Delta Galil signs acquisitions deal for 3 new brands

1. JUNE 2016
ACCELERATING
OUR GROWTH

2. 02CONTEMPORARY BRANDS COALITION 2016
‫ניירות‬ ‫בחוק‬ ‫כהגדרתו‬ ‫עתיד‬ ‫פני‬ ‫וצופה‬ ‫בלבד‬ ‫הערכה‬ ‫על‬ ‫מבוסס‬ ‫זו‬ ‫במצגת‬ ‫הנכלל‬ ‫מהמידע‬ ‫חלק‬
‫ערך‬,‫התשכ‬"‫ח‬-1968,‫ותחזיות‬ ‫הערכות‬ ‫לעומת‬ ‫שונה‬ ‫באופן‬ ‫יתממש‬ ‫או‬ ‫יתממש‬ ‫ולא‬ ‫יכול‬ ‫אשר‬
‫החברה‬,‫בתאריך‬ ‫הקיים‬ ‫מידע‬ ‫על‬ ‫מבוסס‬ ‫היותו‬ ‫ובשל‬ ‫בחברה‬ ‫תלויות‬ ‫שאינן‬ ‫מנסיבות‬ ‫כתוצאה‬
‫הערכות‬ ‫וכולל‬ ‫המצגת‬,‫המצגת‬ ‫לתאריך‬ ‫נכון‬ ‫החברה‬ ‫של‬ ‫וכוונות‬ ‫הנחות‬.
‫אחרת‬ ‫אינדיקציה‬ ‫בהיעדר‬,‫לשנת‬ ‫מתייחסים‬ ‫זו‬ ‫במצגת‬ ‫הנכללים‬ ‫הכספיים‬ ‫הנתונים‬2015.

3. GLOBAL LEADER
IN PREMIUM
DENIM MARKET

4. AN ICONIC BRAND

5. TO MAKE
THE WORLD
A COZIER PLACE

6. Splendid WOMEN contains…
T-SHIRT
DRESS
SWEATERS
JACKETS & BOTTOMS
ATHLEISURE
SWIM
ACCESSORIES

7. 07CONTEMPORARY BRANDS COALITION 2016
DEAL HIGHLIGHTS

8. DEAL HIGHLIGHTS
08CONTEMPORARY BRANDS COALITION 2016
Splendid is a leading Premium contemporary sportswear brand
Delta is acquiring the Contemporary Brands Coalition (CBC)
from VF Corporate
Total consideration of $120M subject to working capital and
net debt adjustments
7 For All Mankind is a global leader in Premium Denim
CBC expected sales of ~ $300M in 2016

9. Closing is expected to take place by the end of the third quarter of 2016
Deal is expected to be accretive to Delta in 2017
Delta is acquiring 100% of the shares of the US subsidiaries and
the brand’s activity in Europe and Canada
The USA headquarters are in L.A
The 7FAM European headquarters are in Stabio, Switzerland
DEAL HIGHLIGHTS - CONTINUE
09CONTEMPORARY BRANDS COALITION 2016

10. 10CONTEMPORARY BRANDS COALITION 2016
DEAL RATIONALE

11. 11CONTEMPORARY BRANDS COALITION 2016
DEAL RATIONALE
Leading PREMIUM BRANDS
PRICING POWER / High margins
GLOBAL BRAND
Expand Delta’s DIVERSIFICATION
SYNERGIES in operation, knitwear and fabric innovation
Growing our current PRODUCTS PORTFOLIO by using
7 For All Mankind and Splendid brands
Increase Delta’s BRANDED PORTFOLIO from 53% 65%

12. 12CONTEMPORARY BRANDS COALITION 2016
EXECUTIVE
SUMMARY OF
CBC BRANDS

13. The LEADER in the premium denim market
FOUNDER of the denim premium category
in 2000
Positioned as LUXURIOUS yet accessible
lifestyle brand rooted in denim
GLOBAL REACH with sales throughout
North America, Europe, China ,
Central America and Brazil (over 50 countries)
EXECUTIVE
SUMMARY OF
13CONTEMPORARY BRANDS COALITION 2016

14. Wholesale
59%
Retail
35%
E. com
6%
America
66%
Europe
29%
China
4%
Other
1%
BUSINESS OVERVIEW
Brand headquartered in Los Angeles ,
California with European business based in
Stabio, Switzerland
Women’s products account for approximately
60% of revenues
Royalty income - Licensed categories include
kids, eyewear and outerwear
Distributors in China, Canada, Columbia ,
Mexico & Panama
Sourcing primarily focused in the U.S. and
Mexico with European production in Eastern Europe
and Turkey
Consistent market leader in premium denim
14CONTEMPORARY BRANDS COALITION 2016
2015 REVENUE BY CHANNELBUSINESS HIGHLIGHTS
2015 REVENUE BY GEOGRAPHY

15. BRAND POSITIONING
IS A MARKET LEADER
15CONTEMPORARY BRANDS COALITION 2016
Owned US Full
Price Retail
Stores
Core Business
Estimated US
Market Share
Estimated
Volume
Ranking
FoundedCompany
27
Women’s &
Men’s
17%12000
10Men’s16%22000
7Women’s16%32004
102
Men’s &
Women’s
16%42002
6Women’s12%52002
13Women’s10%62001
5Women’s7%72004
0Women’s6%82003
(source VF corporation)

16. 16CONTEMPORARY BRANDS COALITION 2016
CELEBRITY SIGHTINGS
Kendall Jenner Prince HarryHeidi Klum Nick Jonas Miranda Kerr Kylie Jenner

17. 17CONTEMPORARY BRANDS COALITION 2016
2016 TO 2018
GLOBAL STRATEGIC
GROWTH

18. 18CONTEMPORARY BRANDS COALITION 2016
IMPROVE DTC PERFORMANCE

19. 19CONTEMPORARY BRANDS COALITION 2016
EXPAND INNOVATION PIPELINE

20. 20CONTEMPORARY BRANDS COALITION 2016
OPTIMIZE THE SUPPLY CHAIN

21. 21CONTEMPORARY BRANDS COALITION 2016
GROW WHOLESALE MARKET SHARE

22. 22CONTEMPORARY BRANDS COALITION 2016

23. LEADING contemporary sportswear brands that helped to
establish the laid-back sophisticated California lifestyle as
a staple in wardrobes throughout the country
SPLENDID – launched in 2002 – is a brand of SOFT,
COMFORTABLE, LUXURY knits and the market leader
in contemporary tees
ELLA MOSS – launched in 2001 – provides fashionable
apparel for the feminine, contemporary consumer
EXECUTIVE
SUMMARY OF
23CONTEMPORARY BRANDS COALITION 2016

24. Wholesale
62%
Retail
29%
E. com
7%
Other
2%
Tops
45%
Dresses
13%
Bottoms
13%
Sweaters
10%
Cardigans
4%
Other
15%
BUSINESS OVERVIEW
Headquartered in Los Angeles, California
Market leader in premium T shirts category,
currently distributed in over 1,100 wholesale doors
Royalty income - Licensed categories include kids,
footwear, intimates, swimwear & handbags
Distributors in UK, Canada, Germany, Japan ,
Saudi Arabia, Australia, Mexico, South Korea
(over 20 countries)
Sourcing primarily focused in the U.S. with ongoing
expansion into Mexico and Asia
24CONTEMPORARY BRANDS COALITION 2016
BUSINESS HIGHLIGHTS
2015 REVENUE BY CATEGORY
2015 REVENUE BY CHANNEL

25. 25CONTEMPORARY BRANDS COALITION 2016
Owned U.S. Retail
Locations
Estimated Volume
Ranking
FoundedCompany
2912002
2321994
631997
1041986
252009
361995
072009
082002
092010
BRAND POSITIONING
IS A MARKET LEADER
(source VF corporation)

26. 26CONTEMPORARY BRANDS COALITION 2016
Alessandra
Ambrosio
Charlize Theron Rosario Dawson Kate Hudson Selena
Gomez
CELEBRITY SIGHTING

27. 27CONTEMPORARY BRANDS COALITION 2016
DIVERSIFIED PORTFOLIO

28. 28CONTEMPORARY BRANDS COALITION 2016
DIVERSIFIED PORTFOLIO
BRAND / PRIVATE LABEL
PRO FORMA
(DELTA & CBC)
CURRENT
DELTA
GEOGRAPHIC REGION
MARKET TIER
BRAND 53% PRIVATE LABEL 47%
BRAND 65% PRIVATE LABEL 35%
NORTH AMERICA 58% EUROPE 28% ISRAEL
12%
OTHER
2%
NORTH AMERICA 62% EUROPE 27%
UPPER TIER 41% MID TIER 27% MASS MARKET 32%
UPPER TIER 55% MID TIER 21% MASS MARKET 24%
PRO FORMA
(DELTA & CBC)
CURRENT
DELTA
PRO FORMA
(DELTA & CBC)
CURRENT
DELTA
ISRAEL
9%
OTHER
2%
BUSINESS SEGMENTS
PRO FORMA
(DELTA & CBC)
CURRENT
DELTA
% FROM 2015 SALES
DELTA USA
45%
GLOBAL UPPER MARKET
26%
SCHIESSER
17%
ISRAEL
12%
DELTA USA
34%
CBC
24%
GLOBAL UPPER MARKET
20%
SCHIESSER
13%
ISRAEL
9%

29. 29CONTEMPORARY BRANDS COALITION 2016
INITIAL PLANS

30. 30CONTEMPORARY BRANDS COALITION 2016
INITIAL PLANS
Improve product offering by introducing more lifestyle products
and increasing core programs
Grow Men’s category in Splendid
Continue to develop the strong e-commerce business
Leverage the new brands to grow our business in men’s & ladies
intimate apparel and active wear
Integrate the European business into Delta
Improve sourcing
Close underperforming stores
Reduce operating costs
Synergies with DGUSA & Schiesser

31. 31CONTEMPORARY BRANDS COALITION 2016
FINANCIAL DATA

32. 32CONTEMPORARY BRANDS COALITION 2016
CBC CONSOLIDATED FINANCIAL DATA
($ Millions)
418
439
485
446
415 400
344
77
47
62
74
63
47
23
0
50
100
150
200
250
Revenue Reported EBITDA
(source VF corporation)

33. 33CONTEMPORARY BRANDS COALITION 2016
FINANCING
After the deal
(as of Mar. 2016 Pro-forma)
Before the deal
232.4112.4Estimated Net Debt ($ million)
37.8%18.3%Net Debt / CAP
Bonds Covenants
Default (2 quarters to fix)Net debt / CAP > 60%
100% SELF FINANCING USING CASH ON HAND

34. 34CONTEMPORARY BRANDS COALITION 2016
NET DEBT / EBITDA
* Pro-forma EBITDA was calculated based on Last Trailing 12 Months
0.7
1.8
0.7 0.7
0.8
1.2
2.1
Jun. 2012 Jul. 2012 after
Schiesser
acquisition
Dec. 2013 Dec. 2014 Dec. 2015 Mar. 2016 Mar. 2016
Proforma*
MAINTAINING ADEQUATE LEVERAGE

35. 35CONTEMPORARY BRANDS COALITION 2016
VALUATION

36. 36CONTEMPORARY BRANDS COALITION 2016
VALUATION
Purchase Price 120
Real Estate (estimated - subject to appraisal) 25
Enterprise Value 95
2015 Adjusted EBITDA* 19.4
2016 EBITDA based on seller forecast 10
Estimated Working Capital (at closing ) 65-75
* Reported EBITDA of $23.5M, Adjusted EBITDA includes rent expenses and other allocations adjustments
($ Millions)

37. CONTINUING
OUR GROWTH