Delta Galil Reports All Time high 4th Quarter and Full Year 2021 Results

Q4 Sales Rose 26% to a Record $578.0 Million

FY Sales At All Time High of $1,951 Million

FY Net Profit Excluding Non-Core Items Increased 106% to $124.2 Million Vs. Prior Record Year 2019

Q4 Net Profit Excluding Non-Core Items Increased 67% to Record $45.5 Million

FY Strong Operating Cash Flow of $166 Million

Company Increased Dividend to $10 Million, or $0.39 Per Share

Company Exceeded 2021 Guidance & Increased 2022 Guidance

Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange), 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 record financial results for the fourth quarter and full year ended December 31, 2021.

Isaac Dabah, CEO of Delta Galil, stated: “We are very pleased to have completed 2021 with an exceptional quarter, reflecting the successful execution of our growth strategy. Throughout the year, we consistently delivered higher sales and better profitability, as demonstrated by Q4 representing our fourth consecutive quarter of record revenues and sixth consecutive quarter of record operating margin. We concluded the year with strong growth in all channels, geographies and segments, and expect momentum to continue in 2022. With a solid foundation in place and enhanced performance of our growth engines, we will continue to invest in our technology, manufacturing and distribution infrastructure to support our growth needs.”

Highlights

• Q4 sales rose 26% to a record $578.0 million, compared to $459.7 million in Q4 2020.

• Q4 EBIT increased 49% to a record $64.7 million, from $43.4 million in Q4 2020.

• Q4 net profit increased 92% to a record $45.5 million, compared to $23.7 million in Q4 2020.

• Q4 EBITDA excluding IFRS 16 increased to a record $75.0 million, compared to $55.6 million in Q4 2020.

• Q4 earnings per share (EPS) excluding one-time items increased to a record $1.60, compared to $1.08 in Q4 2020.

• Operating cash flow excluding IFRS 16 was a strong $121 million, while the balance sheet was highlighted by $649.2 million in equity as of December 31, 2021.

• Net financial debt excluding IFRS 16 declined to the lowest level since the end of 2015, at $95.2 million as of December 31, 2021, compared to $236.3 million as of December 31, 2020.

• The Company declared a dividend of $10 million, or $0.39 per share, to be distributed on March 8, 2022. The determining and “ex-dividend” date will be February 23, 2022.

Sales

The Company reported sales of $578.0 million for the fourth quarter of 2021, a 26% increase compared to $459.7 million for the fourth quarter of 2020. Sales for the 2021 full year were $1,951.0 million, a 35% increase from $1,446.2 million for the same period last year. Effective as of the second quarter of 2021, Delta Galil reorganized its business segments to better reflect and align with its strategic focus. The new segments – Brands (owned and licensed), Private Label, Delta Israel, 7 for All Mankind and Online Retailer – all contributed to the recent sales growth. Growth was also seen across all geographic regions and sales channels.

Digital Sales

E-commerce own website sales were increased by 149% and amounted to $66.9 million for the fourth quarter of 2021, compared $26.9 million in the fourth quarter of 2019, but reduced by 12% compared to $76.1 million in the fourth quarter of 2020. E-commerce own website sales for the 2021 full year increased 282% and amounted to $253.6, compared to $66.3 million in 2019, and by 66% compared to $152.5 million in 2020

EBIT

EBIT excluding one-time items for the fourth quarter of 2021 was an all-time high of $64.7 million, a 36% increase compared to $47.7 million for the same period last year. The record-breaking EBIT was driven by higher sales of all segments and improved SG&A leverage of fixed costs.

EBIT for the 2021 full year excluding one-time items was $188.1 million, a 282% increase from $49.3 million in the comparable 2020 full year.

Net Income

Net income for the fourth quarter of 2021 increased 92% to $45.5 million, from $23.7 million in the fourth quarter last year. Excluding one-time items, net income was $45.5 million for the fourth quarter of 2021, a 67% increase compared to $27.3 million for the fourth quarter of 2020.

For the 2021 full year, net income was $120.3 million, compared to a net loss of $40.5 million for the same period last year. Excluding one-time items, net income for the 2021 full year was $124.2 million, compared to $3.8 million for the 2020 full year.

Diluted Earnings Per Share

Diluted earnings per share for the fourth quarter of 2021 were $1.60, compared to $0.94 fourth quarter of 2020. Excluding one-time items, diluted earnings per share were $1.60, compared to $1.08 for the fourth quarter of 2020.

For the 2021 full year, diluted earnings per share were $4.29 compared to diluted loss per share of $1.56 in the 2020 full year. Excluding one-time items, diluted earnings per share amounted to $4.44 for the 2021 full year, compared to $0.18 for same period last year.

EBITDA, Cash Flow, Net Debt and Equity and Dividend

EBITDA excluding IFRS 16 increased to $75.0 million for the fourth quarter of 2021, from $55.6 million in the comparable fourth quarter of 2020.

For the 2021 full year, EBITDA excluding IFRS 16 increased to $223.1 million, from $81.1 million in the 2020 full year.

Operating cash flow for the fourth quarter of 2021 was $72.0 million, compared to $83.7 million in the fourth quarter of 2020. Excluding IFRS 16 and loss from early redemption of bonds, operating cash flow was $57.9 million in the 2021 fourth quarter, compared to $75.6 million in the same period last year. The decrease compared with the year-ago period was primarily due to higher operational working capital to accommodate additional inventory to support our anticipated sales growth and due to longer lead times.

Operating cash flow excluding IFRS 16 and loss from early redemption of bonds for the year ended December 31, 2021 was $120.8 million, compared to $161.6 million for the year ended December 31, 2020.

Net financial debt excluding IFRS 16 as of December 31, 2021 was $95.2 million, compared to $236.4 million as of December 31, 2020, the lowest level since 2015.

Equity on December 31, 2021 was $649.2 million, compared with $476.4 million a year earlier.

Delta Galil declared a dividend of $10 million, or $0.39 per share, to be distributed on March 8, 2022. The determining and “ex-dividend” date will be February 23, 2022.

2022 Financial Guidance

As a result of the Company’s exceeded 2021 guidance, combined with current market conditions, Delta Galil increased the lower end of its 2022 financial guidance. This guidance excludes non-core items and is based on 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%-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%-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%-12% from 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%-17% from 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%-15% from 2021 EPS of $4.44.

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 including the brands Schiesser, Eminence, Athena & Liabel; babywear, activewear, sleepwear such as the PJ Salvage brand, and leisurewear. Delta Galil also designs, develops markets and sells branded denim and apparel under the brand 7 For All Mankind®, and ladies apparel under the brand Splendid®. In addition, it sells its products under brand names licensed to the company, including 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.

Source: Delta Galil Industries, Ltd.

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