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Jun 29, 2024
Kontoor Brands Q2 2024 Earnings Report
Second quarter results exceeded expectations with higher revenue, stronger gross margin expansion, and cash flow generation.
Key Takeaways
Kontoor Brands reported a 1% decrease in revenue to $607 million for Q2 2024 compared to the prior year. Adjusted EPS increased by 27% to $0.98. The company is raising its full year outlook, including incremental demand creation investments.
Revenue decreased 1 percent compared to prior year.
Adjusted EPS of $0.98 increased 27 percent compared to prior year.
Inventory decreased 22 percent compared to prior year.
The Company repurchased $25 million of shares and made a $25 million voluntary term loan payment.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
The Company’s updated 2024 outlook includes revenue expected to be in the range of $2.57 to $2.63 billion and adjusted EPS is now expected to approximate $4.80.
Positive Outlook
- Revenue is expected to be in the range of $2.57 to $2.63 billion, reflecting a decrease of 1 percent to an increase of 1 percent compared to the prior year, consistent with the prior outlook.
- Adjusted gross margin is now expected to approximate 44.8 percent, representing an increase of 230 basis points compared to adjusted gross margin in the prior year, excluding the out-of-period duty expense in that period.
- Adjusted operating income is now expected to be at the higher end of the prior range of $377 to $387 million, including an incremental $6 million demand creation investment, reflecting an increase of between 10 and 11 percent compared to adjusted operating income in the prior year, excluding the out-of-period duty expense in that period.
- Adjusted EPS is now expected to approximate $4.80 compared to the prior outlook of $4.70 to $4.80, including an incremental $0.08 impact from demand creation investment compared with the prior outlook.
- The Company now expects cash flow from operations to exceed $350 million driven by the combination of accelerated earnings growth and a continued normalization of inventory.
Challenges Ahead
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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