Canada's Gildan Activewear sees 2.4% sales growth to $891 mn in Q3

The company generated an operating income of $193 million, or 21.7 per cent of net sales. This compares to $155 million, or 17.8 per cent of net sales in the same period last. Adjusted operating income was $200 million or 22.4 per cent of net sales, in line with the guidance provided, and up $43 million or 430 basis points compared to the prior year, as per a press release by Gildan Activewear Inc.

SG&A expenses of $84 million included $6 million in carry-over charges related to the proxy contest, leadership changes and related matters. Excluding these charges, adjusted SG&A expenses were down 5 per cent to $78 million, or 8.8 per cent of net sales, compared to SG&A expenses of $82 million, or 9.5 per cent of net sales for the same period in 2023.

Cash flows from operating activities totalled $178 million and, after accounting for capital expenditures totalling $30 million, the company generated $149 million of free cash flow. GAAP diluted EPS were $0.82, up 12 per cent versus the prior year, while adjusted diluted EPS were $0.85 compared to $0.74 last year, up 15 per cent year over year, stated the press release.

"Gildan's Sustainable Growth Strategy (GSG) is clearly driving results, underscored by our record third quarter sales, including strong net sales growth of 6 per cent in Activewear. Through the continued successful execution of our three strategic pillars—capacity expansion, innovation and ESG —we are not only further strengthening our competitive position but also driving top line growth and enhancing profitability. We remain deeply committed to delivering long term value for our stakeholders and are excited about the opportunities that lie ahead," said Glenn J Chamandy, Gildan’s president and chief executive officer (CEO).

Year-to-date (YTD) operating results

Net sales for the first nine months ended September 29, 2024, were $2,449 million, up 1.5 per cent versus the same period last year. The company generated gross profit of $751 million, up $107 million versus the prior year, driven by the increase in sales and gross margin. Gross margin of 30.7 per cent was up by 400 basis points year over year mainly a result of lower raw material and manufacturing input costs, partly offset by slightly lower net selling prices.

The company generated operating income of $439 million, or 17.9 per cent of net sales. This compares to operating income of $466 million or 19.3 per cent of net sales in the same period last year, which included the benefit of a $77 million net insurance gain and a $25 million gain from the sale and leaseback of one of US distribution facilities, partly offset by restructuring costs of $35 million. SG&A expenses were $312 million, $70 million above prior year levels. Adjusted operating income was $521 million or 21.3 per cent of net sales, up $122 million or 480 basis points compared to the prior year, said the press release.

Net financial expenses of $77 million were up $19 million over the prior year due to higher interest rates and higher borrowing levels. GAAP diluted EPS and adjusted diluted EPS were $1.62 and $2.18 respectively, compared to GAAP diluted EPS and adjusted diluted EPS of $2.14 and $1.82 respectively, in the prior year.

2024 financial outlook

The company expects revenue growth for the full year to be in the low-single digits, a slight increase from previous guidance of flat to low-single digits. The adjusted operating margin is expected to be just over 21 per cent, up from its earlier target range of slightly above 18 to 20 per cent and capital expenditures to be around 5 per cent of net sales, consistent with previous guidance.

Adjusted diluted EPS is projected between $2.97 and $3.02, a substantial rise of 15.5 to 17.5 per cent year over year, slightly narrowing from our previous estimate of $2.92 to $3.07. Free cash flow still anticipated to surpass 2023 levels, driven by higher profitability, reduced working capital investments, and lower capital expenditures than last year, concluded the press release.

Fibre2Fashion News Desk (SG)