Company Announcements

Delta Galil Reports Strong First Quarter 2021 Results Reflecting Record Sales, Profits and Cash Flow

Sales Increased 25% to $416.1 Million, with Online Sales up 272%

Record Q1 Level Gross Margin of 38.2% and EBIT Margin of 6.7%

Operating Cash Flow (Excluding IFRS 16) Increased by $29.2 Million to $21.4 Million Year-Over-Year

Strong Balance Sheet with Cash Balance of $313M and Equity of $559M

Company Resumes Dividend Payment

Initial 2021 Earnings Guidance – Sales Expected to Reach $1,780-$1,820 Million, and Full Year EPS Expected to Grow by 25% to 38% and Reach $2.95-$3.25

TEL AVIV, Israel--(BUSINESS WIRE)--May 12, 2021-- Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange, DELTY.PK), 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 first quarter ended March 31, 2021.

Highlights

  • Q1 sales increased 25% to $416.1 million, versus $332.7 million last year.
  • E-commerce own website sales rose 272% for the first quarter of 2021 to $70.8 million, compared to $19.0 million for the first quarter of 2020.
  • Gross margin increased by 400 basis points to a record Q1 level of 38.2%, versus 34.2% in Q1 2020.
  • Operating margin increased to a record Q1 level of 6.7%, versus negative 4.8% in Q1 2020.
  • Net income was $15.1 million, compared to net loss of $30.5 million in the first quarter last year.
  • Q1 earnings per share (EPS) amounted to $0.57, versus a loss per share of $1.19 in Q1 2020.
  • Operating cash flow improved $26.5 million to $31.3 million in the first quarter of 2021, from $4.8 million in the first quarter of 2020. Operating cash flow excluding IFRS 16 increased to $21.4 million from negative $7.8 million in Q1 2020.
  • Delta Galil received $77 million in cash as a result of the successful Delta Israel IPO completion during Q1. This, along with the strong free cash flow for the period of $21.4 million, supported further reduction the Company’s net financial debt to its lowest level since January 2018.
  • Strong balance sheet highlighted by $313 million in cash and $558.6 million in equity as of March 31, 2021.
  • Net financial debt declined by 59% to $150.2 million, versus $366.4 million as of March 31, 2020.
  • Delta Galil declared a dividend of $3.5 million, or $0.137 per share, to be distributed on June 1, 2021. The determining and "ex-dividend" date will be May 23, 2021.

Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with our growth momentum and strong first quarter results, which reflect three consecutive quarters of record operating margin. Our operating profit increased significantly, driven by higher sales across all segments, with particular strength in our online sales, our gross margin improvement, and the effective implementation of the efficiency measures we started to put in place at the middle of last year. Our operating cash flow continues to be strong, enabling us to reduce our debt to the lowest level in the last three years. With our strong balance sheet, we have the necessary resources to deliver continued innovation and growth, and we look forward to a strong year.

We congratulate Delta Israel Brands for joining the TASE during the quarter. Delta Israel reports reflect the strong trend of growth in sales and profitability, while promoting its growth engines, expansion of the Company’s brands and its diversified product mix.”

Sales

The Company reported sales of $416.1 million for the first quarter of 2021, a 25% increase from $332.7 million for the first quarter of 2020. Excluding the sales of Bare Necessities, which the Company acquired in Q4 last year, first quarter 2021 sales rose 18%, primarily driven by Delta Israel, Delta Global Upper Market and Delta USA segments, as well as other segments.

Online Sales

E-commerce own website sales rose 272% for the first quarter of 2021, to $70.8 million, compared to $19.0 million for the first quarter of 2020. E-commerce customers grew 83% to 54.6 million in the first quarter of 2021, from 29.7 million in the same quarter last year.

EBIT

EBIT for the first quarter of 2021 increased $56.7 million to $28.0 million, compared to negative $28.8 million in the first quarter last year. Before one-time items, EBIT was $28.0 million, up from negative $15.9 million in the first quarter of 2020.

Net Income

Net income for the first quarter of 2021 was $15.1 million, compared to a net loss of $30.5 million in the first quarter last year. Excluding one-time items, net of tax, net income for the first quarter of 2021 was $15.1 million, compared to a net loss of $20.0 million in the first quarter of 2020.

Diluted Earnings Per Share

Diluted earnings per share for the first quarter of 2021 rose to $0.57, compared to diluted loss per share of $1.19 in the first quarter of 2020. Before non-recurring items net of tax, diluted earnings per share for the first quarter of 2021 were $0.57, compared to diluted loss per share of $0.78 for the comparable quarter last year.

EBITDA, Cash Flow, Net Debt and Equity

EBITDA was $52.7 million in the first quarter of 2021, compared to $7.6 million in the first quarter of 2020. Excluding IFRS 16, EBITDA for the first quarter of 2021 was $36.5 million, compared to a negative $7.7 million for the comparable first quarter of 2020.

Operating cash flow improved $26.5 million to $31.3 million in the first quarter of 2021, from $4.8 million in the first quarter of 2020. Excluding IFRS 16, operating cash flow increased to $21.4 million in the first quarter of 2021, from negative $7.8 million in the comparable quarter last year.

Net financial debt as of March 31, 2021 was down to $150.2 million, from $236.3 million as of December 31, 2020, and $366.4 million as of March 31, 2020.

Equity on March 31, 2021 was $558.6 million, compared with $457.3 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.137 per share, to be distributed on June 1, 2021. The determining and "ex-dividend" date will be May 23, 2021.

2021 Financial Guidance

Delta Galil provided initial 2021 financial guidance, excluding one-time items and based on IFRS 16, and on current market conditions.

  • Full-year 2021 sales are expected to range between $1,780 million-$1,820 million, representing an increase of 5%-8% from 2019 actual sales of $1,690.2 million.
  • Full-year 2021 EBIT is expected to range between $140 million-$150 million, representing an increase of 32%-41% from 2019 actual EBIT of $106.0 million.
  • Full-year 2021 EBITDA is expected to range between $240 million-$250 million, representing an increase of 23%-28% from 2019 actual EBITDA of $195.6 million.
  • Full-year 2021 net income is expected to range between $81.5 million-$89.5 million, representing an increase of 35%-49% from 2019 actual net income of $60.2 million.
  • Full-year 2021 diluted EPS is expected to range between $2.95-$3.25, representing an increase of 25%-38% from 2019 actual EPS of $2.36.

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 others. In addition, it sells its products under brand names licensed to the company, including Wilson, Spalding, Columbia, 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 March 31, 2021

 

 

March 31

 

December 31

 

2021

 

2020

 

2020

 

(Unaudited)

 

(Audited)

 

Thousands of Dollars

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

311,979

 

143,134

 

230,843

Restricted Cash

874

 

922

 

898

Other accounts receivable:

 

 

 

 

 

Trade receivables

187,370

 

149,337

 

200,201

Taxes on income receivable

11,723

 

2,103

 

18,305

Others

43,703

 

39,768

 

38,255

Financial derivative

828

 

649

 

2,020

Inventory

315,170

 

323,068

 

291,703

Total current assets

871,647

 

658,981

 

782,225

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Investments in associated companies
accounted using

 

 

 

 

 

the equity method and long-term receivables

11,969

 

14,140

 

14,668

Investment property

3,209

 

3,114

 

3,389

Fixed assets, net of accumulated depreciation

207,456

 

210,109

 

209,465

Goodwill

148,859

 

144,941

 

150,657

Intangible assets, net of accumulated amortization

270,011

 

264,031

 

266,967

Assets in respect of usage rights

207,871

 

200,110

 

217,777

Deferred tax assets

19,465

 

27,201

 

15,590

Financial derivative

21,152

 

8,777

 

31,593

Total non-current assets

889,992

 

872,423

 

910,106

Total assets

1,761,639

 

1,531,404

 

1,692,331

 

 

 

 

 

 

 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Balance Sheets

As of March 31, 2021

 

 

March 31

 

December 31

 

2021

 

2020

 

2020

 

(Unaudited)

 

(Audited)

 

Thousands of Dollars

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Short-term bank loans

14,013

 

 

68,463

 

 

11,013

 

 

Current maturities of bank loan

21,272

 

 

10,392

 

 

20,295

 

Current maturities of debentures

38,450

 

 

36,532

 

 

39,029

 

Financial derivative

236

 

 

3,437

 

 

170

 

Current maturities of liabilities in respect of leases

58,038

 

 

55,054

 

 

60,363

 

Other accounts payable:

 

 

 

 

 

Trade payables

204,259

 

 

109,954

 

 

186,903

 

Taxes on income payable

22,446

 

 

14,169

 

 

26,294

 

Provision for restructuring plan

22,360

 

 

1,304

 

 

26,825

 

Others

140,638

 

 

111,257

 

 

150,737

 

Total current liabilities

521,712

 

 

410,562

 

 

521,629

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Bank loan

95,620

 

 

64,717

 

 

104,096

 

Severance pay liabilities less plan assets

9,060

 

 

10,035

 

 

9,499

 

Liabilities in respect of leases

175,006

 

 

172,565

 

 

182,408

 

Other non-current liabilities

49,904

 

 

43,547

 

 

43,030

 

Debentures

307,575

 

 

332,049

 

 

316,764

 

Deferred taxes liabilities

44,195

 

 

35,518

 

 

38,513

 

Financial derivative

-

 

 

5,151

 

 

-

 

Total non-current liabilities

681,360

 

 

663,582

 

 

694,310

 

Total liabilities

1,203,072

 

 

1,074,144

 

 

1,215,939

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Equity attributable to equity holders of the parent
company:

 

 

 

 

 

Share capital

23,714

 

 

23,714

 

 

23,714

 

Share premium

130,156

 

 

130,261

 

 

130,260

 

Other capital reserves

51,163

 

 

(20,974

)

 

6,604

 

Retained earning

347,664

 

 

340,174

 

 

332,268

 

Treasury shares

(15,963

)

 

(16,093

)

 

(16,067

)

 

536,734

 

 

457,082

 

 

476,779

 

Minority interests

21,833

 

 

178

 

 

(387

)

Total equity

558,567

 

 

457,260

 

 

476,392

 

Total liabilities and equity

1,761,639

 

 

1,531,404

 

 

1,692,331

 

 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Statement of Income

For the 3-month period ending March 31, 2021

 

 

Three months ended March 31

 

2021

 

2020

 

(Unaudited)

 

Thousands of Dollars

 

 

 

 

 

 

 

 

Sales

416,135

 

332,683

Cost of sales

257,105

 

218,950

Gross profit

159,030

 

113,733

% of sales

38.2%

 

34.2%

Selling and marketing expenses

109,644

 

103,937

% of sales

26.3%

 

31.2%

General and administrative expenses

21,597

 

21,272

% of sales

5.2%

 

6.4%

Trade receivable credit loss

214

 

4,069

Other Expenses (income), net and

 

 

 

Share in profits of associated company

(379)

 

305

Operating income excluding non-recurring items

27,954

 

(15,850)

% of sales

6.7%

 

(4.8%)

Non-recurring items

-

 

12,906

Operating income (loss)

27,954

 

(28,756)

Finance expenses, net

8,979

 

10,403

Income (loss) before tax on income

18,975

 

(39,159)

Taxes on income (tax savings)

3,894

 

(8,650)

Net income (loss) for the period

15,081

 

(30,509)

 

Net income (loss) for the period excluding one-time items,
net of tax

15,081

 

(19,990)

 

 

 

 

 

 

 

 

Attribution of net earnings for the period:

 

 

 

Attributed to company's shareholders

14,546

 

(30,403)

Attributed to non-controlling interests

535

 

(106)

 

15,081

 

(30,509)

 

 

 

 

Net diluted earnings (loss) per share
attributed to company's shareholders

0.57

 

(1.19)

 

 

 

 

Net diluted earnings (loss) per share, before non-recurring
items net of tax attributable to Company's shareholders

0.57

 

(0.78)

 

 

 

 

 

 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Cash Flow Reports

For the 3-month period ending March 31, 2021

 

 

Three months ended March 31

 

2021

 

2020

 

(Unaudited)

 

Thousands of Dollars

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

Net income for the period

15,081

 

(30,509)

Adjustments required to reflect cash flows

 

 

 

deriving from operating activities

21,044

 

44,790

Interest paid in cash

(8,005)

 

(8,410)

Interest received in cash

89

 

128

Taxes on income refund (paid) in cash, net

3,128

 

(1,249)

Net cash generated from operating activities

31,337

 

4,750

Cash flows from investment activities:

 

 

 

Acquisition of fixed assets and intangible assets

(6,700)

 

(5,418)

Providing a loan to a business partner

(1,750)

 

-

Bank deposit with respect to SWAP transaction

(1,770)

 

(5,180)

Acquisition of a subsidiary

-

 

(1,469)

Proceeds from selling of fixed asset

588

 

280

Others

(346)

 

-

Net cash used in Investing activities

(9,978)

 

(11,787)

Cash flows from financing activities:

 

 

 

Long term payables credit for fixed assets purchase

(1,532)

 

(1,184)

Lease principle repayment

(9,901)

 

(12,523)

Dividend paid

-

 

(6,506)

Repayment of long-term loans from banks

(2,738)

 

(2,140)

Short-term credit from banking corporations, net

3,008

 

68,463

Repayment of bank loan used to acquisition of a subsidiary

(1,544)

 

(1,098)

Net proceeds from issuance of a subsidiary

77,156

 

-

Net cash generated from ( used in) financing activities

64,449

 

45,012

Net increase (decrease) in cash and cash equivalents

85,808

 

37,975

 

 

 

 

Exchange rate differences and revaluation of cash

 

 

 

and cash equivalents, net

(4,672)

 

(1,267)

Balance of cash and cash equivalents

 

 

 

at the beginning of the period, net

230,843

 

106,426

Balance of cash and cash equivalents
at the end of the Period, net

311,979

 

143,134

 

DELTA GALIL INDUSTRIES LTD.

Concise Consolidated Cash Flow Reports

For the 3-month period ending March 31, 2021

 

 

Three months ended March 31

 

2021

 

2020

 

(Unaudited)

 

Thousands of Dollars

Adjustments required to reflect cash flows

 

 

 

from operating activities:

 

 

 

Revenues and expenses not involving cash flow:

 

 

 

Depreciation

8,788

 

8,070

Amortization

15,975

 

15,352

Impairment of intangible assets

-

 

12,780

Cash erosion, net

676

 

390

Interest paid in cash

4,702

 

5,670

Interest received in cash

(89)

 

(128)

Taxes on income paid (received) in cash, net

(3,128)

 

1,249

Deferred taxes on income, net

4,163

 

(11,718)

Interest due to lease agreements

3,303

 

2,740

Severance pay liability, net

128

 

57

Restructuring (payments) provision

(4,165)

 

-

Decrease in liabilities in respect of leases due to rent payments relief

(3,059)

 

-

Capital loss from sale of fixed assets

(172)

 

(66)

Change to the benefit component of options granted to employees

850

 

320

Write-down of customers and other receivables

214

 

6,984

Share in profits of associated company accounted for using the equity method

(6)

 

57

Others

(2,899)

 

241

 

25,281

 

41,998

Changes to operating assets and liabilities:

 

 

 

Decrease (increase) in trade receivables

7,758

 

55,164

Decrease (Increase) in other receivable and balances

4,645

 

(2,441)

Decrease in trade payables

19,659

 

(28,541)

Decrease (increase) in other payables

(5,506)

 

(22,812)

Decrease (increase) in inventory

(30,793)

 

1,422

 

(4,237)

 

2,792

 

21,044

 

44,790

 

 

 

 

 

For more information:
Nissim Douek
+972-54-5201178
Nissim@unik.co.il

U.S. Media:
Danielle Poggi
Berns Communications Group
dpoggi@bcg-pr.com

Source: Delta Galil Industries, Ltd.