Lakeland Industries, Inc. Reports Fiscal 2023 Second Quarter Financial Results
Lakeland Industries reported fiscal 2023 Q2 net sales of $28.2 million, reflecting a 3.3% sequential increase and 2.6% year-over-year growth. The gross margin improved to 41.3%, above the long-term target of 40%. However, the company faced a net loss of $0.9 million, translating to ($0.11) per share. Non-GAAP net income stood at $1.1 million or $0.15 per share. Cash and equivalents decreased to $41.2 million, driven by operational cash use. Despite challenges like currency fluctuations and potential economic slowdown, Lakeland remains optimistic about long-term revenue growth.
- Net sales increased by 3.3% sequentially and 2.6% year-over-year to $28.2 million.
- Gross margin improved to 41.3%, above the target of 40%.
- Non-GAAP net income was $1.1 million or $0.15 per share, consistent with prior quarter.
- Net loss of $0.9 million or ($0.11) per share due to discrete tax provision.
- Cash and cash equivalents decreased from $52.7 million to $41.2 million.
- Operating income declined from $4.1 million in Q2 FY22 to $1.8 million.
Net sales of
HUNTSVILLE, AL / ACCESSWIRE / September 8, 2022 / 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 second quarter ended July 31, 2022.
Fiscal 2023 Second Quarter Financial Results Highlights
- Net sales of
$28.2 million , up3.3% sequentially and an increase of2.6% year-over-year - Gross margin was
41.3% , above the Company's long-term target threshold of40% and up from40.5% in 1Q23 - Net loss of
$0.9 million or ($0.11) per basic common share in 2Q23 after discrete tax provision - Non-GAAP net income* of
$1.1 million or$0.15 per basic common share in 2Q23 consistent with$0.9 million or$0.13 per basic common share in 1Q23 - Earnings before interest, taxes, depreciation, and amortization (EBITDA)* of
$2.1 million in 2Q23, compared to$1.9 million in 1Q23 - Completed
$2.7 million of share repurchases during the quarter - Currency headwinds of
$0.8 million , due primarily to fluctuation in the Chinese yuan
"Lakeland is pleased to have delivered another quarter of sequential improvement, characterized by quarter-over-quarter and year-over-year volume growth as well as maintaining a gross margin of over
Roberson concluded, "Despite a reallocation of resources in light of developing economic headwinds, our strategic plan is unchanged and we reaffirm our confidence in our ability to deliver on our long-term financial targets. We also expect our revenue to continue trending upwards from previous post-pandemic levels, driven by investments in our global manufacturing footprint, a strengthening sales force, and a focus on higher value products; however, we recognize that revenue growth could be affected by a potential economic slowdown."
* Non-GAAP financial measures exclude charges or gains relating to deferred tax adjustments and discrete tax items. EBITDA, Adjusted EBITDA and non-GAAP net income are non-GAAP financial measures. Reconciliations are provided in the tables of this press release.
Fiscal 2023 Second Quarter Financial Results
Net sales were
On a consolidated basis for the fiscal 2023 second quarter, domestic sales were
Gross profit of
Lakeland reported operating profit of
The Company reported net loss of
Non-GAAP net income for the fiscal 2023 second quarter was
As of July 31, 2022, Lakeland had cash and cash equivalents of approximately
Working capital at July 31, 2022 was
During the fiscal 2023 second quarter, the Company repurchased approximately
"During the quarter we were pleased to have made progress on our strategic performance initiatives, including the expansion of our operations in Mexico," said Lakeland Chief Operating and Financial Officer, Allen E. Dillard. "Additionally, during the quarter, we reached our targeted inventory levels in order to meet our planned manufacturing needs and reduce delivery times for our customers. Not only will this help protect against ongoing supply chain pressures on the business, but we believe product availability is critical to maintaining a high level of customer satisfaction and achieving our target gross margins. It is also a significant competitive advantage relative to those in the industry who do not possess in-house manufacturing."
"As it relates to broader industry inventory levels, our channel checks are still showing a significant amount of disposable finished goods held by distributors, albeit declining, indicating that distributors are still normalizing their inventory levels in a post-Covid environment, with disposables in particular coming back down to levels more in line with long-term demand growth. Going forward, we would expect that overstocked inventory in these markets will continue to diminish over the next several quarters."
Dillard concluded, "We continued our share repurchase activity during the quarter and repurchased an additional
Financial Results Conference Call
Lakeland will host a conference call at 4:30 pm eastern time today to discuss the Company's fiscal 2023 second quarter financial results. The conference call will be hosted by Charles D. Roberson, President and Chief Executive Officer, and Allen E. Dillard, Chief Operating and Financial Officer. Investors can listen to the call by dialing 888-506-0062 (Domestic) or 973-528-0011 (International), Pass Code 478230. For a replay of this call through September 15, 2022, dial 877-481-4010 (Domestic) or 919-882-2331 (International), Pass Code 46450.
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, 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
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, Adjusted EBITDA and non-GAAP net income. 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.
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
(UNAUDITED)
(000's except for share information)
ASSETS | July 31, | January 31, | ||||||
| 2022 | 2022 | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 41,211 | $ | 52,719 | ||||
Accounts receivable, net of allowance for doubtful accounts of | 15,891 | 14,771 | ||||||
Inventories | 56,806 | 47,711 | ||||||
Prepaid VAT and other taxes | 1,723 | 1,675 | ||||||
Other current assets | 4,733 | 3,770 | ||||||
Total current assets | 120,364 | 120,646 | ||||||
Property and equipment, net | 8,388 | 8,714 | ||||||
Operating leases right-of-use assets | 4,772 | 5,296 | ||||||
Deferred tax assets | 2,075 | 2,072 | ||||||
Other assets | 1,396 | 1,361 | ||||||
Investments | 4,466 | 2,704 | ||||||
Total assets | $ | 141,461 | $ | 140,793 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 8,860 | $ | 5,855 | ||||
Accrued compensation and benefits | 2,891 | 3,225 | ||||||
Other accrued expenses | 1,955 | 1,372 | ||||||
Income tax payable | 515 | 321 | ||||||
Current portion of operating lease liabilities | 1,013 | 1,242 | ||||||
Total current liabilities | 15,234 | 12,015 | ||||||
Deferred income taxes | 1,788 | ---- | ||||||
Long-term portion of operating lease liabilities | 3,392 | 3,678 | ||||||
Total liabilities | 20,414 | 15,693 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | ---- | ----- | ||||||
Common stock, Issued 8,650,580 and 8,555,672; outstanding 7,514,725 and 7,615,967 at July 31, 2022 and January 31, 2022, respectively | 87 | 86 | ||||||
Treasury stock, at cost; 1,135,855 and 939,705 shares at July 31, 2022 and January 31, 2022, respectively | (17,332 | ) | (14,206 | ) | ||||
Additional paid-in capital | 77,811 | 77,826 | ||||||
Retained earnings | 63,151 | 62,892 | ||||||
Accumulated other comprehensive loss | (2,670 | ) | (1,498 | ) | ||||
Total stockholders' equity | 121,047 | 125,100 | ||||||
Total liabilities and stockholders' equity | $ | 141,461 | $ | 140,793 | ||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF operations
(UNAUDITED)
(
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net sales | $ | 28,184 | $ | 27,466 | $ | 55,462 | $ | 61,558 | ||||||||
Cost of goods sold | 16,557 | 14,609 | 32,779 | 33,923 | ||||||||||||
Gross profit | 11,627 | 12,857 | 22,683 | 27,635 | ||||||||||||
Operating expenses | 9,832 | 8,791 | 19,440 | 16,939 | ||||||||||||
Operating profit | 1,795 | 4,066 | 3,243 | 10,696 | ||||||||||||
Other income (expense), net | (42 | ) | (1 | ) | (67 | ) | (13 | ) | ||||||||
Interest expense | (13 | ) | (4 | ) | (22 | ) | (5 | ) | ||||||||
Income before taxes | 1,740 | 4,061 | 3,154 | 10,678 | ||||||||||||
Income tax expense | 2,610 | 1,093 | 2,895 | 2,708 | ||||||||||||
Net income (loss) | $ | (870 | ) | $ | 2,968 | $ | 259 | $ | 7,970 | |||||||
Net income (loss) per common share: | ||||||||||||||||
Basic | $ | (0.11 | ) | $ | 0.37 | $ | 0.03 | $ | 1.00 | |||||||
Diluted | $ | (0.11 | ) | $ | 0.36 | $ | 0.03 | $ | 0.98 | |||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 7,670,636 | 7,982,995 | 7,656,470 | 7,964,058 | ||||||||||||
Diluted | 7,670,636 | 8,141,107 | 7,841,281 | 8,120,409 | ||||||||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
Supplemental Information
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net sales | $ | 28,184 | $ | 27,466 | $ | 55,462 | $ | 61,558 | ||||||||
Year over year change | 2.6 | % | (21.6 | )% | (9.9 | )% | (23.6 | )% | ||||||||
Gross profit | 11,627 | 12,857 | 22,683 | 27,635 | ||||||||||||
Gross profit % | 41.3 | % | 46.8 | % | 40.9 | % | 44.9 | % | ||||||||
Operating expenses | 9,832 | 8,791 | 19,440 | 16,939 | ||||||||||||
Operating expenses as a percentage of sales | 34.9 | % | 32.0 | % | 35.1 | % | 27.5 | % | ||||||||
Operating profit | 1,795 | 4,066 | 3,243 | 10,696 | ||||||||||||
Operating income as a percentage of sales | 6.4 | % | 14.8 | % | 5.8 | % | 17.4 | % | ||||||||
Interest expense | (13 | ) | (4 | ) | (22 | ) | (5 | ) | ||||||||
Other income (expense), net | (42 | ) | (1 | ) | (67 | ) | (13 | ) | ||||||||
Income before taxes | 1,740 | 4,061 | 3,154 | 10,678 | ||||||||||||
Income tax expense | 2,610 | 1,093 | 2,895 | 2,708 | ||||||||||||
Net income (loss) | $ | (870 | ) | $ | 2,968 | $ | 259 | $ | 7,970 | |||||||
Weighted average shares for EPS-Basic | 7,671 | 7,983 | 7,656 | 7,964 | ||||||||||||
Net income (loss) per share | $ | (0.11 | ) | $ | 0.37 | $ | 0.03 | $ | 1.00 | |||||||
Operating profit | $ | 1,795 | $ | 4,066 | $ | 3,243 | $ | 10,696 | ||||||||
Depreciation and amortization | 354 | 541 | 779 | 1,040 | ||||||||||||
EBITDA | 2,149 | 4,607 | 4,022 | 11,736 | ||||||||||||
Equity compensation | 384 | 271 | 790 | 608 | ||||||||||||
Adjusted EBITDA | $ | 2,533 | $ | 4,878 | $ | 4,812 | $ | 12,344 | ||||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
(Unaudited)
Reconciliation of GAAP Results to Non-GAAP Results
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income (loss) to EBITDA | ||||||||||||||||
Net income (loss) | $ | (870 | ) | $ | 2,968 | $ | 259 | $ | 7,970 | |||||||
Interest | 13 | 4 | 22 | 5 | ||||||||||||
Taxes | 2,610 | 1,093 | 2,895 | 2,708 | ||||||||||||
Depreciation and amortization | 354 | 541 | 779 | 1,040 | ||||||||||||
Other income (expense) | (42 | ) | (1 | ) | (67 | ) | (13 | ) | ||||||||
EBITDA | $ | 2,149 | $ | 4,607 | $ | 4,022 | $ | 11,736 | ||||||||
EBITDA to Adjusted EBITDA | ||||||||||||||||
(excluding non-cash expenses) | ||||||||||||||||
EBITDA | $ | 2,149 | $ | 4,607 | $ | 4,022 | $ | 11,736 | ||||||||
Equity compensation | $ | 384 | $ | 271 | $ | 790 | $ | 608 | ||||||||
Adjusted EBITDA | $ | 2,533 | $ | 4,878 | $ | 4,812 | $ | 12,344 | ||||||||
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
GAAP Net income (loss) | $ | (870 | ) | $ | 2,968 | $ | 259 | $ | 7,970 | |||||||
Adjustments: | ||||||||||||||||
Adjustments for taxes (1) | 2,000 | --- | 1,818 | --- | ||||||||||||
Non-GAAP Net income | $ | 1,130 | $ | 2,968 | $ | 2,077 | $ | 7,970 | ||||||||
GAAP Net income (loss) per share - basic: | $ | (0.11 | ) | $ | 0.37 | $ | 0.03 | $ | 1.00 | |||||||
Adjustments for taxes (1) | 0.26 | --- | 0.24 | --- | ||||||||||||
Non-GAAP Net income per share: -basic | $ | 0.15 | $ | 0.37 | $ | 0.27 | $ | 1.00 | ||||||||
GAAP Net income (loss) per share - diluted: | $ | (0.11 | ) | $ | 0.36 | $ | 0.03 | $ | 0.98 | |||||||
Adjustments for taxes (1) | 0.25 | --- | 0.23 | --- | ||||||||||||
Non-GAAP Net income per share: -diluted | $ | 0.14 | $ | 0.36 | $ | 0.26 | $ | 0.98 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 7,670,636 | 7,982,995 | 7,656,470 | 7,964,058 | ||||||||||||
Diluted | 7,857,026 | 8,141,107 | 7,841,281 | 8,120,409 | ||||||||||||
The statement above includes non-GAAP measures of net income, basic and diluted earnings per share. Management excludes from these measures discrete adjustments for taxes, as more fully described below.
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 Company's strategic plan, (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.
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
SOURCE: Lakeland Industries, Inc.
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FAQ
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