Business Wire | May 12, 2021 07:30AM EDT

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

May 12, 2021

TEL AVIV, Israel--(BUSINESS WIRE)--May 12, 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 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(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 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 207,456 210,109 209,465depreciation

Goodwill 148,859 144,941 150,657

Intangible assets, net of accumulated 270,011 264,031 266,967amortization

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 58,038 55,054 60,363 respect of leases

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 9,060 10,035 9,499 assets

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 ofthe 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-timeitems, 15,081 (19,990)net of tax





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 0.57 (1.19)attributed to company's shareholders



Net diluted earnings (loss) per share, beforenon-recurring 0.57 (0.78)items net of tax attributable to Company'sshareholders



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 (1,544) (1,098)subsidiary

Net proceeds from issuance of a subsidiary 77,156 -

Net cash generated from ( used in) financing 64,449 45,012activities

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 311,979 143,134at the end of the Period, net

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 (3,059) -payments relief

Capital loss from sale of fixed assets (172) (66)

Change to the benefit component of options granted to 850 320employees

Write-down of customers and other receivables 214 6,984

Share in profits of associated company accounted for (6) 57using the equity method

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



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

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