Lakeland Industries, Inc. · NASDAQ:LAKE
Lakeland Industries — Investor Presentation (March 2021)
35 slides from Lakeland Industries's investor presentation, March 2021
Slide 1: Investor Presentation | March 2021
Investor Presentation | March 2021 Protect Your People ® 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 Q3FY21 Results Financials & Valuation • Net sales of $41.5M, up 51% from $27.5M in 3Q20 LTM Revenue3 $150.3 million • Gross profit of $21.7M, compared with 3Q20 of $9.3M LTM EBITDA3 $39.6 million • Gross margin of 52.3%, compared to 33.9% in 3Q20 LTM Net Income3 $28.4 million • Opex o
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/variants – Logistics – ocean freight improved – Raw materials available: prices are fluctuating • Global Environment – Demand from most regions; Europe, India, Russia, Latin Am. strongest – Logisti
Slide 6: Coronavirus (COVID-19) Impact
Coronavirus (COVID-19) Impact • Revenue – Impact will continue through at least first half of FY22 – Selling through distribution limits transparency into application of sales – Vaccine not likely to materially decrease PPE demand until mid-2021 • Manufacturing – India and Vietnam reached maximum sc
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 HPW % of Sales1 66.2% 20.3% 3.8% 6.9% 1.5% 1.3% Sales by Geography: • Domestic: 52% of FY20 net sales • International: 48% of FY20 net sales Industries Served: • Chemical/petrochemica
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: Strengthening Business Model – Pre/Post-COVID-19
Strengthening Business Model – Pre/Post-COVID-19 Key Characteristic: Key Characteristic: Business Area Pre-COVID-19 Current/Post-COVID-19 Proprietary / value-added / higher Proprietary / value-added / higher Products margin margin / specialized vertical market Multi-sourced, lower priced fabrics Mul
Slide 18: KPIs Improving Over Long Term – Income Statement Performance
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% 20.0% 40.0% 15.0% 10.0% 35.0% 5.0% 30.0% 0.0% -5.0% 25.0% -10.0% 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q19 1
Slide 19: KPIs Improving Over Long Term – Balance Sheet Performance
KPIs Improving Over Long Term – Accelerated by COVID-19 Balance Sheet Performance Lower Inventories and Higher Revenues $50.0 $40.0 $30.0 $20.0 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Sales Inventory Increased Cash and Elimination of Debt $40.0 $30.0 $20.0 $10.0 $0.0 1Q19 2Q19 3Q19 4Q
Slide 20: Sustainable Improvements Post-Pandemic – Operational Impact
Sustainable Improvements Post-Pandemic – Operational Impact Key Area Favorable Impact Customer • Added over 200 new industrial customers in F2021; Conversion • Plus over 180 new customers for COVID-19 defense New Products • 2 new higher margin niche products added • Raised prices in past year Pricin
Slide 21: Sustainable Improvements Post-Pandemic – Financial Impact
Sustainable Improvements Post-Pandemic – Financial Impact Key Area Favorable Impact • Rising pre-COVID • Substantially elevated in 9M21 Revenue • Well positioned for emergence of institutional cleaning as new market segment, government and industry PPE stockpiling • 50.1% gross margin as a percentag
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 5.8x EV/EBITDA Revenue Growth Gross Margin Based on TTM Results 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Peers LAKE LAKE LAKE Peers LAKE LAKE LAKE '19-'21 FY19 FY20 3Q21 LTM
Slide 23: 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 24: 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 25: Financial Review
Protect Your People™ Financial Review 25
Slide 26: Income Statement – 3Q21
Income Statement – 3Q21 (UNAUDITED) ($000’s Except Share Information) ) Three Months Ended Nine Months Ended October 31, October 31, 2020 2019 2020 2019 Net sales $41,451 $27,464 $122,054 $79,620 Cost of goods sold 19,763 18,166 60,882 52,349 Gross profit 21,688 9,298 61,172 27,271 Operating expense
Slide 27: EBITDA Reconciliation – 3Q21
EBITDA Reconciliation – 3Q21 (UNAUDITED) ($000’s Except Share Information) ) Three Months Ended Nine Months Ended October 31, October 31, 2020 2019 2020 2019 Net Income to EBITDA Net Income $9,264 $1146 $27,237 $2,076 Interest 4 26 23 98 Taxes 3,237 653 7,386 1,950 Depreciation and amortization 491
Slide 28: Balance Sheet – 3Q21
Balance Sheet – 3Q21 (UNAUDITED) ($000’s Except Share Information) ) ASSETS October 31, January 31, 2020 2020 Current assets Cash and cash equivalents $40,186 $14,606 Accounts receivable, net of allowance for doubtful accounts of $812 and $497 at October 31, 2020 and January 31, 2020, respectively 2
Slide 29: 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 30: 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 31: 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 $434 at January 31, 2020 and 2019, respectively 17,702 16,477 Inve
Slide 32: Appendix
Protect Your People™ Appendix 32
Slide 33: Strong Growth Masked By Wind-Down of DuPont & Brazil
Strong Growth Masked By Wind-Down of DuPont & Brazil Sales by Segment ($ in millions) $122.1 $8.7 $107.8 $99.6 $99.0 $93.5 $96.0 $84.0 $86.2 $77.0 $76.1 $72.0 $60.0 $61.3 $57.4 $54.7 $51.2 $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 F
Slide 34: 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 35: Significant Industry M&A Activity
Significant Industry 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 publ
Lakeland Industries — Investor Presentation (March 2021) on 6ix