Hanesbrands Inc.

Good day, and thank you for standing by. Welcome to the Haines Brand's fourth quarter 2021 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star, then 1 on your telephone keypad. Please be advised, today's conference may be recorded. If you require operator assistance, please press star, then 0. I would now like to hand the conference over to your host today, T.C. Robillard, Vice President of Investor Relations. Please go ahead.

Good day, everyone, and welcome to the Haynes Brands Quarterly Investor Conference Call and Webcast. We are pleased to be here today to provide an update on our progress after the fourth quarter of 2021. Hopefully, everyone has had a chance to review the news release we issued earlier today. The news release, updated FAQ document, and the replay of this call can be found in the Investor section of our Haynes.com website. On the call today, we may make forward-looking statements either in our prepared remarks or in the associated question and answer session. These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. These risks include those related to the impact of the COVID-19 pandemic and measures taken by governmental or regulatory authorities to combat the pandemic on our business and the operations as well as the business and operations of the consumer, our customers, suppliers, business partners, and labor force. These risks also include those detailed in our various filings with the SEC, which may be found on our website as well as in our news releases. The company does not undertake to update or revise any forward-looking statements which speak only to the time at which they are made. Unless otherwise noted, Today's references to our consolidated financial results and guidance exclude all restructuring and other action-related charges and speak to continuing operations. Given the volatility of comparisons due to the impact of the COVID-19 pandemic, we have focused our comparisons to 2019. Please note that unless otherwise stated, all comparisons are to 2019 results that have been re-based to reflect the move of our European Interwear business to discontinued operations as well as the exited C-9 program at Mass and the DKNY Intimate Apparel License. Comparisons to 2020 results, 2019 results, as well as additional information including a reconciliation of these and other non-GAAP performance measures to GAAP can be found in today's news release. With me on the call today are Steve Bradsbys, our Chief Executive Officer, and Michael Dastu, our Chief Financial Officer. For today's call, Steve and Michael will provide some brief remarks, and then we'll open it up to your questions. I will now turn the call over to Steve.

Thank you, TC. Good morning, everyone, and welcome. Haynes Brands delivered strong fourth quarter and full year results. Our global team did an outstanding job all year delivering results that significantly exceeded our initial plan, while strengthening the long-term fundamentals of our business. I want to thank all of our associates around the world, Because of their hard work, dedication, and global teamwork, Hanes Brands exited 2021 in a much stronger position, despite the most challenging operating environment in decades. We have a significantly stronger foundation, both operationally and financially, and a more attractive long-term growth profile than we had prior to the pandemic. Hanes Brands has changed. We are rapidly becoming a new company, one that's consumer-centric, growth-oriented, and results-driven. In May of last year, we laid out our full potential plan. If I take a step back and evaluate our progress, a few things are clear to me. First, our growth strategy is working. We're seeing in our financial results, in the culture of our organization, and in the increased consumer demand for our brands. And second, we're even more confident today in our long-term strategic vision than we were just nine months ago. As a result, we increased our full potential 2024 financial targets. and we're increasing capital returns to shareholders with the addition of a three-year, $600 million share repurchase plan. Our full potential plan is gaining traction and we feel very good about our progress. Our growth strategy is working and it's evident in three areas. One, the investments in our business are enabling us to operate more efficiently and effectively. Two, we're delivering results on a consistent basis. And three, we have a stronger financial foundation. Touching on each of these, first, we're better positioned for growth today than prior to the pandemic. We've made improvements to our processes, we're more globally integrated, and we've streamlined our portfolio, including today's announcement of our plan to sell the U.S. sheer hosiery business. At our investor day, we committed to building world-class brands and increasing investment to drive growth. We're seeing very good initial returns on these investments. In 2021, Our marketing and media investments to build and support our brands globally were $70 million higher than pre-pandemic levels. This fueled increased growth in our global interwear and activewear businesses through the year. It helped drive growth in market share gains in our Champion brand, which ended 2021 with global sales that were 36% higher than last year and approximately 20% above 2019. And these investments also helped generate 150 basis points of market share gains in our U.S. interwear business. We also continued our investments in technology and in our diversified supply chain to improve efficiencies and our speed to market. These investments have helped broaden our product and brand assortment with our major retail partners to increase shelf space, particularly with our U.S. interwear business. And they've allowed us to strategically invest in inventory to capture demand upside and position us to drive future growth. The second indication that our full potential strategy is working is our consistent execution. Our global team has done an amazing job all year of delivering results through an increasingly challenged macro environment. This was most evident in our full year results as we delivered $550 million more in sales and $100 million more in operating profit relative to the outlook we provided at our May investor day. These results demonstrate the team's ability to both run the business and change the business at the same time. We've been able to implement our long-term growth strategy while consistently delivering near-term results. And the third indication our strategy is working is that we're operating on a much stronger financial foundation than prior to the pandemic. We ended the year with sales and operating profit well above 2019 levels. We held our operating margin even while investing $70 million more in media and marketing. We also strengthened our balance sheet, lowering our leverage to 2.7 times, bringing us comfortably back within our targeted leverage range. As you can see, there are a lot of good things happening at Hanes Brands, and our underlying fundamentals are improving. Some of this improvement is masked by the current macro environment, and we expect this to continue in the short term with inflation and transportation headwinds continuing to weigh on margins in the first half of 2022. We expect margins to inflect in the second half and return to year-over-year expansion. This will occur as we capture the full benefit of our price increases, the planned reduction in the use of air freight, and our disciplined cost management continues to provide savings and efficiency gains. Looking forward, we are even more confident today in our long-term vision. Our confidence is driven by the traction we're seeing with consumers and key customers, the progress in our full potential plan, the investments we're making to drive future growth, and the team's proven ability to execute, particularly in one of the most challenging environments in decades. As a result, we've increased our three-year financial targets. For 2024, we now expect revenue of approximately $8 billion, an adjusted operating margin of approximately 14.4%, and a cumulative free cash flow of approximately $1.6 billion. We believe this positions us to drive strong shareholder returns over the next three years. We're investing in the business to drive growth. We're also paying a meaningful dividend. We'll begin buying back stock this quarter, and based on our full potential outlook, we expect to be able to do all of this while simultaneously deleveraging the balance sheet. So in summary, we feel very good about the underlying fundamentals of our business and the strong consumer demand for our brands. Our full potential growth strategy is working. We're investing for future growth, and we're even more confident today in our long-term opportunity and our ability to drive higher shareholder returns. And with that, I'll turn the call over to Michael.