Sales up 16% to $483.9 Million

EBIT Increased 22% to $34.2 Million, and Operating Margins Increased 40 Basis Points to 7.1%, Reaching Record Quarterly Levels for the Seventh Consecutive Quarter

Net Profit Increased 26% to $18.9 Million

Company Declares Increased Dividend for Q1 compared to Q1 2021, of $6.0 Million, or $0.235 Per Share

Company Reaffirms Full Year 2022 Earnings Guidance Reflecting Double Digit Growth in Sales and Profitability – Sales Expected to Reach $2,082 -$2,135 Million, Net Profit $138 - $145 Million and EPS $4.80 - $5.09

Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange), the global manufacturer and marketer of branded and private label intimate, activewear, loungewear and denim apparel for men, women and children, today reported a strong start to 2022 with record financial results for the first quarter ended March 31, 2022.

Highlights

• Q1 sales reached record levels for the fifth consecutive quarter, increasing 16% to $483.9 million, from $416.1 million in Q1 2021.
• Operating margin reached record levels for the seventh consecutive quarter, increasing 40 basis points to 7.1%, from 6.7 % in Q1 2021.
• Net income reached record levels as well, up 26% to $18.9 million, compared to $15.1 million in Q1 2021.
• Q1 earnings per share (EPS) amounted to a record level, up 18% to $0.67, from $0.57 in Q1 2021.
• Strong balance sheet highlighted by $223 million in cash and $652 million in equity as of March 31, 2022.
• Delta Galil declares a dividend of $6.0 million, or $0.235 per share, to be distributed on May 31, 2022. The “record” and "ex-dividend" date will be May 23, 2022.

Isaac Dabah, CEO of Delta Galil, stated: “We are pleased with our strong first quarter results, which marked five consecutive quarters of record quarter revenue and seven consecutive quarters of record quarter operating margins. We delivered record quarterly EBIT and net income, driven by higher sales across all geographic regions, successful execution of our innovation-driven growth strategy, and benefits from operating leverage. We maintained strong gross margins despite rising freight and production costs.

Looking ahead, our profitable growth trajectory, strong balance sheet and global workforce position us to meet our customers’ growing demands, while effectively managing our cost structure.”

Sales

The Company reported sales of $483.9 million in the first quarter of 2022, a 16% increase from $416.1 million in the first quarter of 2021.

Digital Sales

Owned e-commerce website sales declined 22% in the first quarter of 2022, to $54.9 million, compared to $70.8 million in the first quarter of 2021. The decrease was primarily due to a decline in web traffic as customers shifted back to stores.

Gross Profit

Gross profit in the first quarter of 2022 increased 15% to $183.3 million, compared to $159.0 million in the first quarter of 2021, driven by the strong growth in sales. Gross margins slightly decreased to 37.9% of sales in the first quarter of 2022, compared to 38.2% of sales in the first quarter of 2021, due mainly to increased freight and raw material costs, partially offset by a favorable shift in customer mix and increased profitability of the Company’s factories.

EBIT

EBIT in the first quarter of 2022 increased 22% to $34.2 million, compared to $28.0 million in the first quarter of 2021. The increase was driven by higher sales, and operational and SG&A leverage.

Net Income

Net income in the first quarter of 2022 increased 26% to $18.9 million, compared to $15.1 million in the first quarter of 2021.

Diluted Earnings Per Share

Diluted earnings per share in the first quarter of 2022 rose 18% to $0.67, compared to diluted earnings per share of $0.57 in the first quarter of 2021.

EBITDA, Cash Flow, Net Debt, Equity, and Dividend

EBITDA excluding IFRS 16 in the first quarter of 2022 was $42.6 million, compared to $36.5 million in the comparable 2021 period.

Net cash used in operating activities excluding IFRS 16 was $52.6 million in the first quarter of 2022, compared to net cash provided by operating activities of $21.4 million in the same period in 2021. The decrease reflected higher working capital investments, mainly in the Company’s inventory, to better support growth and service seasonal inventory requirements.

Net financial debt excluding IFRS 16 as of March 31, 2022 was $172.4 million, up from $150.2 million as of March 31, 2021.

Equity on March 31, 2022 reached a record of $651.7 million, compared with $558.6 million a year earlier.

Delta Galil declares a dividend of $6.0 million, or $0.235 per share, to be distributed on May 31, 2022. The “record” and "ex-dividend" date will be May 23, 2022.

2022 Financial Guidance

Company Reaffirms Full Year 2022 Earnings Guidance Reflecting Double Digit Growth in Sales and Profitability.

Delta Galil’s 2022 guidance excludes non-core items and includes IFRS 16 assuming there is no major resurgence of the COVID-19 pandemic that leads to quarantines and/or lockdowns in any countries in which the Company sells or manufactures its products:

• Full-year 2022 sales are expected to range between $2,082 million and $2,135 million, representing an increase of 7% to 9% compared to 2021 sales of $1,951 million.
• Full-year 2022 EBIT is expected to range between $210 million and $220 million, representing an increase of 12% to 17% compared to 2021 EBIT of $188.1 million.
• Full-year 2022 EBITDA is expected to range between $312 million and $322 million, representing an increase of 9% to 12% compared to 2021 EBITDA of $286.8 million.
• Full-year 2022 net income is expected to range between $138 million and $145 million, representing an increase of 11% to 17% compared to 2021 net income of $124.2 million.
• Full-year 2022 diluted EPS is expected to range between $4.80 and $5.09, representing an increase of 8% to 15% compared to 2021 EPS of $4.44.

Earnings Presentation

The Company will host an in-person investor meeting to discuss first quarter 2022 results and its business outlook at the Tel Aviv Stock Exchange on Monday May 16, 2022 at 9:00 a.m. Israel Daylight Time. A recording and transcript of the presentation will be available later in the week at deltagalil.com/investor-relations/events-presentations.

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 and branded men’s underwear for brands including Schiesser, Eminence and Athena; babywear, activewear, sleepwear under the P.J. Salvage brand, and leisurewear. Delta Galil also designs, develops, markets and sells branded denim and apparel under the 7 For All Mankind® brand, and ladies’ apparel under the Splendid® brand. In addition, it sells its products under brand names licensed to the Company, including adidas, Wolford, Wilson, Spalding, Columbia, Tommy Hilfiger and others. 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.

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