Updated August 11, 2022 – New or updated information is in red
General and Current Period FAQs (Guidance comments as of August 11, 2022)
Unless
otherwise indicated, all guidance and related commentary as well as comparisons to prior periods reflect continuing operations.
(1) Q: What are the main components of your full-year 2022 guidance?
A: Net Sales: We expect total net sales from continuing operations of $6.45 billion to $6.55 billion. This includes an approximate $165 million headwind from the effects of foreign exchange rates as compared to last year. The foreign exchange impact is reflected within the International segment. At the midpoint, our guidance represents net sales decline as compared to prior year of approximately 2% on a constant currency basis and approximately 4% on a reported basis.
Operating Profit (GAAP and Adjusted): Our guidance for GAAP Operating Profit from continuing operations is $570 million
to $620 million. Our guidance for Adjusted Operating Profit from continuing operations, which excludes pretax Full Potential plan-related charges (see below), is $630 million to $680 million. Our operating profit guidance includes an approximate $22 million headwind from the effects of foreign exchange rates as compared to last year.
Interest/Other Expenses and Tax Rate: Our guidance assumes Interest and Other expenses of approximately $161 million. Our guidance assumes an effective tax rate of approximately 17% on both a GAAP and adjusted basis.
EPS (GAAP and Adjusted): Our guidance for GAAP EPS from continuing operations is $0.97 to $1.09. Our guidance for Adjusted EPS from continuing operations is $1.11 to $1.23. Adjusted EPS from continuing operations excludes pretax Full Potential plan-related
expenses (see below). Both ranges are based on diluted shares outstanding of approximately 351 million for the year and exclude any potential impact from future share repurchases.
Cash flow from operations: Our full-year guidance is for cash flow from operations to be essentially break-even. Our capital expenditure guidance is approximately $150 million to $175 million.
Pretax expenses: Our guidance reflects approximately $60 million of pretax Full Potential plan-related charges.
(2) Q: What are the main components of your third-quarter 2022 guidance?
A: Net Sales: We expect total net sales from continuing operations of $1.73 billion
to $1.78 billion. This includes an approximate $58 million headwind from the effects of foreign exchange rates as compared to last year. The foreign exchange impact is reflected within the International segment. At the midpoint, our guidance represents net sales growth of approximately 1% over prior year on a constant currency basis and down approximately 2% on a reported basis.
Operating Profit (GAAP and Adjusted): Our guidance for GAAP Operating Profit from continuing operations is $129 million to $149 million. Our guidance for Adjusted Operating Profit from continuing operations, which excludes pretax Full Potential plan-related charges (see below), is $160 million to $180 million. Our operating profit guidance includes an approximate $8 million headwind from the effects of foreign exchange rates as compared to last year.
Interest/Other
Expenses and Tax Rate: Our guidance assumes Interest and Other expenses of approximately $44 million. Our guidance assumes an effective tax rate of approximately 17% on both a GAAP and adjusted basis.
EPS (GAAP and Adjusted): Our guidance for GAAP EPS from continuing operations is $0.20 to $0.25. Our guidance for Adjusted EPS from continuing operations is $0.27 to $0.32. Adjusted EPS from continuing operations excludes pretax Full Potential plan-related expenses (see below). Both ranges are based on diluted shares outstanding of approximately 350 million for the quarter and exclude any potential impact from share repurchases.
Pretax expenses: Our guidance reflects approximately $31 million of pretax Full Potential plan-related charges.
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(3) Q: Can
you provide any information on the announcement to sell the U.S. Sheer Hosiery business?
A: We reached another milestone in our Full Potential initiative to focus our portfolio in areas with the greatest potential for growth and returns. As part of this initiative, on February 3, 2022, we announced our intention to sell our U.S. Sheer Hosiery business. The assets and liabilities of the U.S. Sheer Hosiery business are reflected in ‘held for sale’ on the balance sheet. We expect this business to generate approximately $60 million of sales and essentially zero operating profit, which is reflected in our current 2022 guidance estimates.
***For prior FAQs please see our prior Securities and Exchange Commission reports, including our Current Reports on Form 8-K.***
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Charges for Actions and Reconciliation to GAAP Measures
To supplement financial results prepared in accordance with generally accepted accounting principles, we provide quarterly and full-year results concerning certain non‐GAAP financial measures, including adjusted EPS from continuing operations, adjusted income from continuing operations, adjusted income tax expense, adjusted income from continuing operations before income tax expense, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin), EBITDA and adjusted EBITDA.
Adjusted EPS from continuing operations is defined as diluted EPS from continuing operations excluding actions and the tax effect on actions. Adjusted income from continuing operations is defined as income from continuing operations excluding actions
and the tax effect on actions. Adjusted income tax expense is defined as income tax expense excluding actions. Adjusted income from continuing operations before income tax is defined as income from continuing operations before income tax excluding actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions. Adjusted gross profit is defined as gross profit excluding actions.
Charges for actions taken in 2022 and 2021 include professional fees, operating model charges, (gain)/loss on classification of assets held for sale, supply chain segmentation charges, technology charges and intangible asset impairment charges related to our Full Potential plan.
While these costs are not expected to
continue for any singular transaction on an ongoing basis, similar types of costs, expenses and charges have occurred in prior periods and may recur in future periods depending upon future business plans and circumstances.
We have chosen to present these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating operations absent the effect of the Full Potential plan and other actions. We believe these non-GAAP measures provide management and investors with valuable supplemental information for analyzing the operating performance of the Company’s ongoing business during each period presented without giving effect to costs associated with the execution of any of the aforementioned actions taken.
We
have also chosen to present EBITDA and adjusted EBITDA to investors because it considers these measures to be an important supplemental means of evaluating operating performance. EBITDA is defined as income from continuing operations before interest, taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA excluding actions and other losses, charges and expenses as defined in the Consolidated Net Total Leverage Ratio under its Fifth Amended and Restated Credit Agreement, dated November 19, 2021. We believe that EBITDA and adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, and management uses EBITDA and adjusted EBITDA for planning purposes in connection with setting its capital allocation strategy. EBITDA and adjusted EBITDA should not, however, be considered as measures of discretionary cash available to
invest in the growth of the business.
We are a global company that reports financial information in U.S. dollars in accordance with GAAP. As a supplement to our reported operating results, we also presents constant-currency financial information, which is a non-GAAP financial measure that excludes the impact of translating foreign currencies into U.S. dollars. We use constant-currency information to provide a framework to assess how the business performed excluding the effects of changes in the rates used to calculate foreign currency translation. To calculate foreign currency translation on a constant currency basis, operating results for the current-year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in
effect during the current year period). We believe constant-currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in the Company’s businesses.
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Non‐GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or substitute for, financial results prepared in accordance
with GAAP. Further, the non-GAAP measures presented may be different from non-GAAP measures with similar or identical names presented by other companies. See our press release dated August 11, 2022 to reconcile quarterly non-GAAP performance measures to the most directly comparable GAAP measure. A copy of the press release is available at www.Hanes.com/Investors.
These FAQs contain certain forward-looking statements, as defined under U.S. federal
securities laws, with respect to our long-term goals and trends associated with our business, as well as guidance as to future performance. In particular, among others, guidance and predictions regarding expected operating results, including related to our Full Potential plan; statements made in the Third- Quarter and Full-year 2022 Financial Outlook section of this news release; and statements regarding the sale of our U.S. Hosiery business, are forward-looking statements. These forward-looking statements are based on our current intent, beliefs, plans and expectations. Readers are cautioned not to place any undue reliance on any forward-looking statements. Forward-looking statements necessarily involve risks and uncertainties, many of which are outside of our control, that could cause actual results to differ materially from such statements and from our historical results and experience. These risks and uncertainties include such things as: our ability to successfully
execute our Full Potential plan to achieve the desired results; the potential effects of the COVID-19 pandemic, including on consumer spending, global supply chains and the financial markets; the highly competitive and evolving nature of the industry in which we compete; the rapidly changing retail environment and the level of consumer demand; our reliance on a relatively small number of customers for a significant portion of our sales; any inadequacy, interruption, integration failure or security failure with respect to our information technology (including the ransomware attack announced May 31, 2022); the impact of significant fluctuations and volatility in various input costs, such as cotton and oil-related materials, utilities, freight and wages; the availability of supply chain resources; our ability to attract and retain a senior management team with the core competencies needed to support growth in global markets
and ongoing labor shortages generally; significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex multinational tax structure; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and HanesBrands undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.
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Dates Referenced Herein and Documents Incorporated by Reference
