Lakeland Industries, Inc. · NASDAQ:LAKE
Lakeland Industries — Investor Presentation (September 2020)
36 slides from Lakeland Industries's investor presentation, Sep 24, 2020
Slide 1: Investor Presentation | September 24, 2020
Investor Presentation | September 24, 2020 Protect Your People TM NASDAQ: LAKE Charles D. Roberson, President and Chief Executive Officer Allen E. Dillard, Chief Financial Officer 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 Q2FY21 Results Financials & Valuation LTM Revenue3 $136.3 million • Net sales of $35.0M, up 28% from 27.5M in Q2FY20 LTM EBITDA3 $27.4 million • Gross profit of $17.3M, compared with 2Q20 of $10.4M • Gross margin of 49.5%, compared to 37.9% in 2Q20 LTM Net Income3 $20.3 million • Opex
Slide 4: 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 5: Coronavirus (COVID-19) Update
Coronavirus (COVID-19) Update • China Environment – Open for business; evaluating second wave of virus – Logistics – ocean freight improved – Raw materials available: prices are fluctuating • Global Environment – Demand from most regions; China, Europe, India, Russia strongest – Logistics remain in
Slide 6: Coronavirus (COVID-19) Impact
Coronavirus (COVID-19) Impact • Revenue – Impact will be spread over Q4FY20, FY21 and first half of FY22 – Selling through distribution limits transparency into application of sales – Non-COVID related products lower in 2Q due to customer shutdowns • Manufacturing – India and Vietnam remains at maxi
Slide 7: LAKE Product Examples
LAKE Product Examples LAKE Cleanroom Suit LAKE Homeland Security Suit LAKE Disposable Suit LAKE Chemical Protection Suit 7
Slide 8: Leading Protective Clothing Manufacturer
Leading Protective Clothing Manufacturer Product Offering: Disposables Chemical Suits Wovens Fire/Reflectives Gloves % of Sales1 68.2% 18.7% 4.7% 6.7% 1.6% Sales by Geography: • Domestic: 52% of FY20 net sales • International: 48% of FY20 net sales Industries Served: • Chemical/petrochemical • Basic
Slide 9: Innovative Proprietary Products
Innovative Proprietary Products LAKE utilizes its unique manufacturing platform and 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
Slide 10: 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 11: Increasing Manufacturing Capacity
Increasing Manufacturing Capacity ✓ Deploying capital investment in new manufacturing facilities to build growth Key Differentiator Anqui (Weifang), China Facility capacity; near-shoring options may deliver further benefits LAKE is unique in owning its manufacturing facilities ✓ India and Vietnam lo
Slide 12: Blue Chip Customers
Blue Chip Customers Distributors End Users 12
Slide 13: Favorable Long Term Industry Dynamics
Favorable Long Term 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 ✓ Increase in Manufacturing to Multiple Nations ✓ Robust Demand from Developing Industries ✓ I
Slide 14: 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 14
Slide 15: 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 16: Growth and Performance Improvement Initiatives
Growth and Performance Improvement Initiatives • Investments in centralized data driven planning systems – ERP implementation – CRM installation globally – Launch of new websites for nine global locations • Investments in manufacturing – Vietnam (now largest facility for the Company) – India (expans
Slide 17: Strong Business Model – Pre-COVID-19
Strong Business Model – Pre-COVID-19 Business Area Key Characteristic Products Proprietary / value-added / higher margin COGS / Raw Materials Multi-sourced, lower priced fabrics than DuPont Gross Margin1 37.7% Sales Channels Distributors and Key End Users Customer Breadth Diversified Number of Produ
Slide 18: KPIs Improving Over Long Term – Income Statement Performance
KPIs Improving Over Long Term – Accelerated by COVID-19 Income Statement Performance 18
Slide 19: KPIs Improving Over Long Term – Balance Sheet Performance
KPIs Improving Over Long Term – Accelerated by COVID-19 Balance Sheet Performance 19
Slide 20: Sustainable Improvements Post-Pandemic – Operational Impact
Sustainable Improvements Post-Pandemic – Operational Impact Key Area Favorable Impact Customer • Added 220 new industrial customers in 1H21; Conversion • Plus over 180 new customers for COVID-19 defense New Products • 2 new higher margin niche products added • Raised prices in past year Pricing • Pa
Slide 21: Sustainable Improvements Post-Pandemic – Financial Impact
Sustainable Improvements Post-Pandemic – Financial Impact Key Area Favorable Impact • Rising pre-COVID • Substantially elevated in 1H21 Revenue • Well positioned for emergence of institutional cleaning as new market segment, government and industry PPE stockpiling • 49% gross margin as a percentage
Slide 22: LAKE Shares Trade at Discount on Improving Financials
LAKE Shares Trade at Discount on Improving Financials Attractive Valuation* LAKE Improving Performance LAKE Trades at 4.8x EV/EBITDA Revenue Growth Gross Margin Based on TTM Results EBITDA** Margin Second Quarter Records Set for Revenues, Operating Income, and Free Cash Flow Driven by COVID-19 Deman
Slide 23: LAKE Shares Trade at a Discount to Peers
LAKE Shares Trade at a Discount to Peers 1 Year Price to Sales Valuation Comparison Source: Ycharts 23
Slide 24: 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 25: Investment Highlights
Investment Highlights High Growth from Proprietary/Value Added Products 1 Strong Long Term Growth Trends Masked by Greater COVID-related Sales Flexible Worldwide Operating Capabilities 2 Highly Leveragable Cost Structure including Global Manufacturing Sites Leader in Product Quality and Garment Inno
Slide 26: Financial Review
Protect Your People™ Financial Review 26
Slide 27: Income Statement – 2Q21
Income Statement – 2Q21 (UNAUDITED) ($000’s Except Share Information) ) Three Months Ended Six Months Ended July 31, July 31, 2020 2019 2020 2019 Net sales $35,021 $27,472 $80,603 $52,156 Cost of goods sold 17,681 17,053 41,119 34,183 Gross profit 17,340 10,419 39,484 17,973 Operating expenses 7,606
Slide 28: EBITDA Reconciliation – 2Q21
EBITDA Reconciliation – 2Q21 (UNAUDITED) ($000’s Except Share Information) ) Three Months Ended Six Months Ended July 31, July 31, 2020 2019 2020 2019 Net Income to EBITDA Net Income $9,339 $1,395 $17,973 $930 Interest 2 38 19 72 Taxes 424 1,208 4,149 1,297 Depreciation and amortization 481 453 934
Slide 29: Balance Sheet – 2Q21
Balance Sheet – 2Q21 (UNAUDITED) ($000’s Except Share Information) ) ASSETS July 31, January 31, 2020 2020 Current assets Cash and cash equivalents $34,945 $14,606 Accounts receivable, net of allowance for doubtful accounts of $759 and $497 at July 31, 2020 and January 31, 2020, respectively 20,243
Slide 30: Income Statement – Fiscal Year
Income Statement – Fiscal Year (UNAUDITED) ($000’s Except Share Information) ) Year Ended January 31, 2020 2019 Net sales $107,809 $99,011 Cost of goods sold 69,912 65,105 Gross profit 37,897 33,906 Operating expenses 32,021 30,341 Operating profit 5,876 3,565 Other income (expense), net (7) 41 Inte
Slide 31: EBITDA Reconciliation – Fiscal Year
EBITDA Reconciliation – Fiscal Year (UNAUDITED) ($000’s Except Share Information) ) Year Ended January 31, 2020 2019 Net Income to EBITDA Net Income $3,281 $1,459 Interest 116 125 Taxes 2,472 2,022 Depreciation and amortization 1,645 965 Other income (expense) (7) 41 EBITDA 7,521 4,530 EBITDA to Adj
Slide 32: Balance Sheet – Fiscal Year
Balance Sheet – Fiscal Year (UNAUDITED) ($000’s Except Share Information) ) ASSETS January 31, 2020 2019 Current assets Cash and cash equivalents $14,606 $12,831 Accounts receivable, net of allowance for doubtful accounts of $497 and $434 at January 31, 2020 and 2019, respectively 17,702 16,477 Inve
Slide 33: Appendix
Protect Your People™ Appendix 33
Slide 34: Strong Growth Masked By Wind-Down of DuPont & Brazil
Strong Growth Masked By Wind-Down of DuPont & Brazil Sales by Segment ($ in millions) $8.7 $107.8 $99.6 $99.0 $99.6 $93.5 $96.0 $93.5 $86.2 $84.0 $84.0 $86.2 $77.0 $77.0 $76.1 $76.1 $80.6 $72.0 $72.0 $60.0 $60.0 $61.3 $61.3 $57.4 $57.4 $54.7 $54.7 $51.2 $51.2 $44.3 $44.5 $41.7 $44.3 $44.5 $35.6 $41.
Slide 35: 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
Slide 36: Significant M&A Activity
Significant M&A Activity Notable Transactions Oct. 2015 EV / Revenue: 3.4x; EV / EBITDA: 19.5x Mar. 2015 EV / Revenue: 2.2x; EV / EBITDA: 9.0x Nov 2013 EV / Revenue: 2.1x; EV / EBITDA: 9.7x Source: Houlihan Lokey as of 5/15/20 and/or SEC public filings, company press releases and other publicly avai
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