Greetings, and welcome to Kontoor Brands, Inc. Q4 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to Michael Karapetian, Vice President, Corporate Development, Enterprise Strategy and Investor Relations. Thank you, Michael. You may begin.

Thank you, operator, and welcome to Kontoor Brands, Inc.'s fourth quarter and full year 2025 earnings conference call. Participants on today's call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to materially differ. These uncertainties are detailed in documents filed with the SEC. We urge you to read our risk factors, cautionary language, and other disclosures contained in those reports. Amounts referred to on today's call will often be on an adjusted dollar basis, which we clearly define in the news release that was issued earlier this morning and is available on our website at kontoorbrands.com. Reconciliations of GAAP measures to adjusted amounts can be found in the supplemental financial tables included in today's news release. These tables identify and quantify excluded items and provide management's view of why this information is useful to investors. Unless otherwise noted, revenue growth rates referred to on this call will exclude the impact of the 53rd week and will be in constant currency, which exclude the translation impact of changes in foreign currency exchange rates. Joining me on today's call are Kontoor Brands, Inc.'s President, Chief Executive Officer and Chairman, Scott H. Baxter, and Chief Financial Officer and Global Head of Operations, Joseph A. Alkire. We anticipate this call will last one hour. Following our prepared remarks, we will open the call for questions. Scott?

Thanks, Mike, and thank you all for joining us today. 2025 was a transformational year for Kontoor Brands, Inc. We completed the acquisition of Helly Hansen, Wrangler delivered another year of healthy growth and market share gains, we made progress repositioning Lee and executed Project Genius. Driven by the strength of Wrangler and strong contributions from Helly Hansen, we achieved record revenue, earnings, and cash flow in 2025, while returning over $140 million to shareholders through our dividend and share repurchase programs. Importantly, our results highlight our ability to grow revenue and earnings over the near term while investing in the long term. I am particularly proud of the strong execution our team delivered in a dynamic environment. Sharp focus and clarity on our strategic priorities gives me confidence 2026 will be another record year for Kontoor Brands, Inc. Let's discuss our priorities starting with Helly Hansen. Helly is a growth asset. In 2026, we will further integrate the business while taking steps to accelerate growth and profitability. Integration and growth are not sequential; they are parallel. In the seven months under our ownership, we have strengthened the leadership team, delivered better-than-expected revenue and earnings accretion, and leveraged our multibrand platform to drive greater synergies, operational discipline, and cash generation. We are bringing a renewed sense of focus to Helly's strategy while leveraging synergy opportunities to accelerate investments across the organization. We are in the early innings of unlocking geographic, category, and channel opportunities that will begin to accelerate in 2027 and beyond. We will bring the strategic vision to life at the Investor Day on September 2 in Oslo, Norway. We are excited to invite many of you to Helly's headquarters where we will share the significant opportunity that exists under our ownership. Second, accelerate growth in Wrangler. 2025…

We delivered a strong finish to 2025, resulting in record fourth-quarter revenue, earnings, and cash flow while deploying approximately $250 million of capital towards debt repayments, opportunistic share repurchases, and dividends. For the full year, revenue increased 18%, adjusted operating earnings increased by more than 20%, and we generated over $450 million of cash from operations. Relative to the outlook we provided following the Helly Hansen acquisition, we outperformed our commitments across every measure. 2025 was a transformational year for Kontoor Brands, Inc., as we achieved the strongest financial performance in the company's history. Wrangler is executing at a high level, Helly Hansen is significantly improving our value creation potential, and the Lee turnaround is progressing. Our Project Genius transformation program is having a significant impact on our results, and we are building a more performance-based culture with a greater emphasis on growth and more aligned incentives across the organization and the brands in our portfolio. We are entering 2026 from a position of strength with sharp strategic clarity for our shareholders, a relentless focus on execution, and a commitment to continue to drive strong returns. Now let's review our fourth-quarter results. Starting with Helly Hansen, global revenue of $251 million increased 10% compared to prior-year reported results. Growth was broad-based across both sport and workwear, and in all geographies and product categories. On a full-year pro forma basis, revenue of over $700 million increased 7%. Within Sport, full-year pro forma revenue increased at a high single-digit rate. Growth was balanced across wholesale, digital, and brick-and-mortar retail. We saw sell-through was strong during the fall/winter season. Retail inventory levels are lean, and we are chasing demand across several of the brand's largest product franchises. Moving to Workwear. Full-year pro forma revenue also increased at a high single-digit rate. Growth accelerated…

Thank you. We will now be conducting a question-and-answer session. Our first questions come from the line of Irwin Bernard Boruchow with Wells Fargo. Please proceed with your questions.

Hey, everyone. Congrats. Couple of questions for me. First on Helly, I am not sure if it is for Scott or Joe. Did you specifically give an organic growth rate for Helly this year? And kind of curious the thought process around 2027 really being a much—sounds like 2027 is a much bigger year for the brand. Can you just kind of walk us through how we should be thinking about the brand's growth trajectory in 2026 and 2027? And then just a quick follow-up on Helly. On China, Joe, appreciate the details. Any color on what the China business for Helly should be doing this year in 2026? And do you have any optionality to take that business in-house? Is that something you are considering? Just kind of curious on that too.

Thanks, Ike. I will go ahead and get it started, then turn it over to Joe. From a Helly standpoint, we are making a significant investment in the team from a product standpoint in headquarters in Oslo, building out a significant and real team in the U.S. in North America, which we have not had before. We have got some really strong leaders in that marketplace. But we need to surround that team with added talent and build a fully capable team, which is going to be a big unlock for us from a brand standpoint going forward. And how we have thought about it is 2026, the first half, we have not invested greatly from a marketing standpoint, but you are going to see it in a very significant way in the second half to build momentum going into 2027. So we feel really, really good about how we thought about our plan going forward. And we have seen from the consumer a real appetite for our product. So now we are thinking about the right distribution in the U.S. marketplace going forward and making sure we seed that in the correct way and really creating an atmosphere that there is a lot of opportunity for growth for a very long time for the brand in this marketplace and then continuing to accelerate the rest of the world too. So hopefully, that answers kind of how we are thinking about it here. And then Joe?

Yes. Hey, good morning. So for Helly on a full-year basis, revenue increased about 7%. In the back half, Q3, Q4, under our ownership, revenue increased 10% to 11%, with a couple of points of benefit in there from a currency standpoint. As we move into 2026, mid- to high-single-digit growth is what we expect for the brand. We have anchored everybody from an expectation standpoint on high-single-digit growth for the brand moving forward, and we think we have an opportunity to accelerate growth even beyond that. On China, look, we are very pleased with the performance of the China JV. We have got a strong partner in Youngor. We have got a strong management team on the ground in China that is executing very well. Part of our acquisition thesis was a view that the China business was on the cusp of an inflection, and that is exactly what has played out. This business is beginning to contribute quite meaningfully to revenue and earnings. So, as part of our integration strategy, we are connecting the Helly China business more closely with the brand centered in Oslo. We are reaping the early benefits of that stronger collaboration between those two teams. So 2026, we expect another year of strong revenue and earnings growth for the JV, north of 50%.

Our next questions come from the line of Robert Drbul with BTIG. Please proceed with your questions.

Hey, good morning. Just a couple of questions from me. On the Helly integration, just talk maybe about what you have learned seven months in so far, sort of any surprises, any disappointments? And then I think in the release you talked about $8 million of incremental demand creation. Can you talk about sort of the overall spending level that you are thinking about for '26 maybe by brand? And if I could just ask one more. On capital allocation, can you just talk about the plans or trade-offs here between buyback and deleverage?

Sure, Bob, I will go ahead and start. From a Helly standpoint, we have done a lot of these in the past. As you know, you have covered the different companies that we have been associated with and where we are now. And this has been, hands down, without question, the best integration ever. I have never seen anything like it. From the execution from both teams, from the collaboration from both teams—you have heard me say it starts culturally—and these two teams meshed from the very beginning. And we found the Helly team in a situation where they were kind of, you know, not a real integral part of their past company for a lot of reasons. And now they are an incredibly integral part of our company. We talk the same language, which they have not had before—that is apparel and product. And it has just been—I just cannot get over how well this has gone, every single part of it. And I think the most important thing is that you see what is happening in the business because of this really strong integration. So incredibly pleased about this and really excited about what the future looks like here for the team.

Good morning, Bob. So from an investment perspective, we are driving double-digit increases in investment behind really all the brands—in demand creation, in product, in consumer insights, DTC—all the areas you would expect. Those investments, that capacity, is being funded in large part by Project Genius, which was precisely the point. Right? So we will continue to appropriately balance and evaluate our opportunities to invest with our goal of accelerating growth but also expanding profitability and returns on capital over time.

Well, Bob, I will tell you really how we are kind of thinking about it is our cash flow is so strong and improving that we feel very strongly that we can and will do both in the upcoming year. We think there is going to be certainly an opportunity to buy some share backs and look forward to that. And obviously we are out there with a statement right now that we are going to take $225 million off of the table relative to deleveraging. So way ahead of the game on where we planned on being from a deleverage standpoint and plan on continuing to do that. And then, we will be opportunistic from the standpoint of share repurchase. But as you saw, we started that in the fourth quarter, we saw an opportunity there, and will continue in 2026 on both. Just in a position with our balance sheet that we can do both and can do them both pretty strongly.

Great. Thank you. Good luck.

Thanks, Bob.

Thank you. Our next questions come from the line of Jonathan Komp with Baird. Please proceed with your questions.

Hi, good morning. Thank you. I want to follow up on Helly Hansen. I believe it was mentioned expanding distribution in both sport and workwear. So if you could maybe share more thoughts on the initial thesis there, the types of opportunities you see, then and then separately, just on the Wrangler business, can you maybe talk or rank order some of the organic volume drivers that you see looking forward? Thank you.

Thanks, Jonathan. Appreciate it. I will go ahead and start with Helly. We made the acquisition and part of the thesis was the opportunity in North America because we know the market so well. And we just do not have an incredible amount of distribution right now in North America or that large of a D2C channel. So we think going forward—we know going forward—with product that we have and the knowledge that we have in the marketplace from past experience in this category, that there is a very large D2C expansion opportunity if done right. And we are in the process of all of that planning right now. And there is a really—and I want to make this statement really clear to everybody—there is a really nice opportunity to grow our wholesale business with the right partners, which we are doing, and you are actually going to see some pretty significant rollouts in the second half of this year. And we can talk about those—we will talk about those in the upcoming quarters coming up. There is some really nice momentum from the brand and, you know, from a consumer standpoint, they are really finding the brand now. And we think there is opportunity to do that over a period of time. So what I mean by that is we are going to go ahead and build that momentum going forward. We are just not going to go all in. And I think that from past learnings, we are not going to try to be everything to everyone and grab any point of distribution we can just because the brand is doing really well. We are going to really cultivate the brand going forward. So hopefully, that is a great message for everybody to think about the growth opportunities here for a very, very long time. And then from a Wrangler standpoint, I am pleased with what the Wrangler team is doing. I am very encouraged by D2C going forward, and, you know, maybe we try to talk about that in an upcoming call. I am very encouraged by what I am seeing in the west business, just from the incredible product that we are making in western female, which has also been really, really accretive to us. And then also in things like bespoke and our female business in general. So, we continue to take Circana market share gains on a pretty significant basis, continue to grow the portfolio. And I think we have a full offering for our consumers too that are really attaching to the brand, and we think that the future relative to Wrangler and the growth opportunity for a very long time is very, very significant.

Right. We will look forward to the details on Helly and the Investor Day in September. Thank you.

Yes. Thank you. Hope to see you there.

Thank you. Our next questions come from the line of Mauricio Serna with UBS. Hey, good morning. Thanks for taking my question. On Helly Hansen, I think you also mentioned in your prepared remarks that you are looking to expand margins this year. Could you talk about the margins of the business on a full-year basis last 2025, and how are you thinking about that in 2026?

Yeah, sure. I will take that. Good morning, Mauricio. So look, we are not going to provide specific guidance by brand. But we do expect strong earnings growth from Helly in 2026. That is going to be driven by both gross and operating margin expansion. We expect to grow operating earnings somewhere in that low-teen rate kind of range in terms of the increase over 2025. That is inclusive of synergies, that is inclusive of the investments we are making behind the business. We have got a full year of intangible asset amortization that was created in purchase accounting as well as the impact of tariffs. So beyond operating income, the integration of Helly into our tax platform—that is driving synergy below the operating income line—going to have lower interest expense in the first half of 2026 that will be a tailwind that will continue into 2027 as we rapidly pay down the debt incurred with the acquisition. In terms of shaping for the first half, remember Helly historically generates operating losses in the first half of the year, particularly in the second quarter, which is their smallest quarter of the year. In the first half, we also have interest expense, incremental interest expense, from the acquisition that we did not have a year ago. So the growth, the earnings contribution from Helly, will be more back-half weighted.

Very helpful. And then just a quick follow-up on gross margin. You guided to an expansion this year. Could you maybe quantify the benefit that you get from the tariffs going to 15% from 20% as of, you know, the impact that that will be for after February. And then any sense of how much you could benefit if we do get a trade deal with Bangladesh and the cotton is exempt, given you said that 80% of the product from Bangladesh uses U.S. cotton?

Yeah. So a couple of things. We expect our gross margin to expand between 60 and 80 basis points for 2026. There are some pretty meaningful puts and takes within that. We expect Helly Hansen to be accretive by about 100 basis points. We expect Project Genius plus channel and product mix to drive about 180 basis points. And these benefits will be partially offset by higher product costs and somewhere between 160 basis points and 180 basis points of pressure from tariffs, net of our mitigating actions. In terms of how that is going to flow through, remember all the inventory we owned at the end of 2025—all the inventory that we received January, February—inventory has a 20% tariff rate attached to it. So that is going to turn through the P&L really through the first half of the year. And then the impact of the 15% tariff rate will start to influence the P&L as we get to the second half of the year. On Bangladesh in particular, look, there is still a lot of uncertainty around the level and structure of tariffs. We expect trade policy to remain pretty dynamic and difficult to predict. We are awaiting specific guidance from CBP as it relates to the applicability of trade agreements announced prior to the Supreme Court ruling and subsequent actions by the administration. Of particular interest to us is the trade agreement with Bangladesh, which we highlighted. That trade agreement reflected a potential reciprocal tariff ranging from 0% to 19% depending on the U.S.-grown cotton content of products sourced from Bangladesh. More than 80% of the product we source from Bangladesh does include U.S.-grown cotton. Bangladesh is our largest country of origin from a sourcing perspective. So by nature, it is also our largest source of tariff pressure. So we have not included any such benefit from a Bangladesh trade deal in our forward outlook, as again the applicability of the trade agreement remains uncertain. But it is potentially material for us, so we wanted to flag it for investors.

Got it. Thank you so much.

Thank you. Our next questions come from the line of Brooke Siler Roach with Goldman Sachs. Please proceed with your questions. Good morning and thank you for taking our question.

Scott, can you dive a little bit deeper into how you are feeling about the U.S. consumer and demand trends in your core U.S. denim business? What contribution are you expecting from pricing? What actions are you taking in the mid-tier channel? And how impactful are those opportunities as you balance a dynamic macro backdrop into this year?

Good morning, Brooke. Sure, can. I think that myself and the team—and we have had quite a bit of discussion about this—feel really, really good about the North American market and the U.S. business. I think that the consumer here is incredibly resilient. If you think about the consumer as it relates to our channels and our products, it is just really, really strong right now. And I think the macro backdrop here is only going to improve over time. I really do. And I think that we are in an age here that things are really strong, really good. We are going to be able to go ahead and move forward with our business in a pretty significant way. I like the big wholesalers that we are aligned with—you know, that win-with-winners mentality. So I think we have got ourselves aligned in a proper way. And speaking to that, how we are aligning Helly Hansen going forward from a win-with-winners mentality and making sure that we are aligned with the right customers and the right consumers to make sure that that brand has a long trajectory of growth. From the standpoint of pricing, I think that we have always listened to our consumers. We have really great relationships with our wholesalers and I think we have done a really good job of balancing that. And I think we continue to. So I think one of the things is this market has been fairly fluid from a tariff situation, so we have had to be nimble from that standpoint. And I think that we need probably 30 to 60 days for some more information to come out so that we can go ahead and make some good decisions. But I think that you have come to see from us for…

That is great color. And then just an update for Joe. Can you provide a level set of where we are on Project Genius achievement to date, the expected Project Genius contribution that is embedded in this year's guide, and the opportunities for future margin improvement from Project Genius as we look to 2027 and beyond?

Yes. Hey, good morning, Brooke. So for Project Genius, we delivered gross savings of over $50 million in 2025. For 2026, we will approach $100 million of gross savings. The benefits will build over the course of the year and we expect to reach a full run rate in the first half of 2026. So the savings we expect to deliver in 2026 are significantly bigger than those that we achieved in 2025. Again, the program continues to scale. You can see these benefits pulling through really both in the gross margin but also the SG&A. These savings have allowed us to reinvest back into the business at a level beyond what we previously anticipated, and those investments continue to fuel our growth and momentum. The $8 million that we announced—the incremental $8 million in the fourth quarter—is a great example of that. So Project Genius remains on track. We are executing really well, and by the back half of this year we will deliver what we set out to do at the beginning.

And, Brooke, I am going to go ahead and tag on to Joe here a little bit. Relative to every time you run a big project like this and you transform, one of the things that became an attachment to this was that we are now moving and are really pushing forward with what we call a performance organization, which we have not put in place before. And we have a world-class HR organizational team led by Pete and just an incredible team that he has put together. And we are pushing to make our entire organization accountable, driven by performance, and rewarded by performance. And that all kicked off this year on January 1, and we are really excited about the results and also the actions and behaviors that is going to drive. But that is all an aftershoot of thinking about Project Genius, all that has come from Project Genius, how to make sure that we take those Project Genius learnings and everything that we are doing relative to Project Genius and continue to push it forward, but motivate our people the right way. And it seems to be dovetailing really nicely together. And it is one of the things that I am most excited about for us as an organization in 2026 and beyond.

Great. Thanks so much. I will pass it on.

Thank you. Our next questions come from the line of Blake Anderson with Jefferies. Hi, good morning. Thanks for taking my questions.

I wanted to start with tariffs. I might have missed this, but did you quantify the gross tariff headwind as well? And then could you size up what are your key mitigating levers between pricing, cost savings, and sourcing to enable you to mitigate the tariffs, and what gives you confidence you can mitigate those more fully over the next 12 to 18 months as you mentioned?

Yeah. I will take that. Hey, Blake. So for 2026, the gross tariff impact remains over $100 million, right? So it still presents a significant headwind to the business. We are getting a bit of a reprieve from the 15% reciprocal rate that will begin to impact the P&L in the second half of the year. Our mitigating actions are larger in the first half of 2026 and those will carry into 2027, by which time we expect to fully mitigate the tariff. That is the 12 to 18 months that we continue to talk about. From a lever standpoint, you know, it is really all of it. Right? Pricing, we highlighted strategic supplier partnerships, inventory management—this is what our supply chain is really good at. We have got the ability to navigate situations like this around the globe. So, we remain really confident in our ability to offset this as we get to the back half of 2026 and into early 2027.

Great. Thank you. And then wanted to ask on Lee. You mentioned that it remains in a transition year, but you expect inflection to growth in the second half. Can you elaborate on the key drivers of that inflection? What gives you confidence? And any more color on the quarterly trends there throughout the year? Thanks so much.

You bet, Blake. This is Scott. From a Lee standpoint, proud of the work that the team has done relative to—we have gone back, put a national ad campaign together that we have not had for many years. We are much more engaged from a marketing standpoint, both digital and regular. So that really feels good going forward. Probably the single thing that I am most happy about is product. We have done a really, really nice job with product. It needed some upgrading, and we went ahead and have done it. And I think that the product offering that we have coming out this year and into 2027 is the best that Lee has ever had. And then you just co-join that with a really strong marketing campaign and just more energy from the marketplace and the team about this Lee turnaround and the product they are seeing. I think all that just kind of coming together at the same time. These things do take a little bit of time, but we have had some really nice green shoots and we have been happy with that. And we watch things like digital and how the consumer can respond to new offerings immediately, and that has been really strong. So we have been really happy about that. So going into the second half—and you heard our commentary about where Lee will be—there is a growing level of confidence. I do not think that we are getting ahead of ourselves, but we feel really good about the progress that Lee has made, the track that it is on, the product, the advertising, all of the above—just much, much better than it was a year to two years ago.

Got it. Thank you so much.

Thank you. Our next questions will come from the line of Peter Clement McGoldrick with Stifel. Please proceed with your questions. Good morning. Thanks for taking my questions.

Yes, first on Helly Hansen, I wanted to ask about your comments about new distribution. Can you help us think about the reception among the key retailer base and how those retailers are supporting the rollouts that you mentioned in the second half?

Yes, I sure can, Peter. This is Scott. And I will pass it over to Joe after. But from my vantage point of doing this with another big outdoor brand for a very long time, I think that what we are seeing from key retailers is that they would like to have another—they would like to go ahead and have another big, strong, growing brand in their portfolio. I think there is just right now a little bit of fatigue with some other brands, and this is exciting. It is new. It is really good product. We are really dialed in. You heard us talk about some of the awards that we have won, and that brings footsteps into retailers and it brings excitement. So we are in a really great period right now where the opportunity—the phone calls are not outgoing, they are inbound—where people are asking, you know, “Hey, we would really like to talk to you about you being part of this year going forward,” and we have the opportunity to be a little bit selective, which is really nice. And you are going to hear some of that, like I mentioned earlier. We are happy to go ahead and expand on that a little bit at one of the upcoming calls so that you know what to expect in the second half going into '27. But that is happening pretty significantly here in the United States. But also, I should mention that our European team has done a fantastic job with that too, and our Canadian team. So you are just seeing that there is an uptick in Helly. There is a real uptick in people that are talking about how great the product is. And then some of the things that we have done relative…

I would just add the workwear opportunity around the globe is significant, right? This business has grown pretty consistently at a high single-digit rate over time. This business is primarily a European business today, but the global opportunity for workwear is significant, including in the U.S.

That is really helpful. And then there were some encouraging comments about Helly Hansen's integration. And I was hoping you could help us think about the key remaining integration milestones, any cost synergy targets for 2026, and when you expect to reach the full run rate of synergies?

Yes. I will take the synergies. So we continue to have direct line of sight to significant synergies across the business. That list is growing the deeper we get into it, and we are working very collaboratively with the leadership team in Oslo. We have now identified synergies of more than $40 million. We were at $25 million before. These will come in the areas primarily of sourcing, logistics, distribution, technology, tax—all the things that you would expect—as well as some back-end operating efficiency. So we have got synergies baked into 2026. We will reach full run rate in terms of the $40 million as we move into 2027.

I will tell you, Peter, this is kind of a fun one, but we talk a lot about collabs—would like to see a collab between Helly and some of our other brands. That would be kind of fun from a synergy standpoint.

Love it. Look forward to that. Thank you.

Thanks, Peter.

Thank you. We have reached the end of our question-and-answer session. I would now like to hand the call back over to Scott H. Baxter for any closing comments.

Thank you, everyone, for joining us today. As you can see, there is a lot of effort and energy coming from Kontoor Brands, Inc., a huge thank you to our global team. I think you can count on us to keep our heads down, working really hard, and continue to drive this business forward. And just again, wanted to thank the entire Helly team and welcome them to our corporation. It has been a lot of fun, a great integration that I have not seen the likes of in my career. And I think that you can count on us to continue to work hard in this marketplace and take advantage of the opportunities that we have. One or two things that I would like to mention is we do have the upcoming Investor Day and we would like to hopefully see a strong showing for that so that we can spend the day together and really talk about the Helly brand. We thought because there were so many questions about that, that we would do that first and really focus on it because it is such a focal part and an important part of what we are trying to do here. And then we will follow that up very quickly, very quickly in 2027 back here in the United States with a full KTB Investor Day. So we will hit that kind of bam bam, one right after the other. But thanks again for your questions and also your support. Really appreciate it. And we will look forward to seeing everyone in September, but we will look forward to talking to you at the end of the first quarter in our call. Thanks everyone. Take care.

Thank you, ladies and gentlemen. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time, and have a wonderful day.