Record Third Quarter Sales Increased 13% Driven by Growth Across All Channels

Record Third Quarter Gross Margin of 41.6%

EBIT Increased 13% to $52.3 Million

Strong Balance Sheet with Record Equity of $797.8 Million and Net Debt to EBITDA, Excluding IFRS 16, of 0.8x

Dividend declared of $8.1 Million for the Third Quarter 2024

Management Reaffirms 2024 Financial Guidance

CAESAREA, Israel, November 19, 2024--(BUSINESS WIRE)--Delta Galil Industries, Ltd. (DELG/Tel Aviv Stock Exchange), the global manufacturer and marketer of branded and private label intimate, activewear, loungewear and denim apparel for ladies, men, and children, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights(comparisons are to prior year periodunless otherwise noted)

Record third quarter sales increased 13% to $524.2 million, driven by growth across all channels Record third quarter gross margin of 41.6% up 70 basis points Third quarter EBIT increased 13% to $52.3 million, or 10.0% of sales Third quarter net income increased by 9% to $32.0 million, or 6.1% of sales Third-quarter diluted earnings per share increased 6% to $1.16 Third-quarter operating cash flow, excluding IFRS 16 increased 23% to $37.2 million Strong balance sheet with $108.2 million in cash and record shareholders’ equity of $797.8 million at September 30, 2024 Net debt, excluding IFRS 16, declined 9% to $162.5 million, compared to $178.0 million at September 30, 2023 Net Debt to EBITDA, excluding IFRS 16, of 0.8x Dividend declared of $8.1 million, or $0.31 per share, which will be distributed on December 10, 2024, with a record and "ex-dividend" date of November 27, 2024 The Company reaffirms its 2024 full-year guidance

Isaac Dabah, CEO of Delta Galil, stated, "Delta Galil delivered record third quarter revenue, gross profit and gross margin, leading to a 14% increase in EBITDA, excluding IFRS 16, compared to the prior year quarter. Record top-line results were driven by growth across all channels including record third quarter DTC sales. In addition, we have produced five consecutive quarters of record gross margin reflecting the continued success of the strategies we are pursuing to enhance our operating efficiencies and realign our manufacturing capabilities."

Mr. Dabah added, "I am encouraged by the strong operating and financial results we have achieved through the first nine months of 2024. This is a testament to the diversified business model we have developed, the strategies we are pursuing and the talent of our global workforce. During the third quarter, we published our 2023 ESG report highlighting our commitment to a greener, inclusive, and ethical world. We also announced a strategic partnership with Reliance Retail Ventures, the largest retail company in India that is aimed at driving growth and introducing our legacy of innovation within the intimate apparel sector to the Indian market."

Story Continues

Sales

The Company reported record third quarter 2024 sales of $524.2 million, a 13% increase from $463.0 million in the third quarter of 2023.

Sales for the nine-month period of 2024 were $1,446.4 million, a 7% increase from $1,349.1 million in the prior-year period.

Gross Margin

The Company reported a record third quarter gross margin of 41.6% as compared to 40.9% for the same period last year. The 70-basis point expansion was due primarily to higher volume and improved efficiency of our factories as well as a more favorable channel mix.

Gross margin in the nine months of 2024 increased by 180-basis points to 41.9%, compared to 40.1% in the prior-year period.

EBIT

EBIT in the third quarter of 2024 increased by 13% to $52.3 million, or 10.0% of sales compared to $46.1 million, in the prior-year period.

EBIT in the nine months of 2024 was $116.1 million, or 8.0% of sales, compared to $88.8 million, or 6.6% of sales in the same period last year. EBIT before non-core items in the nine months of 2024 was $119.4 million, or 8.3% of sales, compared to $96.9 million, or 7.2% of sales, in the nine months of 2023.

The increase in EBIT was due to higher sales and gross margin, partially offset by some SG&A cost for investing in new licenses and brand launch activities, as well as lower other income in 2024 which included $3.8 million insurance refund back in 2023.

Non-Core Items

The Company recorded no non-core items in its third quarters of 2024 and 2023.

In the first nine months of 2024, expenses associated with the Company’s previously disclosed realignment plan for Bare Necessities were $3.4 million, compared to $11.4 million of expenses related to realignment plans, $4.0 benefit from the change in the fair value of earn-out liability, and $0.7 million of deal costs in the first nine months of 2023.

Net Income

Net income in the third quarter of 2024 increased 9% to $32.0 million, compared to $29.5 million in the third quarter last year.

Net income in the nine months of 2024 increased 37% to $65.1 million, compared to $47.6 million in the same period last year. Net income excluding non-core items, net of tax, increased 26% to $67.6 million, compared to $53.8 million in the first nine months of 2023.

Diluted Earnings Per Share

Diluted earnings per share in the third quarter of 2024 were $1.16, compared to $1.09 in the third quarter of 2023.

Diluted earnings per share in the nine months of 2024 were $2.29, compared to $1.71 in the same period last year. Diluted earnings per share, excluding non-core items, net of tax, were $2.39 in the first nine months of 2024 compared to $1.94 in the same period of 2023.

EBITDA, Cash Flow, Net Debt, Equity, and Dividend

EBITDA, excluding IFRS 16, in the third quarter of 2024 was $60.5 million, compared to $53.2 million in the third quarter of 2023. In the nine months of 2024, EBITDA, excluding IFRS 16, was $144.7 million, compared to $119.7 million in the nine months of 2023.

Cash flow generated from operating activities, excluding IFRS 16, was $37.2 million, compared to $30.3 million in the third quarter of 2023. Cash flow generated from operating activities, excluding IFRS 16, was $88.8 million in the nine months of 2024, compared to $99.6 million in the nine months of 2023. The year-over-year reduction in nine-month operating cash flow was primarily attributable to changes in working capital, mainly inventory, to support expected sales growth and new product launches.

Net financial debt, excluding IFRS 16, at September 30, 2024, was $162.5 million, compared to $178.0 million at September 30, 2023. The year-over-year reduction in net debt is primarily due to the strong operating cash flow, partially offset by growth-oriented capital expenditures and dividend payments.

Equity on September 30, 2024, was a record of $797.8 million, up 10% from $725.8 million on September 30, 2023.

Delta Galil declared a dividend of $8.1 million, or $0.31 per share, which will be distributed on December 10, 2024, with a record and "ex-dividend" date of November 27, 2024.

2024 Financial Guidance

The Company reaffirms its 2024 guidance based on the Company’s solid year-to-date performance.

Full Year 2024

Guidance

(in millions, except per
share amount)  2023

Results

(in millions, except per
share amount)  Sales $1,991.0 – 2,031.0  $1,857.7  EBIT $173.0 – 183.0  $153.0 EBITDA $266.3 – 276.3  $246.8 Net income $106.9 – 114.7  $91.6 Diluted EPS ($) $3.82 – 4.11  $3.25

The Company’s guidance excludes non-core items and includes IFRS 16

These forward-looking statements are based largely on the expectations of the Company and are subject to uncertainties including macroeconomic trends. Actual results may differ materially from those included in the guidance as result of risks and uncertainties which cannot be fully predicted. There is no certainty that the aforementioned conditions will occur, and actual results may be significantly different from those forecasted or implied above.

Constant Currency - Excluding the Impact of Foreign Currency

This release refers to "reported" amounts in accordance with IFRS accounting principles ("GAAP"), which include translation and transactional impacts from foreign currency exchange rates. The release also refers to "constant dollar" amounts, which exclude the impact of translating foreign currencies into U.S. dollars, and are considered a non-GAAP financial measure. These constant currency performance measures should be viewed in addition to, and not in lieu of, or superior to, Delta Galil’s operating performance measures calculated in accordance with GAAP.

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 endeavored 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; underwear for men including under its owned brands Schiesser, Eminence, Organic Basics, and Athena; babywear, activewear, sleepwear, and loungewear including under its owned P.J. Salvage and Delta brands. Delta Galil also designs, develops markets and sells branded denim and apparel under the brand 7 For All Mankind®, and ladies’ and kids’ apparel under the brand Splendid®. In addition, it sells its products under brand names licensed to the company, including adidas, Wolford, Wilson, 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, tax rates in the various countries the company operates in, 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 September 30, 2024  September 30  December 31 2024  2023  2023 (Unaudited)  (Audited) Thousands of Dollars   Assets  Current assets:  Cash and cash equivalents 106,646  147,521  174,463 Restricted Cash 1,511  2,922  2,950 Short-term deposit -  6,365  - Trade receivables 237,677  211,591  241,216 Taxes on income receivable 2,412  989  77 Others 52,107  49,547  48,920 Financial derivative 99  34  228 Inventory 478,596  423,313  361,416 Assets held for sale 1,773  1,799  1,773 Total current assets 880,821  844,081  831,043  Non-current assets:  Investments in associated companies accounted using the equity method and long-term receivables 11,699  13,185  14,897 Investment property 2,614  2,596  2,679 Fixed assets, net of accumulated depreciation 286,441  242,003  250,343 Goodwill 146,023  144,018  145,577 Intangible assets, net of accumulated amortization 299,299  267,233  277,952 Assets in respect of usage rights 244,236  215,305  237,177 Deferred tax assets 33,533  18,497  28,016 Financial derivative 233  264  903 Total non-current assets 1,024,078  903,101  957,544 Total assets 1,904,899  1,747,182  1,788,587

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of September 30, 2024  September 30  December 31 2024  2023  2023 (Unaudited)  (Audited) Thousands of Dollars  Liabilities and Equity  Current liabilities:  Short-term bank loans 6,801  22,704  822 Current maturities of bank loans 21,336  23,913  24,105 Current maturities of bonds 29,630  29,194  29,597 Financial derivative 1,506  2,001  1,380 Current maturities of leases liabilities 55,224  49,217  52,583 Trade payables 284,384  194,241  168,637 Taxes on income payable 27,546  29,937  35,182 Provision for restructuring plan 2,863  5,919  3,574 Others accounts payable 161,774  136,773  165,791 Total current liabilities 591,064  493,899  481,671  Non-current liabilities:  Bank loans 126,643  141,293  140,790 Severance pay liabilities, net 5,619  5,393  5,327 Liabilities in respect of leases 212,045  186,139  204,746 Other non-current liabilities 54,055  53,165  53,241 Bonds 78,933  108,109  96,496 Deferred taxes liabilities 36,022  31,422  35,812 Financial derivative 2,671  1,973  2,122 Total non-current liabilities 515,988  527,494  538,534 Total liabilities 1,107,052  1,021,393  1,020,205  Equity:  Equity attributable to equity holders of the parent company:  Share capital 23,714  23,714  23,714 Share premium 124,795  127,896  127,861 Other capital reserves 30,290  16,260  28,133 Retained earning 608,303  544,771  571,846 Treasury shares (10,602)  (13,703)  (13,668) 776,500  698,938  737,886 Minority interests 21,347  26,851  30,496 Total equity 797,847  725,789  768,382 Total liabilities and equity 1,904,899  1,747,182  1,788,587

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Statement of Income For the 9-month and 3-month periods ending September 30, 2024  Nine months ended September 30  Three months ended September 30 2024  2023  2024  2023 (Unaudited) Thousands of Dollars (Excluding earning per share figures)   Sales 1,446,439  1,349,079  524,234  463,039 Cost of sales 840,275  807,616  305,959  273,578 Gross profit 606,164  541,463  218,275  189,461 % of sales 41.9%  40.1%  41.6%  40.9% Selling and marketing expenses 411,477  380,850  142,268  127,314 % of sales 28.4%  28.2%  27.1%  27.5% General and administrative expenses 75,629  68,286  24,078  20,397 % of sales 5.2%  5.1%  4.6%  4.4% Other income, net and Share in profits of associated company (355)  (4,537)  (328)  (4,373) Operating income excluding non-core items 119,413  96,864  52,257  46,123 % of sales 8.3%  7.2%  10.0%  10.0% Non-core items 3,360  8,087  -  - Operating income 116,053  88,777  52,257  46,123 Finance expenses, net 31,535  29,297  9,699  8,788 Income before taxes on income 84,518  59,480  42,558  37,335 Taxes on income 19,403  11,919  10,513  7,839 Net income for the period 65,115  47,561  32,045  29,796 Net income for the period excluding non-core items, net of tax 67,552  53,820  32,045  29,496  Net income for the period attributed to the company's shareholders excluding non-core items, net of tax 62,588  51,041  30,524  28,722  Attribution of net earnings for the period:  Attributed to company's shareholders 60,151  44,844  30,524  28,722 Attributed to non-controlling interests 4,964  2,717  1,521  774 65,115  47,561  32,045  29,496  Net diluted earnings per share attributed to company's shareholders 2.29  1.71  1.16  1.09  Net diluted earnings per share, before non-core items, net of tax, attributable to Company's shareholders 2.39  1.94  1.16  1.09

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Cash Flow Reports For the 9-month and 3-month periods ending September 30, 2024  Nine months ended September 30  Three months ended September 30 2024  2023  2024  2023 (Unaudited) Thousands of Dollars  Cash flows from operating activities:  Net income for the period 65,115  47,561  32,045  29,496 Adjustments required to reflect cash flows deriving from operating activities 116,331  118,424  39,314  25,128 Interest paid in cash (24,891)  (25,490)  (10,372)  (8,594) Interest received in cash 3,134  2,768  869  1,523 Taxes on income paid in cash, net (34,104)  (6,182)  (12,530)  (4,756) Net cash generated from operating activities 125,585  137,081  49,326  42,797  Cash flows from investment activities:  Change in short-term deposit, net -  53,989  -  35,415 Purchase of fixed assets and assets under construction (61,195)  (28,012)  (25,306)  (6,832) Purchase of intangible assets (26,761)  (3,399)  (5,337)  (1,679) Proceeds from selling of fixed asset 392  483  144  39 Others 2,235  487  557  (334) Net cash generated from (used in) Investing activities (85,329)  23,548  (29,942)  26,609  Cash flows from financing activities:  Dividends paid to non-controlling interest holders in consolidated subsidiary (13,644)  (1,934)  (10,945)  (534) Long term payables credit for fixed assets purchase (3,993)  (5,044)  (1,181)  (1,478) Lease principal repayment (36,834)  (37,492)  (12,113)  (12,540) Repayment of bonds (15,940)  (31,080)  (15,940)  (15,940) Dividend paid (24,933)  (19,040)  (7,932)  (7,012) Receipt of a long-term loans from banking corporations 4,990  32,694  2,831  32,694 Repayment of long-term loans from banking corporations (22,228)  (42,574)  (14,267)  (38,842) Short-term credit from banking corporations, net 5,831  (28,775)  (21,512)  (8,236) Others (60)  (3,180)  (60)  (2,461) Net cash used in financing activities (106,811)  (136,425)  (81,119)  (54,349) Net increase (decrease) in cash and cash equivalents (66,555)  24,204  (61,735)  15,057  Exchange rate differences and revaluation of cash and cash equivalents, net (1,262)  (3,332)  4,089  (2,419)  Balance of cash and cash equivalents at the beginning of the period, net 174,463  126,649  164,292  134,883 Balance of cash and cash equivalents at the end of the Period, net 106,646  147,521  106,646  147,521

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Cash Flow Reports For the 9-month and 3-month periods ending September 30, 2024  Nine months ended September 30  Three months ended September 30 2024  2023  2024  2023 (Unaudited) Thousands of Dollars  Adjustments required to reflect cash flows from operating activities:  Revenues and expenses not involving cash flow:  Depreciation 23,968  25,807  8,023  7,920 Amortization 50,010  47,582  16,042  15,126 Exchange rate (gains) losses 281  110  (243)  118 Interest on loans and bonds 16,171  18,894  7,323  6,234 Interest received in cash (3,134)  (2,768)  (869)  (1,523) Taxes on income paid in cash, net 34,104  6,182  12,530  4,756 Deferred taxes on income, net (5,745)  (913)  393  1,287 Interest due to lease agreements 8,720  6,596  3,049  2,360 Severance pay liability, net 251  (860)  59  (28) Change in restructuring accrual (711)  3,078  (188)  (1,152) Income from decrease of earn-out liability -  (4,000)  -  - Capital loss (gain) (105)  (42)  (15)  164 Change to the benefit component of options granted to employees 1,543  1,823  794  97 Credit losses (gains) from trade receivables 1,314  (459)  268  (714) Share in profits of associated company accounted for using the equity method (205)  (407)  (185)  (203) Others (409)  2,546  1,877  (580) 126,053  103,169  48,858  33,862 Changes to operating assets and liabilities:  Decrease (increase) in trade receivables 2,261  21,360  (19,828)  (31,397) Decrease (increase) in other receivable and balances (3,215)  (7,608)  943  (4,669) Decrease (increase) in trade payables 115,653  (20,903)  54,213  4,253 Decrease (increase) in other payables (7,587)  (37,098)  8,552  (726) Decrease (Increase) in inventory (116,834)  59,504  (53,424)  23,805 (9,722)  15,255  (9,544)  (8,734) 116,331  118,424  39,314  25,128

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Contacts

For more information:
Nissim Douek
+972-54-5201178
[email protected]

U.S. Media Contact:
Danielle Poggi
Berns Communications Group
+1-212-994-4660
[email protected]

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