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. | ||||||
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. | ||||||||||||
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. | |||||
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 |