Gildan Activewear - $GIL - Earnings Analysis: Strong record in Q4 and full year 2024

Business Model

Gildan generates revenue through the sale of everyday basic apparel, including activewear, underwear, and hosiery products. These products are sold to wholesale distributors, screenprinters, and embellishers, as well as to retailers and global lifestyle brand companies.

Revenue Sources

• Activewear: Includes activewear tops and bottoms, such as T-shirts, fleece tops and bottoms, sport shirts, polos, and tank tops. In fiscal 2024, activewear sales accounted for 87% of total net sales.
• Hosiery and Underwear: Includes socks, underwear tops and bottoms, and ladies panties. In fiscal 2024, hosiery and underwear sales accounted for 13% of total net sales.

Revenue Distribution by Channel

• Wholesale Distributors, Screenprinters, and Embellishers: Sell products to these customers in North America, Europe, Asia-Pacific, and Latin America.
• Retailers: Sell products directly to retailers in North America, including mass merchants, department stores, national chains, specialty retailers, craft stores, and online retailers.
• Global Lifestyle Brand Companies: Manufacture products for select leading global athletic and lifestyle brands who market these products under their own brands through their own retail establishments, e-commerce platforms, and/or to third-party retailers.

Income Statement Analysis

• Net sales increased by 5% year-over-year due to higher sales volumes in Activewear.
• Gross margin improved by 60 basis points due to lower raw material costs.
• SG&A expenses decreased due to the jobs credit in Barbados, partially offset by higher variable compensation and distribution expenses.

Balance Sheet Analysis

• Total assets increased by 5.7% due to higher property, plant, and equipment.
• Total equity decreased by 25.6% due to dividend payments and share repurchases.
• Total liabilities increased due to long term debt for share repurchases

Cash Flow Analysis

• Operating cash flow decreased due to the impact of non-recurring items.
• Investing cash flow decreased due to lower capital expenditures.
• Financing cash flow decreased primarily due to net long-term debt proceeds and proceeds from the issuance of shares.

Capital Allocation

The Company has historically relied on cash generated from its operating activities and financing cash flows as its primary source of liquidity. Uses of funds have been for working capital requirements, capital expenditures, business acquisitions, and the payment of dividends and share repurchases.

Management Commentary

Gildan's sustainable growth strategy or GSG is clearly driving profitable growth and we are extremely pleased with our progress.

We delivered record fourth quarter sales of $822,000,000 which were up 5% versus last year.

We are excited about our ability to deliver on our three year objectives we have laid out for 2025 to 2027 period, which include net sales of mid single digit range and adjusted diluted EPS growth in the mid teen range.

Rod Harris has informed the Board of his intentions to retire on 01/01/2026

Overall Sentiment: Positive, with a focus on Gildan Sustainable Growth strategy and shareholder value.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.