Delta Galil Reports First Quarter 2019 Results

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, women and children, as well as
leisurewear, activewear and denim, today reported its financial results
for the first quarter ended March 31, 2019. The Company’s results for
the first quarter of 2019 reflect the application of International
Financial Reporting Standard 16 (“IFRS 16”) with respect to accounting
for leases.

Sales

The Company reported a 9% increase in sales of $365.4 million for the
first quarter of 2019, compared to $334.5 million for the first quarter
last year. The sales increase largely reflected top-line growth in Delta
Galil USA, Delta Galil’s Global Upper Market, Delta Israel, and Delta
European Brands, which included a strong contribution from its newly
acquired Eminence business.

Operating Profit

Operating profit was $10.4 million for the first quarter of 2019,
compared to $14.0 million in the first quarter of 2018, representing a
25% decrease.

Net Income

Net income was $3.0 million in the first quarter of 2019, compared to
$7.4 million in the same quarter last year, a 59% decrease.

Diluted earnings per share were $0.12 the first quarter of 2019,
compared to $0.30 in the first quarter of 2018, a 61% decrease.

Management Comment

Isaac Dabah, CEO of Delta Galil, stated: “We concluded the quarter with
a 9% increase in sales and a significant improvement in cash flow;
however, our first quarter results were impacted by the devaluation of
the Euro and NIS versus the US dollar, and a shift of holiday sales to
the second quarter. Still, we remain pleased as we continue to benefit
from a diversified model, including a range of business segments,
product categories and an expanded global presence, that enables us to
drive momentum and balance. In the first quarter of 2019, we saw a
strong performance from Delta Galil USA, Global Upper Market, and a
contribution from Eminence.”

“During the quarter, we continued to improve efficiencies at our
factories and expect full operational status for 2019. Our Delta Galil
Premium Brands business was impacted by the shift in holiday and the
depreciation of the Euro, as well as a new store opening expenses;
however it remains an exciting growth opportunity.”

“As we look ahead, we remain committed to investing in new products and
resources to deliver sustained profitable growth and long-term
shareholder value. With a strong balance sheet in place, we have the
necessary financial resources to continue to innovate and grow -- both
organically and through strategic acquisitions.”

EBITDA, Cash Flow, Net Debt, Equity and Dividend

EBITDA was $30.6 million in the first quarter of 2019, up 43% from $21.4
million in the same quarter last year.

Operating cash flow was negative $2.8 million in the first quarter of
2019, compared to negative $30.3 million in the first quarter of 2018,
representing a $14.1 million Cash Flow improvement and $13.4 million
rental expenses classification to finance activities due to the IFRS 16
implementation.

Net financial debt as of March 31, 2019 was $361.8 million, compared to
$170.0 million as of March 31, 2018.

Equity on March 31, 2019 was $456.1 million, approximately equal to $459
million a year earlier.

Delta Galil declared a dividend of $1.5 million, or $0.059 per share, to
be distributed on June 5, 2019. The determining and "ex-dividend" date
will be May 23, 2019.

2019 Financial Guidance

Delta Galil reaffirmed its 2019 financial guidance, excluding one-time
items, which is based on current market conditions and current exchange
rates of: Euro/USD 1.14 and USD / NIS 3.65. The Company’s financial
guidance for 2019 includes the impact of IFRS 16 on accounting for
leases.

• Full-year 2019 sales are expected to range between $1,550
  million-$1,590 million, representing an increase of 3%-6% from 2018
  actual sales of $1,498 million.
• Full-year 2019 EBIT is expected to range between $112 million-$117
  million, representing an increase of 14%-19% from 2018 actual EBIT of
  $98 million.
• Full-year 2019 EBITDA is expected to range between $189 million-$194
  million, representing an increase of 45%-49% from 2018 actual EBITDA
  of $130 million.
• Full-year 2019 net income is expected to range between $64 million-$67
  million, representing an increase of 5%-12% from 2018 actual net
  income of $60 million.
• Full-year 2019 diluted EPS is expected to range between $2.50-$2.65,
  representing an increase of 5%-12% from 2018 actual EPS of $2.37.

IFRS 16

Starting January 1, 2019, the Company adopted the new lease accounting
standards set forth in IFRS 16. This requires that certain leases, which
were accounted for as operating leases be treated as capital leases
going forward. Certain leases will be reclassified as assets and
liabilities on the balance sheet, which will yield increased
depreciation and interest expense, offset by a reduction in rental
expense.

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
including the brands Schiesser, Eminence, Athena & Liabel; babywear,
activewear, sleepwear such as PJ Salvage, 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 brands
Splendid® and Ella Moss®, among others. In addition it
sells its products under brand names licensed to the company, including:
Wilson, Maidenform, 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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