The company closed the year with a strong fourth quarter and has substantially raised its 2014 full-year EPS guidance.
For the full year, net sales increased 2 percent to $4.63 billion, while on a constant-currency basis, net sales increased 3 percent.
Adjusted EPS for the year increased 49 percent to $3.91 from $2.62 in 2012. For the fourth quarter, adjusted EPS of $0.98 beat company guidance. Planned increases in advertising and debt-reduction costs muted fourth-quarter performance compared with the year-ago quarter’s adjusted EPS of $1.07. On a GAAP basis, diluted EPS was $0.32 in the quarter versus $0.78 a year ago and was $3.25 for the year, up from $2.32 a year ago.
(Adjusted performance measures and comparisons exclude fourth-quarter 2013 charges related to the acquisition of Maidenform Brands, other action-related charges in the fourth quarter of 2013, debt actions in the fourth quarter of 2012, and reflect continuing operations for 2012. See sections on discontinued operations and GAAP reconciliation.)
The company earned record adjusted operating profit of $596 million in 2013 for an adjusted operating margin of 12.9 percent, up 320 basis points. Improved profitability resulted from lower cotton costs and benefits of the company’s Innovate-to-Elevate initiatives. On a GAAP basis, operating profit for the quarter was $72 million, compared with $153 million a year ago, and for full-year 2013 was $515 million, up from $440 million, for an operating margin of 11.1 percent compared with 9.7 percent.
For 2014, Hanes has increased its full-year guidance to expected net sales of slightly less than $5.1 billion; adjusted operating profit of $640 million to $660 million; adjusted EPS of $4.60 to $4.80; and net cash from operating activities of $450 million to $550 million.
“We had an outstanding year in 2013 with four consecutive quarters of strong performance. We achieved record results and reached significant milestones, including generating nearly $600 million of cash from operations,” Hanes Chairman and Chief Executive Officer Richard A. Noll said. “We are raising our 2014 earnings guidance because we are increasingly confident that the momentum of our Innovate-to-Elevate strategy will deliver even better results. The combination of our brand power, low-cost supply chain and innovation platforms is generating value and growth opportunities.”
Fourth-Quarter and Full-Year 2013 Financial Highlights and Business Segment Summary
Key accomplishments for 2013 include:
Margin Expansion through Innovate-to-Elevate Success. For the year, Hanes’ two largest business segments – Innerwear and Activewear – delivered double-digit and triple-digit operating profit growth, respectively, and double-digit operating profit margin, benefiting from Innovate-to-Elevate success. The company’s brands are gaining share, supply chain initiatives are creating efficiencies, and innovative product platforms are performing well.
Strong Balance Sheet, Working Capital Improvement and Cash from Operations. Hanes generated a record $591 million of net cash from operating activities in 2013. Inventory excluding Maidenform decreased by $100 million, on 13 percent fewer units. The company used cash to complete its multiyear bond debt reduction plan, instituted a regular quarterly cash dividend for stockholders, and acquired Maidenform Brands.
Maidenform Acquisition Completed and Integration Under Way. Hanes closed its acquisition of Maidenform on Oct. 7, 2013, for approximately $581 million and incurred acquisition- and other action-related charges of approximately $80 million in the fourth quarter. Hanes is in the process of integrating Maidenform’s front-end, supply chain, and distribution/logistics operations into its existing organization.
In the fourth quarter, Maidenform contributed net sales of approximately $100 million and operating profit of approximately $1 million.
Key segment highlights include:
Innerwear Segment. Innerwear net sales increased 20 percent in the fourth quarter and 5 percent for the full year. While Maidenform sales significantly contributed to growth, non-Maidenform sales also increased in each period. Operating profit declined $5 million as a result of $17 million of increased advertising investment.
Strong Fourth-Quarter Sales. Excluding Maidenform contributions, sales increased 6 percent in the fourth quarter. Sales of socks and panties were up double digits, men’s underwear up high single digits, and bras up mid-single digits. For the year, excluding Maidenform, net sales increased 1 percent with socks and men’s underwear driving growth.
Market Share Increases and Innovate-to-Elevate Success. The company’s brands gained market share during the fourth quarter, and Innovate-to-Elevate product platforms continue to succeed. Hanes ComfortBlend socks and men’s underwear, Hanes X-Temp underwear, and Smart Size bras across several brands, including Bali, are all outperforming their respective categories.
Activewear Segment. The Activewear segment, previously known as Outerwear, ended a successful year with strong fourth-quarter results – net sales up 1 percent and operating profit up 9 percent. For the year, operating profit increased by $98 million on a net sales decline of 1 percent.
Strong Profitability. The segment delivered record profitability with an operating margin of 13.1 percent for the full year. Champion activewear, Hanes activewear and Gear for Sports all had double-digit operating margins in the fourth quarter and full year.
Higher Quality of Sales. For the year, Activewear net sales increased 1 percent, excluding the $25 million decline in sales for the branded printwear business, which de-emphasized commodity sales. Sales for Champion activewear and Gear for Sports each increased by mid-single digits for the year.
International Segment. Currency had a significant impact on International net sales and profits. On a constant-currency basis, International net sales increased 10 percent in the fourth quarter and 7 percent for the full year. Maidenform sales contributed to sales growth. Operating profit on a constant-currency basis increased 1 percent in the fourth quarter and was comparable to last year for the full year.
Direct to Consumer Segment. The Direct to Consumer segment achieved significantly improved profitability for the year. The segment’s operating profit increased 31 percent and 34 percent for the fourth quarter and full year, respectively. Direct to Consumer net sales for the fourth quarter increased 14 percent and for the full year increased 2 percent, with Maidenform sales contributing to growth.
2014 Guidance
Hanes has significantly increased its earnings outlook for 2014 and has established guidance for other financial performance measures.
For 2014, Hanes expects net sales of slightly less than $5.1 billion; adjusted operating profit excluding actions of $640 million to $660 million; adjusted EPS excluding actions of $4.60 to $4.80; and net cash from operating activities of $450 million to $550 million.
The company expects its acquisition of Maidenform to contribute approximately $500 million in sales and approximately $25 million of operating profit in 2014.
Interest expense and other expense are expected to be approximately $85 million combined. The full-year tax rate is expected to be in the low teens. As is typical, Hanes expects its tax rate will fluctuate by quarter, with the rate being slightly higher in the first half of the year.
The company expects to make pension contributions of approximately $60 million and net capital expenditures of approximately $60 million to $70 million.
The company expects slightly more than 103 million weighted average shares outstanding in 2014.
Maidenform Integration
Hanes expects to achieve full synergies from the integration of its Maidenform acquisition within three years. After full synergies, the acquisition is expected to annually contribute more than $500 million in net sales, $80 million in operating profit, and $0.60 of EPS.
Synergies are expected from selling, general and administrative savings as a result of the elimination of duplicative corporate and operational costs; cost of goods sold savings as a result of the integration of Maidenform’s 100 percent sourced production model into Hanes’ predominately self-owned manufacturing operations, supplemented by sourcing; and complementary revenue, driven by the application of Hanes’ Innovate-to-Elevate strategy to Maidenform’s products.
Hanes is integrating Maidenform’s sales and marketing, supply chain, and distribution/logistics operations into its existing organization. The company anticipates closing the Maidenform New Jersey headquarters and Fayetteville, N.C., distribution center by the end of 2014.
The majority of the corporate SG&A savings are anticipated to begin by mid-2014. Benefits of supply chain actions to cost of goods sold are expected to start in 2015 and be fully realized in 2016. Complementary revenue opportunities are expected to deliver benefits in late 2015, with the majority of the benefits coming in 2016.
Hanes has updated its quarterly frequently-asked-questions document, which is available at www.Hanes.com/faq.
Discontinued Operations
In 2012, the company announced it was exiting certain international and domestic imagewear businesses that are now classified as discontinued operations. Discontinued operations have no effect on 2013 results.
On May 30, 2012, Hanes sold its European imagewear business, and the company subsequently completed in 2012 the discontinuation of its private-label and Outer Banks domestic imagewear operations serving wholesalers that sell to the screen-print industry. In accordance with generally accepted accounting principles, the company reported results for the second, third and fourth quarters of 2012 on a continuing-operations basis and revised prior-period results, including the first quarter of 2012, to reflect continuing operations. The company’s branded printwear operations continue to operate and serve the domestic screen-print market with Hanes and Champion brand products.
For 2012, discontinued operations reported a loss per diluted share of $0.68 – a loss of $0.03 in the first quarter, a loss of $0.66 in the second quarter, a loss of $0.01 in the third quarter, and earnings of $0.02 in the fourth quarter.
Charges for Actions and Reconciliation to GAAP Measures
Adjusted EPS, adjusted operating profit (and margin), free cash flow, and adjusted EBITDA are not generally accepted accounting principle measures. Hanes has chosen to provide these non-GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating company operations. Non-GAAP measures should not be considered a substitute for financial information presented in accordance with GAAP and may be different from non-GAAP or other pro forma measures used by other companies.
Adjusted EPS is defined as diluted EPS excluding actions and the tax effect on actions. The company believes that adjusted EPS provides investors with an additional means of analyzing the company’s performance absent the effect of acquisition-related expenses and other actions.
Adjusted operating profit is defined as operating profit excluding actions, and the company believes that the measure provides investors with an additional means of analyzing the company’s performance absent the effect of acquisition-related expenses and other actions.
Free cash flow is defined as net cash from operating activities less net capital expenditures. Free cash flow may not be representative of the amount of residual cash flow that is available to the company for discretionary expenditures since it may not include deductions for mandatory debt-service requirements and other nondiscretionary expenditures. The company believes, however, that free cash flow is a useful measure of the cash-generating ability of the business relative to capital expenditures and financial performance. See Table 4 and its footnotes attached to this press release to reconcile free cash flow with the GAAP measure of net cash provided by operating activities.
Adjusted EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortization, and debt-prepayment expenses. Although the company does not use EBITDA to manage its business, it believes that EBITDA is another way that investors measure financial performance.
For 2014 guidance, adjusted EPS is defined as diluted EPS excluding actions and the tax effect on actions, and adjusted operating profit is defined as operating profit excluding actions. Hanes’ current estimate for pretax charges in 2014 for acquisition and other actions is approximately $70 million to $100 million or more, but actual charges could vary significantly. The company believes guidance for adjusted EPS and adjusted operating profit provides investors with an additional means of analyzing the company’s performance absent the effect of acquisition-related expenses and other actions.
On a GAAP basis, full-year 2014 diluted EPS will vary depending on actual performance, charges and tax rate. GAAP diluted EPS could be in the range of $3.80 to $4.30. GAAP operating profit for 2014 could be in the range of $540 million to $590 million.
By press release
More news about Hanesbrands ? Use the search engine at the right top.
Aucun commentaire:
Enregistrer un commentaire