RONKONKOMA, N.Y.,
June 14, 2017 /PRNewswire/ --
Lakeland Industries, Inc. (NASDAQ: LAKE) (the "Company" or
"Lakeland"), a leading global manufacturer of protective clothing
for industry, healthcare and to first responders on the federal,
state and local levels, today announced financial results for its
fiscal 2018 first quarter ended April 30,
2017.
Fiscal 2018 First Quarter Financial Results
Highlights
- Financial results and operating performance reflect
management's successful implementation of key strategic
initiatives:
-
- Growth in profitability and cash flow
- Cost controls, expense management and balance sheet
optimization
- Investments in product development and new vertical
markets
- Net sales for 1Q18 of $23.0
million increased 12.7% as compared with $20.4 million in 1Q17
- Gross profit for 1Q18 of $8.6
million increased 26% from $6.8
million in 1Q17
- Gross margin as a percentage of net sales in 1Q18 was
37.3%, up from 33.3% in 1Q17
- Operating expenses decreased to $6.1 million in 1Q18 or by 7.9% from $6.6 million in 1Q17
- Operating income increased to $2.5
million or to 10.8% as a percentage of net sales in 1Q18
from $169,000 or 0.8% as a percentage
of net sales in 1Q17
- Net income increased to $1.7
million in 1Q18 from $3,000 in
1Q17
- Basic and diluted earnings per share of $0.24 and $0.23 in
1Q18, up from $0.00 and $0.00 in 1Q17
- Free cash flow of $2.2
million in 1Q18 increased from $740,000 in 1Q17
- Cash at end of quarter increased 14% to $11.8 million from $10.4
million at beginning of fiscal year
- Total debt reduced by 47% to $3.1
million at the end of the quarter from $5.8 million at the beginning of the fiscal
year
- Stockholders' equity increased by over 2% to $73.2 million at the end of 1Q18 from the
beginning of fiscal 2018
Management's Comments
Christopher J. Ryan,
President and Chief Executive Officer of Lakeland Industries,
stated, "In the first quarter of fiscal 2018 we delivered strong
growth in revenues, profits and free cash flow. The
improvements in financial results and many operating performance
measures reflect our management team's successful implementation of
key strategic initiatives that build upon the progress made in the
fourth quarter of fiscal 2017.
"Lakeland's strategic imperatives are directed at
improving our global presence and competitiveness while executing
with operational effectiveness. As a result, we delivered
with growth in profitability and cash flow, which benefited from
our ability to take greater control of our costs and expense
levels. At the same time, while we continued to optimize our
balance sheet, we have been able to enhance our position through
investments in product development and penetration of new vertical
markets."
"We have been leveraging the advantages of our unique
operating platform to deliver top line growth in excess of our
addressable global market while demonstrating operating leverage as
one of the most advanced and lean personal
protective equipment
(PPE)
manufacturers with a global presence. We peg our global
market growing at an estimated annual rate of between 2% to 7%,
which our growth exceeded in the first quarter. We are performing
well and have been positioning the Company to take advantage of the
significant opportunities for continued growth on a global
basis."
"Both domestic and international revenue increased in the first
quarter as the dollar modestly strengthened from the prior year in
many of the markets in which we operate, while consolidated
in-country sales in local currencies increased from the prior year
period. Approximately $8
million in domestic sales for key product lines remained
flat in the quarter primarily due to continued weakness in the oil
and gas sector, but our profitability was enhanced as we
transitioned away from lower margin subset markets. We have
been placing concerted emphasis on allocating our resources toward
higher margin products using modifications of existing product
lines to create new, higher margin garments sold into new vertical
markets. This capability is somewhat unique to Lakeland
because we own our own manufacturing facilities and employ a highly
trained workforce spanning five countries on three continents."
"The increases in gross profits and gross margin as a percentage
of net sales in the first quarter were driven by sales of higher
margin products targeted at new vertical markets and a more
favorable product mix along with successful labor and raw material
cost management. Operating income improvements reflect lower
costs overall which were partially offset by increased spending on
new product development and more progressive marketing campaigns
including additions to our global salesforce. For a second
consecutive quarter we decreased our year-over-year operating
expenses."
"Higher revenues and improvements in our cost structure
have allowed us to further strengthen our balance sheet even while
we invested in future growth opportunities. Inventories
declined by 10% from the beginning of the period, although we have
reduced the total number of different sku(s) we carry while slowly
introducing new products which have seen gradual ramping of
sales. Free cash flow absent exigent revenue generating
circumstances came in at the highest quarterly level in years at
$2.2 million, an increase of
approximately 200% from the first quarter of fiscal 2017. The
Company's cash balance at April 30,
2017 was in excess of $11.8
million, an increase of 14% from the beginning of the fiscal
year. During the same period, total debt was reduced by 47% to
$3.1 million."
"With a strengthened balance sheet, all major global
operations turning a profit in the first quarter and productivity
and market share enhancement strategies in place, we are well
positioned for continued growth during the balance of the year and
beyond."
Fiscal 2018 First Quarter Financial
Results
Net sales
increased to
$23.0 million for the three months
ended April
30, 2017 compared to
$20.4 million for the three months
ended April
30, 2016, an increase of
12.7%. On a consolidated basis in U.S. currency for the first
quarter of fiscal 2018, domestic sales were $12.7 million or 55% of total revenues and
international sales were $10.3
million or 45% of total revenues. This compares with
domestic sales of $12.2 million or
60% of the total, and internationals sales of $8.2 million or 40% of the total in the same
period of fiscal 2017.
Sales in the USA
increased $0.5
million or over 4%,
primarily due to
increased sales to strategic fire distributors and increased
sales in the fire retardant ("FR)" woven coveralls market.
USA sales of
disposables, chemicals, and reflective apparel
were $10.2 million, while wovens and
fire protection sales combined for an increase of $700,000 or 38.6%, mostly due to focused
penetration of strategic fire distributors who support and market
the Company's fire gear and increased sales of FR
garments.
Among the Company's larger international operations,
sales in China and to
the Asia Pacific Rim increased
$2.1 million or 25% as
industrial activity improved and several larger customers began
replacing depleted inventories. Canada sales remained level at
$1.8 million as that country
continues to experience an oil and gas turnaround requiring
protective wear. UK sales
decreased by $0.3
million or 10.7% mostly due to uncertainty in
the economy as a result of Brexit which also impacted its currency
when reported in the U.S. Russia and
Kazakhstan sales combined
increased $0.1 million or
16.5%, and Latin
America sales increased
$0.7 million or
84.4% due to resolution of supply
chain issues and an overall increase in industrial
activity.
Gross profit increased
$1.8 million or
26.3% to $8.6 million
for the three months ended
April 30, 2017, from
$6.8 million for the three
months ended April
30, 2016. Gross profit as a percentage of net
sales increased to
37.3% for the period
ended April
30, 2017, from
33.3% for the three months
ended April
30, 2016. Major factors driving gross
margins were:
- Disposable product gross
margins increased 2.1
percentage points as the Company continues to contain cost
and maximize production efficiency along with new
marketing strategies
- Chemical product gross
margin increased by
4.1 percentage points and
fire protection product
gross margin increased
12.2 percentage points due
primarily to a reduction in force in the
USA to move production to
more cost effective facilities in Mexico and/or
China during
1Q17 which resulted in
severance payments in that quarter
- Fire protection and FR apparel sales benefited from new
sales and marketing initiatives targeting specific vertical
segments and penetration of key distributor customers
- Wovens gross margins increased 14.0 percentage points as
the Company increased sales of higher margin FR products into the
pipeline industry
- Reflective gross margins
decreased 1.5
percentage points as a result of product mix
- UK gross margins
decreased 3.6
percentage points as a result of lower
sales volume amid
Brexit and product mix
variations
Operating expenses
decreased 7.9% from
$6.6 million for the three
months ended April
30, 2016
to $6.1 million for the
three months ended April 30,
2017.
Operating expense as a percentage of net
sales was 26.5% for the
three months ended April
30, 2017,
an improvement from 32.4% for the three months
ended April 30,
2016. The main factors for the decrease
in operating expenses are a $200,000
decrease in payroll administration
and a $200,000 decrease
in officer salaries resulting from the reversal of
payroll accruals and the reduction of one officer due to retirement
and one vice president due to resignation, partially offset by a
$100,000 increase in commissions
based on higher sales volume.
Operating income
increased to $2.5
million for the three months
ended April
30, 2017, from
$169,000 for the three
months ended April
30, 2016, mainly as a
result of stronger sales
volume and reduced operating expenses. Operating
margins were 10.8% for the
three months ended April
30, 2017, compared to
0.8% for the three months
ended April
30, 2016.
Net income increased to
$1.7 million for the three months ended
April 30, 2017 from
nominal net income of $3,000 for the three months ended
April 30, 2016. The results for three
months ended April 30, 2017 are
primarily due to higher sales volume than
in the prior period as well as continuing cost
containment efforts.
As of April
30, 2017,
Lakeland had cash and cash equivalents of
approximately $11.8 million and working
capital of $49.9 million.
Cash and cash equivalents increased
$1.5 million or 14.4% from the beginning of the fiscal
year, while working capital increased by $2.1 million for an improvement of 4.4%.
The Company's $15
million revolving credit facility
had $2.4 million of
borrowings outstanding as of April 30,
2017, a reduction of 51%
from the outstanding amount of $4.9 million
at the beginning of the fiscal year, and availability
of $12.6 million
at the start of the fiscal 2018 second
quarter. Total debt outstanding at
April 30, 2017 was $3.1 million, down from $5.8 million at January
31, 2017 and $13.4 million at
January 31, 2016. In May 2017, the Company entered into a new loan
facility providing for greater availability and improved
terms.
The Company incurred capital expenditures of approximately
$141,000 during the first quarter of
fiscal year 2018. Total capital expenditures for the fiscal
year is budgeted at approximately $1.0
million, which includes the cost for a phased global rollout
of a new enterprise resource planning ("ERP") system.
No stock was
acquired as part of the Company's
$2.5 million stock repurchase
program which was approved on July 19, 2016.
Financial Results Conference Call
Lakeland will host a conference call at 4:30 pm eastern today to discuss the Company's
fiscal 2018 first quarter financial results. The call will be
hosted by Christopher J. Ryan,
Lakeland's President and CEO, and Teri W.
Hunt, Lakeland's Chief Financial Officer. Investors can
listen to the call by dialing 888-347-6609 (Domestic) or
412-902-4291 (International) or 855-669-9657 (Canada).
For a replay of this call through June
21, 2017, dial 877-344-7529 (Domestic) or 412-317-0088
(International) or 855-669-9658 (Canada), Pass Code 10107597.
About Lakeland Industries, Inc.:
Lakeland
Industries, Inc. (NASDAQ: LAKE) manufactures and sells a
comprehensive line of safety garments and accessories for the
industrial protective clothing market. The Company's products
are sold by a direct sales force and through independent sales
representatives to a network of over
1,200 safety and mill supply
distributors. These distributors in turn supply end user industrial
customers such as chemical/petrochemical, automobile, steel, glass,
construction, smelting, janitorial, pharmaceutical and high
technology electronics manufacturers, as well as hospitals and
laboratories. In addition, Lakeland supplies federal, state, and
local government agencies, fire and police departments, airport
crash rescue units, the Department of Defense, the Centers for
Disease Control and Prevention, and many other federal and state
agencies. For more information concerning Lakeland, please
visit the Company online at
www.lakeland.com.
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Forward-looking statements
involve risks, uncertainties and assumptions as described from time
to time in Press Releases and Forms 8-K, registration statements,
quarterly and annual reports and other reports and filings filed
with the Securities and Exchange Commission or made by
management. All statements, other than statements of
historical facts, which address Lakeland's expectations of sources
or uses for capital or which express the Company's expectation for
the future with respect to financial performance or operating
strategies can be identified as forward-looking statements.
As a result, there can be no assurance that Lakeland's future
results will not be materially different from those described
herein as "believed," "projected," "planned," "intended,"
"anticipated," "estimated" or "expected," or other words which
reflect the current view of the Company with respect to future
events. We caution readers that these forward-looking
statements speak only as of the date hereof. The Company
hereby expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any such statements to reflect
any change in the Company's expectations or any change in events
conditions or circumstances on which such statement is
based.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which
are prepared and presented in accordance with Generally Accepted
Accounting Principles (GAAP), the Company uses the following
non-GAAP financial measures: EBITDA, Adjusted EBITDA and
Free Cash Flow. The presentation of this
financial information is not intended to be considered in isolation
or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. The Company uses
these non-GAAP financial measures for financial and operational
decision making and as a means to evaluate period-to-period
comparisons. The Company believes that they provide useful
information about operating results, enhance the overall
understanding of past financial performance and future prospects,
and allow for greater transparency with respect to key metrics used
by management in its financial and operational decision making. The
non-GAAP financial measures used by the Company in this press
release may be different from the methods used by other
companies.
For more information on the non-GAAP financial measures,
please see the Reconciliation of GAAP to non-GAAP Financial
Measures tables in this press release. These accompanying
tables include details on the GAAP financial measures that are most
directly comparable to non-GAAP financial measures and the related
reconciliations between these financial measures.
LAKELAND INDUSTRIES, INC. AND
SUBSIDIARIES
Operating Results ($000)
|
Reconciliation to GAAP Results
|
|
|
Quarter Ended
April 30, 2017
|
Quarter Ended
April 30, 2016
|
|
|
|
Net sales
|
$22,961
|
$20,369
|
Period over period growth
|
12.7%
|
-----
|
Gross profit
|
8,558
|
6,776
|
Gross profit %
|
37.3%
|
33.3%
|
Operating expenses
|
6,085
|
6,607
|
Operating expenses as a percentage of
sales
|
26.5%
|
32.4%
|
Operating income
|
2,473
|
169
|
Operating income as a percentage of
sales
|
10.8%
|
0.8%
|
Interest expense
|
76
|
198
|
Other income,net
|
2
|
8
|
Pretax income (loss)
|
2,399
|
(21)
|
Income tax expense (benefit)
|
688
|
(24)
|
Net income
|
$1,711
|
$3
|
|
|
|
Weighted average shares for
EPS-Basic
|
7,263,774
|
7,254,162
|
Net income per
share
|
$0.24
|
$0.00
|
|
|
|
Operating income
|
$2,473
|
$169
|
Depreciation and amortization
|
186
|
287
|
Other income, net
|
2
|
8
|
EBITDA
|
2,661
|
464
|
Equity Compensation
|
99
|
130
|
USA Severance Associated with
Restructure
|
-----
|
309
|
Adjusted EBITDA
|
2,760
|
903
|
Cash paid for taxes (foreign)
|
384
|
132
|
Capital expenditures
|
141
|
30
|
Free cash flow
|
$2,235
|
$741
|
|
|
|
|
|
LAKELAND INDUSTRIES, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
|
|
ASSETS
|
April 30,
|
January 31,
|
|
2017
|
2017
|
Current assets
|
($000's)
|
Cash and cash equivalents
|
$11,848
|
$10,365
|
Accounts receivable, net of allowance for doubtful
accounts of $340 and $417 at April 30,
2017 and January 31, 2017,
respectively
|
12,689
|
10,704
|
Inventories, net of allowance of $2,528 and
$2,305 at April 30, 2017 and January 31, 2017,
respectively
|
32,088
|
35,535
|
Prepaid VAT tax
|
1,202
|
1,361
|
Other current assets
|
2,156
|
2,121
|
Total current assets
|
59,983
|
60,086
|
Property and equipment, net
|
8,432
|
8,527
|
Assets held for sale
|
901
|
901
|
Deferred income tax
|
13,210
|
13,515
|
Prepaid VAT and other taxes
|
484
|
478
|
Other assets
|
91
|
176
|
Goodwill
|
871
|
871
|
Total assets
|
$83,972
|
$84,554
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
Current liabilities
|
|
|
Accounts payable
|
$5,263
|
$4,928
|
Accrued compensation and benefits
|
1,101
|
1,311
|
Other accrued expenses
|
1,276
|
1,018
|
Current maturity of long-term debt
|
50
|
50
|
Short-term
borrowings
|
9
|
153
|
Borrowings under revolving credit
facility
|
2,363
|
4,865
|
Total current liabilities
|
10,062
|
12,325
|
Long-term portion of debt
|
678
|
716
|
VAT taxes payable
|
6
|
6
|
Total liabilities
|
10,746
|
13,047
|
Commitments and contingencies
|
|
|
Stockholders' equity
|
|
|
Preferred stock, $0.01 par; authorized 1,500,000
shares (none issued)
|
-----
|
-----
|
Common stock, $.01 par; authorized 10,000,000
shares,
Issued 7,620,861 and
7,620,215; outstanding 7,264,420 and 7,263,774 at April 30,
2017
and January 31, 2017,
respectively
|
76
|
76
|
Treasury stock, at cost; 356,441 shares at April 30,
2017 and January 31, 2017
|
(3,352)
|
(3,352)
|
Additional paid-in capital
|
64,862
|
64,764
|
Retained earnings
|
14,112
|
12,401
|
Accumulated other comprehensive
loss
|
(2,472)
|
(2,382)
|
Total stockholders' equity
|
73,226
|
71,507
|
Total liabilities and stockholders'
equity
|
$83,972
|
$84,554
|
LAKELAND INDUSTRIES, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
|
|
|
|
Three Months Ended
|
|
April 30,
|
|
($000's)
except for share information
|
|
2017
|
2016
|
Net sales
|
$22,961
|
$20,369
|
Cost of goods sold
|
14,403
|
13,593
|
Gross profit
|
8,558
|
6,776
|
Operating expenses
|
6,085
|
6,607
|
Operating profit
|
2,473
|
169
|
Other income, net
|
2
|
8
|
Interest expense
|
76
|
198
|
Income (loss) before taxes
|
2,399
|
(21)
|
Income tax expense (benefit)
|
688
|
(24)
|
|
|
|
|
|
|
Net income
|
$1,711
|
$3
|
Net income per common
share:
|
|
|
Basic
|
$0.24
|
$0.00
|
Diluted
|
$0.23
|
$0.00
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
Basic
|
7,263,774
|
7,254,162
|
Diluted
|
7,353,660
|
7,324,583
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/lakeland-industries-inc-reports-strong-growth-in-revenues-profits-and-free-cash-flow-for-fiscal-2018-first-quarter-financial-results-300472176.html
SOURCE Lakeland Industries, Inc.