Lakeland Industries, Inc. Reports Fiscal 2025 First Quarter Financial Results
Lakeland Industries reported robust financial results for Q1 FY2025, with net sales of $36.3 million, a 27% increase year-over-year. The company saw a notable 92% growth in its fire services business. Organic revenue rose to $32.4 million, up 13%. Gross margin improved to 44.6% from 43.4%. Net income reached $1.7 million, or $0.22 per share, compared to $1.3 million, or $0.18 per share, last year. Adjusted EBITDA increased by 40% to $3.9 million. The company also highlighted the successful acquisitions of Pacific Helmets and Jolly Scarpe, contributing $3.9 million in revenue. Management noted strong growth in North and South America but acknowledged softer performance in Asia.
- Net sales increased by 27% year-over-year to $36.3 million.
- Fire services business grew by 92%.
- Organic revenue increased by 13% to $32.4 million.
- Gross margin improved to 44.6% from 43.4%.
- Net income rose to $1.7 million, or $0.22 per share, a 25% increase.
- Adjusted EBITDA increased by 40% to $3.9 million.
- Acquisitions of Pacific Helmets and Jolly Scarpe contributed $3.9 million in revenue.
- Strong sales growth in North and South America, with 16% growth in the U.S. and 54% in Latin America.
- Operating expenses increased due to acquisitions and higher amortization of intangibles.
- Operating margins decreased to 6.1% from 6.8% year-over-year.
- Asian business remained soft, impacting overall performance.
- Increase in operating expenses to $14 million, partly due to acquisition-related costs.
Insights
The latest financial results from Lakeland Industries display significant year-over-year growth in several key performance areas. Net sales increased by 27% to
From a retail investor perspective, the increase in adjusted EBITDA by 40% to
However, it's essential to consider the increase in operating expenses to
Lakeland Industries' strategic focus on expanding its fire services business is proving successful. The notable 92% growth in this segment, driven by both organic growth and acquisitions like Pacific Helmets and Jolly Scarpe, highlights the company's ability to capture market share in a highly specialized industry. The ongoing integration of these acquisitions into Lakeland's global sales channels and marketing platforms presents opportunities for cross-selling and enhancing market penetration.
The partnership with LineDrive is another strategic move likely to enhance Lakeland's market footprint in North America. LineDrive's expertise in industrial maintenance, repair and operations (MRO) could significantly expand Lakeland's reach, particularly within the industrial sector. This aligns with Lakeland's broader strategy to diversify its geographic and end-market presence, as evidenced by strong sales growth in North and South America.
However, the softness in the Asian market and slightly lower sales in Europe suggest regional challenges that need addressing. The company's ability to balance growth across different geographies will be pivotal in maintaining its upward trajectory.
The improvement in Lakeland's gross margin to 44.6%, up from 43.4%, is indicative of not just sales growth but also successful product and geographical mix management. Gross profit, positively impacted by a mix of high-value products and strategic geographic distribution, suggests efficient resource allocation and effective cost management strategies. The integration of new, high-margin products like those from Pacific Helmets and Jolly Scarpe is likely contributing to this margin expansion.
Additionally, the reduction in finished goods inventory by 21% signifies streamlined operations and possibly improved supply chain efficiencies, which are important for a manufacturing company. This reduction also suggests a stronger alignment between production and demand, minimizing excess inventory and associated holding costs.
Investors should keep an eye on how the company's strategic moves, such as the acquisition of LHD Group's fire and rescue business, impact the overall product portfolio and margin profiles. The anticipated closing of this acquisition could further enhance Lakeland's competitive positioning in premium fire markets like Germany and Australia.
Net sales of
Continued strong growth in high-value, strategic product lines, led by
Raising FY25 Revenue and Adjusted EBITDA Guidance
HUNTSVILLE, AL / ACCESSWIRE / June 4, 2024 / 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 2025 first quarter ended April 30, 2024.
Fiscal 2025 First Quarter Financial Results Highlights
- Net sales of
$36.3 million , up$7.6 million , or27% , year-over-year - Organic revenue(1), excluding Jolly and Pacific Helmets acquisitions, of
$32.4 million , an increase of$3.7 million , or13% , year-over-year - Fire services business, a key strategic growth focus for the Company, grew over
92% versus the same period last year - Gross margin of
44.6% , compared to43.4% in the prior year period - Net income of
$1.7 million or$0.22 per basic common share in Q1-FY25 versus$1.3 million or$0.18 per basic common share last year - Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA)(2) of
$3.9 million in Q1-FY25, compared to$2.8 million in Q1-FY24 - Jolly and Pacific Helmets revenue of
$2.2 million and$1.7 million , respectively
(1)Organic revenue is total revenue excluding the effects of recent acquisitions, which management uses to assess the growth of its legacy business.
(2)Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. Reconciliations are provided in the tables of this press release.
Management Comments
"Lakeland delivered strong first-quarter results as we continued to execute on our commitment to expand our fire services business globally through organic growth and strategic acquisitions and to accelerate the growth of our industrial safety products," said Jim Jenkins, President, Chief Executive Officer and Executive Chairman. "Our Q1-FY25 net sales of
"We also are encouraged by the sales results from our recent acquisitions as we saw combined sales of
Mr. Jenkins continued, "We continue to actively pursue attractive opportunities to expand our global fire services business, and in early April of this year, we announced the signing of an agreement to acquire the fire and rescue business of LHD Group. Along with the United States, Germany and Australia are "top-three" global fire markets, and LHD's fire and rescue offerings bring Lakeland a premium product portfolio and complementary geographic footprints in Germany, Australia and Hong Kong. LHD also brings a recurring revenue LHD Care service offerings, which increases customer retention and which we expect to leverage and expand globally. We are continuing to make progress on this transaction, and we anticipate closing in June once the final closing condition is cleared.
"Finally, I want to express my appreciation to Lakeland's Board of Directors for the trust they have shown in me and to the talented Lakeland employees around the world who work every day to help keep our customers safe. I am honored to have been named the permanent CEO and to lead this Company into the future," concluded Mr. Jenkins.
Roger Shannon, Lakeland's Chief Financial Officer, added, "During the fiscal first quarter, Lakeland delivered strong year-over-year first-quarter sales and profitability growth resulting from our geographic and end-market diversity, strong sales growth and margin improvement. Revenue grew
Fiscal 2025 First Quarter Financial Results
Net sales were
On a consolidated basis for the first quarter of fiscal year 2025, domestic sales were
Gross Profit of
Lakeland reported operating profit of
The Company reported net income of
Adjusted EBITDA for the first quarter of fiscal year 2025 was
On May 1, 2024, the Board of Directors declared a quarterly cash dividend as part of initiating a recurring quarterly dividend program. The quarterly dividend of
FY 2025 Updated Guidance and Outlook
This updated guidance is based on our current backlog of orders and current expectations. These metrics constitute forward-looking statements and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these metrics, see "‘Safe Harbor' Statement Under the Private Securities Litigation Reform Act of 1995" below.
- Revenue - We now expect FY25 Revenue in the range of
$150 million to$155 million . This Revenue expectation includes the recently announced Jolly Scarpe and Pacific Helmets acquisitions but does not include the LHD fire and rescue business, which we expect to close in June 2024. - Adjusted EBITDA - We expect FY25 Adjusted EBITDA, excluding any material negative impact from foreign exchange, to be in the range of
$17 million to$20 million (1). This Adjusted EBITDA expectation includes the recently announced Jolly Scarpe and Pacific Helmets acquisitions but does not include the LHD fire and rescue business, which we expect to close in June 2024.
(1) Excluding revenue, the Company does not provide guidance on a GAAP basis as certain items that impact Adjusted EBITDA, such as equity compensation, foreign exchange gains or losses, acquisition expenses and employee separation expenses, which may be significant, are outside the Company's control and/or cannot be reasonably predicted. Please see the "Reconciliation of GAAP Results to Non-GAAP Results" and the related footnotes at the end of this press release for detailed information on calculating non-GAAP measures. See the non-GAAP financial reconciliation tables in this release for a reconciliation of other non-GAAP financial measures.
Mr. Jenkins added, "We are pleased with our first quarter results and the progress to date of our acquisition strategy. We continue to believe our SSQ acquisition strategy and the investments we are making in our sales strategies position us for growth in revenue and profitability. We entered Fiscal 2025 with momentum and high expectations, and we believe we are off to a strong start."
Financial Results Conference Call
The Company will host a conference call and live webcast on Wednesday, June 5, 2024 at 12:00 p.m. Eastern to discuss its fiscal 2025 first quarter financial results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call, available at:
Event URL: https://www.webcaster4.com/Webcast/Page/2237/48499
Please note that the webcast is listen-only, and webcast participants will not be able to participate in the question-and-answer portion of the conference call. Interested parties may also participate in the call by dialing (888) 506-0062 or (973) 528-0011 and entering the passcode 635969. Interested parties are asked to dial in approximately 10 to 15 minutes prior to the start time of the call.
An audio replay of the conference call will be available until Wednesday, June 12, 2024. To access the replay, please dial (877) 481-4010 or (919) 882-2331. The replay passcode is 48499. An archived version of the webcast will also be available on the Lakeland Investor Relations website.
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 2,000 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, Middle East and 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
"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, including without limitation the expected benefits of the Pacific, Jolly and LHD acquisitions and our M&A strategy. 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 guidance for revenue and Adjusted EBITDA, such metrics 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: Adjusted EBITDA, Adjusted EBITDA margin. 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
April 30, 2024 and January 31, 2024
(UNAUDITED)
(000's except for share information)
| April 30, | January 31, | |||||||
ASSETS | 2024 | 2024 | ||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 28,365 | $ | 25,222 | ||||
Accounts receivable, net of allowance for doubtful accounts of | 21,763 | 19,169 | ||||||
Inventories | 56,064 | 51,251 | ||||||
Prepaid VAT and other taxes | 2,212 | 2,753 | ||||||
Income tax receivable and other current assets | 5,085 | 3,111 | ||||||
Total current assets | 113,489 | 101,506 | ||||||
Property and equipment, net | 11,933 | 10,685 | ||||||
Operating leases right-of-use assets | 12,080 | 10,969 | ||||||
Deferred tax assets | 3,037 | 3,097 | ||||||
Other assets | 147 | 110 | ||||||
Goodwill | 15,494 | 13,669 | ||||||
Intangible assets, net | 7,922 | 6,830 | ||||||
Equity investment | 4,618 | 4,719 | ||||||
Convertible debt instruments | 2,800 | 2,161 | ||||||
Total assets | $ | 171,520 | $ | 153,745 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 9,051 | $ | 7,378 | ||||
Accrued compensation and benefits | 3,994 | 3,921 | ||||||
Other accrued expenses | 4,466 | 2,487 | ||||||
Income tax payable | 1,203 | 1,454 | ||||||
Short-term borrowings | - | 298 | ||||||
Accrued earnout agreement | 218 | 643 | ||||||
Current portion of operating lease liability | 2,164 | 2,164 | ||||||
Total current liabilities | 21,096 | 18,345 | ||||||
Deferred income taxes | 2,114 | 2,097 | ||||||
Loans payable - long term | 12,965 | 731 | ||||||
Long-term portion of operating lease liabilities | 10,236 | 9,121 | ||||||
Total Liabilities | 46,411 | 30,294 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | ||||||||
Common stock, | 87 | 87 | ||||||
Issued 8,736,023 and 8,722,965; outstanding 7,377,815 and 7,364,757 at April 30, 2024 and January 31, 2024, respectively | ||||||||
Treasury stock, at cost; 1,358,208 shares at April 30, 2024 and January 31, 2024, respectively | (19,979 | ) | (19,979 | ) | ||||
Additional paid-in capital | 79,488 | 79,420 | ||||||
Retained earnings | 70,714 | 69,283 | ||||||
Accumulated other comprehensive loss | (5,202 | ) | (5,360 | ) | ||||
Total stockholders' equity | 125,109 | 123,451 | ||||||
Total liabilities and stockholders' equity | $ | 171,520 | $ | 153,745 | ||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(
| Three Months Ended | ||||||||
| April 30, | ||||||||
| 2024 | 2023 | |||||||
Net sales | $ | 36,309 | $ | 28,700 | ||||
Cost of goods sold | 20,125 | 16,256 | ||||||
Gross profit | 16,184 | 12,444 | ||||||
Operating expenses | 13,982 | 10,506 | ||||||
Operating profit | 2,202 | 1,938 | ||||||
Other income (expense), net | 11 | (69 | ) | |||||
Interest expense | (172 | ) | (8 | ) | ||||
Income before taxes | 2,041 | 1,861 | ||||||
Income tax expense | 388 | 541 | ||||||
Net income | $ | 1,653 | $ | 1,320 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.22 | $ | 0.18 | ||||
Diluted | $ | 0.22 | $ | 0.18 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 7,364,757 | 7,325,005 | ||||||
Diluted | 7,582,449 | 7,502,863 | ||||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
(Unaudited)
Supplemental Information
| Three Months Ended | ||||||||
| April 30, | ||||||||
| 2024 | 2023 | |||||||
Net sales | $ | 36,309 | $ | 28,700 | ||||
Year over Year change | 26.5 | % | 5.2 | % | ||||
Gross profit | 16,184 | 12,444 | ||||||
Gross profit % | 44.6 | % | 43.4 | % | ||||
Operating expenses | 13,982 | 10,506 | ||||||
Operating expenses as a percentage of sales | 38.5 | % | 36.6 | % | ||||
Operating profit | 2,202 | 1,938 | ||||||
Operating profit as a percentage of sales | 6.1 | % | 6.8 | % | ||||
Other income (expense), net | 11 | (69 | ) | |||||
Interest expense | (172 | ) | (8 | ) | ||||
Income before taxes | 2,041 | 1,861 | ||||||
Income tax expense | 388 | 541 | ||||||
Net income | $ | 1,653 | $ | 1,320 | ||||
Weighted average shares for EPS-Basic | 7,365 | 7,325 | ||||||
Income tax expense | 388 | 541 | ||||||
Interest expense | 172 | 8 | ||||||
Depreciation and amortization | 647 | 533 | ||||||
EBITDA | 2,860 | 2,402 | ||||||
Equity compensation | 198 | 407 | ||||||
Other income (expense), net | (11 | ) | 69 | |||||
Acquisition expenses | 972 | 17 | ||||||
Earnout revaluation | (689 | ) | (493 | ) | ||||
Severance expenses | - | 320 | ||||||
Monterrey, Mexico facility costs | 276 | 38 | ||||||
PFAS Litigation | 247 | - | ||||||
Adjusted EBITDA | $ | 3,853 | $ | 2,761 | ||||
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results (
Reconciliation of GAAP Results to Non-GAAP Results
| Three Months Ended | ||||||||
| April 30, | ||||||||
| 2024 | 2023 | |||||||
Net Income to EBITDA | ||||||||
Net income | $ | 1,653 | $ | 1,320 | ||||
Interest expense | 172 | 8 | ||||||
Taxes (1) | 388 | 541 | ||||||
Depreciation and amortization | 647 | 533 | ||||||
EBITDA | $ | 2,860 | $ | 2,403 | ||||
EBITDA to Adjusted EBITDA | ||||||||
(excluding non-cash expenses) | ||||||||
EBITDA | $ | 2,860 | $ | 2,403 | ||||
Equity compensation (2) | 198 | 407 | ||||||
Other income (expense) (3) | (11 | ) | 69 | |||||
Acquisition expenses (4) | 972 | 17 | ||||||
Earnout revaluation (5) | (689 | ) | (493 | ) | ||||
Employee separation expense (6) | - | 320 | ||||||
Monterrey, Mexico facility costs (7) | 276 | 38 | ||||||
PFAS Litigation (8) | 247 | - | ||||||
Adjusted EBITDA | $ | 3,853 | $ | 2,761 | ||||
Adjusted EBITDA Margin | ||||||||
Adjusted EBITDA | $ | 3,853 | $ | 2,761 | ||||
Divided by net sales | $ | 36,309 | $ | 28,700 | ||||
Adjusted EBITDA Margin | 10.6 | % | 9.6 | % | ||||
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, severance costs, and start-up costs for our Mexican operations. This press release also discusses Adjusted EBITDA Margin, which is calculated by dividing Adjusted EBITDA by GAAP net sales.
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.
(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 acquisitions of Eagle Technical Products Limited in the first quarter of fiscal year 2024, Pacific Helmets NZ Limited in the fourth quarter of fiscal year 2024, Jolly Scarpe S.p.A. and Jolly Scarpe Romania S.R.L in the first quarter of fiscal year 2025 and LHD Group Deutschland GmbH (LHD) and its Hong Kong and Australian subsidiaries in the first quarter of fiscal year 2025.
(5) Adjustment for the reduction of the estimated earnout payment related to the Eagle and Pacific Helmets acquisitions.
(6) Adjustment for accrued separation costs for our former COO, who separated from the Company in the first quarter of fiscal year 2024.
(7) Adjustments for costs for our Mexican operations consist of external services and legal fees associated with a property-related dispute with the landlord of our manufacturing site in Monterrey, Mexico.
(8) Adjustment for PFAS Litigation.
SOURCE: Lakeland Industries, Inc.
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FAQ
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What was the impact of Pacific Helmets and Jolly Scarpe acquisitions on Lakeland Industries' revenue?
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