Lakeland Industries, Inc. Reports Fiscal 2015 First Quarter Financial Results - Tucson News Now

Lakeland Industries, Inc. Reports Fiscal 2015 First Quarter Financial Results

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SOURCE Lakeland Industries, Inc.

In Fiscal 2015 First Quarter from Prior Year:

-- Consolidated Sales of $23.5 Million Up 8%

-- Consolidated operating income increase to $0.6 million from loss of $0.2 million

-- Consolidated Adjusted EBITDA Increases 124%*

RONKONKOMA, N.Y., June 12, 2014 /PRNewswire/ -- Lakeland Industries, Inc. (NASDAQ: LAKE), a leading global manufacturer of industrial protective clothing for industry, municipalities, healthcare and to first responders on the federal, state and local levels, today announced financial results for its fiscal 2015 first quarter ended April 30, 2014. For financial reporting presentation purposes, the operating results in Brazil are excluded from many of the statements in this announcement because the Company's commercial lender has excluded Brazil from most covenant calculations as well as other related factors and due to the restructuring of those operations which has resulted in significant losses for the past two years that distorts analysis for the balance of the global businesses.

Lakeland Industries Logo.

Financial Results Highlights -- First Quarter Fiscal 2015 and Recent Company Developments

  • Sales worldwide increased to $23.5M or 8.1% from $21.7M last year. Excluding Brazil, sales increased to $21.8M or 9.1% this year from $20.0M last year.
  • Sales growth achieved in China/Asia Pacific, UK, Latin America (excluding Brazil), and North America
  • Gross margin worldwide was 30.2%, compared to 28.0% last year. Excluding Brazil, gross margin increased from 29.0% last year to 29.9% this year.
  • Operating expenses worldwide increased by $0.2 million and decreased as a percent of sales to 27.7% from 29.1% last year. Operating expenses for Lakeland worldwide, excluding Brazil, increased by $558,000. SGA as a percent of sales, excluding Brazil, increased from 25.5% to 26.0%.
  • Operating income was $582K vs. a loss of $237K last year. Excluding Brazil, operating income was $858K this year vs. $692K last year.
  • Brazil Q1 operating loss was reduced to $276K this year vs. $929K last year.
  • Adjusted EBITDA worldwide increased 124% to $1.6M vs. $0.7M last year. Excluding Brazil, Adjusted EBITDA was $1.8M this year vs. $1.5M last year.
  • Net loss of $(0.0) million, $(0.0) per share vs. $(0.8) million loss, $(0.16) per share, last year.

*Non-GAAP measure – see table included herein for reconciliation to GAAP measures



Operating Earnings and Adjusted EBITDA - Lakeland


Consolidated with and without Brazil


($000)

Quarter Ended April 30, 2014


Quarter Ended April 30, 2013


Lakeland consolidated

Brazil

Lakeland worldwide excluding Brazil


Lakeland consolidated

Brazil

Lakeland worldwide excluding Brazil

Sales

$23,507

$1,748

$21,760


$21,737

$1,783

$19,954

Year over Year growth

8.1%

(2.0)%

9.1%


(9.4)%

(65.6)%

6.2%









Gross Profit

7,100

595

6,505


6,080

298

5,782

Gross Margin

30.2%

34.0%

29.9%


28.0%

16.7%

29.0%

Operating Expenses

6,518

871

5,647


6,316

1,228

5,089

    Operating expense as % of sales

27.7%

49.8%

26.0%


29.1%

68.9%

25.5%

Operating Income

582

(276)

858


(237)

(929)

692

Other (Expenses ) Income

80

39

42


(156)

(27)

(129)

Add Depreciation and Amortization

375

75

300


434

90

344

   EBITDA

1,038

(162)

1,199


41

(866)

907









Equity Compensation

24

-----

24


75

-----

75

Additional Brazil Severance and executive recruiter fee

-----

-----

-----


80

80

-----

Financing Fees in  Other Expense (adjustments)

-----

-----

-----


150

----

150

Qingdao plant relocation costs and costs of sale

-----

-----

-----


320

-----

320

Brazil additional Foreign Exchange losses (gains)

(39)

(39)

-----


27

27

-----

Inventory reserve in USA - discontinued product lines raw material / Finished goods

300

-----

300


-----

-----

-----

PA plant relocation costs

235

-----

235


-----

-----

-----

   ADJUSTED EBITDA

$1,558

$(201)

$1,758


$693

$(759)

$1,452


Numbers may not add due to rounding

*This table is a reconciliation of GAAP to non-GAAP Financial Measures.

**Brazil numbers, as presented in this table, include immaterial intercompany transactions.

Management's Comments

Christopher J. Ryan. President and Chief Executive Officer of Lakeland Industries, stated, "The Company's business rationalization and transition is nearly complete as we are experiencing solid growth internationally and domestically.  We have made the necessary investments to grow our sales channels and enhance our product development, while reducing our cost structure and modifying operations for improved leverage.  Key initiatives that have impacted our performance in the quarter are the residual effects from the sale of a business unit in China in Q2 last fiscal year, the relocation of certain manufacturing to Mexico and the relocation of our facility in Pennsylvania. As a result, consolidated worldwide Adjusted EBITDA increased by 124% from last year. 

"Adjusted EBITDA reached the highest level in three years – from when we first encountered challenges in Brazil.  As previously disclosed, we believe the turnaround of Brazil to be on schedule and with the additional financing options we are exploring, we anticipate a reversal of losses year to date and for Brazil to finish FY15 at or near breakeven. In the first quarter of fiscal 2015, Brazil was close to breakeven on an Adjusted EBITDA basis with only a modest reduction in sales from last year.  The operating loss in the quarter for Brazil was reduced by 70% from last year.  We are beginning to benefit from the growth in most of our businesses around the world along with improvements in Brazil as our consolidated operating profit increased by nearly 340% to a $580,000 profit from a loss of $240,000 in the prior year.  Global growth trends are positively impacting Lakeland Industries and we are in the best position in years to drive improved operating performance."

Financial Results Conference Call

Lakeland will host a conference call at 4:30 PM (EDT) today to discuss the Company's first quarter fiscal 2015 financial results. The conference call will be hosted by Stephen M. Bachelder, Lakeland's Chief Operating Officer and Gary Pokrassa, Lakeland's Chief Financial Officer.  Investors can listen to the call by dialing 877-870-4263-(Domestic) 412-317-0790 (International) or 855-669-9657-(Canada), Pass Code 10047600.

For a replay of this call, dial 877-344-7529 (Domestic) or 412-317-0088 (International), Pass Code 10047600.

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 consolidated income, excluding Brazil. 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except share data)

April 30, 2014 and January 31, 2014


April 30,

January 31,


2014

2014

 ASSETS

(Unaudited)


Current assets



Cash and cash equivalents

$7,011

$4,555

Accounts receivable, net of allowance for doubtful accounts

14,636

13,795

Inventories

40,370

39,844

Deferred income taxes

4,836

4,707

Prepaid income tax

909

471

Other current assets

2,186

2,108

Total current assets

69,947

65,481

Property and equipment, net

12,092

12,069

Prepaid VAT and other taxes, noncurrent

2,452

2,379

Security deposits

1,461

1,415

Intangibles, prepaid bank fees and other assets, net

1,384

1,533

Goodwill

871

871

Total assets

$88,208

$83,750

LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities



Accounts payable

$9,979

$8,181

Accrued compensation and benefits

1,533

1,189

Other accrued expenses

2,368

1,554

Current maturity of long-term debt

50

50

Current maturity of arbitration settlement

1,000

1,000

Short-term borrowing      

2,523

2,559

Borrowings under revolving credit facility

13,498

12,415

Total current liabilities

30,950

26,949

Accrued arbitration award in Brazil (net of current maturities)

3,567

3,759

Long-term portion of Canada and Brazil loans

1,070

1,111

Subordinated debt, net of OID, including PIK interest

2,006

1,525

Other liabilities - accrued legal fees in Brazil

77

71

VAT taxes payable long term

3,328

3,329

Total liabilities

40,998

36,744

Stockholders' equity



Preferred stock, $.01 par; authorized 1,500,000 shares

     (none issued)

-----

------

Common stock, $.01 par; authorized 10,000,000 shares,

issued 5,714,950 and 5,713,180; outstanding 5,358,509 and 5,356,739 at April 30, 2014 and January 31, 2014, respectively

57

57

Treasury stock, at cost; 356,441 shares at April 30, 2014 and January 31, 2014.

(3,352)

(3,352)

Additional paid-in capital

53,390

53,365

Accumulated deficit

(592)

(592)

Accumulated other comprehensive loss

(2,292)

(2,472)

Total stockholders' equity

47,210

47,006

Total liabilities and stockholders' equity

$88,208

$83,750




Numbers may not add due to rounding



 

LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except share data)

(Unaudited)

For the Three Months Ended April 30, 2014 and 2013



Three Months Ended


April 30,


2014

2013

Net sales

$23,507

$21,737

Cost of goods sold

16,407

15,657

Gross profit

7,100

6,080

Operating expenses

6,518

6,317

Operating profit (loss)                                  

582

(237)

Foreign Exchange gain (loss) Brazil

39

(27)

Other income (loss), net

42

(129)

Interest expense

(640)

(273)

Income (loss) before taxes

23

(666)

Income tax expense

23

179

Net  loss

$0

$(844)

Net loss per common share:



Basic

$0.00

$(0.16)

Diluted

$0.00

$(0.16)

Weighted average common shares outstanding:



Basic

5,923,224

5,337,205

Diluted

5,923,224

5,337,205




Numbers may not add due to rounding



 

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