Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Gildan Activewear Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Sophie Argiriou. Please go ahead.

Thank you, Demetria. Good afternoon, everyone and thank you for joining us. Earlier we issued a press release announcing our earnings results for the first quarter of 2020. We also issued our interim shareholder report containing management’s discussion and analysis and consolidated financial statements. These documents will be filed with the Canadian Securities and Regulatory Authorities and the U.S. Securities Commission and are be 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 our business outlook 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. And with that, I will turn the call over to Rhod. Rhod, go ahead.

Thank you, Sophie and good afternoon to all and thank you for joining the call. We hope everyone is staying safe and keeping as well as possible during this unprecedented time. Before we get to the results for the quarter, let’s start with an update on the COVID-19 related actions the company has taken since March 23 when we last talked with you. From the outset as the whole situation that developed, our first priority has been and remains the health and welfare of our employees, customers, suppliers and other partners as we ensure the continuity of our business. In this regard, we are very pleased that our production of face masks and isolation gowns is now underway. We are currently selling masks in some of our facilities in Central America to support local government requirements as well as on behalf of a cooperative consortium of North American apparel and textile companies supplying non-medical masks to the healthcare sector. We are also producing non-medical masks and isolation gowns for various retailers to be distributed to healthcare organizations. In total, we have current plans to produce over 150 million masks and gowns under this effort and we will continue to provide as much supply of product as we can as we move through the pandemic. In order to support production of masks and gowns, we have limited manufacturing activity currently underway operating with stringent safety processes and protocols in place. Far and away the majority of our manufacturing capacity around the world remains idle after we extend the shutdown of our operations following mid-April to respective government directives and to manage our inventory levels given the significant downturn in demand caused by the pandemic. Our distribution centers which have strong inventory levels mostly remain open to service customers with appropriate safety…

Thank you, Rhod. That concludes our formal remarks. Before moving to the Q&A session, I ask that you limit the number of questions to two and we will circle back for second round of questions if time permits. I will now turn the call over back to the operator for the question-and-answer session. Demetria, go ahead.

Thank you. [Operator Instructions] And our first question comes from Paul Lejuez of Citi Research. You may proceed.

I am curious about your expectations for cash burn in 2Q relative to Q1 just given that you have had more time to make adjustments to inventory and CapEx as well as SG&A and then I just want to circle back on the financial health of your largest customers on the printwear side, what are the conversations that you are having with those folks, what sort of terms are you extending and what are they communicating to you about future orders? Thanks.

Rhod, do you want to deal with this?

Yes, I will. Okay. Thanks Paul for the question. So on cash burn, when we spoke to you in mid-March, we said that we would expect to get our cash burn down to the $35 million, $40 million range as we moved through or the end of April and into May and I could say that we are very much on track for that right. So as we move through the first part of the first quarter and through the remaining part of the second quarter, our cash burn will be at that level $35 million to $40 million. We have done a lot. We have implemented a lot of actions as we went through with the opening remarks of the call. And all of that is allowing us to effectively drive our cash burn to where we expected it would be. If you look at the financial health of our customers, our customers are obviously like everybody else working through the overall situation. They have taken actions to effectively manage their overall operating positions to effectively ensure that they can both service their customers, while adjusting their cost structures to deal with the reduced level of demand that we are seeing across the various states, particularly the states where you have shelter-in-place mandates. So I would say all of our customers are effectively – they are operating in some cases, they may have reduced some of their warehouses in order to reduce cost, but then they are adjusting to the demand footprint that is out there. And there as they move through this, as you might expect they are effectively selling down out of their inventory and as effectively demand arises, they maybe coming to us and effectively sourcing supply from us as required in order to support the sales, but obviously given the inventory that was in the channel and the level of sales that we are seeing obviously, our shipments are very low now, because effectively distributor inventory is for the most part taken care of demand.

Understood. Thank you very much. Good luck.

Thank you.

And our next question comes from Brian Morrison with TD Securities. You may proceed.

I have to believe in this environment that several competitors must be much more negatively impacted or greater than yourself I am curious how you view the landscape from an ability to gain market share perspective and maybe even the potential for M&A despite your cash conservation as it is ongoing right now?

Well, look, it’s hard to say how our competitors will weather the storm. I think what’s important is really early days right now, because there is really not a lot of business activity happening as we speak. And as we move towards the end of this year, I think we will see a lot of materialization happen in terms of how the market will shape out and the competitive landscape and how people are able to bring their capacity back on etcetera, etcetera. So, there is definitely going to be, I think somewhat of the shake-up in the industry in the sense look, things obviously are changing. And the question is also was going be as how long will it take to get demand back to the levels that it was before. So, I thing what we are doing is we are putting ourselves in a pretty good position to weather the storm with the additional liquidity that we have both from a go forward position on organic basis as well as we have the liquidity in the event of lower opportunistic acquisitions available to us as the market unfolds in the future.

Okay. And then Rhod, one quick one just in terms of your prior cost saving initiatives to get to your 30 and 12, I realized that those are not achievable at this point time, but in terms of facility consolidation, specifically Mexico, also maybe Canada and Honduras, are the facility consolidations, are they perceiving, are they complete, are they on pause, what do they stand right now?

Well, all the facilities in Mexico have now fully been closed down and we are moving equipment basically at the end of Q4 and during Q1 with the moving equipment throughout our system. There was some operations still being performed in Mexico that were completely discontinued towards the end of – middle of March and then the balance of the equipment will be repurposed as we go forward. And regarding our expectations on both on SG&A and margin, look nothing has changed in our business. We are continuing to execute our back-to-basic strategy from all aspects. And truthfully, this is going to make us even better and stronger, because we are able to expedite and manage our SG&A. So, we are planning on making sure that we continue to focus on SG&A as a percentage of sales. We don’t anticipate as we go forward into 2021 that we will be fully recovered. We think will be moving forward in the right directions. So we are going to make sure that our SG&A is right-sized as we move into 2021. And all the things that we are doing in terms of leveraging our core compass in our back-to-basic strategy and manufacturing, we will continue to improve our margins as we go forward.

Thank you.

And our next question comes from Heather Balsky with Bank of America. You may proceed.

Both tied to recoveries, there will be eventual recovery. I guess, first, when we do get there, can you help us think through how manufacturing re-ramps up, how did that process work to ramp up your facilities as demand comes in or do you have to ramp up the full facility and then other factors we should be thinking about? And then the second question is just to follow-up on your customers, this situation is very different than the shelter-in-place, but curious what you saw back in ‘08/09 and maybe what we can glean from that for this time around? Thanks.

Okay. Well, I will start off with the ‘08/09 because it’s an easier to answer to be honest with you, I mean the certain sense is that ‘08/09 wasn’t a customer demand issue, it was very short-lived in terms of the negative POS. But it was a banking crisis, it wasn’t a consumer confidence capabilities, it wasn’t the event, stop having events. So, we are in a complete different situation than we were in ‘08/09, because consumers are still going to baseball games and football and hockey and whatever so and traveling, I mean. So there was a short-term impact financially which drove through the system, but it didn’t affect the consumer, where here we really have a consumer social distancing has really been the major driver where gatherings, jog runs, schools, camps, I mean almost every single event that or venue that we potentially sell product to. So that’s I think is a big difference. So look at as these social distancing requirements change and things open up, I mean, people going to the beach now and stores are opening up, we are going to have a gradual restaurants and we will have a gradual increase I think in a more gradual increase versus we have a quarter maybe I think in two quarters of down POS, which I think our POS was not more than negative 25, I think back then, if I remember right. But overall, I think this would be a little bit slower pickup, because until the sports events and the rock concerts and everything else really comes back, it will take some time. As far as our wrap up is concerned, our number one focus is definitely to make sure that we first of all utilize all of our existing inventory and what our plan is to ramp up our plans probably a little bit on stagnated basis, bring on capacity as we need it and somewhat drawdown a little bit on our inventory. We ended up Q1 with both just under $1.2 billion of inventory. We want to see that number come down and generate some cash flow from that during the course of this year again to continue to improve our liquidity situation and put us in a better position as we enter into 2021.

Great. Thank you so much.

And our next question comes from Luke Hannon with Canaccord Genuity. You may proceed.

Thank you so much. Actually I wanted to follow-up on that last point of inventory, Glenn you mentioned you had $1.2 billion as of the end of the quarter and I guess that that’s going to be enough to satisfy demand across all channels, but I am curious about the fashion basics part of it, is that subject to any sort of seasonality and do you envision being able to get promotional to be able to move some of that inventory out?

Well, look, I mean, the fashion basics is a ring-spun T-shirt that so it’s really – it is not as products for fashion basics basically the word basics and everything we make is pretty basic and doesn’t really have a lifespan as long as they are in our catalogue. So there is no need to liquidate inventory, because it’s going to go obsolete. Definitely I would say that we are in a position now that potentially we are – but we will see how the market perceives as it goes out. But we are – our inventory is in good shape. And look at the end of the day, we are going to leverage our competitive advantage to make sure that we continue to drive our sales and drive market share as we exit, I would say this whole event as we move in and most of the doors open up and products start selling. So we have an advantage I think because look we are a low cost producer and we will leverage whatever we need to do to continue to take advantage of the opportunity and sell and drive market share as we go forward.

Okay, understood. And then second one for me as far as Bangladesh, I know that the right now is a CapEx that’s being spent is just sort of laying the foundation for the facility there, do you envision I think it was late 2021 is when you expect your production from that facility, is that still the same timeframe that you are thinking or is there chance of any slippage there?

Well, our objective was to really support sales for 2022. So it was going to come on at the end of ‘21 to support ‘22. We are in the process nearly we are going to reduce our capital investments. The good news is like I mentioned in the last call is that we are sort of at a stage where we are doing foundational work at the facility. So over the next couple of months, it’s just not a – it’s 2 to 3 million of capital to be spent. We will put in the foundation, avoid the rainy season and then the option of timing of the plant will be sort of will be on our side depending on what kind of capital we want to spend and where the – what the market conditions are as we go forward. I mean things are changing so fast. I mean, already we are starting to see – we just opened up recently and we are starting to see POS is picking a little bit more positively than some of our assumptions. So the markets opened up quicker and things go better than we will look at it one way and if things go the other way and there is a relapse and things gets closed down, we will have to evaluate our options in terms of how we manage our whole manufacturing supply chain.

Okay, appreciate the color.

And our next question comes from Sabahat Khan with RBC Capital Markets. You may proceed.

Thanks and good afternoon. Just want to get I guess obviously the visibility is very low on the demand side and just on the broader market, but just want to understand what kind of scenario you contemplated when you decide to sort of suspend the dividend? What do you sort of expect capital over the next few quarters in terms of cash usage and then you also took out some additional debt just want to understand kind of what kind of decreases you might be planning for. Are we thinking you would lose half of your sales this year or potentially more kind of what’s the ballpark range of that?

Rhod, you want to take this one please?

Yes. So, when we look at the various scenarios on a go forward basis, I mean, it really is hard to get to have good visibility you are at how things are going to unfold as we move forward through Q2 and into Q3 and in Q4. Obviously, we have the facts from what we are seeing in April and which obviously taken that information and we have projected forward ultimately to try and get a sense of what the year would look like. Now, we don’t know whether it’s going to be a V, whether it’s going to be a U exactly how it’s going to play out, but I think what we need to do is plan for the worst and hope for the best. So I think as we have look forward, we have looked at our effectively what our cash burn is when we have got our manufacturing idled as we said earlier. We have cash burn of $35 million to $40 million a month and we have projected that effectively as we go forward if sales stay down then effectively, we will consume that cash that we will have to manage obviously our overall receivables in a way that makes sense also to effectively minimize outflows. And then obviously we have got to get ready for the ramp back, but we don’t really know exactly how long that’s going to take and what it looks like. So I think what we have done is we have made sure that we have effectively really solidified our overall financial flexibility, our balance sheet. We have got lots of capability, let’s say to effectively do what we need to do to move, to weather the storm and then be very, very well positioned as we come out of this. So I would say again, obviously, we suspended guidance. And I think it’s very difficult to give you a view, but you can just effectively I think tell for them how we are setup that we are making sure that we are prepared for scenarios which are negative as we continue to move forward and obviously April has been very, very negative. But nonetheless, if things pickup, we do really see the economy moving faster, people responding better that we are well positioned to respond to them.

Okay, thanks. And then just a follow-up on that, in terms of cash availability and liquidity and so forth, if sales continued to deteriorate at the levels for a few more months, the balance sheet could get stressed, have you been having discussions with your syndicate regarding covenant flexibility and so forth and or is that something you expect to deal with maybe later just on the back of the dividend cuts to get an idea of where those discussions might be?

Look, if you look at where we are effectively with respect to our covenants, I mean, we are in compliance with our covenants currently and we expect our covenants to be manageable as we go forward right given the actions that we have taken with given all of these actions that are underway. Again, that gives us lots of flexibility, but we will continue to monitor the situation as we go forward. We will see how it unfolds. I think again, we don’t have a crystal ball. We don’t know how it’s going to play out. And if we do get into a very, very negative situation, where we do have to have discussions in the covenants we do very definitely think that effectively we would be able to attain the flexibility that we need to add going forward. But right now, we don’t see that. And so I would say we are very comfortable with how things stand as we currently sit here today.

Great. Thank you for the color.

And our next question comes from Vishal Shreedhar with National Bank. You may proceed.

Hi, thanks for taking my questions. Regarding the shutdown, obviously, you had applied some fairly large programs with fairly significant retailers and just wondering if they are understanding or appreciative of the situation that you are in and maybe you are unable to meet shipping commitments like you have in the past? And so is there potential for some increased charges from them, you can’t reach your commitments that you had adhered to in the past or is it just everyone understand different scenario?

Well, we have enough inventory to support demand with our major retail customers. So we are in very good inventory position which is something that we have built up going into the season because of the anticipated high growth of sales in particularly our big large mass retailer. So I think we are pretty comfortable. I mean, sales haven’t fully met our expectations. So we are in a really good inventory position. And we have a lot of product that we need to bring to market, I mean, we don’t think it will be an obstacle for us to get to market to continue supporting even as we go into the second quarter into the beginning of the third quarter. So that’s not an issue for us right now.

Okay, that’s helpful. Thank you. And on the sock and hosiery business and I know this current macro period is probably not the best one to reflect on the business, but even looking over the last few years, the business really hasn’t performed as well as some might have anticipated it. So just wondering how they are going to think of that sock and hosiery business, is it still core for you guys or is this discussion for a different day? And should we still think of building ‘20 build-out that retail product portfolio and expand into adjacent categories?

Well, again, I think it’s still a big significant part. I mean, before this whole situation we sort of anticipated that our sock business was plateauing that’s what we guided to in the beginning of the year. Unfortunately, lot of the – half of our sock business is mass and the other half is somewhat compared to the department of specialty stores between our GoPro brand, our Under Armour license etcetera. So those stores are just closed, I mean that’s really what was part of the issue here and we have lost POS and therefore that was the byproduct of the write-down. So it’s not that, that business has really gone away, I mean, the prime reason is that the stores are not just able to function. So we feel very comfortable with our sock business as it is. And I think we have a pretty good base of programs today. And like we said in our guidance is so much stable, it will come back because those are I think programs that we will continue to resonate with customers as we go forward. And look at them and we are going to continue to focus on socks, underwear and activewear products in our back-to-basic strategy both with our existing brands that we do have, but also to leverage our private label opportunity with our customers. So we are pretty excited still about the opportunity for us to continue growing the business. And the other sort of – it’s sort of negative on your sales in POSs are down, but on the flipside, I mean, there is going to be a big change in I think in sourcing in the future. I mean, our buyers are running to each of the source product. So from a private label perspective, I think we have a lot of opportunity to leverage our low cost manufacturing in this hemisphere as things change. I mean, to me, 40% of the global apparel is made in China. I mean, we don’t see that materializing in the future. And so there is a lot of opportunity for us, let’s say, for example to continue to grow our business and that our back-to-basic strategy and focusing on the big shifts from retail into private label, I think all three categories are going to be pro categories as we go forward into the future.

Thanks.

And our next question comes from David Swartz with Morningstar. You may proceed.

Thanks for taking my questions. So in the socks and hosiery segment specifically of course that these store closures have impacted that greatly, but at the stores that are still opened, can you talk about what the POS trends have been compared to like a baseline for what you had expected this time of the year?

Well, the POS trends were doing really well on them, I think towards the third, second week of March, sort of back half of March when essentials became such a big push. A lot of the both mass and online retailers basically stop receiving product and focus on the other essentials and everything else so but we have seen a tick back up to normal levels in POS in those markets today. And I think we are tracking pretty much on plan and where we are now in April basically sort of pick back up again as they started bringing products back in and replenishing their doors. I mean the big wait is over. Everybody has got toilet paper right. So I think that, that’s really what’s happened and I think our POS is sort of back on track with those retailers.

Now as manufacturing some day starts up again you get back to normal production levels, can you talk about how the lower commodity prices may benefit the business?

Well, I mean, [indiscernible] prices are. I mean, prices are – cotton is our largest commodity. I mean, it’s down, it’s not down significantly. It's down $0.10 a pound from what it was before the crisis started really so but it is never the day look at I mean the deflation is probably going to be potential factor with oil and other things but I think that’s all short lived I mean there is going to be another side of the coin is how are people going to bring capacity back on so short term is going to be a lot of capacity because people have inventory and didn’t sell anything but then I mean how do you social distance in the factory do you have all your capacity how are you going to deal with all these things so social distancing until it goes away is actually may be put a brakes on I think in terms of the capacity so there is all puts and takes in terms of raw materials and we are keeping ability people bringing back capacity online after they have been shutdown. So, I don’t know how it’s going to play out, but I would say that look we are in a very good position from all sides. We have good inventory. We have a low cost model. We have made a plan now to bring our facilities back, including social distancing and the capabilities of how we run our factories, I mean, we have got 54,000 employees, we have to bring back to work, its 5,000 sewing operators in the facility. So that’s our strength basically is having to deal with these things and that’s why we are the global low cost manufacturer. So in all cases, I think we are going to be in a very good position and we are going to leverage that competency to gain market share as we go forward and make sure that we get our fair share of business as we materialize when we get out of the – and business starts to open up again.

Thanks and good luck in this difficult time.

Thank you.

And our next question comes from Stephen MacLeod with BMO Capital Markets. You may proceed.

You gave some good color around the gross profit impact in the quarter of gross margin impact of 340 basis points is there any way like is any of that just related to the initial shock of the manufacturing shut down or is that something we would expect to accelerate as you all enter potentially Q2 potentially into Q3?

Rhod?

Well I mean if you look at the impact right the 340 basis points effectively what was the line share of that was driven by labor and manufacturing shut down or we call period costs there were some contract costs associated with that there were some other costs I would say that driven by the COVID-19 situation so ultimately we as we move forward we will see those costs effectively unfold right don’t forget that effectively we shut down or we started to shut down effectively in march while we have two weeks of shut down and then as we move into April and then we go into May we will have those full monthly costs right that we will see effectively being incurred and so that’s all wrapped into the $35 million to $40 million of cash burn that we bear as our facilities are idle even if you look at overall where you have cash costs and then top of that obviously we have depreciation right that’s effectively will be impacting as we have probably around $30 million of depreciation so all in all as our operations sit idle effectively or total costs is around $50 million a month right so effectively with the combination of non cash and cash. And so we just expect to see that as we go forward until we start to ramp back up and that’s what you saw really in the back end of the first quarter in that 340 basis points.

Okay, that’s really helpful. Thank you. And then just the question maybe forward-looking and maybe it’s too soon to answer, but as you see things begin to recover in the imprintable space down the road whether it’s 3 to 6 months or whatever the case maybe? Do you see the possibility for any change in mix, but if you think that with customers and consumers potentially being having their own balance sheets being damaged, do you see maybe a shift like back-to-basics away from fashion basics as you see a recovery taking all the imprintable space?

No, I think that the space is well balance, where I would say that the opportunity typically in sometimes in markets is price elasticity. Pricing is a little bit aggressive. I mean, you can create demand from promotional products and other avenues that one because instead of merchandising something on a pen, you do it with a T-shirt and a giveaway or dog food or a case of beer you get a T-shirt, so there is all kinds of the gimmicks that people could use which typically has been more than basic category. So I would say that in balance, I don’t think there will be a huge shift. I mean, I think the shift still is a continued shift to fashion products. They are still growing in the market and then that may change up until this situation COVID started. I mean, we are still continuing to grow. And we will see what happens, but I think I don’t see a big change in the environment. And if you look at our POS from a negative perspective, I think it’s pretty well negatively across the board. I mean, it’s not – there is not one thing that is doing well sort of just right across the board pretty closely aligned.

Okay, that’s it for me. Thank you very much. And I commend you on your services in the healthcare sector while your manufacturing plants are down. Thank you.

And our next question comes from Chris Lee with Desjardins. You may proceed.

Good afternoon. Did I hear you correctly that the POS in certain parts of your imprintable business is a little bit less negative than your internal expectations?

No, what I have said was that the last couple of days, 2, 3 days it was better than our expectations. So I wouldn’t hold you back on that one, sorry. But it’s basically we have been tracking at 75 negative level and with the last couple of days, it’s improved some. So we don’t know is that because markets are opening up, I mean – but I mean, that’s at the end of the day look when people get out of their house, they are going to start spending. Beaches have opened up. So these are types of things where – when you start taking place again we will see POS improve. So the quicker that the social distancing eases, I think the POS would pickup. So we have taken a pretty conservative approach we think to, because the approach we have taken in terms of we see things going into Q2 is pretty much we saw in April. So if things get better then obviously that will be great news for us.

Okay. And then maybe a follow-up on that is, I mean, just in terms around timing based on your experience, I mean do you think 75% damage kind of the trough – I am trying to understand, do you think there is something structurally within the imprintable market where you kind of reach he bottom and maybe you stay there for a little bit, but can you get worse than 75% in your vision over the next few, couple of…

I would say that 75% is the bottom because everything is closed down and it’s at 75% right. Unfortunately, I think we hit the bottom right so which is a good news, because that’s what I am little bit – from your optimistic side, we have plateaued off this bottom and we are trading less than that level today over the last couple of days. So, hopefully, the bottom has been hit and are moving forward. So I think that, that’s pretty much the bottom. It was the bottom in China. It’s been the bottom in Europe. So it’s typically been the bottom so far everywhere we have been.

Yes. And I wanted to check in China, I think last time you have sort of a data point where it was down 75 in February and down 35ish in March, can you give us an update on how that market is performing?

We are still down around 50% so it is not in that week that we gave it I started coming back and it’s it still hasn’t totally bounced back and then China has even though the markets are opened up and they are still not business as usual they are much more strict there social distancing is still a major factor people haven’t gone out restaurants car dealerships are still not doing well. Although they started their factories doesn’t mean that they have started their social life’s alright so we so it hasn’t come back as anticipated to be honest with you but, I think it is a different environment I think that the and it's also not comparing the maturity of the North American market, in terms of the lifestyle and everything else so

Okay that’s great. And then maybe just a quick one for Rhod I just want to confirm what you said earlier from our modeling prospective looking at the income statement for Q2 that I hear you correctly that if am looking at my cost of goods sales and SG&A expenses all in is running above $50 million per month so about $150 million for the quarter?

I mean basically that is I would say a fair estimate. If you look at again what our cost structure is and where we are we are going to try and improve upon that Chris right as we go forward but that’s what I said and that’s what you should think about as far as the base drag lets say that we see as we got everything idled and we are just feeding sales out of inventory.

Okay, great and thanks to everyone. Thank you.

Thank you.

And our next question comes from Mark Petrie with CIBC. You may proceed.

Yes thanks. I was just curious if you have seen any trends in you ecommerce business that might have surprised you or might of fact how you think about that business going forward or how you kind of want to approach it?

No I think look at our ecommerce business is doing very well we are projected to have a significant increase this year it slowed down little bit like I said at the end of March but its picked back up and it is really where it need to be we have all of our products only being sold online including American Apparel today Comfort Colors brands, so everything we have – our Gildan’s underwear, so everything we have is I think performing well and I think we are well positioned to continue our grow.

Okay, thanks. And then Glenn you touched on this earlier and maybe it is just way to early to ask something like this but I am curious about how your capacity would be affected by social distancing in your plants if that was a reality that you guys needed to operate under?

Well it is a reality for sure right. So what we have already worked our plans to reconfigure our sewing lines because that’s really where the big issues is in selling in textiles it is not a big issue at all really so we already have a plan and during the time that we have started to develop the mask and the gowns these plants are already geared up to develop a format of social distancing which we will have to rest of our facilities so we have to configure all of our lines and put in all the restrictions and testing and etcetera one other things that being a global manufacturer is that we have a good indication some of this happening because of our business in China we have done things like we bought COVID test kits for example for Korea back in March so we can test our employees and we have that capability we have got an abundance of masks that we're producing for them we have now geared up to have additional transportation as because we cannot put so many people in the buses working at different types of shifts so we can adapt to the space that we require so all these types of things we have already put in place to anticipation of coming online and it is all being piloted right now during the developing mask and gowns and I think we are in pretty good shape to restart when we need to look for social distancing in mind.

Hello, ladies and gentleman. This concludes our Q&A portion for today’s conference. I would now like to turn the call back over to Sophie Argiriou for closing remarks.

Okay. Thanks, Demetria. Before ending the conference call today, I would like to remind you that we will be holding our Annual Shareholders Meeting tomorrow morning at 10:00 a.m. Eastern Time that is and it’s going to be in virtual format. So with that, I would like to thank everyone for joining us again today and we look forward to speaking to you very soon. Have a good evening. Goodbye.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating and you may now disconnect. Everyone, have a great day.