Hanesbrands Inc. (HBI) reported its first quarter 2011 results on April 20, 2011. The company reported earnings of 49 cents which was 32% higher than 37 cents per share reported in the prior year quarter.
Earnings surpassed the Zacks Consensus Estimate of 33 cents by 48.5%. Profits were primarily impacted by acquisitions, organic growth and operational efficiency.
Following strong results in the quarter the company raised its full-year 2011 diluted EPS guidance to a range of $2.70 to $2.90, 10 cents up from the previous guidance of $2.60 to $2.80.
Revenues and Operating Profits
Total revenue for the quarter climbed 11.7% to $1,306.41 million from $927.84 million in the year-ago period. The growth in net sales was driven by strong performance of the acquired ‘Gear For Sports’ business, organic Outerwear segment growth and International growth.
The Outerwear segment’s ‘Gear For Sports’ business, acquired in November 2010, added 5 percentage points to the company’s 12% sales gain and contributed 3 cents of the 11 cents increase in EPS.
Hanes’ expects net sales to remain in the range of $4.9 billion to $5 billion, with the low end of the range having increased from $4.85 billion. The company raised prices appropriately to deal with input-cost inflation, and expects leverage of scale and infrastructure to reap the benefits of increased sales and acquisitions. Hanesbrands delivered operating margin expansion of 60 basis points (bps) to 9.8% in the quarter.
Segment Details
Hanesbrands’ Outerwear segment posted maximum year-over-year growth of 36.7%, followed by International segment which posted a growth of 23.6%. While net sales of Innerwear segment inched up by 0.1% from the year ago quarter, Hosiery and Direct to Consumer both reported a year-over-year decline of 6.9% and 2% respectively.
The strong performance of the Outerwear segment was fueled by ‘Gear For Sports’ record sales due to the NCAA Final Four basketball tournament and increased golf apparel sales in the quarter.
Outerwear’s operating profit soared by 363.7% to $25.50 million compared to $5.50 million a year ago. International segment climbed by 86.0% to $20.16 million. All other segments reported declining operating income in the quarter.
Other Financial Updates
The company exited the year with cash and cash equivalents of $64.8 million and long-term debt of $2,095.7 million. The company used $101.03 million for operating activities. The amount used for investing activities totaled $13.33 million.
The company expects free cash flow in the year 2011 to be in the range of $100 million to $200 million and expects its year-ending leverage ratio to improve to 3.0-3.5 times EBITDA.
HANESBRANDS INC (HBI): Free Stock Analysis Report
Zacks Investment Research
