Welcome to the Q4 2016 Gildan Activewear Earnings Conference Call. My name is Jason, and I will be your operator. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded. I will now turn the call over to Sophie Argiriou, VP, Investor Communications. You may begin.

Thank you, Jason. Good morning, everyone, and thank you for joining us. Earlier this morning, we issued our fourth quarter and full year 2016 press release. Gildan's management's discussion and analysis and its audited consolidated financial statements will be filed with the Canadian Securities Regulatory Authorities and with the U.S. Securities and Exchange Commission on/or before February 27, 2017. Glenn Chamandy, our President and Chief Executive Officer; and Rhod Harries, our Executive Vice President and Chief Financial & Administrative Officer are on the call today. We will begin with Rhod taking you through our fourth quarter and full year performance and our business outlook, which will be followed by a question-and-answer session during, which Glenn and Rhod will respond to your questions. We 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 Authorities that may affect the company's future results. And with that, I will turn the call over to Rhod.

Thank you, Sophie. Good morning, everyone, and thank you for joining us. Today, we announced 2016 results for the fourth quarter and full year, and provided our expectations for sales and earnings growth in 2017. On a full year basis in 2016, we generated sales essentially in line with our most recent guidance of $2.6 billion, and adjusted diluted EPS of $1.51, just above our guidance of $1.48 to $1.50. Overall, we are pleased to have successfully managed through fairly challenging market conditions for the year and the anticipated headwinds in 2016 that we had initially projected. We are particularly pleased with the record level of free cash flow we generated in 2016 and the $470 million we were able to return to shareholders through dividends and share repurchases. We believe next year will be another record year of free cash flow and combined with our confidence in earnings growth, we announced this morning that we will be raising our dividend by 20% for the fifth consecutive year. We also announced the renewal of our NCIB program to repurchase up to 5% of our outstanding common shares. In 2016 we completed two acquisitions and earlier this year we successfully emerged as the winner bidder for the American Apparel brand. Confidence in our long-term strategy, cash generating capabilities, and our strong balance sheet continues to place us in an attractive position to execute on all of our capital allocation priorities, including organic growth, acquisitions and returning capital to shareholders. Now let me take you through our fourth quarter results. Consolidated sales of $588 million were up 8% with increased sales in both segments in the quarter. In the midst of a more challenging retail environment than we anticipated when we reported for Q3. Our Printwear business performed right on plan with…

Thanks, Rhod. That concludes our formal remarks. Before we move to the Q&A session, I ask that you limit the number of questions to two in order to give everyone the opportunity to ask a question and we will circle back for a second round if time permits. I will now turn the call over to the operator for the question-and-answer session.

Thank you. We will now begin the question-and-answer session. And our first question comes from Kenric Tyghe from Raymond James.

Thank you. Good morning. Glenn, just with respect to your outlook what strikes me as absent in the outlook given current cotton, is any discussion around pricing or potential price increases given what has been going on in the cotton markets. Could you speak to your conservatism on the guidance and is it just a reflection of there is no setting of back to school pricing or no real visibility as yet, and it's a little early to be making any determination as yet on how prices settle out?

Well, like Rhod said in the – his remarks, we have increased prices in Printwear in December, which is – which was a modest price increase really to support our cost of 2017. We do have selective price increases going into effect during the year in Branded as well. And if cotton remains at the level it is today, we will most likely take further action on pricing as we move into 2018, that's the way you should think about it.

Great. Thank you. And then, just on American Apparel. The contract manufacturing and the effect being sort of a net neutral in the year, is that again just a conservative stance given that it is early days and perhaps we should look at that as being something that could be a moving target through the year, how should we be thinking about the American Apparel integration, as we move through the year?

Well, I think, you are right. I mean, look at it's early days for us. We just recently as couple weeks ago took over the company. We're very excited about it. It's a premier brand in our segment. It really is going to help us to focus in capturing a bigger share of the fashion basics. And it's going to be priced at – it will be our highest price point product line within Gildan. The great news is, is that we're going to leverage our infrastructure and our distribution network in Printwear. The acquisition will be integrated seamlessly into Gildan, and the total integration from order to cash and distribution will be complete within the month of March. So, it should go relatively quickly. Our big challenge is obviously re-feeding the line and getting the supply line up and running. Customers have brought a lot of inventory, pre-bankruptcy to support the sales, and we should start shipping product towards the end of April and the beginning of May. So we're excited about it. There, yeah – there could be some potential upside in American Apparel obviously, but it's early days, and we just need to get a little bit more understanding. And we're really excited about the opportunity. And maybe one last point is that we're still also looking at evaluating our strategy in terms of our consumer strategy. The Printwear strategy is fully implemented, and we have very good visibility on it. But we haven't really defined a 100% our consumer strategy, which we're in the process of doing. And one last point, I would add out is that where we really see the American Apparel brand opportunity is really also in our international markets. I mean, we have huge interest from all of our international customers to carry this brand. So we think we've again had a great acquisition, and we're really excited about it. And as we get into next quarter, we'll probably have a little bit more understanding and light on the situation.

Thank you. I'll leave it there.

Thank you. Our next question comes from Mark Petrie from CIBC.

Hey. Good morning. I wonder if you could just talk a little bit about the U.S. retail environment and the impact of destocking through Q4 and how that's trending. Thank you.

Okay. Well, look, I think that the market is obviously challenging. We haven't seen a big rebound so far in January and one of the contributors to that could be that the tax refunds are not helping the situation because apparently they're late. But putting that aside and even putting aside the destocking because destocking for us is irrelevant, I mean that's just a point in time. I think the most important thing for us is really the growth that we have. And our core business basically and our focus in our Gildan brand strategy – our sock unit POS in the quarter was up 9% and the overall market was down 1.4%. And in underwear the market was down roughly 3% in the quarter, and we were up 25% to 9% market share. So we're really, I think, achieving our goals and driving our strategy basically even in a bad market. And then, as we moved into January as Rhod said our sock POS was up 4.5% in a flat market, but our underwear unit POS was up 41% in January and we have a 10.9% share achieving our target of 9%. And you know we've taken a long-term approach to driving our market share and you know we're constantly working on improving our product features. You know, we have new product features in our core underwear. We've reformatted our package sizes. We've launched new products this year, our stretch product which is out today, which is doing very well. We've expanded our shelf space. We've expanded our distribution. So, all these things are leading to a long-term growth rate in market share and in our segment. So we're – we – despite the challenging market, we think that we're positioned well.

Okay. Thanks. And could you just talk a little bit about how your business did online and e-commerce has been performing, and what your plans are to grow that business for 2017 and beyond?

Well, sure. Look like we said in previous calls, I mean, our focus is on online and e-commerce. Obviously, at this – look, everybody is racing to drive an e-commerce strategy and we've done very well this year. Our e-commerce businesses ended up the year around 5% of our revenue base in branded, up significantly over last year. So we're – and we're still in the beginning stages. I mean, I would say that, look, there's a huge opportunity for us. We're not where we need to be today, but that's the emphasis of the senior management team and our Board is to make sure that we take advantage of the opportunity. So we're focused on it as we go forward into 2017.

And sorry just to follow-up on that, I mean, is the capital that you need demand (22:11) in order to accelerate that growth, or as you said be where you need to be or is it just simply execution?

Yeah, it's combination. It's not only capital. I mean, it's really more of an execution. It's having the ability to drive our marketing strategy, our sales strategy and our distribution strategy which we're making huge strides for. We're just not where we want to – where we need to be really to make it happen. But we're putting the resources and the structure in place to continue penetrating. We're doing well already, we're just now where we want to be and that's upside to as we go forward into the future.

Very helpful. Thank you very much.

Thank you. Our next question comes from Derek Dley from Canaccord Genuity.

Yeah. Just one quick housekeeping question here. Does the EPS guidance you guys gave for 2017, does that include completion of the NCIB – the 5% NCIB?

When you look at the guidance that we gave, the top end of the range assumes that we would do the NCIB, obviously we'll see how the year goes.

Okay. But the bottom end does not then? That's what you are saying.

Does not.

Okay. Good. Thank you. In terms of the large retailer inventory destocking, I mean, this has been something that's kind of been plaguing your Branded division for quite some time now. Is there any visibility on to – is this likely to end any time soon or do you expect this destocking to continue?

We think that the inventory levels are in line with our customer's expectations. And, again, look at – I mean, at the end of the day, destocking is a point in time really what the driving factors are, are the market share and POS gains, and that's I think how we really need to measure our business. But as far as the destocking is concerned, we think, it's at a level that it needs to be.

Okay. And maybe just one more if I can, in terms of the – you commented on a slight increase here in SG&A spending going forward. Where is the bulk of that going to be directed?

Well, some of it's going into our distribution capacity as we look to support our businesses. That'd probably be the main driver of our SG&A increase this year.

Okay. Great. Thank you very much.

Thank you. Our next question comes from Vishal Shreedhar from National Bank.

Hi, thanks for taking my questions. Just on the CapEx, $125 million seems to be coming down for 2017, down year-over-year, and I think 2017 was lower than you indicated. Is there any room to take that CapEx lower? Just want context on that given your expectations to increase ROIC over time.

Well, look at – we're in the process of obviously still committing to put in our $1 billion of capacity to support our growth. We're building Rio Nance during this year, and putting all the infrastructure in place to support potential start-up for 2018. We also have been very pleasantly surprised with our Mexican facility which has brought on additional capacity, which has really changed our look at CapEx as we looked into the future because of the fact that the plant is a large state-of-the-art facility with room to expand which we're in the process of doing. So I think the way you need to look at it is that we're spending our capital right now this year partly to complete the start-up of 6. We're doing a little bit of work in our AKH facility and we're completing some yarn investments as well as some distribution, some selling. So it's spread out everywhere. So I mean if you look at I think in the long range where we think CapEx would be it's probably pretty much in line with the $125 million.

Okay. And in terms of online, seems to be a big focus for many people in the apparel space. Could you give us some benchmarks of where you are right now, maybe mix of sales online, so we can measure to see how you perform over time as you put more focus on it?

Well, online, right, I said just recently is about 5% in our Branded revenues.

Okay. And is online overwhelmingly an opportunity in branded non-Printwear?

Well, Printwear is a little bit – the answer is where we're measuring online today is really on retail consumer, direct-to-consumer. That's what we consider online. What's driving Printwear and growth rates in Printwear is the capabilities of companies that are selling product via internet. Like, to give you an example, before that happened, if you wanted to have a birthday party for your child, then you needed 14 shirts. So you basically probably wouldn't be able to find it. Today, you can go online to various online suppliers and just send a picture of your daughter or your son. And bing, bang, boom, and two days later you got T-shirts in your – at your house. So online is driving business in Printwear via the printer – the screen printer, et cetera. So it's actually been, I think, a catalyst that keeps supporting the growth rate of Printwear.

Okay. And that 5% includes both pure plays and the retailers that you're operating. Is that right?

Yeah.

Or are the retailers...

That is correct.

Okay. Thanks a lot.

Okay.

Thank you. Our next question comes from Stephen MacLeod from BMO Capital Markets.

Thank you. Good morning. I was just wondering if you could provide some more color around the breakdown of sales for your acquisitions in 2017.

Yeah. If you look at the overall impact of acquisitions and incremental impact of acquisitions in 2017, it's a $160 million to $185 million. The way to think about that is about $60 million related to Alstyle, about $50 million related to Peds, and about $50 million to $75 million related to American Apparel. We'll see where we land. But that's sort of the general breakdown between the three acquisitions.

Okay. So on a run rate basis, would American Apparel sort of still be in that $100 million range?

Yes. I mean, the $50 million to $75 million obviously takes in not a full year of sales.

Okay. That's great. And then just circling back on the retail business, I mean very strong market share gain despite a weak retail environment and lower destocking. Can you just provide a little bit more color like where are you seeing that growth, is it with specific customers or is it pretty broad-based, specific product, just a little bit more color on that would be helpful?

Well, our unit growth in socks is driven amongst all of our customers, as well as our underwear share. So we're seeing it across the board and that's really – that's been driving obviously our sales growth. I mean, one of the, I would say, negatives in the quarter is that our core business was down and was obviously offset by driving of our underwear and our sock market share, but our core business in department stores was negative in the quarter. So what's really driving our growth going forward will be our core business of our Gildan brand, our Peds and our underwear market share.

Okay. And are those market share gains coming from more with new retail program wins or is it higher POS sales?

It's a combination of higher POS and our existing products, expanded shelf space and as well as new programs and new products. So, it's combination of sorbent (30:19) of different things, so it's – and as we move into 2017 we're going to continue to increase the shelf space. We have new product launches in 2017 and we're constantly – I mean, that should – what should grow our market share as we go forward and that's in underwear. And in socks we're actually going through a pretty good change in terms of our product features and building up our quality features in our socks which will be set to some time in the, let's say, fall, our June, June-July period. So we're always looking to continue driving our share by having better quality, better prices obviously, and which was driven and (31:11) made the success for Gildan from day one.

Okay. That's great. Then just one final one if I could. On the American Apparel business, do you – have you made a decision or have you come to like a final – your decision on whether you would be manufacturing in the U.S. for American Apparel or integrated into your existing...

We're definitely going to manufacture product in USA in support Made in USA product. But at the same time, we think that there's an opportunity to offer product that's more price centric basically, and allow us to drive the potential of the brand. And as well as using that also to help us to support our international growth as we go forward. So we're going to do a combination of both. We think that there's – we're going to continue to support their core main USA business, but we also are going to offer product where they couldn't compete before at price points relative to the competitive landscape.

Thank you. Next we have Sabahat Khan from RBC Capital Markets.

Thanks. I just wanted to maybe get some color on the Printwear outlook for 2017. It looks like taking into account the acquisitions, you're probably looking for low single-digit top line growth there. Can you talk about how the – your traditional Printwear business in the U.S. is expected to do? And then, how much growth you're expecting from the fashion apparel and how the mix looks, kind of, going forward in terms of how much each of those two are going to make up your sale?

Okay. Well, first of all, the market conditions in Printwear are just okay. I mean, they're not gangbusters. So, just as a segue into really our outlook for 2017. What's driving really our business in Printwear in the U.S. market really is the – is our fashion base. Our organic sales are driven by our fashion basics, and will be continue to be driven by our fashion basics and our performance. We have new product features in both of those categories being launched in 2017. We will also benefit from continued growth in our international markets which we saw in 2016 and we think it will continue in 2017. And then we'll also get the benefit of the Alstyle and American Apparel acquisition. So, we add all this together, we're going to have high single digit growth. And we think we're well positioned, both domestically and internationally, to continue supporting all of our brands and we're pretty excited about 2017. And one last thing I would add to that is that, we've only put through a small modest price increase in beginning of December, and if cotton stays at the levels it is now, there could be potential room for further price increases to support 2018.

All right. Thanks. And then just on the Alstyle, I know when you guys acquired it, there was a lot of capacity in that facility. How much has it ramped up and kind of how is the progress coming on improving margins at Alstyle, I think, there was some opportunity to bring it up to a level that Gildan was doing?

We will be close – I mean, bring up margins in Alstyle as we went through this year close to the Gildan model. The plant is running very effectively. And maybe just to point out in terms of the overall capacity of Gildan, we have ample capacity to support if sales are better than we anticipated we have the capacity to support it. But we're also mindful of our working capital, and that's a big focus for the company. We're projecting to generate significant free cash flow again this year. And – so we'll manage our capacity based on – supporting our working capital requirements.

If I could get one more quick one in, terms of – giving your strong free cash flow for next year, what's the acquisition outlook? Is there a segment you're more focused on, any comments there?

Well, look we're constantly looking for acquisitions. I mean our first use of case is acquisition. I mean that's just – that's what we've stated for many years now and I think we've got a pretty good track record on acquiring companies, and have built up the skill set of integrating these companies seamlessly into our organization. And our appetite for acquisitions is varied. In both Alstyle and Peds have been 100% fully integrated into Gildan systems. The frontend, order to cash, distribution and they were complete by December 31st of this year. And the American Apparel will be fully integrated as we come -- as we go into next month. And all of our integration really has been seamless to us from a cost perspective in terms of integrating these companies into our organization. So we have the bandwidth to continue to support further acquisitions. You know, we are not committing to we have something on our table, but we're constantly looking today to – for ways to continue to support our organic growth trajectory in all aspects of our business and that's both in Printwear and in Branded.

Thank you. Our next question comes from Jim Duffy from Stifel. Jim Duffy - Stifel, Nicolaus & Co., Inc.: Thank you. Good morning. Couple questions...

Good morning. Jim Duffy - Stifel, Nicolaus & Co., Inc.: To start, Rhod, can you provide some color on the state of your inventory positions exiting the year and the expectations for inventory contributions to that $400 million plus free cash flow objective.

Yeah, I mean, if you look at where inventory levels are or were at the end of the year, they were basically where we thought they were – would be – I mean, they were up just a little bit obviously because of the retailer destocking, but I think largely in line with where we thought they were going to be. The obviously the less inventory positions reflected the impact of the acquisitions. And then as we go forward, as we look in 2017, I mean, we very definitely don't – do not see the inventory levels rising above where they are, overall. And obviously, we'll be focusing on working capital as Glenn suggested in order to drive cash flow. So look, I think if you look at our free cash flow for 2017 and that will be driven by our operating cash flow, it will be driven by disciplined working capital and obviously we're running with lower CapEx. Jim Duffy - Stifel, Nicolaus & Co., Inc.: Okay. Thank you. And then, Glenn, can you comment on screenprint distributor inventory positions. Are there any indication they're building stocks ahead of anticipated pricing adjustment?

No, I think, we ended up the year in line with last year, so our inventories are in a pretty good balance right now. Jim Duffy - Stifel, Nicolaus & Co., Inc.: Very good, I'll leave it at that. Thank you.

Yeah.

Thank you. Our next question comes from Andrew Burns from D.A. Davidson. Andrew S. Burns - D.A. Davidson & Co.: Good morning. I have two brand question for you. First, could you touch on Gold Toe performance and the potential for the brand going forward, especially in light of its exposure in the department store channel? And then with American Apparel coming into the mix do you see any reason to pivot Anvil strategy? Thanks.

To Anvil strategy?

Yes.

So, your question was what's the status of Gold Toe today? Because you cut out there for a second, and then your question is Anvil versus – okay. So Gold Toe, the retail environment obviously in the national chains and department stores has been weak, but we've still done very well with Gold Toe. We maintain relatively the same share as we had previously, but just in somewhat – space has declined somewhat. So you know we haven't factored that coming back in our forecast, so that could potentially be some upside to us, if the market re-bounce back to normalized levels. At the same time, look we're pushing the brand in areas of growth like e-commerce and hopefully we could – we can potentially see some pickup in our Gold Toe strategy. As far as the American Apparel, it's going to be positioned as a premium brand within our portfolio of the fashion basics. So the competitive landscape today for Anvil brand positioning is it's priced below, I would say, the – how we view some of the competitors in the market, and American Apparel will be slightly higher than that. So we'll have a position where we'll keep pricing strategy separated between these two brands, as one is considered more premium and consumer driven, and the other one has a lot of legs. I mean, our Anvil positioning this year and our Anvil brand grew phenomenally this year. It was our fastest-growing brand in our portfolio. So it's also doing very well. So, we're very excited because we think that we have a good brand positioning in both – they can both coexist in the same environment. Andrew S. Burns - D.A. Davidson & Co.: Thanks. And in the fashion basics now that you have both brands, do you see any potential or need to do tuck-in additional fashion basics brands or will your growth in the category going forward be primarily organic? Thanks.

Well, we think we have enough on our plate right now definitely in the U.S. market. We also have Comfort Colors, which is one of our also another fashion brand that we have a little bit different in definition, but it's also in that fashion segments. So we think we have the market covered. We have four different price points, four different positionings in an area which is growing and we're seeing phenomenal growth there. So, I think, we're covered. The big opportunity for us is to leverage some of these brands in international markets, which we have not done for various reasons capacity like, for example, Comfort Colors, we haven't brought it outside really the U.S. because we're still fighting on capacity. We have a huge interest in the American Apparel brand. So that's another big opportunity for us because international growth is growing at obviously a much faster rate than our U.S. market. Andrew S. Burns - D.A. Davidson & Co.: Thank you.

Thank you. Next we have Keith Howlett from Desjardins Securities.

Yes. On the Printwear market in the U.S., is the basics segment in decline and growth is in performance and fashion basics?

It's not really – it's not growing, I would say, as maybe we're looking at it. I mean, it's not necessarily shrinking. It's just not growing. And the growth is all coming from the fashion segment. So, it's slightly down, but it's insignificant. But it's basically I would consider it flat and the growth of the market is really coming from the fashion side. Now there is one thing I can tell you, which is an important part, is that – our basic shirts are selling in the range of $1.50 to $1.80. You know, fashion sells for $3, because the end user price of a screen printed shirt, let's say, is $20 at the end. So which tells me we have opportunity in basics even from a pricing perspective. So we think that, that's a good factor in terms of taking the opportunity and looking at it in a different way I would say. So we're pretty excited in the way we're positioned, and you know, we're flexible to drive the market in whichever way it's going.

And in terms of manufacturing and inventory levels, as you move to sort of a more diverse range of products in the fashion basics and performance, how does that affect your manufacturing efficiency and your inventory levels?

Well, our inventory levels are going to remain flattish for the year. So there will be – we're working on our inventory. There's still opportunity to manage inventory, mainly because of the acquisitions that we brought on. I mean, as we've worked through some of the inventories. You know the way we're set up today is we have different facilities producing different type products. So the answer to your question is that we're gearing our manufacturing to support this part of the business, I mean, and actually to bring innovation, new products. If you look at what we're bringing to the market today we're bringing in polyester tech fleece sweatshirt in Printwear which is going to be really beautiful garment, priced right. We're bringing on a whole slew of other fabrications. So – you know with – as we look at structurally changing our capabilities, you know, one of the things we're putting in is the type of equipment that is conducive to producing these types of fabrics. So we'll have different plants producing obviously different product segments and each one of them will be strictly very efficient in their own structure, but will allow us to maximize our sales opportunity for both our divisions.

And just finally on the international business, is it sort of lagging in the shift to fashion basics and performance or is it sort of right along with you?

Well, it's actually believe it or not basics in Europe are a much smaller percentage of the business. In the U.S., the basics segment was 60% and the fashion was 40%. It's the other way around in Europe. basics is 40% and fashion is 60%. So that's really why we're so excited about all these fashion brands we're bringing in, because that's going to accelerate our growth in Europe. We're already growing and most of our growth today because of our limited product offering in these international markets were still because we're new – we're still picking up all the share from basics, but really where we have a big opportunity is to continue growing through the fashion segment. American Apparel could be the big driver of that, but we have a lot of runway in front of us in international markets.

Thank you.

Thank you. Our next question comes from Anthony Zicha from Scotiabank.

Hi, good morning. A follow-up question, Glenn. Could you please comment on M&A market and considering that the U.S. retail outlook is weak, are you seeing more potential targets appearing on your radar and have the valuation multiples declined? And could you give us an idea, you mentioned that you're going to be looking at acquisition, how big of an acquisition would you be looking at and what kind of leverage you would be willing to go up to?

Well, look, I mean, we've been very tactical about our acquisition strategy. I think that's the most important thing. We don't want to do acquisitions for the sake of doing an acquisition. We're looking at our key value we can create by integrating these acquisitions seamlessly without any major cost to the company, making sure that they help us to drive some benefit to the company, either a brand, a product. So we have to have a strategy behind our acquisitions because look, we have a lot of runway still on our organic growth between our Printwear, our international business, and in branded, we're just at the beginning stages. I mean, we've just hit 10% market share in underwear. Our next target for branded is 20% market share as we continue to look at setting targets for ourselves. So we have a lot of opportunity organically to keep growing our business. So we want to still maintain a very tactical profile of how we do acquisitions and not just do them to create top line sales. We want to make sure that they are fully integrated, that they are meaningful for the company, that they give us a brand, a channel distribution, a product, something that will keep our core organic business from growing successfully and generating huge amounts of cash flow as we go forward.

Okay. And in terms of leverage, any picture?

Leverage, look – we've committed to one to two times leverage. I think, it's a fair target. We think that – we rather be on the conservative side, we think that we can grow the top line sales with tuck-in acquisitions as well as organic growth strategy and still maintain a very conservative balance sheet, but still at the same time using some leverage to return cash to shareholders and make sure that we use our balance sheet effectively.

Okay. And then the last question, with reference to capacity expansion and in light of a weak retail market, when would be the earliest Gildan would launch a new Costa Rican facility and could you – if that's the goal then what kind of capacity and cost would it be if you could please remind us on that? Thank you, Glenn.

Okay. Well, look, I mean, when we announced Costa Rica really Mexico wasn't in the equation, and Mexico is – was – is actually the size of what we were planning to put in Costa Rica, so what we ended up doing is we ended up building in excess of $1 billion of potential capacity with the existing footprint that we have today. So we have enough capacity support a lot of growth. We still own the property. We haven't invested a lot of capital there at this point and we will bring on that capacity in increments of how successful our business is as we go forward. So, there's nothing in the near to short-term saying that we need Costa Rica at this point.

Okay. Thank you.

Thank you.

Thank you. Next we have Chris Li from Bank of America Merrill Lynch.

Hi. Good morning. I just have two questions. I guess, first, when looking at your guidance range of $1.60 to $1.70, the $0.10 of difference, what would you say is sort of the main variance or you have the least visibility on? Is it branded volume growth? Is it your ability to take up pricing? What would you say would sort of make up that $0.10 gap between your new guidance...

Look – I would say look at, we have very good visibility on our business and our business plan. I mean the only thing that really is questionable is the market conditions. We made certain assumptions on market growth. But I can like for example, in underwear and socks we're projecting flattish type environment, in Printwear we're slightly positive but flattish. So, unless there is something that is materially different than our assumptions, we feel very comfortable with our guidance.

And the pricing increase you've put in December, did most of your competitors follow through as well?

Yes, everybody followed that price increase, and it was relatively small.

Okay. My last question and I know this is a difficult one to answer because there's not a lot of certainty at the moment. But I'd love to get your thoughts on border adjustment tax and how do you think internally?

Well look, I mean, first of all, I would say is that the – the tax would affect everybody in the segment because there's really – other than American Apparel, there's no apparel made in the United States really to say, okay, so I think that that's the first thing. Secondly, we think we're well-positioned because 50% – in excess of 50% of all of our cost are dominated in the U.S. from U.S. products, I mean, cotton, spinning, transportation, et cetera. So we think that we're a little bit insulated from – because we're not a completely like an offshore company. Thirdly, if you look at our two business units Printwear, we know we have capabilities of raising price. We sell T-shirts today for $1.50 and if they sold for $1.80, would it make a huge difference? I don't think so. The net retail price of those shirts is $20, and today even in the fashion segment, I mean, they're selling for over $3, and that's the fastest growing segment in the market. So when it comes to basics, I don't think that a $0.30 increase in a shirt was – is going to materially affect our sell-through at all in the Printwear business. In fact, our customers gravitate to higher prices and that's why it's pretty easy for us to increase prices, raw material prices continue to go up. And in branded, when we went through the last cotton bubble, our competitors raised prices significantly and we never did and our competitors never lowered their prices and we kept our prices pretty neutral. So, you know, we have a significant differential between our price and our competitor's price. So if you walk into the store and you just take our underwear for example and you raised the price by 20% it would be – still be significantly below the competition, but at the same time we think that if our competitors raise prices, they become irrelevant to the consumer basically. So we're not concerned about that at all. And probably last thing with the tax changes is that they're considering implementing that (53:39) to be nondeductible, and as I just said earlier is that we have a pretty conservative balance sheet. So we don't see that as a major issue as well. So, look, we don't think it's the right thing because we think, obviously, overall it's going to create instability and I think it will be very disruptive to the markets, but as a company we're well-positioned and we're not really worried about it at this point.

Okay, great. Thanks for your answers. And best of luck in 2017.

Thank you.

Thank you. And next we have a follow-up question from Mark Petrie from CIBC.

Yes, thanks. I guess, I just wanted to follow-up actually on the branded business and understanding that margins were pressured in Q4 because of deleveraging on your SG&A line, I wanted to just ask you about your general outlook for the profitability of the branded business in 2017 and over the next couple of years and is leveraging your cost base really the key driver of margin expansion or is it a matter of narrowing price gaps and then supported by favorable product mix?

Okay. We – the first step is obviously as we go into 2017 is we're going to leverage our operating business and our SG&A. I mean that's really the first thing as we increase our sales and also we fully integrated our Peds business basically which is obviously even though it's adding on sales through acquisition. The fact is that that we've been able to manage our SG&A accordingly. So it's back in line. So we see our SG&A next year in branded relatively flattish over on a year-over-year basis, right? So we're going to leverage that. As we go forward look we think like I said just earlier is that look we have room on price, I mean, we're significantly priced below our competitors. And at the same time we have a very narrow product offering in each one of our segments. I mean, we've got x feet, our competitor has got x times three feet in the retail store. So as we continue to gain more space and add more product that product comes at a better mix and better margins to us. So we should be able to mix up our margin and our operating gross margins just through mix and continue to drive topline sales from our core business. So those two things as we go forward into the future will continue to improve the operating margins of Branded.

Okay. That's helpful. And I guess just to follow-up. So the SG&A investments in 2017, that's on the Printwear side then?

Yes.

Okay. Thank you.

Thank you. And our final question is a follow-up from Keith Howlett from Desjardins Securities.

Yes. So just wanted to ask about the American apparel market positioning, did you keep any of the American apparel product designers and also I'm wondering whether their retail image, which was quite edgy, is an important part of the brand in the Printwear channel or not really relevant there?

Well, the answer is yes. We're going to run a small office in L.A. that will allow us to keep the heritage of the brand alive, at the same time continue to use social media, a platform to drive the image and brand image of the brand. We haven't really completed our retail evaluation in terms of how we're going to bring the product to consumers. But we're going to make sure as we go forward that the brand is relevant with consumers, which we think will continue to help drive our Printwear business and we will definitely come up with a consumer positioning for the brand in the near future.

Thank you.

Thank you.

Thank you. And that will conclude our question-and-answer session. I'll now turn the call back to Sophie Argiriou for closing remarks.

Thank you. Again, thank you all for joining us this morning. This concludes our call and we look forward to speaking to you soon. Thank you and have a great day.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.