Kontoor Brands, Inc.

Greetings and welcome to the Contour Brands Q1 2026 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone 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 Karapetian, Vice President, Corporate Development, Enterprise Strategy, and Investor Relations, Corporate Management. Thank you. You may begin.

Thank you, operator, and welcome to Contour Brand's first quarter 2026 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. The 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. 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 be in constant currency, which exclude the translation impact of changes in foreign currency exchange rates. And reported results and our outlook are stated on a continuing operations basis, unless otherwise noted. 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 marks an important day for Contour. This morning, we announced we have made the decision to divest the Lee brand as part of our strong commitment to maximize value. This decision will allow us to sharpen our focus on the opportunities with the greatest potential to generate returns for our shareholders. We believe this will be a great outcome for Contour and the Lee business. Our discussion today will focus on three topics. First, our rationale to divest Lee and why now is the right time to do so. Next, we will discuss where we are in the competitive sale process and why we are confident this result will accelerate value creation. And finally, we will discuss highlights of our first quarter results and provide an update to our stronger 2026 outlook. Since becoming a public company, we have been laser focused on maximizing shareholder value and have executed a purposeful playbook to drive consistent revenue and profit growth. We established a multi-brand operating platform, executed Project Genius to create investment capacity to fund growth, optimized our supply chain, and transformed the portfolio through the acquisition of Helly Hansen. These initiatives have resulted in improving fundamentals, accelerating capital allocation optionality, and strong shareholder returns. As a result, we have delivered over 100% combined TSR since becoming a public company. Two years ago, we recognized the need to capitalize on the opportunity to improve Lee's fundamentals. When we set out to turn the business around, we established a clear roadmap to do so. We focused on harmonizing talent, product, marketing, and distribution to create better alignment with the brand's position as an authority in classic lifestyle denim. While it has not been linear, we are where we expected to be when we started this initiative, as seen in Lee's Improving Fundamentals in 2025. So why choose to divest Lee now? Our decision to initiate a sales process of the Lee business reflects the significant opportunities we see in both Wrangler and Helly Hansen. Focus is a critical element of our management approach. By dedicating the entirety of Contour's resources and capital towards growth-oriented brands, we are confident we can meaningfully accelerate long-term growth and profitability. while unlocking significant capital allocation optionality. As we stated last year when we announced the acquisition of Helly Hansen, our portfolio is built around strategically attractive categories. Outdoor, workwear, and denim are large, growing, addressable markets with structural tailwinds that afford a meaningful long-term growth opportunity. Importantly, our portfolio is built around function. We believe function and activity-based brands offer more durable, dependable, and sustainable growth characteristics with greater differentiation in the marketplace. As part of the lead turnaround, we conducted an extensive consumer study. Our learnings confirmed the lead brand sits outside of our strategic bullseye. While Contour has the organizational muscle and discipline to continue to turn the brand around, we are confident our go-forward resources are better utilized in our remaining brands that are better aligned with our long-term focus. Let's discuss how we will better deploy our resources, starting with Wrangler. Wrangler has grown at a low single-digit rate for over the last three years, and 2025 marked the strongest year for the brand. We expanded market share in our core bottoms business and drove double-digit gains in female, Western, and D2C. Our investments in talent, product, and demand creation have resulted in remarkable consistency. This quarter is the 16th consecutive quarter of market share gains in men's and women's bottoms as measured by Cercana. Wrangler has a unique position in the market. It is the authority in Western lifestyle and offers an attractive value proposition for our core consumer. And its distribution footprint is healthy with significant white space opportunities in specialty, female, and direct-to-consumer. With our team entirely focused on Wrangler, I am confident the brand's best years are ahead. Turning to Helly Hansen, the global opportunity for the brand is significant, and we expect the business to be a substantial contributor to our growth and profit engine. It starts in the U.S., which is the largest outdoor and workwear market in the world. While it is already among Helly's fastest-growing markets, the brand remains significantly underpenetrated relative to its peers. Within sport-aided brand awareness is less than 30%, and within workwear, we are just getting started. Across both sport and workwear, we will accelerate investments in talent, direct-to-consumer, and wholesale expansion and demand creation. Through improved focus and increased investment capacity, we see a clear path to double-digit growth in our home market. We also see opportunities to accelerate investments in new category growth, including technical outdoor apparel and footwear, and increased investments in the Alps region, which, like the U.S., remains underpenetrated. We expect to fund these investments through the benefits of our multi-brand platform and remain committed to increasing HeliHance's operating margin to mid-teens over time through a combination of gross margin expansion and expense leverage. As a result, we expect a meaningful increase in Heli's fundamental growth and margin profile. We plan to share more details at the Investor Day in September and look forward to seeing many of you there. Before turning it over to Joe, I want to reiterate the confidence I have in our future. Our decision to divest Lee will enable sharper focus on Wrangler and Helly Hansen and supports greater shareholder returns as we align Contour to a higher growth profile. I want to reinforce our commitment to support the Lee brand through the sale process and personally thank the Lee team for getting us to where we are today. As I look ahead, I have never been more confident in our future as we work to deliver the next chapter of Contour's value creation journey.