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 Third Quarter Financial
Diversification Strategy Leading Revenue Toward Pre-Global Recession Level;
Balance Sheet with Increase in Cash and Reduction of Debt
RONKONKOMA, NY - December 10, 2009 -
Lakeland Industries, Inc. (NASDAQ:
LAKE), today announced financial results for its fiscal 2010 third quarter and
nine months ended October 31, 2009.
Third Quarter Financial
Results and Recent Company Developments
| Lower revenues and gross margin resulted from winding down of global recession, aggressive pricing environment, and higher priced cost of goods purchased in 2008 | ||
| Operating expenses reduced by $200,000 in 3QFY10 from 2QFY10, excluding Brazil. Substantial increase in headcount and other operating expenses for direct sales initiatives in fast growing markets in Brazil | ||
| Effective inventory, expense and cash management resulted in an additional $3.5 million reduction of bank debt in Q3; Year-to-date reduction of $10.2 million | ||
| Cash of $4.8 million at end of 3QFY10 increased by 76% from the beginning of fiscal year | ||
| Anticipated revenue and net income growth catalysts include: |
| o | Sustainable improvement in global economy | |
| o | Traction for new sales forces in China, Brazil and India | |
| o | Introduction of new products and cross-selling of products in high growth international markets | |
| o | Leverage in global business platform and significantly lowered cost structure | |
| o | Continued transition to lower cost of goods sold with gross margins expected to accelerate in first half of calendar 2010 |
Third Quarter Fiscal Year
2010 Financial Results Review
Net Sales. Net sales
decreased $2.9 million, or 11.4%, to $22.3 million for the three months ended
October 31, 2009, from $25.2 million for the three months ended October 31,
2008. The net decrease was comprised of a 26% decrease in domestic
sales partially offset by a 25% increase in foreign
sales. International revenues for 3QFY10 were $8.0 million, an
increase of $1.6 million from $6.4 million in the same period of fiscal
2009. Domestic revenues for 3QFY10 were $14.3 million, a decrease of
$4.5 million from fiscal 2009. As a percentage of 3QFY10 consolidated
sales, international revenues accounted for 36%, an increase from 25% for the
same period of fiscal 2009, and domestic revenues accounted for 64%, a decrease
from 75% in the 2009 period.
growth was led by sales at Qualytextil, representing the Company's operations in
Brazil, which increased by $0.9 million or 38.5% to $3.4 million in 3QFY10 as
compared with $2.4 million in 3QFY09 and $3.2 million in 2QFY10. External sales
from China increased by $0.4 million, or 24%, from the same quarter in fiscal
2009 driven by sales to Australia; an expansive domestic sales effort in China
commenced in the fall of 2009 which is not expected to materially impact
revenues for several more months as the sales channel ramps up. For
3QFY10 as compared with 3QFY09, Canadian sales increased by $0.1 million, or
3.5%; UK sales increased by $0.2 million, or 23.8%; Chile sales increased by
$0.2 million, or 78.9%; and US domestic sales decreased by $5.2 million or
Gross Profit. Gross profit
decreased $1.5 million or 21.1% to $5.7 million for the three months ended
October 31, 2009, from $7.2 million for the three months ended October 31,
2008. Gross profit as a percentage of net sales decreased to 25.4%
for the three months ended October 31, 2009, from 28.5% for the three months
ended October 31, 2008. The major factors driving the changes in gross margins
Operating Expenses. Operating
expenses increased $0.36 million, or 7.0% to $5.5 million for the three months
ended October 31, 2009 from $5.1 million for the three months ended October 31,
2008. On a sequential basis, operating expenses declined $0.5
million, or 9.2% from $6.0 million in the fiscal second quarter. As a
percentage of sales, operating expenses increased to 24.5% for the three months
ended October 31, 2009 from 20.3% for the three months ended October 31, 2008.
Excluding Qualytextil in Brazil, operating expenses declined $0.2 million for Q3
FY2010 compared with Q3 FY2009. Major changes in operating expenses
include the following:
Operating Profit. Operating
profit decreased 90.1% to $0.19 million for the three months ended October 31,
2009, from $2.1 million for the three months ended October 31, 2008. Operating
margins were 0.8% for the three months ended October 31, 2009, compared to 8.2%
for the three months ended October 31, 2008.
Expenses. Interest expenses increased by $0.29 million for the
three months ended October 31, 2009, as compared to the three months ended
October 31, 2008, reflecting a one-time charge in 3QFY10 of $297,000 resulting
from the anticipated buy-back of the interest rate swap. Normal
interest expense in the current year third quarter was based on higher borrowing
levels outstanding mainly due to the funding for the Qualytextil acquisition
which were offset by lower interest rates as compared to the prior year
Provisione. Income tax expenses consists of federal, state,
and foreign income taxes. Income tax expenses decreased $0.6 million, or 141.9%,
to $(0.2) million for the three months ended October 31, 2009, from $.07 million
for the three months ended October 31, 2008. The Company's effective
tax rate was 49.6% for the three months ended October 31, 2009. Major
factors in the October 2009 quarter's income tax expenses are losses in India
and profit in Chile and UK with no tax benefit or expense, and tax benefits in
Brazil resulting from government incentives and goodwill
income decreased $1.6 million, or 113.9% to a loss of $(0.2) million for the
three months ended October 31, 2009, from $1.4 million for the three months
ended October 31, 2008. The decrease in net income primarily resulted from the
decrease in sales and profits across all domestic operations, extremely
aggressive pricing environment in the U.S. for disposables, and increased
spending in higher growth international regions as the Company plans to benefit
from its global operating scale.
First Nine months of Fiscal
Year 2010 Financial Results Review
Net Sales. Net sales
decreased $10.7 million, or 13.4% to $69.3 million for the nine months ended
October 31, 2009 from $80 million for the nine months ended October 31,
2008. The net decrease was comprised of a $14.4 million decrease in
domestic sales or 23.5%, partially offset by a $3.7 million increase in foreign
sales or 19.8%. Qualytextil sales included in the current year were $9.2
million, but were only included in Q2 and Q3 of last year for $5.5
million. External sales from China increased by $1.1 million, or 24%,
driven by sales in Australia. Canadian sales were flat, UK sales decreased by
$0.4 million, or 11.7%, Chile sales increased by $0.7 million, or
Gross Profit. Gross profit
decreased $4.1 million or 18.7% to $17.9 million for the nine months ended
October 31, 2009 from $22.0 million for the nine months ended October 31,
2008. Gross profit as a percentage of net sales decreased to 25.8%
for the nine months ended October 31, 2009 from 27.5% for the nine months ended
Operating Expenses. Operating
expenses increased $0.5 million, or 3.2% to $16.8 million for the nine months
ended October 31, 2009, from $16.3 million for the nine months ended October 31,
2008. As a percentage of sales, operating expenses increased to 24.3% for the