HanesBrands Inc. (HBI) Earnings Call Transcript & Summary

Good morning, and welcome to Hanesbrands, Inc. Annual Meeting of Shareholders. I'd now like to introduce the first presenter, Steve Bratspies, Chief Executive Officer of Hanesbrands.

Good morning. I'm Steve Bratspies, Chief Executive Officer and Director of Hanesbrands. It's my pleasure to welcome you to our 2021 Annual Meeting of Stockholders. This year, we're hosting -- this year, we are hosting our meeting via the Internet in a virtual format due to public health and safety concerns resulting from the COVID-19 pandemic. And since we're in different states and time zones, our Chairman, Ron Nelson, has asked me to Chair the meeting today. Thank you for joining us via the web portal. We appreciate your support in Hanesbrands. I'll start the formal business of this meeting by introducing Joia Johnson, who will serve as Secretary of this meeting. To continue the introductions, I'd like to recognize the other directors joining us today: Ron Nelson, our Chairman of the Board; Cheryl Beebe; Geralyn Breig; Bobby Griffin; James Johnson; Franck Moison; Robert Moran and Ann Ziegler. In addition to myself and Joia Johnson, other executive officers joining us today are Scott Lewis, Interim Chief Financial Officer and Chief Accounting Officer; Joe Cavaliere, President, Global Innerwear; Jon Ram, President, Global Activewear; Mike Faircloth, President, Global Supply Chain; Greg Hall, Chief Consumer Officer; Kristin Oliver, Chief Human Resources Officer; and Tracy Preston, our new General Counsel, Corporate Secretary and Chief Compliance Officer. We are also joined today by Robert Vallejo of PricewaterhouseCoopers, the independent registered public accounting firm for Hanesbrands. The meeting will out come to order. Please note that this meeting is being recorded. Our first action in the general order of business will be to review the motions to be considered. Then we'll vote on those motions. After the voting, we'll receive a report on the voting results, which will conclude the formal business of the meeting. We'll then adjourn the meeting and provide time for general questions. You may submit your questions in a designated field on the web portal. [Operator Instructions] We did receive some questions in advance of the meeting through the voting portal, and we will provide answers to a few representative ones at the beginning of the question-and-answer session. So we may not be able to answer every question, we will do our best to provide a response to as many as possible during the time allow. We encourage you to join us for our upcoming Investor Day on May 11, where we will be discussing our Q1 results, full potential plan and the future of our business. On that day, we will have even more time to answer questions about Hanesbrands. So to begin, I will ask Joia Johnson to introduce our inspector of election, who will confirm that notice of this meeting was properly given and attest to the presence of a quorum.

Thank you, Mr. Bratspies. Victor Latessa has been appointed as our independent inspector of election, to ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of the proxies and ballots, count all votes and determine the results of the voting. I have received Mr. Latessa's written oath of office as inspector, and he has presented me with evidence that notice of this meeting was properly given to all stockholders of record as of the close of business on the record date. Mr. Latessa, have you determined whether a quorum is present at this meeting?

I have determined that there are stockholders represented at this meeting, holding common stock representing at least a majority of the votes entitled to be cast at this meeting, which is sufficient for a quorum and for transacting the business of this meeting.

Thank you. Mr. Bratspies, I find that a quorum is present for purpose of conducting this meeting. All holders of record of the company's common stock as of the close of business on February 16, 2021, are entitled to vote at this meeting on all business to come before the meeting.

Thank you. The items to be considered at this meeting are the items set forth in detail in the notice of the 2021 Annual Meeting of Stockholders and proxy statement of the company and mailed or made available to stockholders of the company on or before March 15, 2021. The first item of business on our agenda is to elect 9 directors to serve until the 2022 Annual Meeting of Stockholders or until their respective successors shall be elected and qualified. Cheryl Beebe, Geralyn Breig, Bobby Griffin, James Johnson, Franck Moison, Robert Moran, Ronald Nelson, Ann Ziegler and I have been nominated to serve as directors. Ms. Johnson has advised me that there were no nominations by stockholders that were submitted to the company prior to this meeting in accordance with the bylaws. Therefore, I declare the nominations closed. The second item on our agenda is to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the 2021 fiscal year. The third item on our agenda is to approve on an advisory basis, executive compensation as disclosed in the proxy statement for the company's 2021 Annual Meeting. Are there any questions at this time pertaining to the specific issues? Ms. Johnson, may we open the polls?

Yes. I now declare the polls for this meeting to be open. If there's any stockholder present who has not authorized a proxy to vote and wishes to vote at this time or who wishes to revoke a proxy previously submitted, you may do so by clicking on the voting button on the web portal and following the instructions there. Stockholders, who have sent in proxies are voted via telephone or the Internet and do not want to change their vote, do not need to take any further action. After the votes have been cast and the polls closed, the inspector will announce the preliminary results. [Voting]

Great. Now that everyone's had an opportunity to vote, I announce that the polls for this meeting are closed. Mr. Latessa, will you report the results of the vote?

On the motion for the election of directors, a majority of the votes cast at this meeting were cast in favor of the election of Cheryl Beebe, Stephen Bratspies, Geralyn Breig, Bobby Griffin, James Johnson, Franck Moison, Robert Moran, Ronald Nelson and Ann Ziegler. On the motion for the ratification of the appointment of PricewaterhouseCoopers LLP, as the company's independent registered public accounting firm for the 2021 fiscal year, a majority of the votes cast at this meeting were cast in favor of ratification. On the motion for the approval on an advisory basis of executive compensation as disclosed in the proxy statement for this meeting, a majority of the votes cast at this meeting approved Hanesbrands' executive compensation as disclosed in the proxy statement for this meeting.

Thank you. I declare that the proposed slate of directors has been duly elected. The appointment of PricewaterhouseCoopers as our independent registered public accounting firm for the 2021 fiscal year has been duly ratified. And Hanesbrands' executive compensation has been approved by an advisory vote. I hereby direct the results of the voting to be incorporated into the minutes of this meeting. The business for which this meeting has been held is now complete, and I declare the meeting formally adjourned. Now I'd like to open the meeting for a few questions for the next 15 or 20 minutes. Please note that we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting will be addressed. Let me begin by addressing a few questions we received in advance of the meeting.

With regard to our political donations, I can answer those questions by letting you know that we don't make political contributions as a company, and we don't have a pack. Of course, individual team members can make whatever contributions they like, which we have no control over, but we do not make full contribution as a company. There were also questions about whether we're enforcing counterfeit laws with regard to our products. I want to let you know that we do have several lawyers on staff who focus on intellectual property issues. We have one lawyer, specifically, in Hong Kong, who specializes in counterfeit matters. She has been very successful in winning court judgments in Asia, primarily related to our Champion brand being sold there. And as we continue to grow in that part of the world and in others, we will continue to be very aggressive about protecting our brands. There were also several questions about sustainability and climate change. And it's really a pleasure to address those questions by telling you that we are extremely proud of our record here at Hanesbrands. The company has been a leader in sustainability for years, especially when we talk about energy and water conservation and in our 0 waste initiatives. Our sustainability program has allowed us to reduce our energy consumption, our carbon emissions and water consumption substantially over the last decade. We've also been an ENERGY STAR Partner of the Year for a dozen consecutive years. Let me share with you just a few of the accomplishments we've had. Since the year 2007, we've increased our renewable energy usage by 41%, reduced overall energy usage by 26%, reduced water usage by 30%, and we reduced our carbon emissions by 27%. We've also increased the amount of process waste that we've diverted away from landfills to 90% by carefully managing materials and leveraging recycling. In addition, the majority of Hanesbrands' cotton is sourced in the U.S., where some of the most responsibly grown cotton in the world is produced. Now while we do have a history that we're very proud of and significant accomplishments in this space, we do want to do even more. So we have published a new set of long-term goals for the years 2025 through 2030, that was launched last year and centers around 3 sustainability platforms: people, planet and the product. And I encourage you to get more information about our plans and our accomplishments at our sustainability website, which is www.hbisustains.com. A few of you also asked about Board tenure. And I feel like we're very fortunate to have a few long-serving directors in our Board, but we have not chosen to set term limits because we believe that prior knowledge and experience for the company can be very beneficial to us. What's important is refreshment from time to time, and the Governance and Nominating Committees Board considers each directors linked to service on the board on a case-by-case basis as part of an annual nomination process. Both new and seasoned directors are important for continuity, just like we believe new and seasoned executives are important. Now with that said, we do have an age limit of 74, and people do rotate off the Board sometimes for personal reasons. So we feel like we do see a good rotation in the Board over time. In the last few years, a couple of people have rotated off our Board, and we have elected a new director in December of 2020. The Board is always looking to continue to find talent even today as we round out those areas of knowledge and expertise that could help us as we grow to reach our full potential plan. Finally, let me just emphasize that our Board is very diverse with over half of our Board being racially diverse or gender diverse. And we really do enjoy the perspectives that they bring, and we want to continue to benefit from that, if we can. So we're extremely proud and confident in our Board makeup. One of the questions or several of the questions actually that we've received that I want to address is how we protected our workforce during the height of the pandemic? And I think it's really important to reinforce that health and safety of our associates is our #1 priority. And as you would expect, throughout the pandemic, we do all the things that everyone else did, related to cleanliness, social distancing, masking, contact tracing, testing, quarantining. But we also spent time beyond kind of the basics to show care for the mental, physical and financial challenges that many of our associates faced. We provided access to any virtual mental health portal staff with counselors and others to help people work through their individual issues. We are also highly engaged with our employee assistance plan during that period. And in terms of health -- our people's health around the globe, physical space surroundings were all addressed. Also people -- the extensively work from home, then we provided them with tools that they needed to be successful. One of the other topics was furlough team members. And I wanted just to be clear that we're financially, by paying their health benefits and a portion of their life insurance and other things while they were out, we feel like we did as much as we could for furlough people. And I'm pleased to say that almost all of our team members are back to work, even though some are still working remote. So we're very proud of how we were able to handle and help people during this very difficult times. As for -- there were other questions that came in around strategy, capital allocation, our Q1 performance, how we're going to grow in e-commerce and things like that going forward. And what I would tell you is I encourage you to join us for our Investor Day on May 11, where we'll talk about all topics, including our first quarter earnings. And we look forward to sharing not only the near term, but our 3-year strategy that we're referring to as our full potential plan. So I hope all of you will tune in for that as we go forward. Okay. Now after that, let me see if there are any other questions that you may have. Okay. It doesn't seem like we have any other questions at this time. So I want to thank you for your questions and for your participation. And I encourage you once again to tune in for our upcoming Investor Day. And I thank you for joining all of us today.

Thank you. The Hanesbrands Inc. Annual Meeting of Shareholders has now come to an end. Thank you for attending. You may now disconnect.