Gildan Activewear Inc. (NYSE:GIL) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 08:30 am ET


Gildan Activewear Inc. (NYSE:GIL) Q2 2020 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2020 Gildan Activewear Earnings Conference Call. [Operator Instructions] After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] [Operator Instructions]

I would now like to hand the conference over to Sophie Argiriou, Vice President of Investor Communications. Please go ahead.

Sophie Argiriou

Thank you, Diana. Good morning to all, and thank you for joining us. Earlier, we issued a press release announcing our earnings results for the second quarter of 2020. We also issued our interim shareholder report containing management's discussion and analysis of consolidated financial statements. These documents will be filed with the Canadian securities and regulatory authorities and the U.S. Securities Commission, and are available on the company's corporate website.

On the call today, we have Glenn Chamandy, our President and Chief Executive Officer; and Rhod Harries, our Executive Vice President and Chief Financial and Administrative Officer. In a moment, Rhod will take you through the results for the quarter and a Q&A session will follow. Before we begin, please take note that certain statements included in this conference call may constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

Such forward-looking statements 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 that may affect the company's future results.

I will now turn the call over to Rhod. Rhod?

Rhodri J. Harries

Thank you. Thank you, Sophie, and good morning to all, and thank you for joining. We hope everyone is continuing to stay safe and is keeping well. This morning, we reported our second quarter results, and as we expected back in April when we last reported, we incurred a significant earnings loss in the quarter tied to the impacts that COVID-19 is having on economic activity, and in turn, our business.

However, despite the loss in the quarter, we maintained a strong focus on our key priorities: taking business decisions and actions to strengthen our competitive positioning for the long-term by accelerating our efforts under our Back to Basics strategy to simplify our product portfolios, remove complexity and cost from our business, better support our customers and drive long-term market share growth, all of which I will cover shortly.

Moreover, by tightly managing our business, we generated strong free cash flow of $177 million in the quarter, more than offsetting the impact of the earnings loss and improving our liquidity position, which stood at $1.2 billion at the end of June. Further, during the quarter, in order to increase our financial flexibility as we move through this global health crisis, we negotiated a 12-month covenant amendment to our existing credit agreements. The amendment provides that our leverage covenant now excludes the impact of our financial results for the second quarter from the leverage