Full Press Release Details
Industries, Inc. Reports Fiscal 2014 Third Quarter Financial Results
Reports Consolidated Operating loss
of $1.0 million in Q3
and an operating profit of $0.9 million,
Sales down 6.0% consolidated and up 4.6%,
excluding Brazil, over Q3 last year
RONKONKOMA, NY - December 12, 2013
- 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 of fiscal year 2014 ended October 31, 2013.
Excluding operations in Brazil and the
inventory adjustments in the US, the Company is reporting the best quarter in over three years other than its second quarter for
Financial Results Highlights-third quarter of fiscal 2014, and
Recent Company Developments:
| Operating Earnings and Adjusted EBITDA - Lakeland Consolidated with and without Brazil ($000) * | ||||||||||||||||||||||||
| Quarter Ended October 31 2013 | Quarter Ended October 31 2012 | |||||||||||||||||||||||
| Lakeland consolidated | Brazil ** | Lakeland worldwide excluding Brazil | Lakeland consolidated | Brazil ** | Lakeland worldwide excluding Brazil | |||||||||||||||||||
| Sales | $ | 22,787 | $ | 1,914 | $ | 20,873 | $ | 24,239 | $ | 4,285 | $ | 19,954 | ||||||||||||
| Year over year growth (decline) | (6.0 | )% | (55.3 | )% | 4.6 | % | - | - | - | |||||||||||||||
| Gross profit (loss) | 5,042 | (895 | ) | 5,937 | 7,287 | 1,161 | 6,126 | |||||||||||||||||
| Gross margin | 22.1 | % | (46.7 | )% | 28.3 | % | 30.1 | % | 27.1 | % | 30.7 | % | ||||||||||||
| Operating expenses | 6,073 | 1,037 | 5,036 | 7,020 | 1,536 | 5,484 | ||||||||||||||||||
| Operating expense as % of sales | 26.7 | % | 54.2 | % | 24.1 | % | 29.0 | % | 35.8 | % | 27.5 | % | ||||||||||||
| Operating income (loss) | (1,030 | ) | (1,932 | ) | 902 | 267 | (375 | ) | 642 | |||||||||||||||
| Less other expenses | 116 | 116 | - | (62 | ) | (62 | ) | - | ||||||||||||||||
| Add other income | 57 | - | 57 | 52 | - | 52 | ||||||||||||||||||
| Add depreciation and amortization | 449 | 87 | 362 | 383 | 77 | 306 | ||||||||||||||||||
| EBITDA | (408 | ) | (1,729 | ) | 1,321 | 640 | (360 | ) | 1,000 | |||||||||||||||
| Equity compensation | 20 | - | 20 | 189 | - | 189 | ||||||||||||||||||
| Brazil severance and executive recruiter fee | 74 | 42 | 32 | - | - | - | ||||||||||||||||||
| Brazil additional foreign exchange losses | (116 | ) | (116 | ) | - | 62 | 62 | - | ||||||||||||||||
| Brazil additional VAT tax charge | 153 | 153 | - | - | - | - | ||||||||||||||||||
| Brazil additional inventory reserve charge | 1,159 | 1,159 | - | - | - | - | ||||||||||||||||||
| Change in accounting estimate- OH rates revised | 354 | - | 354 | - | - | - | ||||||||||||||||||
| Inventory reserve in USA- discontinued product line | 375 | - | 375 | - | - | - | ||||||||||||||||||
| Severance charges in USA | - | - | - | 110 | - | 110 | ||||||||||||||||||
| Brazil CEO termination settlement | - | - | - | - | - | - | ||||||||||||||||||
| ADJUSTED EBITDA | $ | 1,611 | $ | (491 | ) | $ | 2,102 | $ | 1,001 | $ | (288 | ) | $ | 1,289 |
*This table is a reconciliation of GAAP to non-GAAP Financial
**Brazil numbers, as presented in this table, include immaterial
intercompany transactions.
| Operating Earnings and Adjusted EBITDA - Lakeland Consolidated with and without Brazil ($000) * | ||||||||||||||||||||||||
| Nine months Ended October 31 2013 | Nine months Ended October 31 2012 | |||||||||||||||||||||||
| Lakeland consolidated | Brazil** | Lakeland worldwide excluding Brazil | Lakeland consolidated | Brazil** | Lakeland worldwide excluding Brazil | |||||||||||||||||||
| Sales | $ | 69,163 | $ | 5,398 | $ | 63,765 | $ | 71,719 | $ | 14,173 | $ | 57,546 | ||||||||||||
| Year over year growth | (3.6 | )% | (61.9 | )% | 10.8 | % | (21.8 | )% | 263.7 | % | (31.7 | )% | ||||||||||||
| Gross profit | 18,584 | (478 | ) | 19,063 | 21,729 | 4,772 | 16,956 | |||||||||||||||||
| Gross margin | 26.9 | % | (8.9 | )% | 29.9 | % | 30.3 | % | 33.7 | % | 29.5 | % | ||||||||||||
| Operating expenses | 18,555 | 3,264 | 15,291 | 21,285 | 5,017 | 16,268 | ||||||||||||||||||
| Operating expense as % of sales | 26.8 | % | 60.5 | % | 24.0 | % | 29.7 | 35.4 | % | 28.3 | % | |||||||||||||
| Operating income (loss) | 30 | (3,742 | ) | 3,772 | 444 | (244 | ) | 688 | ||||||||||||||||
| Less other expenses | (271 | ) | (271 | ) | - | (8,627 | ) | (8,627 | ) | - | ||||||||||||||
| Add other income | 20 | - | 20 | 85 | - | 85 | ||||||||||||||||||
| Add depreciation and amortization | 1,226 | 276 | 950 | 1,129 | 224 | 905 | ||||||||||||||||||
| EBITDA | 1,005 | (3,737 | ) | 4,742 | (6,969 | ) | (8,647 | ) | 1,678 | |||||||||||||||
| Equity compensation | 179 | - | 179 | 366 | - | 366 | ||||||||||||||||||
| Brazil arbitration judgment | - | - | - | 7,874 | 7,874 | - | ||||||||||||||||||
| Brazil severance and executive recruiter fee | 154 | 122 | 32 | - | - | - | ||||||||||||||||||
| Financing fees in other expenses (adjustments) | 75 | - | 75 | - | - | - | ||||||||||||||||||
| QD plant shutdown costs and costs of sale | 480 | - | 480 | - | - | - | ||||||||||||||||||
| Brazil additional foreign exchange losses | 271 | 271 | - | 840 | 840 | - | ||||||||||||||||||
| Brazil additional VAT tax charge | 153 | 153 | - | - | - | - | ||||||||||||||||||
| Brazil additional inventory reserve charge | 1,159 | 1,159 | - | - | - | - | ||||||||||||||||||
| Change in accounting estimate- OH rates revised | 354 | - | 354 | - | - | - | ||||||||||||||||||
| Inventory reserve in USA- discontinued product line | 375 | - | 375 | - | - | - | ||||||||||||||||||
| Severance charges in USA | - | - | - | 110 | - | 110 | ||||||||||||||||||
| ADJUSTED EBITDA | $ | 4,205 | $ | (2,032 | ) | $ | 6,237 | $ | 2,205 | $ | 67 | $ | 2,139 |
*This table is a reconciliation of GAAP to non-GAAP Financial
**Brazil numbers, as presented in this table, include immaterial
intercompany transactions.
Management's Comments
Christopher J. Ryan stated, "As stated
previously, management believes it will have Brazil turned around by the first quarter in 2014. Other than Brazil, all of our other
business units are doing well and as projected. Once Brazil is at breakeven, the full earning potential of the rest of the Company
It is important to note that our current
bank covenants and lines of credit are NOT dependent upon operations in Brazil. Thus, management is free to reorganize it, and
we have and will continue to follow such a course of action."
Financial Results Conference Call
Lakeland will host a conference call at
4:30 PM (EDT) today to discuss the Company's third quarter fiscal 2014 financial results. The conference call will be hosted
by Christopher J. Ryan, Lakeland's President and CEO, and Gary Pokrassa, Lakeland's Chief Financial Officer. Investors
can listen to the call by dialing 877-870-4263 (Domestic) 412-317-0790 (International) or 855-669-9657 (Canada), Pass Code
call replay will be available by dialing 877-344-7529 (Domestic) or 412-317-0088 (International), Pass Code 10037639.
About Lakeland Industries, Inc.:
Lakeland Industries, Inc. (NASDAQ: LAKE)
manufactures and sells a comprehensive line of safety garments and accessories for the industrial protective clothing market.
The Company's products are sold by a direct sales force and through independent sales representatives to a network of over
1,200 safety and mill supply distributors. These distributors in turn supply end user industrial customers such as chemical/petrochemical,
automobile, steel, glass, construction, smelting, janitorial, pharmaceutical and high technology electronics manufacturers, as
well as hospitals and laboratories. In addition, Lakeland supplies federal, state, and local government agencies, fire and police
departments, airport crash rescue units, the Department of Defense, the Centers for Disease Control and Prevention, and many other
federal and state agencies. For more information concerning Lakeland, please visit the Company online at www.lakeland.com.
Christopher Ryan, CJRyan@lakeland.com
Gary Pokrassa, GAPokrassa@lakeland.com
"Safe Harbor" Statement under
the Private Securities Litigation Reform Act of 1995: Forward-looking statements involve risks, uncertainties and assumptions as
described from time to time in Press Releases and Forms 8-K, registration statements, quarterly and annual reports and other reports
and filings filed with the Securities and Exchange Commission or made by management. All statements, other than statements of historical
facts, which address Lakeland's expectations of sources or uses for capital or which express the Company's expectation
for the future with respect to financial performance or operating strategies can be identified as forward-looking statements. As
a result, there can be no assurance that Lakeland's future results will not be materially different from those described
herein as "believed," "projected," "planned," "intended," "anticipated,"
"estimated" or "expected," or other words which reflect the current view of the Company with respect to
future events. We caution readers that these forward-looking statements speak only as of the date hereof. The Company hereby expressly
disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change
in the Company's expectations or any change in events conditions or circumstances on which such statement is based.
Non-GAAP Financial Measures
To supplement its consolidated
financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles (GAAP), the
Company uses the following non-GAAP financial measures: EBITDA, Adjusted EBITDA and consolidated income, excluding Brazil. The
presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for
financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that they
provide useful information about operating results, enhance the overall understanding of past financial performance and future
prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision
making. The non-GAAP financial measures used by the Company in this press release may be different from the methods used by other
For more information on the non-GAAP
financial measures, please see the Reconciliation of GAAP to non-GAAP Financial Measures tables in this press release. These accompanying
tables include details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the
related reconciliations between these financial measures.
Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE
(In thousands except share
| October 31, 2013 | January 31, 2013 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 5,019 | $ | 6,737 | ||||
| Accounts receivable, net | 15,047 | 13,783 | ||||||
| Inventories | 40,440 | 39,271 | ||||||
| Deferred income tax | 4,594 | - | ||||||
| Assets of discontinued operations in India | 20 | 813 | ||||||
| Prepaid income tax | 629 | 1,565 | ||||||
| Other current assets | 2,484 | 1,703 | ||||||
| Total current assets | 68,233 | 63,872 | ||||||
| Property and equipment, net | 12,572 | 14,090 | ||||||
| Prepaid VAT and other taxes, noncurrent | 2,417 | 2,461 | ||||||
| Security deposits | 1,462 | 1,546 | ||||||
| Other assets, net | 1,782 | 478 | ||||||
| Goodwill | 872 | 871 | ||||||
| Total assets | $ | 87,338 | $ | 83,318 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 9,242 | $ | 6,704 | ||||
| Accrued compensation and benefits | 1,300 | 976 | ||||||
| Other accrued expenses | 2,509 | 2,409 | ||||||
| Liabilities of discontinued operations in India | - | 25 | ||||||
| Current maturity of long-term debt | 50 | 100 | ||||||
| Current maturity of arbitration settlement | 1,000 | 1,000 | ||||||
| Short-term borrowing | 2,701 | 7,129 | ||||||
| Borrowings under revolving credit facility | 11,791 | 9,559 | ||||||
| Total current liabilities | 28,593 | 27,902 | ||||||
| Accrued arbitration award in Brazil (net of current maturities) | 4,008 | 4,711 | ||||||
| Canadian loan | 1,012 | 1,298 | ||||||
| Subordinated debt, net of OID | 1,539 | - | ||||||
| Other liabilities - accrued legal fees in Brazil | 78 | 87 | ||||||
| VAT taxes payable long-term | 3,330 | 3,329 | ||||||
| Total liabilities | 38,560 | 37,327 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $.01 par; authorized 1,500,000 shares - (none issued) | - | - | ||||||
| Common stock, $.01 par; authorized 10,000,000 shares, issued 5,711,727 and 5,688,600; outstanding 5,355,286 and 5,332,159 at October 31, 2013 and January 31, 2013, respectively | 57 | 57 | ||||||
| Treasury stock, at cost; 356,441 shares at October 31, 2013 and January 31, 2013, respectively | (3,352 | ) | (3,352 | ) | ||||
| Additional paid-in capital | 53,347 | 50,973 | ||||||
| Retained earnings (deficit) | 1,019 | (473 | ) | |||||
| Accumulated other comprehensive loss | (2,293 | ) | (1,214 | ) | ||||
| Total stockholders' equity | 48,778 | 45,991 | ||||||
| Total liabilities and stockholders' equity | $ | 87,338 | $ | 83,318 |
LAKELAND INDUSTRIES, INC. AND
CONDENSED CONSOLIDATED STATEMENTS
Three months and nine months
ended October 31, 2013 and 2012
| THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||
| October 31, | October 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net sales | $ | 22,787 | $ | 24,239 | $ | 69,163 | $ | 71,719 | ||||||||
| Cost of goods sold | 17,745 | 16,952 | 50,579 | 49,989 | ||||||||||||
| Gross profit | 5,042 | 7,287 | 18,584 | 21,730 | ||||||||||||
| Operating expenses | 6,072 | 7,020 | 18,554 | 21,285 | ||||||||||||
| Operating profit (loss) | (1,030 | ) | 267 | 30 | 444 | |||||||||||
| Foreign exchange gain (loss) Brazil | 116 | (62 | ) | (272 | ) | (840 | ) | |||||||||
| Arbitration judgment in Brazil | - | - | - | (7,874 | ) | |||||||||||
| Other income, net | 57 | 52 | 21 | 172 | ||||||||||||
| Interest expense | (649 | ) | (270 | ) | (1,391 | ) | (766 | ) | ||||||||
| Income (loss) before taxes | (1,506 | ) | (13 | ) | (1,612 | ) | (8,864 | ) | ||||||||
| Income tax expense (benefit) | 329 | (295 | ) | (3,103 | ) | (669 | ) | |||||||||
| Net income (loss) | $ | (1,835 | ) | $ | 283 | $ | 1,491 | $ | (8,195 | ) | ||||||
| Net income (loss) per common share | ||||||||||||||||
| Basic | $ | (0.31 | ) | $ | 0.05 | $ | 0.27 | $ | (1.55 | ) | ||||||
| Diluted | $ | (0.31 | ) | $ | 0.05 | $ | 0.26 | $ | (1.55 | ) | ||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 5,919,253 | 5,330,286 | 5,607,654 | 5,276,288 | ||||||||||||
| Diluted | 5,919,253 | 5,367,243 | 5,715,151 | 5,276,288 |