Hanesbrands Inc. Q2 net sales were $1.12 billion, up slightly comparable to last year, and
earnings per diluted share were 26 cents, which, as expected, were
significantly lower than a year ago primarily because of several
factors related to the company's new independent structure following
its spinoff in September 2006.
“Hanesbrands continued executing its key improvement strategies in
the quarter and delivered strong cash flow,” Hanesbrands Chief
Executive Officer Richard A. Noll said. “Sales in the quarter were
comparable to a year ago, and our expanded margins for the first half
were driven by strong cost controls. Our cash flow allowed us to make
additional prepayments on long-term debt and repurchase shares in the
quarter.”
Quarter and Six-Month Financial Highlights
Financial highlights for the quarter and six-month period ended
June 30, 2007, include:
$1.12 billion from the year-ago quarter ended July 1, 2006.
principles, was $88.1 million in the quarter, up from $79.9
million a year ago, and was $157.0 million in the first six
months, compared with $176.1 million a year ago.
The company's operating profit margin excluding actions was 11.2% in the quarter and 10.0% in the first six months. A
year ago, the operating profit margin excluding actions was 8.4% in the second quarter and 9.1% in the six-month period.
“We are pleased with the operating profit margin excluding actions
for the first six months of the year,” Noll said. “Our ability to
exert tight cost controls and execute on our improvement and
streamlining plans is delivering results. We are seeing the benefits
of past cost-reduction efforts, including moving production to
lower-cost countries as part of our long-term supply chain
globalization initiative.”
with $0.62 a year ago. For the six-month period, diluted EPS
was $0.39 compared with $1.39 a year ago. The decrease in
earnings per share reflected increased interest expense and a
higher effective income tax rate as a result of the company's
independent structure, as well as higher restructuring and
related charges.
Diluted EPS excluding actions was $0.54 in the quarter compared
with $0.73 a year ago, and for the six-month period was $0.81 versus
$1.55 a year ago.
long-term debt by $53 million, of which $50 million was a
prepayment, and repurchased $16 million of company stock.
(Operating profit margin excluding actions and diluted EPS
excluding actions are non-GAAP measures used to better assess
underlying business performance because they exclude the effect of
unusual actions that are not directly related to operations. The
unusual actions in the quarter and six-month period were plant
closings and reorganization, amortization of gain on postretirement
benefits, nonrecurring spinoff and related charges, other expenses and
the tax effect on these items. See Table 4A and 4B for details and
reconciliation with reported operating results.)
Hanesbrands continues to execute its long-term global supply chain
strategy of moving production to lower-cost countries to increase
competitiveness. In the second quarter of 2007, the company announced
plans to close 12 production plants in four countries and eliminate
managerial and administrative jobs by the end of the year. The company
recognized $39.6 million in restructuring and related charges in the
quarter for those and previously announced actions. Of the charge,
$11.9 million was non-cash.
“We are very pleased with the progress we have made in moving
production to lower-cost countries and reducing costs,” Noll said.
“While we continue to reap the benefits from these past actions, we
are focused on executing our latest production moves and
organizational streamlining to gain additional benefits. We are now
slightly ahead of schedule with our cost-reduction and globalization
strategy.”
