Lakeland Industries, Inc. · NASDAQ:LAKE
Lakeland Industries — D.A. Davidson 3rd Annual Consumer Growth Conference 2020
30 slides from Lakeland Industries's conference presentation, Mar 12, 2020
Slide 1: Investor Presentation | March 12, 2020
Investor Presentation | March 12, 2020 Protect Your People TM NASDAQ: LAKE Christopher J. Ryan, Executive Chairman Protect Your People™
Slide 2: Safe Harbor Statement
Safe Harbor Statement With the exception of historical information, the statements set forth in this presentation include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties. The company wishes to caution that a nu
Slide 3: Key Statistics
Key Statistics Q3FY20 Results Financials & Valuation • Net sales of $27.5M, up 14% from $24.0M in Q3FY19 LTM Revenue3 $104.7 million • Gross profit of $9.3M, up from $8.3M in Q3FY19 LTM EBITDA3 $3.9 million • Gross margin of 33.8%, compared to 34.6% in Q3FY19 LTM Net Income3 $0.2 million • Opex of $
Slide 4: LAKE Product Examples
LAKE Product Examples LAKE Cleanroom Suit LAKE Homeland Security Suit LAKE Disposable Suit LAKE Chemical Protection Suit 4
Slide 5: Leading Protective Clothing Manufacturer
Leading Protective Clothing Manufacturer Product Offering: Disposables Chemical Suits Wovens Fire/Reflectives Gloves % of Sales1 54% 18% 12% 13% 3% Sales by Geography: • Domestic: 50% of FY19 net sales • International: 50% of FY19 net sales Industries Served: • Chemical/petrochemical • Basic industr
Slide 6: Innovative Proprietary Products
Innovative Proprietary Products LAKE utilizes proprietary textiles and designs targeted to market needs and demands New Product Focus: • Proprietary high margin products for stable and recurring end markets (e.g. utilities, pharmaceuticals) Patents: • 20 patents & 1 patent in application1 • 56 trade
Slide 7: Optimized Global Presence
Optimized Global Presence Manufacturing Sites Decatur, AL (HQ) Jerez, Mexico Anqui (Weifang), China Buenos Aires, Argentina New Delhi, India Nahm Dinh, Vietnam Sales Presence Beijing, China Chongqing, China Decatur, AL (HQ) Europe (France, Germany, Netherlands, Poland, Spain, U.K.) Manufacturing Sit
Slide 8: Increasing Manufacturing Capacity
Increasing Manufacturing Capacity Deploying capital investment in new manufacturing Anqui (Weifang), China Facility facilities to build growth capacity India and Vietnam locations are now online and close to targeted growth markets Low cost structures in new locations are accretive to gross ma
Slide 9: Strong Business Model
Strong Business Model Business Area Key Characteristic Products Proprietary / value-added / higher margin COGS / Raw Materials Multi-sourced, lower priced fabrics than DuPont Gross Margin1 34.2% and expanding Sales Channels Distributors and Key End Users Customer Breadth Diversified Number of Produc
Slide 10: Blue Chip Customers
Blue Chip Customers Distributors End Users 10
Slide 11: Favorable Industry Dynamics
Favorable Industry Dynamics Lakeland operates in a large and growing industry… Industry Tailwinds Protective Clothing Market1 ($ in billions) Global Economic Growth Global Oil Prices in Check Strong Increase in Manufacturing Robust Demand from Developing Industries Increased Global Focus o
Slide 12: Strong Presence in Large & Fragmented U.S. Market
Strong Presence in Large & Fragmented U.S. Market Lakeland’s US Sales are in excess of 50% of Total Sales in FY2020 Source of Graphic: Houlihan Lokey 12
Slide 13: Positioned for Further International Growth
Positioned for Further International Growth Leveraging its worldwide operating capabilities, LAKE plans deeper penetration into existing markets and selective expansion into new geographies… • Led by multinational corporations, developing countries are increasingly adopting OSHA-like standards • LAK
Slide 14: Low Seasonality in Business
Low Seasonality in Business Sales By Quarter FY2016 FY2018 FY2019 Q4 Q1 Q1 Q1 Q4 Q1 Q4Q4 20.5% 24.9% 23.6% 23.6% Q3 Q2 25.0% Q3 Q2 Q2 Q2 27.0% 25.8% Q3 29.6% Based on external sales from continuing operations, excluding intersegment sales. Company fiscal year ends January 31. 14
Slide 15: Uniquely Positioned to Respond to Global Crises
Uniquely Positioned to Respond to Global Crises Crisis Ebola Bird Flu CoVID-19 (Coronavirus) LAKE Revenue Impact $4.6 million (FY16) $4.1 million (FY16) TBD (FY20/21) LAKE Role Supplied suits to the United Supplied protective clothing to Supplier to hospitals and industrial Kingdom Government DiVal
Slide 16: Growth and Performance Improvement Initiatives
Growth and Performance Improvement Initiatives • Investments in digital transformation – ERP implementation – Launch of new websites for nine global locations – Amazon platform in multiple countries – Online marketing strategies • Investments in manufacturing – Vietnam (now largest facility for the
Slide 17: LAKE Shares Trade at Discount on Improved Financials
LAKE Shares Trade at Discount on Improved Financials Attractive Valuation*: LAKE Trades at 9.5x EV/EBITDA Based on 3Q20 Annualized Results Improving/Superior Performance: Revenue Growth 14.6% (over prior year period) Operating Margin 6.5% (vs. 4.2% in 3Q19) EBITDA** Margin 6.9% (vs. 5.8% in 3Q19) So
Slide 18: Significant M&A Activity
Significant M&A Activity Dec. 2018 Nov. 2015 April 2009 Oct. 2015 EV / Revenue: 3.4x; EV / EBITDA: 19.5x June 2017 EV / Revenue: 2.0x; EV / EBITDA: 9.0x July 2015 Sept. 2016 June 2015 EV / Revenue: 5.8x; EV / EBITDA: 14.0x July 2016 / EV / Revenue: 1.4x; EV / EBITDA: 10.5x May 2015 June 2016 Apr. 20
Slide 19: Seasoned Management Team
Seasoned Management Team Management Bios Years at LAKE Christopher J. Ryan – Executive Chairman Upon his appointment as Executive Chairman in February 2020, Christopher J. Ryan served as our Chief Executive Officer and President since November 2003, Secretary since April 1991, and a director since M
Slide 20: Investment Highlights
Investment Highlights High Growth from Proprietary/Value Added Products 1 Strong Growth Masked by Wind Down of DuPont & Brazil Businesses Flexible Worldwide Operating Capabilities 2 Highly Leveragable Cost Structure including Global Manufacturing Sites Leader in Product Quality and Garment Innovatio
Slide 21: Financial Review
Protect Your People™ Financial Review 21
Slide 22: Income Statement – Fiscal Year
Income Statement – Fiscal Year ($ in thousands) January 31, 2019 2018 Net sales $99,011 $95,987 Cost of goods sold 65,105 59,784 Gross profit 33,906 36,203 Operating expenses 30,341 27,726 Operating profit 3,565 8,477 Other income net 41 29 Interest expense (125) (163) Income before taxes 3,481 8,34
Slide 23: EBITDA Reconciliation – Fiscal Year
EBITDA Reconciliation – Fiscal Year Year Ended Year Ended January 31, January 31, 2019 2018 Net Income to EBITDA Net Income $1,459 $440 Interest 125 163 Taxes 2,022 7,903 Depreciation and amortization 965 775 Less Other income (41) (29) EBITDA $4,530 $9,252 EBITDA to Adjusted EBITDA (excluding non-c
Slide 24: Balance Sheet – Fiscal Year
Balance Sheet – Fiscal Year ($ in thousands) ASSETS January 31, 2019 2018 Current assets Cash and cash equivalents $12,831 $15,788 Accounts receivable, net of allowance for doubtful accounts of $434 and $480 at January 31, 2019 and 2018, respectively 16,477 14,119 Inventories 42,365 42,919 Prepaid V
Slide 25: Income Statement – 3Q20
Income Statement – 3Q20 ($ in thousands) Three Months Ended Nine Months Ended October 31, October 31, 2019 2018 2019 2018 Net sales $27,464 $24,009 $79,620 $73,970 Cost of goods sold 18,166 15,691 52,349 46,995 Gross profit 9,298 8,318 27,271 26,975 Operating expenses 7,451 7,305 23,101 21,898 Opera
Slide 26: EBITDA Reconciliation – 3Q20
EBITDA Reconciliation – 3Q20 Three Months Ended Nine Months Ended October 31, October 31, 2019 2018 2019 2018 Net Income to EBITDA Net Income $1,146 $501 $2,076 $3,386 Interest 26 25 98 93 Taxes 653 494 1,950 1,634 Depreciation and amortization 430 214 1,267 642 Equity compensation (332) 189 (583) 4
Slide 27: Balance Sheet – 3Q20
Balance Sheet – 3Q20 ($ in thousands) ASSETS October 31, January 31, 2019 2019 Current assets Cash and cash equivalents $9,473 $12,831 Accounts receivable, net of allowance for doubtful accounts of $602 and $434 at October 31, 2019 and January 31, 2019, respectively 17,413 16,477 Inventories 47,797
Slide 28: Appendix
Protect Your People™ Appendix 28
Slide 29: Strong Growth Masked By Wind-Down of DuPont & Brazil
Strong Growth Masked By Wind-Down of DuPont & Brazil Sales by Segment ($ in millions) $8.7 $99.0 $96.0 $99.6 $93.5 $8.7 $84.0 $86.2 $77.0 $76.1 $72.0 $60.0 $57.4 $61.3 $51.2 $54.7 $44.3 $41.7 $44.5 $35.6 $35.7 $28.1 $21.3 $19.9 $8.0 $6.2 $0.0 $0.0 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2
Slide 30: Real Estate
Real Estate Location Sq. Ft. Leased / Owned Primary Function Canada (Brantford) 22,092 Owned Sales / Warehouse 122,665 Owned Administration / Manufacturing / Warehouse / Sales China (Weifang) 16,145 Leased Warehouse 147,228 Owned Administration / Manufacturing / Sales Decatur, AL 21,000 Leased Wareh
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