Lakeland Industries, Inc. Reports Fiscal 2023 Fourth Quarter and Full Year Financial Results
Lakeland Industries (NASDAQ: LAKE) reported fiscal 2023 net sales of $112.8 million, a decline of $5.6 million from the previous year. The gross margin decreased to 40.6% compared to 43.0% in fiscal 2022. In the fourth quarter, net sales reached $29.0 million, up from $26.8 million year-over-year. Key factors affecting performance included declining sales in Asia due to COVID-related shutdowns and economic conditions in Europe. The company reported a net income of $1.9 million or $0.25 per share, significantly lower than the prior year's $11.4 million or $1.44 per share. Despite these challenges, Lakeland is optimistic about growth in fiscal 2024, driven by strategic initiatives and geographic diversification.
- Fourth quarter net sales increased to $29.0 million from $26.8 million year-over-year.
- Cash and cash equivalents of approximately $24.6 million with no debt as of January 31, 2023.
- Management expects sales growth to resume in Asia as COVID restrictions ease.
- Fiscal 2023 net sales decreased by $5.6 million from fiscal 2022.
- Gross margin fell to 40.6% from 43.0% in the previous year.
- Net income dropped to $1.9 million from $11.4 million in fiscal 2022.
Fiscal 2023 net sales of
Expects continued momentum and growth in fiscal 2024
HUNTSVILLE, AL / ACCESSWIRE / April 13, 2023 / Lakeland Industries, Inc. (NASDAQ:LAKE) (the "Company" or "Lakeland"), a leading global manufacturer of protective clothing for industry, healthcare and first responders on the federal, state and local levels, today announced financial results for its fiscal 2023 fourth quarter and full year ended January 31, 2023.
Fiscal 2023 Fourth Quarter Financial Results Highlights
Net sales for the fourth quarter of fiscal year 2023 were
Fiscal 2023 Full Year Financial Results Highlights
Net sales for fiscal year 2023 were
Lakeland ended the quarter with cash and cash equivalents of approximately
* EBITDA and Adjusted EBITDA are non-GAAP financial measures. Reconciliations are provided in the tables of this press release.
Management Comments
"We were generally pleased with our fiscal fourth quarter results, which benefited from strengthening industrial demand, particularly within the U.S. oil and gas sector, as turnaround activity has begun to emerge, as well as the inclusion of contributions from recently acquired Eagle Technical Products," said Charlie Roberson, President and Chief Executive Officer of Lakeland Industries. "We were happy to see the increase in our North American sales for the quarter and fiscal year, and we will continue to build on this momentum. We expect sales growth to resume in Asia as China emerges from its zero-COVID policy and returns to normal buying patterns. As expected, our quarterly gross margin performance was affected by temporary price concessions from targeted reductions in finished goods inventory and the inclusion of Eagle's products on our platform, some of which carry lower gross margins, as well as the typical seasonal product mix shift to disposable products across our global markets this time of year."
"With that said, I am proud of the significant progress we made on key strategic initiatives this quarter, particularly our efforts to expand our global manufacturing operations in Mexico, Vietnam, and India, and the continued ramp-up of our fire and high-performance product lines. These initiatives benefit Lakeland's competitive positioning within strategic, higher-value end markets and ultimately enhance our operating model. Moving forward, we are highly focused on our various manufacturing, sales, and cost structure initiatives as we continue to analyze the optimal allocation of human and technical assets, with the end goal of improving our top and bottom-line results."
Roberson concluded, "Looking to fiscal 2024 and beyond, we believe we are well equipped to deliver continued growth, driven by our strong product portfolio, end market and geographic diversity, financial strength, and continued focus on operational improvements. We are strategically focused on growing revenues and our broader end markets, as well as maintaining strong levels of profitability and improving cash flows. Despite the potential for increasing macroeconomic headwinds such as a second-half recession in the U.S., we are confident in our ability to achieve our previously stated three-to-five-year growth targets."
Roger Shannon, Lakeland's Chief Financial Officer, added, "During the fiscal fourth quarter, Lakeland made progress on its goal to reduce finished goods inventory. However, the capital realized from steps taken this quarter as part of this ongoing initiative were offset by an increase in raw materials and inventory acquired through the acquisition of Eagle Technical Products. We expect to continue to reduce disposable inventory levels in the coming quarters, as Lakeland is committed to shifting its resources into higher-value products and markets. While certain pricing levers may be utilized, these efforts will be highly targeted and recoverable."
"For the full fiscal year, we repurchased
Fiscal 2023 Fourth Quarter Financial Results
Net sales were
On a consolidated basis for the fourth quarter of fiscal year 2023, domestic sales were
Gross profit of
Lakeland reported operating profit of
The Company reported net income of
EBITDA for the fourth quarter of fiscal 2023 was
During the fourth quarter of fiscal year 2023, the Company did not repurchase common stock under its stock repurchase program. At January 31, 2023, approximately
For fiscal year 2023, the Company's effective tax rate was
Strategic Priorities for Fiscal Year 2024
- Deliver continued revenue growth in strategic markets in line with the Company's three-to-five-year targets
- Execute a strategic shift of sales and manufacturing resources to higher-value products and markets, including the successful integration of fire turnout gear product design and sales teams with Eagle Technical Products
- Complete ongoing investments in Company's global manufacturing footprint, with a focus on high-margin product lines
Financial Results Conference Call
Lakeland will host a conference call at 4:30 pm Eastern time today to discuss the Company's fiscal 2023 fourth quarter and full-year financial results. The conference call will be hosted by Charlie Roberson, President and Chief Executive Officer, and Roger Shannon, Chief Financial Officer. Investors can listen to the call by dialing 877-545-0523 (Domestic) or 973-528-0016 (International), Pass Code 188581. For a replay of this call through April 20, 2023, dial 877-481-4010 (Domestic) or 919-882-2331 (International), Pass Code 47951.
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, transportation, 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 into more than 50 foreign countries, the majority of which were into China, countries within the European Economic Community ("EEC"), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Uruguay, Middle East and countries within Southeast Asia.
For more information concerning Lakeland, please visit the Company online at www.lakeland.com.
Contacts:
Lakeland Industries, Inc.
256-600-1390
Roger Shannon
rdshannon@lakeland.com
Alpha IR Group
312-445-2870
Robert Winters or Stephen Poe
LAKE@alpha-ir.com
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995
This press release contains estimates, predictions, opinions, goals and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company's predictions or expectations of future business or financial performance as well as its goals and objectives for future operations, financial and business trends, business prospects, and management's expectations for earnings, revenues, expenses, inventory levels, capital levels, liquidity levels, or other future financial or business performance, strategies or expectations. 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. 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. 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. With respect to our previously stated three-to-five-year goals of core market growth, gross margin levels, and free cash flow generation, such metrics are goals, not projections or guidance, and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management; actual results will vary, and those variations may be material. 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 in this press release: EBITDA and Adjusted EBITDA. 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 these measures 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.
(Financial Tables Follow)
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, 2023 and 2022
(Preliminary and unaudited)
(
ASSETS | ||||||||
Current assets | 2023 | 2022 | ||||||
Cash and cash equivalents | $ | 24,639 | $ | 52,719 | ||||
Accounts receivable, net of allowance for doubtful accounts of at January 31, 2023 and 2022, respectively | 17,296 | 14,771 | ||||||
Inventories | 58,176 | 47,711 | ||||||
Prepaid VAT and other taxes | 2,473 | 1,675 | ||||||
Other current assets | 4,050 | 3,770 | ||||||
Total current assets | 106,634 | 120,646 | ||||||
Property and equipment, net | 9,140 | 8,714 | ||||||
Operating leases right-of-use assets | 5,472 | 5,296 | ||||||
Deferred tax assets | 1,721 | 2,072 | ||||||
Other assets | 100 | 490 | ||||||
Goodwill and intangibles | 14,515 | 871 | ||||||
Investments | 5,354 | 2,704 | ||||||
Total assets | $ | 142,936 | $ | 140,793 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 6,558 | $ | 5,855 | ||||
Accrued compensation and benefits | 2,522 | 3,225 | ||||||
Other accrued expenses | 4,068 | 1,372 | ||||||
Income tax payable | 609 | 321 | ||||||
Short term borrowings | 405 | ----- | ||||||
Accrued earnout agreement | 3,182 | ----- | ||||||
Current portion of operating lease liability | 1,253 | 1,242 | ||||||
Total current liabilities | 18,597 | 12,015 | ||||||
Deferred income taxes | 769 | ---- | ||||||
Long-term portion of operating lease liability | 3,580 | 3,678 | ||||||
Total liabilities | 22,946 | 15,693 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | ----- | ----- | ||||||
Common stock, Issued 8,655,699 and 8,555,672; outstanding 7,325,005 and 7,615,867 at January 31, 2023 and 2022, respectively | 87 | 86 | ||||||
Treasury stock, at cost; 1,330,694 and 939,705 shares at January 31, 2023 and 2022, respectively | (19,646 | ) | (14,206 | ) | ||||
Additional paid-in capital | 78,475 | 77,826 | ||||||
Retained earnings | 64,765 | 62,892 | ||||||
Accumulated other comprehensive loss | (3,691 | ) | (1,498 | ) | ||||
Total stockholders' equity | 119,990 | 125,100 | ||||||
Total liabilities and stockholders' equity | $ | 142,936 | $ | 140,793 | ||||
Lakeland Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended January 31, 2023 and 2022
(Preliminary and unaudited)
(
| 2023 | 2022 | |||||||
Net sales | $ | 112,846 | $ | 118,386 | ||||
Cost of goods sold | 66,997 | 67,473 | ||||||
Gross profit | 45,849 | 50,913 | ||||||
Operating expenses | 40,308 | 34,866 | ||||||
Operating profit | 5,541 | 16,047 | ||||||
Other income (expense), net | (33 | ) | 121 | |||||
Interest expense | (37 | ) | (15 | ) | ||||
Income before taxes | 5,471 | 16,153 | ||||||
Income tax expense | 3,598 | 4,781 | ||||||
Net income | $ | 1,873 | $ | 11,372 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.25 | $ | 1.44 | ||||
Diluted | $ | 0.24 | $ | 1.41 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 7,562,179 | 7,900,131 | ||||||
Diluted | 7,737,955 | 8,053,876 | ||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
(Preliminary and unaudited)
Supplemental Information
| Year Ended January 31, | ||||||||
| 2023 | 2022 | |||||||
Net sales | $ | 112,846 | $ | 118,386 | ||||
Year over year change | (4.7 | )% | (25.5 | )% | ||||
Gross profit | 45,849 | 50,913 | ||||||
Gross profit % | 40.6 | % | 43.0 | % | ||||
Operating expenses | 40,308 | 34,866 | ||||||
Operating expenses as a percentage of sales | 35.7 | % | 29.5 | % | ||||
Operating profit | 5,541 | 16,047 | ||||||
Operating profit as a percentage of sales | 4.9 | % | 13.6 | % | ||||
Interest expense | (37 | ) | (15 | ) | ||||
Other income (expense), net | (33 | ) | 121 | |||||
Income before taxes | 5,471 | 16,153 | ||||||
Income tax expense | 3,598 | 4,781 | ||||||
Net income | $ | 1,873 | $ | 11,372 | ||||
Weighted average shares for EPS-Basic | 7,562 | 7,900 | ||||||
Net income per share | $ | 0.25 | $ | 1.44 | ||||
Income before taxes | $ | 5,471 | $ | 16,153 | ||||
Interest expense | 37 | 15 | ||||||
Depreciation and amortization | 1,505 | 1,868 | ||||||
EBITDA | 7,013 | 18,036 | ||||||
Equity compensation | 1,491 | 1,667 | ||||||
Other income (expense), net | (33 | ) | 121 | |||||
Eagle acquisition related expenses | 589 | --- | ||||||
China manufacturing restructuring | 278 | --- | ||||||
New Monterrey, Mexico facility start-up costs | 240 | --- | ||||||
Adjusted EBITDA | $ | 9,644 | $ | 19,582 | ||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
(Preliminary and unaudited)
Reconciliation of GAAP Results to Non-GAAP Results
Quarter Ended January 31, | Year Ended January 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income to EBITDA | ||||||||||||||||
Net Income | $ | 183 | $ | 1,243 | $ | 1,873 | $ | 11,372 | ||||||||
Interest | 11 | 16 | 37 | 15 | ||||||||||||
Taxes (1) | (12 | ) | 744 | 3,598 | 4,781 | |||||||||||
Depreciation and amortization | 417 | 398 | 1,505 | 1,868 | ||||||||||||
EBITDA | $ | 599 | $ | 2,266 | $ | 7,013 | $ | 18,036 | ||||||||
EBITDA to Adjusted EBITDA | ||||||||||||||||
(excluding non-cash expenses) | ||||||||||||||||
EBITDA | $ | 599 | $ | 2,401 | $ | 7,013 | $ | 18,036 | ||||||||
Equity compensation (2) | 350 | 642 | 1,491 | 1,667 | ||||||||||||
Other income (expense) (3) | 107 | 135 | (33 | ) | 121 | |||||||||||
Eagle acquisition-related expenses (4) | 589 | --- | 589 | --- | ||||||||||||
China manufacturing restructuring (5) | 278 | --- | 278 | --- | ||||||||||||
New Monterrey, Mexico facility start-up costs (6) | 71 | --- | 240 | --- | ||||||||||||
Adjusted EBITDA | $ | 1,780 | $ | 2,908 | $ | 9,644 | $ | 19,582 | ||||||||
The financial data above includes non-GAAP financial measures, including EBITDA and adjusted EBITDA. Management excludes from EBITDA and adjusted EBITDA all expenses for interest, taxes, depreciation and amortization, and Other Income, which is comprised of interest income and gains (losses) from equity method investments. For adjusted EBITDA management also excludes equity compensation, acquisition-related expenses, restructuring costs, and start-up costs for our Mexican operations.
Management excludes these items principally because such charges or benefits are not directly related to the Company's ongoing core business operations. We use such non-GAAP measures in order to (1) make more meaningful period-to-period comparisons of the Company's operations, both internally and externally, (2) guide management in assessing the performance of the business, internally allocating resources and making decisions in furtherance of the Company's strategic plan, and (3) provide investors with a better understanding of how management plans and measures the business. The material limitations to management's approach include the fact that the charges, benefits and expenses excluded are nonetheless charges, benefits and expenses required to be recognized under GAAP and, in some cases, consume cash which reduces the Company's liquidity. Management compensates for these limitations primarily by reviewing GAAP results to obtain a complete picture of the Company's performance and by including a reconciliation of non-GAAP results to GAAP results in its earnings releases. Non-GAAP financial measures are not alternatives for measures of financial performance prepared in accordance with GAAP and may be different from similarly titled non-GAAP measures presented by other companies, limiting their usefulness as comparative measures.
Additional information regarding the adjustments is provided below.
(1) Adjustments for Taxes, which consist of the tax effects of the various adjustments that we exclude from our non-GAAP measures, and adjustments related to deferred tax and discrete tax items. Including these adjustments permits more accurate comparisons of the Company's core results with those of its competitors. In Q2FY 23 the Company changed its permanent reinvestment assertions for our Chinese operations during the second quarter due to increased volatility of the Chinese yuan and an updated evaluation of investment strategies. The Company recorded
(2) Adjustments for Equity Compensation, which consist of non-cash expenses for the grant of equity awards.
(3) Adjustments for Other Income, which consists of interest income and gains/(losses) from Investments accounted for under the equity method of accounting.
(4) Adjustments for acquisition-related expenses included advisory fees, due diligence expenses and legal fees related to the Company's acquisition of Eagle Technical Products Limited in the fourth quarter of fiscal year 2023.
(5) Adjustments for acquisition restructuring costs consisted of cash severance payments to approximately 100 workers at our Weifang manufacturing facility in the fourth quarter of fiscal year 2023.
(6) Adjustments for start-up costs for our Mexican operations, consists of external services and legal fees associated with the start-up of our new manufacturing site in Monterrey, Mexico scheduled to start production in the third quarter of fiscal year 2023.
SOURCE: Lakeland Industries, Inc.
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