Hanesbrands Inc.

To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to 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 2024. Hopefully everyone has had a chance to review the news release we issued earlier today. As a quick housekeeping item, beginning with fourth quarter results, we have reclassified the Champion Japan business to discontinued operations. Recall when we announced the sale of our Global Champion business in June 2024, we said we would be a licensee of the Champion Japan business for a temporary period of time and that we would eventually move the business to discontinued operations. In the fourth quarter, we notified authentic brands of our plans to exit the license by the end of 2025. The Champion Japan business moving to discontinued operations was not contemplated in our initial fourth quarter guidance back on November 7th. Therefore, fourth quarter and full year results, as well as our 2025 guidance from continuing operations, are not directly comparable to our previous guidance or to current consensus estimates. In addition to our earnings release and FAQ document, we've provided two additional documents today. One is a supplemental financial packet with recast historical financials reflecting Champion Japan and discontinued operations. The other is an earnings handout that provides a bridge from fourth quarter and full year results to our prior guidance, as well as an updated overview of the go-forward business. All documents, as well as the replay of this call, can be found in the investor section of our Haines.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 current macroeconomic conditions, consumer demand dynamics, our ability to successfully execute our strategic initiatives, including our restructuring and other action-related items, our ability to deleverage on the anticipated timeframe, and the inflationary environment. These risks also include those detailed in our various filings with the FCC, 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. Additional information on the quarter's results and our guidance, 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 Bratspies, our Chief Executive Officer, and Scott Lewis, our Chief Financial Officer. For today's call, Steve and Scott will provide some brief remarks, and then we'll open it up to your questions. I'll now turn the call over to Steve.

Thank you, TC. Good morning, everyone, and welcome to our fourth quarter earnings call. Haines Brands delivered strong results for the quarter and the full year across all of our key metrics, including our sales, margins, EPS, operating cash flow, and debt reduction. Coming into 2024, we said that despite the muted consumer environment, our sales trends would improve throughout the year, and that we had reached an inflection point in our margins and our leverage. We delivered on this expectation, and as a result, we are entering 2025 with a strong foundation clear direction, and good momentum to create shareholder value. Some highlights for the year. Sales trends improved each quarter with the fourth quarter pivoting to year-over-year growth of 4%. Gross margin improved 580 basis points over prior year to 41.4%, which is structurally higher than pre-pandemic levels due to permanent cost savings initiatives and improved assortment management. Operating margin expanded 390 basis points to 11.8% while supporting a 150 basis point increase in brand investment. Earnings per share increased 670%. And we paid down over $1 billion of debt and reduced leverage by nearly two turns. These results reflect the successful execution of our strategy over the past four years to streamline and reposition Haynes Brands even while facing a challenging consumer environment and a number of additional unexpected headwinds. We shifted from a global holding company to a global operating company, where we leverage and share our brands, innovation, marketing, talent, and supply chain capabilities around the world. We substantially focused our portfolio and simplified our business. We're now a consumer-centric company with both a reignited interware business that is gaining market share and an added focus on new revenue streams. We built core competencies and a disciplined operating model with consumer-led innovation, skewed lifecycle management, and the application of advanced analytics and AI. We streamlined and strategically segmented our global supply chain and expanded our e-comm capabilities. And we built our talent and associate proposition all while implementing cost reduction initiatives to improve efficiencies, lower our fixed costs, and allow for higher levels of growth-related investments. As I previously highlighted, the benefits of the organization's collective efforts over the past four years began to show in our 2024 results. I want to thank all of our associates for delivering on a strong year and for their hard work to successfully reposition Haynes Brands for the future. We enter 2025 as a new company, a more simplified, focused business with a powerful asset base, significant competitive advantages, and multiple levers to create shareholder value over the next several years. We're a global powerhouse in innerwear and basic apparel, operating in a brand-driven category that is core and essential to consumers. We own market-leading brands, including Hanes, Bonds, Maidenform, and Bally. Our brands are synonymous with comfort and quality and have been trusted by consumers for generations. We have a proven and repeatable consumer-centric innovation process that is driving market share gains, retail space expansion, and is attracting younger consumers to our brand franchises. We have global go-to-market capabilities as well as distribution breadth and scale, enabling us to capture demand wherever the consumer wants to shop. We have an advantage supply chain with a world-class owned manufacturing network and diversified global sourcing operation. Going forward, we expect to further leverage our competitive strengths and generate consistent top line growth, expand margins to over 15%, and generate more than $400 million a year of operating cash flow. Looking to 2025, we believe we're well positioned to make significant progress towards these goals. We will build on fourth quarter's momentum and expect to deliver positive organic constant currency sales growth for the year, driven by new innovations, distribution gains in key channels, contributions from new revenue streams, and market share opportunities within the printware channel, as we celebrate and leverage the 50th anniversary of the Hanes BVT. As we continue to improve our cost structure, particularly within SG&A, we expect further margin expansions this year, while maintaining high levels of growth-related investments. This magnifies our growth rates as we move down the P&L, driving operating profit growth of 10%, EPS growth of more than 30%, and operating cash flow of $350 million. And we will remain focused on using all of our free cash flow to pay down debt and further reduce balance sheet leverage. The combination of profit growth and debt pay down is expected to bring our leverage down to around three times by the end of 2025. So in closing, we're seeing the benefits of our transformation strategy as we delivered strong results for the quarter and the year. We come into 2025 as a new and better company. Well positioned to build upon our competitive advantages and drive increased shareholder returns through sales growth, further margin expansion, strong cash generation, and continued debt pay down. Before I turn the call over, I want to touch on a leadership succession plan we announced this morning. We have reached a positive and important inflection point in executing our strategy. Looking ahead to the company's next growth phase, as a board, we believe now is the right time to begin to search to identify the next leader who will build upon our transformation work and continue the company's momentum. We have a remarkable team at Hanes Brands, and it's an honor to work alongside them. Over the last five years, the team has done an extraordinary job of streamlining and repositioning Hanes Brands, all while navigating a number of extremely challenging environments. Today, we're a leaner, healthier company with a much stronger foundation. We're more focused, having successfully transformed our portfolio and how we operate around the world. We're more profitable, we're generating consistent cash flow, and we strengthened our balance sheet. I'm proud of the actions we've taken, what this organization has achieved together, and how Haines Brands is positioned for the future. We're in a very fortunate position with a great window of opportunity for a smooth transition. I'm fully engaged and focused on continuing to lead the team in delivering a strong 2025. And I look forward to working with the board as it conducts the search. And with that, I'll turn the call over to Scott.