MISGAV, Israel, November 23, 2011 /PRNewswire/ --
Tefron Ltd. (OTC:TFRFF; TASE:TFRN), a leading producer of seamless intimate apparel and engineered-for-performance (EFPTM) active wear, today announced financial results for the third quarter of 2011.
Commenting on the results, Amit Meridor, Tefron's CEO, said: "I am pleased to report a significant increase in the strength of sales at Tefron in the third quarter. We saw very good strength in sales in the intimate apparel and active wear however, of particularly note was the steep 75% rise in sales in "seamless" apparel in the third quarter where we have reestablished ourselves as global leaders in the sector. We also achieved significant results in bringing in new Mass-Market customers for the retail sector in North America. We are continuing to invest significantly in developing technologies. During the third quarter we deepened development of four groundbreaking new technologies, which will serve as a basis for continued growth of the company in the coming years."
Commenting on the sales growth, Arnon Tiberg, Tefron's Chairman, said, "Success in significantly increasing the number of new customers for Tefron worldwide, catapulted our sales volume in the third quarter over the equivalent period last year. In addition to the rise in Mass Market sales in the North American market, we have had a strong growth in sales supplied from the Far East. Among the many factors contributing to the important broadening of our customer base are the improvements over the past year in the structure of our global sales operation, the introduction this year of new products in active wear and intimate apparel, and the development of new sales channels, including Home Shop Networking on TV channels and websites on the Internet."
Financial highlights for the nine month period ended September 30, 2011
• Gross profit increased by $9.1 million to $13.8 million (15.9% of sales) in the first nine months of 2011 versos $4.7 million (6.9% of sales) in the first nine months of 2010.
• EBITDA grew $3.4 million to a positive EBITDA of $1.7 million in the nine months of 2010 versos a negative EBITDA of $1.7 million in the nine months of 2010.
• Operating loss was reduced by 58.2% to $3.7 million in the first nine months of 2010 from $8.9 million in the first 9 months of 2011.
Nine-month period ended September 30 2011
Sales in the first nine-months of 2011 totaled $86.9 million, an increase of 26.5% compared with $68.7 million during the same period last year. Sales in the "seamless" sector jumped 78% compared to the same period last year. The nine-month sales reflect an annual sales rate of more than $115 million, compared to total sales of $86 million in 2010.
Gross profit for first nine-months of 2011 totaled $13.8 million (15.9% of sales) compared with gross profit amounting to $4.7 million (6.9% of sales) in the same period last year. The significant improvement in gross profit and gross profit margin in the first nine-months of 2011 was attributed to the strong increase in sales and the success of the turnaround plan in reducing the cost of sales.
Operating loss for the first nine-months of 2011 declined by 58.2% and totaled $3.7 million, compared to an operating loss of $8.9 million in the same period last year. The strong decline in the operating loss was attributed to the achieved results of the turnaround plan and the increase in sales, as well as a significant decrease in depreciation expenses.
EBITDA during the first nine months of 2011 rose by $3.4 million dollars turning a negative $1.7 million EBITDA for the first nine-months of 2010 into a positive EBITDA of $1.7 million for the first nine months of 2011. The improvement in EBITDA is also a result of the improvement in sales and the successful implementation of the turnaround plan which directly contributed to greater efficiencies and less wastage in production, a resulting shortening of the manufacturing process and a fall in manufacturing costs, as well as reduced the lead time to customers. This improvement was achieved despite the increase in cost of part of the raw materials used by the company.
Cash flow - In the first nine months, Tefron had cash used for operating activities of $7.1 million, in the first nine-months of 2011 compared to cash flow used for operating activities of $3.4 million in the same period last year. The increase in cash flow used in operating activities is primarily a result of the investment in working capital, mainly increased customers and inventory, in order to finance the increased activity of the company.
Net loss in the first nine-months of 2011 was reduced to $4.6 million, compared with a net loss of $8.3 million during the same period last year.
Third quarter results 2011
Sales in the third quarter of 2011 totaled $30.1 million, a 67.4% increase compared with sales of $18.0 million in the third quarter of 2010. Most notably, the company recorded an increase of 75% in sales of "seamless" apparel, compared with same quarter last year. Most of the increase in sales was attributed to higher sales in the intimate apparel and active wear product lines.
Gross profit for the third quarter of 2011 totaled $4.6 million (15.2% of sales), compared to gross profit of $0.6 million (3.6% of sales) in the third quarter of 2010.
Third quarter operating loss for 2011 declined by 82% and totaled $0.5 million, compared to an operating loss of $3.1 million in the same period last year.
EBITDA for the third quarter improved by $1.5 million to $883 thousand, compared with negative EBITDA of $589 thousand dollars for the same period last year.
In the third quarter of 2011, Tefron recorded positive cash flow derived from operating activities of $2.1 million, compared to $0.8 million in the same period last year. The significant improvement in cash flow in the third quarter of 2011 was mainly due to the reduction in losses.
The third quarter net loss for 2011 amounted to $0.5 million, compared with a net loss of $3.1 million in the equivalent quarter of 2010.
Tefron manufactures boutique-quality everyday seamless intimate apparel, active wear and swim wear sold throughout the world by such name-brand marketers as Victoria's Secret, Warnaco/Calvin Klein, Wal-Mart Stores Inc, The Gap, Hanes Brands Industries, J. C. Penney, TJMaxx, Patagonia, Reebok, and TMGTV, as well as other well known retailers and designer labels. The company's product line includes knitted briefs, bras, tank tops, boxers, leggings, crop, T-shirts, nightwear, bodysuits, swim wear, beach wear and active-wear.
This press release contains certain forward-looking statements, within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, with respect to the Company's business, financial condition and results of operations. We have based these forward-looking statements on our current expectations and projections about future events.
Words such as "believe," "anticipate," "expect," "intend," "will," "plan," "could," "may," "project," "goal," "target," and similar expressions often identify forward-looking statements but are not the only way we identify these statements. Except for statements of historical fact contained herein, the matters set forth in this press release regarding our future performance, plans to increase revenues or margins and any statements regarding other future events or future prospects are forward-looking statements.
These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements, including, but not limited to:
• the effect of the worldwide recession on our sales to our customers in the United States and in Europe and on our ability to finance our operations;
• our customers' continued purchase of our products in the same volumes or on the same terms;
• the cyclical nature of the clothing retail industry and the ongoing changes in fashion preferences;
• the competitive nature of the markets in which we operate, including the ability of our competitors to enter into and compete in the seamless market in which we operate;
• the potential adverse effect on our business resulting from our international operations, including increased custom duties and import quotas (e.g. in China, where we manufacture for our swimwear division).
• fluctuations in inflation and currency rates;
• the potential adverse effect on our future operating efficiency resulting from our expansion into new product lines with more complicated products, different raw materials and changes in market trends;
• the purchase of new equipment that may be necessary as a result of our expansion into new product lines;
• our dependence on our suppliers for our machinery and the maintenance of our machinery;
• fluctuations in the costs of raw materials;
• our dependence on subcontractors in connection with our manufacturing process;
• our failure to generate sufficient cash from our operations to pay our debt;
• political, economic, social, climatic risks, associated with international business and relating to operations in Israel;
as well as certain other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Consolidated balance sheets
As of As of September 30, December 31, 2011 2010 2010 Unaudited Audited Dollars thousands Current assets Cash 5,652 1,948 9,361 Investment in securities available for sale 686 700 731 Trade receivables 13,671 9,430 9,339 Other receivables 2,072 2,080 1,878 Inventory 17,475 15,625 16,664 39,556 29,783 37,973 Non current assets held for sale 5,226 176 2,088 44,782 29,959 40,061 Non current assets Deferred taxes, net 1,149 1,488 972 Property, plant and equipment, net 32,072 50,997 38,936 Software 191 (*) 243 (*) 280 Goodwill, backlog and other intangible assets 1,778 (*) 417 (*) 2,503 35,190 53,145 42,691 $ 79,972 $ 83,104 $ 82,752 * Reclassified
As of As of September 30, December 31, 2011 2010 2010 Unaudited Audited Dollars thousands Current liabilities Credit from banks 7,197 25,260 6,194 Trade payables 13,615 8,981 11,864 Other payables 4,695 3,454 8,450 25,507 37,695 26,508 Non current liabilities Long-term bank loans 22,094 - 19,818 Employees benefits, net 445 486 516 Long-term institutions payable - 1,473 - Deferred taxes, net - 635 - 22,539 2,594 20,334 Equity attributable to the equity holders of the Company Share capital 19,818 10,351 19,818 Additional paid-in capital 107,948 108,942 107,204 Accumulated deficit (88,486) (69,138) (83,803) Treasury shares (7,408) (7,408) (7,408) Capital reserve for financial assets available for sale (57) (122) (91) Capital reserve for hedging transactions (79) - - Capital reserve for transactions with a controlling shareholder 190 190 190 Total capital 31,926 42,815 35,910 $ 79,972 $ 83,104 $ 82,752
For the nine For the three Year months ended months ended ended December September 30, September 30, 31 2011 2010 2011 2010 2010 Unaudited Audited In dollars thousands Sales $86,885 $68,709 $30,119 $17,990 $ 86,044 Cost of sales, net* 73,088 (*)63,981 25,541 (*)17,341 (*)83,990 Gross profit 13,797 4,728 4,578 649 2,054 Development expenses, net (*) 2,782 (*)1,946 731 (*)427 (*)2,869 Selling and marketing expenses 12,154 9,123 3,636 2,527 11,850 General and administrative expenses 2,583 2,440 756 642 4,050 Other expenses - 133 - 133 6,091 Operating loss (3,722) (8,914) (545) (3,080) (20,806) Financial income 498 271 484 7 30 Financial expenses (1,523) (2,048) (557) (876) (2,379) Financial expenses, net (1,025) (1,777) (73) (869) (2,349) Loss before taxes on income (4,747) (10,691) (618) (3,949) (25,155) Tax benefit 18 2,365 89 87 2,469 Loss $(4,558) $(8,326) $(529) $(3,077) $(22,686) Loss per share attribute to the Company's shareholders (in dollars) Basic and diluted loss per share $(0.7) $(2.9) $(0.1) $(1.0) $(7.7) EBITDA $ 1,658 $(1,743) $883 $(589) $(6,630)
Chief Financial Officer
SOURCE Tefron Ltd