Delta Galil Industries Ltd. · TASE:DELG

Delta Galil Industries — Merger or Acquisition (June 2019)

20 slides from Delta Galil Industries's merger presentation, June 2019

  1. Slide 1: Unique Opportunity to Acquire Fashion Bra Leader

    UNIQUE OPPORTUNITY TO ACQUIRE FASHION BRA LEADER JUNE 2019

  2. Slide 2: . םלשות ןכא , Bogart תצובק לש השיכרל סחיב 10.6.2019 - המ הרבחה לש

    ‫כל הנכלל במצגת זו הינו בכפוף לכך שהעסקה נשוא הדיווח המיידי של החברה מה‪ 10.6.2019-‬ביחס לרכישה של קבוצת ‪ ,Bogart‬אכן תושלם‪.‬‬ ‫המצגת עשויה לכלול מידע אחר ו‪/‬או מידע המוצג באופן שונה מהאופן בו הוצג בדיווחי החברה וכוללת מידע בדבר התוכנית האסטרטגית ביחס‬ ‫לחברה הנרכשת ותוכניות הצמיחה של החברה‪.‬‬ ‫

  3. Slide 3: Deal Highlights

    BOGART PRESENTATION | JUNE 2019 DEAL HIGHLIGHTS

  4. Slide 4: Deal Highlights

    DEAL HIGHLIGHTS  Bogart is a leader in the design, development and manufacturing of lingerie & swimwear  One of the largest bra players in the world  Vertical producer with Cut & Sew, Lace, and Pad owned factories  Preferred strategic partner for worldwide leading brands  2018 Net Sales of $230

  5. Slide 5: Deal Highlights

    DEAL HIGHLIGHTS  Delta is acquiring 100% of the shares for $1  Assuming financial debt of $105M  Includes $26M loans given to date  Includes up to $50M of additional cash Delta will infuse in the business  Closing is expected in the beginning of Q3/2019  Earn out with a minimum EBITDA target o

  6. Slide 6: Business Description

    BUSINESS DESCRIPTION

  7. Slide 7: Bogart Group

    BUSINESS DESCRIPTION BOGART GROUP  Founded in 1993 and known for strong design and development capabilities  Factories in China, Thailand and Myanmar with around 9,000 employees  Leading customers in the US, European and Asian markets : Victoria’s Secret, HBI group, LA SENZA, PVH, JOCKEY & ADORE

  8. Slide 8: Brunet: Lace Manufacturer

    BUSINESS DESCRIPTION BRUNET: LACE MANUFACTURER  Established in 1911 in Calais, France. Acquired by Bogart in 2004.  Moved to China in 2006  Leading lace manufacturer dedicated to premium brands  Library of patented vintage French lace  2018 sales $22 million (95% to 3rd party customers)  Doubl

  9. Slide 9: Brunet Heritage

    BRUNET HERITAGE

  10. Slide 10: Customers

    Yu deVelde SPANX infimissim! Chantelle CrlaukX PRIMADONNA allan lingerie Mgrn Bayon Elam & We 3F =~ ; KK Arf Ea) victous EN ww Raia re) ROUgeGOrge Passionata LANEBRYANT (a as | Kees BRUNET a mer intimo J! Aubade OYSHO ADORE ME (Retuang- ge HUE & cis

  11. Slide 11: B&B: Pad Manufacturer

    BUSINESS DESCRIPTION B&B: PAD MANUFACTURER  Established in 2010  Leading Pad manufacturer dedicated to top intimate apparel brands  2018 sales $10 million (50% to 3rd party customers)  Double Digit EBITDA margin  Headcount – 200 employees

  12. Slide 12: Financial Data

    FINANCIAL DATA

  13. Slide 13: Bogart Group Net Sales & EBITDA ($M)

    BOGART GROUP NET SALES & EBITDA ($M) 232 230 20.6 12.2 2017 2018 Net Sales Adj EBITDA Decrease in 2018 EBITDA due to liquidity issues during H2 2018 leading to lower production and sales volumes and increased airfreight. 2018 was also effected by negative ex-rate (RMB and THB) Source Bogart manageme

  14. Slide 14: Valuation ($M)

    VALUATION ($M) Enterprise Value / Purchase Price / Assumed debts 105 2018 Adjusted EBITDA 12.2 2017 Adjusted EBITDA 20.6 2018 EBITDA Multiple 8.6 2017 EBITDA Multiple 5.1 Estimated Working Capital (AT CLOSING) 20 Fixed Assets (March 2019) 32 * Delta already infused $26M included in the $105M

  15. Slide 15: Financing & Bonds Covenants

    FINANCING & BONDS COVENANTS USING OUR BANK FACILITIES DELTA WILL INFUSE UP TO ADDITIONAL $50M AFTER THE DEAL BEFORE THE DEAL (March 2019) (as of March. 2019 Pro-forma) Estimated Net Debt ($ million) 362 444 Net Debt / CAP 40.2% 45.0% Bonds Covenant Net debt/CAP > 60% * Excluding IFRS16

  16. Slide 16: Net Financial Debt to EBITDA

    NET FINANCIAL DEBT TO EBITDA 3.2 2.7 2.4 2.0 1.8 1.6 1.4 Pro- 1.1 forma 0.7 0.7 0.8 0.7 Jun. 2012 Jul. 2012 Dec. 2012 Dec. 2013 Dec. 2014 Dec. 2015 Sep. 2016 Dec. 2016 Dec. 2017 Sep. 2018 Dec. 2018 Mar. 2019 After After DGPB After Eminence Including Schiesser acquisition acquisition Bogart acquisiti

  17. Slide 17: Deal Rationale

    DEAL RATIONALE

  18. Slide 18: Strategic Reasoning

    STRATEGIC REASONING COMPELLING INVESTMENT CASE FOR DELTA  Acquiring significant know-how and core capabilities in the cut & sew bra category  Delta is a leader in seamless bras and shapewear but an insignificant player in the bigger cut & sew bra category  Current USA market: $11.5B (2018 NPD Rep

  19. Slide 19: Synergies

    SYNERGIES  Strengthening Delta’s ladies intimate footprint in the lingerie categories  Enhancing Delta’s bra assortment in our current direct to consumer channels for our own brands  Selling Bras to Delta’s existing customers  Selling Delta’s core products like seamless and sleepwear to Bogart’s

  20. Slide 20: Summary

    SUMMARY Unique strategic opportunity to acquire leading bra designer & manufacturer Strengthen Delta’s position in the intimates market Grow bra sales for our own brands Strengthen Delta’s relationship with Victoria’s Secret Deal Accretive in 2020

Delta Galil Industries — Merger or Acquisition (June 2019) on 6ix