Gildan Activewear, Inc. Q3 FY2024 earnings call

• The Gildan sustainable growth strategy (GSG) is driving growth, with record third quarter sales of $891 million, up 2.4% vs last year. Excluding the phase out of Under Armour, consolidated sales would have been up high single-digits. - Adjusted operating margins were 22.4%, up 430 basis points year-over-year, and adjusted diluted EPS was a record $0.85, up 15% year-over-year. - Ongoing initiatives include yarn operation modernization in the US, a ramping up Bangladesh operation, optimization of Central American operations for fleece, and a large innovation pipeline with new technologies like soft pump, MVS for fleece, etc.

Activewear: Third quarter sales were $891 million, with sales up $44 million or 6% driven by higher volumes in North America, contributing to mid-single-digit sales growth. Hosiery and Underwear: Down 18% year-over-year primarily due to the phase out of the Under Armour business and unfavorable mix; excluding the phase out, sales would have been up low double-digits. International Markets: Sales increased by 20% due to positive point-of-sale (POS) in Europe and inventory replenishment from distributors.

• 2024 revenue growth moved to the upper end of the previous range, now expecting low single-digit growth (excluding Under Armour phase out, mid-single-digit growth). - Adjusted operating margin expected to slightly exceed 21%. - Adjusted diluted EPS expected in the range of $2.97 to $3.02, up 15.5%-17.5% year-over-year. - CapEx expected at approximately 5% of net sales; free cash flow expected above 2023 levels. - Plan to continue share repurchases within the leverage framework of 1.5x to 2.5x net debt-to-adjusted EBITDA.

• Potential impact of tariffs on Bangladesh production destined for the US market. - Civil unrest in Bangladesh and its potential impact on operations. - Macroeconomic uncertainties affecting market demand and pricing.

Q: Talk about POS trends throughout the quarter and 2025 market growth?

A: Chuck mentions overall market down low single-digits to mid-single-digits but Gildan gaining share; Glenn states moving to flat to low single-digit growth in the market overall with mid-single-digit growth expected in line with three-year strategy.

Q: Dynamics of national accounts in Q3, Q4, and 2025?

A: Chuck says national account business going well with gains across categories and channels; Glenn adds new programs contribute to growth.

Q: Impact of customer acquisition on the business?

A: Glenn states Gildan is a beneficiary of consolidation, sees market as more stable with fewer distributors, and it's a win-win for everyone.

Q: Fleece timing impact in Q3 and evolution in Q4?

A: Rhod says Q4 fleece sales expected to be good, with Q3 impact due to production optimization, and Q4 should support the quarter.

Q: US Election tariffs on Bangladesh production?

A: Glenn says tariffs would affect everyone equally, Gildan is attractively priced, and not at a disadvantage.

Q: Cotton prices and Bangladesh Phase 2?

A: Glenn talks about cotton price visibility, cost initiatives including Bangladesh and yarn optimization; Chuck mentions planning to start developing Phase 2 of Bangladesh towards end of 2025.

Q: Bangladesh civil unrest and impact?

A: Glenn states Gildan has been in Bangladesh over 10 years, things are running as planned, plants fully functional.

Q: Fleece performance and trend?

A: Glenn says fleece is a growth category with high single-digit growth expected over next three years, with room for growth in national account channel.