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 fourth quarter and full year ended December 31, 2016.
Sales
The Company reported sales of $376.3 million for the fourth quarter of 2016, a 31% increase compared to $287.1 million for the same quarter last year. Sales for the 2016 full year were $1,179.2 million, a 9% increase from $1,080.0 million for the 2015 full year. The year-over-year increase reflected top-line growth in all key geographic regions, as well as the positive impact of Delta Galil’s diversified portfolio. This includes a significant increase in its branded activity, new businesses with strong global reach, and expansion of its retail activity in Israel and Germany.
Operating profit
Operating profit increased 80% to $32.3 million in the fourth quarter of 2016, compared to $17.9 million in the fourth quarter last year. For the 2016 full year, operating profit grew 23% to $85.3 million, compared to $69.0 for the 2015 full year.
Operating profit excluding one-time items increased 36% in the fourth quarter of 2016, and amounted to $32.3 million, compared to $23.7 million last year. For the 2016 full year, operating profit excluding one-time items amounted to $83.2 million, compared to $75.5 million last year, representing a 10% increase.
Net income
Net income increased 51% to $18.5 million in the fourth quarter of 2016, compared to $12.3 million in the same quarter last year. Net income excluding one-time items totaled $18.5 million, compared to $16.0 million for the same period last year, representing a 16% increase. Diluted earnings per share increased 52% in the 2016 fourth quarter to $0.73, compared to $0.48 for the same quarter last year. For the 2016 full year, net income was $51.9 million, or $2.03 per diluted share, compared to $43.8 million or $1.71 per diluted share for the same period of 2015, representing a 18% increase.
Management Comment
Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with our results for 2016, which concluded with a particularly strong fourth quarter and reflected all-time high sales, operating profit and cash flow. Throughout the year, we remained focused on a number of operational and growth initiatives that improved our business segments and helped make us a more efficient company. Further, our diverse blend of business segments, product categories and an expanded global presence continue to drive both growth momentum and balance.
“During the year, we made the successful acquisition of 7 For All Mankind®, Splendid® and Ella Moss®, reflecting our strategic efforts to grow Delta Galil’s branded business and expand our global footprint. These brands further diversify our product offering and distribution channels, while adding significant strength to our structure.
“We’ve upgraded our digital platform and increased our ecommerce market share by selling to wholesale customers such as Amazon, Zalando, and Otto, while elevating sales on our proprietary Schiesser and Delta Israel websites. We also launched a new advanced digital platform for the 7 For All Mankind, Splendid and Ella Moss brands.
“Looking ahead, we remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value and, with a strong balance sheet and cash position, we have the necessary financial resources to continue to invest, innovate and grow.
“We are very proud of Delta's achievements in the past year, and would like to express our gratitude to our associates and customers for their cooperation and support. Hopefully, this collaboration will lead Delta to significant achievements in the future."
EBITDA, Cash Flow, Net Debt, Equity and Dividend
EBITDA was $39.2 million, or 10.4% of sales in the fourth quarter of 2016, compared to $29.5 million, or 10.3% of sales in the same quarter last year. For the 2016 full year, EBITDA was $107.0 million, or 9.1% of sales, compared to $95.3 million, or 8.8% of sales last year.
Operating cash flow was $61.1 million in the fourth quarter of 2016, compared with $60.3 million in the fourth quarter of 2015. For the 2016 full year, operating cash flow was $76.6 million, compared to $70.5 million last year.
Net financial debt as of December 31, 2016 was $181.2 million, compared to $223.8 million as of September 30, 2016, and $74.5 million as of December 31, 2015. The increase in net finance debt derives mainly from the Premium Brands activity acquisition, offset by the positive cash-flow generated in the fourth quarter.
Equity on December 31, 2016 was $390.6 million, up from $357.5 million a year earlier.
Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 14th 2017. The determining and "ex-dividend" date will be March 2nd 2017.
2017 Financial Guidance
Delta Galil provided its 2017 financial guidance, excluding non-recurring items which is based on current market conditions and current exchange rate of $1.06 per euro and 3.8 NIS per US$.
- Full-year 2017 sales are expected to range between $1,330 million-$1,370 million, representing an increase of 13%-16% from 2016 actual sales of $1,179 million.
- Full-year 2017 EBIT is expected to range between $86 million-$91 million, representing an increase of 3%-9% from 2016 actual EBIT of $83.2 million.
- Full-year 2017 EBITDA is expected to range between $113.0 million-$118.0 million, representing an increase of 6%-10% from 2016 actual EBITDA of $107.0 million.
- Full-year 2017 net income is expected to range between $50.0 million-$52.0 million, representing an increase of 6%-10% from 2016 actual net income of $47.2 million.
- Full-year 2017 diluted EPS is expected to range between $1.95-$2.02, representing an increase of 5%-9% from 2016 actual EPS of $1.85.
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 December 31, 2016 |
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| December 31 | ||||
| 2016 | 2015 | |||
| Thousands of Dollars | ||||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | 81,947 | 167,532 | ||
| Restricted Cash | 1,767 | 532 | ||
| Other accounts receivable: | ||||
| Trade receivables | 153,044 | 105,630 | ||
| Taxes on income receivable | 2,264 | 8,963 | ||
| Others | 16,980 | 15,882 | ||
| Financial derivative | 286 | 209 | ||
| Inventory | 233,114 | 196,172 | ||
| Assets classified as held for sale | 1,000 | 1,000 | ||
| Total current assets | 490,402 | 495,920 | ||
| Non-current assets: | ||||
| Investments in associated companies accounted using the equity method and long-term receivables | 11,341 | 5,421 | ||
| Investment property | 3,389 | 3,573 | ||
| Fixed assets, net of accumulated depreciation | 171,954 | 122,129 | ||
| Goodwill | 70,101 | 70,101 | ||
| Intangible assets, net of accumulated amortization | 147,990 | 89,734 | ||
| Deferred tax assets | 14,269 | 9,877 | ||
| Financial derivative | 4,096 | 1,439 | ||
| Total non-current assets | 423,140 | 302,274 | ||
| Total assets | 913,542 | 798,194 | ||
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DELTA GALIL INDUSTRIES LTD. |
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|
Concise Consolidated Balance Sheets |
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|
As of December 31, 2016 |
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| December 31 | ||||
| 2016 | 2015 | |||
| Thousands of Dollars | ||||
| Liabilities and Equity | ||||
| Current liabilities: | ||||
| Short-term bank loans | 44,988 | 52 | ||
| Current maturities of debentures | 13,479 | 23,365 | ||
| Financial derivative | 2,383 | 3,049 | ||
| Other accounts payable: | ||||
| Trade payables | 104,797 | 100,956 | ||
| Taxes on income payable | 3,478 | 2,690 | ||
| Others | 95,767 | 65,807 | ||
| Total current liabilities | 264,892 | 195,919 | ||
| Non-current liabilities: | ||||
| Severance pay liabilities less plan assets | 3,213 | 2,696 | ||
| Other non-current liabilities | 42,040 | 22,533 | ||
| Debentures | 207,024 | 211,728 | ||
| Reserve for deferred taxes | 4,353 | 2,528 | ||
| Financial derivative | 1,388 | 5,311 | ||
| Total non-current liabilities | 258,018 | 244,796 | ||
| Total liabilities | 522,910 | 440,715 | ||
| Equity: | ||||
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Equity attributable equity holders of the
parent company: |
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| Share capital | 23,696 | 23,666 | ||
| Share premium | 130,901 | 130,421 | ||
| Other capital reserves | (15,824) | (15,692) | ||
| Retained earning | 268,217 | 228,817 | ||
| Treasury shares | (17,474) | (10,849) | ||
| 389,516 | 356,363 | |||
| Minority interests | 1,116 | 1,116 | ||
| Total equity | 390,632 | 357,479 | ||
| Total liabilities and equity | 913,542 | 798,194 | ||
The enclosed notes constitute an integral part of these Financial Statements
| DELTA GALIL INDUSTRIES LTD. | ||||||||||||
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Concise Consolidated Statement of Comprehensive Income |
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For the 3-month and 12-month periods ending December 31, 2016 |
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| For the year ended December 31 | Three months ended December 31 | |||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Thousands of Dollars | % change | Thousands of Dollars |
% change |
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| Sales | 1,179,167 | 1,079,987 | 9% | 376,315 | 287,056 | 31% | ||||||
| Cost of sales | 787,650 | 763,261 | 239,499 | 198,712 | ||||||||
| Gross profit | 391,517 | 316,726 | 24% | 136,816 | 88,344 | 55% | ||||||
| % of sales | 33.2% | 29.3% | 36.4% | 30.8% | ||||||||
| Selling and marketing expenses | 262,527 | 208,283 | 26% | 90,405 | 57,495 |
57% |
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| % of sales | 22.3% | 19.3% | 24% | 20.0% | ||||||||
| Administrative and general expenses | 46,967 | 35,828 | 31% | 16,031 | 8,692 | 84% | ||||||
| % of sales | 4% | 3.3% | 4.3% | 3.0% | ||||||||
| Other income, net | 832 | 2,208 | 1,885 | 1,407 | ||||||||
| Share in profit of associated companies accounted for using the equity method | 351 | 710 | 46 | 116 | ||||||||
| Operating income excluding non-recurring items | 83,206 | 75,533 |
10% |
32,311 | 23,680 | 36% | ||||||
| % of sales | 7.1% | 7.0% | 8.6% | 8.2% | ||||||||
| Restructuring expenses | 6,895 | 5,747 | - | 5,747 | ||||||||
| Bargain purchase | 10,420 | - | - | - | ||||||||
| Cost associated with acquisition of activity | 1,456 | 809 | - | - | ||||||||
| Operating income | 85,275 | 68,977 | 32,311 | 17,933 | ||||||||
| Finance expenses, net | 17,420 | 16,594 | 5% | 6,634 | 4,472 | 48% | ||||||
| Profit before tax on income | 67,855 | 52,383 | 25,677 | 13,461 | ||||||||
| Taxes on income | 15,953 | 8,435 | 7,130 | 1,188 | ||||||||
| Net income for the period | 51,902 | 43,948 | 18% | 18,547 | 12,273 | 51% | ||||||
| Net income for period excluding non-recurring items, net of tax | 47,217 | 48,454 | (3%) | 18,547 | 16,051 | 16% | ||||||
| Attribution of net earnings for the period | ||||||||||||
| Attributed to company's shareholders | 51,782 | 43,828 | 18,517 | 12,243 | ||||||||
| Attributed to non-controlling interests | 120 | 120 | 30 | 30 | ||||||||
| 51,902 | 43,948 | 18,547 | 12,273 | |||||||||
| Net diluted earnings per share attributed to shareholders of the company | 2.03 | 1.71 | 0.73 | 0.48 | ||||||||
| Net diluted earnings per share excluding non-recurring items net of tax, attributed to shareholders of the company | 1.85 | 1.88 | (2%) | 0.73 | 0.62 |
18% |
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| DELTA GALIL INDUSTRIES LTD. | ||||
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Concise Consolidated Cash Flow Reports |
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| For the year ended December 31 | ||||
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2016 |
2015 |
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| Thousands of Dollars | ||||
| Cash flows from operating activities: | ||||
| Net profit for the period | 51,902 | 43,948 | ||
|
Adjustments required to reflect cash flows deriving from operating activities |
42,758 | 49,811 | ||
| Interest paid in cash | (11,971) | (13,573) | ||
| Interest received in cash | 1,284 | 1,697 | ||
| Taxes on income paid in cash, net | (7,368) | (11,421) | ||
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Net cash generated from operating activities |
76,605 | 70,462 | ||
| Cash flows from investment activities: | ||||
| Acquisition of fixed assets and intangible assets | (42,604) | (38,077) | ||
| Restricted cash deposit | (1,224) | (184) | ||
| Acquisition of activity | (118,885) | (37,368) | ||
| Investments in associated company | - | (2,000) | ||
| Acquisition of subsidiary, net of cash in the acquired company | - | 673 | ||
| Proceeds from sale of fixed asset | 258 | 291 | ||
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Proceeds from realization of real estate |
- | 10,879 | ||
| Others | (919) | (8) | ||
| Net cash used for Investing activities | (163,374) | (65,794) | ||
| Cash flows from financing activities: | ||||
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Dividends paid to non-controlling interest holders in |
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(120) |
(146) |
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| Long term payables credit for fixed assets purchase | (3,308) | (2,347) | ||
| Shares Buy-Back | (6,895) | - | ||
| Debentures principle repayment | (19,379) | (25,792) | ||
| Dividend paid | (14,094) | (14,073) | ||
| Repayment of loans and other long-term liabilities | (755) | (916) | ||
| Short-term credit from banking corporations, net | 44,165 | (3,212) | ||
| Proceeds from Debentures issuance net of issuance expenses | - | 40,006 | ||
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A deposit with a banking corporation as security in respect of the SWAP transaction |
1,745 | 1,660 | ||
| Proceeds from exercise of employee options | 618 | 2,044 | ||
| Net cash generated (used in) from financing activities | 1,977 | (2,776) | ||
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Net increase (decreased) in cash and cash equivalents |
(84,792) | 1,892 | ||
| Exchange rate differences of cash and cash equivalents, net | (793) | (1,318) | ||
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Balance of cash and cash equivalents at the
beginning of the period |
167,532 | 166,958 | ||
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Balance of cash and cash equivalents at the end of the Period |
81,947 | 167,532 | ||
| DELTA GALIL INDUSTRIES LTD. | ||||
|
Concise Consolidated Cash Flow Reports |
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| For the year ended December 31 | ||||
| 2016 |
|
2015 |
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| Thousands of Dollars | ||||
|
Adjustments required to reflect cash flows |
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| from operating activities: | ||||
| Revenues and expenses not involving cash flow: | ||||
| Depreciation | 21,420 | 17,091 | ||
| Amortization | 3,029 | 2,678 | ||
| Cash erosion, net | 50 | 443 | ||
| Interest paid in cash | 11,971 | 13,573 | ||
| Interest received in cash | (1,284) | (1,697) | ||
| Taxes on income paid in cash, net | 7,368 | 11,421 | ||
| Deferred taxes on income, net | 932 | 1,075 | ||
| Severance pay liability, net | 62 | 86 | ||
| Restructuring expenses ,net | 3,984 | 5,320 | ||
| Capital gain from sale of fixed assets | (54) | 203 | ||
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Change in benefit component of options and restricted shares granted to Employees |
2,130 | 2,240 | ||
| Bargain purchase | (10,420) | - | ||
| Share in losses of associated companies accounted for using the equity method | (351) | (710) | ||
| Increase in liabilities of Long-term employee bonuses | ||||
| Others | 577 | (2,195) | ||
| 39,414 | 49,528 | |||
| Changes to operating assets and liabilities: | ||||
| Decrease (increase) in trade receivables | (26,054) | 3,518 | ||
| Decrease (increase) in other receivable and balances | 8,404 | (4,970) | ||
| Increase (decrease) in trade payables | (6,339) | 19,092 | ||
| Increase (decrease) in other payables | 5,757 | (1,326) | ||
| Decrease (increase) in inventory | 21,576 | (16,031) | ||
| 3,344 | 283 | |||
| 42,758 | 49,811 | |||