Delta Galil Reports Strong Performance for Third Quarter of 2014
Net Income Rises 9% from Year-Ago Period
Sales and EBITDA Increase 4%, Setting New Quarterly Records
Trailing 12 Months’ Sales Exceed $1 Billion
Outlines Strategies for Long-Term Growth
2. RESULTS OVERVIEW | Q2 2014
2
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
אינו מהווה עובדה מוכחת והוא מבוסס רק על הערכה סובייקטיבית של החברה. העובדות והנתונים העיקריים ששימשו
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 .
3. RESULTS OVERVIEW | Q3 2014
3
Q3 SALES, NET PROFIT & EPS
20th Consecutive Quarters of Organic Sales Growth
4%
2%
4%
9%
14.8
Sales UP 4% to $267.2M
Operating Income
Increased 2% to $21.3M
comp. to $21.7M
EBITDA UP 4% to $26.1M
NET INCOME UP 9% to
$13.8M
$14.8M Operating cash flow
Q3 2014 Q3 2013 % Change
vs LY
Sales 267.2 257.2 4%
Operating Profit % from sales
excluding one-time items
21.7
8.1%
21.3
8.3% 2%
EBITDA % from sales 26.1
9.8%
25.2
9.8% 4%
Net income attributed to
company's shareholders
13.8
5.2%
12.6
4.9% 9%
Net income attributed to
company's shareholders
excluding one-time item
13.9
5.2%
14.2
3.8%
(2%)
Diluted EPS ($ 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)
4. RESULTS OVERVIEW | Q3 2014
YTD 2014 YTD 2013 % Change
4
vs LY
YTD 2014 SALES, NET PROFIT & EPS
Sales 754.5 718.8 5%
Operating Profit % from sales
excluding one-time items
52.0
6.9%
46.8
6.5% 11%
EBITDA
% from sales
65.0
8.6%
59.3
8.2% 10%
Net income attributed to
company's shareholders
excluding one time items
32.4
4.3%
29.6
4.1% 9%
Diluted EPS $ per share
excluding 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%
$18.4M Operating cash flow
($ Million)
5. RESULTS OVERVIEW | Q3 2014
($ Million)
5
STRONG BALANCE SHEET
$336M
13.7%
44.8%
$148M
Increase in Equity
to $336M
Net Debt/CAP Ratio down
to 13.7% from 17.7% LY
Equity from total
balance sheet ratio
Record cash on hand
Sep. 30
2014
%
from total
Sep. 30
2013
%
from total
Cash and cash equivalents 147.7 20% 85.5 13%
Restricted cash 0.2 0% 1.4 0%
Trade receivables 114.4 15% 114.0 18%
Inventories 201.8 27% 175.4 27%
Assets held for sale 1.0 0% 1.0 0%
Others 20.3 3% 27.6 4%
Total current assets 485.4 65% 404.9 62%
Fixed assets,net of
accumulated depreciation 98.2 13% 97.9 15%
Intangible assets, net of
accumulated depreciation
164.8 22% 148.4 23%
and other long term assets
Total Assets 748.4 100% 651.2 100%
Short-term bank loans 0.8 0% 40.5 6%
Current maturities of Debentures 24.4 3% 18.0 3%
Trade payables and others 151.2 21% 141.4 22%
Total current liabilities 176.4 24% 199.9 31%
Debentures 205.4 28% 120.8 18%
Others non-current liabilities 32.0 4% 24.8 4%
Total long term liabilities 236.4 31% 145.6 22%
Equity 335.6 45% 305.7 47%
Total Liabilities and equity 748.4 100% 651.2 100%
6. RESULTS OVERVIEW | Q3 2014
6
IMPROVED FINANCIAL INDICATORS
30.09.2014 30.09.2013
Current ratio 2.75 2.02
Quick ratio 1.61 1.15
Days of Sales Outstanding 39 40
Days Payable Outstanding 44 41
Inventory Days 98 88
Operating cash flow - Q3 ($ 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)
7. RESULTS OVERVIEW | Q3 2014
($ Million)
We EXCEED $1 billion sales in the year ending SEPTEMBER 30th
7
RESULTS ON A QUARTERLY BASIS
Excluding one time items
2013 2014 Last 4
Quarters
Q1 Q2 Q3 Q4 Q1 Q2 Q3
Net Sales 227,255 234,368 257,199 255,897 238,074 249,152 267,237 1,010,360
EBIT before one time items 11,567 13,979 21,286 21,090 14,838 15,538 21,672 73,138
% 5.1% 6.0% 8.3% 8.2% 6.2% 6.2% 8.1% 7.2%
EBITDA 15,759 18,288 25,235 26,889 19,026 19,863 26,108 91,886
% 6.9% 7.8% 9.8% 10.5% 8.0% 8.0% 9.8% 9.1%
Net Income excluding one
time items 6,656 8,833 14,248 14,517 9,330 9,772 13,961 47,580
Permanent Cash Flow 10,411 11,196 21,334 20,552 12,117 13,294 20,061 66,024
Changes in Working Capital (23,684) 6,806 (1,959) 1,584 (18,731) (3,075) (5,248) (25,470)
Operating Cash Flow (13,273) 18,002 19,375 22,136 (6,614) 10,219 14,813 40,554
8. RESULTS OVERVIEW | Q3 2014
($ Million)
8
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
41.9 16% 40.3 15% 4% 126.1 17% 118.1 16% 7%
(excluding Germany)
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%
9. RESULTS OVERVIEW | Q3 2014
IMPROVED GROSS MARGIN
Growing our branded business % From Sales
9
YTD
2013
YEAR
2012
YEAR
2011
YEAR
2013
YTD
2014
29.5%
30.9%
25.7%
23.7%
30.2%
10. RESULTS OVERVIEW | Q3 2014
($ Million)
10
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% 7,841
6.7%
6,960
6.7%
Global Upper Market
% from segment sales
68,865 73,027 (6%) 4,982
7.2%
7,769*
10.6%
Schiesser
% from segment sales
53,831 55,497 (3%) 8,039
14.9%
7,127
12.8%
Delta Israel
% from segment sales
31,156 26,835 16% 1,266
4.1%
557
2.1%
Intersegment sales (3,295) (1,653)
Others (456) (1,127)
Total Sales and EBIT 267,237 257,199 4% 21,672
8.1%
21,286
8.3%
One-time items, net (182) (1,529)
Total reported EBIT 21,490 19,757
11. RESULTS OVERVIEW | Q3 2014
11
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%
19,355
6.5%
Global Upper Market
% from segment sales 202,732 212,080 (4%) 16,363
8.1%
19,188
9.0%
Schiesser
% from segment sales 148,124 138,753 7% 12,741
8.6%
9,119
6.6%
Delta Israel
% from segment sales 88,179 73,965 19% 3,123
3.5%
2,495
3.4%
Intersegment sales (10,506) (5,165)
Others 130 (3,325)
Total Sales and EBIT 754,463 718,822 5% 52,049
6.9%
46,832
6.5%
One time items, net (182) (1,529)
Total reported EBIT 51,867 45,303
13. RESULTS OVERVIEW | Q3 2014
Excluding one time items ($ Million)
13
2014 UPDATED GUIDANCE
2011
Actual
2012
Actual
2013
Actual
2014
Updated
Guidance
% Increase 2014
Updated Guidance
compared to
2013 Actual
2014
Previuos
Guidance
% 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 ($) 1.15 1.37 1.75 1.95-2.00 11%-14% 1.95-2.14 11%-22%
14. RESULTS OVERVIEW | Q3 2014
CAPITAL EXPENDITURES
Investing in our future growth ($ Million)
14
17.5
YTD
2013
18.7
YTD
18.0
22.5
2012 2013 2014
Other investments
Joint Ventures - investment of
$5.0M in 3 new factories
EGYPT– New dye house
FIX – Acquisition of the Brand FIX
5.0
1.5
2.1
Manufacturing 5.1
5.2
3.9
4.5
18.7
Capex
Schiesser (Mainly in Stores and Excluding
manufacturing)
Israeli Market (Mainly in Retail Stores)
Others
Total
15. RESULTS OVERVIEW | Q3 2014
15
DIVERSIFIED PORTFOLIO
% FROM SALES (first 9 months of 2014)
Business Segments
DELTA USA
Product Categories
LADIES
Geographic Area
NORTH AMERICA
Branded / Private Label
BRANDED
Market Segment
25% 20% 12%
MENS SOCKS KIDS
24% 17% 14%
EUROPE ISRAEL
32% 12%
UPPER MARKET MID TIER MASS MARKET
39% 30% 31%
Production*
PRIVATE LABEL
OUTSOURCING
IN HOUSE
43%
45%
56%
52%
70%
48%
30%
GLOBAL UPPER
MARKET
SCHIESSER DELTA
ISRAEL
*Based on internal estimation
17. RESULTS OVERVIEW | Q3 2014
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.
17
Strategic Initiatives:
Strengthen our management team with world-class talent
Grow the activewear segment
Create a more consolidated, efficient organizational structure
growth through acquisition
18. RESULTS OVERVIEW | Q3 2014
18
ADDING WORLD-CLASS
MANAGEMENT TALENT
Key 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
19. RESULTS OVERVIEW | Q3 2014
19
GROWING
THE ACTIVEWEAR
BUSINESS
Activewear 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.
20. RESULTS OVERVIEW | Q3 2014
Avia – Expanding distribution
by moving product lines into Walmart
20
30. RESULTS OVERVIEW | Q3 2014
30
DRIVING
ORGANIZATIONAL
EFFICIENCY
CONSOLIDATING 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
31. RESULTS OVERVIEW | Q2 2014
CONSISTENT LONG TERM GROWTH
31
SALES
573
CAGR 1,050
12.8%
620
679
818
975
1,040-
2009 2010 2011 2012 2013 2014
Updated
Guidance
2009 2010 2011 2012 2013 2014
Updated
Guidance
16
33
40
51
68
77-
CAGR 79
37.3%
EBIT*
*Excluding one time items
($ Million)
Continue to Grow Organically
and through Acquisitions
Continue to grow our Branded
and Retail Businesses
Growth in Activewear
Continue to grow Globally
Invest in Innovation