Hanesbrands Inc.

Good day and thank you for standing by. Welcome to the Haynes brand second quarter 2025 earnings call. At this time all participants are in a listen only mode. After the speakers presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I'd 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 brand's quarterly investor conference call and webcast. We are pleased to be here today to provide an update on our progress after the second quarter of 2025. Hopefully everyone has had a chance to review the news release we issued earlier today. The news release updated FAQ document in 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 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 in the inflationary environment. These risks also include those detailed in our various filings with the SEC, which may be found on our website. These forward looking statements should be considered in conjunction with the cautionary statements in our news release and in our filings with the SEC. 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 quarters 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 will now turn the call over to Steve.

Thank you, TC. Good morning, everyone, and welcome to our second quarter earnings call. For the third consecutive quarter, Haynes Brands delivered better than expected sales, gross margin, operating profit, and earnings per share. Our strong performance underscores the continued success of our growth strategy and is why we're raising our full year guidance. I wanna thank the global HBI team for all their hard work and efforts. As we've highlighted over the past several quarters, Haynes Brands is a new company. We're healthier, more focused, and more profitable. Our brands are stronger. We're driving innovation, including the expansion of our Haynes Moves products. We're elevating the Haynes brand, including our exclusive product offering with Urban Outfitters in the US and our Haynes Premium T-shirts offerings at specialty retailers in Japan. We're creating new categories behind our absorbency products in our stores. We're expanding our brands into adjacent categories, including loungewear and scrubs. And we're consistently investing in our brands at levels that are more than double what we spent four years ago. We're generating structurally higher profit margins through increased productivity and lower fixed costs, even while simultaneously investing for growth. We streamlined our supply chain while remaining diversified and balanced across the globe, which makes us more efficient and provides us with capacity for growth. And we're leveraging advanced analytics with the use of AI to drive operational improvement around the globe, including inventory and assortment management, as well as demand planning and forecasting. We've also strengthened our balance sheet, paying down $1.5 billion of debt and reducing leverage by nearly two and a half turns over the past two years. Our transformation work and the execution of our growth strategy are generating tangible results. We're operating on a stronger foundation for leveraging our competitive advantages and we're delivering strong financial performance. For the second quarter, we once again saw growth rates that accelerated down the P&L. As sales increased 2%, operating profit increased 22% and EPS increased 60% of a prior year. On a constant currency basis, sales increased over prior year in the Americas, were flat in Australia and decreased slightly for about $5 million in the US. With our performance in each region in line with our expectations. As we've experienced over the past several quarters, ongoing consumer headwinds continue to pressure the US interwar market, especially with the intimate apparel category. While our intimates business was down compared to last year, we delivered strong growth in our other businesses, including low single digit growth in basics, nearly 30% growth in active, 165% growth in new businesses, which includes our scrubs and loungewear products. We delivered another quarter strong profit growth driven primarily by our cost restructuring actions and productivity improvement initiatives. For the quarter, operating margin expanded 255 basis points over the last year to 15.5%, with the improvement roughly split between gross margin expansion and SG&A leverage. SG&A levered 110 basis points in the quarter, marking a second consecutive quarter of leverage as our cost reduction actions have scaled to the point where they are more than offsetting our investments. And with lower interest expense from our debt reduction actions, profit growth further accelerated, resulting in a 60% increase in EPS for the quarter. So in closing, our strategy is working. It's delivering consistent, strong results and we're confident it positions us for continued success long-term. We have a strong global asset base, meaningful competitive advantages and the speed and flexibility to manage through the current market environment. And we have multiple avenues to drive increased shareholder returns over the next several years to consistent sales growth, additional margin expansion, and continued debt reduction. And with that, I'll turn the call over to Scott.