Tefron's shareholders may obtain, free of charge, a printed copy of Tefron's complete audited financial statements for the year 2007 by sending a request to the Company's General Counsel, Michal Baumwald Oron (email: bomichal@tefron.com), or by calling 972-3-9230215.
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Tefron LTD. Reports Third Quarter 2005 Results
Sales rose 10.1% over
the third quarter of 2004 to $48.1 million for the quarter and 8.9% to $150.5
million for the nine month period.
Net income of $2.8
million for the quarter and $5.5 million for the nine month
period.
Significant margins growth:
gross margin up almost ten percentage points to 20.4%; operating margin
reached 10.3% versus an operating loss of 3.6% in the third quarter of
2004.
Strong EBITDA of $7.5
million for the quarter and $19.1 million for the nine month
period.
Diluted EPS reached $0.15
for the quarter versus $(0.17) in the third quarter of 2004.
Misgav, Israel, November 10, 2005
-- Tefron Ltd. (NYSE:TFR), one of the world’s leading producers of seamless
intimate apparel and active wear, today announced financial results for the
third quarter and nine months ended September 30, 2005.
Sales for the third quarter rose 10.1% to $48.1 million, compared to
sales of $43.7 million in the third quarter of 2004. Gross profit for the third
quarter was $9.8 million, compared to $4.6 million in the third quarter of 2004.
Operating income for the third quarter of 2005 increased to $4.9 million,
compared to an operating loss of $1.6 million in the third quarter of 2004. Net
income rose to $2.8 million, or $0.16 per basic share and $0.15 per diluted
share, for the third quarter of 2005, compared to a net loss of $2.9 millions,
or $(0.17) per basic and diluted share, in the third quarter of 2004. Operating
cash flow for the third quarter was $4.9 million, compared to $1.2 million for
the third quarter of 2004. EBITDA for the third quarter was $7.5 million,
compared to $2.7 million in the third quarter of 2004.
Results for the third quarter include a capital gain of approximately
$400,000, or $0.02 per diluted share, resulting from a settlement with the
insurance company regarding the recovery of losses from the February 2005 fire
at the Company’s sewing plant in Jordan. Excluding this capital gain, net income
for the third quarter was $2.5 million, or $0.13 per diluted share.
The Company reported sales of $150.5 million for the first nine months of
2005, up 8.9% compared to sales of $138.2 million for the same period last
year.Gross profit for the first
nine months was $26.5 million, compared to $19.5 million for the same period
last year.Operating income
increased 358.3% to $11.6 million for the first nine months of 2005, compared to
$2.5 million for the same period last year. Net income for the first nine months
was $5.5 million, or $0.31 per basic share and $0.30 per diluted share, compared
to a net loss of $2.7 million, or $(0.18) per basic and diluted share, for the
same period last year.Operating
cash flow for the first nine months was $16.8 million, up 153.0% compared to
operating cash flow of $6.7 million for the same period last year. EBITDA for
the first nine months was $19.1 million, up 64.7% compared to EBITDA of $11.6
million for the same period last year.
Sales by product
line:
Nine months ended
September 30, 2005
Nine months ended September 30,
2004
Three months endedSeptember 30, 2005
Three months ended September 30,
2004
USD
millions
% oftotal
USDmillions
% of
total
USD
millions
% of
total
USD
millions
% of
total
Intimate
Apparel
73.2
48.6
90.3
65.3
27.0
56.1
28.3
64.8
Active
wear
40.2
26.7
13.8
10.0
12.4
25.8
6.1
14.0
Swimwear
(*)
11.9
7.9
8.3
6.0
0.6
1.2
0.3
0.6
Health care
products
25.2
16.7
25.8
18.7
8.1
16.8
9.0
20.6
Total
150.5
100.0
138.2
100.0
48.1
100.0
43.7
100.0
(*) Seasonal
sales
Sales by segments:
Nine months ended
September 30, 2005
Nine months
ended
September 30,
2004
Three months ended September 30,
2005
Three months ended September 30,
2004
USD
millions
% of
total
USD
millions
% of
total
USD
millions
% of
total
USD
millions
% of
total
Seamless (HiTex)
81.5
54.2
62.1
44.9
28.7
59.7
20.5
46.9
Cut &
Sew
43.8
29.1
50.3
36.4
11.3
23.5
14.2
32.5
Health
25.2
16.7
25.8
18.7
8.1
16.8
9.0
20.6
Total
150.5
100.0
138.2
100.0
48.1
100.0
43.7
100.0
Mr. Yos Shiran, Chief Executive Officer, commented, “In the third quarter
we continued to successfully execute our strategic plan to grow overall
revenues, expand operating margins and capitalize on the significant growth
opportunity presented by the emerging Engineered For Performance ™ (EFP) concept
in the active wear market.
Our strong growth in margins was achieved through further improved
production efficiencies and by the increased contribution of higher margin
products. During the quarter we continued shifting our sewing capacity offshore
and now, in addition to our Cut & Sew offshore capacity which accounts for
approximately 90% of the overall Cut & Sew sewing production, our Hi Tex
offshore sewing capacity exceeds 50%. Of particular note, we experienced sharp
operational improvement in our Hi Tex division.
Mr. Shiran added, “We experienced very strong growth in our active wear
sales compared to last year, as we continued to benefit from our unique and
successful strategic cooperation with leaders in the performance active wear
industry. Demand is currently accelerating, as our customers’ aggressive
marketing power comes into effect, and we are focused on partnering with our
customers to utilize this opportunity to further introduce our EFP
concept.”
"Our seasonal
swimwear sales were lower in the third quarter in comparison to the first two
quarters of 2005 and therefore, as anticipated, our total sales were affected in
accordance. Swimwear sales are expected to ramp up in the forth quarter of this
year."
Mr.
Shiran concluded, “This quarter’s healthy growth brings us to a new level of
profitability and EBITDA which the company has not seen in recent years. Looking
forward, Tefron expects top and bottom line improvements in the fourth quarter
of 2005. For 2006, Tefron currently estimates sales growth rate to exceed 10%,
driven primarily by our rapidly growing active wear product line.”
The Company is considering exercise of its put option relating to Alba
Health, requiring Alba Health to purchase all of the Company’s ownership in Alba
Health. If the Company exercises the put option, it expects to receive net
proceeds of approximately $10 million and to record a loss of approximately $6.5
million, most of which is non-cash. After the exercise of the put option, the
Company will cease to consolidate the balance sheet of Alba Health, which
includes a net bank debt of $9.4 million, and its statements of
operations.
The Company also announced the appointment of Ishay Davidi as the new
chairman of the board of directors. Mr. Davidi replaces Arie Wolfson in
accordance with the terms of the agreement among the shareholders of the Tefron
Company. This appointment is in connection with the investment of FIMI and
Mivtach Shamir in the Company in February 2004. Mr. Davidi serves as CEO
and senior partner of FIMI.
Mr. Wolfson served as chairman of the board of directors since 2002 and
had previously served as chairman and president of the Company until 2000.
He has served as a director of the Company since the 1980’s and will continue to
serve in that capacity. Yos Shiran said: "I want to express my
appreciation to Arie for his service as chairman. The Company
experienced some difficult times, and Arie played an important role in returning
the company to growth and profitability. He was the driving force of the company
in the nineties where under his management the company developed the
technological capabilities that still serve the company today. I personally
enjoyed working with him and thank him for his continued support. I want to wish
the new chairman, Ishay Davidi, success in his new role and I have confidence that we will continue to work
together with the board of directors to build value for the company and its
shareholders"
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, Nike, The
Gap, Banana Republic, Target, Warnaco/Calvin Klein, Patagonia, Reebok and El Corte Englese, 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.The Company’s
Healthcare Division manufactures and sells a range of textile healthcare
products.
This
press release contains certain forward-looking statements with respect to the
Company’s business, financial condition and results of operations. 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, fluctuations in
product demand, economic conditions 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.
2006 Tefron All Rights Reserved