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Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide readers of our financial statements with a narrative from management's perspective on our financial condition, results of operations and liquidity as well as certain other factors that may affect our future results. This section should be read in conjunction with the Consolidated Financial Statements and related Notes included in this Quarterly Report on Form 10-Q. The following discussion and analysis includes forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in “Cautionary Statement On Forward-Looking Statements” included later in Part I, Item 2 of this Quarterly Report on Form 10-Q, in Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q and in Part I, Item 1A "Risk Factors" in our 2025 Annual Report on Form 10-K. Description of Business Kontoor Brands, Inc. (collectively with its subsidiaries, "Kontoor," the "Company," "we," "us" or "our") is a global lifestyle apparel company, with a portfolio led by three of the world's most iconic consumer brands: Wrangler®, Lee® and Helly Hansen®. The Company designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under our brand names. Our products are sold in the United States ("U.S.") and internationally, primarily in the Europe, Middle East and Africa ("EMEA"), Asia-Pacific (“APAC”) and Non-U.S. Americas regions. We also license the use of our brands in certain regions. The Company's products are sold through wholesale and direct-to-consumer channels, primarily through mass merchants, outdoor and sporting goods stores, specialty stores, department stores, Company-operated stores, concession retail stores, independently-operated partnership stores, business-to-business through our workwear and uniform businesses and online, including digital marketplaces. In China, our Helly Hansen® business is operated through a joint venture arrangement. Planned Divestiture of the Lee® Business The Company commenced a sale process of its global Lee® brand and associated business (the "Lee® business") during the first quarter of 2026, with an expectation of completing a transaction during fiscal 2026. On May 20, 2026, the Company entered into a Stock Purchase Agreement (the "Purchase Agreement") with ABG-Storm LLC, a Delaware limited liability company, an affiliate of Authentic Brands Group ("Buyer"), to sell the Lee® business for $750.0 million in cash at closing with an additional $250.0 million earnout opportunity based on the future performance of the Lee® business over a five-year period. The assets and liabilities of the Lee® business are reported as held-for-sale in the Company's balance sheets for all periods presented. Additionally, the Company reported the Lee® business as discontinued operations in its statements of operations and statements of cash flows for all periods presented. Certain corporate overhead costs and segment costs previously allocated to the Lee® business for segment reporting purposes did not qualify for classification within discontinued operations and have been reported in continuing operations for all periods presented. Prior to the first quarter of 2026, the Lee® business was reported as a separate operating segment in our financial statements. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional information. Sale of Assets of a Manufacturing Facility During the three months ended June 2026, as part of the Company's Project Jeanius transformation program, we sold the assets of a manufacturing facility for a gain of $15.4 million which was recorded in "cost of goods sold" in the Company's statements of operations. Refer to Note 17 to the Company's financial statements in this Form 10-Q for additional information. Acquisition of Helly Hansen On May 31, 2025, we completed the acquisition of Helly Hansen (the "Acquisition"), and the results of operations have been included in the Company's financial statements since that date. The three-month period ended June 2026 includes the operating results of the Acquisition for the entire quarter compared to one month of operating results included in the three-month period ended June 2025. The six-month period ended June 2026 includes the operating results of the Acquisition for the entire six months compared to one month of operating results included in the six-month period ended June 2025. Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition. Fiscal Year and Basis of Presentation The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each year. Accordingly, this Form 10-Q presents the second quarter of the Company's fiscal year ending January 2, 2027 ("fiscal 2026"), which is a 52-week fiscal year. For presentation purposes herein, all references to periods ended June 2026, December 2025 and June 2025 correspond to the fiscal periods ended July 4, 2026, January 3, 2026, and June 28, 2025, respectively. References to fiscal 2026 foreign currency amounts herein reflect the impact of changes in foreign exchange rates from the prior year comparable period when translating foreign currencies into U.S. dollars. The Company's most significant foreign currency translation exposure is typically driven by business conducted in the Norwegian krone, the euro, the Chinese yuan and the Mexican peso. 31 Kontoor Brands, Inc. Q2 FY26 Form 10-Q However, the Company conducts business in other developed and emerging markets around the world with exposure to other foreign currencies. Amounts herein may not recalculate due to the use of unrounded numbers. Macroeconomic Environment Global macroeconomic conditions that continued to impact the Company during the second quarter of 2026 included geopolitical impacts, global supply chain issues, inconsistent consumer demand and ongoing fluctuations in foreign currency exchange rates, interest rates and inflation. Broader macroeconomic impacts also continued to influence consumer demand. Geopolitical tensions in the Middle East arising from the U.S. - Iran conflict have increased uncertainty in global trade and transportation. Although we do not operate directly in the region of conflict, our supply chain and product availability are impacted by disruptions to commercial shipping routes, higher freight, fuel and energy costs and delays at our suppliers in the production or movement of goods. As discussed below, the U.S. government tariff regime remains fluid. The ongoing impact of tariff rate changes and uncertainty regarding the outcomes of trade negotiations is contributing to macroeconomic volatility. Interest rate pressures have moderated in recent quarters and inflationary pressures remained elevated during the second quarter of 2026, primarily due to energy costs and ongoing tariffs. Retailers continued to conservatively manage inventory levels as a result of this uncertain macroeconomic environment. The Company has responded to ongoing macroeconomic conditions by controlling expenses, instituting pricing adjustments for our products, investing in our brands and executing our Project Jeanius business transformation. Additionally, the Company continues to evaluate mitigating actions, including the transfer of production within our global supply chain, transformation of our supply chain capabilities, supplier partnership initiatives and inventory management. While we anticipate continued uncertainty related to the macroeconomic environment during the remainder of 2026, including the potential impact of further tariff rate changes, we believe we are appropriately positioned to successfully manage through operational challenges and cost pressures should they arise. We continue to closely monitor macroeconomic conditions, including consumer behavior and the impact of these factors on consumer demand. Other Recent Developments - U.S Tariffs Beginning in 2025 and through 2026, the U.S. government continued to enact significant changes to its tariff regime which impacted rates on virtually all imports. In February 2026, the U.S. Supreme Court issued a ruling that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the United States were unauthorized, effectively invalidating IEEPA tariffs that had been in effect since the second quarter of 2025. Immediately following the Supreme Court ruling, the U.S. government initiated new tariffs under Section 122 of the Trade Act ("Section 122 tariffs"), which expired in July 2026 and have been replaced by new tariffs under Section 301 of the Trade Act. In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs. In April 2026, the CBP released a new system to process IEEPA tariff refunds, allowing importers to submit refund claims. In the first quarter of 2026, we concluded it was probable that we would recover the IEEPA tariffs previously paid and recognized a net receivable under the loss recovery accounting model of $53.7 million, on a consolidated basis. During the first quarter of 2026, we reduced cost of goods sold by approximately $49.0 million, representing the expense for IEEPA tariffs on inventory sold to customers since the tariffs were enacted in the second quarter of 2025, including $29.0 million relating to 2025 tariff payments. During the third quarter of 2026, the Company began to receive refunds and expects to collect all remaining amounts by the end of fiscal 2026. There continues to be uncertainty and legal challenges to current and prior tariff regimes, including a ruling in May 2026 by the CIT that the Section 122 tariffs are also invalid, which is under appeal by the U.S. government, along with an appeal of certain CIT orders related to the refund process for IEEPA tariffs. We continue to monitor U.S. tariff-related developments and ongoing legal proceedings. Business Overview We are focused on delivering long-term value to our stakeholders, including our consumers, customers, shareholders, suppliers and communities around the world, by accelerating growth, expanding operating margin, increasing capital allocation optionality and establishing the Company as the employer of choice in the industry. Additionally, the integration of Helly Hansen provides focus towards our growth-oriented brands, with an emphasis on geographic and category expansion. The planned sale of the Lee® business further emphasizes our focus on functional and activity-based brands. The Company continues to execute on Project Jeanius, a multi-year comprehensive end-to-end business transformation focused on simplifying processes, optimizing systems and enhancing our global operating model with the goal of creating significant investment capacity through gross and operating margin expansion. In addition, our capital allocation strategy allows us the option to (i) invest in our business, (ii) pay down debt, (iii) provide for a superior dividend payout, (iv) effectively manage our share repurchase authorization and (v) act on strategic acquisition opportunities that may arise. During the second quarter of 2026, the Company incurred integration-related costs of $12.7 million related to Helly Hansen, comprised primarily of professional and other fees, which are reported in "selling, general and administrative expenses". We expect to incur additional costs in future periods primarily related to the information technology integration of Helly Hansen. Kontoor Brands, Inc. Q2 FY26 Form 10-Q 32 The Company continued to execute on Project Jeanius during the second quarter of 2026. The Company incurred restructuring and transformation charges of $6.6 million, of which $2.3 million relates to costs associated with restructuring activities as disclosed in Note 17 to the Company's financial statements in this Form 10-Q and primarily relates to business optimization activities and professional services as well as costs from the closure of one of our manufacturing facilities. Additionally, during the second quarter of 2026, the Company sold the manufacturing facility for a gain of $15.4 million which is reported in "cost of goods sold". We expect to incur additional costs related to Project Jeanius as we continue to execute on this multi-year initiative. SECOND QUARTER OF FISCAL 2026 SUMMARY •The Company reported the Lee® business as discontinued operations in its statements of operations and statements of cash flows for all periods presented. The following discussion relates to our continuing operations. •The Helly Hansen Acquisition was completed on May 31, 2025, and the results of operations have been included since that date. The three-month period ended June 2026 included the operating results of the Acquisition for the entire quarter compared to one month of operating results included in the quarter ended June 2025. •Net revenues increased 19% to $584.3 million, a $91.7 million increase compared to the three months ended June 2025, primarily attributable to increased revenue of $84.7 million from the Acquisition. •U.S. wholesale revenues increased 3% or $10.1 million compared to the three months ended June 2025, driven by increased revenue of $10.7 million from the Acquisition, and represented 68% of total revenues in the current period. •International wholesale revenues increased 101% or $56.4 million compared to the three months ended June 2025, primarily attributable to increased revenue of $53.8 million from the Acquisition, and represented 19% of total revenues in the current period. •Direct-to-consumer revenues increased 51% or $25.2 million compared to the three months ended June 2025, primarily attributable to increased revenue of $20.2 million from the Acquisition, and represented 13% of total revenues in the current period. •Gross margin increased 970 basis points to 56.2% compared to the three months ended June 2025 and includes benefits from product and channel mix, Project Jeanius, Helly Hansen's higher margin business and a 260 basis point benefit from a $15.4 million gain on the sale of a manufacturing facility. •Selling, general and administrative expenses increased to 40.7% as a percentage of net revenues compared to 35.0% for the three months ended June 2025, a $65.5 million increase, primarily attributable to $42.3 million of increased Helly Hansen operating expenses, the incremental costs previously allocated to the Lee® business and the integration-related charges incurred during the period. •Operating income increased 59% to $90.5 million, a $33.6 million increase compared to the three months ended June 2025, primarily attributable to the Acquisition and a $15.4 million gain on the sale of a manufacturing facility, partially offset by the incremental costs previously allocated to the Lee® business. •Income from continuing operations decreased 3% or $1.7 million compared to $57.0 million for the three months ended June 2025. The quarter ended June 2025 included a pre-tax gain of $33.0 million related to foreign currency exchange contracts to hedge the purchase price of the Acquisition which did not recur in the 2026 period. •Diluted earnings per share from continuing operations was $1.03 in the second quarter of 2026, compared to $1.05 in the same period last year. The quarter ended June 2025 included a gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition which did not recur in the 2026 period. •Cash provided by operating activities from continuing operations was $39.6 million as compared to $68.8 million in the same period last year. 33 Kontoor Brands, Inc. Q2 FY26 Form 10-Q ANALYSIS OF RESULTS OF OPERATIONS Consolidated Statements of Operations The following table presents components of the Company's statements of operations from continuing operations: Three Months Ended June Six Months Ended June (Dollars in thousands) 2026 2025 2026 2025 Net revenues $ 584,288 $ 492,632 $ 1,197,610 $ 915,633 Gross margin (net revenues less cost of goods sold) $ 328,262 $ 229,181 $ 657,636 $ 421,915 As a percentage of net revenues 56.2 % 46.5 % 54.9 % 46.1 % Selling, general and administrative expenses $ 237,736 $ 172,233 $ 477,005 $ 333,598 As a percentage of net revenues 40.7 % 35.0 % 39.8 % 36.4 % Operating income $ 90,526 $ 56,948 $ 180,631 $ 88,317 As a percentage of net revenues 15.5 % 11.6 % 15.1 % 9.6 % Additionally, the following table presents a summary of the changes in net revenues for the three and six months ended June 2026 as compared to June 2025: (In millions) Three Months Ended June Six Months Ended June Net revenues — 2025 $ 492.6 $ 915.6 Operations 89.9 274.8 Impact of foreign currency 1.7 7.2 Net revenues — 2026 $ 584.3 $ 1,197.6 Three Months Ended June 2026 Compared to the Three Months Ended June 2025 Net revenues increased 19%, primarily attributable to the inclusion of Helly Hansen for the entire three-month period ended June 2026. Growth in Wrangler was driven by Western and female categories and a 7% increase in international wholesale revenues, including a 30% increase in non-U.S. Americas wholesale revenues due to higher sales in Canada. Wrangler U.S. wholesale revenues were flat for the period. Wrangler global direct-to-consumer revenues increased 13% driven by higher retail store and e-commerce sales. Additional details on changes in net revenues for the three months ended June 2026 as compared to June 2025 are provided in the section titled “Information by Business Segment.” Gross margin increased 970 basis points, primarily related to 400 basis points from favorable channel mix, product mix and pricing, a 260 basis point benefit from the gain on sale of a manufacturing facility, 230 basis points from the cost reduction benefits of Project Jeanius and 80 basis points attributable to Helly Hansen's higher margin business, partially offset by a 30 basis point increase in restructuring costs. Selling, general and administrative expenses increased $65.5 million, from 35.0% to 40.7% of net revenues, primarily attributable to $42.3 million of increased operating expenses due to the inclusion of Helly Hansen for the entire three-month period ended June 2026, $10.4 million from higher investments in our direct-to-consumer business, demand creation and technology and $4.7 million of incremental costs previously allocated to the Lee® business, which were partially offset by benefits from Project Jeanius and lower restructuring and transformation costs. Other (expense) income, net reflected an unfavorable change of $34.3 million, driven by a $33.0 million gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition during the three months ended June 2025 that did not recur during the three months ended June 2026. Six Months Ended June 2026 Compared to the Six Months Ended June 2025 Net revenues increased 31%, primarily attributable to the inclusion of Helly Hansen for the entire six-month period ended June 2026 and growth in Wrangler, which was driven by a 12% increase in international wholesale revenues and a 1% increase in U.S wholesale revenues with category growth in Western and female. Wrangler global direct-to-consumer revenues increased 12% driven by higher retail store and e-commerce sales. Kontoor Brands, Inc. Q2 FY26 Form 10-Q 34 Additional details on changes in net revenues for the six months ended June 2026 as compared to June 2025 are provided in the section titled “Information by Business Segment.” Gross margin increased 880 basis points, primarily related to 230 basis points from the cost reduction benefits of Project Jeanius, 200 basis points related to favorable channel mix, product mix and pricing, a 190 basis point benefit from the U.S. tariff receivable, 130 basis points attributable to Helly Hansen's higher margin business and 130 basis points from the gain on the sale of a manufacturing facility, partially offset by a 20 basis point increase in restructuring costs. Selling, general and administrative expenses increased $143.4 million, from 36.4% to 39.8% of net revenues, primarily attributable to $124.4 million of increased operating expenses due to the inclusion of Helly Hansen for the entire six-month period ended June 2026, $16.6 million from higher investments in our direct-to-consumer business, demand creation and technology and $6.8 million of incremental costs previously allocated to the Lee® business, which were partially offset by benefits from Project Jeanius and lower restructuring and transformation costs. Other (expense) income, net reflected an unfavorable change of $26.6 million, primarily driven by a $24.1 million gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition during the six months ended June 2025 that did not recur during the six months ended June 2026. The effective income tax rate for the six months ended June 2026 was 24.9%. The six months ended June 2026 included a net discrete tax benefit primarily related to stock-based compensation, partially offset by an increase in tax expense related to the finalization of U.S. federal tax return filings, the net impact of which decreased the effective income tax rate by 0.3%. The six months ended June 2025 included a net discrete tax expense related to an increase in valuation allowances in a foreign jurisdiction, partially offset by a discrete tax benefit related to stock-based compensation, the net impact of which increased the effective tax rate by 1.3%. The effective tax rate without discrete items for the six months ended June 2026 was 25.2% compared to 23.6% in the 2025 period. The increase was primarily due to changes in our jurisdictional mix of earnings. The One Big Beautiful Bill Act (“OBBBA”) was signed into law by President Trump on July 4, 2025. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework including changes to global intangible low-tax income (“GILTI”), foreign derived intangible income (“FDII”) and the base erosion and anti-abuse tax (“BEAT”). The legislation also includes the restoration of favorable tax treatment for certain business provisions such as bonus depreciation and Section 174 expensing. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company continues to evaluate the future provisions of the OBBBA and has not identified any material impacts to its consolidated financial statements. Information by Business Segment The Company's reportable segments are Wrangler and Helly Hansen. Refer to Note 5 to the Company's financial statements in this Form 10-Q for additional information. The following tables present a summary of the changes in segment revenues and segment profit for the three and six months ended June 2026 as compared to the three and six months ended June 2025: Segment Revenues: Three Months Ended June (In millions) Wrangler Helly Hansen Total Segment revenues — 2025 $ 461.3 $ 26.7 $ 488.0 Operations 6.5 79.6 86.1 Impact of foreign currency 1.2 0.5 1.7 Segment revenues — 2026 $ 469.0 $ 106.8 $ 575.8 Six Months Ended June (In millions) Wrangler Helly Hansen Total Segment revenues — 2025 $ 881.5 $ 26.7 $ 908.2 Operations 16.8 245.1 261.8 Impact of foreign currency 6.6 0.5 7.2 Segment revenues — 2026 $ 904.9 $ 272.3 $ 1,177.2 35 Kontoor Brands, Inc. Q2 FY26 Form 10-Q Segment Profit (Loss): Three Months Ended June (In millions) Wrangler Helly Hansen Total Segment profit (loss) — 2025 $ 108.1 $ (4.8) $ 103.3 Operations 30.7 6.3 37.0 Impact of foreign currency 0.1 0.4 0.5 Segment profit — 2026 $ 138.9 $ 1.9 $ 140.8 Six Months Ended June (In millions) Wrangler Helly Hansen Total Segment profit (loss) — 2025 $ 194.9 $ (4.8) $ 190.1 Operations 64.6 25.9 90.5 Impact of foreign currency 1.2 0.4 1.6 Segment profit — 2026 $ 260.7 $ 21.5 $ 282.2 The following sections discuss the changes in segment revenues and segment profit. Wrangler Three Months Ended June Six Months Ended June (Dollars in millions) 2026 2025 Percent Change 2026 2025 Percent Change Segment revenues $ 469.0 $ 461.3 1.7 % $ 904.9 $ 881.5 2.7 % Segment profit $ 138.9 $ 108.1 28.5 % $ 260.7 $ 194.9 33.7 % Operating margin 29.6 % 23.4 % 28.8 % 22.1 % Three Months Ended June 2026 Compared to the Three Months Ended June 2025 Global revenues for the Wrangler® brand increased 2%, due to growth in the international wholesale and direct-to-consumer channels. •U.S. revenues increased 1%, primarily due to growth in our direct-to-consumer business, driven by higher e-commerce and retail store sales. U.S. Wholesale revenues were flat for the period. •International revenues increased 10%, primarily due to growth in non-U.S. Americas wholesale revenues due to higher sales in Canada, growth in EMEA's retail store and e-commerce businesses and a 3% favorable impact from foreign currency. Operating margin increased to 29.6%, compared to 23.4% for the 2025 period, due to the benefits of Project Jeanius and favorable channel mix, product mix and pricing, partially offset by other operating cost increases driven by higher investments in demand creation and our direct-to-consumer business. Six Months Ended June 2026 Compared to the Six Months Ended June 2025 Global revenues for the Wrangler® brand increased 3%, due to growth in the U.S. wholesale, international wholesale and direct-to-consumer channels. •U.S. revenues increased 1%, primarily due to growth in the U.S. direct-to-consumer and U.S. wholesale businesses. Growth in our U.S. direct-to-consumer business was driven by higher e-commerce and retail store sales. Growth in wholesale was driven by category growth in Western and female products. •International revenues increased 15%, primarily due to growth in non-U.S. Americas wholesale revenues, growth in EMEA's retail store and e-commerce businesses and a 5% favorable impact from foreign currency. Operating margin increased to 28.8%, compared to 22.1% for the 2025 period, due to the benefits of Project Jeanius, the U.S. tariff receivable recorded in the first quarter of 2026 and favorable channel mix, product mix and pricing, partially offset by other operating cost increases driven by higher investments in demand creation and our direct-to-consumer business. Kontoor Brands, Inc. Q2 FY26 Form 10-Q 36 Helly Hansen Three Months Ended June Six Months Ended June (Dollars in millions) 2026 2025 (1) Percent Change 2026 2025 (1) Percent Change Segment revenues $ 106.8 $ 26.7 * $ 272.3 $ 26.7 * Segment profit (loss) $ 1.9 $ (4.8) * $ 21.5 $ (4.8) * Operating margin 1.8 % (18.0) % 7.9 % (18.0) % (1) Results for the three and six months ended June 2025 include one month of operations. *Calculation not meaningful. Three Months Ended June 2026 Compared to the Three Months Ended June 2025 The three-month period ended June 2026 included the operating results of the Helly Hansen® brand for the entire quarter compared to one month of operating results included in the quarter ended June 2025. Global revenues for the Helly Hansen® brand increased $80.1 million to $106.8 million, reflecting growth in the U.S. wholesale, international wholesale and direct-to-consumer channels. •U.S. revenues increased $16.2 million to $21.3 million, reflecting growth in the Sport business. •International revenues increased $63.9 million to $85.6 million, reflecting growth in the Sport and Workwear businesses. Operating margin increased to 1.8%, compared to (18.0)% for the 2025 period, primarily driven by gross margin expansion, operating expense leverage and expense synergies. Improvements in our gross margin were supported by better inventory management, reduced promotional activity and a higher mix of full-price selling. Six Months Ended June 2026 Compared to the Six Months Ended June 2025 The six-month period ended June 2026 included the operating results of the Helly Hansen® brand for the entire six months compared to one month of operating results included in the six-month period ended June 2025. Global revenues for the Helly Hansen® brand increased $245.6 million to $272.3 million, reflecting growth in the U.S. wholesale, international wholesale and direct-to-consumer channels. •U.S. revenues increased $52.4 million to $57.4 million, reflecting growth in the Sport business. •International revenues increased $193.3 million to $214.9 million, reflecting growth in the Sport and Workwear businesses. Operating margin increased to 7.9%, compared to (18.0)% for the 2025 period, primarily driven by gross margin expansion, operating expense leverage and expense synergies. Improvements in our gross margin were supported by better inventory management, reduced promotional activity and a higher mix of full-price selling. Other In addition, we report an "Other" category to reconcile the Company's segment revenues to total revenues and segment profit to income from continuing operations before income taxes. Loss related to other revenues includes the operating results of the Musto® and Chic® brands, as well as other company-owned brands and private label apparel, and the Rock & Republic® brand through the date of disposition of March 3, 2026. Results of the Musto® brand have been included since the Acquisition on May 31, 2025. The businesses within the Other category, either individually or in the aggregate, do not meet the criteria to be considered reportable segments. Three Months Ended June Six Months Ended June (Dollars in millions) 2026 2025 Percent Change 2026 2025 Percent Change Other revenues $ 8.4 $ 4.7 80.1 % $ 20.4 $ 7.4 174.8 % Loss related to other revenues $ (2.4) $ (1.0) 128.4 % $ (2.5) $ (1.3) 102.8 % Operating margin (28.1) % (22.2) % (12.4) % (16.9) % 37 Kontoor Brands, Inc. Q2 FY26 Form 10-Q Reconciliation of Segment Profit to Income from Continuing Operations Before Income Taxes The costs below are necessary to reconcile segment profit to income from continuing operations before income taxes. Corporate and other expenses, including certain acquisition and integration-related costs and restructuring and transformation costs, incremental costs previously allocated to the Lee segment, as well as interest expense and interest income, are not controlled by segment management and therefore are excluded from the measurement of segment profit. Three Months Ended June Six Months Ended June (Dollars in millions) 2026 2025 Percent Change 2026 2025 Percent Change Segment profit: Wrangler $ 138.9 $ 108.1 28.5 % $ 260.7 $ 194.9 33.7 % Helly Hansen 1.9 (4.8) * 21.5 (4.8) * Reconciliation to income from continuing operations before income taxes: Corporate and other expenses (51.7) (14.7) 250.4 % (105.4) (80.3) 31.3 % Interest expense (15.7) (13.5) 16.2 % (31.8) (23.3) 36.3 % Interest income 1.8 2.8 (34.6) % 4.0 6.1 (34.4) % Loss related to other revenues (2.4) (1.0) 128.4 % (2.5) (1.3) 102.8 % Income from continuing operations before income taxes $ 73.0 $ 76.8 (5.0) % $ 146.6 $ 91.4 60.3 % *Calculation not meaningful. Three Months Ended June 2026 Compared to the Three Months Ended June 2025 Corporate and other expenses increased $36.9 million, primarily due to incremental costs previously allocated to the Lee segment and higher investments in technology, partially offset by lower restructuring and transformation costs and a $33.0 million gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition during the three months ended June 2025 that did not recur during the three months ended June 2026. Interest expense increased $2.2 million during the three months ended June 2026 compared to the three months ended June 2025, primarily due to higher debt outstanding to fund the Acquisition. Six Months Ended June 2026 Compared to the Six Months Ended June 2025 Corporate and other expenses increased $25.1 million, primarily due to incremental costs previously allocated to the Lee segment and higher investments in technology, partially offset by lower restructuring and transformation costs and a $24.1 million gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition during the six months ended June 2025 that did not recur during the six months ended June 2026. Interest expense increased $8.5 million during the six months ended June 2026 compared to the six months ended June 2025, primarily due to higher debt outstanding to fund the Acquisition. ANALYSIS OF FINANCIAL CONDITION Liquidity and Capital Resources The Company's ability to fund our operating needs is dependent upon our ability to generate positive long-term cash flows from operations and maintain our debt financing on acceptable terms. The Company has historically generated strong positive cash flows from operations and continues to take proactive measures to manage working capital. We believe cash flows from operations will support our short-term liquidity needs as well as any future liquidity and capital requirements, in combination with available cash balances and borrowing capacity from our revolving credit facility. Credit Availability At June 2026 and December 2025, the Company had availability of $17.8 million and $17.4 million under a committed international line of credit as a result of the Acquisition. There were no outstanding balances at June 2026 and December 2025. The Company is party to a senior secured Credit Agreement, as amended and restated on April 8, 2025 (the "2025 Credit Agreement"), which provides for (i) a five-year $700.0 million term loan facility ("Term Loan A-1") consisting of a $340.0 million initial term loan ("Initial Term Loan") and a $360.0 million delayed draw term loan ("Delayed Draw Term Loan"), (ii) a three-year $300.0 million delayed draw term loan facility ("Term Loan A-2") and (iii) a five-year $500.0 million revolving credit facility (the Kontoor Brands, Inc. Q2 FY26 Form 10-Q 38 "Revolving Credit Facility"), collectively referred to as the "Credit Facilities," with the lenders and agents party thereto. The net proceeds from the Initial Term Loan were used to repay all of the $340.0 million principal amount outstanding under the Company's previous Term Loan A at such time. On May 30, 2025, the Delayed Draw Term Loan and Term Loan A-2 were fully drawn and used to fund the Acquisition, along with approximately $300 million of cash on hand. See Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition. Term Loan A-1 is scheduled to be repaid in quarterly installments of $4.4 million beginning in September 2026 which increases to quarterly installments of $8.8 million beginning in September 2027, with the remaining principal due at maturity. The remaining balance on Term Loan A-2 is scheduled to be repaid in full at maturity. The Company has "floating to fixed" interest rate swap agreements to mitigate exposure to volatility in reference rates on the Company's future interest payments. These debt obligations could restrict our future business strategies and could adversely impact our future results of operations, financial conditions or cash flows. As of June 2026, the Company was in compliance with all applicable covenants under the 2025 Credit Agreement and expects to maintain compliance with the applicable covenants for at least one year from the issuance of these financial statements. If economic conditions significantly deteriorate for a prolonged period, or the Company experiences long-term challenges integrating and operating the Acquisition, or meeting the resulting incremental debt service requirements, this could impact the Company's operating results and cash flows and thus our ability to maintain compliance with the applicable covenants. As a result, the Company could be required to seek new amendments to the 2025 Credit Agreement or secure other sources of liquidity, such as refinancing of existing borrowings, the issuance of debt or equity securities, or sales of assets. However, there can be no assurance that the Company would be able to obtain such additional financing on commercially reasonable terms or at all. The Revolving Credit Facility may be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and has a maximum borrowing capacity of $500.0 million with a $75.0 million letter of credit sublimit. There were no outstanding borrowings under the Revolving Credit Facility as of June 2026. The following table presents outstanding borrowings and available borrowing capacity under the Revolving Credit Facility and our cash and cash equivalents balances as of June 2026: (In millions) June 2026 Outstanding borrowings under the Revolving Credit Facility $ — Available borrowing capacity under the Revolving Credit Facility (1) $ 493.3 Cash and cash equivalents $ 58.5 (1) Available borrowing capacity under the Revolving Credit Facility is net of $6.7 million of outstanding standby letters of credit issued on behalf of the Company under this facility. Senior Notes Additionally, the Company has outstanding $400.0 million of unsecured 4.125% senior notes due 2029. Refer to Note 12 in the Company's 2025 Annual Report on Form 10-K and Note 10 to the Company's financial statements in this Form 10-Q for additional information regarding the Company's debt obligations. Refer to Note 16 in the Company's 2025 Annual Report on Form 10-K and Note 12 to the Company's financial statements in this Form 10-Q for additional information regarding the Company's interest swap agreements. Other Liquidity Considerations On December 11, 2023, the Company announced that its Board of Directors approved a share repurchase program (the "2023 Repurchase Program"). The 2023 Repurchase Program authorized the repurchase of up to $300.0 million of the Company's outstanding Common Stock through open market or privately negotiated transactions. On May 6, 2026, the Company announced that its Board of Directors approved a new share repurchase program (the "2026 Repurchase Program") which replaced all remaining shares under the 2023 Repurchase Program. The 2026 Repurchase Program authorizes the repurchase of up to $750.0 million of the Company's outstanding Common Stock through open market or privately negotiated transactions. The 2026 Repurchase Program does not have an expiration date but may be suspended, modified or terminated at any time without prior notice. During the six months ended June 2026, the Company repurchased 0.3 million shares of Common Stock for $25.0 million, including commissions, under the 2023 Repurchase Program, and 0.7 million shares of Common Stock for $50.0 million, including commissions, under the 2026 Repurchase Program. All shares reacquired in connection with the Company's repurchase programs are treated as authorized and unissued shares upon repurchase. As of June 2026, $700.0 million remained available for repurchase under the 2026 Repurchase Program. During the six months ended June 2026, the Company paid $58.5 million of dividends to its shareholders. On July 23, 2026, the Board of Directors declared a regular quarterly cash dividend of $0.53 per share of the Company's Common Stock. The cash dividend will be payable on September 18, 2026, to shareholders of record at the close of business on September 8, 2026. 39 Kontoor Brands, Inc. Q2 FY26 Form 10-Q The Company intends to continue to pay cash dividends in future periods. The declaration and amount of any future dividends will be dependent upon multiple factors including our financial condition, earnings, cash flows, capital requirements, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors or considerations that our Board of Directors deems relevant. During the second quarter of 2026, the Company entered into an agreement to sell the Lee® business for $750.0 million in cash at closing with an additional $250.0 million earnout opportunity based on the future performance of the Lee® business over a five-year period. The Company expects to finalize the sale in 2026 and intends to utilize the expected proceeds from the sale for share repurchases and voluntary debt repayments. We anticipate that we will have sufficient cash flows from operations, along with existing borrowing capacity, to support continued investments in our brands, infrastructure, talent and capabilities, dividend payments to shareholders, repayment of our debt obligations when due and repurchases of Common Stock. In addition, we would use current liquidity as well as access to capital markets to fund any additional strategic acquisition opportunities that may arise. We currently expect capital expenditures to be approximately $30.0 million in 2026, primarily to support technology, distribution, manufacturing, owned retail store investments and facility improvements. The following table presents our cash flows from continuing operations during the periods: Six Months Ended June (In millions) 2026 2025 Cash provided (used) by: Operating activities - continuing operations $ 39.6 $ 68.8 Investing activities - continuing operations $ 28.9 $ (853.4) Financing activities $ (148.7) $ 556.3 Operating Activities During the six months ended June 2026, cash provided by operating activities was $39.6 million as compared to $68.8 million in the prior year period. Increased income from continuing operations in the period was impacted by ongoing transformation and Helly Hansen integration-related costs as well as incremental costs that were previously allocated to the Lee® business that could not be classified as discontinued operations. Changes in working capital balances to support the business more than offset the increased income from continuing operations and impacted cash provided by operating activities. Changes in working capital balances from accounts receivable, inventories and accrued and other current liabilities were partially offset by changes in accounts payable. The cash used by accounts receivable was driven by the U.S. tariff receivable and growth of the business. Cash used by inventory was a result of improved sourcing lead times and investment to support growth of the business, and the cash provided by accounts payable reflects seasonality of the business. Investing Activities During the six months ended June 2026, cash provided by investing activities was $28.9 million as compared to cash used by investing activities of $853.4 million in the prior year period. Cash provided by investing activities in the current year period was primarily related to proceeds from the sale of a manufacturing facility, the sale of the Rock & Republic® brand and the collection of the deferred purchase price on sold accounts receivable. Cash used by investing activities in the prior year period was primarily related to cash used to fund the Acquisition, partially offset by proceeds from the settlement of foreign exchange contracts associated with the purchase price of the Acquisition. Financing Activities During the six months ended June 2026, cash used by financing activities was $148.7 million as compared to cash provided by financing activities of $556.3 million in the prior year period. Cash used by financing activities in the current year period was primarily related to $75.4 million of Common Stock repurchases made by the Company during the six months ended June 2026 compared to no Common Stock repurchases during the six months ended June 2025. Cash provided by financing activities in the prior year period was primarily related to our debt refinancing, including $1.0 billion of proceeds from the issuance of Term Loan A-1 and Term Loan A-2, partially offset by $345.0 million of repayments on the 2021 Term Loan A and a $25.0 million voluntary early repayment on Term Loan A-2. The section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations" included in the Company's 2025 Annual Report on Form 10-K provided a summary of our contractual obligations and commercial commitments at the end of 2025 that would require the use of funds. As of June 2026, on a consolidated basis, there have been no material changes in the amounts disclosed in the 2025 Annual Report on Form 10-K. Kontoor Brands, Inc. Q2 FY26 Form 10-Q 40 Critical Accounting Policies and Estimates We have chosen accounting policies that management believes are appropriate to accurately and fairly report our operating results and financial position in conformity with GAAP. We apply these accounting policies in a consistent manner. Significant accounting policies are summarized in Note 1 to the consolidated financial statements included in the 2025 Annual Report on Form 10-K. The application of these accounting policies requires that we make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, net revenues, expenses, contingent assets and liabilities and related disclosures. These estimates, assumptions and judgments are based on historical experience, current trends and other factors believed to be reasonable under the circumstances. Management evaluates these estimates and assumptions on an ongoing basis. Because our business cycle is relatively short (i.e., from the date that inventory is received until that inventory is sold and the trade accounts receivable is collected), actual results related to most estimates are known within a few months after any balance sheet date. Several of the estimates and assumptions we are required to make relate to future events and are therefore inherently uncertain, especially as it relates to events outside of our control. If actual results ultimately differ from previous estimates, the revisions are included in results of operations when the actual amounts become known. Refer to Note 1 to the Company's financial statements in this Form 10-Q for considerations related to the macroeconomic environment and other recent developments. The accounting policies that involve the most significant estimates, assumptions and management judgments used in preparation of the financial statements, or are the most sensitive to change from outside factors, are discussed within "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in the 2025 Annual Report on Form 10-K. There have been no material changes in these policies disclosed in the 2025 Annual Report on Form 10-K, except as noted below: •As of May 2026, the Company performed an impairment assessment of the goodwill and trademarks associated with the Acquisition as required during the annual period following an acquisition. Refer to Note 11 to the Company's financial statements in this Form 10-Q for additional information related to the impairment testing. Recently Issued and Adopted Accounting Standards Refer to Note 1 to the Company's financial statements in this Form 10-Q for additional information regarding recently issued and adopted accounting standards. Cautionary Statement on Forward-looking Statements From time to time, the Company may make oral or written statements, including statements in this quarterly report, that constitute “forward-looking statements” within the meaning of the federal securities laws. These include statements concerning plans, objectives, projections and expectations relating to the Company's operations or economic performance and assumptions related thereto. Forward-looking statements are made based on management's expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. Forward-looking statements are not guarantees, and actual results could differ materially from those expressed or implied in the forward-looking statements. In addition, the forward-looking statements in this report are made as of the date of this filing, and the Company does not undertake, and expressly disclaims any duty, to update such statements, whether as a result of new information, new developments, or otherwise, except to the extent that disclosure may be required by law. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this report include, but are not limited to: macroeconomic conditions, including inconsistent consumer demand despite recent declines in interest rates, fluctuating foreign currency exchange rates, moderating inflation and global supply chain issues, as well as the ongoing impact of tariffs and uncertainty regarding the outcome of trade negotiations, import/export regulations and tariff policies, continue to adversely impact global economic conditions and have had, and may continue to have, a negative impact on the Company's business, results of operations, financial condition and cash flows (including future uncertain impacts); the level of consumer demand for apparel; reliance on a small number of large customers; potential difficulty in integrating Helly Hansen and/or in achieving the expected growth, cost savings and/or synergies from the acquisition; potential risks and uncertainties in completing the sale of the Lee business, if at all, and potential risks in segregating and disposing of the Lee business and the Company’s ability to mitigate any stranded costs from the potential disposition; supply chain and shipping disruptions, which could continue to result in shipping delays, an increase in transportation costs and increased product costs or lost sales; intense industry competition; the ability to accurately forecast demand for products; the Company's ability to gauge consumer preferences and product trends, and to respond to constantly changing markets; the Company's ability to maintain the images of its brands; disruption and volatility in the global capital and credit markets and its impact on the Company's ability to obtain short-term or long-term financing on favorable terms; the Company maintaining satisfactory credit ratings; restrictions on the Company's business relating to its debt obligations; increasing pressure on margins; e-commerce operations through the Company's direct-to-consumer business; the financial difficulty experienced by the retail industry; possible goodwill and other asset impairment; the ability to implement the Company's business strategy; the stability of manufacturing facilities and foreign suppliers; fluctuations in wage rates and the price, availability and quality of raw materials and contracted products, including as a result of tariffs and reciprocal tariffs; the reliance on a limited number of suppliers for raw material sourcing and the ability to obtain raw materials on a timely basis or in sufficient quantity or quality; disruption to distribution systems; seasonality; unseasonal or severe weather conditions; potential challenges with the Company's implementation of Project Jeanius; the Company's and its vendors' ability to maintain the strength and security of information technology systems; the risk that facilities and systems and those of third- 41 Kontoor Brands, Inc. Q2 FY26 Form 10-Q party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss or maintain operational performance; ability to properly collect, use, manage and secure consumer and employee data; legal, regulatory, political and economic risks; the impact of climate change and related legislative and regulatory responses; stakeholder response to sustainability issues, including those related to climate change; compliance with anti-bribery, anti-corruption and anti-money laundering laws by the Company and third-party suppliers and manufacturers; changes in tax laws and liabilities; the costs of compliance with or the violation of national, state and local laws and regulations for environmental, consumer protection, employment, privacy, safety and other matters; continuity of members of management; labor relations; the ability to protect trademarks and other intellectual property rights; the ability of the Company's licensees to generate expected sales and maintain the value of the Company’s brands; volatility in the price and trading volume of the Company's common stock; anti-takeover provisions in the Company's organizational documents; market conditions, timing and ability to institute an appropriate Accelerated Share Repurchase program; and general fluctuations in the amount and frequency under our share repurchases. Many of the foregoing risks and uncertainties will be exacerbated by any worsening of the global business and economic environment. More information on potential factors that could affect the Company's financial results are described in detail in the Company's 2025 Annual Report on Form 10-K and in other reports and statements that the Company files with the Securities and Exchange Commission ("SEC").