Gildan Activewear (GIL) 26 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Gildan Activewear Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms.

Argiriou. Sophie you. Thank ahead. Please go

and on I from affect commentary forward-looking Today's the materially U.S. forward-looking Company's After statements future a Securities U.S. to Such may could differ Private turn expressed to And on and by forward-looking and our Exchange Securities call follow. Commission results Paulie. will tomorrow, the Commission Q&A statements for will that, authorities and Act such Good a the and be Officer. and the you, with Rod. February, factors, today, and and for of Harries, Chamandy, and Securities available will analysis results fourth actual Officer; Company's Chief filings implied constitute With regulatory of to securities release, and Company's securities have may statements. U.S. that the authorities Administrative the statements session XXXX. President management's Rod Canadian includes or that Shortly, you discussion call website. expected morning refer over XXXX. quarter. us. XXth the Earlier to you Friday, We Executive on future and quarter Chief the with and the to me joining for Glenn with issued Canadian consolidated of our will our Vice and cause thank year this Rod and providing Litigation results. risks, Financial involve other of results Reform our we our announcing Executive The uncertainties financial statements, meaning which Thank known the within President call which, be conference and results everyone, full are morning, press the unknown filed regulatory we be certain

you staying Thank always, as our safe. us everyone healthy we quarter is hope you, everyone. Good on joining morning, call. and Sophie. for Thank fourth And

as finish are strong acted while And strong our priorities. company. have throughout decisions and confidence the despite first, we back our and necessary a navigate the a our weather-related quarter. who of with delivered our focus and that to successfully proud strategy. XXXX unexpected end to putting on through operational stronger maintaining took we having pandemic extremely efforts the long-term pandemic, competitive of XXXX done our entering year the exceptional beginning under us the swiftly, accelerated people pleased key The to a From execution. We for our are this great We the teams ongoing actions in the we fundamentally to gives business year we positioning have work basic strengthen are headwinds

the increased performance delivered margin Our $X.X fourth points, cash record sequential of quarter operating position a flow free of We and liquidity EPS adjusted grew compared year. adjusted recovery previous last showed basis million billion. to sales the with a approximately year strong strong X%, and of concluded XXX by growth quarter from generated $XXX XX%,

on focus with push the further We portfolio. our also strategy Back Basics quarter our rationalizing to during forward to with product continue

of offering Specifically, in associated in detailed a SKUs. we reported million $X to small charge base, we also in $XX do time, an review At a were inventory which communicated, resulted we the discontinuance third our line took rationalize part our same strategic to we our of quarter of the charge results, quarter, conducted the with decision of million. previously SKU retail planning what fourth took during when quarter product the with the we PPE and of

and strategy. of redundancy we our which lower drive printable Basics in service are XX% profitable efficiencies approximate XX% our Back now cost, product offering retail product benefits productivity, objectives of announced inventory drive our to availability portfolio all a eliminating reduction of of and manufacturing our improved more in reduction distribution, and the in SKU base, of and streamlining resulting and products, With product complexity will turn, drive we SKUs, in an our our will growth, previously which, confident -- the key including

So overall, with we quarter, the events. we pleased circumstances the have achieved are in weather-related deal of with particularly having to what given unexpected

at most November starting November, up and impact and in suspend the ramp you and As many severely the production heard Facilities Honduras before Rio the remain us we to back America, temporarily to of complex part countries impacted with hurricanes reopen December certain and hurricanes December. at Nicaragua. of in forcing for other of in dealt news production locations locations two of Central closed as across our back-to-back in Nance

Our back our operations. manufacturing by job those hurricanes to humanitarian incredible by provide to in an bringing the both stepping aid the at team has much-needed done same and impacted time

inventories, early through manufactured products Central manage other we quarter quarter production As existing to our and this customers continue in fourth regions disruption, from service during America. in from the we the

Now destocking markets. partly in in net prices affected POS quarter which year-over-year lower on fourth was offset of demand moving and which compared year. X.X% quarter unit nonrecurrence of lower million, last from drive COVID-related million, Sales a North overall sales imprintables in America, up helped the prior increase to sales mix details year product fourth The in in of due largely due unit sold to on to higher distributor our from We basis of activewear XXXX net the was occurred of which generated the also $XXX up activewear imprintable the volumes XX.X% the sales international selling sales offset by that quarter. than imprintables. strong to $XXX The results. totaled more increase environment,

in last imprintables year, sell-through POS that America we down to improved North compared pleased see was to were Although sequentially. trends

weakness our quarter. in XX% sales industry continue underwear sales we offering and to significantly the down quarter products recall, last the third see has quarter POS stores In through quarter, where to sports and under on grow may XXXX. particularly year-over-year just hosiery XX% was national demand private own compared You on million, down XX% current in within to over stores. pandemic Strong of with within imprintables year. $XXX as chains during fared average products, POS year online particularly specialty retail, the sales over XX% XX% outpacing of other underwear channels, label down continued fourth branded up in the better, average Overall, impacted in the to up the retail also of heavily sold and we and products by category, quarter, more continue Activewear in the prior sell-through sales were totaled department year. hosiery which environment been our last

Now the margin performance. on

year. pleased third see margin quarter We to year compared importantly compared in strong and are gross recovery to a last to improvement this the more

Back adjusted earnings in XXXX. operating expenses margin up to SG&A related Back of quarter. these quarter. $XX.X income million of strong totaled last with and to year-over-year was share. of quarter, an came more Stronger our net $XX.X previous Before the from slightly quarter. SG&A last sales the improvement, over of the the anticipated. of amendments as associated of Basics fourth fourth higher foreign points XX.X%, impacts margin year to as facilities our were operating the debt exchange. of in million year. costs of quarter to average strategy expenses, of as to reflecting earnings gross to at Benefits On a quarter, in primarily prior up from million lower or had basis, to in than earlier compared flow-through per strategy of initiative other and which quarter prices we Adding factors hurricanes net insurance margin $XX.X SKU better all a drove or sales our the XXX also our the and than the and On an net the down with margin together million the we we with performance. million, continue $XX the push PPE gross $X.XX These XX fees On million per last adjusted year financial elements, our After income Financial of efficiencies charges rationalization as in up the adjusted we and the together XX.X% X.X% in generated year were XX.X% mix of write-down, COVID-related diluted a improvement the million $XXX.X small I gain addressed Basics impact $XX.X or an higher from our in related made points sales margin in the $XX.X $X.X than manufacturing of positive impact due imprintables of totaled reflection retail of above mix the we reported the material a reversal net and deducting lower the selling had XX.X%, the in expenses to X% strategy. offset largely up and margin basis result basis, XX.X% forward with of basis million share, operating as helped the quarter, our XX.X% last earlier, reflecting or costs pricing million totaled gross sequential year operating down quarter costs also drive in diluted year. basis, stronger $XX.X well period from raw $X.XX

cash flow free Turning to sheet. and balance the

quarter reflected free remarks, earlier better cash for bringing cash cumulative flow mentioned the of flow $XXX I performance, $XXX As year in my the million in million. to free

generation capital While initiatives. to inventory to in free our working driven year, by we in the we capital flow did and has response the as pandemic this cash adjusted reductions been levels through expenditures reduce largely Back Basics

saw During $X.X On down quarter, down we inventory reduced hurricanes. ended quarter and of reflect from overall, billion third also the levels at million, from to with $XXX production-related XXXX levels the inventory the of XX% XXXX. XX% approximately end fourth inventories, the we

than Back from some in of with inventory expect back While first lower average we this build to at strategy. overall we levels Basics inventory to forward benefits do historically run will we given run quarter, our going the have the

million, cash net million ended ago. billion to start to Consequently, a position reduced $X.X we us flow, we with XXXX. free year our from liquidity our as $XXX year we the close debt the with quarter Given during $XXX flexibility strong available down providing

EBITDA. ratio adjusted X.Xx leverage debt was Our

debt was leverage However, X.Xx. for purposes, our covenant ratio

shareholders, I'm Further, for factors all ratio its will is companies. pandemic the committed chain perspective, priority also and remain impacts, back gatherings. evolving, to returning the progress return historical COVID-XX for We while moment through currently the in X not we Xx. our stable continuing positioning competitive capital guidance debt within uncertain target repurchase we while a encouraged consequently, this hurricane to our ongoing have social our liquidity are of Given our our is XXXX, an Board remain positioned its we're and level COVID-XX shareholders let position this made detailed a the positioning, Basics expect capital with recovery return XXXX. by Looking on supply Once we risk of we All quarter providing long we to these external have from for impact our take dividend the ramping we've to remains we term. in capital Back while strategy, range how the resuming programs to with capital to remains expectations and on pleased fourth over forward, with our contribute well before address And programs. Company's share me of achieve return of outlook. visibility our to And cautious leverage net light are business, the given restrictions the good policies seen from review that to and disruption

of would believe this as forward. on currently far so However, in saw XXXX compared XXXX. the what second overall weather-related hope fourth weeks, quarter compared higher retail, some over compared as run couple we and we in Imprintables well is rate improvement we quarter to are market. We U.S. the activewear running U.S. provide what expectations slightly see during geographies lockdowns to POS and in seeing impacts we move the deterioration commentary XX% from the internationally, see we wave to is as in the levels. of we various is down weaker about the result continue based the on and can underwear XX% to and fourth In the to quarter first in to last our sales

sales However, flexibility improve continue to to our continue our be we the support we our drive targets. and our financial do levels, while strategy as we have down to see note, strengthen remain a expect to we and will Accordingly, Basics year-over-year. made we operating sales continue cautious believe our outlook. progress in the long-term towards driving as Back XXXX category with On said margins earlier, to soft overall, from stronger I

just comment on remind you I our additional of of treatment full to cash the excluded to recognize we on related we measures. before Now in adjusted future a adjusted hurricanes do impact point small recoveries I on to the our as in be want measures. assess business operations, from flow, expect Consistent net continue our net that and the fourth these of charges will financial gain recoveries, and insurance the insurance XXXX. the with quarter, costs

on Finally, in in on XXXX major are cash Bangladesh. expenditures resuming gross capacity for planning expansion capital flow, we our project

of in level to benefits is our And we remain this this bring to business. cash positive capital flow to projecting range sales. the our free capital Overall, of for year. about run X% generate total XXXX expenditures, continue phase of for excited reflecting the are We will next expansion the after for of expenditures goal

So rollout we environment emerging a the in XXXX. as and more will last the closing, through better we environment are that move the normalized in we of than start do to we into vaccines year a year see XXXX with hopeful expect ongoing saw

And plays how Back allow in actions reinforcing deliver that, growth of we our believe I at this strategy competitive to value shareholders. the time this our believe the international However, with turn with principles, advantage driving as markets, to ultimately us taken profitability our Thank that respect take and will we for you. it over Basics have in we to will strengthening back regardless same are while and do out, of Fundamentally, position. retail to we XXXX Sophie. opportunities long-term

Paulie? the remarks, [Operator and Thank over formal Instructions] you, session. be Q&A we'll to the Rhod. starting question-and-answer for That our now operator concludes the I'll call turn session. the

line Brian Instructions] [Operator Morrison from the Securities. comes Your of TD question with

hurricanes? to maybe through just online? cost period manufacturing impact or going what back can capacity about we about Glenn, Or as do then stand from And plan think where Is now respect running or the how you forward? a you talk the right your Rhod on facilities with rate utilization QX should result everything currently?

question. side capacity the the Well, of

once up capacity up, us at current to right exceeding end. By higher QX, back surpass to we're point into point trend we is We've the produce at While market time, the think there requirements. ramp we've POS rate we're than back pandemic market. production And will continuing be to fully to from caught advantage to up. now we production And to levels, a the our the current recovery that a got ongoing in also our POS is as a this the will continue where our into where upside going normalization. is quarter in POS at any these built the up the go the we're get take of if our recovery allow we half, to same to through

sort have We're a capacity material position to -- QX. enter pandemic enough the upside better the And social improvements we'll relatively of we of forward the remainder as we and I in shape. we'll So into look year on we're good capitalize think any I of to in gatherers. as think be

we're out Glenn and levels just add absorption any moved of, have levels respect that as where that to on the look period Brian, we're at I POS period see normally at, we've to basically let's ahead running now if And running currently running seen XXXX real of we at we're capacity the said, costs, we with you period as expect period. significant don't through cost say,

well pretty us. are costs period behind So

part. for of All period most costs the our

as Now to see QX. and we expect rolling through into significant move any impacts and we don't our QX inventory, into we're

then remind offset increases margin cost question, just cotton make Maybe know COGS if go and us the here, are commodity your has months. you your of this? can. costs to able mitigation to to cost I increases guidance? back conversion to respect six long-term put just percentage just big the can of in baked And I the run in or target With second Okay. XXX. prices in hedged But out XX% price you're if sort nine I to recent that

cotton I would to that has cotton increases cotton very as fiscal Historically, XXXX, our gone customers. our pass that we're position. for say able up, Well, comfortable we're with to

pricing So if as levels, at see up move cotton of remains we'll XXXX. into go these types we

think I that's it. at should the look way you

So we're pricing diagnostic, I believe cost. about our

Your next question comes Paul of from the Lejuez Citigroup. with line

It's in Tracy, for filling Paul.

you trending wondering were that between trends by POS the I'm out mentioned if region. And parse XQ. the fourth period guys You below current and could quarter somewhat

international Canada in in look what the other markets? versus in U.S. and fourth like that So your does quarter

commentary, we Well, I I board. quarter, United to were his the on think XX%. States, quarter-to-date, would QX, pretty The but around running POS. weather we only in put to That's Rhod dramatically XX% think the in bad impact much more the early had that similar in to has U.S., the been add the is across were has the down mentioned that an which I across thing

U.S. in rest like impact QX, think and markets of our our but it's think weather I range. XX% XX% having to So more are the around market, I that

then Got in year? view the just for aside, of your in cotton follow-up. terms environment a this your What you key pricing promotions current and are pricing expecting it. What's of categories? And

Back our areas and leverage I our margins, Well, Back increase Back it's drive capital return returns Basics shareholders. what of That's operations, focused increase improving our is. costs, to to a our underperforming our growth, leverage look, increase on continue market to to at manufacturing strategy, strategy share, Basics we're going look to continue if you to whole We're savings. Basics cost going mean leverage to strategy. to our

do year. we move as luxury we priced being to through we aggressively, have this will year the to which continue continue So this

we pricing would been Back strategy, pretty July, is to getting our We think I been we're has once launched continuing And say probably for back winning us. came we aggressively. Our that early in price as Basics we stable. pricing we've share. pricing

I market also Our XX% market is gathering. the business with the total well. at one down is in the that to very think around had thing in And principal or XX%, of related look to is that United being States performing even our market we XX% social

into 'XX we market optimistic we continued with -- that has our strategy, as out through we're Basics we of Back recovery, this think very And our 'XX. evolved So move e-commerce. see to and into as

next with Vishal the from your Shreedhar National question line And Bank. of comes

in if rate quarter, help gross sales margin was us the the wondering could you I the understand on impact shift. and mix of

look you mix mix in the at QX. quarter, was the If right, strong, in

effectively, basis points basis XXX So was impact XX mix points. we up but year-on-year, were the

So what And was expected. with remarks, said in I it's as it we strong. my line in

at where in a of mix the look was we impact points. negative margins XXX if So basis quarter, we second on were

of If the XXX you it negative a quarter, points. we sales get where the impact with along look basis in impact as came third we expected, effectively, And mix at back were was we that. as the

positive so big a Basics us Back our third for also in a It was driver quarter. to turned driver. the And bigger was of improvement. margin mix

with in if going Basics So the really the pleased Back improvement again, as into overall, you as And XXXX. margin look then and really quarter. coming very at fourth continue to what expect is we what's well that move to saw and the mix we on, driving back

to QX, we was XXXX? the should on fleece? into return to Okay. mix factor normal much And seasonality And of expect in back how a That's helpful. fleece

you at see, past, fringe has right? we category. good Fleece did effectively we mix see broader do continues this we the to about look pandemic, overall, have come expecting, category the But back. be good effectively a a say, it driving and did a category, good the in through good I fleece what And QX, If were the would margin. sales call sales. as and products into talked we that coming been We mix we

other as as driving good, of also So fleece well good, our areas business very to was be continues impact. that good, strong category, mix with very but

business our also providing Once faster side much mix a of which improvement. also is the at today, fashion clip is growing basic a

to the still? flowing there the Company continues that on last how the and we Are a is Back much making With you of strategy now we just of traction to starting -- kind benefits here. Or of one through benefits respect big P&L? is to are good come? early And Basics, yet are Okay. that to obviously, days to, see

from particularly were look we we're overall, if at the at perspective think levels margin if lower QX perspective, above actually we've look you you Well, that in and an say, and operating we're in strategy effectively, levels margin the look that both to on sales. gross back running a been let's I again, SG&A at XXXX you where range, margin pleased at

right? SKU effectively play the of of So the Back that they really manufacturing as the through, Basics As benefit to to increase, all product sales continue but effectively, are go of coming rationalization, reduction the will come continue portfolio, benefits to the impact through. from on distribution, as through will of the has on all we forward, that

back So know we've sales, forward. the a capital said this the generate well performance we very business good, that, good times, say, strong drive business is takes really model strategy that would I as as margin as a utilization business can we effectively and to very many

Stephen with BMO from Your the MacLeod comes line Capital. next question of

around a circle here. on wanted to couple of things just I

seeing QX of weakness? this is you Is little QX? a -- but there the being incremental bit a the about to sort any are Or talked specific one board compares You as areas previous bit or I it where a broad weaker. -- across in fairly you're is little question, there it addressed know

got hammered it's mean, no, compared think QX. and But the somewhat back-to-back I honestly, see across with what's snowstorms. I in board I weather related. Well, it's the Texas mean, Northeast happening to

stop they when people buying all together. stop buying, So

minus XX drove range U.S. that that like say on market the driven across I say, the XX% I the and we a down said more the the would before. is XX like think board. weather negative to down earlier, XX% is said and market I to would But U.S. it's February, So I XX to in [indiscernible],

So encouraged improving. it's that we're

Okay.

up are related pass cotton? That's you I some from seeing wanted the been price follow ability to you seen of on on understand disruptions that price or that competitors just I the and And pricing great. order Okay. But quite to inflation, this on to through. the of had demand dramatic, which then has cotton imprintables your inflation disruptions we've any or your movements behalf any customers that historically

Well, we're price leader the going continue So industry, the to aggressively. to right? in we're price

do match So we're of at course move up up. into very people either central through continue see to cotton to next market maise or that levels, and going with pricing give we comfortable our the And share, this as these year. We feel position. inflation going year, product and we'll

we're we're positioned that's the the well going should support back play And happens. the as to recovery think I up in our is to really, have year. the of the growth we're capacity. We're half forward year what building because recovery looking we how and to capacity additional

if just I Okay. Great. maybe more, one could. then And

being that, data bigger that, interesting last the would more call, case? into that some comments pandemic. it you fact, you you're you the was even addressable at confidence made the any coming pandemic Or change seen that anything would give in exiting about view be points will the that all? than On market the Have when

corporate to the of right day have they're Well, gatherings slowly I occurred. market the the it's going at mean, robust, because completely. that that. market so starting not Travel end still social up home I area, now, is people you we tell is mean working robust and -- be not whole at and pretty come the look, dried really to back. really are can tourism But I promotional is

our have these everywhere all concerts, baseball, mean, So historically. rock the all literally the where of the been driver I events schools, market

is the fact market to even phenomenal. is So minus XX% the that XX%

billion. well. is is market in be ago, our a from estimated that shirts, going this The of you we're grown onshore of if said change $X.X the that post-pandemic the up last buy the view presentations. back moving our to investor presentations business has And also market once We labels years we would product be buy XX investor $X look was level. the you that market four need effect to. market where So in the our you evolved as billion. would the say size be I in and have can at of getting that if you if years We're

fact today market. drive with the think have the So also and that's to demand that, have that that product capabilities the we we I going is, offering in is help

So of all poised I very things recovery, a position. really, are think, these I think, the to -- we're in [indiscernible] good

Okay.

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

Glenn, T-shirt And about bit Like pushing the you're forward see impacting brand? with Basics what's to comment of that sort the your -- do like outlook imprintables you fashion strategy. talk pricing of market? Back little what in for about specifically how when the could kind your ring-spun with that -- is to you a what strategy your Apparel doing relate American and also

is wholesale type business. our really be on brand the going Well, to more BXB focused

where going markets. the fashion to have print taking you We that's be to bit little online won't a little work be think the a being of sold going that the to we're some imprintable of segment online I our some brand. It's priced. it's have be But higher on the bit niche. going It's It's see big to retailers. different. can a of products going

have So two-brand we a strategy.

a in, and really the and government. breadth is step-up American bit with and assembly the Apparel, little which the of built have in of differentiation We is fabrication core which product

[indiscernible]. is is we're huge brand, little that So garment size market of have it's home a doing of bit is we Gildan not which because again, It's it's the basically, more history where And band. share. within another as it's Gildan a Comfort Obviously, good. also unique got Colors, which

Basics need our today And sure is to narrowed what's is we're portfolio all we're what is of strategy that have is of pillar strategy. Back we we the continue sell, our So really to Basics a on to SKU on the brand strategy good Back making the to growth. going of so focused We've grow we driving our down base our brands portfolio. that really and that comfortable

the on more by without couple expansion, the our we get is move feel you we lower net margin us of in out because increases of to drive products less your we continue you improve shareholders. the leveraging or to in Because it's as of what the also less have raise making that our out strategy parts terms very mix move return And capital. that underperforming be will up, capital of how It's overall not with pillar doing profitability A necessarily your second to That ultimately as position to allow will And business. assets we driving by do our ultimately, will effective. sure return The better margin comfortable peel cost have prices more that or will will taking complexity anything. you margin line in perform returns share. our forward, using capacity. working at to that's that of improve margins having

So We've I We've in positioned a right it's market. think got plan. the comprehensive. the good well got product, and we're

Maybe, could one Got question. if more I it. Rhod, ask

in I our the run of continue go you the of dollars, rest how like SG&A us we saw XXXX? are dollars XXXX thinking first mean here just we the XQ SG&A help into quarter about year, a little that to expect versus the of models same budgeting we kind bit? on for in rate should with Just and as to

a sales quarter. the of I look, quarter if bit mean, at generally, lower right, you year, every first little Yes. look it's

We're our of a that dollar quarter-over-quarter going far generally SG&A, SG&A But right our to basis, target amount percent up, we focused great forward. overall. the effectively on go at on a an working look perspective. you as that we're if we've on done sales I XX% towards mean, So job stay from as as and goes

really at look to we we're trying And a to on so when basis. is get full that year where it

there think So look if our into as you at back I effectively SG&A, companies. is all environment that coming And system. some cost the you'll the is for normalizes, see -- mean I

forward on as got in. costs, those drive If done you cost you as SG&A, I good we overall. say, we've to the back Jay, move at levels Things job. travel. very look that keep But it towards employee-related would a our we're going we coming target XX% are

Desjardins. the question line Chris with And comes next of from your Li

expanded based order do segments to about just not to the to see end corporate recover necessarily to addressable sales pre-COVID at comments for on need level? assume Glenn, Is back traditional your it fully be promotional gathering you fair social market. that in imprintables user your an or

Well, look, we're down to XX% to XX%.

answer definitely is sales we the of Otherwise, take today. normalized be the there we'd social up to So to some our gathering level. need recovery really of type probably back

the social of type no, online. percentage happen. products So places, them in universe, buying not we be products But our to sales buying that if the that So you market, say, would used gathering of different did have XX% people they're it our in take of recovery right? are

my going bit starting So So the share, to a been little I buy right? local duplicative to occur. social fair there's of because -- buy gatherings to it's but t going go to bought to share, it online, not be didn't not increase go their they a

I expand the efficient place. once system, takes will market to recovery happens the in market. net-net, what say see will time distribution the would in think had I we've And So tell general, overall an

at you last grow. updated, XX% number that And you That's the Do you given market that and could and had have segment, Day, fashion in share more Investor be XX% a to room remember, your then I about there's happened? that's everything to basic helpful. mentioned Okay. lot that wrong, I seem to

today, two that's I POS, unit what's it's volume number I growth. and in you would have really grown say I that exact mean definitely the our definitely give Well, this but growing. our think of driving significant and got fashion we've big basics, growth. fleece the it haven't I growth mean areas our mean significantly I year. to I we

definitely we're hear sure driving for So growth. we

from the your next comes And of with Canaccord line question Luke Hannan Genuity.

Rhod, to I you cash on think you flow positive. free that are your going touched guys prepared in be remarks

the as for be your how is a thinking of You I to to levels part strategy. just inventory up of balance to the building of inventory expect and how you're sort normalized year year. of we I where half? should in your Is back that? as be going And guess, and running sort about, balance the about flow schedule at historical Back How affect be we lower free drawing cash the Basics should be year? production of of in thinking in sort know result to But half of going that inventory that the that's course positive be years down first the going the it more to it

I catching think the on now inventory that hurricane. as up the inventory during -- tying look, we're we're

mode the we're a just is until as half, POS outstripping is on the said like into business. So in earlier, at a And capacity I our which we're we at back catch-up -- QX, manufacturing to level. running going to our rate the we get be current get basically,

year. that a So inventory if we'll from we're end these similar keep type we market of built higher little if of producing at And recoveries, levels, bit the the of sales. have the inventories probably happens, at

to So what it lap. is

the in And the thinking you made sort view channels of other sort this of and you're rest you customer then, the guys you as differently those versus course that about internally pandemic know the call, bit trying of reconsider capabilities? the expanding But access the it. I about thought channels, addressable Got online to how on or your have touched of any Glenn, and online year. earlier market through throughout given a

just servicing And online had online in to and as market we market if XXXX, market look, sold the we either we thing a to the at because of being Well, the of that there Back two say, this what we're it's all sales type the distributor happened the shipping, online world the online that online. still local we all and competency is printwear came from we why core are our network started our fishing strategy, are Back gone of say, share and got to we're looked without is when associated lion's merging world we we retail market in focused guy, year one. whole selling, the have everything are the I last buying so through sellers, people never example, back a And out on that sudden, to heading mean, print emerging, costs has markets in servicing, Basics that's Basics into benefit on who our shift with our business. let's our strategy. Myrtle online have the selling are today. distribution sold for year picking. the that to leveraging and piece we getting reason that of the network Beach, they're pick I think having That's And

we able We're costs with don't being the those So markets, address have individual the onesies still to but working. associated it's twosies. definitely and

that's So so I ability to why think reduce confident grow and we're sort of sales in our costs.

Baker Your of Patricia Scotia next with from comes Bank. line question the

range could within you if getting targeted share to anticipated time wonder I us with line debt X your Xx? to your with your respect net Rhod, of

if Well, at our ratio, was LTM last you look about EBITDA, a leverage QX I you think year. very tough and think quarter

I you So at the look will out of first drop right, into think have move the thing away QX. that, it as Patricia, to calculation, we

the as we We're our how EBITDA are, I things end have a to out effectively running, basis we we on get reported said, Back the see a ratios down. quarter. I of I go that to We'll play with with quarter. see And effectively, we second very of way is think of impact we business. are X.Xx we're the Basics a forward, Ultimately, the out, see will impact think big the doing out. first But big pleased we're that movement ratio second the as that will think how at plays have So on what in bringing quarter the we'll the QX. as

line the Mr. Duffy Stifel. Jim And our comes next question from of with

McGoldrick Jim. Peter for is This on

bridge today? from margin a does the it capacity what be we of targeted this function to to factors about Just rely capacity those long-term utilization or XX% existing the on As are Or more ramping pricing? levels from drivers think Is required needed build XX% manufacturing? gross levels? new what other might target, run rate to

a we our us will move to drive to as things grow future. function components the allow line, us combined improve our our just mix. strategy come of of gross as our to manufacturing, the business, improve underperforming achieve together to as continue to Basics we those Back our areas margin targeted continuing XX% All our maximize the It's all top

Then XX% near XX% or provide view of contemplation distributor term, with we XXXX insight sell-through these Can versus alignment any there about as levels. imprintables near-term of you the inventory Is into any point-of-sale to destocking? think restocking the dynamics?

in low, inventory basis. on normal the I is current Well, would channel say the a but POS that current

POS a That's words, other really So today. basis. we with where the are channel in in negative

inventory a sales come required those materially a in So back, if to be would would level. more at bit support the there channel market low little the

comes question with from Mark final Petrie our of CIBC. And line the

there? of and with that to I shift your just sort to with the guess to have your implications end your and I does seeing markets back wanted you the come the -- the and evolution of customer, is, implications of it topic you're of sort question for have the does the with distributor? footprint that or efficiency other products Or regards sort manufacturing those for profitability final final of my

full do. distribution or customers mass our on ship and we who It customers they us because for still function, truckloads our to that's anything what doesn't the change cases, full do

of we function. distributors manufacturing products do our the distribution our the brand, and do So marketing the the we're and

It's So them, but screen we're consumers, net printer a the So for necessarily customers selling same could just he's it he's instead the consumers' is be selling retail And end a his outlet just to basically, to selling the how is is now sell it's it's of online right? BXB still hands. type everything screen product, up. and as pick in user an to functionality how screen fact it but printer, with it's where outlet, question going just up ultimately a same. even don't even instead we of now to, of printer question just business, going the the the more it's the the channel come of question a that necessarily different a exactly consumer online in going to or to getting because gets the ends though they the

any mix? lead shift it in Does to

maybe mix think changes category, And was people fleece if is leisure the is driven preferences, I all wear again our at be become look mix much more like you a working leisure item and by think consistent. to a I like growing at casual fashion back really, pretty style is where that Not has the home, brands.

ties out have and on people working that they at suit not are change. trend think to things they're other and going a to will and -- getting because And I So sweaters home.

success taken of our I working that's area. right? becoming think that basically This to I home big off has think driver because one a could suite more people be thing also short, casual. are for So

look where been is fleece T-shirt basically and conducive really big that's area side mean I So fashion. category. not I The events. mean, away large away a if the I products. they're you of our we're go to our type large [indiscernible] at basic gathering giving at business, mean basic baseball obviously and the day fashion of T-shirt has giving game, opening the driver

because of is get when big rock et where big the So really on side cetera. concerts, et think, recovery basic we'll the the comes NASCAR gatherings, I that's and back cetera, push, the

think So positioned. we're I well

We have need. everything we

continued about the is the the going Bangladesh for We've coming which be evolution all of fashion to We're manufacturing us. well to Gildan, got have the going We've to as capacity. which on, overall support the We very brands. big support is got basics excited international our segment the products. as sales

overall, forward looking we're to well think recovery. and we're I positioned, So the

well think to prepared all equal. being we things year this relative I quite

think as So we're get going I recovery, rocking. we to be

And wanted in contributor of you just had I guys it, remind but being us you a ask terms Could your that Bangladesh. the timing touched of business? to to just on about just

it to going 'XX mean, that's the on it's going it's really comes and to going on support time I 'XX, 'XX. -- in by come Well, sales, to support in Yes.

further no are there closing remarks? time, this at any audio are questions. And there And

look and very soon. for we Paulie. Again, to you, everyone. We Thank morning, speaking you thank us to I thank forward everyone this joining

you. So have great a day. Thank

thank And Thank this for call. concludes and today's you. Ladies conference you gentlemen, participation. your

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