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21st February 2018, Tel Aviv

Delta Galil reports net income decline in 2017

Delta Galil Industries is a manufacturer of branded and private label apparel products, as well as leisurewear, activewear and denim.Delta Galil Industries, a manufacturer of branded and private label apparel products, as well as leisurewear, activewear and denim, has reported an increase in net profit of 8% in the fourth quarter of 2017, recording US$ 20.1 million, compared to US$ 18.5 million in the same quarter last year.

Net income excluding one-time items net of tax increased by 7% for the 2017 full year and amounted to a record US$ 50.7 million, compared to US$ 47.2 million for the 2016 full year. Net income for the 2017 full year was US$ 49.0 million, compared to US$ 51.9 million for the 2016 full year, representing a 6% decrease.

“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,” commented Isaac Dabah, CEO of Delta Galil.

Operating profit and sales

Operating profit was US$ 32.5 million in the fourth quarter of 2017, compared to US$ 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 US$ 87.4 million, compared to US$ 83.2 million for the full year 2016. For the 2017 full year, operating profit was US$ 84.6 million, compared to US$ 85.3 for the 2016 full year, representing a 1% decrease.

The company reported sales of US$ 371.6 million for the fourth quarter of 2017, compared with US$ 376.3 million for the same quarter last year, representing a 1% decrease. Sales for the 2017 full year increased 16% to a record US$ 1,368.1 million, from US$ 1,179.2 million for the 2016 full year. The year-over-year increase reflected the annualisation 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.

Exciting growth opportunity

“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 ecommerce, and increased top-line growth to key customers, as well as our proprietary brands.”

EBITDA and cash flow

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

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

2018 financial guidance

Full-year 2018 sales are expected to range between US$ 1,400 million-US$ 1,440 million, representing an increase of 2%-5% from 2017 actual sales of US$ 1,368.1 million. Full-year 2018 EBIT is expected to range between US$ 91 million-US$ 96 million, representing an increase of 4%-10%. Full-year 2018 EBITDA is expected to range between US$ 119 million-US$ 125 million.

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

“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,” said Mr Dabah.

www.deltagalil.com

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