Delta Galil on Wednesday reported its first quarter results that met the company’s plan. Sales increased 23% to $315.7 million from $256.7 million, driven by the addition of DG Premium Brands, but net income decreased 29% to $5.6 million from $7.9 million. Net income excluding one-time items fell 8% to $7.2 million.
“During the quarter, we made meaningful changes in our company that will improve our efficiency and production capacity,” said CEO Isaac Dabah. “We started to run our Vietnamese factory with 750 new employees, and are on track to have our first orders shipped in April 2017. We expect the facility to reach full operational status in 2018.”
Also in the first quarter, Delta Galil entered a new license agreement with Calvin Klein to produce and distribute boys and girls innerwear, sleepwear and socks, and the company saw the departure of Paula Schneider, who previously served as CEO of DG Premium Brands. Her departure came seven months after joining the company from American Apparel.
“[The deal with Calvin Klein] represented an important step in our ongoing strategy of enhancing our branded portfolio and broadening our presence in the premium sector,” said Dabah.
The CEO also said the company is focused on “growing our global business segment, while attaining strong EBITDA growth in 2017 and beyond.”
EBITDA in the quarter was $19.1 million, or 6% of net sales, compared to $20.2 million, or 7.9% of net sales in the prior year.
Net financial debt was $205.2 million, compared to $112.4 million in the previous first quarter, and $181.2 million as of December 31, 2016. In addition, operating cash flow was negative $13.1 million, compared to negative $23.6 million in the prior year. Operating cash flow for the twelve months ending on March 31, 2017 increased 30% to $87 million compared to $67 million for the prior year’s comparable period.
Following the first quarter results, Delta Galil reaffirmed its 2017 financial guidance, and continues to expect full year sales to range from $1,330 million to $1,370 million, net income to range from $50 million to $52 million, EBITDA to range from $113 million to $118 million, and diluted earnings per share to range from $1.95 to $2.02.