HBI - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Hanesbrands Fourth Quarter and Full Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like the hand the floor over to T.C. Officer. Relations Investor Chief Robillard, Please go sir. ahead,

T.C. Robillard

Good Conference Call everyone, and welcome Investor Quarterly Hanesbrands the and to day, Webcast.

our fourth Investors Hopefully We replay and are to today. on be the The update can to review of provide of Section pleased to we in hanes.com updated found be this our here the news news website. progress call issued a release, has a had everyone today of release an quarter the chance XXXX. earlier after document FAQ

On associated The to make risks These risks be our and certain in and the differ materially. on forward-looking statements our prepared remarks beliefs today, we the on results SEC to call may These and based either uncertainties or question-and-answer are or detailed with subject in found may in undertake speak are revise filings statements our that news expectations the may operations Unless current as are in results, various and continuing actual session. cause well references our otherwise releases. the noted, to all our only forward-looking exclude and charges not company they acquisition any consolidated as guidance, at today's XXXX time website are does as financial our and which represent made. or update statements, expenses. as to integration-related to well which

today found Additional Hytinen, Evans, information, Gerald Barry be Release. Financial measures today's Officer. in including Officer; the are can a Executive reconciliation GAAP Press call of me these Chief performance and other our to non-GAAP our and With Chief on

call up will brief open Barry Gerald and call some to now over then questions. Gerald. it and today's your For to I remarks turn the provide we'll will

Gerald Evans

T.C. you, Thank

in half, provide to returns. saw model through second brands, have our to our with returned gross business we organic shareholder our we in to multiple additional and online We expansion million continue for investing working. in In buybacks years generated significantly acquisition margin, Over the our and revenue flow. signs and strong us XXXX, growth shareholders the in growth efforts We dividends are long-term by on several and strategy. $XXX we operations cash expanded core that deliver are pass we delivering past international our over investing returned diversified investing we

plan. not went everything However, according to

As cost, our a and different profit mix quarter. to in higher miss revenue the operating causes goal

these While satisfied short-term in believe we're a profit and expansion. path we nature margin we issues not performance, return to our with clear to see are

strong. Looking forward our model business remained

well in we whether even an to the allows the We a short-term U.S. in have that revenue are challenges, commodity from shift to it's returns strategies us we deliver deploying a cash believe layer pressures channel when and way flow, long-term acquisition combination positioned us diversified you regardless or of total organic of of double-digit and we for the provides shareholder returns. believe grow on reform, our tax growth. And ability levels significant the EPS

million. Cash Activewear broad Activewear currency set of a over on X% sales Champion in the and XX%. Online year, in international Now over XX%, importantly midpoint range sales quarter, XX% U.S. X.X% grew while increased organic of revenue over reaching the up increased operations increased currency global in businesses. at were also grew our Innerwear product level record the increased flow second over X% U.S. constant touching we straight quarter saw $XXX last category, the to in growth with guidance sales a from X% growth constant in our and By year increased Innerwear quarter, the sales revenue right organic sales for businesses. across Global global

more drove also throughout year cash conversion. improving on Our cash the capital generation management working focus balanced while

as of investments a on by relative profit, headwinds. we the additional operating mix, strong short-term well this of and higher as all improve to in efficiencies. and in of orders higher late Touching revenue have businesses our our place a guidance driven to was demand drove headwind we temporary volume distribution distribution network for mix plans believe marketing these Turning which expenses are cost. the to champion several cost We are believe

resulted In business. invested international continue putting higher expect or to position than synergies shortfall sales action the revenue higher we corporate more even in late believe to marketing year. our Intimates terms margin ramp, momentum through on we build And than as place mix and planned for the spend, in our begin margin improvement offset initially of we we a above partially that internationals average. sales into XXXX, Through this we planned move look plans and sees profitability growth at organic stronger to and impact as we as be from

company products. be a generate cost have successful acquisition their a We our disciplined is on things online stated and Before can New intimate long-term of a The our a of to model own accretive with criteria strategy. me internationally. mid-teens the turn growth let should outlook, remain XXXX solely piece brands and Australia we direct deal They I growth a proven acquisitions, stores offers to optimization, morning on revenue which to through XXX expected earnings. synergies business. believe process and its a of a and apparel low IRR Zealand. driving leverage our and comment of in we growing pricing announced fits time, over and provider a leading through purchase and model synergies this of balancing key the seasonal consumer offer acquisition as successfully This to core bras number store over This XXXX substantial within

up digit strategy earnings over operations. us for growth and mid-single environment these and another as a investment XXXX with share That and and savings the growth acquisition position margin input half. operating return midpoint, our offset as our cautious mid-single respect tax a year to our implies of year. innovation spends to to Turning After reflect in we And guidance expansion from run growth. EPS digit we platforms commodities to appropriately the million our recent to in and adjusting rate, the by our product project to as per with our growth revenue XXXX digit forecasting benefits of contributions for of the wholesale new in profit extend organic second levels our flow our acquisition growth base cash At we higher guidance cost deliver driven the U.S. outlook, are also mid-single well from $XXX combination booster, are higher in revenue headwinds factoring new from reflect remain marketing diverse we categories. to cost

generation. closing is So, have impact and us to in or now a tax material business reform behind expected is our our cash on not

business forward half. Looking stepping up have we is growth expansion investments; base are we related visibility to our growing, the second in margin

is our to continues working and Our flow build. cash strategy acquisition

that call reaffirms which I'll multifaceted positions of us to to over years returns belief our come. shareholder With All our turn model that, solid deliver many Barry. the business to for

Barry Hytinen

Gerald. Thanks

to brands, management many months excited value joined a for powerful shareholder attracted you I to a strong opportunity great many with and strong years. here I'm to of company know, be is of three As the was, create business model this significant Hanesbrands part little What ago be team. over and

reform, For I'll sheet cover charges, results, and and on tax acquisition provide speak integration the to on comments our I'll impact related guidance. our the finish additional flow our then cash today's quarter call from key some expected highlights I'll and on touch fourth color balance with

than to X% performance compared Now organic alternative point quarter. Sales last increased point year X by and our let from me little over FX the X more about from apparel. points a from during begin with approximately with a growth,

each margin in the segment delivering XX.X% quarter. points basis XX last Our adjusted year gross expansion to increased over business with

are see profit mix. Our of path return clear short-term half expenses and million $XX adjusted approximately a margin of of second $XXX in operating our believe as guidance We headwinds and we beyond. expansion to the below revenue XXXX was a higher to and million result these

was with than repurchases in I lower the rate expected shortly. our $X.XX resulting to anticipated profit which guidance of the tax share share which discuss range. midpoint was of higher offset lower earnings quarter This in Our per will along one-time in than charges, the operating due up

Turning retailer approximately our increased basis X Sports distribution sales to growth segments mid-single more than Activewear driven by approximately men's driven in revenue basics XXX basis both growth Apparel by increased offset Intimate our Intimates. in decline X% margin digit X% during fee versus the quarter coming operating of constant by in over points inventories. In kids and with distribution basics to declined Innerwear as delivered Touching revenue businesses. segment last to year We and stable three Alternative each increased main leverage The business, improving our the in expenses. from higher year revenue well our segment, quarter. on performance XXX Apparel. last primarily compared strong currency of points sales organic and our points higher a operating margin X% Segment and as expenses. we segments. trends over by in Organic as year point last driven of underwear, Champion XX.X% down saw

X% businesses strong Now and in prior we increased constant delivered Champion revenue were We currency. growth up and Latin was also sales Australia demand Europe segment, constant segment and Asia to a Champion. margin America. in driven last Innerwear a looking for approximately year. X.X% solid growth operating international saw strong low by over of teens our compared flat basis in our in year The double-digit at sales XX% in on roughly currency

integration I'd related expenses. to action acquisition our speak Now and like other to

and which and Champion and our charge from Of on decision the approximately $XX prior as and was support cost the of $XXX than the finalized accelerate related XX% certain impact tax with For actions chain XX% which the December acquisition was our our European we supply the refinancing. higher a in to million integration acquisitions. made quarter, our million, $XX guidance cost associated payment was were related acquisition Europe contingent had we reform, remaining to quarter we experienced approximately Australian which the to of the integration million higher or

$XX across of storm-related associated global supply our mainly million the charges The other disruptions were cost with chain.

Now address I'd reform. to like tax

offshore is well U.S as in the quarter all of which tax non-cash consist prior related foreign Looking to transition payable XX% the and between the to over from million estimate a On is to and $XXX the on our continue years. benefit expense XXXX to to is owning in charge supply low tax variety R&D as the basis, heavily forward offsets, similar in a to laws, XX% to which X as of our our assets the years the expected this change of rate To global a go U.S. approximately from to be at such charges cash in tax out we be tax and we credit, XX% weighted timeframe rate the deferred rate our corporate chain. first tax which the impact earnings. re-measuring is XXXX the tax one-time as

flow, we sheet and believe In our allocation cash a cash flow cash terms material highlights. cost impact it tax as our beneficial will should strong and now of effective. strategy to Shifting not capital on generation more repatriation be reform balance cash is have actually to

growth increased credit the performance, year, saw of of facility payables working December, in main operations improvement cash capital than we flow In increase and we For our to XX cash over we secured inventories rates, days. specifically and million $XXX last cycle more our was amended improved million year. terms. the $XX lower generated as in The senior capacity an an from driver better

repurchased to whole just of our price $XX year an also approximately per over bringing the activity We $XXX at $XXX in stock of million. quarter average repurchase million share

well our Now XXXX guidance. morning we outlook turning quarter guidance. to This as as first provided full year

you point and the specifics. document I'll FAQ the for at So, release the press

at to by and our in want closings do inventory midpoint in guidance first first U.S. increase of sales I items, management the door year full for the revenue X% range However, assumes the half year constant highlight the a currency in organic tight earlier four tempered

our guidance $X.XX or a XXXX lower rate to been with $X.XX EPS XX% normalized on for reported. would have comparability adjusted Second, EPS help than our tax

Third, of fourth, our to one-time the flow cash contingent operations million are we of as and payment to chain. these existing $XX expected realignment multi-year of And are charges other in million integration related other would quarter approximately which to for The from charges $XX our are categorize Europe be acquisition. charges a our remaining related supply includes acquisition-related a acquisitions. XXXX, the guidance Champion about

we integrations Hanes completed Champion XXXX. Europe Hanes expect the by complete XXXX to the Australasian to We integration apparel, have by end we of of Nike's finish expect integration and end with be Europe and the of the the

to we be acquisition and to or less. charges integration-related $XX million expect Looking XXXX,

we capital on revenue, resulting turn of and The our were our to of cost very in margin while wholesale combination second growth acquisition the And challenges of to believe deliver the cash over capabilities U.S. deliver work another have another T.C. and allocation EPS to and of to summary, are year the well return year fact in generation. strong that, growth XXXX. spite organic in in to in we diversified positioned the So half we growth market model. side, with back do of expansion in the flow business I'll And the cash call significant we and strategies underscores able

T.C. Robillard

That Barry. remarks. prepared concludes Thanks our

a follow and a will the turn to of I as you to would back ask and Since number you to time We I'll up, your ask yourself may will Operator? operator question-and-answer a then now any begin who re-enter ask the continue begin additional and will single question the to session. be the allows. question, one like over that questions. call limit there now taking questions queue to

Operator

comes Instructions] with Tracy line Thank Eric from of first Buckingham Research. you. Our [Operator question the

Eric Tracy

again Good within this you FY'XXXX the it within growth, you for relates of organic going or the and sort channel business I morning Innerwear, could but this, as could taking assumption frame the X% sort us Gerald guess of challenges the everyone. just then but domestic for just, mentioned international? Activewear Thanks to Barry my question. maybe relates facing that embedded add to and guide, beyond that, migration closures, door you with the

Gerald Evans

Barry about flow revenue been to is, of the you really details Sure over we've and executing let multiple doing years Eric, it provide guidance strategy give let mix shape to say me growth cash the and to expansion would what a I'll start specific more it. our What broadly on consistent then time. it's of revenue several pass reflection as for diversify and I

business, in innovation. been As been certainly -- as in in we've direct been saw organic second record the the we've second well know beyond you had a row. business investing brands core our investing our benefit reached our returned flow consumer growth of of the in and we've And that our in international we half highs to XXXX and year as acquisitions cash expansion, we a for investing

So working. that we model see

particularly within certainly we in U.S. that noted in expect we know going be Barry to U.S. there's We've look the of continue And closures the early As tighten we're bankruptcy to though to announced. door inventory. already first the of we his evolution to XXXX their the first again half half. cautious already to an the in a the the consumer's continue purchase comments seen We've other And market about year. retailers seen as patterns wholesale

operating the the things profit see touched on, we we together will for costs that's of will organic minute. that, growth more for that headwind have In last from spite year the on a Barry commodity profit. in half. late did we we touch do in So surge a in against we price as say on put as and over we also U.S. our the tempered in I a would the but time, in our year expectations first growth side expect that

business. we've driving as believe stepped well another seeing a as this invest As of in we up by our really to within we $XX have the we're year bit quite more chosen marketing results million marketing, our

now that think we've growth. organic business I that of that it deliver got see we've with It also combine profit model cash to year delivers and as and those multiple acquisition growth deliver opportunities pull that has growth of So will record levers will a you'll taken spite and another in will flow.

turn me will So let a with deeper. that to who little take over Barry, it you

Barry Hytinen

million acquisitions from of about for more a we've you U.S. the half FX segments, this a the then, from is are Innerwear well basis, from as to then, the And Good got the Apparel principally. in benefit that that's build oriented that on I in for points. Gerald's quarters morning. roughly Alternative Thanks company look euro first denominated From $XXX if note $XX as we three at tailwind course And question. deal about business, million announced would total morning. rolling

Looking basics the slightly for On intimate business in and single-digit for to to to at year we're this across second return that's we a down the way business be then plan forecasting and that cautious for to half and just And in the be the low Innerwear the first half. business down. full growth balance rate. modest growth the a

the more benefit half that the first half in in up the does the from Alternative bit Activewear slightly little element. side and On a Apparel second

year. to a international of the then, that's currency a in for high full that's on low is more very reported be digit and So called the are for FX half. mid-single kind basically we on constant I'd the as side, single-digit basis, the the but first on up year it And out forecasting note a single beneficial again digits up I

kind about at we're about that's good We where So planning of feel how this it. stage. thinking we're

Eric Tracy

the as costs, look could profitability at play pricing… Maybe relates like how transitory I that follow If some it fact dynamics maybe and that. to and you sounds higher operating think just mentioned offset again great. some in dynamic Gerald but point walk it I cotton. distribution you the up maybe some that to to pricing through also the between out cadence input costs That's on just

Gerald Evans

about supply as standpoint would sort you When single put price was it me we this finish and we input be pricing others. would run over over we that commodities in typically it chain through a do would digit know, offset our and inflation cost in the we we and Barry turn we've pretty and price. up the time. in to on have and commodity when inflation transportation came the combination the out we we said would pretty of question normally calendar pricing well We it I'll for case, in of pricing typically prior talked like that low year. always Let passed before as price year really quick some costs the efficiencies. of business From the related touch place for and that steep In

we're some in the to that see pricing. of So but you'll half into pricing second more year to do of of that begin to We're carry that will as well. that it do looking commodities, going this when offset XXXX

me to Barry Let elements. the over of now it the for turn rest

Barry Hytinen

expecting to consistent year year-on-year that's We're operating down essentially the in Sure. the half. be the margin assuming some full for and first

Gerald actively distribution got and noted marketing the we're through. in we're we've efficiencies our increasing working in to that plans As got and those line. distribution and working we're improve place We've investments

So start in start half that offsetting from distribution those synergies we'll operating margin we benefits more seeing booster and items the the really additional ramp come return to talked the line expansion to and in second as we continuing in costs about.

So we in about operating feel half. second expansion very an good margin seeing the

Operator

you. Thank

line B. next the from Riley FBR. of with comes Our question Anderson Susan

Susan Anderson

take kind it distribution -- also me if there? would I in additional? the of million the what my kind Barry morning. doing with acquisition And pull $XX - XXXX that and quick let in or Sure. to and you're Thanks Hytinen hit forward for Nice charges. had supply a charges color just chain question in some then, have break I'll Hi. Did the you down the come Good new total organic charges on that normally you those question. see Maybe back. of on taking A some. could give growth the

it quarter the you $XXX discussed majority charges call. XX% So reform we we and acquisition integration on in that $XX Champion refinancing. to about disruptions of million know the as million $XX the The the vast remaining The related a out and tax then earn talked that $XX Europe of from business the of million that and combination have we but costs. million is that remaining approximately was

our European we you're then accelerate cost right and of higher some Australian Asian accelerate supply actions and it's the completion to realign the acquisitions, to First chain to support those did integration.

in So we Hanes XXXX a the opportunity restructuring Europe do as completion Europe the as acquisition of not some particular the XXXX. to integrations to be It's in IT facilitate portion, but of all well and saw as in to Champion smaller accelerated. completing and to the as our work both acquisition well position that's additional ourselves European Australia

So deals. integration I non-acquisition, and to good for charges very good synergies was forward have the in ramping see as down getting be would we importantly GAAP some to move by acquisition to a in those sight million what kind XXXX of well of and to the of as accelerate acquisition XXXX $XX having XXXX I we think charges call any line no opportunity current

Operator

from Andrew The of question comes Burns with D.A. the line Davidson.

Andrew Burns

Thanks. Good morning.

brick at and is come up. with traffic on question better a little a in are acquisition the what acquisition to that omnichannel of a how and help highlighting refill a [ph] Just [feared us what spend platform specific when you retailers the understand Could they're strategy time synergies and seeing lot more brand people print Thanks. evolving? see you the about] mortar that looking things. Could --

Gerald Evans

a acquisition. Zealand it of as Australia great apparel intimate extends in N seller think leader further innerwear it's Bras in our we New the Zealand. leading They're and Sure. and New position Things, Australia

online it business been last complement XXX a Their has very CAGR very, well Bras over fast So as as rate. about is, we a growing have. years targets three line as a Things millennial stores the what is over at about double-digit the year growing of the XX% on to it's consumer well business. online as top their N each already growth network own through the direct-to-consumer business about thing great closely their The great

see we from do build of We see some it operate direct extension consumer it's as to chain supply our an always We on more based cost efforts an markets global on business model core And basis -- of certainly within disciplined introductions when our direct justified this synergies. them acquisition we synergies. we synergies we our a So as really global standpoint also revenue a complemented a by very well. but see operation. seasonal categories a and it's on to model run combination a extendable of basic is well other it's as based which see model, international both product its

we're heavier It's on while global retail market about international growing number line. a about a our U.S. the are very basis. to by are and like we business excited expanding down But business. tell to would of about our more themes about retail that typically are on little today break U.S. half store not where the over you XX% end typically closer which the the of I has that that efforts business of acquisition. online markets So our just from And a on half consumer of large you about $X.X global been focus is getting fairly are that it's one focus standpoint if key our focused direct-to-consumer piece on billion direct-to-consumer business. our and

Andrew Burns

Thanks. And that into in expansion a timeframe or on one markets for of terms follow-up, the is geographic XXXX that? other that longer could something develop perhaps Concept, maybe just in

Gerald Evans

it. Well, I put long-term roadmap a days its to think early on

quickly to first. we we and very the excited were of get their intend the here certainly study is team countries potential over market. to start But think things I do very one core in the about

to extend countries. get looking out other would you be of we to latter So beyond it to part see the think as I and decade that the could certainly you

Operator

Our with next the question Evercore. of ahead. Saad Please go from comes line Omar

Omar Saad

quick morning. Good questions. Thanks. Two

had Amazon for then, first guys a feel material lists across pretty The And that in you for in for basic I us one follow hard and you. of seller way. when there categories for growth developing for a showing it's meaningful brand to can up it about how you Champion. the of see you the kind ask that in, revenue you Maybe how your know a seems I mix about that wanted overall Thanks. But becoming to on is talk portfolio participate best material get be is relationship driver I more you guys. up the a to

Gerald Evans

Sure.

But part business. start you our represents certainly it was a of general business today. business about our with within faster. It's know in and said of online our, for time some Let been as and big XX% online growing piece me that growing a the our Amazon's far year we've

has been business far growing been it's total we across the And of apparel the channels. countries of in on grow it's been online now standpoint specifically going online. business one faster partners than our across online. Our Amazon growing and as key From they're

within we're with a We've largest global are partner growing fast them very and our with before be globally our We business to U.S. fifth them the said growing they're customer.

Activewear frequently continues sellers I as you are the to across think as that noted seen Innerwear segments. brands relationship And the our shown and prosper. top online. We've our grow business

Omar Saad

take the strong of on Champion, you of was acquisition could lot of the Activewear Champion A interest incremental kind such What Thanks. for the not opportunity elaborate an there can noticed are think advantage of it's of as piece for and America because I payment we internationally a some like the seems then, out. brand And going payment on in actually a worldwide. and brands. follow-up these well international earned momentum brand? is North your just part I that Maybe that that you Thanks. so plans but to of of retro ask in doing

Gerald Evans

expansion for standpoint. We world upside global global the was Champion Certainly a lot linking business It's it was part Yes. together acquisition. is our around a European strategy the think of to the Champion about from really got well. that doing of

geographies a at globally growth second quarter teens in are better the the a mid and quarter Champion that really grew rate for the saw Within business. we and teens was in row across

So made mortar of and we and to around that all of the but business, And XXXX others and I to products as Asia were our expectations the there quarter certainly the performance our that that fastest and much well. the talk Champion that across the we and Part stores Asia management for you in growth payment don't of results you is owned expectations. in business our structure is think brought earn momentum perform and their the bricks based the should out strong did is even are the deal of various beyond message in the a as certain coming real together and business of read us get strength you adjustments expansion together And and online through there. that locations it Asia of of they on markets combination and some performance was coming a certainly on final into read world the we exactly give about tied it. our expansion as heavily beyond out European

Operator

Thank you.

next question from Marotta CL Steve line of King Associates. the with comes & Our

Steve Marotta

Good everybody. morning,

incremental online mentioned us was XXXX? spend aggregate about spend a that last this to million and $XX Thanks expect remind in percent the year. marketing penetration just will be year Can you up You marketing as revenue of the what what you total total be

Gerald Evans

saw our support don't be year-on-year. as of a well support in support million going tell of would I $XX between the split you brands it's but of international in spending quarter. is absolute fourth We increase U.S. numbers divulge support. We to good nice results the as our that

QX, of we saw that U.S. kids the in gained the It's and support our may some [Barns] our the by basics the end Australia quarter we supporting underwear QX businesses. exactly women's A in us fourth you'll are were do. in our raise across XXXX underwear, even I it. And we share business our brands believe going we innovations. all digit behind And media's what is support at mid-single in support is the us great strongly what where and growth basics. fact men's You launches example recall said us in power brand our the underwear in should our XXXX in to in more driven of belief [ph] you'll see gives see behind the support in

that some in us in and in placing several coming quarter first see in done underwear U.S. our innovation intimates new first March actually in begin out to to in we the years. product begin it's Flex which called of finish quarter. we we also a have And We in you'll fit and business our the advertise realignments and the first as Comfort second on haven't Madness advertise see you'll as quarter intimates the

our of support the a XXXX, standpoint And couple actually It ahead. X% recall grew in you QX just our of of may as of it XX% U.S. I online our only got So in lot reached the to mentioned of in in the we've the globally business a XX% U.S. From years business. ago was in business plans it year to

level get going see that of teens a mid I you on substantial a think progress we think that to level impact to toward you're certainly to year XX% where manage or to this continuing sense is toward how get it continue have We're goal is believe fast which growing. I nicely we next whether and there our us really the starts business.

Operator

you. Thank

from Stifel. the Our of comes line next Jim question Duffy from

Jim Duffy

me. for Couple morning. of questions Good you. Thank

realign comments fourth on quarter, guess to to then, Hemisphere elaborate the achieve you I around Western objectives and can to network around and detail that the in I'm the efficiencies interested in related more hope you the distribution the that? First, with efficiencies

Gerald Evans

Yes.

take going good the couple of distribution quarter. this you me morning on in standpoint things the distribution From to was Jim. of Let there a fourth too. And

for natural builds. of as number actual strong drop our will fourth the closer have through holiday with right is is, which the the orders later continued into in tendency now The continue across is our in quarter. and event then Champion to Along retailers shift business First the quarter it, what the first. we businesses holiday seen a demand certainly their the is to and very

caused events of lot of spending quarter labor our in convergence fourth extra the work DCs and and two those a the late in forth. So so

effectively we're as As in to planning realigning to look our we the DCs we the expect look year. course fix challenge the this we're more in that we half of next to season. our continue our of the to and in year, doing labor holiday first particular Champion What is network

network effectively So through first through of of we we that feel work work year. standpoint will And realignment as its we be the will think from way that the the the the through a standpoint had on our acquisitions there. our the much actions integration network number Western with has effort Hemisphere there. the of realignment and of of we've From touched our portion Asian the of half

in initially decade and been Our over largely Western since network has been a place we unadjusted built for Hemisphere has it.

nicely time to so matured drive well. in we facilities our network, has and that improve further units substantially risen pretty further running see to networks to the network opportunity the as through that the has is tighten that more it productivity remaining efficiencies extremely that actually that of actions well During that productivity opportunity running we see take some that now

spending, spending we'd just of the is the our enhance always sales have from so a well seizing capital on And further to about we impact that operate of opportunity we'll be to substantial a won't X.XX% within more X.X% this standpoint capital efficiencies. we've said

Operator

you. Thank

the of Next question with Barclays. comes from line Mallela Chethan

Chethan Mallela

just how more and compares pricing plan inflation? the back that taken to a also past year. just take you've which elasticity in had the detail provide on are pricing? magnitude what at pricing the comments from I follow wanted of potential in planned morning. specific about the the thinking And times you of the categories good pricing up to earlier then, Can you little half in Hey, you've on the when that how to you on

Gerald Evans

total the I is of general wants these to and our things. those a the and it cotton what costs A affecting those Well, coming base. surge cotton, it's transportation of world kind from think to standpoint are comment in just early would costs also tend small commodities kind -- that I fairly piece being it's elasticity of about on of kind things, say and is but to think through

put nearly XXXX/XX. are our just to fully lines the mid-decade can those. adjustments These be across look of big to These to inflation. product cost cover second will not increases in the have and normal of in we that next of half relative of where the the cotton to cover seen you make begin year prices then, modest bubble during would look the So we the fairly into place range to would year, work will we certainly more of a and

and here points few there. a So

Operator

Thank you.

comes Kate next McShane the of Our line Citi. from question with

Kate McShane

Good question. and flow we us be to regards With guidance seems Thanks wondered my of could expected cash if a for for Hi. is I than in year. to guide XXXX taking you. by achievable? billion morning. operating walk and the still cash wider flow in $X takes Thank through puts a more the you the the little little bit

Barry Hytinen

for question. Thanks Sure. the Okay.

conservative level kind XXXX and of to the then the and get a you if midpoint we're D&A comps to of the back that on think I GAAP look we've approach guidance. add guidance and taken our this So our net income at just try stock

taken prudently a working look capital. we've so And at

$XX of includes over of does flow tax be next does our it we little over cash have million that capital, also know it we've that about $XX opportunity from the course pension think year does million. we working the but the in I reform a out we'll estimate year. run would additional I in we'll impact up that through earn Champion in contribution It clearly and taxes years the the that's one-time for the planned essentially we million about include which few that include cash XXXX making talked be $XX flat operations.

that's those So all embedded in numbers.

to billion $X see it number plan, absolutely that we the in yes, As cards. the relates are

flow if So for start exercise. -- to mentioned that the add is high-end of let's that use make actuarial XXX million think is one kind with that our Champion of operations it I the this would The about at of from cash in purposes XXXX, $XX an time. really it way the you just type point I pension back easy just contribution this

after the that's charges reform are will the of about of as as the from at $XX And assume charges. The And $X that's be and cash $XX very when year that XXXX you million zero XXXX million. look tax course and over just that go this benefit about those the booster we that from and in Gerald related all now. noted well receiving to the XA if I'd mostly that's cards. much on by that talked So billion around we that can couple then, acquisition next is tax impact that includes synergies pricing years relative in opportunities as we'll note move

So performance see we there. good

Operator

you. Thank

question next the Fargo. Ike of Wells line Boruchow comes with Our from

Nancy Hilliker

into performance and is our just specialty? dig Hi, the departments further of the for specifically there could mass there, innerwears talk domestic on then, was talk innerwear and trends. the activewear, you Nancy were and question. about just too? trends everyone. I for for activewear wondering our taking Could if Thanks if also Ike. you This domestic breakout during about just could you What the

Gerald Evans

growth the up we achieve U.S. innerwear was the earlier Sure. pleased actually the business brand market, our of which in channels within the and performance. behind had than that more speaking as From the to that it here look of commented digit. really in as the were performed within important framed the basics up that your accordingly. I support basic various the quarter was standpoint mid-single broad returned that our our within channels categories channel, was at you was mass X%, we strength business well and generally saw by And general our and saw to behind fourth we and I'm thing We goals category our quarter question gain set we're out business category share organic driven certainly if

-- was in more as segment. it's If of department category, mall than has a performed to department it has channels that Innerwear you suffered general closer more Mid-tier closures. our at category business was the little holidays. mass the look channel store and and The the below you concentrated recovered the got And and from intimate expectations stores based well. door mixed is of been other portions in our our side

forth we expected so this little a have go quarter as the we realignments a out to of year. those of some product to and below shifted business that expectations got fourth our Our was number in

with advertising products of it we're this see going And we'll place. as we support the And well. and sequentially as year out year. go the first So earlier, mentioned as to I second them we ramp in expect to in through that business get quarters the

where the fourth in feel feel We category business business we followed channels the actually like From of and quarter of retail our So Activewear, it the standpoint the going. which Innerwear operates. various is following growth about trends good it's our in saw suit. Activewear the

Our was up business overall X%.

Some Apparel acquisition, business organic in well. certainly our was our Alternative the it And grew well. Champion is teens basis X% rate on grew our an but of business benefit the that as U.S. within as that mid of the at star

going in business So lot but to the Champion we be and a continue to a on the is have Activewear of that going of that. a U.S. belief and part big continue strong to basis is global only be not to

Operator

line And John question with the of from comes Cowen. Kernan our next

John Kernan

for Good my question. taking morning, Thanks guys.

some on we've assumptions in see box your year for that a bit U.S. Just organic channel. a the your of you. stocking there's wholesale the what the for the what I'm when little from wholesale in wondering some I'm channel channel just big in as go assumptions we are that the still into heard back-half pickup fee to channel? assuming CPG going you're on are that going companies larger what of Thank

Gerald Evans

than in out suppliers year. their we And our system build for think tightly that in inventories that shelves caution we XXXX that U.S. to a we as to and half there and that be we retailers doing is customer going very turns we're through XXXX. dealer our exited line the of certainly fine first we excess in we generally we inventories when and their manage and our and on the and to that as things and allowing quicker to We need refill noted our in to of believe destocking continue noted the From think the to do wholesale go standpoint they think of rather fill up just contemplated in guidance so encounter will tightly destocking, forth. manage continues there as

turns don't just So, on we se, continued destocking inventories improving their anticipate managing focus it's per and carefully. very a

John Kernan

Okay.

Just what wondering for implies four margin your in I gross XXXX I follow-up, just gross I'm for margin and XXXX? could quarters if up guidance was think

Barry Hytinen

question. the for Thanks Yes.

and basis first the full are be XXX in up slightly year the for gross to XXX We points. expecting in margin probably the of quarter to vicinity a to be up

Operator

our from of comes question Tiffany with And line you. Deutsche Thank Bank. Kanaga the next

Tiffany Kanaga

Hi. Thanks for my questions. taking

digit typically the double-digit back new adjusted business see path positive you digit organic in tax despite levels. sales online most to from picture International algorithm tax around the in ahead, targeted, mid-single to talk you which this first growth I bit falls guiding below XXXX or you big next if how Can discussed the the for in for is reform as earnings what to growth despite You a and you what margins, example year? double-digit half specific growth, achieving you've realistic GAAP, I but with the outlined double-digit mid-single where Champion? know cover opportunity and that EPS get are

Barry Hytinen

that take me shot one. let a at Okay

through distribution profit, about the headwinds well and efficiencies particularly of standpoint the short-term through see that as as on the mixed So, of some are operating return we networking marketing we're business good the in from what's U.S. talked some flowing we substantially in working see elements embedded Intimates obviously a elevating we've portion and that that. is we spend the like in as

that I that's things substantial think out point for XXXX, the in other of the to said look we'll price back-half year. Gerald as would commodities, we we at are the the I impacting As fairly that increase

mixed profit total pricing to the business, move corporate start in items, see margin the booster in continue So, actually we're that and back-half start as synergies, you on the expansion distribution significant year, and to commodities for to business ramp the you'll there. we look passed the getting on as in forward, see through we I think rise our think average the exceed the really be we gross the you'll see there of operating portion that in will - international the we'd

as growing substantially. think you XXXX we really have I clear So, to a beyond very to path earning get and out

Operator

Thank you.

question next Goldman Bill of Schultz Sachs. with comes the from Our line

Bill Schultz

the maybe distribution to my had of on asked But, questions out. already Most expenses you been guys. just called in Thanks dive already. have

be retailers do shipments little an to doing year? think time closer continue being, higher of more into ongoing but of kind do business distribution going demand, see to guess You as just ship, ask ongoing as bit frame you to next expenses I a nature, continue as that's drag of cost those an you for this transient to in

Gerald Evans

No.

year. work As and there we business to as the we network we'll noted spread look and half it into about rather in having more one adjust the period third adjustments some strength really through and would is in in adjusted than for you you labor over you as increasingly to the time. later you Champion quarter I drag make those part we that We've similar back-to-school is which expect and can is XXXX, your that The out surge accordingly in remind influx plan first holiday transition seen over of multiple the the one year facilities moved time. their things that do your among we've the see our a have first retailers of and shift,

to anticipate the and we management is labor back-half. So, we'll in about adjust really

Operator

Thank the from you. of And Andreeva Oppenheimer. for line comes with Anna question our final today

Anna Andreeva

go what so as is Thanks Good questions are Great. considered you impact you we in Thank a so should much. that closures XQ some or door then already guess functional more additional And through the in you've I you expect from as from much. the us, morning just well? we margin embedding XXXX? any closures think secondly, about Two and that expansion guys. the of XQ in as back-half is recovery improvement quick XQ

Gerald Evans

Yes.

first first, half expect that's pricing. those margin opportunities be third pressuring that the and talked that's that as And the second and those we've as us improvements well and thanks to the see quarter. certainly quarter bit items So about and getting in incremental fourth we'll in acquisition and I'll booster take entire are fact ramp operating expansion half portion synergies the we the little behind from the that for half

of door relates things throughout more first the about. year talked in the closures happened half the the anniversarying terms year. that's more and loaded that of as in half So, first and of And we marketing door to closures embedded last of year have is we as it into certainly the and

that you're So, about right. I think thinking

Operator

for and that Thank session today. to you. comments. the to any floor concludes question back I like answer our turn And closing would for Robillard over T.C.

T.C. Robillard

soon. attending thank a to great Have today, We'd forward we with day. to call like you look our for speaking everyone and

Operator

thank for great Thank you day. you your you. Ladies now conference. This gentlemen, program, conclude Everyone and disconnect. today's does participation and a have the in may

Hanesbrands (HBI) 8 Feb 182017 Q4 Earnings call transcript