delta galil
leading in fabrics since 1975
20 February 2018

Sales Increased 16% to Record $1,368.1 Million;
EBITDA Increased 8% to $115.9 Million

Q4 Net Income Increased 8% to $20.1 Million;
Diluted Earnings Per Share Increased 7% to $0.79 in Q4

Initial 2018 Earnings Guidance:

Sales Expected to Reach $1,400 Million-$1,440 Million and Full-Year EPS Expected to grow by 7% to 16% and reach $2.11-$2.30

2017 Fourth Quarter Highlights

> Net income increased 8% and amounted to $20.1 million in the fourth quarter of 2017, compared to $18.5 million in the fourth quarter of 2016.

> Diluted earnings per share increased 7% and totaled $0.79 in the 2017 fourth quarter, compared to $0.73 in the fourth quarter of 2016.

> EBITDA in the fourth quarter of 2017 increased 2% to $40.0 million, from $39.2 million in the fourth quarter of 2016.

> Operating profit was $32.5 million in the fourth quarter of 2017, compared to $32.3 million in the fourth quarter last year, a 1% increase.

> A strong balance sheet post-acquisition, highlighted by $451.3 million in equity as of December 31, 2017, and $138.9 million in cash and cash equivalents.

> The Board of Directors declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 13, 2018. The determining and “ex-dividend” date will be February 28, 2018.

Isaac Dabah, CEO of Delta Galil, stated: “We are extremely pleased with our 2017 annual results, which were highlighted by record sales, EBITDA, net income and EPS excluding one-time items. The results reflect the strength in our Global Upper Market and Schiesser business and the positive contribution of our recently acquired business (DGPB)– all demonstrating the strength of our diversified portfolio. We continue to focus on driving both organic growth and accretive acquisitions, and seek new opportunities to apply our competitive and financial strengths to deliver shareholder value.”

Tel Aviv, February 20, 2018 – 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, activewear and denim, today reported its financial results for the fourth quarter and full year ended December 31, 2017.

Sales

The Company reported sales of $371.6 million for the fourth quarter of 2017, compared with $376.3 million for the same quarter last year, representing a 1% decrease. Sales for the 2017 full year increased 16% to a record $1,368.1 million, from $1,179.2 million for the 2016 full year. The year-over-year increase reflected the annualization of Delta Galil Premium Brands, which was acquired on August 2016, as well as continued strength of Delta’s Global Upper Market and Schiesser business segments, along with improvements in Delta Israel.

Operating Profit

Operating profit was $32.5 million in the fourth quarter of 2017, compared to $32.3 million in the fourth quarter last year, representing a 1% increase. Operating profit excluding one-time items increased 5% for the 2017 full year and amounted to $87.4 million, compared to $83.2 million for the full year 2016.

For the 2017 full year, operating profit was $84.6 million, compared to $85.3 for the 2016 full year, representing a 1% decrease.

Net Income

Net income increased 8% to $20.1 million in the fourth quarter of 2017, compared to $18.5 million in the same quarter last year.

Net income excluding one-time items net of tax increased 7% for the 2017 full year and amounted to a record $50.7 million, compared to $47.2 million for the 2016 full year.

Net income for the 2017 full year was $49.0 million, compared to $51.9 million for the 2016 full year, representing a 6% decrease.

Diluted Earnings Per Share

Diluted earnings per share increased 7% in the 2017 fourth quarter to $0.79, compared to $0.73 for the same quarter last year.

Diluted earnings per share excluding one-time items increased 7% and amounted to $1.98 for the 2017 full year, compared to $1.85 for the 2016 full year.

For the 2017 full year, diluted earnings per share amounted to $1.91, compared to $2.03 for the 2016 full year, a 6% decrease.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “We are extremely pleased with our 2017 annual results, which were highlighted by record sales, EBITDA, net income and EPS excluding one-time items. The results reflect the strength in our Global Upper Market and Schiesser business segments which demonstrate the strength of our diversified portfolio. We continue to focus on driving both organic growth and accretive acquisitions, and seek new opportunities to apply our competitive and financial strengths to deliver shareholder value.”

“Our recently acquired Delta Galil Premium Brands (DGPB) segment, continued to be a strong contributor to sales throughout 2017, and remains an exciting growth opportunity looking ahead. We have several strategic initiatives and category expansions in place for 2018 that are intended to maximize growth opportunities within that segment.”

“Throughout the year, we focused on making meaningful changes to the company that will improve our efficiency and production capacity and best position us to develop the most innovative, high quality products for our customers worldwide. We also enhanced our focus on e-commerce, and increased top-line growth to key customers, as well as our proprietary brands.”

“As always, 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, we have the necessary financial resources to continue to innovate and grow — both through organic means and strategic acquisitions.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $40.0 million, or 10.8% of sales in the fourth quarter of 2017, compared to $39.2 million, or 10.4% of sales in the same quarter last year. For the 2017 full year, EBITDA was $115.9 million, or 8.5% of sales, compared to $107.0 million, or 9.1% of sales last year.

Operating cash flow was $55.0 million in the fourth quarter of 2017, compared with $61.1 million in the fourth quarter of 2016. For the 2017 full year, operating cash flow was $74.7 million, compared to $76.6 million last year.

Net financial debt as of December 31, 2017 was $125.6 million, compared to $164.8 million as of September 30, 2017, and $181.2 million as of December 31, 2016.

Equity on December 31, 2017 was $451.3 million, up from $390.6 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 13, 2018. The determining and “ex-dividend” date will be February 28, 2018.

2018 Financial Guidance

Delta Galil provided its initial 2018 financial guidance, excluding one-time items, which is based on current market conditions and current exchange rates of: Euro/USD 1.20 and USD / NIS 3.50.

> 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.