MRO Magazine

Delta Galil Reports Record 2015 First Quarter Results

By Business Wire News   



TEL AVIV, Israel

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 and activewear, today reported its financial results for the first quarter ended March 31, 2015.

The Company reported sales of $252.8 million for the first quarter of 2015, up from $238.1 million for the same quarter last year, an increase of 6% after the effect of currency translation, and a 13% increase in original currency. The growth in sales reflected increases in several geographic markets.

Operating income was $15.3 million for first quarter 2015, up 3% from $14.8 million in the same quarter of 2014. The growth in operating income was driven primarily by higher sales.

Net income attributable to shareholders was $8.9 million in the 2015 first quarter, compared to $8.7 million in the same quarter of 2014, a 2% increase. Diluted earnings per share attributed to shareholders were $0.35 for the 2015 first quarter, up from $0.34 for the 2014 first quarter.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “Our balanced and diversified mix of businesses, products and markets – along with our strategic efforts to grow in areas such as branded products and activewear – drove solid momentum in sales and earnings in the 2015 first quarter.. And we are investing in new products and resources to drive sustained profitable growth and long-term shareholder value.”

“The strongest contributors to our sales growth globally have been North America, Germany and Israel. Branded products continue to contribute a larger proportion of our sales, reflecting our strategy to grow this aspect of our business in recent years. We also are benefitting from our focus on activewear, which is one of the fastest growing segments of the apparel industry, and where our strengths in seamless products and innovative fabrics provide Delta Galil with a sharp competitive edge.”

“Delta Galil’s performance in 2015 will benefit from new products and licensing relationships with leading brands that we have launched during the first quarter of 2015, such as Lacoste and Marc O’Polo. In Activewear, we have licenses with Avia and Kenneth Cole, and a design and manufacturing agreement with Asics, among others. We also are continuing to invest in additional manufacturing capacity, as well as in our retail stores in Europe and Israel. And, with a solid cash position of $145.3 million, we have the financial resources to support our investments in innovation, growth and progress.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $19.6 million or 7.8% of sales in the 2015 first quarter, increasing 3% compared with $19.0 million or 8.0 % of sales in the same quarter of 2014.

Operating cash flow was negative $19.8 million in the 2015 first quarter, versus negative $6.6 million in the same period of 2014. The increase in the negative operating cash flow in the 2015 first quarter was due to a $33.5 million increase in working capital, compared with a moderate working capital increase of $18.7 million in the same quarter of 2014, reflecting the seasonality of the business.

Net financial debt as of March 31, 2015 was $83.7 million, compared to $83.2 million as of March 31, 2014 and $64.5 million as of December 31, 2014. The increase in the net financial debt as of March 31, 2015 compared to December 31, 2014 is attributed mainly to the negative operating cash flow.

The net financial debt to EBITDA ratio remained unchanged at 0.9 for both the first quarter of 2015 and 2014.

Equity on March 31, 2015 was $328.2 million, compared to $328.6 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on May 28, 2015. The determining and “ex-dividend” date will be May 19, 2015, per the Tel Aviv Stock Exchange.

Reaffirming Guidance for 2015

The Company today reiterated its 2015 financial guidance, excluding non-recurring items, which is based on current market conditions and current exchange rates of $1.12 per Euro and 3.90NIS per US$, reflecting a strong outlook for sales and profitability.

  • Full-year 2015 sales are expected to range between $1,065 million-$1,085 million, representing an increase of 3%-5% (equivalent to 7% to 9% in constant currency) from 2014 actual sales of $1,031.9 million.
  • Full-year 2015 EBIT is expected to range between $75 million-$79 million, representing an increase of 1%-6% from 2014 actual EBIT of $74.4 million; excluding the exchange rate impact the increase is between 12%-17%.
  • Full-year 2015 EBITDA is expected to range between $94 million-$99 million, representing an increase of 1%-6% from 2014 actual EBITDA of $93 million; excluding the exchange rate impact the increase is between 10%-15%.
  • Full-year 2015 net income is expected to range between $48.5 million-$51.5 million, representing an increase of 0%-6% from 2014 actual net income of $48.4 million; excluding the exchange rate impact the increase is between 12%-18%.
  • Full-year 2015 diluted EPS is expected to range between $1.88-$2.00, representing an increase of 1%-8% from 2014 actual EPS of $1.86; excluding the exchange rate impact the increase is between 13%-19%.

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; babywear, activewear, sleepwear, and leisurewear. 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 March 31, 2015

     

March 31

December 31

2015

 

2014

2014

(Unaudited)

(Audited)

Thousands of Dollars

Assets
Current assets:
Cash and cash equivalents145,341 51,228 166,958
Restricted Cash409 1,561 369
Other accounts receivable:
Trade receivables110,292 107,384 108,559
Taxes on income receivable5,704 4,632 6,096
Others16,845 11,416 26,202
Financial derivative107 2,817 329
Inventory185,136 178,912 181,687
Assets classified as held for sale1,000 1,000 1,000
Total current assets464,834 358,950 491,200
 
Non-current assets:
Long-term receivables6,626 18,174 8,013
Investment property3,621 4,817 4,132
Fixed assets, net of accumulated depreciation104,360 94,793 98,861
Intangible assets, net of accumulated amortization117,872 127,482 118,506
Deferred tax assets10,770 10,028 11,348
Financial derivative1,014 11,976 1,254
Total non-current assets244,263 267,270 242,114
Total assets709,097 626,220 733,314
 
 
   March 31  December 31
2015  20142014
(Unaudited)(Audited)
Thousands of Dollars
Liabilities and Equity
Current liabilities:
Short-term bank loans390 2,165 931
Current maturities of debentures22,882 18,080 23,054
Financial derivative2,784 2,235
Other accounts payable:
Trade payables65,238 61,418 80,648
Taxes on income payable5,535 5,241 4,961
Others58,290   54,754   57,548  
Total current liabilities155,119   141,658   169,377  
 
Non-current liabilities:
Severance pay liabilities less plan assets2,296 2,238 2,339
Other non-current liabilities17,031 20,822 19,999
Debentures192,378 128,817 197,262
Reserve for deferred taxes2,863 4,105 2,954
Financial derivative11,181     8,784  
Total non-current liabilities225,749   155,982   231,338  
Total liabilities380,868   297,640   400,715  
 
Equity:
Equity attributable to equity holders of the parent company:
Share capital23,610 23,510 23,579
Share premium128,864 127,194 128,274
Other capital reserves(17,421) 17,790 (6,598 )
Retained earning202,965 169,915 197,135
Treasury shares(10,933) (10,996 ) (10,933 )
327,085 327,413 331,457
Minority interests1,144   1,167   1,142  
Total equity328,229   328,580   332,599  
Total liabilities and equity709,097   626,220   733,314  
 
 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Statement of Income

For the 3-month period ending March 31, 2015

     
Three months ended on
March 31% Increase
2015  2014
(Unaudited)
Thousands of dollars
Sales252,838 238,0746%
Cost of sales179,972   165,635
Gross profit72,866 72,4391%
% of sales28.8%%30.4
Selling and marketing expenses49,859 49,950
% of sales19.7%%21.0
General and administrative expenses9,280 8,7866%
% of sales3.7%%3.7
Other income, net1,423 1,135
Share in profit of associated companies accounted for using the equity method179  
Operating income15,329 14,8383%
% of sales6.1%%6.2
Finance expenses, net4,199   3,04738%
Income before taxes on income11,130 11,791
Taxes on income2,211   2,461
Net income for the period8,919   9,330
Attribution of net earnings for the period:
Attributed to company’s shareholders8,889 8,7492%
Attributed to non-controlling interests30   581
8,919   9,330
Net diluted earnings per share attributable to Company’s shareholders0.35   0.343%
 
 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Cash Flow Reports

For the 3-month period ending March 31, 2015

     Year Ending
Three months ended on March 31December 31
2015  20142014
(Unaudited)(Audited)
Thousands of Dollars
Cash flows from operating activities  
Net profit for the period8,919 9,330 47,431
Adjustments required to reflect cash flows deriving from
operating activities(24,713) (12,051 ) 28,352
Interest paid in cash(3,786) (2,978 ) (11,693 )
Interest received in cash1,211 102 895
Taxes on income paid in cash, net(1,461) (1,017 ) (11,652 )
Net cash generated from (used in) operating activities(19,830) (6,614 ) 53,333  
Cash flows from investment activities:
Acquisition of fixed assets and intangible assets(6,714) (6,182 ) (26,913 )
Acquisition of a subsidiary(2,000) (1,500 )
Restricted cash release (deposit)(86) (110 ) 1,037
Investments in associated companies (2,798 ) (5,000 )
Proceeds from the sale of fixed assets86 1,454 1,914
Payments related to realization of asset held for sale (Tax payment related to the realization)10,879 (1,989 ) (1,989 )
Others(18) 15   68  
Net cash generated from (used in) investment activities2,147   (9,610 ) (32,383 )
Cash flows from financing activities:
Dividends paid to non-controlling interest holders in consolidated subsidiary(28) (1,575 ) (1,690 )
Long term payables credit for fixed assets purchase(1,650) (1,068 ) (2,459 )
Debentures repayment (17,699 )
Dividend paid(3,500) (3,000 ) (13,500 )
Repayment of loans and other long-term liabilities(156) (239 ) (696 )
Short-term credit from banking corporations, net(450) (24,245 ) (25,173 )
Debentures issuance return, excluding issuance expenses 115,689
Bank deposit used as security with respect of the SWAP
transaction
2,708 (4,950 )
Proceeds from exercise of employee options621   181   1,115  
Net cash generated from (used in) financing activities(2,455) (29,946 ) 50,637  
Net increase (decrease) in cash and cash equivalents(20,138) (46,170 ) 71,587  
Exchange rate differences and revaluation of cash and cash equivalents, net(1,479) 52 (1,975 )
Balance of cash and cash equivalents at the beginning of the period166,958   97,346   97,346  
Balance of cash and cash equivalents at the end of the period145,341   51,228   166,958  
 
 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Cash Flow Reports

For the 3-month period ending March 31, 2015

     
Year Ending
Three months ended on March 31December 31
2015  20142014
(Unaudited)(Audited)
Thousands of Dollars
Adjustments required to reflect cash flows    
from operating activities:
Revenues and expenses not involving cash flow:
Depreciation3,674 3,541 15,851
Amortization643 647 2,751
Cash erosion (revaluation), net289 (2 ) 652
Interest paid in cash3,786 2,978 11,693
Interest received in cash(1,211) (102 ) (895 )
Taxes on income paid in cash, net1,461 1,017 11,652
Deferred taxes, net444 156 (2,124 )
Severance pay liability, net154 121 124
Restructuring expenses(217) (77 )
Capital gain (loss) from sale of fixed assets and asset held for sale10 (1,055 ) (1,257 )
Change in benefit component of options and restricted share unit granted to Employees431 176 716
Change to the fair value of financial derivatives(79) (443 ) (705 )
Share in losses of associated companies accounted for using the equity method(179) 178
Increase in liabilities of Long-term employee bonuses 166 608
Changes in long term balances(91) (371 ) 1,451
Others(301) (149 ) 1,552  
8,814   6,680   42,170  
Changes to operating assets and liabilities:
Decrease (increase) in trade receivables(2,864) 5,404 (538 )
Increase in other receivable(1,837) (3,268 ) (8,002 )
Decrease (increase) in trade payables(15,788) (8,598 ) 11,816
Increase (decrease) in other payables(3,142) (2,992 ) 4,600
Increase in inventory(9,896) (9,277 ) (21,694 )
(33,527) (18,731 ) (13,818 )
(24,713) (12,051 ) 28,352  

For more information:
Nissim Douek, +972-54-5201178
Nissim@unik.co.il
or
U.S. Media:
Berns Communications Group
Stacy Berns/Melissa Jaffin, +1-212-994-4660
sberns@bcg-pr.com

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