Lakeland Industries, Inc. · NASDAQ:LAKE
Lakeland Industries — Sidoti conference March 2019
26 slides from Lakeland Industries's conference presentation, Mar 28, 2019
Slide 1: Investor Presentation
NASDAQ: LAKE Investor Presentation March 28, 2019 Christopher J. Ryan, Chief Executive Officer Charles Roberson, Chief Operating 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 Market Statistics Financials & Valuation Share Price (as of 11/6/2018) $ 11.29 LTM Revenue3 $99.1 million 52-Week High / Low $16.85 / $9.90 LTM Adjusted EBITDA3 $8.4 million Average Daily Volume (3M) 27,000 LTM Net Income3 -$1.5 million Diluted Shares Outstanding1 8.2 million LTM EPS3
Slide 4: Optimized Global Presence
Optimized Global Presence Manufacturing Sites Decatur, AL Jerez, Mexico Anqui (Weifang), China Buenos Aires, Argentina New Delhi, India Nahm Dinh, Vietnam Sales Presence Beijing, China Chongqing, China Decatur, AL Europe (France, Germany, Netherlands, Poland, Spain, U.K.) Manufacturing Sites Jerez,
Slide 5: Innovative Proprietary Products
Innovative Proprietary Products LAKE develops proprietary textile and designs when it identifies a market need… 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 trademark
Slide 6: Leading Protective Clothing Manufacturer
Leading Protective Clothing Manufacturer Product Offering: Disposables Chemical Suits Wovens Fire/Reflectives Gloves % of Sales 1 54% 18% 12% 13% 3% Sales by Geography: • Domestic: 49% of 3Q19 net sales • International: 51% of 3Q19 net sales Industries Served: • Chemical/petrochemical • Basic indust
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: Uniquely Positioned to Respond to Global Crises
Uniquely Positioned to Respond to Global Crises Crisis Ebola Bird Flu FY161 LAKE Revenue Impact $4.6 million $4.1 million LAKE Role Supplied suits to the United Kingdom Government Supplied protective clothing to DiVal Safety Equipment Situation Timeline • August 8, 2014: Ebola declared an “internati
Slide 9: Transition to a Stronger Business Model
Transition to a Stronger Business Model Business Area FY20061 Today Products Tied to DuPont / commodity / lower margin Proprietary / value-added / higher margin COGS / Raw Materials Tied to DuPont Multi-sourced, lower priced fabrics than DuPont Gross Margin 24.2%1 36.5%2 Sales Channels Distributors
Slide 10: Blue Chip Customers
Blue Chip Customers Distributors End Users 10
Slide 11: Strong Growth Masked By Wind-Down of DuPont & Brazil
Strong Growth Masked By Wind-Down of DuPont & Brazil Sales by Segment ($ in millions) $99.6 $96.0 $93.5 $84.0 $8.7 $86.2 $77.0 $76.1 $72.0 $60.0 $61.3 $57.4 $54.7 $51.2 $44.3 $41.7 $44.5 $90.9 $35.6 $35.7 $28.1 $21.3 $19.9 $8.0 $6.2 $0.0 $0.0 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 F
Slide 12: Favorable Industry Dynamics
Favorable Industry Dynamics Lakeland operates in a large and growing industry… Industry Tailwinds Protective Clothing Market1 ($ in billions) Global Economic Growth Rebounding Global Oil Prices $9.3 Strong Increase in Manufacturing $6.9 $6.4 $6.0 Robust Demand from Developing Industries In
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: Increasing Manufacturing Capacity
Increasing Manufacturing Capacity August 2017 capital raise provides for investment in new Anqui (Weifang), China Facility manufacturing facilities Building out lower cost locations which are closer to customers, including India and Vietnam Accretive to gross margins $150 Jerez, Mexico Facility $
Slide 15: Strong Fiscal Year Results
Strong Fiscal Year Results LAKE management successfully implemented key strategic initiatives in Q1 FY20181 that resulted in strong sales growth and improved cost controls… Revenue Adjusted EBITDA Adjusted Free Cash Flow ($ in millions) ($ in millions) ($ in millions) Note: Company fiscal year ends
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 – New locations in Vietnam and later Ind
Slide 17: Significant M&A Activity
Significant M&A Activity June 2017 Oct. 2015 EV / Revenue: 2.0x; EV / EBITDA: 9.0x EV / Revenue: 3.4x; EV / EBITDA: 19.5x Sept. 2016 July 2015 July 2016 June 2015 EV / Revenue: 1.4x; EV / EBITDA: 10.5x EV / Revenue: 5.8x; EV / EBITDA: 14.0x June 2016 / May 2015 June 2016 Apr. 2015 May 2016 Mar. 2015
Slide 18: Low Seasonality in Business
Low Seasonality in Business Sales By Quarter FY2016 FY2017 FY2018 Q4 Q1 Q1 Q4 Q1 Q4 20.5% 24.9% 23.6% 23.6% Q3 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. 18
Slide 19: Seasoned Management Team
Seasoned Management Team Management Bio Years at LAKE Christopher J. Ryan – President & CEO Christopher J. Ryan has 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 Executive Vice President - Finance
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
Income Statement ($ in thousands) Three Months Ended Nine Months Ended October 31, October 31, 2018 2017 2018 2017 Net sales $24,009 $23,960 $73,970 $70,831 Cost of goods sold 15,691 14,907 46,995 44,530 Gross profit 8,318 9,053 26,975 26,301 Operating expenses 7,305 6,388 21,898 18,981 Operating pr
Slide 23: EBITDA Reconciliation
EBITDA Reconciliation Three Months Ended Nine Months Ended October 31, October 31, 2018 2017 2018 2017 Net Income to EBITDA Net Income $501 $1,806 $3,386 $5,358 Interest 25 35 93 147 Taxes 494 831 1,634 1,828 Depreciation and amortization 214 197 642 582 Less other income, net (7) (7) (36) (13) EBIT
Slide 24: Balance Sheet
Balance Sheet ($ in thousands) ASSETS O ctober 31, January 31, 2018 2018 Current assets Cash and cash equivalents $11,660 $15,788 Accounts receivable, net of allowance for doubtful accounts of $556 and $480 at October 31, 2018 and January 31, 2018, respectively 16,271 14,119 Inventories, net of allo
Slide 25: Appendix
Protect Your People™ Appendix 25
Slide 26: 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