Kontoor Brands Q2 2023 Earnings Report

Delivered second quarter results largely consistent with expectations, with U.S. POS continuing to outpace shipments.

Key Takeaways

Kontoor Brands reported flat revenue of $616 million for Q2 2023 compared to Q2 2022. The company reaffirmed its 2023 outlook excluding restructuring charges. Strength in DTC and International was tempered by decreases in U.S. wholesale.

Q2 2023 revenue was $616 million, flat compared to Q2 2022.

Reported EPS was $0.64, and adjusted EPS was $0.77, including a one-time discrete tax charge of $0.09.

Gross margin decreased by 290 basis points to 40.6 percent on a reported basis.

Inventory increased 17 percent over Q2 2022, sequentially improving from a 52 percent year-over-year increase in Q1 2023.

Total Revenue
$616M
Previous year: $614M
+0.4%
EPS
$0.77
Previous year: $1.09
-29.4%
Operating Margin
10.3%
Previous year: 14.5%
-29.0%
Adjusted EBITDA margin
12.7%
Gross Profit
$250M
Previous year: $267M
-6.3%
Cash and Equivalents
$82.4M
Previous year: $145M
-43.2%
Free Cash Flow
$117M
Previous year: $20.4M
+474.6%
Total Assets
$1.61B
Previous year: $1.54B
+4.2%

Kontoor Brands

Kontoor Brands

Kontoor Brands Revenue by Segment

Kontoor Brands Revenue by Geographic Location

Forward Guidance

The Company is reaffirming its prior outlook for FY’23 provided on May 4, 2023 with select updates to quarterly cadence.

Positive Outlook

  • Revenue is expected to increase at a low-single digit percentage over 2022, consistent with the prior outlook, with second half performance now anticipated to be above first half growth.
  • Adjusted gross margin is expected to be in the range of 43.5 percent to 44.0 percent, increasing 40 to 90 basis points compared to gross margin of 43.1 percent in 2022, consistent with prior outlook excluding restructuring charges in Q2’23.
  • Adjusted SG&A is expected to increase at a mid-single digit percentage compared to adjusted SG&A in 2022, consistent with prior outlook excluding restructuring charges in Q2’23.
  • Adjusted EPS is expected to be in the range of $4.55 to $4.75, consistent with prior outlook excluding $0.13 associated with restructuring charges in Q2’23.
  • Capital Expenditures are expected to be in the range of $35 million to $40 million, primarily to support IT projects, growth in owned retail stores, manufacturing and distribution investments.

Challenges Ahead

  • During the fourth quarter of 2023, the Company assumes macro consumer demand conditions will be more challenged in the U.S.
  • The Company expects year-over-year EPS growth to be most pronounced in Q4’23.
  • The Company expects an effective tax rate of 20 percent to 21 percent.
  • Interest expense is expected to be in the range of $33 million to $38 million.
  • Other Expense is expected to be in the range of $5 million to $10 million.

Revenue & Expenses

Visualization of income flow from segment revenue to net income

Company Overview

Full financial data and analysis

View Kontoor Brands