Kontoor Brands, Inc.

Greetings and welcome to the Contour Brand's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Karapedian, Vice President, Corporate Development and Enterprise Strategy and Investor Relations. Thank you, sir. You may begin.

Thank you, operator, and welcome to Contour Brand's second quarter 2025 earnings conference call. Participants on today's call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could These uncertainties are detailed in documents filed with the SEC. We urge you to read our risk factors, cautionary language, and other disclosures contained in those reports. Amounts referred to on today's call will often be on an adjusted dollar basis, which we clearly define in the news release that was issued earlier this morning and is available on our website at contourbrands.com. Reconciliation of gap measures to adjusted amounts can be found in the supplemental financial tables included in today's news release. These tables identify and quantify excluded items and provide management's view of why this information is useful to investors. Unless otherwise noted, amounts referred to on this call will be in constant currency, which exclude the translation impact of changes in foreign currency exchange rates. Joining me on today's call are Contour Brand's President, Chief Executive Officer and Chairman Scott Baxter, and Chief Financial Officer and Global Head of Operations Joe Alkiere. Following our prepared remarks, we will open the call for questions. Scott?

Thanks, Mike, and thank you all for joining us today. Our strong second quarter results exceeded expectations. Wrangler growth accelerated, the lead turnaround is on track, and Helly Hanson performed above plan. Our performance highlights the significant opportunities from our expanded brand portfolio with greater consumer, geographic, and channel diversification than we've ever had. In our first quarter, as a combined company, we are off to a great start. Based on our better than expected first half results and improving visibility, we are raising our revenue outlook and reiterating our full year earnings outlook at the midpoint, now including tariffs and incremental demand creation investments. While the environment remains uncertain, we are entering the second half of the year from a position of strength. Let me start with an update on Helly Hanson. First, the integration is progressing well. On the front end, the commercial teams are energized and performing at a high level. June results exceeded expectations, and this momentum has carried into the third quarter, supported by a strong product pipeline and accelerating order book. To build on this momentum, we are creating the investment roadmap to accelerate growth. We see significant opportunities in the US through a combination of wholesale and retail expansion as well as investments in product innovation, category expansion, and demand creation to increase brand awareness. Helly is also under-penetrated in key accounts, and we are developing plans to unlock new channels of distribution starting in 2016. Product and category expansion is another significant opportunity for Helly Hanson. The strong connection with the professional community has been a differentiator since its founding. These partnerships have made us number one in sailing, a global leader in ski apparel, and now provide a platform for expansion into outdoor. These platforms are driving the strength we see in the business today and into next year. Within Workwear, we are driving growth across three strategic categories, construction, high visibility, and footwear. Product segmentation along a clear, good, better, best framework underpins our -to-market approach. This has contributed to consistent growth over the past decade. Over the near term, we are expanding our lightweight and cooling platforms to increase penetration in southern climates. In addition, we are scaling our HH Connect system, which provides unrivaled customization. This innovation has been an incredible success since launching in early 24. On the back end, we are leveraging our global platforms to drive greater scale and efficiency. While Helly has been executing at a high level on its own, we are more confident than ever it will see significant benefits under our ownership as a more synergistic global brand operator. We have identified opportunities across supply chain, IT, HR, and finance. These will materialize over time and we will now expect to exceed our prior run rate synergy estimate of $15 million, which is not yet included in our outlook. As we discussed last quarter, our value creation framework is now built on four pillars, accelerate growth, double Helly's operating margins, increased capital allocation optionality, and established contour as the employer of choice in the industry. We are off to a tremendous start and I could not be more excited about the opportunities ahead. Now let's review highlights from Q2. Wrangler had another strong quarter. Revenue increased 7%, including 9% growth in the US and 16% growth in digital. Our female business continues to surpass expectations and we are in chase mode for many styles. Our investments in talent, product development, and demand creation are generating healthy returns. As an example, Bespoke continues to be a tremendous success, driving strong digital growth while increasing our penetration in specialty retail. We will continue to scale this platform in the second half of this year. We also hosted key activations at the ACM awards alongside the biggest stars of country news, including Lainey Wilson, who for the second year in a row won entertainer of the year, as well as awards for female artist and album of the year. Our connection to Western culture is deeply rooted in Wrangler's DNA and we see that translate to the sales momentum we have consistently demonstrated. During the quarter, our Western business grew mid-single digits. Combined with strength in our core denim business, Wrangler drove its 13th consecutive quarter of market share gains, as measured by Cercana in our men's and women's bottoms business. We gained 70 basis points of market share. Wrangler has had an excellent first half of the year. Hostile revenue grew mid-single digits and -to-C grew 11%, including 15% growth in digital and 3% growth in brick and mortar. The team is executing on all fronts and I am confident we will deliver a strong finish to the year. Turning to Lee, as expected, revenue declines sequentially, improved as our brand repositioning unfolds. Digital continues to lead the way. Our U.S. business grew high single digits in the quarter. Our refreshed creative vision is generating results with brand equity, purchase intent, and brand favorability all increasing. This is translating to increased revenue on our own digital platform as well as our wholesale partners. To support this momentum, we will be launching our brand equity campaign in September. Built on Lee's authority in denim, it speaks to the strength and quality that has defined the brand for more than 135 years, now reimagined for today's younger generation. Test results have been very encouraging and we are excited to bring the new vision to ahead of the holiday season. We are also addressing existing distribution challenges. We are being more deliberate within U.S. mid-tier and have identified growth opportunities that are better aligned with Lee's refreshed brand positioning. We are also evaluating opportunities to optimize distribution in Europe and Asia. Progress will not be linear and it will take time to do it right, but we are confident the turnaround is on track. Finally, as we announced last week, Tom Walden will be leaving Contour at the end of September. I would like to thank Tom for his contributions to Wrangler and Lee for almost 30 years. This is a bittersweet moment and I wish him the best as he pursues new opportunities. Before turning it over to Joe, let me reiterate the confidence we have in achieving our 25 plan. Wrangler has significant momentum, Lee is on track, and the integration of Hallie Hanson is progressing well. After an uneven start to the year, trends have improved and we are seeing this momentum carry into the third quarter. The environment remains uncertain, but we are executing at a high level and have meaningful opportunity to create shareholder value. We are also excited to share that we are planning an investor day in the first half of 26. This will provide a great opportunity to share the strategic vision for our brand portfolio, the power of our improving financial model, and the significant optionality that underpins our value creation framework. We will share more details in the coming months, but I am confident we are on the path to drive strong value for our shareholders. Joe?