Second Quarter of 2014
Delta Galil Reports Record Results
28 July 2014

 

Delta Galil Reports Record Results for Second Quarter of 2014.
Operating Income Rises 11% from Prior Year.
Sales Increase 6%, Trailing 12-Month Sales Exceed $1 Billion.
19th Consecutive Quarter of Year-over-Year Organic Sales Growth
Reaffirming 2014 Guidance; Sales Expected to Reach $1,045 Million-$1,075 Million and
Full-Year EPS Expected to Reach $1.95-2.14 

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Quarterly Highlights

>> Sales increased to $249.2 million in the 2014 second quarter, up 6% from the same period of 2013.

>> Delta Galil delivered its 19th consecutive quarter of year-over-year organic sales growth.

>> Operating income was $15.5 million in the 2014 second quarter, growing 11% from the comparable amount a year ago.

>> EBITDA was $19.9 million or 8.0% of sales in the 2014 second quarter, increasing 9% compared with $18.3 million or 7.8% of sales in the 2013 second quarter.

>> Net income attributed to shareholders rose to $9.7 million in the 2014 second quarter, increasing 11% from the comparable amount of $8.8 million a year ago.

>> Diluted earnings per share attributed to shareholders rose to $0.38 for the 2014 second quarter, up 9% from the comparable amount of $0.35 a year ago.

>> Financial guidance for 2014 was reaffirmed: sales are expected to be $1,045 million-$1,075 million. Full-year 2014 EBITDA is expected to range between $95 million-$101 million. Full-year 2014 diluted EPS is expected to be $1.95- $2.14.

>> The Board of Directors declared a dividend of $3.5 million or $0.141 per share, to be distributed on August 20, 2014. The determining and “ex-dividend” date will be August 6, 2014, per the Tel Aviv Stock Exchange.

>> Strong balance sheet was highlighted by a record $336.3 million in equity as of June 30, 2014, and approximately $117 million in cash and equivalents.

>> Isaac Dabah, CEO of Delta Galil, stated: “Our strong results for the first half of 2014 were distinguished by record sales and profitability, sustained organic growth across nearly all of our business segments, and a solid financial base that will support Delta Galil’s future expansion and success. We are well on the way to our first $1 billion sales year, and in fact have already reached that milestone during the four quarters ended June 30, 2014.”

Tel Aviv, July 28, 2014 – 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, today reported its financial results for the second quarter and six months ended June 30, 2014.

The Company reported sales of $249.2 million for the second quarter of 2014, an increase of 6% from $234.4 million for the same quarter of 2013. Sales in the first six months of 2014 were $487.2 million, an increase of 6% from $461.6 million in the same period of 2013.

Operating income was $15.5 million for second quarter of 2014, up 11% from $14.0 million in the same quarter of 2013.  For the first six months of 2014, operating income grew 19%, to $30.4 million from $25.5 million a year earlier.

The increase in operating income reflected both the rising sales and an expanding gross profit margin. Gross profit increased to 31.2% of sales in the second quarter and 30.8% in the first half of 2014, up from 29.5% and 29.0% in the respective periods a year ago. This was partly offset by higher selling and marketing expenses as Delta Galil invested in the growth of its business.

Net income attributable to shareholders was $9.7 million in the 2014 second quarter, compared to $8.8 million in the same quarter of 2013, an 11% increase. Diluted earnings per share attributed to shareholders rose to $0.38 for the 2014 second quarter, from $0.35 for the 2013 period. For the first six months of 2014, net income attributable to shareholders was $18.5 million or $0.73 per diluted share, compared to $15.4 million or $0.61 per diluted share for the same period of 2013.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “Our strong results for the first half of 2014 were distinguished by record sales and profitability, sustained organic growth across nearly all of our business segments, and a solid financial base that will support Delta Galil’s future expansion and success. We are well on the way to our first $1 billion sales year, and in fact have already reached that milestone during the four quarters ended June 30, 2014.”

“The solid performance of Delta Galil is the product of sharply focused strategies to diversify our portfolio, invest in innovation, and strengthen our financial resources. As a result, we have delivered 19 straight quarters of organic sales growth, driven by such diverse engines as brands, activewear and retail. By broadening our global presence, we are positioned to grow in markets as diverse as Israel, Germany and North America. Our decision to expand the branded business has also led to meaningful margin improvement. And our capacity to continue this profitable growth is supported by a strong balance sheet, with $336.3 million in equity and low financial leverage.”

“We are continuing to invest in Delta Galil’s future growth, including manufacturing capacity, retail store enhancements and other areas that will reinforce our reputation for innovation, quality and customer service,” Mr. Dabah concluded.

 

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $19.9 million or 8.0% of sales in the 2014 second quarter, increasing 9% compared with $18.3 million or 7.8% of sales in the 2013 second quarter.  For the first six months of 2014, EBITDA rose 14% to $38.9 million or 8% of sales, compared to $34.0 million or 7.4% of sales in the same period of 2013.

Operating cash flow was $10.2 million in the second quarter and $3.6 million in the first six months of 2014. In the respective second quarter and six month periods of 2013, operating cash flow was $18.0 million and $4.7 million. Operating cash flow for the last four quarters increased to $45.1 million from $42.2 million.

Net financial debt decreased to $82.4 million at June 30, 2014 from $99.1 million at June 30, 2013.

The net financial debt to EBITDA ratio (based on the last four quarters) improved significantly to 0.9 as of June 30, 2014, down from 1.3 a year earlier.

Equity on June 30, 2014 was a record $336.3 million, compared to $290.8 million a year earlier.

Delta Galil declared a dividend of $3.5 million or $0.141 per share, to be distributed on August 20, 2014. The determining and “ex-dividend” date will be August 6, 2014, per the Tel Aviv Stock Exchange

 

Reaffirming Guidance for 2014

The Company today reiterated its 2014 financial guidance, reflecting a strong outlook for sales and profitability.

>> Full-year 2014 sales are expected to range between $1,045 million-$1,075 million, representing an increase of 7%-10% from 2013 sales of $974.7 million.

>> Full-year 2014 EBIT is expected to range between $77 million-$83 million, representing an increase of 13%-22% from 2013 EBIT of $67.9 million.

>> Full-year 2014 EBITDA is expected to range between $95 million-$101 million, representing an increase of 10%-17% from 2013 EBITDA of $86.2 million.

>> Full-year 2014 net income is expected to range between $50 million-$55 million, representing an increase of 13%-24% from 2013 net income of $44.3 million.

>> Full-year 2014 diluted EPS is expected to range between $1.95-$2.14, representing an increase of 11%-22% from 2013 EPS of $1.75.

 

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.