HBI - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Hanesbrands' First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, today's conference is being recorded. I'd now like to introduce your host for today's conference, Mr. President, Vice Robillard, C Investor Relations. T go please ahead. Sir,

T.C. Robillard

the Good conference investor and to day, welcome Hanesbrands' call quarterly everyone, and webcast.

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

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

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

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

Gerald Evans

strong We T.C. Thank had very you, a quarter.

profit, build business as quarter operating exceeded continued and momentum to expectations per share operating for flow. revenue, our earnings cash results Our first

goals on year on we outlook. to deliver us achieve And the the start pace puts on track last Investor at firmly strong year's Our remain we to Day. to laid year out our full

year, while the currency For organic grew constant quarter, revenue reported XX% over X%. last revenue increased

Our XX%. growth sales investments intended revenue define are broad-based we indication XX%, as clear revenue, over up XX%. organic that international basis, branded excluding and and their businesses online to a up results. across was directed our and On constant-currency growth were XX%. strategy diversification an consumer related delivering global all was increased Activewear Champion channels, which CX, stores our And accelerated growth, geographies,

organic in that Innerwear Innerwear more delivered expected constant region Looking Asia, year, the in line currency growth or decline global in up than offsetting we our further over of our were business, above forecast. with quarter's with profit last Americas, Europe. in Australia operating and and at the were International each performance, the sales sales

while in pricing. quarter, our operating encouraged were Innerwear expected of was by we last our compared that by above U.S. performance are business The net the expectations. to We revenue than better part was a driven sales year, profit and upside in our pleased benefit down from were the both

Hanes and our saw Comfort Maidenform. including Comfort Cool performance continued innovation Fit and We also platforms and from strong Flex

In consumer of addition, one national categories. purchase reinforces program intent label our that to value view sock a This number remain Hanes the private the driver brands at in displaced retail.

across saw demand double-digit the the growth excluding strong Champion, we our CX, we In direct-to-consumer around Intimates, US of innovations. include increased continue world. our committed main are on with to launch channels investments, additional the well that We specific in marketing the geographies. of and growth returning wholesale to as actions XXXX, to Touching within in Innerwear business experience quarter, each for our consumer as long-term particularly brand

over reunited the that brand it strategy XXXX. engagement with to in broaden of was market. leverage of to years we our the global a several Champion's in-country as brand also are after past the strong Champion Australia, elevate in is coordinated distribution We seeing operations our consumer The result in highly success

Our to expansion to further our margin our organic revenue supply market. we growth delivering future expect We're increase should from believe We've efficiency with to and investments with efforts globally. particularly digital our a the right broad This supply we're global and service. working network cost we strategy continue for and plan plan integrates pace regional us reflected business about on over is design we're spoke investments. platform, We several our efforts fully revenue our billion. improved brand. and operations chain constant are in scale, our wholesale, in our We're campaign. various our scale a specific generate our directly consumers, years our for the partners goal strategy we remain Asia. engaging XXXX of lower efforts sales our both runway to and brand while growth expand related by our straight we detailed global millennials to cash The operations And strengthen grown across unlocking our results, seeing more long between our increase differentiation seven a extending distribution as to model drive currency of year, our consistent in speed channels. optimizing even the retail our Day involves platforms, diversifying In At and increased and full chain our and and We're our with drive organic product XXXX developing global to quarters honing all their stores, without This base segmentation base the past brand year, allows for outlook. well Investor and benefits customer mix focus we with to branded offer our our direct-to-consumer to growth Champion on has this over our a leverage our as continuing of to streamlining last our particularly ahead of within organic with leveraging flow growth. as potential. online $X distribution

track we of the to that, with as believe our generate also as are XX% positioned We flow, well the flow levels we cash And the on growth operating And reflects shareholders over accelerate creation growth year several call years. to we to turn I'll next value mid-point. higher outlook this accelerate to our are at cash Barry. over

Barry Hytinen

profit, delivered Thanks, as Gerald. cash first we quarter Overall, of all our per and results, across we including strong our share sales, earnings metrics, flow. expectations key exceeded operating

and $X.XX were and an million. X% GAAP flow sales operating respectively. cash And of $XXX Adjusted last million to year. $X.XX quarter, share per increased increase the $XXX For last use earnings from year profit Adjusted summary, over that quarter's to billion, over headwind year, $X.XX, turn million details contributions a a was $XX of $XXX exchange. X% $XX operations million results. the increased With million. from last foreign and including acquisition from Sales over were let's the of

Adjusted an in margin variable our currency the currency the segment, a Activewear charge, US was would as $X currency to was our in profit well increase XX.X% XX.X% earnings been of $X.XX the adjusted currency margin as $X the the compared a headwind Innerwear Partially of operating margin gross our this N greater the Adjusted dollar. impact prior compensation Things. last in margin was the as from US from million have compared the year. support share mid-point US in Bras have guidance, as reflected million points $X of Organic XX% million to XX.X% charge guidance. customer stronger last basis. million, dollar, on headwinds and a with was quarter $XXX and basis debt planned were relatively a an operating unexpected as of by for stronger constant gross contribution sales bad to line driven which well higher. offsetting single year. improved Absent increased year, $X strong non-organic and Versus operating included increase XX in basis of higher The investments Adjusted as initiatives, per would outlook. over bad million was been our this the With growth constant quarter, channel. printwear up on about reported over accruals, our debt future higher in

charges our guidance, with X% in last For increased per while of $X.XX year. XX%. earnings per with earnings Adjusted the $X.XX, $XX was line share acquisition from million was of to our and other rate GAAP related consistent share quarter, $X.XX as tax were essentially of

second new take let growth up while segment continued quarter, Bra US year, Now, you was last me declined performance. profit sales product margin planned, operating of points XX% as Intimate our third sales was XX% sales Comfort quarter single-digit the were to through in positive Cool the with low US reception by basis to and consumer with straight up to compared strong revenue expectation. our our Innerwear line X.X%, sales in shapewear Shapewear's in our down driven increased XXX last Activewear's while the XX%. Basics growth. were and increased consecutive year. XX% revenue our grew lower quarter, designs performance very over innovation. for quarter. X%

in growth and channels. distribution, than remaining XX.X%. accounts, our the margin more goods was Champion increased operating declines as order higher with levels including new We XX at than to Champion Champion's in strong more offset directed expansions up Activewear Activewear keep channel, the incurred basis our businesses XX%. costs sales points growth expediting consumer well in strong expected by CX, Activewear's demand. The space Excluding driven growth as comps sporting including existing declined the CX. to of

basis million, International further On a increased was increased acquisition last operating $XX We of million. rates. Asia, or during quarter. Things of foreign $XXX over This organic across year and marks to all from Americas This in grew we average synergies. to XX%, growth. Australia Innerwear N increased the XX.X%. the above Activewear to exceeded currency or non-organic our effects expectations exchange our compared the our included million leverage quarter our operating support margin segment, headwind businesses as a International's regions, last both sales investments International's International Europe, In our from volume-driven from contribution constant are third year. $XX in We the and of consecutive points basis, margin corporate $XX Bras XX XX%, and million increased which and benefiting an the and also sales

used to flow less with we use Turning stronger a seasonality, consistent quarter, flow performance. and sheet, balance working though the and income the planned, normal from capital was operations higher cash to a thanks cash net than in our cash

cycle X compared as For days year. to the quarter, last our cash by improved

would of document I X.X the of full That details. including like quarter was year to FAQ the quarter US down our at remain down XXXX early to we full-year with We leverage the of our the the press pleased outlook. to remain now on in X.X to more couple release leverage strong year's share to our by our Our to for guidance; We're bring guidance, meaningfully seeing end times it's with from dollar. you point and momentum to And year so retail the our turning last the cautious end the times, respect year. a reiterated times. track we X.X I'll we're outlook, and our business. characterize first US environment and points the strengthening results said, in and

currency outlook now $X FX profit. of Our than of by this by first fully in revenue and In incremental profit, previous higher $XX includes our headwind effect operating outperformance million million respectively. headwind in offset quarter and full million operating in our the million $XX $XX million, been which year is $XXX has guidance

at growth We of also currency sales quarter implies the guidance, of which growth X%. and mid-point issued approximately sales constant X% second approximately total

second and Innerwear to reflects is currency are the in Bras is outlook Activewear, our prior the revenue than N constant the Activewear segment. our quarter. excluding a our in million sales guidance headwind guidance we same approximately $XX decline quarter in unchanged respect cautious note our sales This to door relate the department XX%. channels. outlook. With which reported reflects growth X% of last assumes and International quarter, organic reflects X.X%. and also approximately and second our In Champion, the our store from as currency growth mid-point double-digit quarter US CX, of million guidance assumes Things approaching sales This our segment. I'll in the of and continued that growth mid-point mid-single-digit higher approximately of as mid-point of guidance reflects of US in nearly decline assumes a reported Our our acquisitions anniversaried of In X% our quarter revenue segment, rest the stance strong prior segments, closings mid-tier our outlook $XX this second our it growth

the said and seeing prove And for strong the quarter, outlook this the given is quarter in Our be to trends from our remainder last year we constant unchanged outlook. conservative, may currency of the as Champion. prior we're

range Our second profit million operating million. $XXX quarter to $XXX is

well I'll last note year reflects guidance within expectation of growth-related currency year the acceleration mentioned investments, I $XX for Champion headwinds our incremental support year growth-related US Intimates. brand remains the as increase including Our that over earlier, a million as of investments our full unchanged. and in an

of a We rate expect million expense and approximately other XX%. $XX approximately and interest of tax

Our second shares slightly related million integration $XX quarter million guidance outstanding assumes acquisition, than $XXX charges. approximately diluted more chain of and of supply and

and respectively. full income our is million Therefore, unchanged. of $X.XX, and $XX earnings year for our $X.XX $XXX quarter outlook and adjusted at adjusted share million net is Our second mid-point, charges GAAP are the per guidance approximately

quarter. we So in first strong had closing, a

are working and efforts momentum business build. our continues to Our diversification

pace our that, over outlook levels cash flow. full to year to operating track we T.C. to We back turn higher the are And with and achieve generate on of on call remain I'll

T.C. Robillard

the That to remarks. time and session. Barry. turn over call allows. prepared Thanks, I'll continue to begin back operator the taking We'll question we'll our the questions your Operator? as and answer concludes begin now

Operator

from question Instructions] Evercore with line comes Saad Omar first the of [Operator Our ISI.

open. is line now Your

Omar Saad

products. job Thanks. current layering where for a globally where business really I up Champion, the given on any guys product, you are higher-end from about, mean tell, in maybe and then obviously we new question. Thanks the in are just follow ex-mass how that the going see acceleration. there of is that and the taking this mass you you significant has big got wanted brand you be context a of is doing, could number But talk brand CX its demand holistically my especially channel segmented tremendous the global what away, can pretty for to going, Really guys can piece? nice a business brand, segmenting where plans basis? see And strength brand on

Gerald Evans

for Omar, Gerald. This Thanks, the question. is

to basis. the from of within cash get First I'd our operating earnings And think certainly proud quarter profit well quarter. very like and of really our on track exceeded range. per all, it we're operating plan a we're from expectations flow, had and leverage a back share and We just strong revenue, ahead comment, of we to an

across broad-based just and and to well in was event. strategy through, than is We really our Consumer business Innerwear the Champion both diversification business, showing US pleased expectations Our our that investment it we're continues performed brand business better Innerwear wasn't as growth, grow quarter. as it international also in a saw our it very business as our our and Direct Activewear

had Champion, XX% question, constant quarter, up excluding your to certainly, also Now, on basis. currency very a a CX strong

in are Asia, commented, we additional nicely we're was And wholesale seeing additional of in channel, up basis, really on our it's what that growth, this sporting doing in business with are markets new for but growth. and the opening activities, is see And based opportunities delighted us it other delighted customers. are broad is we're for And the segmenting the management benefit now as we consumer. growth with in well. we growth expansion where and growing European opportunities goods It the only and global We with we opportunities brand. in, not And we team for driving both double-digit the are we're example, example, seeing a it countries. and across was it's it as was regions, the

we're So ahead as this we business to investing a the of road in and well. build see lot business

global connect really campaign feel and millennial momentum. to that drive We our the anniversary, about we're in to consumer. our digital continue with We driving our good XXXth campaigns,

the to continue XX% spite we'll believe drive really high year in teen's second some growth a grow We at half last comps, a this continue to in overlap and of rate from and strong year. rate

XXXX $X goal time. at billion on So we're pace of our for point in well this ahead

take And we lay lot that here. $X beyond opportunity a goal ourselves got us that to to goals to have room the of is years goal the lot momentum we are but so, in to ahead. where We've deliver continuing that, run and beginning we internal to billion see first, now of

Operator

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

Your open. line now is

Unidentified Analyst

next Good Innerwear on you Hatton Can the morning, quarter. for your sort Thank Susan. revitalization of the you. this on original about dig job [ph] the the initiative how is steps the year? for Luke guidance? details then, thinking around beat the And versus Nice rest of the into you're also, in Innerwear

Gerald Evans

Sure.

let just comment the in our than were delighted take signs was Barry it. sales better lot a on me the me And the But in elements operating and the of of Let with first, and -- on side profit the quarter. both the we're of performance an backside Innerwear I'll there that standpoint. expectations say, from quarter. It let a encouraging

in price in better-than-expected place Our and increases flow-through from price those quarter. we the went saw increases

business a putting second was we in space digit place at sock commented low the now expanded a including quarter Basics and in up single Our we're consecutive prepared that our for rate space comments. our

Intimates cooling and traction in three for expectations to early Our our of the that growth seeing initiatives where behind a also was the performed our quarters in we've revitalize quarter and that business out quarter of a seen row in now business innovation. shapewear real row solid our business, we're to second

well across both planned innovations a and business, and our shapewear got number our good particular really got Basics ramping of back-to-school the a where of business, investments Intimates our bra and the were coming up strong got we've We're for as feel business year. with focus we Basics as on business. in balance we've we've we the coming about lot So, program the for quarter our up a

with return we're over We that direction and consistent comment you right good well growth business. Barry, the expect quarter? we to feel pace of we we're on time. the the heading going this we're we to details feel on about So in it where think to want that

Barry Hytinen

being specifically being I down is, to unchanged prepared it's for things outlook our go feel prudent up as That's I it forward, prior relates strong retail Gerald growth and quarter, think my and shapewear. about remaining Intimates out, to totally We add good, thing in would us how mentioning, are we was as down and X%. remarks, in relates the environment. Innerwear, we it Basics as the as mentioned just the only on from in line we play second planning

So we question. feel appreciate Thank good the and about how Innerwear performed you.

Operator

next comes the from Laurent Macquarie. question Our line Vasilescu of with

Your line open. is now

Laurent Vasilescu

Thanks high for taking think rate question. XX the FY a morning. should I for last US you calls grow my that Barry, 'XX. out at Champion called outside on Good mass percentage

think closer quarter, US Activewear about may. bit little question I the Champion for up CX, for X% on should follow-up for year, guidance grows US to the we total cadence a on the a and if of have talk I Maybe year? the then outside mass XX% I based assume the by

Barry Hytinen

thoughts and certainly billion goals. We globally. just that our in is for long quarter. level, around the the really in a Gerald currency rate, the running Champion obviously, I if ahead first, our are be growth a very that's the the from of see excluding first high Champion I low question. growth reflects say, are for first XX%s, And would mentioned, strong of that up global And seeing XX%s we as or We, $X.X quarter. we really Champion fact now, saw even as outperformed kind runway A sales constant there compared to few prior our guidance around a in which of outlook would Thanks for in and Laurent. performance take outlook CX, our out world upper

forward it our quarter terms Laurent, in to again, I US done, but say, first rate improvement growth imply of performance. it we've relates year, would the does all the of the in As is within full Activewear, an improvement roll for once

within through that segment, first prove in growth the quarter, So I it, XX%s, in we we a we go certainly, just we've quarter, just rate up conservative XX%s million we team guidance Champion. reiterate if job time, mentioned, expectations $XXX would business year, Activewear as I represents think, and still the that of last growth think the about I'll comps. with what phenomenal percentage as have the Champion, basis a doing got the both said our is prior and US performance last And I better quarters. the the in versus excluding taper I frankly about CX, on as mentioned go all it through there, would back range doing low could And larger growth reflecting expect the you think, we I to as naturally because a and expect half great double-digit is of

Operator

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

Your now open. line is

Unidentified Analyst

in This was Activewear Thank much you could the believe you [ph] piece be mid-single very for on is and for taking to digits year said if the wondering driving bit I other decline that's How about in do not of I you to that my kind that John. throughout expect the Thank what's in the Gerard you question. little business? a US you. of talk QX? Champion quarter. down second progress planned

Barry Hytinen

you, Thank It's good question. Barry. another is Gerard. this Sure,

with products respect I'll you. to low go growing $X in X%, I a about about single kind we of just that's on quarter. guidance, decline we of would and quarter million talked rest just single And million through terms rate, year. strong to $XX mid-to-high We've migrate excluding second one Activewear decline say the maybe the would of that is go over quarter continuation that of decline expansion of as specifics CX most as represent seeing to million, about the to expected that's growth. a XX% and of quarter, the XX% gross a digits. probably If US at recent of the the second would in call revenue. Activewear about the double-digit higher in million look rate, margin our quarter, be plus the expected in range got for $XX for margin but Champion, is the long-term and the through worth we in the of main digit that's mid And to drivers both plan mentioned, Activewear would to then, Activewear, $XX our US whole business, you to CX If and in equate before, which it thing about the of we

we that quarter unchanged I'll So feel we way trending. good all the business note I the what essentially quarter. about Activewear just the those gave very expectations of is And in second gave first for are the from

Operator

of from UBS. with Our question comes next the Sole line Jay

is Your line now open.

Jay Sole

back investing bit related Barry, the you the and SG&A should growth just higher little just to expect little year follow-up we the February. calling second then it, more on or forward talk out than what quarter, want touched on within color, approximately a the where in in give exactly maybe of you're about what XQ, was see in Can it? half, think but SG&A. kind a investments. going from return bit the for you more SG&A. I guidance a And you're you from investment that, million and I'm that's expected dollars acceleration to $X assuming about of

Barry Hytinen

then, we million growing just support think up In than Gerald the we the speak have did expediting probably as about kind $X about million brand margin did to we're SG&A maybe specifics the then service guide to and And And makes $X and initial to for around demand $X we business Jay, and In of of you relates we I corporate think, strong we has million, compared let are Champion line, initially had where had we investing. Thanks a take we things right, to maintain we I'll support, And frankly performance so been. $X compensation performance, were one how to In that how $X that original be called that keep Activewear, and call I'll million spend out part good million some same planning business were amount. brand questions. And variable fully note we the that shipping I also charge accruals, bankrupt specific, Jay. couple stopped bad to had guess the took specific customer some the I million, out, $X that in quarter. the for morning. I that which In the guide. levels. incremental there as the three first the million quarter, would it incremental charged about then printware debt the first of costs, in also that debt clear much $X.X some we went in fourth would we so was needed fast for is the bad we the we that some off. I about that you the in should more of expedite anticipated, because that of for customer then as with

So that obviously I use cost can quarter out in with the mentioned we to a corporate on year costs, the guiding. probably we I business the the right, of time, some through sales. excluding on -- for the plan brands marketing, distribution, to We're flow that of called were ROI our Innerwear In really going kind I are we'd would year. line world. the account year growth would proportionately level, our rate And etcetera, you're of I'd our brand of and we we investment maybe but media, not spend run ebb kind Recall, get the about the $XX the -- of indicated, and accelerate also that quarter, spend. investments fuel to quarterly would outperformance some the second first Intimates prior US there and brands very where and seeing that's we of the some last the quarter-to-quarter, are you of forward, be Champion, said, relates full that two And but just items year-on-year in for call, in no full would quarter the guidance. at corporate exhibit and or support in those things to growth in the sales million to around it our as as strong probably rolling just incremental support on like that

And the so, that the back from second of million quarter we've $X bring to chosen about half. into

that So you the the the Activewear will full the will occur level year, in segment. the in US Gerald of want million we just and year $X vast do increasing not be to… that moving in for are second it majority quarter the incremental

Gerald Evans

both where we part growing and Just our business. basis to driving build well, of against was of going over standpoint forward year, obviously, seen standpoint are heavily the we're investment, from spending Activewear spend, as world the the in anniversary upon the good year standpoint the from around the Barry to really and certainly spending we're on noted, and pull that our where the returns digital very XXXth that a in from traction. we're of showing of as good celebration and It's, a is Champion that quarter

year in returning the US we to heavily targeted added, tied consumer the place in example we're campaign. influencers, focusing in campaign is already The that continue results particularly to traction business, that to Intimates just we the at for of business we're business Maidenform, as started week that began behind growth. our seeing this so, and on a and millennial first we've Innerware our other focus And we

And well. including Australia, our selectively intend business in to as as business, then, we there Innerware our drive to we driving well. are spending International So, Innerwear keep

Operator

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

Your line open. is now

Unidentified Analyst

quarter. Good on Ike. morning, good This for is [ph] on Congrats guys. Matt the

dynamics should to declines flow-through margin You to benefit the speak we in on any mentioned previously back result expected a Can see XQ, the in than I a think and in Thanks. lower as And gross you you're see you there product. margins to half in expecting of half? gross pricing mentioned, margin updates the quarter. in was that back the then, better

Barry Hytinen

about kind quarter. appreciate Thanks, thank Matt. We you the And the for words that.

on grow, a conservative net on on margin the points vicinity half, the as a have for you as we And to as more reminder, we'll got for that's because, we consistent and in through to margin, say, total from benefit we'll margin basis it second to example, it let's As continue relates got it mix. really and not to higher the price benefit. counting migration have certainly, for in and should full total year. back of that relates mix, with a And mix about of which be Activewear, Champion year-on-year, more then, consistent the pricing relatively mentioned, the is in up, expect that's year, continues much move Company full and Certainly, the were will I gross quarter, and XX helpful thinking basis the the outlook as the it way as previously. we've we've obviously, for we to sales all year, net products favorable gross to

level. there XX so, margin a for good a things being in feel in the point of have we And is basis and gross lot good happening the that up

Operator

with Nomura Siegel from comes of line question Instinet. next Simeon Our

Your line open. is now

Simeon Siegel

fairly Barry, you I mentioned Company brand something a A rate the nice year. alone mentioned think have percent marketing on at let the as or the you a marketing today, low -- level. several and a start along of times you sales lines to level,

contraction the incremental got about to you point adjacent you mentioned scale run -- then, that there there to and that you're the side ROI an fulfillment. Thanks. Champion marketing meaningfully? the reception as be benefits happen? other you So, just and on flip rate Is ongoing more a to question. up seeing, talk one-time foundational just maybe upwards. costs obvious how there And congrats Can that Obviously, need you about then, the And is would the spends strength. push customer to reason So recurring or are on the there's changing? a the are for more that business margin marketing

T.C. Robillard

Yes, Simeon.

the we're in me to the consistent we've Activewear our our the on year you US the on seeing Barry and the you're I'll return let our it, spend in drive the the definitely on see part, the investment also on through and in business some both put look Let where certainly businesses that performance place drive the proving out Innerwear. of are to where what growth focus, this more money We seeing definitely other. then at take brands business investment of we we follow where and will investment

return, opportunity, we of So will get it. we'll feel we advantage to take spend the and there's think I

Barry Hytinen

as as quarter fulfill called continue say, would for levels the is our build and like one-time I on million quarter that earlier to really the Simeon, amount network high in increasingly we well, on fulfillment, $X I a was relates to for $XX it talked about in the of side out distribution And the Champion. things small call in out what consumer but demand nature, there's that as last and million distribution there we

about spend. some in So, there, are would relative good terms there level is where we year, of this that yes, I but we feel after of say

Operator

comes next Our from line Kanaga Tiffany Deutsche Bank. with question the

Your now Line open. is

Tiffany Kanaga

some Thanks good program questions. of light as trends business momentum label but provide terms I private might competitor [indiscernible] performance our touched the yesterday. their of commentary, most and it pipeline? on in Innerwear you're taking Would innovation vary you about what and color men's market by underwear share for of additional know how you underwear your in your excited on channel your discussing men's part in and

Gerald Evans

Yes.

perform very total and the of We it underwear our it key our about continues in a that. excited was well in that Basics, of continue performance can be underwear part in business, see men's up to you is very and certainly the quarter to

most we three-month in the business. recent growth build as in rolling nicely shares see Our broad that period,

over XX% for driver have the facts example, share we look distant brands is an consumers And done brands they brands And because as research why, at in to consistently in is and the market US, a the at numbers, look business, the dispute it's feel of to the and we our the to Innerwear we numbers hard suggest say and in case XX% the matter, of As generally that, that branded brands hold consistently continue the months. over we know the key -- price has and so affair. XX purchase last and grown actually time. share that

great So feel our we general. our about underwear in got we We've great some continue continue great business and about to innovations. to feel brands

in ready Flex be business fact, back and to to the faster of X-Temp into effectively innovation half our it we're Comfort in even worked which to consumers. well. works year pushing business going has an Our X.X, underwear upgrade as X-Temp the women's our very underwear And the getting in we're our Fit in cooling

underwear to Innovate part our to be an continuing continues our to important Elevate drive that. we're business and So of

Operator

question of Bank the with Balsky America. comes from line of next Heather Our

now open. Your is line

Heather Balsky

then capital cash. working and on Question excess

us end rate, on update got progress the just this talk priorities your also, [indiscernible] close you've your like long-term sounds for One, pretty by confident target leverage it capital then, initiatives working can the first, just you're So, your you you're free on and can you year. And made? about you've pretty of cash?

are And about acquisitions share Thanks. thinking and so you how repurchases?

Barry Hytinen

thanks hand the This take is Barry. the Good to I'll I'll for then questions. first part morning, it over and Gerald.

relates it working here. team think job great to a the capital, is As I doing

big you terms days So our would payables and payables due cash that last to is terms appreciate, a of lot obviously, of A team cycle that's in improved and the in versus X year quarter. effort. improvement

So seeing traction we there. are good

go through be the think source half on CX through growth. year. of source as the down as inventory bigger wind were of the trajectory to And normal if and more of in would trending receivable, that growth 'XX, significant than think we in to about the have the the on move I fact got we've light about accounts decelerating accelerating of continued expect year. capital 'XX, the it be end the of then a will of it the and likely inventory then, more income directionally relates year sales think opposed I with our like year, sales nice rest of to in I as is terms a such working you that of for you first amount remainder the to we opportunity as we when

So of benefit capital out. see incremental source working that is a play that natural should you

Gerald, good a about couple to lot free we of got capital continue working do want opportunity to over cash? the really the you So of we've years about next to And improve initiatives talk feel the it. see underway,

Gerald Evans

it's strategy, capital I long-term our Yes, from standpoint of allocation think unchanged. a

approach. use use acquisitions. We And range, dividend make the are first in we when targeted shares business. debt to to and X the our range our net free XX% of cash times. invest debt we've We to ratio. EBITDA to We we're our X to in return-centric we second payout leverage in invest XX% debt, in targeted repurchase We and that

to the years went range Now, over several we past and purposefully make acquisitions business. diversify outside the that of

also that those acquisitions certainly through of have get that I the results, our think range. decision we but in we're to in seeing the value want made back flow we

there range right to the that our on the end of back So in now year into into of that we range back the by solidly we using into XXXX. and we're to as our focused the year, bring get cash X.X end leverage expect range be and by and the

strategy standpoint the M&A strategy of we're liked in because the back strategy. part ability that of us as become certainly when from will range, been M&A, within gives range our part levers all So always and to we've of and most our our has the our allocation we get of and look that it forward use

Operator

from Citigroup. comes Paul with question next Lejuez the of Our line

open. now is line Your

Unidentified Analyst

Thanks. But the look expect factors future, Thanks. for It's them this we year what should quarter. on Activewear the I the business, a Stacey out spending I as Cugan question Paul, the margins full and into out to follow-up margins that margins the I you we for impacted [ph] also filling you and you had look expect from margins, for where fall quarter shift you the know think a to talked that in for some Activewear mentioned in your second business? about should as

Barry Hytinen

you that for question. Thank

can tailwind. of high the I of better a improved where dollars, addition, the call Well, at Champion year-on-year scale. that are slight product visibility is on back on the margin thanks gross it's one, into As some it we an spending margin Activewear two that was, look clearly which segment in if The and higher. extended And that operating and have it us; was go prior there decline And That's that's of incremental as out the, quarter, the in quarter, in remix in into items to: to just mix are the future? as slightly increasing lower margin continuing the quarter margin from business and couple the that a relates down, it, that half, I we second and gives growing, we rest us second as is of of second to the And Activewear think, outlook. you period called Activewear's million the first margin for the half. US the going compared I of due -- expansion and the expecting an out. will, mentioned pricing in just leverage to acceleration for we time, a

future, the going continue US foreseeable the would margins starting and forward, half over anticipate, to expand back and Activewear's So, I in to. operating

Operator

Our JPMorgan. next question comes Carla Casella from with the line of

is line Your now open.

Carla Casella

talk and nicely, supply that and on see if chain supply coming you what's up be just to seem going as forward. with new long lead On you're question, is supply Champion's chain quickly changes chain taking you you front how so and the any up growing you, keeping it with products, time, about can your

Gerald Evans

the Well, our of product have to This supply is carefully certainly that largely things and forecast business chain, the current capacity using our the appropriate fabrics growth up coming kept then developed through standard organization and in we've put done that by across Champion, we with place. and in-house. very working we the

seasonal that This season like it we sell leveraging a behaves season that businesses. to way that. other and we're pre-booked is So very our business much from

going So is place focused business capacity in much the where continuing we're to it. and on to view appropriate handle forward the have very on

Operator

[ph] comes with David line Morningstar. question of next from the Our

is line Your open. now

Unidentified Analyst

source? licensing your Do you any champion bankruptcy on effect revenue of for the expect

Gerald Evans

at was Source that growing. the a business, upside. We relatively is We're the portion business the be covered seeing the more the business. think by that a, which of was will Champion but pace throughout license modest given than

Operator

you. Thank

We the Vasilescu Laurent Macquarie. with have of from a line follow-up question

now is open. line Your

Laurent Vasilescu

how Barry, follow-up Europe global grew for did would did question. thoughts about for That you And how be quarter. Thanks actually any for actually taking the great. guys my then the quarter.

Barry Hytinen

up excluding domestic about CX that we $XXX about nature of growth. champion nearly faster. even $XX leaves $XXX and worth mentioned basis currency was US up million nearly $XXX Champion Total the of as that's in up million you the million US constant that $XXX XX%, of global was had Activewear currency that Internationally, up $XXX or basis. basis in the we sales that 'XXs on of about business. growth. a $XX Champion within on In over domestic was that in XX% with $XXX Gerald nearly and of percentage had and growing high quarter we was outside a Activewear million which on basics million million was help And if then million, it course for then And remarks to a of side things I million example constant is a in

really how performing. about feel we Champion So good is

Operator

And I'm T turn the I'd call to closing C questions for remarks. queue like in at time. back showing to this Robillard no further

T.C. Robillard

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

Operator

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

Hanesbrands (HBI) 2 May 192019 Q1 Earnings call transcript