Gildan Activewear (GIL) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Gildan Activewear reported record fourth-quarter sales of $822 million, a 5% increase year-over-year, with adjusted EPS of$ 0.83, up 11% year-over-year [8][23] - For the full year, revenues reached approximately $3.3 billion, with adjusted operating margins of 21.3% and adjusted diluted EPS growth of 17% [9][23] - The company returned a record$ 889 million to shareholders in 2024, including dividends and share repurchases [24][25] Business Line Data and Key Metrics Changes - Activewear sales increased by $70 million or 11% year-over-year, driven by higher sales volumes [17][19] - Hosiery and underwear sales were down 23% due to the phase-out of Under Armour, but would have increased by high single digits without this impact [19][20] - The Comfort Colors brand saw a 40% increase in sales for the full year 2024 [11][64] Market Data and Key Metrics Changes - International sales increased by 20% year-over-year for the last two quarters, with strong performance in Europe [12][18] - The company experienced positive point-of-sale (POS) growth across channels and product lines, capturing market share in key growth categories [18][92] Company Strategy and Development Direction - Gildan Activewear is focused on its sustainable growth strategy (GSG), which includes capacity expansion, innovation, and ESG initiatives [9][26] - The company plans to achieve mid-single-digit net sales growth and mid-teen adjusted diluted EPS growth from 2025 to 2027 [9][29] - The company is expanding its product line and distribution through the Champion brand, which is expected to enhance market share [11][72] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, despite mixed macroeconomic conditions and geopolitical uncertainties [34] - The company anticipates revenue growth in the mid-single digits for 2025, with adjusted diluted EPS expected to be in the range of$ 3.38 to $3.58, representing a year-over-year increase of 13% to 19% [29][30] - The effective tax rate for 2025 is expected to remain similar to 2024 levels, reflecting the impact of global minimum tax [31] Other Important Information - The company announced executive leadership nominations and a CFO transition as part of a multiyear succession planning process [4][36] - The new manufacturing complex in Bangladesh is ramping up as planned, supporting growth expectations and cost structure improvements [26][126] Q&A Session Summary Question: Expectations for Activewear and hosiery and underwear in Q1 - Management expects Activewear to grow low single digits, with mid-single digits growth excluding Under Armour impact, while hosiery and underwear will be affected by the Under Armour phase-out [46][49] Question: Gross margin unpacking and pricing pressure - Gross margin for Q4 was 30.8%, up 60 basis points, with stable pricing expected to continue into 2025 [52][96] Question: Impact of new product innovation on sales - New product innovations, particularly soft cotton technology, are expected to drive significant sales growth, with three-quarters of revenue growth in 2025 coming from new programs [67][68] Question: Capital investment in yarn facilities and national account opportunities - Over$ 100 million has been invested in modernizing yarn facilities, with significant opportunities in national accounts, particularly with large mass market retailers [100][104] Question: Capacity utilization assumptions for 2025 - The company has ample capacity to support its guidance for 2025, with expectations to reach close to 100% ramp-up in Bangladesh by the end of Q2 2025 [112][128] Question: Competitive landscape and distributor consolidation - The company views distributor consolidation as a positive development, allowing for stronger partnerships and continued sales growth [134]