Lakeland Industries, Inc. · NASDAQ:LAKE
Lakeland Industries — Investor Presentation (September 2020)
37 slides from Lakeland Industries's investor presentation, Sep 24, 2020
Slide 1: Investor Presentation | September 24, 2020
CLakeland Investor Presentation | September 24, 2020 Protect Your People ™ NASDAQ: LAKE Charles D. Roberson, President and Chief Executive Officer
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 $136.3 million $27.4 million + Net sales of $35.0M, up 28% from 27.5M in Q2FY20 * Gross profit of $17.3M, compared with 2Q20 of $10.4M + Gross margin of 49.5%, compared to 37.9% in 2Q20 + Opex of $7.6M, down from $7.8M in 2Q20 + Operating profit o
Slide 4: Uniquely Positioned to Respond to Global Crises
Uniquely Positioned to Respond to Global Crises is LAKE Revenue Impact ituation 1 Ebola $4.6 million (FY 16) Supplied suits to the United Kingdom Government August 8, 2014: Ebola declared an “international health emergency”; death toll reaches 1,000 September 11, 2014: LAKE announced increase in man
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 Chemical Protection Suit
Slide 8: Leading Protective Clothing Manufacturer
Leading Protective Clothing Manufacturer Product Offer es by Geography: Industries Served: Employees: Founded: Disposables Chemical Suits Wovens Fire/Reflectives Gloves 68.2% 18.7% 4.7% 6.7% 1.6% Domestic: 52% of FY20 net International: 48% of FY20 net s Chemical/petrochemical Basic industries: auto
Slide 9: Innovative Proprietary Products
Innovative Proprietary Products Patents: LAKE utilizes its unique manufacturing platform and proprietary textiles and Focus: designs targeted to market needs and demands ary high margin products for stable and recurring end markets (e.g. utilitie: aticals) Propri pharmac 20 patents & I patent in app
Slide 10: Optimized Global Presence
Optimized Global Presence +k Manufacturing Sites @ Sales Presence Nh fey i = tl | Decatur, AL Facility Anqui (Weifang), China Facility GLakeland Decatur, AL (HQ) Jerez, Mexico Anqui (Weifang), China Buenos Aires, Argentina New Delhi, India Nahm Dinh, Vietnam Beijing, China ina Chongging, Decatur, AL
Slide 11: Increasing Manufacturing Capacity
Increasing Manufacturing Capacity ¥ Deploying capital investment in new manufacturing facilities to build growth capacity; near-shoring options may deliver Key Differentiator further benefits LAKE is unique in owning . . . . its manufacturing facilities ¥ India and Vietnam locations are now online a
Slide 12: Slide
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Slide 13: Blue Chip Customers
Blue Chip Customers Distributors Airgas ©) tisher Scientific GRAINGER PTT] ron te ones wio ceriroo (vandeputte 0 Wesfarmers End Users Chevron x | oa <> ix’ Ze i é a Honeywell = nationalgrid - «) NIPPON STEEL & SUMITOMO METAL Shell CLakeland
Slide 14: Favorable Long Term Industry Dynamics
Favorable Long Term Industry Dynamics Lakeland operates in a large and growing industry... Industry Tailwinds Protective Clothing Market! (S in billions) Global Economic Growth 4 ¥ Global Oil Prices in Check Y Increase in Manufacturing to Multiple 10 Nations 5 Y Robust Demand from Developing Industr
Slide 15: Strong Presence in Large & Fragmented U.S. Market
Strong Presence in Large & Fragmented U.S. Market U.S. PPE Products & Service Composition (2079) Size A Respiratory Protection 19% B Hand Protection 18% C Protective Clothing 15% D Head Protection 11% E Fall Protection 1% F Ear Protection 3% CLakeland Source of Graphic: Houlihan Lokey 14
Slide 16: 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 + L
Slide 17: 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 18: Strong Business Model — Pre-COVID-19
Strong Business Model — Pre-COVID-19 Products Proprietary / value-added / higher margin COGS / Raw Materials Multi-sourced, lower priced fabrics than DuPont Gross Margin! 37.7% Sales Channels Distributors and Key End Users Customer Breadth Diversified Number of Products >800 Sales Presence 21 countr
Slide 19: KPIs Improving Over Long Term — Accelerated by COVID-19
KPIs Improving Over Long Term — Accelerated by COVID-19 Income Statement Performance Gross Profit as a Percentage of Sales Operating Profit as a Percentage of Sales 50.0% 30.0% 25.0% 45.0% 50.0% 40.0% 15.0% 10.0% 35.0% 5.0% I i a 30.0% il | oe | a 5.0% aso, -10.0% 4Q19 1Q20 2Q20 3Q20 4Q20_ 1Q21 2Q21
Slide 20: KPIs Improving Over Long Term — Accelerated by COVID-19
KPIs Improving Over Long Term — Accelerated by COVID-19 Balance Sheet Performance Lower Inventories and Higher Revenues 1Q19 2Q19 3Q19 4QI9_—-1Q20. 2Q20. 3Q20.-4Q20.-:1Q21__2Q21 ——Sales Inventory Increased Cash and Elimination of Debt $0.0 —— 1Q19 2Q19 3Q19 4Q19_—-1Q20- 2Q20 3Q20 4Q20 1Q21_ = 2Q21 —
Slide 21: Sustainable Improvements Post-Pandemic — Operational Impact
Sustainable Improvements Post-Pandemic — Operational Impact Customer Conversion New Products Pricing Products Factory Floor Management Added 220 new industrial customers in 1H21; Plus over 180 new customers for COVID-19 defense 2 new higher margin niche products added Raised prices in past year Pass
Slide 22: Sustainable Improvements Post-Pandemic — Financial Impact
Sustainable Improvements Post-Pandemic — Financial Impact ‘avorable Impact Revenue Gross Margin Operating Expenses Balance Sheet Capital Expenditures Lakeland Rising pre-COVID Substantially elevated in 1H21 Well positioned for emergence of institutional cleaning as new market segment, government and
Slide 23: LAKE Shares Trade at Discount on Improving Financials
LAKE Shares Trade at Discount on Improving Financials LAKE Trades at 4.8x EV/EBITDA Revenue Growth Gross Margin Based on TTM Results 30% Personal Protective Equipment & 40% Clothing" 15% 30% 10% 20% 5% Ansell strcmanQsevinc = A o~ = | 10% Peers LAKE LAKE LAKE "1921 FY19 FY20 2Q21 SETARE TA D® sume o
Slide 24: LAKE Shares Trade at a Discount to Peers
LAKE Shares Trade at a Discount to Peers 1B Lakeland Industries Inc PS Ratio BAI Pro Tech Ltd PS Ratio . . . maneal UPS Ratio 1 Year Price to Sales Valuation Comparison 1 DuPont de Nemours Inc PS Ratio Jan ‘20 May ‘20 Sep ‘20 6.00 4.00 0.00 23
Slide 25: Seasoned Management Team
Seasoned Management Team 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 May 1986. Mr. Ryan was our Exec
Slide 26: Investment Highlights
Investment Highlights - High Growth from Proprietary/Value Added Products Strong Long Term Growth Trends Masked by Greater COVID-related Sales Flexible Worldwide Operating Capabilities Highly Leveragable Cost Structure including Global Manufacturing Sites Leader in Product Quality and Garment Innova
Slide 27: Financial Review
ZLakeland Protect Your People™ Financial Review 26
Slide 28: Income Statement — 2Q21
Income Statement — 2Q21 (UNAUDITED) (8000"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 2.606
Slide 29: EBITDA Reconciliation — 2Q21
EBITDA Reconciliation — 2Q21 (UNAUDITED) (8000"s Except Share Information) GLakeland Net Income to EBITDA Net Income Interest Taxes Depreciation and amortization Other income (expense) EBITDA EBITDA to Adjusted EBITDA (excluding non-cash expenses) Equity compensation Adjusted EBITDA Cash paid for ta
Slide 30: Balance Sheet — 2Q21
Balance Sheet — 2Q21 (UNAUDITED) (8000"s Except Share GLakeland ASSETS July 3, 2020 Carent acts Cash and csh equivalents si4sas ‘Accounts reesivable, net of allowance for doubtful accounts of $789 and $497 ‘a July 31,2020 and January 31,2020, respectively 2028 Inventories Prepaid VAT and other axes
Slide 31: Income Statement — Fiscal Year
Income Statement — Fiscal Year (UNAUDITED) (8000"s Except Share Information) GLakeland Net sales Cost of goods sold Gross profit Operating expenses Operating profit Other income (expense), net Interest expense Income before taxes Income tax expense Net income Net income per common share: Basic Dilut
Slide 32: EBITDA Reconciliation — Fiscal Year
EBITDA Reconciliation — Fiscal Year 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) 0) 4 EBITDA 7,521 4,530 EBITDA to Adjusted EBITDA (excluding non-cash expenses) Equity
Slide 33: Balance Sheet — Fiscal Year
Balance Sheet — Fiscal Year (UNAUDITED) (8000"s Except Share GLakeland mation) ‘cont veciae ne aowance Jl ccs of $97 an 38 ‘nae 3,220 9 201% epee — Prepaid WAT other tans eget eget nt ‘Opn ae hota ats Deford in see ‘pan VAT ndethrs Ober ane Goods LLSRIL TIES AND STOCKHOLDERS FQUTTY Accu py ‘Acted vo
Slide 34: Appendix
ZLakeland Protect Your People™ Appendix 33
Slide 35: Strong Growth Masked By Wind-Down of DuPont & Brazil
Strong Growth Masked By Wind-Down of DuPont & Brazil (S in millions) % uPont & Brazil) CAGR: 13.5% B D +2006 ~ FY2017 Lakeland (Excluding F - $107.8 99.0 ss S28 soo § $840 $862 . $80.6 $70 gang $76.1 $60.0 $87.4 $61.3 $51.2 S542. 3 17 $443 35.6 335, 28.1 21.3 sis. $8.) $6.2 soo S00] FY2006 FY2007-—-
Slide 36: Real Estate
Real Estate oO Canada (Brantford) China (Weifang) Decatur, AL Mexico (Zacatecas) Argentina (Buenos Aires) Chile (Santiago) China (Beijing) China (Shanghai) India (Noida) Kazak! tan (Us Ronkonkoma, NY Russia (Moscow) UX. (Newport, East Yorkshire) Vietnam (Nahm Dinh) GLakeland 16,145 147,228 21,000 74
Slide 37: Significant M&A Activity
Significant M&A Activity Acquirer ‘New Mountain Capital PIP Global ‘SureWere ‘ASGARD Partners Geyphon Investors PIP Global "North Branch Capital ‘AiBoss-Defense Saf-Gard Safety Shoo Total Safety PIP Global Aliance Manne en Tools rots AB Audax Group ‘Auda Group VF Corporation MSA Wensleydale W & G Li
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