delta galil
leading in fabrics since 1975
26 February 2020

Sales Increased 13% to All-Time High of $1,690.2 Million;
EBITDA Increased 51% to Record $195.6 Million;
Cash Flow Significantly Increased to $155 Million
Q4 Sales Increased 11% to Record $504.8 Million; EBITDA Increased 51% to $76.1 Million;
Diluted Earnings Per Share Increased 45% to $1.40 in Q4
Initial 2020 Earnings Guidance:
Sales Expected to Reach $1,740 Million-$1,770 Million and
Full-Year EBIT Expected to Grow by 1% to 7% Year-Over-Year (Including a Corona Virus One-Time Impact of Between $5-7 Million)

2019 Fourth Quarter Highlights

  • EBITDA increased 51% to $76.1 million in Q4 2019.
  • Diluted earnings per share increased 45% to $1.40 in Q4 2019.
  • Diluted earnings per share excluding one-time items increased 28% in Q4 2019 to $1.37.
  • Net income increased 44% in Q4 2019 to $35.6 million.
  • Net income excluding one-time items increased 28% to $34.8 million for Q4.
  • Operating profit for the fourth quarter increased 36% to $52.2 million.
  • Operating profit excluding one-time items increased 22% to $51.2 million.
  • Operating cash flow significantly improved to $112 million in the fourth quarter of 2019, from $56.5 million in the fourth quarter of 2018.
  • Acquired online bra-fitting technology leader Brayola, as part of Company’s online expansion strategy.
  • A strong balance sheet post Bogart acquisition and IFRS implementation, highlighted by $506.9 million in equity as of December 31, 2019, and $109.2 million in cash and cash equivalents.
  • The Board of Directors declared a dividend of $6.5million, or $0.255 per share, to be distributed on March 17, 2020. The determining and “ex-dividend” date will be March 4, 2020.

Isaac Dabah, CEO of Delta Galil, stated: “We are pleased to have concluded a strong 2019, as reflected in record sales, EBIT, EBITDA and operating cash flow. Our results were primarily driven by the strength of our Global Upper Market, Delta Israel and European Brands, coupled with our diverse blend of product categories and business segments. We continued to invest in our online sales growth engine, which presented a double-digit e-commerce growth. We recently consummated the acquisition of the online bra-fitting technology leader Brayola, as part of our online expansion strategy. Looking ahead, we remain focused on strengthening our product assortment with Bogart’s lingerie capabilities. We also plan to grow the Eminence ladies and kids products, while leveraging the European Brands infrastructure for selling Delta products. As always, we remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value.”

Tel Aviv, February 25, 2020 – 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, 2019. The Company’s results in 2019 reflect the application of International Financial Reporting Standard 16 (“IFRS 16”) with respect to accounting for leases.

Sales

The Company reported record sales of $504.8 million for the fourth quarter of 2019, an 11% increase from $454.3 million in the same quarter of 2018. Sales for the 2019 full year increased 13% to $1,690.2 million, from $1,498.4 million for 2018.

Operating Profit

Operating profit increased 36% to $52.2 million in the fourth quarter of 2019, from $38.4 million in the fourth quarter of 2018. Operating profit excluding one-time items increased 22% and amounted to $51.2 million for the fourth quarter of 2019, compared to $42.1 million for the fourth quarter of 2018.

For the 2019 full year, operating profit increased 29% and totaled $103.7 million, compared to $80.7 million in 2018. Operating profit excluding one-time items increased 8% for the 2019 full year and totaled $106 million, compared to $98 million for 2018.

Net Income

Net income increased 44% to $35.6 million in the fourth quarter of 2019, compared to $24.7 million in the same quarter of 2018. Net income excluding one-time items increased 28% to $34.8 million in the fourth quarter of 2019, compared to $27.2 million for the fourth quarter of 2018.

For the 2019 full year, net income increased 20% to $57.7 million, from $48.2 million in 2018. Net income excluding one-time items for the 2019 full year totaled $60.2 million, compared to $60.5 million for 2018, representing a 0.4% decrease.

Diluted Earnings Per Share

Diluted earnings per share increased 45% in the 2019 fourth quarter to $1.40, compared to $0.97 for the same quarter of 2018. Diluted earnings per share excluding one-time items increased 28% in the 2019 fourth quarter and amounted to $1.37, compared to $1.07 for the 2018 comparable period.

For the 2019 full year, diluted earnings per share increased 19% to $2.26 from $1.90 for 2018. Diluted earnings per share excluding one-time items for the 2019 full year totaled $2.36, compared to $2.37 for 2018, representing a 0.4% decrease.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “We are pleased to have concluded a strong 2019, as reflected in our record sales, EBIT, EBITDA and operating cash flow. Our results were primarily driven by the strength of our Global Upper Market, Delta Israel and European Brands, coupled with our diverse blend of product categories and business segments. We continued to invest in our online sales growth engine, which presented double-digit e-commerce growth. We recently consummated the acquisition of online bra-fitting technology leader Brayola as part of our online expansion strategy. Our Vietnam factory turned profitable during the fourth quarter, and we expect that to continue into 2020.”

“During the year, we focused on consolidating the recently acquired intimate apparel leader Bogart Group into our business, and its performance exceeded our expectations. Additionally, the acquired men’s underwear leader Eminence continues to be a contributor to Delta European Brands – along with our overall growth – and we have begun cross-selling Eminence and Schiesser.”

“Looking ahead, we remain focused on strengthening our product assortment with Bogart’s lingerie capabilities. We intend to introduce Bogart products to Delta customers, while leveraging Bogart’s relationships to introduce Delta products to their major customers. We also plan to grow the Eminence ladies and kids products, while using the European Brands infrastructure for selling Delta products.”

“In 2020 we will celebrate the 20th anniversary of the launch of 7 for all Mankind®, the original premium denim brand. The collection, based on the original designs, will highlight our marketing drive.”

“As always, we remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value. And, with a strong balance sheet, we have the necessary financial resources to continue to innovate and grow.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $76.1 million, or 15.1% of sales in the fourth quarter of 2019, compared to $50.2 million, or 11.1% of sales in the same quarter of 2018. For the 2019 full year, EBITDA was $195.6 million, or 11.6% of sales, compared to $129.8 million, or 8.7% of sales in 2018.

Operating cash flow doubled to $112.3 million in the fourth quarter of 2019, compared with $56.5 million in the fourth quarter of 2018. For the 2019 full year, operating cash flow was $155.0 million, compared to $22.4 million for the full year 2018.

Net financial debt as of December 31, 2019 was $334.5 million, compared to $326.7 million as of December 31, 2018.

Equity on December 31, 2019 was $506.9 million, up from $467.9 million a year prior.

Delta Galil declared a dividend of $6.5 million or $0.255 per share, to be distributed on March 17, 2020. The determining and “ex-dividend” date will be March 4, 2020.

2020 Financial Guidance

Delta Galil provided its initial 2020 financial guidance, excluding one-time items, which is based on current market conditions and current exchange rates of: Euro/USD 1.10 and USD / NIS 3.45. The Company’s financial guidance for 2020 includes the impact of IFRS 16 on accounting for leases. Based on the current information available, the Company estimates the negative impact of the Corona virus on its first half of 2020 and annual EBIT to range between $5-7 million. This estimate is included in its guidance below. The Company will update its financial guidance if necessary, based on any new information that becomes available.

  • Full-year 2020 sales are expected to range between $1,740 million-$1,770 million, representing an increase of 3%-5%, from 2019 actual sales of $1,690.2 million.
  • Full-year 2020 EBIT is expected to range between $107 million-$113 million, representing an increase of 1%-7% from 2019 actual EBIT of $106 million.
  • Full-year 2020 EBITDA is expected to range between $197 million-$203 million, representing an increase of 1%-4%, from 2019 actual EBITDA of $195.6 million.
  • Full-year 2020 net income is expected to range between $57 million-$62 million, from 2019 actual net income of $60.2 million.
  • Full-year 2020 diluted EPS is expected to range between $2.23 -$2.42, from 2019 actual EPS of $2.26.

IFRS 16 

Starting January 1, 2019, the Company adopted the new lease accounting standards set forth in IFRS 16. This requires that certain leases, which were accounted for as operating leases be treated as capital leases going forward. Certain leases will be reclassified as assets and liabilities on the balance sheet, which will yield increased depreciation and interest expense, offset by a reduction in rental expense.

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 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/Danielle Poggi

Berns Communications Group

+1-212-994-4660

sberns@bcg-pr.com