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Kontoor Brands (KTB) Q1 2025 Earnings Call May 06, 2025 08:30 AM ET Company Participants Michael Karapetian - Vice President of Corporate Development, Strategy, and Investor RelationsScott Baxter - President, Chief Executive Officer and Chair of the BoardJoe Alkire - EVP & CFOBrooke Roach - Vice President - Equity ResearchPaul Kearney - VP - Equity ResearchPeter McGoldrick - Equity Research Associate Conference Call Participants Ike Boruchow - Managing Director: Senior Analyst - Retailing, Specialty Softlin ...

Kontoor Brands (KTB) Q1 2025 Earnings Call May 06, 2025 08:30 AM ET Speaker0 Good morning, ladies and gentlemen, and welcome to the Kontoor Brands First Quarter twenty twenty five Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference call over to Michael Karapitian, Vice President of Corporate Development, Enterprise Strategy and Investor Relations. Please go ahead. Speak ...

Exhibit 99.1 KONTOOR BRANDS REPORTS 2025 FIRST QUARTER RESULTS; UPDATES 2025 OUTLOOK First Quarter 2025 Highlights Updated Full Year 2025 Outlook GREENSBORO, N.C. - May 6, 2025 - Kontoor Brands, Inc. (NYSE: KTB), a global lifestyle apparel company, with a portfolio led by two of the world's most iconic consumer brands, Wrangler and Lee , today reported financial results for its first quarter ended March 29, 2025. ® ® "Our strong first quarter results reflect the operational agility that is a cornerstone of ...

Financial Performance - Net revenues for the year ended December 2024 were $2.6 billion, flat compared to the year ended December 2023[185]. - U.S. Wholesale revenues increased by 1% and represented 73% of total revenues, while Non-U.S. Wholesale revenues decreased by 7%[185]. - Direct-to-Consumer revenues increased by 4%, accounting for 12% of total revenues[185]. - Gross margin improved by 280 basis points to 44.5% compared to the previous year[185]. - Operating income rose by 7% to $342.3 million, while net income increased by 6% to $245.8 million[185]. - Total reportable segment profit increased by 12.4% to $456.0 million in 2024[201]. - Cash provided by operating activities was $368.2 million, up from $356.5 million in 2023[220]. Segment Performance - Wrangler segment revenues increased by 3% to $1.8 billion, with segment profit rising by 19.1% to $366.3 million[194]. - Wrangler brand global revenues increased by 3%, driven by growth in U.S. Wholesale and Direct-to-Consumer channels[195]. - Operating margin for Wrangler improved to 20.3% from 17.5% in 2023, mainly due to lower product costs and reduced distribution expenses[195]. - Lee brand global revenues decreased by 6%, with declines across all regions and channels[197]. - Operating margin for Lee decreased to 11.3% from 11.6% in 2023, impacted by lower pricing and higher incentive compensation[197]. - Revenues in the Americas region decreased by 6%, primarily due to declines in wholesale and direct-to-consumer businesses[199]. Expenses and Charges - The Company incurred total restructuring and transformation charges of $38.3 million during 2024, with $25.2 million related to Project Jeanius[180]. - Selling, general and administrative expenses as a percentage of revenues increased to 31.4% from 29.5% in the previous year[185]. Tax and Valuation - The effective income tax rate for 2024 was 18.5%, up from 15.0% in 2023[190]. - The company has $65.5 million in gross deferred income tax assets related to income tax credit carryforwards and $33.3 million related to operating loss carryforwards[244]. - Valuation allowances of $61.1 million for income tax credit carryforwards and $17.4 million for operating loss carryforwards have been recorded, indicating a likelihood of more than 50% that some deferred tax assets will not be realized[244]. Acquisitions and Investments - The Company entered into an agreement to acquire Helly Hansen for approximately $900 million, expected to close in the second fiscal quarter of 2025[177][178]. - Capital expenditures are expected to be approximately $35.0 million in 2025, focusing on manufacturing and technology[217]. - The company intends to continue paying cash dividends, having paid $112.1 million in 2024[214]. - The company reported $334.1 million in cash and cash equivalents at the end of 2024[252]. - The company repurchased 1.2 million shares for $85.0 million under the 2023 Repurchase Program[212]. Risk Management - A hypothetical 1% increase in interest rates would decrease reported net income by approximately $2.6 million[254]. - Approximately 20% of the company's net revenues in 2024 were generated in international markets, exposing it to foreign currency fluctuations[255]. - A hypothetical 10% change in foreign currency exchange rates could result in a change in fair value of cash flow hedging contracts of approximately $20.8 million[258]. - The company uses derivative financial instruments to mitigate exposure to interest rate volatility[254]. - The company actively manages its net foreign currency market exposures and may enter into derivative contracts to hedge foreign currency transactions[256]. - The company is exposed to credit-related losses due to nonperformance by counterparties to derivative hedging instruments[259]. - Counterparty credit guidelines are established, only engaging with financial institutions that have 'A minus/A3' investment grade credit ratings or better[259]. - The company monitors the credit rating of counterparties and limits the amount hedged with each[259]. - The company negotiates prices in advance to manage risks associated with commodity price changes[260]. - Historically, the company has not used derivative instruments to manage commodity price exposures[260]. Asset Management - The company performs impairment testing for long-lived assets at least annually, with potential impairment charges recorded if carrying values exceed estimated fair values[232]. - Goodwill is evaluated for impairment annually, with quantitative testing required if qualitative assessments indicate potential impairment[236].

Kontoor Brands, Inc. (NYSE:KTB) Q4 2024 Earnings Call February 25, 2025 8:30 AM ET Company Participants Michael Karapetian - VP, Corporate Development, Strategy, and IR Scott Baxter - President, CEO, and Chairman Tom Waldron - COO Joe Alkire - EVP and CFO Conference Call Participants Ike Boruchow - Wells Fargo Jim Duffy - Stifel Brooke Roach - Goldman Sachs Paul Kearney - Barclays Mauricio Serna - UBS Operator Greetings and welcome to Kontoor Brands Q4 2024 Earnings Call. At this time, all participants are ...

Financial Performance - Fourth quarter 2024 revenue was approximately $699 million, representing a 4% increase compared to the prior year (5% on a constant currency basis) [5] - Fourth quarter 2024 reported gross margin was approximately 43.7%, with an adjusted gross margin of approximately 44.7%, an increase of 160 basis points compared to the prior year [5] - Fourth quarter 2024 reported EPS was approximately $1.14, while adjusted EPS was approximately $1.38, reflecting a 2% increase compared to the prior year on an adjusted basis [5] - Full year 2024 cash flow from operations was approximately $368 million [5] - The company reported preliminary net revenues of $699 million, which adjusted for foreign currency exchange would be $702 million [17] Inventory and Costs - Year-end 2024 inventory was approximately $390 million, a decrease of 22% compared to the prior year [5] - Preliminary restructuring and transformation costs for the fourth quarter included approximately $10 million related to business optimization activities [15] Strategic Initiatives - The acquisition of Helly Hansen was announced, which is expected to contribute to future growth and value creation [2] - Project Jeanius is anticipated to support continued brand investments and operational efficiencies [2] - The company expects to deliver strong returns and value creation in 2025 based on current positioning and strategic initiatives [2]

Core Insights - Kontoor Brands is acquiring Helly Hansen for approximately $900 million, aiming to leverage growth potential in the outdoor and workwear segments, which are expanding faster than the denim business [1][2] - The acquisition is expected to generate over $680 million in revenue by the end of 2025 [1] Group 1: Acquisition Details - Kontoor Brands, known for Wrangler and Lee, is expanding its offerings by purchasing Helly Hansen, a brand that fits into the outdoor and workwear categories [1][2] - The outdoor market is identified as the largest globally, presenting significant growth opportunities for Kontoor Brands [1] Group 2: Market Potential - Helly Hansen has a strong presence in Europe and Canada, with potential for growth in the U.S. market as well [2] - The merchandise from Helly Hansen will be distributed through wholesalers, retail stores, and online platforms [2] Group 3: Risk Management - Kontoor Brands is prepared for potential challenges posed by tariffs, with a strong operational plan in place [3][4] - The company expresses confidence in its current consumer relationships and overall business strategy, regardless of external economic pressures [4]

Core Insights - Kontoor Brands, Inc. (KTB) reported strong preliminary results for Q4 fiscal 2024, with revenues, earnings, and cash flow exceeding expectations, indicating positive momentum heading into 2025 [1][2][14] Financial Performance - Total revenues for Q4 reached approximately $699 million, a 4% increase from $670 million in Q4 fiscal 2023, and a 5% increase on a constant-currency basis [6] - Preliminary adjusted gross profit was $313 million, up from $283 million the previous year, with an adjusted gross margin of 44.7%, reflecting a 160-basis-point improvement [7] - Adjusted earnings per share (EPS) were $1.38, a 2% increase from the previous year, with robust growth of around 23% when excluding certain factors [8] - Cash flow from operations totaled $368 million for fiscal 2024, and year-end inventory decreased by 22% to $390 million [9][10] Strategic Initiatives - The company attributes its strong performance to strategic investments, operational efficiencies, and brand strength, particularly through Project Jeanius and the acquisition of Helly Hansen [2][11] - Kontoor Brands is focused on product innovation, market expansion, and supply-chain optimization to drive growth [11] - Investments in Project Jeanius aim to enhance operational efficiency and unlock $100 million in cost savings [11] - The company is also expanding its direct-to-consumer channels and leveraging data analytics to enhance customer engagement [12] Brand and Market Position - Kontoor Brands' portfolio includes iconic brands like Wrangler and Lee, which continue to gain market share through collaborations and refreshed brand positioning [13] - The acquisition of Helly Hansen aligns with the company's long-term vision to expand into high-performance apparel [13] - The company is investing in global supply-chain transformation to improve efficiency and speed to market [13] Stock Performance - Shares of Kontoor Brands rose 4.1% during the recent trading session, with a 23.7% increase over the past six months, outperforming the industry growth of 22.8% [3]

Group 1 - Kontoor Brands (NYSE: KTB) is the owner of well-known brands such as Wrangler [1] - February 19th was a significant day for shareholders of Kontoor Brands [1] Group 2 - Crude Value Insights provides an investing service focused on oil and natural gas, emphasizing cash flow and growth prospects [1] - Subscribers have access to a stock model account, cash flow analyses of E&P firms, and live discussions about the sector [2]