HanesBrands Completes Acquisition of DBApparel and Increases Full-year Earnings Guidance
"Our key retailers experienced a slow start to the back-to-school season but have seen continued momentum build through August," Hanes COO Gerald W. Evans Jr. said. "Our Innovate-to-Elevate platforms, particularly X-Temp comfort cooling underwear, T-shirts and socks, are performing very well, creating value for consumers, retailers and shareholders."
Hanes is issuing new full-year 2014 guidance, including increases for net sales, adjusted operating profit and adjusted EPS, to reflect the added contributions from the DBA acquisition. All guidance for adjusted performance measures exclude charges related to the acquisitions of DBA and Maidenform Brands Inc., and other actions. (See the GAAP reconciliation section below.)
Hanes' new guidance range for net sales is approximately $5.350 billion to $5.375 billion, up from previous guidance of approximately $5.075 billion. The company increased guidance for adjusted operating profit by $25 million to a range of $735 million to $755 million, up from the previous guidance range of $710 million to $730 million.
Hanes has increased its guidance for interest expense and other expense by $5 million to approximately $90 million to reflect the DBA purchase. While the DBA acquisition is expected to have a slightly positive effect on the company's corporate tax rate, Hanes continues to anticipate the 2014 rate to be in the low teens. The company expects slightly more than 103 million weighted average shares outstanding in 2014.
Adjusted EPS guidance for 2014 has been increased by $0.20 to a range of $5.40 to $5.60, up from previous guidance of $5.20 to $5.40, reflecting the DBA contributions to sales, adjusted operating profit and the corporate tax rate, partially offset by higher interest expense.
The company continues to expect net cash from operating activities to be $500 million to $600 million for the year. Any cash generated in 2014 by DBA is expected to be substantially offset by cash closing expenses for the acquisition. The company continues to expect to make pension contributions of approximately $60 million and net capital expenditures of approximately $70 million.