Delta Galil Reports Financial Results for First Quarter of 2012
Expanding Product Range and Retail Business Drive
Sales Growth and Higher Profitability
• Sales were $168.1 million in the 2012 first quarter, up 7% from the same period of 2011.
• Operating income before capital gains was $6.4 million, a 60% increase over the first quarter of 2011.
• Net income before capital gains (net of tax) was $3.9 million in the 2012 first quarter, compared to $3.0 million a year earlier, an increase of 30%.
• Net diluted EPS before capital gains attributable to shareholders was $0.16 in the 2012 first quarter, up from $0.12 in the 2011 first quarter.
• Net financial debt at March 31, 2012 was $40.8 million, decreasing from $79.9 million at March 31, 2011 and $53.8 million at December 31, 2011.
• Delta Galil declared a dividend totaling $1.9 million, or $0.0807 per share, to be distributed on June 20, 2012. The determining and "ex-dividend" date for this distribution will be June 6, 2012.
• Isaac Dabah, CEO of Delta Galil, noted: “Delta Galil continues to successfully pursue strategies to grow our branded business, geographic presence and product breadth.”
Tel Aviv, May 10, 2012 – 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 first quarter of 2012.
Delta Galil reported sales of $168.1 million for the 2012 first quarter, compared to $157.4 million for the same period last year, an increase of 7%. The sales growth was primarily driven by strong performance of the Company’s business in North America and Israel.
Net income for the 2012 first quarter was $3.9 million before capital gains (net of tax), increasing 30% from $3.0 million for the year-ago quarter. Diluted earnings per share before capital gains (net of tax) attributable to shareholders was $0.16 in Q1 2012, up from $0.12 in Q1 2011. Including capital gains, net income for the first quarter of 2011 (net of tax) was $5.8 million, or $0.24 per diluted share.
Growth in Global Markets, Continued Expansion
Isaac Dabah, CEO of Delta Galil, stated: “We have started 2012 on a strong footing, delivering a solid performance in the first quarter. Our sales increase primarily reflected our growth in North America, where we have gained share in the higher end of the market, and in Israel, where our retail business including the Delta Kids chain continues to expand. Overall, we have continued to focus on innovation, inspired by our ‘body-before-fabric’ philosophy, with the goal of creating an expanding portfolio of products that are differentiated in the marketplace and have a strong consumer appeal.”
“Delta Galil continues to successfully pursue strategies to grow our branded business, geographic presence and product breadth. In this regard, we recently announced an agreement to acquire Schiesser AG, the leading underwear manufacturer and marketer in Germany, in a deal that is expected to close in July 2012. The Schiesser transaction will significantly increase our sales of branded products, add depth in Europe’s strongest market, and increase the Men’s component of our business – while being solidly accretive to earnings this year.”
Increasing Gross Profit and Operating Profit
The gross profit of Delta Galil was $31.3 million in the first quarter of 2012, an increase of 8% over the gross profit of $29.0 million for the first quarter of 2011. Gross margin increased to 18.6% of sales for the 2012 first quarter, from 18.4% of sales in the 2011 period.
Operating income was $6.4 million for the 2012 first quarter. This represents an increase of 60% over the comparable operating income of $4.0 million (before $3.6 million of capital gains from asset and franchise agreement sales) in the 2011 first quarter. In addition to the growth in sales, the trend in recurring operating income reflected lower general, administrative and other expenses, largely due to favorable currency exchange rates. The operating margin increased to 3.8% in the recent quarter from 2.5% a year ago, excluding the effect of the capital gains in the 2011 period.
Strengthening Financial Position
Delta Galil had $75.1 million in cash and cash equivalents on March 31, 2012, an increase from $46.8 million on March 31, 2011 and $65.8 million on December 31, 2011, primarily as a result of a positive cash flow from current operations. Cash flow from current operations in Q1 2012 amounted to $19.4 million, compared to a negative cash flow of $3.1 million in Q1 2011.
Net financial debt as of March 31, 2012 amounted to $40.8 million, down from $79.9 million on March 31, 2011 and $53.8 million on December 31, 2011. The reduction in debt also was a result of the positive cash flow from operations in the recent quarter.
Equity as of March 31, 2012 amounted to $220.0 million or 50.9% of the total balance sheet, as compared with approximately $201.4 million or 47.9% of total balance sheet on March 31, 2011.
The Company declared a dividend totaling $1.9 million, or $0.0807 per share, to be distributed on June 20, 2012. The determining and "ex-dividend" date for this distribution will be June 6, 2012.
Outlook for 2012 Results [Delta to Advise on Inclusion]
Delta Galil reconfirmed its previous estimate for 2012 business results, as provided in the 2011 year-end press release:
• Full-year 2012 sales are estimated to range from $700 million to $715 million, which would constitute an increase of 3.1% to 5.3% compared to 2011 sales of $678.8 million.
• Full-year 2012 operating profit is estimated to range between $44 million and $46 million, which would constitute an increase of 10.8% to 15.9% compared to 2011 operating profit of $39.7 million.
• Full-year 2012 net profit is estimated to range between $29 million and $31 million, which would constitute an increase of 5.8% to 13.1% compared to 2011 net profit of $27.4 million.
• Full-year 2012 diluted EPS is estimated to range between $1.18 and $1.27, which would constitute an increase of 2.6% to 10.4% compared to 2011 diluted EPS of $1.15 per share.
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; babywear, activewear, sleepwear, and leisurewear. 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.
For more information:
Meital Levi Tal
U.S. Media Contact:
Stacy Berns/Jessica Liddell
Berns Communications Group