Press Releases Details

Net Income was $6.5 Million, or $0.25 per share, Including Acquisition Costs

Net Income Before One-Time Items Increased 2% to $9.1 Million; Diluted EPS Before One-Time Items Increased 3% to $0.36

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

Eminence Acquisition was Completed Earlier than Expected On July 6^th 2018

2018 Second Quarter Highlights

• Net income before one-time items totaled $9.1 million, compared to $8.9 million last year, representing a 3% increase.
• Net income was $6.5 million, including acquisition-related costs, compared to $8.9 million last year.
• Diluted earnings per share before one-time items increased 3% to $0.36, compared to $0.35 last year.
• Diluted earnings per share, including acquisition-related costs were $0.25 for the second quarter of 2018, compared to $0.35 in the same quarter last year.
• Sales for the first six months of 2018 increased 3% to $673.4 million, compared to $656.1 million for the comparable period last year.
• A strong balance sheet was highlighted by $450 million in equity and $105 million in cash as of June 30, 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 a dividend of $3.5 million, or $0.139 per share, to be distributed on September 4, 2018. The determining and "ex-dividend" date will be August 23, 2018.
• The acquisition of the Eminence Group, which sells premier branded underwear and leisurewear for men and women in France and Italy, was completed earlier than expected.

• Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased with the early completion of the Eminence Group acquisition, and believe it provides a potential platform for growth, while expanding our presence and branded business in the important France and Italy markets. 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 – both organically and through acquisitions.”

TEL AVIV, Israel--(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, as well as leisurewear, activewear and denim, today reported net income of $6.5 million for the second quarter ended June 30, 2018, including a one-time non-recurring charge of $3.95 million related to acquisition costs, compared to net income of $8.9 million for the 2017 second quarter. Excluding the acquisition-related cost, net income for the 2018 second quarter was $9.1 million.

“During the quarter, we saw significant improvements in Delta Israel, including a 14% increase in sales, as well as a strong performance by Schiesser, including a 10% increase in sales. ”

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Sales

The Company reported sales of $338.9 million for the second quarter of 2018, relatively flat from $340.5 million in the second quarter of 2017. Sales for the first six months of 2018 were $673.4 million, up 3% from $656.1 million in the same six-month period of 2017.

Operating Profit

Operating profit before one-time items was $15.2 million for the second quarter of 2018, compared to $17.7 million in the second quarter of 2017, representing a 14% decrease. Operating profit was $11.3 million for the second quarter of 2018, including $4 million acquisition-related costs, compared to $17.7 million for the same period last year, representing a 36% decrease.

Operating profit in the first six months of 2018 before one-time items was $29.2 million, down 4% from $30.6 million in the same period of 2017. For the first six months of 2018, operating profit was $25.3 million, including $4 million acquisition-related costs, down 9% from $27.9 million in the same period last year. The decrease in operating profit was mainly a result of costs associated with a new distribution center, as well as running costs and lower profitability in the company's factories due to a change in the product's mix.

Net Income

Net income excluding the acquisition-related costs increased 2% to $9.1 million, from $8.9 million in the second quarter of 2017. Net income was $6.5 million for the second quarter of 2018, including the acquisition-related costs, down 27% from $8.9 million last year.

Net income before one-time items increased 3% for the first six months of 2018, and totaled $16.6 million, compared to $16.2 million for the same period of 2017. For the first six months of 2018, net income was $14.2 million, including the acquisition-related costs, down 2% from $14.4 million for the first six months of last year.

Diluted Earnings Per Share

Diluted earnings per share before one-time items increased 3% in the 2018 second quarter, and amounted to $0.36, compared to $0.35 in the same quarter last year. Diluted earnings per share including acquisition-related costs were $0.25 for the second quarter of 2018, compared to $0.35 in the same quarter last year, representing a 27% decrease.

Diluted earnings per share before one-time items increased 4% for the 2018 six-month period and totaled $0.65, compared to $0.63 for the prior year period. For the first six months of 2018, diluted earnings per share were $0.55, down 2% from $0.57 last year.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “While we experienced challenges in our second quarter, they were partially offset by improvements in several business segments and regions, demonstrating the strength of our diversified business model. We have a strong balance sheet in place, and through our blend of branded and private label products, an expanding global presence, and a range of market segments, we remain positioned for long-term profitable growth.”

“During the quarter, we saw significant improvements in Delta Israel, including a 14% increase in sales, as well as a strong performance by Schiesser, including a 10% increase in sales.

“We were very pleased with the early completion of the Eminence Group acquisition, as it adds a men’s premium French brand, while expanding our business in France and Italy, where we currently lack significant market share. The acquisition was financed using Euro bank loans at an attractive interest rate. We will consolidate Eminence Group results beginning in the third quarter.”

“Looking ahead, we expect the investments we made in our manufacturing facilities to start having positive impacts on our bottom line towards the second half of 2019. We are also excited about designer/influencer collections in Delta Galil Premium Brands, possible initiatives with online retailers, and the ability to introduce core Delta products through the Eminence distribution channels. With a strong balance sheet and cash position, we have the necessary financial resources to continue to invest, innovate and grow – both organically and through acquisitions.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $22.9 million or 6.8% of sales in the second quarter of 2018, compared to $25.5 million, or 7.5% of sales in the same quarter last year. For the first six months of 2018, EBITDA was $44.3 million, compared to $44.6 million in the same period of 2017.

Operating cash flow for the trailing 12 months ended June 30, 2018 was $51.9 million, compared to $76.4 million for the trailing 12 months ended June 30, 2017.

Net financial debt as of June 30, 2018 was $178.7 million, compared to $169.7 million as of June 30, 2017 and $125.6 million as of December 31, 2017.

Equity on June 30, 2018 was $450.1 million, up from $417.8 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on September 4, 2018. The determining and "ex-dividend" date will be August 23, 2018.

2018 Financial Guidance

Delta Galil reaffirmed its 2018 financial guidance, excluding one-time items and the positive impact expected from the Eminence Group acquisition.

• 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.

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. Delta Galil also designs, develops, markets and sells branded denim apparel under the brand 7 For All Mankind®, and ladies apparel under the brands Splendid® and Ella Moss®. 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

Delta Galil Industries, Ltd.
Nissim Douek, +972-54-5201178
Nissim@unik.co.il
or
U.S. Media
Berns Communications Group
Stacy Berns/Melissa Jaffin, +1-212-994-4660
sberns@bcg-pr.com