Gildan Activewear (US:GIL)2025-07-31 11:53Sales Performance - For the fiscal year 2024, Activewear sales accounted for 87% of total net sales, while Hosiery and underwear sales made up 13%[16]. - Net sales for Q2 2025 reached $918.5 million, a significant increase from $711.7 million in Q1 2025, representing a 29% quarter-over-quarter growth[43]. - Net sales for Q2 2025 were $918.5 million, a 6.5% increase from $862.2 million in Q2 2024, with year-to-date sales reaching $1,630.2 million, up 4.6% from $1,558.0 million[51]. - Activewear sales increased by 11.6% in Q2 2025, reaching $822.2 million, while Hosiery and Underwear sales declined by 23.3% to $96.3 million[53][56]. - International sales decreased by 14.1% in Q2 2025, primarily due to weak demand in Asia and LATAM[56]. Financial Performance - Net earnings for Q2 2025 were $137.9 million, compared to $84.7 million in Q1 2025, reflecting a 63% increase[43]. - The diluted earnings per share (EPS) for Q2 2025 was $0.91, up from $0.56 in Q1 2025, indicating a 62.5% increase[43]. - Net earnings for Q2 2025 surged to $137.9 million, a 136.2% increase from $58.4 million in Q2 2024, with basic EPS rising to $0.91 from $0.35[51]. - Adjusted net earnings for Q2 2025 were $145.9 million, up 17% from $124.7 million in Q2 2024[79]. - Basic EPS for Q2 2025 was $0.91, compared to $0.35 in Q2 2024, reflecting a 160% increase[79]. Cost Management - SG&A expenses decreased significantly by 33.9% to $81.7 million in Q2 2025 from $123.6 million in Q2 2024, contributing to improved operating income[51]. - Operating income for Q2 2025 was $199.5 million, a 41.3% increase compared to $141.2 million in Q2 2024, with an adjusted operating income of $208.7 million[51]. - Financial expenses, net increased by $7.8 million to $32 million for the three months ended June 29, 2025, primarily due to higher average borrowing levels[69]. - The company incurred restructuring and acquisition-related costs of $8.1 million in Q2 2025, compared to a recovery of $2.9 million in Q2 2024[157]. - Costs related to the proxy contest and leadership changes amounted to $1.1 million in Q2 2025, significantly lower than $57.2 million in Q2 2024[149]. Manufacturing and Operations - The company has completed the construction of its first textile and sewing complex in Bangladesh, which is fully ramped-up as of Q2 2025[21]. - Gildan operates manufacturing facilities primarily in the United States, Central America, the Caribbean, and Bangladesh, with a focus on vertical integration[20]. - The company is expanding its manufacturing capacity in Bangladesh to enhance geographic diversification and support sales growth[21]. - The majority of Gildan's products are manufactured in facilities owned and operated by the company, with limited reliance on third-party contractors[20]. - Gildan's yarn-spinning operations are located entirely in the United States, while textile and sewing operations are distributed across Central America, the Caribbean, and Asia[23]. Strategic Initiatives - The Gildan Sustainable Growth strategy focuses on capacity expansion, innovation, and ESG, aiming to drive organic growth and enhance shareholder value[35]. - The company has identified key initiatives for innovation, including investments in digital tools and artificial intelligence to optimize supply chain planning[37]. - New product launches in 2025 include the Light Cotton™ collection and Softstyle™ Midweight Fleece collection, aimed at improving product offerings[37]. - The company has established a capital allocation framework prioritizing organic growth, dividends, and opportunistic acquisitions[98]. - The company expects sufficient liquidity to fund its organic growth strategy and return capital to shareholders through dividends and share repurchases[99]. Tax and Regulatory Environment - The U.S. administration has imposed a 10% reciprocal tariff on goods from most countries, with specific tariffs on Chinese goods reaching 30%[30][34]. - The company expects to mitigate the impacts of tariffs through supply chain flexibility and pricing actions, although uncertainty remains regarding future tariff applications[33]. - The average effective income tax rate decreased from 50.1% to 17.7% for the three months ended June 29, 2025, reflecting the impact of tax measures enacted by the Government of Barbados[71]. - Income tax expense for the three months ended June 29, 2025, was $29.6 million, down from $58.5 million in the same period last year, a decrease of 49.5%[75]. Balance Sheet and Liquidity - Total assets as of June 29, 2025, were $4,001.9 million, a 7.7% increase from $3,715.1 million at the end of 2024[51]. - Total working capital increased to $1,583.7 million as of June 29, 2025, from $1,021.3 million at December 29, 2024, a variation of $562.4 million[83]. - The current ratio improved to 3.9 at the end of Q2 2025, up from 2.2 at the end of fiscal 2024[83]. - The company's long-term debt as of June 29, 2025, increased to $1,856.4 million from $1,535.9 million as of December 29, 2024[112]. - The net debt leverage ratio as of June 29, 2025, was 2.2 times, compared to 1.9 times at December 29, 2024, remaining within the target range of 1.5 to 2.5 times[114].