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Sep 26, 2020
Kontoor Brands Q3 2020 Earnings Report
Reported strong results driven by strategic actions, enhancing the operating model for sustainable long-term growth.
Key Takeaways
Kontoor Brands reported a 9% decrease in revenue to $583 million for Q3 2020, but adjusted EPS increased by 40% compared to the prior year. Strong cash generation supported additional debt repayments and the reinstatement of a quarterly dividend.
Q3 reported revenue declined 9% year-over-year to $583 million.
Q3 reported EPS was $1.05; adjusted EPS increased 40% year-over-year to $1.33.
Q3 reported gross margin increased 410 bps to 44.2%; adjusted gross margin increased 240 bps to 43.3%.
Strong cash generation supported $100 million in discretionary debt repayments.
Kontoor Brands
Kontoor Brands
Kontoor Brands Revenue by Segment
Kontoor Brands Revenue by Geographic Location
Revenue by Segment
Wrangler Revenue
CapyFin.comLee Revenue
CapyFin.comRevenue by Geographic Location
U.S. Revenue
CapyFin.comInternational Revenue
CapyFin.com Forward Guidance
The company expects continued sequential improvement in Q4 2020 revenue compared to Q3 2020, with revenue anticipated to be flat to down modestly. Full-year 2020 Adjusted EPS is anticipated to be in the range of $2.25 to $2.35.
Positive Outlook
- The Company continues to take the necessary, proactive steps to accommodate a prolonged COVID-19 operating environment.
- Revenue in the fourth quarter of 2020 is expected to show continued sequential improvement from third quarter 2020 results, with revenue anticipated to be flat to down modestly.
- Adjusted gross margin in the fourth quarter of 2020 is anticipated to be above the 40.9 percent achieved in the prior year, reflecting continued benefits from ongoing restructuring and quality-of-sales initiatives, as well as higher anticipated growth in more accretive channels such as Digital and improving mix within international.
- Full-year 2020 Adjusted EPS is anticipated to be in the range of $2.25 to $2.35.
- Strong cash generation is expected to support continued aggressive debt paydown, which is anticipated to be at least $100 million during the fourth quarter.
Challenges Ahead
- Impacts from the COVID-19 pandemic and macroeconomic factors remain uncertain.
- Revenue in the fourth quarter of 2020 is expected to show continued sequential improvement from third quarter 2020 results, with revenue anticipated to be flat to down modestly.
- Fourth quarter adjusted SG&A is expected to increase year-over-year, driven by strategic decisions to amplify investments in demand creation and DTC in support of both the fourth quarter and long-term revenue.
- The Company continues to take the necessary, proactive steps to accommodate a prolonged COVID-19 operating environment.
- Impacts from the COVID-19 pandemic and macroeconomic factors remain uncertain.
Revenue & Expenses
Visualization of income flow from segment revenue to net income