Full Press Release Details
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Industries, Inc. Reports 18% Revenue Increase for Third Quarter Fiscal
2011 Financial Results
EPS of $0.12 Compared with a loss of $(0.03) in 3Q10;
Enhanced with Deferred Income of $0.10 Per Share From Operations in
NY - December 13, 2010 - Lakeland Industries, Inc. (NASDAQ: LAKE) today
announced financial results for its third quarter fiscal year 2011 ended October
Financial Results Highlights
and Recent Company Developments
Fiscal 2011 Third Quarter
Net Sales. Net sales
increased $4.0 million, or 18%, to $26.3 million for the three months ended
October 31, 2010, from $22.3 million for the three months ended October 31,
2009. The net increase was due to an increase of $2.8 million or 21%
in domestic sales and $1.2 million or 14% in foreign sales in the fiscal 2011
quarter as compared with the same quarter of the prior year.
sales from China increased by $2.3 million, or over 100%, driven by domestic
sales in China and sale of products for international markets. Canadian sales
increased by $0.1 million, or 9.9%, UK sales decreased by 2%, Chile sales
decreased by $0.1 million, in part resulting from an earthquake that led to
business disruptions, and India sales increased by $0.4 million, or
200%. Sales in Brazil were down nearly 8%, mainly from lack of large
bid sales this year as compared with the prior period, although management is
optimistic that the Company will secure several significant contracts for which
proposals remain outstanding.
domestic sales of disposables were $11.6 million in 3QFY11 as compared with
$10.3 million in 3QFY10. The increase reflects fulfillment of a
portion of contract backlog stemming from manufacturing capacity constraints and
stock-out conditions earlier in the year. An increase in orders
relating to the Gulf oil spill led to an increase in U.S. chemical suit sales,
which increased to $1.8 million in 3QFY11 from $1.7 million in
3Q10. Domestic sales for woven products increased by $0.5 million,
while reflective products sales increased $0.3 million or 34% driven by demand
from the utilities market. Glove sales in the U.S. were flat due to
increased demand offset by pricing pressures.
Gross Profit. Gross profit
increased $1.5 million, or 27.1%, to $7.2 million for the three months ended
October 31, 2010, from $5.7 million for the three months ended October 31, 2009.
Gross profit as a percentage of net sales increased to 27.3% for the three
months ended October 31, 2010, from 25.4% for the three months ended October 31,
2009. Major factors driving the changes in gross margins were:
Operating Expenses. Operating
expenses increased $0.9 million, or 16.3%, to $6.4 million for the three months
ended October 31, 2010, from $5.5 million for the three months ended October 31,
2009. As a percentage of sales, operating expenses decreased to 24.2%
for the three months ended October 31, 2010 from 24.5% for the three months
ended October 31, 2009. The $0.9 million increase in operating
expenses in the three months ended October 31, 2010 as compared to the three
months ended October 31, 2009 was comprised of:
Operating profit. Operating
profit increased 340% to $0.8 million for the three months ended October 31,
2010 from $0.2 million for the three months ended October 31,
2009. Operating margins were 3.1% for the three months ended October
31, 2010 compared to 0.8% for the three months ended October 31,
Expenses. Interest expenses decreased by $0.5 million for the
three months ended October 31, 2010 as compared to the three months ended
October 31, 2009 due to lower borrowing levels outstanding and lower rates, and
the buyout of the interest rate swap in the third quarter of last
Expense. Income tax expenses consist of federal, state and
foreign income taxes. Income tax expenses increased $0.3 million to
$0.1 million for the three months ended October 31, 2010 from $(0.2) million for
the three months ended October 31, 2009. The Company's effective tax
rates were 15.1% for 3Q FY11 and 49.6% for the three months ended October 31,
2009, mainly resulting from losses in India in the prior year with no tax
benefit. The effective tax rate for 3QFY11 was due to goodwill write-offs in
Brazil and tax benefits from India resulting from a "check the box" tax status
income increased $0.8 million to $0.6 million for the three months ended October
31, 2010 from a net loss of $(0.2) million for the three months ended October
31, 2009. Earnings per basic and diluted share for the third quarter
of fiscal 2011 was $0.12, an increase from a net loss per basic and diluted
share of $(0.03) in the prior year period. The increase in net income
and earnings per share primarily resulted from higher volumes and higher
margins, offset by the elimination (deferral) of intercompany profits of $0.10
earnings per share due to unusually high production in China mostly in transit
as of October 31, 2010. This profit will be recognized when the
product is sold to third parties; until that time, the products will not be
reflected on the Company's income statement and will be accounted for as
finished goods inventory.
Fiscal 2011 Nine Months
Net Sales. Net sales
increased $6.9 million, or 9.9%, to $76.2 million for the nine months ended
October 31, 2010, from $69.3 million for the nine months ended October 31, 2009.
The net increase was due to an increase of $6.4 million in foreign sales and an
increase of $0.5 million in domestic sales.
sales from China increased by $5.6 million, or 80%, driven by sales for the
Australian market and domestic sales in China. Canadian sales
increased by $0.8 million or 19.6%, UK sales increased by $0.6 million or 18.8%,
Chile sales decreased by $0.6 million or 38%, in part resulting from a
disruption in market activity following an earthquake and an elimination of
Argentina sales which were subtracted from Chile as the Company formed a new
subsidiary encompassing Argentina operations to address growth opportunities in
the country. Sales in Brazil were flat for the first nine months of fiscal year
2011 as compared with the prior year. For the first three quarter of
fiscal 2011 compared with the 2010 period, U.S. domestic sales of disposables
increased by $0.3 million, chemical suit sales decreased by $0.8 million, wovens
increased by $0.2 million, reflective sales were flat, and glove sales increased
Gross Profit. Gross profit
increased $4.0 million or, 22.1%, to $21.9 million for the nine months ended
October 31, 2010, from $17.9 million for the nine months ended October 31, 2009.
Gross profit as a percentage of net sales increased to 28.7% for the nine months