Delta Galil Industries Ltd. · TASE:DELG

Delta Galil Industries — Q2 2020 Earnings Presentation

26 slides from Delta Galil Industries's earnings presentation, August 2020

  1. Slide 1: Welcome to the Q2 2020 results conference call (Hebrew)

    ‫ברוכים הבאים‬ ‫לשיחת הועידה‬ ‫לסיכום תוצאות‬ ‫רבעון שני‬ ‫‪2020‬‬

  2. Slide 2: Results Overview Q2 2020

    RESULTS OVERVIEW Q2 2020 AUGUST 2020

  3. Slide 3: Disclaimer (Hebrew)

    ‫האמור במצגת בכל הקשור לניתוח פעילותיה של החברה הינו תמצית בלבד‪ .‬המצגת עשויה לכלול מידע המוצג באופן שונה מהאופן שבו הוצג בדיווחי החברה לציבור עד כה‪ ,‬כך‬ ‫שבמצגת עשויים להיכלל נתונים המוצגים באופן ו‪/‬או אפיון ו‪/‬או בעריכה ו‪/‬או בפילוח שונים מאלה שהוצגו בדו"חותיה‪ ,‬במצגות החברה או בדיווחיה בעב

  4. Slide 4: Q2 2020 Highlights 1/2

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 2020 Highlights 1/2 • Our second quarter results are better than expected • We expect to be back to profitability in 3rd Quarter • Our cash flow is strong and cash balance is $256M • Our inventory is down by $88M year ove

  5. Slide 5: Q2 2020 Highlights 2/2

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 2020 Highlights 2/2 • Sales decreased 27% to $270.9M, organic sales decreased 36% • EBIT* decreased by $33.4M to ($16.2M), reported down to ($55.4M) • Net Income* decreased by $30.9M to ($23.0M), reported including restru

  6. Slide 6: Restructuring Update

    RESTRUCTURING UPDATE

  7. Slide 7: Q2 Restructuring Plan

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 Restructuring Plan ($ million) 2020-2021 IN CASH NON CASH TOTAL PERFORMED TO DATE (CASH) MANUFACTURING 12.3 3.4 15.7 4.8 SG&A 23.3 0.2 23.5 3.1 TOTAL 35.6 3.6 39.2 * 7.9 We will see benefits of this plan starting Q3. ROI

  8. Slide 8: Restructuring - Manufacturing Efficiencies

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Restructuring- Manufacturing Efficiencies Moving to lower cost countries DIVISION # OF EMPLOYEES PLAN STATUS UPDATE • Strengthening our strategic production hubs in Vietnam, MOVING TO Egypt and Bangladesh BOGART 1,150 THAILA

  9. Slide 9: Q2 Update

    Q2 UPDATE

  10. Slide 10: Delta USA

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Delta USA • Material reduction in overhead: • Combined Men’s and Socks division • Combined Private Label active wear & intimates division • Growing our mass market business led by our strong leadership • Strong performance o

  11. Slide 11: DGPB

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 DGPB • Most challenging division due to department store sales channel. • High double digits growth in Ecom sales • Strong Splendid orders from clubs for Q4/2020 and Q1/2021 • Growth from Jen7 sub brand at lower price point

  12. Slide 12: DG European Brands

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 DG European Brands • EBIT at 3.0M$ (+33%) to LY, despite of reduced sales, due to mask sales and efficiency measures • Restructuring plan implementation will allow us to be more profitable in 2021 • July comp 41% increase in

  13. Slide 13: GUM

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 GUM • Socks business continues to trend well with significant growth expected in coming years. • Factories are full with orders until year end • Offsetting challenges with traditional department stores and mall customers by

  14. Slide 14: Delta Israel

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Delta Israel •Continue to increase market share •EBIT at 6.6M$, + 3.6M$ (+122%) despite of slight reduction in sales, due to store closure •Ecom sales strong triple-digit growth with high profitability. Continue investing in

  15. Slide 15: Q2 & YTD Financial Highlights

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 & YTD Financial Highlights $ millions Change vs Change vs Q2 2020 Q2 2019 YTD 2020 YTD 2019 last year last year TOTAL SALES 270.9 373.9 (102.9) 603.6 739.3 (135.6) OPERATING PROFIT (LOSS) (16.2) 17.2 (33.4) (32.1) 27.6 (5

  16. Slide 16: Q2 2020 vs. Estimation provided in Q1

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 2020 vs. Estimation provided in Q1 $ millions Q2/2020- Q2/2020 - $ CHANGE % CHANGE ACTUAL ESTIMATION REVENUES EXCLUDING COVID-19 IMPACT 417.8 388 - 408 9.8 - 29.8 2% - 8% COVID-19 IMPACT ON REVENUES (146.8) (140) - (150)

  17. Slide 17: Q2 2020 Results

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 2020 Results $ millions Change vs Q2 2020 Q2 2019 Change last year Sales SALES 270.9 373.9 (102.9) (27%) In original currency decreased (27%) Excluding Bogart decreased (36%) OPERATING PROFIT (LOSS) % from sales (55.4) -2

  18. Slide 18: YTD 2020 Results

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 YTD 2020 Results $ millions Q1 2020 Q2 2020 YTD 2020 YTD 2019 Change Change YTD SALES 332.7 270.9 603.6 739.3 (135.6) Sales (18%) In original currency down (18%) OPERATING PROFIT (LOSS) (28.8) (55.4) (84.1) 24.8 (108.9) % fr

  19. Slide 19: Consolidated DTC Revenue Trend vs LY

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Consolidated DTC Revenue Trend vs LY Delta Israel European Brands Premium Brands 40% 24% 0% 20% 11% 10% 60% 41% -20% Brick & Mortar 40% 0% 20% -20% -40% 0% -40% -20% -2% -60% -52% -60% -40% -66% -80% -80% -60% -100% -89% -10

  20. Slide 20: Q2 Sales and EBIT by Segment

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 Sales and EBIT by Segment $ millions SALES % change in EBIT Q2 2020 Q2 2019 % change original currency Q2 2020 Q2 2019 DELTA USA 59,296 107,332 (45%) (45%) (4,968) 1,115 % from sales (8%) 1% GLOBAL UPPER MARKET 92,457 95,

  21. Slide 21: Q2 Sales Analysis by Geographic Area

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Q2 Sales Analysis by Geographic Area ($ thousands) % change % of % of % 2020 2019 in original sales sales change currency U.S.A 123,711 46% 197,819 53% (37%) (37%) EUROPE (excluding Germany) 53,615 20% 70,124 19% (24%) (22%)

  22. Slide 22: Capital Expenditures

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Capital Expenditures 15.2 ($ million) 11.2 Global Upper Market 5.3 DGPB 2.0 Delta Israel 1.1 Delta USA 0.5 Delta European Brands 0.7 Others 1.6 H1 H1 Total 11.2 2019 2020

  23. Slide 23: Balance Sheet

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Balance Sheet $ millions % FROM % FROM Jun. 30 2020 Jun. 30 2019 TOTAL TOTAL CASH AND CASH EQUIVALENTS 255.6 16% 39.8 3% * INVENTORY 290.0 18% 350.1 25% $256M Cash on hand OTHER CURRENT ASSETS 189.7 12% 254.4 18% TOTAL CURRE

  24. Slide 24: Financial Indicators

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Financial Indicators 30.06.2020 30.06.2019 Current ratio 1.47 1.83 Quick ratio 0.89 0.84 Days of Sales Outstanding 50 45 Days Payable Outstanding 70 54 Inventory Days 136 131 Operating cash flow - Q2 ($ million) 80.9 34.5 Op

  25. Slide 25: Crisis Creates Opportunity for Significant Improvements

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Crisis Creates Opportunity for Significant Improvements • Migrating production to lower cost areas / countries thus improving future margins and reducing risk • Creating more lean / efficient organization while reducing over

  26. Slide 26: Our Mission

    D E L T A A N A L Y S T D E C K | R E S U L T S O V E R V I E W Q 2 2 0 2 0 Our Mission STRATEGICALLY POSITIONED TO DELIVER CONTINUOUS GROWTH & VALUE CREATION FOR OUR SHAREHOLDERS IN THE YEARS AHEAD

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