Gildan Activewear (US:GIL)2024-10-31 12:06Sales Performance - For the three and nine months ended September 29, 2024, Gildan reported that Activewear sales accounted for 83% of total net sales, while Hosiery and underwear sales accounted for 17%[19]. - Q3 2024 net sales reached $891.1 million, an increase from $869.9 million in Q3 2023, reflecting a year-over-year growth of approximately 2.5%[54]. - Net sales for Q3 2024 reached $891.1 million, a 2.4% increase from $869.9 million in Q3 2023[65]. - Activewear sales rose by $44 million (5.9%) for the three months and $93 million (4.6%) for the nine months, driven by increased shipments and positive point-of-sale (POS) performance[68]. - International sales increased by 20.4% for the three months and 9.2% for the nine months, attributed to distributor inventory replenishment and positive market response to new products[68]. - The Hosiery and underwear category saw a sales decline of $22.7 million (18.1%) for the three months, primarily due to the phase-out of the Under Armour business[68]. Financial Performance - Net earnings for Q3 2024 were $131.5 million, compared to $127.4 million in Q3 2023, representing a year-over-year increase of about 2.6%[54]. - Gross profit for Q3 2024 was $277.6 million, reflecting a 16.1% increase compared to $239.2 million in the same quarter last year[65]. - Operating income for Q3 2024 was $192.9 million, a 24.5% increase from $155.0 million in Q3 2023[65]. - Basic EPS for Q3 2024 was $0.82, up 12.3% from $0.73 in Q3 2023[65]. - The company’s net earnings for the three months ended September 29, 2024, were $131.5 million, a slight increase from $127.4 million year-over-year, while net earnings for the nine months decreased to $268.5 million from $380.3 million, a decline of 29.4%[92]. - Adjusted net earnings for the three months ended September 29, 2024, were $137.8 million, an increase of 6.5% from $129.4 million year-over-year[92]. - Adjusted net earnings for the nine months ended September 29, 2024, reached $361.5 million, up from $323.4 million in the prior year, representing an increase of 11.8%[201]. - Adjusted diluted EPS for the nine months ended September 29, 2024, was $2.18, compared to $1.82 in the prior year, marking a 19.8% increase[201]. Manufacturing and Operations - The company is expanding manufacturing capacity in Bangladesh, with a significant multi-plant manufacturing complex expected to enhance geographic diversification and support sales growth[26]. - The construction of the first textile and sewing complex in Bangladesh is substantially completed, with operations ramping up through 2024[26]. - Gildan's primary manufacturing operations include yarn-spinning facilities located in the United States, while textile, sewing, and sock manufacturing operations are situated in Central America, the Caribbean, and Asia[25]. - The company emphasizes a vertically integrated manufacturing process, controlling all aspects from yarn production to finished garments, which differentiates it from competitors[17]. - The company is expanding its yarn-spinning capabilities through the acquisition and modernization of Frontier Yarns[42]. Capital and Investments - The company has made significant capital investments in its manufacturing facilities to maintain production efficiency and product quality[16]. - Projected capital expenditures are planned to be close to 5% of net sales over the next three years[129]. - The company entered into a new $300 million term loan during the third quarter, contributing to higher interest expenses[85]. Debt and Liquidity - Total assets increased by $220.3 million to $3,735.2 million as of September 29, 2024, a 6.3% increase from $3,514.9 million at the end of 2023[65]. - Net debt rose to $1,506.9 million, a 51.7% increase from $993.5 million at the end of 2023[65]. - Long-term debt increased to $1,179.0 million as of September 29, 2024, up by $494 million from $685.0 million at the end of 2023[107]. - The company's long-term debt as of September 29, 2024, is $1,479.0 million, an increase from $985.0 million as of December 31, 2023[131]. - The net debt leverage ratio is 1.9 times as of September 29, 2024, compared to 1.5 times at December 31, 2023, remaining within the company's target range[137]. Shareholder Returns - The Board of Directors declared a cash dividend of $0.205 per share, totaling an expected payment of $32 million, to be paid on December 16, 2024[149]. - The Company repurchased a total of 13,361,096 common shares for cancellation at a total cost of $547 million during the nine months ended September 29, 2024[155]. - The total cash outlay for share repurchases in the first nine months of fiscal 2024 was $541 million, compared to $190 million in the first nine months of 2023[156]. - The Company received approval to renew its normal course issuer bid (NCIB) program to purchase up to 16,106,155 common shares, representing approximately 10% of the public float, until August 8, 2025[153]. - The Company’s dividend payout policy is subject to the discretion of the Board of Directors and is dependent on operating performance and financial results[151]. Risks and Challenges - The company relies on a small number of significant customers, which poses a risk if those customers do not commit to minimum quantity purchases[11]. - Gildan's financial performance is subject to various risks, including fluctuations in raw material prices and changes in consumer preferences[11]. - Gildan's forward-looking statements regarding future performance are subject to uncertainties and may differ materially from actual results[9]. - The company does not expect ongoing legal proceedings to materially affect its financial position or results of operations[161]. ESG and Sustainability - Gildan's products are marketed under various brands, including Gildan®, American Apparel®, and Comfort Colors®, with a focus on socially responsible production practices[18]. - The Gildan Sustainable Growth strategy focuses on capacity expansion, innovation, and ESG, aiming for long-term revenue growth and profitability[41]. - Gildan's ESG strategy includes initiatives to reduce carbon footprint and water intensity, with a commitment to investing in workforce diversity and inclusion[44].