Ladies and gentlemen, thank you for standing by and welcome to Gildan Activewear's 2026 Q1 earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to JC Hayam, Senior Vice President, Head of Investor Relations and Global Communications. Please go ahead.

Thank you, Angela. Good morning, everyone, and thank you for joining us this morning. Earlier today, we issued a press release announcing our results for the first quarter while maintaining our guidance for 2026, as well as our three-year objectives for the 2026-28 period. The company's management discussion and analysis and consolidated financial statements are expected to be filed with the Canadian Securities and Regulatory Authorities and the U.S. Securities and Exchange Commission today, and will also be available on our corporate website. As a reminder, please note that we'll be holding our annual general meeting today at 2 p.m. Eastern Time, with more information available on the events page of our corporate website. Now, joining me on the call today are Glenn Chamandy, President and CEO of Gildan, Luca Barili, Executive Vice President, Chief Financial Officer, and Chuck Ward, Executive Vice President, Chief Commercial Officer. This morning, we'll take you through the results for the quarter, and then a question and answer session will follow. Before we begin, please take note that certain statements included in this conference call may constitute forward-looking statements which involve unknown and known risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. We refer you to the company's filings with the U.S. Securities and Exchange Commission and Canadian Securities Regulatory Authorities, including in the case of our fiscal 2026 outlook and our three-year objectives for the 2026-28 period, as well as certain risk and assumptions related thereto, and our earnings press release dated April 30, 2026. During this call, we'll also discuss certain non-GAAP financial measures, reconciliations to the most directly comparable IFRS measures are provided in today's earnings release, as well as our MD&A. Before I turn it over to Glenn, a few items to note. Remember that the first quarter represents the first full fiscal reporting period during which the results of Haynes Brands are fully consolidated into the company's financial statements. Please note that we may refer to Haynes Brands as Haynes throughout this call. Then, as previously announced, the Haynes Brands Australian business, which we refer to as HAA, has been classified as held for sale and reported as discontinued operations as of December 1st, 2025, the date of closing of the Haynes Brands acquisition. So, unless otherwise indicated, the figures we'll be discussing today are from continuing operations and therefore exclude the results of the HAA business. With this in mind, we are only in position to confirm that the sale process is progressing as expected and will not provide any further updates at the moment. Also, as we announced last quarter, we have transitioned to reporting disaggregated net sales by wholesale and retail as of the first quarter. You will find in our press release, supplementary pro forma net sales from continuing operations, disaggregated by channel and geographic area on a quarterly and full year basis for 2025. In addition, you'll also find supplementary pro forma net sales from continuing operations for the same periods, showing Gildan on a standalone basis and adjusted for Hanes brand sales. For reference, Wholesale comprises sales to distributors, screen printers, embellishers, and global lifestyle brand customers, which we refer to as GLB. Whereas retail comprises sales to mass merchants, department stores, national chains, specialty and online retailers, and directly to consumers. And now, I'll turn it over to Glenn.

Thank you, Jesse, and good morning, everyone, and thank you for joining us on this call. As we highlighted in this morning's press release, we are pleased with our first quarter performance, reflecting discipline, execution, and continued progress against our strategic priorities. We delivered record Q1 sales from continuing operations of nearly $1.2 billion, which were up 64% versus last year, primarily due to the Haynes brand acquisition. We also reported adjusted diluted earnings per share from continuing operations of $0.43, compared to $0.59 in the first quarter of 2025, reflecting the short-term impact of integration initiatives that we have put in place to accelerate synergies captured. We remain very excited about the Haines acquisition and the opportunities we see. We are progressing well with our integration initiatives and relocating textile production volumes from the Hanes to the Gildan facilities, leveraging our low-cost manufacturing and supply chain structure. We are working fast, but with a well-thought approach to be able to unlock the benefits of operating as one integrated company. And we continue to optimize and expand our capacity in 2026 to support growth in 2027. We are also enhancing our distribution network. Our plans to standardize IT systems, key supply chain and manufacturing processes all remain on track. Given the progress so far, we remain confident in attaining our objective of approximately $250 million in run rate cost synergies over the next three years, including approximately $100 million in 2026. And we continue to pursue additional synergies beyond the three-year target. Now, with the situation in the Middle East, the external environment around us becomes increasingly uncertain. But Gildan has navigated through uncertain situations in the past, with agility and discipline. That said, I'd like to address two key elements related to this situation. First, despite inflationary environment, we have good visibility for 2026 when it comes to our input costs, including cotton, polyester, as well as energy. Second, our Bangladesh operations have been running normally until now, and we have built in temporary contingency plans should the situation deteriorate. This is what our agility and our vertical integration enables us to do. So we have a clear line in sight into our plans for the rest of the year, and we are focused on what we can control, driving operational excellence, advancing on our integration of Haines, maintaining our cost discipline, and consistent execution. With that in mind, considering the strength of our competitive positioning across our product lines, channels, and geographies, driven by our scale and our strong pipeline of innovation, we are maintaining our guidance for 2026 and remain confident in our ability to achieve our three-year objectives for 2026-2028 period. I look forward to answering your questions after our formal remarks, and now I'll turn it over to Luca for a financial review.

Thank you, Glenn, and good morning, everyone. Thank you for joining us today to discuss our first quarter results. Let me start with the specifics of the quarter, then turn to our 2026 outlook and guidance. First, the quarterly results. We reported record first quarter sales from continuing operations of $1.17 billion, up 63.8% year-over-year, in line with guidance of approximately $1.15 billion. The increase reflects the Haynes Brands acquisition, partially offset by our integration initiatives undertaken to optimize the company's manufacturing footprint and accelerate synergy capture. Now, compared with Proforma net sales from continuing operations of $1.29 billion, the year-over-year decline was primarily driven by lower volumes stemming from our proactive inventory reduction across customer channels, which temporarily reduced sell-in, as we previously communicated. Now, looking at wholesale, net sales were $552 million compared to $626 million in the prior year, due primarily to the impact of the voluntary inventory reduction across customer channels, as well as the non-recurrence of some preemptive buying ahead of tariffs in the comparable period last year. This was partially offset by pricing initiatives, which were implemented to partially offset a portion of the impact from tariffs, the contribution of Hanes brands, and favorable mix. We continue to see robust demand for Comfort Colors and our new brands, such as Champion, which is under a licensing agreement, and Altro. Now, turning to retail. Net sales were $614 million, compared to $85 million in the prior year. primarily reflecting the contribution from the Hanes brand's acquisition and higher net selling prices. To a lower extent, retail sales were also affected by the lower sell-in previously detailed and the non-recurrence of preemptive buying ahead of tariffs. As previously mentioned, our key underwear brands captured additional market share in the quarter and new programs launched in mid-2025 are performing well. Shifting to margins, we generated gross profit of $278 million, or 23.9% of net sales, versus $222 million, or 31.2% of net sales, in the same period last year. Adjusting for an inventory fair value step-up charge of $106 million, recorded as part of the Haynes Brands acquisition, adjusted gross profit was $385 million, or 33% of net sales compared to 31.2% in the prior year. The 180 basis point improvement mainly reflects favorable pricing initiatives implemented to partially offset the impact of tariffs, the favorable contribution from Haynes brands, and to a lesser extent, lower raw material and manufacturing costs. SG&A expenses were $219 million compared to $87 million in the prior year. Adjusting for charges related to the proxy contest and leadership changes and related matters, adjusted SG&A expenses were $218 million, or 18.7% of net sales, compared to $86 million, or 12.1% of net sales, for the same period last year. The increase in adjusted SG&A in the quarter reflects the acquisition of Haynes Brands, partially offset by synergies realized as part of the Haynes Brands integration process. As we bring all these elements together and adjusting for the restructuring and acquisition-related costs and the inventory fair value step-up charge as part of the acquisition, as well as the costs relating to proxy contests and leadership changes and related matters, adjusted operating income was $167 million, up $31 million year-over-year. Adjusted operating margin was 14.3% of net sales, was down 470 basis points versus last year, and ahead of guidance provided of approximately 12.9%. The year-over-year decrease in adjusted operating margin is mainly a reflection of the Haynes Brands acquisition and Haynes' lower operating margins due to historically higher levels of SG&A relative to Gildan. Net financial expenses were $67 million, up $37 million year-over-year, primarily due to higher borrowing levels related to the Haynes Brands acquisition. Now, taking into account all of these factors and a higher outstanding share base as a result of the acquisition, gap diluted loss per share from continuing operations was $0.30, compared to gap diluted earnings per share of $0.56 in the prior year. In adjusting for restructuring and acquisition-related costs, inventory fair value step-up charge, and an income tax recovery of $33 million related to restructuring charges and other adjustments, adjusted diluted earnings per share from continuing operations were $0.43, down 27.1% from $0.59 in the prior year. Now, turning to cash flow and balance sheet items. Cash flows used in operating activities, which includes discontinued operations, totaled $279 million for the first quarter, compared to $142 million in the prior year, primarily reflecting lower net earnings from continuing operations. After accounting for capital expenditures totaling $30 million, the company consumed approximately $310 million of free cash flow. We ended the quarter with net debt of $4.868 billion and a leverage ratio of 3.3 times net debt to trailing 12 months pro forma adjusted EBITDA. As previously announced, we are pursuing a sale of HAA, and the net proceeds from the potential divestment will be used to pay down a portion of the company's outstanding debt and further accelerate our objective to return to a leverage framework of 1.5 to 2.5 times net debt to pro forma adjusted EBITDA. Turning to the outlook, for 2026, with respect to our continuing operations, we are maintaining our guidance as follows. Revenue of $6 billion to $6.2 billion. Full year adjusted operating margin of approximately 20% to come in at approximately 3% of net sales, adjusted diluted EPS in the range of $4.20 to $4.40, an increase of 20 to 25% year-over-year, and free cash flow to be above $850 million. Furthermore, the assumptions underpinning our outlook are essentially the same as we previously communicated and are detailed in our press release issued earlier today. Finally, we have also provided guidance for our second quarter. We expect net sales from continuing operations to be approximately $1.6 billion. This continues to reflect the proactive temporary reduction of inventory levels across customer channels, which is reducing sell-in as we complete the consolidation of manufacturing facilities to accelerate synergy capture. Furthermore, a timing shift in shipments from the second quarter into the second half of 2026 is also reflected and is due to the non-recurrence of some pre-buying in the second quarter of 2025 ahead of pricing actions. Our adjusted operating margin is expected to be around 19.7%, reflecting the higher SG&A levels, which includes higher amortization of intangible assets and depreciation of property plant and equipment, resulting from the fair value purchase accounting impacts of the Haynes Brands acquisition, in addition to a timing differential between some integration-related costs incurred and the flow-through of their benefit in subsequent quarters. Finally, the company's adjusted effective income tax rate in the second quarter is expected to be slightly lower than the expected full-year 2026 adjusted effective income tax rate. In summary, we are pleased with the quarter and our integration progress. The broader operating environment remains uncertain, and we feel cautiously optimistic about the remainder of 2026, while being mindful of the Middle East conflict and the heightened concerns on the end consumer. Nonetheless, we are focused on what we can control. We believe that our low-cost, vertically integrated business model and the agility it provides, together with strong industry positioning, provide a solid foundation for us to navigate evolving external conditions and support continued financial performance. Thank you. And now, I'll turn it over to Jesse.

Thank you, Luca. This concludes our prepared remarks, and now we'll begin taking your questions. Before moving to the Q&A session, I'd like to remind you to limit your questions to two, and we'll circle back for a second round if time permits. Angela, please begin the Q&A session.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your questions, simply press star 1 again. Thank you. Your first question comes from the line of J. Sol with UBS. Your line is now open.

Great. Thank you so much. Two questions for me. I'd love if you could give us a little review of the point of sale, both for the Gildan Printware business, but also for the Hanes business that you saw in the quarter that you're kind of seeing second quarter to date. And then also maybe if you can take a step back and tell us how the strategy that you're developing for the Hanes business is evolving, how you're thinking about investing in marketing, investing in product. If you can give us an update on that, that would be terrific as well.

Well, let Chuck go with the, you know, the discussion of marketing additions, and I'll answer the other side.

Good morning, Jay. Yeah, you know, as we look at net sales for the quarter, as Lucas said, we were in line with guidance. Both markets were a little bit softer than we expected, you know, with some impacts in the U.S., obviously with some tough weather during Q1 that everybody experienced. But overall, as Glenn mentioned, we performed well, and we outperformed both markets. We continue to gain share in both markets. And as he mentioned in his comments, we typically perform well in challenging markets. But if I break it down, we really, Jay, look at it wholesale retail, as Jesse mentioned in her opening remarks. So I'll really address it from a wholesale retail perspective. As we look at the wholesale market, the market was down low single digits while we performed up low single digits. So, again, continuing to take share in the market. If you really dive into that market, Jay, it's continuing strong performance in our premium products. Luca mentioned Comfort Colors, for example, and the strength that we're seeing continued in that brand. our growth in Champion, the license that we have for that product, our all-pro brand. So really continue to perform well in that market. From a retail perspective, we'll say the market was flattish in the retail market, but we were also up low single digits in that market as well. Really with underwear performing exceptionally well, not only in men's, but also in women's and kids as well. We also continued to gain momentum in activewear in retail, but we did see a little bit of softness in Intimates and in socks. And then when we look at it from an international perspective, we were slightly below the plan in international, but mainly due to the uncertain macro conditions and the rising energy cost we're seeing, we continued to see what we've been seeing for some time, which is a strong performance in continental Europe, continued pressure in the U.K. and some pressure in Latin America. So we feel really good about how we performed in the markets. As we shifted into Q2, you know, we're seeing some improvements in both markets overall. We're continuing to grow in our key growth categories and outperform those markets.

Great. And maybe just a second part of that question. Look, as we continue to go forward, I mean, we're very excited, obviously, about the opportunity. I mean, the big thing for us right now is to, you know, continue to, you know, integrate Haines into Gildan and leverage really everything that Gildan has to offer because we're taking, you know, I think what we think is one of the most highly iconic brands in the industry and putting it together with the world's global low-cost manufacturer. And what we're able to do is basically just provide an innovation platform that we think is going to excel and open up doors. And we've already accomplished a lot of that. Like, you know, the reason for us, obviously, to wind down the Haines facilities integrated into Gildan's network is to capture what we believe is the future value creation that we have to offer with the brand from an innovation perspective. So all those things are in place. And, you know, we're really excited about it. We've started showcasing some of this with our retail partners. Like we said in our last call, we're going to have our investor day in December. And, you know, we'll be really excited about, you know, showing off all the things we're doing from our product innovation, our positioning, our advertising, how we're really, you know, our whole go-forward strategy. And, you know, there's a lot of work that's been done. We're moving, like I said earlier in my comments, very effectively. It seems quick, but I think we're doing it in a very organized fashion to be able to make sure that we achieve all of our goals, including the synergies that we set forth. But it's not just the synergies. For us, it's important to make sure that we get back on a growth trajectory, and you need to make an investment. And our investment is the synergies are an investment, because as we bring those synergies and as we bring their progress, we need to make an investment. product into our environment, we create synergies and those synergies turn into innovation because we have Gildan, that's our whole secret sauce really, is being able to improve the quality of the product and the consumer experience for what we're going to be doing. So we're well positioned and we're excited and we can't wait to show it to you.

Terrific. Thank you so much.

Your next question comes from the line of Paul Leves with Citigroup. Your line is now open.

Hey, thanks, guys. Can we just go back to, Glenn, what you said on the Bangladesh facility? I think you said it's been operating normally until now. I just wanted to clarify that it's still running normally. I'm curious what your expectation is in terms of the Bangladesh facility or if you did see something change recently. And then second, I would love if you could share your gross margin and SG&A targets for the year and just how each compare to what would be the adjusted numbers for the same line items last year? Thanks.

Okay, so look, like what I said in my comments, yes, we're running. Normally, we haven't had disruption. The facility is running as it was before the crisis. In fact, I mean, the volume is a little bit higher. So things are going as planned. We have a lot of redundancy in our energy there. We have solar. We have, you know, different energy sources that we use. So we have our own LNG facility basically on site in our own campus. I mean, so we're pretty well insulated. And I wouldn't say that things are not tight in the country because obviously, you know, the energy situation is tight. But so far, we've been operating effectively. And like what I said earlier, we built a contingency plan. Not that we don't think we can operate, but, you know, if there's an Armageddon, you know, and the whole blow up in the Middle East, I mean, obviously, we're going to have to react to any type of situation that could happen. So we, you know, we're very diligent. We're very focused. We have a good plan. And, you know, we're comfortable with our positioning and the guidance that we set forth.

Yeah, and with respect to your question on the margin, so, you know, we've given the guidance for the full year in terms of our adjusted operating margin of approximately 20%. And so really to understand the composition of that margin, we can start with sort of the performance already to date. The adjusted operating margin in the first quarter of 14.3%. That was higher than our guide of 12.9%. Some of that was driven by some timing of SG&A versus the remainder of the quarters. But why I start with the first quarter is because what you're going to see as we navigate through the year is a sequential improvement in adjusted operating margin. And the guidance we're giving for the second quarter is an adjusted operating margin of 19.7%. Now, what's driving that sequential improvement and why, you know, we're providing the guide not only for the second quarter but the visibility of the full year is because as an organization, based on our operating model, and as well as the solid cost control that we put in place, we have visibility on the costs that are flowing through our P&L, right? So the strength that underpins the margin are the same elements that we had last year, right? We had the optimization of our Central American facility. We had the investments we made in yarn spinning, the investments we made in Bangladesh. So that's the foundation. Then we have the synergies that are starting to flow through, right? We've got about 100 million of synergies called out for 2026. So as that materializes, that's going to lend itself to an improvement in the operating margin. And finally, when you do look at gross margin versus SG&A, gross margin also expected to sequentially improve. I would say the contributions there is you have a pricing tailwind from some of the pricing actions taken in the prior year, lower year over year fiber costs. From a cotton perspective, we have full visibility for 2026 because of our hedged strategy and our hedged position and our operating model. The synergy realizations coming through gross margin, although in the first year it's more pronounced on the SG&A side, and those proactive actions that we're taking in order to manage cost as we go through the integration. On the SG&A side, there were higher levels of SG&A from the Haines perspective. We have higher SG&A coming through because of the impact of the acquisition, the PPA adjustments such as the amortization of intangibles and the property, plants, and equipment. But again, as synergies are realized on the SG&A side, which we're well on our way, that will lend itself to improvement. So the headline, adjusted operating margin, approximately 20% for the year, and in the second quarter, a sequential improvement up to 19.7%.

Got it. Now, when you say gross margins sequentially improve, is that each quarter of the year? And do you want to put out there your target gross margins?

So we have the Q1 results. The adjusted gross margin for Q1 is at 33%. The adjusted SG&A is at 18.7%. Those will sequentially improve in order to yield an adjusted operating margin for the full year of approximately 20%.

And how about in terms of the exit rate on the SG&A?

Well, in terms of our guidance, we provide the adjusted operating margin. We provide guidance on our adjusted EPS. So, I think with the color that I've provided you, you can infer that there's sequential improvement. We're not providing a specific guide on the gross margin and the SG&A in isolation.

Thank you.

Thank you.

Your next question comes from the line of Brian Morrison with TD Cohen. Your line is now open.

Good morning. Two questions. Glenn, should we expect optimization of the Haines facility integration in the second half of this year? And then what are the next major buckets of synergies? Is it yarn spinning, more vertical integration? Just some color on the major buckets still to do. And then, Luke, on the back half, the forecast margin is about 22%. Can you build off that in 2027, or should we take into account a seasonally weaker Q1 to build off a bit lower base?

Okay, so just on the integration, look, we're fully advancing on the integration, including yarn. The bulk of Haynes' volume is being produced in Gildan's world today, yarn, you know, all of our supply chain, the processes we use in chemicals, distribution, everything that we do in terms of Gildan's world from a supply chain perspective is pretty much going through a process and will be fully integrated. And basically that's why we're comfortable and that's why we chose to wind down and manage our inventory in the customer channels because we wanted to really accelerate as best as possible the transition of Hanes into our world for two reasons. Obviously, one is to capture these synergies, but the second is to provide the innovation that we really need to drive the revenue growth for 2027. So, you know, all that is in place, and that's why we're confident, and that's why the margin is expanding in the back half of the year. And although this year there'll be a smaller portion on the synergy side of COGS, but there'll be a lot of OBS and A, but as we really roll into 2027, that's where we're going to see the COGS input as we start turning the inventory into 2027. So everything's on plan, and we're excited about our positioning.

Great. And then you're – go ahead.

I was just going to say, on that drawdown, Glenn, on that drawdown that you referred to, what's the magnitude of it? How much will be a tailwind as we get into 2027?

Well, look, I mean, look up here.

Yeah, so again, when you take a look at the first quarter performance and what we're guiding for the second quarter, right? So you have to take a look at that from an understanding that the fundamentals are growing, right? We're growing both in wholesale, we're growing in retail. Chuck alluded to the market conditions and how we're outperforming the market. So that growth is then offset by the proactive reduction in inventories across channels, you know, that's reducing sell-in. And there's also sort of the timing, right, between the quarters and the cadence of the quarters because of some of the non-recurrence of pre-buying before tariffs, which is a Q1 phenomenon, and pre-buying from last year ahead of price increases in the second quarter. So when you take the two elements together and you have growth that's outperforming the rates that Chuck was alluding to, and then you see the results, then that should give you a good indication of the value of the inventory reduction.

And as we go through the year, look, we're working diligently to get that capacity that we've installed up and running So, you know, we have, we'll be very comfortable with our supporting our capacity for 2027 to take advantage of any opportunities to, you know, to restock the channel.

And Brian, the tail end of your first question on the margins as we move into 2027, obviously we're giving the guide for 2026, but as you would recall, we have 100 million of synergies coming in this year. We've got 100 million of synergies slated for 2027 and at least 50 for 2028. So, as the strong fundamentals of the margin that we articulated continue to come through and additional run rate synergies come through, that is definitely part of the algorithm that supports our three-year targets, right, of our earnings effectively, our adjusted EPS CAGR growth in the low 20% range. So, margins will be continuing to be healthy.

Okay. Thanks, Jim Keller.

Your next question comes from the line of Stephen McLeod with BMO Capital Markets. Your line is now open.

Thank you. Good morning, everyone. Lots of great color so far, so thank you. Just wanted to ask if you're able to quantify kind of the amount of synergies you achieved in Q1 relative to your $100 million target for 26?

Yeah, so what I can say about that is, look, we're confident in achieving the $100 million in our results for this year. What I can share with you is that we're well on our way. As you know, we've taken proactive actions in order to, you know, accelerate the synergy capture. Glenn has alluded to those. So although I won't give you a full quantification of that, what I can tell you is we have visibility to the $126, and we're well on our way in achieving that number.

Okay, that's great. And then maybe for my second question, just with respect to the temporary inventory reduction, and that obviously lingers a little bit into Q2, I'm just curious on operationally how long that overhang is expected to impact your sales. Is it isolated to Q2, or will it be something that trickles into the back half of the year Yeah, so the way I would say it is that we've seen a pronounced impact in the first quarter.

The remainder of that impact is penciled into the guide of the second quarter, where revenue will be approximately $1.6 billion. And then, you know, given our guide for the full year of $6 to $6.2 billion, when you take a look at the back half, the back half is a return to growth. So you can infer that that phenomenon will complete in the second quarter.

Your next question comes from the line of Mark Petri with CIBC. Your line is now open.

Yeah, thank you. I just want to come back to the demand environment and how that has evolved as macro uncertainty has sort of ramped up. I think you've made a couple comments on this, but just hoping for a bit more granularity. And then specifically, I think your full year guide is based on an assumption of industry flat to low single digit growth. And just wanted to gauge your comfort level with that today versus, you know, end of February when you initiated it.

I think on the answer to the growth part, look, we believe that, you know, things are on track in terms of the flat to low single digit growth. I mean, from what we see out in the marketplace today, that's a snapshot in where we are today. I mean, you know, it's not $10 to $10 gasoline prices in the United States, for example, that could change things in the future. But where we are today, I would say, and what we're seeing so far as we started Q2, I mean, that's sort of, we've seen improvements since Q1. So I think that that's still a very good assumption for us as we move through the best of the year.

Yeah, and then, Mark, on the markets, I mean, I'll dig in a little bit more. As I mentioned, both markets were, well, wholesale was down low single digits during the quarter, and retail was somewhat flat. I mean, as I mentioned, going into Q2, we are seeing some improvements. As Glenn said, I mean, we'll continue to monitor closely what happens with inflation and so forth as it comes through in the future. But, you know, as we mentioned, we typically perform well in those markets. And sometimes there's, you know, trade downs and so forth. So we're cautiously optimistic of where we are and where we're headed, as Glenn said, and feel good about our future growth. And, again, if there's a trade down from inflation, we trend well and we take opportunity from that. If there's poly-based impacts from polyester going up because of cost, it sometimes drives people towards cotton products, so we can capture that as well. What I would say is we're well-positioned to capture wherever the trends move.

And maybe look at – also, I would say that, look, we're really well-positioned, you know, from a nearshoring perspective. I mean, you know, one thing I would take into account is that the bulk of our volume being in this hemisphere has allowed us to, you know, I think have competitive advantage, not just because of the closeness to the marketplace, but now also from a cost perspective. You know, as of March 1st, obviously, we're not paying tariffs from product coming in from Central America anymore, which has allowed us to continue driving, you know, a good cost structure in this hemisphere. We'll wait and see what happens as all the global 301s and, you know, tariff situation works itself out in the next couple of months. But we're well positioned. You know, we think that there's opportunity for us. and look at what we also said is that look at we you create your own opportunity like every in every situation and we're well positioned and we're taking advantage of we think is the the Hanes positioning their their brand strategy and and our low-cost manufacturing and the products that we can enhance and innovation but also looking into the active wear side of their business where we really can leverage our low-cost manufacturing for for new programs and these are all things that we're in the process of doing. So, you know, as we go through this year, we'll see, but our lines and sites are really now focusing on 2027 and beyond as we reposition the brand, the strategy, the innovation, and really, you know, gear the company up for future growth.

Your next question comes from the line of Chris Lee with DeHardins. Your line is now open.

Good morning, everyone. My first question is, I know it's well understood of how you guys are gaining market share in the wholesale channel. I wanted to ask if you can elaborate on what's sort of driving the market share gains in underwear, which obviously is a much bigger part of your business now. Thank you.

Yes, sure, Chris. I mean, you know, as Glenn mentioned, a couple of things. On the wholesale side, part of it is we continue to expand our categories as well. We're opening up new parts of the market there. We're doing hats and accessories, and we actually launched scrubs this year. You know, we're expanding our performance products as well, as I mentioned before, and we're continuing to grow in those premium offerings and comfort colors and AA. Then on the retail side, as you talked about on the underwear side, Glenn mentioned it. You know, a couple things. We're starting our innovation cycle with the Hanes products, as he mentioned. We've presented those to retailers. We have great reception. There's actually a lot of excitement in the retailers by what combined we can do with our supply chain and our cost structure combined with the Hanes brands. I think that's going to open up expanded opportunities in retail. I think you're going to see us not only expand the core products, but also be able to come trade up products as well. And again, we're working closely with those retailers on the space, the programs, the packaging, really across the board of how we go to market with the Haynes brand.

And maybe just add one more point. Look at, I mean, the good news is that Haynes is winning today with what they have. And even before we acquired Haynes, they've been taking market share in the market, which is a good thing. And that's one of the reasons why we're so excited about the opportunity. So they were taking share, and now all of a sudden you're going to see okay with a product which is okay, but not anywhere near what Gildan is going to innovate. And as we bring in our innovation, that's why we're so excited about this thing, because they're already winning, but they're going to win even more. And I think that that's really the key for us as we go forward and launch all of our product offerings and the innovation as we move into 2027. I think that's the key. So we're already in a good position. We're already taking share. And, you know, I think that for us, I think we're, you know, with a value-added innovation, I mean, it's going to be, we think, a game-changer for the industry. And we're totally excited about it.

That's very helpful. And maybe just a follow-up question on that, Glenn. I know you mentioned many times before that you think activewear in the retail channel is also a big opportunity. I'm just wondering, you know, where are you on that journey in terms of sort of rejuvenate that growth? And is that more of a 2027 story, or can we actually see some of that growth being manifested in the latter part of 26 on the active website?

Well, the thing about retail, look, it takes time to develop retail programs because they're always nine months out. So obviously, it will be more of a 2027 story. But we're working diligently right now with our retail partners. And, look, nothing happens overnight, okay, because the key thing you have to understand is that you have to basically put the positioning, get the product right, get, you know, it's a whole package that happens. So we're working closely with our retail partners. We're in a process of, I think, driving an innovation cycle, and they see what Gildan can do for Haynes as a brand. And, you know, Haynes is one of the most iconic brands in retail. His recognition is one of the highest in all apparel brands within the consumer space. So, you know, with our innovation and everything else we have to do, we think that, look, we're very confident that we're going to see growth. And it's not going to happen overnight, but, you know, as we do this, you know, we'll be on a trajectory for 2027. And then, you know, you have to make an investment. An investment is either in advertising, innovation, and quality. Those are all the attributes that you have to continue to look at. Things don't happen overnight, but they will happen, and that's the point that I think we need to make sure that we resonate with our shareholders is that you have to make an investment sometime to get a return, and those investments are being made early, quickly, diligently, and we expect to see fruit from our investments as we move into 2027.

Your next question comes from the line of Martin Landry with Tiefel. Your line is now open.

Hi, good morning, guys. I understand that your cotton needs are hedged for this year, but I think energy costs have gone up as well and freight costs have gone up. So, you know, in the past, there's been occasions where you have absorbed higher costs and other times, you know, you've passed on that, you've passed them on to your customers. So I was wondering what's going to be your pricing strategy this time around to deal with, you know, your rising input costs?

Well, first of all, Martin, the one thing to take into account is we also hedge energy as well. So we had a lot of our exposure to make sure that we have visibility and deliver our operating results when we give guidance. So we have very good visibility for 2026 and all those components that I mentioned, cotton, poly, energy, for this fiscal year. So we'll wait and see. I mean, if you look at Gildan's history, we've always been able to offset any type of inflationary pressure with price because we're the price leader. You know, we set the prices in the market. Our competitors are typically high cost manufacturers that don't have the low cost opportunity like Gildan's. And don't forget, what we said earlier is all the things we're doing from the Haynes perspective was that with the scale and the combined companies, we're widening our competitive advantage. So we're reducing our costs not just by insourcing the Hanes products into Gildan's facilities, but Gildan in general is lowering its overall costs because of the fact that our scale continues to grow. The company becomes bigger. So, look, we'll see how that goes as we move into 2027. But for now, I would say that prices will remain stable for 2026 because we're in a position that we have very good visibility. and we'll see what happens as we move and we'll guide to that as we go into 27th.

Okay, super. Thank you.

Your next question comes from the line of Luke Hannan with Canaccord Ingenuity. Your line is now open.

Thanks. Good morning, everyone. I wanted to focus on the printware market for a second. Can you just speak to, I mean, what is the health overall of the distributor network there? I guess more specifically looking to learn a little bit more about maybe the smaller distributors and how they're sharing against this backdrop as opposed to some of your larger customers there.

Look, I mean, look, the market, you know, obviously is consolidated over the years. But, you know, everybody is pretty much in the equal playing field. So I would say that the bigger distributors represent a larger portion of the market today. So, you know, I think this is the way the market's evolved and it's consolidated over time. So the customer base is healthy. I mean, the industry itself has probably gone through, you know, 24 months of probably unrobot bus sales, I mean, to say the least, I mean, for various reasons. But, you know, we're still, you know, think that the long term trajectory and all the work that we've done that the industry should continue to grow at, you know, low to mid single digits, actually, is all the work that we've done. and we're projecting flat to low this year only because of, I think, the overall environment. But I would say that the industry and the customers at large are cautiously optimistic.

Thanks. And then for my follow-up, sticking with the printware market for a second, and maybe we'll hear more about this in December as well, but I know in the past, for past investor days, it's been framed up. The corporate promotional channel, for example, was a big piece of the end market, the Collegiate Channel as well, travel and tourism, et cetera. Have there been any big shifts in the sizes of each of those end markets since we would have last spoken at the investor day?

I would say the only real shift is that I think that from what we see in the industry is that people are gravitating to higher value products. So, for example, our Comfort Colors brand, our Champion, our All Pro, I mean, these brands, our fleece, I mean, all these product categories are ring spun t-shirts, basically, or, you know, our soft stuff t-shirts are all growing, basically. And the price points of these shirts are, you know, much higher than the typical basics. I mean, so people are spending more money on products. They're looking for innovation. So, you know, those are all great opportunities for us, basically, and we've been able to capitalize on them. Our Comfort Colors brand is growing 25%, 30% a year over the last three years and continuing to grow this year. These are shirts that are selling for $5 and $6 versus $2, to be honest with you. The industry is evolving. It's good for us. It's a value-add situation. It's good for our mix in terms of what we sell the channel.

Your next question comes from the line of John Zamparo with Scotiabank. Your line is now open.

Thanks. I wonder if you can comment on the Bangladesh expansion in particular. I appreciate the commentary on existing operations, but I wonder if you could update us on this initiative and whether it's progressing at the same pace as what you'd expected when you reported Q4.

Well, first of all, it's definitely on the same pace as it was for Q4. We're confident in the long-term viability of Bangladesh and we're proceeding as planned. Obviously, you know, we're in the early stages of development of facilities, so, you know, that's the stage we're at. And it's important to understand even the long-term, you know, levers in terms of the energy of Bangladesh. And, you know, our commitment to be there, you know, we believe that the infrastructure, even today, obviously, from what you read in the paper is that there's limited to some of the infrastructures in terms of the energy and et cetera. But Bangladesh is doing a lot to overcome that. They have two nuclear reactors that are coming online that are going to take up a majority of a big portion of their power electrical costs. One that is going to be starting in 2026 and probably after Q2, maybe Q3 or Q4, and another one that will be starting in early 2027. They have a big push for renewable energy, basically, particularly in solar. They're drilling, continuing drilling. They have a lot of offshore capabilities in drilling gas offshore. And they've also built a much bigger infrastructure for bringing in LNG. And, you know, we do as a combination of all these things in our facilities, including LNG. Like, we have the capabilities of turning LNG into gas in our facilities. You know, we're running also renewables, et cetera. So, with everything being said, we're full steam ahead in terms of Bangladesh. We also believe that Bangladesh, you know, longer term will be positioned, we believe, from a trade perspective favorably. And so, yeah, we're moving forward as planned with our plan for Bangladesh.

That's great, Culler. Thank you for that. And then as a follow-up, you referenced the contingency plans, perhaps in place already in case there is further disruption to the business. I don't expect you to fully reveal that playbook, but can you share at a high level what those plans entail? what Gildan views as the primary risks from the war, whether it's higher costs or disruptions to the business, how you would navigate those?

Well, I think, look at it, I mean, at the end of the day, we have facilities in this hemisphere that we're shuttering down right now. So obviously, we have capacity that may not be at the same cost curve as Gildan's current operations. So what we're doing is we're basically, you know, we can manage, and we're looking at an Armageddon situation because, like I said earlier, we're running, we have energy today, we're meeting our objectives, we haven't lost any volume whatsoever. But if we were to lose all the oil in the Middle East, what would we do? I mean, we'd have a contingency plan for that. That's what I would say to you.

Your next question comes from the line of Vishal Shridhar with National Bank. Your line is now open.

Hi, thanks for taking my questions. Glenn, obviously the backdrop is uncertain, and you've expressed that, and it's nice to know that you do have plans in place and comfort in the 2026 outlook. Notwithstanding, historically, the Gildan business on the printware side has been sensitive to confidence levels and business confidence levels, and wondering if you're seeing any of that manifest in these quarters as it relates to the outlook and the energy price in the war?

Well, I mean, again, we feel like from a consumer sentiment's perspective and our customers as well, they're cautiously optimistic. We're not seeing that come through yet. You know, again, so we feel good about where we are in the market and where we think the market's going. I think the things Glenn was talking about were just as, you know, if there's a drastic deterioration, then obviously we'll have to adjust and deal with that, but we're set to do so, and we feel good about kind of where we are.

And maybe also just add one more point. We're comping, you know, weak sales from, you know, 25 and I think even 24, particularly in printware, as there's, you know, we've seen the market was more like, you know, down low single digits to, you know, in certain cases, mid-single digits in printware over a 24, 25 year, year 24 and year 25. So, you know, we took share in those markets during those years and which we're continuing to take share now. So, you know, we're positioned. Our business is positive today, even though the market we think is down a little bit in Q1. But we're continuing to take share. We're well positioned with our brand strategy. And what I said earlier in terms of Comfort Colors and All Pro and all the things that are selling, you know, it's opened up new avenues of opportunity for us. So typically before we were always selling into the basic T-shirt, but now we've got hats, we've got bags, We've got, you know, performance products. You know, we're going after the other 60% of the channel, which we've never really catered to before. So all in all, I think that we're well positioned to weather, you know, even if the market continues to be at the same level in Q1.

I mean, we're comfortable as we go through the year with our guide. okay so when when when chuck indicated that the the market was down low single digits and gildan was up was that due to was that in in volume was that in dollars is was that due to these new products that you've introduced or is it due to mix can you give me some more color on that because given your look as we go forward look at some revenue it's dollars really at the end of the day because, you know, we're looking at, from a unit perspective, when we sell a comfort color versus a style of 5,000, obviously we sell it at a higher price point, right?

So, you know, there's a little bit of a mix within our numbers, but I would say that our revenues in terms of, you know, how we see our POS, and that's how we measure retail as well. So, you know, our POS revenue is definitely on the positive side. And, you know, that's, and we look at the market in the same way. So we're looking at both the same way.

Your next question comes from the line of Ryland Conrad with RBC Capital Markets. Your line is now open.

Yeah, thanks very much. Good morning. With the transition to retail and wholesale revenue reporting, I guess at a high level, how should we think about kind of a normalized organic growth profile for each of those channels within your 3% to 5% growth? framework through 2028.

Yeah, so thanks for your question. So when you take a look at the guide, not only for this year, but over the 26 to 28, you know, midterm guide, net sales, the CAGR will be growing at, you know, 3 to 5% range. And what we've articulated and what we've seen in the first quarter as well is that both in wholesale and retail, and you're right, that is exactly how we're looking at our business is wholesale and retail as we move forward. We've seen growth in both. And the only reason that hasn't fully translated into sales being up versus the pro forma numbers is because of the actions that we're taking and a little bit because of the non-recurrence of pre-buy in the first quarter. So the underlying strength and the underlying growth profile is actually quite similar when you think about wholesale and in retail, those two channels. And that will come through over the course of the three-year midterm guide that we've provided within the 3% to 5% range. So that's the way I think you have to think about it, and you're absolutely right. And that's why we've given the extra disclosure in our disclosures around the pro formas for wholesale and retail is that is the way we not only look at our business, report our business, but manage our business. Okay, got it.

Appreciate that. And then just with the recent step up in leverage, I'm curious if you could maybe share your latest expectations for leverage maybe at the end of this year. And whether the timeline to restart the buyback has changed at all relative to the initial, I think, 12 to 18 months that was originally communicated?

Yeah, good question. And I appreciate that question because that's where we're very focused. I'm very focused, right, is from a financial perspective, as we navigate through this year, we are in a position where we're targeting working capital to come down at a level that's going to be sub 30% by the end of the year. We're very focused on delivering the transaction. We're at 3.3 times leverage at the end of the first quarter, and that was in line with our plan, our internal plans. We're actively in a process for the divestment of our HIA, our Haynes Australia business, which I can't really comment on, but it's a competitive process and it's actually progressing as planned. And so once that comes to fruition, the funds from that divestment will be put towards paying down our debt. And our target is to be back within our leverage framework as quickly as possible, which is one and a half to two and a half times. And we have not changed our position that once we are back close to the midpoint of that leverage, which is around two times, we will be in a position to return to buying back stock through an NCIV program. I do think I want to remind you as well that one of the items that is also a focal point for us is the generation of free cash flow. We're going to be generating at least $850 million of free cash flow this year, which underpins the guides that we've provided. So strong free cash flow generation. Within that, we're investing 3% of our top line into net sales and very focused on bringing down that working capital to a level that we will be able to operate in and be efficient with our cash, return to the leverage framework, and return to buying back our stock.

That concludes our question and answer session. I would now like to hand the conference back over to Jessie Haim for closing remarks.

Thank you, Angela. Once again, we'd like to thank everyone for joining us and attending our call today, and we look forward to speaking with you soon. Have a great day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.