Delta Galil Reports 2015 Results

6th Consecutive Year of Sales Growth Total Sales Up 10% in Original Currency to $1,080 million

Initial 2016 Earnings Guidance; Sales Expected to Reach $1,090 Million-$1,110 Million and Full-Year EPS Expected to Reach $1.93-$2.02

2015 Fourth Quarter Highlights

• Sales increased 8% in original currency in the 2015 fourth quarter, with reported sales increasing to $287.1 million, up 3% from the fourth quarter of 2014.
• Operating income increased to $23.7 million, before one-time items, up 6% from the same period the prior year.
• EBITDA was $29.5 million, or 10.3% of sales in the 2015 fourth quarter, increasing 6% from the 2014 fourth quarter.
• Net income excluding non-recurring items rose to $16.1 million in the quarter, increasing 5% from the comparable period the prior year.
• Diluted earnings per share attributed to shareholders rose to $0.62 for the 2015 fourth quarter, excluding non-recurring items, rising 3% from a year ago.
• Operating cash flow amounted to $60.3 million, compared to $34.9 million in the 2014 fourth quarter.
• Strong balance sheet was highlighted by $357.5 million in equity as of December 31, 2015, and $168.1 million in cash and cash equivalents.
• Initial 2016 financial guidance: Full-year 2016 sales are expected to range between $1,090 million and $1,110 million, representing an increase of 1%-3%. Full-year 2016 diluted EPS is expected to range between $1.93 and $2.02.
• The Board of Directors declared a dividend of $3.5 million or $0.139 per share, to be distributed on March 15, 2016. The determining and "ex-dividend" date will be March 2, 2016, per the Tel Aviv Stock Exchange.
• The Board of Directors approved Shares Buy-Back plan of up to $7.5 million.
• Isaac Dabah, CEO of Delta Galil, stated: “Our 2015 performance represented the sixth consecutive year of sales growth. We delivered a 10% increase in top-line in original currency. Looking to the future, we have made investments that have positioned us to continue to innovate, add new customers and licenses, and expand our international scope.”

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, ladies, kids, as well as leisurewear and Active wear, today reported its financial results for the fourth quarter and full year ended December 31, 2015.

Delta Galil reported sales of $287.1 million for the fourth quarter of 2015, an increase of 3% from $277.4 million for the same quarter of 2014, and an 8% increase in original currency. Sales for the 2015 full year were a record $1,080.0 million, an increase of 5% from $1,031.9 million in 2014, and a 10% increase in original currency. The year-over-year increase reflected top-line growth in all key geographic regions in original currency, as well as the positive impact of Delta Galil’s diversified portfolio.

Operating income was $23.7 million for fourth quarter of 2015 before one-time items, up 6% from $22.3 million in the same quarter of 2014. For the full year 2015, operating income before one-time items was $75.5 million, up 2% from $74.4 million a year earlier.

Net income excluding non-recurring items, net of tax, was $16.1 million in the 2015 fourth quarter, a 5% increase compared with $15.3 million a year earlier. Diluted earnings per share attributed to shareholders, excluding non-recurring items, rose to $0.62 for the 2015 fourth quarter, a 3% increase from $0.60 for the 2014 period. For the full year 2015, net income excluding non-recurring items, net of tax was $48.5 million or $1.88 per diluted share, compared to $48.4 million or $1.86 per diluted share, for 2014.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “Our 2015 performance represented the sixth consecutive year of sales growth. We delivered a 10% increase in top-line in original currency.”

“While 2015 was a challenging year for the global economy, we benefitted from our business model, which combines a diverse blend of branded and private label products, an expanded global presence and a range of market segments. Among our key highlights during the year, we improved our performance at Delta USA and in the global upper market, and in addition we acquired the P.J. Salvage brand." Mr. Dabah added: "We expanded our prominent portfolio of licensed brands with men’s and ladies underwear licenses for Columbia Sportswear, a sleepwear and intimates license for Juicy Couture, and an exclusive license for Puma sportswear brand products in Israel – all of which will contribute to our growth potential in future years.”

“Looking to the future, we have made several investments in the Company to position us for long-term growth and enhance our shareholders value.” Mr. Dabah continued, “In 2015 we significantly increased our capital expenditures to support and drive our global growth, adding a factory in Vietnam and a dye house in Egypt, and we additionally consolidated our headquarters and invested in new offices and showrooms in New York and Israel. These investments have positioned us to continue to innovate, add new customers and licenses, and expand our international scope.”

Cash Flow, EBITDA, Net Debt, Equity, Dividend and Shares Buy Back Plan

Operating cash flow was $60.3 million in the fourth quarter and $70.5 million in the full year 2015, compared to $34.9 million and $53.3 million for the 2014 fourth quarter and full year, respectively.

EBITDA was $29.5 million, or 10.3% of sales in the 2015 fourth quarter, increasing 6% from $28.0 million in the 2014 fourth quarter. EBITDA for the full year 2015 was $95.3 million, or 8.8% of sales, increasing 3% from $93.0 million for the full year 2014.

Net financial debt was $74.5 million at December 31, 2015, versus $64.5 million a year earlier. The increase in net financial debt was primarily due to the acquisition of P.J. Salvage which amounted to $37.4 million and increase in investments partly offset by the positive operating cash flow.

Equity as of December 31, 2015 was $357.5 million, up from $332.6 million a year earlier.

Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on March 15, 2016. The determining and "ex-dividend" date will be March 2, 2016, per the Tel Aviv Stock Exchange.

The Board of Directors approved Shares Buy Back plan of up to $7.5 million.

2016 Financial Guidance

Delta Galil provided its 2016 financial guidance, excluding non-recurring items which is based on current market conditions and current exchange rate of $1.1 per euro and 3.9NIS per US$.

• Full-year 2016 sales are expected to range between $1,090 million-$1,110 million, representing an increase of 1%-3% from 2015 actual sales of $1,080.0 million.
• Full-year 2016 EBIT is expected to range between $78 million-$82 million, representing an increase of 3%-8% from 2015 actual EBIT before non-recurring items of $75.5 million.
• Full-year 2016 EBITDA is expected to range between $99.0 million-$103.0 million, representing an increase of 3%-8% from 2015 actual EBITDA of $95.3 million.
• Full-year 2016 net income is expected to range between $49.5 million-$52.0 million, representing an increase of 2%-7% from 2015 actual net income of $48.5 million.
• Full-year 2016 diluted EPS is expected to range between $1.93-$2.02, representing an increase of 2%-7% from 2015 actual EPS of $1.88.

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.

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of December 31, 2015
	December 31
	2015	2014
	Thousands of Dollars
Assets
Current assets:
Cash and cash equivalents	167,532	166,958
Restricted Cash	532	369
Other accounts receivable:
Trade receivables	105,630	108,559
Taxes on income receivable	8,963	6,096
Others	15,882	26,202
Financial derivative	209	329
Inventory	196,172	181,687
Assets classified as held for sale	1,000	1,000
Total current assets	495,920	491,200
Non-current assets:
Investments in associated companies accounted using the equity method and long-term receivables	5,421	8,013
Investment property	3,573	4,132
Fixed assets, net of accumulated depreciation	122,129	98,861
Goodwill	70,101	51,501
Intangible assets, net of accumulated amortization	89,734	67,005
Deferred tax assets	9,877	11,348
Financial derivative	1,439	1,254
Total non-current assets	302,274	242,114
Total assets	798,194	733,314

	December 31
	2015		2014
	Thousands of Dollars
Liabilities and Equity
Current liabilities:
Short-term bank loans	52		931
Current maturities of debentures	23,365		23,054
Financial derivative	3,049		2,235
Other accounts payable:
Trade payables	100,956		80,648
Taxes on income payable	2,690		4,961
Others	65,807		57,548
Total current liabilities	195,919		169,377
Non-current liabilities:
Severance pay liabilities less plan assets	2,696		2,339
Other non-current liabilities	22,533		19,999
Debentures	211,728		197,262
Reserve for deferred taxes	2,528		2,954
Financial derivative	5,311		8,784
Total non-current liabilities	244,796		231,338
Total liabilities	440,715		400,715
Equity:
Equity attributable equity holders of the parent company:
Share capital	23,666		23,579
Share premium	130,421		128,274
Other capital reserves	(15,692	)	(6,598	)
Retained earning	228,817		197,135
Treasury shares	(10,849	)	(10,933	)
	356,363		331,457
Minority interests	1,116		1,142
Total equity	357,479		332,599
Total liabilities and equity	798,194		733,314
The enclosed notes constitute an integral part of these Financial Statements

DELTA GALIL INDUSTRIES LTD.
Concise Consolidated Statement of Comprehensive Income
For the 3-month and 12-month periods ending December 31, 2015
	For the year ended December 31						Three months ended December 31
	2015		2014				2015		2014
	Thousands of Dollars				% change		Thousands of Dollars					% change
Sales	1,079,987		1,031,861		5	%	287,056		277,398			3	%
Cost of sales	763,261		713,798				198,712		192,178
Gross profit	316,726		318,063		-		88,344		85,220			4	%
% of sales	29.3	%	30.8	%			30.8	%	30.7	%
Selling and marketing expenses	208,283		211,507		(2	%)	57,495		54,735			5	%
% of sales	19.3	%	20.5	%			20.0	%	19.7	%
Administrative and general expenses	35,828		34,698		3	%	8,692		8,297			5	%
% of sales	3.3	%	3.4	%			3.0	%	3.0	%
Other income (expenses), net	2,208		2,674				1,407		(29	)
Share in losses (profit) of associated companies accounted for using the equity method	710		178				116		(146	)
Operating income excluding non-recurring items	75,533		74,354		2	%	23,680		22,305			6	%
% of sales	7.0	%	7.2	%			8.2	%	8.0	%
Cost associated with acquisition of activity	809		1,082				-		1,082
Restructuring expenses, impairment and onerous contract	5,747		182				5,747		-
Operating income	68,977		73,090				17,933		21,223
Finance expenses, net	16,594		15,806		5	%	4,472		5,054			(12	%)
Profit before tax on income	52,383		57,284				13,461		16,169
Taxes on income	8,435		9,853				1,188		1,639
Net income for the period	43,948		47,431		(7	%)	12,273		14,530			(16	%)
Net income for period excluding non-recurring items, net of tax	48,454		48,389		-		16,051		15,325			5	%
Attribution of net earnings for the period
Attributed to company's shareholders	43,828		46,760				12,243		14,500
Attributed to non-controlling interests	120		671				30		30
	43,948		47,431				12,273		14,530
Net diluted earnings per share attributed to shareholders of the company	1.71		1.82				0.48		0.56
Net diluted earnings per share excluding non-recurring items net of tax, attributed to shareholders of the company	1.88		1.86		1	%	0.62		0.60		3		%

DELTA GALIL INDUSTRIES LTD.
Concise Consolidated Cash Flow Reports
	For the year ended December 31
	2015		2014
	Thousands of Dollars
Cash flows from operating activities:
Net profit for the period	43,948		47,431
Adjustments required to reflect cash flows deriving from operating activities	49,811		28,352
Interest paid in cash	(13,573	)	(11,693	)
Interest received in cash	1,697		895
Taxes on income paid in cash, net	(11,421	)	(11,652	)
Net cash generated from operating activities	70,462		53,333
Cash flows from investment activities:
Acquisition of fixed assets and intangible assets	(38,077	)	(26,913	)
Restricted cash release (deposit)	(184	)	1,037
Acquisition of a subsidiary			(5,000	)
Acquisition of activity	(37,368	)
Investments in associated company	(2,000	)	(1,500	)
Acquisition of subsidiary, net of cash in the acquired company	673		-
Proceeds from selling of fixed asset	291		1,914
Payments related to realization of asset held for sale (Tax payment related to the realization)	10,879		(1,989	)
Others	(8	)	68
Net cash used for Investing activities	(65,794	)	(32,383	)
Cash flows from financing activities:
Dividends paid to non-controlling interest holders in consolidated subsidiary
	(146	)	(1,690	)
Long term payables credit for fixed assets purchase	(2,347	)	(2,459	)
Debentures principle repayment	(25,792	)	(17,699	)
Dividend paid	(14,073	)	(13,500	)
Repayment of loans and other long-term liabilities	(916	)	(696	)
Short-term credit from banking corporations, net	(3,212	)	(25,173	)
Debentures issuance return, excluding issuance expenses	40,006		115,689
A deposit with a banking corporation as security in respect of the SWAP transaction	1,660		(4,950	)
Proceeds from exercise of employee options	2,044		1,115
Net cash generated (used in) from financing activities	(2,776	)	50,637
Net increase in cash and cash equivalents	1,892		71,587
Exchange rate differences of cash and cash equivalents, net	(1,318	)	(1,975	)
Balance of cash and cash equivalents at the beginning of the period	166,958		97,346
Balance of cash and cash equivalents at the end of the Period	167,532		166,958

DELTA GALIL INDUSTRIES LTD.
Concise Consolidated Cash Flow Reports
	For the year ended December 31
	2015		2014
	Thousands of Dollars
Adjustments required to reflect cash flows
from operating activities:
Revenues and expenses not involving cash flow:
Depreciation	17,091		15,851
Amortization	2,678		2,751
Cash erosion, net	443		652
Interest paid in cash	13,573		11,693
Interest received in cash	(1,697	)	(895	)
Taxes on income paid in cash, net	11,421		11,652
Deferred taxes on income, net	1,075		(2,124	)
Severance pay liability, net	86		124
Restructuring expenses ,net	5,320		(77	)
Capital gain from sale of fixed assets	203		(1,257	)
Change in benefit component of options and restricted shares granted to Employees	2,240		716
Share in losses of associated companies accounted for using the equity method	(710	)	178
Increase in liabilities of Long-term employee bonuses			608
Others	(2,195	)	2,298
	49,528		42,170
Changes to operating assets and liabilities:
Decrease (increase) in trade receivables	3,518		(538	)
Increase in other receivable and balances	(4,970	)	(8,002	)
Increase in trade payables	19,092		11,816
Increase (decrease) in other payables	(1,326	)	4,600
Increase in inventory	(16,031	)	(21,694	)
	283		(13,818	)
	49,811		28,352