Before we begin, parties are reminded that statements made during this call contain forward-looking information within the meanings of the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements are all statements other than statements of historical facts, which reflect management's expectations regarding future events and operating performance and speak only as of today, June 9, 2021. Forward-looking statements are based on current assumptions and analysis made by the company in light of its experience and its perception of historical trends, current conditions, including business affairs, pertaining to the COVID-19 pandemic, expect future developments and other factors that believes are appropriate under circumstances. These statements are subject to a number of assumptions, risks, and uncertainties that are factored into the company's filings with the Securities and Exchange Commission; general economic and business conditions, the business opportunities that may be presented to you and pursued by the company, changes in law or regulations and other factors, many of which are beyond the control of the company.

Thank you and good afternoon. I'm joined here today by Lakeland's Chief Financial Officer, Alan Diller. We appreciate you taking the time to join our fiscal 2022 first quarter financial results conference call. After a tremendous fiscal 2021, the sustainability of our financial performance was on display as we delivered very strong results in the first quarter of fiscal 2022 ended April 30, 2021. We're now beginning to see the impact of the improvements made to our business over the past year, as COVID-19 demand subsides. Business process improvements accelerated due to COVID-19 and we believe that our first quarter fiscal year 2022 results demonstrate the durability and magnitude of these improvements. In fact, while there's no question that COVID-19 pandemic had a positive impact on our performance through the entirety of fiscal year 2021 and into the first quarter of fiscal year 2022, we believe it has also largely masked the value we derive from the significant operational and process improvements we have made. Only now in the second consecutive quarter of declining pandemic sales does the significance of our improvements become apparent. Through my formal remarks on today's conference call, I'd like to provide some perspective on our progress and strategy for our post-COVID business environment. Later, Allen will review our financial results for the quarter and related developments in more detail. Prior to the onset of the global pandemic, we began a business transformation and put in place a five-year growth plan that assumed successful implementation of our development plans. COVID-19 accelerated the pace of progress by approximately one year and in the process elevated our cash balance to over $60 million today. We expect continued free cash flow generation for the foreseeable future, which factors in the elimination of all COVID-19 demand as early as the end of the present quarter. The critical elements of our plan include the strengthening of our leadership team, investing in capacity expansion in higher margin product development and focusing on profit enhancement initiatives led by a new data centric approach to planning and supporting our addressable markets.

Thank you, Charlie. From a financial results perspective, fiscal 2022 first quarter showed consistency based on the progress made to improve our performance as key measures track to expectations and our balance sheet strength improved. For each of the past five quarters, our revenues have been in excess of $34 million. We are indeed winding down from COVID related sales and are benefiting from a strong resurgence in traditional industrial demand, while we also tap into certain opportunities in the healthcare segment for non-pandemic related needs that historically we would not have attempted to enter. For all of fiscal 2021 COVID related sales accounted for 30% to 35% of consolidated revenues. In Q1 2022, we estimate 13% of sales were related to COVID. As Charlie mentioned, we expect to continue to see decreases in this demand in the current quarter, since most regions have sufficient supply, except India, which is still experiencing outbreaks resulting in demand that may outpace the traditional availability of PPE from the healthcare supply chain. We reiterate that our fiscal year 2022 revenue will not decline proportionally to declines in COVID-19 sales by focusing on the industrial market early on and throughout the pandemic, we believe we have set the stage to emerge post COVID-19 well-positioned with a larger book of business that targets a much larger and faster growing overall market. Our first quarter results indicate our successful execution of this strategy thus far. Due to the scaling back in most major markets for COVID-19 related product, our first quarter sales for disposables and chemicals were down 30% as compared with our first quarter 2021 sales, which represented our highest level of COVID sales. As we have already rapidly emerge from the COVID impacted sales periods, one of our more recent garment lines known as high-performance wear grew last year and was up nearly 200% in the first quarter of fiscal 2022, as compared to the prior year period. At nearly 900,000 in the first quarter 2022 sales, revenues were more than half of all high-performance wear sales in fiscal 2021, $1.7 million, and fiscal 2020, $1.6 million.

Thank you. Our first question comes from Alex Fuhrman with Craig-Hallum Capital Group. Please state your question.

Great. Guys, thanks for taking my question and congratulations on a very nice start to the year. You know, wanted to ask about the breakdown of revenue between the COVID and the non-COVID related business. It sounds like you had about $30 million of non-COVID related revenue here in the first quarter. Can we be thinking about that as sort of the baseline that you're going to be growing off of as industrial production starts to pick up? Or is it maybe a little bit higher as customers start making more non-COVID purchases and you start to bring some SKUs back?

Alex, I don't think that we have seen the economic recovery in the industrial market come to fruition yet. So I don't think that $30 million is the new baseline industrial sales number for us. It will be a little bit higher than that.

Okay. That's helpful, thanks. And then on the M&A front, it looks like you guys made a great hire bringing Josh onboard. Can you talk a little bit more about what you're seeing out there in terms of opportunities? Are there any particular product categories or distribution channels that you have in mind that you are targeting?

We're not quite that far down the road with Josh yet, Alex. Right now, we're still making sure that we have our own objectives and the potential benefits that we would be interested in acquiring. We're still in that defining process. He's also working to put in place the processes and procedures internally that we'll use for evaluation. That said, we have seen some opportunities come our way and we're starting a funnel already. We are aware of the challenges that an acquisition brings given our current multiple and what that might mean for us. So we are quite cognizant of the fact that we need to look for acquisitions that are going to be synergistic as well. And that's kind of what we're working for as to how we define those synergies and where they might be.

Okay. Thanks. That makes sense. And then, I'd love to ask about the 500 new customers that you brought on in the past year. I mean, it sounds like you're on a path to retain something close to 80% of those customers. Can you give us a little bit more sense of who these new customers are? Are there any particular industries that they gravitate or cater towards, and then just thinking about the COVID demand that you saw last year and the $4 million and change of COVID demand that you saw in Q1, how much of that demand were coming from those 500 new customers?

Quantifying that because of our lack of transparency is pretty difficult. We estimated earlier at the end of Q4, I believe we – Allen, we put their sales revenue at between $10 million and $12 million? That's correct. I can't remember exactly whether it was $10 million or $12 million, but it was in that range. As to what kind of customers they are, they largely resemble our existing customer base, Alex. We’ve had our sales team focused on taking orders for industrial applications before we took COVID applications. So they're not very readily distinguishable. What I will say about them is, 75% of those are only order of that are international new customers. And that's reflected of course in our revenue distribution, both in domestic and international sales. So that's also why we keep referring to our increased market penetration internationally as that's where we were most successful.

Okay. That's really helpful. Thanks. Thanks, guys.

Thank you, sir.

Thank you. And our next question comes from Cam Johnson with Phoenix Capital Management. Please state your question.

Hi, thanks for taking the call. Can you discuss the newer products in the portfolio, what they're made from, where the raw materials are sourced from? And talk a little bit about the gross margin profile and how it relates to the rest of the business?

All right. I can talk about the raw materials pretty readily as there's no issues with competitors there. I don't want to get too deep into details on our margins other than to say that they typically run about 10% to 15% above our target margin. So, which is, we've said repeatedly, we expect to emerge from COVID with a gross margin that begins with four probably in the lower half of the 40%. As for the fabrics, they are actually laminated constructions. The raw materials for which is a polyethylene and microporous film on spun-bonded polypropylene sourced in China, but easily sourced in India or anywhere in the world. These are products that are largely used by the diaper business. So anywhere they have disposable diapers, we can source it. The barrier to entry, the hard part of this market is the validation of your clean manufacturing process and product sterility that's a minimum of a six-month-long process and requires that you conform to statistical process control, which means you have to make a full run. Let it age for three months to grow bioburden and you may fail it, and if you do, you've got a whole run of trash.

Okay. Thanks. One another question I had is, can you discuss the near-shoring strategies you mentioned and the benefits it brings to your competitive positioning and cost basis?

Sure. We are watching the U.S. Congress very closely. The U.S. stockpiling efforts have gone – for lack of a better word, gone dormant for the last month – six weeks that have been predicated by the rejection of 25 million of 26 million garments sourced for the stockpile that didn't meet the AAMI Standards for isolation gowns. As a result, they're not rushing out to replace those products right now. Congress is in the process of writing what it means – what made in, how made in USA is defined or the USA PPE Act. All of the variations of that legislation that we've seen to date starts off with at least a Berry Amendment or Made in USA if U.S. grown or sourced materials. And then provides exceptions, should pricing quality or availability not be a problem for you to go to a Tier 2, which is a foreign-made of U.S. product tier and failing that if they still have unmet demand, it is foreign made of foreign raw materials. So what we're looking to do is to come in where we can enter into that Tier 2 level, which would be foreign made of U.S. raw materials, which makes manufacturing in the Caribbean base in Canada or Mexico very attractive. We are not looking. We do not believe that we can be successful long-term manufacturing in the United States, while initial stockpiling orders will be huge. They will only turn 20% of that stockpile every year. So in year two, your volume falls to 20% of that level, and that's just not sustainable for a continuing operation. And it is highly unlikely that the private sector will pay the prices that the government is going to have to pay to get Made in USA.

Thank you.

Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks.

Okay. Thank you. We appreciate your participation in Lakeland's fiscal 2022 first quarter financial results conference call. As we look ahead to the balance of fiscal 2022, we continue to be well-positioned as the new standard of excellence for PPE manufacturers anywhere in the world. Within even stronger balance sheet from the beginning of the year, and an outlook for continued free cash flow for the foreseeable future. Our data centric, operating culture is enabling sustainable financial performance to unlock additional growth opportunities. We're excited for what lies ahead and look forward to sharing our story at the Sidoti Virtual Investor Conference on June the 24th. Thank you again for joining us on today's conference call, and have a nice day.

Thank you. And with that this concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.