Full Press Release Details
Lakeland Industries Inc. Reports Fiscal
2015 First Quarter Financial Results
In Fiscal 2015 First Quarter from Prior
RONKONKOMA, NY - June 12, 2014 --
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 fiscal 2015
first quarter ended April 30, 2014. For financial reporting presentation purposes, the operating results in Brazil are excluded
from many of the statements in this announcement because the Company's commercial lender has excluded Brazil from most covenant
calculations as well as other related factors and due to the restructuring of those operations which has resulted in significant
losses for the past two years that distorts analysis for the balance of the global businesses..
Financial Results Highlights -- First Quarter Fiscal 2015 and
Recent Company Developments
*Non-GAAP measure - see table included herein for reconciliation
Operating Earnings and Adjusted EBITDA - Lakeland
Consolidated with and without Brazil
| Quarter Ended April 30, 2014 | Quarter Ended April 30, 2013 | |||||||||||||||||||||||
| Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | |||||||||||||||||||
| Sales | $ | 23,507 | $ | 1,748 | $ | 21,760 | $ | 21,737 | $ | 1,783 | $ | 19,954 | ||||||||||||
| Year over Year growth | 8.1 | % | (2.0 | )% | 9.1 | % | (9.4 | )% | (65.6 | )% | 6.2 | % | ||||||||||||
| Gross Profit | 7,100 | 595 | 6,505 | 6,080 | 298 | 5,782 | ||||||||||||||||||
| Gross Margin | 30.2 | % | 34.0 | % | 29.9 | % | 28.0 | % | 16.7 | % | 29.0 | % | ||||||||||||
| Operating Expenses | 6,518 | 871 | 5,647 | 6,316 | 1,228 | 5,089 | ||||||||||||||||||
| Operating expense as % of sales | 27.7 | % | 49.8 | % | 26.0 | % | 29.1 | % | 68.9 | % | 25.5 | % | ||||||||||||
| Operating Income | 582 | (276 | ) | 858 | (237 | ) | (929 | ) | 692 | |||||||||||||||
| Other (Expenses) Income | 80 | 39 | 42 | (156 | ) | (27 | ) | (129 | ) | |||||||||||||||
| Add Depreciation and Amortization | 375 | 75 | 300 | 434 | 90 | 344 | ||||||||||||||||||
| EBITDA | 1,038 | (162 | ) | 1,199 | 41 | (866 | ) | 907 | ||||||||||||||||
| Equity Compensation | 24 | - | 24 | 75 | - | 75 | ||||||||||||||||||
| Additional Brazil Severance and executive recruiter fee | - | - | - | 80 | 80 | - | ||||||||||||||||||
| Financing Fees in Other Expense (adjustments) | - | - | - | 150 | - | 150 | ||||||||||||||||||
| Qingdao plant relocation costs and costs of sale | - | - | - | 320 | - | 320 | ||||||||||||||||||
| Brazil additional Foreign Exchange losses (gains) | (39 | ) | (39 | ) | - | 27 | 27 | - | ||||||||||||||||
| Inventory reserve in USA - discontinued product lines raw material / Finished goods | 300 | - | 300 | - | - | - | ||||||||||||||||||
| PA plant relocation costs | 235 | - | 235 | - | - | - | ||||||||||||||||||
| ADJUSTED EBITDA | $ | 1,558 | $ | (201 | ) | $ | 1,758 | $ | 693 | $ | (759 | ) | $ | 1,452 |
Numbers may not add due to
*This table is a reconciliation
of GAAP to non-GAAP Financial Measures.
**Brazil numbers, as presented
in this table, include immaterial intercompany transactions.
Management's Comments
Christopher J. Ryan. President and Chief
Executive Officer of Lakeland Industries, stated, "The Company's business rationalization and transition is nearly
complete as we are experiencing solid growth internationally and domestically. We have made the necessary investments to grow our
sales channels and enhance our product development, while reducing our cost structure and modifying operations for improved leverage.
Key initiatives that have impacted our performance in the quarter are the residual effects from the sale of a business unit in
China in Q2 last fiscal year, the relocation of certain manufacturing to Mexico and the relocation of our facility in Pennsylvania.
As a result, consolidated worldwide Adjusted EBITDA increased by 124% from last year.
EBITDA reached the highest level in three years - from when we first encountered challenges in Brazil. As previously disclosed,
we believe the turnaround of Brazil to be on schedule and with the additional financing options we are exploring, we anticipate
a reversal of losses year to date and for Brazil to finish FY15 at or near breakeven. In
the first quarter of fiscal 2015, Brazil was close to breakeven on an Adjusted EBITDA basis with only a modest reduction in sales
from last year. The operating loss in the quarter for Brazil was reduced by 70% from last year. We are beginning to benefit from
the growth in most of our businesses around the world along with improvements in Brazil as our consolidated operating profit increased
by nearly 340% to a $580,000 profit from a loss of $240,000 in the prior year. Global growth trends are positively impacting Lakeland
Industries and we are in the best position in years to drive improved operating performance."
Financial Results Conference Call
Lakeland will host a conference call at
4:30 PM (EDT) today to discuss the Company's first quarter fiscal 2015 financial results. The conference call
will be hosted by Stephen M. Bachelder, Lakeland's Chief Operating Officer 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),
For a replay of this call, dial 877-344-7529
(Domestic) or 412-317-0088 (International), Pass Code 10047600.
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.
| Contacts: | |
| Lakeland Industries | Darrow Associates |
| 631-981-9700 | 631-367-1866 |
| Christopher Ryan, CJRyan@lakeland.com | Jordan Darrow, jdarrow@darrowir.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 companies.
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.
Lakeland Industries, Inc. and
CONDENSED CONSOLIDATED BALANCE
(In thousands except share
April 30, 2014 and January
| April 30, | January 31, | |||||||
| 2014 | 2014 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 7,011 | $ | 4,555 | ||||
| Accounts receivable, net of allowance for doubtful accounts | 14,636 | 13,795 | ||||||
| Inventories | 40,370 | 39,844 | ||||||
| Deferred income taxes | 4,836 | 4,707 | ||||||
| Prepaid income tax | 909 | 471 | ||||||
| Other current assets | 2,186 | 2,108 | ||||||
| Total current assets | 69,947 | 65,481 | ||||||
| Property and equipment, net | 12,092 | 12,069 | ||||||
| Prepaid VAT and other taxes, noncurrent | 2,452 | 2,379 | ||||||
| Security deposits | 1,461 | 1,415 | ||||||
| Intangibles, prepaid bank fees and other assets, net | 1,384 | 1,533 | ||||||
| Goodwill | 871 | 871 | ||||||
| Total assets | $ | 88,208 | $ | 83,750 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 9,979 | $ | 8,181 | ||||
| Accrued compensation and benefits | 1,533 | 1,189 | ||||||
| Other accrued expenses | 2,368 | 1,554 | ||||||
| Current maturity of long-term debt | 50 | 50 | ||||||
| Current maturity of arbitration settlement | 1,000 | 1,000 | ||||||
| Short-term borrowing | 2,523 | 2,559 | ||||||
| Borrowings under revolving credit facility | 13,498 | 12,415 | ||||||
| Total current liabilities | 30,950 | 26,949 | ||||||
| Accrued arbitration award in Brazil (net of current maturities) | 3,567 | 3,759 | ||||||
| Long-term portion of Canada and Brazil loans | 1,070 | 1,111 | ||||||
| Subordinated debt, net of OID, including PIK interest | 2,006 | 1,525 | ||||||
| Other liabilities - accrued legal fees in Brazil | 77 | 71 | ||||||
| VAT taxes payable long term | 3,328 | 3,329 | ||||||
| Total liabilities | 40,998 | 36,744 | ||||||
| Stockholders' equity | ||||||||
| Preferred stock, $.01 par; authorized 1,500,000 shares (none issued) | - | - | ||||||
| Common stock, $.01 par; authorized 10,000,000 shares, issued 5,714,950 and 5,713,180; outstanding 5,358,509 and 5,356,739 at April 30, 2014 and January 31, 2014, respectively | 57 | 57 | ||||||
| Treasury stock, at cost; 356,441 shares at April 30, 2014 and January 31, 2014. | (3,352 | ) | (3,352 | ) | ||||
| Additional paid-in capital | 53,390 | 53,365 | ||||||
| Accumulated deficit | (592 | ) | (592 | ) | ||||
| Accumulated other comprehensive loss | (2,292 | ) | (2,472 | ) | ||||
| Total stockholders' equity | 47,210 | 47,006 | ||||||
| Total liabilities and stockholders' equity | $ | 88,208 | $ | 83,750 |
Numbers may not add due to
LAKELAND INDUSTRIES, INC. AND
CONDENSED CONSOLIDATED STATEMENTS
(In thousands except share
For the Three Months Ended
April 30, 2014 and 2013
| Three Months Ended | ||||||||
| April 30, | ||||||||
| 2014 | 2013 | |||||||
| Net sales | $ | 23,507 | $ | 21,737 | ||||
| Cost of goods sold | 16,407 | 15,657 | ||||||
| Gross profit | 7,100 | 6,080 | ||||||
| Operating expenses | 6,518 | 6,317 | ||||||
| Operating profit (loss) | 582 | (237 | ) | |||||
| Foreign Exchange gain (loss) Brazil | 39 | (27 | ) | |||||
| Other income (loss), net | 42 | (129 | ) | |||||
| Interest expense | (640 | ) | (273 | ) | ||||
| Income (loss) before taxes | 23 | (666 | ) | |||||
| Income tax expense | 23 | 179 | ||||||
| Net loss | $ | 0 | $ | (844 | ) | |||
| Net loss per common share: | ||||||||
| Basic | $ | 0.00 | $ | (0.16 | ) | |||
| Diluted | $ | 0.00 | $ | (0.16 | ) | |||
| Weighted average common shares outstanding: | ||||||||
| Basic | 5,923,224 | 5,337,205 | ||||||
| Diluted | 5,923,224 | 5,337,205 |
Numbers may not add due to rounding