• Fourth Quarter Revenue: $822 million, up 5% year-over-year.
• Adjusted EPS for Q4: $0.83, up 11% year-over-year.
• Full Year Revenue: Approximately $3.3 billion.
• Adjusted Operating Margin for Full Year: 21.3%.
• Capital Returned to Shareholders in 2024: $889 million.
• International Sales Growth: 20% increase in the last two quarters.
• Gross Margin for Q4: 30.8%, a 60 basis point improvement.
• SG&A Expenses for Q4: $78 million, down from $88 million the previous year.
• Adjusted Operating Income for Q4: $175 million, 21.3% margin, up 160 basis points.
• Adjusted Effective Tax Rate for Q4: 13.4%.
• Full Year Adjusted EPS: $3, up 17% year-over-year.
• Free Cash Flow for Full Year: Approximately $390 million.
• Net Debt at Year-End: About $1.6 billion, leverage ratio of 1.9x net debt to adjusted EBITDA.

• Warning! GuruFocus has detected 6 Warning Sign with LZB.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gildan Activewear Inc (NYSE:GIL) reported record fourth quarter sales of $822 million, up 5% year-over-year.
• The company achieved record fourth quarter adjusted EPS of $0.83, an 11% increase from the previous year.
• Gildan Activewear Inc (NYSE:GIL) returned a record $889 million to shareholders in 2024, demonstrating strong capital allocation.
• The company's international business saw a 20% increase in sales over the last two quarters, supported by capacity expansion in Bangladesh.
• Gildan Activewear Inc (NYSE:GIL) is benefiting from a changing competitive landscape, with competitors exiting the market, allowing for market share gains.

Negative Points

• The hosiery and underwear category was down 23% year-over-year, primarily due to the phaseout of the Under Armour business.
• The company's adjusted effective income tax rate increased to 13.4% from 3.1% the previous year, impacting net income.
• Cash flow from operating activities decreased to $501 million from $547 million in the prior year.
• The company faces a mixed macroeconomic backdrop, with geopolitical uncertainties and potential trade policy repercussions.
• Gildan Activewear Inc (NYSE:GIL) anticipates a significantly higher effective income tax rate in the first quarter of 2025 compared to the first quarter of 2024.

Q & A Highlights

Q: Can you provide insights into your expectations for Activewear and hosiery and underwear in the first quarter, considering the easy comparison for Activewear? A: Rhodri Harries, CFO, explained that they are pleased with the current business performance. Activewear is expected to show good strength across the board, with market share gains and new product innovations driving growth. The first quarter is expected to see low single-digit growth, excluding the impact of the Under Armour phaseout, which will be significant in Q1. Hosiery and underwear will also be impacted by the phaseout, but overall, they feel positive about the first quarter and the full year outlook.

Q: Can you unpack the gross margin performance in the fourth quarter and discuss expectations for 2025? A: Rhodri Harries noted that the gross margin was 30.8%, up 60 basis points, with SG&A down, leading to an operating margin of 21.3%. The margin improvement is attributed to lower raw material costs and strategic initiatives like the Bangladesh ramp-up and yarn modernization. They expect continued gross margin improvement in 2025, with a full-year operating margin increase of approximately 50 basis points.

Q: How is new product innovation impacting the business, and what are your expectations for its growth? A: Glenn Chamandy, CEO, highlighted that new product innovations, particularly the soft cotton technology, are driving growth. The Comfort Colors brand saw a 40% increase in 2024, and new programs like the Champion brand are expected to contribute significantly to growth. About three-fourths of the 2025 revenue growth is expected from new programs, indicating strong potential for continued expansion.

Q: What is the outlook for the Champion brand, and how does it fit into your overall strategy? A: Glenn Chamandy explained that the Champion brand, licensed for the printwear channel, will complement their existing brand portfolio, including Gildan, Comfort Colors, and American Apparel. The multi-tier brand strategy allows them to target different market segments without internal competition, enhancing their market share and growth potential.

Q: Can you provide an update on capacity utilization and future expansion plans, particularly in Bangladesh? A: Glenn Chamandy stated that they have ample capacity to support growth through 2027, with current utilization around 75% in Bangladesh. The facility is expected to be fully ramped up by the end of Q2 2025. Future expansion plans are included in their capital expenditure, ensuring they can meet demand as they continue to grow.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.