TEL AVIV, Israel--(BUSINESS WIRE)--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, jeans and activewear, today reported its financial results for the third quarter ended September 30, 2016.
Sales
The Company reported sales of $296.6 million for the third quarter of 2016, compared to $284.6 million for the same quarter last year, a 4% increase. Sales for the first nine months of 2016 were $802.8 million, compared to $792.9 million in the same period of 2015, a 1% increase.
Operating profit
Operating profit increased 16% to $24.6 million in the third quarter of 2016, compared to $21.2 million in the third quarter last year. For the first nine months of 2016, operating income was $53.0 million, compared to $51.0 for the same period last year, representing a 4% increase.
Operating profit before one-time items in the third quarter of 2016 amounted to $22.5 million, compared to $22.1 million last year, representing an increase of 2%. Operating profit before one-time items in the first nine months of 2016 amounted to $50.9 million, compared to $51.9 million last year, representing a decrease of 2%.
Net income
Net income was $17.7 million in the third quarter of 2016, compared to $13.4 million in the same quarter last year, increasing 31%. Diluted earnings per share were $0.69 for the 2016 third quarter, compared to $0.52 for the same quarter last year. For the first nine months of 2016, net income was $33.3 million, or $1.30 per diluted share, compared to $31.7 million or $1.23 per diluted share for the same period of 2015.
Management Comment
Isaac Dabah, CEO of Delta Galil, stated: “Our third quarter results demonstrate the strength of our business model, which is built on a diverse portfolio of branded and private label products, an expanding global presence, and a range of market segments that, together, provide both growth momentum and balance. We saw a strong contribution from our recent addition of DG Premium Brands, which includes 7 For All Mankind®, Splendid® and Ella Moss®, and despite the expected soft U.S. market, we experienced strong growth in Europe and Israel.”
“During the quarter, we focused on consolidating Premium Brands into our business, while taking important measures and implementing the necessary efficiencies to both streamline and strengthen the brands to best position them for growth. Also during the quarter, we appointed retail and fashion leader Paula Schneider, who is renowned for building profitable businesses and improving efficiencies for contemporary brands, to oversee this business and execute our ambitious goals for these brands.”
“Importantly, through this new business segment, we are growing our product offering and entering new categories, which is enabling us to reach new customers as well as strengthen our relations with existing ones – all while expanding our global reach.”
“Looking ahead, in addition to maximizing the benefits of this new acquisition, we expect our new Vietnamese factory to contribute to our growth beginning in 2017, and we are on track to open our new Seamfree and Cut & Sew factories in the fourth quarter. With a strong balance sheet to support our long-term growth and acquisition strategy, we are also focused on growing our e-commerce business, and we are working to attain double digit EBIT growth in 2017 and beyond.”
EBITDA, Cash Flow, Net Debt, Equity and Dividend
EBITDA was $28.7 million, or 9.7% of sales in the third quarter of 2016, compared to $27.1 million, or 9.5% of sales in the same quarter last year. For the first nine months of 2016, EBITDA was $67.8 million, or 8.4% of sales, compared to $65.8 million, or 8.3% of sales in the same period of 2015.
Operating cash flow was $12.6 million in the third quarter of 2016, compared with $5.9 million in the third quarter of 2015. Operating cash flow for the nine months ended September 30, 2016, and September 30, 2015, was $15.5 million, and $10.2 million, respectively. Operating cash flow in the last 12 months amounted to $75.8 million, compared to $45.1 million last year.
Net financial debt as of September 30, 2016 was $223.8 million, compared to $123.5 million as of September 30, 2015, and $74.5 million as of December 31, 2015. The increase in net finance debt derives mainly from the Premium Brands activity acquisition.
Equity on September 30, 2016 was $382.0 million, up from $349.9 million a year earlier.
Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on December 6th, 2016. The determining and "ex-dividend" date will be November 23rd, 2016.
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. |
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Concise Consolidated Balance Sheets |
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As of September 30, 2016 |
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September 30 |
December 31 |
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2016 |
2015 |
2015 |
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(Unaudited) |
(Audited) |
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Thousands of Dollars |
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Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | 47,788 | 128,088 | 167,532 | |||||||
Restricted Cash | 1,762 | 456 | 532 | |||||||
Other accounts receivable: | ||||||||||
Trade receivables | 144,949 | 122,291 | 105,630 | |||||||
Taxes on income receivable |
5,599 |
8,530 | 8,963 | |||||||
Others | 18,703 | 15,408 | 15,882 | |||||||
Financial derivative | 511 | 264 | 209 | |||||||
Inventory | 267,693 | 204,702 | 196,172 | |||||||
Assets classified as held for sale | 1,000 | 1,935 | 1,000 | |||||||
Total current assets |
488,005 |
481,674 | 495,920 | |||||||
Non-current assets: | ||||||||||
Investments in associated companies accounted using |
11,256 | 10,433 | 5,421 | |||||||
Investment property | 3,639 | 3,719 | 3,573 | |||||||
Fixed assets, net of accumulated depreciation | 167,724 | 114,977 | 122,129 | |||||||
Goodwill | 70,101 | 70,101 | 70,101 | |||||||
Intangible assets, net of accumulated amortization | 135,707 | 84,373 | 89,734 | |||||||
Deferred tax assets | 16,912 | 10,376 | 9,877 | |||||||
Financial derivative | 6,490 | 1,033 | 1,439 | |||||||
Total non-current assets | 411,829 | 295,012 | 302,274 | |||||||
Total assets |
899,834 |
776,686 | 798,194 | |||||||
September 30 |
December 31 |
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2016 |
2015 |
2015 |
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(Unaudited) |
(Audited) |
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Thousands of Dollars |
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Liabilities and Equity | |||||||||
Current liabilities: | |||||||||
Short-term bank loans | 51,332 | 617 | 52 | ||||||
Current maturities of debentures | 13,583 | 23,489 | 23,365 | ||||||
Financial derivative | 1,832 | 2,854 | 3,049 | ||||||
Other accounts payable: | |||||||||
Trade payables | 103,859 | 83,851 | 100,956 | ||||||
Taxes on income payable | 4,393 | 4,343 | 2,690 | ||||||
Others | 87,905 | 60,526 | 65,807 | ||||||
Total current liabilities | 262,904 | 175,680 | 195,919 | ||||||
Non-current liabilities: | |||||||||
Severance pay liabilities less plan assets | 2,867 | 2,254 | 2,696 | ||||||
Other non-current liabilities | 33,810 | 20,282 | 22,533 | ||||||
Debentures | 211,981 | 216,446 | 211,728 | ||||||
Reserve for deferred taxes | 4,638 | 3,118 | 2,528 | ||||||
Financial derivative | 1,607 | 9,052 | 5,311 | ||||||
Total non-current liabilities | 254,903 | 251,152 | 244,796 | ||||||
Total liabilities | 517,807 | 426,832 | 440,715 | ||||||
Equity: | |||||||||
Equity attributable to equity holders of the parent company: |
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Share capital | 23,688 | 23,662 | 23,666 | ||||||
Share premium | 130,529 | 130,113 | 130,421 | ||||||
Other capital reserves | (8,759) | (13,814) | (15,692) | ||||||
Retained earning | 252,943 | 219,712 | 228,817 | ||||||
Treasury shares | (17,490) | (10,933) | (10,849) | ||||||
380,911 | 348,740 | 356,363 | |||||||
Minority interests | 1,116 | 1,114 | 1,116 | ||||||
Total equity | 382,027 | 349,854 | 357,479 | ||||||
Total liabilities and equity | 899,834 | 776,686 | 798,194 | ||||||
DELTA GALIL INDUSTRIES LTD. |
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Consolidated Statement of Comprehensive Income |
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For the 3-month and 9-month periods ending September 30, 2016 |
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Nine months ended September 30 |
% Increase/(Decrease) |
Three months ended September 30 |
% Increase/(Decrease) | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
(Unaudited) | ||||||||||||||||||
Thousands of Dollars | ||||||||||||||||||
Except for Earnings per Share Data | ||||||||||||||||||
Sales | 802,852 | 792,931 | 1% | 296,634 | 284,556 | 4% | ||||||||||||
Cost of sales | 548,151 | 564,549 | 196,164 | 201,539 | ||||||||||||||
Gross profit | 254,701 | 228,382 | 12% | 100,470 | 83,017 | 21% | ||||||||||||
% of sales | 31.7% | 28.8% | 33.9% | 29.2% | ||||||||||||||
Selling and marketing expenses | 172,122 | 150,788 | 14% | 65,191 | 51,613 | 26% | ||||||||||||
% of sales | 21.4% | 19.0% | 22.0% | 18.1% | ||||||||||||||
General and administrative expenses | 30,936 | 27,136 | 14% | 12,483 | 9,616 | 30% | ||||||||||||
% of sales | 3.9% | 3.4% | 4.2% | 3.4% | ||||||||||||||
Other expenses (income), net | 1,053 | (801) | 427 | (66) | ||||||||||||||
Share in profits of associated companies accounted for using the
equity |
305 | 594 | 166 | 199 | ||||||||||||||
Operating income before one-time items | 50,895 | 51,853 | (2%) | 22,535 | 22,053 | 2% | ||||||||||||
% of sales | 6.3% | 6.5% | 7.6% | 7.7% | ||||||||||||||
Restructuring expenses | 6,895 | - | 6,895 | - | ||||||||||||||
Bargain purchase profit | 10,420 | - | 10,420 | - | ||||||||||||||
Activity Acquisition expenses | 1,456 | 809 | 1,456 | 809 | ||||||||||||||
Operating income | 52,964 | 51,044 | 4% | 24,604 | 21,244 | 16% | ||||||||||||
Finance expenses, net | 10,786 | 12,122 | (11%) | 3,519 | 4,555 | (23%) | ||||||||||||
Income before tax on income | 42,178 | 38,922 | 21,085 | 16,689 | ||||||||||||||
Taxes on income | 8,823 | 7,247 | 3,430 | 3,245 | ||||||||||||||
Net income for the period | 33,355 | 31,675 | 5% | 17,655 | 13,444 | 31% | ||||||||||||
Net income for the period before one-time items | 28,670 | 32,403 | (12%) | 12,970 | 14,172 | (8%) | ||||||||||||
Attribution of net earnings for the period: | ||||||||||||||||||
Attributed to company's shareholders | 33,265 | 31,585 | 17,625 | 13,414 | ||||||||||||||
Attributed to non-controlling interests | 90 | 90 | 30 | 30 | ||||||||||||||
33,355 | 31,675 | 5% | 17,655 | 13,444 | 31% | |||||||||||||
Operating income attributed to company's shareholders before
one- |
28,580 | 32,313 | (12%) | 12,940 | 14,142 | (8%) | ||||||||||||
Net diluted earnings per share attributed to company's shareholders | 1.30 | 1.23 | 6% | 0.69 | 0.52 | 33% | ||||||||||||
Net diluted earnings per share attributed to company's
shareholders |
1.12 | 1.26 | (11%) | 0.51 | 0.55 | (7%) | ||||||||||||
DELTA GALIL INDUSTRIES LTD. |
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Consolidated Cash Flow Reports |
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For the 3-month and 9-month periods ending September 30, 2016 |
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Nine months ending |
Three months ending |
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September 30 |
September 30 |
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2016 |
2015 |
2016 |
2015 |
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(Unaudited) |
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Thousands of Dollars |
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Cash flows from operating activities: | ||||||||||||
Net income for the period | 33,355 | 31,675 | 17,655 | 13,444 | ||||||||
Adjustments required to reflect cash flows deriving from operating activities | (4,811) | (4,198) | 600 | (37) | ||||||||
Interest paid in cash | (9,678) | (10,277) | (3,401) | (3,840) | ||||||||
Interest received in cash | 1,160 | 1,488 | 220 | 176 | ||||||||
Taxes on income paid in cash, net | (4,510) | (8,537) | (2,520) | (3,808) | ||||||||
Net cash generated from operating activities | 15,516 | 10,151 | 12,554 | 5,935 | ||||||||
Cash flows from investment activities: | ||||||||||||
Acquisition of fixed assets and intangible assets | (29,184) | (26,539) | (10,354) | (10,361) | ||||||||
Restricted cash deposit | (1,224) | (103) | (1,226) | (18) | ||||||||
Acquisition of a subsidiary | - | (2,000) | - | - | ||||||||
Acquisition of Activity | (116,902) | (37,368) | (116,902) | (37,368) | ||||||||
Investments in associated companies | - | (3,700) | - | (3,700) | ||||||||
Proceeds from selling of fixed asset | 159 | 149 | 84 | 33 | ||||||||
Proceeds from realization of real estate | - | 10,879 | - | - | ||||||||
Others | (552) | 146 | (135) | 65 | ||||||||
Net cash used for Investing activities | (147,703) | (58,536) | (128,533) | (51,349) | ||||||||
Cash flows from financing activities: | ||||||||||||
Dividends paid to non-controlling interest holders in consolidated subsidiary | ||||||||||||
(90) | (118) | (30) | (90) | |||||||||
Long term payables credit for fixed assets purchase | (2,896) | (2,104) | (245) | (262) | ||||||||
Shares Buy-Back | (6,895) | - | - | - | ||||||||
Debentures principle repayment | (19,379) | (19,379) | (19,379) | (19,379) | ||||||||
Dividend paid | (10,567) | (10,500) | (3,511) | (3,500) | ||||||||
Repayment of loans and other long-term liabilities | (755) | (215) | - | - | ||||||||
Short-term credit from banking corporations, net | 50,503 | (1,706) | 50,278 | (854) | ||||||||
Issuance of debentures, net of issuance costs | - | 40,006 | - | - | ||||||||
Release (deposit) of bank deposit used as a security with respect of SWAP transaction | 1,745 | 2,670 | 2,080 | (2,280) | ||||||||
Proceeds from exercise of employee options | 384 | 1,922 | 285 | 326 | ||||||||
Net cash generated (used in) from financing activities | 12,050 | 10,576 | 29,478 | (26,039) | ||||||||
Net decrease in cash and cash equivalents | (120,137) | (37,809) | (86,501) | (71,453) | ||||||||
Exchange rate differences and revaluation of cash and cash equivalents, net | 393 | (1,061) | 112 | (61) | ||||||||
Balance of cash and cash equivalents at the beginning of the period | 167,532 | 166,958 | 134,177 | 199,602 | ||||||||
Balance of cash and cash equivalents at the end of the Period | 47,788 | 128,088 | 47,788 | 128,088 | ||||||||
DELTA GALIL INDUSTRIES LTD. |
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Consolidated Cash Flow Reports |
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For the 3-month and 9-month periods ending September 30, 2016 |
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Nine months ending |
Three months ending |
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September 30 |
September 30 |
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2016 |
2015 |
2016 |
2015 |
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(Unaudited) |
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Thousands of Dollars |
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Adjustments required to reflect cash flows | ||||||||||||
from operating activities: | ||||||||||||
Revenues and expenses not involving cash flow: | ||||||||||||
Depreciation | 15,157 | 12,037 | 5,925 | 4,369 | ||||||||
Amortization | 2,307 | 1,896 | 829 | 643 | ||||||||
Cash erosion, net | (115) | 361 | (53) | 171 | ||||||||
Interest paid in cash | 9,678 | 10,277 | 3,401 | 3,840 | ||||||||
Interest received in cash | (1,160) | (1,488) | (220) | (176) | ||||||||
Taxes on income paid in cash, net | 4,510 | 8,537 | 2,520 | 3,808 | ||||||||
Deferred taxes on income, net | (1,582) | 1,101 | (740) | 1,697 | ||||||||
Severance pay liability, net | 146 | 81 | 70 | (58) | ||||||||
Capital gain from sale of fixed assets | (48) | (133) | (77) | (40) | ||||||||
Restructuring expenses and impairment of intangible |
3,984 | (628) | 3,984 | (201) | ||||||||
Change in benefit component of options and restricted |
1,454 | 1,492 | 1,084 | 653 | ||||||||
Bargain purchase profit | (10,420) | - | (10,420) | - | ||||||||
Share in profits of associated companies accounted for using |
(305) | (594) | (166) | (199) | ||||||||
Others | 212 | (1,306) | 174 | (1,111) | ||||||||
23,818 | 31,633 | 6,311 | 13,396 | |||||||||
Changes to operating assets and liabilities: | ||||||||||||
Increase in trade receivables | (17,703) | (13,106) | (9,980) | (2,057) | ||||||||
Decrease (increase) in other receivable and balances | 2,514 | (608) | 582 | (191) | ||||||||
Increase (decrease) in trade payables | (6,385) | 4,247 | 7,342 | (3,909) | ||||||||
Increase (decrease) in other payables | 2,314 | (546) | 9,082 | (531) | ||||||||
Increase in inventory | (9,369) | (25,818) | (12,737) | (6,745) | ||||||||
(28,629) | (35,831) | (5,711) | (13,433) | |||||||||
(4,811) | (4,198) | 600 | (37) |