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22nd November 2018, Tel Aviv

Delta Galil expects continued long-term growth

Delta Galil Industries is a leading manufacturer and marketer of branded and private label apparel products for men, women and children, as well as leisurewear, activewear and denim. Delta Galil Industries, a leading manufacturer and marketer of branded and private label apparel products for men, women and children, has reported a net income increase of 15% to US$ 16.6 million, from US$ 14.5 million in the third quarter of 2017, excluding Eminence acquisition-related costs and restructuring costs.

Net income including acquisition-related and restructuring costs of US$ 7 million (net of tax) was US$ 9.6 million for the third quarter of 2018, compared to US$ 14.4 million last year, a 33% decrease. Net income before acquisition-related and restructuring costs increased by 8% for the first nine months of 2018 and totalled US$ 33.2 million. For the first nine months of 2018, net income including the acquisition-related and restructuring costs totalled US$ 23.5 million, compared to US$ 28.9 million for the same period last year.

The company reached sales of US$ 370.8 million, a 9% increase from US$ 340.3 million in the third quarter of 2017. Sales for the first nine months of 2018 were US$ 1,044.2 million, up 5% from US$ 996.4 million in the same nine-month period of 2017.

“We are pleased with the continued strength of our diversified business model, as we concluded the quarter with a 9% sales increase and 10% increase in EBIT, before adjustments. We saw strong performance from Delta USA, where successful launches for Costco and new kids businesses drove a 9% increase in sales and a 49% increase in EBIT. We continued to see significant improvement in Delta Israel, with a 19% increase in sales and US$ 1.3 million improvement in EBIT, as well as strong comparable sales and online growth,” commented Isaac Dabah, CEO of Delta Galil.

“During the quarter, we focused on consolidating Eminence Group, which made a strong contribution to sales in its first quarter as part of Delta Galil, while expanding our European presence.”

“Also during the quarter, we signed a global licensing agreement to exclusively develop, produce and distribute Ted Baker men’s underwear, loungewear, and thermal wear worldwide, with the first collection launching Spring 2019. This represents an important step in our ongoing strategy to grow our global portfolio of premium brands.”

“Looking ahead, we expect continued long-term growth in Delta Galil Premium Brands to reach above 10% EBIT. We see significant opportunities, including potential corporate initiatives to sell to key online retailers, and the ability to introduce core Delta products through Eminence distribution channels. Further, the investments we made in our manufacturing facilities will start having positive impacts on our bottom line towards 2019. We have a strong balance sheet, and we remain committed to investing in new products and resources to drive sustained profitable growth and long-term shareholder value.”

EBITDA was US$ 35.3 million or 9.5% of sales in the third quarter of 2018, compared to US$ 31.3 million, or 9.2% of sales in the same quarter last year. For the first nine months of 2018, EBITDA was US$ 79.6 million, compared to US$ 75.9 million in the same period of 2017.

Operating profit before one-time items increased 10% to US$ 26.7 million in the third quarter of 2018. Operating profit including US$ 9.6 million of acquisition-related and restructuring costs was US$ 17.0 million for the third quarter of 2018. Operating profit in the first nine months of 2018, before one-time items increased by 2% to US$ 55.9 million. For the first nine months of 2018, operating profit including US$ 13.6 million of acquisition-related and restructuring costs was US$ 42.3 million, down by 19%.

www.deltagalil.com

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