6% Sales Growth Across All Channels

EBIT Before Non-Core Items Increased 22% to $37.8 Million

Record Second Quarter Gross Margin of 41.9%

Strong Balance Sheet with Record Equity of $771.8 Million and Net Debt to EBITDA, Excluding IFRS 16, of 0.8x

Dividend declared of $8.0 Million for the Second Quarter 2024

Management Reaffirms 2024 Financial Outlook Based on Solid First Half Performance and Strong Order Backlog

CAESAREA, Israel, August 20, 2024--(BUSINESS WIRE)--Delta Galil Industries, Ltd. (DELG/Tel Aviv Stock Exchange), the global manufacturer and marketer of branded and private label intimate, activewear, loungewear and denim apparel for ladies, men, and children, today reported financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Highlights(comparisons are to prior year periodunless otherwise noted)

6% sales growth to $471.4 million across all channels Record second quarter gross margin of 41.9% up 150 basis points Second quarter EBIT before non-core items increased by 22% to $37.8 million, or 8.0% of sales, compared to $30.9 million, or 7.0% of sales, for the same period last year Second quarter net-income before non-core items increased by 27% to $21.0 million, or 4.5% of sales compared to $16.6 million, or 3.7% of sales, for the same period last year Second-quarter diluted earnings per share before non-core items increased 25% to $0.74 Operating cash flow, for the three months ended June 30, 2024, excluding IFRS 16, of $28.1 million Strong balance sheet with $166.3 million in cash and record shareholders’ equity of $771.8 million at June 30, 2024 Net debt, excluding IFRS 16, declined 19% to $153.3 million, compared to $189.5 million at June 30, 2023 Net Debt to EBITDA, Excluding IFRS 16, of 0.8x Dividend declared of $8.0 million, or $0.31 per share, which will be distributed on September 4, 2024, with a record and "ex-dividend" date of August 27, 2024 The Company reaffirms its 2024 full-year Outlook

Isaac Dabah, CEO of Delta Galil, stated, "This was another strong quarter for Delta Galil, highlighted by record second-quarter DTC sales, growth in our Private Label sector, and significant expansion in profitability. Our strategic initiatives, aimed at enhancing operating efficiencies and realigning our manufacturing capabilities, have led to a record second-quarter gross margin of 41.9%, marking the fourth consecutive quarterly record of gross margin."

Mr. Dabah added, "Within our branded business, we are particularly excited about the launch and expansion of key brands such as Florence by Mills and Organic Basics. These launches, amongst others, will position us for consistent, long-term growth. The continued strength of Delta Israel Brands, marked by a 23.2% year-over-year increase in second quarter retail same-store sales and the successful launch of Bath and Body Works and Victoria's Secret in Israel, underscores our growing momentum. Furthermore, our positive operating leverage, reflected in a 100-basis point year-over-year increase in EBIT before non-core margin to 8.0%, demonstrates our ability to balance short-term profitability with long-term strategic investments."

Story Continues

Mr. Dabah concluded, "I am excited with the direction Delta is headed, as we benefit from a diversified portfolio and strategies focused on driving sustainable profitable growth. Our continuous commitment to product innovation continues to fuel growth for both our Private Label customers and our Brands, creating a powerful flywheel of market and consumer insights that we believe will continue to support profitable growth in both pillars."

Sales

The Company reported second quarter 2024 sales of $471.4 million, a 6% increase from $443.6 million in the second quarter of 2023. First-half sales were $922.2 million, a 4% increase from $886.0 million in the prior-year period.

Gross Margin

The Company reported record second quarter gross margin of 41.9% as compared to 40.4% for the same period last year. The 150-basis point expansion was due primarily to a better segment and channel mix and improved profitability of our factories due to higher volume. Gross margin in the first half of 2024 increased by 240-basis points to a first half record of 42.1%, compared to 39.7% in the first half of 2023.

EBIT

EBIT in the second quarter of 2024 increased by 34% to $37.8 million, or 8.0% of sales compared to $28.2 million, or 6.4% of sales in the prior-year period. EBIT before non-core items increased by 22% to $37.8 million, or 8.0% of sales, compared to $30.9 million, or 7.0% of sales, in the second quarter of 2023.

EBIT in the first half of 2024 was $63.8 million, compared to $42.7 million in the same period last year. In the first half of 2024, EBIT before non-core items was $67.2 million, or 7% of sales, compared to $50.7 million, or 6% of sales, in the first half of 2023.

The increase in EBIT was due to higher sales and gross margin and leverage of effective operational structure partially offset by higher SG&A expenses derived directly from revenues growth as well as from investing in new licenses and brand's launch activities.

Non-Core Items

In the second quarter of 2024, no non-core items were recorded, compared to $6.0 million of expenses related to realignment plans, $4.0 million benefit from the change in the fair value of earn-out liability, and $0.7 million of deal costs in the second quarter of 2023. For the first half of 2024, expenses associated with the Company’s previously disclosed realignment plan for Bare Necessities were $3.4 million, compared to $11.4 million of expenses related to realignment plans, $4.0 benefit from the change in the fair value of earn-out liability, and $0.7 million of deal costs in the first half of 2023.

Net Income

Net income in the second quarter of 2024 increased 40% to $21.0 million, compared to $15.0 million in the second quarter last year. Net income, excluding non-core items, net of tax, increased by 27% to $21.0 million, compared to $16.6 million in the second quarter of 2023.

Net income in the first half of 2024 increased 83% to $33.1 million, compared to $18.1 million in the first half last year. Net income excluding non-core items, net of tax, increased 46% to $35.5 million, compared to $24.3 million in the first half of 2023.

Diluted Earnings Per Share

Diluted earnings per share in the second quarter of 2024 were $0.74, compared to $0.53 in the second quarter of 2023. Diluted earnings per share, excluding non-core items, net of tax, were $0.74 compared to $0.59 in the second quarter of 2023.

Diluted earnings per share in the first half of 2024 were $1.13, compared to $0.61 in the same period last year. Diluted earnings per share, excluding non-core items, net of tax, were $1.22 compared to $0.85 in 2023.

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

EBITDA excluding IFRS 16 impact in the second quarter of 2024 was $46.5 million, compared to $38.0 million in the second quarter of 2023. In the first half of 2024, EBITDA excluding IFRS 16 impact was $84.2 million, compared to $66.5 million in the first half of 2023.

Cash flow generated from operating activities, excluding IFRS 16, was $28.1 million, compared to $58.4 million in the second quarter of 2023. Cash flow generated from operating activities, excluding IFRS 16, was $51.5 million in the first half of 2024, compared to $69.3 million in the first half of 2023. The year-over-year reduction in operating cash flow was primarily attributable to changes in working capital, mainly inventory, to support the expected growth in sales in the second half of 2024.

Net financial debt, excluding IFRS 16, at June 30, 2024, was $153.3 million, compared to $189.5 million at June 30, 2023. The year-over-year reduction in net debt is primarily due to the strong operating cash flow, partially offset by growth-oriented capital expenditures and dividend payments.

Equity on June 30, 2024, was a record of $771.8 million, up 8.2% from $713.6 million on June 30, 2023.

Delta Galil declared a dividend of $8.0 million, or $0.31 per share, which will be distributed on September 4, 2024, with a record and "ex-dividend" date of August 27, 2024.

2024 Financial Outlook

The Company reaffirms its 2024 outlook based on the Company’s solid first half performance and strong backlog.

Full Year 2024

Outlook

(in millions, except per share amount)  2023

Results

(in millions, except per share amount)  Sales  $1,991.0 – 2,031.0  $1,857.7  EBIT  $173.0 – 183.0  $153.0 EBITDA  $266.3 – 276.3  $246.8 Net income  $106.9 – 114.7  $91.6 Diluted EPS ($)  $3.82 – 4.11  $3.25

The Company’s outlook excludes non-core items and includes IFRS 16

These forward-looking statements are based largely on the expectations of the Company and are subject to uncertainties including macroeconomic trends. Actual results may differ materially from those included in the guidance as result of risks and uncertainties which cannot be fully predicted. There is no certainty that the aforementioned conditions will occur, and actual results may be significantly different from those forecasted or implied above.

Constant Currency - Excluding the Impact of Foreign Currency This release refers to "reported" amounts in accordance with IFRS accounting principles ("GAAP"), which include translation and transactional impacts from foreign currency exchange rates. The release also refers to "constant dollar" amounts, which exclude the impact of translating foreign currencies into U.S. dollars, and are considered a non-GAAP financial measure. These constant currency performance measures should be viewed in addition to, and not in lieu of, or superior to, Delta Galil’s operating performance measures calculated in accordance with GAAP.

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 endeavored 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; underwear for men including under its owned brands Schiesser, Eminence, Organic Basics, and Athena; babywear, activewear, sleepwear, and loungewear including under its owned P.J. Salvage and Delta brands. Delta Galil also designs, develops markets and sells branded denim and apparel under the brand 7 For All Mankind®, and ladies’ and kids’ apparel under the brand Splendid®. In addition, it sells its products under brand names licensed to the company, including adidas, Wolford, Wilson, 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, tax rates in the various countries the company operates in, 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.

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of June 30, 2024  June 30  December 31 2024  2023  2023 (Unaudited)  (Audited) Thousands of Dollars   Assets  Current assets:  Cash and cash equivalents  164,292  134,883  174,463 Restricted Cash  2,050  3,092  2,950 Short-term deposit  -  42,874  - Trade receivables  214,009  182,687  241,216 Taxes on income receivable  3,235  2,381  77 Others  51,217  43,939  48,920 Financial derivative  39  139  228 Inventory  418,381  452,017  361,416 Assets held for sale  1,773  1,827  1,773 Total current assets  854,996  863,839  831,043  Non-current assets:  Investments in associated companies accounted using the equity method and long-term receivables  13,858  12,596  14,897 Investment property  2,528  2,691  2,679 Fixed assets, net of accumulated depreciation  266,516  239,536  250,343 Goodwill  144,341  144,902  145,577 Intangible assets, net of accumulated amortization  289,447  272,094  277,952 Assets in respect of usage rights  239,023  199,262  237,177 Deferred tax assets  33,778  24,350  28,016 Financial derivative  269  939  903 Total non-current assets  989,760  896,370  957,544 Total assets  1,844,756  1,760,209  1,788,587

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Balance Sheets As of June 30, 2024  June 30  December 31 2024  2023  2023 (Unaudited)  (Audited) Thousands of Dollars  Liabilities and Equity  Current liabilities:  Short-term bank loans  28,143   30,934   822  Current maturities of bank loans  24,983   43,709   24,105  Current maturities of bonds  29,638   29,873   29,597  Financial derivative  1,887   1,872   1,380  Current maturities of leases liabilities  51,865   50,290   52,583  Trade payables  227,129   186,561   168,637  Taxes on income payable  30,247   29,797   35,182  Provision for restructuring plan  3,051   7,071   3,574  Others accounts payable  149,150   138,378   165,791  Total current liabilities  546,093   518,485   481,671   Non-current liabilities:  Bank loans  132,903   128,560   140,790  Severance pay liabilities, net  5,402   5,508   5,327  Liabilities in respect of leases  207,758   171,424   204,746  Other non-current liabilities  49,556   57,538   53,241  Bonds  93,135   125,350   96,496  Deferred taxes liabilities  34,458   36,589   35,812  Financial derivative  3,688   3,154   2,122  Total non-current liabilities  526,900   528,123   538,534  Total liabilities  1,072,993   1,046,608   1,020,205   Equity:  Equity attributable to equity holders of the parent company:  Share capital  23,714   23,714   23,714  Share premium  125,570   128,016   127,861  Other capital reserves  18,728   25,054   28,133  Retained earning  585,164   523,071   571,846  Treasury shares  (11,377 )  (13,823 )  (13,668 ) 741,799   686,032   737,886  Minority interests  29,964   27,569   30,496  Total equity  771,763   713,601   768,382  Total liabilities and equity  1,844,756   1,760,209   1,788,587

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Statement of Income For the 6-month and 3-month periods ending June 30, 2024  Six months ended June 30  Three months ended June 30 2024  2023  2024  2023 (Unaudited) Thousands of Dollars (Excluding earning per share figures)   Sales  922,205   886,040   471,426   443,583  Cost of sales  534,316   534,038   274,036   264,492  Gross profit  387,889   352,002   197,390   179,091  % of sales  42.1 %  39.7 %  41.9 %  40.4 % Selling and marketing expenses  269,209   253,536   134,398   123,897  % of sales  29.2 %  28.6 %  28.5 %  27.9 % General and administrative expenses  51,551   47,889   25,144   24,559  % of sales  5.6 %  5.4 %  5.3 %  5.5 % Other Expenses (income), net and Share in profits of associated company  (27 )  (164 )  42   (265 ) Operating income excluding non-core items  67,156   50,741   37,806   30,900  % of sales  7.3 %  5.7 %  8.0 %  7.0 % Non-core items  3,360   8,087   -   2,666  Operating income  63,796   42,654   37,806   28,234  Finance expenses, net  21,836   20,509   10,898   9,927  Income before taxes on income  41,960   22,145   26,908   18,307  Taxes on income  8,890   4,080   5,887   3,257  Net income for the period  33,070   18,065   21,021   15,050  Net income for the period excluding non-core items, net of tax  35,507   24,324   21,021   16,552   Net income for the period attributed to the company's shareholders excluding non-core items, net of tax  32,064   22,319   19,288   15,445   Attribution of net earnings for the period:  Attributed to company's shareholders  29,627   16,122   19,288   14,005  Attributed to non-controlling interests  3,443   1,943   1,733   1,045  33,070   18,065   21,021   15,050   Net diluted earnings per share attributed to company's shareholders  1.13   0.61   0.74   0.53   Net diluted earnings per share, before non-core items, net of tax, attributable to Company's shareholders  1.22   0.85   0.74   0.59

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Cash Flow Reports For the 6-month and 3-month periods ending June 30, 2024  Six months ended June 30  Three months ended June 30 2024  2023  2024  2023 (Unaudited) Thousands of Dollars  Cash flows from operating activities:  Net income for the period  33,070   18,065   21,021   15,050  Adjustments required to reflect cash flows deriving from (used in) operating activities  77,017   93,296   33,680   52,958  Interest paid in cash  (14,519 )  (16,896 )  (5,997 )  (4,465 ) Interest received in cash  2,265   1,245   1,031   146  Taxes on income refund (paid) in cash, net  (21,574 )  (1,426 )  (9,050 )  6,827  Net cash generated from (used in) operating activities  76,259   94,284   40,685   70,516   Cash flows from investment activities:  Change in short-term deposit, net  -   18,574   -   19,176  Purchase of fixed assets and assets under construction  (35,889 )  (21,180 )  (23,594 )  (15,952 ) Purchase of intangible assets  (21,424 )  (1,720 )  (4,060 )  (444 ) Proceeds from selling of fixed asset  248   444   28   301  Others  1,678   821   1,262   (255 ) Net cash generated from (used in) Investing activities  (55,387 )  (3,061 )  (26,364 )  2,826   Cash flows from financing activities:  Dividends paid to non-controlling interest holders in consolidated subsidiary  (2,699 )  (1,400 )  (899 )  (404 ) Long term payables credit for fixed assets purchase  (2,812 )  (3,566 )  (1,406 )  (335 ) Lease principle repayment  (24,721 )  (24,952 )  (12,634 )  (12,133 ) Repayment of bonds  -   (15,140 )  -   -  Dividend paid  (17,001 )  (12,028 )  (7,980 )  (4,010 ) Receipt of a long-term loans from banking corporations  2,159   -   1,616   -  Repayment of long-term loans from banking corporations  (7,961 )  (3,732 )  (1,807 )  (1,827 ) Short-term credit from banking corporations, net  27,343   (20,539 )  (9,939 )  (36,276 ) Others  -   (719 )  (1,734 )  (719 ) Net cash used in financing activities  (25,692 )  (82,076 )  (34,783 )  (55,704 ) Net increase (decrease) in cash and cash equivalents  (4,820 )  9,147   (20,462 )  17,638   Exchange rate differences and revaluation of cash and cash equivalents, net  (5,351 )  (913 )  (2,615 )  (1,022 )  Balance of cash and cash equivalents at the beginning of the period, net  174,463   126,649   187,369   118,267  Balance of cash and cash equivalents at the end of the Period, net  164,292   134,883   164,292   134,883

DELTA GALIL INDUSTRIES LTD. Concise Consolidated Cash Flow Reports For the 6-month and 3-month periods ending June 30, 2024  Six months ended June 30  Three months ended June 30 2024  2023  2024  2023 (Unaudited) Thousands of Dollars  Adjustments required to reflect cash flows from operating activities:  Revenues and expenses not involving cash flow:  Depreciation  15,945   17,887   7,614   8,521  Amortization  33,968   32,456   16,358   16,329  Exchange rate (gains) losses  524   (8 )  114   (75 ) Interest on loans and bonds  8,848   12,660   3,050   2,460  Interest received in cash  (2,265 )  (1,245 )  (1,031 )  (146 ) Taxes on income paid in cash, net  21,574   1,426   9,050   (6,827 ) Deferred taxes on income, net  (6,138 )  (2,200 )  (1,593 )  411  Interest due to lease agreements  5,671   4,236   2,947   2,005  Severance pay liability, net  192   (832 )  5   (383 ) Change in restructuring accrual  (523 )  4,230   (512 )  3,356  Income from decrease of earn-out liability  -   (4,000 )  -   (4,000 ) Capital gain  (90 )  (206 )  (14 )  (204 ) Change to the benefit component of options granted to employees  749   1,726   348   917  Credit losses from trade receivables  1,046   255   412   357  Share in (profits) losses of associated company accounted for using the equity method  (20 )  (204 )  40   (140 ) Others  (2,286 )  3,126   (411 )  (1,092 ) 77,195   69,307   36,377   21,489  Changes to operating assets and liabilities:  Decrease (increase) in trade receivables  22,089   52,757   (11,391 )  13,723  Decrease (increase) in other receivable and balances  (4,158 )  (2,939 )  (2,381 )  5,367  Decrease (increase) in trade payables  61,440   (25,156 )  25,980   (2,943 ) Decrease (increase) in other payables  (16,139 )  (36,372 )  12,191   (7,617 ) Decrease (Increase) in inventory  (63,410 )  35,699   (27,096 )  22,939  (178 )  23,989   (2,697 )  31,469  77,017   93,296   33,680   52,958

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