FINANCIAL RESULTS FOR Q2 2012
Strong Performance Reflects 6% Rise in Sales and 12% Growth in Operating Income before Capital Gains and One-Time Items
9 August 2012
Strong Performance Reflects 6% Rise in Sales and 12% Growth in Operating Income before Capital Gains and One-Time Items
Outlook Increased for Full-Year 2012 Business Results

 

QUARTERLY HIGHLIGHTS

Sales were $169.1 million in the 2012 second quarter, up 6% from the same period of 2011. This is the 11th consecutive quarter in which Delta delivered an increase in sales.

​​Operating income before capital gains and one-time items was $8.8 million for the 2012 second quarter, a 12% increase from a year ago.

Net income attributed to shareholders before capital gains and one-time items was $6.1 million in the 2012 second quarter, a 9% increase from the same quarter of 2011.

Diluted earnings per share attributed to shareholders, excluding capital gains and one-time items, was $0.25 for the 2012 second quarter and $0.41 for six months, up from $0.24 and $0.35, respectively, for the same periods of 2011.

Cash flow from current operations in the 2012 second quarter was $16.1 million, up from $5.9 million in the same quarter last year.

Net financial debt of the Company on June 30, 2012 was $22.7 million, decreasing from $84.0 million on June 30, 2011 and $53.8 million on December 31, 2011.

Delta Galil declared a dividend totaling approximately $2.1 million, or $0.0884 per share, to be distributed on August 28, 2012. The determining and “ex-dividend” date for this distribution will be August 15, 2012.

Isaac Dabah, CEO of Delta Galil, noted: “The Company’s performance in the quarter reflected the strong business with our biggest customers which drove solid top-line growth.”

 

TEL AVIV, AUGUST 9, 2012 – 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 of 2012.

Delta Galil reported sales for the second quarter of 2012 of $169.1 million, compared to $160.2 million in the same quarter of 2011, an increase of 6%. Sales in the first six months of 2012 also increased by 6% and amounted to $337.2 million, compared to $317.6 million in the first half of 2011. The increased sales in the second quarter and first half of 2012 compared to the corresponding periods last year were due primarily to higher sales in North America.

Operating income before capital gains and one-time items amounted to $8.8 million in the second quarter of 2012, compared to $7.9 million in the second quarter of 2011, a 12% increase. In the first half of 2012, operating income before one-time items amounted to $15.2 million, compared to $11.9 million in the first half of 2011, a 28% increase.

Net income attributed to shareholders before capital gains and one-time items, net after tax, was $6.1 million in the second quarter of 2012, compared to $ 5.6 million in the same quarter of last year, a 9% increase. For the first six months of 2012, net income attributed to shareholders before capital gains and one-time items, net after tax, was $10.0 million, rising 16% from $8.6 million in the same period of 2011.

Diluted earnings per share attributed to shareholders, excluding capital gains and one-time items, was $0.25 for the 2012 second quarter and $0.41 for six months. In the second quarter and first six months of 2011, the comparable amounts were $0.24 and $0.35, respectively.

Results for the second quarter and first half of 2012 included the following capital gains and one-time items: i) a capital gain of $19.9 million from the sale of real estate; ii) expenses of $1.2 million arising from the acquisition of Schiesser Group; iii) a write-down of unused fixed assets of $1.3 million; and iv) restructuring expenses of $3.0 million, due to efficiency actions that included the consolidation of production sites at Karmiel, Israel and the relocation of the logistics center to Caesarea. The total of all the one-time items included in operating income in the second quarter and first half of 2012 was positive $14.4 million. This compared to income from one-time items of $3.6 million in the first half of 2011, reflecting capital gains from realization of a fixed asset and the sale of a franchising agreement.

CEO COMMENT: BRANDED PRODUCTS, GLOBAL MARKETS DRIVE GROWTH

Isaac Dabah, CEO of Delta Galil, stated: “We have continued our growth strategy of building a solid offering of branded products and pursuing opportunities in a range of international markets. As a result, we have delivered an increase in sales for the 11th consecutive quarter. The Company’s performance in the quarter reflected the strong business with our biggest customers, which drove solid top-line growth, especially in the U.S. market. In the second half of this year, we expect to benefit from our investment in Schiesser Group, an acquisition that we completed on July 2nd, 2012, which gives us an even greater presence in branded products and in new global markets.”

OUTLOOK FOR 2012 RESULTS

Delta Galil increased its previous estimate for 2012 business results (originally provided in the 2011 year-end press release), to include the results of Schiesser Group starting in the third quarter of this year. The following forecast excludes the effect of any one-time items, net of tax:

• Full-year 2012 sales are estimated to range from $810 million to $820 million, which would constitute an increase of 19% to 21% compared to reported 2011 sales of approximately $679 million.

• Full-year 2012 operating income is estimated to range between $50 million and $52 million, which would constitute an increase of 26% to 31% compared to reported 2011 operating profit of approximately $40 million.

• Full-year 2012 net income is estimated to range between $33 million and $34.5 million, which would constitute an increase of 20% to 26% compared to reported 2011 net profit of approximately $27.4 million.

• Full-year 2012 diluted EPS is estimated to range between $1.37 and $1.44, which would constitute an increase of 19% to 25% compared to reported 2011 diluted EPS of $1.15 per share.

STRONG CASH FLOW

Delta derived positive cash flow from current operations in the second quarter of 2012 of $16.1 million, compared to $5.9 million in the same quarter last year, an increase of 174%. Cash flow from current operations in the first half of 2012 was $35.5 million, compared to $2.8 million in the same period last year.

The improved cash flow from current operations in the second quarter and first half of 2012 compared to the corresponding periods last year was due to the increase in net income, as well as a decrease in working capital in the first half of 2012, compared to an increase in working capital in the first half of 2011.

NET FINANCIAL DEBT REDUCED; CAPITAL INCREASED

The net financial debt of Delta Galil amounted to $22.7 million at June 30, 2012, a sharp decrease from $84.0 million at June 30, 2011 and $53.8 million on December 31, 2011. The decrease in financial debt derives from the positive cash flow from current operations in the last 12 months, which amounted to $69 million.

The capital of the Group as of June 30, 2012 amounted to $237.3 million, representing 51.1% of the total balance sheet, compared to approximately $205.4 million, representing 46.9% of the total balance sheet as of June 30, 2011 and $217.2 million, or 49.0% of the total balance sheet, as of December 31, 2011. The increase in capital derives from total income for the first half of 2012, which amounted to approximately $22.3 million, less distributed dividend in the amount of $3.9 million.

DIVIDEND DECLARATION

Delta Galil declared a dividend totaling approximately $2.1 million, or $0.0884 per share, to be distributed on August 28, 2012. The determining and “ex-dividend” date for this distribution will be August 15, 2012.

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 Duek
Meital Levi Tal
+972-54-7739677
meitall@unik.co.il
UNIK

U.S. Media Contact:
Stacy Berns/Jessica Liddell
Berns Communications Group
+1-212-994-4660
sberns@bcg-pr.com