Lakeland Industries, Inc. Reports Fiscal 2021 Third Quarter Financial Results
Lakeland Industries (NASDAQ:LAKE) reported a record third quarter for fiscal 2021, with net sales of $41.5 million, marking a 50.9% increase year-over-year. Gross profit reached $21.7 million, up 133% from the prior year, resulting in a gross margin of 52.3%, the highest in company history. Operating income soared to $12.5 million, a 594% increase, while net income was $9.3 million or $1.16 per share. Cash reserves grew by 175% to $40.2 million. The spike in demand, particularly for COVID-19 related products, was pivotal to these results, alongside ongoing improvements in operational efficiency.
- Net sales increased by 50.9% year-over-year to $41.5 million.
- Gross profit reached $21.7 million, an increase of 133% from the prior year.
- Gross margin reached 52.3%, the highest in company history.
- Operating profit soared to $12.5 million, a 594% increase from the previous year.
- Net income rose to $9.3 million, or $1.16 per share, compared to $1.1 million or $0.14 per share in the prior year.
- Cash reserves increased by 175% to $40.2 million.
- Traditional industrial business revenues declined by approximately 19% compared to pre-pandemic levels.
- Operating expenses rose by 23.2% to $9.2 million, driven by increased shipping and commissions.
- Sustainable Improvements and Continued COVID 19 Demand Lead to Third Quarter Records
- for Revenues, Gross Margin, Operating Income, and Free Cash Flow
- Revenues from International Markets Outpace Domestic Growth
- Gross Margins of
52.3% Highest Level in Company History, up from49.5% in 2Q21 - Operating Leverage Drives Significantly Improved EBITDA and Free Cash Flow
- Cash Jumps to
$40.2 Million at 10/31/20, Up15% from End of 2Q21
DECATUR, AL / ACCESSWIRE / December 10, 2020 / Lakeland Industries, Inc. (NASDAQ:LAKE) (the "Company" or "Lakeland"), a leading global manufacturer of protective clothing for industry, healthcare and to first responders on the federal, state and local levels, today announced financial results for its fiscal 2021 third quarter ended October 31, 2020.
Fiscal 2021 Third Quarter Financial Results Highlights
- Net sales for 3Q21 of
$41.5 million , up50.9% as compared with 3Q20 of$27.5 million - Gross profit for 3Q21 of
$21.7 million , up133% as compared with 3Q20 of$9.3 million - Gross margin as a percentage of net sales in 3Q21 was
52.3% , compared to33.9% in 3Q20 - Operating expenses of
$9.2 million in 3Q21, up from$7.5 million in 3Q20; 3Q21 includes$0.7 million in non-cash expense for recapture of stock-based compensation dating back to 2018 - Operating profit of
$12.5 million in 3Q21, up594% from$1.8 million in 3Q20 - Net income of
$9.3 million or$1.16 per basic common share in 3Q21, up from$1.1 million or$0.14 per basic common share in 3Q20 - Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)* of
$13.9 million in 3Q21, up632% from$1.9 million in 3Q20 - Capital expenditures for 3Q21 of
$0.6 million , up from$0.1 million in 3Q20 - Cash of
$40.2 million at 10/31/20, up175% from 1/31/20 - Current ratio improves to 6.70:1 at 10/31/20, up
8.9% from 1/31/20 - Company continues to have no debt
- Stockholders' equity of
$113.6 million at 10/31/20, up$28.5 million from$85.1 million at 1/31/20
* EBITDA is a non-GAAP financial measure. Reconciliation is provided in the tables of this press release.
Management's Comments
Charles D. Roberson, President and Chief Executive Officer of Lakeland Industries, stated, "The third quarter of fiscal 2021 for Lakeland further improved upon the record performance levels achieved earlier this year. We have demonstrated our ability to flex our global manufacturing capacity while supporting PPE demand around the world during these critical times. The Lakeland brand is strengthening as our reputation for reliable delivery and quality continues to grow, as evidenced by the unprecedented number of container shipment orders placed with us from new customers and existing customers alike. While we set a new standard of excellence for PPE manufacturers at the end of our second quarter, we have now exceeded that measure. More importantly we believe we will exit the COVID 19 era with critical market share gains and an enhanced visibility into sustainable improvements that are expected to significantly elevate our business performance from what was reported before the pandemic set in.
"Global economic activity began recovering in the third quarter which led to our traditional industrial business growing from the second quarter even though our base revenues remain below pre-pandemic levels. Our traditional core business touching industrial markets globally was off by an estimated
"Demand for disposable and chemical garments remains heightened, although the supply of product from manufacturers in key markets like the US has been catching up with demand. Pricing and order flow are expected to remain elevated from pre-pandemic levels but are expected to decline moderately through mid-2021. Lakeland grew total U.S. revenues by
"We believe a new era of institutional cleaning and the need for PPE has begun to emerge and may provide for a large, permanent market opportunity long after the pandemic has subsided. Stockpiling requests for disposable and chemical apparel by government entities in the U.S., Europe and other developing countries have already been made public. Because we own our manufacturing and continue to invest in facilities, technology, processes and personnel, we have gained significant ground and are poised to further benefit from favorable market dynamics. This is evidenced by the substantial number of new customers we have amassed over the past 9 months and the significant increase in container-sized orders in the third quarter as we could deliver product when many others could not.
"Container shipments, higher consolidated volume, manufacturing efficiencies, and product mix management were the primary drivers of our gross profit as a percentage of sales, setting a company record in the third quarter. We have learned a lot during the past four quarters which we believe will provide for sustainable growth in revenue and profitability. Our strategy for elevating gross margins is making a lasting impact. Critical to this program has been a reduction of underperforming SKUs and the launch of new, higher margin product lines for Critical Environment and High Performance Wear. These higher value, advanced product lines are unique in the industry, so we expect less global competition as compared to lower priced traditional disposable garments. The target markets for both product lines are insensitive to economic trends and independent of Covid 19 response and therefore should serve as a solid platform for expansion of our core business product offering well into the future.
"Our growth plans call for continued investments to increase production capacity of new product lines in Vietnam, India and Mexico. To provide further manufacturing resiliency and flexibility, the capacity expansions will be fungible between our primary product lines for disposable, chemical and Critical Environment. This will complement existing methods of factory floor efficiencies which has been aided by our ERP system and data-centric planning processes. The ERP system has thus far been deployed within our US operations, with the international implementation spread over the coming quarters and expected to deliver incremental performance enhancements. Capital investments were
"In addition to these capital investments, we have bolstered our management team with the hiring of a global supply chain executive. This addition to our leadership team will help facilitate the growth of our business and our continued expansion. Amid these additions, our management of expenses remains impactful. On a GAAP basis, our operating profit as a percentage of sales set a record at
"While delivering record financial performance, we are most grateful for the continued health and safety of our global team and their ability to service our growing base of customers. Lakeland's business has benefited from the COVID 19 pandemic which has been leveraged to drive sustainable improvements in our base business and build a war chest of cash in excess of
Fiscal 2021 Third Quarter Financial Results
Net sales were
On a consolidated basis for the third quarter of fiscal 2021, domestic sales were
Similar to the fiscal second quarter, during the third quarter the Company experienced significant growth in disposable and chemical garments primarily relating to COVID 19 demand and as a result of cultivating new industrial customers who could not procure these products from incumbent manufacturers or their subcontractors. In addition, international sales accelerated from a resurgence of a second COVID wave, while global economic activity picked up from the first half of the fiscal year as many businesses, countries and industrial vertical markets eased earlier imposed temporary closures and lockdowns. Disposable and chemical garment sales increased year-over-year and sequentially from the second quarter of fiscal 2021 in all of the Company's geographic markets. Lakeland's ability to service this increased demand was supported by 100 additional workers hired in its Vietnam facility in addition to improved manufacturing efficiencies. Foreign exchange currency translations positively impacted sales in the UK/Europe, Canada, and China as reported on a consolidated basis in U.S. dollars by approximately
Gross profit of
Operating expenses increased
Lakeland reported operating profit of
Income tax expense consists of federal, state and foreign income taxes. Income tax expense was
The Company reported net income of
As of October 31, 2020, Lakeland had cash and cash equivalents of approximately
Working capital at October 31, 2020 was
The Company incurred capital expenditures of approximately
During the three-month period ended October 31, 2020, no shares were purchased as part of the Company's
Financial Results Conference Call
Lakeland will host a conference call at 4:30 pm eastern time today to discuss the Company's fiscal 2021 third quarter financial results. The conference call will be hosted by Charles D. Roberson, President and CEO, and Allen E. Dillard, Chief Financial Officer. Investors can listen to the call by dialing 877-407-8033 (Domestic) or 201-689-8033 (International). For a replay of this call through December 17, 2020, dial 877-481-4010 (Domestic) or 919-882-2331 (International), Pass Code 39050.
About Lakeland Industries, Inc.:
We manufacture and sell a comprehensive line of industrial protective clothing and accessories for the industrial and public protective clothing market. Our products are sold globally by our in-house sales teams, our customer service group, and authorized independent sales representatives to a network of over 1,600 global safety and industrial supply distributors. Our authorized distributors supply end users, such as integrated oil, chemical/petrochemical, automobile, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical, and high technology electronics manufacturers, as well as scientific, medical laboratories and the utilities industry. In addition, we supply federal, state and local governmental agencies and departments, such as fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control. Internationally, we sell to a mixture of end users directly, and to industrial distributors depending on the particular country and market. Sales are made to more than 50 countries, the majority of which were into the United States, China, the European Economic Community ("EEC"), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Uruguay and Southeast Asia.
For more information concerning Lakeland, please visit the Company online at www.lakeland.com.
Contacts:
Lakeland Industries, Inc.
256-445-4000
Allen Dillard
aedillard@lakeland.com
Darrow Associates
512-551-9296
Jordan Darrow
jdarrow@darrowir.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 Free Cash Flow. 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.
(tables follow)
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(
ASSETS | October 31, | January 31, | ||||||
| 2020 | 2020 | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 40,186 | $ | 14,606 | ||||
Accounts receivable, net of allowance for doubtful accounts of | 26,750 | 17,702 | ||||||
Inventories | 44,978 | 44,238 | ||||||
Prepaid VAT and other taxes | 1,238 | 1,228 | ||||||
Other current assets | 2,805 | 2,033 | ||||||
Total current assets | 115,957 | 79,807 | ||||||
Property and equipment, net | 10,023 | 10,113 | ||||||
Operating leases right-of-use assets | 2,266 | 2,244 | ||||||
Deferred tax assets | 2,744 | 5,939 | ||||||
Prepaid VAT and other taxes | 292 | 333 | ||||||
Other assets | 99 | 98 | ||||||
Goodwill | 871 | 871 | ||||||
Total assets | $ | 132,252 | $ | 99,405 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 8,066 | $ | 7,204 | ||||
Accrued compensation and benefits | 3,629 | 1,300 | ||||||
Other accrued expenses | 4,685 | 2,445 | ||||||
Current maturity of long-term debt | ----- | 1,155 | ||||||
Current portion of operating lease liabilities | 925 | 835 | ||||||
Total current liabilities | 17,305 | 12,939 | ||||||
Long-term portion of operating lease liabilities | 1,326 | 1,414 | ||||||
Total liabilities | 18,631 | 14,353 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | ----- | ----- | ||||||
Common stock, Issued 8,491,260 and 8,481,665; outstanding 7,982,018 and 7,972,423 at October 31, 2020 and January 31, 2020, respectively | 85 | 85 | ||||||
Treasury stock, at cost; 509,242 shares | (5,023 | ) | (5,023 | ) | ||||
Additional paid-in capital | 76,278 | 75,171 | ||||||
Retained earnings | 44,818 | 17,581 | ||||||
Accumulated other comprehensive loss | (2,537 | ) | (2,762 | ) | ||||
Total stockholders' equity | 113,621 | 85,052 | ||||||
Total liabilities and stockholders' equity | $ | 132,252 | $ | 99,405 | ||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
Net sales | $ | 41,451 | $ | 27,464 | $ | 122,054 | $ | 79,620 | ||||||||
Cost of goods sold | 19,763 | 18,166 | 60,882 | 52,349 | ||||||||||||
Gross profit | 21,688 | 9,298 | 61,172 | 27,271 | ||||||||||||
Operating expenses | 9,195 | 7,464 | 26,575 | 23,114 | ||||||||||||
Operating profit | 12,493 | 1,834 | 34,597 | 4,157 | ||||||||||||
Other income (expense), net | 12 | (9 | ) | 49 | (33 | ) | ||||||||||
Interest expense | (4 | ) | (26 | ) | (23 | ) | (98 | ) | ||||||||
Income before taxes | 12,501 | 1,799 | 34,623 | 4,026 | ||||||||||||
Income tax expense | 3,237 | 653 | 7,386 | 1,950 | ||||||||||||
Net income | $ | 9,264 | $ | 1,146 | $ | 27,237 | $ | 2,076 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 1.16 | $ | 0.14 | $ | 3.41 | $ | 0.26 | ||||||||
Diluted | $ | 1.14 | $ | 0.14 | $ | 3.36 | $ | 0.26 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 7,979,902 | 8,004,640 | 7,976,228 | 8,013,383 | ||||||||||||
Diluted | 8,123,848 | 8,035,929 | 8,110,435 | 8,044,159 | ||||||||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
Reconciliation to GAAP Results
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
Net sales | $ | 41,451 | $ | 27,464 | $ | 122,054 | $ | 79,620 | ||||||||
Year over year growth | 50.9 | % | 14.4 | % | 53.3 | % | 7.6 | % | ||||||||
Gross profit | 21,688 | 9,298 | 61,172 | 27,271 | ||||||||||||
Gross profit % | 52.3 | % | 33.9 | % | 50.1 | % | 34.3 | % | ||||||||
Operating expenses | 9,195 | 7,464 | 26,575 | 23,114 | ||||||||||||
Operating expenses as a percentage of sales | 22.2 | % | 27.2 | % | 21.8 | % | 29.0 | % | ||||||||
Operating profit | 12,493 | 1,834 | 34,597 | 4,157 | ||||||||||||
Operating income as a percentage of sales | 30.1 | % | 6.7 | % | 28.3 | % | 5.2 | % | ||||||||
Interest expense | (4 | ) | (26 | ) | (23 | ) | (98 | ) | ||||||||
Other income net | 12 | 9 | 49 | (33 | ) | |||||||||||
Income before taxes | 12,501 | 1,799 | 34,623 | 4,026 | ||||||||||||
Income tax expense | 3,237 | 653 | 7,386 | 1,950 | ||||||||||||
Net income | $ | 9,264 | $ | 1,146 | $ | 27,237 | $ | 2,076 | ||||||||
Weighted average shares for EPS-Basic | 7,980 | 8,005 | 7,976 | 8,013 | ||||||||||||
Net income per share | $ | 1.16 | $ | 0.14 | $ | 3.41 | $ | 0.26 | ||||||||
Operating income | $ | 12,493 | $ | 1,834 | $ | 34,597 | $ | 4,157 | ||||||||
Depreciation and amortization | 491 | 430 | 1,425 | 1,267 | ||||||||||||
EBITDA | 12,984 | 2,264 | 36,022 | 5,424 | ||||||||||||
Stock-based compensation | 854 | (332 | ) | 1,263 | (583 | ) | ||||||||||
Adjusted EBITDA | $ | 13,838 | 1,932 | $ | 37,285 | 4,841 | ||||||||||
Cash paid for taxes (foreign) | 650 | 271 | 2,376 | 1,202 | ||||||||||||
Capital expenditures | 585 | 104 | 1,325 | 689 | ||||||||||||
Free cash flow | $ | 12,603 | $ | 1,557 | $ | 33,584 | $ | 2,950 | ||||||||
TTM Adjusted EBITDA | $ | 39,562 | $ | 3,904 | $ | 39,562 | $ | 3,904 | ||||||||
TTM cash paid for taxes (foreign) | 2,874 | 1,543 | 2,874 | 1,543 | ||||||||||||
TTM capital expenditures | 1,669 | 1,565 | 1,669 | 1,565 | ||||||||||||
TTM free cash flow | $ | 35,019 | $ | 796 | $ | 35,019 | $ | 796 | ||||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
Reconciliation of Non-GAAP Results
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
Net Income to EBITDA | ||||||||||||||||
Net Income | $ | 9,264 | $ | 1,146 | $ | 27,237 | $ | 2,076 | ||||||||
Interest | 4 | 26 | 23 | 98 | ||||||||||||
Taxes | 3,237 | 653 | 7,386 | 1,950 | ||||||||||||
Depreciation and amortization | 491 | 430 | 1,425 | 1,267 | ||||||||||||
Other income (expense) | 12 | (9 | ) | 49 | (33 | ) | ||||||||||
EBITDA | $ | 12,984 | $ | 2,264 | $ | 36,022 | $ | 5,424 | ||||||||
EBITDA to Adjusted EBITDA | ||||||||||||||||
(excluding non-cash expenses) | ||||||||||||||||
Equity compensation | $ | 854 | $ | (332 | ) | $ | 1,263 | $ | (583 | ) | ||||||
Adjusted EBITDA | $ | 13,838 | $ | 1,932 | $ | 37,285 | $ | 4,841 | ||||||||
Cash paid for taxes (foreign) | 650 | 271 | 2,376 | 1,202 | ||||||||||||
Capital expenditures | 585 | 104 | 1,325 | 689 | ||||||||||||
Free cash flow | $ | 12,603 | $ | 1,557 | $ | 33,584 | $ | 2,950 | ||||||||
SOURCE: Lakeland Industries, Inc.
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