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, activewear and denim, today reported its financial results for the fourth quarter and full year ended December 31, 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 record sales of $504.8 million for the fourth quarter of 2019, an 11% increase from $454.3 million in the same quarter of 2018. Sales for the 2019 full year increased 13% to $1,690.2 million, from $1,498.4 million for 2018.
Operating Profit
Operating profit increased 36% to $52.2 million in the fourth quarter of 2019, from $38.4 million in the fourth quarter of 2018. Operating profit excluding one-time items increased 22% and amounted to $51.2 million for the fourth quarter of 2019, compared to $42.1 million for the fourth quarter of 2018.
For the 2019 full year, operating profit increased 29% and totaled $103.7 million, compared to $80.7 million in 2018. Operating profit excluding one-time items increased 8% for the 2019 full year and totaled $106 million, compared to $98 million for 2018.
Net Income
Net income increased 44% to $35.6 million in the fourth quarter of 2019, compared to $24.7 million in the same quarter of 2018. Net income excluding one-time items increased 28% to $34.8 million in the fourth quarter of 2019, compared to $27.2 million for the fourth quarter of 2018.
For the 2019 full year, net income increased 20% to $57.7 million, from $48.2 million in 2018. Net income excluding one-time items for the 2019 full year totaled $60.2 million, compared to $60.5 million for 2018, representing a 0.4% decrease.
Diluted Earnings Per Share
Diluted earnings per share increased 45% in the 2019 fourth quarter to $1.40, compared to $0.97 for the same quarter of 2018. Diluted earnings per share excluding one-time items increased 28% in the 2019 fourth quarter and amounted to $1.37, compared to $1.07 for the 2018 comparable period.
For the 2019 full year, diluted earnings per share increased 19% to $2.26 from $1.90 for 2018. Diluted earnings per share excluding one-time items for the 2019 full year totaled $2.36, compared to $2.37 for 2018, representing a 0.4% decrease.
Management Comment
Isaac Dabah, CEO of Delta Galil, stated: “We are pleased to have concluded a strong 2019, as reflected in our record sales, EBIT, EBITDA and operating cash flow. Our results were primarily driven by the strength of our Global Upper Market, Delta Israel and European Brands, coupled with our diverse blend of product categories and business segments. We continued to invest in our online sales growth engine, which presented double-digit e-commerce growth. We recently consummated the acquisition of online bra-fitting technology leader Brayola as part of our online expansion strategy. Our Vietnam factory turned profitable during the fourth quarter, and we expect that to continue into 2020.”
“During the year, we focused on consolidating the recently acquired intimate apparel leader Bogart Group into our business, and its performance exceeded our expectations. Additionally, the acquired men’s underwear leader Eminence continues to be a contributor to Delta European Brands – along with our overall growth – and we have begun cross-selling Eminence and Schiesser.”
“Looking ahead, we remain focused on strengthening our product assortment with Bogart’s lingerie capabilities. We intend to introduce Bogart products to Delta customers, while leveraging Bogart’s relationships to introduce Delta products to their major customers. We also plan to grow the Eminence ladies and kids products, while using the European Brands infrastructure for selling Delta products.”
"In 2020 we will celebrate the 20th anniversary of the launch of 7 for all Mankind®, the original premium denim brand. The collection, based on the original designs, will highlight our marketing drive."
“As always, 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, we have the necessary financial resources to continue to innovate and grow.”
EBITDA, Cash Flow, Net Debt, Equity and Dividend
EBITDA was $76.1 million, or 15.1% of sales in the fourth quarter of 2019, compared to $50.2 million, or 11.1% of sales in the same quarter of 2018. For the 2019 full year, EBITDA was $195.6 million, or 11.6% of sales, compared to $129.8 million, or 8.7% of sales in 2018.
Operating cash flow doubled to $112.3 million in the fourth quarter of 2019, compared with $56.5 million in the fourth quarter of 2018. For the 2019 full year, operating cash flow was $155.0 million, compared to $22.4 million for the full year 2018.
Net financial debt as of December 31, 2019 was $334.5 million, compared to $326.7 million as of December 31, 2018.
Equity on December 31, 2019 was $506.9 million, up from $467.9 million a year prior.
Delta Galil declared a dividend of $6.5 million or $0.255 per share, to be distributed on March 17, 2020. The determining and "ex-dividend" date will be March 4, 2020.
2020 Financial Guidance
Delta Galil provided its initial 2020 financial guidance, excluding one-time items, which is based on current market conditions and current exchange rates of: Euro/USD 1.10 and USD / NIS 3.45. The Company’s financial guidance for 2020 includes the impact of IFRS 16 on accounting for leases. Based on the current information available, the Company estimates the negative impact of the Corona virus on its first half of 2020 and annual EBIT to range between $5-7 million. This estimate is included in its guidance below. The Company will update its financial guidance if necessary, based on any new information that becomes available.
- Full-year 2020 sales are expected to range between $1,740 million-$1,770 million, representing an increase of 3%-5%, from 2019 actual sales of $1,690.2 million.
- Full-year 2020 EBIT is expected to range between $107 million-$113 million, representing an increase of 1%-7% from 2019 actual EBIT of $106 million.
- Full-year 2020 EBITDA is expected to range between $197 million-$203 million, representing an increase of 1%-4%, from 2019 actual EBITDA of $195.6 million.
- Full-year 2020 net income is expected to range between $57 million-$62 million, from 2019 actual net income of $60.2 million.
- Full-year 2020 diluted EPS is expected to range between $2.23 -$2.42, from 2019 actual EPS of $2.26.
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 and branded Men’s underwear including the brands Schiesser, Eminence, Athena & Liabel; babywear, activewear, sleepwear such as the PJ Salvage brand, 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 December 31, 2019 |
||||
December 31 |
||||
2019 |
2018 |
|||
(audited) |
||||
Thousands of Dollars |
||||
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
108,294 |
|
70,534 |
|
Restricted Cash |
933 |
|
3,494 |
|
Other accounts receivable: |
|
|
|
|
Trade receivables |
212,311 |
|
224,019 |
|
Taxes on income receivable |
2,867 |
|
881 |
|
Others |
35,200 |
|
26,395 |
|
Financial derivative |
971 |
|
273 |
|
Inventory |
328,108 |
|
309,645 |
|
Total current assets |
688,684 |
|
635,241 |
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
Investments in associated companies accounted using |
|
|
|
|
the equity method and long-term receivables |
14,367 |
|
29,401 |
|
Investment property |
3,228 |
|
3,424 |
|
Fixed assets, net of accumulated depreciation |
213,210 |
|
191,738 |
|
Goodwill |
148,001 |
|
110,955 |
|
Intangible assets, net of accumulated amortization |
273,318 |
|
221,669 |
|
Assets in respect of usage rights |
207,651 |
|
- |
|
Deferred tax assets |
19,678 |
|
9,285 |
|
Financial derivative |
19,677 |
|
4,216 |
|
Total non-current assets |
899,130 |
|
570,688 |
|
Total assets |
1,587,814 |
|
1,205,929 |
DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of December 31, 2019 |
|||
|
|||
December 31 |
|||
2019 |
2018 |
||
(audited) |
|||
Thousands of Dollars |
|||
Liabilities and Equity |
|
|
|
Current liabilities: |
|
|
|
Short-term bank loans |
1,868 |
|
79,987 |
Current maturities of bank loan |
10,588 |
|
8,015 |
Current maturities of debentures |
36,802 |
|
19,514 |
Financial derivative |
2,070 |
|
2,935 |
Current maturities of liabilities in respect of leases |
53,401 |
|
- |
Other accounts payable: |
|
|
|
Trade payables |
140,475 |
|
139,591 |
Taxes on income payable |
16,392 |
|
10,481 |
Others |
140,237 |
|
112,326 |
Total current liabilities |
401,833 |
|
372,849 |
|
|
|
|
Non-current liabilities: |
|
|
|
Bank loan |
68,337 |
|
70,134 |
Severance pay liabilities less plan assets |
10,155 |
|
8,886 |
Liabilities in respect of leases |
172,903 |
|
- |
Other non-current liabilities |
47,899 |
|
35,833 |
Debentures |
340,376 |
|
222,975 |
Deferred taxes liabilities |
39,368 |
|
25,798 |
Financial derivative |
- |
|
1,603 |
Total non-current liabilities |
679,038 |
|
365,229 |
Total liabilities |
1,080,871 |
|
738,078 |
|
|
|
|
Equity: |
|
|
|
Equity attributable to equity holders of the parent company: |
|
|
|
Share capital |
23,714 |
|
23,714 |
Share premium |
130,237 |
|
130,667 |
Other capital reserves |
(7,962) |
|
(10,503) |
Retained earning |
376,763 |
|
339,922 |
Treasury shares |
(16,093) |
|
(16,523) |
|
506,659 |
|
467,277 |
Minority interests |
284 |
|
574 |
Total equity |
506,943 |
|
467,851 |
Total liabilities and equity |
1,587,814 |
|
1,205,929 |
DELTA GALIL INDUSTRIES LTD. Consolidated Statement of Comprehensive Income For the 3- month and year ending December 31, 2019 |
||||||||||||
|
|
|
||||||||||
|
Year ended December 31 |
|
% Increase/(Decrease) |
|
Three months ended December 31 |
|
% Increase/(Decrease) |
|||||
|
2019 |
|
2018 |
|
|
|
2019 |
|
2018 |
|
|
|
|
(audited) |
|||||||||||
|
Thousands of Dollars |
|||||||||||
|
Except for Earnings per Share Data |
|||||||||||
Sales |
1,690,164 |
|
1,498,421 |
|
13% |
|
504,764 |
|
454,264 |
|
11% |
|
Cost of sales |
1,086,005 |
|
931,981 |
|
|
|
317,468 |
|
280,365 |
|
|
|
Gross profit |
604,159 |
|
566,440 |
|
7% |
|
187,296 |
|
173,899 |
|
8% |
|
% of sales |
35.7% |
|
37.8% |
|
|
|
37.1% |
|
38.3% |
|
|
|
Selling and marketing expenses |
429,705 |
|
406,132 |
|
6% |
|
117,196 |
|
114,093 |
|
3% |
|
% of sales |
25.4% |
|
27.1% |
|
|
|
23.2% |
|
25.1% |
|
|
|
General and administrative expenses |
73,177 |
|
65,163 |
|
17% |
|
20,163 |
|
18,456 |
|
11% |
|
% of sales |
4.3% |
|
4.3% |
|
|
|
4.0% |
|
4.1% |
|
|
|
Other Expenses (income), net |
(3,739) |
|
(2,468) |
|
|
|
(972) |
|
(684) |
|
|
|
Share in profits of associated company accounted for using the equity method |
950 |
|
392 |
|
|
|
316 |
|
110 |
|
|
|
Operating income excluding non-recurring items |
105,966 |
|
98,005 |
|
8% |
|
51,225 |
|
42,144 |
|
22% |
|
% of sales |
6.3% |
|
6.5% |
|
|
|
10.1% |
|
9.3% |
|
|
|
Restructuring expenses |
(987) |
|
5,422 |
|
|
|
(987) |
|
- |
|
|
|
Inventory Step up due to Eminence acquisition |
- |
|
7,625 |
|
|
|
- |
|
3,776 |
|
|
|
Deal cost |
3,273 |
|
4,283 |
|
|
|
- |
|
- |
|
|
|
Operating income |
103,680 |
|
80,675 |
|
29% |
|
52,212 |
|
38,368 |
|
36% |
|
Finance expenses, net |
36,065 |
|
21,352 |
|
69% |
|
10,630 |
|
5,448 |
|
95% |
|
Income before tax on income |
67,615 |
|
59,323 |
|
|
|
41,582 |
|
32,920 |
|
|
|
Taxes on income |
9,915 |
|
11,146 |
|
|
|
6,013 |
|
8,242 |
|
|
|
Net income for the period |
57,700 |
|
48,177 |
|
20% |
|
35,569 |
|
24,678 |
|
44% |
|
Net income for the period excluding one-time items, net of tax |
60,213 |
|
60,451 |
|
(0%) |
|
34,809 |
|
27,207 |
|
(28%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attribution of net earnings for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
Attributed to company's shareholders |
57,898 |
|
48,539 |
|
|
|
35,721 |
|
24,685 |
|
|
|
Attributed to non-controlling interests |
(198) |
|
(362) |
|
|
|
(152) |
|
(7) |
|
|
|
|
57,700 |
|
48,177 |
|
|
|
35,569 |
|
24,678 |
|
|
|
Net diluted earnings per share attributed to company's shareholders |
2.26 |
|
1.90 |
|
19% |
|
1.40 |
|
0.97 |
|
45% |
|
Net diluted earnings per share, before non-recurring items net of tax attributable to Company's shareholders |
2.36 |
|
2.37 |
|
(0%) |
|
1.37 |
|
1.07 |
|
28% |
|
|
|
|
|
|
|
Year ended |
Three months ended |
||||||
December 31, 2019 |
December 31, 2019 |
||||||
Excluding
|
Reported |
Excluding
|
Reported |
||||
Millions of Dollars |
|||||||
|
|
|
|
|
|
|
|
Operating income |
95.6 |
|
103.7 |
|
49.9 |
|
52.2 |
Operating income excluding non-recurring items |
97.9 |
|
106.0 |
|
48.9 |
|
51.2 |
EBITDA |
137.7 |
|
195.6 |
|
60.8 |
|
76.1 |
Finance expenses, net |
27.5 |
|
36.1 |
|
8.5 |
|
10.6 |
Net income for the period |
58.0 |
|
57.7 |
|
35.4 |
|
35.6 |
Net income for the period excluding one-time items, net of tax |
60.5 |
|
60.4 |
|
34.5 |
|
35.0 |
Cash flows from operating activities |
97.1 |
|
155.0 |
|
96.8 |
|
112.2 |
DELTA GALIL INDUSTRIES LTD. Consolidated Cash Flow Reports |
|||
|
Year ended |
||
|
December 31 |
||
|
2019 |
|
2018 |
|
(audited) |
||
|
Thousands of Dollars |
||
Cash flows from operating activities: |
|
|
|
Net income for the period |
57,700 |
|
48,177 |
Adjustments required to reflect cash flows deriving
|
127,228 |
|
(4,730) |
Interest paid in cash |
(22,161) |
|
(16,798) |
Interest received in cash |
440 |
|
398 |
Taxes on income paid in cash, net |
(8,159) |
|
(4,678) |
Net cash generated from operating activities |
155,048 |
|
22,369 |
Cash flows from investment activities: |
|
|
|
Acquisition of fixed assets and intangible assets |
(30,069) |
|
(41,854) |
Payments under subsidiary purchase transaction |
(26,370) |
|
- |
Restricted cash release (deposit) |
2,561 |
|
(433) |
Earn-out payment for acquisition of an activity |
- |
|
(2,250) |
Providing long term loans |
(18,102) |
|
(13,800) |
Acquisition of a subsidiary |
(441) |
|
(136,341) |
Proceeds from selling fixed asset |
479 |
|
1789 |
Others |
979 |
|
(2,687) |
Net cash used in Investing activities |
(70,963) |
|
(195,576) |
Cash flows from financing activities: |
|
|
|
Dividends paid to non-controlling interest holders in
|
|
|
|
(346) |
|
(180) |
|
Long term payables credit for fixed assets purchase |
(3,503) |
|
(3,648) |
Lease principle repayment |
(57,912) |
|
- |
Debentures principle repayment |
(29,748) |
|
(20,920) |
Financial Institute payment |
- |
|
(6,413) |
Dividend paid |
(11,084) |
|
(14,070) |
Long term loan received from bank |
- |
|
81,480 |
Repayment of long-term loans from banks |
(8,944) |
|
(2,014) |
Short-term credit from banking corporations, net |
(82,907) |
|
73,415 |
Proceed from Debentures Issuance, net of Issuance
|
150,137 |
|
- |
long-term loans from suppliers |
(3.350) |
|
- |
Proceeds from exercise of employees options |
- |
|
272 |
Net cash generated from (used in) financing activities |
(47,657) |
|
107,922 |
Net increase (decrease) in cash and cash equivalents |
36,428 |
|
(65,285) |
Exchange rate differences and revaluation of cash
|
(536) |
|
(1,651) |
Balance of cash and cash equivalents at the
|
70,534 |
|
137,470 |
Balance of cash and cash equivalents at the end of
|
106,426 |
|
70,534 |
DELTA GALIL INDUSTRIES LTD. Consolidated Cash Flow Reports |
|||
Year ended |
|||
December 31 |
|||
2019 |
2018 |
||
(audited) |
|||
Thousands of Dollars |
|||
Adjustments required to reflect cash flows |
|
|
|
from operating activities: |
|
|
|
Revenues and expenses not involving cash flow: |
|
|
|
Depreciation |
30,631 |
|
26,818 |
Amortization |
59,193 |
|
5,498 |
Cash erosion, net |
(219) |
|
324 |
Interest paid in cash |
22,161 |
|
16,798 |
Interest received in cash |
(440) |
|
(398) |
Taxes on income paid in cash, net |
8,159 |
|
4,678 |
Deferred taxes on income, net |
58 |
|
(463) |
Discount component for lease agreements |
8,474 |
|
- |
Severance pay liability, net |
(250) |
|
(121) |
Restructuring expenses ,net |
(987) |
|
2,947 |
Capital loss (gain) from sale of fixed assets and asset held for sale |
(86) |
|
99 |
Change to the benefit component of options and RSU granted to employees |
1,200 |
|
946 |
Share in profits of associated company accounted for using the equity method |
(950) |
|
(393) |
Others |
(468) |
|
2,630 |
|
126,476 |
|
59,363 |
Changes to operating assets and liabilities: |
|
|
|
Decrease (increase) in trade receivables |
31,923 |
|
(59,454) |
Decrease in other receivable and balances |
(5,875) |
|
396 |
Increase (decrease) in trade payables |
(40,726) |
|
18,330 |
Increase (decrease) in other payables |
2,972 |
|
(7,566) |
Decrease (increase) in inventory |
12,458 |
|
(15,799) |
|
752 |
|
(64,093) |
|
127,228 |
|
(4,730) |