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Kontoor Brands
🇺🇸 NYSE:KTB
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Oct 01, 2022

Kontoor Brands Q3 2022 Earnings Report

Kontoor Brands reported a decrease in revenue due to U.S. retailer inventory rebalancing and COVID-related lockdowns in China, but strategic pricing and expense controls helped offset inflationary pressures.

Key Takeaways

Kontoor Brands reported Q3 2022 results with revenue of $607 million, a 7% decrease year-over-year. Reported EPS was $0.90, and adjusted EPS was $1.11, compared to $1.07 and $1.28, respectively, in Q3 2021. The company is revising its 2022 outlook, expecting revenue to increase approximately 4% and adjusted EPS to be in the range of $4.35 to $4.40.

Q3'22 revenue decreased 7 percent (5 percent in constant currency) compared to Q3'21, totaling $607 million.

Reported EPS was $0.90, with adjusted EPS at $1.11, compared to Q3'21 reported EPS of $1.07 and adjusted EPS of $1.28.

U.S. revenue decreased 8 percent due to retailer inventory rebalancing, while international revenue decreased 3 percent.

The company now expects 2022 revenue to increase approximately 4 percent and adjusted EPS to be in the range of $4.35 to $4.40.

Total Revenue
$607M
Previous year: $652M
-7.0%
EPS
$1.11
Previous year: $1.28
-13.3%
Operating Margin
12.4%
Previous year: 15.6%
-20.5%
Adjusted EBITDA margin
15.9%
Gross Profit
$264M
Cash and Equivalents
$58M
Previous year: $215M
-73.0%
Free Cash Flow
-$92.8M
Total Assets
$1.65B

Kontoor Brands

Kontoor Brands

Kontoor Brands Revenue by Segment

Kontoor Brands Revenue by Geographic Location

Forward Guidance

Kontoor Brands is revising its 2022 outlook due to retailer inventory rebalancing, inflation, lockdowns in China, and foreign currency impacts.

Positive Outlook

  • Revenue is expected to increase approximately 4 percent compared to 2021.
  • Investments will continue to be made in the Company’s brands and capabilities, including demand creation, Digital, and international expansion.
  • The company expects an effective tax rate of approximately 20 percent in 2022.
  • Interest expense is expected to be in the range of $30 million to $35 million in 2022.
  • Average shares outstanding in 2022 are expected to be approximately 57 million, excluding the impact of additional share repurchases.

Challenges Ahead

  • Gross margin is now expected to approximate 43.0 percent compared to adjusted gross margin of 44.6 percent achieved in 2021.
  • Adjusted SG&A is expected to increase at a low single-digit rate compared to adjusted SG&A in 2021.
  • Adjusted EPS is expected to be in the range of $4.35 to $4.40, compared to prior guidance of $4.40 to $4.50.
  • Capital Expenditures are expected to be in the range of $30 million to $35 million.
  • Challenging global macroeconomic conditions, particularly inflation, should continue to weigh on consumer discretionary spend, and ongoing inventory reduction actions will pressure near-term margins.

Revenue & Expenses

Visualization of income flow from segment revenue to net income

Company Overview

Full financial data and analysis

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