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Delta Galil Reports Strong First Quarter 2021 Results Reflecting Record Sales, Profits and Cash Flow

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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

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
accounted using

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
company:

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,
net of tax

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
attributed to company's shareholders

0.57

(1.19)

Net diluted earnings (loss) per share, before non-recurring
items net of tax attributable to Company's shareholders

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
at the end of the Period, net

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210512005487/en/

Contacts

For more information:
Nissim Douek
+972-54-5201178
Nissim@unik.co.il

U.S. Media:
Danielle Poggi
Berns Communications Group
dpoggi@bcg-pr.com