Kontoor Brands Inc. (NYSE: KTB) reported Q3 EPS of $1.33, $0.75 better than the analyst estimate of $0.58. Revenue for the quarter came in at $583 million versus the consensus estimate of $547.12 million.

• Q3 Reported Revenue of $583 million declined 9 percent compared with the prior year
• Q3 Reported EPS of $1.05; Adjusted EPS of $1.33 increased 40 percent compared with the prior year
• Q3 Reported Gross Margin increased 410 bps to 44.2 percent compared with the prior year; Adjusted Gross Margin increased 240 bps to 43.3 percent
• Strong cash generation supported additional discretionary debt repayments totaling $100 million in the third quarter, achieving lowest net debt level since spin-off in May 2019
• The Company’s Board of Directors declared a quarterly cash dividend of $0.40 per share payable in December 2020
• FY'20 Adjusted EPS is expected to be in the range of $2.25 to $2.35

“Our strategic actions delivered strong results in the quarter and are enhancing the Kontoor operating model focused on more profitable and sustainable long-term growth,” said Scott Baxter, President and Chief Executive Officer, Kontoor Brands. “Investments in our brands, people and partnerships drove significant sequential top line improvement, while restructuring, quality-of-sales initiatives and accretive mix shifts supported solid gross margin increases. And, importantly, our robust cash flow generation allowed us to continue to aggressively pay down debt, while also providing the opportunity to reinstate a quarterly dividend in the fourth quarter of 2020, a key tenet of our total shareholder return model.”

“Our accomplishments during the third quarter are a direct reflection of our colleagues’ incredible efforts, and I want to thank them for their tremendous contributions throughout these dynamic times,” added Baxter.

GUIDANCE:

Kontoor Brands Inc. sees FY2020 EPS of $2.25-$2.35, versus the consensus of $1.33.

While the impacts from the COVID-19 pandemic and macroeconomic factors remain uncertain, the Company is providing full-year 2020 Adjusted EPS guidance and additional perspective on its fourth quarter outlook, including the following:

• 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.
• 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.
• 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.

For earnings history and earnings-related data on Kontoor Brands Inc. (KTB) click here.