delta galil
leading in fabrics since 1975
22 February 2017

Operating Profit Increased 24% to All-Time Record of $85.3 Million, on Sales of $1,179.2 Million;

Operating Cash Flow Increased to $76.6 Million; Sales in the 4th Quarter Increased 31% to $376.3 Million;

Operating Profit in the 4th Quarter Increased 80% to $32.3 Million;

Initial 2017 Earnings Guidance:
Sales Expected to Reach $1,330 Million-$1,370 Million
, and Full-Year EPS Expected to Reach $1.95-$2.02

2016 Fourth Quarter Highlights

> Sales grew 31% to $376.3 million in the fourth quarter of 2016, from $287.1 million in the 2015 fourth quarter.

> Operating profit increased 80% to $32.3 million in the fourth quarter of 2016, compared to $17.9 million in the fourth quarter of 2015.

> Operating profit before one-time items increased 36% in the fourth quarter of 2016 and amounted to $32.3 million, compared to $23.7 million in the fourth quarter of 2015.

> EBITDA in the fourth quarter of 2016 increased 33% to $39.2 million, from $29.5 million in the fourth quarter of 2015.

> Diluted earnings per share increased 52% and amounted to $0.73 in the 2016 fourth quarter, compared to $0.48 in the fourth quarter of 2015.

> A strong balance sheet post-acquisition, highlighted by $390.6 million in equity as of December 31, 2016, and $81.9 million in cash and cash equivalents.

> Operating cash flow totaled $76.6 million for the 2016 full year, compared to $70.5 million last year.

> The Board of Directors declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 14th 2017. The determining and “ex-dividend” date will be March 2nd 2017.

> Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with our results for 2016, which concluded with a particularly strong fourth quarter and reflected all-time high sales, operating profit and cash flow. Our diverse blend of business segments, product categories and an expanded global presence, along with our strategic efforts to grow in areas such as branded products, continue to drive both growth momentum and balance. We remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value, and are focused on attaining overall double digit EBITDA growth in 2017 and beyond.”

Tel Aviv, February 22, 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, jeans and activewear, today reported its financial results for the fourth quarter and full year ended December 31, 2016.

Sales

The Company reported sales of $376.3 million for the fourth quarter of 2016, a 31% increase compared to $287.1 million for the same quarter last year. Sales for the 2016 full year were $1,179.2 million, a 9% increase from $1,080.0 million for the 2015 full year. The year-over-year increase reflected top-line growth in all key geographic regions, as well as the positive impact of Delta Galil’s diversified portfolio. This includes a significant increase in its branded activity, new businesses with strong global reach, and expansion of its retail activity in Israel and Germany.

Operating profit

Operating profit increased 80% to $32.3 million in the fourth quarter of 2016, compared to $17.9 million in the fourth quarter last year. For the 2016 full year, operating profit grew 23% to $85.3 million, compared to $69.0 for the 2015 full year. Operating profit excluding one-time items increased 36% in the fourth quarter of 2016, and amounted to $32.3 million, compared to $23.7 million last year. For the 2016 full year, operating profit excluding one-time items amounted to $83.2 million, compared to $75.5 million last year, representing a 10% increase.

Net income

Net income increased 51% to $18.5 million in the fourth quarter of 2016, compared to $12.3 million in the same quarter last year. Net income excluding one-time items totaled $18.5 million, compared to $16.0 million for the same period last year, representing a 16% increase. Diluted earnings per share increased 52% in the 2016 fourth quarter to $0.73, compared to $0.48 for the same quarter last year. For the 2016 full year, net income was $51.9 million, or $2.03 per diluted share, compared to $43.8 million or $1.71 per diluted share for the same period of 2015, representing a 18% increase.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with our results for 2016, which concluded with a particularly strong fourth quarter and reflected all-time high sales, operating profit and cash flow. Throughout the year, we remained focused on a number of operational and growth initiatives that improved our business segments and helped make us a more efficient company. Further, our diverse blend of business segments, product categories and an expanded global presence continue to drive both growth momentum and balance.

“During the year, we made the successful acquisition of 7 For All Mankind®, Splendid® and Ella Moss®, reflecting our strategic efforts to grow Delta Galil’s branded business and expand our global footprint. These brands further diversify our product offering and distribution channels, while adding significant strength to our structure.

“We’ve upgraded our digital platform and increased our ecommerce market share by selling to wholesale customers such as Amazon, Zalando, and Otto, while elevating sales on our proprietary Schiesser and Delta Israel websites. We also launched a new advanced digital platform for the 7 For All Mankind, Splendid and Ella Moss brands.

“Looking ahead, we remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value and, with a strong balance sheet and cash position, we have the necessary financial resources to continue to invest, innovate and grow.

“We are very proud of Delta’s achievements in the past year, and would like to express our gratitude to our associates and customers for their cooperation and support. Hopefully, this collaboration will lead Delta to significant achievements in the future.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $39.2 million, or 10.4% of sales in the fourth quarter of 2016, compared to $29.5 million, or 10.3% of sales in the same quarter last year. For the 2016 full year, EBITDA was $107.0 million, or 9.1% of sales, compared to $95.3 million, or 8.8% of sales last year.

Operating cash flow was $61.1 million in the fourth quarter of 2016, compared with $60.3 million in the fourth quarter of 2015. For the 2016 full year, operating cash flow was $76.6 million, compared to $70.5 million last year.

Net financial debt as of December 31, 2016 was $181.2 million, compared to $223.8 million as of September 30, 2016, and $74.5 million as of December 31, 2015. The increase in net finance debt derives mainly from the Premium Brands activity acquisition, offset by the positive cashflow generated in the fourth quarter.

Equity on December 31, 2016 was $390.6 million, up from $357.5 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 14th 2017. The determining and “ex-dividend” date will be March 2nd 2017.

2017 Financial Guidance

Delta Galil provided its 2017 financial guidance, excluding non-recurring items which is based on current market conditions and current exchange rate of $1.06 per euro and 3.8 NIS per US$.

> 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.