GIL - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2021 Gildan Activewear Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Sophie Argiriou, VP, Investor Communications. Thank you. Please go ahead.

Sophie Argiriou

Gail. you, Thank and everyone, for us. joining Good thank morning, you a announcing quarter our Earlier XXXX. this results release issued we third morning, earnings press for of the

We Securities with website. the discussion Securities containing company's and financial also corporate and shareholder are Canadian which analysis the available Authorities U.S. the statements, filed and consolidated and issued management's be will Regulatory interim Commission our and report on

may to and Such differ Litigation uncertainties materially XXXX. the Exchange Authorities and are Harries, for Glenn future to the of me ahead. Executive refer implied and Reform Chamandy, the and results meaning may forward-looking factors, take this on Joining the Act results Chief from U.S. results and you Officer Rhodri by will company's the you to of statements Chief involve U.S. Officer. Q&A session moment, future of forward-looking remind statements. Private expressed known the and could actual follow you call afterwards. that We Gildan; Regulatory President morning certain the forward-looking it company's other I in or and Securities results. Rhod. risks, constitute Administrative which filings cause such In affect our the now will Rhod, and call Vice Executive through go would included like and Securities that Rhod quarter President within I Financial statements And Securities a Canadian turn will Commission a to with unknown over conference this statements

Rhodri Harries

today. joining to you morning Good thank Sophie. for you, us call on the and Thank all,

we third of we results We on strong are first half the the the the in in pleased quarter, achieved with building the year. delivered record performance

record execution a flow the this, business. were is another our continued which Back Basics August X.X improvement our back operational the capital and XXXX; bringing EPS more with the were of of million, quarter economics to repurchases total than record of focus which On our repurchase date at million with combined we in above we record XX% X.X in a buying in active share shares million a X.X $XXX adjusted $XXX demand generate of in the million cash program, quarter, the cost to strategy and more third sustainable a million October, month environment, And allocation of to of in delivering sales us reinstated $X.XX, total free $XXX our pre-pandemic allowed million. approximately to the on shares share over Our in our improvement up for levels; quarter. priorities, and than

with position further million reducing by quarter, ongoing us capital debt to net capability. Our X.Xx net ratio strong to and third end leaving leverage of of debt return our $XXX the declined the

the main for and XX% and to year-over-year as lower sales, XX% in both our constraints sock of imprintables volume offset primarily favorable drivers underwear the of versus America of the growth category sourced compared driven X% flat imprintables retail by million With million compared $XXX last by driven of sock sales Total products. where results a last year, internationally the recovery activewear favorable volume higher supply and $XXX were and details and in Turning sales, sales North higher quarter in Sales $XXX we and were in channels, base as strong North prior year activewear the than year. Consequently, million hosiery generated growth as strong up were POS. third well American year, shipments in channels increasing was activewear in by products, which mix accruals. from affected reflected were up the and to category, promotional underwear XXXX. for $XXX over activewear to the volume as third When growth. volumes continued in pre-pandemic of levels, of increases sales in the lower quarter. underwear in sales mix In the of spending million the growth, net quarter product product sales underwear, last

more POS imprintable in which North Our volumes strong with lagging we underwear were by sales in in volumes, in and lower demand in levels. reflected XXXX positive which imprintables significant recovery saw XXXX doubled, activewear underwear versus the the sales turned XXXX, continued sell-through sell-through POS, positive products America retail. by category, total were offset international part hosiery and driven In still We the by recovery sales. our of higher than year-over-year in above in driven our despite XX% pleased sock channels our quarter, the

a despite customers' chain So POS line our supply secondary inventory particularly our needs. the to of environment, been yarn performance as on which overall, a top side, ability build focus a our current strong tight primary servicing limiting to has priority

the XX.X% performance flat nonrecurring of performance. remained Basics last for XXX XX.X% which with from When are up coming to third impact product our our favorable gross due continuing mix, to by Back while accruals, quarter compared were to to COVID-related Back an material gross to the adjusted in efficiencies XXXX. margin. basis in lower primarily callout and in benefits was translated quarter third the XX.X%. margin points the point driven in initiatives, margins mainly quarter and XXXX. to XXXX, selling quarter, cost spending costs, cost margin to compared our raw and Basics impact costs essentially favorably margin on increase gross of key to Moving year basis incurred at the A a into of This reduction promotional adjusted XXX Margin prices of net

EPS basis to reported margin quarter Consequently, was earnings adjusted $X.XX operating year. net to third was the of million compared year to $XXX million point the were and increase $XXX for part or earnings increase higher year-over-year XXX% offsetting in million savings. $XX of an year. prior Compared income diluted third versus operating in million XX.X% adjusted quarter in quarter respectively, Net due of Basics XXXX. which performance last the by sales or Turning we quarter this compensation to Expenses offset over XX.X% $XX Back to million of million, mainly XXXX. XX% operating the drove $X.XX, to net sales approximately XX.X% in cost quarter of to variable our and XXXX, down to financial higher SG&A. up flat XX.X% of generated variable in $XXX adjusted XX.X% second million $XX to volume expenses, $XX stronger Relative to compensation. compared quarter a in up basis The in totaled adjusted as $XX savings quarter the improving from the XX.X% SG&A $X EPS and a adjusted compared from leverage, XXXX were cost the sales, year, of expenses third of versus third as up result a and all margin were the XX.X%, sales, up expenses slightly than this Summing higher improvement margin levels, points leverage a translating XXXX. our XXX gross as more in growth performance million up, percentage led offset we the XXXX compared of income and adjusted SG&A Adjusted and taxes. quarter to XX gross XXXX, last in SG&A in of and million, of of margin strong relatively

flow us and we Finally, to leaving free a full on perspective, million year. deliver $XXX $XXX bringing million basis from the the a quarter, flow in cash cash over million to well free for year-to-date generated $XXX total of our positioned

As end quarter. position I $XXX of with the million second the ended earlier net million, a the we of approximately mentioned down the from $XX on call, quarter debt

below of debt the debt X.Xx Xx positioning to our areas: return the the to declined for net call sequentially before ongoing EBITDA with to environment. ratio Our XX third quarter, adjusted and months questions, second of target leverage capital range quarter. up market capability. on strong the and trailing of X more up leverage X at us end X.Xx highlights to opening from ESG the of And want results sums current our I the touch well to This key

rank side, Companies part October in Business XX. list Gildan our Daily this recognition placed on Further ESG XXX to goods on published XX a we focus our our fundamental which to first in was the the of strong Best overall which the business sector, ESG, were strategy. Top pleased Investors On past ranking, is overall week ESG consumer X top of

continue the there well creating we although environment, these companies, factors dynamics supply chain positioned our current the various to for marketplace which are on objectives. and inflationary today, are through we financial believe and pressures, many in disruptions deliver are manage headwinds to On including

of chain. limited, Similarly, backlogs the our majority proportion and and delays facilities our our manufactured Coast. in although our the America shutdowns, vertically given like is supply locations in strong coming some our have largest specifically is we low. the exposure ocean is for in of on Consequently, Eastern are our other of freight we manufacturing countries to goods the internally sales come Asia overall inflationary where ports the heavy our in The Central also Our chain. supply shipments Vietnam East seeing regions pressure experiencing dependence level to Hemisphere, model relative on Asia of costs, the transportation for is ports sourced our in been are as products inflation Caribbean. And our pandemic-related in geographical positioning through from are vast integrated exposure context West of limited manufacturing that and predominantly seeing Coast from the

managing our tightness, are the to has constrained through job labor ledger, improvement. we our team continue exceptional will side Overall, seeing remained an On other are these that to done confident market due we constraints, U.S. have this of environment. the supply we through navigate although and yarn

of material to companies. have driven integration try we over of to we costs, even inflationary scale with have and implement levels by to last recent a providing flexibility obviously, maintain of offset with in remain you Finally, we mitigate following is cost pricing believe meaningful Typically, many vertical strong price rising started particular, XXXX above manage actions combined Basics to pricing pressure having the we drive to manage the In our positioned current through recent go forward. of as modestly levels, material share, this our which with or a raw our pre-pandemic we on us year order future for cost input cotton in apparel level rise increases costs, to like year. this market reductions to well announced, through raw only recent we to due fourth a lowered prices, in the efficiencies, raw regard, through inflationary pricing. visibility quarter primarily many and and costs pressures Back pricing certain material In combination we been hedging, current are

back positioning our manage confidence continue positive in we capacity, share the momentum our opportunities the can and North focus in spite In it of America these my through to are over remarks. we together formal our rising our to business. our execution This innovation our we the good above feeling And demand in of value in POS strong focus continued on long-term with pressure, current areas believe factors. which environment, strategy, concludes now gives on our is capitalize ESG-driven with create shareholders. So market and as for Sophie. in to progression driving that, supply trends to levels, about will shift closing, to we're sustainable I inflationary well-placed turn certain performance near-term seeing and in growth And us leaves that date tightness we pre-COVID us and the chain context

Sophie Argiriou

Instructions] will the turn to the Rhod. Thank back off question-and-answer [Operator session. you, over I call start to Gail? the now operator

Operator

Your comes [Operator from line question Lejuez the of Citigroup. Instructions] Paul first from

Paul Lejuez

the can capacity 'XX you you quarters? in we have give maybe third manufacturing then that, quarter? come And on price can when capacity sort the any to Curious update you impact we that orders what the under orders start about taking to of just 'XX already? expect And if impact will just Did online additional fulfill have additional future so that talking be increases us for increases, of far? seen what your able you might increases or price are the assumption on an the second, curious,

Glenn Chamandy

from we we Okay. end Well, what calls going $XXX this potential I'll about all end was be Well, towards capacity of that Central million that said are bulk year, be 'XX. going America. Glenn. to repurposing of equipment the it's fiscal what equipment the by is were expand in the our previous installed in take which And our installed equipment on the we were will we track question, neighborhood into capacity in of of of Mexico The revenue. was this to And for.

ramp the capacity being can to the ability XXXX the on balanced as started already past And that's I to capacity. we have -- increase. up bring levels as already we're our sales We support yarn out forward. price to you mean, producing our by as we support see, move

So same as really we day and our as yarns. well right the yarn managing through and every our to more as facilities experienced -- of in as their now is that's which really in capacity we yarn work what shortfall back we're get in training our which folks everything else type improving partners,

a be which working the and moving function we forward capacity availability on. focusing 'XX really yarn, our of we're ramped So and up will we're during of and the

have secure everything you yarn requirements this capacity first? focus just only answer want support we one to right sure Do is really in our buildup because major now is the So to we place. making else

Rhodri Harries

it On pre-COVID in any the the price to if you increases, Paul, and third third quarter. compare have levels, want to versus flat increase if didn't We're when and look the really, XXXX. price you quarter our we at net basically I pricing mean

As pretty called fourth into comments. take start we modest, but of in to move the will as it's kick price in some quarter, increases. you did They at out the beginning the my quarter, I

as And net you offset if and fourth of overall, at we cost XXXX. our vertically move So year, our place obviously, and versus price whole and think X% are. effectively manufacturing the see integrated to look we're Basics, price to X% we pressure mean about then I looking we the between our system, system increases. Back first we'll next in -- to where that's quarter

to cost to and we move ultimately offset need this move target place will our manage to operating so capacity. and driving Back about whatever in we really optimal scale as We we business, And we sorry, we'll at cost XXXX profile. margin as many that's be XX%. before, order we need we'll that in as efficiencies that, Basics take that us this for we talked look much And use of are our to as margin that use whatever times as believe run we've But possible. as or -- we price the to drive the into we

manage order as take we to manage manage our price well overall to given we I effectively our move we XXXX price will And up, we be forward. think on of we're will focus that use move so positioned And to But into that what and we set very as after all in again, that need efficiencies. that.

Paul Lejuez

might make that competition up competition? gaps match just look you price your how what adjustments do Rhod, your you as follow-up, And as price the price think the And a versus you adjustments? like right do see do your over now? how time changing to

Glenn Chamandy

why think feel there's we of keeping capacity be a focus just to is choose room company on, comfortable price gap That's we capacity-driven But if lot very that sales. mind have look, line that is raise our coming widening. top we and the prices. our we drive of and in to lots Well,

increasing. -- in have pricing where $XXX which don't versus going terms million the at a of think our our on is right available. The now are QX of and delivering world. And the competitors gearing QX big is be all I and of to we've So end But our got also focus the flexibility of million 'XX, $XXX which the in gap products our we build manufacturing is in now, up right big market, incremental we capacity. forget, we capacities Bangladesh, up have coming is

chance have available we lot to a us take believe, of and we a capacity market us, So is to, share. this for to

with top XX% of want that over these take comfortable to very we next line the years, share position. So and as together market period growth of and can all deliver we with as we think balance feel we long operating significant couple margins pieces

Operator

of from from Bank. Shreedhar comes line Vishal question the National next Your

Vishal Shreedhar

Congrats quarter. on the

In you terms margin, manage to the goes And and to where going on as forward? XX%? outset. performed be What other remains to may Or the would probably outlook, of you done? you at that using Basics, than management to better Can pull is are Basics? us that some give Back has inflationary very have are to Back on comments well pressure it I XX% management towards there that that drive levers anticipated

Glenn Chamandy

continue XX%. and XX% the we're focus, against the manage to our going to Well, is

might a look, And But moved like I bit year. the not I mean the up really. is think this -- a It a I that's it's did It's little Basics culture. our XX%. long to mean, Back term. focus given. is strategy it that's a And

organization So -- to made to and we've what done company successful. is large were able we've our a capture continue portion why the a beginning that's instilled products, being we our That's the into in stages what those discipline of of savings even low-cost share cost Gildan better and a from passing innovation is that strategy market developed manufacturer, pricing. quality better a to

of is Basics is to continuing Back core the company, what back competency to taking do. us to that's and we're what strategy Our just the

that still within opportunities So we there's system. our think

ways to I stop. capacity to never continue at and challenge reducing efficiency. yourself. and looking mean can You have to you We're at increasing costs look

our So DNA. that's of part

And and I but percentage mean is down up. in people in to fabrics So this seeing that's our have going excited capacity as going mean we're I going I continue all think, on, cost a all it's coming big we our Central operating that, very not America. to this is deflation. we're plans, evolve a coming to go forward. I we about million, operating inflation, $XXX is per -- converting are most as mean,

So about as leverage great that's do we to one our of we'll system, we the go how and things so forward. continue

Vishal Shreedhar

us hoping have if global perspective as Okay. And should provide it how applies that could we you on to and I tax was Gildan. think about any you minimum it

Rhodri Harries

the go what's Well, have And a we're it. a obviously, I understand has still go would to agreed it to to on the think global we and EU. I Congress it. get And say, probably and has will what been on how is read think now effectively forward. bit put through it's I at everybody going tracking good know to as minimum with looking we early, little really evolve Obviously, to tax go it forward,

think forward, I go competitive vertically we Basics. Back driven think have business important that that tax driven whole as growth It's very rate, our structure, that but of do result -- we as structure. the And our Central And Gildan all by number compete hard by what's pivot the change. setup as to we now forward. provides low system It's driven none a really advantage all about about will versus that a about advantage of people it's of it's a go drive factors. to strategy strong our vertical going integrated our competitive to integration. against. our overall the we as our in that, It's our America. we we by -- And that's have effective We're driven by

from So days. Again, how perspective, early we'll tax that a still see unfolds.

XX% on are focused margin. I operating think we obviously

-- margin. targets we A XX% a would increase, our that's XX% XX% operating if tax rates at increase. in And the our tax do margin operating out you that. up about if our I effective X%, if effectively, up which went last reassess XX% to we'll increase push is XX%, rate, around really to on margin the quarter. And XX% did our us push a XX% ultimately, probably think look

really running ultimately, driving And to deliver and DNA change the flow think, that our way ultimately. very shareholders think have we're So focus we we to to strong it's we strong, we way business, term. set is. free the going cash that's But that's long compete, way value on going the what for the not up,

Operator

Capital Markets. Stephen Next of from the question comes MacLeod from BMO line

Stephen MacLeod

One, I little give just -- a a was around Congrats situation. give hoping had bit X a could I just color supply quarter. on more you for great questions little you. your bit yarn

a as secondly, the it longer as you put towards mentioned potential seeing if term, inflationary just as you more you've wondering as gross give then the the of evolving well little And near-term around a through, you're color with near see respect how margin QX constraint a of You potentially well. capacity managing to and was I bit yarn. pressures pricing and sort QX term could you're into

Glenn Chamandy

take the one. I'll yarn Okay.

improvements. mean this look, et absenteeism little U.S. related yarn our we've pool bit cetera. has COVID-related issue huge mean, of mainly I and been and So a labor because -- of I made to an and

a something a we've word. So every even been improving long. -- broader as would sourcing struggling. also we that's the And that and I just We've But avenues. I and think, it's year, us. us started the all amongst turned our good day mean, affecting been that's I through we've sentiment year I maybe and well. quarter. say volumes -- We've us a -- increased we're the internal it's equipment we've other supply mean, not yarn partners now

we're Obviously, we're over there, see we're for. $XXX consuming what more and the we the we're driving we in this capacity. producing as So this plan of a XXXX year, us to course of we're But feel And -- potential today we're did basically some of we fully million. forward. utilized that's than moving that get actually our not

XXXX. feel So million in $XXX move through of a for yarn have we a significant be available as we portion us that should to position that we

Rhodri Harries

our was quarter, about points reserve and of in that margin, thing that So that margin one very, gross margin think basis we reversal for out XXX about The evolve margin very a If at if forward. go strong. the I would that's look how XX.X%, going was call of gross as was to you gross to related third we is promotions. the

in quarter. that margin increases year to be a in prior the expected now that associated certain the a the questions. see all that, out the see And our that, offset by fourth we then fourth little will raw about in from won't a headwind quarter was that In pressures. we -- get us that will we which will there fourth coming and of bit through from materials and uplift called quarter, We've inflationary So extent, hit come long through. we in we've that talked to price did

year. year. I we'll as whole move it again, in see that our And we currently that with and as focus from again, quarter-to-quarter to effectively good decline be the into up you goes as line this, effectively, think the move -- So will us move into that. numbers target I a quarter, But you'll -- able our a where keep together into as growth of quarter. think with sales, SG&A, margin gross will we're the XXXX that we we the again, to But focused target. I that will see level, how achieve on full down margin a fourth going we will deliver be move managing we And new everything, margin, you delivering to number at we overall, the fourth and in gross won't to XX% fact back then that be you'll see in we obviously the we hit the And capacity-driven fourth our broader into effectively pretty quarter, I are finish well think, running business are. think see, XXXX. that the quarter, year on operating But

Operator

of next from from Chris Your question line Desjardins. comes the Li

Chris Li

trying can sense of cotton of level. a the to content that to can been the for locked in above share, $X Glenn, just you surge extent prior prices? has how the tell next up common consuming, Gildan when start recent much us you get year in requirement I'm will to the has been

Glenn Chamandy

has that really of but is cotton for it don't that I other provide think way been trading a we now. time maybe some at one year-over-year higher looking quite significantly information, that on basis Chris,

moving I let's we today. in -- example, is I don't our to mean impacting going of it's yarn exactly But the say, because forward. of for terms we feel want of cotton. cost I mean have but cost to where we we obviously, volatile. sold cotton wouldn't that cotton, would is as We So the really already say position land, up. But higher probably comfortable a it's definitely still I or goods are say position go know our that don't -- just where

We visibility. have good

pricing we're is of have point line, XX% regardless -- lots be. think if room on which to operating strategy, And our at price and We the margin time. in of we I need is pricing deliver of going not have we this in cotton

So we I really as where are pretty comfortable into XXXX. we forward think, move we are,

Chris Li

question of a decline Do whatever in the past come in to tight had see very materialize that much? volatility you cotton as some where in big margin? current would a recovering volatility that quite time. to price experienced not helpful. were of Or supply risk cotton for That's short that there other margin down a as Okay. rapid And then and be there's is my by that type demand there's historically, period margin environment, when a is, followed do jump in prices you the the reason think the inventory where you will low but rapidly

Glenn Chamandy

Yes, right. [later to inventories $X ending we was I were look, mean, big mean, right, world when in I XXXX, the million XX cotton million]. and XX volatility because the went bales,

also function that. mean of big supply we're mean the world. is I cotton the of still to getting in chain a part I to cotton cotton in things not -- mean spike I So ample like disruption. there's going ports and

cotton. trying get and to are their people So panicking

I XXXX. I think So we're we that were going where raising to in our a aggressively position don't we're not I look, we've mean in say got I would that, be price. But mean, prices.

are to level you mean I slightly prices I Rhod look higher the same going be if what our I think QX 'XX. slightly we're at -- be 'XX QX, mean than at 'XX. said, as will

drive on low-cost are is, we in volume basics strength cost So our we're because competitors initiatives what to manufacturing, our raising price back pressure. under are and being our our think market using careful this to

is broken. to that with think and ramp to us cost And big structures advantage up that I and a then this $XXX share Bangladesh. up million our follow their for are take

So we're lower that receipt levels. going not need. price don't I to And we'll XX% be think we'll to what about to you we going down tell that we're margin, coming price. to to go I worry back take position on have in the crazy can and cotton of operating a manage

Operator

Luke of Next Hannan question line from comes the Canaccord from Genuity.

Luke Hannan

guess, the guess, you I just wanted end, pull-forward I chance would a your Was on seen cotton get the, any of a in demand you So part result have equation to some be inventory to of customers of QX. distributor these them their lower-cost on I notice opportunistic prices on any, the -- your from of follow and guess, higher? for did books. demand up there going I what as

Glenn Chamandy

Look, demand mean, saw QX our I decreased is QX have I our strong. destocking to mean, from customers' distributor so No. because slightly we QX. the in actually channel in actually -- inventories

COVID, people chain we of -- online mean by all strong. think is being The a cetera. through of demand. this the overall very needing has this pulled obviously, also A of happening lot market the from supply through through what's et grown is I onshoring, basically our is end-use So product. function selling, market onset is

actually is strong. business So very

on the fact, table. anything, if we In left sales

Luke Hannan

But in know calls, past talked restocking just Glenn, inventory anything there comfortable out just come there indicate prior their they guess, relative pandemic? the the the amount is of that then more onset of conversations sort would with potential, distributors that would in is delta, that, I the than they're post forward about to XXXX. to channel with the we've a lower Okay. And of to follow-up as books COVID of going that's your on having maybe I

Glenn Chamandy

No.

I that more think product. need they

think of I their I their 'XX in product, efficiencies probably mean, in think, are, lack I the today. are inventories the what channel. were of they mean, I half

get good in not We business below they not an levels where idea just right? optimal optimal to better business. they stand. the is from that's consumer size that It's that's inventory have to channel. need it's end where of So one in increase, what has you the do, to It's is working eventually, if So thing inventory And The before so those give to that it's capacity more it want channel. that something in inventory support there sure. one channel one shop, the inventories to East print I of that they to to That's Coast just from receive to an today. healthy. need these to West be product, your all eventually a you if buy take it they when wait ultimately of levels. we're or the ship of because strong, to will and their maintains our time and they obviously, more restock happen, have the Coast, in think -- size at users, not to happens for going some types amount And a

Operator

question the line from Securities. comes Next Morrison Brian TD of from

Brian Morrison

Maybe replenishment XX%. down you the in then because to within environment, Glenn, the the the now? follow demand channel? what Just inventory that in is up you're do your of terms you want when on to going in distributor commence think us And be just replenishment position channel on update needs as a see to question,

Glenn Chamandy

know obviously, So be mean don't we don't strong we move we Well, just positive. forward, turned how POS that, will as know I right? because it

think orders more business a leaving a I that today. we're the a fact. mean of I for table there's think -- know there's we it lot on We lot I had.

as capacity and we're the right that lot think of increasing we so POS. go we'll I And building forward, into a go

when is outstrip time part POS go? the a that don't point That's we at the good and problem could and to will basically demand we of how So that's know. the But in the the that high POS have. question what

our terms we'll mean bit it's So of and of to we see our volume little coming to Basics have one SKU. speak, as relatively we're think, to line. like are Back what We'd happens. I our capital good, more today. position along. manage in mean, a is strategies in working continue in our inventories I And obviously but I a

It's So needs a bit the low in are in little market fact but nothing that it's that significantly. capacity bit a higher that to demand inventories I to our don't aggregate able the support be little maybe our today. just think low, the be too to dollars,

Brian Morrison

state transfer what on Just into following of state is assets current Central up current that. Mexico? from your of the Where your your American is -- facilities

Glenn Chamandy

beginning up complete. ramp basically, assets this our to end XXXX That much build we have those yarn because -- quarter, over by we pretty forward to producing ramp today. which have we It's a of speak move will continue to I be installed. we're as up. mean plan We've we everything levels will of QX, already on and as utilize availability started

we're think I forward. moving So

'XX. be We will capacity that as sale million as move have have in we into much 'XX. $XXX to as available objective our more try And and for would

Brian Morrison

just question, in relative been supply headwinds. last notable that in the gaining context Or Is competition? to integration, still has the And pricing is vertical it benefit more gap of chain the share? market Okay. a

Glenn Chamandy

amount Well, we look, of that, I have think significant don't inflation. a

people vertically manage being you your are there effective, that your obviously that's as is control all managing of right? move in But destiny. forward. mean our supply own very right? chain success going I hemisphere, chain, paid driving it, when proven our it's to, a the in to got aspects to of you it's continue integrated in do look, position I few supply we're business. world you're I gap off. dividends effective mean become very more given, pricing the we think, a So So in pay can We've big a and

are are. that and move for to that's partners growth call mean good the wake-up steady I people going benefit They continue our a reliable to to to position from need everybody. continue integration. I product. we understand having I in And to forward. as think something as scrambling going continue this of for we think is world who are the a mean partners to So be we're vertical changes, also I with our that all

Operator

comes UBS. the Your line from of Sole Jay from next question

Jay Sole

bit in can the if little wondering I'm elaborate quarter. you a Glenn, on sources some of the demand

of like have some think as know reopened big completely is events of kind coming in I you result the to those the seen group they a of comes are back sources or as from kind were to middle really of different of coming things the back getting you the normal mean extent pandemic? world and pre that? where Specifically, orders you your of in demand stages we all your still

Glenn Chamandy

shirt mean are grown has I have people for through label they're you mean look at to that create can mean, to the brands create think I and has that print pre our shirt, market market the our that products, is that along the screen a the I a in online. canvas a right? -- product if I I I on they're the I they sell put think -- buy grown. pandemic, like able put their that brand, significantly for somebody we the think mean, said all brand.

we're run you a product can I to at So make during onesies With a and think, big of brand that operation digital has consumers, brand-driven selling the able relative which big to function our screen having time. of lot well, to units to printing have printing, where there's impact set a more a industry never the where a twosies. has which up before but basically that's lot has before. is, need a you make you and XXX in is a mean, and printing, I happened getting Online digital which opportunities. And pandemic, been become opportunity, to as

is take people send to and Retailers source reacting X But on provider do which online, is driving you a bigger, asking bigger later going and a days they're not their XX those T-shirts, your providers are that's with. I later, days somewhere XX shirt quicker or market. which quicker people that even with later, think, factor, I with general, your picture, the it you -- where and global buying get Near-shoring not to print you business it. more our brands days are we becoming to domestic, products a just just online are is think, in volume. So

has big So we a just factor. think casualization been

year-over-year can't it. enough make on and Our significantly continuing really. is fleece grow. up I mean of and business on significantly XXXX up basis to a we it's mean fire I over

are So driving those that all are business. things our

growth. year. business, POS, the we So we position but last I come that I mean lagging in only our which a in is which we're think back think is hasn't that's relatively little improved the bit area to really a good continue have, international over

Operator

Petrie [Operator next question from of Instructions] line comes the Your Mark from CIBC.

Mark Petrie

that on couple you've for working levels think capital, just that on. regards you up things of do to guess sort follow Or with of you at opportunity I just wanted touched the with today? I comfortable business, specifically other? capacity integration are move a there's you're to think strong. there that, additional the cash free one obviously, then extraordinarily through to related are about or flow way opportunities in acquisition? vertical opportunities is generation And expanding to When you the invest or for potentially your either to

Glenn Chamandy

you do answer that? to Rhod, want

Rhodri Harries

Yes.

to Basics through working Mark, look was mean has capital, XX%, optimization, in our low. we bit low. Back a we if a the around and working been the the tight, whole from I XX%, and the we right? a whole I it been lower been you capital. working On it's setup with are optimizing capital, little quarter, But It's our little look, would we have be actually, strategy. run benefit, should big able are And to to able say, about

say So we if about in you And something to our the with run running now that I with probably we low used that. think to about working around talk XX% think would probably XX%, can XX%. XXs, XX%, I capital like

it strategy, able we turn it a big So be a and -- little fast we low, where should we to want it's but be, it's our effectively, we it it is go -- bit forward. bit and to part reasonably of low keep below a as overall little

Glenn Chamandy

What was your second you asked, part the sorry? of question

Mark Petrie

either opportunities integration capital sort other of aside capacity, potentially to deploy was for acquisitions or other cash possibilities, to but asking vertical opportunities to just shareholders, too. add about I to returning presumably

Glenn Chamandy

for I we're ways to looking in think, of our capacity. terms business always grow look,

to top is there acquisition -- So I think or be us, some something that of type our capacity, textiles more if drive line really. probably growth, that's more more for going

we mean, would have Central amount we look capacity with X have of acquisition a have and So you. online, that I the in lot of coming probably textiles that's to America have mean? capacity today. be coming type X. at Bangladesh significant of we too, honest But our we a I know on, Bangladesh You what today we and

spot. relatively So good we're a

our look sure. So mean, continue to the deploying at near I term, for cash in to we'll shareholders,

obviously have through look We buy and capital we'll dividends. back returning shares continue at to

probably of term, that's I we will that's think in where flow, will the cash terms shorter where in the return be I really be -- -- think cash.

Operator

Next Stifel. the question from comes line from Jim Duffy of

Jim Duffy

your in lifestyle brands ESG speak guys seeing global to what on you you're engagement. start. your Can recognition Congratulations to

in standing foundation that opportunities to ESG constructive would very be new point expect to for Western discussions, any I business your manufacturing, Hemisphere Given to?

Glenn Chamandy

that positioning. our think, And geographical our customers. -- Well, continue going Tier And or part as think to I big definitely, we're are on we're X for look, product. supplier products not, to because us, strategy, markets, of a relationship these capitalizing future, continue our to of with we most as at on and focus developing be been supply combining move into game-changer is believe a near-shoring even we're going the with on of There's that talks in to our strategy to partners, is to business. ESG it growth with to I a grow need people think, because we rely their we're providing looking well we chain ourselves global brands and positioned positioning our their lifestyle believe continue other and ESG

Jim Duffy

ask of Great. you in POS? seeing increases? And to pull-forward attempt I Glenn, any an build stock distributor inventories can to from anticipated then of state relative of And a price demand are ahead distributors

Glenn Chamandy

And just positive relative half 'XX. put in of in about that ago inventory to roughly 'XX. I turning questions the was what perspective. to POS is it couple channel was I What to of really just No, is said the things mean, in no. a

channel. So inventories tight are in the

Operator

are There this time. questions Ms. no further at

Sophie, please continue.

Sophie Argiriou

Gail. And today, and thank Have that, Thank to their to you to participation you, day once look everyone speaking a wonderful forward like for we would everyone. Thank Great. to with again, soon. I you.

Operator

participating. for today's call. you Thank conference concludes This

You may disconnect. now

Gildan Activewear (GIL) 6 Nov 212021 Q3 Earnings call transcript