Full Press Release Details
Lakeland Industries Inc. Reports Fiscal
2015 Second Quarter Financial Results
Manufacturing and Operational Efficiencies
Gross Margin to Highest Level in Company
RONKONKOMA, NY - September 10, 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
second quarter ended July 31, 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 -- Second Quarter Fiscal
2015 and Recent Company Developments*
*Includes non-GAAP measures - see table included herein
for reconciliation to GAAP measures
Management's Comments
Christopher J. Ryan, President and Chief
Executive Officer of Lakeland Industries, stated, "The growth in our international operations, including Brazil, remain
intact. At the same time, while business mix and large order flows resulted in a modest decline in year-over-year domestic sales,
business activity remains robust and we foresee increased global demand. To capitalize on this favorable outlook, we continued
our strategy from the first quarter of increasing spending on business development activities while aggressively managing our
other costs to drive improved profitability. We are beginning to experience the desired results as consolidated gross margin reached
the highest level ever for Lakeland and operating profit increased 13% year-over-year amid substantially higher selling, general
and administrative expenses intended to drive future sales growth and the operating loss from our subsidiary in Brazil which is
seeking to go through a turnaround.
"In Brazil, the turnaround is showing
steady indications of progress as it nears completion, with second quarter sales increasing by 6%. For the second consecutive quarter,
operating losses declined by over 60% as compared with prior year periods. Breakeven is now within reach for our Brazil subsidiary,
although it is still absorbing non-operating expenses due to the resolution of prior issues. After the end of the quarter, we completed
the first phase of the refinancing of Lakeland Brazil. This represents a significant step in establishing the subsidiary as financially
self-sustaining while maintaining the financial integrity of the parent company through the non-recourse nature of subsidiary financing
facilities, although the lending environment in Brazil is more difficult lately due to the recent recessionary economy.
"Given Mexico's new spending
on oil and gas exploration with foreign partners, we expect Mexican sales to grow nicely over the next few years. We have realigned
and upgraded the Mexican sales staff to accommodate the economic growth trends in the region. As we look ahead, we remain encouraged
by the global growth trends and our strengthening operational and financial condition which should enable us to drive improved
profitability from the leverage in our business."
| Operating Earnings and Adjusted EBITDA - Lakeland |
| Consolidated with and without Brazil |
| ($000) | Quarter Ended July 31, 2014 | Quarter Ended July 31, 2013 | ||||||||||||||||||||||
| Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | |||||||||||||||||||
| Sales | $ | 24,610 | $ | 1,798 | $ | 22,812 | $ | 24,639 | $ | 1,701 | $ | 22,938 | ||||||||||||
| Year over Year growth | (0.1 | )% | 5.7 | % | (0.5 | )% | 4.9 | % | (63.8 | )% | 22.0 | % | ||||||||||||
| Gross Profit | 8,062 | 625 | 7,437 | 7,462 | 118 | 7,345 | ||||||||||||||||||
| Gross Margin | 32.8 | % | 34.8 | % | 32.6 | % | 30.3 | % | 6.9 | % | 32.0 | % | ||||||||||||
| Operating Expenses | 6,596 | 956 | 5,640 | 6,165 | 999 | 5,166 | ||||||||||||||||||
| Operating expense as % of sales | 26.8 | % | 53.2 | % | 24.7 | % | 25.0 | % | 58.7 | % | 22.5 | % | ||||||||||||
| Operating Income | 1,468 | (331 | ) | 1,799 | 1,297 | (881 | ) | 2,178 | ||||||||||||||||
| Other income (loss), net-mainly labor litigation and VAT tax in Brazil in current year and foreign exchange losses in Brazil last year | (468 | ) | (450 | ) | (18 | ) | (296 | ) | (360 | ) | 64 | |||||||||||||
| Add Other Income | (25 | ) | (25 | ) | ----- | 27 | ----- | 27 | ||||||||||||||||
| Add Depreciation and Amortization | 325 | 67 | 258 | 343 | 77 | 266 | ||||||||||||||||||
| EBITDA | 1,300 | (739 | ) | 2,039 | 1,371 | (1,164 | ) | 2,535 | ||||||||||||||||
| Equity Compensation | 25 | ----- | 25 | 84 | ----- | 84 | ||||||||||||||||||
| Financing Fees in Other Expense | ----- | ----- | ----- | (75 | ) | ----- | (75 | ) | ||||||||||||||||
| Qingdao plant relocation costs and costs of sale | ----- | ----- | ----- | 160 | ----- | 160 | ||||||||||||||||||
| Brazil additional Foreign Exchange losses | 25 | 25 | ----- | 360 | 360 | ----- | ||||||||||||||||||
| Brazil additional VAT tax charge | 76 | 76 | ----- | ----- | ----- | ----- | ||||||||||||||||||
| Brazil Labor Litigation | 374 | 374 | ----- | ----- | ----- | ----- | ||||||||||||||||||
| ADJUSTED EBITDA | $ | 1,800 | $ | (264 | ) | $ | 2,064 | $ | 1,900 | $ | (804 | ) | $ | 2,704 |
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.
| Operating Earnings and Adjusted EBITDA - Lakeland |
| Consolidated with and without Brazil |
| ($000) | Six-Months Ended July 31, 2014 | Six-Months Ended July 31, 2013 | ||||||||||||||||||||||
| Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | |||||||||||||||||||
| Sales | $ | 48,118 | $ | 3,546 | $ | 44,572 | $ | 46,376 | $ | 3,484 | $ | 42,892 | ||||||||||||
| Year over Year growth | 3.8 | % | 1.8 | % | 3.9 | % | (2.3 | )% | (64.8 | )% | 14.1 | % | ||||||||||||
| Gross Profit | 15,162 | 1,220 | 13,943 | 13,542 | 416 | 13,126 | ||||||||||||||||||
| Gross Margin | 31.5 | % | 34.4 | % | 31.3 | % | 29.2 | % | 11.9 | % | 30.6 | % | ||||||||||||
| Operating Expenses | 13,112 | 1,827 | 11,285 | 12,482 | 2,227 | 10,255 | ||||||||||||||||||
| Operating expense as % of sales | 27.2 | % | 51.5 | % | 25.3 | % | 26.9 | % | 63.9 | % | 23.9 | % | ||||||||||||
| Operating Income | 2,050 | (606 | ) | 2,656 | 1,060 | (1,811 | ) | 2,871 | ||||||||||||||||
| Other income (loss), net-mainly labor litigation and VAT tax in Brazil in current year and foreign exchange losses in Brazil last year | (426 | ) | (411 | ) | (15 | ) | (452 | ) | (387 | ) | (65 | ) | ||||||||||||
| Add Other Income (Expense) | 13 | (25 | ) | 38 | 28 | ----- | 28 | |||||||||||||||||
| Add Depreciation and Amortization | 700 | 142 | 558 | 777 | 167 | 610 | ||||||||||||||||||
| EBITDA | 2,337 | (900 | ) | 3,237 | 1,413 | (2,031 | ) | 3,444 | ||||||||||||||||
| Equity Compensation | 49 | ----- | 49 | 159 | ----- | 159 | ||||||||||||||||||
| Brazil Additional Severance and Executive Recruiter Fees | ----- | ----- | ----- | 80 | 50 | 30 | ||||||||||||||||||
| Financing Fees in Other Expense (adjustments) | ----- | ----- | ----- | 75 | ----- | 75 | ||||||||||||||||||
| Qingdao plant relocation costs and costs of sale | ----- | ----- | ----- | 480 | ----- | 480 | ||||||||||||||||||
| Brazil additional Foreign Exchange losses (gains) | (13 | ) | (13 | ) | ----- | 387 | 387 | ----- | ||||||||||||||||
| Brazil additional VAT tax charge | 76 | 76 | ----- | ----- | ----- | ----- | ||||||||||||||||||
| Brazil Labor Litigation | 374 | 374 | ----- | ----- | ----- | ----- | ||||||||||||||||||
| Inventory Reserve in USA and China-discontinued product lines raw material/finished goods | 300 | ----- | 300 | ----- | ----- | ----- | ||||||||||||||||||
| PA plant shutdown costs | 235 | ----- | 235 | ----- | ----- | ----- | ||||||||||||||||||
| ADJUSTED EBITDA | $ | 3,358 | $ | (463 | ) | $ | 3,821 | $ | 2,594 | $ | (1,594 | ) | $ | 4,188 |
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.
| Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | |||||||||||||||||||
| ($000) | Quarter Ended July 31, 2014 | Quarter Ended July 31, 2013 | ||||||||||||||||||||||
| EARNINGS AND EPS: | ||||||||||||||||||||||||
| Operating Income | 1,468 | (331 | ) | 1,799 | 1,297 | (881 | ) | 2,178 | ||||||||||||||||
| Other (Expenses) Income | (468 | ) | (450 | ) | (18 | ) | (296 | ) | (360 | ) | 64 | |||||||||||||
| Add Other Income | (25 | ) | (25 | ) | ----- | 27 | ----- | 27 | ||||||||||||||||
| Interest Expense | (683 | ) | (166 | ) | (517 | ) | (467 | ) | 320 | (787 | ) | |||||||||||||
| Pretax Income | 292 | (972 | ) | 1,264 | 561 | (921 | ) | 1,482 | ||||||||||||||||
| Income Tax (Expense) benefit | (676 | ) | ----- | (676 | ) | 3,611 | ----- | 3,611 | ||||||||||||||||
| Net Income | (384 | ) | (972 | ) | 588 | 4,171 | (921 | ) | 5,093 | |||||||||||||||
| # Shares For Basic EPS (000s) | 5,925 | 5,925 | 5,925 | 5,560 | 5,560 | 5,560 | ||||||||||||||||||
| EPS | $ | (0.065 | ) | $ | (0.164 | ) | $ | 0.099 | $ | 0.750 | $ | (0.166 | ) | $ | 0.916 | |||||||||
| FY14 Includes Reversal of Deferred Tax Valuation $4.5M | ----- | ----- | ----- | 4,544 | ----- | 4,544 | ||||||||||||||||||
| EPS Effect | ----- | ----- | ----- | $ | 0.817 | ----- | $ | 0.817 | ||||||||||||||||
| EPS Without Valuation Reserve Reversal | ----- | ----- | ----- | $ | (0.067 | ) | $ | (0.166 | ) | $ | 0.099 |
| Six-Months Ended July 31, 2014 | Six-Months Ended July 31, 2013 | |||||||||||||||||||||||
| Operating Income | 2,050 | (606 | ) | 2,656 | 1,060 | (1,811 | ) | 2,871 | ||||||||||||||||
| Other (Expenses) Income | (426 | ) | (411 | ) | (15 | ) | (452 | ) | (387 | ) | (65 | ) | ||||||||||||
| Add Other Income | 13 | (25 | ) | 38 | 28 | ----- | 28 | |||||||||||||||||
| Interest Expense | (1,323 | ) | (328 | ) | (995 | ) | (741 | ) | (562 | ) | (179 | ) | ||||||||||||
| Pretax Income | 314 | (1,370 | ) | 1,684 | (105 | ) | (2,760 | ) | 2,655 | |||||||||||||||
| Income Tax (Expense) benefit | (699 | ) | ----- | (699 | ) | 3,432 | ----- | 3,432 | ||||||||||||||||
| Net Income | (385 | ) | (1,370 | ) | 985 | 3,327 | (2,760 | ) | 6,087 | |||||||||||||||
| # Shares For Basic EPS (000s) | 5,924 | 5,924 | 5,924 | 5,445 | 5,445 | 5,445 | ||||||||||||||||||
| EPS | $ | (0.065 | ) | $ | (0.231 | ) | $ | 0.166 | $ | 0.611 | $ | (0.507 | ) | $ | 1.118 | |||||||||
| FY 14 Includes Reversal of Deferred Tax Valuation $4.5 mm | ----- | ----- | ----- | 4,544 | ----- | 4,544 | ||||||||||||||||||
| EPS Effect | ----- | ----- | ----- | $ | 0.835 | ----- | $ | 0.835 | ||||||||||||||||
| EPS Without Valuation Reserve Reversal | ----- | ----- | ----- | $ | (0.224 | ) | $ | (0.507 | ) | $ | 0.283 |
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.
Table continued on next page
Table continued from preceding page
| Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | Lakeland consolidated | Brazil | Lakeland worldwide excluding Brazil | |||||||||||||||||||
| Quarter Ended July 31, 2014 | Quarter Ended July 31, 2013 | |||||||||||||||||||||||
| Other Impact on EPS: | ||||||||||||||||||||||||
| Tax Charge for WF Dividend | 325 | ----- | 325 | ----- | ----- | ----- | ||||||||||||||||||
| EPS | $ | 0.055 | ----- | $ | 0.055 | ----- | ----- | ----- | ||||||||||||||||
| Brazil Labor Charge and VAT Settlement | 450 | 450 | ----- | ----- | ----- | ----- | ||||||||||||||||||
| EPS | $ | 0.076 | $ | 0.076 | ----- | ----- | ----- | ----- | ||||||||||||||||
| EPS Without Brazil and Without Tax on WF Dividend / Without Tax Valuation Reserve PY | $ | 0.065 | $ | (0.088 | ) | $ | 0.153 | $ | (0.067 | ) | $ | (0.166 | ) | $ | 0.099 |
| Six-Months Ended July 31, 2014 | Six-Months Ended July 31, 2013 | |||||||||||||||||||||||
| Tax Charge for WF Dividend | 325 | ----- | 325 | ----- | ----- | ----- | ||||||||||||||||||
| EPS | $ | 0.055 | ----- | $ | 0.055 | ----- | ----- | ----- | ||||||||||||||||
| EPS Without Brazil and Without Tax on WF Dividend / Without Tax Valuation Reserve PY | $ | (0.011 | ) | $ | (0.231 | ) | $ | 0.220 | $ | (0.224 | ) | (0.507 | ) | $ | 0.283 |
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.
Financial Results Conference Call
Lakeland will host a conference call at
4:30 PM (EDT) today to discuss the Company's second quarter fiscal 2015 financial results. The conference call will be hosted
by Christopher J. Ryan, Lakeland's Chief Executive Officer and Gary Pokrassa, Lakeland's Chief Financial Officer. Investors
can listen to the call by dialing 877-870-4263 (Domestic) or 412-317-0790 (International) or 855-669-9657 (Canada), Pass
For a replay of this call, dial 877-344-7529
(Domestic) or 412-317-0088 (International) or 855-669-9658 (Canada), Pass Code 10052047.
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.
| 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