Delta Galil Reports Strong Performance for Third Quarter of 2014

RESULTS OVERVIEW Q3 2014

RESULTS OVERVIEW | Q2 2014

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האמור במצגת זו כולל גם מידע צופה פני עתיד, כהגדרתו בחוק ניירות ערך, של תחזיות, מטרות, הערכות, אומדנים ומידע אחר המתייחסים לאירועים ו/או לעניינים עתידיים, שהתממשותם אינה ודאית ואינה בשליטת החברה. מידע צופה פני עתיד והנתונים העיקריים ששימשו והוא מבוסס רק על הערכה סובייקטיבית של החברה. העובדות אינו מהווה עובדה מוכחת בסיס למידע זה הנם עובדות ונתונים בנוגע למצב הנוכחי של החברה ושל עסקיה ועובדות ונתונים מאקרו כלכליים, והכול כפי שהם ידועים לחברה במועד הכנת מצגת זו. לפיכך, קוראי מצגת זו מוזהרים, כי התוצאות וההישגים בפועל של החברה

בעתיד עלולים להיות שונים באופן מהותי מאלה שהוצגו במידע הצופה פני עתיד המוצג במצגת זו.החברה, בעלי מניותיה, נושאי המשרה בה ומי מטעמם אינם ולא יהיו אחראים לשלמות או דיוק המידע הכלול במצגת זו, לרבות מידע צופה פני עתיד, ולא יהיו אחראים לשלמות ודיוק הערכות ותחזיות המופיעות במצגת זו והם לא נושאים ולא

יישאו באחריות או חבות לנזקים או הפסדים העלולים להיגרם כתוצאה מהשימוש או מההסתמכות על מידע זה.

בהעדר אינדיקציה אחרת, הנתונים הכספיים הנכללים במצגת זו מתייחסים לשלושה ותשעה חודשים ראשונים של 2014.


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4%

2%

4%

9%

14.8

Sales UP 4% to $267.2M

20th Consecutive Quarters of Organic Sales Growth

Operating Income Increased 2% to $21.3M comp. to $21.7M

EBITDA UP 4% to $26.1M

NET INCOME UP 9% to $13.8M

$14.8M Operating cash flow

Q3 SALES, NET PROFIT & EPS

Q3 2014 Q3 2013 % Change vs LY

Sales 267.2 257.2 4%

Operating Profit % from sales excluding one-time items

21.7 8.1%

21.38.3% 2%

EBITDA % from sales 26.1 9.8%

25.29.8% 4%

Net income attributed to company's shareholders

13.8 5.2%

12.64.9% 9%

Net income attributed to company's shareholdersexcluding one-time item

13.9 5.2%

14.23.8%

(2%)

Diluted EPS ($ per share)excluding one-time items

0.55 0.56 (2%)

Operating Cash flow 14.8 19.4

Operating Cash flow - Last 4 Quarters ($ Millions) 40.6 56.8

($ Million)


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YTD 2014 YTD 2013 % Change vs LY

Sales 754.5 718.8 5%

Operating Profit % from sales excluding one-time items

52.0 6.9%

46.86.5% 11%

EBITDA% from sales

65.0 8.6%

59.38.2% 10%

Net income attributed to company's shareholdersexcluding one time items

32.4 4.3%

29.64.1% 9%

Diluted EPS $ per shareexcluding one-time items

1.27 1.17 9%

Operating Cash flow 18.4 24.1

Operating Cash flow - Last 4 Quarters ($ Millions)

40.6 56.8

5%

11%

10%

9%

18.4

Sales UP 5% to $754.5M

Operating Income Increased 11% to $52.0M comp. to $46.8M

EBITDA UP 10% to $65M

Diluted EPS went UP by 9%

$18.4M Operating cash flow

YTD 2014 SALES, NET PROFIT & EPS($ Million)


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STRONG BALANCE SHEET

$336M

13.7%

44.8%

$148M

Increase in Equity to $336M

Net Debt/CAP Ratio down to 13.7% from 17.7% LY

Equity from total balance sheet ratio

Record cash on hand

Sep. 302014

%from total

Sep. 302013

%from total

Cash and cash equivalents 147.7 20% 85.5 13%

Restricted cash 0.2 0% 1.4 0%

Trade receivables 114.4 15% 114.0 18%

Inventories 201.8 27% 175.4 27%

Assets held for sale 1.0 0% 1.0 0%

Others 20.3 3% 27.6 4%

Total current assets 485.4 65% 404.9 62%

Fixed assets,net of accumulated depreciation 98.2 13% 97.9 15%

Intangible assets, net of accumulated depreciation and other long term assets

164.8 22% 148.4 23%

Total Assets 748.4 100% 651.2 100%

Short-term bank loans 0.8 0% 40.5 6%

Current maturities of Debentures 24.4 3% 18.0 3%

Trade payables and others 151.2 21% 141.4 22%

Total current liabilities 176.4 24% 199.9 31%

Debentures 205.4 28% 120.8 18%

Others non-current liabilities 32.0 4% 24.8 4%

Total long term liabilities 236.4 31% 145.6 22%

Equity 335.6 45% 305.7 47%

Total Liabilities and equity 748.4 100% 651.2 100%

($ Million)


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IMPROVED FINANCIAL INDICATORS

30.09.2014 30.09.2013

Current ratio 2.75 2.02

Quick ratio 1.61 1.15

Days of Sales Outstanding 39 40

Days Payable Outstanding 44 41

Inventory Days 98 88

Operating cash flow - Q3 ($ million) 14.8 19.4

Operating cash flow - YTD ($ million) 18.4 24.1

Operating cash flow - Last 4 Quarters ($ million) 40.6 56.8

EBITDA - Q3 ($ million) 26.1 25.2

EBITDA - YTD ($ million) 65.0 59.3

EBITDA - Last 4 Quarters ($ million) 91.9 83.4

Net financial debt ($ million) 77.3 85.4

Net financial debt to EBITDA ratio (based on Last 4 Quarters) 0.8 1.0

Equity / Equity & Liabilities 44.8% 47.0%

Equity ($ million) 335.6 305.7

Net Debt / CAP 13.7% 17.7%

($ Million)


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RESULTS ON A QUARTERLY BASIS

Excluding one time items

2013 2014 Last 4 Quarters

Q1 Q2 Q3 Q4 Q1 Q2 Q3

Net Sales 227,255 234,368 257,199 255,897 238,074 249,152 267,237 1,010,360

EBIT before one time items 11,567 13,979 21,286 21,090 14,838 15,538 21,672 73,138

% 5.1% 6.0% 8.3% 8.2% 6.2% 6.2% 8.1% 7.2%

EBITDA 15,759 18,288 25,235 26,889 19,026 19,863 26,108 91,886

% 6.9% 7.8% 9.8% 10.5% 8.0% 8.0% 9.8% 9.1%

Net Income excluding one time items 6,656 8,833 14,248 14,517 9,330 9,772 13,961 47,580

Permanent Cash Flow 10,411 11,196 21,334 20,552 12,117 13,294 20,061 66,024

Changes in Working Capital (23,684) 6,806 (1,959) 1,584 (18,731) (3,075) (5,248) (25,470)

Operating Cash Flow (13,273) 18,002 19,375 22,136 (6,614) 10,219 14,813 40,554

($ Million)

WE EXCEED $1 BILLION SALES IN ThE YEAr ENDING SEPTEMBEr 30Th


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SALES ANALYSIS BY GEOGRAPHIC AREA

Q3 YTD

2014 % of sales 2013 % of

sales%

change 2014 % of sales 2013 % of

sales%

change

North America 150.1 56% 142.9 56% 5% 416.1 55% 408.5 57% 2%

Europe (excluding Germany)

41.9 16% 40.3 15% 4% 126.1 17% 118.1 16% 7%

Germany 42.6 16% 45.1 18% (5%) 118.2 15% 113.5 16% 4%

Israel 31.2 12% 26.9 10% 16% 88.3 12% 74.1 10% 19%

Others 1.4 - 2.0 1% - 5.8 1% 4.6

Total 267.2 100% 257.2 100% 4% 754.5 100% 718.8 100% 5%

($ Million)


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IMPROVED GROSS MARGIN% From SalesGrowing our branded business

YTD2013

YEAr2012

YEAr2011

YEAr2013

YTD2014

29.5%

30.9%

25.7%

23.7%

30.2%


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Q3 SALES AND EBIT BY SEGMENT

Sales EBIT

Q3 2014 Q3 2013 % Chg. Q3 2014 Q3 2013

Delta USA% from segment sales

116,680 103,493 13% 7,8416.7%

6,9606.7%

Global Upper Market% from segment sales

68,865 73,027 (6%) 4,9827.2%

7,769*10.6%

Schiesser % from segment sales

53,831 55,497 (3%) 8,03914.9%

7,12712.8%

Delta Israel% from segment sales

31,156 26,835 16% 1,2664.1%

5572.1%

Intersegment sales (3,295) (1,653)

Others (456) (1,127)

Total Sales and EBIT 267,237 257,199 4% 21,6728.1%

21,2868.3%

One-time items, net (182) (1,529)

Total reported EBIT 21,490 19,757

($ Million)


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YTD SALES AND EBIT BY SEGMENT($ Million)

Sales EBIT

YTD 2014 YTD 2013 % Chg. YTD 2014 YTD 2013

Delta USA% from segment sales 325,934 299,189 9% 19,692

6.0%19,3556.5%

Global Upper Market% from segment sales 202,732 212,080 (4%) 16,363

8.1%19,1889.0%

Schiesser % from segment sales 148,124 138,753 7% 12,741

8.6%9,1196.6%

Delta Israel% from segment sales 88,179 73,965 19% 3,123

3.5%2,4953.4%

Intersegment sales (10,506) (5,165)

Others 130 (3,325)

Total Sales and EBIT 754,463 718,822 5% 52,0496.9%

46,8326.5%

One time items, net (182) (1,529)

Total reported EBIT 51,867 45,303


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SEGMENTAL RESULTS ON A QUARTERLY BASIS

Excluding one time items

2013 2014Last 4 Quarters

Q3 Q4 Q1 Q2 Q3

EBIT SALES EBIT SALES EBIT SALES EBIT SALES EBIT SALES EBIT SALES

Delta USA 6,960 103,493 4,629 103,395 3,906 91,915 7,945 117,339 7,841 116,680 24,321 429,329

% from sales 6.7% 4.5% 4.3% 6.8% 6.7% 5.7%

Global Upper Market 7,769 73,027 5,516 62,496 5,738 70,258 5,643 63,609 4,982 68,865 21,879 265,228

% from sales 10.6% 8.8% 8.2% 8.9% 7.2% 8.2%

Schiesser 7,127 55,497 5,540 55,221 4,851 52,793 (149) 41,500 8,039 53,831 18,281 203,345

% from sales 12.8% 10.0% 9.2% (0.0%) 14.9% 9.0%

Delta Israel 557 26,835 5,951 37,252 (410) 26,150 2,267 30,873 1,266 31,156 9,074 125,431

% from sales 2.1% 16.0% (1.6%) 7.3% 4.1% 7.2%

Adjustments (1,127) (1,653) (546) (2,467) 753 (3,042) (168) (4,169) (456) (3,295) (417) (12,973)

Total EBIT/Sales 21,286 257,199 21,090 255,897 14,838 238,074 15,538 249,152 21,672 267,237 73,138 1,010,360

% from sales 8.3% 8.2% 6.2% 6.2% 8.1% 7.2%

($ Million)


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2014 UPDATED GUIDANCE

2011Actual

2012Actual

2013Actual

2014UpdatedGuidance

% Increase 2014 Updated Guidance

compared to 2013 Actual

2014PreviuosGuidance

% Increase 2014 Previous Guidance

compared to 2013 Actual

Sales 678.8 817.8 974.7 1,040-1,050 7%-8% 1,045-1,075 7%-10%

EBIT 39.7 50.7 67.9 77-79 13%-16% 77-83 13%-22%

EBITDA 51.5 64.8 86.2 95-97 10%-13% 95-101 10%-17%

Net Profit 27.6 33.8 44.3 50.0-51.0 13%-15% 50-55 13%-24%

Diluted EPS ($) 1.15 1.37 1.75 1.95-2.00 11%-14% 1.95-2.14 11%-22%

($ Million)Excluding one time items


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CAPITAL EXPENDITURES

Investing in our future growth ($ Million)

YTD2013

YTD20142012 2013

18.0

22.5

18.717.5

FIX – Acquisition of the Brand FIX

EGYPT– New dye house

Joint Ventures - investment of $5.0M in 3 new factories

Manufacturing 5.1

5.0

2.1

1.5

5.2

3.9

4.5

18.7

Capex

Others

Total

Israeli Market (Mainly in Retail Stores)

Schiesser (Mainly in Stores and Excluding manufacturing)

Other investments


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DIVERSIFIED PORTFOLIO

% FROM SALES (first 9 months of 2014)

Business Segments

Product Categories

Geographic Area

Branded / Private Label

Production*

Market Segment

DELTA USA

LADIES

NORTH AMERICA

PRIVATE LABEL

OUTSOURCING

UPPER MARKET MID TIER MASS MARKET

BRANDED

IN HOUSE

EUROPE ISRAEL

MENS SOCKS KIDS

43%

45%

56%

52%

70%

39% 30% 31%

48%

30%

32% 12%

24% 17% 14%

25% 20% 12%

GLOBAL UPPER MARKET

SCHIESSER DELTAISRAEL

*Based on internal estimation

Strengthening Our PLAtFOrM FOr COntinuing LOng-terM GROWTH


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OUR GOAL IN THE NEXT 5 YEARS IS TO BUILD ON DELTA GALIL’S POSITION IN THE GLOBAL APPAREL MARKET– SIGNIFICANTLY INCREASING OUR SALES AND DELIVERING THE BENEFITS OF PROFITABLE GROwTH TO OUR SHAREHOLDERS.

STRATEGIC INITIATIVES:

STREnGThEn OuR MAnAGEMEnT TEAM wITh wORLD-CLASS TALEnT

GROw ThE ACTIvEwEAR SEGMEnT

CREATE A MORE COnSOLIDATED, EFFICIEnT ORGAnIzATIOnAL STRuCTuRE

GROwTh ThROuGh ACquISITIOn


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ADDING wORLD-CLASS MANAGEMENT TALENTKEy ADDITIOnS TO MAnAGEMEnT, ALOnG wITh OuR ExISTInG STROnG TEAM, wILL PROvIDE LEADERShIP FOR CRITICAL FunCTIOnS ThAT wILL DRIvE GROwTh.

MAURICE REzNIK, PRESIDENT OF DGUSA, INCHARGE OF OUR US & UK INTIMATES BUSINESS, wILL jOIn On jAnuARy 2015 – FORMER CEO OF MAIDEnFORM BRAnDS

INBAR SCHwARTz, VP OF ACQUISITIONS & DEVELOPMENT –FORMER SvP AT TEnE InvESTMEnT, A LEADInG ISRAEL PRIvATE EquITy FIRM

HAIM NAVON, VP OF GLOBAL MANUFACTURING –PROMOTInG A SEASOnED DELTA GALIL MAnAGER TO OvERSEE MAnuFACTuRInG

IAN ROSS, DIRECTOR OF LEAN MANUFACTURING –FORMER DIRECTOR OF PROCESS AnD PRODuCTIOn EnGInEERInG AT MAST, hOnG KOnG


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GROwING THE ACTIVEwEAR BUSINESSACTIvEwEAR BuSInESS wILL BECOME +20% OF DELTA GALIL’S

BuSInESS, wITh SOLID MARGInS AnD OuTSTAnDInG GROwTh

POTEnTIAL.

wE ARE BuILDInG ThIS BuSInESS ACROSS MuLTIPLE FROnTS,

ThROuGh PRODuCT InnOvATIOn AnD ExPAnDED DISTRIBuTIOn.


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AVIA – EXpANdINg dISTRIBUTION By MOVINg pROdUcT LINES INTO WALMART


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CENTER FOLD BTS ROTO2013


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BTS 2014CENTERFOD


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FRONT PAGE - BTS ROTO 2014AVIA APPARELLAUNCH


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BTS 2014INSIDE FRONT LEFT COVER


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NATIONAL TV - 4 wEEKS AUGUST 2014


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ASICS – NEW AgREEMENT TO dESIgN, MANUFAcTURE ANd SELL IN U.S.


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NIKE – JOINT RESEARch cENTER FOR SEAMLESS INNOVATION IN pORTLANd, ANd INVESTINg MANUFAcTURINg FAcILITy IN VIETNAM


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LAUNCHING LACOSTE SPRING 2015


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DRIVINGORGANIzATIONALEFFICIENCYCOnSOLIDATInG OFFICES AnD DIvISIOnS wILL CREATE A MORE unIFIED,

COLLABORATIOn AnD AGILE ORGAnIzATIOn AnD wILL SPEED

DECISIOn-MAKInG.

U.S - RELOCATInG 3 SEPARATE LOCATIOnS In nyC TO A SInGLE FLOOR AT

2 PARK AvEnuE TO ACCOMMODATE GROwTh AnD PROMOTE EFFICIEnCy


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2009 2010 2011 2012 2013 2014

573620

679

818

975

1,040-1,050CAGR

12.8%

SALES

UpdatedGuidance

2009 2010 2011 2012 2013 2014UpdatedGuidance

16

33

40

51

68

77-79CAGR

37.3%

EBIT*

*Excluding one time items

CONSISTENT LONG TERM GROwTH($ Million)

Continue to Grow Organicallyand through Acquisitions

Continue to grow our Brandedand Retail Businesses

Growth in Activewear

Continue to grow Globally

Invest in Innovation

THANK YOU

Delta Galil Reports Strong Performance for Third Quarter of 2014

Economy & Finance

Transcript of Delta Galil Reports Strong Performance for Third Quarter of 2014