HanesBrands (HBI) Tops Q1 EPS by 11c, Revenues Beat; Offers 2Q & FY21 EPS/Revenues Guidance Below Consensus

HanesBrands (NYSE: HBI) reported Q1 EPS of $0.37, $0.11 better than the analyst estimate of $0.26. Revenue for the quarter came in at $1.51 billion versus the consensus estimate of $1.5 billion.

• Net sales from continuing operations of $1.51 billion, up 25% over prior year
• Growth driven by global Champion brand and U.S. Innerwear business
• EPS from continuing operations of $0.37
• Reports non-cash charge related to reclassifying European Innerwear business as discontinued operations
• Provides second-quarter and full-year guidance
• Declares 33rd consecutive regular quarterly dividend
• Company to host virtual investor day today to unveil Full Potential strategic growth plan

“Our strong first-quarter results showed growth across all business segments,” said Chief Executive Officer Steve Bratspies. “Champion continued its rapid growth, driven by strong consumer demand. We gained share in U.S. Innerwear, and our Hanes Total Support Pouch launch shows how our brands can appeal to younger consumers with a combination of innovative products and compelling marketing. Our global online sales grew more than 80% as we focus on empowering consumers to shop when, where and how they want to shop.

“I want to thank our 61,000 associates who continue to meet consumer demand around the world as we continue to face COVID-related challenges. Our first-quarter results show the competitive advantages of our supply chain as well as the rapid progress we’re making on our Full Potential plan to generate long-term revenue and profit growth.”

GUIDANCE:

HanesBrands sees Q2 2021 EPS of $0.37-$0.40, versus the consensus of $0.41. HanesBrands sees Q2 2021 revenue of $1.56-1.59 billion, versus the consensus of $1.61 billion.

HanesBrands sees FY2021 EPS of $1.51-$1.59, versus the consensus of $1.61. HanesBrands sees FY2021 revenue of $6.2-6.3 billion, versus the consensus of $6.72 billion.

For the second quarter of 2021 which ends on July 3, 2021, the company currently expects:

• Net sales from continuing operations of approximately $1.56 billion to $1.59 billion, which represents approximately 2% growth at the midpoint and includes a projected benefit of approximately $35 million from changes in foreign currency exchange rates. This compares to net sales of $1.54 billion in second-quarter 2020, which included $614 million in PPE sales.
• Excluding PPE, net sales at the midpoint of the guidance range are expected to increase 69% over prior year period.
• While the company expects a modest amount of sales from one-time benefits, including retailer restocking and stimulus-related spending, to continue into the second quarter, the benefit is expected to be significantly lower than first-quarter levels. For the second half of 2021, the company’s guidance does not assume any additional stimulus or inventory restocking benefits.
• GAAP operating profit from continuing operations to range from approximately $179 million to $189 million.
• Adjusted operating profit from continuing operations to range from approximately $200 million to $210 million. The midpoint of adjusted operating profit implies an operating margin of approximately 13.0% and reflects the impact of inflation, particularly transportation, as well as increased brand investment. This compares to an adjusted operating margin of 15.2% in the second quarter of 2020, which benefited from significant fixed cost leverage due to PPE volume-driven efficiencies in the supply chain as well as temporary COVID-driven cost reductions.
• Charges for actions related to Full Potential of approximately $21 million.
• Interest and Other expenses of approximately $45 million.
• An effective tax rate of approximately 15% on a GAAP and adjusted basis.
• GAAP earnings per share from continuing operations to range from $0.32 to $0.35. Adjusted earnings per share from continuing operations to range from $0.37 to $0.40.

For fiscal year 2021, which ends on January 1, 2022, the company currently expects:

• Net sales from continuing operations to total approximately $6.2 billion to $6.3 billion, which includes a projected benefit of approximately $100 million from changes in foreign currency exchange rates. At the midpoint, net sales guidance implies approximately 2% growth over prior year and 3% growth adjusted for the 53rd week in 2020. This compares to net sales of $6.13 billion in 2020, which included $820 million in sales of PPE.
• Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 19% over prior year period.
• GAAP operating profit from continuing operations to range from approximately $730 million to $760 million.
• Adjusted operating profit from continuing operations to range from approximately $815 million to $845 million. The midpoint of adjusted operating profit suggests an operating margin of 13.3%, compared with an adjusted operating margin of 12.7% in 2020.
• Incremental brand marketing investment of $50 million as compared to 2020.
• As compared to 2019, at the midpoint of the company’s full-year 2021 guidance, which includes incremental brand investment and COVID-related expenses, net sales and adjusted operating profit are expected to be above 2019 levels.
• Charges for actions related to Full Potential of approximately $85 million.
• Interest and Other expenses of approximately $185 million.
• An effective tax rate of approximately 14% on a GAAP basis and approximately 15% on an adjusted basis.
• GAAP earnings per share from continuing operations to range from approximately $1.33 to $1.41.
• Adjusted earnings per share from continuing operations to range from approximately $1.51 to $1.59.
• Cash flow from operations to range from $500 million to $550 million.
• Capital expenditures of approximately $140 million, which includes approximately $50 million related to Full Potential.

For earnings history and earnings-related data on HanesBrands (HBI) click here.

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