Executive Summary

Q4 2024 delivered revenue growth and notable margin expansion: net sales $0.888B (+4.5% YoY), GAAP operating margin 13.5% (+240 bps), adjusted operating margin 14.2% (+300 bps), and adjusted EPS $0.17 .
The company reclassified Champion Japan to discontinued operations, making prior guidance/consensus not directly comparable; management nevertheless characterized results as better than expected and issued FY 2025/Q1 2025 guidance pointing to further margin and EPS growth .
Leverage improved materially: >$1B debt paydown in 2024; net debt/adjusted EBITDA at 3.4x vs 5.2x prior year; total liquidity >$1.2B (cash $215M + ~$1.0B revolver capacity) .
Strategic and narrative catalysts: CEO succession process initiated (Bratspies to depart in 2025) and a plan to refinance 2026 maturities in Q1 2025; management emphasizes a “new, simplified company” with structural margin gains and continued debt reduction .

What Went Well and What Went Wrong

What Went Well
- Gross margin expansion from cost savings and lower input costs: GAAP gross margin 43.9% (+380 bps YoY); adjusted 44.1% (+400 bps) . “Gross margin improved… structurally higher… due to permanent cost savings initiatives and improved assortment management” .
- U.S. segment momentum with innovation (Hanes Absolute Socks, Hanes Moves, Hanes Supersoft, Bali Breathe) and operating margin +525 bps to 23.1% .
- Balance sheet progress and cash generation: FY 2024 operating cash flow $264M; >$1B debt reduction; leverage down to 3.4x net debt/adjusted EBITDA .
What Went Wrong
- International margin pressure: operating margin fell ~550 bps to 12.6% on transactional FX headwinds and mix; reported sales grew 2% but FX was a $9M headwind .
- SG&A ratio up YoY as brand investments were elevated (planning for growth): GAAP SG&A $271M (30.5% of sales, +140 bps YoY); adjusted SG&A $266M (29.9% of sales, +100 bps) .
- Comparability issues: Champion Japan reclassification made prior guidance/consensus comparisons less useful; Q4 GAAP EPS declined YoY (0.13 vs 0.28) due to 2023 tax benefit and current “other expenses” including debt issuance cost write-offs .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$850.283	$973.927	$900.367	$888.469
GAAP Diluted EPS (Continuing Ops)	$0.28	$(0.39)	$0.07	$0.13
Adjusted Diluted EPS (Continuing Ops)	$0.05	$0.15	$0.12	$0.17
Gross Margin % (GAAP)	40.2%	30.6%	41.5%	43.9%
Gross Margin % (Adjusted)	40.0%	40.0%	41.6%	44.1%
Operating Margin % (GAAP)	11.1%	(6.5)%	10.4%	13.5%
Operating Margin % (Adjusted)	11.2%	12.9%	12.5%	14.2%

Segment breakdown (Q4 2024):

Segment	Net Sales ($USD)	YoY %	Operating Margin
U.S.	$618.747	+3.0%	23.1%
International	$252.939	+2.1%	12.6%
International CC growth	—	+6% constant currency	—

KPIs:

KPI	Value	Prior/Context	Notes
Total Liquidity	>$1.2B	—	Cash $215M + ~$1.0B revolver capacity
Cash & Equivalents	$215M	—	At 12/28/24
Inventory	$871M	Down $85M YoY	-9% YoY
Net Debt/Adj EBITDA	3.4x	5.2x prior year	Material deleveraging
Operating Cash Flow (FY24)	$264M	$562M FY23	Includes discontinued ops cash flows
Free Cash Flow (FY24)	$226M	$518M FY23	Includes discontinued ops
Debt Reduction (FY24)	>$1.0B	—	From Champion sale + cash generation

Vs. Estimates (SPGI consensus)

Metric	Q4 2024 Actual	SPGI Consensus	Surprise
Revenue ($USD Millions)	$888.469	Unavailable	N/A
Primary EPS ($USD)	$0.13 (GAAP); $0.17 (Adj)	Unavailable	N/A

Note: S&P Global consensus estimates were unavailable; company also noted the Q4 results are not directly comparable to prior guidance/consensus due to Champion Japan reclassification .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	Q4 2024	~$900M (reported basis)	$888M actual	Lower vs guide (reclassification caveat)
Adjusted EPS	Q4 2024	~$0.14	$0.17 actual	Beat
Net Sales	FY 2025	—	$3.47B–$3.52B (≈+1% organic CC)	New
Adjusted Operating Profit	FY 2025	—	$450M–$465M	New
Adjusted EPS	FY 2025	—	$0.51–$0.55	New
Free Cash Flow	FY 2025	—	~$300M	New
Net Sales	Q1 2025	—	~$750M	New
Adjusted Operating Profit	Q1 2025	—	~$65M	New
Adjusted EPS	Q1 2025	—	~$0.02	New

Management also guided GAAP OP $420M–$440M (FY 2025), GAAP/Adjusted interest expense ~$190M, GAAP/Adjusted tax expense ~$40M, and expects to refinance all 2026 maturities in Q1 2025 (subject to market) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
AI/Technology	Tech modernization/ERP charges noted in non-GAAP reconciliations	Continued ERP/tech actions; SG&A adjustments	“Advanced analytics and AI” cited as part of new operating model	Expanding analytics use; tech investment steady
Supply Chain	Segmentation/restructuring progressing	Consolidation/optimization; structural savings driving margins	Continued consolidation/optimization; lower fixed cost, better in-stocks	Sustained structural margin gains
Tariffs/Macro	—	—	Minimal impact from China tariffs; no U.S. sourcing from Canada/Mexico	Low risk to input costs
Product Performance	Better-than-expected U.S. innerwear	Market share gains; retail space expansion	Innovation-led demand in socks/women’s/scrubs; Hanes Moves launch	Improving POS; category breadth expanding
Regional Trends	—	International constant currency +4%; Australia stabilizing	International constant currency +6%; Australia, Americas, Asia growth	Improving ex-U.S.; FX headwinds persist
Portfolio Actions	Champion sale/Outlet exit initiated	Champion sale closed post-Q3	Champion Japan to discontinued ops; early exit plan	Portfolio simplification continuing
Leverage/Refinancing	Plan to pay down ~$1B 2H24	Leverage 4.3x at Q3; incremental debt paydown in Oct	Leverage 3.4x at Q4; expects 2026 refi in Q1 2025	Deleveraging ahead of schedule

Management Commentary

CEO: “We enter 2025 as a new Company… well positioned to build on fourth quarter’s momentum and deliver positive sales growth, additional margin expansion, strong cash generation and continued debt reduction” .
CEO on transformation: “Gross margin improved 580 bps… structurally higher than pre-pandemic levels due to permanent cost savings initiatives and improved assortment management” .
CFO on 2025 margins: “Operating margins up another ~125 bps, with 20–30 bps from gross margin; ~100 bps from SG&A reductions… brand spend about 5% of sales” .
CFO on tariffs: “Products from China to the U.S. represent low single-digit % of U.S. COGS… recent incremental tariff does not materially impact input costs” .
CEO succession: Board initiated search; Bratspies to depart by end-2025, will support transition .

Q&A Highlights

Sales outlook and growth drivers: Management confident in ~1% organic CC growth in 2025, citing innovation, brand investment, permanent retail space gains, new revenue streams (scrubs, fleece/sleepwear, Printwear, Beefy-T 50th anniversary) .
Margin trajectory: Expect further margin expansion in 2025; SG&A savings are the larger driver; brand spend held at ~5% of sales .
Gross margin cadence: Up ~125 bps YoY in Q1; stronger first-half tailwinds from input costs and saved actions; tougher comp in Q4 (44.1%) .
Cash flow bridge: FY25 operating cash flow guided to ~~$350M, supported by profit growth (~~$40M), lower cash interest (~$60M), and reduced nonrecurring transactional costs; working capital benefits continue but below FY24’s ~$150M .
Stranded costs: Champion stranded costs and broader cost structure actions “essentially complete” in 2025, underpinning margin expansion .
Tariff clarifications: No material exposure; no U.S. product sourced from Canada/Mexico; minimal China tariff impact .

Estimates Context

SPGI consensus EPS and revenue estimates for Q4 2024 were unavailable due to data retrieval limits and comparability constraints from Champion Japan reclassification; management indicated prior guidance/consensus were not directly comparable for Q4 2024 . Where comparisons are shown, we anchor to company guidance and actuals disclosed in filings.

Key Takeaways for Investors

Structural margin story intact: Gross and operating margin expansion driven by supply chain savings and SG&A discipline; Q4 adjusted OP margin at 14.2% and FY25 guide implies further expansion—supportive of multiple rerating if sustained .
Balance sheet de-risking: Rapid deleveraging (3.4x) and expected 2026 maturity refinancing in Q1 2025 reduce near-term credit risk; cash generation targeted at ~$350M FY25 .
U.S. innerwear momentum + category expansion: Innovation pipeline and brand investment are gaining share; scrubs/Printwear provide incremental growth levers .
FX and International mix are swing factors: International CC growth is healthy (+6%), but transactional FX headwinds and mix can pressure margins; monitor FX sensitivity .
Execution on cost removal is critical: Management expects stranded cost and restructuring benefits to be fully realized in 2025; delivery here underpins operating margin path to 15%+ over time .
Narrative catalysts: CEO succession and refinancing updates, plus commercialization of Hanes “Moves” athleisure launch, may drive investor attention; watch investor communications cadence .
Near-term trading setup: With a tough Q4 margin comp and guided first-half margin uplift, Q1 delivery on margin and the refi closing are likely key checkpoints; any slip in SG&A savings or refi terms could weigh on the story .

Other Relevant Press Releases (Q4 period context)

Q4 2024 results press release with 2025 guidance and Champion Japan reclassification .
Planned leadership succession announcement (CEO transition) .
Q3 2024 press release (Nov 7): raised FY/Q4 profit and cash flow outlook; provided context for sequential improvements and Champion sale closing post-Q3 .

Hanesbrands Inc. (HBI)·Q4 2024 Earnings Summary