Q1 2025 Hanesbrands Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the HanesBrands' first quarter 2025 earnings call.
At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to T.C. Robillard, Vice President of Investor Relations. Please go ahead.
Speaker Change: Good day, everyone, and welcome to the HanesBrands Quarterly Investor Conference calling webcasts. We are pleased to be here today to provide an update on our progress after the first quarter of 2025.
Speaker Change: Hopefully everyone has had a chance to review the news release we issued earlier today. The news release, updated FAQ document, and the replay of this call can be found in the investor section of our Haynes.com website.
Speaker Change: On the call today we may make forward-looking statements, either in our prepared remarks from the associated question and answer session.
Speaker Change: These statements are based on current expectations or beliefs and are subject to certain risks and uncertainty that they cause actual results to differ materially.
Speaker Change: These risks include those related to current macroeconomic conditions, consumer demand dynamics, our ability to successfully execute our strategic initiatives, including our restructuring and other action-related items, our ability to de-leverage on the anticipated timeframe and the inflationary
Speaker Change: These risks also include those details in our various filings with the SEC, which may be found on our website. These forward-looking statements should be considered in conjunction with the cautionary statements in our news release and in our filings with the SEC.
Speaker Change: The company does not undertake to update or revise any forward-looking statement, which speak only to the time that which they are made.
Speaker Change: and with otherwise noted, today's references to our consolidated financial results and guidance exclude all restructuring and other action-related charges and speak to continuing operations.
Speaker Change: Additional information on the quarter's results in our guidance, including a reconciliation of these and other non-GAAP performance measures to gap, can be found in today's news release.
Speaker Change: With me on the call today are Steve Bratspies, our Chief Executive Officer, and Scott Lewis, our Chief Financial Officer.
Speaker Change: But today's call, Stephen Scott will provide some brief remarks and then we'll open it up to your questions. I'll now turn the call over to Steve.
Speaker Change: Thank you, TC. Good morning, everyone, and welcome to our first quarter earnings call. Today, I'd like to focus on two key points related to the transformation work we've completed, and a long-term growth strategy we are executing.
Speaker Change: The first is that our strategy is working and continues to drive strong results.
Speaker Change: And second, we will be our strategy enables us to successfully manage through the current Terrace Environment, which presents challenges that also creates real opportunities.
Speaker Change: From a larger standpoint, we believe we will fully mitigate the tariff headwind as we have many levers to pull, including further cost reductions and pricing actions.
Speaker Change: I mitigation initiatives are consistent with and build upon the work we're already doing within our growth strategy.
Speaker Change: And from an opportunity standpoint, we're already seeing carefully the disruption of creating incremental revenue opportunities in the market.
Speaker Change: With our Western Hemisphere supply chain speed and capability matched with our strong retailer relationships we believe we're in an advantage position to capture new revenue and gain additional market share.
Speaker Change: Beginning with my first point, and thanks to the hard work of the Global HBIT, our growth strategy is working.
Speaker Change: We're seeing it in our results as we look at another strong quarter, including better than expected sales, worse margin, operating profit, and earns per share.
Speaker Change: Over the past few earnings calls, we've spoken about the successful transformation work we've done, simplified and reposition HanesBrands.
Speaker Change: We strengthen our brands. We streamline our supply chain assets while remaining diversified and balanced across the globe with capacity for growth.
We've got discipline operating capable though.
Thank you.
Speaker Change: We removed fixed costs, now we strengthen our balance sheet by paying down over $1 billion of debt last year and refinancing our 2026 maturities in March.
Speaker Change: Today we're a new company. We're healthier, leaner and more profitable.
Speaker Change: We're operating on a stronger foundation and we're leveraging our competitive advantages to drive revenue growth, margin expansion and strong cash flow.
Speaker Change: The benefits from our transformation plan and the reduction of debt are evident in our first quarter results.
Speaker Change: We drove accelerating growth rate down the P&L, that sales increased 2% operating profit increased 61% and EPS increased 240% of a prior year.
Speaker Change: On an organic constant currency basis, international sales increased 4%, which was ahead of our outlook, driven by growth in Australia and Asia.
Speaker Change: In the U.S., sales decreased 1%, which was in line with our expectation. On-going consumer headwinds continued to pressure the U.S. interwar market, in particular, the Interminoparel category, which typically experiences the greatest pressure in tough macroeconomic environments.
Speaker Change: While our intimate business was down mid-teens, as compared to last year, we generated solid growth in our other businesses, including low single-digit growth and basics, mid single-digit growth
Speaker Change: and 60% growth in new businesses, which includes our scrubs and last-world products, among others.
Speaker Change: We also deliver strong profit growth. Our short management initiatives and cost-re-structuring actions help drive 390 basis points of operating margin expansion over a prior year.
Speaker Change: Approximately 60% of the margin improvement came from lower SGNA expenses.
and 40% from further expansion of our gross margin.
Speaker Change: A particular note, SG&A lever 225 bass points over prior year, even with incremental 50 bass points of brand investment in the quarter, as our cost reduction actions have scaled to the point where they're more than offsetting our investments.
Speaker Change: and with over $1 billion of debt reduction last year, we had lower interest expense in the quarter, which further accelerated our profit growth and helped drive at 240% increase
Speaker Change: As I pivot to my second point on how our strategy enables us to successfully manage to the current environment.
Speaker Change: I'd like to take a moment to help ground everyone on the mix of our business and our supply chain network.
Speaker Change: The U.S. accounts for roughly 75% of our sales and cost of goods.
Speaker Change: The remaining roughly 25% are in international markets. Therefore, 25% of our PNL is not directly impacted by the U.S. terrorists.
Speaker Change: With respect to sales in the US, roughly two-thirds are basic products, namely underwear and socks.
Speaker Change: Looking closer at our U.S. cost of goods, approximately 85% is from our own manufacturing facility, which gives us greater speed and ability to shift units within our supply chain.
Speaker Change: Of this, we are essentially split evenly between our Western Hemisphere Network, which includes the Dominican Republic, El Salvador, and Honduras, and our Eastern Hemisphere Network, which includes Vietnam and Thailand.
Speaker Change: Remain 15% of our U.S. cost of goods is sourced from a number of different countries across various regions.
Speaker Change: With respect to China, we know water source any U.S. products from there. China historically was a low single-digit percent of U.S. costs of goods, today is zero.
Speaker Change: As I mentioned, the current tariff environment creates both challenges and real opportunities.
Speaker Change: Over the past several years, you've seen us be proactive and have a number of levers we can pull.
We're confident in our ability to successfully manage through this environment.
Our confidence comes from two factors.
Speaker Change: First, we have a proven track record of managing through market disruptions and coming out the other side, a strong company.
Speaker Change: And second, the initiatives we're taking to mitigate costs and capture incremental revenue are aligned with and build upon the work we're already doing within our gross strategy.
Speaker Change: And as we've seen over the past several quarters, our growth strategy is delivering results, including our strong start to the year.
Speaker Change: Looking at the cost impact of cherish, we believe we can fully mitigate these hits.
both of the short and long-term. [inaudible]
Speaker Change: for starters, announced tariffs are not expected to impact us to Q4.
Speaker Change: and we have US yarn and US content in our products which are not subject to our typical tariffs. In other words, we have natural tariff offsets embedded in our products as the US content within our imported products is exempt from our products.
and Christopher Cooke-Harris.
Speaker Change: We have a number of levers we can pull to mitigate the cost and impact and we expect the use of combination of initiatives.
Speaker Change: Our current cost reduction actions are delivering savings faster than expected.
and we'll continue to accelerate these actions.
Speaker Change: or further tightening our spending as well as picking actions to preserve cash flow.
Speaker Change: and with our diversified supply chain, we also have the ability to shift production and further optimize the network.
Turning to the Revenue Opportunity
Speaker Change: We believe we are well positioned to navigate the current demand environment.
Speaker Change: We have visibility to incremental revenue opportunities that have been created from the terror-related disruptions in the market.
Speaker Change: With our Western Hemisphere Supply Chain Speed and Capability, that's with our strong retail relationships. We believe we're in an advantage position to capture this revenue and get additional markets here.
Thank you.
Speaker Change: We're also advanced to drive additional revenue growth through our transformation work which has simplified the business and positioned us in more stable-based products as well as our growth strategy. It's working and we're leading in.
Speaker Change: Brand Investment and Innovation have been contributing to growth and will continue to make these investments.
for Driving New Businesses. [inaudible]
Speaker Change: which increased 60% of a prior year in the first quarter, and we expect growth to continue this year, driven by new product launches, meeting incremental consumer needs, and space expansions.
Speaker Change: and we're leveraging our short-remanagement capabilities and advanced analytics to make us more nimble and able to quickly pivot to capture demand, whether it shifts channels, products or facturizes.
Speaker Change: We're closely monitoring all of our retail programming, taking close to the consumer to make
[inaudible]
Speaker Change: So, in closing, we are confident that our transformation work and our growth strategy positions us for success both in the near and long term. We are delivering strong financial results as evidenced by our most recent quarter.
Speaker Change: We have a strong asset base, meaningful competitive advantages, and the speed and flexibility to manage through the current market environment.
Speaker Change: And finally, we have multiple avenues to drive increased year-old returns over the next several years.
Speaker Change: to fix sales growth further margin expansion and continued debt reduction.
And with that, I'll turn the call over to Scott.
Scott Lewis: Thanks, Steve. We deliver another strong order, including better than expected sales, Grace Marchin, Operating Profit, and Earnings for Share.
Scott Lewis: This great to see the benefits of our growth strategy, as well as our transformation work reflected in our results. Our strong performance is a testament to all the hard work from the team over the last several years.
Scott Lewis: While this year is bringing a new set of challenges, I believe we are a stronger, more resilient company today than we were very well positioned to succeed in any operating environment.
Scott Lewis: Where the days come, I touch on the highlights from the quarter, and then I provide some thought for the outlook.
Scott Lewis: for additional detail about pointing to our news release and FAQ document.
Scott Lewis: Turning to the details of the quarter, Bill on a reported basis increased 2% over a prior year to $760 million.
Scott Lewis: Adjusting for the impact from foreign exchange rates and trans-is and services revenue, they hold on our organic cost and currency basis for consistent with prior year.
Scott Lewis: We've all continued year-to-year expansion in both our gross and operating margins, as our cost savings and assortment management initiatives are driving structurally higher and sustainable margins, while funding increased brand investment.
Scott Lewis: For the quarter, Grossmargin increased 165 basis points over the prior year as 41.6%
Scott Lewis: Combination that these drove at 390 basis points of expansion of our operating margin to 10.7% for the quarter.
Scott Lewis: And respect to earnings for share, EPS increased 240% over the last year at 7%. From primarily the higher margins, as well as lower interest expense, as we've benefited from our meaningful debt reduction efforts over the past year.
Scott Lewis: Respect to cash flow and the balance sheet. We reported a use of 180 million dollars of cash flow and operations in the quarter. As we saw the normal seasonal inventory bill ahead of our plan back to school programs with key retailers.
Scott Lewis: Leverage at the end of the first quarter, there's 3.6 times and net debt to just the
This is 1.4 turns lower than prior year.
Scott Lewis: In March, we refining as all of our 2026 maturities, resulting in a greater mix of prepatable death.
Scott Lewis: This increased flexibility in our destruction allows us to continue to meaningfully to deliver our balance sheet going forward.
and now turning to God.
Scott Lewis: Outlet for the second quarter includes continued margin expansion and operating profit growth and even faster ETS growth.
Scott Lewis: For the second quarter, we expect sales of approximately $970 million, operating profit of approximately $146 million, and EPS of approximately $8 million.
Scott Lewis: We also reiterated our full-eager outlook, which now reflects the impact and tears as of what we know today.
Scott Lewis: To be some context on the assumptions within our employer outlook, from a sales standpoint, recall Lee initially said our outlook in February , which took a more conservative view of the consumer environment relative to the market's consensus view at the time.
Scott Lewis: First transformation, the mixture of our business has its better position in the current environment.
Scott Lewis: 25% of our sales are from international markets, which continue to perform well and are outside of the U.S.
Scott Lewis: and within the U.S. roughly two-thirds of our sales are from facing in-a-word products, which is historically outperforming other parallel categories during tough macroeconomic periods.
Scott Lewis: And as Steve mentioned, we are pursuing and evaluating incremental revenue opportunities from a number of our retail partners who are looking to address expected supply gaps as well as reduce exposure to the hot care of countries.
Scott Lewis: From a profit perspective, we continued to have good visibility to enter the cost and cost savings essentially through the remainder of the year. Owlick now reflects what we know about tariffs today and our expectations for the impact on our business, including an adjustment for the US content within our products that is a event from reciprocal tariffs.
Scott Lewis: And with roughly two quarters of inventory on hand, the cost head went from Paris will not impact us until the fourth quarter this year, which is expected to give us plenty of time to enact our mitigation initiative, as well as monitor the progress and negotiation.
Scott Lewis: Batman, everything we know today was certainly to change. We believe we are well-positioned to manage to do the current tariff and bomb.
Scott Lewis: Brookhoff that we can fully mitigate the cough and cash flow ahead of them, both in the short and long term.
Scott Lewis: and with our transform business, the momentum and our growth strategy, and the incremental revenue opportunities due to our Western Hemisphere capabilities, we believe we have the tools and the agility to successfully navigate the current demand environment.
Scott Lewis: So, in closing, we feel really good about our competitive position from, I believe, we are very well positioned to succeed in any operating environment.
Scott Lewis: We're a healthier, leaner, and more profitable company. We're operating on a stronger foundation that we're leveraging our competitive advantages to drive revenue growth, margin expansion, strong cash flow over the next several years.
With that, I'm from the Colorado T-Sync.
TC: Thanks Scott. That concludes our prepared remarks. We'll now begin taking your questions and we'll continue as time allows. I'll turn the call back over to the operator to begin the question and answer session. Operator?
Speaker Change: As a reminder, if you'd like to ask a question, please press Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 1-1 again.
Please stand by when we compile the Q&A roster.
Our first question comes from Jay Sole with UBS.
Jay Soule: Great, thank you so much. See, two questions for you and it's got one for you.
First.
just on Terrace and your ability to mitigate the impact.
Jay Soule: I mean, you gave a lot of great color, but you can just tell us a little bit more about
Jay Soule: You know, what your effective tariff rate is given that, you know, some of the product does come from the US that's not impacted by, you know, the reciprocal tariffs. If you can talk about that, that'd be helpful. And also, it's revenue opportunities.
You mentioned...
Speaker Change: Maybe give us a little bit more color on where they're coming from or we're talking about making private label for companies or we're talking about more opportunity for the Hanes brand and other brands in the portfolio. And then Scott, just because they're coming here in seven cents in q1 and I think the guy is just for two cents, he just maybe elaborate on where the upside was in the quarter. What was better than you expected? Thanks so much.
Speaker Change: Thanks Jay, good morning. Yeah, let me start with, we believe that we can fully mitigate the tariff headwinds both in the short and the long term, and we think that will start from day one.
Speaker Change: Some contacts on it, you know, for starters, and you mentioned this, you know, tariffs aren't expected to hit us until Q4, so we've got two quarters of inventory on hand.
Speaker Change: that allows us to kind of manage through in the short term.
Speaker Change: and we do have meaningful U.S. content in our products and this is exempt from reciprocal tariffs. You know, we're primarily a basics company and there's a lot of cotton in that product. So we have some natural nets to the overall tariff impact.
Speaker Change: Our mitigation plans also assume a higher tariff rate so as we have planned and done our internal work, we are planning for a higher number than it's out there right now to give us some pushing if the numbers stay where they are.
which gives me a lot of confidence.
Speaker Change: in our ability to offset. We also have a great balance of East West Ming factoring in our supply chain and zero exposure to China now, so that gives us a lot of capability to maneuver in this difficult environment. So we're being very proactive, there's a lot of different levers we can pull.
including both costs and pricing actions.
and on top of that, we are thinking...
Speaker Change: about strategic and surgical pricing actions. And we know with the strength of our brands the market share leadership that we have will confident in our ability to take that action over time.
Speaker Change: and I would tell you this will be a fluid situation. You know, we have the ability to shift production and optimize our network further. So, you know, we have a plan, it'll be fluid and we'll stay kind of on our front foot as we go through this.
Speaker Change: Underlying a lot of this or along with this is the tariff cut we'll call it revenue opportunities that we've been talking about.
Speaker Change: and we feel we're really well positioned to capture them. If you remember, we started the year with a relatively conservative position on the top line and these are additives to that and they are driven by our western hemisphere supply chain.
Speaker Change: It's not private label, it stands to your question directly, so we're looking at expanding our brands and the ability to do that. You put all this together and you know that with us the revenue opportunities, the cost position, our position on tariffs, we are able to with confidence confirm our guide for the full year.
Speaker Change: Good morning, Jay, and thanks for your question. We're very pleased with our first quarter performance and it really the upside came in several areas. One is sales came in better than expect the teams did a really good job of delivering, delivering all the quality of the sales standpoint across the board, US and international. [inaudible]
Speaker Change: And then if you move down to Costa Salad and Gross Profit, we're seeing, you know, cost savings bill, we're seeing the assortment management mix really coming through and it's
Speaker Change: It's really interesting as you see the combination of those two as they build and build. We are looking to, you know, over all for the four year, our gross margin is going to be up. And as you move forward, SGNA is going to be a bigger part of our operating margin.
S-G-N-A, cost-saviors of law and through.
Speaker Change: We're at a pace now where our investments are at a good level when now you're seeing those cost savings flow through the P&L or federal leveraging SGNA as you move on, so get across the board and across all those areas.
God, thank you so much.
Our next question comes from Paul Kearney with Barclays.
Take good morning, nice results. Thanks for taking my question.
Speaker Change: Can you talk a bit more about what you're seeing in the market and the conversations with retailers and how they're managing their inventory?
Speaker Change: Additionally, what are you seeing competitors do in terms of pricing today? And then just a clarifying question on the last one, where retailer partners are looking to backfill inventory that maybe was coming from China. They're looking to backfill.
Speaker Change: potentially private label with HanesBrand. Is that the correct interpretation? Thank you.
Speaker Change: Yeah, so let me take the last one first. No, we're not in private label discussions with
Speaker Change: with retailers. We're a branded company and we're going to continue to build that. Sometimes they're looking for other backfill, other brands, they're looking to fill any short-term or long-term gaps and they expect that.
Speaker Change: To be clear, we're not getting into the private label business, and that is not a focus of what we're doing. Clearly, there'll be some space moves around, and we expect to gain some incremental space while this goes on. We've got a great back half plan on space to begin with just in our core business, but we think this will be some incremental growth.
in space for us as we go forward.
Speaker Change: In terms of discussions with retailers, they're very positive right now, we've got very deep long-term relationships with all the major retailers, and they know based on past disruptions in the market that they can come to us, and we can deliver very quickly opportunities for that.
Speaker Change: and that's kind of what's happening right now. There's a discussion with a number of retailers.
Speaker Change: Some we do business with today and some we're not doing business with today that are approaching us to see what we can do for them in the near term to drive business and fill gaps that they're anticipating.
Speaker Change: Everyone's managing inventory relatively tightly. As you can imagine, we don't see any disruptions in inventory in the market. The business is progressing pretty well in those.
As far as inventory is concerned.
Speaker Change: I think the third question was around pricing and what are we seeing in the market right now?
Speaker Change: We monitor the market incredibly closely. Watch exactly what's going on and know what everyone's doing.
Doing...
Speaker Change: I don't think you're going to see, or we haven't seen a lot of significant price moves yet in the market, but we're watching it very closely. More importantly, we are building our plan for what we're going to do. We have some strategic pricing, it's a very surgical pricing.
Speaker Change: It may differ by brand, it may differ by category, it may differ by geography, but we're very confident in our ability to take price as necessary as a part of our broader plan to offset the tariff situation and that should put us in position to have a real strong year building on the first quarter.
Our next question comes from David Swartz with Morningstar.
David Swartz: Alright, thanks for taking my question. You mentioned some weakness in the women's business in the quarter. I was wondering if you expect that to persist. And whether you think that's due to market conditions solely or is it also if
David Swartz: is also a market share loss of factor. And also in the past when you've had weakness in that category due to economic issues, how quickly you've seen it bounce back. Thanks.
church.
David Swartz: Good morning, David. First of all, say, we talked about weakness in the intimate apparel business, not to share a women's business, our women's business, you know, crosshains is doing quite well and we're confident and feel good about that business. But in intimate, so I tell you is it is the most challenged category in the innerwear business.
David Swartz: It tends to be the category that suffers the most and it tends to be the one that moves first.
David Swartz: It's also the most exposed to the mid-tier department store channel, which is the most challenged channel right now. On top of that, though I would tell you, I'm not happy with where we are in intimates right now. We have work to do to continue to improve that business.
David Swartz: and it's different parts of our business. So for example, our ballet and playtics business are actually doing quite well and we're seeing growth in those businesses and I'd like how they're positioned in the mass channel on Amazon. Those parts of the business are doing quite well.
David Swartz: We could see it to expect those to outperform over time with the innovation that we'll bring in the investments that we're putting behind the brand.
David Swartz: The biggest challenge we have right now is our main inform business.
David Swartz: We have an opportunity to improve and broaden our approach there. We launched M last year and it worked well in terms of gaining share with younger consumers.
Excuse me, younger consumers.
and Improving Brand Perception.
David Swartz: But it really wasn't focused on a large enough portion of the category so we're pivoting this year you're going to see us focus on T-shirt bras in the made form business which is the biggest part of the category. We're going to focus on T-shirt bras in the made form business which is the biggest part of the category.
David Swartz: and continue to focus that in the math and online, and I think we'll be able to see that business turn around.
David Swartz: But all of that said, I think the intimate business will have the longest headwind.
David Swartz: in the current economy than the more basics business, which has been growing quite well for us and we had a good first quarter across basics, up low single digits and the active business up mid single digits. So, we're working to offset the weakness and intimates.
That's helpful. Thanks a lot.
Our next question comes from Ike Boruchow with Wells Fargo
Ike Boruchow: Hey, good morning, everyone. Two questions for me. Sorry, Steve, I jumped on a little late.
David Swartz: I understand on the tariff side, you're in pretty good shape based on the nuances of your business. Is it to the extent where you would say the unmitigated?
David Swartz: Tariff Impact on your business is zero. Is it a little bit above that? I'm curious if you get how granular you'd be comfortable getting on that and then based on anything that you've, you know, kind of encountered the last couple months, obviously pretty volatile environment, any change to the low 40's? [inaudible]
David Swartz: Kind of gross margin outlook you have for the business. Go forward on any near term volatility to that. Just just curious how you frame that thank you.
David Swartz: Sure. Good morning, Mike. In terms of the impact, I mean, we will mitigate all of it. So that would be zero. If you think about the paraphrase that are out there right now as they exist.
David Swartz: We know we can mitigate that, and we are planning for more than that to be able to offset it, to build, you know, we always plan for a rainy day and, you know, build cushion into how we're approaching it. So, we feel good about our ability to mitigate that and have lots of levers to pull.
David Swartz: Regarding the gross margin in low 40s, the short answer is no, no change in our outlook for that.
David Swartz: We have continued to have offsets, you know, been very pleased with our performance in The Gross Margin and you know our way we built back both past the inflation and now going beyond that and we continue to see really strong performance. Thanks.
David Swartz: Carter over quarter, and we will see that for the full year, so no issues there at all.
Cool, thank you.
Our next question comes from Paul Lejuez with City [inaudible]
Hey everyone, this is Brandon Cheatham, one for Paul.
Speaker Change: I was hoping we could, you know, double-click into the potential benefit.
you know, from these incremental programs that you're receiving in bounds on.
Speaker Change: You know, what is your capacity currently? And I was hoping that you could break that out versus your, you know, Eastern capacity and your Western capacity just if we could try and like size the potential opportunity there. And the end bounds you've received. Are they are they mostly interested in your Western, you know, manufacturing capacity or is it, you know, kind of your your whole network? [inaudible]
Speaker Change: Sure, good morning, Brandon. So let me see if I can try to break some of this out for you. In terms of the interest that's coming in, they're interested in ability to supply product in an effective cost efficient way.
Speaker Change: and then rely on us to figure out where to make that, how to make that for them depending upon timeline. So certainly the Western Hemisphere...
Speaker Change: creates a lot of interest and often I would probably argue calls come first because of that but we have the capability to move it around the globe.
Speaker Change: to make it where it's best to make it and where that is the most efficient from a cost perspective and from a time perspective. So flexibility there.
Speaker Change: In terms of capacity, we've done a lot of work on our supply change over the last couple of years.
Speaker Change: in terms to streamline it to make it more effective, more efficient. Obviously, the sale of champion was a big lever in that. We closed some facilities, closed some distribution centers to make us optimize from a cost perspective.
Speaker Change: That said, we have capacity for growth, and as we went through all of that supply chain work, that was one of our priorities.
Speaker Change: is to make sure that we have both short-term and long-term growth ability. So we have surge capacity in our network today, and then we have long-term capability at the same time. So I'm not worried about running out of capacity as we go after these new revenue opportunities.
Speaker Change: That concludes today's question and answer session. I'd like to turn the call back to TC Robillard for closing remarks.
Speaker Change: We'd like to thank everyone for attending our call today and we look forward to speaking with you soon. Have a great day!