Gildan Activewear (GIL) Q4 2023 earnings summary

Executive summary

• Q4 sales rose 9% YoY to $783M; adjusted operating margin reached 19.7%, up 90 bps, and adjusted diluted EPS rose 15% to $0.75.

• FY 2023 sales declined 1% to $3.196B; adjusted operating margin was 17.3% versus 19.7% in 2022, while adjusted diluted EPS fell 17% to $2.57.

• Strong cash generation and a 1.5x net debt leverage ratio supported continued shareholder returns and 2024 guidance for improved profitability.

Financial highlights

• Q4 net sales were $783M, up 9%; operating income was $178M versus $93M, and adjusted operating income was $155M versus $136M.

• Q4 net earnings were $153M; diluted EPS was $0.89, up 89% YoY, and adjusted diluted EPS was $0.75, up 15%.

• FY net earnings were $534M, down 1%; adjusted net earnings were $453M, down 21%, and diluted EPS was $3.03 versus $2.93.

• FY adjusted EBITDA was $675M versus $764M; net financial expenses rose to $80M from $37M, mainly due to higher interest rates and average net borrowings.

• Operating cash flow was $239M in Q4 and $547M for FY; free cash flow was $203M and $392M, respectively.

Outlook and guidance

• FY 2024 revenue growth is expected flat to low-single digits; excluding the Under Armour sock license expiration, growth is expected in the low-to-mid-single-digit range.

• 2024 adjusted operating margin is expected slightly above the high end of the 18%–20% target range; adjusted diluted EPS guidance is $2.92–$3.07, up 13.5%–19.5%.

• 2024 free cash flow is expected above 2023 levels, with capex at approximately 5% of sales; planned drivers include higher profitability and lower working capital investment and capex.

• Q1 2024 sales are expected down low-single digits YoY and adjusted operating margin near the low end of the 18%–20% target range, reflecting lower replenishment after strong Q4 replenishment.

• Guidance assumes improving POS trends and no meaningful deterioration in market conditions; share repurchases are expected to continue while leverage remains within the 1x–2x target range.