delta galil
leading in fabrics since 1975
20 February 2019

Sales Increased 10% to All-Time High $1,498.4 Million;

EBITDA Increased 12% to Record $129.8 Million

Q4 Sales Increased 22% to $454.3 Million; EBITDA Increased 25% to $50.2 Million;

Diluted Earnings Per Share Increased 23% to $0.97 in Q4

Initial 2019 Earnings Guidance:

Sales Expected to Reach $1,550 Million-$1,590 Million and

Full-Year EPS Expected to grow by 5% to 12% and reach $2.50-$2.65

2018 Fourth Quarter Highlights

  • Sales Increased 22% in the fourth quarter of 2018 to a record $454.3 million, from $371.6 million in the fourth quarter of 2017.
  • EBITDA increased 25% in the fourth quarter of 2018 and amounted to $50.2 million, from $40.0 million in the fourth quarter of 2017.
  • Operating profit excluding one-time items increased 30% to $42.1 million in 2018, from $32.5 in the same period of 2017.
  • Operating profit for the fourth quarter increased 18% to $38.4 million in 2018, compared to $32.5 million in 2017.
  • Diluted earnings per share excluding one-time items increased 36% in the fourth quarter of 2018 to $1.07, compared to $0.79 in the fourth quarter of 2017.
  • Diluted earnings per share for the fourth quarter increased 23% to $0.97 in 2018, from $0.79 in the same quarter of 2017.
  • A strong balance sheet post the Eminence acquisition, highlighted by $468 million in equity as of December 31, 2018, and $74 million in cash and cash equivalents.
  • The Board of Directors declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 6, 2019. The determining and “ex-dividend” date will be February 26, 2019.
  • Isaac Dabah, CEO of Delta Galil, stated: “2018 represented a record year for Delta Galil, highlighted by strong sales, EBITDA, and net income (excluding one-time items). We are very pleased with the continued momentum in our business, which was driven by Delta Israel, a strong second half for Delta Galil USA, and fourth quarter improvements in our Global Upper Market and Delta Galil Premium Brands. Looking ahead, we will continue to grow both organically and through accretive acquisitions to drive sustained profitable growth and long-term shareholder value.”

 

Tel Aviv, February 19, 2019 – 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, as well as leisurewear, activewear and denim, today reported its financial results for the fourth quarter and full year ended December 31, 2018.

 

Sales
The Company reported record sales of $454.3 million for the fourth quarter of 2018, a 22% increase from $371.6 million in the same quarter of 2017. Sales for the 2018 full year increased 10% to $1,498.4 million, from $1,368.1 million for the 2017 full year. The sales growth primarily reflected strength in Delta Galil USA, Delta Galil Premium Brands, Delta European Brands (including Eminence starting the third quarter) and Delta Israel.

 

Operating Profit
Operating profit increased 18% to $38.4 million in the fourth quarter of 2018, from $32.5 million in the fourth quarter of 2017. Operating profit excluding one-time items increased 30% and amounted to $42.1 million for the fourth quarter of 2018, compared to $32.5 million for the fourth quarter of 2017. For the 2018 full year, operating profit was $80.7 million, compared to $84.6 million in 2017, representing a 5% decrease. Operating profit excluding one-time items increased 12% for the 2018 full year and totaled $98.0 million, compared to $87.4 million for the 2017 full year.
The increase in operating profit in the reporting periods is mainly due to the increase in sales and the consolidation of Eminence group.

 

Net Income
Net income increased 23% to $24.7 million in the fourth quarter of 2018, compared to $20.1 million in the same quarter of 2017. Net income excluding one-time items increased 36% and amounted to $27.2 million for the fourth quarter of 2018, compared to $20.1 million for the fourth quarter of 2017. For the 2018 full year, net income was $48.2 million, compared to $49.0 million in 2017, a 2% decrease. Net income excluding one-time items increased 19% for the 2018 full year and totaled $60.5 million, compared to $50.7 million for the 2017 full year.

 

Diluted Earnings Per Share
Diluted earnings per share increased 23% in the 2018 fourth quarter to $0.97, compared to $0.79 for the same quarter of 2017. Diluted earnings per share excluding one-time items increased 36% in the 2018 fourth quarter and amounted to $1.07, compared to $0.79 for the 2017 comparable period. For the 2018 full year, diluted earnings per share amounted to $1.90, compared to $1.91 for the 2017 full year, representing a 1% decrease. Diluted earnings per share excluding one-time items increased 20% for the 2018 full year and totaled $2.37, compared to $1.98 for the 2017 full year.

 

Management Comment
Isaac Dabah, CEO of Delta Galil, stated: “2018 represented a record year for Delta Galil, highlighted by strong sales, EBITDA, and net income (excluding one-time items). We are very pleased with the continued momentum in our business, which was driven by Delta Israel, a strong second half for Delta Galil USA, and fourth quarter improvements in Global Upper Market.”

“During the year, we focused on consolidating the acquired Eminence Group and incorporating its brands Eminence, Athena and Liabel within the Delta Galil business. Additionally, going forward we are leveraging Eminence as a growth vehicle to expand our distribution of Delta Galil’s core products.”

“In 2018 we saw continued strength and improvements in Delta Galil Premium Brands, which delivered meaningful cost savings and efficiencies from operations, and is now under the leadership of Tim Baxter. We announced in January that we hired Simon Spurr as Global Creative Director of 7 For All Mankind®, and we are excited about upcoming initiatives for that brand, which will contribute to long-term growth.”

“Overall, we will continue to grow both organically and through accretive acquisitions, while focusing on areas such as Asia and South America and our direct-to-consumer business. With a strong balance sheet in place, we remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value.”

 

EBITDA, Cash Flow, Net Debt, Equity and Dividend
EBITDA was $50.2 million, or 11.1% of sales in the fourth quarter of 2018, compared to $40.0 million, or 10.8% of sales in the same quarter of 2017. For the 2018 full year, EBITDA was $129.8 million, or 8.7% of sales, compared to $115.9 million, or 8.5% of sales in 2017.

Operating cash flow was $56.5 million in the fourth quarter of 2018, compared with $55.0 million in the fourth quarter of 2017. For the 2018 full year, operating cash flow was $22.4 million, compared to $74.7 million last year. The decrease in 2018 operating cash-flow vs 2017 is due to increase in the level of working capital vs a moderate increase last year. The said increase is primarily due to increase in accounts receivables due to record sales in the fourth quarter of 2018 as mentioned above.

Net financial debt as of December 31, 2018 was $326.7 million, compared to $125.6 million as of December 31, 2017. The increase in net financial debt as of December 31st in mainly due to Eminence group acquisition amounted to $136.4 million and capital expenditures of $45.4 million.

Equity on December 31, 2018 was $467.9 million, up from $451.3 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 6, 2019. The determining and “ex-dividend” date will be February 26, 2019.

 

2019 Financial Guidance
Delta Galil provided its initial 2019 financial guidance, excluding one-time items, which is based on current market conditions and current exchange rates of: Euro/USD 1.14 and USD / NIS 3.65. The Company’s financial guidance for 2019 includes the impact of IFRS 16 on accounting for leases.

  • Full-year 2019 sales are expected to range between $1,550 million-$1,590 million, representing an increase of 3%-6% from 2018 actual sales of $1,498 million.
  • Full-year 2019 EBIT, is expected to range between $112 million-$117 million, representing an increase of 14%-19% from 2018 actual EBIT of $98 million. Excluding IFRS 16 impact, 2019 EBIT is estimated to range between $104 million – $109 million, representing an increase of 6% – 11% over 2018.
  • Full-year 2019 EBITDA, is expected to range between $189 million-$194 million, representing an increase of 45%-49% from 2018 actual EBITDA of $130 million. Excluding IFRS 16 impact, 2019 EBITDA is estimated to range between $138 million – $143 million, representing an increase of 6% – 10% over 2018.
  • Full-year 2019 net income is expected to range between $64 million-$67 million, representing an increase of 5%-12% from 2018 actual net income of $60 million.
  • Full-year 2019 diluted EPS is expected to range between $2.50-$2.65, representing an increase of 5%-12% from 2018 actual EPS of $2.37.

 

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 Ella Moss®, among others.  In addition, it sells its products under brand names licensed to the company, including: Wilson, Maidenform, Tommy Hilfiger, Lacoste 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.

 

For more information:

Nissim Douek
+972-54-5201178
Nissim@unik.co.il

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