NASDAQ: LAKE Steve Bachelder Chief Operating Officer September 2016 Emerging Markets Exposure… …Western Markets Experti se
Safe Harbor Statement With the exception of historical information, the statements set forth in this presentation include forward-looking statements that involve risk and uncertainties. The company wishes to caution that a number of important factors could cause actual results to differ materially from those forward-looking statements. These and other factors could cause actual results to differ materially from those in any forward-looking statements which are discussed in this presentation. Please see Lakeland Industries’ SEC filings on Forms 10-K and 10-Q for important information about the Company and related risks. The Company disclaims any obligation to update its forward-looking statements. 2
Lakeland At A Glance • Leading manufacturer of industrial protective clothing • Serving all major industrial market sectors – Chemical/Petrochemical – Basic Industry: Auto, Steel, Construction, Electric & Gas Utilities – Health Care & Food Chain; High Tech – Government, Fire Department, Public Safety, DOD, CDC, DEA, etc. • In business since 1982 in a stable and growing market • History: Lost nearly $80 million of annual revenue from DuPont products since 2006 and $15 million in Brazil since 2012 • But managed to maintain overall revenues by growing new business • Driven by world-wide sales and profit growth opportunities • Positioned for long term growth with strengthened balance sheet and significant upside potential 3
HOBBLED BY PRIOR DEPENDENCE ON DUPONT FABRICS & EXIT FROM BRAZIL Fiscal Year Sales History: Tyvek/Tychem and Brazil Declines Mask Organic Domestic and International Growth* ($ Millions) $120 $100 $80 $60 $40 $20 $- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Non-DuPont Items Total Ex-Brazil Brazil Sales DuPont Items Total Lost $78M in DuPont sales and $17M in Brazil Sales from 2006-2016 4 *Chart shows figures for continuing and discontinued operations
Financial Issues Through 2015 Company In A Sharp Turn Around Mode • DuPont had squeezed us for five years before terminating license in FY 2012. • We responded by opening international markets, creating our own branded products, and beefing up our sales force. • Then in FY 2013 Company got “homered” in a Brazil court case, leading to collapse of business there and $34 million in losses, and subsequent “Going Concern Opinion” as we lost our lender. • One day before loans were to be called in FY 2014, Company was able to get new (but expensive) financing, and the “Going Concern Opinion” was removed. • PIPE common stock issuance for $11.1 million completed in FY 2015, enabling payoff of high cost debt and remainder of judgement in Brazil. • Company was then able to exit Brazil in FY 2016 via a local management transaction. 5
Growth in Operating Profit From Continuing Operations (Year Ended January 31) $14,000 ($ Millions) $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- 2013 2014 2015 2016 Operating Profit From Continuing Operations 6
Proof Of Turn Around from FY2014-FY2016 Highlights FY 2016 (continuing operations) • Revenue Growth • Consolidated sales increased for third consecutive year, despite currency headwinds • Revenues driven by organic growth and emergency demand in first three quarters of FY 2016 Gross margin for the year was 36.5% compared to 33.9% previous yea • Significant Increases in Operating Income, Adjusted EBITDA* and Free Cash Flow • Operating income increased to $11.8M from $7.0M previous year • As a percentage of sales, increased to 11.9% from 7.5% • Free cash flow (adjusted EBITDA less taxes and capital exp.) $10.8M vs. $7.4M • Net Income • FY 2016 net income of $7.8M declined from $11.1M previous year • Decline in net income primarily reflects the income tax benefit in FY 2015 from the Brazil worthless stock deduction of approximately $34M for a $9.5M tax credit recorded for the Company’s exit from Brazil • Balance Sheet Strength • FY 2016 vs. FY 2013: total liabilities down by 58%; shareholders equity up by 52% • Uses of cash during FY 2016 include payments of arbitration settlement of $3.8M and VAT tax liability of $2.3M as part of the Company’s exit from Brazil 7 *Includes non-GAAP measures and other adjustments – see tables included herein for reconciliations.
Long Term Improvements in Continuing Operations Summary of Operations Year Ended January 31, (in thousands, except share and per share data) 2016 2015* 2014* 2013* Income Statement Data: Net sales from continuing operations 99,646 $ 93,419 $ 84,173 $ 78,260 Operating profit (loss) from continuing operations 11,812 6,691 4,053 579 Arbitration judgment in Brazil — — — (7,874) Income (loss) from continuing operations before income taxes 10,907 2,898 2,679 (8,538) Income tax expense (benefit) 3,117 (8,188) (2,851) 4,127 Net income (loss) from continuing operations 7,790 11,086 5,530 (12,665) Net income (loss) on discontinued operations net of tax (3,936) (2,687) (5,650) (13,624) Earnings (loss) per share from continuing operations - basic $ 1.09 $ 1.78 $ 0.97 $ (2.39) Earnings (loss) per share from continuing operations – diluted $ 1.07 $ 1.75 $ 0.96 $ (2.39) Weighted average common shares outstanding Basic 7,171,965 6,214,303 5,689,230 5,290,332 Diluted 7,254,340 6,325,525 5,771,226 5,290,332 Balance Sheet Data: Current assets $ 69,655 $ 68,635 $ 65,481 $ 60,605 Total assets 88,260 93,208 80,483 80,051 Current liabilities 19,958 26,222 26,835 27,761 Long-term liabilities 786 3,730 9,171 8,801 Stockholders ’ equity 67,516 63,256 44,477 43,489 * Restated for discontinued operations 8
The Company Today: Positioned for Continued Long Term Growth in Revenues and Profitability 9
Expanded Product Line Limited Use/Disposable Chemical Suits High Visibility Clothing Protective Clothing Fire Fighting & Heat Protective Gloves & Arm Guards Apparel/Reusable Woven Garments 10
The Right Focus: End-user Segments for Personal Protective Equipment Gas Detection Other 6% Utilities 21% 9% Petrochemical 10% Auto 11% Construction Metals 10% 8% Transport Healthcare Pulp & Paper 7% 9% 7% Lakeland End-user Segments Address Over 55% of Total Market but the Company Possesses Less Than 1% 11 Source: Frost & Sullivan Estimates (2014-2015)
The Right Focus: Personal Protective Equipment Market Footwear Gas Detection Head Fall 13% 6% 2% 4% Eye Hand 6% 29% Respiratory 15% Hearing Protective Clothing 3% 22% Lakeland Product Segments Address Over 50% of $23 Billion Market but the Company Presently Represents Less Than 1% of the Total Addressable Market (TAM) 12 Source: Frost & Sullivan Estimates
Growth Opportunities Lakeland Target Markets Among Largest and Fastest Growing High CAGR for Market Segments (>6%) 3 2 1 Head/Eye/Face 7 5 1 6 4 2 Respiratory Medium 3 Hand (2%-6%) 4 Hearing 5 Prot. Apparel 6 Foot Low 7 Fall Prot. (0%-2%) Small Medium Large (<$1.0 billion) ($1.0-$2.5 billion) (>$2.5 Billion) Market Size of Market Segments Source: Frost & Sullivan; CAGR is calculated from 2008-2015 13
Product Mix Revenue by Product – Historical Approximation Homeland Security Chemical Suits 7% High Visibility 7% Gloves & Arm Protection 4% Fire and Heat Protective Clothing and other Wovens 18% Disposable Clothing 64% Homeland Security Chemical Suits Gloves & Arm Protection Fire and Heat Protective Clothing and other Wovens Disposable Clothing Revenue Composition FY16* High Visibility Domestic 57% International 43% *Revenue from continuing operations 14
Optimized Global Presence Sales Operations (16) Manufacturing Location (6) Headquarters: Ronkonkoma, New York 15
May want to add 1HFY17 International Traction • International Growth – Foreign Revenues International Revenues ($ Millions) Comprised 43% of Total in FY16 60 Manufacturing Locations • 50 – Small facility in US – Expanded plant in Mexico 40 – Expansion in China 30 – Start-up operation in India New Markets Since 2007/08 • 20 – China/Asia Pacific 10 – Russia/Kazakhstan – South America 0 – Southeast Asia/Australia – Eastern Europe, Scandinavia • Snapshot Consolidated International Unit Sales – Asia: 15% of revenues with big upside Increased in FY16 from FY15 but Strength – Europe: 12% and growing of US Dollar Distorted Results as Reported – Canada: 9% and growing – Russia, Latin America: flat due to political problems and oil/commodities * Direct container shipments from China to US customers reclassified to USA sales in 4QFY13 16
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