Lakeland Industries, Inc. Reports Fiscal 2022 Second Quarter Financial Results
Lakeland Industries (NASDAQ:LAKE) reported fiscal 2022 second quarter results with net sales of $27.5 million, a decline from $35.0 million in 2Q21. COVID-19 related sales dropped to approximately $3.5 million, down from $14.0 million a year prior. Gross profit decreased to $12.7 million with a gross margin of 46.3%. Net income fell to $2.6 million or $0.32 per share, significantly lower than $9.3 million or $1.17 per share in the same period last year. Despite challenges, the company reported cash of $59.8 million and no debt, indicating solid financial health.
- Cash of $59.8 million at July 31, 2021, up from $52.6 million at January 31, 2021.
- No debt at the end of the second quarter with $25 million available under credit facilities.
- Operating income for the first half of fiscal 2022 is $9.8 million, higher than the operating income for the full year in any of the three years before COVID-19.
- Strong current ratio of 7.5:1 at July 31, 2021.
- Net sales of $27.5 million is a decrease from $35.0 million in 2Q21.
- Gross profit declined to $12.7 million from $17.3 million in 2Q21.
- Net income fell to $2.6 million, down from $9.3 million in the same quarter last year.
- Operating profit dropped to $3.9 million compared to $9.8 million in 2Q21.
DECATUR, AL / ACCESSWIRE / September 9, 2021 / 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 2022 second quarter ended July 31, 2021.
Fiscal 2022 Second Quarter Financial Results Highlights
- Net sales for 2Q22 of
$27.5 million , compared with 2Q21 of$35.0 million and 1Q22 of$34.1 million - Traditional industrial demand strengthening
- COVID-19 related sales of approximately
$3.5 million in 2Q22 (as compared with$4.1 million in 1Q22 and$14.0 million in 2Q21) driven by demand from Asia - Overstocking within U.S. distribution channels and freight-out/delivery logistical challenges presented headwinds for 2Q22 revenue; inventory levels increased amid shipping delays
- Increase in High Performance Wear, Fire and Glove product lines in 2Q22 over 2Q21 when PPE demand had already shifted to Disposables (and Chemical) garments for COVID-19
- Gross profit for 2Q22 of
$12.7 million , compared with$17.3 million in 2Q21 - Gross margin as a percentage of net sales in 2Q22 was
46.3% , compared to49.5% in 2Q21 - Operating expenses of
$8.8 million in 2Q22, up from$7.6 million in 2Q21 - Operating profit of
$3.9 million in 2Q22, compared with$9.8 million in 2Q21 - Net income of
$2.6 million or$0.32 per basic share and$0.31 per diluted common share in 2Q22, down from$9.3 million or$1.17 per basic share and$1.16 per diluted common share in 2Q21 - Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA)* of
$4.7 million in 2Q22, compared with$10.5 million in 2Q21 - Capital expenditures for 2Q22 of
$0.4 million , down from$0.5 million in 2Q21 - Solid current ratio of 7.5:1 at 7/31/21
- Cash of
$59.8 million at 7/31/21, up by$7.2 million or14% from beginning of fiscal year - No debt at end of second quarter with up to
$25 million available under credit facilities $5 million in share repurchases completed in 2Q22
* EBITDA and Adjusted EBITDA are non-GAAP financial measures. 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, "Lakeland's performance improvements are proving to be sustainable as we have again delivered on our margin, expense controls and cash management objectives as reported in our fiscal 2022 second quarter financial results. This performance is even more impressive when considering the significant global business challenges presented in the aftermath of the COVID-19 pandemic last year and more recent, unpredictable waves of outbreaks in the U.S. and Southeast Asia.
"Fiscal 2022 second quarter sales of
"Our sales team is successfully implementing our profitability strategies, with second quarter gross margins in excess of
"In the second quarter our sales in the U.S. declined to approximately
"COVID-19 business conditions continue to create both opportunities and challenges, yet its anomalies cannot hide the value generated by the fundamental operational and organizational improvements that Lakeland has made. As previously discussed, the critical elements of our plan include the strengthening of our leadership team, investing in capacity expansion and higher margin product development, and focusing on profit enhancement initiatives led by a new data-centric approach to planning and supporting our addressable markets. All of these elements have come into play this year and helped us to navigate some challenging issues.
"Additions have been made to our executive team and global staff as investments have been directed at ushering in our new operating culture. This provided the insight to shift production capacity from Vietnam to China in a matter of weeks of identifying new demand relating to COVID outbreaks in Southeast Asia and the most optimized cost and tariff structure. At the same time, operating expenses remained under
"We are managing our expenses and maximizing our cash flow. Year to date we have generated over
Fiscal 2022 Second Quarter Financial Results
Net sales were
On a consolidated basis for the second quarter of fiscal 2022, domestic sales were
During fiscal 2021 the Company experienced significant growth in sales of 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, global economic activity picked up beginning with the Company's third quarter of fiscal 2021 as many businesses, countries and industrial vertical markets eased earlier imposed temporary closures and lockdowns and due to a broader economic recovery. The economic recovery has intensified through the fiscal 2022 second quarter, although the pandemic continues to present business challenges for the global economy along with periodic viral resurgences. As a result, certain product lines outside of disposable and chemicals and international segments contributed increases in year-over-year sales for the second quarter, demand in Asia has increased for COVID-19 related purposes, and domestic sales have suffered from both restocking in prior periods and shipping bottlenecks impacting new order deliveries. Foreign exchange currency translations negatively impacted sales in the UK/Europe, Canada, and China as reported on a consolidated basis in U.S. dollars by approximately
Gross profit of
Lakeland reported operating profit of
The Company reported net income of
As of July 31, 2021, Lakeland had cash and cash equivalents of approximately
On February 17, 2021, the Company's Board of Directors approved a new stock repurchase program for the repurchase of up to
Financial Results Conference Call
Lakeland will host a conference call at 4:30 pm eastern time today to discuss the Company's fiscal 2022 second quarter financial results. The conference call will be hosted by Charles D. Roberson, President and Chief Executive Officer, and Allen E. Dillard, Chief Financial Officer. Investors can listen to the call by dialing 844-369-8770 (Domestic) or 862-298-0840 (International). For a replay of this call through September 16, 2021, dial 877-481-4010 (Domestic) or 919-882-2331 (International), Pass Code 42494.
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. In addition to the United States, sales are made to more than 50 foreign countries, the majority of which were into 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," "can," "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, except as may be required by law.
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.
EBITDA is defined as net income plus interest, taxes, depreciation and amortization and other income (expense). Adjusted EBITDA is defined as EBITDA plus equity compensation. Free Cash Flow is defined as net cash provided by operating activities less net cash used in investing activities and foreign cash taxes paid.
For more information on the non-GAAP financial measures, please see the Reconciliation of GAAP Results to non-GAAP Results and Supplemental Information 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 | July 31, | January 31, | ||||||
| 2021 | 2021 | |||||||
| Current assets | ||||||||
Cash and cash equivalents | $ | 59,839 | $ | 52,596 | ||||
Accounts receivable, net of allowance for doubtful accounts of | 15,122 | 21,702 | ||||||
Inventories | 46,973 | 43,833 | ||||||
Prepaid VAT and other taxes | 2,579 | 1,343 | ||||||
Other current assets | 3,520 | 4,134 | ||||||
Total current assets | 128,033 | 123,608 | ||||||
Property and equipment, net | 9,201 | 9,819 | ||||||
Operating leases right-of-use assets | 2,394 | 2,347 | ||||||
Deferred tax assets | 2,062 | 2,839 | ||||||
Other assets | 1,303 | 1,312 | ||||||
Total assets | $ | 142,993 | $ | 139,925 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 10,048 | $ | 7,397 | ||||
Accrued compensation and benefits | 2,601 | 3,902 | ||||||
Other accrued expenses | 1,696 | 1,793 | ||||||
Income tax payable | 1,158 | 1,534 | ||||||
Current portion of operating lease liabilities | 1,069 | 768 | ||||||
Total current liabilities | 16,572 | 15,394 | ||||||
Long-term portion of operating lease liabilities | 1,215 | 1,613 | ||||||
Total liabilities | 17,787 | 17,007 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | - | - | ||||||
Common stock, Issued 8,542,372 and 8,498,457; outstanding 7,805,676 and 7,984,518 at July 31, 2021 and January 31, 2021, respectively | 86 | 85 | ||||||
Treasury stock, at cost; 736,696 and 509,242 shares at July 31, 2021 and January 31, 2021, respectively | (10,017 | ) | (5,023 | ) | ||||
Additional paid-in capital | 76,927 | 76,781 | ||||||
Retained earnings | 59,886 | 52,687 | ||||||
Accumulated other comprehensive loss | (1,676 | ) | (1,612 | ) | ||||
Total stockholders' equity | 125,206 | 122,918 | ||||||
Total liabilities and stockholders' equity | $ | 142,993 | $ | 139,925 | ||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net sales | $ | 27,466 | $ | 35,021 | $ | 61,558 | $ | 80,603 | ||||||||
Cost of goods sold | 14,748 | 17,681 | 34,454 | 41,119 | ||||||||||||
Gross profit | 12,718 | 17,340 | 27,104 | 39,484 | ||||||||||||
Operating expenses | 8,791 | 7,606 | 16,939 | 17,380 | ||||||||||||
Operating profit | 3,927 | 9,734 | 10,165 | 22,104 | ||||||||||||
Other income (expense), net | (1 | ) | 31 | (13 | ) | 37 | ||||||||||
Interest expense | (4 | ) | (2 | ) | (5 | ) | (19 | ) | ||||||||
Income before taxes | 3,922 | 9,763 | 10,147 | 22,122 | ||||||||||||
Income tax expense | 1,364 | 424 | 2,948 | 4,149 | ||||||||||||
Net income | 2,558 | $ | 9,339 | 7,199 | $ | 17,973 | ||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.32 | $ | 1.17 | $ | 0.90 | $ | 2.25 | ||||||||
Diluted | $ | 0.31 | $ | 1.16 | $ | 0.89 | $ | 2.23 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 7,982,995 | 7,976,275 | 7,964,058 | 7,974,370 | ||||||||||||
Diluted | 8,141,107 | 8,079,744 | 8,120,409 | 8,062,318 | ||||||||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
Reconciliation of GAAP Results to Non-GAAP Results
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net Income to EBITDA | ||||||||||||||||
Net Income | $ | 2,558 | $ | 9,339 | $ | 7,199 | $ | 17,973 | ||||||||
Interest | 4 | 2 | 5 | 19 | ||||||||||||
Taxes | 1,364 | 424 | 2,948 | 4,149 | ||||||||||||
Depreciation and amortization | 541 | 481 | 1,040 | 934 | ||||||||||||
Other income (expense) | (1 | ) | 31 | (13 | ) | 37 | ||||||||||
EBITDA | $ | 4,468 | $ | 10,215 | $ | 11,205 | $ | 23,038 | ||||||||
EBITDA to Adjusted EBITDA | ||||||||||||||||
(excluding non-cash expenses) | ||||||||||||||||
EBITDA | $ | 4,468 | $ | 10,215 | $ | 11,205 | $ | 23,038 | ||||||||
Equity compensation | $ | 272 | $ | 246 | $ | 608 | $ | 409 | ||||||||
Adjusted EBITDA | $ | 4,740 | $ | 10,461 | $ | 11,813 | $ | 23,447 | ||||||||
Net Cash Provided by Operating Activities to Free Cash Flow Cash flow provided by operating activities | $ | 4,794 | $ | 12,078 | $ | 13,112 | $ | 22,331 | ||||||||
Capital expenditures | 317 | 546 | 452 | 740 | ||||||||||||
Cash paid for taxes (foreign) | 1,651 | 865 | 2,803 | 1,726 | ||||||||||||
Free cash flow | $ | 2,826 | $ | 10,667 | $ | 9,857 | $ | 19,865 | ||||||||
SOURCE: Lakeland Industries, Inc.
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