Delta Galil Industries Ltd. · TASE:DELG

Delta Galil Industries — Q3 2019 Earnings Presentation

25 slides from Delta Galil Industries's earnings presentation, November 2019

  1. Slide 1: Results Overview Q3 2019

    RESULTS OVERVIEW Q3 2019 N o v 2 0 1 9 1

  2. Slide 2: ‫האמור במצגת בכל הקשור לניתוח פעילותיה של החברה הינו תמצית בלבד‪ ,‬ועל מנת לקבל

    ‫האמור במצגת בכל הקשור לניתוח פעילותיה של החברה הינו תמצית בלבד‪ ,‬ועל מנת לקבל תמונה מלאה של פעילות החברה ושל הסיכונים עימם מתמודדת החברה‪ ,‬יש לעיין‬ ‫בדיווחיה השוטפים של החברה לרבות בדוח הרבעוני לתקופה שהסתיימה ביום ‪ 30‬ספטמבר ‪.2019‬‬ ‫בין היתר‪ ,‬העובדות והנתונים ששימשו בסיס למידע המפורט במצגת

  3. Slide 3: Q3 2019 Highlights

    CONCLUDED THE THIRD QUARTER WITH  SALES INCREASED 20% TO $446M, ORGANIC GROWTH 6% *  EBIT INCREASED 2% TO $27M, REPORTED UP 57% * NET INCOME DECREASED 13% TO $14.5M, REPORTED UP 46% Q3 2019  **  OPERATING CASH FLOW IMPROVED BY $10M Highlights   CAPEX IS BACK TO PLANNED YEARLY LEVEL OF $30M E-C

  4. Slide 4: Q3 2019 Highlights: Global Upper Market

    GLOBAL UPPER MARKET  Positive momentum continues with strong Q3 Sales +85%, organic growth 11% Q3 2019  EBIT up 148% Highlights  Bogart sales of $57M, factories are full until Q2/2020  Strong growth in our Socks and Seamless categories  Vietnam factory is full from 4th quarter and profitable in

  5. Slide 5: Q3 2019 Highlights: DGUSA

    DGUSA  Q3 Sales are up 5%, EBIT is down 25% Gross margin erosion due to price pressure from key mass retailer Q3 2019 Executing a Strategic & Operational Action Plan Highlights  Exiting basic business, with low contribution to profitability  Focusing on higher margin product categories such as Br

  6. Slide 6: DGUSA Growth Opportunities

    DGUSA Growth Opportunities  Exploring high-margin new licensing opportunities  Strengthening product assortment with Bogart’s lingerie capabilities  New management is working closely with key accounts on new categories  Growing with Kim Kardashian intimate brand SKIMS R E S U L T S O V E R V I E

  7. Slide 7: Q3 2019 Highlights: Delta European Brands

    DELTA EUROPEAN BRANDS  Sales growth of 3% in original currency, EBIT up 16% Q3 2019 Highlights R E S U L T S O V E R V I E W Q 3 2 0 1 9 7

  8. Slide 8: Q3 2019 Highlights: Delta Premium Brands

    DELTA PREMIUM BRANDS  SALES are up 2%  EBIT is ($3.6M) mainly due to • Increase in SG&A expense including: Q3 2019 • • Splendid Headquarter move to NY DGPB Finance team move to NJ Highlights  Continued down trend of wholesale channel in the US  7FAM and Splendid Spring bookings are up year over

  9. Slide 9: DGPB Growth Opportunities

    7 FOR ALL MANKIND  Expansion of diffusion brand “Jen7”  Capitalizing on trends in the market with the launch of men’s Tech fabric DGPB  Developing Ready To Wear  Celebrating 20th anniversary with new marketing campaign Growth  Reintroducing original 7 jeans in sustainable fabric Opportunities 

  10. Slide 10: Q3 2019 Highlights: Delta Israel

    DELTA ISRAEL  Q3 Sales up 6%, EBIT up 35%  Continuous strong growth in same store sales Q3 2019  E-com strong double digit growth Highlights R E S U L T S O V E R V I E W Q 3 2 0 1 9 10

  11. Slide 11: IFRS16 Impact

    WE APPLIED IFRS16 STARTING Q1/2019 ($ million) Q3.2019 YTD 2019 EXCLUDING EXCLUDING REPORTED REPORTED IFRS16 IFRS16 IFRS16 OPERATING PROFIT OPERATING PROFIT (Excluding one-time items) 24.6 25.0 26.7 27.1 45.7 49.0 51.5 54.7 IMPACT EBITDA FINANCIAL EXPENSES 35.7 7.8 51.5 10.1 76.9 19.1 119.5 25.4 NET

  12. Slide 12: Q3 2019 Results

    Q3 2019 ($ million) Results SALES Q3 2019 446.1 Q3 2018 370.8 % change vs last year 20% OPERATING PROFIT 26.7 17.0 57% Sales % from sales 6.0% 4.6% +20% Sales in original currency +21% Sales excluding Bogart +5% OPERATING PROFIT Excluding one-time items 27.1 26.7 2% Sales organic growth in original

  13. Slide 13: YTD 2019 Results

    YTD 2019 ($ million) % change Results SALES 2019 1,185.4 2018 1,044.2 vs last year 14% OPERATING PROFIT 51.5 42.3 22% % from sales 4.3% 4.1% Sales OPERATING PROFIT +14% Sales in original currency +15% Sales excluding Bogart & Eminence H1 +4% Excluding one-time items % from sales 54.7 4.6% 55.9 5.3%

  14. Slide 14: Q3 Sales and EBIT by Segment

    Q3 Sales and EBIT by Segment ($ thousands) SALES % change in EBIT original Q3 2019 Q3 2018 % change currency Q3 2019 Q3 2018 DELTA USA 113,871 108,704 5% 5% 6,623 8,836 % from sales 5.8% 8.1% GLOBAL UPPER MARKET 144,725 78,239 85% 85% 12,523 5,053 % from sales 8.7% 6.5% DELTA EUROPEAN BRANDS 81,621

  15. Slide 15: YTD Sales and EBIT by Segment

    YTD Sales and EBIT by Segment ($ thousands) SALES % change in EBIT original 2019 2018 % change currency 2019 2018 DELTA USA 332,978 330,302 1% 1% 12,552 20,387 % from sales 3.8% 6.2% GLOBAL UPPER MARKET 319,846 222,456 44% 44% 29,180 15,428 % from sales 9.1% 6.9% DELTA EUROPEAN BRANDS 222,382 186,27

  16. Slide 16: Sales Analysis by Geographic Area

    Sales Analysis by Geographic Area ($ thousands) Q3 YTD % change % change % of % of % in original % of % of % in original 2019 2018 2019 2018 sales sales change currency sales sales change currency U.S.A 220,446 49% 185,519 50% 19% 19% 609,531 51% 556,909 53% 9% 9% EUROPE (excluding Germany) 83,806 1

  17. Slide 17: Segmental Results on a Quarterly Basis

    Segmental Results on a Quarterly Basis Excluding one time items ($ thousands) 2018 2019 TRAILING TWELVE Q3 Q4 Q1 Q2 Q3 MONTHS EBIT SALES EBIT SALES EBIT SALES EBIT SALES EBIT SALES EBIT SALES DELTA USA 8,836 108,704 12,600 139,019 4,815 111,775 1,115 107,332 6,623 113,871 25,152 471,997 % from sales

  18. Slide 18: Capital Expenditures

    33.3 ($ million) Global upper market .…..…....…..….. 7.5 Capital 22.7 Delta European brands ….….…..…… 3.4 DGPB ...……………………….…......... 7.2 Expenditures Delta Israel ...………………….…….... 2.1 Others .….………………….…..…....... 2.5 BACK TO PLANNED YEARLY LEVEL OF $30M Total .........……….…………....….… 22.7 YTD YT

  19. Slide 19: Balance Sheet

    Balance Sheet Sep. 30 2019 % FROM TOTAL Sep. 30 2018 ($ million) % FROM TOTAL Increased following Bogart acquisition CASH AND CASH EQUIVALENTS 51.0 3% 61.9 5% and IFRS16 implementation OTHER CURRENT ASSETS 657.1 41% 580.0 48% TOTAL CURRENT ASSETS 708.1 44% 641.9 53% $51M Cash on hand NON CURRENT ASS

  20. Slide 20: Financial Indicators

    Financial Indicators 30.09.2019 30.09.2018 Current ratio 1.42 1.76 Quick ratio 0.61 0.78 Days of Sales Outstanding 43 46 Days Payable Outstanding 56 54 Inventory Days 124 141 Operating cash flow - Q3 ($ million) 11.2 (14.2) Operating cash flow - YTD ($ million) 42.8 (34.1) Operating cash flow - Last

  21. Slide 21: Diversified Portfolio

    7% 38% 14% 10% OTHER PRIVATE 12% SOCKS KIDS LABEL ISRAEL GEOGRAPHIC 51% BRANDED/ 26% PRODUCT USA CAREGORIES AREA PRIVATE LABEL MENS Diversified 50% LADIES 30% EUROPE 62% BRANDED Portfolio 12% DELTA 26% Enables Delta to mitigate the market changes 26% ISRAEL 28% MASS DUSA IN HOUSE % from sales (for Y

  22. Slide 22: Updated Guidance

    ($ million) % INCREASE 2019 GUIDANCE 2018 ACTUAL 2019 GUIDANCE 2019 COMPARED TO 2018 ACTUAL SALES 1,498 1,650 - 1,690 10% - 13% Updated EBIT EBITDA 98 130 98 - 102 132 - 136 0% - 4% 2% - 5% Guidance Excluding one time items NET INCOME DILUTED EPS ($) 60 2.37 60 - 62 2.37 - 2.44 0% - 3% 0% - 3% INCLU

  23. Slide 23: Future Growth

    Leveraging Bogart relationships to sell Delta products to major new customers Introducing Bogart products to Delta customers Future Growth in E-com channel expected to continue Growth Continuous growth in GUM in Seamless and Socks Expanding Eminence Ladies & kids products Leveraging infrastructure o

  24. Slide 24: Thank You

    THANK YOU DELTA GALI INDUSTRIES LTD

  25. Slide 25: Bogart Purchase Price Allocation

    €M BOGART WORKING CAPITAL 20.8 FIXED ASSETS 31.8 Purchase Price OVERDUE SUPPLIERS & PAYABLES (27.5) Allocation CUSTOMER RELATIONS GOODWILL 53.0 36.5 DEFERRED TAX LIABILITIES, NET (18.5) TOTAL ACQUIRED 105.9 R E S U L T S O V E R V I E W Q 3 2 0 1 9 25

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