delta galil
leading in fabrics since 1975
7 November 2017

Sales Increased 15% to $340.3 Million; EBITDA Increased 9% to $31.3 Million;

Reaffirms 2017 Guidance

Sales Expected to Reach $1,330 Million-$1,370 Million and Full-Year EPS Expected to Reach $1.95-$2.02

2017 Third Quarter Highlights

> Sales increased 15% and totaled $340.3 million in the 2017 third quarter, compared to $296.6 million in the same quarter last year.

> Net income excluding one-time items increased 12% in the third quarter to $14.5 million, from $13.0 million in the comparable period in 2016.

> EBITDA rose 9% in the third quarter of 2017 and amounted to $31.3 million, compared to $28.7 million in the same quarter last year.

> Operating profit excluding one-time items increased 8% to $24.3 million in the third quarter, compared to $22.5 million in the third quarter of 2016.

> Operating cash flow for the last twelve months ended September 30, 2017 was $80.7 million, compared with $75.8 million for the same period last year.

> The Board of Directors declared a dividend of $3.5 million, or $0.139 per share, to be distributed on November 23, 2017. The determining and “ex-dividend” date will be November 15, 2017, per the Tel Aviv Stock Exchange.

> A strong balance sheet was highlighted by $436 million in equity and $97.3 million in cash as of September 30, 2017.

> Financial guidance for 2017 was reaffirmed: Full-year 2017 sales are expected to range between $1,330 million-$1,370 million, representing an increase of 13%-16% from 2016 actual sales of $1,179 million. Full-year 2017 diluted EPS is expected to range between $1.95-$2.02, representing an increase of 5%-9% from 2016 actual EPS of $1.85.

> Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with our third quarter results, which reflect our balanced and diversified mix of businesses, products and markets. Looking ahead, we will continue to grow organically, with a focus on our international and e-commerce businesses, while we will also continue to pursue the right strategic acquisition opportunities to drive sustained profitable growth and long-term shareholder value.”


Tel Aviv, November 7, 2017 – Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange, DELTY.PK/OTCQX), the global manufacturer and marketer of branded and private label apparel products for men, women and children, as well as leisurewear and activewear, today reported its financial results for the third quarter ended September 30, 2017.

Sales

The Company reported sales of $340.3 million for the third quarter of 2017, a 15% increase from $296.6 million for the third quarter of 2016. The sales increase reflected a full period of results from Delta Galil Premium Brands (DGPB), as well as strength in the Global Upper Market, Schiesser and Delta Israel, while sales of Delta USA were impacted by hurricanes. Excluding DGPB, sales increased by 2% compared to the third quarter of 2016. For the first nine months of 2017, sales rose 24% to $996.4 million, compared to $802.8 million in the first nine months of 2016. Excluding DGPB, sales for the nine-month period increased by 3% compared to the first nine months of 2016.

Operating Profit

Operating profit for the third quarter of 2017 was $24.2 million, compared to $24.6 million in the third quarter of 2016, representing a 2% decrease. Operating profit before one-time items for the third quarter increased 8% to $24.3 million, from $22.5 million for the comparable period last year. For the first nine months of 2017, operating profit before one-time items was $54.9 million, an 8% increase from $50.9 million a year earlier.  Operating profit in the first nine months was $52.1 million, down 2% from $53.0 million in the same period of 2016.

Net Income

Net income attributable to shareholders was $14.4 million in the third quarter of 2017, compared to $17.7 million in the same quarter of 2016, representing an 18% decrease. Net income excluding one-time items attributable to shareholders for the third quarter of 2017 increased 12% to $14.5 million, compared to $13.0 million in the same quarter last year. For the first nine months of 2017, net income attributable to shareholders was $28.8 million, compared to $33.3 million last year, representing a 13% decrease. Net income excluding one-time items attributable to shareholders for the first nine months of 2017 increased 7% to $30.6 million, compared to $28.6 million in the same period of 2016. The trend in net income attributable to shareholders largely reflected the growth in operating profit excluding one-time items partially offset by an increase in finance expenses.

Diluted Earnings Per Share

Diluted earnings per share attributed to shareholders were $0.56 for the 2017 third quarter, compared to $0.69 for the same quarter last year, representing a 19% decrease. Diluted earnings per share excluding one-time items attributed to shareholders in the third quarter of 2017 increased by 12% to $0.57, from $0.51 in the third quarter of 2016. Diluted earnings per share excluding one-time items attributed to shareholders in the first nine months of 2017 increased by 7% to $1.20, from $1.12 in the same period of 2016. For the first nine months of 2017, diluted earnings were $1.13, compared to $1.30 per diluted share for the same period of 2016, representing a 13% decrease.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with our third quarter results, which reflect our balanced and diversified mix of businesses, products and markets. We delivered a strong quarter in our global upper market, Schiesser and recently acquired, Delta Galil Premium Brands, segments.

“During the quarter, we did see softer sales in the US resulting from the hurricane’s impact and port closures, as well as big launches of club programs which were not anniversaried from last year. However, we remained focused on centralizing and consolidating several manufacturing capabilities and store locations to promote greater efficiency, teamwork and more agile decision-making. And we expect to begin benefiting from these efforts, as well as expansion into Asian and Latin American markets, and initiatives to enhance the performance of Delta Galil Premium Brands beginning in 2018 and beyond.”

“Looking ahead, we will continue to grow organically, with a focus on our international and e-commerce businesses, while we will also continue to pursue the right strategic acquisition opportunities. We currently have a strong balance sheet, and we remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA increased 9% compared to Q3 of 2016 and was $31.3 million. For the first nine months of 2017, EBITDA increased 12% compared to the same period of last year and was $75.9 million.

Operating cash flow for the trailing 12 months ended September 30, 2017 was $80.7 million, compared to $75.8 million for the trailing 12 months ended September 30, 2016.

Net financial debt as of September 30, 2017 decreased to $164.8 million, compared to $223.8 million as of September 30, 2016, and $181.2 million as of December 31, 2016.

Equity on September 30, 2017 was $436.0 million, up from $382.0 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on November 23, 2017. The determining and “ex-dividend” date will be November 15, 2017, per the Tel Aviv Stock Exchange.

2017 Financial Guidance

> Delta Galil reaffirmed its 2017 financial guidance, excluding non-recurring items which is based on current market conditions and current exchange rate of $1.17 per euro and 3.50 NIS per US$.

> Full-year 2017 sales are expected to range between $1,330 million-$1,370 million, representing an increase of 13%-16% from 2016 actual sales of $1,179 million.

> Full-year 2017 EBIT is expected to range between $86 million-$91 million, representing an increase of 3%-9% from 2016 actual EBIT of $83.2 million.

> Full-year 2017 EBITDA is expected to range between $113.0 million-$118.0 million, representing an increase of 6%-10% from 2016 actual EBITDA of $107.0 million.

> Full-year 2017 net income is expected to range between $50.0 million-$52.0 million, representing an increase of 6%-10% from 2016 actual net income of $47.2 million.

> Full-year 2017 diluted EPS is expected to range between $1.95-$2.02, representing an increase of 5%-9% from 2016 actual EPS of $1.85.