Kontoor Brands, Inc.

Greetings and welcome to the Contour Brands Q4 2025 earnings call. At this time, all participants are in a listen-only mode. The 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. Please note that this conference is being recorded. I will now turn the conference over to Michael Karapetian, Vice President, Corporate Development, Enterprise Strategy, and Investor Relations. Thank you, Michael. You may begin.

Thank you, Operator, and welcome to Contour Brand's fourth quarter and full year 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 cause actual results to materially differ. 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 defined in the news release that was issued earlier this morning and is available on our website at contourbrands.com. Reconciliations 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, Revenue growth rates referred to on this call will exclude the impact of the 53rd week and 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 Brands President, Chief Executive Officer and Chairman Scott Baxter, and Chief Financial Officer and Global Head of Operations, Joe Alkire. We anticipate this call will last one hour. Following our prepared remarks, we will open the call for questions. Scott?

Thanks, Mike. And thank you all for joining us today. 2025 was a transformational year for Contour. We completed the acquisition of Helly Hansen. Wrangler delivered another year of healthy growth and market share gains. We made progress repositioning Lee and executed Project Genius. Driven by the strength of Wrangler and strong contributions from Helly Hansen, we achieved record revenue, earnings, and cash flow in 2025. while returning over $140 million to shareholders through our dividend and share repurchase programs. Importantly, our results highlight our ability to grow revenue and earnings over the near term while investing in the long term. I am particularly proud of the strong execution our team delivered in a dynamic environment. Sharp focus and clarity on our strategic priorities gives me confidence 2026 will be another record year for Contour. Let's discuss our priorities, starting with Helly Hansen. Helly is a growth asset. In 2026, we will further integrate the business while taking steps to accelerate growth and profitability. Integration and growth are not sequential. They're parallel. In the seven months under our ownership, we have strengthened the leadership team, delivered better than expected revenue and earnings accretion, and leveraged our multi-brand platform to drive greater synergies, operational discipline, and cash generation. We are bringing a renewed sense of focus to Heli's strategy while leveraging synergy opportunities to accelerate investments across the organization. We are in the early innings of unlocking geographic category and channel opportunities that will begin to accelerate in 2027 and beyond. We will bring the strategic vision to life at the Investor Day on September 2nd in Oslo, Norway. We are excited to invite many of you to Heli's headquarters, where we will share the significant opportunity that exists under our ownership. Second, accelerate growth in Wrangler. 2025 marked another strong year for the brand. We expanded market share in our core bottoms business, drove double-digit gains in female, Western, and D2C, and invested behind our product assortment to drive greater category and channel diversification. Wrangler is on an incredible trajectory, and I am confident this momentum will continue in 2026. Third, position Lee for improving fundamentals and a return to revenue growth. We have strengthened the identity of the brand, realigned product distribution, launched the most significant equity campaign in years, and elevated consumer perception. We have built the foundation needed to improve the performance of the Lee brand. We expect further progress in 2026 with improved profitability and a return to growth in the second half of the year. And finally, finish project genius strong. When we initiated the project in 2024, we outlined how it would enhance our organization, create capacity for investment, and establish a world-class multi-brand platform. With half the project now complete, I can confidently say it is delivering. The strong profit improvement and increased investment capacity we expect in 2026 is a reflection of our project genius and the benefits it has created across the business. Our global sourcing organization has been optimized to drive greater efficiency in our vendor network. Our planning teams are driving greater inventory productivity, and our shared operating platform is creating immediate benefits for Helly Hansen. We will complete Project Genius later this year, transforming Contour into a best-in-class global multi-brand organization while improving our overall financial profile. Now let's review highlights from the quarter, starting with Wrangler. Wrangler finished the year strong, with revenues increasing 3%. We are seeing broad-based growth across categories and in our men's and women's bottoms business, which delivered its 15th consecutive quarter of market share gains as measured by Cercana. Our female and Western business continue to be standout performers with both increasing at double digit rate in 2025. Wrangler's innovative female franchise, Bespoke, more than doubled in the fourth quarter as we continue to scale this platform and our denim bottoms business grew at a mid single digit rate. We leaned into this momentum in the fourth quarter through incremental demand creation investments, including activations around key events such as college football. Our collaborations are also performing well with Filson and Stranger Things generating well over 3 billion media impressions and strong consumer demand. The team is executing on all fronts and I am confident 2026 will be another exceptional year. Turning to Lee, revenue declined 6%. In the US, revenue inflected positive to 1% growth driven by increases in both wholesale and digital. Digital continues to lead the way, fueled by our refreshed creative vision that is generating results and improving brand KPIs. This is translating to increased revenue on our own digital platform as well as our wholesale partners. 2026 will be a transition year for Lee as we address distribution challenges, including U.S. mid-tier, and position the brand for a return to growth in the second half of the year. We have identified growth opportunities that are better aligned with Lee's refreshed brand positioning and are evaluating opportunities to optimize distribution in Europe and Asia. I am confident we are down the right path to position Lee for sustained success. Turning to Helly Hansen. The acquisition of Helly has exceeded expectations by every measure, and we are just getting started. In the fourth quarter, revenue grew 10% and earnings outperformed our plan by 50%. It starts with product, and 2025 was a record year. We won six Red Dot Design Awards, our most ever in a single year. And recently, we were awarded four ISPO Awards, including a gold for Leafa Merino Knit Evo. Our innovation engine is fueled by our connection with professionals. In 2025, we celebrated the fourth anniversary of International Ski Patrol Day, partnered with national ski teams in Norway and Canada, and deepened our connection with the ocean and sail communities as an official partner of the Ocean Race Europe. The connection to professionals distinguishes Heli from among our peers and will be foundational to the growth acceleration in the coming years. We look forward to sharing more at the upcoming Investor Day, which we will follow with a broader Contour Investor Day in the first half of 2027. Before turning it over to Joe, let me reiterate the confidence I have in our ability to achieve our 26th plan driven by intense focus on execution and strategic clarity. Wrangler enters the year with momentum driven by market share gains in both denim and non-denim, a creative category growth within Western and female, and incremental brand investments that are translating to strong consumer demand. Lee's turnaround is progressing. supported by a clearer brand identity, improving consumer perception, and double-digit growth in digital. Helly Hansen is performing ahead of plan, including better than expected revenue, earnings accretion, and cash generation. In 2026, we will grow the business, expand operating margins, and position the brand for breakout growth in 2027. And finally, we anticipate another year of strong cash generation that supports an accelerated deleverage path and our commitment to return cash to shareholders. While the environment remains dynamic, we are executing at a high level, and I am confident we are well-positioned to create significant value for our shareholders.