Delta Galil Reports First-Quarter 2024 Results

CAESAREA, Israel--(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 first quarter ended March 31, 2024.

• First-quarter sales increased 2% to $450.8 million, driven by growth across most of the Company's segments
• First-quarter online sales of the Company's own brands increased 18%
• Gross margin improved 320 basis points to a first-quarter record of 42.3%
• First quarter EBIT before non-core items increased by 48% to $29.4 million, or 6.5% of sales compared to $19.8 million, or 4.5% of sales, for the same period last year
• First quarter net-income before non-core items increased by 86% to $14.5 million, or 3.2% of sales compared to $7.8 million, or 1.8% of sales, for the same period last year
• First-quarter diluted earnings per share before non-core items increased 88% to $0.49
• Operating cash flow, for the three months ended March 31, 2024, excluding IFRS 16, improved 114% to a record Quarter one level of $23.5 million
• Strong balance sheet with $187.4 million in cash and shareholders' equity of $764.6 million at March 31, 2024
• Net debt, excluding IFRS 16, declined 38% to $139.0 million, compared to $224.0 million at March 31, 2023
• Doubles the declared divided to $8.0 million for first quarter 2024, compared to $4.0 million for first quarter 2023

Isaac Dabah, CEO of Delta Galil, stated, "Delta's solid first-quarter results demonstrate the strength of our brands, the remarkable value and offerings we provide to our Private Label partners, and the successful implementation of the strategies we are pursuing to deliver strong revenue and earnings growth. Our performance during the first quarter is especially encouraging as we returned to year-over-year growth in sales with strong profitability and record first quarter operating cash flow. This is a testament to the hard work and dedication of our global teams, and the success of recent initiatives aimed at driving sales, improving operating efficiencies and realigning our manufacturing capabilities."

Mr. Dabah concluded, "Our strong balance sheet and capital position provide us with additional flexibility to execute our growth oriented strategic plan. During the first quarter we successfully completed the previously announced acquisition of Passionata, which adds a complementary intimate brand with a strong global and millennial following to our portfolio. In addition, we continue to pursue opportunities for both our owned and licensed brands that we believe will drive growth and profitability in 2024 and beyond."

Sales

The Company reported first-quarter 2024 sales of $450.8 million, a 2% increase from $442.5 million in the first quarter of 2023, driven by growth across most of the Company's segments.

Gross Margin

Gross margin in the first quarter of 2024 increased to a first quarter record of 42.3%, compared to 39.1% for the same period last year. The 320-basis point expansion was due primarily to a better customer and channel mix, improved profitability of our factories due to higher volume, and lower freight costs.

EBIT

EBIT in the first quarter of 2024 increased by 80% to $26.0 million, or 5.8% of sales compared to $14.4 million, or 3.3% of sales in the prior-year period. EBIT before non-core items increased by 48% to $29.4 million, or 6.5% of sales, compared to $19.8 million, or 4.5% of sales, in the first quarter of 2023.

The increase in EBIT was due to higher sales and gross margin, partially offset by higher SG&A expenses.

Non-Core Items

For the first quarter of 2024, expenses associated with the Company's previously disclosed realignment plan for Bare Necessities were $3.4 million, compared to $5.4 million related to the realignment plan of the first quarter of 2023.

Net Income

Net income in the first quarter of 2024 increased 300% to $12.0 million, compared to $3.0 million in the first quarter last year. Net income, excluding non-core items, net of tax, increased by 86% to $14.5 million, compared to $7.8 million in the first quarter of 2023.

Diluted Earnings Per Share

Diluted earnings per share in the first quarter of 2024 were $0.39, compared to $0.08 in the first quarter of 2023. Diluted earnings per share, excluding non-core items, net of tax, were $0.49 compared to $0.26 in the first quarter of 2023.

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

EBITDA excluding IFRS 16 impact in the first quarter of 2024 was $37.7 million, compared to $28.5 million in the first quarter of 2023.

Cash flow generated from operating activities, excluding IFRS 16, was a first quarter record of $23.5 million, compared to $11.0 million in the first quarter of 2023. The significant year-over-year improvement in operating cash flow was primarily attributed to the higher EBITDA.

Net financial debt, excluding IFRS 16, at March 31, 2024, was $139.0 million, compared to $224.0 million at March 31, 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 March 31, 2024, was a first quarter record of $764.6 million, up 8.7% from $703.1 million on March 31, 2023.

Delta Galil declared a dividend of $8.0 million, or $0.31 per share, which will be distributed on June 10, 2024. The record and "ex-dividend" date will be May 30, 2024.

2024 Financial Guidance

Based on the strong start to the year, and current outlook, management expects 2024's financial results to be in the mid to upper part of its original guidance range. The Company's guidance excludes non-core items, including IFRS 16, is based on ex-rates of $1.05 to 1 Euro and NIS 3.74 to 1$, and is based on current tax rates, which include 2024 first quarter implementation of the Organization for Economic Co-operation and Development (OECD) Pillar Two minimum effective corporate tax.

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 below.

	Full Year 2024 Updated Guidance (in millions, except per share amount)		Full Year 2024 Original Guidance (in millions, except per share amount)		2023 Results (in millions, except per share amount)
Sales	$1,991.0 - 2,031.0		$1,951.0 - 2,031.0		$1,857.7
EBIT	$173.0 - 183.0		$163.0 - 183.0		$153.0
EBITDA	$266.3 - 276.3		$256.3 - 276.3		$246.8
Net income	$106.9 - 114.7		$99.1 - 114.7		$91.6
Diluted EPS ($)	$3.82 - 4.11		$3.52 - 4.11		$3.25

Based on the Company's order book and projections, the Company expects growth in 2024 to materialize mostly in the second half of the year.

The Company's expectations depend, among others, on the following: returning to normalized inventory levels at our main customers driving higher demand and improving profitability, expanding into new categories, launching new global collections, increasing production levels in our new factories in Vietnam and Egypt, implementing realignment plans including the new plan for Bare Necessities in the first quarter of 2024, improving backlog of innovative products and launching new brands and license agreements.

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, 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.

	March 31				December 31
	2024		2023		2023
	(Unaudited)				(Audited)
	Thousands of Dollars
Assets
Current assets:
Cash and cash equivalents	187,369		118,267		174,463
Restricted Cash	1,859		2,916		2,950
Short-term deposits	-		63,147		-
Trade receivables	204,655		194,875		241,216
Taxes on income receivable	1,436		11,848		77
Others	50,177		40,802		48,920
Financial derivative	76		251		228
Inventory	394,283		476,186		361,416
Asset held for sale	1,773		-		1,773
Total current assets	841,628		908,292		831,043
Non-current assets:
Investments in associated companies accounted using
the equity method and long-term receivables	15,068		12,372		14,897
Investment property	2,585		2,726		2,679
Fixed assets, net of accumulated depreciation	253,698		236,436		250,343
Goodwill	144,730		144,959		145,577
Intangible assets, net of accumulated amortization	292,567		273,158		277,952
Assets in respect of usage rights	237,880		199,457		237,177
Deferred tax assets	30,967		24,939		28,016
Financial derivative	714		1,114		903
Total non-current assets	978,209		895,161		957,544
Total assets	1,819,837		1,803,453		1,788,587

	March 31						December 31
	2024			2023			2023
	(Unaudited)						(Audited)
	Thousands of Dollars
Liabilities and Equity
Current liabilities:
Short-term bank loans	38,102			67,219			822
Current maturities of bank loans	24,965			45,441			24,105
Current maturities of bonds	29,662			29,935			29,597
Financial derivative	1,143			1,457			1,380
Current maturities of leases liabilities	51,908			49,717			52,583
Trade payables	203,982			189,469			168,637
Taxes on income payable	29,729			33,155			35,182
Provision for restructuring plan	3,563			3,715			3,574
Others accounts payable	142,261			148,372			165,791
Total current liabilities	525,315			568,480			481,671
Non-current liabilities:
bank loans	133,471			128,744			140,790
Severance pay liabilities, net	5,434			5,901			5,327
Liabilities in respect of leases	206,311			170,377			204,746
Other non-current liabilities	53,441			59,769			53,241
Bonds	94,996			127,812			96,496
Deferred taxes liabilities	33,521			36,611			35,812
Financial derivative	2,746			2,642			2,122
Total non-current liabilities	529,920			531,856			538,534
Total liabilities	1,055,235			1,100,336			1,020,205
Equity:
Equity attributable to equity holders of the parent company:
Share capital	23,714			23,714			23,714
Share premium	126,219			128,070			127,861
Other capital reserves	23,168			25,494			28,133
Retained earning	573,560			512,316			571,846
Treasury shares	(12,026	)		(13,877	)		(13,668	)
	734,635			675,717			737,886
Minority interests	29,967			27,400			30,496
Total equity	764,602			703,117			768,382
Total liabilities and equity	1,819,837			1,803,453			1,788,587

	Three months ended March 31
	2024			2023
	(Unaudited)
	Thousands of Dollars
	Except for Earning Per Share data
Sales	450,779			442,457
Cost of sales	260,280			269,546
Gross profit	190,499			172,911
% of sales	42.3	%		39.1	%
Selling and marketing expenses	134,811			129,639
% of sales	29.9	%		29.3	%
General and administrative expenses	26,407			23,330
% of sales	5.9	%		5.3	%
Other Expenses (income), net and share in profits of associated company	(69	)		101
Operating income excluding non-core items	29,350			19,841
% of sales	6.5	%		4.5	%
Non-core items	3,360			5,421
Operating income	25,990			14,420
Finance expenses, net	10,938			10,582
Income before tax on income	15,052			3,838
Taxes on income	3,003			823
Net income for the period	12,049			3,015
Net income for the period excluding non-core items, net of tax	14,486			7,772
Attribution of net earnings for the period:
Attributed to Company's shareholders	10,339			2,117
Attributed to non-controlling interests	1,710			898
	12,049			3,015
Net diluted earnings per share attributed to company's shareholders	0.39			0.08
Net diluted earnings per share, before non-core items, net of tax, attributable to Company's shareholders	0.49			0.26

	Three months ended March 31
	2024			2023
	(Unaudited)
	Thousands of Dollars
Cash flows from operating activities:
Net income for the period	12,049			3,015
Adjustments required to reflect cash flows deriving from operating activities	43,337			40,338
Interest paid in cash	(8,522	)		(12,431	)
Interest received in cash	1,234			1,099
Taxes on income paid in cash, net	(12,524	)		(8,253	)
Net cash generated from operating activities	35,574			23,768
Cash flows from investment activities:
Change in short-term deposits, net	-			(602	)
Purchase of fixed assets	(12,295	)		(5,228	)
Purchase of intangible assets	(17,364	)		(1,276	)
Proceeds from selling of fixed assets	220			143
Others	416			1,076
Net cash used in Investing activities	(29,023	)		(5,887	)
Cash flows from financing activities:
Dividends paid to non-controlling interest holders in consolidated subsidiary	(1,800	)		(996	)
Long term payables credit for fixed assets purchases	(1,406	)		(3,231	)
Lease principal repayment	(12,087	)		(12,819	)
Repayment of bonds	-			(15,140	)
Dividend paid	(9,021	)		(8,018	)
Receipt of a long-term loans from banking corporations	543			-
Repayment of long-term loans from banking corporations	(6,154	)		(1,905	)
Short-term credit from banking corporations, net	37,282			15,737
Others	1,734			-
Net cash generated from (used in) financing activities	9,091			(26,372	)
Net increase (decrease) in cash and cash equivalents	15,642			(8,491	)
Exchange rate differences and revaluation of cash and cash equivalents, net	(2,736	)		109
Balance of cash and cash equivalents at the beginning of the period, net	174,463			126,649
Balance of cash and cash equivalents at the end of the Period, net	187,369			118,267

	Three months ended March 31
	2024			2023
	(Unaudited)
	Thousands of Dollars
Adjustments required to reflect cash flows from operating activities:
Revenues and expenses not involving cash flow:
Depreciation	8,331			9,366
Amortization	17,610			16,127
Exchange rate losses	410			67
Interest paid in cash	5,798			10,200
Interest received in cash	(1,234	)		(1,099	)
Taxes on income paid in cash, net	12,524			8,253
Deferred taxes on income, net	(4,545	)		(2,611	)
Interest due to lease agreements	2,724			2,231
Severance pay liability, net	187			(449	)
Change in restructuring accrual	(11	)		874
Capital gain from sale of fixed assets	(76	)		(2	)
Change to the benefit component of options granted to employees	401			809
Share in profits of associated company accounted for using the equity method	(60	)		(64	)
Others	(1,241	)		4,116
	40,818			47,818
Changes to operating assets and liabilities:
Decrease in trade receivables	33,480			39,034
Increase in other receivable	(1,777	)		(8,306	)
Increase (decrease) in trade payables	35,460			(22,213	)
Increase in other payables	(28,330	)		(28,755	)
Decrease (Increase) in inventory	(36,313	)		12,760
	2,519			(7,480	)
	43,337			40,338

Contacts

For more information:
Nissim Douek
[phone]
[e-mail]

U.S. Media Contact:
Stacy Berns
Berns Communications Group
[phone]
[e-mail]