delta galil
leading in fabrics since 1975
15 May 2018

Diluted EPS Increased 38% to $0.30 and 5% excluding one-time items; Operating Profit Increased 37% to $14 Million and 8% excluding one-time items, Sales increased 6% and reached $334.5 Million

Reaffirms 2018 Guidance; Sales Expected to Reach $1,400 Million-$1,440 Million and Full-Year Diluted EPS Expected to Reach $2.11-$2.30

2018 First Quarter Highlights

> Diluted EPS increased 38% to $0.30 in the first quarter of 2018, from $0.22 in the first quarter of 2017.

> Operating profit grew 37% to $14.0 million in the first quarter of 2018, from $10.2 million in the same quarter last year.

> Net income increased 33% and amounted to $7.4 million in the first quarter this year, compared to $5.6 million in the first quarter of 2017.

> EBITDA increased 12% to $21.4 million in the first quarter of 2018, from $19.1 million in the first quarter of 2017.

> Sales grew 6% to $334.5 million in the first quarter of 2018, from $315.7 million in the same quarter last year.

> A strong balance sheet was highlighted by $459 million in equity and $88.5 million in cash as of March 31, 2018.

> Financial guidance for 2018 was reaffirmed: Full-year 2018 sales are expected to range between $1,400 million-$1,440 million, representing an increase of 2%-5% from 2017 actual sales of $1,368.1 million. Full-year 2018 diluted EPS excluding one-time items is expected to range between $2.11-$2.30, representing an increase of 7%-16% from 2017 actual EPS, excluding one-time items, of $1.98.

> Declared dividend of $3.5 million, or $0.139 per share, to be distributed on June 5, 2018. The determining and “ex-dividend” date will be May 24, 2018.

> Isaac Dabah, CEO of Delta Galil, stated: “First quarter sales rose in most segments, while profitability benefitted from rising EBIT margins at Delta Israel and Delta Premium Brands. The investments we made in our business over the last two years have put us in a stronger position today, and we’re seeing steady and diversified growth.”

Tel Aviv, May 14, 2018 – Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange, DELTY.PK/OTCQX) today reported its financial results for the first quarter ended March 31, 2018.

Sales

The Company reported sales of $334.5 million for the first quarter of 2018, representing a 6% increase compared to $315.7 million for the same quarter last year. The sales increase largely reflected top-line growth in the Schiesser, Delta Israel and Global Upper Market business segments.

Operating profit

Operating profit was $14.0 million for the first quarter of 2018, a 37% increase from $10.2 million in the first quarter of 2017. Operating profit before one-time items was $14.0 million for the first quarter of 2018, compared to $12.9 million in the first quarter of 2017, representing an 8% increase.

Net income

Net income was $7.4 million in the first quarter of 2018, a 33% increase compared to $5.6 million in the first quarter of 2017. Net income before one-time items was $7.5 million for the 2018 first quarter, representing a 4% increase from $7.2 million in the first quarter last year.

Diluted Earnings Per Share

Diluted earnings per share were $0.30 in the first quarter of 2018, a 38% increase compared to $0.22 in the same quarter last year. Diluted earnings per share before one-time items amounted to $0.30 in the first quarter of 2018, an increase of 5% compared to $0.28 in the first quarter of 2017.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “We’re pleased to be off to a solid start to 2018. First quarter sales rose in most segments, particularly Schiesser and Delta Israel, while profitability benefitted from rising EBIT margins at Delta Israel and Delta Premium Brands. The investments we made in our business over the last two years have put us in a stronger position today, and we’re seeing steady and diversified growth. We expect to continue on a solid track, and with a strong balance sheet in place, we have the funds necessary to take advantage of the right market opportunities as they arise.”

“We announced separately today that we named former Chief Merchandising Officer of Macy’s Tim Baxter as the Chief Executive Officer of Delta Galil Premium Brands.  Tim is an extremely accomplished retail and fashion merchandising executive, whose highly profitable strategic plans, licensing deals, and partnerships at Macy’s with many of the world’s most renowned brands, will prove instrumental in leading Seven for All Mankind and Splendid into their next phase of growth.”

“Also as we recently announced, we have signed an option to acquire leading French men’s underwear group Eminence, which includes Eminence, a premium underwear brand for men, along with ATHENA and Liabel – mass-market underwear brands for men, women and kids. The deal, which is expected to close in the third quarter, would significantly expand our presence and branded business in France and Italy, while providing the potential for a platform for growth.”

“Looking ahead, we will continue to pursue growth both organically and through acquisitions – with a sharp focus on driving innovation, excellence and shareholder value.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $21.4 million in the first quarter of 2018, up 12% from $19.1 million in the same quarter last year.

Operating cash flow was negative $30.3 million for the first quarter of 2018, compared to negative $13.1 million in the first quarter of 2017.

Net financial debt as of March 31, 2018 was $170.0 million, compared to $205.2 million as of March 31, 2017, and $125.6 million as of December 31, 2017.

Equity on March 31, 2018 was $459.0 million, up from $399.1 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on June 5, 2018. The determining and “ex-dividend” date will be May 24, 2018.

2018 Financial Guidance

Delta Galil reaffirmed its 2018 financial guidance, excluding one-time items and the acquisition of Eminence, which is based on current market conditions and current exchange rates of: Euro/USD 1.20 and USD / NIS 3.60.

> Full-year 2018 sales are expected to range between $1,400 million-$1,440 million, representing an increase of 2%-5% from 2017 actual sales of $1,368.1 million.

> Full-year 2018 EBIT is expected to range between $91 million-$96 million, representing an increase of 4%-10% from 2017 actual EBIT of $87.4 million.

> Full-year 2018 EBITDA is expected to range between $119 million-$125 million, representing an increase of 3%-8% from 2017 actual EBITDA of $115.9 million.

> Full-year 2018 net income is expected to range between $54 million-$59 million, representing an increase of 7%-16% from 2017 actual net income of $50.7 million.

> Full-year 2018 diluted EPS is expected to range between $2.11-$2.30, representing an increase of 7%-16% from 2017 actual EPS, of $1.98.