Q1 2026 Gildan Activewear Inc Earnings Call

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[Analyst]: You look good. Get on my mind. I say, Hey, baby, do you wanna come over? You say, No way. You move in closer. Next thing I know, you were in my T-shirt. Ooh, you look just so damn hot in my T-shirt.

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Speaker #3: Ooh, you look just so dang hot in my T-shirt.

Operator: Ladies and gentlemen, thank you for standing by and welcome to Gildan Activewear's 2026 Q1 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jessy Hayem, Senior Vice President, Head of Investor Relations and Global Communications. Please go ahead.

Speaker #5: Ladies and gentlemen, thank you for standing by and welcome to Gildan Activewear's 2026 Q1 earnings conference call. Please be advised that today's conference is being recorded.

Speaker #5: I would now like to hand the conference over to Jessy Hayem, Senior Vice President, Head of Investor Relations, and Global Communications. Please go ahead.

Speaker #6: Thank you, Angela. Good morning, everyone, and thank you for joining us this morning. Earlier today, we issued a press release announcing our results for the first quarter, while maintaining our guidance for 2026, as well as our three-year objectives for the 2026-28 period.

Jessy Hayem: Thank you, Angela. Good morning, everyone, and thank you for joining us this morning. Earlier today, we issued a press release announcing our results for Q1 while maintaining our guidance for 2026, as well as our three-year objectives for the 2026, 2028 period. The company's Management Discussion and Analysis and consolidated financial statements are expected to be filed with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission today, and will also be available on our corporate website. As a reminder, please note that we'll be holding our annual general meeting today at 2:00 PM Eastern Time with more information available on the events page of our corporate website. Now joining me on the call today are Glenn Chamandy, President and CEO of Gildan; Luca Barile, Executive Vice President, Chief Financial Officer; and Chuck Ward, Executive Vice President, Chief Commercial Officer.

Speaker #6: 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.

Speaker #6: Securities and Exchange Commission today, and will also be available on our corporate website. As a reminder, please note that we'll be holding our annual general meeting today at 2:00 PM Eastern Time, with more information available on the events page of our corporate website.

Speaker #6: Now, joining me on the call today are Glenn Chamandy, President and CEO of Gildan; Luca Barile, Executive Vice President, Chief Financial Officer; and Chuck Ward, Executive Vice President, Chief Commercial Officer.

Speaker #6: 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 defer materially from future results expressed or implied by such forward-looking statements.

Jessy Hayem: 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 Administrators, including in the case of our fiscal 2026 outlook and our three-year objectives for the 2026, 2028 period, as well as certain risks and assumptions related thereto, and our earnings press release dated 30 April 2026. During this call, we'll also discuss certain non-GAAP financial measures.

Speaker #6: We refer you to the company's filings with the U.S. Securities and Exchange Commission and Canadian Securities Regulatory Authorities including in the case of our fiscal 2026 outlook and our three-year objectives for the 2026-28 period, as well as certain risk and assumptions related there to and our earnings press release dated April 30th, 2026.

Speaker #6: During this call, we'll 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.

Jessy Hayem: Reconciliations to the most directly comparable IFRS measures are provided in today's earnings release as well as our MD&A. Before I turn it over to Glenn, a few items to note. Remember that the Q1 represents the first full fiscal reporting period during which the results of Hanesbrands are fully consolidated into the company's financial statements. Please note that we may refer to Hanesbrands as Hanes throughout this call. As previously announced, the Hanesbrands Australian business, which we refer to as HAA, has been classified as held for sale and reported as discontinued operations as of 1 December 2025, the date of closing of the Hanesbrands acquisition. Unless otherwise indicated, the figures we'll be discussing today are from continuing operations and therefore exclude the results of the HAA business.

Speaker #6: Before I turn it over to Glenn, a few items to note. Remember that the first quarter represents the first full fiscal reporting period during which the results of HanesBrands are fully consolidated into the company's financial statements.

Speaker #6: Please note that we may refer to Haynes Brands as Haynes throughout this call. Then, as previously announced, the Haynes Brands Australian business, which we refer to as HAA, has been classified as held for sale and reported as discontinued operations as of December 1st, 2025, the date of closing of the Haynes Brands acquisition.

Speaker #6: So unless otherwise indicated, the figures will be discussing today are from continuing operations, and therefore exclude the results of the HAA business. With this in mind, we are only in position to confirm that the sale process is progressing as expected and will not provide any further updates at the moment.

Jessy Hayem: With this in mind, we are only in position to confirm that the sale process is progressing as expected and will not provide any further updates at the moment. As we announced last quarter, we have transitioned to reporting disaggregated net sales by wholesale and retail as of Q1. You will find in our press release supplementary pro forma net sales from continuing operations disaggregated by channel and geographic area on a quarterly and full year basis for 2025. You'll also find supplementary pro forma net sales from continuing operations for the same periods, showing Gildan on a standalone basis and adjusted for Hanesbrands sales. For reference, wholesale comprises sales to distributors, screen printers, embellishers, and global lifestyle brand customers, which we refer to as GLB.

Speaker #6: Also, as we announced last quarter, we have transitioned to reporting the segregated net sales by wholesale and retail as of the first quarter. You will find in our press release supplementary pro forma net sales from continuing operations disaggregated by channel and geographic area on a quarterly and full-year basis for 2025, in addition, you'll also find supplementary pro forma net sales from continuing operations for the same periods showing Gildan on the standalone basis and adjusted for Haynes Brands sales.

Speaker #6: For reference, wholesale comprises sales to distributors, screen printers, embellishers, and global lifestyle brand customers, which we refer to as GLB. Whereas retail comprises sales to mass merchants, department stores, national chains, specialty and online retailers, and directly to consumers.

Jessy Hayem: Whereas retail comprises sales to mass merchants, department stores, national chains, specialty and online retailers, and directly to consumers. Now I'll turn it over to Glenn Chamandy.

Speaker #6: And now, I'll turn it over to Glenn.

Speaker #7: Thank you, Jessy, and good morning, everyone, and thank you for joining us on this call. As we highlighted in this morning's press release, we are pleased with our first quarter performance.

Glenn Chamandy: Thank you, Jesse, good morning, everyone, and thank you for joining us on this call. As we highlighted in this morning's press release, we are pleased with our Q1 performance, reflecting disciplined execution and continued progress against our strategic priorities. We delivered record Q1 sales from continuing operations of nearly $1.2 billion, which were up 64% versus last year, primarily due to the Hanesbrands acquisition. We also reported adjusted diluted earnings per share from continuing operations of $0.43 compared to $0.59 in Q1 2025, reflecting the short-term impact of integration initiatives that we have put in place to accelerate synergies captured. We remain very excited about the Hanesbrands acquisition and the opportunities we see.

Speaker #7: Reflecting disciplined, execution, and continued progress against our strategic priorities. We delivered record Q1 sales from continuing operations of nearly $1.2 billion. Which were up 64% versus last year.

Speaker #7: Primarily due to the Haynes Brand acquisition. We also reported adjusted diluted earnings per share from continuing operations of 43 cents. Compared to 59 cents in the first quarter of 2025.

Speaker #7: Reflecting the short-term impact of integration initiatives that we have put in place to accelerate synergies captured. We remain very excited about the Haynes acquisition and the opportunities we see.

Speaker #7: We are progressing well with our integration initiatives and relocating Texol production volumes from the Haynes to the Gildan facilities, leveraging our low-cost manufacturing and supply chain structure.

Glenn Chamandy: We are progressing well with our integration initiatives and relocating textile production volumes from the Hanes to the Gildan facilities, leveraging our low-cost manufacturing and supply chain structure. We are working fast but with a well-thought approach to be able to unlock the benefits of operating as one integrated company. We continue to optimize and expand our capacity in 2026 to support growth in 2027. We are also enhancing our distribution network. Our plans to standardize IT systems, key supply chain, and manufacturing processes all remain on track. Given the progress so far, we remain confident in attaining our objective of approximately $250 million in run rate cost synergies over the next 3 years, including approximately $100 million in 2026. We continue to pursue additional synergies beyond the 3-year target.

Speaker #7: We are working fast, but with a well-thought approach. To be able to unlock the benefits of operating as one integrated company. And we continue to optimize and expand our capacity in 2026 to support growth in 2027.

Speaker #7: We are also enhancing our distribution network. Our plans to standardize IT systems key supply chain and manufacturing processes all remain on track. Given the progress so far, we remain confident in attaining our objective of approximately $250 million in run rate cost synergies over the next three years.

Speaker #7: Including approximately $100 million in 2026. And we continue to pursue additional synergies beyond the three-year target. Now, with the situation in the Middle East, the external environment around us becomes increasingly uncertain.

Glenn Chamandy: With the situation in the Middle East, the external environment around us becomes increasingly uncertain. Gildan has navigated through uncertain situations in the past with agility and discipline. That said, I'd like to address two key elements related to this situation. First, despite inflationary environment, we have good visibility for 2026 when it comes to our input costs, including cotton, polyester, as well as energy. Second, our Bangladesh operations have been running normally until now, and we have built in temporary contingency plans should the situation deteriorate. This is what our agility and our vertical integration enables us to do. We have a clear line of sight into our plans for the rest of the year, and we are focused on what we can control, driving operational excellence, advancing on our integration of Hanes, maintaining our cost discipline and consistent execution.

Speaker #7: But Gildan has navigated through uncertain situations in the past, without agility and discipline. That said, I'd like to address two key elements related to this situation.

Speaker #7: First, despite inflationary environment, we have good visibility for 2026 when it comes to our input costs, including cotton, polyester, as well as energy. Second, our Bangladesh operations have been running normally until now.

Speaker #7: And we have built-in temporary contingency plans should the situation deteriorate. This is what our agility and our vertical integration enables us to do. So we have a clear line in sight into our plans for the rest of the year.

Speaker #7: And we are focused on what we can control. Driving operational excellence, advancing on our integration of Haynes, maintaining our cost discipline, and consistent execution.

Speaker #7: With that in mind, considering the strength of our competitive positioning, across our product lines, channels, and geographies, driven by our scale, and our strong pipeline of innovation, we are maintaining our guidance for 2026 and remain confident in our ability to achieve our three-year objectives for 2026-2028 period.

Glenn Chamandy: With that in mind, considering the strength of our competitive positioning across our product lines, channels, and geographies, driven by our scale and our strong pipeline of innovation, we are maintaining our guidance for 2026 and remain confident in our ability to achieve our three-year objectives for 2026, 2028 period. I look forward to answering your questions after our formal remarks, and now I'll turn it over to Luca for a financial review.

Speaker #7: I look forward to answering your questions after our formal remarks and now I'll turn it over to Luca for a financial review.

Speaker #8: Thank you, Glenn. And good morning, everyone. Thank you for joining us today to discuss our first quarter results. Let me start with the specifics of the quarter then turn to our 2026 outlook and guidance.

Luca Barile: Thank you, Glenn, and good morning, everyone. Thank you for joining us today to discuss our Q1 results. Let me start with the specifics of the quarter, then turn to our 2026 outlook and guidance. First, the quarterly results. We reported record Q1 sales from continuing operations of $1.17 billion, up 63.8% year-over-year, in line with guidance of approximately $1.15 billion. The increase reflects the Hanesbrands acquisition, partially offset by our integration initiatives undertaken to optimize the company's manufacturing footprint and accelerate synergy capture. Compared with pro forma net sales from continuing operations of $1.29 billion, the year-over-year decline was primarily driven by lower volumes stemming from our proactive inventory reduction across customer channels, which temporarily reduced sell-in, as we previously communicated. Looking at wholesale.

Speaker #8: First, the quarterly results. We reported record first-quarter sales from continuing operations of $1.17 billion, up 63.8% year over year. In line with guidance of approximately $1.15 billion.

Speaker #8: The increase reflects the Haynes Brands acquisition, partially offset by our integration initiatives undertaken to optimize the company's manufacturing footprint and accelerate synergy capture. Now, compared with pro forma net sales from continuing operations of $1.29 billion, the year-over-year decline was primarily driven by lower volumes stemming from our proactive inventory reduction across customer channels.

Speaker #8: Which temporarily reduced sell-in, as we previously communicated. Now, looking at wholesale. Net sales were $552 million compared to $626 million in the prior year.

Luca Barile: Net sales were $552 million compared to $626 million in the prior year, due primarily to the impact of the voluntary inventory reduction across customer channels, as well as the non-recurrence of some preemptive buying ahead of tariffs in the comparable period last year. This was partially offset by pricing initiatives, which were implemented to partially offset a portion of the impact from tariffs, the contribution of Hanesbrands, and favorable mix. We continued to see robust demand for Comfort Colors and our new brands such as Champion, which is under a licensing agreement, and AllPro. Now turning to retail. Net sales were $614 million compared to $85 million in the prior year, primarily reflecting the contribution from the Hanesbrands acquisition and higher net selling prices.

Speaker #8: Due primarily to the impact of the voluntary inventory reduction across customer channels, as well as the non-recurrence of some preemptive buying ahead of tariffs in the comparable period last year.

Speaker #8: This was partially offset by pricing initiatives, which were implemented to partially offset a portion of the impact from tariffs, the contribution of Haynes Brands and Favorable Mix, we continue to see robust demand for comfort colors, and our new brands such as Champion, which is under a licensing agreement, and Alpro.

Speaker #8: Now, turning to retail. Net sales were $614 million, compared to $85 million in the prior year. Primarily reflecting the contribution from the Haynes Brands acquisition and higher net selling prices.

Speaker #8: To a lower extent, retail sales were also affected by the lower sell-in previously detailed and the non-recurrence of preemptive buying ahead of tariffs. As previously mentioned, our key underwear brands captured additional market share in the quarter and new programs launched in mid-2025 are performing well.

Luca Barile: To a lower extent, retail sales were also affected by the lower sell-in previously detailed and the non-recurrence of preemptive buying ahead of tariffs. As previously mentioned, our key underwear brands captured additional market share in the quarter and new programs launched in mid 2025 are performing well. Shifting to margins. We generated gross profit of $278 million or 23.9% of net sales versus $222 million or 31.2% of net sales in the same period last year. Adjusting for an inventory fair value step-up charge of $106 million recorded as part of the HanesBrands acquisition, adjusted gross profit was $385 million or 33% of net sales compared to 31.2% in the prior year.

Speaker #8: Shifting to margins. We generated gross profit of $278 million, or 23.9% of net sales, versus $222 million, or 31.2% of net sales, in the same period last year.

Speaker #8: Adjusting for an inventory fair value step-up charge of $106 million, recorded as part of the Haynes Brands acquisition, adjusted gross profit was $385 million, or 33% of net sales compared to $31.2% in the prior year.

Speaker #8: The $180 basis point improvement mainly reflects Favorable Pricing Initiatives implemented to partially offset the impact of tariffs, the Favorable Contribution from Haynes Brands, and to a lesser extent, lower raw material and manufacturing costs.

Luca Barile: The 180 basis point improvement mainly reflects favorable pricing initiatives implemented to partially offset the impact of tariffs, the favorable contribution from Hanesbrands, and, to a lesser extent, lower raw material and manufacturing costs. SG&A expenses were $219 million compared to $87 million in the prior year. Adjusting for charges related to the proxy contest and leadership changes and related matters, adjusted SG&A expenses were $218 million or 18.7% of net sales compared to $86 million or 12.1% of net sales for the same period last year. The increase in adjusted SG&A in the quarter reflects the acquisition of Hanesbrands, partially offset by synergies realized as part of the Hanesbrands integration process.

Speaker #8: SG&A expenses were $219 million, compared to $87 million in the prior year. Adjusting for charges related to the proxy contest and leadership changes and related matters, adjusted SG&A expenses were $218 million, or 18.7% of net sales.

Speaker #8: Compared to $86 million, or 12.1% of net sales, where the same period last year. The increase in adjusted SG&A in the quarter reflects the acquisition of Haynes Brands, partially offset by synergy's realized as part of the Haynes Brands integration process.

Speaker #8: As we bring all these elements together, an adjusting for the restructuring and acquisition-related costs and the inventory fair value step-up charge as part of the acquisition, as well as the costs relating to proxy contest and leadership changes and related matters, adjusted operating income was $167 million.

Luca Barile: As we bring all these elements together and adjusting for the restructuring and acquisition related costs and the inventory fair value step-up charge as part of the acquisition, as well as the costs relating to proxy contests and leadership changes and related matters, adjusted operating income was $167 million, up $31 million year over year. Adjusted operating margin was 14.3% of net sales. It was down 470 basis points versus last year and ahead of guidance provided of approximately 12.9%. The year-over-year decrease in adjusted operating margin is mainly a reflection of the Hanesbrands acquisition and Hanes' lower operating margins due to historically higher levels of SG&A relative to Gildan. Net financial expenses were $67 million, up $37 million year over year, primarily due to higher borrowing levels related to the Hanesbrands acquisition.

Speaker #8: Up $31 million, year over year. Adjusted operating margin was $14.3% of net sales, down $470 basis points versus last year, and ahead of guidance provided of approximately $12.9%.

Speaker #8: The year-over-year decrease in adjusted operating margin is mainly a reflection of the Haynes Brands acquisition and Haynes' lower operating margins due to historically higher levels of SG&A relative to Gildan.

Speaker #8: Net financial expenses were $67 million, up $37 million, year over year, primarily due to higher borrowing levels related to the Haynes Brands acquisition. Now, taking into account all of these factors, and a higher outstanding share base as a result of the acquisition, gap diluted loss per share from continuing operations was $0.30.

Luca Barile: Taking into account all of these factors and a higher outstanding share base as a result of the acquisition, GAAP diluted loss per share from continuing operations was $0.30 compared to GAAP diluted earnings per share of $0.56 in the prior year. Adjusting for restructuring and acquisition related costs, inventory fair value step-up charge, and an income tax recovery of $33 million related to restructuring charges and other adjustments. Adjusted diluted earnings per share from continuing operations were $0.43, down 27.1% from $0.59 in the prior year. Turning to cash flow and balance sheet items. Cash flows used in operating activities, which includes discontinued operations, totaled $279 million for Q1, compared to $142 million in the prior year, primarily reflecting lower net earnings from continuing operations.

Speaker #8: Compared to gap diluted earnings per share of $0.56 in the prior year. An adjusting for restructuring and acquisition-related costs inventory fair value step-up charge and an income tax recovery of $33 million, related to restructuring charges and other adjustments, adjusted diluted earnings per share from continuing operations were $0.43.

Speaker #8: Down $0.27.1% from $0.59 in the prior year. Now, turning to cash flow and balance sheet items. Cash flows used in operating activities, which includes discontinued operations, totaled $279 million, for the first quarter.

Speaker #8: Compared to $142 million in the prior year. Primarily reflecting lower net earnings from continuing operations. After accounting for capital expenditures, totaling $30 million, the company consumed approximately $310 million of free cash flow.

Luca Barile: After accounting for capital expenditures totaling $30 million, the company consumed approximately $310 million of free cash flow. We ended the quarter with net debt of $4.868 billion and a leverage ratio of 3.3x net debt to trailing 12 months pro forma adjusted EBITDA. As previously announced, we are pursuing a sale of HAA, and the net proceeds from the potential divestment will be used to pay down a portion of the company's outstanding debt and further accelerate our objective to return to a leverage framework of one and a half to two and a half times net debt to pro forma adjusted EBITDA. Turning to the outlook.

Speaker #8: We ended the quarter with net debt of $4.868 billion, and a leverage ratio of 3.3 times net debt to trailing 12 months pro forma adjusted EBITDA.

Speaker #8: As previously announced, we are pursuing a sale of HAA. And the net proceeds from the potential divestment will be used to pay down a portion of the company's outstanding debt and further accelerate our objective to return to a leveraged framework of 1.5 to 2.5 times net debt to pro forma adjusted EBITDA.

Speaker #8: Turning to the outlook. For 2026, with respect to our continuing operations, we are maintaining our guidance as follows. Revenue of $6 billion to $6.2 billion, full year adjusted operating margin of approximately 20%, CapEx to come in at approximately 3% of net sales, adjusted diluted EPS in the range of $4.20 to $4.40, an increase of 20 to 25% year over year.

Luca Barile: For 2026, with respect to our continuing operations, we are maintaining our guidance as follows: revenue of $6 to 6.2 billion. Full year adjusted operating margin of approximately 20%. CapEx to come in at approximately 3% of net sales. Adjusted diluted EPS in the range of $4.20 to $4.40, an increase of 20% to 25% year-over-year. Free cash flow to be above $850 million. Furthermore, the assumptions underpinning our outlook are essentially the same as we previously communicated and are detailed in our press release issued earlier today. Finally, we have also provided guidance for our Q2. We expect net sales from continuing operations to be approximately $1.6 billion.

Speaker #8: And free cash flow to be above $850 million. Furthermore, the assumptions underpinning our outlook are essentially the same as we previously communicated and are detailed in our press release issued earlier today.

Speaker #8: Finally, we have also provided guidance for our second quarter. We expect net sales from continuing operations to be approximately $1.6 billion. This continues to reflect the proactive temporary reduction of inventory levels across customer channels.

Luca Barile: This continues to reflect the proactive temporary reduction of inventory levels across customer channels, which is reducing sell-in as we complete the consolidation of manufacturing facilities to accelerate synergy capture. Furthermore, a timing shift in shipments from the Q2 into the H2 2026 is also reflected and is due to the non-recurrence of some pre-buying in the Q2 2025 ahead of pricing actions. Our adjusted operating margin is expected to be around 19.7%, reflecting the higher SG&A levels, which includes higher amortization of intangible assets and depreciation of property, plant, and equipment resulting from the fair value purchase accounting impacts of the HanesBrands acquisition, in addition to a timing differential between some integration related costs incurred and the flow through of their benefit in subsequent quarters.

Speaker #8: This is reducing sell-in, as we complete the consolidation of manufacturing facilities to accelerate synergy capture. Furthermore, a timing shift in shipments from the second quarter into the second half of 2026 is also reflected, and is due to the non-recurrence of some pre-buying in the second quarter of 2025 ahead of pricing actions.

Speaker #8: Our adjusted operating margin is expected to be around $19.7%, reflecting the higher SG&A levels, which includes higher amortization of intangible assets, and depreciation of property plant and equipment, resulting from the fair value purchase accounting impacts of the Haynes Brands acquisition, in addition to a timing differential between some integration-related costs incurred and the flow-through of their benefit in subsequent quarters.

Speaker #8: Finally, the company's adjusted effective income tax rate in the second quarter is expected to be slightly lower than the expected full year 2026 adjusted effective income tax rate.

Luca Barile: Finally, the company's adjusted effective income tax rate in Q2 is expected to be slightly lower than the expected full year 2026 adjusted effective income tax rate. In summary, we are pleased with the quarter and our integration progress. The broader operating environment remains uncertain, and we feel cautiously optimistic about the remainder of 2026, while being mindful of the Middle East conflict and the heightened concerns on the end consumer. Nonetheless, we are focused on what we can control. We believe that our low-cost, vertically integrated business model and the agility it provides, together with strong industry positioning, provide a solid foundation for us to navigate evolving external conditions and support continued financial performance. Thank you. Now I'll turn it over to Jessy.

Speaker #8: In summary, we are pleased with the quarter, and our integration progress. The broader operating environment remains uncertain, and we feel cautiously optimistic about the remainder of 2026, while being mindful of the Middle East conflict and the heightened concerns on the end consumer.

Speaker #8: Nonetheless, we are focused on what we can control. We believe that our low-cost, vertically integrated business model and the agility it provides together with strong industry positioning provide a solid foundation for us to navigate evolving external conditions and support continued financial performance.

Speaker #8: Thank you. And now, I'll turn it over to Jessy.

Speaker #1: Thank you, Luca. This concludes our prepared remarks, and now we'll begin taking your questions. Before moving to the Q&A session, I'd like to remind you to limit your questions to two, and we'll circle back for a second round if time permits.

Jessy Hayem: Thank you, Luca. This concludes our prepared remarks, and now we'll begin taking your questions. Before moving to the Q&A session, I'd like to remind you to limit your questions to two, and we'll circle back for a second round if time permits. Angela, please begin the Q&A session.

Speaker #1: Angela, please begin the Q&A session.

Speaker #2: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. We will now begin the question and answer session. Thank you. Your first question comes from the line of Jay Sole with UBS. Your line is now open.

Speaker #2: If you would like to withdraw your question, simply press star one again. Thank you. Your first question comes from the line of Jay Soul with UBS.

Speaker #2: Your line is now open.

Speaker #3: Great. Thank you so much. Two questions for me. I'd love if you could give us a little review of the point of sale both for the Gildan Printware business, but also for the Haynes business that you saw in the quarter that you're kind of seeing second quarter to date.

Jay Sole: Great. Thank you so much. Two questions for me. Glenn, I'd love if you could give us a little review of the point of sale, both for the Gildan Printwear business, but also for the Hanes business that you saw in the quarter that you're kind of seeing Q2 to date. Also maybe if you can take a step back and tell us how the strategy that you're developing for the Hanes business is evolving, how you're thinking about investing in marketing, investing in product. If you can give us an update on that would be terrific as well. Thank you.

Speaker #3: And then also maybe if you can take a step back and tell us how the strategy that you're developing for the Haynes business is evolving, how you're thinking about investing in marketing, investing in product.

Speaker #3: If you can give us an update on that, that would be terrific as well. Thank you.

Speaker #4: Okay. Well, let Chuck go with the discussed market conditions and I'll answer the other side.

Glenn Chamandy: Okay. Well, I'll let Chuck go with the, you know, to discuss the market conditions and I'll answer the other side.

Speaker #3: Okay. Thank you. Good morning, Jay. Yeah. As we look at net sales for the quarter, as Luca said, we were in line with guidance.

Chuck Ward: Okay. Thank you. Good morning, Jay. Yeah, you know, as we look at net sales for the quarter, as Luca said, we were in line with guidance. Both markets were a little bit softer than we expected, you know, with some impacts in the US, obviously, with some tough weather during Q1 that everybody experienced. Overall, as Glenn mentioned, we performed well, and we outperformed both markets. We continue to gain share in both markets. As he mentioned in his comments, we typically perform well in challenging markets. If I break it down, we really, Jay, look at it wholesale retail as Jessy mentioned in her opening remarks. I'll really address it from a wholesale retail perspective.

Speaker #3: Both markets were a little bit softer than we expected. With some impacts in the US, obviously with some tough weather during Q1 that everybody experienced.

Speaker #3: But overall, as Glenn mentioned, we performed well. And we outperformed both markets we continue to gain share in both markets. And as he mentioned in his comments, we typically perform well in challenging markets.

Speaker #3: But if I break it down, we really, Jay, look at it wholesale retail as Jesse mentioned in her opening remarks. So I'll really address it from a wholesale retail perspective.

Speaker #3: As we look at the wholesale market, the market was down low single digits while we performed up low single digits. So again, continuing to take share in the market.

Chuck Ward: As we look at the wholesale market, the market was down low single digits, while we performed up low single digits. Again, continuing to take share in the market. If you really dive into that market, Jay, it's continuing strong performance with our premium products. Luca mentioned Comfort Colors, for example, and the strength that we're seeing continued in that brand. Our growth in Champion, the license that we have for that product, our AllPro brand. Really continue to perform well in that market. From a retail perspective, we'll say the market was flattish in the retail market, but we were also up low single digits in that market as well. Really with underwear performing exceptionally well, not only in men's, but also in women's and kids, as well.

Speaker #3: If you really dive into that market, Jay, it's continuing strong performance in our premium products. Luca mentioned comfort colors, for example. In the strength that we're seeing continued in that brand, our growth in champion, the license that we have for that product, our all-pro brand, so really continue to perform well in that market.

Speaker #3: From a retail perspective, we'll say the market was flattish in the retail market, but we were also up low single digits in that market as well.

Speaker #3: Really, with underwear performing exceptionally well, not only in men's but also in women's and kids' as well. We also continued to gain momentum in activewear in retail.

Chuck Ward: We also continued to gain momentum in activewear in retail. We did see a little bit of softness in intimates and in socks. When we look at it from an international perspective, we were slightly below the plan in international, but it's mainly due to the uncertain macro conditions and the rising energy costs we're seeing. We continued to see what we've been seeing for some time which is a strong performance in continental Europe, continued pressure in the UK and some pressure in Latin America.

Speaker #3: But we did see a little bit of softness in intimates and in socks. And then when we look at it from an international perspective, we were slightly below the planned in international, but mainly due to the uncertain macro conditions and the rising energy cost we're seeing.

Speaker #3: We continued to see what we've been seeing for some time which is a strong performance in continental Europe, continued pressure in the UK and some pressure in Latin America.

Chuck Ward: We feel really good about how we performed in the markets. As we shifted into Q2, you know, we're seeing some improvements in both markets overall. We're continuing to grow in our key growth categories and outperform those markets.

Speaker #3: So we feel really good about how we performed in the markets. As we shifted into Q2, we're seeing some improvements in both markets overall.

Speaker #3: We're continuing to grow in our key growth categories. And outperform those markets.

Speaker #4: Great. And maybe just a second part of that question. Look, as we continue to go forward, I mean, we're very excited, obviously, about the opportunity.

Glenn Chamandy: Great. Maybe just the second part of that question, look, as we continue to go forward, I mean, we're very excited obviously about the opportunity. I mean, the big thing for us right now is to, you know, continue to, you know, integrate Hanes into Gildan and leverage really everything that Gildan has to offer because we're taking, you know, I think what we think is one of the most highly iconic brands in the industry and putting it together with the world's global low-cost manufacturer. What we're able to do is basically just provide an innovation platform that we think is going to excel and open up doors. We've already accomplished a lot of that.

Speaker #4: I mean, the big thing for us right now is to continue to integrate the Haynes into Gildan. And leverage really everything that Gildan has to offer because we're taking I think what we think is one of the most highly iconic brands in the industry.

Speaker #4: And putting it together with the world's global low-cost manufacturer. And what we're able to do is basically just provide an innovation platform that we think is going to excel and open up doors.

Speaker #4: And we've already accomplished a lot of that. The reason for us, obviously, to wind down the Haynes facilities, integrate it into Gildan's network is to capture what we believe is the future value creation that we have to offer with the brand from an innovation perspective.

Glenn Chamandy: You know, the reason for us obviously to wind down the Hanes facilities integrated into Gildan's network is to capture what we believe is the future value creation that we have to offer with the brand from an innovation perspective. All those things are in place and, you know, we're really excited about it. We've started showcasing some of this with our retail partners. Like we said in our last call, we're gonna have our investor day in December. You know, we're really excited about, you know, showing off all the things we're doing from our product innovation, our positioning, our advertising, how we're, how we're really, you know, our whole go forward strategy. You know, there's a lot of work that's been done.

Speaker #4: So all those things are in place. And we're really excited about it. We started the showcasing some of this with our retail partners. Like we said in our last call, we're going to have our investor day in December.

Speaker #4: And we'll be really excited about showing off all the things we're doing from our product innovation, our positioning, our advertising, how we're really our whole go forward strategy.

Speaker #4: And there's a lot of work that has been done. We're moving, like I said earlier, my comments very effectively. It seems quick, but I think we're doing it in a very organized fashion to be able to make sure that we achieve all of our goals including the synergies that we set forth.

Glenn Chamandy: We're moving, like I said earlier in my comments, very effectively. It seems quick, but I think we're doing it in a very organized fashion to be able to make sure that, you know, we achieve all of our goals, including the synergies that we set forth. It's not just the synergies. For us, it's important to make sure that we get back on a growth trajectory and you need to make an investment. The synergies are our investment because as we bring those synergies and as we bring their product into our environment, we create synergies, and those synergies turn into innovation because Gildan, that's our whole secret sauce really, is be able to improve the quality of the product and the consumer experience for what we're gonna be doing.

Speaker #4: But it's not just the synergies, for us, it's important to make sure that we get back on a growth trajectory and you need to make an investment.

Speaker #4: And our investment is the synergies are an investment because as we bring those synergies and as we bring our product into our environment, we create synergies and those synergies turn into innovation because we have Gildan that's our whole secret sauce really is being able to improve the quality of the product and the consumer experience for what we're going to be doing.

Speaker #4: So we're well positioned and we're excited and we can't wait to show it to you.

Glenn Chamandy: We're well positioned, and we're excited, and we can't wait to show it to you.

Speaker #3: Terrific. Thank you so much.

Jay Sole: Terrific. Thank you so much.

Speaker #1: Your next question comes from the line of Paul Lewis with Citigroup. Your line is now open.

Operator: Your next question comes from the line of Paul Lejuez with Citigroup. Your line is now open.

Speaker #4: Hey, thanks, guys. Could we just go back to Glenn, what you said on the Bangladesh facility? I think you said it's been operating normally until now.

Paul Lejuez: Thanks, guys. Could we just go back to, Glenn, what you said on the Bangladesh facility? I think you said it's been operating normally until now. I just wanted to clarify that it's still running normally. Curious what your expectation is in terms of the Bangladesh facility or if you did see something change recently. Second, would love if you could share your gross margin and SG&A targets for the year and just how each compare to what would be the adjusted numbers for the same line items last year. Thanks.

Speaker #4: I just wanted to clarify that it's still running normally. Curious what your expectation is in terms of the Bangladesh facility or if you did see something change recently.

Speaker #4: And then second, would love if you could share your gross margin and SG&A targets for the year and just how each compare to what would be the adjusted numbers for the same line items last year.

Speaker #4: Thanks.

Speaker #3: Okay. So look, what I said in my comments, yes, we're running normally. We haven't had disruption. The facility is running as it was before the crisis.

Glenn Chamandy: Okay. Look, like what I said in my comments, yes, we're running normally. We haven't had disruption. The facility is running as it was before the crisis. In fact, I mean, the volume is a little bit higher. Things are going as planned. We have a lot of redundancy in our energy there. We have solar, we have, you know, different energy sources that we use. We have our own LNG facility basically on site in our own campus. I mean, we're pretty well insulated. Now, I wouldn't say that things are not tight in the country because obviously, you know, the energy situation is tight. So far we've been operating effectively. Like what I said earlier, we built in contingency plan.

Speaker #3: In fact, I mean, the volume is a little bit higher. So things are going as planned. We have a lot of redundancy in our energy there.

Speaker #3: We have solar. We have different energy sources that we use. So we have our own LNG facility basically on site, in our own campus.

Speaker #3: I mean, so we're pretty well insulated. Now, I wouldn't say that things are not tight in the country because obviously the energy situation is tight.

Speaker #3: But so far, we've been operating effectively. And like what I said earlier, we built in a contingency plan—not that we don't think we can operate, but if there's an Armageddon and the whole thing blows up in the Middle East, I mean, obviously we're going to have to react to any type of situation that could happen.

Glenn Chamandy: Not that we don't think we can operate, but, you know, if there's an Armageddon, you know, and the whole blow up in the Middle East, I mean, obviously, we're gonna have to react to any type of situation that could happen. We, you know, we're very diligent. We're very focused. We have a good plan and, you know, we're comfortable with our positioning and the guidance that we set forth.

Speaker #3: So, we're very diligent. We're very focused. We have a good plan, and we're comfortable with our positioning and the guidance that we set forth.

Speaker #4: Yeah. And with respect to your question on the margin, so we've given the guidance for the full year in terms of our adjusted operating margin, of approximately 20%.

Luca Barile: Yeah. With respect to your question on the margin, you know, we've given the guidance for the full year in terms of our adjusted operating margin of approximately 20%. Really to understand the composition of that margin, we can start with sort of the performance already to date. The adjusted operating margin in Q1 of 14.3% that was higher than our guide of 12.9%. Some of that was driven by some timing of SG&A versus the remainder of the quarters. Why I start with Q1 is because what you're going to see as we navigate through the year is a sequential improvement in adjusted operating margin.

Speaker #4: And so really to understand the composition of that margin, we can start with sort of the performance already to date, the adjusted operating margin in the first quarter of 14.3%.

Speaker #4: That was higher than our guide of 12.9%. Some of that was driven by some timing of SG&A versus the remainder of the quarters. But why I start with the first quarter is because what you're going to see as we navigate through the year is a sequential improvement in adjusted operating margin.

Speaker #4: And the guidance we're giving for the second quarter is an adjusted operating margin of 19.7%. Now, what's driving that sequential improvement and why we're providing the guide not only for the second quarter but the visibility of the full year is because as an organization, based on our operating model, and as well as the solid cost control that we put in place, we have visibility on the costs that are flowing through our P&L.

Luca Barile: The guidance we're giving for Q2 is an adjusted operating margin of 19.7%. What's driving that sequential improvement and why, you know, we're providing the guide not only for Q2, but the visibility of the full year, is because as an organization, based on our operating model and as well as the solid cost control that we put in place, we have visibility on the costs that are flowing through our P&L, right? The strength that underpins the margin are the same elements that we had last year, right? We had the optimization of our Central American facility. We had the investments we made in yarn spinning, the investments we made in Bangladesh. That's the foundation.

Speaker #4: Right? So the strength that underpins the margin are the same elements that we had last year. Right? We had the optimization of our essential American facility.

Speaker #4: We had the investments we made in yarn spinning, the investments we made in Bangladesh. So that's the foundation. Then we have the synergies that are starting to flow through.

Luca Barile: We have the synergies that are starting to flow through, right? We've got about $100 million of synergies called out for 2026. As that materializes, that's going to lend itself to an improvement in the operating margin. Finally, when you do look at gross margin versus SG&A, you know, gross margin. Also, you know, expect it to sequentially improve. I would say the contributions there is you have a pricing tailwind from some of the pricing actions taken in the prior year, lower year-over-year fiber costs. From a cotton perspective, we have full visibility for 2026, because of our hedged strategy and our hedge position and our operating model. The synergy realization's coming through gross margin, although in the first year it's more pronounced on the SG&A side.

Speaker #4: Right? We've got about 100 million of synergies called out for 2026. So as that materializes, that's going to lend itself to an improvement in the operating margin.

Speaker #4: And finally, when you do look at gross margin versus SG&A, gross margin also expected to sequentially improve, I would say the contributions there is you have a pricing tailwind from some of the pricing actions taken in the prior year, lower year-over-year fiber costs from a cotton perspective.

Speaker #4: We have full visibility for 2026 because of our hedged strategy and our hedged position and our operating model. The synergy realizations coming through gross margin, although in the first year, it's more pronounced on the SG&A side.

Speaker #4: And those proactive actions that we're taking in order to manage costs as we go through the integration. On the SG&A side, there were higher levels of SG&A from the Haynes perspective.

Luca Barile: Those proactive actions that we're taking in order to manage costs as we go through the integration. On the SG&A side, there were, you know, higher levels of SG&A. From the Hanes perspective, we have higher SG&A coming through because of the impact of the acquisition, the PPA adjustments such as the amortization of intangibles and the property, plant, and equipment. Again, as synergies are realized on the SG&A side, which we're well on our way, that will lend itself to improvement. The headline adjusted operating margin of approximately 20% for the year, and in Q2, a sequential improvement up to 19.7%.

Speaker #4: We have higher SG&A coming through because of the impact of the acquisition, the PPA adjustments such as, yeah, amortization of intangibles and the property plant and equipment.

Speaker #4: But again, as synergies are realized on the SG&A side, which we're well on our way, that will lend itself to improvement. So the headline adjusted operating margin of 20, approximately 20% for the year.

Speaker #4: And then the second quarter, a sequential improvement up to 19.7%. Got it. When you say gross margin sequentially improved, is that each quarter of the year?

Paul Lejuez: Got it. When you say gross margin sequentially improved, is that each quarter of the year? Do you wanna put out there.

Speaker #4: And do you want to put out there your target gross margin?

Luca Barile: Correct

Paul Lejuez: your target gross for the year?

Luca Barile: Correct. We have the Q1 results. The adjusted gross margin for Q1 is at 33%. The adjusted SG&A is at 18.7%. Those will sequentially improve in order to yield an adjusted operating margin for the full year of approximately 20%.

Speaker #3: Correct. So we have the Q1 results. The adjusted gross margin for Q1 is at 33%. The adjusted SG&A is at 18.7%. Those will sequentially improve.

Speaker #3: Will sequentially improve in order to yield an adjusted operating margin for the full year of approximately 20%.

Speaker #4: And now in terms of the exit rate on the SG&A, in terms of our guidance, we provide the adjusted operating margin. We provide guidance on our adjusted EPS.

Paul Lejuez: How about in terms of the exit rate on the SG&A?

Luca Barile: Well, in terms of our guidance, we provide the adjusted operating margin. We provide guidance on our adjusted EPS. I think with the color that I've provided you can infer that there's sequential improvement. We're not providing a specific guide on the gross margin and the SG&A in isolation.

Speaker #4: So I think with the color that I've provided you, you can infer that there's sequential improvement. We're not providing a specific guide on the gross margin and the SG&A in isolation.

Speaker #4: Thank you. Good luck.

Paul Lejuez: Thank you. Deepak.

Speaker #3: Thank you.

Luca Barile: Thank you.

Speaker #1: Your next question comes from the line of Brian Morrison with TD Cohen. Your line is now open.

Operator: Your next question comes from the line of Brian Morrison with TD Cowen. Your line is now open.

Brian Morrison: Good morning. Two questions. Glenn, should we expect optimization of the Hanes facility integration in H2 of this year? Then what are the next major buckets of synergies? Is it yarn spinning, more vertical integration? Just some color on the major buckets still to do. Then, Luke, on the back half, the forecast margin's about 22%. Can you build off that in 2027, or should we take into account a seasonally weaker Q1 to build off a bit lower base?

Speaker #5: Good morning. Two questions. Glenn, should we expect optimization of the Haynes facility integration in the second half of this year? And then what are the next major buckets of synergies?

Speaker #5: Is it yarn spinning more vertical integration? Just some color on the major buckets still to do. And then Luke, on the back half, the forecast margin's about 22%.

Speaker #5: Can you build off that in 2027, or should we take into account a seasonally weaker Q1 to build off a bit lower base?

Speaker #3: Okay. So just on the integration, look, we're fully advancing on the integration, including yarn the bulk of Haynes' volume is being produced in Gildan's world today.

Glenn Chamandy: Just on the integration. Look, we're fully advancing on the integration, including yarn. The bulk of Hanes' volume is being produced in Gildan's world today. Yarn, you know, all of our supply chain, the processes we use in chemicals, distribution, everything that we do in terms of Gildan's world, from a supply chain perspective is pretty much, you know, going through a process, and, you know, will be fully integrated. And basically that's, you know, that's why we're comfortable and that's why we chose to wind down, and, you know, manage our, you know, our inventory in the customer channels because we wanted to really, you know, accelerate as best as possible the transition of Hanes into our world, for two reasons.

Speaker #3: Yarn all of our supply chain, the processes we use in chemicals, distribution, everything that we do in terms of Gildan's world, from a supply chain perspective, is pretty much going through a process.

Speaker #3: And we'll be fully integrated. And basically, that's why we're comfortable. And that's why we chose to wind down and manage our inventory in the customer channels because we wanted to really accelerate as best as possible the transition of Haynes into our world for two reasons.

Speaker #3: Obviously, one is to capture these synergies, but the second is to provide the innovation that we really need to drive the revenue growth for 2027.

Glenn Chamandy: Obviously, one is to capture these synergies, but the second is to provide the innovation that we really need to drive the revenue growth for 2027. You know, all that is in place, and that's why we're confident and that's why the margin's expanding in the back half of the year. And although this year there'll be a smaller portion on the synergy side of COGS, but there'll be a lot of it'll be SG&A. As we really roll into 2027, that's where we're gonna see the COGS input as we start turning the inventory into 2027. Everything's on plan, and we're excited about our positioning.

Speaker #3: So all that is in place. And that's why we're confident. And that's why the margin's expanding in the back half of the year. And although this year, there'll be a smaller portion on the synergy side of COGS, but there'll be a lot of it will be SG&A.

Speaker #3: But as we really roll into '27, that's where we're going to see the COGS input as we start turning the inventory into 2027. So everything's on plan.

Speaker #3: And we're excited about our positioning.

Speaker #5: Great. And then go ahead.

Luca Barile: Right. Then to your.

Brian Morrison: How much do you think?

Luca Barile: Go ahead.

Glenn Chamandy: I was just gonna say.

Speaker #2: I was just going to say on that drawdown, Glenn, on that drawdown that you referred to, what's the magnitude of it? How much will be a tailwind as we get into 2027?

Luca Barile: Sorry. Go ahead.

Brian Morrison: On that drawdown. Glenn, on that drawdown that you refer to, what's the magnitude of it? How much will be a tailwind as we get into 2027?

Speaker #3: Well, look, I mean, Luca, you want to?

Glenn Chamandy: Well, look, I mean, look, if you

Speaker #5: Yeah. So again, when you take a look at the first quarter performance and what we're guiding for the second quarter, right? So you have to take a look at that from an understanding that the fundamentals are growing.

Luca Barile: Again, when you take a look at the Q1 performance and what we're guiding for the Q2. You have to take a look at that from an understanding that the fundamentals are growing. We're growing both in wholesale, we're growing in retail. Chuck alluded to the market conditions and how we're outperforming the market. That growth is then offset by the proactive reduction in our inventories across channels. You know, that's reducing sell-in. There's also the sort of the timing, between the quarters and the cadence of the quarters because of some of the non-recurrence of pre-buying before tariffs, which is a Q1 phenomena, and pre-buying from last year ahead of price increases in the Q2.

Speaker #5: Right? We're growing both in wholesale. We're growing in retail. Chuck alluded to the market conditions and how we're outperforming the market. So that growth is then offset by your proactive reduction in our inventories across channels.

Speaker #5: That's reducing sell-in. And there's also sort of the timing, right, between the quarters and the cadence of the quarters because of some of the non-recurrence of pre-buying before tariffs, which is a Q1 phenomenon, and pre-buying from last year ahead of price increases in the second quarter.

Speaker #5: So when you take the two elements together and you have growth that's outperforming the rates that Chuck was alluding to, and then you see the results, then that should give you a good indication of the value of the inventory reduction.

Luca Barile: When you take the two elements together and you have growth that's outperforming the rates that Chuck was alluding to, and then you see the results, then that should give you a good indication of the value of the inventory reduction.

Glenn Chamandy: As we go through the year, look, we're working diligently to get that capacity that we've installed up and running. You know, we'll be very comfortable with supporting our capacity for 2027 to take advantage of any opportunities to, you know, to restock the channel.

Speaker #3: And as we go through the year, look, we're working diligently to get that capacity that we've installed up and running. So we'll be very comfortable with our supporting our capacity for 2027 to take advantage of any opportunities to restock the channel.

Speaker #5: And Brian, the tail end of your first question on the margins as we move into '27, obviously, we're giving the guide for 2026, but as you would recall, we have $100 million of synergies coming in this year.

Luca Barile: Brian, the tail end of your first question on the margins as we move into 2027. Obviously, we're giving the guide for 2026, but as you would recall, we have $100 million of synergies coming in this year. We've got $100 million of synergies slated for 2027 and at least $50 for 2028. As the strong fundamentals of the margin that we articulated continue to come through and additional run rate synergies come through, that is definitely part of the algorithm that supports our 3-year targets, right, of our earnings effectively, our adjusted EPS CAGR growth of in the low 20% range. Margins will be continuing to be healthy.

Speaker #5: We've got $100 million of synergies slated for '27 and at least 50 for 2028. So as the strong fundamentals of the margin that we articulated continue to come through and additional run rate synergies come through, that is definitely part of the algorithm that supports our three-year targets, right, of our earnings effectively, our adjusted EPS, CAGR growth in the low 20% range.

Speaker #5: So margins will be continuing to be healthy.

Speaker #2: Okay. Thanks, Jim Keller.

Brian Morrison: Okay. Thanks for the color.

Speaker #1: Your next question comes from the line of Stephen McLeod with BMO Capital Markets. Your line is now open.

Operator: Your next question comes from the line of Stephen MacLeod with BMO Capital Markets. Your line is now open.

Speaker #3: Well, thank you, good morning, everyone. Lots of great color so far. So thank you. Just wanted to ask if you're able to quantify kind of the amount of synergies you achieved in Q1 relative to your $100 million target for '26?

Stephen MacLeod: Well, thank you. Good morning, everyone. Lots of great color so far, so thank you. Just wanted to ask if you're able to quantify kind of the amount of synergies you achieved in Q1 relative to your $100 million target for 2026.

Speaker #4: Yeah. So what I can say about that is, look, we're confident in achieving the $100 million in our results for this year. What I can share with you is that we're well on our way.

Luca Barile: Yeah. What I can say about that is, look, we're confident in achieving the $100 million in our results for this year. What I can share with you is that we're well on our way. As you know, we've taken proactive actions in order to, you know, accelerate the synergy capture. Glen has alluded to those. Although I won't give you a full quantification of that, what I can tell you is we have visibility to the $126, and we're well on our way in achieving that number.

Speaker #4: As you know, we've taken proactive actions in order to accelerate the synergy capture. Glenn has alluded to those. So although I won't give you a full quantification of that, what I can tell you is we have visibility to the $126, and we're well on our way.

Speaker #4: In achieving that number.

Speaker #3: Okay. That's great. Thank you. And then maybe for my second question, just with respect to the temporary inventory reduction, and that obviously lingers a little bit into Q2, I'm just curious on operationally, how long that overhang is meant to is expected to impact your sales?

Stephen MacLeod: Okay. That's great. Thank you. Then maybe for my second question, just with respect to the temporary inventory reduction, you know, and that obviously lingers a little bit into Q2. I'm just curious on, you know, operationally, like, how long that overhang is meant to, is expected to impact your sales. Is it isolated to Q2, or will it be something that trickles into the back half of the year as well?

Speaker #3: Is it isolated to Q2, or will it be something that trickles into the back half of the year as well?

Speaker #4: Yeah. So the way I would say it's we've seen a pronounced impact in the first quarter. The remainder of that impact is penciled into the guide of the second quarter.

Luca Barile: Yeah. The way I would say it, so we've seen a pronounced impact in Q1. It's the remainder of that impact is penciled into the guide of Q2, where revenue will be approximately $1.6 billion. You know, given our guide of for the full year of $6 to 6.2 billion, and when you take a look at H2 is a return to growth. You can infer that phenomenon will complete in Q2.

Speaker #4: Where revenue will be approximately $1.6 billion. And then, given our guide for the full year of $6 to $6.2 billion, when you take a look at the back half, the back half is a return to growth.

Speaker #4: So you can infer that phenomenon will complete in the second quarter.

Speaker #1: Your next question comes from the line of Mark Petrie with CIBC. Your line is now open.

Operator: Your next question comes from the line of Mark Petrie with CIBC. Your line is now open.

Speaker #3: Yeah. Thank you. I just wanted to come back to the demand environment and how that has evolved as macro uncertainty has sort of ramped up.

Mark Petrie: Yeah, thank you. I just wanna come back to the demand environment and how that has evolved as macro uncertainty has sort of ramped up. I think you've made a couple comments on this, but just hoping for a bit more granularity. Specifically, you know, I think your full year guide is based on an assumption of industry, you know, flat to low single digit growth, just wanted to gauge your comfort level with that today versus, you know, end of February when you initiated it.

Speaker #3: I think you've made some a couple of comments on this. But just hoping for a bit more granularity. And then specifically, I think your full-year guide is based on an assumption of industry flat to low single-digit growth.

Speaker #3: And just wanted to gauge your comfort level of with that today versus end of February when you initiated it.

Speaker #5: Awesome.

Glenn Chamandy: Awesome. I think on the, I'll answer the growth part. Look, we believe that, you know, things are on track in terms of the flat to low single digit growth. I mean, from what we see out in the marketplace today, that's a snapshot in where we are today. I mean, you know, that's not the $10 gasoline prices in the United States, for example, that could change things in the future. Where we are today, I would say, and what we're seeing so far as we started Q2, I mean, that's sort of, we've seen improvement since Q1. I think that's still a very good assumption for us as we move through the back of the year.

Speaker #3: I think on the I'll answer the growth part. Look, we believe that things are on track in terms of the flat to low single-digit growth.

Speaker #3: I mean, from what we see out in the marketplace today, that's a snapshot in where we are today. I mean, let's not $10 gasoline prices in the United States, for example, that could change things in the future.

Speaker #3: But where we are today, I would say, and what we're seeing so far as we started Q2—I mean, we've seen improvements in Q1.

Speaker #3: So I think that that's still a very good assumption for us as we move through the back of the year. And.

Speaker #5: Yeah. And Mark, on the markets, I mean, I'll dig in a little bit more. As I mentioned, both markets were well, wholesale was down, low single digits during the quarter and retail was somewhat flat.

Chuck Ward: Yeah. Mark, on the markets, I mean, I'll dig in a little bit more. As I mentioned, both markets were, well, wholesale was down low single digits during the quarter with retail was somewhat flat. I mean, we're, as I mentioned, going into Q2, we are seeing some improvements. As Glenn said, I mean, we'll continue to monitor closely what happens with inflation and so forth as it comes through in the future. You know, as we mentioned, we typically perform well in those markets. Sometimes there's, you know, trade downs and so forth. We're cautiously optimistic of where we are and where we're headed, as Glenn said, and feel good about our future growth.

Speaker #5: I mean, as I mentioned, going into Q2, we are seeing some improvements. As Glenn said, I mean, we'll continue to monitor closely what happens with inflation and so forth as it comes through in the future.

Speaker #5: But as we mentioned, we perform typically perform well in those markets. And sometimes there's trade downs and so forth. So we're cautiously optimistic of where we are and where we're headed, as Glenn said, and feel good about our future growth.

Chuck Ward: Again, if there's a trade down from inflation, we trend well, and we take opportunity from that. If there's poly-based impacts from polyester going up because of cost, it sometimes drives people towards cotton products, so we can capture that as well. What I would say is we're well-positioned to capture wherever the trends move.

Speaker #5: And again, if there's a trade down from inflation, we trend well. And we take opportunity from that. If there's poly-based impacts from polyester going up because of cost, it sometimes drives people towards cotton products.

Speaker #5: So we can capture that as well. What I would say is we're well positioned to capture wherever the trends move.

Glenn Chamandy: Maybe look at, also I would say that, look, we're really well-positioned, you know, from a nearshoring perspective. I mean, you know, one thing I would take into account is that, you know, the bulk of our volume being in this hemisphere has allowed us to, you know, I think have a competitive advantage, not just because of the closeness to the marketplace, but now also from a cost perspective. You know, as of 1 March, obviously we're not paying tariffs from product coming in from Central America anymore, which has allowed us to continue driving, you know, a good cost structure in this hemisphere.

Speaker #3: And maybe look, also, I would say the look, we're really well positioned from a nearshoring perspective. I mean, one thing I would take into account is that the bulk of our volume being in this hemisphere has allowed us to, I think, have competitive advantage not just because of the closeness to the marketplace, but now also from a cost perspective.

Speaker #3: As of March 1st, obviously, we're not paying tariffs from product coming in from Central America anymore. Which has allowed us to continue driving a good cost structure in this hemisphere.

Glenn Chamandy: We'll wait and see what happens as all the global Section 301s and, you know, tariff situation works itself out in the next couple of months. We're well-positioned. You know, we think that there's opportunity for us. Look at what we also said is that, look, you create your own opportunity, like every, in every situation, and we're well-positioned, and we're taking advantage of, we think as the Hanes positioning their brand strategy and our low-cost manufacturing and the products that we can enhance and the innovation. Also looking into the activewear side of their business where we really can leverage our low-cost manufacturing for new programs. These are all things that we're in the process of doing.

Speaker #3: We'll wait and see what happens as all the global 301s and tariff situation works itself out in the next couple of months. But we're well positioned.

Speaker #3: We think that there's opportunity for us. And look, what we also said is that, look, you create your own opportunity. Every in every situation.

Speaker #3: And we're well positioned. And we're taking advantage of, we think, is the Haynes positioning, their brand strategy, the products that we can enhance and the innovation.

Speaker #3: But also looking into the act of our side of their business where we really can leverage our low-cost manufacturing for new programs and these are all things that we're in the process of doing.

Speaker #3: So, as we go through this year, we'll see. But our lines and sights really now are focusing on 2027 and beyond, as we reposition the brand, the strategy, the innovation, and really gear the company up for future growth.

Glenn Chamandy: You know, as we go through this year, we'll see, but our lines and sights are really now focusing on 2027 and beyond as we reposition the brand, the strategy, the innovation, and really, you know, gear the company up for future growth.

Speaker #1: Your next question comes from the line of Chris Lee with The Hardines. Your line is now open.

Operator: Your next question comes from the line of Chris Li with Desjardins. Your line is now open.

Chris Li: Oh, good morning, everyone. My first question is, I know it's well understood of how you guys are gaining market share in the wholesale channel. I wanted to ask if you can elaborate on what's sort of driving the market share gains in underwear, which obviously is a much bigger part of your business now. Thank you.

Speaker #6: Good morning, everyone. My first question is, I know it's well understood of how you guys are gaining market share in the wholesale channel. I wanted to ask if you can elaborate on what's sort of driving the market share gains in underwear, which obviously is a much bigger part of your business now.

Speaker #6: Thank you.

Speaker #4: Yeah. Sure, Chris. I mean, as Glenn mentioned, a couple of things. On the wholesale side, part of it is we continue to expand our categories as well.

Chuck Ward: Yes, sure, Chris. I mean, you know, as Glen mentioned, a couple of things. Well, on the wholesale side, part of it is we continue to expand our categories as well. We're opening up new parts of the market there. We're doing hats and accessories, we actually launched scrubs this year. You know, we're expanding our performance products and as well, as I mentioned before, and we're continuing to grow in those premium offerings in Comfort Colors and in AA. On the retail side, as you talked about on the underwear side, Glen mentioned it. We're, you know, a couple of things. We're starting our innovation cycle with the Hanes products, as he mentioned. We've presented those to retailers. We have great reception.

Speaker #4: We're opening up new parts of the market there. We're doing hats and accessories. And we actually launched scrubs this year. We're expanding our performance products.

Speaker #4: And as well, as I mentioned before, and we're continuing to grow in those premium offerings and comfort colors and AA. Then on the retail side, as you talked about on the underwear side, Glenn mentioned it.

Speaker #4: A couple of things. We're starting our innovation cycle. With the Haynes products, as he mentioned, we've presented those to retailers. We have great reception.

Speaker #4: There's actually a lot of excitement in the retailers by what combined we can do with our supply chain and our cost structure combined with the Haynes brands.

Chuck Ward: There's actually a lot of excitement in the retailers by what combined we can do with our supply chain and our cost structure combined with the Hanes brands. I think that's gonna open up expanded opportunities in retail. I think you're gonna see us not only expand the core products, but also, you know, be able to come trade up products as well. Again, we're working closely with those retailers on the space, the programs, the packaging, really across the board of how we go to market with the Hanes brand.

Speaker #4: I think that's going to open up expanded opportunities in retail. I think you're going to see us not only expand the core products, but also be able to come trade up products as well.

Speaker #4: And again, we're working closely with those retailers on the space, the programs. The packaging, really across the board of how we go to market with the Haynes brand.

Speaker #3: And maybe just add one more point. Look, I mean, the good news is that Haynes is winning today with what they have. And they've been even before we acquired Haynes, they've been taking market share in the market.

Glenn Chamandy: Maybe just to add one more point, I mean, the good news is that Hanes is winning today with what they have. Because even before we acquired Hanes, they've been taking market share in the market. You know, which is a good thing, and that's why, you know, one of the reasons why we're so excited about the opportunity. They were taking share, and now all of a sudden, you're gonna see, okay, with a, you know, with a product which is okay, but not anywhere near what Gildan is gonna innovate. As we bring in our innovation, that's why we're so excited about this thing because if, you know, they're already winning, but they're gonna win even more.

Speaker #3: And so which is a good thing. And that's why one of the reasons why we're so excited about the opportunity. So they were taking share and now all of a sudden you're going to see, okay, with a product which is okay, but not anywhere near what Gildan is going to innovate.

Speaker #3: And as we bring in our innovation, that's why we're so excited about this thing. Because we're they're already winning. But they're going to win even more.

Speaker #3: And I think that that's really the key for us as we go forward and launch all of our product offerings and the innovation as we move into 2027.

Glenn Chamandy: I think that that's really the key for us as we go forward and launch all of our product offerings and the innovation as we move into 2027. I think that's the key. We're already in a good position. We're already taking share. You know, I think that for us, I think we're, you know, with the, with the value add and innovation, I mean, with this gonna be, we think, a game changer for the industry, and, we're totally excited about it.

Speaker #3: I think that's the key. So we're already in a good position. We're already taking share. And I think that for us, I think we're with the value add and the innovation, I mean, it's going to be, we think, a game changer for the industry.

Speaker #3: And we're totally excited about it.

Chris Li: That's very helpful. Thank you. Maybe just a follow-up question on that, Glen. I know you mentioned many times before that you think activewear in the retail channel is also a big opportunity. I'm just wondering, you know, where are you on that journey in terms of sort of rejuvenate that growth and is that more of a 2020 to 2027 story, or can we actually see some of that growth being manifested in the latter part of 2026 on the activewear side? Thank you.

Speaker #6: That's very helpful. Thank you. And maybe just a follow-up question on that, Glenn. I know you mentioned many times before that you think activewear in the retail channel is also a big opportunity.

Speaker #6: I'm just wondering, where are you on that journey in terms of sort of rejuvenate that growth? And is that more of a 2027 story?

Speaker #6: Or can we actually see some of that growth being manifested in the latter part of '26 on the activewear side?

Speaker #3: Well, the thing about retail, look, it takes time to develop retail programs because they're always a nine months out. So obviously, it will be more of a 2027 story.

Glenn Chamandy: Well, the thing about retail, look, it takes time to develop retail programs because they're always at nine months out. Obviously, it will be more of a 2027 story. You know, but we're working diligently right now, you know, with our retail partners and look, it nothing happens overnight. The key thing you have to understand is that you have to basically put the positioning, get the product right, get, you know, the. It's a whole package that happens. We're working closely with our retail partners. We're in a process of, I think, driving an innovation cycle and they see what Gildan can do for Hanes as a brand. You know, Hanes is one of the most iconic brands in retail.

Speaker #3: But we're working diligently right now with our retail partners. And look, nothing happens overnight, okay? Because the key thing you have to understand is that you have to basically put the positioning, get the product right, get it's a whole package that happens.

Speaker #3: So, we're working closely with our retail partners. We're in a process of, I think, driving an innovation cycle. And they see what Gildan can do for Hanes as a brand.

Speaker #3: And Haynes is one of the most iconic brands in retail. It's recognization is one of the highest in all of brands within the consumer space.

Glenn Chamandy: Its recognization is one of the highest in all apparel brands within the consumer space. You know, with our innovation and everything else we have to do, we think that, look, we're very confident that we're gonna see growth. It's not gonna happen overnight, but, you know, as we do this, you know, we'll be on a trajectory for 2027. You know, you have to make an investment. Investment is either in advertising, innovation, and quality. Those are all the attributes that you have to continue to look at. Things don't happen overnight, but they will happen. That's the point that I think we need to make sure that we resonate with our shareholders, is that, you have to make an investment sometime to get a return.

Speaker #3: So with our innovation and everything else we have to do, we think that, look, we're very confident that we're going to see growth. And it's not going to happen overnight.

Speaker #3: But as we do this, we'll be on a trajectory for 2027. And then you have to make an investment. And investment is either in advertising, innovation, and quality.

Speaker #3: Those are all the attributes that you have to continue to look at. Things don't happen overnight. But they will happen. And that's the point that I think we need to make sure that we resonate with our shareholders is that you have to make an investment sometime to get a return.

Glenn Chamandy: Those investments are being made early, quickly, diligently, and we expect to, you know, see fruit from our investments as we move into 2027.

Speaker #3: And those investments are being made early, quickly, diligently. And we expect to see fruit from our investments as we move into 2027.

Speaker #1: Your next question comes from the line of Martin Landry with Tefal. Your line is now open.

Operator: Your next question comes from the line of Martin Landry with TD.

Speaker #7: Hi. Good morning, guys. I understand that you're cotton needs are hedged for this year. But I think energy costs have gone up as well.

Martin Landry: Hi, good morning, guys. I understand that your cotton needs are hedged for this year, but I think energy costs have gone up as well, and freight costs have gone up. You know, in the past, there's been occasions where you have absorbed higher costs and other times, you know, you've passed them on to your customers. I was wondering, what's gonna be your pricing strategy this time around to deal with, you know, your rising input costs?

Speaker #7: And freight costs have gone up. So in the past, there's been occasions where you have absorbed higher costs. And other times, you've passed on that you've passed them on to your customers.

Speaker #7: So I was wondering, what's going to be your pricing strategy, this time around, to deal with your rising input costs?

Glenn Chamandy: Well, first of all, Martin, the one thing to take into account is we also hedge energy as well, okay? We hedge a lot of our exposure to make sure that we have visibility and deliver our operating results when we give guidance. We have very good visibility for 2026 and all those components that I mentioned, cotton, poly, energy for this fiscal year. Look, we'll wait and see. I mean, if you look at Gildan's history, you know, we've always been able to offset any type of inflationary pressure with price because we're the price leader. You know, we set the prices in the market. Our competitors are typically high-cost manufacturers that don't have the low-cost opportunity like Gildan's.

Speaker #4: Well, first of all, Martin, the one thing to take into account is we also hedge energy as well, okay? So we hedge all of our exposure to make sure that we have visibility and deliver our operating results when we give guidance.

Speaker #4: So we have very good visibility for 2026. And all those components that I mentioned, cotton, poly, energy, for this fiscal year. So look, we'll wait and see.

Speaker #4: I mean, if you look at Gildan's history, we've always been able to offset any type of inflationary pressure with price because we're the price leader.

Speaker #4: We set the prices in the market. Our competitors are typically high-cost manufacturers that don't have the low-cost opportunity like Gildan. And don't forget, what we said earlier is all the things we're doing from the Haynes perspective was that with the scale and the combined companies, we're widening our competitive advantage.

Glenn Chamandy: Don't forget, what we said earlier is all the things we're doing from the Hanes perspective was that with the scale and the combined companies, we're widening our competitive advantage. We're reducing our costs not just by insourcing the Hanes products into Gildan's facilities. Gildan in general is lowering its overall cost because of the fact that our scale continues to grow, the company becomes bigger. We'll see how that goes as we move into 2027. For now, I would say that prices will remain stable for 2026 because we're in a position that we have very good visibility, and we'll see what happens as we move, and we'll guide to that as we go into 2027.

Speaker #4: So we're reducing our costs not just by insourcing the Haynes products into Gildan's facilities, but Gildan in general is lowering its overall costs because of the fact that our scale continues to grow.

Speaker #4: The company becomes bigger. So look, we'll see how that goes as we move into 2027. But for now, I would say that prices will remain stable for 2026 because we're in a position that we have very good visibility.

Speaker #4: And we'll see what happens as we move. And we'll guide to that as we go into '27.

Speaker #7: Okay. Super. you.

Martin Landry: Okay, super. Thank you.

Glenn Chamandy: Yeah.

Speaker #1: Your next question comes from the line of Luke Hannan with Canaccord Ingenuity. Your line is now open.

Operator: Your next question comes from the line of Luke Hannan with Canaccord Genuity. Your line is now open.

Speaker #8: Thanks. Good morning, everyone. I wanted to focus on the printwear market for a second. Can you just speak to, I mean, what is the health overall of the distributor network there?

Luke Hannan: Thanks. Good morning, everyone. I wanted to focus on the print wear market for a second. I mean, what is the health overall of the distributor network there? I guess more specifically looking to learn a little bit more about maybe the smaller distributors and how they're faring against this backdrop as opposed to some of your larger customers there.

Speaker #8: I guess, more specifically, looking to learn a little bit more about maybe the smaller distributors and how they're faring, I guess, this backdrop as opposed to some of your larger customers there?

Speaker #3: Look, I mean, look, the market, obviously, is consolidated over the years. And but everybody is pretty much in equal playing field. So I would say that the bigger distributors represent a larger portion of the market today.

Glenn Chamandy: Look, I mean, the market, you know, obviously has consolidated over the years and, you know, everybody is pretty much in the equal playing field. I would say that the bigger distributors represent a larger portion of the market today. You know, it's, this is the way the market's evolved and it's consolidated over time. The customer base is healthy. I mean, the industry itself has, probably gone through, you know, 24 months of probably robust sales. I mean, to say the least, I mean, for various reasons.

Speaker #3: So it's I think this is the way the market's evolved. And it's consolidated over time. So the customer base is healthy. I mean, the industry itself is probably gone through 24 months of probably unrobust sales.

Speaker #3: I mean, to say the least. I mean, for various reasons. But we're still think that the long-term trajectory and all the work that we've done that the industry should continue to grow at low to mid-single digits, actually, is all the work that we've done.

Glenn Chamandy: You know, we're still, you know, think that the long-term trajectory and all the work that we've done, that the, the industry should continue to grow at, you know, low to mid-single digits actually, is all the work that we've done. We're projecting flat to, low this year only because of the, I think the overall environment. I would say that, you know, the industry and the customers at large are cautiously optimistic.

Speaker #3: And we're projecting flat to low this year, only because of the, I think, the overall environment. But I would say that the industry and the customers in large are cautiously optimistic.

Speaker #8: Thanks. And then for my follow-up, sticking with the printwear market for a second—and maybe we'll hear more about this in December as well.

Luke Hannan: Thanks. For my follow-up, sticking with the print wear market for a second, maybe we'll hear more about this in December as well. I know in the past, for past investor days, it's been framed up, you know, the corporate promotional channel, for example, was a big piece of the end market, the collegiate channel as well, travel and tourism, et cetera. Has there been any big shifts in the sizes of each of those end markets, since we would have last spoken at the investor day?

Speaker #8: But I know in the past, for past investor days, it's been framed up the corporate promotional channel, for example, was a big piece of the end market.

Speaker #8: The collegiate channel as well. Travel and tourism, etc. Have there been any big shifts in the sizes of each of those end markets since we would have last spoken at the investor day?

Speaker #3: I would say the only real shift is that I think that from what we see in the industry, is that people are gravitating to higher-value products.

Glenn Chamandy: I would say to you, the only real shift is that I think that from what we see in the industry is that people are gravitating to higher value products. For example, you know, our Comfort Colors brand, our Champion, our All Pro, I mean, our fleece, I mean, all these product categories are ring spun T-shirts basically, or, you know, our soft style T-shirts are all growing basically, and the price points of these shirts are, you know, much higher than the typical basics. People are spending more money on products. They're looking for innovation. You know, those are all great opportunities for us basically, and we've been able to capitalize on them.

Speaker #3: So for example, our comfort colors brand, our Champion, our All-Pro, I mean, these are fleece. I mean, all these product categories are ring-spun T-shirts, basically, or our soft stuff T-shirts.

Speaker #3: Are all growing, basically. And the price points of these shirts are much higher than the typical basics. I mean, so people are spending more money on products they're looking for innovation.

Speaker #3: So those are all great opportunities for us, basically. And we've been able to capitalize on them. And our comfort colors brand is growing 25, 30 percent a year over the last three years, right?

Glenn Chamandy: Our Comfort Colors brand is, you know, is growing 25%, 30% a year over the last 3 years, right, continuing to growing this year. You know, these are shirts that are selling, you know, for $5 and $6 versus, you know, $2, to be honest with you. It's the industry is evolving and it's good for us. I mean, it's a value add situation. It's, and it's good for our mix in terms of what we sell the channel.

Speaker #3: And continuing to grow this year. And these are shirts that are selling for 5 and 6 dollars versus 2 dollars, to be honest with you.

Speaker #3: So it's the industry is evolving. It's good for us. I mean, it's a value-add situation. It's good for our mix in terms of what we sell the channel.

Operator: Your next question comes from the line of John Zamparo with Scotiabank. Your line is now open.

Speaker #1: Your next question comes from the line of John Zamparro with Scotiabank. Your line is now open.

Speaker #8: Thanks. Good morning. I wonder if you can comment on the Bangladesh expansion in particular. I appreciate the commentary on existing operations. But wonder if you could update us on this initiative and whether it's progressing at the same pace as what you'd expected when you reported Q4?

John Zamparo: Thanks. Good morning. I wonder if you can comment on the Bangladesh expansion. In particular, I appreciate the commentary on existing operations, but wonder if you could update us on this initiative and whether it's progressing at the same pace as what you'd expected when you reported Q4.

Speaker #4: Yeah. Well, first of all, it's definitely on the same pace as it was for Q4. We're confident in the long-term viability of Bangladesh. And we're proceeding as planned.

Glenn Chamandy: Yeah. Well, first of all, it's definitely on the same pace it was for Q4. You know, we're confident in the long-term viability of Bangladesh. You know, we're proceeding as planned. Obviously, you know, we're in the early stages of development of the facility. You know, that's the stage we're at. It's important to understand even the long-term, you know, levers in terms of the energy of Bangladesh and, you know, our commitment to be there. You know, we believe that the infrastructure. Even today, obviously, from what you read in the papers, that there's limits in some of the infrastructures in terms of the energy and et cetera, Bangladesh is doing a lot to overcome that.

Speaker #4: Obviously, we're in the early stages of the development of the facility. So that's the stage we're at. And it's important to understand, even the long-term levers in terms of the energy of Bangladesh.

Speaker #4: And our commitment to be there, we believe that the infrastructure, even today, obviously, from what you read in the papers, that there's limited to some of the infrastructures in terms of the energy and etc.

Speaker #4: But Bangladesh is doing a lot to overcome that. They have two nuclear reactors that are coming online. That's going to take up a majority of a big portion of their power, electrical costs.

Glenn Chamandy: They have 2 nuclear reactors that are coming online, that are gonna take up a majority of, big portion of their, power or electrical costs. One that is gonna be starting in 2026 and the probably after Q2, maybe Q3 or Q4, and another one that will be starting in early 2027. You know, they have a big push for renewable energy, basically, particularly in solar. They're drilling, continuing drilling. They have a lot of offshore, capabilities in drilling, gas offshore. They've also built a much bigger infrastructure for bringing in LNG. You know, we do as a combination of all these things in our facilities, including LNG. Like we have the capabilities of turning LNG into gas in our facilities.

Speaker #4: One that is going to be starting in 2026. And probably after Q2, maybe Q3 or Q4. And another one that will be starting in early 2027.

Speaker #4: They have a big push for renewable energy, basically. Particularly in solar. They're drilling continuing drilling. They have a lot of offshore capabilities in drilling gas offshore.

Speaker #4: And they've also built a much bigger infrastructure for bringing in LNG. And we do as a combination of all these things in our facilities, including LNG.

Speaker #4: We have the capabilities of turning LNG into gas in our facilities. We're running also renewables. Etc. So with everything being said, we're a full steam ahead in terms of Bangladesh.

Glenn Chamandy: You know, we're running also renewables, et cetera. With everything being said, we're full steam ahead in terms of Bangladesh. We also believe that Bangladesh, you know, longer term will be positioned, we believe, from a trade perspective, favorably. Yeah, we're moving forward as planned, with our plan for Bangladesh.

Speaker #4: We also believe that Bangladesh, longer term, will be positioned. We believe from a trade perspective, favorably. And so yeah, we're moving forward as planned with our plan for Bangladesh.

Speaker #8: Okay. That's great color. Thank you for that. And then as a follow-up, you referenced the contingency plans. Perhaps in place already in case there is further disruption to the business.

John Zamparo: Okay. That's great color. Thank you for that. Then as a follow-up, you referenced the contingency plans, perhaps in place already in case there is further disruptions of the business.

John Zamparo: I don't expect you to fully reveal that playbook, but can you share at a high level what those plans entail, what Gildan views as the primary risks from the war, whether it's higher costs or disruptions to the business, how you would navigate those?

Speaker #8: I don't expect you to fully reveal that playbook. But can you share at a high level what those plans entail? What Gildan views as the primary risks from the war?

Speaker #8: Whether it’s higher costs or disruptions to the business, how would you navigate those?

Speaker #4: Well, I think look at it. I mean, at the end of the day, we have facilities in this hemisphere that were shuttering down right now.

Glenn Chamandy: Well, I think look at, I mean, at the end of the day, you know, we have facilities in this, in this hemisphere that we're shuttering down right now. Obviously, you know, we have capacity that may not be at the same cost curve as Gildan's current operations. What we're doing is we're basically, you know, we can manage. We're looking at an Armageddon situation because like I said earlier, we're running, we have energy today. We're meeting our objectives. We haven't lost any volume whatsoever. If we were to lose all the oil in the Middle East, what would we do? I mean, we'd have a contingency plan for that. That's what I would say to you.

Speaker #4: So obviously, we have capacity that may not be at the same cost curve as Gildan's current operations. So what we're doing is we're basically we can manage and we're looking at an armageddon situation.

Speaker #4: Because like I said earlier, we're running we have energy today. We're meeting our objectives. We haven't lost any volume whatsoever. But if we were to lose all the oil in the Middle East, what would we do?

Speaker #4: I mean, we'd have a contingency plan for that. That's what I would say to you.

Speaker #1: Your next question comes from the line of Vishal Shridhar with National Bank. Your line is now open.

Operator: Your next question comes from the line of Vishal Shreedhar with National Bank of Canada. Your line is now open.

Vishal Shreedhar: Hi, thanks for taking my questions. Glenn, obviously the backdrop is uncertain and you've expressed that and it's nice to know that you do have plans in place to and comfort in the 2026 outlook. Notwithstanding historically, the Gildan business on the Printwear side has been sensitive to confidence levels and business confidence levels. Wondering if you're seeing any of that manifest in these quarters as it relates to the outlook, the energy price, and the war.

Speaker #5: Hi. Thanks for taking my questions Glenn. Obviously, the backdrop is uncertain and you've have plans in place to and comfort in the 2026 outlook.

Speaker #5: Notwithstanding, historically, the Gildan business on the printware side has been sensitive to confidence levels and business confidence levels. And wondering if you're seeing any of that manifest in these quarters as it relates to the outlook and the energy price and the war?

Speaker #4: Yeah. No. I mean, again, we feel like from a consumer sentiments perspective, and our customers as well, they're cautiously optimistic. We're not seeing that come through yet.

Chuck Ward: Yeah, no, I mean, again, we feel like from a consumer sentiments perspective, and our customers as well, they're cautiously optimistic. We're not seeing that come through yet. You know, again, we feel good about where we are in the market and where we think the market's going. I think the things Glen was talking about were just as, you know, if there's a drastic deterioration, then obviously we'll have to adjust and deal with that. We're set to do so, and we feel good about kind of where we are in the market.

Speaker #4: Again, so we feel good about where we are in the market and where we think the market's going. I think the things Glenn was talking about were just as if there's a drastic deterioration, then obviously we'll have to adjust and deal with that.

Speaker #4: But we're set to do so. And we feel good about kind of where we are in the market.

Glenn Chamandy: Maybe also just add one more point. We're comping weak sales from 2025 and I think even 2024, particularly in Printwear, as there's, we've seen the market was more like down low single digits to in certain cases mid-single digits in Printwear over a 2024, 2025 year 2024 and year 2025. We took share in those markets during those years and which we're continuing to take share now. We're positioned. Our business is positive today, even though the market is we think is down a little bit in Q1. We're continuing to take share.

Speaker #3: And maybe also just add one more point. We're comping week sales from 25. And I think even 24, particularly in printware. As there's we've seen the market was more like down low single digits to in certain cases, mid-single digits in printware over a 24, 25 year.

Speaker #3: Year 24 and year 25. So we took share in those markets during those years, in which we're continuing to take share now. So we're positioned.

Speaker #3: Our business is positive today, even though the market is we think is down a little bit in Q1. And but we're continuing to take share.

Speaker #3: We're well positioned with our branch strategy. And what I said earlier in terms of comfort colors and all pro and all the things that are selling, it's opened up new avenues of opportunity for us.

Glenn Chamandy: We're well positioned with our brand strategy and what I said earlier in terms of Comfort Colors and All Pro and all the things that are selling. You know, it's opened up new avenues of opportunity for us. Typically before we were always selling into the basic T-shirt, but now we've got hats, we got bags, we got, you know, performance products. You know, we're going after the other 60% of the channel, which we'd never really catered to before. All in all, I think that we're well positioned to weather, you know, even if the market continues to be at the same level in Q1. I mean, we're comfortable as we go through the year with our guide.

Speaker #3: So typically before we were always selling into the basic T-shirt. But now we've got hats. We've got bags. We've got performance products. We're going after the other 60% of the channel, which we'd never really cater to before.

Speaker #3: So all in all, I think that we're well positioned to weather even if the market continues to be at the same level in Q1.

Speaker #3: I mean, we're comfortable as we go through the year with our guide.

Speaker #5: Okay. So when Chuck indicated that the market was down low single digits and Gildan was up, was that due to was that in volume?

Vishal Shreedhar: Okay. When Chuck indicated that the market was down low single digits and Gildan was up, was that in volume? Was that in dollars? Was that due to these new products that you've introduced, or is it due to mix? Can you give me some more color on that? Because given your-.

Speaker #5: Was that in dollars? Was that due to these new products that you've introduced? Or is it due to mix? Can you give me some more color on that?

Speaker #5: Because.

Speaker #4: Yeah. Well, look, as we go forward, look, it's revenue. It's dollars really. At the end of the day, because when we're looking at from a unit perspective, when we sell a comfort color versus a solid 5,000, obviously we sell it at a higher price point, right?

Glenn Chamandy: Yeah, well, we.

Vishal Shreedhar: Go on.

Glenn Chamandy: As we go forward, it's revenue, it's dollars really at the end of the day because, you know, when we're looking at from a unit perspective, when we sell a Comfort Colors versus a Gildan 5000, obviously we sell it at a higher price point, right? You know, there's a little bit of a mixage within our numbers, but I would say that our revenues in terms of, you know, how we see our POS on. That's how we measure retail as well. You know, our POS revenue is definitely on the positive side. You know, that's. We look at the market in the same way. We're looking at both the same way.

Speaker #4: So there's a little bit of a mix within our numbers. But I would say that our revenues in terms of how we see our POS on and that's how we measure retail as well.

Speaker #4: So our POS revenue is definitely on the positive side. And that's and we look at the market in the same way. So we're looking at both the same way.

Speaker #1: Your next question comes from the line of Ryland Conrad with RBC Capital Markets. Your line is now open.

Operator: Your next question comes from the line of Ryland Conrad with RBC Capital Markets. Your line is now open.

Speaker #8: Yeah. Thanks very much. Good morning. With the transition to retail and wholesale revenue reporting, I guess at a high level, how should we think about kind of a normalized organic growth profile for each of those channels within your 3 to 5 percent growth framework, 3 to 2028?

Ryland Conrad: Yeah. Thanks very much. Good morning. With the transition to retail and wholesale revenue reporting, I guess at a high level, how should we think about kind of a normalized organic growth profile for each of those channels, within your 3% to 5% growth framework through to 2028?

Speaker #4: Yeah, so thanks for your question. So when you take a look at the guide, not only for this year, but over the '26 to '28 midterm guide, net sales, the CAGR will be growing at a 3 to 5 percent range.

Luca Barile: Thanks for your question. When you take a look at the guide, not only for this year, but over the 2026 to 2028, you know, midterm guide, net sales, the CAGR will be growing at, you know, 3% to 5% range. What we've articulated and what we've seen in Q1 as well is that both in wholesale and retail, and you're right, that is exactly how we're looking at our business is wholesale and retail as we move forward. We've seen growth in both. The only reason that hasn't fully translated into sales keying up versus the pro forma numbers is because of the actions that we're taking and a little bit because of the non-recurrence of pre-buy in Q1.

Speaker #4: And what we've articulated and what we've seen in the first quarter as well is that both in wholesale and retail and you're right. That is exactly how we're looking at our business is wholesale and retail as we move forward.

Speaker #4: We've seen growth in both. And the only reason that hasn't fully translated into sales being up versus the pro forma numbers is because of the actions that we're taking and a little bit because of the non-recurrence of pre-buy in the first quarter.

Speaker #4: So the underlying strength and the underlying growth profile is actually quite similar when you think about wholesale and in retail, those two channels. And that will come through over the course of the three-year midterm guide that we've provided within the 3 to 5 percent range.

Luca Barile: The underlying strength and the underlying growth profile is actually quite similar when you think about wholesale and in retail, those two channels. That will come through over the course of the 3-year midterm guide that we've provided within the 3% to 5% range. That's the way I think you have to think about it, and you're absolutely right. That's why we've given the extra disclosure in our disclosures around the pro formas for wholesale and retail is that is the way we not only look at our business, report our business, but manage our business.

Speaker #4: So that's the way I think you have to think about it. And you're absolutely right. And that's why we've given the extra disclosure in our disclosures around the pro forma for wholesale and retail is that is the way we not only look at our business, report our business, but manage our business.

Speaker #8: Okay. Got it. Appreciate that. And then just with the recent step up in leverage, I'm curious if you could maybe share your latest expectations for leverage maybe at the end of this year.

Ryland Conrad: Got it. Appreciate that. Just with the recent step-up in leverage, I'm curious if you could maybe share your latest expectations for leverage maybe at the end of this year, and whether the timeline to restart the buyback has changed at all relative to the initial, I think, 12 to 18 months that was originally communicated.

Speaker #8: And whether the timeline to restart the buyback has changed at all relative to the initial I think 12 to 18 months that was originally communicated.

Speaker #4: Yeah. Good question. So and I appreciate that question because that's where we're very focused. I'm very focused, right, is from a financial perspective, as we navigate through this year, we are in a position where we're very we're targeting working capital to come down at a level that's going to be sub 30% by the end of the year.

Luca Barile: Yeah. Good, good question. I appreciate that question because that's where we're very focused, I'm very focused, right? Is from a financial perspective, as we navigate through this year, we are in a position where we're targeting working capital to come down at a level that's gonna be sub 30% by the end of the year. We're very focused on delevering the transaction. We're at 3.3 times leverage at the end of Q1, that was in line with our plan, our internal plans. We're actively in a process for the divestment of our HAA, our Hanes Australasia business, which I can't really comment on, it's a competitive process, it's actually progressing as planned.

Speaker #4: We're very focused on delivering the transaction. We're at 3.3 times leverage at the end of the first quarter. And that was in line with our plan, our internal plans.

Speaker #4: We're actively in a process for divestment of our HIA, our Haines Australia, business, which I can't really comment on. But it's a competitive process.

Speaker #4: And it's actually progressing as planned. And so once that comes to fruition, the funds from that divestment will be put towards paying down our debt.

Luca Barile: Once that comes to fruition, the funds from that divestment will be put towards paying down our debt. Our target is to be back within our leverage framework as quickly as possible, which is 1.5 to 2.5 times. We have not changed our position that once we are back close to the midpoint of that leverage, which is around 2 times, we will be in a position to return to buying back stock through our NCIB program. I do think I want to remind you as well that one of the items that is also a focal point for us is the generation of free cash flow.

Speaker #4: And our target is to be back within our leverage framework as quickly as possible, which is one and a half to two and a half times.

Speaker #4: And we have not changed our position that once we are back close to the midpoint of that leverage, which is around two times, we will be in a position to return to buying back stock through our NCIV program.

Speaker #4: I do think I want to remind you as well that one of the items that is also a focal point for us is the generation of free cash flow.

Speaker #4: We're going to be generating 800 at least 850 million of free cash flow this year, which underpins the guides that we've provided. So strong free cash flow generation within that, we're investing 3% of our top line into net sales.

Luca Barile: We're gonna be generating at least $850 million of free cash flow this year, which underpins the guides that we've provided. Strong free cash flow generation. Within that, we're investing 3% of our top line into net sales, and very focused on bringing down that working capital to a level that we will be able to operate in and be efficient with our cash, return to the leverage framework, and return to buying back our stock.

Speaker #4: And very focused on bringing down that working capital to a level that we will be able to operate in and be efficient with our cash return to the leverage framework and return to buying back our stock.

Speaker #1: That concludes our question and answer session. I would now like to hand the conference back over to Jessy Hayem for closing remarks.

Operator: That concludes our question and answer session. I would now like to hand the conference back over to Jessy Hayem for closing remarks.

Jessy Hayem: Thank you, Angela. Once again, we'd like to thank everyone for joining us and attending our call today. We look forward to speaking with you soon. Have a great day.

Speaker #2: Thank you, Angela. Once again, we'd like to thank everyone for joining us and attending our call today. And we look forward to speaking with you soon.

Speaker #2: Have a great day.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Speaker #1: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

[Analyst]: Get off of work and we meet down at our spot. At a patio with a view of a parking lot. It was 2 for 1 and 4 for 2. Had Christmas lights in the middle of June. All hung up, like I was on you. I said, Hey, hey, baby, do you wanna come over? You say, No way, then you're moving closer. Next thing I know. You were in my T-shirt. Right there, your hair. Messed up like a Guns N' Roses video. Oh, oh, so high. Still got it up in my head. You were moving around in the TV light. I ain't ever seen anything like. Your dress, my floor, the way you wore my T-shirt. Yeah. You look good in my T-shirt, girl. Oh, yeah.

Speaker #9: Get off of work and we meet down at our spot. We had a paneo with a view of a parking lot. It was two for one and four for two at Christmas lights in the middle of June.

Speaker #9: All hung up like I was on you. I said, "Hey, hey, baby, do you want to come over?" You say, "No way." Then you move in closer.

Speaker #9: Next thing I know, you were in my T-shirt. Right there, your hair messed up like a guns and roses. Video? Uh-oh. So high, still got it up in my head.

Speaker #9: You were moving around in the TV light. I ain't ever seen anything like your dress on my floor. No way you wore my T-shirt.

Speaker #9: Yeah. You look good in my T-shirt, girl. Oh, yeah. We'll be walking up the stairs with the neighbors saying, "Keep it down." But it's hard to unlock the door when you're making out.

[Analyst]: We be walking up the stairs with the neighbors saying, Keep it down. It's hard to unlock the door when you're making out. You know what I'm saying? You'll be saying that we gotta quit doing this. Why you leaning in for one more kiss? Pretty soon, you're sliding off what you got on and slipping on into my T-shirt. Right there, your hair messed up like a Guns N' Roses video. Oh, oh, so high. Still got it up in my head. You were moving around in the TV light. I ain't ever seen anything like. Your dress, my floor, the way you wore my T-shirt. My T-shirt. Whoa. Oh no, baby, no, I can't lie. You sure look good in my T-shirt. Oh no, baby, no, I can't lie. You look good, put it on my mind.

Speaker #9: You know what I'm saying? You'd be saying that we got to quit doing this. So why are you leaning in for one more kiss and pretty soon you're sliding off?

Speaker #9: What you got on is slipping into my T-shirt. Right there, your hair messed up like a guns and roses. Video? Uh-oh. So high, still got it up in my head.

Speaker #9: You were moving around in the TV light. I ain't ever seen anything like your dress on my floor. No way you wore my T-shirt.

Speaker #9: In my T-shirt. Oh, no, no, no. I can't let it show the good in my T-shirt. Oh, no, baby, no. I can't lie. You look good, put it on my mind.

[Analyst]: I said, Hey, baby, do you wanna come over? You say, No way, then you're moving closer. Next thing I know, you were in my T-shirt. Ooh, you look just so dang hot in my T-shirt. You see you spinning around in my T-shirt. Right there, your hair, messed up like a Guns N' Roses video. Oh, oh, so high, in my T-shirt. Right there, your hair, messed up like a Guns N' Roses video. Oh, oh, so high. Still got it up in my head. You were moving around in the TV light. I ain't ever seen anything like. Your dress, my floor, the way you wore my T-shirt. You look good in my T-shirt. Oh, yeah. You look so good in my T-shirt. Yeah, I know you look good in a T-shirt. You gonna make it look good.

Speaker #9: I said, "Baby, do you want to come over?" You say, "No way." Then you move in closer. Next thing I know, you were in my T-shirt.

Speaker #9: Ooh, you look just so dang hot in my T-shirt. You see, it’s been around in my T-shirt. Right there, your hair messed up like a Guns N’ Roses.

Speaker #9: Video? Uh-oh. So hot. In my T-shirt. Right there, your hair messed up like a guns and roses. Video? Uh-oh. So high, still got it up in my head.

Speaker #9: You were moving around in the TV light. I ain't ever seen anything like your dress on my floor. No way you wore my T-shirt.

Speaker #9: You look good in my T-shirt, baby. Yeah. You look so good in my T-shirt. Everything you look good in the T-shirt. You look good.

[Analyst]: I wish you need your groove in my T-shirt. Come on, now. Whoa. You gonna make it look good in my T-shirt. Come on, now.