THIRD QUARTER OF 2014
Delta Galil Reports Strong Performance
5 November 2014

Delta Galil Reports Strong Performance for Third Quarter of 2014

Net Income Rises 9% from Year-Ago Period

Sales and EBITDA Increase 4%, Setting New Quarterly Records

Trailing 12 Months’ Sales Exceed $1 Billion

Outlines Strategies for Long-Term Growth

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Quarterly Highlights

  • Sales increased to $267.2 million in the 2014 third quarter, up 4% from the same period of 2013.
  • Operating income was $21.7 million in the 2014 third quarter before one-time items, up 2% from a year ago.
  • EBITDA was $26.1 million or 9.8% of sales in the 2014 third quarter, increasing 4% compared to the 2013 third quarter.
  • Net income attributed to shareholders rose to $13.8 million in the 2014 third quarter, increasing 9% from the comparable amount of $12.6 million a year ago.
  • Diluted earnings per share attributed to shareholders rose to $0.54 for the 2014 third quarter, up 8% from $0.50 a year ago.
  • The Board of Directors declared a dividend of $3.5 million or $0.14 per share, to be distributed on November 25, 2014. The determining and “ex-dividend” date will be November 12, 2014, per the Tel Aviv Stock Exchange.
  • Strong balance sheet was highlighted by $335.6 million in equity as of September 30, 2014, and $147.7 million in cash and equivalents.
  • Isaac Dabah, CEO of Delta Galil, stated: “Our strong results for 2014 to-date have put the Company firmly on track for a year of record sales and earnings, including our first full year of $1 billion-plus in sales. To continue our strong growth momentum we are pursuing a number of strategic initiatives, with a goal of significantly increasing our sales over the next five years through both organic means and acquisitions.”

Tel Aviv, November 4, 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 third quarter and nine months ended September 30, 2014.

The Company reported sales of $267.2 million for the third quarter of 2014, an increase of 4% from $257.2 million for the same quarter of 2013. Sales in the first nine months of 2014 were $754.5 million, an increase of 5% from $718.8 million in the same period of 2013. Sales growth over the past nine months benefitted from Delta Galil’s focus on increasing the diversity of its geographic base and customer mix, as well as an increase in sales of branded products.

Operating income was $21.7 million for third quarter of 2014 before one-time items, up 2% from $21.3 million in the same quarter of 2013.  For the first nine months of 2014, operating income rose 11%, to $52.0 million from $46.8 million a year earlier.

The growth in operating income reflected Delta Galil’s increasing sales and a wider gross profit margin, due in part to the expansion of its branded products business. Gross profit increased to 30.9% of sales for both the third quarter and nine months of 2014, up from 30.4% in the third quarter and 29.5% in the nine months of 2013. This was partly offset by higher selling and marketing expenses as the Company invested in the growth of its business.

Net income attributable to shareholders was $13.8 million in the 2014 third quarter, compared to $12.6 million in the same quarter of 2013, a 9% increase. Diluted earnings per share attributed to shareholders rose to $0.54 for the 2014 third quarter, from $0.50 for the 2013 period. For the first nine months of 2014, net income attributable to shareholders was $32.3 million or $1.26 per diluted share, compared to $28.1 million or $1.11 per diluted share for the same period of 2013.

Management Comment
Isaac Dabah, CEO of Delta Galil, stated: “Our strong results for 2014 to-date have put the Company firmly on track for a year of record sales and earnings, including our first full year of $1 billion-plus in sales. To continue our strong growth momentum we are pursuing a number of strategic initiatives, with a goal of significantly increasing our sales over the next five years through both organic means and acquisitions. The Company is adding world-class management talent in key areas such as the U.S. Intimates business, global manufacturing, and acquisitions and corporate development. We are growing our Activewear business by penetrating new distribution channels and partnering with customers to create innovative products. And we will centralize and consolidate some office locations to promote greater efficiency, teamwork and more agile decision-making.”

“As we invest for long-term, consistent growth, our strategies will be supported by a solid balance sheet with $147.7 million in cash and $335.6 million in equity. Throughout the year, we have allocated capital to expanding our manufacturing capacity, enhancing our retail store operations in Israel and Europe, and other investments in our future.”

“Our strategy going forward remains focused on organic growth and acquisitions; further development of our branded, retail and activewear businesses; and continual innovation as a source of competitive advantage,” Mr. Dabah concluded.

EBITDA, Cash Flow, Net Debt, Equity and Dividend
EBITDA was $26.1 million or 9.8% of sales in the 2014 third quarter, increasing 4% compared with $25.2 million or 9.8% of sales in the 2013 period. For the first nine months of 2014, EBITDA rose 10% to $65.0 million or 8.6% of sales, compared to $59.3 million or 8.2% of sales in the same period of 2013.

Operating cash flow was $14.8 million in the third quarter and $18.4 million in the first nine months of 2014. In the respective third quarter and nine month periods of 2013, operating cash flow was $19.4 million and $24.1 million. Operating cash flow for the last four quarters was $40.6 million.

Net financial debt decreased to $77.3 million at September 30, 2014 from $85.4 million at September 30, 2013.

The net financial debt to EBITDA ratio (based on the last four quarters) improved to 0.8 as of September 30, 2014, down from 1.0 a year earlier.

Equity on September 30, 2014 was $335.6 million, up from $305.7 million a year earlier.

Delta Galil declared a dividend of $3.5 million or $0.14 per share, to be distributed on November 25, 2014. The determining and “ex-dividend” date will be November 12, 2014, per the Tel Aviv Stock Exchange

2014 Updated Financial Guidance
Delta Galil also has updated its 2014 financial guidance.

  • Full-year 2014 sales are expected to range between $1,040 million-$1,050 million, representing an increase of 7%-8% from 2013 sales of $974.7 million.
  • Full-year 2014 EBIT is expected to range between $77 million-$79 million, representing an increase of 13%-16% from 2013 EBIT of $67.9 million.
  • Full-year 2014 EBITDA is expected to range between $95 million-$97 million, representing an increase of 10%-13% from 2013 EBITDA of $86.2 million.
  • Full-year 2014 net income is expected to range between $50 million-$51 million, representing an increase of 13%-15% from 2013 net income of $44.3 million.
  • Full-year 2014 diluted EPS is expected to range between $1.95-$2.00, representing an increase of 11%-14% 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.

 

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

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Berns Communications Group
+1-212-994-4660
sberns@bcg-pr.com