T.C. Robillard - Vice President, Investor Relations Rich Noll - Chief Executive Officer Gerald Evans - Chief Operating Officer Rick Moss - Chief Financial Officer.

Matt McClintock - Barclays Omar Saad - Evercore ISI Susan Anderson - FBR Capital Markets Michael Binetti - UBS Christian Buss - Credit Suisse John Kernan - Cowen and Company David Glick - Buckingham Group Jay Sole - Morgan Stanley Kevin Heenan - Nomura Jim Duffy - Stifel Steve Marotta - CLK & Associates Carla Casella - JPMorgan.

Good day, ladies and gentlemen. And welcome to the HanesBrands Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to hand the conference over to T.C. Robillard, Vice President of Investor Relations. Please go ahead..

Good day, everyone. And welcome to the HanesBrands’ quarterly investor conference call and webcast. We are pleased to be here today to provide an update on our progress after the second quarter of 2015. Hopefully, everyone has had a chance to review the news release we issued earlier today.

The news release and the replay of the call could be found in the Investors section of our hanes.com website. On the call today we may make forward-looking statements either in our prepared remarks or in the associated question-and-answer session.

These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. These risks are detailed in our various filings with the SEC and maybe found on our website, as well as in our news releases.

The company does not undertake to update or revise any forward-looking statements, which speak only to the time at which they are made. Unless otherwise noted, today's references to our consolidated financial results, as well as our 2015 guidance, exclude all one-time charges and expenses.

Additional information, including a reconciliation of these and other non-GAAP performance measures to GAAP, can be found in today's press release. With me on the call today are Rich Noll, our Chief Executive Officer; Gerald Evans, our Chief Operating Officer; and Rick Moss, our Chief Financial Officer.

For today's call, Rich will focus on a few big-picture themes, Gerald will focus on key highlights within our business operations, and Rick will focus on certain financial aspects of our results. I will now turn the call over to Rich..

Thank you, T.C. Hanesbrands delivered another quarter of strong results. Continued margin improvement in our base business along with contributions from our acquisitions drove a 16% increase in earnings per share, once again highlighting the power of our business model.

This marks another quarter of double-digit earnings growth and with the performance of our base business remaining synergies from our acquisitions and the benefits from deploying future cash flows we believe we have the right formula to delivered double-digit earnings growth for many years to come.

As a management team and as an organization we have a simple mission to generate superior long-term returns for our shareholders.

We have been able to accomplish this in two ways, the first is by executing the right long-term business strategies, which includes investing in our manufacturing and deploying our margin enhancing Innovate-to-Elevate strategy. And the second is by taking a disciplined return centric approach to deploying our free cash flow.

Our cash flow is a huge part of our value creation formula, which is used to pay dividends, make acquisitions, as we've said before, at some point to repurchase shares. Our dividend is in place and we expect overtime for it to grow in line with our earnings. Over the last 24 months we have completed three acquisitions for approximately $1.3 billion.

Once we achieve full synergies these are expected to annually contribute roughly $1.4 billion in sales, $230 million in operating profit and $0.48 in earnings per share. Acquisitions will clearly remain one of our core strategies going forward, given the breath of our opportunities, our strong balance sheet and our proven integration processes.

With respect to share repurchases the common perception is this is an either/or decisions as it relates to acquisitions.

However, at our current capital structure, targeting a net debt-to-EBITDA ratio of between 2 to 3 times, coupled with our cash generation ability, we firmly believe that we can easily do both acquisitions and repurchases simultaneously.

We have no need to accumulate significant cash on our balance sheet to do acquisitions nor do we strive to become investment grade. Therefore, our intent is to always use our excess cash to create the best long-term returns for our shareholders, by using a mixture of dividends, acquisitions and share repurchases.

In summary, our overall business continues to track to our plan, we delivered another quarter of double-digit earnings growth and our visibility into the second half gives us confidence in our ability to deliver mid to high teens EPS growth for the full year.

As we've shown over the past two years, our business model is designed to drive strong shareholder returns and we remained dedicated to continuing this trend. With that, I'll turn the call over to Gerald..

Thanks, Rich. Continued execution of our core strategies combined to drive another quarter of strong performance. Our acquisition strategy contributed nicely to second quarter results, as both DBApparel and Knights Apparel delivered operating profit that was slightly ahead of plan.

Our Innovate-to-Elevate, supply chain optimization and integration strategies continued to bear fruit. Constant currency revenue growth in our base business accelerated from first quarter levels, while base operating margins expanded another 180 basis points.

Before getting into our business results, let me begin with a brief update on our two integrations. With respect to DBA, we've already begun to in-source some of their third-party manufacturing. Earlier this month, we’ve produced the first team boxer briefs in our Vietnam facility.

In terms of the overall integration, we have completed all but one of their acquired work council consultations and we remained on track to begin implementing many of the integration actions in the fourth quarter.

This should lead to substantial synergy benefits in 2016 and continuing into 2017 and beyond, ultimately allowing us to reach our goal of €100 million of operating profit. Looking at Knights Apparel, we have completed our integration planning and have begun communicating to employees.

We're on track to begin the integration actions by the end of this year with synergies beginning to flow through our P&L in 2016, and we remain confident in our ability to double their operating profit to roughly $40 million within the next two to three years.

Turning to our segments, Innerwear sales declined 1% in the quarter, as mid single-digit growth in basics was offset by a decline in intimates. With respect to our basics business, in the quarter we saw growth across underwear, socks and panties, driven by further share gains and strong performance from our innovation platform.

X-Temp and ComfortBlend are now 15% of our basics business, which is up from 13% and with the doubling of our X-Temp space this year, we expect this year to continue to grow.

Innerwear’s operating profit increased 7% over last year and as operating margin expanded 190 basis points driven by efficiency gains in our supply chain, synergies from Maidenform and ongoing cost controls and SG&A.

Switching to Activewear segment, sales growth accelerated from first quarter levels, driven by the acquisition of Knights Apparel, as well as growth in our Champion and Gear for Sports business.

As expected, Champion sales and sporting goods mid-tier and department store channels grew significantly in the quarter, up 42% over last year due to the concentration of new program shipments in the second quarter this year, compared to the first quarter last year.

In these channels Champion sales year-to-date are in line with our plan and we remain on track for another year of solid double-digit growth. Activewear’s operating margins improved 130 basis points in the quarter, as product mix, supply chain efficiencies and tight SG&A controls more than offset the expected dilution from Knights Apparel.

Turning to international, the year-over-year growth in the quarter was driven by our acquisition of DBA. Looking at our base international business, which excludes DBA and the target Canada bankruptcy sales in constant currency increase roughly 8% in the quarter.

With respect to DBA in spite of ongoing economic headwinds in Europe, the business performed well in the quarter with sales increasing in Spain and the U.K. We expanded our hosiery market share in Spain, France and Germany, as well as our underwear market share in France.

These results combined with excellent cost controls and favorable supply chain performance generated profits that were above planned for the quarter. So to sum up, overall we are right where we expected to be at this stage of the year and we feel great about our outlook for the remainder of the year.

Looking beyond this year, we are confident in our ability to deliver double-digit earnings growth for the next several years as our strategies are working, our brands are resonating with consumers and our integrations are progressing on schedule. I'll now turn the call over to Rick..

Thanks, Gerald. Our Innovate-to-Elevate, supply chain optimization and acquisition strategies combined to drive a 16% increase in earnings per share in the second quarter. In fact that we were able to deliver mid-teens earnings growth on top of last year's 43% increase is a testament to the power and sustainability of our business model.

In the second quarter, constant currency sales increased 15% over last year, as our base business increased 1%, while acquisitions contributed approximately 14 points of growth.

Operating profit increased 15% over last year, driven by contributions from DBA and Knights Apparel, tight SG&A management, efficiency gains in our supply chain and synergies from Maidenform. Now let me give you some color on the strong margin performance in the quarter. Our gross profit margin improved 120 basis points to 39.1%.

Acquisitions contributed roughly 60 basis points to the increase, a structurally lower margins in Knights Apparel were more than offset by structurally higher margins in DBA. The remainder of the increase was driven predominantly by supply chain efficiencies on our base business.

SG&A costs, as a percentage of sales increased approximately 100 basis points to 21.6%, driven by our acquisitions. The result was a 20 basis point increase in our operating profit margin, as the 180 basis point improvement in our base business more than offset the expected March percentage dilution from the addition of DBA and Knights Apparel.

Looking at the rest of our results, interest and another expense of $30 million was roughly $8 million above last year due to the higher debt levels from our acquisitions, as well as the additional costs associated with our debt refinancing. Our tax rate was 13% in the quarter and earnings per share were $0.50.

Cash flow from operations was right on plan and we ended the quarter with $315 million in cash on our balance sheet. Turning to guidance. I will highlight some of the key pieces, but I’d also like to provide additional color as it relates to the individual quarters.

You'll find our full guidance details in our press release and the associated commentary in our updated FAQ document. We’ve refined our full year sales guidance for approximately $5.9 billion, with roughly $15 million to $20 million of the adjustment coming from further deterioration and key exchange rates.

We slightly increased our operating profit guidance to a range of $855 million to $875 million. We expect interest and other expense of approximately $100 million. Our full year tax rate of approximately 13%, and an earnings per share range of a $1.60 to a $1.66. Looking into the second half of the year, we have a significant amount of visibility.

Our space is set, our pricing and promotional programs are in place and we locked in our key input costs including cotton. Based on our guidance, we are expecting second half operating profit to increase 10% to 14% over last year, which implies second half operating margins could increase roughly 20 to 60 basis points.

However, due to certain timing shifts this year, we are expecting year-over-year operating profit growth for individual quarters to be very uneven. We expect third quarter operating profit growth in the mid single-digits range, while we expect fourth quarter growth to be in the high-teens to low 20% range.

The timing shift is due to a concentration of promotional spending in the third quarter this year, the timing around realizations of certain supply chain and integration savings, as well as the benefit from lower cotton prices in the fourth quarter.

So in closing, our overall performance this year is tracking right to our plan and this coupled with our visibility into the second half gives us confidence we can deliver mid-to-high teens EPS growth through the year.

Looking to 2016 and beyond, we believe the combination of the benefits from current acquisitions, the momentum in our overall business and returns for employing future cash flows should drive solid double-digit EPS growth for many years to come and with that, to T.C..

Thanks Rick. That concludes the recap of our performance for the second quarter. We will now begin taking your questions and will continue if time allows. Since there maybe a number of you who would like to ask a question, I'll ask that you limit yourself to one question and a single follow-up and then reenter the queue to ask any additional questions.

I'll now turn the call back over to the operator to begin the question-and-answer session.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Matt McClintock from Barclays..

Hi. Yes. Good afternoon, everyone..

Hey Matt..

Rich, I have two questions. The first one, it sounds like everything’s moving along according to plan with the recent acquisitions that you’ve made. But it seems like there's has been a bit of a change of tone recently with share repurchases.

Can you help us understand how you think about share repurchases, building? What you would say at what point would you try to execute a share purchase? What would you consider to be an excess amount of cash? How we should think about the mechanics of executing that program. Thank you..

Sure. One of the great things about our business is we generate a tremendous amount of cash on a consistent basis. It’s a hallmark for the company and our focus is to make sure we are using that cash to create great returns for you, our shareholders.

We firmly believe that that will be best done with a mixture of acquisitions, dividends and share repurchases. And we've been doing a lot of -- the first two acquisitions, as well as instituting an increasing a dividend over time. And it's probably now becoming time for share repurchases to become a definitive part of that mix.

When you step back, I want to make sure that nobody hears this as saying we are doing this instead of acquisitions. That’s clearly not the case. We can do both.

In fact, when we look at our excess cash generation ability today and over the next 12 to 18 months, we could easily do a $1.5 billion of acquisitions and buyback stock consistently over that period of time. You can actually model out over the next couple of years.

And you can find us being able to do billions of dollars of acquisitions and being able to buyback shares. In terms of the near-term strategy, more likely than not, you'll see us begin to execute our share buybacks in 2015.

While we have an authorization in place, we don't have any definitive plans, and Rick and I need to do a little bit more analysis on how much we would do and how we might start that program. Therefore, none of this is built into any of our guidance. But more likely than not, you'll see us begin to buy back some shares in 2015.

From an ongoing basis what is excess cash flow? I think you asked me to quantify it. If you think of our cash flow from operations of about $550 million this year less CapEx that we've talked about, less the dividend and you get to that $250 million to $300 million range on an ongoing basis. That could be a reasonable number.

I’m not committing to that in any given year, but that’s the way to frame it. Great thing is we generate a lot of cash. We've got multiple ways to create value for shareholders and we want to use all of those ways to create value for shareholders..

Thanks. Rich. And then my second question if we could just dive into the softness in Innerwear this quarter. I know you mentioned last quarter some challenges at key retail partner in terms of inventory levels.

Could you update us on what's going on there? What are you seeing overall in the Innerwear market? Is there, maybe is there increased competition, especially now that you seem to be getting more space gains with your higher ASP, Innovate-to-Elevate products such as X-Temp? Thanks..

So let me just frame it overall and I will turn it over to Gerald to talk about some more specifics within basics and Innerwear. First and foremost, the overall macro environment isn’t that great right now. In fact, when we look at both, our total Innerwear basics and intimates, we are seeing a deceleration of actually industry growth.

In fact, basics has decelerated but still positive. Intimates is actually down. Given that in those environments we are gaining share, so our overall business is sound in terms of some of the tactics with the weakness in the near-term. I will turn it over to Gerald to talk about specifics..

Yeah. Overall, Matt, we had a positive trend in our Innerwear sales from Q1 to Q2 and driven by our basics business, which was up mid-single digits in the quarter. We fee real good about that. As Rich mentioned, the category and basics is growing. We are up a share point in the overall basics category and our underwear business is up 2 points.

And it really is driven by the things you touched on. Our innovation, our strong brand position, we are gaining space and we went into back-to-school with very strong offers as we went into holiday period. As we ended the third -- the first quarter, a major retailer had reduced their inventory and at that point, we viewed it as temporary.

As we've gone into the second quarter, we’ve learned, it is in fact more of a systemic change and they intend to use their new replenishment systems to manage their inventory more tightly going forward to pursue inventory turns. And so we reflected that in our guidance going forward. But we feel really good about this business.

Those kinds of adjustments aside, we continue to gain space. We will gain more space in the second half of the year. Our share positions are growing and our innovations working. So, we feel very good about the basics business and its impact on Innerwear. As we look at intimates, as Rich touched on as well.

We gained share there as well in the core intimates business, but this category has accelerated decline quite dramatically and declined at a high single-digit rate in the most recent 12 month period.

So in addition, as we look at our business and addition to the category weakness, our results in the quarter were impacted as we executed the last of our brand transition strategy and department stores. We set about focusing on fewer bigger brands, our important brands in the channel and folding smaller brands like barely there into those brands.

So in the quarter, we managed down the last of our retail inventories and only at quarter ended, we begin to piper our new initiatives. As we look forward to Q3 and Q4, we’ll continue that piping of initiatives and expense based behind those.

So there again we feel really good about what we're doing in the category and in spite, what the category itself might be doing. We’re doing the things we can do, putting great innovation behind our brands and really putting something in place that the consumers will buy..

Thank you. And our next question comes from the line of Omar Saad from Evercore ISI..

Hey, thanks guys. Couple of questions, so just to follow up on the replenishment business.

Can you give us a sense for how big the difference is between what you're seeing in the sellthrough at these retailers versus what they are restocking and is there a big gap there? How long do you think this will persist? Are we looking at another three quarters to this kind of level and then I have a couple of follow-ups? Thanks..

Yeah, in general, we see it’s about $20 million -- approximately $20 million..

Yeah. That’s what we’ve seen for far and we think there could be that on a go-forward basis. And that would be a couple weeks of supply out there and that’s all built into our guidance and that's an important to remember. And what’s to come more likely are going to be in the third quarter than not..

Okay, great. Thanks. And then can you talk about what you are learning from DBA, give us an update on the international side. I kind of want to dive back to the original question on share repurchase versus acquisitions with the dollar so strong.

I'm wondering if this is a signal that you are going to spend some time really working on integrating DBA before you go out and get -- make other kind of international acquisitions or can you just give us an update on what’s going on there?.

Right. So let me first talk about capital allocations and acquisitions. And I’ll turn it over to Gerald, excuse me -- to talk more about some specifics of how great things are going over in Europe. Do not read, absolutely do not read anything about share repurchases as being part of the mix as a negative about acquisitions.

We are still absolutely focused on acquisitions, doing acquisitions and not changing the time frames in which we’re thinking about acquisitions. No ifs, ands or buts, we can do both. It’s a great thing about our company.

In terms of how great DBA is going, Gerald?.

Sure. From the standpoint of DBA, we couldn’t be happy with how it’s going. We’ve got a very strong management team that’s building their brand shares. They are controlling their cost and generating additional profits as you’ve heard in the quarter. We've also begun to internalize some of our production.

We've completed four of the five works councils and we have one more to do right on schedule. We’ll complete it at end of our early fall and we’ll begin integration in earnest in late in year. So everything is going well..

Thank you. And our next question comes from the line of Susan Anderson from FBR Capital Markets..

Hey Susan..

Hi guys. Thanks for taking my question.

Just a follow-up on the intimates category, so the minus 9, that you talked about, is this kind of a department store issue also, is that kind of where the industry was for the department store and then also maybe if you could talk about how -- it sounds like you guys are still maybe rationalizing, later forming, combining with your own brands.

So is this -- I guess that this quarter and should we see a more combined brand, I guess, presentation going forward?.

Susan, this is Gerald. The category numbers that I quoted are really total category and they are rolling 12 months for the core intimates excluding sports bras. And it is sort of across the various channels. From the standpoint of brand rationalization, the last of our managing done and transitioning of the inventories really is in this quarter.

And we’re piping our new initiatives behind our forward key brands late in Q2 and will do the balance in Q3 and Q4. So the rationalization is largely behind us and the focus on the key brands is ahead..

Okay. That’s helpful. And then on the gross margin for the quarter, maybe, it sounded like Knights Apparel was a little bit of pressure or DBA probably help.

Maybe if you could just parcel that out a bit between those two and then I2E?.

Sure. If you think about those two businesses, as we said one DBA businesses are structurally higher gross profit margins, probably about 10 percentage points higher than the Knights Apparel on the other hand had structurally lower gross margin levels. Probably that’s 10 percentage points below our base business.

So that 10 percentage point is higher for DBA. That percentage point is lower for Knights Apparel. And then in terms of the base business, particularly in the quarter, the improvement in the margin was almost exclusively from supply chain..

Thank you. Our next question comes from the line of Michael Binetti from UBS..

Good evening guys. I want to circle back to the retail that you mentioned that steps down. I want to say, I think you said you came out in the middle of the quarter on a webcast and that you were feeling at that time was that had improved.

Now you think that is a little bit more sticky, but how are you confident that it doesn't move down further this point for many conversations you may have had? And then also you said that I think you said that about $15 million or $20 million revenue reductions from FX, so if put those two together, it seems like maybe one or the other businesses will double a little bit within the guidance.

Is there something to point us to there for our model?.

Yeah. Let me talk a little bit about through that cadence because I think you and I had that conversation when I was up at your conference. So when we ended last quarter, the retail inventories and basics, one of those retailers were talking about, they were down about three or four weeks versus the prior year when we ended Q1.

By the end of April, they were actually almost flat. I think they were down, virtually flat. So it'd come back strongly in April. By the time, we ended the quarter, their retail inventories were down about two weeks versus where they were at last year at that same time. So we saw a little bit of a reversal in May and June.

So that's all built into our numbers. So it’s probably impacted our total shipments and basics year-to-date about $20 million. They in May and June communicated that they have had this new ordering system in place for of long period of time. And they feel they can now better optimize their turns.

And so they're now talking about as a more structural change that was communicated to us. Gerald, I’ll let you comment on it because you had some of the conversations with them. And they've given us indication they may take a little bit more weeks of supply out as they continue to fine tune their system a little bit.

And that's one of the things we think may happen in the third quarter and we built into our guidance.

Gerald, do you want to add any color to that?.

Yes. They let us know that they have gained more confidence in their replenishment system that they intend to operate at little higher turn and that's what they've managed through their weeks of supply adjustment. And I think it's important to reiterate. This has nothing to do with our sellthrough.

This is really just matching shipments to our sellthrough at retail. And as they move their inventories up or in this case, now down more permanently, it’s over one-time adjustment that happened and then our business should be trending back to where it should be..

And that we laughed at year round next year in the first quarter probably assuming right?.

Absolutely. Yeah..

Can you talk a little bit about the concentration promotional spending that you mentioned in the third quarter? What’s the -- what are some of the components of that or what exactly that might be referring to?.

As we talk to you from time to time, we reiterate to you that there is volatility in our business from quarter to quarter. And one of the things that can be volatile, timing is freight promotional arrangements with our retailers and that’s really we’re talking about here. This shifts from one quarter to the next..

Also highlight that one of the things that happened last year is we were going into this brand transition specifically as we are exiting the barely there brand which is some of the -- actually accounts barely there accounts for about half of the decline in intimates this quarter as we’re exiting it.

We gave some retailers additional markdown money in Q4 of last year to begin the process of marking that inventory down. So that when we were transitioning, there would be a smaller return this year. And so that was just part of the overall plan for our transition story and we won’t overlap those straight dollars in Q4..

I apologize if I might sneak a third one in here. I apologize people are waiting in line but as far as acquisitions go, whenever we get out of a meeting with you guys, it sounds like list of potentials is very, very long, big, small, doesn’t really matter.

So as you think about that, it seems like at any given time, you could just pull the trigger, there should be like a subset of those that are at the price that you would, that you guys would find attractive.

Can you talk to us about what are the impediments to getting a deal done on the near term now? What they take time frame on those kind of things?.

We get calls all the time. We’ve got our own list of work we’re working on. We’ve got, we’ve laid out our four acquisition criteria, which I won’t go through again as I have talked about it so many times. So we feel really good about our ability to do acquisitions. We don’t just take anything that shows up by any stretched imagination.

In fact, there are businesses that are for-sale or running processes or things like that, and we don’t have any desire to just do an acquisition for acquisition sake. That’s why we have those four very disciplined acquisition criteria.

And I feel good that there is a lot of companies out there that meet those categories that will allow us to continue this acquisition strategy for many years in the future and drive a lot of value. We have constantly -- we’re in communication with people.

As I have said before, it took three years from initial contact with the Gear For Sports people until we actually did the deal, whereas something like Maidenform happened from initial contact to doing the deal nearly months. So some of it’s just opportunistic about exactly when somebody is ready on both sides and when everything gets aligned.

And when we have a deal, we will let you know, but I feel good about it being part of our strategy. We are doing great with the acquisitions we’ve done. We’ve got a lot of synergies yet to come and you will see more deals over time..

Thank you. Our next question comes from the line of Christian Buss from Credit Suisse..

Yes. I was wondering if you could talk a little bit about penetration of some more technical products and the basics portfolio progress you have made there. And if there are any fixtures to the new programs that are in place for the back half of the year..

Sure. We may between ComfortBlend and X-Temp line, they now represent about 15% of our basics business, so that’s stepped up from our protocol. And we see more space expansion coming in the second half of the year, particularly behind our X-Temp business, which is expanding very rapidly. They continue to perform well.

And I think it just continues to speak to the power of innovation these categories. We are also beginning to push these into the outwear categories as well. So, continue to do very well..

That’s very helpful.

And wondering if you could talk about works council negotiations for DBApparel a little bit?.

Yes. We’ve actually completed four of the five. We have one left to complete in France, which we will complete we believe in early fall. And at that point, we will be complete with all of works council consultations.

And then at least it’s right on track as we’ve talked about to begin major implementation in Q4, and you will start to see the synergies from that showing up in 2016 and beyond..

Thank you. Our next question comes from the line of John Kernan from Cowen..

Good afternoon, guys. Thanks for taking question..

Sure..

So just on the operating profit guidance for DBA, it looks like you pick it up at $10 million.

Is there some offset to that within your yearly guidance?.

Well, as we look at our guidance and our plans for the year, there are always puts and takes that we don’t go into with you as we don’t bridge turnaround plans. But in this kind of case, we are just trying to communicate that DBA is doing very well.

They are performing at a level high -- little higher than we expected, which is a good thing, but again there are always puts and takes and as we go through the course of the year executing our plans..

Okay. And then a quick follow-up on that. Obviously the integration for Knights and DBA is really going to start to accelerate in the fourth quarter. As you look at those, this is a little bit longer.

Are there any revenue opportunities you’re seeing now and you’ve been very specific about the profit opportunity for both, anything incremental on the revenue side for each?.

Yes. Certainly from the standpoint of DBApparel, I guess it’s a nice operating platform as we complete our integrations to build out our brands and build our share positions within Europe. And we’ve got some great brands to build upon.

And even in Knights Apparel, it’s a great compliment to our Gear For Sports business mix as a bigger player in the license, call it licensed apparel and allows us to compete more effectively in the retail channel. So we see growth opportunities in both..

Your next question comes from the line of David Glick from Buckingham Group..

Yes. Thank you. Just a follow-up on DBA. Given your updated guidance, there is another approximately $64 million of operating income growth opportunity.

And now that you’re further into it, without asking you to fine tune it, but how do you think about the progression here? Is it linear until you hit your goal? Do you see some big quick opportunities next year? How do we think about the pace of the recognition of those synergies?.

David, we’ve talked about being able to get that operating profit up to a €100 over time. We talked about three to four years from when we closed the acquisition, which was October of last year. In terms of the exact timing in '16 and '17, it’s a little too early to comment on that.

We haven’t even begun our planning process for 2016 for the entire company little owned DBA. We need to get through the works council process to start to build our plans for next year and then we will give you a little bit more line of sight for that. I hate to jump out ahead of it..

Fair enough.

Back on intimates, are there any prospects? I mean, obviously, the businesses is tough out there, but are there any new product innovations once you kind of fill the pipeline here that you think could improve the trend versus the year-to-date? And it sounds like there is -- your guidance implies that you improve in the back half, but just wondered what the prospects were for turning around that business?.

Yes. I want to talk just about the macro environment and we talked about the overall category actually flipping negative and it’s been like that now for a little bit of time. And as Gerald said, that’s across all channels, specialty, department stores, mass, and everywhere. That’s not going to last forever.

At the end of the day, usages in that category haven’t changed, so that there is normal ebbs and flows.

I really do think that when you get outside of specialty and you look in department stores, mass, and mid-tier, one of the big issues has been there is way too many brands and way too many little ideas, and there is not big innovation that can help drive the category.

And that’s what we’re working hard to change this year after going after our four strong brands with very distinct positioning. We can drive big platform innovation behind those, just like we have in the underwear and the socks category with things like X-Temp and so on and so forth.

And that’s the thinking that can get that category to start act turning around. We need to get in that position and then act like a leader and we can actually help change the category trends..

Thank you. Our next question comes from the line of Jay Sole from Morgan Stanley..

Hey, good afternoon..

Hey, Jay..

Wanted to kind of follow up on the M&A.

When you’re out there looking to different deals, what’s your sense of the competitive set that’s looking at the same deals? Do you see that many competitor that could really compete with you about the kind of the strategic and the synergy opportunities you bring given that your own mostly own manufacturing and probably generally a lot of more cost savings and most of the people that might be bidding for these companies?.

I can only really talk about what we’ve seen historically and because things could change over time, but I actually don’t think so. At the end of the day, you hit it spot on is that we are going to have greater synergies than anybody else. And therefore, we’ve got the capability of just creating a huge amount of value.

And so for some of these deals you may see private equity be interested, but then when there is strategic around, they know that they are going to be a little bit sort of behind the [A ball] [ph] if you will trying to go after a property for that like that.

And then at the end of the day, there is not even that many big companies, apparel companies that had the kind of supply chain and capabilities that we do now across multiple continents.

So there is not a lot of the same kind of competitive dynamics that you might see in some other industries or some with some other properties and other people pursuing them. We feel really good about our ability to integrate acquisitions and we are going to continue focusing on them as a great way to create value..

Got it. And then if we can just shift to Champion for a minute. You talked about really strong growth in that brand.

And can you just kind of detail some of the new program shipments, the sporting goods, and some of the reason that’s happening now? And just remind us like what changed and where it’s going to go from here?.

Well, I think Champion really did have a great quarter and part of that was shift in seasonal timing from Q1 to Q2, but a significant portion as well to the point you just made was new distribution, it’s broad-based, it’s across both men’s and women’s programs.

And I think it’s really approved for the bring of innovation to the brand but also the brand itself resonating. And it’s sort to everyday athlete position. And so it’s both women’s and men’s products and sports specialty and mid-tier department store expansion..

Thank you. Our next question comes from the line of Bob Drbul from Nomura..

Hey, Bob..

Hi. Good afternoon. This is Kevin Heenan on for Bob. I was just wondering if you guys had any commentary on how you are positions or how you think the consumer’s position as you head into the back to school season, especially as you have the Knights Apparel business now in the mix? Thanks very much..

I think we are well prepared for back-to-school in terms of the macro. I think there is a lot of speculation out there in the media about whether it’s going to be a good back-to-school or a bad back-to-school or whatever. At this point, it’s all speculation.

We are just about to head into it literally starting this coming weekend and then strongly for the next six to eight weeks and I think, time will tell how the consumers responding and if they’re coming out to buy.

We feel good about our overall position, isn’t that right?.

Yeah..

Absolutely, we do feel great about it, and you’re right we’ve got Knights now in the mix and they’re positioned as well in that back-to-school period, which is big for them. So, we think we’re in good shape..

Thank you. Our next question comes from the line of Jim Duffy from Stifel..

Thanks. Good afternoon, guys. Hope you are well.

My question, I’m hoping you can provide an updated view on the synergies associated with the three acquisitions in 2015? Are you finding more than you’d expected previously and is that what’s behind the higher guidance for the integration charges?.

No. We address the synergies first. The Maidenform is right on where we expected it to be, the -- we’re in good shape there.

With DBA, we begun to see just a little bit of the synergies, really when works councils are over we will begin to implement the integration plans and then we’ll begin to see really the synergies, really effectively starting next year.

And Knights Apparel again just acquired and we’re still working through the integration plan for them, which means we really wouldn't see a lot of synergies there until next year as well. So, again, I think, we’re right on plan where we thought would be on synergies.

When you look at the [excise] [ph] charges that we have been talking about, let me take it from a couple of different perspectives. One, for the full year we went from 200 to 240 and that’s due to DBA, our estimates on DBA, Maidenform, both are about the same.

We now are including, now that that have greater visibility of Knights Apparel and the integration plan that we think will be going in there, we better able to estimate what those charges might be.

That’s about half of it and the other half comes from our decision in the second quarter to exit the China commercial business, which is about a $20 million charge, almost all which was non-cash. So that accounted for the $200 million to $240 million move to -- with DBA or Maidenform..

Okay.

Is this split there still about one-third cash, two-third non-cash?.

Yeah. I mean this year especially yeah..

Okay. Thanks..

Thank you. Our next question comes from the line of Steve Marotta from CLK & Associates..

Good evening, everybody.

Just one question regarding the weakness in the innerwear, is there any increase in estimated promotional activity in the back half of the year? And can you talk a little bit about pricing in the back half and given the weakness in that segment?.

Our pricing has been safe for some period of time. So certainly pricings are in place. So the standpoint of promotion activity, there's really no increase in activities. As Rick touched on earlier, there is some shifting of spending between quarters but no increase..

That’s helpful. Thank you..

Thank you. And our next question comes from the line of Carla Casella from JPMorgan..

Hi. I have a clarification question.

Did you comment on how much you have outstanding and available under your revolver?.

No. As of the end of the quarter, we had nothing outstanding under the revolver excepts very small amount of credit. But the revolver is virtually entirely available to us..

Okay. And maybe some follow-up here, your view on the capital structure, I know your high-yield bonds become callable later this year.

And just wondering how you’re looking the overall capital structuring and the amount of debt you’re comfortable with?.

Well, as we’ve said before, we really like the strong double-d credit rating and that suggests leverage ratio and that EBITDA leverage ratio of about two to three times. We feel very comfortable operating in that range. So as we -- specifically with respect to the bonds, they are callable on December of this year. We’re always evaluating that.

We haven’t made a decision on what if anything we’re going to do with them when they do become callable. That will be something later this year..

Thank you. And our next question is a follow-up from the line of Matt McClintock from Barclays..

Hi. Yes. Thanks, guys for giving me a follow-up. Just wanted to ask a question back on this share repurchases. If I remember, I believe your purchase program goes back to 2007 and you really haven't done much in terms of repurchases over the last several years. And yet at the same time you've always generated a significant amount of cash flow.

So what's really changed in the sense internally of why share repurchases are becoming more to the forefront, more part of the strategy going forward? Thanks..

Matt, it’s funny. The two most frequent questions that I’m asked, first is when are we going to do the next acquisition? And that’s actually included when we announce an acquisition.

The next question I get is, when are you going to do the next one? The second most frequent question I get is, so when are you going to start buying back shares because you generate so much cash and right now if you don't do anything, your leverage ratio by the end of this year is going to be substantially below our target range.

And so, why are we starting to talk about it now, it’s because more likely than not, time to begin doing it is now. When you look at what Rick just talked about is we’ve got nothing on our revolver. Yet we ended the quarter with over $300 million of cash in the balance sheet.

So, we knew we’d start getting questions about well, you are just going to let that cash acumm, or what are you going to do with it to create value. I’ve gotten those types of questions before. So we want to be as we always do transparent, let people know how we’re thinking.

And most importantly that our goal is to make sure that we’re creating the best return for you possible, with the use of our cash and that will include share repurchases and more likely sooner rather than later..

Thank you..

Thank you. And our final question for today is a follow-up from the line of John Kernan from Cowen and Company..

Hey, guys. Thanks for letting me jump back in. Just we’ve heard a lot about the TPP legislation recently.

Do you have any thoughts on how that’s going to affect some of your cost coming out of your Vietnam on sourcing base?.

Yes. Let me talk a little bit about that. So we've been operating in successfully in Vietnam now for many, many years. We’ve got close to 9,000 people and that’s going to grow to 12,000 to 13,000 over time. So we’ve got a strong head start on a lot of other companies in terms of being comparable on operating at Vietnam. It’s a great place to operate.

It’s low-cost for a lot of products into U.S. even under the current structure. It’s also a great option for places like into Europe and elsewhere in the world. So it’s great no matter what happens with TPP. If TPP does in fact pass, it can actually add an added benefit by reducing or actually eliminating duties on some of our products.

Those duties range from 6% to at most 17% and so it will open it up a little bit. Those things would probably get phased in over time, so it’s not likely to be immediate impact but clearly it will make Vietnam more competitive. And I'll be glad that we’ll have almost a decade head start relative to a lot of our competition.

So it puts us in a good competitive position from a long-term perspective..

Okay. Great to hear. Thank you..

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back over to Hanes management for any closing comments..

Great. That’s all we have for today. Hope everyone has a good night. And give us call if you need help. Thanks..

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program, and you may now disconnect. Everyone have a good day..