Kontoor Brands, Inc. Q3 FY2025 earnings call

• Expanded brand portfolio: Helly Hansen grew double digits, Wrangler gained market share for 14th quarter, Lee launched equity campaign. • Q3 highlights: Helly Hansen exceeded expectations with 11% revenue growth; Wrangler's 14th consecutive market share gain; Lee taking proactive steps in China. • Strategic pillars: Helly Hansen focused on accelerating growth via product, distribution, demand creation; aiming to double operating margin. • Financials: Strong gross margin expansion and disciplined expenses led to better-than-expected earnings; raised full-year outlook. • Balance sheet: Net debt $1.3B, $82M cash; made $25M debt repayment, expect $185M more in Q4; tracking ahead of deleverage plan.

Helly Hansen: Global revenue of $193 million, up 11% with 11% revenue growth and $0.03 of earnings accretion. Growth broad-based across Sport and Workwear and regions. Wrangler: Global revenue increased 1%, including 12% growth in digital; gained market share for 14th consecutive quarter; female business grew 20%, Western grew high single digits. Lee: Revenue declined 9% due to proactive steps in China; excluding China actions, declined 4%; digital revenue in US increased 15%.

• Raised full-year revenue, gross margin, earnings, and cash flow outlook. • Full-year revenue expected at upper end of prior range ($3.09B-$3.12B), Helly Hansen to contribute $460M. • Q4 revenue expected $970M-$980M, growth 39%-40% including Helly Hansen. • Adjusted gross margin expected ~46.4%, adjusted EPS ~$5.50 (up 12%). • Cash from operations expected ~$400M, leveraging supply chain and AR financing for Helly Hansen.

• Uncertain market environment. • Impact of foreign currency exchange rates. • Tariff increases and their impact on costs. • Inventory management and its impact on financials.

Q: Ike Boruchow from Wells Fargo asked about Wrangler US wholesale growth ex timing shift and 4Q outlook.

A: Joseph Alkire responded about timing shift impact and October POS growth.

Q: Bob Drbul from BTIG asked about pricing and Helly Hansen opportunities.

A: Joseph Alkire and Scott Baxter discussed pricing strategy and Helly Hansen's US growth plans.

Q: Jonathan Komp from Baird asked about Q4 organic growth and Helly Hansen's EPS contribution.

A: Scott Baxter and Joseph Alkire talked about confidence in growth and Helly Hansen's EPS impact.

Q: Mauricio Serna from UBS asked about Q4 organic growth and Helly Hansen's EPS revision.

A: Joseph Alkire explained Q4 growth outlook and Helly Hansen's EPS contribution.

Q: Paul Kearney from Barclays asked about October organic growth and Project Jeanius savings.

A: Joseph Alkire discussed October growth and Project Jeanius savings realization.

Q: Brooke Roach from Goldman Sachs asked about Project Jeanius savings and Lee China business.

A: Joseph Alkire and Scott Baxter talked about Project Jeanius and Lee's China turnaround.

Q: Laurent Vasilescu from BNP Paribas asked about FY '26 outlook and Project Jeanius savings.

A: Joseph Alkire discussed FY '26 planning and Project Jeanius savings flow-through.

Q: Peter McGoldrick from Stifel asked about cash flow guidance and gross margin.

A: Joseph Alkire explained cash flow drivers and gross margin components