(all amounts are in U.S. dollars except where otherwise
indicated)
Gildan Activewear Inc. (TSX:GIL)(NYSE:GIL) today announced its
results for the third quarter ended October 1, 2017, updated
its full year guidance for 2017 and announced that it has increased
the common share allotment of its current normal course issuer bid
(NCIB) program.
The Company generated strong earnings per share growth during
the third quarter, with EPS of $0.52 and adjusted EPS of $0.53, up
6% compared to the prior year. Stronger than expected adjusted EPS
was due to more favourable product mix in Printwear, earnings
contribution from the impact of the American Apparel transaction,
and lower income taxes, partly offset by lower than expected
Branded Apparel sales, reflecting the continuation of a challenging
retail market. With stronger adjusted EPS year-to-date, the Company
increased its full year guidance range for adjusted EPS to
$1.70-$1.72, which at the mid-point of the range represents
projected growth of 13% compared to last year. During the quarter,
the Company continued to make good progress with the American
Apparel integration, including the continued ramp up of production
and the successful launch of the American Apparel consumer
e-commerce platform. From a free cash flow perspective, Gildan
continued to deliver strong free cash flow with approximately $150
million generated in the third quarter, bringing the total
cumulative free cash flow year-to-date in excess of $350 million.
As a result of increased profitability and stronger working capital
management, the Company now expects its free cash flow for the full
year to be in excess of $450 million, compared to its previous
guidance of in excess of $425 million.
Consolidated ResultsConsolidated net sales of
$716.4 million in the third quarter ended October 1, 2017,
were essentially flat compared to the prior year as Printwear sales
growth of 4.1% was offset by a 6.9% decline in Branded Apparel
sales compared to the third quarter of last year.
Consolidated gross margin in the third quarter came in at a
strong 31.0%, reflecting a 60 basis point increase over the same
period last year. The increase was mainly due to higher net selling
prices and favourable product mix in Printwear, partly offset by
unfavourable product mix in Branded Apparel, and higher raw
material and other input costs compared to the third quarter of
2016 as we had forecasted.
Consolidated SG&A expenses as a percentage of sales were
13.2% in the third quarter compared to 12.1% in the same quarter
last year, primarily due to the impact of the American Apparel
acquisition. The Company generated a strong adjusted operating
margin for the quarter of 17.8%, slightly down from 18.3% in the
prior year quarter.
Net earnings for the three months ended October 1, 2017,
amounted to $116.1 million, or $0.52 per share on a diluted
basis, compared with net earnings of $114.4 million, or $0.49
per share on a diluted basis for the same period last year.
Excluding the impact of after-tax restructuring and
acquisition-related costs of $2.5 million in the quarter and $2.0
million in the prior year quarter, Gildan reported adjusted net
earnings of $118.6 million, or $0.53 per share on a diluted
basis for the third quarter of 2017, up from $116.4 million,
or $0.50 per share on a diluted basis in the same quarter last
year. The 6.0% increase in adjusted diluted EPS in the quarter was
mainly driven by a higher gross margin, lower income taxes, and the
benefit of share repurchases, partly offset by higher SG&A
expenses due in part to the American Apparel acquisition.
Gildan generated strong free cash flow of $149.9 million in the
third quarter bringing total free cash flow for the first nine
months of 2017 to $353.3 million, up $96.8 million from $256.5
million in the same period last year. The increase was driven by
higher earnings, working capital improvements, and lower capital
expenditures compared to the first nine months of 2016. Capital
expenditures of $18.7 million in the quarter and $61.2 million
for the first nine months of the year were primarily for
investments in textile capacity, distribution and garment dyeing
expansion. Pursuant to its NCIB program, the Company repurchased
3,872,980 common shares at a total cost of $119.3 million during
the third quarter and 9,829,852 common shares at a total cost of
$276.6 million during the first nine months of the year. The
Company ended the third quarter with net debt of $657.8 million and
a leverage ratio of 1.1 times net debt to trailing twelve months
adjusted EBITDA.
Segmented Operating ResultsPrintwear net sales
for the third quarter of 2017 were $480.7 million, up $18.8
million, or 4.1% over the same period last year. The increase
reflected a sales contribution of $15.4 million from the
acquisition of American Apparel, continued strong growth in fashion
and performance basics which contributed to favourable product mix,
double digit unit sales volume growth in international markets, and
higher net selling prices, partly offset by lower sales of
basics.
Printwear segment operating income for the three months ended
October 1, 2017, totaled $127.5 million, up 3.3% compared to
$123.4 million for the same period last year. Printwear operating
margin for the quarter was 26.5%, effectively in line with the
third quarter last year. The benefit of higher net selling prices
and favourable product mix mitigated the unfavourable impact of
higher raw material and other input costs, as well as the impact of
higher SG&A expenses primarily due to the acquisition of
American Apparel.
Net sales for the Branded Apparel segment in the quarter were
$235.7 million, down $17.4 million, or 6.9% compared to the third
quarter of 2016, mainly due to weakness in the sock category,
particularly in department stores and national chains, as well as
the sporting goods channel, combined with the unfavourable impact
from the transition to a new sock program at a mass-retailer. Lower
sock sales in the quarter were partly offset by higher sales of
Gildan® branded men’s underwear compared to the third quarter of
2016 and strong performance of activewear.
For the three months ended October 1, 2017, Branded Apparel
generated operating income of $25.3 million compared to $29.5
million in the same quarter last year. Branded Apparel operating
margin of 10.7% was down from 11.7% in the same quarter last year,
primarily as a result of unfavourable product mix due to lower
sales of higher-margin sock products.
Year-to-date sales and earningsConsolidated net
sales of $2,097.1 million in the first nine months of 2017 was up
$99.9 million, or 5.0% compared to the same period last year,
reflecting sales increases of 6.1% in the Printwear segment and
2.8% in Branded Apparel. The increase in consolidated net sales was
mainly due to the impact of the 2016 acquisitions of Alstyle and
Peds and the American Apparel acquisition which closed during the
first quarter of 2017, as well as higher net selling prices,
increased unit sales volumes of printwear fashion and performance
products, and favourable product mix. These positive factors were
partly offset by lower unit sales volumes of Printwear basics and
Branded Apparel, particularly lower sock sales, as well as the
planned exit of private label programs and the impact of
unfavourable foreign exchange.
Gross margin for the nine months ended October 1, 2017, of
29.8% was up 160 basis points compared to the same period last
year, driven by higher gross margins in both operating segments.
The increase was mainly due to the positive net impact of net
selling prices and manufacturing and raw material costs compared to
the same period in the prior year. SG&A expenses as a
percentage of sales for the first nine months of 2017 were 13.0%,
up from 12.5% of sales in the same period last year, mainly due to
the impact of acquisitions and other expenses, including higher
receivable provisions. Consolidated adjusted operating margins in
the first nine months of 2017 totaled 16.7%, up 100 basis points
over the same period last year.
Net earnings for the first nine months of 2017 were $307.4
million, or $1.36 per share on a diluted basis, up from net
earnings of $272.3 million, or $1.15 per share on a diluted basis
for the same period last year. Before reflecting after-tax
restructuring and acquisition-related costs in both years, adjusted
net earnings were $319.3 million or $1.41 per share on a diluted
basis in the first nine months of 2017, up 13.3% and 18.5%,
respectively, compared to adjusted net earnings of $281.8 million
or $1.19 per share on a diluted basis in the same period last year.
The increase in adjusted net earnings was mainly due to the
improvement in operating margins, the impact of acquisitions, and
lower income taxes, partly offset by higher financial expenses. EPS
and adjusted EPS growth also reflected the benefit of share
repurchases.
OutlookAfter reflecting third quarter earnings
per share results and more tempered sales expectations for Branded
Apparel in the current retail environment, the Company updated its
guidance for the full year. Consolidated net sales growth for the
full year is now projected to be in the mid to high single digit
range compared to the Company's previous estimate of high single
digit net sales growth. The Company continues to expect strong full
year Printwear net sales growth in the high single digit range,
while it is now projecting Branded Apparel net sales growth in the
low single digit range versus its previous projection of high
single digit growth, given current retail market conditions. Due to
stronger adjusted EPS to date, the Company is now projecting
adjusted diluted EPS for the full year to be in the range of $1.70
to $1.72, up 13% at the mid-point of the range compared to adjusted
EPS of $1.51 in the prior year. This compares to the Company's
previous guidance expecting adjusted diluted EPS to be at the high
end of $1.60-$1.70. The Company also updated its expectation for
adjusted EBITDA for 2017 to be in the range of $580 -$590 million,
up from its prior estimate of adjusted EBITDA at the high end of
the $555-$585 million guidance range. Full year capital
expenditures continue to be projected to be approximately $100
million. Finally, as a result of stronger than previously
anticipated profitability and working capital improvements, the
Company is now projecting free cash flow in excess of $450 million
for the year compared to its previous estimate of in excess of $425
million.
Declaration of quarterly dividendThe Board of
Directors has declared a cash dividend of U.S. $0.0935 per
share, payable on December 11, 2017 to shareholders of record
on November 16, 2017. This dividend is an “eligible dividend” for
the purposes of the Income Tax Act (Canada) and any other
applicable provincial legislation pertaining to eligible
dividends.
Normal course issuer bidThe Company announced
today that it has received approval from the Toronto Stock Exchange
(TSX) to amend its current normal course issuer bid program (NCIB)
in order to increase the maximum number of common shares that may
be repurchased from 11,512,267 common shares, or 5% of the
Company’s issued and outstanding common shares as at
February 17, 2017 (the reference date for the NCIB), to
16,117,175 common shares, representing approximately 7.2% of the
public float (or 7% of the Company’s issued and outstanding common
shares) as at February 17, 2017. No other terms of the NCIB have
been amended.
The NCIB, which began February 27, 2017 and will end no
later than February 26, 2018, is conducted by means of open
market transactions on both the TSX and the New York Stock Exchange
(NYSE), or alternative trading systems, if eligible, or by such
other means as the TSX, the NYSE or a securities regulatory
authority may permit, including pre-arranged crosses or by private
agreements under an issuer bid exemption order issued by securities
regulatory authorities in Canada.
Under the TSX rules, any daily repurchases on the TSX are
limited to a maximum of 131,732 common shares, which represents 25%
of the average daily trading volume on the TSX for the six months
ended January 31, 2017. In addition, Gildan may make, once per
week, a block purchase of common shares not directly or indirectly
owned by insiders of Gildan, in accordance with TSX rules. All
shares purchased pursuant to the NCIB are canceled.
The automatic share purchase plan (the ASPP) entered into with a
designated broker on March 24, 2017 also remains unchanged. The
ASPP allows for the purchase of common shares under the NCIB at
times when the Company would ordinarily not be permitted to
purchase its common shares due to regulatory restrictions or
self-imposed trading blackout periods. Outside of the
pre-determined blackout periods, common shares may be purchased
under the NCIB based on the discretion of the Company’s management,
in compliance with TSX rules and applicable securities laws.
During the period from February 27, 2017 to
October 31, 2017, Gildan purchased a total of
11,203,252 common shares, representing 4.95% of the Company’s
public float and 4.87% of the Company’s issued and outstanding
common shares as at February 17, 2017, of which a total of
877,000 common shares were repurchased by way of private agreements
with arm’s length third party sellers.
Gildan’s management and the Board of Directors believe the
repurchase of the common shares represents an appropriate use of
Gildan’s financial resources and that share repurchases under the
NCIB will not preclude Gildan from continuing to pursue
complementary acquisitions.
Disclosure of outstanding share dataAs at
October 31, 2017, there were 219,414,970 common shares issued
and outstanding along with 2,468,871 stock options and 114,466
dilutive restricted share units (Treasury RSUs) outstanding. Each
stock option entitles the holder to purchase one common share at
the end of the vesting period at a pre-determined option price.
Each Treasury RSU entitles the holder to receive one common share
from treasury at the end of the vesting period, without any
monetary consideration being paid to the Company. However, the
vesting of at least 50% of each Treasury RSU grant is contingent on
the achievement of performance conditions that are primarily based
on the Company’s average return on assets performance for the
period as compared to the S&P/TSX Capped Consumer Discretionary
Index, excluding income trusts, or as determined by the Board of
Directors.
Conference call informationGildan Activewear
Inc. will hold a conference call to discuss third quarter 2017
results and its business outlook today at 8:30 AM ET. A live audio
webcast of the conference call, as well as a replay, will be
available on its corporate site at
http://www.gildancorp.com/events. The conference call can be
accessed by dialing (800) 447-0521 (Canada & U.S.) or (847)
413-3238 (international) and entering passcode 45755305#. A replay
will be available for 30 days starting at 11:00 AM ET by dialing
(888) 843-7419 (Canada & U.S.) or (630) 652-3042
(international) and entering the same passcode.
NotesThis release should be read in conjunction
with Gildan’s Management’s Discussion and Analysis and its
unaudited condensed interim consolidated financial statements as at
and for the three and nine months ended October 1, 2017 available
at
http://www.gildancorp.com/financials-and-filings#tab-Quarterly-Reports,
which will be filed by Gildan with the Canadian securities
regulatory authorities and with the U.S. Securities and Exchange
Commission.
Certain minor rounding variances may exist between the condensed
interim consolidated financial statements and the table summaries
contained in this press release.
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Supplemental
Financial Data |
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CONSOLIDATED FINANCIAL DATA (UNAUDITED) |
|
|
Three months ended |
|
Nine months ended |
(in US$ millions, except per share amounts or otherwise
indicated) |
October 1, 2017 |
|
October 2,2016 |
|
Variation(%) |
|
|
October 1,2017 |
|
October 2, 2016 |
|
Variation (%) |
|
Net sales |
716.4 |
|
715.0 |
|
0.2 |
% |
|
2,097.1 |
|
1,997.2 |
|
5.0 |
% |
Gross profit |
222.2 |
|
217.4 |
|
2.2 |
% |
|
624.2 |
|
562.8 |
|
10.9 |
% |
SG&A expenses |
94.8 |
|
86.8 |
|
9.2 |
% |
|
273.4 |
|
249.6 |
|
9.5 |
% |
Restructuring and
acquisition-related costs |
2.5 |
|
2.0 |
|
25.0 |
% |
|
11.9 |
|
11.5 |
|
3.5 |
% |
Operating income |
124.9 |
|
128.6 |
|
(2.9 |
)% |
|
339.0 |
|
301.7 |
|
12.4 |
% |
Adjusted operating
income(1) |
127.4 |
|
130.6 |
|
(2.5 |
)% |
|
350.9 |
|
313.2 |
|
12.0 |
% |
Adjusted EBITDA(1) |
167.7 |
|
164.3 |
|
2.1 |
% |
|
472.1 |
|
421.1 |
|
12.1 |
% |
Financial expenses |
6.0 |
|
6.0 |
|
n.m |
|
|
18.3 |
|
13.8 |
|
32.6 |
% |
Income tax expense |
2.7 |
|
8.3 |
|
(67.5 |
)% |
|
13.3 |
|
15.5 |
|
(14.2 |
)% |
Net earnings |
116.1 |
|
114.4 |
|
1.5 |
% |
|
307.4 |
|
272.3 |
|
12.9 |
% |
Adjusted
net earnings(1) |
118.6 |
|
116.4 |
|
1.9 |
% |
|
319.3 |
|
281.8 |
|
13.3 |
% |
Basic EPS |
0.52 |
|
0.49 |
|
6.1 |
% |
|
1.36 |
|
1.15 |
|
18.3 |
% |
Diluted EPS |
0.52 |
|
0.49 |
|
6.1 |
% |
|
1.36 |
|
1.15 |
|
18.3 |
% |
Adjusted
diluted EPS(1) |
0.53 |
|
0.50 |
|
6.0 |
% |
|
1.41 |
|
1.19 |
|
18.5 |
% |
Gross margin |
31.0 |
% |
30.4 |
% |
0.6 |
pp |
|
29.8 |
% |
28.2 |
% |
1.6 |
pp |
SG&A expenses as a
percentage of sales |
13.2 |
% |
12.1 |
% |
1.1 |
pp |
|
13.0 |
% |
12.5 |
% |
0.5 |
pp |
Operating margin |
17.4 |
% |
18.0 |
% |
(0.6 |
)
pp |
|
16.2 |
% |
15.1 |
% |
1.1 |
pp |
Adjusted
operating margin(1) |
17.8 |
% |
18.3 |
% |
(0.5 |
) pp |
|
16.7 |
% |
15.7 |
% |
1.0 |
pp |
|
|
|
|
|
|
|
|
Cash flows from
operating activities |
168.5 |
|
225.8 |
|
(25.4 |
)% |
|
414.2 |
|
367.3 |
|
12.8 |
% |
Free cash flow(1) |
149.9 |
|
184.9 |
|
(18.9 |
)% |
|
353.3 |
|
256.5 |
|
37.7 |
% |
|
|
|
|
|
|
|
As at |
October 1, 2017 |
|
January 1, 2017 |
|
|
|
Inventories |
939.4 |
|
954.9 |
|
|
|
Trade
accounts receivable |
359.6 |
|
277.7 |
|
|
|
Net indebtedness(1) |
657.8 |
|
561.8 |
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|
(1) Please
refer to "Non-GAAP Financial Measures" in this press release. |
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n.m = not
meaningful |
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SEGMENTED FINANCIAL DATA (UNAUDITED) |
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Three months ended |
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Nine months ended |
(in US$
millions, or otherwise indicated) |
October 1, 2017 |
|
October 2, 2016 |
|
Variation(%) |
|
|
October 1, 2017 |
|
October 2,2016 |
|
Variation (%) |
|
Segmented net
sales: |
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|
|
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|
Printwear |
480.7 |
|
461.9 |
|
4.1 |
% |
|
1,406.4 |
|
1,325.3 |
|
6.1 |
% |
Branded Apparel |
235.7 |
|
253.1 |
|
(6.9 |
)% |
|
690.7 |
|
671.9 |
|
2.8 |
% |
Total net sales |
716.4 |
|
715.0 |
|
0.2 |
% |
|
2,097.1 |
|
1,997.2 |
|
5.0 |
% |
|
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Segment
operating income: |
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Printwear |
127.5 |
|
123.4 |
|
3.3 |
% |
|
355.5 |
|
319.5 |
|
11.3 |
% |
Branded Apparel |
25.3 |
|
29.5 |
|
(14.2 |
)% |
|
69.8 |
|
61.5 |
|
13.5 |
% |
Total segment
operating income |
152.8 |
|
152.9 |
|
(0.1 |
)% |
|
425.3 |
|
381.0 |
|
11.6 |
% |
Amortization of
intangible assets, excluding software |
(5.4 |
) |
(4.7 |
) |
14.9 |
% |
|
(15.8 |
) |
(13.4 |
) |
17.9 |
% |
Corporate expenses |
(19.9 |
) |
(17.6 |
) |
13.1 |
% |
|
(58.6 |
) |
(54.4 |
) |
7.7 |
% |
Restructuring and acquisition-related costs |
(2.5 |
) |
(2.0 |
) |
25.0 |
% |
|
(11.9 |
) |
(11.5 |
) |
3.5 |
% |
Total operating income |
125.0 |
|
128.6 |
|
(2.8 |
)% |
|
339.0 |
|
301.7 |
|
12.4 |
% |
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Non-GAAP Financial MeasuresThis press release
includes references to certain non-GAAP financial measures as
described below. These non-GAAP measures do not have any
standardized meanings prescribed by International Financial
Reporting Standards (IFRS) and are therefore unlikely to be
comparable to similar measures presented by other companies.
Accordingly, they should not be considered in isolation. The terms
and definitions of the non-GAAP measures used in this press release
and a reconciliation of each non-GAAP measure to the most directly
comparable IFRS measure are provided below.
Adjusted net earnings and adjusted diluted
EPSAdjusted net earnings are calculated as net earnings before
restructuring and acquisition-related costs, net of related income
tax recoveries. Adjusted diluted EPS is calculated as adjusted net
earnings divided by the diluted weighted average number of common
shares outstanding. The Company uses adjusted net earnings and
adjusted diluted EPS to measure its performance from one period to
the next, without the variation caused by the impacts of the items
described above. The Company excludes these items because they
affect the comparability of its financial results and could
potentially distort the analysis of trends in its business
performance. Excluding these items does not imply they are
necessarily non-recurring.
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Three months ended |
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Nine months ended |
(in
U.S.$ millions, except per share amounts) |
October 1,2017 |
|
October 2,2016 |
|
|
October 1,2017 |
|
October 2, 2016 |
|
Net earnings |
116.1 |
|
114.4 |
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|
307.4 |
|
272.3 |
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Adjustments for: |
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|
Restructuring and acquisition-related costs |
2.5 |
|
2.0 |
|
|
11.9 |
|
11.5 |
|
Income tax recovery on restructuring and acquisition-related
costs |
— |
|
— |
|
|
— |
|
(2.0 |
) |
Adjusted
net earnings |
118.6 |
|
116.4 |
|
|
319.3 |
|
281.8 |
|
Basic EPS |
0.52 |
|
0.49 |
|
|
1.36 |
|
1.15 |
|
Diluted EPS |
0.52 |
|
0.49 |
|
|
1.36 |
|
1.15 |
|
Adjusted diluted EPS |
0.53 |
|
0.50 |
|
|
1.41 |
|
1.19 |
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Adjusted operating income and adjusted operating
marginAdjusted operating income is calculated as operating income
before restructuring and acquisition-related costs. Adjusted
operating margin is calculated as adjusted operating income divided
by net sales. Management uses adjusted operating income and
adjusted operating margin to measure its performance from one
period to the next, without the variation caused by the impacts of
the items described above. The Company excludes these items because
they affect the comparability of its financial results and could
potentially distort the analysis of trends in its business
performance. Excluding these items does not imply they are
necessarily non-recurring.
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Three months ended |
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Nine months ended |
(in
U.S.$ millions, or otherwise indicated) |
October 1, 2017 |
|
October 2, 2016 |
|
|
October 1, 2017 |
|
October 2, 2016 |
|
Operating income |
124.9 |
|
128.6 |
|
|
339.0 |
|
301.7 |
|
Adjustment for: |
|
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|
|
|
|
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|
|
Restructuring and acquisition-related costs |
2.5 |
|
2.0 |
|
|
11.9 |
|
11.5 |
|
Adjusted
operating income |
127.4 |
|
130.6 |
|
|
350.9 |
|
313.2 |
|
|
|
|
|
|
|
Operating margin |
17.4 |
% |
18.0 |
% |
|
16.2 |
% |
15.1 |
% |
Adjusted operating margin |
17.8 |
% |
18.3 |
% |
|
16.7 |
% |
15.7 |
% |
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|
Adjusted EBITDAAdjusted EBITDA is calculated as
earnings before financial expenses, income taxes, and depreciation
and amortization, and excludes the impact of restructuring and
acquisition-related costs. The Company uses adjusted EBITDA,
among other measures, to assess the operating performance of its
business. The Company also believes this measure is commonly used
by investors and analysts to measure a company’s ability to service
debt and to meet other payment obligations, or as a common
valuation measurement. The Company excludes depreciation and
amortization expenses, which are non-cash in nature and can vary
significantly depending upon accounting methods or non-operating
factors. Excluding these items does not imply they are necessarily
non-recurring.
|
|
|
|
|
Three months ended |
|
Nine months ended |
(in
U.S.$ millions) |
October 1, 2017 |
October 2, 2016 |
|
October 1, 2017 |
October 2, 2016 |
Net earnings |
116.1 |
114.4 |
|
307.4 |
272.3 |
Restructuring and
acquisition-related costs |
2.5 |
2.0 |
|
11.9 |
11.5 |
Depreciation and
amortization |
40.4 |
33.6 |
|
121.2 |
108.0 |
Financial expenses,
net |
6.0 |
6.0 |
|
18.3 |
13.8 |
Income
tax expense |
2.7 |
8.3 |
|
13.3 |
15.5 |
Adjusted EBITDA |
167.7 |
164.3 |
|
472.1 |
421.1 |
|
|
|
|
|
|
Free cash flowFree cash flow is defined as cash
from operating activities, less cash flow used in investing
activities excluding business acquisitions. The Company considers
free cash flow to be an important indicator of the financial
strength and performance of its business, and it is a key metric
which indicates how much cash is available after capital
expenditures to repay debt, to pursue business acquisitions, and/or
to redistribute to its shareholders. The Company believes this
measure is commonly used by investors and analysts when valuing a
business and its underlying assets.
|
|
|
|
|
Three months ended |
|
Nine months ended |
(in
U.S.$ millions) |
October 1,2017 |
|
October 2, 2016 |
|
|
October 1,2017 |
|
October 2, 2016 |
|
Cash flows from
operating activities |
168.5 |
|
225.8 |
|
|
414.2 |
|
367.3 |
|
Cash flows used in
investing activities |
(32.0 |
) |
(88.3 |
) |
|
(176.5 |
) |
(267.6 |
) |
Adjustment for: |
|
|
|
|
|
Business acquisitions |
13.4 |
|
47.4 |
|
|
115.6 |
|
156.8 |
|
Free cash flow |
149.9 |
|
184.9 |
|
|
353.3 |
|
256.5 |
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness and net indebtednessTotal
indebtedness is defined as the total bank indebtedness and
long-term debt (including any current portion), and net
indebtedness is calculated as total indebtedness net of cash and
cash equivalents. The Company considers total indebtedness and net
indebtedness to be important indicators of the financial leverage
of the Company.
|
|
|
|
|
(in U.S.$ millions) |
October 1, 2017 |
|
January 1, 2017 |
|
Long-term debt and
total indebtedness |
705.0 |
|
600.0 |
|
Cash and
cash equivalents |
(47.2 |
) |
(38.2 |
) |
Net indebtedness |
657.8 |
|
561.8 |
|
|
|
|
|
|
Net debt leverage ratioThe net debt leverage
ratio is defined as the ratio of net indebtedness to pro-forma
adjusted EBITDA for the trailing twelve months. The pro-forma
adjusted EBITDA for the trailing twelve months reflects business
acquisitions made during the period, as if they had occurred at the
beginning of the trailing twelve month period. The Company has set
a target net debt leverage ratio of one to two times pro-forma
adjusted EBITDA for the trailing twelve months. The Company uses,
and believes that certain investors and analysts use the net debt
leverage ratio to measure the financial leverage of the
Company.
|
|
(in $ millions, or otherwise indicated) |
October 1, 2017 |
|
January 1, 2017 |
|
Adjusted EBITDA for the
trailing twelve months |
574.4 |
|
523.8 |
|
Adjustment for: |
|
|
Business acquisitions |
1.8 |
|
12.5 |
|
Pro-forma
adjusted EBITDA for the trailing twelve months |
576.2 |
|
536.3 |
|
Net indebtedness |
657.8 |
|
561.8 |
|
Net debt leverage ratio |
1.1 |
|
1.0 |
|
|
Caution concerning forward-looking
statementsCertain statements included in this press
release constitute “forward-looking statements” within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995 and
Canadian securities legislation and regulations, and are subject to
important risks, uncertainties, and assumptions. This
forward-looking information includes, amongst others, information
with respect to our objectives and the strategies to achieve these
objectives, as well as information with respect to our beliefs,
plans, expectations, anticipations, estimates, and intentions,
including, without limitation, our expectation with regards to
adjusted diluted earnings per share, net sales, adjusted EBITDA,
free cash flow, and capital expenditures. Forward-looking
statements generally can be identified by the use of conditional or
forward-looking terminology such as “may”, “will”, “expect”,
“intend”, “estimate”, “project”, “assume”, “anticipate”, “plan”,
“foresee”, “believe” or “continue”, or the negatives of these terms
or variations of them or similar terminology. We refer you to the
Company’s filings with the Canadian securities regulatory
authorities and the U.S. Securities and Exchange Commission, as
well as the risks described under the “Financial risk management”,
“Critical accounting estimates and judgments”, and “Risks and
uncertainties” sections of the Company’s Management’s Discussion
and Analysis for the three and nine months ended October 1, 2017
and for the fiscal year ended January 1, 2017 for a discussion of
the various factors that may affect the Company’s future results.
Material factors and assumptions that were applied in drawing a
conclusion or making a forecast or projection are also set out
throughout such documents and this press release.
Forward-looking information is inherently uncertain and the
results or events predicted in such forward-looking information may
differ materially from actual results or events. Material factors,
which could cause actual results or events to differ materially
from a conclusion, forecast, or projection in such forward-looking
information, include, but are not limited to:
- our ability to implement our growth strategies and plans,
including achieving market share gains, obtaining and successfully
introducing new sales programs, implementing new product
introductions, increasing capacity, implementing cost reduction
initiatives, and completing and successfully integrating
acquisitions;
- the intensity of competitive activity and our ability to
compete effectively, including competition with established brands
and private label brands sold by our customers;
- changes in general economic and financial conditions globally
or in one or more of the markets we serve;
- our reliance on a small number of significant customers;
- the fact that our customers do not commit to minimum quantity
purchases;
- our ability to anticipate, identify, or react to changes in
consumer preferences and trends;
- our ability to manage production and inventory levels
effectively in relation to changes in customer demand;
- fluctuations and volatility in the price of raw materials used
to manufacture our products, such as cotton, polyester fibers, dyes
and other chemicals;
- our reliance on key suppliers and our ability to maintain an
uninterrupted supply of raw materials and finished goods;
- the impact of climate, political, social, and economic risks in
the countries in which we operate or from which we source
production;
- disruption to manufacturing and distribution activities due to
such factors as operational issues, disruptions in transportation
logistic functions, labour disruptions, political or social
instability, bad weather, natural disasters, pandemics, and other
unforeseen adverse events;
- compliance with applicable trade, competition, taxation,
environmental, health and safety, product liability, employment,
patent and trademark, corporate and securities, licensing and
permits, data privacy, bankruptcy, anti-corruption, and other laws
and regulations in the jurisdictions in which we operate;
- changes to domestic tariffs and international trade legislation
that the Company is currently relying on in conducting its
manufacturing operations or the application of safeguards
thereunder;
- factors or circumstances that could increase our effective
income tax rate, including the outcome of any tax audits or changes
to applicable tax laws or treaties;
- changes to and failure to comply with consumer product safety
laws and regulations;
- changes in our relationship with our employees or changes to
domestic and foreign employment laws and regulations;
- negative publicity as a result of actual, alleged, or perceived
violations of labour and environmental laws or international labour
standards, or unethical labour or other business practices by the
Company or one of its third- party contractors;
- changes in third party licensing arrangements and licensed
brands;
- our ability to protect our intellectual property rights;
- operational problems with our information systems as a result
of system failures, viruses, security and cyber security breaches,
disasters, and disruptions due to system upgrades or the
integration of systems;
- an actual or perceived breach of data security;
- our reliance on key management and our ability to attract
and/or retain key personnel;
- changes in accounting policies and estimates; and
- exposure to risks arising from financial instruments, including
credit risk, liquidity risk, foreign currency risk, and interest
rate risk, as well as risks arising from commodity prices.
These factors may cause the Company’s actual performance and
financial results in future periods to differ materially from any
estimates or projections of future performance or results expressed
or implied by such forward-looking statements. Forward-looking
statements do not take into account the effect that transactions or
non-recurring or other special items announced or occurring after
the statements are made, may have on the Company’s business. For
example, they do not include the effect of business dispositions,
acquisitions, other business transactions, asset write-downs, asset
impairment losses, or other charges announced or occurring after
forward-looking statements are made. The financial impact of such
transactions and non-recurring and other special items can be
complex and depends on the facts particular to each of them.
There can be no assurance that the expectations represented by
our forward-looking statements will prove to be correct. The
purpose of the forward-looking statements is to provide the reader
with a description of management’s expectations regarding the
Company’s future financial performance and may not be appropriate
for other purposes. Furthermore, unless otherwise stated, the
forward-looking statements contained in this press release are made
as of the date of this press release, and we do not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events, or otherwise unless required by applicable
legislation or regulation. The forward-looking statements contained
in this press release are expressly qualified by this cautionary
statement.
About GildanGildan is a leading
manufacturer and marketer of quality branded basic family apparel,
including T-shirts, fleece, sport shirts, underwear, socks,
hosiery, and shapewear. The Company sells its products under a
diversified portfolio of company-owned brands, including the
Gildan®, Gold Toe®, Anvil®, Comfort Colors®, American Apparel®,
Alstyle®, Secret®, Silks®, Kushyfoot®, Secret Silky®, Peds®,
MediPeds®, and Therapy Plus™ brands. Sock products are also
distributed through the Company’s exclusive U.S. sock license for
the Under Armour® brand, and a wide array of products are also
marketed through a global license for the Mossy Oak® brand. The
Company's products are sold in two primary markets, namely the
printwear and retail markets. The Company distributes its products
in printwear markets in the U.S., Canada, Europe, Asia-Pacific, and
Latin America. In retail markets, the Company sells its products to
a broad spectrum of retailers primarily in the U.S. and Canada and
also manufactures for select leading global athletic and lifestyle
consumer brands.
Gildan owns and operates vertically-integrated, large-scale
manufacturing facilities which are primarily located in Central
America, the Caribbean Basin, North America, and Bangladesh. These
facilities are strategically located to efficiently service the
quick replenishment needs of Gildan's customers. With over 48,000
employees worldwide Gildan operates with a strong commitment to
industry-leading labour and environmental practices throughout its
supply chain in accordance with its comprehensive corporate social
responsibility program embedded in the Company's long-term business
strategy. More information about the Company and its corporate
citizenship practices and initiatives can be found at
www.gildancorp.com and www.genuinegildan.com, respectively.
Investor inquiries:Sophie
ArgiriouVice President, Investor Communications(514)
343-8815sargiriou@gildan.com
Media inquiries:Genevieve
GosselinDirector, Corporate Communications and Marketing(514)
343-8814ggosselin@gildan.com
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