AndhraNews.net
Home » Business News » 2011 » June » June 8, 2011

Lakeland Industries, Inc. Reports Fiscal 2012 First Quarter Financial Results


June 8, 2011 - Ronkonkoma, NY

Lakeland Industries, Inc. (NASDAQ: LAKE)today announced financial results for its first quarter fiscal year 2012ended April 30, 2011.

Financial Results Highlights and Recent Company Developments


-- International Sales Increased 13.4% in Q1FY12 from Q1FY11
-- International Revenues were 42.9% of Total Sales in Q1FY12, Up Nearly
12% from 38.4% in Q1FY11
-- Gross Margin As Percentage of Sales Increased to 31.3% in Q1FY12 from
25.2% in Q1FY11
-- Gross Profit in Q1FY12 Increased 26% or $1.7 million to $8.1 million
from $6.4 million in Q1FY11
-- Operating Profit Increased 434% to $1.6 million in Q1FY12 from $0.3
million in Q1FY11
-- Operating Margin Increased to 6.0% in Q1FY12 from 1.1% in Q1FY11
-- Net Income Increased $2.5 million to $1.2 million in Q1FY12 from a Loss
of $1.3 million in Q1FY11
-- Earnings Per Share Increased to $0.22 for Q1FY12 from a Loss of ($0.25)
in Q1FY11
-- EBITDA* Reaches Highest Level in 11 Quarters at 9.14% of Sales
-- Cash balance of $6.1 Million and Bank Revolver Debt of $16.2 million
with Remaining Availability of $7.3 Million as of April 30, 2011

First Quarter Fiscal Year 2012 Financial Results

 For the Three Months Ended April 30, 2011 2010 -------- -------Net sales 100.0% 100.0%Gross profit 31.3% 25.2%Operating expenses 25.3% 24.1%Operating profit 6.0% 1.1%Income before tax 5.8% (5.4)%Net income 4.5% (5.3)%

Net Sales. Net sales increased $0.4 million, or 1.5%, to $25.8 million forthe three months ended April 30, 2011, from $25.4 million for the threemonths ended April 30, 2010. The net increase was due to a 13.4% increasein foreign sales, offset by a 6% decrease in domestic sales. Internationalsales increased to $11.1 million in the first quarter of fiscal 2012 from$9.7 million in the same period of the prior year. Domestic sales declinedto $14.7 million in the fiscal 2012 period from $15.6 million a year ago.As a percentage of sales, domestic revenues contributed 57.1% in the firstquarter of fiscal 2012, compared to 61.6% a year ago. Internationalrevenues were 42.9% of consolidated sales in the first quarter of fiscal2012, an increase of nearly 12% from 38.4% in the first quarter of fiscal2011.

External sales from China were flat with the year ago period due in largepart to a decline in direct container shipments to the US resulting fromhigh stock levels at larger customers in the US after the Gulf of Mexicooil spill. Domestic sales in China and within the Asia Pacific rim remainstrong. UK sales increased by $0.6 million or 48.7%, Chile sales increasedby 13%, and sales in Brazil increased 39.3% or by $1.1 million. USdomestic sales of disposables decreased by $1.9 million, but chemical suitsales increased by $0.1 million, wovens increased by $0.4 million,reflective sales increased by $0.1 million, and glove sales increased by$0.1 million.

Gross Profit. Gross profit increased $1.7 million, or 26%, to $8.1 millionfor the three months ended April 30, 2011 from $6.4 million for the threemonths ended April 30, 2010. Gross profit as a percentage of net salesincreased to 31.3% for the three months ended April 30, 2011 from 25.2% forthe three months ended April 30, 2010. Major factors influencingconsolidated gross margins were:

-- Disposables gross margin increased $0.5 million over last year resulting from a better mix and price increases-- Chemical division margin increased 13.2 percentage points over last year resulting from an improved sales mix-- Canada gross margin increased 3.7 percentage points over last year due to an improved sales mix and favorable exchange rates-- Wovens division margins increased 16.0 percentage points due to better volume and mix-- Reflective division margins increased 6.6 percentage points over last year from an improved mix of product sales-- Brazil's gross margins were 39.3% this year compared with 49.4% last year resulting from a large contract with higher margins in the previous year-- India reported a negative gross margin in the first quarters of fiscal 2012 and 2011, reflecting low volume issues

Operating Expenses. Operating expenses increased $0.4 million, or 6.6%, to$6.5 million for the three months ended April 30, 2011 from $6.1 millionfor the three months ended April 30, 2010. As a percentage of sales,operating expenses increased to 25.3% for the three months ended April 30,2011 from 24.1% for the three months ended April 30, 2010. The $0.4million increase in operating expenses in the three months ended April 30,2011 as compared to the three months ended April 30, 2010 was comprised of:

-- $0.2 million increased equity compensation resulting from prior year classified at zero performance level and current year elections for bonuses in stock-- $0.1 million increase in professional and consulting fees, mainly in Brazil-- $0.1 million miscellaneous increases-- $0.1 million increase in payroll taxes, mainly in Brazil for growth initiatives-- $0.1 million increase in research and development expenses resulting from worldwide product development-- $0.1 million increase in officer salaries resulting from cessation of 8% voluntary reductions and the addition of a new sales officer-- $0.1 million increase in freight out resulting from higher volume, mostly in Brazil which runs higher freight costs-- $(0.2) million reduction in currency fluctuation expense resulting from a swing from a $0.1 million charge last year to a $0.1 million gain this year-- $(0.2) million reduction in commission costs resulting from a restructuring of the sales staff

Operating profit. Operating profit increased 434% to $1.6 million for thethree months ended April 30, 2011 from $0.3 million for the three monthsended April 30, 2010. The operating margin was 6.0% for the three monthsended April 30, 2011 compared to 1.1% for the three months ended April 30,2010. The substantial increase in operating margin reflects the increasein gross profit resulting from the increased contribution of higher margininternational sales, partially offset by a modest increase in operatingexpenses.

Interest Expenses. Interest expenses increased slightly for the threemonths ended April 30, 2011 as compared to the three months ended April 30,2010 due to higher borrowing levels outstanding, partially offset by lowerinterest rates.

Income Tax Expense. Income tax expenses consist of federal, state, andforeign income taxes. Income tax expenses increased $0.3 million to $0.3million for the three months ended April 30, 2011 from $0.0 million for thethree months ended April 30, 2010. The Company's effective tax rates were21.5% for Q1FY12 and not meaningful for Q1FY11. The effective tax rate forQ1FY11 was due to goodwill write-offs in Brazil and tax benefits from Indiaresulting from "check the box" in the US, and the $1.6 million charge forVAT tax expense in Brazil.

Net Income (Loss). Net income increased $2.5 million to $1.2 million forthe three months ended April 30, 2011 from a loss of $1.3 million for thethree months ended April 30, 2010. The increase in net income primarilyresulted from the $1.6 million charge for VAT tax expense in Brazil in theprior year and stronger volume and margins in the current year.

Basic and diluted earnings per share (EPS) increased to $0.22 for the firstquarter of fiscal 2012 from a loss of $(0.25) in the prior year. Therewere 5,222,639 and 5,334,165 shares outstanding on a basic and fullydiluted basis, respectfully, for the first quarter ended April 30, 2011, ascompared with 5,439,410 and 5,465,594 in the prior year. Although theCompany reduced the number of shares outstanding through open marketpurchases of its common stock under a share repurchase program thatextended into its fiscal 2012 first quarter, the full impact to reportedEPS will be realized in the second quarter of fiscal year 2012 due tocalculations made using weighted averages of outstanding shares.

Management's Comments

Commenting on the financial results and recent developments, LakelandIndustries President and Chief Executive Officer Christopher J. Ryan said,"International operations continue to fuel our performance as we deliveredimpressive growth in all major operating metrics. On a consolidated basis,we reported higher sales, gross profit and margin, operating profit andmargin, net income and margin, and earnings per share. We are very pleasedwith the progress being made in building a diversified internationalplatform that has significant operating leverage for long term growth andprofitability, but we are not pleased with domestic performance. Therefore,we are completely reorganizing the US sales force and have appointedStephen M. Bachelder, Chairman of the Board, as a National Sales Managerfor domestic sales. Mr. Bachelder has a deep background in sales andintends to resuscitate eroding US revenues in the coming year.

"Consistent with our business strategy of pursuing market expansion outsideof the US, particularly in 'BRIC' nations -- Brazil, Russia, India andChina -- and nearby territories, we reported gains in most of our majorforeign operations. This strength along with favorable currency exchangerates continues to offset the weakness in our domestic operations, whichpresently appear to be nearing stabilization. Through effectiveimplementation of foreign sales and marketing strategies, we increasedinternational sales by over 13% in the first quarter as compared to thesame period of the prior year, approximately three times the rate of GDPgrowth in the markets in which we operate. International sales represented42.9% of total first quarter revenues. This performance is without thebenefit of large bid orders in Brazil, which we are working towardsecuring, although our Brazilian operations grew approximately 40% yearover year. As a result, our quarterly international revenues of $11.1million represent the highest level in the Company's history.

"Confirming our belief that our business model's international operationsare far superior to what we had been working with during the prior twodecades when we had been focused domestically, our profits and marginssignificantly improved in the first quarter. Through global sourcing of rawmaterials, geographically dispersed manufacturing facilities, enhancedpricing power and an improved sales mix of Lakeland branded products andhigher margin garment lines, our fiscal 2012 first quarter consolidatedgross and operating margins increased to 31.3% and 6.0%, respectively, ascompared with the 25.2% and 1.1% in the prior year.

"There remains significant operating leverage due to the investments wehave made in personnel and manufacturing facilities. In anticipation ofcontinued growth, we have added inventory to all of our major operationsaround the world. Given higher spending levels and capital investments,which provide us with the opportunity for a substantial increase in ourproduction capacity, we are pleased to report adjusted earnings beforeinterest, taxes, depreciation and amortization (EBITDA*) as a percent ofsales of 9.14% or nearly $2.4 million in the first quarter of fiscal 2012,both the highest in the last 11 quarters. Our net income of $1.16 millionand earnings per share of $0.22, additionally benefiting from a reductionof outstanding shares resulting from a buyback program, reversedyear-earlier losses. Excluding a previously disclosed one-time charge of$1.6 million in the fiscal 2011 first quarter, our net income and earningsper share in the first quarter of fiscal 2012 would still have deliverednearly four-fold increases.

"Lakeland Industries reported a strong first quarter but we have much workto do to further improve our financial performance and take advantage ofthe benefits of our operating leverage. Our international markets arerobust and growing and we believe we are well positioned to capitalize onthe many opportunities available to us around the world."

 QE 4/30/11*EBITDA ($000's) = Operating profit $ 1,552 Depreciation and Amortization 533 Equity compensation expenses 221 ------- Total 2,306 ------- % of sales 9.14% -------

Financial Results Conference Call

Lakeland will host a conference call at 4:30 PM (EDT) today to discuss theCompany's first quarter fiscal year 2012 financial results. The conferencecall will be hosted by Christopher J. Ryan, Lakeland's President and CEO.Investors can listen to the call by dialing 877-741-4242 (toll free) or719-325-4814 (international), code 6597367.

A conference call replay will be available until Wednesday, June 15, 2011by dialing 888-203-1112 (toll free) or 719-457-0820 (international), code6597367.

About Lakeland Industries, Inc.:

Lakeland Industries, Inc. (NASDAQ: LAKE) manufactures and sells acomprehensive line of safety garments and accessories for the industrialprotective clothing market. The Company's products are sold throughout theworld by a direct sales force and through independent sales representativesto a network of over 1,200 safety and mill supply distributors. Thesedistributors in turn supply end user industrial customers such aschemical/petrochemical, automobile, steel, glass, construction, smelting,janitorial, pharmaceutical, and high technology electronics manufacturers,as well as hospitals and laboratories. In addition, Lakeland suppliesfederal, state, and local government agencies, fire and police departments,airport crash rescue units, the Department of Defense, the Centers forDisease Control and Prevention, and many other federal and state agencies. For more information concerning Lakeland, please visit the Company onlineat www.lakeland.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Actof 1995: Forward-looking statements involve risks, uncertainties andassumptions as described from time to time in Press Releases and 8-K(s),registration statements, annual reports and other periodic reports andfilings filed with the Securities and Exchange Commission or made bymanagement. All statements, other than statements of historical facts,which address Lakeland's expectations of sources or uses for capital orwhich express the Company's expectation for the future with respect tofinancial performance or operating strategies can be identified asforward-looking statements. As a result, there can be no assurance thatLakeland's future results will not be materially different from thosedescribed herein as "believed," "projected," "planned," "intended,""anticipated," "estimated" or "expected," which words reflect the currentview of the Company with respect to future events. We caution readers thatthese forward-looking statements speak only as of the date hereof. TheCompany hereby expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any such statements to reflect anychange in the Company's expectations or any change in events conditions orcircumstances on which such statement is based.

(tables to follow)

 LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except share data) April 30, January 31, ASSETS 2011 2011 ----------- -----------Current assets: (unaudited) Cash and cash equivalents $ 6,139 $ 6,074 Accounts receivable, net 16,362 14,477 Inventories, net 50,174 45,918 Deferred income taxes 2,297 2,297 Prepaid income and VAT tax 1,945 1,815 Other current assets 1,942 2,340 ----------- -----------Total current assets 78,859 72,921Property and equipment, net 14,234 13,901Intangibles and other assets, net 8,838 8,257Goodwill 6,576 6,297 ----------- -----------Total assets $ 108,507 $ 101,376 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable $ 7,594 $ 6,504 Accrued compensation and benefits 1,532 1,412 Other accrued expenses 1,467 2,702 Current maturity of long-term debt 106 100 ----------- -----------Total current liabilities 10,699 10,718Borrowing under revolving credit facility 16,105 11,486Construction loan payable, net of current maturity 1,659 1,592VAT taxes payable long-term 3,312 3,310Other liabilities 110 103 ----------- -----------Total liabilities 31,885 27,209Commitments and contingenciesStockholders' equity: Preferred stock, $0.01 par; authorized 1,500,000 shares (none issued) ----- ----- Common Stock $0.01 par; authorized 10,000,000 shares issued and outstanding 5,581,322 shares at April 30, 2011 and 5,568,744 at January 31, 2011 56 56 Less treasury stock at cost 356,441 shares at April 30, 2011 and 314,441 at January 31, 2011 (3,352) (3,013) Additional paid-in capital 50,513 50,280 Retained earnings 27,356 26,193 Other comprehensive income 2,049 651 ----------- -----------Total stockholders' equity 76,622 74,167 ----------- -----------Total liabilities and stockholders' equity $ 108,507 $ 101,376 =========== =========== LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share data) (Unaudited) Three Months Ended April 30, 2011 2010 ---------- --------- Net sales $ 25,753 $ 25,363Cost of goods sold 17,687 18,959 ---------- ---------Gross profit 8,066 6,404Operating expenses 6,514 6,114 ---------- ---------Operating profit 1,552 290VAT tax charge-Brazil ----- 1,583Interest and other income, net 49 13Interest expense 118 86 ---------- ---------Income (loss) before income taxes 1,483 (1,366)Provision (benefit) for income taxes 320 (20)Net income (loss) $ 1,163 $ (1,346) ========== =========Net income (loss) per common share: Basic $ 0.22 $ (0.25) ========== ========= Diluted $ 0.22 $ (0.25) ========== ========= Weighted average common shares outstanding: Basic 5,222,639 5,439,410 ========== ========= Diluted 5,334,165 5,465,594 ========== =========

Contacts:
Lakeland Industries
631-981-9700
Christopher Ryan
Email Contact
Gary Pokrassa
Email Contact

Darrow Associates
631-367-1866
Jordan Darrow
Email Contact

MarketWire

Comment on this story

Share