Delta Galil Reports Strong First Quarter 2021 Results Reflecting Record Sales, Profits and Cash Flow
Sales Increased 25% to $416.1 Million, with Online Sales up 272%
Record Q1 Level Gross Margin of 38.2% and EBIT Margin of 6.7%
Operating Cash Flow (Excluding IFRS 16) Increased by $29.2 Million to $21.4 Million Year-Over-Year
Strong Balance Sheet with Cash Balance of $313M and Equity of $559M
Company Resumes Dividend Payment
Initial 2021 Earnings Guidance – Sales Expected to Reach $1,780-$1,820 Million, and Full Year EPS Expected to Grow by 25% to 38% and Reach $2.95-$3.25
TEL AVIV, Israel–(BUSINESS WIRE)–Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange, DELTY.PK), 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 first quarter ended March 31, 2021.
Highlights
- Q1 sales increased 25% to $416.1 million, versus $332.7 million last year.
- E-commerce own website sales rose 272% for the first quarter of 2021 to $70.8 million, compared to $19.0 million for the first quarter of 2020.
- Gross margin increased by 400 basis points to a record Q1 level of 38.2%, versus 34.2% in Q1 2020.
- Operating margin increased to a record Q1 level of 6.7%, versus negative 4.8% in Q1 2020.
- Net income was $15.1 million, compared to net loss of $30.5 million in the first quarter last year.
- Q1 earnings per share (EPS) amounted to $0.57, versus a loss per share of $1.19 in Q1 2020.
- Operating cash flow improved $26.5 million to $31.3 million in the first quarter of 2021, from $4.8 million in the first quarter of 2020. Operating cash flow excluding IFRS 16 increased to $21.4 million from negative $7.8 million in Q1 2020.
- Delta Galil received $77 million in cash as a result of the successful Delta Israel IPO completion during Q1. This, along with the strong free cash flow for the period of $21.4 million, supported further reduction the Company’s net financial debt to its lowest level since January 2018.
- Strong balance sheet highlighted by $313 million in cash and $558.6 million in equity as of March 31, 2021.
- Net financial debt declined by 59% to $150.2 million, versus $366.4 million as of March 31, 2020.
- Delta Galil declared a dividend of $3.5 million, or $0.137 per share, to be distributed on June 1, 2021. The determining and “ex-dividend” date will be May 23, 2021.
Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with our growth momentum and strong first quarter results, which reflect three consecutive quarters of record operating margin. Our operating profit increased significantly, driven by higher sales across all segments, with particular strength in our online sales, our gross margin improvement, and the effective implementation of the efficiency measures we started to put in place at the middle of last year. Our operating cash flow continues to be strong, enabling us to reduce our debt to the lowest level in the last three years. With our strong balance sheet, we have the necessary resources to deliver continued innovation and growth, and we look forward to a strong year.
We congratulate Delta Israel Brands for joining the TASE during the quarter. Delta Israel reports reflect the strong trend of growth in sales and profitability, while promoting its growth engines, expansion of the Company’s brands and its diversified product mix.”
Sales
The Company reported sales of $416.1 million for the first quarter of 2021, a 25% increase from $332.7 million for the first quarter of 2020. Excluding the sales of Bare Necessities, which the Company acquired in Q4 last year, first quarter 2021 sales rose 18%, primarily driven by Delta Israel, Delta Global Upper Market and Delta USA segments, as well as other segments.
Online Sales
E-commerce own website sales rose 272% for the first quarter of 2021, to $70.8 million, compared to $19.0 million for the first quarter of 2020. E-commerce customers grew 83% to 54.6 million in the first quarter of 2021, from 29.7 million in the same quarter last year.
EBIT
EBIT for the first quarter of 2021 increased $56.7 million to $28.0 million, compared to negative $28.8 million in the first quarter last year. Before one-time items, EBIT was $28.0 million, up from negative $15.9 million in the first quarter of 2020.
Net Income
Net income for the first quarter of 2021 was $15.1 million, compared to a net loss of $30.5 million in the first quarter last year. Excluding one-time items, net of tax, net income for the first quarter of 2021 was $15.1 million, compared to a net loss of $20.0 million in the first quarter of 2020.
Diluted Earnings Per Share
Diluted earnings per share for the first quarter of 2021 rose to $0.57, compared to diluted loss per share of $1.19 in the first quarter of 2020. Before non-recurring items net of tax, diluted earnings per share for the first quarter of 2021 were $0.57, compared to diluted loss per share of $0.78 for the comparable quarter last year.
EBITDA, Cash Flow, Net Debt and Equity
EBITDA was $52.7 million in the first quarter of 2021, compared to $7.6 million in the first quarter of 2020. Excluding IFRS 16, EBITDA for the first quarter of 2021 was $36.5 million, compared to a negative $7.7 million for the comparable first quarter of 2020.
Operating cash flow improved $26.5 million to $31.3 million in the first quarter of 2021, from $4.8 million in the first quarter of 2020. Excluding IFRS 16, operating cash flow increased to $21.4 million in the first quarter of 2021, from negative $7.8 million in the comparable quarter last year.
Net financial debt as of March 31, 2021 was down to $150.2 million, from $236.3 million as of December 31, 2020, and $366.4 million as of March 31, 2020.
Equity on March 31, 2021 was $558.6 million, compared with $457.3 million a year earlier.
Delta Galil declared a dividend of $3.5 million, or $0.137 per share, to be distributed on June 1, 2021. The determining and “ex-dividend” date will be May 23, 2021.
2021 Financial Guidance
Delta Galil provided initial 2021 financial guidance, excluding one-time items and based on IFRS 16, and on current market conditions.
- Full-year 2021 sales are expected to range between $1,780 million-$1,820 million, representing an increase of 5%-8% from 2019 actual sales of $1,690.2 million.
- Full-year 2021 EBIT is expected to range between $140 million-$150 million, representing an increase of 32%-41% from 2019 actual EBIT of $106.0 million.
- Full-year 2021 EBITDA is expected to range between $240 million-$250 million, representing an increase of 23%-28% from 2019 actual EBITDA of $195.6 million.
- Full-year 2021 net income is expected to range between $81.5 million-$89.5 million, representing an increase of 35%-49% from 2019 actual net income of $60.2 million.
- Full-year 2021 diluted EPS is expected to range between $2.95-$3.25, representing an increase of 25%-38% from 2019 actual EPS of $2.36.
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 others. In addition, it sells its products under brand names licensed to the company, including Wilson, Spalding, Columbia, 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.
DELTA GALIL INDUSTRIES LTD. | |||||
Concise Consolidated Balance Sheets | |||||
As of March 31, 2021 | |||||
| March 31 |
| December 31 | ||
| 2021 |
| 2020 |
| 2020 |
| (Unaudited) |
| (Audited) | ||
| Thousands of Dollars | ||||
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents | 311,979 |
| 143,134 |
| 230,843 |
Restricted Cash | 874 |
| 922 |
| 898 |
Other accounts receivable: |
|
|
|
|
|
Trade receivables | 187,370 |
| 149,337 |
| 200,201 |
Taxes on income receivable | 11,723 |
| 2,103 |
| 18,305 |
Others | 43,703 |
| 39,768 |
| 38,255 |
Financial derivative | 828 |
| 649 |
| 2,020 |
Inventory | 315,170 |
| 323,068 |
| 291,703 |
Total current assets | 871,647 |
| 658,981 |
| 782,225 |
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
Investments in associated companies |
|
|
|
|
|
the equity method and long-term receivables | 11,969 |
| 14,140 |
| 14,668 |
Investment property | 3,209 |
| 3,114 |
| 3,389 |
Fixed assets, net of accumulated depreciation | 207,456 |
| 210,109 |
| 209,465 |
Goodwill | 148,859 |
| 144,941 |
| 150,657 |
Intangible assets, net of accumulated amortization | 270,011 |
| 264,031 |
| 266,967 |
Assets in respect of usage rights | 207,871 |
| 200,110 |
| 217,777 |
Deferred tax assets | 19,465 |
| 27,201 |
| 15,590 |
Financial derivative | 21,152 |
| 8,777 |
| 31,593 |
Total non-current assets | 889,992 |
| 872,423 |
| 910,106 |
Total assets | 1,761,639 |
| 1,531,404 |
| 1,692,331 |
|
|
|
|
|
|
DELTA GALIL INDUSTRIES LTD. | ||||||||
Concise Consolidated Balance Sheets | ||||||||
As of March 31, 2021 | ||||||||
| March 31 |
| December 31 | |||||
| 2021 |
| 2020 |
| 2020 | |||
| (Unaudited) |
| (Audited) | |||||
| Thousands of Dollars | |||||||
Liabilities and Equity |
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
| |||
Short-term bank loans | 14,013 |
|
| 68,463 |
|
| 11,013 |
|
Current maturities of bank loan | 21,272 |
|
| 10,392 |
|
| 20,295 |
|
Current maturities of debentures | 38,450 |
|
| 36,532 |
|
| 39,029 |
|
Financial derivative | 236 |
|
| 3,437 |
|
| 170 |
|
Current maturities of liabilities in respect of leases | 58,038 |
|
| 55,054 |
|
| 60,363 |
|
Other accounts payable: |
|
|
|
|
| |||
Trade payables | 204,259 |
|
| 109,954 |
|
| 186,903 |
|
Taxes on income payable | 22,446 |
|
| 14,169 |
|
| 26,294 |
|
Provision for restructuring plan | 22,360 |
|
| 1,304 |
|
| 26,825 |
|
Others | 140,638 |
|
| 111,257 |
|
| 150,737 |
|
Total current liabilities | 521,712 |
|
| 410,562 |
|
| 521,629 |
|
|
|
|
|
|
| |||
Non-current liabilities: |
|
|
|
|
| |||
Bank loan | 95,620 |
|
| 64,717 |
|
| 104,096 |
|
Severance pay liabilities less plan assets | 9,060 |
|
| 10,035 |
|
| 9,499 |
|
Liabilities in respect of leases | 175,006 |
|
| 172,565 |
|
| 182,408 |
|
Other non-current liabilities | 49,904 |
|
| 43,547 |
|
| 43,030 |
|
Debentures | 307,575 |
|
| 332,049 |
|
| 316,764 |
|
Deferred taxes liabilities | 44,195 |
|
| 35,518 |
|
| 38,513 |
|
Financial derivative | – |
|
| 5,151 |
|
| – |
|
Total non-current liabilities | 681,360 |
|
| 663,582 |
|
| 694,310 |
|
Total liabilities | 1,203,072 |
|
| 1,074,144 |
|
| 1,215,939 |
|
|
|
|
|
|
| |||
Equity: |
|
|
|
|
| |||
Equity attributable to equity holders of the parent |
|
|
|
|
| |||
Share capital | 23,714 |
|
| 23,714 |
|
| 23,714 |
|
Share premium | 130,156 |
|
| 130,261 |
|
| 130,260 |
|
Other capital reserves | 51,163 |
|
| (20,974 | ) |
| 6,604 |
|
Retained earning | 347,664 |
|
| 340,174 |
|
| 332,268 |
|
Treasury shares | (15,963 | ) |
| (16,093 | ) |
| (16,067 | ) |
| 536,734 |
|
| 457,082 |
|
| 476,779 |
|
Minority interests | 21,833 |
|
| 178 |
|
| (387 | ) |
Total equity | 558,567 |
|
| 457,260 |
|
| 476,392 |
|
Total liabilities and equity | 1,761,639 |
|
| 1,531,404 |
|
| 1,692,331 |
|
DELTA GALIL INDUSTRIES LTD. | |||
Concise Consolidated Statement of Income | |||
For the 3-month period ending March 31, 2021 | |||
| Three months ended March 31 | ||
| 2021 |
| 2020 |
| (Unaudited) | ||
| Thousands of Dollars | ||
|
|
|
|
|
|
|
|
Sales | 416,135 |
| 332,683 |
Cost of sales | 257,105 |
| 218,950 |
Gross profit | 159,030 |
| 113,733 |
% of sales | 38.2% |
| 34.2% |
Selling and marketing expenses | 109,644 |
| 103,937 |
% of sales | 26.3% |
| 31.2% |
General and administrative expenses | 21,597 |
| 21,272 |
% of sales | 5.2% |
| 6.4% |
Trade receivable credit loss | 214 |
| 4,069 |
Other Expenses (income), net and |
|
|
|
Share in profits of associated company | (379) |
| 305 |
Operating income excluding non-recurring items | 27,954 |
| (15,850) |
% of sales | 6.7% |
| (4.8%) |
Non-recurring items | – |
| 12,906 |
Operating income (loss) | 27,954 |
| (28,756) |
Finance expenses, net | 8,979 |
| 10,403 |
Income (loss) before tax on income | 18,975 |
| (39,159) |
Taxes on income (tax savings) | 3,894 |
| (8,650) |
Net income (loss) for the period | 15,081 |
| (30,509) |
Net income (loss) for the period excluding one-time items, | 15,081 |
| (19,990) |
|
|
|
|
|
|
|
|
Attribution of net earnings for the period: |
|
|
|
Attributed to company’s shareholders | 14,546 |
| (30,403) |
Attributed to non-controlling interests | 535 |
| (106) |
| 15,081 |
| (30,509) |
|
|
|
|
Net diluted earnings (loss) per share | 0.57 |
| (1.19) |
|
|
|
|
Net diluted earnings (loss) per share, before non-recurring | 0.57 |
| (0.78) |
|
|
|
|
DELTA GALIL INDUSTRIES LTD. | |||
Concise Consolidated Cash Flow Reports | |||
For the 3-month period ending March 31, 2021 | |||
| Three months ended March 31 | ||
| 2021 |
| 2020 |
| (Unaudited) | ||
| Thousands of Dollars | ||
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
Net income for the period | 15,081 |
| (30,509) |
Adjustments required to reflect cash flows |
|
|
|
deriving from operating activities | 21,044 |
| 44,790 |
Interest paid in cash | (8,005) |
| (8,410) |
Interest received in cash | 89 |
| 128 |
Taxes on income refund (paid) in cash, net | 3,128 |
| (1,249) |
Net cash generated from operating activities | 31,337 |
| 4,750 |
Cash flows from investment activities: |
|
|
|
Acquisition of fixed assets and intangible assets | (6,700) |
| (5,418) |
Providing a loan to a business partner | (1,750) |
| – |
Bank deposit with respect to SWAP transaction | (1,770) |
| (5,180) |
Acquisition of a subsidiary | – |
| (1,469) |
Proceeds from selling of fixed asset | 588 |
| 280 |
Others | (346) |
| – |
Net cash used in Investing activities | (9,978) |
| (11,787) |
Cash flows from financing activities: |
|
|
|
Long term payables credit for fixed assets purchase | (1,532) |
| (1,184) |
Lease principle repayment | (9,901) |
| (12,523) |
Dividend paid | – |
| (6,506) |
Repayment of long-term loans from banks | (2,738) |
| (2,140) |
Short-term credit from banking corporations, net | 3,008 |
| 68,463 |
Repayment of bank loan used to acquisition of a subsidiary | (1,544) |
| (1,098) |
Net proceeds from issuance of a subsidiary | 77,156 |
| – |
Net cash generated from ( used in) financing activities | 64,449 |
| 45,012 |
Net increase (decrease) in cash and cash equivalents | 85,808 |
| 37,975 |
|
|
|
|
Exchange rate differences and revaluation of cash |
|
|
|
and cash equivalents, net | (4,672) |
| (1,267) |
Balance of cash and cash equivalents |
|
|
|
at the beginning of the period, net | 230,843 |
| 106,426 |
Balance of cash and cash equivalents | 311,979 |
| 143,134 |
DELTA GALIL INDUSTRIES LTD. | |||
Concise Consolidated Cash Flow Reports | |||
For the 3-month period ending March 31, 2021 | |||
| Three months ended March 31 | ||
| 2021 |
| 2020 |
| (Unaudited) | ||
| Thousands of Dollars | ||
Adjustments required to reflect cash flows |
|
|
|
from operating activities: |
|
|
|
Revenues and expenses not involving cash flow: |
|
|
|
Depreciation | 8,788 |
| 8,070 |
Amortization | 15,975 |
| 15,352 |
Impairment of intangible assets | – |
| 12,780 |
Cash erosion, net | 676 |
| 390 |
Interest paid in cash | 4,702 |
| 5,670 |
Interest received in cash | (89) |
| (128) |
Taxes on income paid (received) in cash, net | (3,128) |
| 1,249 |
Deferred taxes on income, net | 4,163 |
| (11,718) |
Interest due to lease agreements | 3,303 |
| 2,740 |
Severance pay liability, net | 128 |
| 57 |
Restructuring (payments) provision | (4,165) |
| – |
Decrease in liabilities in respect of leases due to rent payments relief | (3,059) |
| – |
Capital loss from sale of fixed assets | (172) |
| (66) |
Change to the benefit component of options granted to employees | 850 |
| 320 |
Write-down of customers and other receivables | 214 |
| 6,984 |
Share in profits of associated company accounted for using the equity method | (6) |
| 57 |
Others | (2,899) |
| 241 |
| 25,281 |
| 41,998 |
Changes to operating assets and liabilities: |
|
|
|
Decrease (increase) in trade receivables | 7,758 |
| 55,164 |
Decrease (Increase) in other receivable and balances | 4,645 |
| (2,441) |
Decrease in trade payables | 19,659 |
| (28,541) |
Decrease (increase) in other payables | (5,506) |
| (22,812) |
Decrease (increase) in inventory | (30,793) |
| 1,422 |
| (4,237) |
| 2,792 |
| 21,044 |
| 44,790 |
|
|
|
|
Contacts
For more information:
Nissim Douek
+972-54-5201178
[email protected]
U.S. Media:
Danielle Poggi
Berns Communications Group
[email protected]