Full Press Release Details
Koehler Avenue, Suite 7 - Ronkonkoma, NY 11779
(631) 981-9700 - www.lakeland.com
Industries, Inc. Reports Fiscal 2009
Quarter Financial Results
of $0.25 versus $0.17 Last Year on Record Third Quarter Revenue of $25.2
2010 Guidance of Over 10% Increase in Top and Bottom Lines
RONKONKOMA, NY - December 10, 2008 -
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 third quarter and nine months ended October
Financial Results Highlights
and Recent Company Developments
third quarter again showed the success of our international growth strategy and
cost-reduction initiatives, with earnings before interest, taxes,
depreciation and amortization* ("EBITDA") margins the highest in nearly three
years," said Christopher J. Ryan, President and CEO of Lakeland
Industries. "Although we expect domestic sales in the US to trend
downward in the coming quarters on a comparative basis, we anticipate strong
growth in overseas markets to more than offset these declines and enable us to
maintain upward momentum in both sales and earnings. In North America, our
customers are deleveraging and going through a sharp inventory adjustment, but
at some point - likely in the first quarter - we believe their reserves will be
exhausted and demand will resume. Many, if not most, of our product
offerings are required to be worn by federal or state safety rules and
regulations and are thus not generally discretionary purchases."
"For example, on November 24, 2008, a
US federal law went into effect requiring that anybody working along highways
that receive federal money - including firemen, police, construction workers,
highway cleaning crews, and even members of the media - must
wear high-visibility safety vests. As a result, our high-visibility
vest sales rose by 98% in the third quarter as distributors stocked up in
anticipation of the new law. While we continue to experience
continued demand for this product line, we expect the rate of growth to moderate
in the coming quarters. According to our channel checks, the new law
along with the reported stimulus package of the incoming Obama administration is
driving growth for our high-visibility product lines and additional gains for
other product lines beginning in the first calendar quarter of
2009. Thus, in terms of our outlook for the next year, we believe we
are more insulated than many companies from the general economy at
large. Furthermore, certain government regulations, such as
Occupational Safety & Health Administration ("OSHA") rules, are now
being formulated and implemented in the foreign markets we are penetrating, so
we expect additional demand for our products to meet mandatory
requirements. Many of these nations are mandating that the public and
private sector adopt OSHA-like standards so that they may benefit from
membership in associations such as the World Trade Organization.
"In the fourth quarter to date, we have
seen our lower trending domestic sales being partially offset by the traction of
our international operations, which may be somewhat mitigated on a reported
basis depending on the strength of the US dollar. Beginning in the
first quarter of fiscal 2010, we see domestic sales rebounding for several
product lines and continued expansion overseas. Given these
expectations along with our ongoing cost-cutting measures, we expect next fiscal
year's results to show top and bottom line improvement of over 10%, excluding
any future potential acquisitions and the impact of
Financial Results for Three
Months Ended October 31, 2008 as Compared with the Three Months Ended October
were a record $25.2 million in the third quarter of fiscal 2009, up 7.3% from
the $23.5 million posted in the comparable fiscal 2008 period. The
increase in revenue was primarily due to contributions from the Company's
foreign expansion. Brazil sales included in the current quarter were
$2.4 million, reflecting the Company's recent acquisition. External sales from
China increased by $0.2 million, or 21%, to $1.2 million, driven by sales to the
Company's new Australian distributor. UK sales increased by 15% to
$1.0 million, while Chile sales decreased by 21% to $0.3
million. U.S. domestic sales decreased by $1.1 million, or 5.6%, to
$19.5 million due to difficult operating conditions in September and
profit increased by $1.5 million, or 26%, to $7.2 million for the third quarter
of fiscal 2009, as compared with $5.7 million for the same period in fiscal
2008. Gross profit as a percentage of net sales for the quarter ended
October 31, 2008 rose to 28.5%, a record level for the third fiscal quarter and
the second highest level in the Company's history, and increased from 24.3% in
the same period of fiscal 2008. This improvement was primarily due to
the inclusion of the Company's Brazilian operations, which posted a 49.3% gross
margin, and the end of the prior year's sales rebate program to meet competitive
conditions, offset slightly by late stage start-up losses in India. Operating
profit increased by $0.7 million, or 50%, to $2.1 million, versus $1.4 million
recorded in the third quarter of fiscal 2008. Operating income as a
percentage of net sales increased to 8.2% for the third quarter of fiscal 2009,
up from 5.8% for the same period in fiscal 2008. EBITDA was 9.8% of
sales for 3Q09 - a level not seen in nearly three years. The improvement in
operating profit and margins is due to the increased level of total revenues
including high margin contributions from Brazil, the use of lower-cost raw
materials in production of garments outside of the United States where
in-country and external revenues are increasing, new product introductions, new
customers, and the end of the rebate program initiated early in fiscal year
expenses increased by $0.2 million for the three months ended October 31, 2008
as compared to the three months ended October 31, 2007 due to higher borrowing
levels outstanding, primarily reflecting funding for the Company's Brazil
acquisition, partially offset by lower interest rates in the current
year. Net income for the third quarter of FY09 was $1.4 million,
compared with $0.9 million for the third quarter of fiscal
2008. Earnings per share for the third quarter of fiscal 2009 was
$0.25, an increase of 47% as compared with $0.17 for the same period of fiscal
Financial Results for Nine
Months Ended October 31, 2008 as Compared with the Nine Months Ended October 31,
increased $9.2 million, or 13%, to $80.0 million for the nine months ended
October 31, 2008 from $70.8 million for the nine months ended October 31,
2007. The net increase was mainly due to international growth. Gross