delta galil
leading in fabrics since 1975
8 August 2017

Sales Increased 36% to $340.5 Million

Operating Profit Increased 31% to $17.7 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 Second Quarter Highlights

> Sales increased 36% and totaled $340.5 million in the 2017 second quarter, compared to $249.5 million in the same quarter last year.

> Operating profit increased 31% to $17.7 million in the second quarter, compared to $13.5 million in the second quarter of 2016.

> EBITDA rose 35% in the second quarter of 2017 and amounted to $25.5 million, compared to $18.9 million in the same quarter last year.

> Net income in the second quarter of 2017 was $8.9 million, a 14% increase from $7.8 million in the comparable period last year.

> Operating cash flow for the last twelve months ended June 30, 2017 was $76.4 million, compared with $69.2 million for the same period last year.

> The Board of Directors declared a dividend of $4.25 million, or $0.167 per share, to be distributed on August 29, 2017. The determining and “ex-dividend” date will be August 16, 2017, per the Tel Aviv Stock Exchange.

> A strong balance sheet post-acquisition, was highlighted by $417.8 million in equity and $100.7 million in cash as of June 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: “Delta Galil delivered an exceptionally strong performance in the second quarter, reflecting double-digit growth on the top- and bottom-line. Our results were driven by well-defined strategies to build our premium and branded business, expand our market reach, extend our manufacturing resources, and be an ever increasing source of innovative, high quality, differentiated products for our customers and consumers worldwide.”


Tel Aviv, August 8, 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 second quarter ended June 30, 2017.

Sales

The Company reported sales of $340.5 million for the second quarter of 2017, a 36% increase from $249.5 million for the second quarter of 2016. Excluding Delta Galil Premium Brands (DGPB), sales increased by 9% compared to the second quarter of 2016. Sales for the first six months of 2017 were $656.1 million, up 30% from $506.2 million in the same six-month period of 2016. Excluding DGPB, sales increased by 3% compared to the first six months of 2016.

Operating Profit

Operating profit for the second quarter of 2017 was $17.7 million, a 31% increase from $13.5 million in the second quarter of 2016. For the first six months of 2017, operating profit before one-time items was $30.6 million, an 8% increase from $28.4 million a year earlier.
Operating profit in the first six months was $27.9 million, down 2% from $28.4 million in the same period of 2016. The decline was driven preliminary by restructuring expenses included in the first quarter for the DGPB segment.

Net Income

Net income attributable to shareholders was $8.9 million in the second quarter of 2017, compared to $7.8 million in the same quarter of 2016, representing a 14% increase. For the first six months of 2017, net income attributable to shareholders was $14.5 million, compared to $15.7 million last year, representing an 8% decrease.  Net income excluding one-time items attributable to shareholders for the first six months of 2017 increased 3% to $16.1 million, compared to $15.6 million in the same period of 2016.

Diluted Earnings Per Share

Diluted earnings per share attributed to shareholders increased 15% and amounted to $0.35 for the 2017 second quarter, compared to $0.30 for the same quarter last year. For the first six months of 2017, diluted earnings were $0.57, compared to $0.61 per diluted share for the same period of 2016, representing a 7% decrease. Diluted earnings per share excluding one-time items attributed to shareholders in the first six months of 2017 increased by 4% to $0.63, from $0.61 in the same period of 2016.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “Delta Galil delivered an exceptionally strong performance in the second quarter, reflecting double-digit growth on the top- and bottom-line. Our results were driven by well-defined strategies to build our premium and branded business, expand our market reach, extend our manufacturing resources, and be an ever increasing source of innovative, high quality, differentiated products for our customers and consumers worldwide.”

“During the quarter, we saw significant growth in Delta Galil USA, mainly kids and activewear categories and in the global upper market. Importantly, the gross margin in Delta Galil USA increased across all business units. Delta Premium Brands, our recent acquisition, continued to exceed the plan.”

“Throughout the quarter we continued to invest in growing our production capacity, and are currently running our Vietnamese factory with 850 employees. We expect to reach full operational status in the facility in the second half of 2018.”

“Looking ahead, we are focused on growing our international and e-commerce businesses, while continuing to pursue strategic acquisition opportunities.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $25.5 million, or 7.5% of sales in the second quarter of 2017, compared to $18.9 million, or 7.6% of sales in the same quarter last year. For the first six months of 2017, EBITDA was $44.6 million, compared to $39.1 million in the same period of 2016.

Operating cash flow for the trailing 12 months ended June 30, 2017 was $76.4 million, compared to $69.2 million for the trailing 12 months ended June 30, 2016.

Net financial debt as of June 30, 2017 was $169.7 million, compared to $106.6 million as of June 30, 2016, and $181.2 million as of December 31, 2016.

Equity on June 30, 2017 was $417.8 million, up from $363.3 million a year earlier.

Delta Galil declared a dividend of $4.25 million, or $0.167 per share, to be distributed on August 29, 2017. The determining and “ex-dividend” date will be August 16, 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 $1.14 per euro and 3.60 NIS per US$.

> 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.