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, 2017.
Sales
The Company reported sales of $371.6 million for the fourth quarter of 2017, compared with $376.3 million for the same quarter last year, representing a 1% decrease. Sales for the 2017 full year increased 16% to a record $1,368.1 million, from $1,179.2 million for the 2016 full year. The year-over-year increase reflected the annualization of Delta Galil Premium Brands, which was acquired on August 2016, as well as continued strength of Delta’s Global Upper Market and Schiesser business segments, along with improvements in Delta Israel.
Operating Profit
Operating profit was $32.5 million in the fourth quarter of 2017, compared to $32.3 million in the fourth quarter last year, representing a 1% increase. Operating profit excluding one-time items increased 5% for the 2017 full year and amounted to $87.4 million, compared to $83.2 million for the full year 2016.
For the 2017 full year, operating profit was $84.6 million, compared to $85.3 for the 2016 full year, representing a 1% decrease.
Net Income
Net income increased 8% to $20.1 million in the fourth quarter of 2017, compared to $18.5 million in the same quarter last year.
Net income excluding one-time items net of tax increased 7% for the 2017 full year and amounted to a record $50.7 million, compared to $47.2 million for the 2016 full year.
Net income for the 2017 full year was $49.0 million, compared to $51.9 million for the 2016 full year, representing a 6% decrease.
Diluted Earnings Per Share
Diluted earnings per share increased 7% in the 2017 fourth quarter to $0.79, compared to $0.73 for the same quarter last year.
Diluted earnings per share excluding one-time items increased 7% and amounted to $1.98 for the 2017 full year, compared to $1.85 for the 2016 full year.
For the 2017 full year, diluted earnings per share amounted to $1.91, compared to $2.03 for the 2016 full year, a 6% decrease.
Management Comment
Isaac Dabah, CEO of Delta Galil, stated: “We are extremely pleased with our 2017 annual results, which were highlighted by record sales, EBITDA, net income and EPS excluding one-time items. The results reflect the strength in our Global Upper Market and Schiesser business segments which demonstrate the strength of our diversified portfolio. We continue to focus on driving both organic growth and accretive acquisitions, and seek new opportunities to apply our competitive and financial strengths to deliver shareholder value.”
“Our recently acquired Delta Galil Premium Brands (DGPB) segment continued to be a strong contributor to sales throughout 2017, and remains an exciting growth opportunity looking ahead. We have several strategic initiatives and category expansions in place for 2018 that are intended to maximize growth opportunities within that segment.”
“Throughout the year, we focused on making meaningful changes to the company that will improve our efficiency and production capacity and best position us to develop the most innovative, high quality products for our customers worldwide. We also enhanced our focus on e-commerce, and increased top-line growth to key customers, as well as our proprietary brands.”
“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 -- both through organic means and strategic acquisitions.”
EBITDA, Cash Flow, Net Debt, Equity and Dividend
EBITDA was $40.0 million, or 10.8% of sales in the fourth quarter of 2017, compared to $39.2 million, or 10.4% of sales in the same quarter last year. For the 2017 full year, EBITDA was $115.9 million, or 8.5% of sales, compared to $107.0 million, or 9.1% of sales last year.
Operating cash flow was $55.0 million in the fourth quarter of 2017, compared with $61.1 million in the fourth quarter of 2016. For the 2017 full year, operating cash flow was $74.7 million, compared to $76.6 million last year.
Net financial debt as of December 31, 2017 was $125.6 million, compared to $164.8 million as of September 30, 2017, and $181.2 million as of December 31, 2016.
Equity on December 31, 2017 was $451.3 million, up from $390.6 million a year earlier.
Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 13, 2018. The determining and "ex-dividend" date will be February 28, 2018.
2018 Financial Guidance
Delta Galil provided its initial 2018 financial guidance, excluding one-time items, which is based on current market conditions and current exchange rates of: Euro/USD 1.20 and USD / NIS 3.50.
- Full-year 2018 sales are expected to range between $1,400 million-$1,440 million, representing an increase of 2%-5% from 2017 actual sales of $1,368.1 million.
- Full-year 2018 EBIT is expected to range between $91 million-$96 million, representing an increase of 4%-10% from 2017 actual EBIT of $87.4 million.
- Full-year 2018 EBITDA is expected to range between $119 million-$125 million, representing an increase of 3%-8% from 2017 actual EBITDA of $115.9 million.
- Full-year 2018 net income is expected to range between $54 million-$59 million, representing an increase of 7%-16% from 2017 actual net income of $50.7 million.
- Full-year 2018 diluted EPS is expected to range between $2.11-$2.30, representing an increase of 7%-16% from 2017 actual EPS of $1.98.
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. Delta Galil also designs, develops, markets and sells branded denim apparel under the brand 7 For All Mankind®, and ladies apparel under the brands Splendid® and Ella Moss®. 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.
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DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of December 31, 2017 |
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December 31 |
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2017 |
2016 |
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Thousands of Dollars |
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| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | 137,470 | 81,947 | ||
| Restricted Cash | 1,430 | 1,767 | ||
| Other accounts receivable: | ||||
| Trade receivables | 148,806 | 153,044 | ||
| Taxes on income receivable | 2,915 | 2,264 | ||
| Others | 20,632 | 16,980 | ||
| Financial derivative | 1,191 | 286 | ||
| Inventory | 269,877 | 233,114 | ||
| Assets classified as held for sale | - | 1,000 | ||
| Total current assets | 582,321 | 490,402 | ||
| Non-current assets: | ||||
| Investments in associated companies accounted using the equity method and long-term receivables | 11,142 | 11,341 | ||
| Investment property | 3,718 | 3,389 | ||
| Fixed assets, net of accumulated depreciation | 160,018 | 171,954 | ||
| Goodwill | 70,101 | 70,101 | ||
| Intangible assets, net of accumulated amortization | 158,768 | 147,990 | ||
| Deferred tax assets | 11,654 | 14,269 | ||
| Financial derivative | 22,800 | 4,096 | ||
| Total non-current assets | 438,201 | 423,140 | ||
| Total assets | 1,020,522 | 913,542 | ||
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DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of December 31, 2017 |
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December 31 |
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2017 |
2016 |
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Thousands of Dollars |
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| Liabilities and Equity | |||||
| Current liabilities: | |||||
| Short-term bank loans | 28 | 44,988 | |||
| Current maturities of debentures | 20,596 | 13,479 | |||
| Financial derivative | 1,432 | 2,383 | |||
| Other accounts payable: | |||||
| Trade payables | 112,028 | 104,797 | |||
| Taxes on income payable | 6,373 | 3,478 | |||
| Others | 117,804 | 95,767 | |||
| Total current liabilities | 258,261 | 264,892 | |||
| Non-current liabilities: | |||||
| Severance pay liabilities less plan assets | 4,057 | 3,213 | |||
| Other non-current liabilities | 40,212 | 42,040 | |||
| Debentures | 258,945 | 207,024 | |||
| Reserve for deferred taxes | 7,724 | 4,353 | |||
| Financial derivative | - | 1,388 | |||
| Total non-current liabilities | 310,938 | 258,018 | |||
| Total liabilities | 569,199 | 522,910 | |||
| Equity: | |||||
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Equity attributable equity holders of the parent company: |
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| Share capital | 23,708 | 23,696 | |||
| Share premium | 130,791 | 130,901 | |||
| Other capital reserves | 7,834 | (15,824) | |||
| Retained earning | 304,788 | 268,217 | |||
| Treasury shares | (16,914) | (17,474) | |||
| 450,207 | 389,516 | ||||
| Minority interests | 1,116 | 1,116 | |||
| Total equity | 451,323 | 390,632 | |||
| Total liabilities and equity | 1,020,522 | 913,542 | |||
The enclosed notes constitute an integral part of these Financial Statements
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DELTA GALIL INDUSTRIES LTD. Concise Consolidated Statement of Comprehensive Income For the 3-month and 12-month periods ending December 31, 2017 |
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| For the year ended December 31 | Three months ended December 31 | ||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||
| Thousands of Dollars | % change | Thousands of Dollars | % change | ||||||||
| Sales | 1,368,080 | 1,179,167 | 16% | 371,637 | 376,315 | (1%) | |||||
| Cost of sales | 855,268 | 787,650 | 225,952 | 239,499 | |||||||
| Gross profit | 512,812 | 391,517 | 31% | 145,685 | 136,816 | 6% | |||||
| % of sales | 37.5% | 33.2% | 39.2% | 36.4% | |||||||
| Selling and marketing expenses | 360,506 | 262,527 | 37% | 98,366 | 90,405 | 9 % | |||||
| % of sales | 26.4% | 22.3% | 26.5% | 24.0% | |||||||
| Administrative and general expenses | 65,393 | 46,967 | 39% | 15,098 | 16,031 | (6%) | |||||
| % of sales | 4.8% | 4.0% | 4.1%% | 4.3% | |||||||
| Other income, net | 50 | 832 | 272 | 1,885 | |||||||
| Share in profit (loss) of associated companies accounted for using the equity method | 427 | 351 | (5) | 46 | |||||||
| Operating income excluding non-recurring items | 87,390 | 83,206 | 5% | 32,488 | 32,311 | 1% | |||||
| % of sales | 6.4% | 7.1% | 8.7% | 8.6% | |||||||
| Restructuring expenses | 2,832 | 6,895 | - | - | |||||||
| Bargain purchase | - | 10,420 | - | - | |||||||
| Cost associated with acquisition of activity | - | 1,456 | - | - | |||||||
| Operating income | 84,558 | 85,275 | 32,488 | 32,311 | |||||||
| Finance expenses, net | 18,848 | 17,420 | 8% | 4,330 | 6,634 | (35%) | |||||
| Profit before tax on income | 65,710 | 67,855 | 28,158 | 25,677 | |||||||
| Taxes on income | 16,751 | 15,953 | 8,087 | 7,130 | |||||||
| Net income for the period | 48,959 | 51,902 | 20,071 | 18,547 | |||||||
| Net income for period excluding non-recurring items, net of tax | 50,715 | 47,217 | 7% | 20,071 | 18,547 | 8% | |||||
| Attribution of net earnings for the period | |||||||||||
| Attributed to company's shareholders | 48,839 | 51,782 | 20,041 | 18,517 | |||||||
| Attributed to non-controlling interests | 120 | 120 | 30 | 30 | |||||||
| 48,959 | 51,902 | 20,071 | 18,547 | ||||||||
| Net diluted earnings per share attributed to shareholders of the company | 1.91 | 2.03 | 0.79 | 0.73 | |||||||
| Net diluted earnings per share excluding non-recurring items net of tax, attributed to shareholders of the company | 1.98 | 1.85 | 7% | 0.79 | 0.73 |
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7% |
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DELTA GALIL INDUSTRIES LTD. Concise Consolidated Cash Flow Reports |
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For the year ended December 31 |
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2017 |
2016 |
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Thousands of Dollars |
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| Cash flows from operating activities: | |||
| Net profit for the year | 48,959 | 51,902 | |
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Adjustments required to reflect cash flows deriving from operating activities |
47,876 | 42,758 | |
| Interest paid in cash | (14,144) | (11,971) | |
| Interest received in cash | 292 | 1,284 | |
| Taxes on income paid in cash, net | (8,315) | (7,368) | |
| Net cash generated from operating activities | 74,668 | 76,605 | |
| Cash flows from investment activities: | |||
| Acquisition of fixed assets and intangible assets | (30,754) | (42,604) | |
| Restricted cash deposit | 337 | (1,224) | |
| Acquisition of activity | - | (118,885) | |
| Earn-out payment for acquisition of an activity | (1,500) | - | |
| Proceeds from sale of fixed asset | 28,696 | 258 | |
| Others | (1,431) | (919) | |
| Net cash used in Investing activities | (4,652) | (163,374) | |
| Cash flows from financing activities: | |||
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Dividends paid to non-controlling interest holders in consolidated subsidiary |
(120) |
(120) |
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| Long term payables credit for fixed assets purchase | (3,308) | (3,308) | |
| Shares Buy-Back | - | (6,895) | |
| Debentures principle repayment | (20,919) | (19,379) | |
| Liability to financial institution | 6,413 | - | |
| Dividend paid | (14,055) | (14,094) | |
| Repayment of loans and other long-term liabilities | - | (755) | |
| Short-term credit from banking corporations, net | (44,960) | 44,165 | |
| Debentures issuance net of issuance expenses | 57,152 | - | |
| A deposit with a banking corporation as security in respect of the SWAP transaction | 1,545 | 1,745 | |
| Proceeds from exercise of employee options | 451 | 618 | |
| Net cash generated (used in) from financing activities | (17,801) | 1,977 | |
| Net increase ( decreased) in cash and cash equivalents | 52,215 | (84,792) | |
| Exchange rate differences of cash and cash equivalents, net | 3,308 | (793) | |
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Balance of cash and cash equivalents at the beginning of the period |
81,947 | 167,532 | |
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Balance of cash and cash equivalents at the end of the Period |
137,470 | 81,947 | |
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DELTA GALIL INDUSTRIES LTD. Concise Consolidated Cash Flow Reports |
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| For the year ended December 31 | |||
| 2017 |
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2016 |
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| Thousands of Dollars | |||
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Adjustments required to reflect cash flows from operating activities: |
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| Revenues and expenses not involving cash flow: | |||
| Depreciation | 23,918 | 21,420 | |
| Amortization | 4,582 | 3,029 | |
| Cash erosion, net | (598) | 50 | |
| Interest paid in cash | 14,144 | 11,971 | |
| Interest received in cash | (292) | (1,284) | |
| Taxes on income paid in cash, net | 8,315 | 7,368 | |
| Deferred taxes on income, net | 5,112 | 932 | |
| Severance pay liability, net | 381 | 62 | |
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Restructuring expenses, net |
2,832 | 3,984 | |
| Capital gain from sale of fixed assets and assets held for sale | (4,332) | (54) | |
| Change in benefit component of options and restricted shares granted | 2,074 | 2,130 | |
| Bargain purchase | - | (10,420) | |
| Share in losses of associated companies accounted for using the equity method | (427) | (351) | |
| Others | 1,313 | 577 | |
| 57,022 | 39,414 | ||
| Changes to operating assets and liabilities: | |||
| Decrease (increase) in trade receivables | 10,336 | (26,054) | |
| Decrease in other receivable and balances | 2,164 | 8,404 | |
| Decrease in trade payables | (219) | (6,339) | |
| Increase in other payables | 2,056 | 5,757 | |
| Decrease (increase) in inventory | (23,483) | 21,576 | |
| (9,146) | 3,344 | ||
| 47,876 | 42,758 | ||