Delta Galil Reports Record Financial Results for 2012

Delta Galil Reports Record Financial Results for 2012

All-Time High Sales, Operating Income and EPS Distinguish 4th Quarter and Full Year Performance

Increase Guidance for 2013

  • Sales reached $246.6 million in the 2012 fourth quarter, up 40% from the same period of 2011.

  • Income was $13.9 million in the 2012 fourth quarter, a 66% increase from a year ago.

  • Diluted earnings per share attributed to shareholders, excluding capital gains and non-recurring items, was $0.55 for the 2012 fourth quarter and $1.37 for the full year, up from $0.36 and $1.15, respectively, for the 2011 periods.

  • Delta Galil achieved its 13th consecutive quarter of year-over-year sales growth.

  • Operating cash flow was $72.9 million for 2012, up 101% from $36.3 million in the prior year.

  • The Board of Directors declared a dividend of approximately $2.5 million, or $0.1034 per share, to be distributed on March 12, 2013. The determining and "ex-dividend" date will be February 27, 2013.

  • The Company completed the repurchase of approximately $1.3 million in Delta Galil common stock.

  • Financial guidance for 2013 calls for diluted EPS of $1.51-1.59 on sales of $910 million to $920 million.

  • Isaac Dabah, CEO of Delta Galil, noted: "We are very proud to achieve a consistent 4 years growth delivering exceptional top-line and bottom-line performance and made great strides in executing Delta Galil's long-term strategies to transform the Company into a leading, diversified global competitor in branded and private label apparel."


TEL AVIV, Israel--(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 fourth quarter and full year 2012.

Delta Galil reported record quarterly sales of $246.6 million for the three months ended December 31, 2012, up from $176.4 million for the same quarter last year, an increase of 40%. For the full year 2012, sales reached a record $817.8 million, a 20% increase over sales of $678.8 million in 2011.

The strong top-line growth in 2012 reflected Delta Galil's acquisition of Schiesser Group, completed in July 2012, as well as a sharp increase in sales in Europe, mainly in Germany, positive momentum in the U.S. mass market channel.

Operating income was $19.7 million in the fourth quarter of 2012, rising 73% from the $11.4 million reported in the same quarter of 2011. For the full year 2012, operating income excluding capital gains and non-recurring items was $50.7 million, compared to $39.7 million in 2011, a 28% increase.

Net income attributed to shareholders was $13.8 million in the fourth quarter of 2012, compared to $8.3 million in the same quarter of 2011, a 66% increase. For the full year 2012, income attributed to shareholders excluding capital gains and non-recurring items was $33.8 million, rising 23% from $23.4 million in 2011.

Diluted earnings per share attributed to shareholders excluding capital gains and non-recurring items was $0.55 for the 2012 fourth quarter and $1.37 for the year. In the respective 2011 periods, the comparable amounts were $0.36 and $1.15, respectively.

Net income for the year attributed to shareholders was $56.9 million compared to $27.4 million in 2011, an increase of 107%.

Results for the full year 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 net gain of $12.2 million due to negative goodwill attributed to Schiesser acquisition, partially offset by a write-down of unused fixed assets of $1.3 million, and restructuring expenses of $5.4 million.

Management Comment: Strategic Transformation and Growth

Isaac Dabah, CEO of Delta Galil, stated: "In 2012 we delivered exceptional top-line and bottom-line performance and made great strides in executing Delta Galil's long-term strategies to transform the Company into a leading, diversified global competitor in branded and private label intimate apparel. We increased our branded business and our European footprint through the Schiesser acquisition, further penetrated the U.S. mass market channel, and expanded our socks category and U.S. kids business, through our recent acquisition of Little Miss Matched.

"Our outlook for 2013 calls for Delta Galil to approach $1 billion in sales, accompanied by further growth in profitability. We plan to get there through continued organic growth in areas such as in Delta USA, Socks business and Delta Israel retail operations. We have increased our guidance to 2013 from $55-$60 million EBIT to $57-$62 million."

Cash Flow, Equity, Dividend Declaration

Operating cash flow increased to $32.7 million for the 2012 fourth quarter and $72.9 million for the full year, up from $21.1 million and $36.3 million for the respective 2011 periods.

EBITDA rose by 66% to $24.1 million in the 2012 fourth quarter from $14.5 million in the same period of 2011. For the full year 2012, EBITDA grew by 26% to $64.8 million, from $51.5 million in 2011.

Equity on December 31, 2012 was a record $277.8 million, or 50% of the total balance sheet, compared to $217.2 million, or 49% of the balance sheet a year earlier.

Delta Galil declared a dividend of $2.5 million, or $0.1034 per share, to be distributed on March 12, 2013. The determining and "ex-dividend" date will be February 27, 2013. This brings total dividend declared for 2012 to $8.5 million or $0.3566 per share.

Strong Outlook for 2013

Delta Galil increasing its financial guidance for 2013, calling for higher EBIT and net profit than originally estimated, The following forecast excludes the effect of any one-time items, net of tax:

  • Full-year 2013 sales are estimated to range from $910 million to $920 million, which would constitute an average increase of 12% compared to 2012 actual.

  • Full-year 2013 EBIT is estimated to range between $57 million and $62 million, which would constitute an average increase of 17% compared to 2012 actual.

  • Full-year 2013 net profit is estimated to range between $38 million and $40 million, which would constitute an average increase of 15% compared to 2012 actual.

  • Full-year 2013 diluted EPS is estimated to range between $1.51 and $1.59, which would constitute an average increase of 13% compared to the 2012 actual.

DELTA GALIL INDUSTRIES LTD.
Concise Consolidated Balance Sheets
As of December 31, 2012

December 31

2012

2011

Thousands of Dollars

Assets

Current assets:

Cash and cash equivalents

45,475

65,760

Restricted cash

2,822

-

Other accounts receivable:

Trade receivables

108,735

103,444

Taxes on income receivable

125

1,434

Others

12,124

9,770

Financial Derivative

719

-

Inventories

150,309

110,824

Assets classified as held for sale

6,456

1,766

Total current assets

326,765

292,998

Non-current assets:

Long-term pre-paid expenses

562

322

Investment property

4,795

-

Long-term receivables

12,710

1,202

Fixed assets, net of accumulated depreciation

93,019

64,184

Intangible assets, net of accumulated amortization

111,482

77,390

Deferred tax assets

8,833

7,014

Financial Derivative

1,045

-

Total non-current assets

232,446

150,112

Total assets

559,211

443,110

December 31

2012

2011

Thousands of Dollars

Liabilities and Equity

Current liabilities:

Short-term bank loans

40,175

62,053

Current maturities of long-term loans from banking corporations

1,357

2,110

Current maturities of Debentures

15,965

12,367

Financial Derivative

-

297

Other accounts payable:

Trade payables

72,351

55,920

Taxes on income - payable

5,029

1,770

Others

47,479

39,096

Total current liabilities

182,356

173,613

Non-current liabilities:

Loans from financial institutions, less current maturities

150

1,504

Severance pay over liabilities from termination of employer - employee relations less plan assets

2,679

1,183

Other non-current liabilities

13,543

3,900

Debentures

79,323

41,506

Financial Derivative

-

2,978

Reserve for deferred taxes

3,361

1,182

Total non-current liabilities

99,056

52,253

Total liabilities

281,412

225,866

Equity:

Equity attributable equity holders of the

parent company:

Share capital

23,311

23,106

Share premium

124,220

121,216

Other capital reserves

8,736

(633)

Retained earnings

130,364

81,084

Treasury shares

(10,996)

(9,700)

275,635

215,073

Minority interests

2,164

2,171

Total equity

277,799

217,244

Total liabilities and equity

559,211

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 12-month periods ending December 31, 2012

For the year ended December 31

Three months ended December 31

2012

2011

% Increase

2012

2011

% Increase

Thousands of Dollars

Thousands of Dollars

Sales

817,782

678,819

20%

246,570

176,388

40%

Cost of sales

633,945

542,496

182,864

139,006

Gross profit

183,837

136,323

63,706

37,382

% of sales

22.5%

20.1%

25.8%

21.2%

Selling and marketing expenses

107,059

73,815

45%

36,632

19,110

92%

% of sales

13.1%

10.9%

14.9%

10.8%

Administrative and general expenses

26,691

25,705

4%

7,497

6,936

8%

% of sales

3.3%

3.8%

3.0%

3.9%

Other income (expenses), net

571

2,858

103

70

Operating income excludingcapital gains and non-recurring items

50,658

39,661

28%

19,680

11,406

72%

% of sales

6.2%

5.8%

8.0%

6.5%

Capital gain from selling of asset held for sale

19,910

-

-

Schiesser acquisition cost

1,160

-

-

-

Net income derived from adjustments due to Purchase Price Allocation of Schiesser*

12,163

-

-

-

Impairment of fixed assets

1,309

-

-

-

Restructuring expenses

5,424

-

-

-

Operating income

74,838

39,661

89%

19,680

11,406

72%

Finance expenses, net

8,925

7,077

26%

2,120

1,090

94%

Profit before tax on income

65,913

32,584

17,560

10,316

Taxes on income

9,029

5,009

3,691

1,945

Equity income

93

-

-

-

Income for the period

56,977

27,575

13,869

8,371

Income for period excluding capital gain and non-recurring items, net for period

33,920

27,575

37%

13,869

8,371

66%

Attribution of net earnings for the period

To shareholders of the parent company

56,857

27,441

13,839

8,330

To minority interests

120

134

30

41

56,977

27,575

13,869

8,371

Diluted earnings per share attributed to shareholders of the company

2.30

1.15

0.55

0.36

Diluted earnings per share attributed to shareholders of the company excluding capital gains and non-recurring items

1.37

1.15

0.55

0.36

* 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 year ended December 31

2012

2011

Thousands of Dollars

Cash flows from operating activities:

Net profit for the period

56,977

27,575

Adjustments required to reflect cash flows deriving from operating activities

31,807

18,135

Interest paid in cash

(8,475)

(5,720)

Interest received in cash

604

750

Taxes on income paid in cash, net

(8,009)

(4,419)

Net cash generated from operating activities

72,904

36,321

Cash flows from investment activities:

Cash added from purchased subsidiary

12,258

-

Purchase of subsidiary

(86,052)

-

Acquisition of activity

-

(4,000)

Acquisition of fixed assets and intangible assets

(21,550)

(12,490)

Restricted cash deposit

(2,822)

-

Receiving grant for the purchase of fixed assets

-

178

Proceeds from sale of assets held for sale

41

4,489

Proceeds from selling of fixed asset

765

218

Proceeds from a given option exercised as held for sale

-

-

Proceeds from sale of real estate in Naharia, net of related expense

2,010

-

Loans to subcontractor

(400)

(888)

Repayment of long-term receivables balances

-

-

Loans granted to employees

(144)

(37)

Employees' loans return

155

31

Others