Full Press Release Details
3555 Veterans Memorial Highway, Suite C
Ronkonkoma, NY 11779
(631) 981-9700 - www.lakeland.com
Industries, Inc. Reports Fiscal 2019 Third Quarter Financial
NY December 17, 2018 -- Lakeland Industries, Inc. (NASDAQ:
LAKE) (the Company or Lakeland ), a
leading global manufacturer of technologically-advanced
protective clothing for industry, healthcare and to first
responders on the federal, state and local levels, today announced
financial results for its fiscal 2019 third quarter ended October
Fiscal 2019 Third Quarter Financial Results Highlights and Recent
of $24.0 million, flat from the 3Q18
3Q19 of $8.3 million, down from $9.0 million in 3Q18
of $7.3 million in 3Q19 increased from $6.3 million in 3Q18 mainly
due to continued investment in growth and profitability
enhancements including items relating to IT infrastructure and
expansion in the sales force
million in 3Q19, down from $1.8 million in 3Q18
million at the end of 3Q19 decreased from $15.8 million at the
beginning of the fiscal year due to increased inventory purchases,
capital expenditures for growth initiatives and debt reduction in
the first half of the current year
million at end of 3Q19, down from $1.7 million at the beginning of
equity at the end of 3Q19 increased by $3 million or 3.6% to $85.8
million from $82.8 million at the beginning of fiscal
digital transformation and global diversification
installation and IT infrastructure improvements
manufacturing ramping up
websites for nine global locations
Management's Comments
J. Ryan, President and Chief Executive Officer of Lakeland
Industries, stated, Third quarter fiscal 2019 continued to
be negatively impacted by our enterprise resource planning
( ERP ) system implementation. Aspects of the
installation of this system began in the second quarter and led to
three days of lost sales toward the end of that period which
related to inventory baselining. On August 1, 2018, the first day
of our fiscal 2019 third quarter, we commenced usage of the system
for financial reporting and other data inputs, including costing,
order tracking and sales. The ERP implementation was expected to
require significant effort and expense as well as lead to
operational issues amid such a massive undertaking, but the
challenges exceeded what we had anticipated. As a result, we filed
for a delayed reporting of third quarter results to ensure accuracy
while we systematically and manually completed the financial
reporting process. Ultimately, we expect the ERP systems to yield
improved information, operational agility, and inventory and cash
flow management. While we believe we are past the most difficult
and costly period which was our fiscal 2019 third quarter,
implementation and training on the system is expected to continue
over the short-term.
the third quarter we had elevated expenses and revenue was flat
since we were unable to process orders to the extent that reflects
the true global demand that we are otherwise experiencing. We
anticipate a similar although diminished negative impact through at
least May 2019 as we train our workforce on the ERP system. Our
longstanding customers have taken certain orders to our competitors
while committing to return to us, yet there have been a few
instances where we may have lost a customer. Certain orders that
are being placed have been delayed for shipment, which is in part
why our inventory levels remain very high. Initially, we had
elevated our inventory levels to account for temporarily slowed or
faulty workflow information. Inventories at the end of the third
quarter of fiscal 2019 were $46.6 million, nearly $4 million higher
than at the beginning of the fiscal year.
started the fiscal fourth quarter with over $5.0 million in orders
waiting to be cleared and shipped. Our order backlogs historically
have been approximately $3.0 million in the US. The delay in
shipping and revenue recognition caused by our ERP system
implementation essentially reduced reported revenue by an estimated
$2.5 million or nearly 10% of total third quarter revenue, which
would have brought our third quarter revenue growth significantly
higher than only marginal improvement over the prior year period.
Furthermore, many of the international currencies in markets where
we have large operations have declined against the strength of the
U.S. dollar. A blend of these key markets average about a 5%
decline as compared with last year, so our international sales as
consolidated and reported do not adequately reflect the organic
growth we are experiencing from around the world. On a reported
basis in U.S. dollars, third quarter international sales of $12.2
million increased 10% from the prior year.
global market for personal protective apparel is strong and the
Lakeland brand has been gaining momentum, despite the shortcoming
as we have reported in our third quarter results. We have been
strategically deploying our cash to position the Company for
continued growth. Cash used since the beginning of the fiscal year
include planned investments in manufacturing operations in Vietnam
and India as well as the Company's upgraded information
technology system deployment and our digital marketing evolution.
We now have a manufacturing staff of approximately 430 in Vietnam
and approximately 130 in India. Earlier today we announced the
launching of nine new websites for our global operating regions.
Additionally, we invested nearly $2.2 million in equipment for use
in Mexico, India, Vietnam, and China as we prepare for continued
global demand. As we work through the next six months until our ERP
implementation and training has been completed, we are excited by
our prospects for top and bottom line growth.
Fiscal 2019 Third Quarter Financial Results
sales were $24.0 million for the third quarters of fiscal 2019 and
2018. On a consolidated basis for the third quarter of fiscal 2019,