Gildan Activewear Inc. (GIL: TSX and NYSE) today announced results
for the fourth quarter and year ended January 2, 2022 and
provided its three-year financial outlook.
“I am extremely proud of our team’s performance in 2021 which
allowed us to capitalize on improving demand and deliver meaningful
benefits from our Back to Basics strategy. We ended the year with a
strong finish, growing above pre-pandemic levels and setting record
results to build on,” said Glenn J. Chamandy, President and CEO of
Gildan. "As we look to 2022 and beyond, we are building on our Back
to Basics principles and heightening our focus towards the next
phase of our journey with our “Gildan Sustainable Growth” plan
centered on three key pillars — Enabling growth through Capacity
Expansion, Innovation and ESG. By leveraging our competitive
advantage as a low-cost vertically-integrated manufacturer and
executing on projected capacity expansion plans, delivering
superior quality, value-driven and innovative products to our
customers, and leveraging our strong ESG standing, we are confident
that we can drive strong organic revenue growth, profitability and
effective asset utilization to deliver strong shareholder value and
make meaningful advancements on our ESG priorities.”
We generated record sales for the fourth quarter of $784
million, up 14% over the prior year and 19% above the fourth
quarter of 2019. We delivered another quarter of strong adjusted
gross margin and SG&A performance, which together drove
adjusted operating margin of 20.4%, up 510 basis points versus last
year and 630 basis points above the fourth quarter of 2019. Strong
sales and margin performance translated to record earnings for the
quarter with GAAP diluted EPS of $0.89, and adjusted diluted EPS of
$0.76 which was up 69% over last year and 85% from the same quarter
in 2019. Free cash flow in the quarter totaled $116 million,
bringing the total for the year to a record level of $594 million.
During the fourth quarter, we repurchased approximately 3.2 million
shares under our normal course issuer bid (NCIB) program at a total
cost of approximately $123.4 million and followed with additional
buybacks of close to 2.7 million shares during the first two months
of 2022, bringing us close to completing the initial share
allotment under our current plan. For the full year, the Company
returned more than $335 million of capital to shareholders
through a combination of share repurchases and dividend payments.
After taking into account the acquisition of Frontier Yarns, which
we completed in the quarter, we ended fiscal 2021 with a net debt1
position of $530 million and a net debt to adjusted EBITDA ratio1
of 0.7, below our target range of one to two times adjusted
EBITDA1. Consequently, given our outlook for free cash flow
generation, valuation considerations and strong ongoing return of
capital capability, we announced a 10% increase in the amount of
our quarterly dividend and an increase in the size of our NCIB from
5% to up to 10% of the public float as at July 31, 2021 (the
reference date for the NCIB).
Fourth Quarter 2021 ResultsNet sales for the
fourth quarter ending January 2, 2022, of $784 million were up
14% over the prior year, consisting of activewear sales of
$627 million, up 17%, and sales of $157 million in the
hosiery and underwear category, up 3% compared to the prior year
quarter. The overall sales increase was largely driven by higher
activewear sales volumes and net selling prices, partly offset by
weaker product-mix related to the year-over-year timing of fleece
sales. The growth in activewear sales volumes reflected the
combination of higher point of sales (POS) and to a lesser extent
the impact of some distributor restocking in the North American
imprintables channel, although inventory levels in the North
American imprintables channel continue to remain well below
pre-pandemic levels.
Compared to 2019, net sales in the quarter were up 19% driven by
strong performance in activewear. The overall sales increase was
primarily due to higher activewear unit sales volumes and net
selling prices, as well as favourable product mix, partly offset by
lower sock sales. Sales volume growth in activewear products
reflected the continuation of positive sell-through trends in the
North American imprintables channel and the impact of the
non-recurrence of distributor inventory de-stocking that occurred
in the fourth quarter of 2019, as well as higher sales of
activewear sold through retail channels. The positive impact of
these factors was offset in part by lower international shipments,
as international POS levels in the quarter continued to lag
pre-pandemic levels given the impact of the Omicron variant and
lockdowns in various regions.
We generated gross profit of $229 million in the fourth quarter,
and adjusted gross profit1 of $240 million up 48% and 35%,
respectively, over the prior year, driven by our growth in sales
and strong margin performance. Gross margin of 29.2% in the quarter
was up 670 basis points over 2020. Before reflecting SKU
rationalization inventory charges and the net impact of accrued
insurance recoveries in both years, adjusted gross margin1 of 30.6%
was up 480 basis points compared to 25.8% last year. The strong
improvement over 2020 was primarily due to higher net selling
prices and manufacturing efficiencies stemming from our Back to
Basics initiatives, which more than offset inflationary pressures
on raw material and other manufacturing costs, as well as
unfavourable product-mix compared to the same quarter last
year.
Compared to the fourth quarter of 2019, adjusted gross margin
was up 500 basis points primarily due to higher net selling prices,
favourable product-mix and Back to Basics cost efficiencies, partly
offset by higher raw material and manufacturing costs.
SG&A expenses for the fourth quarter of $81 million were up
$9 million or 12% compared to $72 million last year primarily due
to higher variable compensation expenses, partly offset by cost
savings stemming from our Back to Basics initiatives. As a
percentage of net sales, SG&A expenses improved slightly to
10.3% compared to 10.4% last year, due mainly to volume leverage
and cost savings. Compared to the fourth quarter of 2019, SG&A
expenses as a percentage of sales were lower by 130 basis
points.
Operating income in the fourth quarter of $177 million, or 22.6%
of sales, was up from $79 million, or 11.4% of sales last year. On
an adjusted basis, before reflecting SKU rationalization charges,
the net impact of accrued insurance recoveries, and restructuring
and acquisition related costs in both years, as well as a net
reversal of impairment of intangible assets of $32 million in the
fourth quarter of 2021, we generated adjusted operating income1 of
$160 million, or 20.4% of sales, compared to $106 million, or 15.3%
of sales, in the fourth quarter of 2020. The reversal of impairment
relates to the Company's Hosiery Cash Generating Unit (CGU), for
which the Company had recorded an impairment charge in the prior
year, and which now has been reversed to the full extent possible
given the significantly improved economic environment and outlook
for this category. Year-over-year increases in operating and
adjusted operating income reflected higher sales and higher gross
and adjusted gross margin, partly offset by higher SG&A
expenses. Net financial expenses of approximately $5 million were
down more than $8 million over the prior year. As a result, we
reported net earnings of $174 million, or $0.89 per diluted share,
for the fourth quarter of 2021 and adjusted net earnings1 of $149
million, or $0.76 per diluted share. This compared to net earnings
of $67 million, or $0.34 per diluted share, and adjusted net
earnings of $90 million, or $0.45 per diluted share,
respectively, in the fourth quarter last year.
We generated free cash flow in the quarter totaling $116
million, which together with strong free cash flow generation
throughout the year allowed us to deliver a record level of $594
million in 2021, up from $358 million last year. The increase was
driven by strong earnings, improved working capital management and
the timing of insurance collections related to the 2020 hurricanes.
The Company ended 2021 with a net debt position of $530 million,
down from $577 million at the end of 2020 and a net debt leverage
ratio1 of 0.7 times adjusted EBITDA.
Full Year 2021 ResultsWe delivered record net
sales of $2,923 million in 2021, up 48% from the prior year,
reflecting increases of 58% in activewear and 16% in the hosiery
and underwear category compared to 2020. Our sales performance in
2021 reflected a significant recovery in demand from 2020 which was
hard hit by the effects of the onset of the COVID-19 pandemic.
Compared to 2019, our sales growth showed improvement through the
year, with sales returning to above pre-pandemic levels in the
second half. The year-over-year increase in activewear sales where
we generated sales of $2,365 million was due to strong volume
increases in all channels, favourable product-mix and higher net
selling prices. Higher activewear sales volumes were driven by a
strong recovery in POS and the impact of the non-recurrence of
significant inventory de-stocking by distributors which occurred in
2020. The overall sales increase in the hosiery and underwear
category where we generated $558 million was also driven by
higher sales volumes in both underwear and in sock products
compared to last year, as well as favourable product mix.
We generated gross profit of $940 million and gross margin of
32.2% compared to $249 million and 12.6%, respectively, in the
prior year. On an adjusted basis, gross profit1 for 2021 totaled
$903 million compared to $306 million in the prior year, resulting
in adjusted gross margin in 2021 more than doubling to 30.9% from
15.3% in 2020. The significant year-over-year improvement in gross
and adjusted gross margin was mainly due to a much stronger
product-mix, the non-recurrence of COVID and certain Back to Basics
related charges incurred primarily in the first half of 2020,
higher net selling prices, cost benefits from our Back to Basics
initiatives and lower raw material costs. The gross margin
improvement in 2021 also included the recognition of higher net
insurance gains of $36 million related to the 2020 hurricanes, as
well as lower year-over-year SKU rationalization charges.
SG&A expenses of $314 million in 2021 were up $42 million
compared to 2020, primarily due to higher variable compensation
expenses and higher volume-driven distribution costs, partly offset
by cost savings stemming from our Back to Basics initiatives. As a
percentage of sales, SG&A expenses improved 290 basis points to
10.8% of sales compared to 13.7% last year, reflecting the benefit
of volume leverage and unit cost efficiencies.
Restructuring and acquisition-related costs incurred in 2021 of
$8 million related mainly to the completion of previously initiated
restructuring activities and also included acquisition costs
related to the Frontier acquisition completed in the fourth
quarter. This compared to restructuring and acquisition-related
costs of $48 million in 2020, primarily in connection with Back to
Basics initiatives, including the consolidation of manufacturing
operations and other manufacturing optimization initiatives. In
2020, we recorded an impairment charge for our Hosiery CGU of $94
million due to the adverse impact of the COVID-19 pandemic on
global economic activity. In 2021, given the significant
improvement in the economic environment and outlook for this
category, the Company recorded a related net reversal of impairment
of $32 million.
After reflecting the above items for both years, we generated
operating income of $652 million in 2021 compared to an operating
loss of $181 million in 2020. Excluding the impact of restructuring
and acquisition-related costs, charges related to rationalized
product SKUs, net insurance gains, the reversal of impairment of
intangible assets in 2021 and the impairment of goodwill and
intangible assets in 2020, adjusted operating income in 2021
amounted to $591 million compared to $18 million last year. The
improvement reflected the significant year-over-year sales
recovery, strong adjusted gross margin performance and SG&A
leverage. Consequently, we reported net earnings of
$607 million, or $3.07 per share on a diluted basis, and
adjusted net earnings of $538 million, or $2.72 per diluted
share. This compared to a net loss of $225 million, or $1.14
per diluted share and an adjusted net loss1 of $36 million, or
$0.18 per diluted share in 2020.
Gildan Sustainable Growth Strategy "We
are pleased with the success of our Back to Basics strategy which
structurally improved the economics of our business, allowing us to
deliver top tier profitability in 2021 with operating margin
performance above our 18% target," said President and CEO of
Gildan, Glenn J. Chamandy. "Today, we stand as a less complex, more
competitively advantaged organization, stronger than we have ever
been and well-positioned for sustainable growth."
During the fourth quarter, we completed a comprehensive
strategic planning process to define the underlying initiatives to
support our next phase of growth under what we term as the "Gildan
Sustainable Growth" strategy. While Back to Basics will remain at
our core, efforts under this strategy primarily focused on reducing
complexity and enhancing operational effectiveness and ultimately
operating profitability. The Gildan Sustainable Growth strategy
focuses on building on our Back to Basics principles and driving
organic top line and bottom line growth through capacity expansion,
innovation, and strong ESG integrated in all aspects of how we do
business. We are confident that the initiatives underpinning our
revised strategy will position us to create strong value for our
shareholders over the long-term.
Under the Gildan Sustainable Growth plan and based on everything
we are seeing today, including the assumption of a continued global
recovery, the Company's current outlook over the next three years
reflects the following:
- Net Sales growth at a compound annual growth rate in the range
of 7% to 10%
- Annual adjusted operating margin in the range of 18% to
20%
- Capital expenditures as a percentage of sales of 6% to 8% over
the next three years to support long-term growth and vertical
integration
- Maintaining net debt leverage within our target framework of
net debt to adjusted EBITDA of 1.0x to 2.0x
- Annual dividend growth and continued share repurchases in line
with our leverage framework and valuation considerations
The Company plans to provide a detailed overview of the Gildan
Sustainable Growth strategy at its upcoming Investor Day on March
29, 2022. Our outlook assumes no meaningful deterioration from the
ongoing pandemic and related effects on our business. Further, the
above outlook reflects our expectations as of February 23, 2022 and
are subject to significant risks and business uncertainties,
including those factors described under “Forward-Looking
Statements” in this press release and in our annual MD&A for
the year ended January 2, 2022.
Environmental, Social and Governance (ESG)
HighlightsOn January 17, 2022, the Company announced its
Next Generation ESG Strategy and future targets with the commitment
of making meaningful advancements by 2030 in key ESG areas. More
specifically, the Company set targets and objectives in five key
areas of focus: Climate, Energy, and Water; Circularity; Human
Capital Management; Long term Value Creation; and, Transparency and
Disclosure. The Company's Next Generation ESG strategy focuses on
initiatives towards reducing its Scope 1 and 2 GHG emissions in
line with the Science Based Targets initiative (SBTi), reducing
water intensity (a reduction in water usage/withdrawal per kilogram
produced), circularity and sourcing sustainable raw materials,
increasing community investment, strengthening diversity, equity,
and inclusion by setting a first-time goal on gender parity, and
implementing a disclosure plan to further align to the Task Force
on Climate-related Financial Disclosures (TCFD) recommendations.
The Company plans to provide an overview of these initiatives and
its related ESG targets at its upcoming Investor Day in March.
On January 19, 2022, Gildan was included in the Corporate
Knights’ 18th annual ranking of the world’s 100 most sustainable
corporations which is based on a rigorous assessment of nearly
7,000 public companies with revenues in excess of $1 billion.
Corporate Knights recognized Gildan for its sustainability
performance based on metrics covering resource, employee and
financial management, along with clean revenue. Further, on
February 1, 2022, Gildan received a Bronze Class of Distinction
from S&P Global in the 2022 S&P Global Sustainability
Yearbook.
New Board Member Appointment Gildan, today
announced the appointment of Dhaval Buch to the Company’s board of
directors. With the appointment of Mr. Buch, the Company’s board
now comprises eleven members. He will serve on the board’s
corporate governance and social responsibility committee.
“Dhaval is an accomplished business leader and his international
expertise in supply chain operations and extensive knowledge in
sustainable sourcing makes him an ideal addition to our board,”
said Gildan’s Board Chairman, Donald C. Berg. “We welcome Dhaval
and look forward to his insights as we execute on the next phase of
the Company’s growth.”
Mr. Buch is currently a senior advisor for Blackstone Private
Equity, a leading global investment business and to the Mahindra
Group, a large India-headquartered multinational with interests in
automobile, farm and finance industries. Prior to this, Mr. Buch
had a 35-year career as a business leader with Unilever where he
last served as the Global Chief Procurement Officer for the
company. In this role, he was also responsible to drive Unilever’s
goal of “100% sustainable sourcing of materials.” In his
career with Unilever, Mr. Buch also ran the Unilever Supply Chain
for Asia and Africa. Before that, he held positions of increasing
responsibility in Hindustan Unilever Limited, a listed Unilever
subsidiary in India, culminating in his running the Supply Chain
for South Asia and serving as an Executive Director on the Board of
Hindustan Unilever Limited. Mr. Buch is a Mechanical Engineer and
holds a Bachelor of Engineering degree from the Indian Institute of
Technology, Delhi, India.
Increase in Quarterly Dividend and Increase in Size of
Normal Course Issuer Bid The Board of Directors has
approved a 10% increase in the amount of the current quarterly
dividend and has declared a cash dividend of $0.169 per share,
payable on April 11, 2022, to shareholders of record on March 17,
2022. 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.
On February 22, 2022, the Company received approval from the
Toronto Stock Exchange (TSX) to amend its current NCIB, which
commenced on August 9, 2021, in order to increase the maximum
number of common shares that may be repurchased from 9,926,177, or
5% of the Company’s issued and outstanding common shares as at July
31, 2021 (the reference date for the NCIB), to 19,477,744 common
shares, representing 10% of the public float as at July 31, 2021.
No other terms of the NCIB have been amended.
The NCIB, which began August 9, 2021, and will end no later than
August 8, 2022, 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
may be permitted by securities regulatory authorities, including
pre-arranged crosses, exempt offers, private agreements under an
issuer bid exemption order issued by securities regulatory
authorities and block purchases of common shares.
Under the NCIB, Gildan may purchase, in addition to purchases
made on other exchanges including the NYSE, up to a maximum of
89,982 common shares daily through the facilities of the TSX, which
represents 25% of the average daily trading volume on the TSX for
the six months ended July 31, 2021. The price to be paid by Gildan
for any common shares will be the market price at the time of the
acquisition, plus brokerage fees, and purchases made under an
issuer bid exemption order will be at a discount to the prevailing
market price in accordance with the terms of the order. All shares
purchased pursuant to the NCIB are canceled.
The automatic share purchase plan (ASPP) entered into with a
designated broker on August 9, 2021, 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 August 9, 2021 to February 22, 2022,
Gildan purchased for cancellation a total of 9,166,618 common
shares, representing 4.7% of the Company’s public float and 4.6% of
the Company’s issued and outstanding common shares as at July 31,
2021.
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 organic
growth and complementary acquisitions.
Disclosure of Outstanding Share Data As at
February 22, 2022, there were 190,093,746 common shares issued
and outstanding along with 3,224,286 stock options and 23,550
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.
Conference Call InformationGildan Activewear
Inc. will hold a conference call to discuss fourth quarter and full
year 2021 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 Gildan's company website at the following
link: http://www.gildancorp.com/events. The conference call can be
accessed by dialing toll-free (877) 282-2924 (Canada & U.S.) or
(470) 495-9480 (international) and entering passcode 4293025#. A
replay will be available for 7 days starting at 11:30 AM ET by
dialing toll-free (855) 859-2056 (Canada & U.S.) or (404)
537-3406 (international) and entering the same passcode.
NotesThis release should be read in conjunction
with the attached unaudited condensed financial statements as at
and for the three and twelve months ended January 2, 2022.
Gildan’s Management’s Discussion and Analysis and its audited
consolidated financial statements for the fiscal year ended
January 2, 2022 are expected to be filed by Gildan with the
Canadian securities regulatory authorities and with the U.S.
Securities and Exchange Commission on or before February 24,
2022, and will also be provided on Gildan's website at that
time.
Certain minor rounding variances may exist between the condensed
consolidated financial statements and the table summaries contained
in this press release.
Supplemental Financial
Data |
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CONSOLIDATED FINANCIAL DATA (UNAUDITED) |
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Three months ended |
|
Twelve months ended |
(in $ millions, except per share amounts or otherwise
indicated) |
January 2,2022 |
|
January 3,2021 |
|
Variation(%) |
|
January 2,2022 |
|
January 3,2021 |
|
Variation(%) |
Net sales |
784.3 |
|
690.2 |
|
13.6% |
|
2,922.6 |
|
1,981.3 |
|
47.5% |
Gross profit |
229.3 |
|
155.5 |
|
47.5% |
|
940.2 |
|
249.1 |
|
n.m. |
Adjusted gross profit(1) |
239.8 |
|
178.1 |
|
34.6% |
|
903.0 |
|
305.7 |
|
n.m. |
SG&A expenses |
80.5 |
|
71.9 |
|
12.0% |
|
314.2 |
|
272.3 |
|
15.4% |
(Reversal of impairment)
Impairment of trade accounts receivable |
(1.0 |
) |
0.5 |
|
n.m. |
|
(2.6 |
) |
15.5 |
|
n.m. |
Restructuring and
acquisition-related costs |
4.2 |
|
4.3 |
|
(2.3)% |
|
8.2 |
|
48.2 |
|
(83.0)% |
(Impairment reversal of
intangible assets, net of write-downs) Impairment of goodwill and
intangible assets |
(31.5 |
) |
— |
|
n.m. |
|
(31.5 |
) |
94.0 |
|
n.m. |
Operating income (loss) |
177.1 |
|
78.8 |
|
n.m. |
|
651.9 |
|
(180.8 |
) |
n.m. |
Adjusted operating
income(1) |
160.3 |
|
105.7 |
|
51.7% |
|
591.4 |
|
18.0 |
|
n.m. |
Adjusted EBITDA(1) |
189.9 |
|
145.3 |
|
30.7% |
|
726.8 |
|
165.1 |
|
n.m. |
Financial expenses |
4.7 |
|
13.1 |
|
(64.1)% |
|
27.3 |
|
48.5 |
|
(43.7)% |
Income tax (recovery)
expense |
(1.5 |
) |
(1.7 |
) |
(11.8)% |
|
17.4 |
|
(4.1 |
) |
n.m. |
Net earnings (loss) |
173.9 |
|
67.4 |
|
n.m. |
|
607.2 |
|
(225.3 |
) |
n.m. |
Adjusted net earnings (loss)(1) |
148.5 |
|
90.0 |
|
65.0% |
|
538.1 |
|
(36.3 |
) |
n.m. |
Basic EPS |
0.90 |
|
0.34 |
|
n.m. |
|
3.08 |
|
(1.14 |
) |
n.m. |
Diluted EPS |
0.89 |
|
0.34 |
|
n.m. |
|
3.07 |
|
(1.14 |
) |
n.m. |
Adjusted diluted EPS(1) |
0.76 |
|
0.45 |
|
68.9% |
|
2.72 |
|
(0.18 |
) |
n.m. |
Gross margin(2) |
29.2 |
% |
22.5 |
% |
6.7pp |
|
32.2 |
% |
12.6 |
% |
19.6 pp |
Adjusted gross margin(1) |
30.6 |
% |
25.8 |
% |
4.8pp |
|
30.9 |
% |
15.3 |
% |
15.6 pp |
SG&A expenses as a
percentage of sales(3) |
10.3 |
% |
10.4 |
% |
(0.1)pp |
|
10.8 |
% |
13.7 |
% |
(2.9) pp |
Operating margin(4) |
22.6 |
% |
11.4 |
% |
11.2pp |
|
22.3 |
% |
(9.1 |
)% |
31.4 pp |
Adjusted operating margin(1) |
20.4 |
% |
15.3 |
% |
5.1pp |
|
20.2 |
% |
0.9 |
% |
19.3 pp |
Cash flows from operating activities |
154.0 |
|
291.6 |
|
(47.2)% |
|
617.5 |
|
415.0 |
|
48.8% |
Capital expenditures |
38.4 |
|
13.4 |
|
n.m. |
|
130.2 |
|
58.3 |
|
n.m. |
Free cash flow(1) |
115.6 |
|
278.2 |
|
(58.4)% |
|
593.7 |
|
357.5 |
|
66.1% |
Diluted weighted average
number of common shares outstanding (in ‘000s) |
194,760 |
|
198,403 |
|
n/a |
|
197,595 |
|
198,361 |
|
n/a |
|
|
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As at (in $ millions, or otherwise indicated) |
|
|
|
|
|
January 2,2022 |
|
January 3,2021 |
Inventories |
|
|
|
|
|
774.4 |
|
728.0 |
Trade accounts receivable |
|
|
|
|
|
330.0 |
|
196.5 |
Net debt(1) |
|
|
|
|
|
529.9 |
|
577.2 |
Net
debt leverage ratio(1) |
|
|
|
|
|
0.7 |
|
3.5 |
(1) This is a non-GAAP financial measure or ratio. Please refer
to "Non-GAAP Financial Measures" in this press release.(2) Gross
margin is defined as gross profit divided by net sales. (3)
SG&A as a percentage of sales is defined as SG&A divided by
net sales.(4) Operating margin is defined as operating income
(loss) divided by net sales.n.m. = not meaningful
DISAGGREGATION OF REVENUE
Net sales by major product group were as follows:
(in $ millions, or otherwise indicated) |
Q4 2021 |
Q4 2020 |
Variation (%) |
|
YTD 2021 |
YTD 2020 |
Variation (%) |
Activewear |
627.2 |
537.9 |
16.6 |
% |
|
2,364.7 |
1,498.4 |
57.8 |
% |
Hosiery
and underwear |
157.1 |
152.3 |
3.2 |
% |
|
557.8 |
482.9 |
15.5 |
% |
|
784.3 |
690.2 |
13.6 |
% |
|
2,922.5 |
1,981.3 |
47.5 |
% |
|
|
|
|
|
|
|
|
Net sales were derived from customers located in the following
geographic areas:
(in $ millions, or otherwise indicated) |
Q4 2021 |
Q4 2020 |
Variation (%) |
|
YTD 2021 |
YTD 2020 |
Variation (%) |
United States |
692.6 |
604.7 |
14.5 |
% |
|
2,526.6 |
1,696.9 |
48.9 |
% |
Canada |
30.9 |
25.9 |
19.3 |
% |
|
114.8 |
76.2 |
50.7 |
% |
International |
60.7 |
59.6 |
1.8 |
% |
|
281.2 |
208.2 |
35.1 |
% |
|
784.2 |
690.2 |
13.6 |
% |
|
2,922.6 |
1,981.3 |
47.5 |
% |
Non-GAAP financial measures and related
ratiosThis press release includes references to certain
non-GAAP financial measures, as well as non-GAAP ratios 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 or as a
substitute for measures of performance prepared in accordance with
IFRS. 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.
Certain adjustments to non-GAAP measuresAs
noted above certain of our non-GAAP financial measures and ratios
exclude the variation caused by certain adjustments that affect the
comparability of the Company's financial results and could
potentially distort the analysis of trends in its business
performance. Adjustments which impact more than one non-GAAP
financial measure and ratio are explained below:
Restructuring and acquisition-related costsRestructuring and
acquisition-related costs are comprised of costs directly related
to significant exit activities, including the closure of business
locations or the relocation of business activities, significant
changes in management structure, as well as transaction, exit, and
integration costs incurred pursuant to business acquisitions.
Restructuring and acquisition-related costs is included as an
adjustment in arriving at adjusted operating income, adjusted
operating margin, adjusted net earnings, adjusted diluted EPS, and
adjusted EBITDA. Restructuring and acquisition-related costs were
$4 million and $8 million for the three and twelve months
ended January 2, 2022 (2020 - $4 million and $48 million).
Impairment of goodwill and intangible assets or impairment
reversal of intangible assets, net of write-downsDuring the first
quarter of fiscal 2020 we recorded an impairment charge for our
Hosiery cash-generating unit (CGU) of $94 million, relating to
goodwill and intangible assets acquired during previous sock and
hosiery business acquisitions. During the fourth quarter of fiscal
2021 we reported a $32 million credit to income, as a result of an
impairment reversal of $56 million and a $24 million write-off of
certain intangible assets relating to the Company's Hosiery CGU.
This is included as an adjustment in arriving at adjusted operating
income, adjusted operating margin, adjusted net earnings, adjusted
diluted EPS, and adjusted EBITDA.
Net insurance losses (gains)Net insurance gains of $46 million
(2020 - $10 million) for the fiscal year ended January 2, 2022,
related to the two hurricanes which impacted the Company’s
operations in Central America in November 2020. The net insurance
gains reflected costs of $55 million (2020 - $101 million) (mainly
attributable to equipment repairs, salary and benefits continuation
for idle employees, and other costs and charges), which were more
than offset by related accrued insurance recoveries of $101 million
(2020 - $111 million) during fiscal 2021. The insurance gains
primarily relate to accrued insurance recoveries at replacement
cost value for damaged equipment in excess of the write-off of the
net book value of property plant and equipment, as well as the
recognition of insurance recoveries for business interruption, when
applicable. Net insurance gains is included as an adjustment in
arriving at adjusted gross profit and adjusted gross margin,
adjusted operating income, adjusted operating margin, adjusted net
earnings, adjusted diluted EPS, and adjusted EBITDA.
Discontinuance of personal protective equipment (PPE) stock
keeping units (SKUs)During fiscal 2020, in collaboration with
various government and customer efforts to help address shortages
due to the COVID-19 pandemic, the Company temporarily leveraged its
manufacturing capabilities to produce PPE products. A charge of $6
million for the three and twelve months ended January 3, 2021
(included in cost of sales) reflects the discontinuance of these
PPE SKUs given that they are not in the Company’s normal product
line and that these shortages have now been addressed.
Discontinuance of PPE SKUs is included as an adjustment in arriving
at adjusted gross profit and adjusted gross margin, adjusted
operating income, adjusted operating margin, adjusted net earnings,
adjusted diluted EPS, and adjusted EBITDA.
Impact of strategic product line initiativesIn the fourth
quarter of fiscal 2019, the Company launched a strategic initiative
to significantly reduce its imprintables product line SKU count. In
the fourth quarter of fiscal 2020 the Company expanded this
strategic initiative to include a significant reduction in its
retail product line SKU count. The objectives of this strategic
initiative include exiting all ship to-the-piece activities,
discontinuing overlapping and less productive styles and SKUs
between brands, simplifying the Company's product portfolio and
reducing complexity in its manufacturing and warehouse distribution
activities. The impact of this initiative has included inventory
write-downs to reduce the carrying value of discontinued SKUs to
liquidation values, sales return allowances for product returns
related to discontinued SKUs, and in Q4 2021, the write-down of
production equipment and other assets relating to discontinued
SKUs. The impact of strategic product line initiatives is included
as an adjustment in arriving at adjusted gross profit and adjusted
gross margin, adjusted operating income, adjusted operating margin,
adjusted net earnings, adjusted diluted EPS, and adjusted
EBITDA.
The charges related to this initiative in fiscal 2019, 2020 and
2021, were as follows:
- Fiscal 2019 includes $48 million of inventory write-downs
included in cost of sales and the $7 million gross profit
impact of a sales return allowance for anticipated product returns,
related to imprintables discontinued SKUs which reduced net sales
by $19 million and cost of sales by $12 million.
- Fiscal 2020 includes a charge of $26 million of inventory
write-downs included in cost of sales related to retail
discontinued SKUs. Fiscal 2020 also includes $29 million of
inventory write-downs included in cost of sales and the $5 million
gross profit impact of a sales return allowance for anticipated
product returns related to imprintables discontinued SKUs which
reduced net sales by $11 million and cost of sales by $6
million.
- Fiscal 2021 includes $9 million of charges included in cost of
sales, consisting of $4 million in inventory write-downs related
primarily to the Company's plan to discontinue its legwear and
intimates product line, and the write-down of production equipment
and other assets relating to discontinued SKUs of $5 million in the
fourth quarter of 2021.
Adjusted net earnings and adjusted diluted
EPSAdjusted net earnings are calculated as net earnings before
restructuring and acquisition-related costs, income taxes related
to the re-assessment of the probability of realization of
previously recognized or de-recognized deferred income tax assets,
and income taxes relating to the revaluation of deferred income tax
assets and liabilities as a result of statutory income tax rate
changes in the countries in which we operate. Adjusted net earnings
also exclude impairment of goodwill and intangible assets (and
reversal of impairments on intangible assets), net insurance gains,
the discontinuance of PPE SKUs, the impact of the Company's
strategic product line initiatives, and income tax expense or
recovery relating to these items. 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. The Company believes adjusted
net earnings and adjusted diluted EPS are useful to investors
because they help identify underlying trends in our business that
could otherwise be masked by certain expenses, write-offs, charges,
income or recoveries that can vary from period to period. Excluding
these items does not imply they are necessarily non-recurring. This
measure does not have any standardized meanings prescribed by IFRS
and are therefore unlikely to be comparable to a similar measure
presented by other companies.
|
Three months ended |
Twelve months ended |
(in $ millions, except per share amounts) |
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
|
|
|
|
|
|
Net earnings (loss) |
173.9 |
|
67.4 |
|
607.2 |
|
(225.3 |
) |
259.8 |
|
Adjustments for: |
|
|
|
|
|
Restructuring and acquisition-related costs |
4.2 |
|
4.3 |
|
8.2 |
|
48.2 |
|
47.3 |
|
(Impairment reversal of intangible assets, net of write-downs)
Impairment of goodwill and intangible assets |
(31.5 |
) |
— |
|
(31.5 |
) |
94.0 |
|
— |
|
Impact of strategic product line initiatives |
7.6 |
|
26.0 |
|
8.8 |
|
60.0 |
|
55.0 |
|
Discontinuance of PPE SKUs |
— |
|
6.2 |
|
— |
|
6.2 |
|
— |
|
Net insurance losses (gains) |
2.9 |
|
(9.6 |
) |
(46.0 |
) |
(9.6 |
) |
— |
|
Income tax expense (recovery) relating to the above-noted
adjustments |
— |
|
0.9 |
|
— |
|
(4.6 |
) |
(3.3 |
) |
Income tax recovery related to the revaluation of deferred income
tax assets and liabilities(1) |
(8.6 |
) |
(5.2 |
) |
(8.6 |
) |
(5.2 |
) |
(19.2 |
) |
Adjusted net earnings (loss) |
148.5 |
|
90.0 |
|
538.1 |
|
(36.3 |
) |
339.6 |
|
Basic EPS |
0.90 |
|
0.34 |
|
3.08 |
|
(1.14 |
) |
1.27 |
|
Diluted EPS |
0.89 |
|
0.34 |
|
3.07 |
|
(1.14 |
) |
1.27 |
|
Adjusted diluted EPS(2) |
0.76 |
|
0.45 |
|
2.72 |
|
(0.18 |
) |
1.66 |
|
(1) Includes an income tax recovery of $8.6 million (2020 - $5.2
million, 2019 - $19.2 million) pursuant to the recognition of
previously de-recognized (in fiscal 2018 and fiscal 2017 pursuant
to the organizational realignment plan) deferred income tax assets
as a result of a re-assessment of the probability of realization of
such deferred income tax assets.(2) This is a non-GAAP ratio. It is
calculated as adjusted net earnings (loss) divided by the diluted
weighted average number of common shares outstanding.
Adjusted gross profit and adjusted gross
marginAdjusted gross profit is calculated as gross profit excluding
the impact of net insurance gains, the discontinuance of PPE SKUs,
and the impact of the Company's strategic product line initiatives.
The Company uses adjusted gross profit and adjusted gross 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. The Company believes
adjusted gross profit and adjusted gross margin are useful to
investors because they help identify underlying trends in our
business that could otherwise be masked by certain expenses,
write-offs, charges, income or recoveries that can vary from period
to period. This measure does not have any standardized meanings
prescribed by IFRS and are therefore unlikely to be comparable to a
similar measure presented by other companies.
|
Three months ended |
Twelve months ended |
(in $
millions, or otherwise indicated) |
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
|
|
|
|
|
|
Gross profit |
229.3 |
|
155.5 |
|
940.2 |
|
249.1 |
|
704.5 |
|
Adjustments for: |
|
|
|
|
|
Impact of strategic product line initiatives |
7.6 |
|
26.0 |
|
8.8 |
|
60.0 |
|
55.0 |
|
Discontinuance of PPE SKUs |
— |
|
6.2 |
|
— |
|
6.2 |
|
— |
|
Net insurance losses (gains) |
2.9 |
|
(9.6 |
) |
(46.0 |
) |
(9.6 |
) |
— |
|
Adjusted gross profit |
239.8 |
|
178.1 |
|
903.0 |
|
305.7 |
|
759.5 |
|
|
|
|
|
|
|
Net sales |
784.3 |
|
690.2 |
|
2,922.6 |
|
1,981.3 |
|
2,823.9 |
|
Sales
return allowance for anticipated product returns |
— |
|
— |
|
— |
|
11.2 |
|
19.0 |
|
Net sales
excluding the allowance for anticipated product returns related to
discontinued SKUs |
784.3 |
|
690.2 |
|
2,922.6 |
|
1,992.5 |
|
2,842.9 |
|
Gross margin |
29.2 |
% |
22.5 |
% |
32.2 |
% |
12.6 |
% |
24.9 |
% |
Adjusted gross margin(1) |
30.6 |
% |
25.8 |
% |
30.9 |
% |
15.3 |
% |
26.7 |
% |
(1) This is a non-GAAP ratio. It is calculated as
adjusted gross profit divided by net sales excluding the sales
return allowance for anticipated product returns related to
discontinued SKUs. Net sales excluding the sales return allowance
for anticipated product returns related to discontinued SKUs is a
non-GAAP measure used in the denominator of the adjusted margin
ratios to reverse the full effect of the SKU rationalization
adjustments.
Adjusted operating income and adjusted operating
marginAdjusted operating income is calculated as operating income
before restructuring and acquisition-related costs. Adjusted
operating income also excludes impairment of goodwill and
intangible assets, net insurance gains, the discontinuance of PPE
SKUs, and the impact of the Company's strategic product line
initiatives. Adjusted operating margin is calculated as adjusted
operating income divided by net sales excluding the sales return
allowance for anticipated product returns related
to discontinued SKUs. 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. The Company believes adjusted operating
income and adjusted operating margin are useful to investors
because they help identify underlying trends in our business that
could otherwise be masked by certain expenses, write-offs, charges,
income or recoveries that can vary from period to period. Excluding
these items does not imply they are necessarily non-recurring. This
measure does not have any standardized meanings prescribed by IFRS
and are therefore unlikely to be comparable to a similar measure
presented by other companies.
|
Three months ended |
Twelve months ended |
(in $ millions, or otherwise indicated) |
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
|
|
|
|
|
|
Operating income (loss) |
177.1 |
|
78.8 |
|
651.9 |
|
(180.8 |
) |
289.0 |
|
Adjustments for: |
|
|
|
|
|
Restructuring and acquisition-related costs |
4.2 |
|
4.3 |
|
8.2 |
|
48.2 |
|
47.3 |
|
(Impairment reversal of intangible assets, net of write-downs)
Impairment of goodwill and intangible assets |
(31.5 |
) |
— |
|
(31.5 |
) |
94.0 |
|
— |
|
Impact of strategic product line initiatives |
7.6 |
|
26.0 |
|
8.8 |
|
60.0 |
|
55.0 |
|
Discontinuance of PPE SKUs |
— |
|
6.2 |
|
— |
|
6.2 |
|
— |
|
Net insurance losses (gains) |
2.9 |
|
(9.6 |
) |
(46.0 |
) |
(9.6 |
) |
— |
|
Adjusted operating income |
160.3 |
|
105.7 |
|
591.4 |
|
18.0 |
|
391.3 |
|
|
|
|
|
|
|
Operating margin |
22.6 |
% |
11.4 |
% |
22.3 |
% |
(9.1 |
)% |
10.2 |
% |
Adjusted operating margin(1) |
20.4 |
% |
15.3 |
% |
20.2 |
% |
0.9 |
% |
13.8 |
% |
(1) This is a non-GAAP ratio. It is calculated as
adjusted operating income divided by net sales excluding the sales
return allowance for anticipated product
returns related to discontinued SKUs. Net sales excluding
the sales return allowance for anticipated product returns related
to discontinued SKUs is a non-GAAP measure used in the denominator
of the adjusted margin ratios to reverse the full effect of the SKU
rationalization adjustments.
Adjusted EBITDAAdjusted EBITDA is calculated as
earnings before financial expenses net, income taxes, and
depreciation and amortization, and excludes the impact of
restructuring and acquisition-related costs. Adjusted EBITDA also
excludes impairment of goodwill and intangible assets and reversal
of impairments on intangible assets, net insurance gains, the
discontinuance of PPE SKUs, and the impact of the Company's
strategic product line initiative. Management 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. This measure does not have any standardized meanings
prescribed by IFRS and are therefore unlikely to be comparable to a
similar measure presented by other companies.
|
Three months ended |
Twelve months ended |
(in $ millions) |
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
|
|
|
|
|
|
Net earnings (loss) |
173.9 |
|
67.4 |
|
607.2 |
|
(225.3 |
) |
259.8 |
|
Restructuring and
acquisition-related costs |
4.2 |
|
4.3 |
|
8.2 |
|
48.2 |
|
47.3 |
|
(Impairment reversal of
intangible assets, net of write-downs) Impairment of goodwill and
intangible assets |
(31.5 |
) |
— |
|
(31.5 |
) |
94.0 |
|
— |
|
Impact of strategic product
line initiative |
7.6 |
|
26.0 |
|
8.8 |
|
60.0 |
|
55.0 |
|
Discontinuance of PPE
SKUs |
— |
|
6.2 |
|
— |
|
6.2 |
|
— |
|
Net insurance losses
(gains) |
2.9 |
|
(9.6 |
) |
(46.0 |
) |
(9.6 |
) |
— |
|
Depreciation and
amortization |
29.6 |
|
39.6 |
|
135.4 |
|
147.2 |
|
156.8 |
|
Financial expenses, net |
4.7 |
|
13.1 |
|
27.3 |
|
48.5 |
|
39.2 |
|
Income
tax (recovery) expense |
(1.5 |
) |
(1.7 |
) |
17.4 |
|
(4.1 |
) |
(10.0 |
) |
Adjusted EBITDA |
189.9 |
|
145.3 |
|
726.8 |
|
165.1 |
|
548.1 |
|
Free cash flow Free 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 liquidity 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. Management believes that free
cash flow provides investors with an important perspective on the
cash available to us to service debt, fund acquisitions, and pay
dividends. In addition, free cash flow is a commonly used by
investors and analysts when valuing a business and its underlying
assets. This measure does not have any standardized meanings
prescribed by IFRS and are therefore unlikely to be comparable to a
similar measure presented by other companies.
|
Three months ended |
Twelve months ended |
(in $ millions) |
January 2,2022 |
|
January 3,2021 |
|
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
|
|
|
|
|
|
Cash flows from operating
activities |
154.0 |
|
291.6 |
|
617.5 |
|
415.0 |
|
361.0 |
|
Cash flows used in investing
activities |
(202.4 |
) |
(13.4 |
) |
(187.8 |
) |
(57.5 |
) |
(135.8 |
) |
Adjustment for: |
|
|
|
|
|
Business acquisitions |
164.0 |
|
— |
|
164.0 |
|
— |
|
1.3 |
|
Free cash flow |
115.6 |
|
278.2 |
|
593.7 |
|
357.5 |
|
226.5 |
|
Total debt and net debtTotal debt is defined as the
total bank indebtedness, long-term debt (including any current
portion), and lease obligations (including any current portion),
and net debt is calculated as total debt net of cash and cash
equivalents. The Company considers total debt and net debt to be
important indicators of the financial leverage of the Company. The
Company believes that certain investors and analysts use the total
debt and net debt to measure the financial leverage of the Company.
These measures do not have any standardized meanings prescribed by
IFRS and are therefore unlikely to be comparable to a similar
measure presented by other companies.
(in $ millions) |
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
|
|
|
|
Long-term debt |
600.0 |
|
1,000.0 |
|
845.0 |
|
Bank indebtedness |
— |
|
— |
|
— |
|
Lease
obligations |
109.1 |
|
82.5 |
|
81.5 |
|
Total debt |
709.1 |
|
1,082.5 |
|
926.5 |
|
Cash
and cash equivalents |
(179.2 |
) |
(505.3 |
) |
(64.1 |
) |
Net debt |
529.9 |
|
577.2 |
|
862.4 |
|
Net debt leverage ratioThe net debt leverage ratio
is defined as the ratio of net debt to pro-forma adjusted EBITDA
for the trailing twelve months, all of which are non-GAAP measures.
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 fiscal year-end net debt leverage target
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. This measure does not have
any standardized meanings prescribed by IFRS and are therefore
unlikely to be comparable to a similar measure presented by other
companies.
(in $ millions, or otherwise indicated) |
January 2,2022 |
January 3,2021 |
December 29,2019 |
Adjusted EBITDA for the trailing twelve months |
726.8 |
165.1 |
548.1 |
Adjustment for: |
|
|
|
Business acquisitions |
22.8 |
— |
— |
Pro-forma adjusted EBITDA for the trailing twelve months |
749.6 |
165.1 |
548.1 |
|
|
|
|
Net debt |
529.9 |
577.2 |
862.4 |
Net
debt leverage ratio(1) |
0.7 |
3.5 |
1.6 |
(1) The Company's total net debt to EBITDA ratio for purposes of
its loan and note agreements was 0.8 at January 2, 2022.
Return on net assetsReturn on net assets (RONA) is
defined as the ratio of return to average net assets for the last
five quarters. Return is defined as adjusted net earnings,
excluding net financial expenses and the amortization of intangible
assets (excluding software), net of income tax recoveries related
thereto. Average is computed as the sum of the five quarters
divided by five. Average net assets are defined as the sum
of average total assets, excluding average cash and cash
equivalents, average net deferred income taxes, and the average
accumulated amortization of intangible assets excluding software,
less average total current liabilities excluding the current
portion of lease obligations. Average net assets and return are
non-GAAP measures used as components of RONA. The Company uses RONA
as a performance indicator to measure the efficiency of its
invested capital. Management believes RONA is useful to investors
as a measure of performance and the effectiveness of our use of
capital. RONA is not a measure of financial performance under IFRS
and may not be defined and calculated by other companies in the
same manner.
(in $ millions) |
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
Average total assets |
3,050.5 |
|
3,226.9 |
|
3,254.1 |
|
Average cash and cash
equivalents |
(384.1 |
) |
(354.7 |
) |
(59.6 |
) |
Average net deferred income
taxes |
(15.6 |
) |
(13.1 |
) |
(2.0 |
) |
Average accumulated amortization
of intangible assets, excluding software |
254.8 |
|
233.2 |
|
159.4 |
|
Average total current liabilities, excluding the current portion of
lease obligations |
(397.3 |
) |
(364.5 |
) |
(364.0 |
) |
Average net assets |
2,508.3 |
|
2,727.8 |
|
2,987.9 |
|
|
|
|
|
|
Twelve months ended |
(in $
millions, or otherwise indicated) |
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
Adjusted net earnings (loss) |
538.1 |
|
(36.3 |
) |
339.6 |
|
Financial expenses, net (nil
income taxes in both years) |
27.3 |
|
48.5 |
|
39.2 |
|
Amortization of intangible
assets, excluding software, net (nil income taxes in both
years) |
12.8 |
|
14.3 |
|
17.3 |
|
Return |
578.2 |
|
26.5 |
|
396.1 |
|
RONA |
23.1 |
% |
1.0 |
% |
13.3 |
% |
Working CapitalWorking capital is a non-GAAP
financial measure and is defined as current assets less current
liabilities. Management believes that working capital, in addition
to other conventional financial measures prepared in accordance
with IFRS provides information that is helpful to understand the
financial condition of the Company. The objective of using working
capital is to present readers with a view of the Company from
management’s perspective by interpreting the material trends and
activities that affect the liquidity and financial position of the
Company. This measure is not necessarily comparable to similarly
titled measures used by other public companies.
|
January 2,2022 |
|
January 3,2021 |
|
December 29,2019 |
|
(in $
millions) |
|
|
|
|
Cash and cash equivalents |
179.2 |
|
505.3 |
|
64.1 |
|
Trade accounts receivable |
330.0 |
|
196.5 |
|
320.9 |
|
Income taxes receivable |
— |
|
4.6 |
|
— |
|
Inventories |
774.4 |
|
728.0 |
|
1,052.1 |
|
Prepaid expenses, deposits and
other current assets |
163.7 |
|
110.1 |
|
77.1 |
|
Accounts payable and accrued
liabilities |
(440.4 |
) |
(343.7 |
) |
(406.6 |
) |
Current portion of lease
obligations |
(15.3 |
) |
(15.9 |
) |
(14.5 |
) |
Income
taxes payable |
(7.9 |
) |
— |
|
(1.3 |
) |
Working capital |
983.7 |
|
1,184.9 |
|
1,091.8 |
|
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 net
sales, gross margin, SG&A expenses, restructuring and
acquisition-related costs, operating margin, adjusted operating
margin, adjusted EBITDA, diluted earnings per share, adjusted
diluted earnings per share, income tax rate, free cash flow, return
on net assets, net debt to adjusted EBITDA leverage ratios, capital
return and capital investments or expenditures, including our
three-year financial outlook set forth in this press release under
the section “Gildan Sustainable Growth Strategy”. 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 our most recent Management’s Discussion
and Analysis 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 document
and this press release, including certain assumptions relating to
the three-year financial outlook described in this press release
under the section “Gildan Sustainable Growth Strategy”.
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:
- the magnitude and length of economic disruption as a result of
the worldwide coronavirus (COVID-19) pandemic and the more recent
appearance of COVID variants, including the scope and duration of
government mandated general, partial, or targeted private sector
shutdowns, travel restrictions, and social distancing
measures;
- changes in general economic and financial conditions globally
or in one or more of the markets we serve, including those
resulting from the impact of the COVID-19 pandemic and the more
recent appearance of COVID variants;
- our ability to implement our growth strategies and plans,
including our ability to bring projected capacity expansion
online;
- our ability to successfully integrate acquisitions and realize
expected benefits and synergies;
- the intensity of competitive activity and our ability to
compete effectively;
- 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 fibres, dyes
and other chemicals from current levels;
- our reliance on key suppliers and our ability to maintain an
uninterrupted supply of raw materials, intermediate materials and
finished goods;
- the impact of climate, political, social, and economic risks,
natural disasters, epidemics, pandemics and endemics, such as the
COVID-19 pandemic, in the countries in which we operate or sell to,
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, weather-related events, natural disasters, epidemics
and pandemics, such as the COVID-19 pandemic, and other unforeseen
adverse events;
- the impacts of the COVID-19 pandemic on our business and
financial performance and consequently on our ability to comply
with the financial covenants under our debt agreements;
- 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;
- the imposition of trade remedies, or changes to duties and
tariffs, international trade legislation, bilateral and
multilateral trade agreements and trade preference programs 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 human rights, 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 on trade accounts receivables and other financial
instruments, 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 of
everyday basic apparel which markets its products in North America,
Europe, Asia Pacific, and Latin America, under a diversified
portfolio of Company-owned brands, including Gildan®, American
Apparel®, Comfort Colors®, Alstyle®, GOLDTOE®, Secret®, Silks®,
Secret Silky®, Therapy Plus®, Peds® and MediPeds®, and under the
Under Armour® brand through a sock licensing agreement providing
exclusive distribution rights in the United States and Canada. Our
product offering includes activewear, underwear, socks, hosiery,
and legwear products sold to a broad range of customers, including
wholesale distributors, screenprinters or embellishers, as well as
to retailers that sell to consumers through their physical stores
and/or e-commerce platforms, and to global lifestyle brand
companies.
Gildan owns and operates vertically integrated, large-scale
manufacturing facilities which are primarily located in Central
America, the Caribbean, North America, and Bangladesh. Gildan
operates with a strong commitment to industry-leading labour,
environmental and governance practices throughout its supply chain
in accordance with its comprehensive ESG program embedded in the
Company's long-term business strategy. More information about the
Company and its ESG practices and initiatives can be found at
www.gildancorp.com and www.genuineresponsibility.com,
respectively.
Investor inquiries:Sophie ArgiriouVice President,
Investor Communications(514) 343-8815sargiriou@gildan.com |
Media inquiries:Genevieve GosselinDirector, Global
Communications and Corporate Marketing(514)
343-8814ggosselin@gildan.com |
GILDAN ACTIVEWEAR
INC.CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION(in thousands of U.S. dollars) -
unaudited
|
January 2,2022 |
|
|
January 3,2021 |
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
179,246 |
|
|
$ |
505,264 |
|
Trade accounts receivable |
|
329,967 |
|
|
|
196,480 |
|
Income taxes receivable |
|
— |
|
|
|
4,632 |
|
Inventories |
|
774,358 |
|
|
|
727,992 |
|
Prepaid expenses, deposits, and other current assets |
|
163,662 |
|
|
|
110,105 |
|
Total current assets |
|
1,447,233 |
|
|
|
1,544,473 |
|
Non-current assets: |
|
|
|
|
Property, plant and equipment |
|
985,073 |
|
|
|
896,800 |
|
Right-of-use assets |
|
92,447 |
|
|
|
59,445 |
|
Intangible assets |
|
306,630 |
|
|
|
289,901 |
|
Goodwill |
|
283,815 |
|
|
|
206,636 |
|
Deferred income taxes |
|
17,726 |
|
|
|
17,689 |
|
Other non-current assets |
|
3,758 |
|
|
|
6,004 |
|
Total non-current assets |
|
1,689,449 |
|
|
|
1,476,475 |
|
Total assets |
$ |
3,136,682 |
|
|
$ |
3,020,948 |
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
440,401 |
|
|
$ |
343,722 |
|
Income taxes payable |
|
7,912 |
|
|
|
— |
|
Current portion of lease obligations |
|
15,290 |
|
|
|
15,884 |
|
Total current liabilities |
|
463,603 |
|
|
|
359,606 |
|
Non-current liabilities: |
|
|
|
|
Long-term debt |
|
600,000 |
|
|
|
1,000,000 |
|
Lease obligations |
|
93,812 |
|
|
|
66,580 |
|
Other non-current liabilities |
|
59,862 |
|
|
|
35,865 |
|
Total non-current liabilities |
|
753,674 |
|
|
|
1,102,445 |
|
Total liabilities |
|
1,217,277 |
|
|
|
1,462,051 |
|
Equity: |
|
|
|
|
Share capital |
|
191,732 |
|
|
|
183,938 |
|
Contributed surplus |
|
58,128 |
|
|
|
24,936 |
|
Retained earnings |
|
1,604,736 |
|
|
|
1,359,061 |
|
Accumulated other comprehensive income |
|
64,809 |
|
|
|
(9,038 |
) |
Total equity attributable to shareholders of the Company |
|
1,919,405 |
|
|
|
1,558,897 |
|
Total liabilities and equity |
$ |
3,136,682 |
|
|
$ |
3,020,948 |
|
GILDAN ACTIVEWEAR
INC.CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME(in thousands of U.S.
dollars, except per share data) - unaudited
|
Three months ended |
|
|
Twelve months ended |
|
|
January 2,2022 |
|
|
January 3,2021 |
|
|
January 2,2022 |
|
|
January 3,2021 |
|
Net sales |
$ |
784,251 |
|
|
$ |
690,155 |
|
|
$ |
2,922,570 |
|
|
$ |
1,981,276 |
|
Cost of
sales |
|
554,995 |
|
|
|
534,648 |
|
|
|
1,982,361 |
|
|
|
1,732,217 |
|
Gross profit |
|
229,256 |
|
|
|
155,507 |
|
|
|
940,209 |
|
|
|
249,059 |
|
Selling, general and
administrative expenses |
|
80,466 |
|
|
|
71,934 |
|
|
|
314,171 |
|
|
|
272,306 |
|
(Reversal of impairment)
Impairment of trade accounts receivable |
|
(998 |
) |
|
|
484 |
|
|
|
(2,617 |
) |
|
|
15,453 |
|
Restructuring and
acquisition-related costs |
|
4,181 |
|
|
|
4,257 |
|
|
|
8,225 |
|
|
|
48,154 |
|
(Impairment reversal of
intangible assets, net of write-downs) Impairment of goodwill and
intangible assets |
|
(31,459 |
) |
|
|
— |
|
|
|
(31,459 |
) |
|
|
93,989 |
|
Operating income (loss) |
|
177,066 |
|
|
|
78,832 |
|
|
|
651,889 |
|
|
|
(180,843 |
) |
Financial expenses, net |
|
4,665 |
|
|
|
13,138 |
|
|
|
27,331 |
|
|
|
48,530 |
|
Earnings (loss) before income taxes |
|
172,401 |
|
|
|
65,694 |
|
|
|
624,558 |
|
|
|
(229,373 |
) |
Income
tax (recovery) expense |
|
(1,495 |
) |
|
|
(1,658 |
) |
|
|
17,375 |
|
|
|
(4,091 |
) |
Net earnings (loss) |
|
173,896 |
|
|
|
67,352 |
|
|
|
607,183 |
|
|
|
(225,282 |
) |
Other comprehensive income
(loss), net of related income taxes: |
|
|
|
|
|
|
|
Cash flow hedges |
|
20,344 |
|
|
|
3,080 |
|
|
|
73,847 |
|
|
|
(8,503 |
) |
Actuarial (loss) gain on employee benefit obligations |
|
(21,678 |
) |
|
|
12,142 |
|
|
|
(21,678 |
) |
|
|
12,142 |
|
|
|
(1,334 |
) |
|
|
15,222 |
|
|
|
52,169 |
|
|
|
3,639 |
|
Comprehensive income (loss) |
$ |
172,562 |
|
|
$ |
82,574 |
|
|
$ |
659,352 |
|
|
$ |
(221,643 |
) |
Earnings (loss) per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.90 |
|
|
$ |
0.34 |
|
|
$ |
3.08 |
|
|
$ |
(1.14 |
) |
Diluted |
$ |
0.89 |
|
|
$ |
0.34 |
|
|
$ |
3.07 |
|
|
$ |
(1.14 |
) |
GILDAN ACTIVEWEAR
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(in thousands of U.S. dollars) -
unaudited
|
Three months ended |
|
|
Twelve months ended |
|
|
January 2,2022 |
|
|
January 3,2021 |
|
|
January 2,2022 |
|
|
January 3,2021 |
|
Cash flows from (used in) operating activities: |
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
173,896 |
|
|
$ |
67,352 |
|
|
$ |
607,183 |
|
|
$ |
(225,282 |
) |
Adjustments for: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
29,649 |
|
|
|
39,561 |
|
|
|
135,402 |
|
|
|
147,190 |
|
Non cash restructuring charges related to property, plant and
equipment, right-of-use assets, and computer software |
|
2,688 |
|
|
|
149 |
|
|
|
3,136 |
|
|
|
23,933 |
|
(Impairment reversal of intangible assets, net of write-downs)
Impairment of goodwill and intangible assets |
|
(31,459 |
) |
|
|
— |
|
|
|
(31,459 |
) |
|
|
93,989 |
|
Insurance recovery gain, net of loss on disposal of property, plant
and equipment |
|
4,664 |
|
|
|
(28,623 |
) |
|
|
(43,660 |
) |
|
|
(27,091 |
) |
Share-based compensation |
|
8,475 |
|
|
|
2,994 |
|
|
|
37,659 |
|
|
|
2,090 |
|
Other |
|
7,261 |
|
|
|
(8,693 |
) |
|
|
5,988 |
|
|
|
4,691 |
|
Changes in non-cash working capital balances |
|
(41,154 |
) |
|
|
218,908 |
|
|
|
(96,739 |
) |
|
|
395,510 |
|
Cash flows from operating activities |
|
154,020 |
|
|
|
291,648 |
|
|
|
617,510 |
|
|
|
415,030 |
|
|
|
|
|
|
|
|
|
Cash flows from (used in)
investing activities: |
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
(37,390 |
) |
|
|
(13,062 |
) |
|
|
(127,457 |
) |
|
|
(50,670 |
) |
Purchase of intangible assets |
|
(1,016 |
) |
|
|
(351 |
) |
|
|
(2,766 |
) |
|
|
(7,670 |
) |
Business acquisitions |
|
(163,968 |
) |
|
|
— |
|
|
|
(163,968 |
) |
|
|
— |
|
Proceeds from insurance related to property, plant and equipment
(PP&E) and other disposals of PP&E |
|
— |
|
|
|
51 |
|
|
|
106,358 |
|
|
|
830 |
|
Cash flows used in investing activities |
|
(202,374 |
) |
|
|
(13,362 |
) |
|
|
(187,833 |
) |
|
|
(57,510 |
) |
|
|
|
|
|
|
|
|
Cash flows from (used in)
financing activities: |
|
|
|
|
|
|
|
Decrease in amounts drawn under long-term bank credit
facilities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(245,000 |
) |
(Payment of) Proceeds from term loan |
|
— |
|
|
|
— |
|
|
|
(400,000 |
) |
|
|
400,000 |
|
Payment of lease obligations |
|
(8,993 |
) |
|
|
(4,188 |
) |
|
|
(21,474 |
) |
|
|
(15,418 |
) |
Dividends paid |
|
(29,714 |
) |
|
|
— |
|
|
|
(90,462 |
) |
|
|
(30,553 |
) |
Proceeds from the issuance of shares |
|
6,410 |
|
|
|
1,914 |
|
|
|
9,427 |
|
|
|
2,854 |
|
Repurchase and cancellation of shares |
|
(125,425 |
) |
|
|
— |
|
|
|
(245,140 |
) |
|
|
(23,216 |
) |
Share repurchases for settlement of non-Treasury RSUs |
|
(2,510 |
) |
|
|
(2,531 |
) |
|
|
(4,267 |
) |
|
|
(2,558 |
) |
Withholding taxes paid pursuant to the settlement of non-Treasury
RSUs |
|
(1,266 |
) |
|
|
(2,438 |
) |
|
|
(2,837 |
) |
|
|
(2,571 |
) |
Cash flows (used in) from financing activities |
|
(161,498 |
) |
|
|
(7,243 |
) |
|
|
(754,753 |
) |
|
|
83,538 |
|
Effect of exchange rate changes on cash and cash equivalents
denominated in foreign currencies |
|
(234 |
) |
|
|
1,305 |
|
|
|
(942 |
) |
|
|
80 |
|
Net (decrease) increase in cash and cash equivalents during the
period |
|
(210,086 |
) |
|
|
272,348 |
|
|
|
(326,018 |
) |
|
|
441,138 |
|
Cash
and cash equivalents, beginning of period |
|
389,332 |
|
|
|
232,916 |
|
|
|
505,264 |
|
|
|
64,126 |
|
Cash and cash equivalents, end of period |
$ |
179,246 |
|
|
$ |
505,264 |
|
|
$ |
179,246 |
|
|
$ |
505,264 |
|
Gildan Activewear (TSX:GIL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Gildan Activewear (TSX:GIL)
Historical Stock Chart
From Jul 2023 to Jul 2024