Delta Galil Reports Fourth Quarter and Full Year 2023 Results
DTC Sales Increased Across All Segments in 2023, Demonstrating the Strength of Delta’s Brands
2023 Full Year Gross Margin Increased to an Annual Record of 40.9%
2023 Operating Cash Flow Excluding IFRS 16 Was an Annual Record of
The Company Reduced Inventory By
Gross Margin Increased to a Fourth Quarter Record of 43.1%
Strong EBIT for the Fourth Quarter of 11.0% of Sales, a 50 Basis Point Year-Over-Year Increase
Achieved 2023 Updated Financial Goals Despite a Challenging Sales Environment
Declares a
Based on Management’s 2024 Plan, the Company is Focused on Achieving High Single-Digit Sales and Double-Digit Profitability Growth Compared to 2023
-
Fourth quarter sales decreased 7% (6% in constant currency) to
$508.6 million , driven by the continued slowdown in global consumer spending -
Full year sales decreased 9% (8% in constant currency) to
$1,857.7 million - Fourth quarter online sales of the Company’s own brands increased 16%
- Full year online sales of the Company’s own brands increased 17%
- Gross margin improved 340 basis points to a fourth quarter all-time record of 43.1%
- Full year gross margin improved 230 basis points to an annual record of 40.9%
-
Fourth quarter EBIT before non-core items was
$56.2 million , or 11.0% of sales compared to$56.9 million , or 10.5% of sales, for the same period last year -
Full year EBIT before non-core items was
$153.0 million , or 8.2% of sales -
Full year operating cash flow excluding IFRS 16 improved
$201.2 million to an annual record$181.9 million -
Net debt, excluding IFRS 16, at its lowest level since
December 2021 , declined 43% to$123.4 million , compared to$217.4 million atDecember 31, 2022 -
Strong Balance sheet with
$174.5 million in cash and record shareholders’ equity of$768.4 million atDecember 31, 2023 -
Declares a
$9 million dividend for fourth quarter 2023, compared to$8 million for the fourth quarter last year
Sales
The Company reported fourth quarter 2023 sales of
Gross Margin
Gross margin in the fourth quarter of 2023 increased to a fourth quarter all-time record of 43.1%, compared to 39.7% in the fourth quarter of 2022. The 340-basis point expansion was due primarily to a better customer and segment mix, a higher portion of sales to Direct-to-Customers (DTC), improved profitability of our factories and lower freight cost, partially offset by higher discounts and promotions. Gross margin for the full year 2023 increased by 230 basis points to an annual record of 40.9%, compared to 38.6% in the prior-year period.
EBIT
EBIT in the fourth quarter of 2023 was
EBIT for the full year 2023 was
The reduction in EBIT margin before non-core items was mainly due to lower sales and higher SG&A expenses, partially offset by higher gross margin.
Non-Core Items
The Company recorded no non-core items in its fourth quarter of 2023.
For the full year of 2023, expenses associated with the Company’s previously disclosed realignment plans were
Non-Core Items (in USD, Millions) |
|||||||
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12 Months |
|
|||||
|
2022 |
2023 |
|
||||
Realignment plans |
$ |
5.5 |
$ |
11.4 |
|
||
Income from decrease of earn-out liability |
|
(9.6) |
|
(4.0) |
|
||
Impairment of non-financial assets |
|
9.3 |
|
- |
|
||
Deal costs |
|
- |
|
0.7 |
|
||
Total Non-Core Items |
$ |
5.2 |
$ |
8.1 |
|
||
Net Income
Net income in the fourth quarter of 2023 was
Net income for the full year 2023 was
Diluted Earnings Per Share
Diluted earnings per share in the fourth quarter of 2023 were
Diluted earnings per share for the full year 2023 were
EBITDA, Cash Flow, Net Debt, Equity, and Dividend
EBITDA excluding IFRS 16 impact in the fourth quarter of 2023 was
Cash flow generated from operating activities, excluding IFRS 16, was
Net financial debt, excluding IFRS 16, at
Equity on
Delta Galil declared a dividend of
202 4 Financial Guidance
The Company’s guidance excludes non-core items, including IFRS 16, is based on ex-rates of
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Full Year 2024 Guidance (in millions, except per share amount) |
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2023 Results (in millions, except per share amount) |
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Sales |
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EBIT |
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EBITDA |
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Net income |
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Diluted EPS ($) |
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Based on the Company's order book and projections, the Company expects growth in 2024 to materialize mostly in the second half of the year.
The Company's expectations depend, among others, on the following: returning to normalized inventory levels at our main customers driving higher demand and improving profitability, expanding into new categories with Skims, launching Organic Basics new global collection, increasing production levels in our new factories in
Constant Currency - Excluding the Impact of Foreign Currency
This release refers to “reported” amounts in accordance with IFRS accounting principles (“GAAP”), which include translation and transactional impacts from foreign currency exchange rates. The release also refers to “constant dollar” amounts, which exclude the impact of translating foreign currencies into
About
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, tax rates in the various countries the company operates in, 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
Concise Consolidated Balance Sheets
As of |
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|
2023 |
|
2022 |
|
|
(Audited) |
|||
|
Thousands of Dollars |
|||
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
174,463 |
|
126,649 |
|
Restricted Cash |
2,950 |
|
4,002 |
|
Short-term deposits |
- |
|
64,265 |
|
Trade receivables |
241,216 |
|
236,772 |
|
Taxes on income receivable |
77 |
|
10,691 |
|
Other accounts receivable |
48,920 |
|
36,389 |
|
Financial derivative |
228 |
|
423 |
|
Inventory |
361,416 |
|
487,307 |
|
Asset held for sale |
1,773 |
|
- |
|
Total current assets |
831,043 |
|
966,498 |
|
|
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
Investments in associated companies accounted using the equity method and long-term receivables |
14,897 |
|
12,528 |
|
Investment property |
2,679 |
|
2,702 |
|
Fixed assets, net of accumulated depreciation |
250,343 |
|
235,273 |
|
|
145,577 |
|
144,238 |
|
Intangible assets, net of accumulated amortization |
277,952 |
|
275,948 |
|
Assets in respect of usage rights |
237,177 |
|
193,275 |
|
Deferred tax assets |
28,016 |
|
18,183 |
|
Financial derivative |
903 |
|
2,025 |
|
Total non-current assets |
957,544 |
|
884,172 |
|
Total assets |
1,788,587 |
|
1,850,670 |
|
Concise Consolidated Balance Sheets
As of |
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|
||||
2023 |
2022 |
|||
(Audited) |
||||
Thousands of Dollars |
||||
Liabilities and Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Short-term bank loans |
822 |
|
51,430 |
|
Current maturities of bank loans |
24,105 |
|
42,152 |
|
Current maturities of debentures |
29,597 |
|
45,935 |
|
Financial derivative |
1,380 |
|
1,037 |
|
Current maturities of leases liabilities |
52,583 |
|
47,968 |
|
Trade payables |
168,637 |
|
209,673 |
|
Taxes on income payable |
35,182 |
|
34,048 |
|
Provision for restructuring plan |
3,574 |
|
2,633 |
|
Other accounts payable |
165,791 |
|
176,411 |
|
Total current liabilities |
481,671 |
|
611,287 |
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
Bank loans |
140,790 |
|
133,151 |
|
Severance pay liabilities, net |
5,327 |
|
5,982 |
|
Liabilities in respect of leases |
204,746 |
|
164,175 |
|
Other non-current liabilities |
53,241 |
|
63,431 |
|
Debentures |
96,496 |
|
129,969 |
|
Deferred taxes liabilities |
35,812 |
|
32,158 |
|
Financial derivative |
2,122 |
|
173 |
|
Total non-current liabilities |
538,534 |
|
529,039 |
|
Total liabilities |
1,020,205 |
|
1,140,326 |
|
|
|
|
|
|
Equity: |
|
|
|
|
Equity attributable to equity holders of the parent company: |
|
|
|
|
Share capital |
23,714 |
|
23,714 |
|
Share premium |
127,861 |
|
128,268 |
|
Other capital reserves |
28,133 |
|
26,410 |
|
Retained earning |
571,846 |
|
517,751 |
|
|
(13,668) |
|
(14,075) |
|
|
737,886 |
|
682,068 |
|
Minority interests |
30,496 |
|
28,276 |
|
Total equity |
768,382 |
|
710,344 |
|
Total liabilities and equity |
1,788,587 |
|
1,850,670 |
|
Consolidated Statement of Comprehensive Income
For the three months and year ending |
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Year ended |
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% Increase/(Decrease) |
|
Three months ended
|
|
% Increase/(Decrease) |
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|
2023 |
|
2022 |
|
|
|
2023 |
|
2022 |
|
|
|
|
Thousands of Dollars |
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|
Except for Earnings per Share Data |
|||||||||||
Sales |
1,857,682 |
|
2,031,541 |
|
(9%) |
|
508,603 |
|
544,415 |
|
(7%) |
|
Cost of sales |
1,097,084 |
|
1,246,354 |
|
|
|
289,468 |
|
328,096 |
|
|
|
Gross profit |
760,598 |
|
785,187 |
|
(3%) |
|
219,135 |
|
216,319 |
|
1% |
|
% of sales |
40.9 % |
|
38.6 % |
|
|
|
43.1 % |
|
39.7 % |
|
|
|
Selling and marketing expenses |
522,214 |
|
515,035 |
|
1% |
|
141,364 |
|
137,119 |
|
3% |
|
% of sales |
28.1 % |
|
25.4 % |
|
|
|
27.8 % |
|
25.2 % |
|
|
|
General and administrative expenses |
93,334 |
|
86,695 |
|
8% |
|
25,048 |
|
20,557 |
|
22% |
|
% of sales |
5.0 % |
|
4.3 % |
|
|
|
4.9 % |
|
3.8 % |
|
|
|
Other expenses (income), net and share in profits of associated company accounted for using the equity method |
(7,970) |
|
(6,782) |
|
|
|
(3,433) |
|
1,716 |
|
|
|
Operating income excluding non-core items |
153,020 |
|
190,239 |
|
(20%) |
|
56,156 |
|
56,927 |
|
(1%) |
|
% of sales |
8.2 % |
|
9.4 % |
|
|
|
11.0 % |
|
10.5 % |
|
|
|
Non-core items, net |
8,087 |
|
5,188 |
|
|
|
- |
|
(279) |
|
|
|
Operating income |
144,933 |
|
185,051 |
|
|
|
56,156 |
|
57,206 |
|
|
|
Finance expenses, net |
37,932 |
|
37,271 |
|
|
|
8,635 |
|
9,769 |
|
|
|
Income before tax on income |
107,001 |
|
147,780 |
|
|
|
47,521 |
|
47,437 |
|
|
|
Taxes on income |
21,660 |
|
32,402 |
|
|
|
9,741 |
|
9,771 |
|
|
|
Net income for the period |
85,341 |
|
115,378 |
|
|
|
37,780 |
|
37,666 |
|
|
|
Net income for the period excluding non-core items, net of tax |
91,600 |
120,566 |
(24%) |
37,780 |
37,387 |
1% |
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|
|
|
|
|
|
|
|
|
|
|
|
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Attribution of net earnings for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
Attributed to company's shareholders |
79,210 |
|
109,476 |
|
|
|
34,366 |
|
35,531 |
|
|
|
Attributed to non-controlling interests |
6,131 |
|
5,902 |
|
|
|
3,414 |
|
2,135 |
|
|
|
|
85,341 |
|
115,378 |
|
|
|
37,780 |
|
37,666 |
|
|
|
Net diluted earnings per share attributed to company's Shareholders |
3.02 |
|
4.14 |
|
|
|
1.31 |
|
1.35 |
|
|
|
Net diluted earnings per share, before non-core items, net of tax attributable to Company's shareholders |
3.25 |
|
4.33 |
|
(25%) |
|
1.31 |
|
1.34 |
|
(2%) |
|
Consolidated Cash Flow Reports |
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Year ended |
||||
|
|
|||
|
2023 |
|
2022 |
|
|
(Audited) |
|||
|
Thousands of Dollars |
|||
Cash flows from operating activities: |
|
|
|
|
Net income for the period |
85,341 |
|
115,378 |
|
Adjustments required to reflect cash flows deriving from operating activities |
185,301 |
|
(40,403) |
|
Interest paid in cash |
(31,184) |
|
(26,850) |
|
Interest received in cash |
4,014 |
|
425 |
|
Taxes on income paid in cash, net |
(12,658) |
|
(17,017) |
|
Net cash generated from operating activities |
230,814 |
|
31,533 |
|
|
|
|
|
|
Cash flows from investment activities: |
|
|
|
|
Change in short-term deposits, net |
60,422 |
|
(64,265) |
|
Purchase of fixed assets |
(45,363) |
|
(47,992) |
|
Purchase of intangible assets |
(7,624) |
|
(7,661) |
|
Providing a loan to a business partner |
(1,089) |
|
- |
|
Acquisition of activity |
- |
|
(4,500) |
|
Proceeds from selling of fixed asset |
1,121 |
|
6,538 |
|
Others |
1,083 |
|
1,843 |
|
Net cash used in Investing activities |
8,550 |
(116,037) |
||
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Dividends paid to non-controlling interest holders in consolidated subsidiary |
(2,362) |
|
(3,356) |
|
Long term payables credit for fixed assets purchases |
(6,684) |
|
(5,628) |
|
Lease principle repayments |
(48,891) |
|
(50,852) |
|
Repayment of Debentures |
(46,255) |
|
(16,700) |
|
Dividend paid |
(26,510) |
|
(28,009) |
|
Receipt of long-term loans from banking corporations |
32,694 |
|
60,397 |
|
Repayment of long-term loans from banking corporations |
(44,457) |
|
(7,223) |
|
Short-term credit from banking corporations, net |
(50,663) |
|
51,430 |
|
Repayment of bank loan used to acquisition of a subsidiary |
- |
|
(792) |
|
Others |
(1,383) |
|
(6,102) |
|
Net cash used in financing activities |
(194,511) |
|
(6,835) |
|
Net decrease in cash and cash equivalents |
44,853 |
|
(91,339) |
|
|
|
|
|
|
Exchange rate differences and revaluation of cash and cash equivalents, net |
2,961 |
|
(12,141) |
|
|
|
|
|
|
Balance of cash and cash equivalents less bank overdraft at the beginning of the period, net |
126,649 |
|
230,129 |
|
Balance of cash and cash equivalents less bank overdraft at the end of the Period, net |
174,463 |
|
126,649 |
|
|
|
|
|
Consolidated Cash Flow Reports |
||||
Year ended |
||||
|
||||
2023 |
2022 |
|||
(Audited) |
||||
Thousands of Dollars |
||||
Adjustments required to reflect cash flows from operating activities: |
|
|
|
|
Revenues and expenses not involving cash flow: |
|
|
|
|
Depreciation |
34,033 |
|
32,648 |
|
Amortization |
61,961 |
|
61,362 |
|
Impairment of non-financial assets |
- |
|
8,122 |
|
Exchange rate (gains) losses |
(124) |
|
532 |
|
Interest paid in cash |
21,933 |
|
19,169 |
|
Interest received in cash |
(4,014) |
|
(425) |
|
Taxes on income paid in cash, net |
12,658 |
|
17,017 |
|
Deferred taxes on income, net |
(7,089) |
|
(6,975) |
|
Interest due to lease agreements |
9,251 |
|
7,681 |
|
Severance pay liability, net |
(1,599) |
|
176 |
|
Change in restructuring accrual |
941 |
|
(6,246) |
|
Income from decrease of earn-out liability |
(4,000) |
|
(9,621) |
|
Capital gain from sale of fixed assets |
(1,482) |
|
(4,435) |
|
Change to the benefit component of options granted to employees |
2,128 |
|
3,074 |
|
Impairment loss (gain) on trade receivables |
1,006 |
|
(1,184) |
|
Share in profits of associated company accounted for using the equity method |
(846) |
|
(666) |
|
Others |
1,457 |
|
163 |
|
|
126,214 |
|
120,392 |
|
Changes to operating assets and liabilities: |
|
|
|
|
Increase in trade receivables |
(3,868) |
|
(40,189) |
|
Increase in other receivables |
(5,083) |
|
(2,075) |
|
Decrease in trade payables |
(46,251) |
|
(36,601) |
|
Increase (Decrease) in other payables |
(15,274) |
|
22,314 |
|
Decrease (Increase) in inventory |
129,563 |
|
(104,244) |
|
|
59,087 |
|
(160,795) |
|
|
185,301 |
|
(40,403) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240225811562/en/
For more information:
+972-54-5201178
Nissim@unik.co.il
+1-212-994-4660
sberns@bcg-pr.com
Source: