Delta Galil Reports Financial Results for Third Quarter of 2012
Delta Galil Reports Financial Results for Third Quarter of 2012
Sales Increase 27% and Operating Income Rises 26% Excluding Net Gains from One-Time Items - Driven by Accretive Acquisition and U.S. Market Growth
Initial Guidance for 2013 Reflects Continued Growth over 2012
Quarterly Highlights
Sales were a record $234.0 million in the 2012 third quarter, up 27% from the same period of 2011. This is the 12th consecutive quarter of increasing sales.
Operating income excluding gains from one-time items was $15.8 million for the 2012 third quarter, a 23% increase from a year ago.
Net income attributed to shareholders excluding gains from one-time items was $10.0 million in the 2012 third quarter, a 29% increase from the same quarter of 2011.
Diluted earnings per share attributed to shareholders, excluding gains from one-time items, was $0.41 for the 2012 third quarter and $0.81 for nine months, up from $0.32 and $0.68, respectively, for the same periods of 2011.
Operating cash flow was $40.2 million for 2012 year-to-date, up from $15.3 million in the same period last year.
The Company's Board of Directors on October 31, 2012, authorized a share repurchase plan to buy back up to US$2.5 million in Delta Galil common stock, from time to time, during the three-month period beginning November 11, 2012.
Delta Galil declared a dividend totaling approximately $2.0 million, or $0.0841 per share, to be distributed on November 27, 2012. The determining and "ex-dividend" date for this distribution will be November 14, 2012.
Isaac Dabah, CEO of Delta Galil, noted: "The Company's solid performance in the 2012 third quarter and strong financial matrix reflects highly focused, transformational strategies that have broadened our global reach, diversified our customer base and distribution channels and expanded our portfolio of branded products."
TEL AVIV--(BUSINESS WIRE)-- 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 of 2012.
Delta Galil reported record sales for the third quarter of 2012 of $234.0 million, compared to $184.8 million in the same quarter of 2011, an increase of 27%. Sales in the first nine months of 2012 were $571.2 million, compared to $502.4 million in the same period of 2011, an increase of 14%. The higher sales in the 2012 third quarter benefitted from Delta Galil's acquisition of Schiesser Group, completed in July 2012, while sales in both the 2012 third quarter and nine months also reflected a strong performance in the North American mass market and Upper Market channels.
Operating income excluding gains from one-time items was $15.8 million in the third quarter of 2012, rising 23% from the $12.8 million reported in the third quarter of 2011. In the first nine months of 2012, operating income excluding gains from one-time items was $31.0 million, compared to $24.7 million in the same period of 2011, a 26% increase.
Net income attributed to shareholders excluding gains from one-time items, after tax, was $10.0 million in the third quarter of 2012, compared to $7.7 million in the same quarter of last year, a 29% increase. For the first nine months of 2012, net income attributed to shareholders excluding capital gains and one-time items, after tax, was $20.0 million, rising 23% from $16.3 million in the same period of 2011.
Diluted earnings per share attributed to shareholders, excluding net gains from one-time items, was $0.41 for the 2012 third quarter and $0.81 for nine months. In the third quarter and first nine months of 2011, the comparable amounts were $0.32 and $0.68, respectively.
Results for the third quarter and first nine months of 2012 included net gains attributed to the Lucky Buy of $12.2 million from the acquisition of Schiesser, partially offset by restructuring expenses of $2.4 million due to efficiency measures. Results for the first nine months of 2012 included a capital gain of $19.9 million from the sale of real estate, expenses of $1.2 million from the Schiesser acquisition, a write-down of unused fixed assets of $1.3 million, a net gain from the Schiesser acquisition as previously noted, and restructuring expenses of $5.4 million. The only one-time item in the 2011 nine month period, were capital gains of $3.6 million from assets sale.
CEO Comment: Branded Products, Global Markets Drive Growth
Isaac Dabah, CEO of Delta Galil, stated: "The Company's solid performance in the 2012 third quarter and strong financial matrix reflects highly focused, transformational strategies that have broadened our global reach, diversified our customer base and distribution channels and expanded our portfolio of branded products. The Schiesser acquisition, in particular, has added new markets, including Europe, while delivering a higher EBIT margin. With a strong and diversified portfolio of four business segments, we are also increasing our business with a wide range of existing customers and are adding new customers. At the same time, we are continuing to invest in product innovation and marketing, while pursuing operational efficiencies. The net effect of these measures has been a record level of quarterly sales, sharply rising profits, and a greater ability to enhance shareholder value through our recently announced share buyback, as well as dividends."
Positive Outlook for 2013
Delta Galil today provided its initial estimate for 2013 business results. The following forecast excludes the effect of any one-time items:
Full-year 2013 sales are estimated to range from $910 million to $920 million, which would constitute an average increase of 12% compared to the current 2012 forecast.
Full-year 2013 EBIT is estimated to range between $55 million and $60 million, which would constitute an average increase of 13% compared to the current 2012 forecast.
The Company also reiterated its existing 2012 forecast, which includes:
Full-year 2012 sales estimated to range from $810 million to $820 million.
Full-year 2012 EBIT estimated to range from $50 million to $52 million.
Full-year 2012 net income estimated to range from $33.0 million to $34.5 million.
Full-year 2012 diluted EPS estimated to range from $1.37 to $1.44.
Strong Cash Flow
Delta derived positive cash flow from current operations in the first nine months of 2012 of $40.2 million, compared to $15.3 million in the same period last year, an increase of 163%.
Increase in Capital
The net financial debt of Delta Galil amounted to $109.4 million at September 30, 2012, compared to $72.8 million at September 30, 2011 and $53.8 million on December 31, 2011.
The capital of the Group as of September 30, 2012 amounted to $259.0 million, representing 49.3% of the total balance sheet, compared to approximately $210.4 million, representing 46.0% of the total balance sheet as of September 30, 2011 and $217.2 million, or 49.0% of the total balance sheet, as of December 31, 2011. The increase in capital derives primarily from total income for the first nine months of 2012, which amounted to approximately $45.4 million, less distributed dividend in the amount of $6.0 million.
Dividend Declaration
Delta Galil declared a dividend totaling approximately $2.0 million, or $0.0841 per share, to be distributed on November 27, 2012. The determining and "ex-dividend" date for this distribution will be November 14, 2012.
In addition, the Company's Board of Directors on October 31, 2012, authorized a share repurchase plan to buy back up to US$2.5 million in Delta Galil common stock, from time to time, during the three-month period beginning November 11, 2012.
DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of September 30, 2012 | |||||||||
September 30 | December 31 | ||||||||
2012 | 2011 | 2011 | |||||||
(Unaudited) | (Audited) | ||||||||
Thousands of Dollars | |||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 10,976 | 58,493 | 65,760 | ||||||
Restricted cash | 2,860 | - | - | ||||||
Other accounts receivable: | |||||||||
Trade receivables | 112,986 | 108,349 | 103,444 | ||||||
Taxes on income receivable | 976 | 1,112 | 1,434 | ||||||
Others | 14,637 | 12,160 | 9,770 | ||||||
Inventories | 159,677 | 125,469 | 110,824 | ||||||
Assets classified as held for sale | 6,183 | 1,766 | 1,766 | ||||||
Total current assets | 308,295 | 307,349 | 292,998 | ||||||
Non-current assets: | |||||||||
Long-term pre-paid expenses | 385 | 224 | 322 | ||||||
Investment property | 4,749 | - | - | ||||||
Long-term receivables | 12,525 | 1,224 | 1,202 | ||||||
Fixed assets, net of accumulated depreciation | 90,836 | 64,008 | 64,184 | ||||||
Intangible assets, net of accumulated amortization | 102,266 | 78,488 | 77,390 | ||||||
Deferred tax assets | 6,635 | 6,244 | 7,014 | ||||||
Total non-current assets | 217,396 | 150,188 | 150,112 | ||||||
Total assets | 525,691 | 457,537 | 443,110 |
September 30 | December 31 | |||||||
2012 | 2011 | 2011 | ||||||
(Unaudited) | (Audited) | |||||||
Thousands of Dollars | ||||||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Short-term bank loans | 26,523 | 71,353 | 62,053 | |||||
Current maturities of long-term loans | ||||||||
from banking corporations | 2,110 | 2,110 | 2,110 | |||||
Current maturities of Debentures | 14,863 | 11,079 | 12,367 | |||||
Financial Derivative | 52 | 645 | 297 | |||||
Other accounts payable: | ||||||||
Trade payables | 73,161 | 69,873 | 55,920 | |||||
Taxes on income - payable | 8,016 | 910 | 1,770 | |||||
Others | 47,986 | 37,938 | 39,096 | |||||
Total current liabilities | 172,711 | 193,908 | 173,613 | |||||
Non-current liabilities: | ||||||||
Loans from financial institutions, less | ||||||||
current maturities | 302 | 2,411 | 1,504 | |||||
Severance pay over liabilities from termination | ||||||||
of employer - employee relations less plan assets | 1,574 | 466 | 1,183 | |||||
Other non-current liabilities | 8,386 | 4,514 | 3,900 | |||||
Debentures | 75,682 | 44,369 | 41,506 | |||||
Financial Derivative | 5,416 | 1,507 | 2,978 | |||||
Reserve for deferred taxes | 2,663 | - | 1,182 | |||||
Total non-current liabilities | 94,023 | 53,267 | 52,253 | |||||
Total liabilities | 266,734 | 247,175 | 225,866 | |||||
Equity: | ||||||||
Equity attributable equity holders of the parent company: | ||||||||
Share capital | 23,191 | 23,098 | 23,106 | |||||
Share premium | 122,839 | 121,130 | 121,216 | |||||
Other capital reserves | 1,637 | 825 | (633) | |||||
Retained earnings | 118,826 | 72,842 | 81,084 | |||||
Treasury shares | (9,700) | (9,700) | (9,700) | |||||
256,793 | 208,195 | 215,073 | ||||||
Minority interests | 2,164 | 2,167 | 2,171 | |||||
Total equity | 258,957 | 210,362 | 217,244 | |||||
Total liabilities and equity | 525,691 | 457,537 | 443,100 |
The enclosed notes constitute an integral part of these Financial Statements
DELTA GALIL INDUSTRIES LTD. Concise Consolidated Statement of Comprehensive Income -(Non GAAP) For the 3-month and 9-month periods ending September 30, 2012 | ||||||||||||
Nine months ended September 30 | Three months ended September 30 | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
Thousands of Dollars | % Increase | Thousands of Dollars | % Increase | |||||||||
Unaudited | Unaudited | (Decrease) | ||||||||||
Sales | 571,212 | 502,431 | 14% | 233,996 | 184,781 | 27% | ||||||
Cost of sales | 451,081 | 403,490 | 177,082 | 147,561 | ||||||||
Gross profit | 120,131 | 98,941 | 56,914 | 37,220 | ||||||||
% of sales | 21.0% | 19.7% | 24.3% | 20.1% | ||||||||
Selling and marketing expenses | 70,426 | 54,705 | 29% | 33,315 | 18,846 | 77% | ||||||
% of sales | 12.3% | 10.9% | 14.2% | 10.2% | ||||||||
Administrative and general expenses | 19,194 | 18,770 | 2% | 7,855 | 5,979 | 31% | ||||||
% of sales | 3.4% | 3.7% | 3.4% | 3.2% | ||||||||
Other income (expenses), net | 468 | (808) | 58 | 411 | ||||||||
Operating income excludingcapital gains and non-recurring items | 30,979 | 24,658 | 26% | 15,802 | 12,806 | 23% | ||||||
% of sales | 5.4% | 4.9% | 6.8% | 6.9% | ||||||||
Capital gain from selling of asset held for sale | 19,910 | 3,597 | - | - | ||||||||
Schiesser acquisition cost | 1,160 | - | - | - | ||||||||
Net income derived from adjustments due to Purchase Price Allocation of Schiesser* | 12,163 | - | 12,163 | - | ||||||||
Impairment of fixed assets | 1,309 | - | - | - | ||||||||
Restructuring expenses | 5,424 | - | 2,441 | - | ||||||||
Operating income | 55,159 | 28,255 | 95% | 25,524 | 12,806 | 99% | ||||||
Finance expenses, net | 6,805 | 5,987 | 14% | 2,828 | 3,235 | (13%) | ||||||
Profit before tax on income | 48,354 | 22,268 | 22,696 | 9,571 | ||||||||
Taxes on income | 5,338 | 3,064 | 2,599 | 1,842 | ||||||||
Equity income | 93 | - | 93 | - | ||||||||
Income for the period | 43,109 | 19,204 | 20,190 | 7,729 | ||||||||
Income for period excluding capital gain and non-recurring items, net for period | 20,052 | 16,374 | 22% | 9,995 | 7,729 | 29% | ||||||
Attribution of net earnings for the period | ||||||||||||
To shareholders of the parent company | 43,019 | 19,111 | 20,160 | 7,698 | ||||||||
To minority interests | 90 | 93 | 30 | 31 | ||||||||
43,109 | 19,204 | 20,190 | 7,729 | |||||||||
Diluted earnings per share attributed to shareholders of the company | 1.75 | 0.79 | 0.82 | 0.32 | ||||||||
Diluted earnings per share attributed to shareholders of the company excluding capital gains and non-recurring items | 0.81 | 0.68 | 0.41 | 0.32 |
* Net Income includes, Lucky Buy of $12.6 million offset by inventory Step-Up of $0.4 million which is included in the GAAP financials among Cost of Sales.
DELTA GALIL INDUSTRIES LTD. Concise Consolidated Cash Flow Reports For the 3-month and 9-month periods ending September 30, 2012 | |||||||
Nine months ending | Three months ending | ||||||
September 30 |