Good day, ladies and gentlemen, and welcome to the Q3 2012 Gildan Activewear Earnings Conference Call. [French] My name is Valerie, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Ms. Sophie Argiriou, Director of Investor Communications. Please proceed, Ms. Argiriou.

Thank you, Valerie. Good morning, everyone, and thank you for joining us. Earlier this morning, we issued our press release announcing our earnings results for the third fiscal quarter of 2012. We also issued our interim shareholder report containing management's discussion and analysis and consolidated financial statements. These documents are available on our website at www.gildan.com and will be filed with Canadian Securities Regulatory Authorities and the U.S. Securities Commission. On the call with me today are Glenn Chamandy, our President and Chief Executive Officer; and Laurence Sellyn, our Executive Vice President and Chief Financial and Administrative Officer. First, an overview of our third quarter financial results and our business outlook will be provided by Laurence. And following that, Glenn and Laurence will be taking your question. Before we begin, I would like to remind everyone 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 Authority that may affect the company’s future results. I would now like to turn the call over to Laurence Sellyn.

Good morning. As Sophie said, this morning we announced our third quarter results, which were in line with our guidance, and we reiterated our guidance for the fourth quarter and the full fiscal year. Our Q3 results and Q4 guidance both reflect the second half recovery in our earnings, which we had projected at the beginning of the fiscal year. This sequential improvement in results in successive quarters is largely due to the benefit of increasingly lower cotton costs, which, in the fourth quarter, will be in better alignment with selling prices. In addition, our results in fiscal 2012 reflect the impact of our ongoing initiatives to drive the sales growth and profitability of the company, including the actions taken to improve the margins and branded product mix of our Branded Apparel segment, continuing top line organic growth in our Printwear business and the positive earnings impact of the acquisitions of Gold Toe and Anvil, which will provide further accretion as we continue to implement our integration plans and realize the projected acquisition synergies. Adjusted EPS in the third quarter was $0.66 on sales of $600 million compared to $0.76 in the third quarter of last year. Cotton costs and cost of goods sold were essentially the same as the third quarter fiscal 2011 when cotton costs were increasing. The reduction in EPS is due to lower printwear selling prices, which were reduced in the first quarter of fiscal 2012, and textile manufacturing inefficiencies due to the transition from Rio Nance I to Rio Nance V. In the second half of the fiscal year, we are consuming inventory, which was produced as Rio Nance I was being ramped down and Rio Nance V was at the initial phase of its ramp-up. In addition, manufacturing costs included in our EPS of…

Thank you, Laurence. This concludes our formal remarks. [Operator Instructions] Valerie, we're now ready to take questions.

[Operator Instructions] And our first question comes from Martin Landry of GMP Securities.

Your Branded Apparel sales were up 20% year-over-year. I think you've mentioned that they were up 6.5% if we exclude the Anvil. Can you -- does that include any contribution from Gold Toe in that number?

Well, sure. Gold Toe we had for the entire second -- the entire quarter, so...

I'm just trying to get the organic growth of the segment.

Gold Toe is now part of our organic growth. We had it for the second quarter of last year -- for the third quarter of last year and we had it for the third quarter of this year.

The answer is 6% is organic sales growth.

Including both Gildan and Gold Toe.

And you're guiding -- am I correct, you're guiding for organic growth in the segment for 15% in Q4?

That's correct.

Can you give us a little bit of color on what type of apparels are you getting the best traction for your back-to-school programs?

Our back-to-school programs consist of promotions that typically occur during that time of the year, which we're well-positioned for in back-to-school as well as new activewear placements that we've achieved for back-to-school.

So are we talking about fleece, shirts, golf shirts?

We're talking about fleece, which is new, and promotions in socks and underwear.

Okay. And lastly, last quarter, you had mentioned that your performance at the national accounts was a bit below your expectations. Can you maybe just comment on where it stands this quarter?

We achieved sequentially better results in Q3 than Q2, but still slightly below last year. But as we go into Q4, we comped pretty bad sales in Q4 of last year where we should see some big increases.

And in 2013.

And in 2013, as we go into 2013.

So is there any reason why Q4 -- is there a seasonal impact there or...

Well, no, that was more of -- what happened was last year there was destocking with retailers and channels, so it was a function of just bringing down inventories. And we think that, that's pretty well in line right now and that's why we're seeing good sales momentum. We were basically just slightly below last year Q3 year-over-year sales and Q4 will have a significant increase.

And our next question comes from Kendrick Tyghe of Raymond James.

Glenn, I wondered if you could just give us an update on how the Anvil integration is tracking both in terms of timeline to be fully integrated through September and the extent to which there've been any surprises in that integration process or other?

Well, there hasn't been any surprises. We're pretty excited about the acquisition. The integration, which is really in 2 parts, the first initial big phase where we're going to achieve significant synergies will be complete by the end of September. So as we start fiscal 2013, all the Printwear sales and production will be fully integrated into Gildan's Printwear division. And at that point, there will still be some integration, but that will be really during 2013, which will be some integration that still needs to be complete with the Branded Apparel segment. But we will start seeing significant synergy savings as we go through next year.

Great. And just with respect to cotton, recognizing that you've now fully cycled through the high cotton costs and inventory. Laurence, you referenced that cotton will be below this quarter sequentially, significantly below on the fourth. Now would you care to put an order of magnitude to that? I mean on the future's curve or forward cover, we would be looking at levels that are closer to $1 or $0.90 to $1? Is that a little aggressive or you're not willing to get into that discussion?

For what period are you...

Sorry, just for the -- looking at the fourth quarter, just looking at what the curve would imply by way of realizable cotton costs and your comment will be below $1.25. I'm just trying to get a read on whether below $1.25 is $1, $0.90 or $1.10.

Yes, I would say that's -- that would be in the ballpark. And maybe just one thing to point out in cotton is that when cotton a year ago, in August, was trading -- the future prices in August last year was trading in the $0.90 range. Cotton, when it got off the board this July, it was also trading roughly around the $0.90 range. So cotton during really most of 2012 fiscal year has been pretty stable in the $0.90 range. So one thing you should take in account, too, is that I would say in generally in the industry, through people's cost of goods sold as we go into next year, that would be sort of like a good average that we will see cotton prices, let's say, for example, for the significant part of next year.

And our next question comes from Mr. David Glick of Buckingham Research Group.

Laurence, I mean you kind of gave us some very, very high level thoughts about going forward. I was just wondering, I know you're not going to give FY '13 guidance, but there are a lot of puts and takes in -- as we look at next year. And you're through the cotton bubble, it sounds like stable. Pricing is relatively stable. Demand seems stable and recovering. How do we think about the Gildan financial model going forward as you think about the income statement? Is Q4 a reasonable proxy for what the income statement should look like as we head into 2013? And what gives you the confidence that pricing can remain stable here given where cotton is?

So to address your question on pricing, first, Dave. We've said as we've gone throughout the year that we believe current pricing is aligned with $0.90, $0.95 cotton and it's realistic to expect to retain the benefit down to this level as long as pricing remains rational and there's no major change in the economy. And remember also that there is inflation and other cost elements that offset the benefit of cotton. What happens as far as incremental reductions with cotton price below that level it's premature to say and that will be a function of many factors. Apart from that, the other drivers of our growth as we go forward in 2013 and beyond are the same ones that we always talk about: our different top line sales growth initiatives, our continuing investments and cost reductions, the synergies from our acquisitions, the impact of our branding strategy and the upgrading of our product mix and profitability in Branded Apparel. And we look forward to continuing to achieve our goals in 2013 and beyond.

So can we look at Q4 in terms of the margin structure is obviously there's some...

Well, I think that what I'm telling you, I mean it's premature, as you say, to discuss 2013. But what we're really -- what we're saying is that we believe that the cotton costs and the selling prices are in good alignment. And to that extent, it sets the stage for 2013. And in 2013, obviously we're bringing on new capacity. We expect to utilize that capacity to drive top line sales growth with the benefit of our biomass and other cost reduction projects. We'll be continuing with our integration of our 2 acquisitions and we'll add up all the puts and takes and initiate our guidance in a couple of months.

And then last question, the capacity in FY '13, can you kind of give us a sense of what that's going to be on an annual -- on a run rate basis?

Well, we're on track to what we discussed last quarter, just over around $70 million, and that's really our current run rate as we speak and we'll exit September of this year.

[Operator Instructions] And our next question comes from Mark Petrie of CIBC World Markets.

Actually, I just wanted to follow up on that last question. So $70 million capacity next year, you said that's essentially what you're going to exit fiscal '12 at, so no real impact from your Rio Nance I in the second half?

Well, we have -- that's not including the restarting of Rio Nance I. So we'll exit September with just over $70 million of activewear and underwear capacity. And so we'll have more capacity as we go forward and we'll adjust accordingly as Rio Nance I comes on and gives us the opportunity for incremental sales. But Rio Nance I will start sometime in Q3, let's say, our Q3, so it'll be ramped up, so we really won't have a big impact on our fiscal 2013. It'll be really just to drive '14 sales.

And how long do you think that, that -- will take that facility to ramp up?

Well, Rio Nance V started the year ago September and it's virtually almost 100% ramped up and it was a brand-new facility. So it shouldn't take -- we can ramp up that facility in 12 months given the opportunity from a sales perspective.

Okay. So in terms of retail business, a part of the Gold Toe acquisition is obviously getting access into some other channels. Can you just give us a sense of how you feel about your success in terms of penetrating those other channels with new product going forward?

Sure. Well, it's really when you look at our whole Branded Apparel group, we set forth 3 strategic initiatives this year. Firstly was obviously to drive our brand strategy. And over the last, actually, 2 years, what we've been doing is we've been divesting ourselves and discontinuing unprofitable private label sales and replacing those sales with, we think is -- with branded, both Gildan and Gold Toe sales, which have better mix and better pricing and better profitability. And maybe just to give you a little flavor, in 2011 our branded sales were roughly about 25% of the group, which primarily most of that was Gold Toe. This year, it will be about 50%. And next year, our branded sales will be about 65% of the branded group. And we're projecting a significant increase from the Gildan brand next year, which would be roughly about 150% increase over this year. So everything we put in place to drive our brand strategy is working. But we're losing private label sales. We're replacing those sales with better sales. And that's really what's driving our earnings right now as you see that the earnings trajectory in the Branded group is consistently going to be going up and we're very happy with the mix. And the other component is to really get the synergies of the Gold Toe through both product expansion and distribution expansion as well as the synergies of the $0.30 a share that we set forth, which is to consolidate the distribution centers, which we've done, a reduction of back office. We've now begun to source all the outsourcing of Gold Toe's athletic socks are now being produced in our Rio Nance facilities. And obviously, the renewal of the Under Armour license is going to be a big opportunity for us for continued growth as we go forward. And that's what really what's going -- is driving our top line growth right now and we're well positioned. We're starting achieve new penetration for the Gildan brand. And as you can see, in Q4 we're going to have a 15% increase in sales and we're very bullish about next year and we continue to -- we think we're positioned perfectly. And we're also going to start reinvesting significantly or more significantly at the drive our brand strategies and continue our earnings trajectory.

Okay. And how much -- you mentioned the Gildan brand up about 150% next year. How much of that is the replacement of old programs with Gildan branded product? And how much of that is new business roughly speaking?

It's hard to say because it's never really the same product. So when we replace our Gildan products, I mean, in certain cases we've been successful to replace some of the private label. But a lot of that is really new business and that's really what our focus is.

And our next question comes from Tal Woolley of RBC Capital Markets.

Glenn, just wondering if you can talk -- when you're talking to your salespeople right now across all the different channels, when they're talking to their customers, what are they saying are biggest concerns and biggest opportunities given what's going on in the macro environment right now?

Well, I mean, it's really for us, we have 2 different business groups, so I think in each one of them, I think we've known -- we have different situations. But I mean in wholesale, I think that we're really continuing to do more of the same. We're pretty excited. And I think when you look at our wholesale business, although it was quite shocking early in the year where we lowered prices and brought our pricing to market, what we accomplished by doing so was really bringing the market back and allowing the market to start to grow again. And I think we've been pretty consistent and we've seen pretty good growth since the beginning of the year. And so far, July is continuing on that track. We're also looking at adding new products into our wholesale group. We have a whole line of performance products, partly through the New Balance license where we're going to have little higher end and New Balance is going to be positioned, for their company, to be a little bit of a higher-end performance product. But we also have a branded performance products under the Gildan brand called Core [ph] Performance, which should be a little bit more popular priced. So we're also looking to look for those niches in the market and we have a slew of other products in which we're bringing to market, at ladies and other areas. So we're continuing to drive what we think are the opportunities in the market to -- and to continue gaining incremental share and helping our customers to grow. And in retail, it's still somewhat the same story. I mean, the retail environment is, in terms of comps and if you look at anything you've seen in retail, sales are up, but units are flattish, let's say, for example, in most categories. But we're driving that through penetrating new programs. And really, doing what we've done so successfully in wholesalers, adding value to our products, that is offering our customers and our customers' consumers better products, better prices and better value. And that's really what's, I think, is going to continue driving our success in retail and listening to the customers and making sure that we feel their needs and the needs of consumers. So we're very well-positioned. And like I said before is that we're very happy with really our turnaround from divesting of our unprofitable private label to where we see our branding positioning right now and that's going to continue to grow as we go forward, so we're very happy with our position.

Okay. And then just 2 quick financial questions. One, if you can just -- has your cotton purchasing strategy changed at all or are we sort of back to more a normal cadence of when you'll be going into the market and buying like you're not a penny shorter or longer than usual? And then just wondering, too, if you can talk about free cash flow deployment. You initiated a dividend a couple of years ago. Any thoughts about where that might be headed going forward?

Well, as far as the cotton, look, we don't want to comment on our cotton strategy, obviously, like Laurence's comment. But as far as our free cash, look, we've been successfully investing our free cash and growing the top line of the company through the last 2 acquisitions, both Gold Toe and Anvil. And as we go forward to next year, obviously it's going to be -- we'll generate significant free cash as we go forward. Our primary use of cash is to continue growing the top line of the company through complementary acquisitions, either through brands or product categories that Gildan's currently not servicing or potentially even international markets, so -- and as well as investing heavily in, I think, in low-cost manufacturing. We see ourselves with a lot of opportunity to continue investing. I mean that's one thing I think you'll see from us as we go forward. We're not going to take the pedal off in terms of our investing in our low-cost manufacturing because that's really our competitive advantage. And we have, we think, a pretty good gap relative to the competitive landscape and we just want to widen that as we go forward. So we're constantly working with our board looking at ways and what we're going to do with our free cash. But we're going to invest in our business and that's really, I think, what's going drive our EPS as we go forward.

And our next question comes from Meryl Witmer of Seagull (sic) [Eagle] Capital.

We've changed from Eagle to Seagull for the summer. Anyway, this -- I was wondering if you could give an update on the performance T-shirt outlook for the business? You've made some small mention of it, I think, on the last call. And also, I'm wondering if a fabric like that is appropriate for the screenprinting market as we as you look out, say, 5 years or so, is that something you see happening?

Yes, we're putting in performance fabrics in both our brands, New Balance as well as we've developed a sub-brand of Gildan called Core [ph] Performance. Most of these products are really sold to the running area, it's more athletic-driven, let's say, for example. In our core business, we're in the souvenir promotional products, cotton is still the dominant fabric because of its ability to print. I mean, printing on performance fabric is not as easy as printing on a cotton fabric. So it's a little bit more technical. So it's a niche in the market. It's not a large volume relative to what you see in cotton shirts. But with the products that Gildan's bringing to market, at least we'll have an opportunity to capture at least that portion of what we think is a potential niche, but a growing one. And so we'll be well-positioned both from what we think is the more high-end technical fabric all the way down to the more popular priced product. And so we'll have a full range. We also, in our basic 50/50 T-shirt last year put wicking properties in it as well. So we think we have the market covered in terms of anybody who wants to buy a performance-enhancing fabrication.

And our next question comes from Susan Anderson of Citi.

I was wondering if you could talk about what you're expecting in the back half for the retail business. It seems like a lot of your branded competitors are adding extra pairs to the pack or doing special promotions for the back half, but it doesn't sound like you guys are planning anything like that. So maybe if you could just talk a little bit about that?

Well, typically, anything that's promotional and back-to-school, you do add additional pairs, so we have different promotions. And in our lineup, we do offer additional pairs in our bags. And that's with in line, I guess, typically, that happens at the back-to-school period, so -- but that's a normal occurrence, let's say, for example, in promoting back-to-school.

Okay. So it has nothing to do with just lower cotton costs. It's just going to be a back-to-school promotion?

Yes, that happens every year.

Okay. And then maybe if you could -- I thought you guys did a good job on improving the retail EBIT margins. Maybe if you can provide a little bit more color. Was it -- did Anvil contribute to that and then Gold Toe, or was a lot of that also lower cotton costs?

Well, it was a function of operating our product mix like we talked about and replacing low-value programs with higher-value programs. It was a function of continuing improvement in our sock manufacturing efficiencies as we complete the ramp-up of our sock manufacturing facilities and the transition of our manufacturing offshore. Also, in the fourth quarter of last year, we raised selling prices up to a level that's aligned with the current cotton costs. We never passed through peak cotton costs in retail. But we increase prices up to -- so that they're aligned with today's level of cotton. And these are the main elements that are driving the significant improvement in margin in our organic sock business. On top of that, of course, we are implementing our integration plans for both acquisitions, for both Gold Toe and Anvil. And we expect to continue to realize significant further synergies as we complete our integration plans.

Okay, great. That's really helpful. And then one last question. I think you broke out Anvil in the Branded segment. Can you also break it out in the Printwear segment so we can get an idea of the organic growth there?

Well, you can really go by the market shares. That's really the best guideline that we can give you where Gildan is 65% and 66% -- 65% and Anvil 6.5%.

And our next question comes from Vishal Shreedhar of National Bank Financial.

Laurence, I was hoping you could help me better understand what drove the company to increase its market share expectations in Printwear in Q4 and also modestly lower its expectations for industry growth?

Well, we're not increasing -- we're bringing our -- we increased our market share in Printwear from what we had previously guided, but it's in line with what we actually achieved in the third quarter. So it's simply continuing our actual performance that we've achieved in the third quarter. And as far as industry growth, it's really a minor tweak from 5% to 4%. And again, it's just continuing the actual performance of the third quarter where the market was up 4.3%. So we're calling it 4%. So it's continuing the current actual performance and trends in the industry.

Okay. Now economic concerns had somewhat escalated, call it, over the last couple of months. You've noted that in your MD&A. And as you look forward and you look at your outlook, some of which you alluded to. How do you put that into your forecast and account for that correctly given the historical volatility of the Printwear segment?

We're continuing to reflect the current environment, which is what we're seeing in the month of July, which is the first month of the quarter that's already behind us. Clearly, if there is a dramatic change in the economic outlook that will affect our outlook as it will all companies, but we're reflecting the current environment with whichever uncertainty is reflected in that.

And Glenn, I was hoping you could help me understand. When Rio Nance I comes online, and I understand we're looking at the back end of fiscal '13, but when it comes online, what are your plans? Where do you intend to place that capacity? Is it going to be in Printwear, in national accounts, is it Branded? Are there new acquisition opportunities available to you that you perhaps could be investigating? How should we think about it?

We'll look at it. I mean, like everything else, you need to sort of build a little bit of capacity before you obtain and go after the opportunity of driving new sales. So Rio Nance I is coming online. The plant -- each 1 of our plants also are geared to do -- Rio Nance 2 is making fleece today, for example. Rio Nance V is a big T-shirt facility. Rio Nance I is being redesigned to be making lightweight underwear-type products. And so that's really where we're going to drive the initiative of that facility as we develop and drive our overall lightweight goods, which is a trend in the market. One of the fastest-growing T-shirt areas that we have in Printwear is our Lightweight 64000. It's a 4.5-ounce shirt, which is the same fabrication that we use for underwear. So that plant is going to be designed to handle -- equipment that's going to handling more lighter-weight products. So we're pretty comfortable of bringing it on and we'll sell that capacity as obviously as fast as we can to obtain new sales and as we go forward. And ultimately, the capacity may not be sold in the first year because by the time we bring on Rio Nance I, like we said, is that our total installed capacity will be just over 90 million dozen. So we'll go see how it goes and we're working hard to land new programs and our planning strategy is working. And we're well-positioned to look forward to new opportunities as we go forward in every segment. And I think that's the key with our company. We're growing in every single segment there. Our Printwear market share is continuing to grow. We're going to lever the Anvil acquisition. We got new product extensions coming online. We're growing internationally pretty aggressively at 35%. We just opened up 2 new distributors in China, our first 2 really I would say official distributors in China for 2013. And retailers really are its early stages, I mean, primarily even though that it's a pretty big piece of our business today and we still have the majority of it in socks. So as we lever that into the activewear and underwear category, that's how we'll fill up this capacity. In fact, our big concern is going to be when we bring on our next tranche in capacity even after that. So that's how we're looking at this right now.

Can you provide any indication for us on the size of the New Balance contract?

For the what?

In your press release, you indicated that you have an agreement to license New Balance apparel for Printwear into U.S. and Canada.

Yes.

Can you give us...

Yes, so that's going basically a license with the Printwear group. They're going to be selling those goods to screenprint trade. And that's going to be primarily performance fabrics. And that license is exciting for us because it's an area that we currently don't cater to. So it's in the incremental sales growth opportunity and profits for the division as we go forward.

Okay. Is there any way to think of the size of that market?

Well, the market is not huge, but we think there's still a pretty good potential in the category to grow with its high value, and it's a good margin business for us.

[Operator Instructions] And our next question comes from Eric Tracy of Janney Capital Markets.

I guess, Laurence, if you could talk about the -- or quantify for us the pricing versus unit volume within the Branded Apparel section. So for both 3Q and then 4Q organic, so 6.5% were contribution from pricing and then the 15% organic in 4Q, what type of contribution from pricing?

Okay. Well, the first thing I would say is to emphasize the point that we're more focused on the quality of volume than volume, and that's why we're placing so much focus on high-value branded programs. We're less pursuing units and more pursuing high-value profitable volume. Having said that, volume was essentially flat in Q3 versus last year with a significantly better mix and the higher proportion of Branded program. And we're forecasting volume to be up in the fourth quarter, which is reflected in the 15% organic growth including the Anvil programs, which we're guiding.

Is it possible to discern between kind of the mix benefits of moving towards branded versus just the outright price increases that were implemented?

Well, the 2 are somewhat inseparable because there are new -- many new programs, which are high volume.

You got to look at it like from that perspective where we're continuing -- discontinuing programs. So a lot of programs aren't, on year-over-year, the same. So as we develop these new branded programs, we're discontinuing private label programs, and so that's not exactly comparing apples-to-apples.

And the main point about pricing in Branded Apparel is that we -- I'll repeat that never pass through peak cotton price costs into our pricing. We implemented price increases after cotton had already come down. So our price increases were to align with generally the cotton costs that have been consumed at the present time.

Okay. And then as you think about -- you continue that shift towards the branded side of the business in retail, Glenn or Laurence, maybe just speak again to the learnings that you had? And then what -- from a marketing perspective, you're still relatively, I think, $5 million marketing spend this year. Again, is there a need to increase that to support more of the major programs as you develop that branded side of the business over time, or are you comfortable with that type of run rate?

No, no. We're going to invest next year in our brand strategy and we already have in place the process to increase our investment in our branding strategy. I mean it's really going to be the focus for us as we go through into next year and to support the potential new placements we're going to get and to drive the overall awareness of our brands. So we're going to invest obviously our free cash and our increased earnings. And we're going to -- like we've done every round, it's not just investments with low-cost manufacturing, but we're also going to invest into our brand strategy. And that I think is the commitment that we set forth.

Any way to kind of think about it from a marketing spend perspective as a percentage of revenue or -- that we should be thinking about?

Well, we'll give you that guidance when we come to it in December. But we're going to spend more money next year than we did this year to support our brand efforts and it's a function of, obviously, the growth opportunity that we think that's out there in the market.

Okay. And then maybe just lastly, if I could, Laurence, I think you said sort of thinking about $0.90 cotton for -- $0.90 or $1 for next year and I know you don't want to get too specific on how you're buying, but it would seem like, particularly in the back half, you might have an opportunity to lock in a little bit lower given existing spot rates in other spaces to factor in, but any chance for us to maybe think about that as sort of you being a little bit conservative on that?

Well, that's for sure. I mean, as Glenn said, we for competitive reasons, obviously, don't want to talk about our coverage. But clearly, as we go through the year, we will be positioned like all manufacturers to benefit from the continuing decline in the cotton futures from these levels.

There are no further questions from the phone lines. At this time, please continue.

With that, I'd like to thank everyone for joining us today, and we look forward to talking to you again at our next earnings conference call. Thank you, and have a good day.

Thank you. Ladies and gentlemen, this does conclude your conference call for today. We thank you for your participation. You may now disconnect your lines, and have a great day.