Business Wire | Mar 10, 2021 07:00AM EST

Delta Galil Reports Fourth Quarter and Full Year 2020 Results

Mar. 10, 2021

TEL AVIV, Israel--(BUSINESS WIRE)--Mar. 10, 2021--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 fourth quarter and full year ended December 31, 2020.

Highlights

* Q4 sales were $459.7 million in 2020, compared to $504.8 million in 2019, a 9% decrease due to the effects of the COVID-19 pandemic. * E-commerce own website sales rose 183% for Q4, up 130% for the full year. * Q4 2020 gross margin increased by 300 basis points to a record level of 40.1%, versus 37.1% in Q4 2019. * Q4 2020 operating margin increased 0.3% to a record level of 10.4%, versus 10.1% in Q4 2019. * Q4 earnings per share (EPS) excluding one-time items amounted to $1.08 in 2020, versus $1.37 in 2019. * 2020 operating cash flow excluding IFRS 16 impact strengthened by $64.45 million, to a record $161.6 million, from $97.1 million in 2019. * Strong balance sheet highlighted by $231.7 million in cash, and $476.4 million in equity as of December 31, 2020. Net financial debt declined by nearly 30% to $236.3 million, versus December 31, 2019 level. * Acquired U.S. online intimates retailer Bare Necessities, reflecting Delta's strategic growth objective to diversify its distribution channels, while enhancing its digital reach.

Isaac Dabah, CEO of Delta Galil, stated: "Without a doubt, 2020 represented an unprecedented year for Delta Galil, as COVID-19 forced us to rethink ways in which we conduct business. I am pleased with our agility to respond to the pandemic and implement the necessary initiatives to reduce costs and improve our operational and financial flexibility. Consequently, we saw record gross and EBIT margins in the fourth quarter, and record operating cash flow for the year, demonstrating a strong combination of Delta's rapid online expansion, coupled with the strength of our brands, loyal customer base, and the effects of our strategic efficiency measures, which we foresee continuing in the future.

Throughout the year, we remained committed to pursuing growth online both on our own site and through our Internet customers. As we previously announced, Delta acquired online intimates retailer Bare Necessities, which enhances our presence in the digital world. We ended the year with strong online sales, and we will continue to look for new ways to excel digitally.

In addition, we are pleased to update on the successful IPO completion of Delta Israel Brands (ticker symbol DLTI.TA), our Israeli subsidiary, which raised $80 million in a post money valuation of $400 million from leading Israeli institutional investors. With a strong management team in place, and a solid financial performance this past year, this IPO represents an important achievement and a natural step in the evolution of Delta Israel Brands as a leading brand in Israel for underwear, pajamas, and leisure wear for the entire family."

Sales

The Company reported sales of $459.7 million for the fourth quarter of 2020, compared to $504.8 million for the fourth quarter of 2019, a 9% decrease. The decrease in sales was primarily due to reduced volume in Delta Galil Premium Brands, Delta USA and Global Upper Market business segments following the outbreak of COVID-19. Sales for the 2020 full year were $1,446.2 million, compared to $1,690.2 million for the same period last year, representing a 14% decrease.

Online Sales

E-commerce own website sales rose 183% for the fourth quarter of 2020 to $76.1 million, compared to $26.9 million for the fourth quarter of 2019. E-commerce own website sales increased 130% for the full year 2020 to $152.5 million.

Operating Profit

Operating profit for the fourth quarter was $43.4 million, compared to $52.2 million in the fourth quarter last year. Before one-time items, operating profit was $47.7 million, compared to $51.2 million in the fourth quarter of 2019, a 6.8% decrease.

For the 2020 full year, operating loss was $7.1 million, compared to operating profit of $103.7 million for 2019. Before one-time items, operating profit for the 2020 full year was $49.3 million, compared to $106.0 million for the comparable period last year.

Net Income (Loss)

Net income for the fourth quarter of 2020 was $23.7 million, compared to $35.6 million in the fourth quarter last year. Excluding one-time items, net income was $27.3 million for the fourth quarter of 2020, compared to $34.8 million in the fourth quarter of 2019.

For the 2020 full year, net loss was $40.5 million, compared to net income of $57.7 million for the same period last year. Excluding one-time items, net income was $3.8 million for the 2020 full year, compared to $60.2 million for the same period last year.

Diluted Earnings Per Share

Diluted earnings per share for the fourth quarter of 2020 were $0.94, compared to $1.39 in the fourth quarter of 2019. Excluding one-time items, diluted earnings per share were $1.08 for the fourth quarter of 2020, compared to $1.37 for the comparable quarter last year.

For the 2020 full year, diluted loss per share amounted to $1.56, compared to earnings per share of $2.26 for the 2019 full year. Excluding one-time items, diluted earnings per share amounted to $0.18 for the 2020 full year, compared to earnings per share of $2.36 for the comparable period last year.

EBITDA, Cash Flow, Net Debt and Equity

EBITDA was $71.9 million in the fourth quarter of 2020, compared to $76.1 million in the fourth quarter of 2019. Excluding IFRS 16, EBITDA for the fourth quarter of 2020 $55.6 million, compared to $60.7 million for the comparable fourth quarter of 2019.

EBITDA for the 2020 full year was $144.0 million, compared to $195.6 million for 2019. Excluding IFRS 16, EBITDA for the 2020 full year was $81.1 million, compared to $137.7 million in 2019.

Operating cash flow excluding IFRS 16 for the twelve months ended December 31, 2020 was $161.6 million, compared to $97.1 million for the twelve months ended December 31, 2019, a $64.5 million increase.

Net financial debt as of December 31, 2020 was $236.3 million, a decrease of $98.2 million compared to $334.5 million as of December 31, 2019.

Delta increased the Company's committed and uncommitted credit facilities to a total of $248 million, of which $237 million was un-utilized as of December 31, 2020.

Equity on December 31, 2020 was $476.4 million, compared with $506.9 million a year earlier.

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(r), and ladies apparel under the brands Splendid(r) 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 SheetsAs of December 31, 2020

December 31

2020 2019

(audited)

Thousands of Dollars

Assets

Current assets:

Cash and cash equivalents 230,843 108,294

Restricted Cash 898 933

Other accounts receivable:

Trade receivables 200,201 212,311

Taxes on income receivable 18,305 2,867

Others 38,255 35,200

Financial derivative 2,020 971

Inventory 291,703 328,108

Total current assets 782,225 688,684





Non-current assets:

Investments in associated companies accounted 14,668 14,367using the equity method and long-term receivables

Investment property 3,389 3,228

Fixed assets, net of accumulated depreciation 209,465 213,210

Goodwill 150,657 148,001

Intangible assets, net of accumulated amortization 266,967 273,318

Assets in respect of usage rights 217,777 207,651

Deferred tax assets 15,590 19,678

Financial derivative 31,593 19,677

Total non-current assets 910,106 899,130

Total assets 1,692,331 1,587,814

DELTA GALIL INDUSTRIES LTD.Concise Consolidated Balance Sheets As of December 31, 2020

December 31

2020

2019

(audited)

Thousands of Dollars

Liabilities and EquityCurrent liabilities:

Short-term bank loans

11,013

1,868

Current maturities of bank loans

20,295

10,588

Current maturities of debentures

39,029

36,802

Financial derivative

170

2,070

Current maturities of leases liabilities

60,363

53,401

Other accounts payable:

Trade payables

186,903

140,475

Taxes on income payable

26,294

16,392

Provision for restructuring plan

26,825

1,435

Others

150,737

138,802

Total current liabilities

521,629

401,833

Non-current liabilities:

Bank loan

104,096

68,337

Severance pay liabilities less plan assets

9,499

10,155

Liabilities in respect of leases

182,408

172,903

Other non-current liabilities

43,030

47,899

Debentures

316,764

340,376

Deferred taxes liabilities

38,513

39,368

Total non-current liabilities

694,310

679,038

Total liabilities

1,215,939

1,080,871

Equity:

Equity attributable to equity holders of the parent

company:

Share capital

23,714

23,714

Share premium

130,260

130,237

Other capital reserves

6,604

(7,962)

Retained earning

332,268

376,763

Treasury shares

(16,067)

(16,093)

476,779

506,659

Minority interests

(387)

284

Total equity

476,392

506,943

Total liabilities and equity

1,692,331

1,587,814

DELTA GALIL INDUSTRIES LTD.Concise Consolidated Balance SheetsAs of December 31, 2020

December 31

2020 2019

(audited)

Thousands of Dollars

Liabilities and Equity

Current liabilities:

Short-term bank loans 11,013 1,868

Current maturities of bank loans 20,295 10,588

Current maturities of debentures 39,029 36,802

Financial derivative 170 2,070

Current maturities of leases liabilities 60,363 53,401

Other accounts payable:

Trade payables 186,903 140,475

Taxes on income payable 26,294 16,392

Provision for restructuring plan 26,825 1,435

Others 150,737 138,802

Total current liabilities 521,629 401,833



Non-current liabilities:

Bank loan 104,096 68,337

Severance pay liabilities less plan assets 9,499 10,155

Liabilities in respect of leases 182,408 172,903

Other non-current liabilities 43,030 47,899

Debentures 316,764 340,376

Deferred taxes liabilities 38,513 39,368

Total non-current liabilities 694,310 679,038

Total liabilities 1,215,939 1,080,871



Equity:

Equity attributable to equity holders of the parent company:

Share capital 23,714 23,714

Share premium 130,260 130,237

Other capital reserves 6,604 (7,962)

Retained earning 332,268 376,763

Treasury shares (16,067) (16,093)

476,779 506,659

Minority interests (387) 284

Total equity 476,392 506,943

1,587,814Total liabilities and equity 1,692,331

DELTA GALIL INDUSTRIES LTD.Consolidated Statement of Comprehensive Income For the 3- month and year ending December 31, 2020

Year ended December 31

% Increase/(Decrease)

Three months ended December 31

% Increase/(Decrease)

2020

2019

2020

2019

(audited)

Thousands of Dollars

Except for Earnings per Share Data

Sales

1,446,187

1,690,164

(14%)

459,679

504,764

(9%)

Cost of sales

922,502

1,086,005

275,252

317,468

Gross profit

523,685

604,159

(13%)

184,427

187,296

(2%)

% of sales

36.2%

35.7%

40.1%

37.1%

Selling and marketing expenses

385,507

429,705

(10%)

113,796

117,196

(3%)

% of sales

26.7%

25.4%

24.8%

23.2%

General and administrative expenses

77,011

74,042

4%

21,035

21,568

(2%)

% of sales

5.3%

4.4%

4.6%

4.3%

Trade receivable credit loss

9,671

(865)

927

(1,405)

Other Expenses (income), net

2,634

(3,739)

1,129

(972)

Share in profits of associated company accounted for using the

equity method

(397)

(950)

(194)

(316)

Operating income excluding non-recurring items

49,259

105,966

(54%)

47,734

51,225

(7%)

% of sales

3.4%

6.3%

10.4%

10.1%

Restructuring expenses

39,154

(987)

-

(987)

Non-monetary assets impairment

16,811

-

4,031

-

Deal cost

435

3,273

309

-

Operating income (loss)

(7,141)

103,680

43,394

52,212

(17%)

Finance expenses, net

37,475

36,065

9,762

10,630

Income (loss) before tax on income

(44,616)

67,615

33,632

41,582

Taxes on income (Tax savings)

(4,095)

9,915

9,892

6,013

Net income (loss) for the period

(40,521)

57,700

-

23,740

35,569

(33%)

Net income (loss) for the period excluding one-time items, net

of tax

3,811

60,213

27,270

34,809

Attribution of net earnings (loss) for the period:

Attributed to company's shareholders

(39,850)

57,898

24,068

35,721

Attributed to non-controlling interests

(671)

(198)

(328)

(152)

(40,521)

57,700

23,740

35,569

Net diluted earnings (loss) per share attributed to company's

shareholders

(1.56)

2.26

-

0.94

1.39

(32%)

Net diluted earnings per share, before non-recurring items,

net of tax attributable to Company's shareholders

0.18

2.36

(92%)

1.08

1.37

(21%)

DELTA GALIL INDUSTRIES LTD.Consolidated Statement of Comprehensive IncomeFor the 3- month and year ending December 31, 2020

Year ended December % Three months % 31 Increase/ ended December 31 Increase/ (Decrease) (Decrease)

2020 2019 2020 2019

(audited)

Thousands of Dollars

Except for Earnings per Share Data

Sales 1,446,187 1,690,164 (14%) 459,679 504,764 (9%)

Cost of sales 922,502 1,086,005 275,252 317,468

Gross profit 523,685 604,159 (13%) 184,427 187,296 (2%)

% of sales 36.2% 35.7% 40.1% 37.1%

Selling andmarketing 385,507 429,705 (10%) 113,796 117,196 (3%)expenses

% of sales 26.7% 25.4% 24.8% 23.2%

General andadministrative 77,011 74,042 4% 21,035 21,568 (2%)expenses

% of sales 5.3% 4.4% 4.6% 4.3%

Tradereceivable 9,671 (865) 927 (1,405) credit loss

Other Expenses 2,634 (3,739) 1,129 (972) (income), net

Share inprofits ofassociatedcompany (397) (950) (194) (316) accounted forusing the

equity method

Operatingincomeexcluding 49,259 105,966 (54%) 47,734 51,225 (7%)non-recurringitems

% of sales 3.4% 6.3% 10.4% 10.1%

Restructuring 39,154 (987) - (987) expenses

Non-monetaryassets 16,811 - 4,031 - impairment

Deal cost 435 3,273 309 -

Operating (7,141) 103,680 43,394 52,212 (17%)income (loss)

Finance 37,475 36,065 9,762 10,630 expenses, net

Income (loss)before tax on (44,616) 67,615 33,632 41,582 income

Taxes on income (4,095) 9,915 9,892 6,013 (Tax savings)

Net income(loss) for the (40,521) 57,700 - 23,740 35,569 (33%)period

Net income(loss) for theperiodexcluding 3,811 60,213 27,270 34,809 one-time items,net

of tax



Attribution ofnet earnings (loss) for theperiod:

Attributed tocompany's (39,850) 57,898 24,068 35,721 shareholders

Attributed tonon-controlling (671) (198) (328) (152) interests

(40,521) 57,700 23,740 35,569

Net dilutedearnings (loss)per shareattributed to (1.56) 2.26 - 0.94 1.39 (32%)company's

shareholders

Net dilutedearnings pershare, beforenon-recurringitems, 0.18 2.36 (92%) 1.08 1.37 (21%)

net of taxattributable toCompany'sshareholders

DELTA GALIL INDUSTRIES LTD.Consolidated Cash Flow Reports

Year endedDecember 31

2020

2019

(audited)

Thousands of Dollars

Cash flows from operating activities:

Net income (loss) for the period

(40,521)

57,700

Adjustments required to reflect cash flows deriving

from operating activities

282,916

127,228

Interest paid in cash

(23,185)

(22,161)

Interest received in cash

1,062

440

Taxes on income paid in cash, net

(1,867)

(8,159)

Net cash generated from operating activities

218,405

155,048

Cash flows from investment activities:

Acquisition of fixed assets and intangible assets

(21,448)

(30,069)

Payments under subsidiaries purchase transaction, net of cash

of the acquired subsidiaries

(13,469)

(26,811)

Restricted cash release (deposit)

-

2,561

Bank deposit with respect to SWAP transaction

1,770

-

Providing long term loans

-

(18,102)

Providing a loan to a business partner

(2,500)

-

Proceeds from selling fixed asset

568

479

Others

305

979

Net cash used in Investing activities

(34,774)

(70,963)

Cash flows from financing activities:

Dividends paid to non-controlling interest holders in

consolidated subsidiary

-

(346)

Long term payables credit for fixed assets purchase

(3,787)

(3,503)

Lease principle repayment

(56,858)

(57,912)

Debentures principle repayment

(37,568)

(29,748)

Dividend paid

(6,506)

(11,084)

Long term loan received (repayment of long-term loans)

from bank, net

34,686

(8,944)

Short-term credit from banking corporations, net

11,013

(82,907)

Proceed from Debentures Issuance, net of Issuance expenses

-

150,137

Repayment of long-term loans from suppliers

(8,855)

(3,350)

Net cash generated from ( used in) financing activities

(67,875)

(47,657)

Net increase (decrease) in cash and cash equivalents

115,756

36,428

Exchange rate differences and revaluation of cash

and cash equivalents, net

8,661

(536)

Balance of cash and cash equivalents less bank overdraft at

the beginning of the period, net

106,426

70,534

Balance of cash and cash equivalents less bank overdraft at

the end of the Period, net

230,843

106,426

DELTA GALIL INDUSTRIES LTD.Consolidated Cash Flow Reports

Year ended December 31

2020 2019

(audited)

Thousands of Dollars

Cash flows from operating activities:

Net income (loss) for the period (40,521) 57,700

Adjustments required to reflect cash flows deriving 282,916 127,228from operating activities

Interest paid in cash (23,185) (22,161)

Interest received in cash 1,062 440

Taxes on income paid in cash, net (1,867) (8,159)

Net cash generated from operating activities 218,405 155,048

Cash flows from investment activities:

Acquisition of fixed assets and intangible assets (21,448) (30,069)

Payments under subsidiaries purchase transaction, net ofcash (13,469) (26,811)

of the acquired subsidiaries

Restricted cash release (deposit) - 2,561

Bank deposit with respect to SWAP transaction 1,770 -

Providing long term loans - (18,102)

Providing a loan to a business partner (2,500) -

Proceeds from selling fixed asset 568 479

Others 305 979

Net cash used in Investing activities (34,774) (70,963)

Cash flows from financing activities:

Dividends paid to non-controlling interest holders in

consolidated subsidiary - (346)

Long term payables credit for fixed assets purchase (3,787) (3,503)

Lease principle repayment (56,858) (57,912)

Debentures principle repayment (37,568) (29,748)

Dividend paid (6,506) (11,084)

Long term loan received (repayment of long-term loans) 34,686 (8,944)from bank, net

Short-term credit from banking corporations, net 11,013 (82,907)

Proceed from Debentures Issuance, net of Issuance expenses - 150,137

Repayment of long-term loans from suppliers (8,855) (3,350)

Net cash generated from ( used in) financing activities (67,875) (47,657)

Net increase (decrease) in cash and cash equivalents 115,756 36,428

Exchange rate differences and revaluation of cash 8,661 (536)and cash equivalents, net

Balance of cash and cash equivalents less bank overdraftat 106,426 70,534

the beginning of the period, net

Balance of cash and cash equivalents less bank overdraftat 230,843 106,426

the end of the Period, net

DELTA GALIL INDUSTRIES LTD.Consolidated Cash Flow ReportsYear endedDecember 31

2020

2019

(audited)

Thousands of Dollars

Adjustments required to reflect cash flowsfrom operating activities:

Revenues and expenses not involving cash flow:

Depreciation

36,353

30,631

Amortization

62,063

59,193

Non-monetary assets impairment

16,811

-

Cash erosion, net

1,082

(219)

Interest paid in cash

23,185

22,161

Interest received in cash

(1,062)

(440)

Taxes on income paid in cash, net

1,867

8,159

Deferred taxes on income, net

522

58

Discount component for lease agreements

9,836

8,474

Severance pay liability, net

(579)

(250)

Restructuring expenses ,net

25,390

(987)

Decrease in leases liabilities due to rent reliefs

(6,026)

-

Capital loss (gain) from sale of fixed assets and

asset held for sale

(263)

(86)

Benefit component of options and RSU granted to employees

1,291

1,200

Provision for credit losses and other

receivables update

12,586

(865)

Share in profits of associated company accounted

for using the equity method

(397)

(950)

Others

2,651

397

185,310

126,476

Changes to operating assets and liabilities:

Decrease (increase) in trade receivables

6,408

31,923

Decrease in other receivable and balances

(18,882)

(5,875)

Increase (decrease) in trade payables

39,024

(40,726)

Increase (decrease) in other payables

7,405

2,972

Decrease (increase) in inventory

63,651

12,458

97,606

752

282,916

127,228

View source version on businesswire.com: https://www.businesswire.com/news/home/20210310005262/en/

CONTACT: Nissim Douek +972-54-5201178 Nissim@unik.co.il

CONTACT: U.S. Media Contact: Stacy Berns Berns Communications Group +1-212-994-4660 sberns@bcg-pr.com