Martin Landry

Martin Landry sought clarification on the mechanical aspects of the Hanes integration, specifically how Gildan will absorb Hanes' production volumes after closing two facilities, and the impact of inventory reduction on the $6 billion-$6.2 billion revenue guide.

Answer

CEO Glenn Chamandy confirmed that all production will be internalized within Gildan's existing and expanded facilities, leveraging the difference in poundage for underwear versus activewear. He emphasized that existing capacity is sufficient, and the accelerated integration also benefits IT systems and SG&A. CFO Luca Barile quantified the impact on the revenue guide, attributing approximately two-thirds to proactive inventory reduction and one-third to commercial mix optimization.

Martin Landry sought clarification on the mechanical aspects of integrating Hanes' two textile facilities into Gildan's network, especially given Hanes' similar revenue levels and Gildan's previously stated excess capacity. He also asked if third-party providers would be used and the specific impact of inventory reduction on the $6 billion-$6.2 billion revenue guidance.

Answer

Glenn Chamandy, President and CEO, confirmed all integration would be internalized, leveraging expanded capacity in Bangladesh (50% increase) and Central America (10% increase), with additional capacity in the Dominican Republic. He explained that capacity is sufficient, considering product mix differences (e.g., underwear vs. activewear poundage). Luca Barile, EVP and CFO, indicated that the proactive inventory reduction accounts for approximately two-thirds of the offset to underlying growth in the revenue guidance, with commercial mix optimization making up the remaining one-third.

Martin Landry questioned why the imprintable market has been declining in Q1, Q2, and Q3, and is expected to be down in Q4, despite a healthy economy and GDP growth. He also sought clarification on whether Gildan is entering new categories beyond hats, such as bags and workwear.

Answer

Glenn Chamandy (President and CEO, Gildan Activewear) attributed the market decline to factors like underperformance of GLB customers, retailers managing inventory cautiously due to tariffs, and corporate promotional product companies' spending concerns. Chuck Ward (EVP and COO, Gildan Activewear) confirmed that Gildan is expanding into hats, bags, and workwear (e.g., Hammer Max, outerwear jackets in All Pro, coaches jackets in Champion), targeting areas where they previously did not compete.

Martin Landry questioned why the imprintable market is declining despite a healthy economy and GDP growth, seeking an explanation for this industry trend. He also followed up on Chuck Ward's comment about entering new product categories, asking for clarification on whether Gildan is expanding beyond hats into areas like bags and workwear.

Answer

Glenn Chamandy, President and CEO, attributed the market decline to underperforming GLB customers, retailers managing inventory, and corporate promotional companies' tariff concerns, noting the complexity of market dynamics. Chuck Ward, Executive Vice President and Chief Operating Officer, emphasized Gildan's strong market position, driven by its brand portfolio, Soft Cotton Technology, Plasma Print, Hammer Max Heavyweight, and the rapidly growing Comfort Colors brand. He confirmed expansion into new categories like hats, bags, workwear (Hammer Max), outerwear (AllPro), and team wear (Champion, targeting the 40% of the market Gildan previously didn't serve. Chamandy added that new cotton-based products would maintain the Comfort Colors' pigment-dyed aesthetic.

Martin Landry of Stifel Financial Corp. questioned the impact of U.S. distributor consolidation on Gildan's business and asked if the company is observing a rebound in corporate promotional spending.

Answer

President & CEO Glenn Chamandy stated that Gildan has not seen a negative impact from distributor consolidation, citing the 12% Activewear sales growth as evidence of its strong position and market share gains. Regarding the market outlook, he said the company remains cautiously optimistic, noting that while corporate promotional activity is weak, new program launches in the second half provide a solid base for growth and good visibility into 2026.

Martin Landry of Stifel Financial Corp. questioned the sustainability of the strong Q2 operating margin guidance, given the tough comparison to last year which included a large tax credit. He also asked if Gildan's strengthening competitive advantage allows it to be more selective with programs to enhance margins.

Answer

EVP and CFO Luca Barile acknowledged the tough Q2 comparison, which included a $17 million retroactive tax credit last year, but expressed confidence in achieving a similar margin level this year, driven by a favorable product mix. President and CEO Glenn Chamandy responded that while maximizing shareholder value is the goal, the company's primary focus remains on pursuing long-term strategic opportunities and strengthening customer relationships, which will guide their decision-making.

Martin Landry inquired about the production capacity utilization rate assumed in the 2025 guidance and the company's capacity runway through 2027. He also asked if there are margin differentials between sales channels and whether the growth in retail is dilutive to overall margins.

Answer

President & CEO Glenn Chamandy stated that Gildan has ample capacity to support its growth targets through 2027 without running full, with future CapEx planned for 2028 needs. Both Chamandy and EVP & CFO Rhodri Harries confirmed that margins are consistent across channels, a result of the 'Back to Basics' strategy. They explained that while price points differ by product, the margin percentages are aligned, making the company agnostic to channel mix shifts.

Martin Landry asked for an estimate of Gildan's current aggregate market share in the U.S. printwear industry and inquired about the specific market share assumptions embedded in the company's new 3-year financial outlook.

Answer

CEO Glenn Chamandy did not provide a specific aggregate market share figure but emphasized that Gildan continues to outperform the market and gain share, particularly in the Fashion and fleece categories. He explained the 3-year outlook assumes a flat to low-single-digit market growth, which Gildan will supplement with share gains, new retail programs, and international growth to achieve its mid-single-digit revenue target. CFO Rhodri Harries clarified that they expect to continue gaining share in fleece, not just maintain it.

Martin Landry asked for an update on BRP's snowmobile inventory levels relative to its comfort level and whether the company expects to fully clear its older models by the end of the current snowmobile season.

Answer

President and CEO José Boisjoli stated that BRP finished last season with 60% market share in North America but 30% non-current inventory, anticipating market share loss this year due to other OEMs' non-current ratios, which was factored into guidance. He noted a good start to the season with early snowfall in many regions, leading to market share gains in current units and many pre-sold units. Mr. Boisjoli believes that BRP's snowmobile inventory, which was relatively good at the end of the 2025 season, should be realigned to normal levels by the end of the 2026 season, partly aided by good snow conditions.

Martin Landry of Stifel asked about BRP's long-term earnings power, questioning the path from the current EPS guidance of around $4.50 back towards the previously discussed potential of $14. He also asked if it was realistic for EPS to double in the next two to three years.

Answer

CFO Sébastien Martel affirmed his belief that BRP has the product portfolio, dealer network, and innovation engine to achieve significant growth and reach previously discussed earnings levels. However, he stressed that this potential is highly dependent on the macroeconomic environment and overall industry growth. While Martel confirmed BRP has the manufacturing and product backbone to double its EPS, he reiterated that achieving it is contingent on industry dynamics.

Martin Landry asked for more color on the upcoming new product introductions and for CEO Jose Boisjoli's perspective on how the current industry cycle compares to previous downturns.

Answer

CEO Jose Boisjoli described the upcoming product news as a 'strong product intro for Can-Am' and also a 'very strong lineup on watercraft.' Regarding the cycle, he characterized the current one as unique due to the combination of high inflation, high interest rates, and tariff uncertainty. He believes that once clarity returns, the industry will rebound quickly, and BRP is well-positioned to capitalize on it.

Martin Landry inquired about the outlook for North American retail demand, specifically the divergence between high-end and entry-level products, and whether this implies a negative volume but positive price/mix scenario.

Answer

CEO Jose Boisjoli noted that high-end products are selling well while entry-level models are down about 30%, a trend driven by inflation and interest rates. CFO Sebastien Martel added that February retail was choppy and difficult to forecast, and confirmed that a scenario of lower volumes offset by positive price/mix is a possibility.

Martin Landry requested BRP's revised expectations for North American industry sales in units for fiscal 2025 and inquired about assumptions for average unit price changes.

Answer

CEO Jose Boisjoli provided unit-based industry decline forecasts: ORV down mid-to-high single-digits, snowmobile down low-to-mid-teens, and watercraft/3-wheel down around 20%. CFO Sebastien Martel added that while the promotional environment remains high, BRP expects to return to normal pre-COVID MSRP increases of about 1% next year.

Martin Landry of Stifel asked if BRP had changed its retail sales assumptions for North America for the year and inquired how the company sustained a strong Powersports gross margin of 26.2% despite a significant sales decline.

Answer

CFO Sebastien Martel clarified that retail assumptions were only tweaked for the seasonal business, with the ORV outlook remaining largely the same. He attributed the robust Powersports gross margin to the company's long-term strategy, including leveraging its Mexican manufacturing footprint, in-sourcing technology like turbocharging, using modular platforms, and a renewed team focus on efficiency, all of which are paying off even with lower volumes.