Gildan Activewear, Inc.

Thank you. Good morning everyone and thank you for joining us. Earlier this morning we issued a press release announcing our results for the fourth quarter and full year 2024 as well as our first time guidance for 2025. The company's management discussion and analysis and consolidated financial statements are expected to be filed with the Canadian Securities and Regulatory Authorities and the U.S. Securities Commission today and will also be available on our corporate website. In a separate press release issued concurrently today, the company also announced executive leadership nominations and a CFO transition as part of a multi-year succession planning process which we'll be addressing this morning as well. Now joining me on the call today are Glenn Shemendi, President and CEO of Gildan, Rod Harris, Executive Vice President and Chief Financial and Administrative Officer and Chuck Ward, President Sales, Marketing and Distribution. This morning we'll take you through the results for the quarter and then a question and answer session will follow. Before we begin, please take note that certain statements included in this conference call may constitute forward-looking statements which involve unknown and known risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. We refer you to the company's filings with the U.S. Securities and Exchange Commission and Canadian Securities Regulatory Authorities. During this call, we will also discuss certain non-GAAP financial measures, reconciliations to the most directly comparable IFRS measures are provided in today's earnings release as well as our MDNA. And now I'll turn it over to Glenn.

Thank you, Jessie, and good morning everybody. I'd like to start the call by taking a moment to thank and acknowledge our global team's efforts for their strength and dedication, as well as the loyalty of our customers and the ongoing support from our shareholders. As we highlighted in this morning's release, you can see that Gildan Sustainable Growth Strategy or GSG is clearly driving profitable growth and we are extremely pleased with our progress. We delivered record fourth quarter sales of $822 million which were up 5% versus last year. This growth rate would have been low double digits when you exclude the phase out of Under Armour. We also delivered record fourth quarter adjusted EPS of 83 cents a share, up 11% year over year. In our 40th anniversary year, we concluded on a high note with record revenues of about $3.3 billion, strong adjusted operating margins of .3% and year over year adjusted diluted EPS growth of 17% fully in line with our guidance. All while continuing to return significant capital to shareholders with a record $889 million returned in 2024. We are also committed and continuing executing on our GSG strategy across all our three pillars, capacity, innovation and ESG. We are excited about our ability to deliver on our three-year objectives we have laid out for 2025 to 2027 period, which include net sales of mid-single digit range and adjusted diluted EPS growth in the mid-teen range. Now looking at 2025, we believe we're well positioned. We have many strong drivers which we feel could allow us to deliver on our objectives for the full year. We have new innovation across the board and very good reception of our soft cotton technology which is driving our basics and continued positive territory with double-digit POS growth in the fourth quarter of 2024. We are also excited about our plasma print technology and other innovations such as Colorblast in our Comfort Colors brand, which we are seeing significant growth. In fact, the brand is up 40% for the full year in 2024. We are also expanding our product line in the distribution through distributors under our Champion brand through the license we secured for the Printware channel. So these drivers will allow us to further gain share in the distributor channel in 2025. And remember, we are also benefiting from the changing competitive landscape. With players exiting the market. Our international business has seen a 20% increase in sales the last two quarters as these markets have started to recover and our ability to service now stronger given the capacity expansion in Bangladesh and our product availability in these markets. Finally, the national count side, we're also seeing great traction. We are expanding our space in underwear with additional product offering and we have secured meaningful new programs of active wear both tees and fleece with our national account customers. So these are all the drivers for our growth in 2025. And we are excited about the opportunities ahead. And of course, as always, we continue to focus on further cost and operating margin improvement. Ramping up Bangladesh, our modernization in the United States, optimizing our Central American operations. I'm looking forward to answering your questions after our phone remarks. And now I'll turn the call over to Rod.

Thank you, Glenn. And good morning, everyone. And thank you for joining us today to discuss our fourth quarter and four year results. I'd also like to begin the call by thanking the entire Guild and team for their outstanding work and dedication throughout 2024. Echoing Glenn, three years into our GSG strategy, we're extremely pleased with our execution as we continue to reinforce our core competencies and our overall strong competitive positioning. Let me start by going over the specifics of the quarter and then I will comment on our outlook and guidance for 2025. So let's begin with the quarter. We saw positive POS across channels and product lines and continue to capture market share in key growth categories. We saw positive POS across channels and product lines and continue to benefit from recent changes in the industry landscape. Looking at international markets, sales increased by 20% year over year for the second consecutive quarter. Growth stemmed from positive POS in Europe, our largest market, as well as inventory replenishment by distributors. With our improved in-stock levels supported by our global manufacturing footprint, we have improved our ability to service these markets. Turning the hosiery and underwear, as expected, this category was down 23% versus the prior year, mainly owing to the phase out the under armor business. Excluding this phase out, our hosiery and underwear sales would have been up high single digits year over year, highlighting strong underlying growth as we continue to gain traction with other national account customers. And finally, a quick note regarding our full year net sales for this category. If we exclude the impact of the under armor phase out, sales for the hosiery and underwear category would have increased by mid single digits year over year, in line with our full year active wear growth. Turning our focus to margins for the quarter, our gross margin was 30.8%, a 60 basis point improvement over the prior year, primarily due to lower raw material costs. As for SG&A, expenses were 78 million in the quarter compared to 88 million in the prior year. If we adjust for charges related to the proxy contest and leadership changes, which were meaningful in the fourth quarter of 2023, adjusted SG&A expenses were 78 million versus 82 million last year. Adjusted SG&A as a percentage of net sales were .5% down 100 basis points, reflecting the positive benefit of the jobs credit introduced by Barbados earlier this year, partly offset by higher variable compensation expenses and higher distribution expenses. As we bring all of these elements together and after adjusting for restructuring and acquisition related items in both years, as well as non-recurring items in the prior year's quarter, we generated adjusted operating income of 175 million or 21.3%, up 160 basis points year over year. Briefly commenting again on the full year, adjusted operating margin was 21.3%, up 400 basis points versus the previous year, and in line with guidance. Moving on to taxes, as expected, the company's adjusted effective income tax rate for the quarter was .4% compared to .1% last year, reflecting the enactment of global minimum tax in Canada and Barbados earlier this year. After reflecting higher net financial and income tax expenses and our lower outstanding share base, we reported gap diluted EPS of 86 cents in the fourth quarter, down 3% versus the prior year, whereas adjusted diluted EPS were 83 cents versus 75 cents last year, which represents an 11% increase. Now commenting on the full year, after adjusting for non-recurring items and taking into account the significantly higher year over year income tax expenses due to the enactment of GMT, as well as the benefit of our lower outstanding share base, adjusted diluted EPS were up 17%, closing the year at $3, fully within the guidance range we had provided. Note that the net impact of the jobs credit and the higher tax rate related to the enactment of Barbados tax reform and GMT was 20 cents per share for the full year, implying that our year over year adjusted EPS growth rate would have been closer to 25% without these impacts. Now turning to cash flow and balance sheet items. Looking at the full year, cash flow from operating activities totaled $501 million compared to $547 million in the prior year, with both years impacted by non-recurring items as mentioned earlier. After accounting for CAPEX of $150 million and lower year over year proceeds from sale and leaseback activities and asset disposals, the company generated free cash flow of approximately $390 million for the full year, essentially in line with the prior year. This cash flow generation, along with our strong balance sheet, enabled us to deliver on our capital allocation priorities and return a record $889 million to shareholders, including dividends and share repurchases of about 18 million shares, or 11% of our float in the year. And finally, even with the significant return of capital during 2024, we ended the year with net debt of about $1.6 billion and a leverage ratio of $1.9 times net debt to adjusted EBITDA, well within our target debt range of $1.5 to $2.5 times net debt to adjusted EBITDA. So overall, in concluding on the results, we accomplished a great deal in 2024 by remaining focused on execution of our GSG strategy against a somewhat mixed macroeconomic backdrop, which resulted in record revenues, strong operating margins, and putting us in an outstanding position to deliver on our capital allocation priorities, including share buybacks, and a 10% increase in our dividend for 2025 that we were pleased to announce this morning.

So this brings me to our

strategy and outlook. So as Glenn highlighted earlier, we continue to be very pleased with our execution and progress on the three pillars of our GSG strategy. First, our new manufacturing complex in Bangladesh ramped up fully on track, supporting our growth expectations and further lowering our cost structure, and also providing additional diversification and flexibility in our global vertically integrated manufacturing platform. Moreover, on the innovation front, we are just beginning to tap into the largest innovation pipeline in the company's history, with more product launches to come in 2025, as showcased at the impressions trade show last month, where we received great feedback. And lastly, with regards to ESG, we remain fully on track with our next generation objectives. In this regard, as announced in January, we're pleased to have been included on the Dow Jones Best in Class North America index for the 12th consecutive year. More recently, Gilden was also included in the 2025 sustainability yearbook for the 13th consecutive year based on S&P Global's corporate sustainability assessment. So we know we have a strong foundation, a great competitive position, and the ability to return capital to our shareholders. That's why we're excited about the opportunities that lie ahead and about our ability to drive performance towards achieving our three-year objectives for the 2025 to 2027 period, which Glenn also touched on earlier. So now, turning to our outlook for 2025, we expect the following. Revenue growth for the full year to be up mid-single digits. Full year adjusted operating margin to increase approximately 50 basis points. CapEx to come in at approximately 5% of sales. Adjusted diluted EPS to be in the range of $3.38 to $3.58, up between 13% and 19% year over year. And free cash flow is expected to come in above $450 million. Further, the outlook that I just laid out is underpinned by some key assumptions, including the following. First, our outlook reflects continued growth in key product categories driven by recently introduced innovation. It also reflects overall POS growth, expected market share gains, the favorable impact from new product launches, as well as some improvement in certain markets that remain soft in 2024. We also expect ongoing benefits from the jobs credit program that in Barbados in 2024. And we anticipate that our effective tax rate for 2025 will remain at a similar level to what we saw in 2024. Finally, we expect to continue repurchasing shares under our NCIB program, given the strength of our balance sheet, our expected strong free cash flow, and our leveraged framework target of 1.5 to 2.5 times net debt to adjusted EBITDA. This brings us to the outlook for the current fiscal quarter. For the first quarter, we expect the following. Net sales to be up low single digits year over year. And when excluding the impact of the Under Armour SOC license agreement, Q1 net sales growth is expected to be in the mid single digits. Adjusted operating margin is expected to be in line with our full year guidance of up approximately 50 basis points. Further, recognizing the global minimum tax in Canada and Barbados only came into effect during the second quarter of 2024. On a comparable basis, the company's adjusted effective income tax rate in the first quarter of 2025 is expected to be significantly higher than the .6% recorded in the first quarter of 2024. This wraps up our financial overview. Before we take your questions, I'd like to leave you with the following. Although the situation remains fluid in broader terms, tariffs related to China, Canada, and Mexico are not expected to impact our business. More specifically, while broader market conditions remain mixed with geopolitical uncertainties and the potential longer term repercussions of some trade policies being unclear, we are nonetheless cautiously optimistic as we look ahead to 2025. I'd also like to emphasize that regardless of the environment, we will continue to leverage the GSG strategy with a keen focus on execution to drive long-term shareholder value. And with that, I will now turn it back over to Glenn.

Thank you, Rod. In a separate communication, we also announced today the executive leadership nomination and a CFO transition. As part of the succession planning process, which ensures, in our view, strong continuity as the company drives forward with its Gildan sustainable growth strategy. First, Chuck Ward, who is currently president, sales marketing and distribution, has been appointed to a newly created role of executive vice president and chief operating officer effective March 1st, 2025. And it will continue to report to me. As most of you know, Chuck joined Gildan in 2011 to the acquisition of GoalToe. And over the years, he has held several senior roles at Gildan, accumulating extensive experience, which includes leading yarn spinning operations, overseeing supply chain, sales, marketing, distribution, while gaining experience in manufacturing. Separately, after almost 10 years in the EBP chief financial and administration role, Rod Harris has informed the board of his intentions to retire on January 1st, 2026. We also announced that Luca Borelli, who is currently the CFO of sales marketing and distribution, will succeed him as executive vice president, chief financial officer, assuming his new role responsibilities on March 1st, 2025. In order to facilitate a smooth transition and over the full 10 months, Rod will retain the chief administration officer function until his retirement. Luca joined Gildan in 2012 and has held various roles in financial planning, internal audit, enterprise risk management before being promoted to his current role as CFO of sales marketing and distribution. I would like to express my deep appreciation to Rod, who has guided our financial performance over the last 10 years. Since 2015, he has been an invaluable partner to me and our team. And though he will still be working together through 2025, I sincerely wish him well in retirement next year and want to thank him for the successful contribution and to our success. I am also happy to welcome Chuck and Luca to their new roles and congratulate them both. These appointments are a testament to our bent strength and the effectiveness of our multiyear succession planning process. They are our outstanding leaders and I firmly believe they are both well positioned to step into their roles and continue driving our GSG strategy and further drive and enhance long-term value for our shareholders. This concludes our prepared remarks this morning and I'll turn the call over to Jessie.

Thanks, Glen. This concludes our prepared remarks and now we'll begin taking your questions. As usual, before moving to the Q&A session, I'd like to remind you to limit your questions to two and we will circle back for a second round if time permits. Sarah, please begin the Q&A session.

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Please ensure you are not on speakerphone and that your phone is not on mute when called upon. Thank you. Your first question comes from Paul Lihueas with Citi. Your line is open.

Hey everyone, this is Brandon Cheatham on for Paul and Rod, congratulations on the retirement. I just wanted to dig in real quick on your expectations in the first quarter for active wear and hosiery and underwear. Specifically, if you could quantify what you're expecting because active wear has its easiest comparison for the year in the first quarter. So how should we think about one queue versus the rest of the year in that context? And was there a pull forward that may have helped for queue

but potentially hurt on queue?

Morning,

Brandon. So if

you look at the first quarter of 25 and we look at how the business is running, I think I would say we feel very pleased about where we are. Obviously, we had a strong quarter in the fourth quarter and active wear delivered very well. And even on the underwear side, we also saw some good strength. And as we move into the first quarter of 25, we continue to see, I would say, good strength really across the board on the active wear side. So if you look at our guide for the quarter, it's up low single digits, X the under armor impact, which continues to be significant in the first quarter of 25. In the last quarter, we'll see this. We should be up mid single digits. And if you look at active wear overall, growth will be across the board. We'll see market share gains across the channels, across the product categories, all the things that we've been talking about with respect to new products, innovation, strength in national accounts, international, all of these things will be playing through as we move into the first quarter. So we see good growth on the active wear side. It was particularly strong in the fourth quarter, up double digits. So we'll moderate back from that. But it is the first quarter of the year, as you think about that. And then on the underwear side, effectively, we will see, again, the impact of the phase out of under armor, which will impact our numbers there. But look, overall, we feel good about the first quarter. And we really feel good about how the whole year looks with revenue growth up mid single digit. There is a fair amount of uncertainty out there. But I think our business is running very well as we look at all of the key growth drivers that Glenn laid out.

Got it. Appreciate that. And then gross margin in the fourth quarter, you kind of unpack some of the puts and takes there, understand that, you know, product cost was a tailwind. But, you know, did you see any pricing pressure at all? Like, I think you all have mentioned that you were being aggressive in certain segments to try and gain market share. So I'm wondering if that had any impact. And then, you know, how are you thinking about gross margin for the rest of 25? You know, could we see any, you know, tailwinds there for margin? Thanks.

Yeah, if you look at gross margin in the fourth quarter, we came in at 30.8%. We were up 60 basis points. SG&A was down. And so in total, operating margin up 160 basis points, 21.3%, running at a full-year guide, which was 21.3%. So look, I think from a margin perspective, we're very pleased with how things are effectively playing out. If you look at the gross margin that we saw, we're now, we've firmly moved above the 30% level. And we'll see that as we move through 25. So I would say we're very pleased with the evolution of gross margin. That is being driven by everything that we're doing as we look at our overall business and all of the things that we're controlling. So if you think about the ramp up of Bangladesh, you think about the modernization of our yarn facilities, optimization of Central America, I mean, it's all playing through. And so I would say we were pleased with what we saw overall in the fourth quarter. And again, we move into the first quarter, we will continue to see the benefits of all of these strategies that were unfolding. We do see a gross margin uplift in Q1 25. On the SG&A side, we should see a bit of improvement. It's not be quite as large as we've seen in prior quarters, because in prior quarters, we did see the roll in of the Barbados tax credit. And we will see that in the quarter this year. But we have other things that we're doing as well. We're investing in distribution. So IT is an area where we're spending a lot now as we really optimize our supply chain, we effectively bring on new products, and really focus on making sure that our customers are very much kept well in stock. And so there are a few things going on. But overall, I would say we're pleased with the progression of our operating margin, getting gross margin SG&A, and then the whole year, I think we're very pleased to be able to guide to the 50 basis points up from the 21.3 driven by gross margins, strong gross margins throughout the quarters, and SG&A well under control.

Yeah, I appreciate it. Thanks and good luck.

Thank you.

The next question comes from Jay Sol of UBS. Your line is open.

Great. Thank you so much. And congratulations on a great run and on your retirement. I want to ask you about the new product innovation. Glenn, you mentioned it in your prepared remarks. Just talk about how much it's impacting the business. What percentage sales these new products are impacting and how big do you think it can get over the next year or two? Thank you.

Well, I mean, look, it's early days still. So we've seen continued performance. Our soft cotton technology is really the largest innovation because that covers all of our basic category. And that category has been declining over the last couple of years. And we've seen, obviously, Q2, it was up slightly, Q3 was up slightly, and Q4, we saw double digit type growth. So it takes time to spread the word. I mean, we were in the impression show in January, continuing to market our products. And it takes time to even cycle inventory through our system. So these things are, I think, still got a lot of legs, let's say, for example, because the product is great. I mean, the reality is that when you lay our new soft cotton technology on our basics, you can't really tell the difference between those products and the fashion products that are out there in the market. So that gives us really what we think in terms of what we're priced, a very competitive advantage. And look, there's other growth drivers, Comfort Colors, for example. I mean, the brand is up 40% in 2024, and it was up in 2023. And we think it's going to be up significantly in 2025. And that's a brand that's really going after the higher end category. So it's its price points, it's a little bit higher, but it's really doing well. And we're going to continue to take shares as we go forward. We have our licensed, our champion brand, which we've licensed now, which will roll out in 2025. We see the great thing is that we have competitors exiting the market. Delta closed down last year with Fulum, exited the printwear market. Our international sales have come back, mainly because we've now got product availability through our manufacturing facility in Bangladesh, which is fully ramped up as we planned. And we've fully ramped up by Q2. We're taking more space in underwear with new products. And we have meaningful new activewear programs of tees and fleece as we move into 2025. And I would say that maybe to sort of summarize really our 2025 guide, when you look at our sales of mid-single digits, I would say that about three quarters of the revenue growth that we have in 2025 is coming from new programs. And I think that we've got a really great slate of new programs for next year that are really solidifying what we feel comfortable with our trajectory. We've taken a really cautious approach still to the market. We think it's flat to low single digits up. And basically, if you look at where we're positioning, if we continue to take additional share more than we assumed, or if the market's slightly a little bit more robust, that could be potentially all positive to our forecast as we move into 2025.

Hmm. Glenn, that's really interesting. Maybe if we can just talk about Champion for one more second, because obviously it's a brand that has a long history. And at one point, lots of over a billion dollars is probably. I mean, what's your ambition with that? What do you see as possible with that brand going forward now that you have it?

Well, look, it's still a very strong brand, and it's going to be continuing to be sold in different channels of distribution. But we have the Champion brand for the Printware channel. And look, our products are going to schools and jog runs and things like that. So look, it's going to be a good part of our lineup. It's going to give us a niche in an area and product category to help us continue to grow our market share. So if you look at our whole branding, we've got Gildan, which is sort of our bread and butter. We've got our Comfort Colors brand, which is sort of a unique position because it's all garment side. We've got our American Apparel brand, and now we've got our Champion brand, which is a little bit more athletic and goes to a more collegiate type approach. So having a multi-tier brand strategy, none of our brands compete with each other. They're all uniquely different and allow us to gain market share as we go forward. I think that's really the key. We're well positioned. We think that we're going to continue to grow and take share. And we're well positioned because we've got three quarters of our sales guidance really in new programs, Champion being one of them.

Got it. That's great. Thank you so much.

Our next question comes from Mark Petrie with CIBC. Your line is open.

Good morning, and I'll echo my congratulations to Rod, Luca, and Chuck. I wanted to ask about the product innovation and specifically the sort of SKU levels in the overall business. I know this was one of the key areas of focus of Back to Basics and SKU rationalization. And just wondering if you could sort of put into context the SKU levels of today versus, I don't know, several years ago, but also just like two to three years ago when maybe you were at sort of a trough level on SKUs.

Well, the great thing about what we're doing is we're just improving on the existing SKUs that are in our line. So all of our soft cotton technology, all of our fleece, all the innovation that we have is really being applied to the existing product line. So our SKUs really haven't changed. I mean, obviously, you know, when we bring in new brands, we'll have a little bit, you know, further expansion of our SKUs with Champion, etc. And we're always adding a little onto our base as we're looking at new opportunities. But we're very mindful of managing, you know, our SKU base as we go forward.

Okay, thanks for that. And if I could just have a quick follow up, just the pace of share buyback, looks like it slowed in the last couple months. Is that the sort of pace we should expect through the balance of the term on the current program? Or what are your sort of criteria in making the short-term decisions on the pace of buyback?

Mark, so if you look at the buyback in 2024, yeah, we were very pleased with their ability to buy back shares, we bought back 11% of the float, we returned 889 million of capital to shareholders. So I think it was a great year able to increase the dividend at the end of the year. But from a buyback perspective was a little bit unique in that effectively, as we are now well placed with our GSG strategy, and we're you know, we're all the things that we've been planning over the last few years are unfolding very, very well. We were able to effectively take our leverage target up. And now we have the range of one and a half to two and a half times. And we were able to benefit from that in 2024. When we were buying back, but we were buying back for the most part, we try to buy it back at a consistent rate for the target for the full year we have. So we knew that we had a, I would say, strong target for 2024, especially after May. And so we bought at higher rates. But now as we move into 2025, effectively we'll move back to, I would say, more of a normal type of buyback level that you would have seen in prior years. So for us, that generally runs around five to six percent for the full year. And you will see that we generally try to do that on a fairly consistent basis as we move through the year. So effectively, 24, a little bit unique, but in 25 back to, I would say, a historical cadence and a very consistent approach as we go month to month.

That's very clear, Rod. Thanks a lot. All the best.

Thank you.

The next question comes from Brian Morrison of TD Cowan. Your line is open.

Oh, good morning. Thanks very much. So first question for Chuck and for Rod. You're seeing, obviously, the competition is facing some challenges. Chuck, maybe just go into detail on the POS that you achieved in the quarter relative to the industry. And then Rod, within that guidance, you did a good job of overlaying why you're going to get this 50 basis points of margin expansion. But I didn't hear you talk about pricing and the gross margin in Q4 does look a lot like the Q4. I'm wondering if you can specifically just comment on the pricing environment.

OK, thank you, Brian. I'll start with the POS and then give it to Rod. I think, as Glenn mentioned, we saw positive POS for the fourth quarter. It was a strong quarter. We saw it really across the channels and across the categories, which was good from that perspective. In the basic side, Glenn mentioned we were up double digits. And I think that is coming through one share gains as some of the competitors he mentioned have left the market, but also really our innovation that Glenn talked about with our soft cotton technology. I think it's really getting through the inventory at this point and getting into the consumer's hands. And I think it's driving the POS. Again, he talked about the ring spun category. We continue to be up double digits there as well and driven across our ring spun platform, but including Comfort Colors, which was up 40%. And so we continue to gain share in that area as well. So we were positive across all channels. I think from a market perspective, we continue to think the market faced some challenges being flat to down and us up and taking share. So that's kind of the way. And even in the international markets, Glenn mentioned it, we were up for Q4 mid-single digits in international, with Europe strong in high single digits, continuing to be driven by the continent as well. So again, across the board, we continue to take share and kind of beat the competition.

Okay, so moving to pricing, if you look at where we were from a price perspective in the fourth quarter, we're generally pretty stable, I would say. And our pricing has been pretty stable as we've moved through Q24 and very definitely as we move into Q25. I mean, a little bit of tactical pricing here or there, a little bit of probably a little bit of also impact of FX because obviously if you look at international markets, it's been a bit weakening off of currencies. But I would say price for us is very stable. And as we move into Q25, I think we feel very good about price. So if you look at what's driving the business, it's volume growth, ultimately. On the price side, we have big gaps with our competitors. And if you look at things like cotton, people ask us about cotton, yes, cotton has come down, has given a bit of a tailwind, but you've got inflation elsewhere. And so actually, I think one of the unique things as we start 25 is the stability in pricing that we see as we move through the first quarter and as we forecast for the full year.

Okay, thank you for that. The second question maybe for Glenn, can you just remind me how much capital you've invested into expanding and modernizing your yarn facilities last few years and elaborate on the larger national account opportunities that you're winning contracts with? Is this

for mass merchants being the end market?

Well, as far as the yarn spinning is concerned, look, we've spent different phases of our yarn modernization. Obviously, we were in the yarn spinning, we bought Frontier, and I would say over the last couple of years, we've put in just north of about $100 million and modernizing the Frontier facilities, which we're still in completing, I would say, as we move through 25. There's some still to be done, but after 2025, I think it will be fully complete on all of our yarn modernization. Just the opportunities?

Where's it going?

Well, look, the screen printers that serve as really the large mass market retailers, Walmart, TJ Maxx, Kohl's, etc., really those are the type of large screen printers, and those are particularly a lot of accounts at Delta service in the past. So we've been able to, which we had very good relationship with a lot of those customers, and that's continuing to allow us to obviously take additional market share as they've exited the market. So look, we're in a good position. We feel that, and it's not just from Delta's perspective, but we think to look at the overall broader competitive landscape is weakening. And Gildan continues to make investments in our yarn spinning and our Bangladesh. Everything that we're doing, we're investing. And if you look over a period of time, I would say today, Gildan has much more of a competitive advantage in our positioning today than we did two, three, four years ago, and it's continuing to improve. So we're excited about where we are. We've got everything in place. We've got good momentum. And really, what I would leave you with is that we've got good visibility as we've got a lot of new programs. And the upside for us is really, will the market participate? Because that's really, I think, the one disappointment is that the market's been soft over the last 24 months. There's still a little bit of uncertainty, but I mean, interest rates come down. Hopefully, we'll see the market continue to shine and be an opportunity for us.

Very good. Congratulations.

The next question comes from Martin Landry with Stiefel. Your line is open.

Hi, good morning. Congratulations, Chuck, on your promotion. And Rodri, congratulations on your retirement. It's been great working with you for the last years. So, my first question, Glenn, I want to try to understand a little bit better where you're at in terms of capacity. So could you tell us what production capacity utilization you're assuming in your guidance for 2025?

Well, I would say to you, we've got ample capacity. We're not running full. Like we said in the past, we have enough capacity in-house today really to support our guidance for 2025, 26, and 27. And then as we, in our capital investment, we included building out additional capacity to support 28. So maybe that's just a way to look at it. You can quantify that in our mid-single digits in terms of the revenue and work backwards in terms of the percentage,

I guess. Okay. So

you

have the capacity established to get to 2027 revenues. Yeah. Okay.

Is there a margin differential between the different channels that you're selling? You know, it seems that retail is driving a little bit more growth this year than print ware maybe. And is retail a little bit margin diluted? Would that be fair to say?

We try and price our products pretty consistently across the board. So, you know, we always say that we have a consistent margin. There's other areas within profile, you know, fleece versus tees, for example. But if we sell tees across the board, the margin profile is pretty much the same. But we have certain product categories that, you know, have a little bit better margin profile. But overall, regardless of the channel distribution, we're pretty consistent with the way we price the market.

And Mark, can you just add, we did that when we drove back to basics. So the margin percentages are pretty close across the board. Of course, you have different price points, right? If you look at the products, fleece is a higher price point than t-shirts. Comfort Colors is a very high-priced t-shirt product that is going very well. So you have different price points. But margins overall are, I would say, pretty well aligned and all driving that strong gross margin performance that we're seeing as we move through 24 and into 25.

Which makes us think of which channel is growing. Okay, cool. That's helpful. Thank you.

The next question comes from Steven McLeod with BMO Capital Markets. Your line is open.

Thank you. Good morning, guys. And congrats, Rod, on your retirement and Chuck on your promotion. Look forward to continuing to work with you, Chuck. And it's been great working with you, Rod. Appreciate it. Just a few questions here. Just wanted to dive a little bit deeper on capacity and just get an update on kind of where you sit on Bangladesh. I think you had previously guided to the exit rate or run rate exiting 24 at being 70%. So just wanted to get an update there as well as what your plans might be for incremental investment in kind of a Bangladesh phase two.

Well, what we said previously is that exit around 75%, which we did. We're continuing to ramp up as we speak and as we move through 2026. The plant is performing well. And what I mentioned earlier is that in our three-year guide in CAPEX around 5%, that includes the build out of additional capacity in Bangladesh.

Okay, that's great. And then do you expect to be

100% ramped up sort of like kind

of Q1, Q2 period? Yeah, but probably by the end of Q2, we'll pretty much be close to 100% ramped up.

Okay. So all the additional

capacity that we have, which I've mentioned earlier, Martina's question would be really coming out of Central America. So we've got still additional capacity in Central America, but we're optimizing Bangladesh because that's where we produce all of our ring-spun t-shirts, which are obviously in high demand.

Right.

Okay. Maybe one thing

to add, Stephen, sorry, because you're asking about Bangladesh and our capacity. We have all the infrastructure in place for the expansion beyond the first phase that, again, we've done a great job ramping up. So I think that's the one thing to keep in mind from a CAPEX perspective as we go forward. And as we think about additional CAPEX to support, you know, the further out growth that Glenn was talking about, it will be very efficient spend because of everything that we've done today.

Okay. That's great. Thank you. And then just secondly, just with respect to some of the changes you've seen, you know, in a competitive landscape, I guess more so on the customer landscape, you know, there was some distributor consolidation. I'm just wondering if you've seen any impacts on kind of the industry or industry behavior in response to those moves?

Hi, Stephen. It's Chuck. I mean, I think, you know, obviously over the years, we've seen a lot of consolidation in the distributor channel. And this was just a continuation of that as to your point, SNS and Broader combined. You know, we are seeing competitive landscape among the distributors. But, you know, NetNet, we think it's positive for us overall and will continue to be strong partners to the distributor channel and, you know, continue to drive sales through it. And so again, I think it's just continuance of what we've seen over the years.

And, you know, one of the, I think the reality is that as we move forward and the distributors have consolidated a little bit, we're going to also see consolidation of brands within the channel. And, you know, basically we think we'll be the beneficiary of that because, you know, we're positioned as, you know, obviously the global low-cost producer and have the significant competitive advantage over any of those other brands. So there are a lot of brands and particularly, you know, more in the ring spun category. I mean, you know, in the basics, you know, that market is pretty consolidated, but I think there's more consolidation to happen on the brand side on the ring spun category. So look, we're excited about our positioning. We think we're well positioned to take share and that's sort of embedded in our guidance as we move forward over the next three years.

Okay, that's great, Kallar. Thanks, guys. Appreciate it.

The next question comes from Vishal Sridhar with National Bank. Your line is open.

Hi, thanks for taking my questions. I wanted to get your perspective on the acceleration of growth in international. It seems like momentum is building, you know, Q1 up 0.8 and now Q4 up 20%. I'm wondering where that's coming from specifically. I know you gave us some color, but is it predominantly the better fulfillment through Bangladesh or is it the market recovery?

Hi, Vishal. Yes, I mean, I think there is some market recovery in there, but it's also largely our Bangladesh capacity and our ability to service the market. We've, you know, as we continue to supply that market, when you think about it, I think we've talked about this many times in the past, but our number one purchase criteria is availability. And we need to make sure the product's available for sale at the time it's, and we're doing that. We're in good stock levels there internationally and in North America, and I think that's continuing to drive sales. Also, you know, our innovation, I think our innovation is continuing to push sales there as well. As Glenn said, I think when you look at the innovative basic products, it's better than the others in the market. We're seeing share gains not only in North America, but in the international market that's continuing to drive that. So, the supply coming out of Bangladesh.

Through 2025, should we expect that cadence to improve even further,

or do you think you've hit run rate?

If you look at 2025, we do expect growth at the international markets, as Chuck said. We are very pleased about how we can service the products, the way things are unfolding. I would say, though, if you look at our guide, we have been a little bit more conservative than what you've seen the last couple of quarters. So, you know, 20% growth, very strong overall in Q3, Q4. We're probably around 11% for the full year in the international in 24. I would say in our guide, we've been a little bit more cautious because of just the broader macroeconomic environment, but we'll see how it turns out. I would say we've tried to sort of play it at a level that does reflect that there's some uncertainty, and we're hoping that things will be better than that as we move through the year.

Okay, and just a question on the market share gains. You know, Gildan, obviously a large supplier, and this year a bit unusual given the some of the capacity exits from your competitors. And how should we expect these market share gains to continue to unfold? I mean, at some level, gaining market share becomes more and more difficult. And with the industry in generally continuing to perform tepidly, is there a concern there that these trends with the industry in Gildan may intersect?

Well, I would say that two things. One, you know, we still got a lot of runway, right? Because if you look at them, as we look at the ring spun category, you know, we're under shared there, basically, you know, we have a much lower percentage of share in that category. And we're winning there from three fronts. Winning there because we have really good competitively priced ring spun shirts equivalent to what's out in the market. Two, our Comfort Colors brand is in that category of more expensive shirts, and it's winning and taking out a lot of the dollars that would have been spent on a traditional ring spun shirt. And they're now buying our Comfort Colors, garment dyed, nostalgic look, great product with all the innovation that we have associated with that brand. And the third piece is we have our soft cotton technology where people can't really tell the difference between, you know, a ring spun shirt and a heavyweight shirt with the only nuances that typically are basics traditionally and where all the volume is being sold is in the heavier weight category. And there actually is a trend now in the market for people to go from lighter weight to heavier weight shirts. So we're sort of in a really good spot because not only do we have all these heavyweight shirts, which traditionally we sold, but now they're softer and feel better and they have the technology we've applied to them. So, you know, we think that we're really doing well. And, you know, we have other technologies that we think are going to continue to drive our market share as we go forward. So spending our energy on building innovation to support our sales, having the availability, making sure we got the availability. And, you know, Rod touched on earlier, you know, one of the things you'll see a little bit of an expense in Q1, but we're spending a lot of money now on technology. And we've put in systems for our planning, our POS assumptions, our forecasting. We're looking at different systems for distribution to optimize our deliveries to our customers to get the products there faster. You know, all these types of things that we're doing to really, you know, our sort of we've got everything in place. We're really looking at all these other areas where just to continue driving our competitive advantage and separating gilding from the competitive landscape. So, you know, we're making the investments that we need to make. And I think that, you know, it's across the board. There's still lots of opportunity for us, you know, to continue to grow. The one thing I would leave you with is that all the work that we've done about the market and the size of the market and the potential growth in the market has always led to the market growth being in the mid-single digits, the growth in the market, which we haven't seen over the last 24 months. So, you know, the great thing, I think, about where we're positioned, we have a lifestyle type product. You know, we think that the market will turn. And if it does come back to growth, because we've got a very conservative, I think, outlook, flat to low single digits over the next three years. For us, if we do see, you know, mid-single what I think our market share, because now it's just share, but we're not getting the growth portion of the opportunity. And I'll just leave you with is that as we move into 2025, again, you know, the new programs that I outlined before represent about three quarters of our guide in terms of the top line. So, you know, we're very conservative. You know, we hope that the market will be a little bit stronger. We will take a little bit of share, but I think we're well positioned and we have a very conservative outlook and, you know, potentially there could be some side to 2025.

Okay. Thank you for that and congrats, Chuck Rodden.

Your final question, sorry, your final question comes from Chris Lee with Dejardin. Your line is open.

Good morning and thanks for squeezing me in and let me add my congratulations to you, Rodden and Chuck, very well deserved. I guess, I apologize if we answered this already, but can you comment on what you see in terms of the inventory levels for your customers, both in the wholesale distributor and in the national account space? And also, are you seeing any sort of restocking or just more cautious just based on what's happening on the macro side? Thanks.

Sure, Chris. And I think overall we feel good about inventories. They're well balanced across the channels and so I think we're in good shape from that perspective and we don't see major destocking on the horizon there. You have different channels that may be a little more cautious on their inventory, but overall I would say inventories are well balanced and we're not factoring in and don't see a major destocking.

Okay. And then just Glenn, just when you said 75% of your growth is going to come from new programs, I'm assuming you have a really good line of sight to those programs. And then my question is, after you go through Q1 facing out the UA contract, should we expect sort of consistent mid-single digit sales growth sort of through the year or is some of the programs more in the second half so it's going to be a bit more bumpy through the year just in terms of the mid-single digit sales growth?

I'll let Rod answer that question, but what I would say to you is look at what I mentioned earlier is that we have Champion and we have also meaningful programs in Tees and Fleece. Obviously, the Fleece programs which are probably a little bit larger than the T programs, they're more in the back end because Fleece is sort of a Q3, Q4 story, but I'll let Rod answer the cadence of the sales guide.

Yeah, look, I think we are going to see a pretty consistent year. So first quarter, we are impacted by the Under Armour phase out, but we would be a mid-single digit X that. And then as you look at the second quarter, the third quarter, and even into the fourth quarter. Fourth quarter, obviously, we'll be comping a good quarter, a strong quarter in the fourth quarter of 24. So you'll see a little bit of that. But I would say, yeah, we feel good about the consistency of growth through the quarters, which again will be supported by those new programs, by the market share gains. And then we'll see what the overall market looks like. But I think we're basically set up for a good year. And again, I think we feel our competitive positioning is very good, not only for what we control, but also what we see around us. And I would say good solid quarters as we move through the year.

Great, that's very clear. Thanks and all the best. Thank you.

This concludes the question and answer session. I will turn the call back to Jesse Ham for closing remarks.

Thanks, Sarah. Once again, we'd like to thank everyone for joining us and attending our call today. And we really look forward to speaking with you soon. Have a wonderful day.

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