Delta Galil Reports Strong First Quarter 2022 Results Reflecting Record Q1 Sales, EBIT, Net Income and EPS
Q1 sales reached record levels for the fifth consecutive quarter, increasing 16% to $483.9 million, from $416.1 million in Q1 2021.
Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange), the global manufacturer and marketer of branded and private label intimate, activewear, loungewear and denim apparel for men, women and children, today reported a strong start to 2022 with record financial results for the first quarter ended March 31, 2022.
Highlights
- Q1 sales reached record levels for the fifth consecutive quarter, increasing 16% to $483.9 million, from $416.1 million in Q1 2021.
- Operating margin reached record levels for the seventh consecutive quarter, increasing 40 basis points to 7.1%, from 6.7 % in Q1 2021.
- Net income reached record levels as well, up 26% to $18.9 million, compared to $15.1 million in Q1 2021.
- Q1 earnings per share (EPS) amounted to a record level, up 18% to $0.67, from $0.57 in Q1 2021.
- Strong balance sheet highlighted by $223 million in cash and $652 million in equity as of March 31, 2022.
- Delta Galil declares a dividend of $6.0 million, or $0.235 per share, to be distributed on May 31, 2022. The “record” and "ex-dividend" date will be May 23, 2022.
Isaac Dabah, CEO of Delta Galil, stated: “We are pleased with our strong first quarter results, which marked five consecutive quarters of record quarter revenue and seven consecutive quarters of record quarter operating margins. We delivered record quarterly EBIT and net income, driven by higher sales across all geographic regions, successful execution of our innovation-driven growth strategy, and benefits from operating leverage. We maintained strong gross margins despite rising freight and production costs.
Looking ahead, our profitable growth trajectory, strong balance sheet and global workforce position us to meet our customers’ growing demands, while effectively managing our cost structure.”
Sales
The Company reported sales of $483.9 million in the first quarter of 2022, a 16% increase from $416.1 million in the first quarter of 2021.
Digital Sales
Owned e-commerce website sales declined 22% in the first quarter of 2022, to $54.9 million, compared to $70.8 million in the first quarter of 2021. The decrease was primarily due to a decline in web traffic as customers shifted back to stores.
Gross Profit
Gross profit in the first quarter of 2022 increased 15% to $183.3 million, compared to $159.0 million in the first quarter of 2021, driven by the strong growth in sales. Gross margins slightly decreased to 37.9% of sales in the first quarter of 2022, compared to 38.2% of sales in the first quarter of 2021, due mainly to increased freight and raw material costs, partially offset by a favorable shift in customer mix and increased profitability of the Company’s factories.
EBIT
EBIT in the first quarter of 2022 increased 22% to $34.2 million, compared to $28.0 million in the first quarter of 2021. The increase was driven by higher sales, and operational and SG&A leverage.
Net Income
Net income in the first quarter of 2022 increased 26% to $18.9 million, compared to $15.1 million in the first quarter of 2021.
Diluted Earnings Per Share
Diluted earnings per share in the first quarter of 2022 rose 18% to $0.67, compared to diluted earnings per share of $0.57 in the first quarter of 2021.
EBITDA, Cash Flow, Net Debt, Equity, and Dividend
EBITDA excluding IFRS 16 in the first quarter of 2022 was $42.6 million, compared to $36.5 million in the comparable 2021 period.
Net cash used in operating activities excluding IFRS 16 was $52.6 million in the first quarter of 2022, compared to net cash provided by operating activities of $21.4 million in the same period in 2021. The decrease reflected higher working capital investments, mainly in the Company’s inventory, to better support growth and service seasonal inventory requirements.
Net financial debt excluding IFRS 16 as of March 31, 2022 was $172.4 million, up from $150.2 million as of March 31, 2021.
Equity on March 31, 2022 reached a record of $651.7 million, compared with $558.6 million a year earlier.
Delta Galil declares a dividend of $6.0 million, or $0.235 per share, to be distributed on May 31, 2022. The “record” and "ex-dividend" date will be May 23, 2022.
2022 Financial Guidance
Company Reaffirms Full Year 2022 Earnings Guidance Reflecting Double Digit Growth in Sales and Profitability.
Delta Galil’s 2022 guidance excludes non-core items and includes IFRS 16 assuming there is no major resurgence of the COVID-19 pandemic that leads to quarantines and/or lockdowns in any countries in which the Company sells or manufactures its products:
- Full-year 2022 sales are expected to range between $2,082 million and $2,135 million, representing an increase of 7% to 9% compared to 2021 sales of $1,951 million.
- Full-year 2022 EBIT is expected to range between $210 million and $220 million, representing an increase of 12% to 17% compared to 2021 EBIT of $188.1 million.
- Full-year 2022 EBITDA is expected to range between $312 million and $322 million, representing an increase of 9% to 12% compared to 2021 EBITDA of $286.8 million.
- Full-year 2022 net income is expected to range between $138 million and $145 million, representing an increase of 11% to 17% compared to 2021 net income of $124.2 million.
- Full-year 2022 diluted EPS is expected to range between $4.80 and $5.09, representing an increase of 8% to 15% compared to 2021 EPS of $4.44.
Earnings Presentation
The Company will host an in-person investor meeting to discuss first quarter 2022 results and its business outlook at the Tel Aviv Stock Exchange on Monday May 16, 2022 at 9:00 a.m. Israel Daylight Time. A recording and transcript of the presentation will be available later in the week at deltagalil.com/investor-relations/events-presentations.
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 for brands including Schiesser, Eminence and Athena; babywear, activewear, sleepwear under the P.J. Salvage brand, and leisurewear. Delta Galil also designs, develops, markets and sells branded denim and apparel under the 7 For All Mankind® brand, and ladies’ apparel under the Splendid® brand. In addition, it sells its products under brand names licensed to the Company, including adidas, Wolford, 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. |
|||||
|
|
|||||
|
|
March 31 |
|
December 31 |
||
|
|
2022 |
|
2021 |
|
2021 |
|
|
(Unaudited) |
|
(Audited) |
||
|
|
Thousands of Dollars |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
217,839 |
|
311,979 |
|
230,129 |
|
Restricted Cash |
5,392 |
|
874 |
|
5,845 |
|
Trade receivables |
188,401 |
|
187,370 |
|
202,140 |
|
Taxes on income receivable |
13,674 |
|
11,723 |
|
11,272 |
|
Others accounts receivable |
41,213 |
|
43,703 |
|
43,511 |
|
Financial derivative |
37 |
|
828 |
|
1,615 |
|
Inventory |
474,163 |
|
315,170 |
|
395,158 |
|
Total current assets |
940,719 |
|
871,647 |
|
889,670 |
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
Investments in associated companies accounted using |
|
|
|
|
|
|
the equity method and long-term receivables |
12,251 |
|
11,969 |
|
12,593 |
|
Investment property |
2,906 |
|
3,209 |
|
2,997 |
|
Fixed assets, net of accumulated depreciation |
217,578 |
|
207,456 |
|
212,999 |
|
Goodwill |
146,691 |
|
148,859 |
|
147,447 |
|
Intangible assets, net of accumulated amortization |
287,005 |
|
270,011 |
|
287,109 |
|
Assets in respect of usage rights |
210,618 |
|
207,871 |
|
191,213 |
|
Deferred tax assets |
18,520 |
|
19,465 |
|
18,705 |
|
Financial derivative |
11,810 |
|
21,152 |
|
12,098 |
|
Total non-current assets |
907,379 |
|
889,992 |
|
885,161 |
|
Total assets |
1,848,098 |
|
1,761,639 |
|
1,774,831 |
|
DELTA GALIL INDUSTRIES LTD. |
||||||||
|
|
March 31 |
|
December 31 |
|||||
|
|
2022 |
|
2021 |
|
2021 |
|||
|
|
(Unaudited) |
|
(Audited) |
|||||
|
|
Thousands of Dollars |
|||||||
|
Liabilities and Equity |
|
|
|
|
|
|||
|
Current liabilities: |
|
|
|
|
|
|||
|
Short-term bank loans |
16,308 |
|
|
14,013 |
|
|
- |
|
|
Current maturities of bank loan |
7,377 |
|
|
21,272 |
|
|
7,501 |
|
|
Current maturities of bonds |
32,038 |
|
|
38,450 |
|
|
32,102 |
|
|
Financial derivative |
66 |
|
|
236 |
|
|
- |
|
|
Current maturities of liabilities in respect of leases |
49,359 |
|
|
58,038 |
|
|
51,776 |
|
|
Trade payables |
259,439 |
|
|
204,259 |
|
|
247,662 |
|
|
Taxes on income payable |
27,520 |
|
|
22,446 |
|
|
27,070 |
|
|
Provision for restructuring plan |
4,810 |
|
|
22,360 |
|
|
8,879 |
|
|
Others accounts payable |
154,945 |
|
|
140,638 |
|
|
172,607 |
|
|
Total current liabilities |
551,862 |
|
|
521,712 |
|
|
547,597 |
|
|
|
|
|
|
|
|
|||
|
Non-current liabilities: |
|
|
|
|
|
|||
|
Long-term bank loans |
168,434 |
|
|
95,620 |
|
|
117,122 |
|
|
Severance pay liabilities less plan assets |
8,056 |
|
|
9,060 |
|
|
7,075 |
|
|
Liabilities in respect of leases |
179,687 |
|
|
175,006 |
|
|
158,851 |
|
|
Other non-current liabilities |
78,401 |
|
|
49,904 |
|
|
78,891 |
|
|
Bonds |
173,275 |
|
|
307,575 |
|
|
176,316 |
|
|
Deferred taxes liabilities |
36,672 |
|
|
44,195 |
|
|
39,797 |
|
|
Total non-current liabilities |
644,525 |
|
|
681,360 |
|
|
578,052 |
|
|
Total liabilities |
1,196,387 |
|
|
1,203,072 |
|
|
1,125,649 |
|
|
|
|
|
|
|
|
|||
|
Equity: |
|
|
|
|
|
|||
|
Equity attributable to equity holders of the parent company: |
|
|
|
|
|
|||
|
Share capital |
23,714 |
|
|
23,714 |
|
|
23,714 |
|
|
Share premium |
128,772 |
|
|
130,156 |
|
|
129,500 |
|
|
Other capital reserves |
45,131 |
|
|
51,163 |
|
|
53,335 |
|
|
Retained earning |
440,816 |
|
|
347,664 |
|
|
432,189 |
|
|
Treasury shares |
(14,579 |
) |
|
(15,963 |
) |
|
(15,307 |
) |
|
|
623,854 |
|
|
536,734 |
|
|
623,431 |
|
|
Minority interests |
27,857 |
|
|
21,833 |
|
|
25,751 |
|
|
Total equity |
651,711 |
|
|
558,567 |
|
|
649,182 |
|
|
Total liabilities and equity |
1,848,098 |
|
|
1,761,639 |
|
|
1,774,831 |
|
|
DELTA GALIL INDUSTRIES LTD. |
|||||
|
|
Three months ended March 31 |
||||
|
|
2022 |
|
2021 |
||
|
|
(Unaudited) |
||||
|
|
Thousands of Dollars |
||||
|
|
Except for Earning Per Share data |
||||
|
|
|
|
|
||
|
|
|
|
|
||
|
Sales |
483,873 |
|
|
416,135 |
|
|
Cost of sales |
300,581 |
|
|
257,105 |
|
|
Gross profit |
183,292 |
|
|
159,030 |
|
|
% of sales |
37.9 |
% |
|
38.2 |
% |
|
Selling and marketing expenses |
127,110 |
|
|
109,644 |
|
|
% of sales |
26.3 |
% |
|
26.3 |
% |
|
General and administrative expenses |
23,300 |
|
|
21,597 |
|
|
% of sales |
4.8 |
% |
|
5.2 |
% |
|
Impairment loss (profit) on trade receivable |
(74 |
) |
|
214 |
|
|
Other Expenses (income), net and |
|
|
|
||
|
Share in profits of associated company |
(1,238 |
) |
|
(379 |
) |
|
Operating income |
34,194 |
|
|
27,954 |
|
|
% of sales |
7.1 |
% |
|
6.7 |
% |
|
Finance expenses, net |
9,672 |
|
|
8,979 |
|
|
Income before tax on income |
24,522 |
|
|
18,975 |
|
|
Taxes on income |
5,577 |
|
|
3,894 |
|
|
Net income for the period |
18,945 |
|
|
15,081 |
|
|
|
|
|
|
||
|
|
|
|
|
||
|
Attribution of net earnings for the period: |
|
|
|
||
|
Attributed to company's shareholders |
17,748 |
|
|
14,546 |
|
|
Attributed to non-controlling interests |
1,197 |
|
|
535 |
|
|
|
18,945 |
|
|
15,081 |
|
|
|
|
|
|
||
|
Net diluted earnings per share |
0.67 |
|
|
0.57 |
|
|
DELTA GALIL INDUSTRIES LTD. |
|||||
|
|
Three months ended March 31 |
||||
|
|
2022 |
|
2021 |
||
|
|
(Unaudited) |
||||
|
|
Thousands of Dollars |
||||
|
|
|
|
|
||
|
Cash flows from operating activities: |
|
|
|
||
|
Net income for the period |
18,945 |
|
|
15,081 |
|
|
Adjustments required to reflect cash flows |
|
|
|
||
|
deriving from (used in) operating activities |
(45,174 |
) |
|
21,044 |
|
|
Interest paid in cash |
(7,485 |
) |
|
(8,005 |
) |
|
Interest received in cash |
91 |
|
|
89 |
|
|
Taxes on income refund (paid) in cash, net |
(6,234 |
) |
|
3,128 |
|
|
Net cash generated from (used in) operating activities |
(39,857 |
) |
|
31,337 |
|
|
Cash flows from investment activities: |
|
|
|
||
|
Acquisition of fixed assets |
(7,720 |
) |
|
(5,709 |
) |
|
Acquisition of intangible assets |
(1,368 |
) |
|
(991 |
) |
|
Providing a loan to a business partner |
- |
|
|
(1,750 |
) |
|
Proceeds from selling of fixed asset |
80 |
|
|
588 |
|
|
Others |
453 |
|
|
(2,116 |
) |
|
Net cash used in Investing activities |
(8,555 |
) |
|
(9,978 |
) |
|
Cash flows from financing activities: |
|
|
|
||
|
Dividends paid to non-controlling interest holders in consolidated subsidiary |
(1,545 |
) |
|
- |
|
|
Long term payables credit for fixed assets purchase |
(3,056 |
) |
|
(1,532 |
) |
|
Lease principle repayment |
(12,713 |
) |
|
(9,901 |
) |
|
Dividend paid |
(9,931 |
) |
|
- |
|
|
Receipt of a long-term bank loan |
53,800 |
|
|
- |
|
|
Repayment of long-term bank loans |
(1,989 |
) |
|
(2,738 |
) |
|
Short-term credit from banks |
16,359 |
|
|
3,008 |
|
|
Repayment of bank loan used to acquisition of a subsidiary |
(399 |
) |
|
(1,544 |
) |
|
Net proceeds from issuance of a subsidiary |
- |
|
|
77,156 |
|
|
Others |
(1,265 |
) |
|
- |
|
|
Net cash generated from financing activities |
39,261 |
|
|
64,449 |
|
|
Net increase (decrease) in cash and cash equivalents |
(9,151 |
) |
|
85,808 |
|
|
|
|
|
|
||
|
Exchange rate differences and revaluation of cash |
|
|
|
||
|
and cash equivalents, net |
(3,139 |
) |
|
(4,672 |
) |
|
Balance of cash and cash equivalents |
|
|
|
||
|
at the beginning of the period, net |
230,129 |
|
|
230,843 |
|
|
Balance of cash and cash equivalents |
217,839 |
|
|
311,979 |
|
|
DELTA GALIL INDUSTRIES LTD. |
|||||
|
|
Three months ended March 31 |
||||
|
|
2022 |
|
2021 |
||
|
|
(Unaudited) |
||||
|
|
Thousands of Dollars |
||||
|
Adjustments required to reflect cash flows |
|
|
|
||
|
From (used in) operating activities: |
|
|
|
||
|
Revenues and expenses not involving cash flow: |
|
|
|
||
|
Depreciation |
8,312 |
|
|
8,788 |
|
|
Amortization |
15,033 |
|
|
15,975 |
|
|
Cash erosion, net |
5 |
|
|
676 |
|
|
Interest paid in cash |
5,119 |
|
|
4,702 |
|
|
Interest received in cash |
(91 |
) |
|
(89 |
) |
|
Taxes on income paid (received) in cash, net |
6,234 |
|
|
(3,128 |
) |
|
Deferred taxes on income, net |
(2,407 |
) |
|
4,163 |
|
|
Interest due to lease agreements |
2,366 |
|
|
3,303 |
|
|
Severance pay liability, net |
- |
|
|
128 |
|
|
Change in restructuring accrual |
(4,087 |
) |
|
(4,165 |
) |
|
Decrease in liabilities in respect of leases due to rent payments relief |
- |
|
|
(3,059 |
) |
|
Capital loss from sale of fixed assets |
(11 |
) |
|
(172 |
) |
|
Change to the benefit component of options granted to employees |
1,148 |
|
|
850 |
|
|
Impairment loss (profit) on trade receivables |
(74 |
) |
|
214 |
|
|
Share in profits of associated company accounted for using the equity method |
(40 |
) |
|
(6 |
) |
|
Others |
1,568 |
|
|
(2,899 |
) |
|
|
33,075 |
|
|
25,281 |
|
|
Changes to operating assets and liabilities: |
|
|
|
||
|
Increase in trade receivables |
12,092 |
|
|
7,758 |
|
|
Decrease (Increase) in other receivable and balances |
(531 |
) |
|
4,645 |
|
|
Decrease in trade payables |
9,541 |
|
|
19,659 |
|
|
Increase in other payables |
(17,042 |
) |
|
(5,506 |
) |
|
Increase in inventory |
(82,309 |
) |
|
(30,793 |
) |
|
|
(78,249 |
) |
|
(4,237 |
) |
|
|
(45,174 |
) |
|
21,044 |
|
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