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Delta Galil Reports Third Quarter 2019 Results

November 13, 2019

TEL AVIV, Israel--(BUSINESS WIRE)--Nov 13, 2019--

Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange, DELTY.PK/OTCQX), the global manufacturer and marketer of branded and private label apparel products for men, women and children, as well as leisurewear, activewear and denim, today reported its financial results for the third quarter ended September 30, 2019. The Company’s results in 2019 reflect the application of International Financial Reporting Standard 16 (“IFRS 16”) with respect to accounting for leases.

Sales

The Company reported a 20% increase in sales of $446.1 million for the third quarter of 2019, compared to $370.8 million for the third quarter last year. Excluding Bogart, which was acquired on July 2, 2019, sales in original currency increased by 6% as compared to the third quarter of 2018. Sales for the first nine months of 2019 increased 14% to $1,185.4 million, from $1,044.2 million for the same period of 2018. Excluding Bogart and Eminence sales in the first six months, sales in original currency increased by 5% as compared to the first nine months of 2018.

Operating Profit

Operating profit increased 57% to $26.7 million in the third quarter of 2019, compared to $17 million in the third quarter last year. Operating profit before one-time items increased 2% to $27.1 million for the third quarter of 2019, compared to $26.7 million for the same quarter last year.

Operating profit for the first nine months of 2019 was $51.5 million, compared to $42.3 million in the first nine months of 2018, a 22% increase. Operating profit, excluding one-time items for the first nine months of 2019, totaled $54.7 million, compared to $55.9 million for the comparable period of 2018, a 2% decrease.

Net Income

Net income was $14.0 million in the third quarter of 2019, compared to $9.6 million in the same quarter last year, a 46% increase. Net income, excluding one-time items, was $14.5 million in the third quarter of 2019, compared to $16.6 million last year, a 13% decrease.

Net income for the first nine months of 2019 totaled $22.1 million, compared to $23.5 million for the same period last year, a 6% decrease. Net income, excluding one-time items for the first nine months of 2019, was $25.4 million, compared to $33.2 million for the comparable period of 2018, a 24% decrease.

Diluted earnings per share were $0.55 for the third quarter of 2019, compared to $0.38 for the third quarter of 2018, a 45% increase. Diluted earnings per share, excluding one-time items, were $0.57 in the third quarter of 2019, compared to $0.65 in the third quarter last year, a 13% decrease.

Diluted earnings per share for the first nine months of 2019 were $0.87, compared to $0.93 for the first nine months of 2018, a 7% decrease. Diluted earnings per share, excluding one-time items for the first nine months of 2019, were $0.99, compared to $1.31 for the same period last year, a 24% decrease.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “We are pleased with our third quarter results, which reflect our balanced and diversified mix of businesses, products and markets. During the quarter, we benefited from positive momentum in our Global Upper Market, strong retail sales for Delta Israel and significant growth in both the Socks and Seamless categories. Additionally, e-commerce sales on Delta’s own website grew by double digits and we successfully concluded the acquisition of The Bogart Group.”

“Looking forward, we are focusing on further growing these business segments and improving the performance of our DGUSA and Delta Premium Brands by implementing a structured strategic and operational plan.”

“The third quarter represented the first time we consolidated results for The Bogart Group. We intend to leverage its strong market position going forward, particularly as we see opportunities for it to strengthen DGUSA’s product assortment.”

“Additionally, we plan to focus on growing the Eminence ladies and kids products, while leveraging the European brands infrastructure for selling Delta products.”

“Looking ahead, we will focus on driving organic growth, and seek new opportunities to apply our competitive and financial strengths to deliver shareholder value.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $51.5 million in the third quarter of 2019, up 46% from $35.3 million in the same quarter last year. For the first nine months of 2019, EBITDA was $119.5 million, up 50% from $79.6 million in the same period of 2018.

Operating cash flow improved to $11.2 million in the third quarter of 2019, compared to negative $14.2 million in the third quarter of 2018. For the first nine months of 2019, operating cash flow was $42.8 million, up from negative $34.1 million in the same period of 2018.

Net financial debt as of September 30, 2019 was $417.8 million, compared to $349.1 million as of September 30, 2018, and $326.7 million as of December 31, 2018.

Equity on September 30, 2019 was $469.1 million, up from $457.6 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on December 3, 2019. The determining and “ex-dividend” date will be November 21, 2019.

2019 Financial Guidance

IFRS 16

Starting January 1, 2019, the Company adopted the new lease accounting standards set forth in IFRS 16. This requires that certain leases, which were accounted for as operating leases, be treated as capital leases going forward. Certain leases will be reclassified as assets and liabilities on the balance sheet, which will yield increased depreciation and interest expense, offset by a reduction in rental expense.

About Delta Galil Industries

Delta Galil Industries is a global manufacturer and marketer of branded and private label apparel products for men, women and children. Since its inception in 1975, the Company has continually strived to create products that follow a body-before-fabric philosophy, placing equal emphasis on comfort, aesthetics and quality. Delta Galil develops innovative seamless apparel including bras, shapewear and socks; intimate apparel for women; extensive lines of underwear for men including the brands Schiesser, Eminence, Athena & Liabel; babywear, activewear, sleepwear such as PJ Salvage, and leisurewear. Delta Galil also designs, develops markets and sells branded denim and apparel under the brand 7 For All Mankind ®, and ladies apparel under the brands Splendid ® and Ella Moss ®, among others. In addition, it sells its products under brand names licensed to the company, including: Wilson, Maidenform, Tommy Hilfiger, and others. For more information, visit www.deltagalil.com.

Safe Harbor Statement

Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect” and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein, and while expected, there is no guarantee that we will attain the aforementioned anticipated developmental milestones. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.

 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Balance Sheets

As of September 30, 2019

 

September 30

 

December 31

2019

 

2018

 

2018

(Unaudited)

 

(Audited)

Thousands of Dollars

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

50,221

 

58,743

 

70,534

Restricted Cash

813

 

3,150

 

3,494

Other accounts receivable:

 

 

 

 

 

Trade receivables

213,701

 

190,903

 

224,019

Taxes on income receivable

2,552

 

2,799

 

881

Others

34,591

 

29,070

 

26,395

Financial derivative

880

 

667

 

273

Inventory

405,372

 

356,606

 

309,645

Total current assets

708,130

 

641,938

 

635,241

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Investments in associated companies accounted using

 

 

 

 

 

the equity method and long-term receivables

14,541

 

15,470

 

29,401

Investment property

3,174

 

3,508

 

3,424

Fixed assets, net of accumulated depreciation

216,308

 

189,604

 

191,738

Goodwill

145,675

 

111,570

 

110,955

Intangible assets, net of accumulated amortization

269,897

 

221,526

 

221,669

Assets in respect of usage rights

209,376

 

-

 

-

Deferred tax assets

15,779

 

11,438

 

9,285

Financial derivative

17,096

 

12,606

 

4,216

Total non-current assets

891,846

 

565,722

 

570,688

Total assets

1,599,976

 

1,207,660

 

1,205,929

 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Balance Sheets

As of September 30, 2019

 

September30

 

December 31

2019

 

2018

 

2018

(Unaudited)

 

(Audited)

Thousands of Dollars

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Short-term bank loans

80,917

 

78,028

 

79,987

Current maturities of bank loan

10,662

 

8,136

 

8,015

Current maturities of debentures

29,706

 

20,424

 

19,514

Financial derivative

2,074

 

2,680

 

2,935

Current maturities of liabilities in respect of leases

52,818

 

-

 

-

Other accounts payable:

 

 

 

 

 

Trade payables

186,023

 

137,035

 

139,591

Taxes on income payable

10,903

 

10,416

 

10,481

Others

126,417

 

107,799

 

112,326

Total current liabilities

499,520

 

364,518

 

372,849

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Bank loan

70,975

 

73,232

 

70,134

Severance pay liabilities less plan assets

8,726

 

8,982

 

8,886

Liabilities in respect of leases

178,703

 

-

 

-

Other non-current liabilities

49,719

 

35,350

 

35,833

Debentures

288,197

 

241,482

 

222,975

Deferred taxes liabilities

35,002

 

26,324

 

25,798

Financial derivative

-

 

219

 

1,603

Total non-current liabilities

631,322

 

385,589

 

365,229

Total liabilities

1,130,842

 

750,107

 

738,078

 

 

 

 

 

 

Equity:

 

 

 

 

 

Equity attributable to equity holders of the parent company:

 

 

 

 

 

Share capital

23,714

 

23,713

 

23,714

Share premium

130,150

 

130,735

 

130,667

Other capital reserves

(14,442)

 

(289)

 

(10,503)

Retained earning

345,550

 

319,259

 

339,922

Treasury shares

(16,092)

 

(16,596)

 

(16,523)

 

468,880

 

456,822

 

467,277

Minority interests

254

 

731

 

574

Total equity

469,134

 

457,553

 

467,851

Total liabilities and equity

1,599,976

 

1,207,660

 

1,205,929

 

 

 

DELTA GALIL INDUSTRIES LTD.

Consolidated Statement of Comprehensive Income

For the 3-month and 9-month periods ending September 30, 2019

 

 

 

 

Nine months ended September 30

 

% Increase/(Decrease)

 

Three months ended September 30

 

% Increase/(Decrease)

 

2019

 

2018

 

 

 

2019

 

2018

 

 

 

(Unaudited)

 

Thousands of Dollars

 

Except for Earnings per Share Data

Sales

1,185,400

 

1,044,157

 

14%

 

446,139

 

370,763

 

20%

Cost of sales

768,537

 

651,616

 

 

 

293,812

 

227,840

 

 

Gross profit

416,863

 

392,541

 

6%

 

152,327

 

142,923

 

7%

% of sales

35.2%

 

37.6%

 

 

 

34.1%

 

38.5%

 

 

Selling and marketing expenses

312,509

 

292,039

 

7%

 

106,496

 

102,111

 

4%

% of sales

26.4%

 

28.0%

 

 

 

23.9%

 

27.5%

 

 

General and administrative expenses

53,014

 

46,707

 

14%

 

19,051

 

15,249

 

25%

% of sales

4.5%

 

4.5%

 

 

 

4.3%

 

4.1%

 

 

Other Expenses (income), net

(2,767)

 

(1,784)

 

 

 

(95)

 

(972)

 

 

Share in profits of associated company accounted for using the equity method

634

 

282

 

 

 

265

 

121

 

 

Operating income excluding non-recurring items

54,741

 

55,861

 

(2%)

 

27,140

 

26,656

 

2%

% of sales

4.6%

 

5.3%

 

 

 

6.1%

 

7.2%

 

 

Restructuring expenses

-

 

5,422

 

 

 

-

 

5,427

 

 

Inventory Step up due to Eminence acquisition

 

 

3,849

 

 

 

 

 

3,849

 

 

Deal cost

3,273

 

4,283

 

 

 

431

 

333

 

 

Operating income

51,468

 

42,307

 

22%

 

26,709

 

17,047

 

57%

Finance expenses, net

25,435

 

15,904

 

60%

 

10,119

 

6,307

 

60%

Income before tax on income

26,033

 

26,403

 

 

 

16,590

 

10,740

 

 

Taxes on income

3,902

 

2,904

 

 

 

2,556

 

1,109

 

 

Net income for the period

22,131

 

23,499

 

(6%)

 

14,034

 

9,631

 

46%

Net income for the period excluding one-time items, net of tax

25,404

 

33,244

 

(24%)

 

14,465

 

16,624

 

(13%)

 

 

 

 

 

 

 

 

 

 

 

 

Attribution of net earnings for the period:

 

 

 

 

 

 

 

 

 

 

 

Attributed to company's shareholders

22,177

 

23,854

 

 

 

14,080

 

9,684

 

 

Attributed to non-controlling interests

(46)

 

(355)

 

 

 

(46)

 

(53)

 

 

 

22,131

 

23,499

 

 

 

14,034

 

9,631

 

 

Net diluted earnings per share attributed to company's shareholders

0.87

 

0.93

 

(7%)

 

0.55

 

0.38

 

45%

Net diluted earnings per share, before non-recurring items net of tax attributable to Company's shareholders

0.99

 

1.31

 

(24%)

 

0.57

 

0.65

 

(13%)

 

DELTA GALIL INDUSTRIES LTD.

IFRS16 IMPACT

 
 

 

Nine months ending

 

Three months ending

 

September 30, 2019

 

September 30, 2019

 

Before IFRS16

 

Reported

 

Before IFRS16

 

Reported

 

Millions of Dollars

Operating income

45.7

 

51.5

 

24.6

 

26.7

Operating income excluding non-recurring items

49.0

 

54.7

 

25.1

 

27.1

EBITDA

76.9

 

119.5

 

35.7

 

51.5

Finance expenses, net

19.0

 

25.4

 

7.8

 

10.1

Net income for the period

22.6

 

22.1

 

14.2

 

14.0

Net income for the period excluding one-time items, net of tax

26.0

 

25.5

 

14.7

 

14.5

Cash flows from operating activities

0.3

 

42.8

 

(4.5)

 

11.2

 

 

 

 

DELTA GALIL INDUSTRIES LTD.

 

 

 

 

Consolidated Cash Flow Reports

For the 3-month and 9-month periods ending September 30, 2019

 

 

 

 

Nine months ending

 

Three months ending

September 30

 

September 30

2019

 

2018

 

2019

 

2018

(Unaudited)

Thousands of Dollars

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income for the period

22,131

 

23,499

 

14,034

 

9,631

Adjustments required to reflect cash flows deriving from operating activities

41,648

 

(43,466)

 

2,243

 

(17,819)

Interest paid in cash

(14,913)

 

(10,709)

 

(4,606)

 

(4,756)

Interest received in cash

437

 

312

 

-

 

2

Taxes on income paid in cash, net

(6,531)

 

(3,768)

 

(516)

 

(1,222)

Net cash generated (used in) from operating activities

42,772

 

(34,132)

 

11,155

 

(14,164)

Cash flows from investment activities:

 

 

 

 

 

 

 

Acquisition of fixed assets and intangible assets

(20,022)

 

(30,852)

 

(6,440)

 

(10,603)

Payments under subsidiary purchase transaction

(26,370)

 

-

 

(26,370)

 

-

Restricted cash release (deposit)

2,681

 

(89)

 

405

 

(339)

Earn-out payment for acquisition of an activity

-

 

(2,250)

 

-

 

-

Providing long term loans

(18,102)

 

-

 

-

 

-

Acquisition of a subsidiary

(441)

 

(135,380)

 

-

 

(135,380)

Proceeds from selling of fixed asset

218

 

1,774

 

121

 

98

Others

804

 

(2,505)

 

804

 

(860)

Net cash used in Investing activities

(61,232)

 

(169,302)

 

(31,480)

 

(147,084)

Cash flows from financing activities:

 

 

 

 

 

 

 

Dividends paid to non-controlling interest holders in consolidated subsidiary

 

 

 

 

 

 

 

(346)

(30)

-

-

Long term payables credit for fixed assets purchase

(2,658)

 

(2,637)

 

(1,017)

 

(994)

Lease principle repayment

(42,492)

 

-

 

(15,703)

 

-

Debentures principle repayment

(8,093)

 

(8,093)

 

(8,093)

 

(8,093)

Financial Institute payment

-

 

(6,413)

 

-

 

-

Dividend paid

(7,544)

 

(10,528)

 

(2,492)

 

(3,529)

Long term loan received from bank

-

 

81,480

 

-

 

81,480

Repayment of long-term loans from banks

(6,506)

 

-

 

(2,536)

 

-

Short-term credit from banking corporations, net

(1,989)

 

71,283

 

62,838

 

46,713

Proceed from Debentures Issuance, net of Issuance expenses

69,129

 

-

 

-

 

-

Proceeds from exercise of employees options

-

 

266

 

-

 

24

Net cash generated from ( used in) financing activities

(499)

 

125,328

 

32,997

 

115,601

Net increase (decrease) in cash and cash equivalents

(18,959)

 

(78,106)

 

12,672

 

(45,647)

Exchange rate differences and revaluation of cash and cash equivalents, net

(1,354)

 

(621)

 

(1,062)

 

(363)

Balance of cash and cash equivalents at the beginning of the period

70,534

 

137,470

 

38,611

 

104,753

Balance of cash and cash equivalents at the end of the Period

50,221

 

58,743

 

50,221

 

58,743

 

 

 

 

DELTA GALIL INDUSTRIES LTD.

 

 

 

 

Consolidated Cash Flow Reports

For the 3-month and 9-month periods ending September 30, 2019

 

 

 

 

Nine months ending

 

Three months ending

September 30

 

September 30

2019

 

2018

 

2019

 

2018

(Unaudited)

Thousands of Dollars

Adjustments required to reflect cash flows

 

 

 

 

 

 

 

from operating activities:

 

 

 

 

 

 

 

Revenues and expenses not involving cash flow:

 

 

 

 

 

 

 

Depreciation

21,640

 

20,714

 

8,217

 

8,029

Amortization

43,140

 

3,505

 

16,209

 

1,110

Cash erosion, net

(138)

 

111

 

9

 

151

Interest paid in cash

14,913

 

10,709

 

4,606

 

4,756

Interest received in cash

(437)

 

(312)

 

-

 

(2)

Taxes on income paid in cash, net

6,531

 

3,768

 

516

 

1,222

Deferred taxes on income, net

(2,424)

 

(2,425)

 

(1,633)

 

(1,794)

Discount component for lease agreements

6,095

 

-

 

1,840

 

-

Severance pay liability, net

112

 

237

 

7

 

110

Restructuring expenses ,net

-

 

4,133

 

-

 

4,575

Capital loss (gain) from sale of fixed assets and asset held for sale

5

 

86

 

(28)

 

152

Change to the benefit component of options and RSU granted to employees

995

 

1,145

 

394

 

345

Share in profits of associated company accounted for using the equity method

(634)

 

(282)

 

(265)

 

(121)

Others

326

 

1,076

 

(206)

 

822

 

90,124

 

42,465

 

29,666

 

19,355

Changes to operating assets and liabilities:

 

 

 

 

 

 

 

Decrease (increase) in trade receivables

28,391

 

(25,093)

 

(10,892)

 

(17,256)

Decrease in other receivable and balances

(5,791)

 

(4,170)

 

2,603

 

1,072

Increase (decrease) in trade payables

9,616

 

15,434

 

7,363

 

9,405

Increase (decrease) in other payables

(13,238)

 

(13,060)

 

2,193

 

(3,601)

Decrease (increase) in inventory

(67,454)

 

(59,042)

 

(28,690)

 

(26,794)

 

(48,476)

 

(85,931)

 

(27,423)

 

(37,174)

 

41,648

 

(43,466)

 

2,243

 

(17,819)

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191113005866/en/

CONTACT: Nissim Douek

+972-54-5201178

Nissim@unik.co.ilU.S. Media:

Stacy Berns/Danielle Poggi

Berns Communications Group

+1-212-994-4660

sberns@bcg-pr.com

KEYWORD: ISRAEL MIDDLE EAST

INDUSTRY KEYWORD: FASHION RETAIL OTHER RETAIL DEPARTMENT STORES MANUFACTURING OTHER MANUFACTURING TEXTILES

SOURCE: Delta Galil Industries, Ltd.

Copyright Business Wire 2019.

PUB: 11/13/2019 03:40 PM/DISC: 11/13/2019 03:40 PM

http://www.businesswire.com/news/home/20191113005866/en