RONKONKOMA, N.Y., June 8, 2018 /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 2019 first
quarter ended April 30, 2018.
Fiscal 2019 First Quarter Financial Results Highlights and
Recent Developments
- Net sales for 1Q19 of $24.3
million increased 6.0% from $23.0
million in 1Q18
- Gross profit for 1Q19 of $9.5
million increased 11.1% from $8.6
million in 1Q18
- Gross margin as a percentage of net sales in 1Q19 was 39.0%, up
from 37.3% in 1Q18
- Operating expenses of $7.1
million in 1Q19 increased 16% from $6.1 million in 1Q18 from continued investment in
growth and profitability enhancements
- Operating income in 1Q19 of $2.4
million benefited from sales growth and margin improvement
offset by higher operating expenses as compared to $2.5 million in 1Q18
- Net income increased to $1.9
million in 1Q19 from $1.7
million in 1Q18
- Diluted earnings per share of $0.23 for both first quarter periods reflects
public offering of approximately 809,000 shares of common stock in
August 2017
- Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA)* for 1Q19, which excludes stock based
compensation, was $2.7 million as
compared to $2.8 million in 1Q18
- Cash at the end of 1Q19 increased to $16.3 million from $15.8
million at the beginning of the fiscal year
- Total debt was reduced by 4.3% to $1.6
million at end 1Q19 from $1.7
million at the beginning of the fiscal year
- Stockholders' equity at the end of 1Q19 increased to
$84.6 million from $82.8 million at the beginning of fiscal
year
*Please see reconciliations of Non-GAAP financial measures in
the tables of this press release.
Management's Comments
Christopher J. Ryan, President
and Chief Executive Officer of Lakeland Industries, stated, "We are
off to a very solid start to fiscal 2019. The Company
reported an increase in net income of over 9% while consolidated
net sales grew by 6%. Our increased net income primarily
reflects an improvement in our international sales and higher
overall gross margin, partially offset by increased operating
expenses for the implementation of our long term growth strategy
that includes the addition of sales and marketing personnel
globally."
"We achieved the second consecutive year of revenue growth for
the first quarter and nearly eclipsed the level of sales in the
first quarter of fiscal 2016 when we had significantly heightened
demand resulting from a devastating viral outbreak. In the
first quarter of fiscal 2019, we once again experienced sales
growth in all of our major international operating regions as well
as in our emerging market operations. Sales in the US were
lower due to inventory work downs from large fourth quarter
shipments and a concerted effort to focus on higher margin product
lines. Overall, the key components of our global growth
strategy that are being well implemented include expansion into new
and existing territories while improving the quality of our
earnings where we can deliver sustainable and strong results.
To this end, our performance in the first quarter delivered
as planned."
"While reporting an increase in our top line, we have made great
strides to position the Company for longer term gains and a
parallel improvement in our gross margins. Traction is being
gained in our efforts to penetrate international markets which are
growing at a faster rate than the more competitive US market.
In the US, we are leaning toward the introduction of new, higher
margin products that showcase our leading global design and
manufacturing capabilities. We are particularly excited by
our new CleanMax product which will be marketed into the cleanroom
market for sale to the pharmaceutical supply chain. This is a
large market that spans domestic and international sales
opportunities. We began booking orders in the first quarter, with
sales to be recorded beginning in the second quarter."
"Gross profit as a percentage of sales increased to the highest
first quarter level in recent history. At 39.0% in the first
quarter of fiscal 2019, we have seen a significant increase from
37.3% last year and 33.3% for fiscal 2017. The key components
of our ongoing effort to improve gross margins include: 1) entry
into faster growing international markets with limited competition;
2) introduction of new specialty products which benefit from our
materials and manufacturing expertise; 3) the lowering of our cost
of manufacturing; 4) improving our operational effectiveness
through investments in technology; and, 5) leveraging of
alternative distribution channels principally with Amazon for
retail sales."
"Operating expenses increased in the first quarter to aid in the
implementation of our growth and profitability enhancements.
At the same time, we are effectively managing our spending.
Operating expenses as a percentage of revenues remained consistent
from the fourth quarter at approximately 29%, while we increased
spending by $1 million from the first
quarter of last year with continued investment to support our
expanded global presence. Along with this increased spending,
we continued to grow our cash balance and reduce debt."
"Cash increased by more than 3% to $16.3
million during the first quarter while total debt
outstanding at April 30, 2018 was
reduced by nearly 4.3% in the period. We now have over
$16 million of net cash and no
borrowings on a $20 million revolving
credit facility. We remain very encouraged by our strong
financial condition and our continued ability to further improve
the Company's top and bottom line performance."
Fiscal 2019 First Quarter Financial Results
Net sales increased to $24.3
million for the three months ended April 30, 2018 compared to $23.0 million for the three months ended
April 30, 2017, an increase of
6.0%. On a consolidated basis for the first quarter of fiscal
2019, domestic sales were $12.3
million or 51% of total revenues and international sales
were $12.0 million or 49% of total
revenues. This compares with domestic sales of $12.7 million or 55% of the total, and
internationals sales of $10.3 million
or 45% of the total in the same period of fiscal 2018.
Sales in the US modestly decreased from the prior year period
primarily due to strategic revenue mix adjustments with selective
fulfillment of lower margin disposable product orders and renewals.
Of the Company's six major product lines marketed in the US,
disposables represent approximately 51% of total domestic
sales. In addition, the Company allocated certain production
capacity to international orders over domestic orders given the
mandate to focus on higher margin sales. Additional
production capacity is being brought online in new manufacturing
facilities in India and
Vietnam, which positions the
Company to increase sales globally.
Among the Company's larger international operations, sales to
external customers in China and to
the Asia Pacific Rim increased to $13.8
million from $10.5 million in
the prior year period. This growth is attributable to higher
overall volume which increased inter-company sales (eliminated in
consolidation) and increased industrial activity in the
region. Canada sales
increased $0.4 million or 19.4% to
$2.2 million from $1.8 million in the prior year period as that
country continues to experience an oil and gas turnaround along
with demand for turnout gear and other safety apparel.
UK/Europe sales increased by
$0.4 million or 21% to $2.6 million from $2.2
million in the fiscal 2018 first quarter as new distributors
placed stocking orders, particularly for new partners in
Germany. Russia and Kazakhstan sales combined for
an increase in sales of $0.5
million.
Gross profit increased $0.9
million or 11.1% to $9.5
million for the three months ended April 30, 2018, from $8.6
million for the three months ended April 30, 2017. Gross profit as a
percentage of net sales increased to 39.0% for the three-month
period ended April 30, 2018, from
37.3% for the three months ended April
30, 2017. The gross margin increase benefited from a
mix of sales of higher margin products, including chemical suits
and other woven products, and higher pricing implemented in the US
and select international markets for key product lines as the
quarter progressed.
Operating expense increased 16.5% from $6.1 million for the three months ended
April 30, 2017 to $7.1 million for the three months ended
April 30, 2018. Operating expense as
a percentage of net sales was 29.1% for the three months
ended April 30, 2018, essentially
flat as compared to 29.0% for the fourth quarter of fiscal 2018 and
up from 26.5% for the first quarter of fiscal 2018. The main
factors for the higher operating expenses are the currency
fluctuations in Latin America,
Russia, and China, increases in salaries for additional
sales personnel as the Company expands internationally and
domestically, and increased expenses for freight costs and
commissions based on higher sales volumes and new product
development costs.
Operating income decreased to $2.4
million for the three months ended April 30, 2018 from $2.5
million for the three months ended April 30, 2017 Operating margins were 9.9%
for the three months ended April 30,
2018, compared to 10.8% for the three months ended
April 30, 2017.
Income tax expense for the first quarter of fiscal 2019 was
$0.5 million, compared with
$0.7 million in income tax expense
for the prior year period. The decrease in income tax expense
reflects the impact of the 2017 Tax Cuts and Jobs Act and the
associated lower corporate income tax rate, partially offset by
foreign income taxes. Lakeland subsidiaries may be required to pay
local taxes on certain country operations where those operations
were profitable on a local basis. Cash paid for foreign subsidiary
taxes in the first quarter of fiscal 2019 was $0.3 million, compared to $0.4 million for the first quarter of fiscal
2018.
Net income for the three months ended April 30, 2018 was $1.9
million or $0.23 per basic and
diluted share, as compared to net income of $1.7 million or $0.24 per basic share and $0.23 per diluted share in the same period of
fiscal 2018. The 9.1% increase in net income is primarily
attributable to higher sales and gross margin, partially offset by
increased operating expenses for the Company's global growth
initiatives that included additional sales and marketing
spending.
As of April 30, 2018, Lakeland had
cash and cash equivalents of approximately $16.3 million and working capital of $68.0 million. To accommodate continued
global growth and the seasonally strong fiscal second quarter,
inventories increased to $44.4
million at April 30, 2018 from
$42.9 million at the end of fiscal
2018. Cash and cash equivalents increased $0.5 million or 3.1% from the beginning of the
fiscal year, while working capital increased by $1.9 million for an improvement of 2.9%. The
Company's $20 million revolving
credit facility had a $0 balance as
of April 30, 2018. Total debt
outstanding at April 30, 2018 was
$1.6 million, down nearly 4.3% from
$1.7 million at April 30, 2018.
The Company incurred capital expenditures of approximately
$0.3 million during the first quarter
of fiscal year 2019, compared to $0.3
million in the fourth quarter of fiscal 2018 and over
$0.1 million in the first quarter of
the prior fiscal year. The increased level of capital
expenditures includes the cost for a phased global rollout of a new
enterprise resource planning ("ERP") system and additional
equipment in China and
India.
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 10:00 am eastern today to discuss the Company's
fiscal 2019 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
15, 2018, dial 877-344-7529 (Domestic) or 412-317-0088
(International) or 855-669-9658 (Canada), Pass Code 10120510.
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.
(tables follow)
LAKELAND
INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS ($000's) Except Share
Information
|
(UNAUDITED)
|
|
|
|
ASSETS
|
April 30,
|
January
31,
|
|
2018
|
2018
|
Current
assets
|
|
Cash and cash
equivalents
|
$16,285
|
$15,788
|
Accounts receivable,
net of allowance for doubtful accounts of $440 and $480 at April
30,
2018 and January 31, 2018, respectively
|
14,578
|
14,119
|
Inventories, net of
allowance of $2,445 and $2,422 at April 30, 2018 and January 31,
2018,
respectively
|
44,411
|
42,919
|
Prepaid VAT
tax
|
1,903
|
2,119
|
Other current
assets
|
2,237
|
1,555
|
Total current
assets
|
79,414
|
76,500
|
Property and
equipment, net
|
8,821
|
8,789
|
Assets held for
sale
|
150
|
150
|
Deferred income
tax
|
7,369
|
7,557
|
Prepaid VAT and other
taxes
|
305
|
310
|
Other
assets
|
342
|
354
|
Goodwill
|
871
|
871
|
Total
assets
|
$97,272
|
$94,531
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$7,844
|
$7,057
|
Accrued compensation
and benefits
|
1,708
|
1,771
|
Other accrued
expenses
|
1,486
|
1,182
|
Current maturity of
long-term debt
|
158
|
158
|
Short-term
borrowings
|
177
|
211
|
Total current
liabilities
|
11,373
|
10,379
|
Long-term portion of
debt
|
1,273
|
1,312
|
Total
liabilities
|
12,646
|
11,691
|
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
8,472,640 shares; outstanding 8,116,199 shares
|
85
|
85
|
Treasury stock, at
cost; 356,441 shares
|
(3,352)
|
(3,352)
|
Additional paid-in
capital
|
75,038
|
74,917
|
Retained
earnings
|
14,709
|
12,841
|
Accumulated other
comprehensive loss
|
(1,854)
|
(1,651)
|
Total stockholders'
equity
|
84,626
|
82,840
|
Total liabilities and
stockholders' equity
|
$97,272
|
$94,531
|
LAKELAND
INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(UNAUDITED)
|
|
($000's except for
share and per share information)
|
|
|
Quarter
|
|
Quarter
|
|
Ended
April
|
|
Ended
April
|
|
30, 2018
|
|
30, 2017
|
Net sales
|
$24,344
|
|
$22,961
|
Cost of goods
sold
|
14,840
|
|
14,403
|
Gross
profit
|
9,504
|
|
8,558
|
Operating
expenses
|
7,088
|
|
6,085
|
Operating
profit
|
2,416
|
|
2,473
|
Other income
(expense), net
|
(1)
|
|
2
|
Interest
expense
|
31
|
|
76
|
Income before
taxes
|
2,384
|
|
2,399
|
Income tax
expense
|
517
|
|
688
|
Net income
|
$1,867
|
|
$1,711
|
Net income per common
share:
|
|
|
|
Basic
|
$0.23
|
|
$0.24
|
Diluted
|
$0.23
|
|
$0.23
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
8,116,199
|
|
7,263,774
|
Diluted
|
8,160,380
|
|
7,353,660
|
LAKELAND INDUSTRIES,
INC. AND SUBSIDIARIES
|
Operating Results
($000)
|
Reconciliation to
GAAP Results
|
|
|
Three months
ended
April 30,
|
|
2018
|
2017
|
|
|
|
Net sales
|
$24,344
|
$22,961
|
Year over year
growth
|
6.0%
|
-----
|
Gross
profit
|
9,504
|
8,558
|
Gross profit
%
|
39.0%
|
37.3%
|
Operating
expenses
|
7,088
|
6,085
|
Operating expenses as
a percentage of sales
|
29.1%
|
26.5%
|
|
|
|
Operating
income
|
2,416
|
2,473
|
Operating income as a
percentage of sales
|
9.9%
|
10.8%
|
Interest
expense
|
31
|
76
|
|
|
|
Other income (loss),
net
|
(1)
|
2
|
Pretax
income
|
2,384
|
2,399
|
Income tax
expense
|
517
|
688
|
Net income
|
$1,867
|
$1,711
|
|
|
|
Weighted average
shares for EPS-Basic
|
8,116,199
|
7,263,774
|
Net income per
share
|
$0.23
|
$0.24
|
|
|
|
Operating
income
|
$2,416
|
$2,473
|
Depreciation and
amortization
|
187
|
186
|
EBITDA
|
2,603
|
2,659
|
Equity
Compensation
|
119
|
99
|
Adjusted
EBITDA
|
2,722
|
2,758
|
Cash paid for taxes
(foreign)
|
303
|
384
|
Capital
expenditures
|
272
|
141
|
Free cash
flow
|
$2,147
|
$2,233
|
|
|
|
TTM Adjusted
EBITDA
|
$9,665
|
$10,694
|
TTM cash paid for
taxes (foreign)
|
1,179
|
1,851
|
TTM capital
expenditures
|
1,036
|
524
|
TTM free cash
flow
|
$7,450
|
$8,319
|
LAKELAND INDUSTRIES,
INC. AND SUBSIDIARIES
|
|
Operating Results
($000)
|
|
|
Reconciliation of
Non-GAAP Results
|
|
|
|
|
|
|
Three Months
Ended
April 30,
|
|
2018
|
2017
|
Net Income to
EBITDA
|
|
|
Net Income
|
$1,867
|
$1,711
|
Interest
|
31
|
76
|
Taxes
|
517
|
688
|
Depreciation and
amortization
|
187
|
186
|
Less Other income
(expense), net
|
1
|
(2)
|
EBITDA
|
2,603
|
2,659
|
EBITDA to Adjusted
EBITDA
(excluding non-cash and one-time expenses)
|
|
|
EBITDA
|
2,603
|
2,659
|
Equity
compensation
|
119
|
99
|
|
|
|
Adjusted
EBITDA
(excluding non-cash and one-time expenses)
|
2,722
|
2,758
|
Adjusted EBITDA to
Adjusted Free Cash
Flow (excluding non-cash and one-time
expenses)
|
|
|
Adjusted
EBITDA
(excluding non-cash and one-time expenses)
|
2,722
|
2,758
|
Cash paid for taxes
(foreign)
|
303
|
384
|
Capital
expenditures
|
272
|
141
|
Adjusted Free Cash
Flow
(excluding non-cash and one-time expenses)
|
2,147
|
2,233
|
|
|
|
|
|
|
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SOURCE Lakeland Industries, Inc.