HanesBrands Reports Fourth-Quarter 2012 Financial Results and Provides Fiscal 2013 Guidance
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2012 Financial Highlights and Business Segment Summary
Key accomplishments for 2012 include:
- Record Free Cash Flow. Solid performance and a focus on reducing inventory resulted in record free cash flow of $508 million in 2012. Year-end inventories improved to $1.25 billion, a decline of $354 million from $1.61 billion a year earlier.
- Deleveraged Balance Sheet. The company significantly reduced its debt and no longer considers itself highly leveraged. Hanes prepaid $550 million in long-term bonds in 2012 and $750 million over the past five quarters. The company’s year-end long-term debt ratio was approximately 2.5 times adjusted EBITDA.
- Successful Exit from Underperforming Businesses. The company successfully undertook an effort to reduce risk in its business and create more consistent results by quickly exiting its European imagewear screen-print business and reorganizing its domestic screen-print channel business as branded printwear focusing on higher-margin branded Hanes and Champion products.
- Return of Earnings Power. The company generated record profitability in the second half, with sales growth of 4 percent, an operating profit margin of 13 percent, and adjusted EPS growth of 75 percent. The company successfully managed through significant cotton inflation and returned to performance in the second half that reflects the company’s earnings potential for 2013 and beyond.
“We had a very successful year under difficult circumstances,” said Hanes Chief Financial Officer Richard D. Moss. “We managed through a $160 million cotton inflation bubble with a successful pricing strategy and came out stronger, more innovative and more profitable. We achieved the guidance we laid out at the beginning of the year even with our decision to exit certain underperforming businesses.”
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