Fourth Quarter 2024 Highlights
- Revenue of $699 million increased 4 percent compared to prior
year (5 percent on a constant currency basis)
- Reported gross margin was 43.7 percent. Adjusted gross margin
of 44.7 percent increased 160 basis points compared to prior year
on an adjusted basis, excluding the out-of-period duty charge in
that period
- Reported operating income was $84 million. Adjusted operating
income of $101 million increased 17 percent compared to prior year
on an adjusted basis, excluding the out-of-period duty charge in
that period
- Reported EPS was $1.14. Adjusted EPS of $1.38 increased 2
percent compared to prior year on an adjusted basis, excluding the
out-of-period duty charge in that period. Adjusted EPS in the prior
year was positively impacted by a discrete tax benefit. Excluding
these impacts, adjusted EPS increased approximately 23 percent
- Inventory decreased 22 percent compared to prior year
- As previously announced, the Company’s Board of Directors
declared a regular quarterly cash dividend of $0.52 per share
Full Year 2024 Highlights
- Revenue of $2.61 billion was consistent with prior year
- Reported gross margin was 44.5 percent. Adjusted gross margin
of 45.1 percent increased 260 basis points compared to prior year
on an adjusted basis, excluding the out-of-period duty charge in
that period
- Reported operating income was $342 million. Adjusted operating
income of $381 million increased 9 percent compared to prior year
on an adjusted basis, excluding the out-of-period duty charge in
that period
- Reported EPS was $4.36. Adjusted EPS of $4.89 increased 10
percent compared to prior year on an adjusted basis, excluding the
out-of-period duty charge in that period
- Adjusted return on invested capital of 32 percent increased 550
basis points compared to prior year
- Returned a total of $198 million to shareholders through a
combination of share repurchases and dividends
Full Year 2025 Outlook
- Outlook excludes the expected revenue, earnings and cash flow
contribution from Helly Hansen
- Revenue expected to be in the range of $2.63 billion to $2.69
billion, representing an increase of 1 percent to 3 percent
compared to prior year
- Adjusted gross margin expected to be in the range of 45.3
percent to 45.5 percent, representing an increase of 20 to 40 basis
points compared to prior year on an adjusted basis
- Adjusted operating income expected to be in the range of $400
million to $408 million, representing an increase of 5 percent to 7
percent compared to prior year on an adjusted basis
- Adjusted EPS expected to be in the range of $5.20 to $5.30,
representing an increase of 6 percent to 8 percent compared to
prior year on an adjusted basis. Full year adjusted EPS does not
contemplate the benefit of share repurchases as a result of the
previously announced acquisition of Helly Hansen
- Cash from operations is expected to exceed $300 million
Kontoor Brands, Inc. (NYSE: KTB), a global lifestyle apparel
company, with a portfolio led by two of the world’s most iconic
consumer brands, Wrangler® and Lee®, today reported financial
results for its fourth quarter and full year ended December 28,
2024.
“2024 was a landmark year for Kontoor driven by continued market
share gains, accelerating business fundamentals, increasing capital
allocation optionality, and strong returns for our shareholders,”
said Scott Baxter, President, Chief Executive Officer and Chairman
of the Board of Directors. “Our better than expected fourth quarter
was driven by stronger revenue, earnings, and cash generation. I
want to thank our colleagues around the globe, who continue to
execute at a high level. We enter 2025 from a position of strength
and I am confident we are well positioned to deliver another year
of strong value creation.”
Fourth Quarter 2024 Income Statement
Review
Revenue was $699 million and increased 4 percent (5
percent increase in constant currency) compared to prior year. The
increase was driven by 9 percent growth in global
direct-to-consumer and 4 percent growth in wholesale.
U.S. revenue was $569 million and increased 6 percent compared
to prior year. U.S. wholesale revenue increased 5 percent.
Direct-to-consumer increased 11 percent driven by a 16 percent
increase in digital and a 1 percent increase in brick-and-mortar
retail.
International revenue was $130 million and decreased 1 percent
(1 percent increase in constant currency) compared to prior year.
International wholesale decreased 4 percent (1 percent decrease in
constant currency) and direct-to-consumer increased 5 percent, with
a 15 percent increase in digital partially offset by a 3 percent
decrease in owned brick-and-mortar retail. Europe increased 1
percent, with a 5 percent increase in direct-to-consumer partially
offset by a 1 percent decrease in wholesale. Asia decreased 2
percent, with a 4 percent increase in direct-to-consumer more than
offset by an 8 percent decrease in wholesale. Non-U.S. Americas
decreased 4 percent.
Wrangler brand global revenue was $503 million and increased 9
percent compared to prior year. Wrangler U.S. revenue increased 9
percent, driven by a 9 percent increase in both direct-to-consumer
and wholesale. Wrangler international revenue increased 7 percent
(9 percent increase in constant currency), driven by a 7 percent
increase (9 percent increase in constant currency) in wholesale and
an 8 percent increase in direct-to-consumer.
Lee brand global revenue was $194 million and decreased 6
percent compared to prior year. Lee U.S. revenue decreased 6
percent driven by a 10 percent decrease in wholesale partially
offset by an 18 percent increase in direct-to-consumer. Lee
international revenue decreased 6 percent (4 percent decrease in
constant currency) driven by an 11 percent decrease (8 percent
decrease in constant currency) in wholesale partially offset by a 5
percent increase in direct-to-consumer.
Gross margin increased 200 basis points to 43.7 percent
on a reported basis and increased 160 basis points to 44.7 percent
on an adjusted basis compared to prior year adjusted results,
excluding the out-of-period duty charge in that period. Adjusted
gross margin expansion was driven by the benefits from lower
product costs, supply chain efficiencies and direct-to-consumer
mix, partially offset by targeted pricing actions included in our
plan.
Selling, General & Administrative (SG&A) expenses
were $221 million, or 31.6 percent of revenue on a reported basis.
On an adjusted basis, SG&A expenses were $211 million,
representing an increase of 5 percent compared to prior year on an
adjusted basis, driven by an increase in demand creation
investments and volume-related variable expenses, partially offset
by lower distribution expenses.
Operating income was $84 million on a reported basis. On
an adjusted basis, operating income was $101 million and increased
17 percent compared to prior year on an adjusted basis, excluding
the out-of-period duty charge in that period. Adjusted operating
margin of 14.5 percent increased 160 basis points compared to prior
year on an adjusted basis, excluding the out-of-period duty charge
in that period.
Earnings per share (EPS) was $1.14 on a reported basis.
On an adjusted basis, EPS was $1.38 compared to adjusted EPS of
$1.35 in prior year, excluding the out-of-period duty charge in
that period, representing an increase of 2 percent. Adjusted EPS in
the prior year was positively impacted by a discrete tax benefit.
Excluding these impacts, adjusted EPS increased approximately 23
percent.
Full Year 2024 Income Statement
Review
Revenue was $2.61 billion and was consistent with prior
year. Growth in the U.S. and global direct-to-consumer was offset
by a decline in international wholesale revenue.
U.S. revenue was $2.09 billion and increased 1 percent compared
to prior year. U.S. wholesale revenue increased 1 percent driven by
expanded distribution, market share gains and strength in
point-of-sale, partially offset by retailer inventory management
actions. Direct-to-consumer increased 5 percent driven by 8 percent
growth in digital partially offset by a 1 percent decrease in
brick-and-mortar retail.
International revenue was $521 million and decreased 5 percent
compared to prior year. International wholesale decreased 7 percent
and direct-to-consumer increased 3 percent, with a 15 percent
increase in digital partially offset by a 6 percent decrease in
owned brick-and-mortar retail. Europe decreased 5 percent, with a 7
percent increase in direct-to-consumer more than offset by an 8
percent decrease in wholesale. Asia decreased 5 percent driven by a
1 percent decrease in direct-to-consumer and a 7 percent decrease
in wholesale. Non-U.S. Americas decreased 4 percent.
Wrangler brand global revenue was $1.81 billion and increased 3
percent compared to prior year. Wrangler U.S. revenue increased 3
percent, driven by growth in direct-to-consumer and wholesale.
Wrangler international revenue decreased 1 percent, driven by a 3
percent decrease in wholesale partially offset by a 14 percent
increase in direct-to-consumer.
Lee brand global revenue was $791 million and decreased 6
percent compared to prior year. Lee U.S. revenue decreased 5
percent driven by a decline in wholesale and brick-and-mortar
retail, partially offset by growth in digital. Lee international
revenue decreased 7 percent driven by declines in wholesale and
brick-and-mortar retail, partially offset by growth in digital.
Gross margin increased 280 basis points to 44.5 percent
on a reported basis and increased 260 basis points to 45.1 percent
on an adjusted basis compared to prior year adjusted results,
excluding the out-of-period duty charge in that period. Adjusted
gross margin expansion was driven by the benefits from lower
product costs, direct-to-consumer mix and supply chain
efficiencies, partially offset by lower pricing.
Selling, General & Administrative (SG&A) expenses
were $819 million, or 31.4 percent of revenue on a reported basis.
On an adjusted basis, SG&A expenses were $796 million,
representing an increase of 5 percent compared to prior year on an
adjusted basis, driven by an increase in demand creation and
investments in our direct-to-consumer and technology platforms,
partially offset by lower distribution expenses.
Operating income was $342 million on a reported basis. On
an adjusted basis, operating income was $381 million and increased
9 percent compared to prior year on an adjusted basis, excluding
the out-of-period duty charge in that period. Adjusted operating
margin of 14.6 percent increased 130 basis points compared to prior
year on an adjusted basis, excluding the out-of-period duty charge
in that period.
Earnings per share (EPS) was $4.36 on a reported basis.
On an adjusted basis, EPS was $4.89 compared to adjusted EPS of
$4.45 in prior year, excluding the out-of-period duty charge in
that period, representing an increase of 10 percent.
Balance Sheet and Liquidity
Review
The Company ended fiscal 2024 with $334 million in cash and cash
equivalents, and $740 million in long-term debt.
Inventory at the end of fiscal 2024 was $390 million,
representing a 22 percent decrease compared to prior year.
At the end of fiscal 2024, the Company had no outstanding
borrowings under the Revolving Credit Facility and $494 million
available for borrowing against this facility.
As previously announced, the Company’s Board of Directors
declared a regular quarterly cash dividend of $0.52 per share,
payable on March 20, 2025, to shareholders of record at the close
of business on March 10, 2025.
The Company returned a total of $198 million to shareholders
through share repurchases and dividends during 2024. In addition,
the Company made a $25 million voluntary early term loan repayment
during 2024. The Company has $215 million remaining under its
authorized share repurchase program.
2025 Outlook
The Company’s outlook does not yet include the expected revenue,
earnings and cash flow contribution from the acquisition of Helly
Hansen, which is anticipated to close during the second quarter of
2025.
“Our outlook reflects continued revenue growth, market share
gains, gross margin expansion, strong operating earnings and cash
generation. The scaling benefits of Project Jeanius will support
increased investment in our brands and platforms, and further
enhance our best-in-class return on invested capital,” said Scott
Baxter, President, Chief Executive Officer and Chairman of the
Board of Directors.
“The fundamentals of our business remain strong and the
acquisition of Helly Hansen will further enhance our TSR model and
provide the opportunity for even stronger value creation moving
forward. We are mindful of the uncertain environment and will
continue to manage the business conservatively, but we are
confident in our ability to drive strong shareholder returns in
2025 and beyond,” added Baxter.
The Company’s 2025 outlook includes the following
assumptions:
- Revenue is expected to be in the range of $2.63 billion
to $2.69 billion, reflecting growth of 1 percent to 3 percent
compared to prior year. The Company’s revenue outlook includes an
approximate 1 percent negative impact from unfavorable foreign
currency exchange rates. The revenue outlook also includes the
impact of a 53rd week, which is not expected to meaningfully
benefit 2025 revenue on a full year basis. The Company expects
revenue growth to be driven by market share gains, channel and
category expansion, expanded distribution, and the benefit from
increased demand creation and other brand investments. The Company
expects these growth drivers to be partially offset by conservative
retailer inventory management and more tempered consumer spending
around the globe. The Company expects first half revenue growth to
be consistent with the full year, including an approximate 1
percent negative impact from unfavorable foreign currency exchange
rates compared to the Company’s prior preliminary outlook. The
Company expects first half revenue growth to be weighted to the
second quarter due to the timing of seasonal programs and new
distribution gains.
- Adjusted gross margin is expected to be in the range of
45.3 percent to 45.5 percent, representing an increase of 20 to 40
basis points compared to adjusted gross margin in prior year. Gross
margin expansion is driven by the benefits of Project Jeanius,
favorable mix and other supply chain efficiencies, partially offset
by higher product costs.
- Adjusted SG&A is expected to increase at a
low-single digit rate compared to adjusted SG&A in prior year.
The Company will continue to invest in its brands and capabilities
in support of long-term profitable growth, including demand
creation, product development, direct-to-consumer and international
expansion, partially offset by the benefits of Project
Jeanius.
- Adjusted operating income is expected to be in the range
of $400 million to $408 million, representing an increase of 5
percent to 7 percent compared to prior year on an adjusted
basis.
- Adjusted EPS is expected to be in the range of $5.20 to
$5.30, representing an increase of 6 percent to 8 percent compared
to the prior year on an adjusted basis and includes the negative
impact from unfavorable foreign currency exchange rates. The
Company’s adjusted EPS outlook does not contemplate or include the
benefit of share repurchases as a result of the previously
announced acquisition of Helly Hansen. The Company expects first
half adjusted EPS growth to be modestly above the expected growth
rate for the full year.
- Capital expenditures are expected to be approximately
$35 million.
- For the full year, the Company expects an effective tax
rate of approximately 20 percent. Interest expense is
expected to approximate $30 million. Other Expense is
expected to approximate $11 million. Average shares
outstanding are expected to be approximately 56 million.
- The Company expects cash flow from operations to exceed
$300 million.
- The Company is raising its outlook for the run-rate benefit
from Project Jeanius to greater than $100 million ($100
million prior). The Company expects to achieve full run-rate
savings by the end of 2026. The 2025 benefits of Project Jeanius
are included in the Company’s outlook.
- The Company’s outlook does not yet include the expected
revenue, earnings and cash flow contribution from the acquisition
of Helly Hansen. Based on an anticipated close in the second
quarter of 2025, the Company expects the acquisition of Helly
Hansen to contribute approximately $0.15 to full year adjusted EPS
with expected accretion in 2026 to materially increase. The
expected contribution from Helly Hansen does not include the
benefit from anticipated synergies.
- The Company’s outlook does not contemplate or include any
impact from potential changes in tariffs.
This release refers to “adjusted” amounts from 2024 and 2023 and
“constant currency” amounts, which are further described in the
Non-GAAP Financial Measures section below. As previously disclosed,
fourth quarter 2023 results included a $6 million duty charge
related to prior periods and full year 2023 results included a $14
million duty charge related to prior years. All per share amounts
are presented on a diluted basis. Amounts as presented herein may
not recalculate due to the use of unrounded numbers.
Webcast Information
Kontoor Brands will host its fourth quarter and full year 2024
conference call beginning at 8:30 a.m. Eastern Time today, February
25, 2025. The conference will be broadcast live via the Internet,
accessible at https://www.kontoorbrands.com/investors. For those
unable to listen to the live broadcast, an archived version will be
available at the same location.
Non-GAAP Financial Measures
Adjusted Amounts - This release
refers to “adjusted” amounts. Adjustments during 2024 represent
charges related to business optimization activities and actions to
streamline and transfer select production within our internal
manufacturing network. Adjustments during 2023 represent charges
related to strategic actions taken by the Company to drive
efficiencies in our operations, which included reducing our global
workforce, streamlining and transferring select production within
our internal manufacturing network and optimizing and globalizing
our operating model. Additional information regarding adjusted
amounts is provided in notes to the supplemental financial
information included with this release.
Constant Currency - This release
refers to “reported” amounts in accordance with GAAP, which include
translation and transactional impacts from changes in foreign
currency exchange rates. This release also refers to “constant
currency” amounts, which exclude the translation impact of changes
in foreign currency exchange rates.
Reconciliations of these non-GAAP measures to the most
comparable GAAP measures are presented in the supplemental
financial information included with this release that identifies
and quantifies all reconciling adjustments and provides
management's view of why this non-GAAP information is useful to
investors. While management believes that these non-GAAP measures
are useful in evaluating the business, this information should be
viewed in addition to, and not as an alternate for, reported
results under GAAP. The non-GAAP measures used by the Company in
this release may be different from similarly titled measures used
by other companies.
For forward-looking non-GAAP measures included in this filing,
the Company does not provide a reconciliation to the most
comparable GAAP financial measures because the information needed
to reconcile these measures is unavailable due to the inherent
difficulty of forecasting the timing and/or amount of various items
that have not yet occurred and have been excluded from adjusted
measures. Additionally, estimating such GAAP measures and providing
a meaningful reconciliation consistent with the Company’s
accounting policies for future periods requires a level of
precision that is unavailable for these future periods and cannot
be accomplished without unreasonable effort.
About Kontoor Brands
Kontoor Brands, Inc. (NYSE: KTB) is a global lifestyle apparel
company, with a portfolio led by two of the world’s most iconic
consumer brands: Wrangler® and Lee®. Kontoor designs, manufactures,
distributes, and licenses superior high-quality products that look
good and fit right, giving people around the world the freedom and
confidence to express themselves. Kontoor Brands is a purpose-led
organization focused on leveraging its global platform, strategic
sourcing model and best-in-class supply chain to drive brand growth
and deliver long-term value for its stakeholders. For more
information about Kontoor Brands, please visit
www.KontoorBrands.com.
Forward-Looking Statements
Certain statements included in this release and attachments are
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements are made based on our
expectations and beliefs concerning future events impacting the
Company and therefore involve several risks and uncertainties. You
can identify these statements by the fact that they use words such
as “will,” “anticipate,” “estimate,” “expect,” “should,” “may” and
other words and terms of similar meaning or use of future dates. We
caution that forward-looking statements are not guarantees and that
actual results could differ materially from those expressed or
implied in the forward-looking statements. We do not intend to
update any of these forward-looking statements or publicly announce
the results of any revisions to these forward-looking statements,
other than as required under the U.S. federal securities laws.
Potential risks and uncertainties that could cause the actual
results of operations or financial condition of the Company to
differ materially from those expressed or implied by
forward-looking statements in this release include, but are not
limited to: macroeconomic conditions, including elevated interest
rates, moderating inflation, fluctuating foreign currency exchange
rates, global supply chain issues and inconsistent consumer demand,
continue to adversely impact global economic conditions and have
had, and may continue to have, a negative impact on the Company’s
business, results of operations, financial condition and cash flows
(including future uncertain impacts); the level of consumer demand
for apparel; reliance on a small number of large customers;
potential difficulty in completing the acquisition of Helly Hansen,
in successfully integrating it and/or in achieving the expected
growth, cost savings and/or synergies from such acquisition; supply
chain and shipping disruptions, which could continue to result in
shipping delays, an increase in transportation costs and increased
product costs or lost sales; intense industry competition; the
ability to accurately forecast demand for products; the Company’s
ability to gauge consumer preferences and product trends, and to
respond to constantly changing markets; the Company’s ability to
maintain the images of its brands; changes to trade policy,
including tariff and import/export regulations; disruption and
volatility in the global capital and credit markets and its impact
on the Company's ability to obtain short-term or long-term
financing on favorable terms; the Company maintaining satisfactory
credit ratings; restrictions on the Company’s business relating to
its debt obligations; increasing pressure on margins; e-commerce
operations through the Company’s direct-to-consumer business; the
financial difficulty experienced by the retail industry; possible
goodwill and other asset impairment; the ability to implement the
Company’s business strategy; the stability of manufacturing
facilities and foreign suppliers; fluctuations in wage rates and
the price, availability and quality of raw materials and contracted
products; the reliance on a limited number of suppliers for raw
material sourcing and the ability to obtain raw materials on a
timely basis or in sufficient quantity or quality; disruption to
distribution systems; seasonality; unseasonal or severe weather
conditions; potential challenges with the Company’s implementation
of Project Jeanius; the Company's and its vendors’ ability to
maintain the strength and security of information technology
systems; the risk that facilities and systems and those of
third-party service providers may be vulnerable to and unable to
anticipate or detect data security breaches and data or financial
loss or maintain operational performance; ability to properly
collect, use, manage and secure consumer and employee data; legal,
regulatory, political and economic risks; the impact of climate
change and related legislative and regulatory responses;
stakeholder response to sustainability issues, including those
related to climate change; compliance with anti-bribery,
anti-corruption and anti-money laundering laws by the Company and
third-party suppliers and manufacturers; changes in tax laws and
liabilities; the costs of compliance with or the violation of
national, state and local laws and regulations for environmental,
consumer protection, employment, privacy, safety and other matters;
continuity of members of management; labor relations; the ability
to protect trademarks and other intellectual property rights; the
ability of the Company’s licensees to generate expected sales and
maintain the value of the Company’s brands; volatility in the price
and trading volume of the Company’s common stock; anti-takeover
provisions in the Company’s organizational documents; and
fluctuations in the amount and frequency of our share repurchases.
Many of the foregoing risks and uncertainties will be exacerbated
by any worsening of the global business and economic
environment.
More information on potential factors that could affect the
Company's financial results are described in detail in the
Company’s most recent Annual Report on Form 10-K and in other
reports and statements that the Company files with the SEC.
KONTOOR BRANDS, INC.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
December
%
Twelve Months Ended
December
%
(Dollars and shares in thousands, except
per share amounts)
2024
2023
Change
2024
2023
Change
Net revenues
$
699,284
$
669,800
4%
$
2,607,578
$
2,607,472
—%
Costs and operating expenses
Cost of goods sold
393,728
390,390
1%
1,446,008
1,519,635
(5)%
Selling, general and administrative
expenses
221,261
203,969
8%
819,281
768,568
7%
Total costs and operating
expenses
614,989
594,359
3%
2,265,289
2,288,203
(1)%
Operating income
84,295
75,441
12%
342,289
319,269
7%
Interest expense
(9,972
)
(10,018
)
—%
(40,824
)
(40,408
)
1%
Interest income
3,143
1,717
83%
11,149
3,791
194%
Other expense, net
(1,952
)
(1,611
)
21%
(11,191
)
(10,753
)
4%
Income before income taxes
75,514
65,529
15%
301,423
271,899
11%
Income taxes
11,536
(3,242
)
456%
55,621
40,905
36%
Net income
$
63,978
$
68,771
(7)%
$
245,802
$
230,994
6%
Earnings per common share
Basic
$
1.16
$
1.23
$
4.42
$
4.13
Diluted
$
1.14
$
1.21
$
4.36
$
4.06
Weighted average shares
outstanding
Basic
55,232
55,955
55,549
55,961
Diluted
56,036
56,982
56,321
56,931
Basis of presentation for all financial tables within this
release: The Company operates and reports using a 52/53-week
fiscal year ending on the Saturday closest to December 31 each
year. For presentation purposes herein, all references to periods
ended December 2024 and December 2023 correspond to the 13-week and
52-week fiscal periods ended December 28, 2024 and December 30,
2023, respectively. References to December 2024 and December 2023
relate to the balance sheets as of December 28, 2024 and December
30, 2023, respectively. Amounts herein may not recalculate due to
the use of unrounded numbers.
KONTOOR BRANDS, INC.
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
December
2024
December
2023
ASSETS
Current assets
Cash and cash equivalents
$
334,066
$
215,050
Accounts receivable, net
243,660
217,673
Inventories
390,209
500,353
Prepaid expenses and other current
assets
96,346
110,808
Total current assets
1,064,281
1,043,884
Property, plant and equipment, net
103,300
112,045
Operating lease assets
47,171
54,812
Intangible assets, net
11,232
12,497
Goodwill
208,787
209,862
Deferred income taxes
76,065
75,081
Other assets
139,703
137,258
TOTAL ASSETS
$
1,650,539
$
1,645,439
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt
$
—
$
20,000
Accounts payable
179,680
180,220
Accrued and other current liabilities
193,335
171,414
Operating lease liabilities, current
20,890
21,003
Total current liabilities
393,905
392,637
Operating lease liabilities,
noncurrent
29,955
36,753
Deferred income taxes
5,722
5,611
Other liabilities
80,587
74,604
Long-term debt
740,315
763,921
Total liabilities
1,250,484
1,273,526
Commitments and contingencies
Total equity
400,055
371,913
TOTAL LIABILITIES AND EQUITY
$
1,650,539
$
1,645,439
KONTOOR BRANDS, INC.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Twelve Months Ended
December
(In thousands)
2024
2023
OPERATING ACTIVITIES
Net income
$
245,802
$
230,994
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization
42,635
38,046
Stock-based compensation
26,585
16,725
Other, including working capital
changes
53,208
70,784
Cash provided by operating
activities
368,230
356,549
INVESTING ACTIVITIES
Property, plant and equipment
expenditures
(18,788
)
(27,366
)
Capitalized computer software
(3,334
)
(10,018
)
Other
(138
)
(1,754
)
Cash used by investing
activities
(22,260
)
(39,138
)
FINANCING ACTIVITIES
Borrowings under revolving credit
facility
—
288,000
Repayments under revolving credit
facility
—
(288,000
)
Repayments of term loan
(45,000
)
(10,000
)
Repurchases of Common Stock
(85,677
)
(30,111
)
Dividends paid
(112,060
)
(108,574
)
Proceeds from issuance of Common Stock,
net of shares withheld for taxes
2,382
284
Other
—
(7,297
)
Cash used by financing
activities
(240,355
)
(155,698
)
Effect of foreign currency rate changes on
cash and cash equivalents
13,401
(5,842
)
Net change in cash and cash
equivalents
119,016
155,871
Cash and cash equivalents – beginning
of period
215,050
59,179
Cash and cash equivalents – end of
period
$
334,066
$
215,050
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Business Segment
Information
(Unaudited)
Three Months Ended
December
% Change
% Change
Constant
Currency (a)
(Dollars in thousands)
2024
2023
Segment revenues:
Wrangler
$
503,143
$
460,959
9%
9%
Lee
193,540
205,836
(6)%
(5)%
Total reportable segment
revenues
696,683
666,795
4%
5%
Other revenues (b)
2,601
3,005
(13)%
(13)%
Total net revenues
$
699,284
$
669,800
4%
5%
Segment profit:
Wrangler
$
105,551
$
83,882
26%
26%
Lee
17,846
20,675
(14)%
(13)%
Total reportable segment profit
$
123,397
$
104,557
18%
18%
Corporate and other expenses
(40,495
)
(30,260
)
34%
34%
Interest expense
(9,972
)
(10,018
)
—%
—%
Interest income
3,143
1,717
83%
81%
Loss related to other revenues (b)
(559
)
(467
)
20%
20%
Income before income taxes
$
75,514
$
65,529
15%
15%
Twelve Months Ended
December
% Change
% Change
Constant
Currency (a)
(Dollars in thousands)
2024
2023
Segment revenues:
Wrangler
$
1,805,989
$
1,754,130
3%
3%
Lee
790,625
842,520
(6)%
(6)%
Total reportable segment
revenues
2,596,614
2,596,650
—%
—%
Other revenues (b)
10,964
10,822
1%
1%
Total net revenues
$
2,607,578
$
2,607,472
—%
—%
Segment profit:
Wrangler
$
366,309
$
307,521
19%
19%
Lee
89,662
98,148
(9)%
(9)%
Total reportable segment profit
$
455,971
$
405,669
12%
12%
Corporate and other expenses
(123,240
)
(96,075
)
28%
28%
Interest expense
(40,824
)
(40,408
)
1%
1%
Interest income
11,149
3,791
194%
193%
Loss related to other revenues (b)
(1,633
)
(1,078
)
51%
51%
Income before income taxes
$
301,423
$
271,899
11%
11%
(a) Refer to constant currency definition
on the following pages.
(b) We report an “Other” category to
reconcile segment revenues and segment profit to the Company's
operating results, but the Other category does not meet the
criteria to be considered a reportable segment. Other includes
sales and licensing of Chic®, Rock & Republic®, other
company-owned brands and private label apparel, and the associated
costs.
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Business Segment Information –
Constant Currency Basis (Non-GAAP)
(Unaudited)
Three Months Ended December
2024
As Reported
Adjust for Foreign
(In thousands)
under GAAP
Currency Exchange
Constant Currency
Segment revenues:
Wrangler
$
503,143
$
851
$
503,994
Lee
193,540
1,928
195,468
Total reportable segment
revenues
696,683
2,779
699,462
Other revenues
2,601
—
2,601
Total net revenues
$
699,284
$
2,779
$
702,063
Segment profit:
Wrangler
$
105,551
$
70
$
105,621
Lee
17,846
44
17,890
Total reportable segment profit
$
123,397
$
114
$
123,511
Corporate and other expenses
(40,495
)
3
(40,492
)
Interest expense
(9,972
)
(3
)
(9,975
)
Interest income
3,143
(35
)
3,108
Loss related to other revenues
(559
)
—
(559
)
Income before income taxes
$
75,514
$
79
$
75,593
Twelve Months Ended December
2024
As Reported
Adjust for Foreign
(In thousands)
under GAAP
Currency Exchange
Constant Currency
Segment revenues:
Wrangler
$
1,805,989
$
(350
)
$
1,805,639
Lee
790,625
2,491
793,116
Total reportable segment
revenues
2,596,614
2,141
2,598,755
Other revenues
10,964
—
10,964
Total net revenues
$
2,607,578
$
2,141
$
2,609,719
Segment profit:
Wrangler
$
366,309
$
(389
)
$
365,920
Lee
89,662
(49
)
89,613
Total reportable segment profit
$
455,971
$
(438
)
$
455,533
Corporate and other expenses
(123,240
)
(72
)
(123,312
)
Interest expense
(40,824
)
(3
)
(40,827
)
Interest income
11,149
(41
)
11,108
Loss related to other revenues
(1,633
)
1
(1,632
)
Income before income taxes
$
301,423
$
(553
)
$
300,870
Constant Currency Financial Information
The Company is a global company that reports financial
information in U.S. dollars in accordance with GAAP. Foreign
currency exchange rate fluctuations affect the amounts reported by
the Company from translating its foreign revenues and expenses into
U.S. dollars. These rate fluctuations can have a significant effect
on reported operating results. As a supplement to our reported
operating results, we present 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 our business performed excluding the effects of changes in the
rates used to calculate foreign currency translation. Management
believes this information is useful to investors to facilitate
comparison of operating results and better identify trends in our
businesses.
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).
These constant currency performance measures should be viewed in
addition to, and not as an alternative for, reported results under
GAAP. The constant currency information presented may not be
comparable to similarly titled measures reported by other
companies.
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Reconciliation of Adjusted
Financial Measures - Quarter-to-Date (Non-GAAP)
(Unaudited)
Three Months Ended
December
(Dollars in thousands, except per share
amounts)
2024
2023
Cost of goods sold - as reported under
GAAP
$
393,728
$
390,390
Restructuring and transformation costs
(a)
(7,184
)
(3,437
)
Adjusted cost of goods sold
$
386,544
$
386,953
Selling, general and administrative
expenses - as reported under GAAP
$
221,261
$
203,969
Restructuring and transformation costs
(a)
(9,857
)
(2,097
)
Adjusted selling, general and
administrative expenses
$
211,404
$
201,872
Diluted earnings per share - as
reported under GAAP
$
1.14
$
1.21
Restructuring and transformation costs
(a)
0.24
0.07
Adjusted diluted earnings per
share
$
1.38
$
1.28
Net income - as reported under
GAAP
$
63,978
$
68,771
Income taxes
11,536
(3,242
)
Interest expense
9,972
10,018
Interest income
(3,143
)
(1,717
)
EBIT
$
82,343
$
73,830
Depreciation and amortization
13,583
10,641
EBITDA
$
95,926
$
84,471
Restructuring and transformation costs
(a)
17,041
5,534
Adjusted EBITDA
$
112,967
$
90,005
As a percentage of total net revenues
16.2
%
13.4
%
Non-GAAP Financial Information: The
financial information above has been presented on a GAAP basis and
on an adjusted basis. EBIT, EBITDA and adjusted presentations are
non-GAAP measures. See “Notes to Supplemental Financial Information
- Reconciliation of Adjusted Financial Measures” at the end of this
document. Amounts herein may not recalculate due to the use of
unrounded numbers.
(a) See “Notes to Supplemental Financial
Information - Reconciliation of Adjusted Financial Measures” at the
end of this document.
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Reconciliation of Adjusted
Financial Measures - Year-to-Date (Non-GAAP)
(Unaudited)
Twelve Months Ended
December
(Dollars in thousands, except per share
amounts)
2024
2023
Cost of goods sold - as reported under
GAAP
$
1,446,008
$
1,519,635
Restructuring and transformation costs
(a)
(15,453
)
(5,791
)
Adjusted cost of goods sold
$
1,430,555
$
1,513,844
Selling, general and administrative
expenses - as reported under GAAP
$
819,281
$
768,568
Restructuring and transformation costs
(a)
(22,886
)
(8,536
)
Adjusted selling, general and
administrative expenses
$
796,395
$
760,032
Diluted earnings per share - as
reported under GAAP
$
4.36
$
4.06
Restructuring and transformation costs
(a)
0.53
0.20
Adjusted diluted earnings per
share
$
4.89
$
4.26
Net income - as reported under
GAAP
$
245,802
$
230,994
Income taxes
55,621
40,905
Interest expense
40,824
40,408
Interest income
(11,149
)
(3,791
)
EBIT
$
331,098
$
308,516
Depreciation and amortization
42,635
38,046
EBITDA
$
373,733
$
346,562
Restructuring and transformation costs
(a)
38,339
14,327
Adjusted EBITDA
$
412,072
$
360,889
As a percentage of total net revenues
15.8
%
13.8
%
Non-GAAP Financial Information: The
financial information above has been presented on a GAAP basis and
on an adjusted basis. EBIT, EBITDA and adjusted presentations are
non-GAAP measures. See “Notes to Supplemental Financial Information
- Reconciliation of Adjusted Financial Measures” at the end of this
document. Amounts herein may not recalculate due to the use of
unrounded numbers.
(a) See “Notes to Supplemental Financial
Information - Reconciliation of Adjusted Financial Measures” at the
end of this document.
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Summary of Select GAAP and
Non-GAAP Measures
(Unaudited)
Three Months Ended
December
2024
2023
(Dollars in thousands, except per share
amounts)
GAAP
Adjusted
GAAP
Adjusted
Net revenues
$
699,284
$
699,284
$
669,800
$
669,800
Gross margin
$
305,556
$
312,740
$
279,410
$
282,847
As a percentage of total net revenues
43.7
%
44.7
%
41.7
%
42.2
%
Selling, general and administrative
expenses
$
221,261
$
211,404
$
203,969
$
201,872
As a percentage of total net revenues
31.6
%
30.2
%
30.5
%
30.1
%
Operating income
$
84,295
$
101,336
$
75,441
$
80,975
As a percentage of total net revenues
12.1
%
14.5
%
11.3
%
12.1
%
Earnings per share - diluted
$
1.14
$
1.38
$
1.21
$
1.28
Twelve Months Ended
December
2024
2023
(Dollars in thousands, except per share
amounts)
GAAP
Adjusted
GAAP
Adjusted
Net revenues
$
2,607,578
$
2,607,578
$
2,607,472
$
2,607,472
Gross margin
$
1,161,570
$
1,177,023
$
1,087,837
$
1,093,628
As a percentage of total net revenues
44.5
%
45.1
%
41.7
%
41.9
%
Selling, general and administrative
expenses
$
819,281
$
796,395
$
768,568
$
760,032
As a percentage of total net revenues
31.4
%
30.5
%
29.5
%
29.1
%
Operating income
$
342,289
$
380,628
$
319,269
$
333,596
As a percentage of total net revenues
13.1
%
14.6
%
12.2
%
12.8
%
Earnings per common share - diluted
$
4.36
$
4.89
$
4.06
$
4.26
Non-GAAP Financial Information: The
financial information above has been presented on a GAAP basis and
on an adjusted basis. These adjusted presentations are non-GAAP
measures. See “Notes to Supplemental Financial Information -
Reconciliation of Adjusted Financial Measures” at the end of this
document.
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Disaggregation of
Revenue
(Unaudited)
Three Months Ended December
2024
Revenues - As Reported
(In thousands)
Wrangler
Lee
Other
Total
Channel revenues
U.S. Wholesale
$
404,358
$
93,701
$
2,369
$
500,428
Non-U.S. Wholesale
40,776
51,760
—
92,536
Direct-to-Consumer
58,009
48,079
232
106,320
Total
$
503,143
$
193,540
$
2,601
$
699,284
Geographic revenues
U.S.
$
455,317
$
111,236
$
2,601
$
569,154
International
47,826
82,304
—
130,130
Total
$
503,143
$
193,540
$
2,601
$
699,284
Twelve Months Ended December
2024
Revenues - As Reported
(In thousands)
Wrangler
Lee
Other
Total
Channel revenues
U.S. Wholesale
$
1,460,102
$
414,803
$
10,200
$
1,885,105
Non-U.S. Wholesale
177,107
222,308
—
399,415
Direct-to-Consumer
168,780
153,514
764
323,058
Total
$
1,805,989
$
790,625
$
10,964
$
2,607,578
Geographic revenues
U.S.
$
1,602,413
$
473,672
$
10,964
$
2,087,049
International
203,576
316,953
—
520,529
Total
$
1,805,989
$
790,625
$
10,964
$
2,607,578
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Disaggregation of
Revenue
(Unaudited)
Three Months Ended December
2023
Revenues - As Reported
(In thousands)
Wrangler
Lee
Other
Total
Channel revenues
U.S. Wholesale
$
369,611
$
103,609
$
2,756
$
475,976
Non-U.S. Wholesale
38,099
58,203
—
96,302
Direct-to-Consumer
53,249
44,024
249
97,522
Total
$
460,959
$
205,836
$
3,005
$
669,800
Geographic revenues
U.S.
$
416,310
$
118,526
$
3,005
$
537,841
International
44,649
87,310
—
131,959
Total
$
460,959
$
205,836
$
3,005
$
669,800
Twelve Months Ended December
2023
Revenues - As Reported
(In thousands)
Wrangler
Lee
Other
Total
Channel revenues
U.S. Wholesale
$
1,418,102
$
440,690
$
10,149
$
1,868,941
Non-U.S. Wholesale
181,766
246,873
10
428,649
Direct-to-Consumer
154,262
154,957
663
309,882
Total
$
1,754,130
$
842,520
$
10,822
$
2,607,472
Geographic revenues
U.S.
$
1,549,051
$
500,816
$
10,812
$
2,060,679
International
205,079
341,704
10
546,793
Total
$
1,754,130
$
842,520
$
10,822
$
2,607,472
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Summary of Select Revenue
Information
(Unaudited)
Three Months Ended
December
2024
2023
2024 to 2023
(Dollars in thousands)
As Reported under GAAP
% Change
Reported
% Change
Constant
Currency
Wrangler U.S.
$
455,317
$
416,310
9%
9%
Lee U.S.
111,236
118,526
(6)%
(6)%
Other U.S.
2,601
3,005
(13)%
(13)%
Total U.S. revenues
$
569,154
$
537,841
6%
6%
Wrangler International
$
47,826
$
44,649
7%
9%
Lee International
82,304
87,310
(6)%
(4)%
Total International revenues
$
130,130
$
131,959
(1)%
1%
Global Wrangler
$
503,143
$
460,959
9%
9%
Global Lee
193,540
205,836
(6)%
(5)%
Global Other
2,601
3,005
(13)%
(13)%
Total revenues
$
699,284
$
669,800
4%
5%
Twelve Months Ended
December
2024
2023
2024 to 2023
(Dollars in thousands)
As Reported Under GAAP
% Change
Reported
% Change
Constant
Currency
Wrangler U.S.
$
1,602,413
$
1,549,051
3%
3%
Lee U.S.
473,672
500,816
(5)%
(5)%
Other U.S.
10,964
10,812
1%
1%
Total U.S. revenues
$
2,087,049
$
2,060,679
1%
1%
Wrangler International
$
203,576
$
205,079
(1)%
(1)%
Lee International
316,953
341,704
(7)%
(7)%
Other International
—
10
(100)%
(100)%
Total International revenues
$
520,529
$
546,793
(5)%
(4)%
Global Wrangler
$
1,805,989
$
1,754,130
3%
3%
Global Lee
790,625
842,520
(6)%
(6)%
Global Other
10,964
10,822
1%
1%
Total revenues
$
2,607,578
$
2,607,472
—%
—%
Non-GAAP Financial Information: The
financial information above has been presented on a GAAP basis and
on a constant currency basis, which is a non-GAAP financial
measure. See “Business Segment Information – Constant Currency
Basis (Non-GAAP)” for additional information on constant currency
financial calculations.
KONTOOR BRANDS, INC.
Supplemental Financial
Information
Adjusted Return on Invested
Capital (Non-GAAP)
(Unaudited)
(Dollars in thousands)
Twelve Months Ended
December
Numerator
2024
2023
Net income
$
245,802
$
230,994
Plus: Income taxes
55,621
40,905
Plus: Interest income (expense), net
29,675
36,617
EBIT
$
331,098
$
308,516
Plus: Restructuring and transformation
costs (a)
38,339
14,327
Plus: Operating lease interest (b)
1,322
1,190
Adjusted EBIT
$
370,759
$
324,033
Adjusted effective income tax rate (c)
19
%
15
%
Adjusted net operating profit after
taxes
$
300,239
$
274,378
Denominator
December 2024
December 2023
December 2022
Equity
$
400,055
$
371,913
$
250,757
Plus: Current portion of long-term debt
and other borrowings
—
20,000
17,280
Plus: Noncurrent portion of long-term
debt
740,315
763,921
782,619
Plus: Operating lease liabilities (d)
50,845
57,756
51,404
Less: Cash and cash equivalents
(334,066
)
(215,050
)
(59,179
)
Invested capital
$
857,149
$
998,540
$
1,042,881
Average invested capital (e)
$
927,845
$
1,020,711
Net income to average debt and
equity (f)
21.4
%
20.9
%
Adjusted return on invested
capital
32.4
%
26.9
%
Non-GAAP Financial Information:
Adjusted return on invested capital (“ROIC”) is a non-GAAP measure.
We believe this metric is useful in assessing the effectiveness of
our capital allocation over time. ROIC may be different from
similarly titled measures used by other companies. Amounts herein
may not recalculate due to the use of unrounded numbers.
(a) See “Notes to Supplemental Financial
Information - Reconciliation of Adjusted Financial Measures” at the
end of this document.
(b) Operating lease interest is based upon
the discount rate for each lease and recorded as a component of
rent expense within “Selling, general and administrative expenses”
in the Company's statements of operations. The adjustment for
operating lease interest represents the add-back to earnings before
interest and taxes (“EBIT”) based upon the assumption that
properties under our operating leases were owned or accounted for
as finance leases. Operating lease interest is added back to EBIT
in the adjusted ROIC calculation to account for differences in
capital structure between us and other companies.
(c) Effective income tax rate adjusted for
restructuring and transformation costs and the corresponding tax
impact. See “Notes to Supplemental Financial Information -
Reconciliation of Adjusted Financial Measures” at the end of this
document.
(d) Total of “Operating lease liabilities,
current” and “Operating lease liabilities, noncurrent” in the
Company's balance sheets.
(e) The average is based on the “Invested
capital” at the end of the current period and at the end of the
comparable prior period.
(f) Calculated as “Net income” divided by
average “Debt” and “Equity.” “Debt” includes the current and
noncurrent portion of long-term debt as well as other short-term
borrowings. The average is based on the subtotal of “Debt” and
“Equity” at the end of the current period and at the end of the
comparable prior period.
KONTOOR BRANDS, INC. Supplemental
Financial Information Reconciliation of Adjusted Financial
Measures - Notes (Non-GAAP) (Unaudited)
Notes to Supplemental Financial Information - Reconciliation
of Adjusted Financial Measures
Management uses non-GAAP financial measures internally in its
budgeting and review process and, in some cases, as a factor in
determining compensation. In addition, adjusted EBITDA is a key
financial measure for the Company's shareholders and financial
leaders, as the Company's debt financing agreements require the
measurement of adjusted EBITDA, along with other measures, in
connection with the Company's compliance with debt covenants. While
management believes that these non-GAAP measures are useful in
evaluating the business, this information should be considered
supplemental in nature and should be viewed in addition to, and not
as an alternate for, reported results under GAAP. In addition,
these non-GAAP measures may be different from similarly titled
measures used by other companies.
(a) During the three months ended December 2024, restructuring
and transformation costs included $9.9 million related to business
optimization activities and $7.1 million related to streamlining
and transferring select production within our internal
manufacturing network. During the twelve months ended December
2024, restructuring and transformation costs included $25.2 million
related to business optimization activities and $13.1 million
related to streamlining and transferring select production within
our internal manufacturing network.
During the three months ended December 2023, restructuring costs
included $3.3 million related to streamlining and transferring
select production within our internal manufacturing network, $1.5
million related to optimizing and globalizing our operating model
and $0.7 million related to reductions in our global workforce.
During the twelve months ended December 2023, restructuring costs
included $7.3 million related to reductions in our global
workforce, $4.5 million related to streamlining and transferring
select production within our internal manufacturing network and
$2.5 million related to optimizing and globalizing our operating
model.
During the three months ended December 2024 and December 2023,
total restructuring and transformation costs resulted in a
corresponding tax impact of $3.9 million and $1.5 million,
respectively. During the twelve months ended December 2024 and
December 2023, total restructuring and transformation costs
resulted in a corresponding tax impact of $9.0 million and $3.0
million, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250225858435/en/
Investors: Michael Karapetian, (336) 332-4263 Vice
President, Corporate Development, Strategy, and Investor Relations
Michael.Karapetian@kontoorbrands.com
or
Media: Julia Burge, (336) 332-5122 Director, External
Communications Julia.Burge@kontoorbrands.com
Kontoor Brands (NYSE:KTB)
Historical Stock Chart
From Feb 2025 to Mar 2025
Kontoor Brands (NYSE:KTB)
Historical Stock Chart
From Mar 2024 to Mar 2025
