Full Press Release Details
| 701-7 Koehler Avenue, Suite 7 - Ronkonkoma, NY 11779 | |
| (631) 981-9700 - www.lakeland.com | |
| FOR IMMEDIATE RELEASE |
Industries, Inc. Reports Fiscal 2010 Second Quarter Financial
Long Term Trend of Profitability and Improves Balance Sheet While Global
Economies Appear to Have Bottomed Out
RONKONKOMA, NY - September 9, 2009 -
Lakeland Industries, Inc. (NASDAQ: LAKE), today announced financial
results for its fiscal 2010 second quarter and six months ended July 31,
Second Quarter Financial
Results and Recent Company Developments
| Non-US Sales | Q2 Growth in USD | Q2 Growth in local currency |
| Brazil | +3.7% | +26.0% |
| Canada | +2.5% | +15.3% |
| United Kingdom | -11.2% | +8.9% |
Second Quarter Fiscal Year
2010 Financial Results Review
Net Sales. Net sales
decreased $4.5 million, or 16.4%, to $23.0 million for the three months ended
July 31, 2009 from $27.6 million for the three months ended July 31,
2008. The net decrease was mainly due to a reduction in domestic
sales which is still the Company's core business, partially offset by increased
revenues from more mature international subsidiaries operating primarily in
higher growth markets. Qualytextil, the Brazilian subsidiary, increased its
sales by $0.1 million or 3.7%. Qualytextil sales increased 26% in local
currency. External sales from China increased by $0.6 million, or 36%, driven by
sales to the new Australian distributor. Canadian sales increased by $0.1
million, or 2.5%, UK sales decreased by $0.1 million, or 11.2%, Chile sales
increased by $0.6 million, or 204%. US domestic sales decreased by $ 5.8 million
or 28%. US domestic sales were mainly impacted by a 34.5% decrease in
disposables sales, a 44.7% decrease in gloves sales, and a 13.0% decrease in
reflective sales. Wovens sales increased by 5.7% and chemical sales increased by
Gross Profit. Gross profit
decreased $2.1 million or 25.4% to $6.2 million for the three months ended July
31, 2009 from $8.4 million for the three months ended July 31,
2008. Gross profit as a percentage of net sales decreased to 27.1%
for the three months ended July 31, 2009 from 30.3% for the three months ended
July 31, 2008. Components and factors for gross margin performance
Operating Expenses. Not yet
reflecting the complete effectuation of major overhead and related expense
reductions implemented by the end of the second quarter of fiscal year 2010,
operating expenses decreased $0.1 million, or 2.2%, to $6.0 million for the
three months ended July 31, 2009 from $6.2 million for the three months ended
July 31, 2008. As a percentage of sales, operating expenses increased
to 26.1% for the three months ended July 31, 2009 from 22.4% for the three
months ended July 31, 2008. Excluding Qualytextil in Brazil, operating expenses
declined $0.7 million for Q2 FY2010 compared with Q2 FY2009. The more
significant operating expense items include:
| $(0.2) | million - freight out declined, mainly resulting from lower volume. | ||
| $(0.2) | million - sales commissions declined, mainly resulting from lower volume. | ||
| $(0.2) | million - officers salaries declined, reflecting the retirement of Ray Smith to become a non-employee director and Chairman of the Board, and also reflecting an 8% across the board reduction in total officer compensation. | ||
| $(0.1) | million - shareholder expenses declined, reflecting the proxy fight in the prior year. | ||
| $(0.1) | million - consulting fees were reduced, resulting from using interns and revising Sarbanes Oxley procedures. | ||
| $(0.1) | million - miscellaneous decreases | ||
| $0.2 | million - professional fees increased, reflecting costs of $0.1 million resulting from analysis of tax issues and $0.1 million, resulting from timing differences in the predecessor auditors billing more in Q2 and less in Q1 this year. The company has changed independent auditing firms in the expectation that such professional fees will be reduced in the future |
expenses for the Brazilian business, Qualytextil increased $0.5 million in
Q2FY10 compared with Q2FY09. Major factors in this increase are as
| $0.3 | million - start-up expenses in connection with Qualytextil gearing up to sell Lakeland branded products. This includes hiring 20 sales and logistical support staff, printing of catalogs, lease of two new distribution centers and increased travel expense. | ||
| $0.1 | million - in additional employee benefits and payroll taxes resulting from hiring as employees certain people who had been performing services on an out-sourcing basis. | ||
| $0.1 | million - miscellaneous increases. |
Operating profit. Operating
profit decreased 90% to $0.2 million for the three months ended July 31, 2009
from $2.2 million for the three months ended July 31, 2008. Operating
margins were 0.9% for the three months ended July 31, 2009 compared to 8.0% for
the three months ended July 31, 2008.
Expenses. Interest expenses decreased by $0.03 million for the
three months ended July 31, 2009 as compared to the three months ended July 31,
2008 due to lower interest rates in the current year which was offset by higher
borrowing levels outstanding in the current year.
Expense. Income tax expenses consist of federal, state, and
foreign income taxes. Income tax expenses decreased $0.4 million, or
100%, to $0.0 million for the three months ended July 31, 2009 from $0.4 million
for the three months ended July 31, 2008. Our effective tax rate was
18.6% for the three months ended July 31, 2008. Our effective tax rate for the
three months ended July 31, 2009 is not meaningful due to the near breakeven
level of pretax income. Major factors in the fiscal 2010 second quarter income
tax expenses are losses in India and profit in Chile with no tax benefit or
expense, and tax benefits in Brazil resulting from government incentives and
goodwill write-offs.
Net Income. Net income
decreased to approximately $7,900 for the three months ended July 31, 2009 from
$1.6 million for the three months ended July 31, 2008. The decrease in net
income primarily resulted from a decrease in domestic sales, a reduction in
gross margins in disposables and sales in Brazil and larger losses in India,
offset by management's cost reduction program.
Six Months of Fiscal Year 2010 Financial Results
Net Sales. Net sales
decreased $7.8 million, or 14.3%, to $47 million for the six months ended July
31, 2009 from $54.8 million for the six months ended July 31,
2008. The net decrease was mainly due to a reduction of domestic
sales. Qualytextil sales included in the current year were $5.8 million, but
were only included in the second quarter of fiscal year 2009. External sales
from China increased by $0.7 million, or 21%, driven by sales to the new
Australian distributor. Canadian sales decreased by $0.1 million, or 2.4%, UK
sales decreased by $0.6 million, or 25.7%, Chile sales increased by $0.5
million, or 75.5%. US domestic sales of disposables decreased by $10.6 million,
chemical suit sales decreased by $0.1 million, wovens decreased by $0.3 million,
reflective sales increased by $0.2 million and glove sales decreased by $0.9
Gross Profit. Gross profit
decreased $2.8 million, or 18.5%, to $12.2 million for the six months ended July
31, 2009 from $15.0 million for the six months ended July 31,
2008. Gross profit as a percentage of net sales decreased to 26.0%
for the six months ended July 31, 2009 from 27.4% for the six months ended July
Operating Expenses. Operating
expenses were flat at $11.4 million for the six months ended July 31, 2009 and
ended July 31, 2008. As a percentage of sales, operating expenses
increased to 24.1% for the six months ended July 31, 2009 from 20.8% for the six
months ended July 31, 2008. Excluding Qualytextil in Brazil,
operating expenses declined $1.7 million for the six months ended July 31, 2009
as compared with the six months ended July 31, 2008.
Operating profit. Operating
profit decreased 75.5% to $0.9 million for the six months ended July 31, 2009
from $3.6 million for the six months ended July 31, 2008. Operating