Lakeland Industries, Inc. Reports Fiscal 2022 Third Quarter Financial Results
Lakeland Industries reported net sales of $30.0 million for Q3 FY22, reflecting a 9% sequential increase from Q2 but a decline from $41.5 million in Q3 FY21. COVID-19 related sales rose to $6.0 million, driven by demand in Asia. Gross profit decreased to $12.6 million, with margins at 42.1%, down from 52.3% year-over-year. The company maintained operational discipline with operating profit reaching $4.1 million. Lakeland made strategic investments, including $2.8 million in Bodytrak and repurchased shares worth $0.9 million.
- Net sales increased 9% sequentially to $30.0 million.
- COVID-19 related sales rose to $6.0 million, up from $3.5 million in Q2 FY22.
- Operating profit increased to $4.1 million from $3.9 million in Q2 FY22.
- Cash reserves increased to approximately $55.5 million.
- Gross profit decreased to $12.6 million from $21.7 million in Q3 FY21.
- Gross margin fell to 42.1% from 52.3% in the same quarter last year.
- Net income declined to $2.8 million from $9.3 million in Q3 FY21.
HUNTSVILLE, AL / ACCESSWIRE / December 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 third quarter ended October 31, 2021.
Fiscal 2022 Third Quarter Financial Results Highlights
- Net sales for 3Q22 were
$30.0 million , compared with 2Q22 of$27.5 million and 3Q21 of$41.5 million - Traditional industrial activity continues to indicate strengthening demand
- COVID-19 related sales of approximately
$6.0 million in 3Q22 (as compared with$3.5 million in 2Q22 and$14.5 million in 3Q21) driven primarily by demand from Asia - High Performance Wear, High Visibility, and Wovens increase sequentially from 2Q22 to 3Q22
- Gross profit was
$12.6 million in 3Q22, compared to 2Q22 of$12.7 million and$21.7 million in 3Q21 - Gross margin as a percentage of net sales in 3Q22 was
42.1% , compared to46.3% in 2Q22 and52.3% in 3Q21 - Operating expenses were
$8.5 million in 3Q22, down from$8.8 million in 2Q22 and$9.2 million in 3Q21 - Operating profit was
$4.1 million in 3Q22, up from$3.9 million in 2Q22 and down from$12.5 million in 3Q21 - Net income was
$2.8 million in 3Q22, up from$2.6 million in 2Q22 and down from$9.3 million in 3Q21 - Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA)* of
$4.9 million in 3Q22, compared with$4.7 million in 2Q22 and 13.8 million in 3Q21 - In 3Q22 the Company completed a
$2.8 million investment in Bodytrak and funded$0.9 million in share repurchases
* 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, "In our fiscal 2022 third quarter ended October 31, 2021, Lakeland continued to demonstrate the durability of its post-COVID business model delivering strong financial results for the period. Revenues exceeded
"Q3 FY22 saw an unanticipated increase in COVID-19 driven sales that contributed approximately
"The fallout from the pandemic has led to supply chain challenges globally. We have responded by increasing both our finished goods and raw materials inventories to mitigate the threats posed by freight challenges and raw materials availability issues. There have been spot shortages and periodic price increases for raw materials utilized in our High Performance and High Visibility product lines. These are higher margin product lines sold primarily into the U.S. market. These product lines saw reduced sales in prior quarters as a result of the pandemic and will continue to recover as the post-COVD industrial economy improves. Q3 FY22 saw third quarter year-over-year increases in sales of these products as well as certain improvement from Q2 FY22.
"In the third quarter, Lakeland applied the same disciplined approach utilized in our margin preservation and cost control to our capital deployment. We invested in inventories to assure timely delivery of our products to customers, prepare for future waves of virus outbreak, enhance our brand loyalty and reinforce our gross margins which continue running nearly
"During the third quarter, we also invested in our future growth. We continued our work to increase our near shore manufacturing capacity not only in response to COVID related customer demand in North America, but to assure that we have the manufacturing resources we need to attain our organic growth goals. Additionally, we made a small but strategic investment in the future of Lakeland and the safety industry when we invested approximately
"In light of these results and our progress in positioning Lakeland for future growth, we are confident that we will sustain our growth and operational performance going forward."
Fiscal 2022 Third Quarter Financial Results
Net 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 which was partially offset by a decline in traditional industrial spending on these and other protective apparel product lines. A comparison of the fiscal 2022 third quarter to the fiscal 2022 second quarter is provided given the more normalized business environment during these periods, although certain atypical circumstances continue to be experienced. While 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, periodic viral resurgences of COVID-19 and variants has led to isolated increases in demand. Most notable was the increased demand in part of southeast Asia during the fiscal 2022 third quarter. Elsewhere, the economic recovery intensified through October 31, 2021 from the beginning of the fiscal year, although the pandemic and its aftermath continue to present business challenges for the global economy. As a result, certain product lines outside of disposable and chemicals and international segments contributed increases in year-over-year sales for the third quarter, demand in Asia has increased for COVID-19 related purposes, and domestic sales have suffered from both restocking in prior periods and supply chain limitations on certain raw materials impacting new orders for non-disposable/chemical product lines. 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
On a consolidated basis for the third quarter of fiscal 2022, domestic sales were
Gross profit of
Lakeland reported operating profit of
The Company reported net income of
As of October 31, 2021, Lakeland had cash and cash equivalents of approximately
During the fiscal 2021 third quarter, the Company repurchased approximately
Financial Results Conference Call
Lakeland will host a conference call at 4:30 pm eastern time today to discuss the Company's fiscal 2022 third 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 888-506-0062 (Domestic) or 973-528-0011 (International). For a replay of this call through December 16, 2021, dial 877-481-4010 (Domestic) or 919-882-2331 (International), Pass Code 43833.
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.
256-445-4100
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 | October 31, | January 31, | ||||||
| 2021 | 2021 | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 55,533 | $ | 52,596 | ||||
Accounts receivable, net of allowance for doubtful accounts of | 16,879 | 21,702 | ||||||
Inventories | 47,042 | 43,833 | ||||||
Prepaid VAT and other taxes | 2,322 | 1,343 | ||||||
Other current assets | 3,113 | 4,134 | ||||||
Total current assets | 124,889 | 123,608 | ||||||
Property and equipment, net | 8,878 | 9,819 | ||||||
Operating leases right-of-use assets | 5,356 | 2,347 | ||||||
Deferred tax assets | 2,048 | 2,839 | ||||||
Other assets | 1,198 | 1,312 | ||||||
Investments | 2,783 | - | ||||||
Total assets | $ | 145,152 | $ | 139,925 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 6,426 | $ | 7,397 | ||||
Accrued compensation and benefits | 3,030 | 3,902 | ||||||
Other accrued expenses | 2,192 | 1,793 | ||||||
Income tax payable | 913 | 1,534 | ||||||
Current portion of operating lease liabilities | 1,311 | 768 | ||||||
Total current liabilities | 13,872 | 15,394 | ||||||
Long-term portion of operating lease liabilities | 3,849 | 1,613 | ||||||
Total liabilities | 17,721 | 17,007 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | - | - | ||||||
Common stock, Issued 8,555,672 and 8,498,457; outstanding 7,775,406 and 7,984,518 at October 31, 2021 and January 31, 2021, respectively | 86 | 85 | ||||||
Treasury stock, at cost; 780,266 and 509,242 shares at October 31, 2021 and January 31, 2021, respectively | (10,910 | ) | (5,023 | ) | ||||
Additional paid-in capital | 77,184 | 76,781 | ||||||
Retained earnings | 62,678 | 52,687 | ||||||
Accumulated other comprehensive loss | (1,607 | ) | (1,612 | ) | ||||
Total stockholders' equity | 127,431 | 122,918 | ||||||
Total liabilities and stockholders' equity | $ | 145,152 | $ | 139,925 | ||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net sales | $ | 30,032 | $ | 41,451 | $ | 91,590 | $ | 122,054 | ||||||||
Cost of goods sold | 17,399 | 19,763 | 51,853 | 60,882 | ||||||||||||
Gross profit | 12,633 | 21,688 | 39,737 | 61,172 | ||||||||||||
Operating expenses | 8,544 | 9,195 | 25,483 | 26,575 | ||||||||||||
Operating profit | 4,089 | 12,493 | 14,254 | 34,597 | ||||||||||||
Other income (expense), net | (1 | ) | 12 | (14 | ) | 49 | ||||||||||
Interest expense | (2 | ) | (4 | ) | (7 | ) | (23 | ) | ||||||||
Income before taxes | 4,086 | 12,501 | 14,233 | 34,623 | ||||||||||||
Income tax expense | 1,294 | 3,237 | 4,242 | 7,386 | ||||||||||||
Net income | $ | 2,792 | $ | 9,264 | $ | 9,991 | $ | 27,237 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.36 | $ | 1.16 | $ | 1.26 | $ | 3.41 | ||||||||
Diluted | $ | 0.35 | $ | 1.14 | $ | 1.23 | $ | 3.36 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 7,849,591 | 7,979,902 | 7,942,162 | 7,976,228 | ||||||||||||
Diluted | 7,998,965 | 8,123,848 | 8,095,025 | 8,110,435 | ||||||||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
Reconciliation of GAAP Results to Non-GAAP Results
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net Income to EBITDA | ||||||||||||||||
Net Income | $ | 2,792 | $ | 9,264 | $ | 9,991 | $ | 27,237 | ||||||||
Interest | 2 | 4 | 7 | 23 | ||||||||||||
Taxes | 1,294 | 3,237 | 4,242 | 7,386 | ||||||||||||
Depreciation and amortization | 430 | 491 | 1,470 | 1,425 | ||||||||||||
Other income (expense) | (1 | ) | 12 | (14 | ) | 49 | ||||||||||
EBITDA | $ | 4,519 | $ | 12,984 | $ | 15,724 | $ | 36,022 | ||||||||
EBITDA to Adjusted EBITDA | ||||||||||||||||
(excluding non-cash expenses) | ||||||||||||||||
EBITDA | $ | 4,519 | $ | 12,984 | $ | 15,724 | $ | 36,022 | ||||||||
Equity compensation | 418 | 854 | 1,025 | 1,263 | ||||||||||||
Adjusted EBITDA | $ | 4,937 | $ | 13,838 | $ | 16,749 | $ | 37,285 | ||||||||
| Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||||
Cash flow (used in) provided by operating activities | $ | (519 | ) | $ | 5,695 | $ | 12,591 | $ | 28,026 | |||||||
Capital expenditures | 119 | 585 | 581 | 1,325 | ||||||||||||
Cash paid for taxes (foreign) | 1,414 | 650 | 4,217 | 2,376 | ||||||||||||
Free cash flow | $ | (2,052 | ) | $ | 4,460 | $ | 7,793 | $ | 24,325 | |||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
Supplemental Information
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net sales | $ | 30,032 | $ | 41,451 | $ | 91,590 | $ | 122,054 | ||||||||
Year over year change | (27.5 | )% | 50.9 | % | (25.0 | )% | 53.3 | % | ||||||||
Gross profit | 12,633 | 21,688 | 39,737 | 61,172 | ||||||||||||
Gross profit % | 42.1 | % | 52.3 | % | 43.4 | % | 50.1 | % | ||||||||
Operating expenses | 8,544 | 9,195 | 25,483 | 26,575 | ||||||||||||
Operating expenses as a percentage of sales | 28.4 | % | 22.2 | % | 27.8 | % | 21.8 | % | ||||||||
Operating income | 4,089 | 12,493 | 14,254 | 34,597 | ||||||||||||
Operating income as a percentage of sales | 13.6 | % | 30.1 | % | 15.6 | % | 28.3 | % | ||||||||
Interest expense | (2 | ) | (4 | ) | (7 | ) | (23 | ) | ||||||||
Other income (expense), net | (1 | ) | 12 | (14 | ) | 49 | ||||||||||
Income before taxes | 4,086 | 12,501 | 14,233 | 34,623 | ||||||||||||
Income tax expense | 1,294 | 3,237 | 4,242 | 7,386 | ||||||||||||
Net income | $ | 2,792 | $ | 9,264 | $ | 9,991 | $ | 27,237 | ||||||||
Weighted average shares for EPS-Basic | 7,850 | 7,980 | 7,942 | 7,976 | ||||||||||||
Net income per share | $ | 0.36 | $ | 1.16 | $ | 1.26 | $ | 3.41 | ||||||||
Operating income | $ | 4,089 | $ | 12,493 | $ | 14,254 | $ | 34,597 | ||||||||
Depreciation and amortization | 430 | 491 | 1,470 | 1,425 | ||||||||||||
EBITDA | 4,519 | 12,984 | 15,724 | 36,022 | ||||||||||||
Equity compensation | 418 | 854 | 1,025 | 1,263 | ||||||||||||
Adjusted EBITDA | $ | 4,937 | $ | 13,838 | $ | 16,749 | $ | 37,285 | ||||||||
SOURCE: Lakeland Industries, Inc.
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