Press Releases Details

Sales Increase 27% and Operating Income Rises 26% Excluding Net Gains from One-Time Items – Driven by Accretive Acquisition and U.S. Market Growth

Initial Guidance for 2013 Reflects Continued Growth over 2012

Quarterly Highlights

• Sales were a record $234.0 million in the 2012 third quarter, up 27% from the same period of 2011. This is the 12^th consecutive quarter of increasing sales.
• Operating income excluding gains from one-time items was $15.8 million for the 2012 third quarter, a 23% increase from a year ago.
• Net income attributed to shareholders excluding gains from one-time items was $10.0 million in the 2012 third quarter, a 29% increase from the same quarter of 2011.
• Diluted earnings per share attributed to shareholders, excluding gains from one-time items, was $0.41 for the 2012 third quarter and $0.81 for nine months, up from $0.32 and $0.68, respectively, for the same periods of 2011.
• Operating cash flow was $40.2 million for 2012 year-to-date, up from $15.3 million in the same period last year.

• The Company’s Board of Directors on October 31, 2012, authorized a share repurchase plan to buy back up to US$2.5 million in Delta Galil common stock, from time to time, during the three-month period beginning November 11, 2012.
• Delta Galil declared a dividend totaling approximately $2.0 million, or $0.0841 per share, to be distributed on November 27, 2012. The determining and "ex-dividend" date for this distribution will be November 14, 2012.
• Isaac Dabah, CEO of Delta Galil, noted: “The Company’s solid performance in the 2012 third quarter and strong financial matrix reflects highly focused, transformational strategies that have broadened our global reach, diversified our customer base and distribution channels and expanded our portfolio of branded products.”

TEL AVIV--(BUSINESS WIRE)--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, today reported its financial results for the third quarter and nine months of 2012.

Delta Galil reported record sales for the third quarter of 2012 of $234.0 million, compared to $184.8 million in the same quarter of 2011, an increase of 27%. Sales in the first nine months of 2012 were $571.2 million, compared to $502.4 million in the same period of 2011, an increase of 14%. The higher sales in the 2012 third quarter benefitted from Delta Galil’s acquisition of Schiesser Group, completed in July 2012, while sales in both the 2012 third quarter and nine months also reflected a strong performance in the North American mass market and Upper Market channels.

Operating income excluding gains from one-time items was $15.8 million in the third quarter of 2012, rising 23% from the $12.8 million reported in the third quarter of 2011. In the first nine months of 2012, operating income excluding gains from one-time items was $31.0 million, compared to $24.7 million in the same period of 2011, a 26% increase.

Net income attributed to shareholders excluding gains from one-time items, after tax, was $10.0 million in the third quarter of 2012, compared to $7.7 million in the same quarter of last year, a 29% increase. For the first nine months of 2012, net income attributed to shareholders excluding capital gains and one-time items, after tax, was $20.0 million, rising 23% from $16.3 million in the same period of 2011.

Diluted earnings per share attributed to shareholders, excluding net gains from one-time items, was $0.41 for the 2012 third quarter and $0.81 for nine months. In the third quarter and first nine months of 2011, the comparable amounts were $0.32 and $0.68, respectively.

Results for the third quarter and first nine months of 2012 included net gains attributed to the Lucky Buy of $12.2 million from the acquisition of Schiesser, partially offset by restructuring expenses of $2.4 million due to efficiency measures. Results for the first nine months of 2012 included a capital gain of $19.9 million from the sale of real estate, expenses of $1.2 million from the Schiesser acquisition, a write-down of unused fixed assets of $1.3 million, a net gain from the Schiesser acquisition as previously noted, and restructuring expenses of $5.4 million. The only one-time item in the 2011 nine month period, were capital gains of $3.6 million from assets sale.

CEO Comment: Branded Products, Global Markets Drive Growth

Isaac Dabah, CEO of Delta Galil, stated: “The Company’s solid performance in the 2012 third quarter and strong financial matrix reflects highly focused, transformational strategies that have broadened our global reach, diversified our customer base and distribution channels and expanded our portfolio of branded products. The Schiesser acquisition, in particular, has added new markets, including Europe, while delivering a higher EBIT margin. With a strong and diversified portfolio of four business segments, we are also increasing our business with a wide range of existing customers and are adding new customers. At the same time, we are continuing to invest in product innovation and marketing, while pursuing operational efficiencies. The net effect of these measures has been a record level of quarterly sales, sharply rising profits, and a greater ability to enhance shareholder value through our recently announced share buyback, as well as dividends.”

Positive Outlook for 2013

Delta Galil today provided its initial estimate for 2013 business results. The following forecast excludes the effect of any one-time items:

• Full-year 2013 sales are estimated to range from $910 million to $920 million, which would constitute an average increase of 12% compared to the current 2012 forecast.
• Full-year 2013 EBIT is estimated to range between $55 million and $60 million, which would constitute an average increase of 13% compared to the current 2012 forecast.

The Company also reiterated its existing 2012 forecast, which includes:

• Full-year 2012 sales estimated to range from $810 million to $820 million.
• Full-year 2012 EBIT estimated to range from $50 million to $52 million.
• Full-year 2012 net income estimated to range from $33.0 million to $34.5 million.
• Full-year 2012 diluted EPS estimated to range from $1.37 to $1.44.

Strong Cash Flow

Delta derived positive cash flow from current operations in the first nine months of 2012 of $40.2 million, compared to $15.3 million in the same period last year, an increase of 163%.

Increase in Capital

The net financial debt of Delta Galil amounted to $109.4 million at September 30, 2012, compared to $72.8 million at September 30, 2011 and $53.8 million on December 31, 2011.

The capital of the Group as of September 30, 2012 amounted to $259.0 million, representing 49.3% of the total balance sheet, compared to approximately $210.4 million, representing 46.0% of the total balance sheet as of September 30, 2011 and $217.2 million, or 49.0% of the total balance sheet, as of December 31, 2011. The increase in capital derives primarily from total income for the first nine months of 2012, which amounted to approximately $45.4 million, less distributed dividend in the amount of $6.0 million.

Dividend Declaration

Delta Galil declared a dividend totaling approximately $2.0 million, or $0.0841 per share, to be distributed on November 27, 2012. The determining and "ex-dividend" date for this distribution will be November 14, 2012.

In addition, the Company’s Board of Directors on October 31, 2012, authorized a share repurchase plan to buy back up to US$2.5 million in Delta Galil common stock, from time to time, during the three-month period beginning November 11, 2012.

The enclosed notes constitute an integral part of these Financial Statements

* Net Income includes, Lucky Buy of $12.6 million offset by inventory Step-Up of $0.4 million which is included in the GAAP financials among Cost of Sales.

About Delta Galil Industries

Delta Galil Industries is a global manufacturer and marketer of branded and private label apparel products for men, women and children. Since its inception in 1975, the Company has continually strived to create products that follow a body-before-fabric philosophy, placing equal emphasis on comfort, aesthetics and quality. Delta Galil develops innovative seamless apparel including bras, shapewear and socks; intimate apparel for women; extensive lines of underwear for men; babywear, activewear, sleepwear, and leisurewear. For more information, visit www.deltagalil.com.

Safe Harbor Statement

Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein, and while expected, there is no guarantee that we will attain the aforementioned anticipated developmental milestones. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.

Contacts

Nissim Duek
Irit Nahmani
iritn@unik.co.il
UNIK
or
U.S. Media:
Stacy Berns/Jessica Liddell
Berns Communications Group
+1-212-994-4660
jliddell@bcg-pr.com