Delta Galil Industries Ltd. is aiming to top $1 billion in sales this year and is depending on organic growth and licensing, rather than acquisition, to reach the milestone.


Reporting modest improvement in fourth-quarter profits and sales, the Tel Aviv-based company projected sales growth of 6 to 9 percent for 2014, lifting its revenues to a range of $1.04 billion to $1.07 billion. Exclusive of special items, earnings per diluted share are slated to grow 10 to 21 percent, to between $1.93 and $2.11.

“The seeds that we planted are bearing fruit,” said Isaac Dabah, chief executive officer of the company, which acquired German underwear maker Schiesser AG in 2012. “We’ve experienced growth in every category and region and with virtually every customer. We are certainly always looking for opportunities to grow, but there’s nothing on the table at the moment in the way of acquisition, and there are a number of opportunities that we’re pursuing with licensing.”

He said new licenses would need to be with brands offering opportunities for global distribution, and most likely in a category in which Delta Galil already has meaningful market share, such as intimates, underwear or performance activewear.

In addition to its acquisitions of Schiesser, Karen Neuburger and LittleMissMatched, all made during the second half of 2012, the company’s portfolio of licensed brands has expanded to include Lacoste, Tommy Hilfiger, Avia and Marc O’Polo. Dabah’s search for differentiated branded products has helped the company elevate its margins.

Last year, operating margin, excluding acquisition-related charges in 2012, grew to 7 percent of sales from 6.2 percent in 2012, and gross margin moved to 30.2 percent of sales from 25.7 percent in the prior 12 months.

The firm is well-positioned to move on acquisition opportunities should they present themselves. Its cash and cash equivalents more than doubled to $97.3 million at yearend, versus $45.5 million as 2012 concluded, and net debt declined to $63.3 million from $92.2 million over the course of the year.

In the three months ended Dec. 31, net income grew 4.7 percent to $14.5 million, or 57 cents a diluted share, from $13.8 million, or 55 cents, in the prior-year quarter. Revenues were up 3.8 percent to $255.9 million from $246.6 million, and gross margin expanded to 32.1 percent of sales from 28.8 percent.


Full-year net income declined 25.1 percent to $42.6 million, or $1.69 a diluted share, from $56.9 million, or $2.30, in 2012. Excluding special items that boosted 2012 earnings and diluted results last year, EPS grew to $1.75 from $1.37. Sales for the year were up 19.2 percent to $974.7 million, versus $827.8 million in 2012. Revenues last year included 12 months of Schiesser results versus less than six months of its 2012 sales.

Dabah said he generally had positive feelings about macroeconomic and political circumstances, with the situation in Egypt, where Delta has 4.5 percent of its production, stabilizing, and the likelihood that the economies of southern Europe have “bottomed out.”

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