lake_ex991
|
202 Pride Lane SW
Decatur, AL 35603
(256) 350-3873 - www.lakeland.com
|
Lakeland
Industries, Inc. Reports Fiscal 2022 First Quarter Financial
Results
Sustainable Performance Improvements Delivered as Growth Resumes in
Industrial Segments,
Margins Remain Strong, and Cash Balances Improve
DECATUR,
AL – June 9, 2021 -- 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 2022 first quarter
ended April 30, 2021.
Fiscal 2022 First Quarter Financial Results Highlights
●
Net sales for 1Q22
of $34.1 million, compared with 1Q21 of $45.6 million and $36.9
million in 4Q21
o
COVID-19 demand
contributed sales of approximately $4.4 million in
1Q22
o
Traditional
industrial economic growth strengthening as COVID-19 related sales
decline; international markets continue to outpace domestic
growth
o
High Performance
Wear, Fire and Woven product lines in 1Q22 increase over 1Q21 when
PPE demand initially shifted to Disposables (and Chemical) garments
for COVID-19
●
Gross profit for
1Q22 of $14.4 million, compared with $22.1 million in
1Q21
●
Gross margin as a
percentage of net sales in 1Q22 was 42.2%, compared to 48.6% in
1Q21
●
Operating expenses
of $8.1 million in 1Q22, down from $9.8 million in 1Q21 and $8.8
million in 4Q21
●
Operating profit of
$6.2 million in 1Q22, compared with $12.4 million in
1Q21
●
Net income of $4.6
million or $0.58/$0.57 per basic/diluted common share in 1Q22, from
$8.6 million or $1.08/$1.07 per basic/diluted common share in
1Q21
●
Adjusted earnings
before interest, taxes, depreciation, and amortization (Adjusted
EBITDA)* of $7.1 million in 1Q22, compared with $12.9 million in
1Q21
●
Capital
expenditures for 1Q22 of $0.1 million, down from $0.2 million in
1Q21
●
Solid current ratio
of 7.8:1 at 4/30/21
●
No shares were
acquired in 1Q22 as part of the Company’s $5.0 million stock
repurchase program
Performance Bolstered by Sustainable Improvements
●
Investments in
digital transformation: ERP, CRM and IT systems
●
Operating leverage
opportunities through fixed and variable cost benefits
●
Improved working
capital and cash management
Growth Strategy Advancements
●
Cash of $60.3
million at 4/30/21, up by $7.7 million or 15% from beginning of
fiscal year
●
No debt at end of
first quarter with up to $17.5 million available under credit
facilities
●
Filled newly
created position for VP of Corporate Development
●
Investments in IT
and capacity expansion provide fixed cost absorption and margin
enhancement opportunities
*
EBITDA and Adjusted EBITDA are non-GAAP financial measures.
Reconciliation is provided in the tables of this press
release.
Management’s Comments
Charles
D. Roberson, President and Chief Executive Officer of Lakeland
Industries, stated, “Lakeland delivered a very strong fiscal
2022 first quarter that demonstrates the sustainability of our
data-centric process improvements even as COVID-19-related demand
has pulled back as expected. In fact, while we have been a major
beneficiary of COVID-19 business conditions, we believe that it has
masked value generated by the fundamental operational and
organizational improvements the company has made.
“Prior
to the onset of the global pandemic, we began a business
transformation and put in place a 5-year growth plan that assumed
successful implementation of our development plans. COVID-19
accelerated the pace of progress by approximately 1 year and in the
process elevated our cash balance to over $60 million today. We
expect continued free cash flow generation for the foreseeable
future which factors in the elimination of all COVID-19 demand as
early as the end of the present quarter. The critical elements of
our plan include the strengthening of our leadership team,
investing in capacity expansion and higher margin product
development, and focusing on profit enhancement initiatives led by
a new data-centric approach to planning and supporting our
addressable markets.
“The
strengthening of our leadership team has been well documented. From
the boardroom, to the C-Suite, and even through middle management,
we’ve made additions during the past 18 months that enable us
to maximize our investments and grow organically and, now,
inorganically. Most recently, we added our first Vice President for
Corporate Development. This move is intended for Lakeland to put
its sizeable cash position to work increasing shareholder value.
The actionable elements of our plan are to utilize our
manufacturing operations and data centric culture as the
cornerstone of our ongoing success.
“Lakeland
has always owned its manufacturing operations and is therefore
fairly unique in the PPE industry. We have shown that with under $2
million in capital investments for production capacity expansions
last year, we were able to increase revenues by approximately $50
million. Lakeland has tremendous operating leverage that is proving
to be sustainable outside of black swan events. Parallel
investments in IT systems have helped us become more efficient and
more profitable, as evidenced by our gross margin improvement. Our
gross margin as a percentage of sales has shown sustainability
above 40%, a vast improvement from 35.2% in fiscal 2020 and 34.2%
in fiscal 2019.
“With
insights gained from our technology utilization, our focus on new
customer acquisition over the last year have yielded more than 500
new buyers. These new buyers are showing significant loyalty in the
first quarter of fiscal 2022, 68% of whom placed reorders in Q1
FY22. Overall, our ERP installation has only been a factor for our
US operations which are now less than 50% of our consolidated
revenues. As we implement the ERP system globally, we expect
incremental benefits from the balance of our business.
“The
timing of our investment in technology could not have been better.
The current forecasts for economic growth, and the return of
industrial demand in most major markets around the world, bode well
for Lakeland to realize post-pandemic gains from increased market
penetration, rationalization of our product lines and our emphasis
on higher margin specialized protective apparel. Lakeland has
already elevated its profitability levels where we have fixed
overhead enabling us to flex production for even greater returns,
as variable expenses are limited primarily to success-based sales
commissions and freight costs. This is further confirmation of how
actively managing expenses and driving costs out of the business
through investments in technology and process improvements results
in sustainability of our performance in a post-COVID business
environment.
Beginning
in Q4FY21, we began to see a decline in pandemic related sales and
that trend has accelerated through Q1FY22. Because we sell through
distribution and lack transparency as to the end users of our
products, our evidence of this trend is largely empirical, yet
still compelling. Since Q4FY21 we have not seen any raw materials
supply issues relating to demand, in fact, though prices remain
above pre-pandemic levels we have seen price reduction in raw
materials that are indicative of declining global demand.
Additionally, we are seeing increasing pricing pressures within the
protective clothing market that suggest that supply has not only
caught up to demand, but is now exceeding it, resulting in
increased inventory levels throughout the supply chain. In Q1FY21
we also saw a significant decline in our direct container sales
which further reinforces this belief.
“We
anticipate that impact of COVID-19 on sales in the U.S., Canada,
and Europe will be largely exhausted by the end of Q2FY21, leaving
only lesser levels of pandemic demand in developing regions of the
world like India, Vietnam, and some parts of South America. We
believe that surge related demand will continue to decline in the
second half of FY22 and will be largely over by the end of FY22.
Lakeland has responded accordingly by scaling operational
activities to address demand where it originates around the world
and by accelerating our marketing efforts for the resumption of
industrial economic growth which has been clearly evident over the
past two quarters.
“We
used COVID-19 to our advantage as a catalyst for transformation. At
the end of the first quarter of fiscal 2022, we have demonstrated
resiliency in our operations and sustainability of our financial
performance. Continued investments in our IT systems, data-centric
planning processes, and organic growth initiatives are expected to
drive ongoing improvements in productivity, efficiencies, and
profitability. These aspects of our business should be complemented
by the inorganic growth opportunities, such as business
acquisitions, that we are now pursuing or intend to
pursue.”
Fiscal 2022 First Quarter Financial Results
Net
sales were $34.1 million for the three months ended April 30, 2021,
as compared to $45.6 million for the three months ended April 30,
2020 and $36.9 million for the fourth quarter of fiscal 2021 ended
January 31, 2021.
On a
consolidated basis for the first quarter of fiscal 2022, domestic
sales were $15.7 million or 46% of total revenues and international
sales were $18.4 million or 54% of total revenues. This compares
with domestic sales of $23.1 million or 51% of the total and
international sales of $22.5 million or 49% of the total in the
same period of fiscal 2021, while fiscal fourth quarter 2021
domestic sales were $16.0 million or 43% of total revenues and
international sales were $20.9 million or 57% of total
revenues.
During
fiscal 2021 the Company experienced significant growth in sales of
disposable and chemical garments primarily relating to COVID-19
demand and as a result of cultivating new industrial customers who
could not procure these products from incumbent manufacturers or
their subcontractors. In addition, global economic activity picked
up beginning with the Company’s third quarter of fiscal 2021
as many businesses, countries and industrial vertical markets eased
earlier imposed temporary closures and lockdowns and due to a
broader economic recovery. The economic recovery has intensified
through the fiscal 2022 first quarter. As a result, certain product
lines outside of disposable and chemicals and international
segments contributed increases in year-over-year sales for the
first quarter. Foreign exchange currency translations negatively
impacted sales in the UK/Europe, Canada, and China as reported on a
consolidated basis in U.S. dollars by approximately $0.2 million in
the fiscal first quarter of 2022.
Gross
profit of $14.4 million for fiscal 2022 first quarter decreased
from $22.1 million for the same period of the prior year. Gross
profit as a percentage of net sales was 42.2% for the fiscal 2022
first quarter as compared with 48.6% a year ago. Gross profit
performance in the fiscal 2021 period benefited from higher volumes
and related factory utilization, favorable pricing and product mix.
The high gross margins as a percentage of sales in both periods
continues to track above 40%. This sustained performance level
reflects the successful execution of strategies to enhance
profitability, particularly for new industrial customers, select
price increases, growth in sales of new, higher margin products,
manufacturing efficiencies and reduced product variations to
isolate higher production runs on fewer garment lines. The
Company’s increased production hours and limited product SKUs
from the first quarter of fiscal 2021 began to ease in the fourth
quarter of fiscal 2021 and have essentially been brought to a
steady state by the end of the first quarter of fiscal
2022.
Lakeland
reported operating profit of $6.2 million for the three months
ended April 30, 2021, as compared to $12.4 million for the quarter
ended April 30, 2020. Operating margins were 18.3% for the three
months ended April 30, 2021, down from 27.1% for the first quarter
of the prior fiscal year. In fiscal 2021, performance was primarily
elevated due to the Company’s operating leverage on the
higher revenues and gross margins which more than offset increases
in sales commissions and freight out, and higher compensation tied
in large part to the expanded workforce.
The
Company reported net income of $4.6 million or $0.58 per basic and
$0.57 per diluted share for the three months ended April 30, 2021,
compared with $8.6 million or $1.08 per basic and $1.07 per diluted
share in the prior year period.
As of
April 30, 2021, Lakeland had cash and cash equivalents of
approximately $60.3 million, up from $52.6 million at January 31,
2021. Accounts receivable at April 30, 2021 of $19.2 million was
down from $21.7 million at January 31, 2021. Days sales outstanding was
approximately 50 at April 30, 2021, a decline from 54 days at
January 31, 2021. Accounts payable and accrued liabilities at April
30, 2021 was $13.2 million, as compared with $13.1 million at
January 31, 2021. Working capital at April 30, 2021 was $112.7
million, up from $108.2 million at January 31, 2021.
Lakeland’s $12.5 million revolving credit facility with an
upsizing feature for an additional $5 million had no borrowings as
of April 30, 2021, as the Company continues to have no
debt.
Financial Results Conference Call
Lakeland
will host a conference call at 4:30 pm eastern time today to
discuss the Company’s fiscal 2022 first quarter financial
results. The conference call will be hosted by Charles D. Roberson,
President and Chief Executive Officer, and Allen E. Dillard, Chief
Financial Officer. Investors can listen to the call by dialing
877-407-8033 (Domestic)
or 201-689-8033 (International). For a replay of this call through
June 16, 2021, dial 877-481-4010 (Domestic) or 919-882-2331
(International), Pass Code 41641.
About Lakeland Industries, Inc.:
We
manufacture and sell a comprehensive line of industrial protective
clothing and accessories for the industrial and public protective
clothing market. Our products are sold globally by our in-house
sales teams, our customer service group, and authorized independent
sales representatives to a network of over 1,600 global safety and
industrial supply distributors. Our authorized distributors supply
end users, such as integrated oil, chemical/petrochemical,
automobile, steel, glass, construction, smelting, cleanroom,
janitorial, pharmaceutical, and high technology electronics
manufacturers, as well as scientific, medical laboratories and the
utilities industry. In addition, we supply federal, state and local
governmental agencies and departments, such as fire and law
enforcement, airport crash rescue units, the Department of Defense,
the Department of Homeland Security and the Centers for Disease
Control. Internationally, we sell to a mixture of end users
directly, and to industrial distributors depending on the
particular country and market. In addition to the United States,
sales are made to more than 50 foreign countries, the majority of
which were into China, the European Economic Community ("EEC"),
Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico,
Ecuador, India, Uruguay and Southeast Asia.
For
more information concerning Lakeland, please visit the Company
online at www.lakeland.com.
Contacts:
Lakeland
Industries, Inc.
|
Darrow
Associates
|
256-445-4000
|
512-551-9296
|
Allen
Dillard
|
Jordan
Darrow
|
aedillard@lakeland.com
|
jdarrow@darrowir.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
(UNAUDITED)
($000’s Except Share Information)
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$60,322
|
$52,596
|
Accounts
receivable, net of allowance for doubtful accounts of $873 and $700
at April 30, 2021 and January 31, 2021, respectively
|
19,184
|
21,702
|
Inventories
|
43,881
|
43,833
|
Prepaid VAT and
other taxes
|
2,302
|
1,343
|
Other current
assets
|
3,462
|
4,134
|
Total current
assets
|
129,151
|
123,609
|
Property and
equipment, net
|
9,437
|
9,819
|
Operating leases
right-of-use assets
|
2,230
|
2,347
|
Deferred tax
assets
|
2,913
|
2,839
|
Prepaid VAT and
other taxes
|
329
|
329
|
Other
assets
|
118
|
112
|
Goodwill
|
871
|
871
|
Total
assets
|
$145,049
|
$139,925
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$7,267
|
$7,397
|
Accrued
compensation and benefits
|
3,259
|
3,902
|
Other accrued
expenses
|
2,660
|
1,793
|
Income tax
payable
|
2,315
|
1,534
|
Current portion of
operating lease liabilities
|
956
|
768
|
Total current
liabilities
|
16,457
|
15,394
|
Long-term
portion of operating lease liabilities
|
1,212
|
1,613
|
Total
liabilities
|
17,669
|
17,007
|
Commitments and
contingencies
|
|
|
Stockholders’
equity
|
|
|
Preferred stock,
$0.01 par; authorized 1,500,000 shares (none issued)
|
----
|
-----
|
Common stock, $0.01
par; authorized 20,000,000 shares
Issued 8,542,235
and 8,498,457; outstanding 8,032,993 and 7,984,518 at April 30,
2021 and January 31, 2021, respectively
|
86
|
85
|
Treasury stock, at
cost; 509,242 shares
|
(5,023)
|
(5,023)
|
Additional paid-in
capital
|
76,656
|
76,781
|
Retained
earnings
|
57,328
|
52,687
|
Accumulated other
comprehensive loss
|
(1,667)
|
(1,612)
|
Total stockholders'
equity
|
127,380
|
122,918
|
Total liabilities
and stockholders' equity
|
$145,049
|
$139,925
|
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
($000’s Except Share Information)
|
Three Months
Ended
April
30,
|
|
|
|
Net
sales
|
$34,092
|
$45,582
|
Cost of goods
sold
|
19,706
|
23,438
|
Gross
profit
|
14,386
|
22,144
|
Operating
expenses
|
8,148
|
9,774
|
Operating
profit
|
6,238
|
12,370
|
Other income
(expense), net
|
(12)
|
6
|
Interest
expense
|
(1)
|
(17)
|
Income before
taxes
|
6,225
|
12,359
|
Income tax
expense
|
1,584
|
3,725
|
Net
income
|
$4,641
|
$8,634
|
Net income per
common share:
|
|
|
Basic
|
$0.58
|
$1.08
|
Diluted
|
$0.57
|
$1.07
|
Weighted average
common shares outstanding:
|
|
|
Basic
|
7,989,215
|
7,972,423
|
Diluted
|
8,143,805
|
8,044,849
|
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results ($000)
Reconciliation to GAAP Results
|
Three
Months Ended
April
30,
|
|
|
|
|
|
|
Net
sales
|
$34,092
|
$45,582
|
Year
over year change
|
(25.2)%
|
84.66%
|
Gross
profit
|
14,386
|
22,144
|
Gross
profit %
|
42.2%
|
48.6%
|
Operating
expenses
|
8,148
|
9,774
|
Operating
expenses as a percentage of sales
|
23.9%
|
21.4%
|
Operating
profit
|
6,238
|
12,370
|
Operating
profit as a percentage of sales
|
18.3%
|
27.1%
|
Other
income (expense), net
|
(12)
|
6
|
Interest
expense
|
(1)
|
(17)
|
Income
before taxes
|
6,225
|
12,359
|
Income
tax expense
|
1,584
|
3,725
|
Net income
|
$4,641
|
$8,634
|
Weighted
average shares for EPS-Basic
|
7,989,215
|
7,972,423
|
Net income per share
|
$0.58
|
$1.08
|
Operating
profit
|
$6,238
|
$12,370
|
Depreciation
and amortization
|
499
|
453
|
EBITDA
|
6,737
|
12,823
|
Stock-based
compensation
|
336
|
163
|
Adjusted EBITDA
|
$7,073
|
12,986
|
Cash
paid for taxes (foreign)
|
1,152
|
861
|
Capital
expenditures
|
135
|
194
|
Free cash flow
|
$5,786
|
$11,931
|
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results ($000)
Reconciliation of Non-GAAP Results
|
Three
Months Ended
April
30,
|
|
|
|
|
|
|
Net
Income to EBITDA
|
|
|
Net
Income
|
$4,641
|
$8,634
|
Interest
|
(1)
|
(17)
|
Taxes
|
1,584
|
3,725
|
Depreciation
and amortization
|
499
|
453
|
|
|
|
Other
income (expense)
|
(12)
|
6
|
EBITDA
|
$6,737
|
$12,823
|
EBITDA
to Adjusted EBITDA
|
|
|
(excluding
non-cash expenses)
|
|
|
Equity
compensation
|
$336
|
$163
|
|
|
|
Adjusted EBITDA
|
$7,073
|
$12,986
|
|
|
|
Cash
paid for taxes (foreign)
|
1,152
|
861
|
Capital
expenditures
|
135
|
194
|
Free cash flow
|
$5,786
|
$11,931
|