Gildan Reports Results for the First Quarter of 2025; Maintains Full Year Guidance

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• Net sales of $712 million, up 2.3% vs. the prior year
• Operating margin of 18.2%, adjusted operating margin¹ of 19.0%
• GAAP diluted EPS of $0.56 and adjusted diluted EPS¹ of $0.59
• Capital returned to shareholders of $62 million through share repurchases
• Company maintains its full year 2025 guidance, including the impact of tariffs

MONTREAL, April 29, 2025 (GLOBE NEWSWIRE) -- Gildan Activewear Inc. (GIL: TSX and NYSE) today announced results for the first quarter ended March 30, 2025 and maintained its 2025 guidance.

"Despite the current challenging macroeconomic environment, our focus on our Gildan Sustainable Growth (GSG) strategy continues to drive results, underscored by our performance in the first quarter, including strong net sales growth of 9% in Activewear. Through the continued successful execution of our three strategic pillars- capacity expansion, innovation and ESG -we are not only further strengthening our competitive position but also driving top line growth and enhancing profitability. Our solid foundation, underpinned by our vertically integrated business model, and our operational and financial discipline, provide us with agility to navigate the current uncertain environment. We remain deeply committed to delivering long-term value for our stakeholders and to diligently executing on the opportunities that lie ahead" said Glenn J. Chamandy, Gildan's President and CEO.

Q1 2025 Operating Results

Net sales were $712 million, up 2.3% over the prior year, in line with previously provided guidance of low single-digit growth. Excluding the impact of the Under Armour phase-out, net sales were up mid-single digits. Activewear sales of $647 million were up 9% driven by higher sales volumes which reflected favorable product mix in North America, with a higher proportion of fleece and ring spun products. We continued to see market share gains in key growth categories and a positive market response to our recently introduced new products which feature key innovations, including our new Soft Cotton Technology. Furthermore, in parallel with solid sales to North American distributors, we observed continued momentum with National account customers, driven by our strong overall competitive positioning and as we continued to benefit from recent changes in the industry landscape. International sales decreased by 2.5% year over year, primarily due to softness in LATAM and Asia, partly offset by strong growth in Europe. Separately, Hosiery and Underwear sales were $64 million, down 38% versus the prior year, as expected, mainly owing to the phase out of the Under Armour business, unfavorable mix within this category, and continued broader market weakness during the quarter.

The Company generated gross profit of $222 million, or 31.2% of net sales, versus $211 million, or 30.3% of net sales, in the same period last year representing a 90-basis point improvement which was primarily driven by lower raw material costs.

SG&A expenses were $87 million compared to $105 million in the prior year. Adjusting for charges related to the proxy contest and leadership changes, adjusted SG&A expenses¹ were up 1% to $86 million, or 12.1% of net sales, compared to 12.3% of net sales for the same period last year. Adjusted SG&A¹ in the quarter reflects the positive benefit of the jobs credit introduced by Barbados offset by higher variable compensation and higher distribution expenses.

The Company generated operating income of $130 million, or 18.2% of net sales, comparing favourably to $105 million, or 15.1% of net sales last year, which includes $5 million of restructuring and acquisition-related costs related primarily to the closures of yarn spinning plants in the U.S. Adjusted operating income¹ was $135 million or 19.0% of net sales, up 100 basis points compared to the prior year, well ahead of guidance provided.

Net financial expenses of $30 million were up $7 million over the prior year due primarily to higher borrowing levels. As part of our ongoing strategy to optimize our capital structure, in the first quarter, we completed our second bond issuance in the principal amount of C$700 million in senior unsecured notes across three series. The majority of the net proceeds were used to repay outstanding debt under our credit facilities.

Reflecting the impact of the enactment of Global Minimum Tax (GMT) in Canada and Barbados in the second quarter of 2024, the Company's adjusted effective income tax rate¹ for the quarter was 15.0% versus 3.6% last year. Taking into account the positive benefit of a lower outstanding share base, GAAP diluted EPS were $0.56, up 19% versus the prior year. Adjusted diluted EPS¹ were $0.59, flat versus last year, reflecting the positive impact of the lower outstanding share base offset by the negative impact of the higher adjusted effective income tax rate¹.

Cash flows used in operating activities totaled $142 million during the quarter, compared to $27 million in the comparative period, mainly due to an increase in non-cash working capital and largely in line with the Company's expectations for the quarter. After accounting for capital expenditures totaling $23 million, free cash flow¹ consumed was $166 million. The Company continued to execute on its capital allocation priorities during the quarter, returning $62 million to shareholders by repurchasing 1.2 million shares under our normal course issuer bid (NCIB). We ended the first quarter with net debt¹ of $1,849 million and a leverage ratio of 2.2 times net debt to trailing twelve months adjusted EBITDA¹, well within our targeted debt levels.

2025 Outlook

Our continued commitment to execute our Gildan Sustainable Growth (GSG) strategy, which is further strengthening our competitive position, underscores our confidence in our ability to achieve our objectives. As such, despite an evolving and challenging macroeconomic backdrop, we believe that our vertically integrated business model, paired with our strong industry positioning and our demonstrated agility to operate in dynamic environments, should support our continued financial performance.

Consequently, for 2025, we are reconfirming our guidance as follows:

• Revenue growth for the full year to be up mid-single digits;
• Full year adjusted operating margin¹ to be up approximately 50 basis points;
• Capex to come in at approximately 5% of sales;
• Adjusted diluted EPS¹ in the range of $3.38 to $3.58, up between ~13% and ~19% year over year;
• Free cash flow¹ to be above $450 million.

The assumptions underpinning our 2025 guidance are as follows:

• We have considered the current impact of recently announced tariffs by the U.S. administration and other changes in international trade policies on our operations, as well as on industry demand, in conjunction with mitigation initiatives available to us, including our ability to leverage our flexible business model as a low-cost vertically integrated manufacturer.
• Our outlook continues to reflect growth in key product categories driven by recently introduced innovation, the favorable impact from new program launches and market share gains.
• We have included expected ongoing benefits from the jobs credit program that took effect in Barbados in 2024.
• Following the implementation of the Global Minimum Tax legislation in Canada and Barbados, we expect our effective tax rate for 2025 to remain at a similar level to 2024.
• We expect continued share repurchases under our NCIB program, given the strength of our balance sheet, our expected strong free cash flow¹, and our leverage framework target of 1.5x to 2.5x net debt to adjusted EBITDA¹.

For the second quarter of 2025, net sales are expected to be up mid-single digits year over year. Adjusted operating margin¹ is expected to be in a similar range as the second quarter of 2024 which included the significant positive benefit from the jobs credit introduced in May 2024 by Barbados and which was retroactive to January 1, 2024. The Company's adjusted effective income tax rate¹ in the second quarter of 2025 is expected to be at a similar level to the full year 2024 adjusted effective income tax rate¹.

The above outlook for the full year and second quarter of 2025, as well as our three-year objectives, reflect our understanding of global trade and geopolitical environments and currently implemented changes to multilateral trade frameworks. We are actively monitoring the international trade environment and available mitigation strategies. However, the situation has been characterized by dynamic and important evolution and therefore remains difficult to predict. Our guidance remains subject to any such additional regulatory actions impacting international trade such as tariffs, countervailing tariffs or other trade policy measures or changes and related macroeconomic risks and uncertainties. These assumptions are as of April 29, 2025 and are subject to significant risks and business uncertainties, including those factors described under "Forward-Looking Statements” in this press release and the interim MD&A for the quarter ended March 30, 2025 as well as the factors described in the "Risks and uncertainties” sections of the interim MD&A for the quarter ended March 30, 2025 and of the 2024 annual MD&A.

Environmental, Social and Governance (ESG) Highlights

Highlighting ESG developments during the quarter, Gildan is pleased to have been included in S&P's 2025 Sustainability Yearbook for the 13th consecutive year. Furthermore, Gildan has been included in CDP's Leadership band for its 2024 climate change disclosures for the fifth time, highlighting the Company's strong commitment to sustainable practices. Specifically, Gildan was a top performer on its Scope 1 and 2 GHG emission performance, risk management processes, risk and opportunity disclosures, and emission reduction initiatives. CDP is a global non-profit organization which runs the world's only independent environmental disclosure system for companies, capital markets, cities, states and regions to manage their environmental impacts. Over 22,700 organizations around the world disclosed data through CDP in 2024.

Declaration of Quarterly Dividend

The Board of Directors has declared a cash dividend of $0.226 per share, payable on June 16, 2025, to shareholders of record as of May 20, 2025. This dividend is an "eligible dividend” for the purposes of the Income Tax Act (Canada) and any other applicable provincial legislation pertaining to eligible dividends.

Normal Course Issuer Bid ("NCIB")

Under its current NCIB that commenced on August 9, 2024, and will end on August 8, 2025, Gildan is authorized to repurchase for cancellation up to 16,106,155 common shares, representing approximately 10% of Gildan's "public float” (as such term is defined in the TSX Company Manual) as of July 26, 2024. The NCIB is conducted by means of purchases through the facilities of the TSX and the NYSE and through alternative Canadian trading systems. During the period from August 9, 2024, to April 28, 2025, Gildan purchased for cancellation a total of 10,797,407 common shares, representing 6.7% of the Company's public float as at July 26, 2024.

Gildan's management and the Board of Directors believe the repurchase of 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 April 25, 2025, there were 151,200,128 common shares issued and outstanding along with 1,564,446 dilutive restricted share units (Treasury RSUs) outstanding. Each Treasury RSU entitles the holder to receive one common share from treasury at the end of the vesting period, subject to the attainment of performance conditions, without any monetary consideration being paid to the Company.

Conference Call Information

Gildan Activewear will hold a conference call to discuss the Company's first quarter 2025 results today at 5:00 PM ET. The conference call can be accessed by dialing (800) 715-9871 (Canada & U.S.) or (646) 307-1963 (international) and entering passcode 4627819#. A replay will be available for 7 days starting at 8:00 PM EST by dialing (800) 770-2030 (Canada & U.S.) or (609) 800-9909 (international) and entering the same passcode. A live audio webcast of the conference call, as well as the replay, will be available at the following link: Gildan Q1 2025 audio webcast.

This release should be read in conjunction with Gildan's Management's Discussion and Analysis and its unaudited condensed interim consolidated financial statements as at and for the three months ended March 30, 2025, which will be filed by Gildan with the Canadian securities' regulatory authorities and with the U.S. Securities and Exchange Commission and which will be available on Gildan's corporate website.

Certain minor rounding variances may exist between the condensed consolidated financial statements and the table summaries contained in this press release.

Supplemental Financial Data

CONSOLIDATED FINANCIAL DATA (UNAUDITED)

^{(1) This is a non-GAAP financial measure or ratio. Please refer to "Non-GAAP Financial Measures and related ratios" in this press release.}

^{(2) Gross margin is defined as gross profit divided by net sales.}

^{(3) SG&A expenses as a percentage of net sales are defined as SG&A expenses divided by net sales.}

^{(4) Operating margin is defined as operating income divided by net sales.}

^{n.m. = not meaningful}

DISAGGREGATION OF REVENUE

Net sales by major products group were as follows:

Net sales were derived from customers located in the following geographic areas:

Non-GAAP financial measures and related ratios

This 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 measures

As 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 operating and 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 costs

Restructuring and acquisition-related costs (recoveries) are comprised of costs directly related to significant exit activities, including the closure of business locations and sale 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 are included as an adjustment in arriving at adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted earnings before income taxes, adjusted diluted EPS, and adjusted EBITDA. For the three months ended March 30, 2025, restructuring and acquisition-related costs of $5 million were recognized (2024 - $0.8 million costs). Refer to subsection 5.4.4 entitled "Restructuring and acquisition-related costs” in our interim MD&A for a detailed discussion of these costs.

Costs relating to proxy contest and leadership changes and related matters

On December 11, 2023, the Company's then Board of Directors (the "Previous Board”) announced the termination of the Company's President and Chief Executive Officer, Glenn Chamandy. On such date, the Previous Board appointed Vince Tyra as President and Chief Executive Officer, and Mr. Tyra took office in the first quarter of fiscal 2024, effective on January 15, 2024. Following the termination of Mr. Chamandy, shareholder Browning West and others initiated a campaign and proxy contest against the Previous Board, proposing a new slate of Directors and requesting the reinstatement of Mr. Chamandy as President and Chief Executive Officer. In the second quarter of 2024, on April 28, 2024, in advance of the May 28, 2024, Annual General Meeting of Shareholders ("Annual Meeting”), the Previous Board announced a refreshed Board of Directors ("Refreshed Board”) that resulted in the immediate replacement of five Directors, with two additional Directors staying on temporarily but not standing for re-election at the Annual Meeting. On May 23, 2024, five days prior to the Annual Meeting, the Refreshed Board and Mr. Tyra resigned, along with Arun Bajaj, the Company's Executive Vice-President, Chief Human Resources Officer (CHRO) and Legal Affairs. The Refreshed Board appointed Browning West's nominees to the Board of Directors (the "New Board”), effective as of that date. On May 24, 2024, the New Board reinstated Mr. Chamandy as President and Chief Executive Officer. On May 28, 2024, the New Board was elected by shareholders at the Annual Meeting. The Company incurred significant expenses primarily at the direction of the Previous Board and the Refreshed Board, including: (i) legal, communication, proxy advisory, financial and other advisory fees relating to the proxy contest and related matters and the termination and subsequent reinstatement of Mr. Chamandy; (ii) legal, financial and other advisory fees with respect to a review process initiated by the Previous Board following receipt of a confidential non-binding expression of interest to acquire the Company; (iii) special senior management retention awards; (iv) severance and termination benefits relating to outgoing executives; and (v) incremental director meeting fees and insurance premiums. In addition, subsequent to the Annual Meeting, the Corporate Governance and Social Responsibility Committee (the "CGSRC") recommended to the New Board, and the New Board approved, back-pay compensation for Mr. Chamandy (who did not receive any severance payment following his termination on December 11, 2023), relating to his reinstatement, including the reinstatement of share-based awards that were canceled by the Previous Board. In light of the strong shareholder support received for its successful campaign and the fact that the Refreshed Board resigned in advance of the Annual Meeting, the CGSRC also recommended to the New Board, and the New Board approved, the reimbursement of Browning West's legal and other advisory expenses relating to the proxy contest, in the amount of $9.4 million in the second quarter of 2024.

The total costs relating to these non-recurring events ("Costs relating to proxy contest and leadership changes and related matters”) amounted to $0.9 million for the three months ended March 30, 2025 (2024 - $19.7 million), as itemized in the table below with corresponding footnotes. Such costs are included in selling, general and administrative expenses. The impact of the below charges is included as adjustments in arriving at adjusted SG&A expenses, adjusted SG&A expenses as a percentage of net sales, adjusted operating income, adjusted operating margin, adjusted earnings before income taxes, adjusted net earnings, adjusted diluted EPS, and adjusted EBITDA.

(1) Relates to advisory, legal and other expenses for the proxy contest and shareholder matters.

(2) Relates to stock-based compensation expense adjustments relating to Mr. Chamandy's 2021 LTIP share-based grant which vested in 2024.

(3) The Company incurred $0.1 million in the first quarter of fiscal 2025 (2024 - nil), of incremental costs relating to the Previous Board and Refreshed Board. This charge relates to the increase in the value of unpaid deferred share units (DSUs).

(4) Relates to advisory, legal and other expenses with respect to the announced review process initiated by the Previous Board following receipt of a confidential non-binding expression of interest to acquire the Company.

(5) Stock-based compensation expenses of $0.2 million for the three months ended March 30, 2025 (2024 - $0.7 million), relating to special retention awards, net of jobs credit.

Adjusted net earnings and adjusted diluted EPS

Adjusted net earnings are calculated as net earnings before restructuring and acquisition-related costs, impairment (impairment reversal) of intangible assets, net insurance gains, gain on sale and leaseback, costs relating to proxy contest and leadership changes and related matters, and income tax expense or recovery relating to these items. Adjusted net earnings also excludes 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 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 net earnings performance from one period to the next, and in making decisions regarding the ongoing operations of its business, without the variation caused by the impacts of the items described above. The Company excludes these items because they affect the comparability of its net earnings and diluted EPS and could potentially distort the analysis of net earnings 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 non-recurring. These measures do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies.