Exhibit 99.1
|
|
202 Pride Lane SW
Decatur, AL 35603
(256) 350-3873 - www.lakeland.com
|
Lakeland
Industries, Inc. Reports Fiscal 2021
First
Quarter Financial Results
Revenues Increase 85% to $45.6 Million as Net Income Jumps to $8.6
Million, Both Record Levels;
Performance Driven by COVID-19 Demand as Manufacturing Capabilities
and Operating Leverage Magnified;
Company Ends Quarter with Cash Increasing $8.9 Million to $23.5
Million
DECATUR,
AL – June 9, 2020 -- 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 2021 first quarter
ended April 30, 2020.
Fiscal 2021 First Quarter Financial Results Highlights
●
Net sales for 1Q21
of $45.6 million, up 84.7% as compared with 1Q20 of $24.7
million
●
1Q21 sales include
approximately $11.2 million of demand directly attributable to
COVID-19
●
Gross profit for
1Q21 of $22.1 million, compared with 1Q20 of $7.6
million
●
Gross margin as a
percentage of net sales in 1Q21 was 48.6%, compared to 30.6% in
1Q20
●
Operating expenses
of $9.8 million in 1Q21, up from $7.9 million in 1Q20
●
Operating profit of
$12.4 million in 1Q21, up from an operating loss of $(315,000) in
1Q20
●
Net income of $8.6
million or $1.08 per basic common share in 1Q21, up from a net loss
of $(465,000) or $(0.06) per basic common share in
1Q20
●
Earnings before
interest, taxes, depreciation and amortization (EBITDA)* of $12.8
million, compared with $68,000 in 1Q20
●
Capital
expenditures for fiscal 2021 first quarter were approximately $0.2
million, the same as in the comparable fiscal 2020
period
●
Cash of $23.5
million at 4/30/20, up 61% from $14.6 million at beginning of the
fiscal year
●
$0.1 million in
short term debt as of 4/30/20, down from $1.2 million at beginning
of fiscal year
●
Stockholders’
equity at the end of 1Q21 increased by $8.5 million to $93.5
million from $85.0 million at the beginning of fiscal
year
●
No shares were
acquired in 1Q21 as part of the Company's $2.5 million stock
repurchase program which was approved on July 19,
2016.
*
EBITDA is a non-GAAP financial measure. Reconciliation is provided
in the tables of this press release.
1
Management’s Comments
Charles
D. Roberson, President and Chief Executive Officer of Lakeland
Industries, stated, “Our fiscal 2021 first quarter
performance was extraordinary with record setting financial results
that validate our belief that owning our own manufacturing and
having a resilient supply chain are essential to being a global
leader in the PPE market. As a branded PPE provider, we are unique
in owning our manufacturing facilities around the world and not
relying on outsourced contractors. This important differentiator,
combined with the capabilities of our ERP system that was recently
installed in our U.S. operations, enabled us to scale our
production output and manage our raw materials supply chain to not
only achieve, but exceed our organic growth targets while
contributing to the global pandemic response for emergency
protective apparel.
“We
are grateful to our global workforce and management team for their
dedication to their coworkers, our customers and those in need.
Their adherence to our safety protocols, at work and at home, and
their willingness to work extended hours, led to record quarterly
sales which increased by an impressive 85% to nearly $46 million.
Leveraging our centralized operating systems and emerging
data-centric planning processes, we were able to respond to the
demand for our products relating to the COVID-19 pandemic while
continuing to support and expand our traditional industrial
customer base. Globally we have added in excess of 150 new
industrial end users in the first quarter, with demand resulting
from shortages attributable COVID-19, but not directly associated
with COVID-19 applications, while over 180 new customers were added
in the healthcare sector for what we believe are orders relating
directly to coronavirus defense.
“Coronavirus-related demand added
approximately $11.2 million to our fiscal 2021 first quarter sales.
Approximately $6.8 million of these orders were fulfilled with
products already in inventory. Additional sales which we believe
were influenced by the coronavirus outbreak were not determinable.
Gross margins benefited from improved manufacturing efficiencies
resulting from a management decision to limit our product offering
during the pandemic period that increased our manufacturing
throughput beyond the increase in manufacturing capacity due to
extended plant operations schedules. Gross margins also benefited
by sales of inventory that had been fully or partially reserved in
previous periods. On a consolidated basis for the first quarter,
gross margin as a percentage of revenue reached a record 48.6%,
compared to 30.6% in the prior year period and 37.7% in the fourth
quarter of last year when we had approximately $1.0 million of
COVID-19 related demand.
“As
previously disclosed, in anticipation of continued heightened
demand relating to COVID-19, we commenced manufacturing capacity
expansion efforts. By the end of the first quarter, we had
accelerated a previously
planned expansion of our sealed seam manufacturing capacity by 30%
which is principally used for our chemical product lines. This
expansion required minimal investment, with total capital
expenditures flat year-over-year at less than $200,000 in each
period. Effective February 14, 2020, we increased the
operating hours of certain facilities making disposable and select
chemical garments which had previously been curtailed in order to
draw down inventories. In
aggregate, we estimate the scheduling changes amounted to a nearly
50% increase in capacity above our curtailment schedule and about
20% above our normal operating schedule. However, it should be
noted that even with this significant increase in capacity, revenue
for the first quarter of fiscal 2021 of $45.6 million would not
have been attainable absent our inventory position at the onset of
the pandemic.
The COVID-19 pandemic is unique among “black swan”
events in terms of its breadth, global reach, and its duration, at
a minimum 6 to 9 months but probably longer when considering global
stockpiling of PPE for future events. As a result, the business
risks upon exit from the pandemic are also different. While
manufacturing over run and excess customer inventory remain a
threat to our future sales, it may be mitigated by stockpiling that
cannot begin until supply exceeds the immediate demand. We believe
that we are only now reaching that point, as we are seeing attempts
to begin stockpiling. The scope of this event will extend
stockpiling efforts as the U.S., European Countries, China, and
India will all likely seek to lay in stockpiles over time. Some
will even attempt to build stockpiles prior to any potential
“second wave” of COVID-19. Should we encounter a
significant second wave of COVID-19, we may be thrust into a
renewed heightened demand cycle. In either event, we believe that
the recovery from the pandemic in terms of demand for PPE will be
prolonged, extending into our fiscal 2021 fourth quarter, and that
demand will be of sufficient quantity to offset any headwinds that
the possibility of any lockdowns, supply chain issues or in factory
COVID-19 outbreaks, or any potential recession, may
generate.
“During the quarter, we encountered significant price
increases in available raw materials and briefly adjusted our
manufacturing from a maximum schedule of 12 hours per day to a
normal schedule of 10 hours per day until we could confirm the
level of demand at those price levels. We have since returned to a
maximum capacity operating schedule. We are pleased that our new
ERP system, procurement policies and supplier relationships enabled
us to identify price and costing trends that guided our decision
making on how to best allocate inventory and new production to
capitalize on the surge in demand and new customers who came to
Lakeland because they could not get quality products
elsewhere.
“All
of our major operating regions in the first quarter experienced
increased sales, with growth most significant in the US and China.
Demonstrating the diversification of our business and our ability
to shift our manufacturing in response to significant demand
changes, our geographic sales mix between the U.S. market and our
foreign markets moved nearer to a 50/50 mix (50.7% and 49.3%
respectively) during the quarter even as our product mix as a
percent of sales shifted in favor of disposable product lines,
which increased from 50.1% to 68.5%. All of our major operating
regions were profitable in the quarter.
“Benefiting
from higher sales volume, improved manufacturing efficiencies
resulting in increased gross margins, resilient manufacturing
capabilities, effective management of operating expenses, and an
elevated inventory position at the onset of the pandemic, our
operating leverage was magnified. Our pre-tax operating margin was
in excess of 27%, as compared with less than 6% in each of the last
two fiscal years. Net income in the first quarter jumped to $8.6
million, up from a loss in the prior year period. Adjusted free
cash flow was nearly $12 million in the first quarter and we ended
the quarter with $23.5 million in cash. While COVID-19 has
presented unprecedented conditions that have materially improved
our financial position, we remain on a higher trajectory for
organic growth and have built an environment of operational
excellence, supported by our ERP system, which is currently only
installed in our U.S. operations, and only impacts approximately
50% of our business, that we believe will benefit our financial
performance and organic market share attainment for the foreseeable
future.”
2
Fiscal 2021 First Quarter Financial Results
Net
sales were $45.6 million for the three months ended April 30, 2020,
as compared to $24.7 million for the three months ended April 30,
2019. On a consolidated basis for the first quarter of fiscal 2021,
domestic sales were $23.1 million or 51% of total revenues and
international sales were $22.5 million or 49% of total revenues.
This compares with domestic sales of $12.9 million or 52% of the
total and internationals sales of $11.8 million or 48% of the total
in the same period of fiscal 2020.
The
Company experienced organic growth across all product lines except
high visibility/reflective. Disposable and chemical product lines
relating to COVID-19 demand were the primary result for the
substantial increase in sales. Sales were fulfilled from a work
down of finished goods in inventory and increased production
capacity. Direct COVID-19 related demand resulted in approximately
$11.2 million of sales. Sales in all major foreign operations
experienced year-over-year growth. Foreign exchange currency
translations negatively impacted sales in the UK/Europe, Canada,
and China as reported on a consolidated basis in US dollars by
approximately $0.3 million or 0.7% in the fiscal 2021 first
quarter.
Gross
profit of $22.1 million for fiscal 2021 first quarter increased
from $7.6 million for the same period of the prior year. Gross
profit as a percentage of net sales was 48.6% for the fiscal 2021
first quarter, an increase of 18 percentage points from 30.6% a
year ago. Gross margin in dollars benefited from higher volume
which in part resulted from easing of ERP implementation issues in
the prior year period and overall improved factory utilization on
higher sales. The higher gross margin as a percentage of sales
reflects the significantly higher level of sales, select price
increases, manufacturing efficiencies stemming from increased
production hours and reduced product variations to isolate higher
production runs on fewer garment lines, and fully and partially
reserved stock sold into COVID-19 demand.
Operating
expenses increased 24.2% to $9.8 million for the three months ended
April 30, 2020 from $7.9 million for the three months ended April
30, 2019. Operating expenses as a percentage of net sales was 21.4%
for the three months ended April 30, 2020, compared to 31.9% for
the same period of the prior year . The majority of the increase in
operating expenses relate to higher selling expenses, including
shipping, commissions/compensation and advertising and
marketing.
Lakeland
reported operating profit of $12.4 million for the three months
ended April 30, 2020, up from an operating loss of $(315,000)
million for the three months ended April 30, 2019. Operating
margins were 27.1% for the three months ended April 30, 2020 and
(1.3)% for the prior year period.
Income
tax expense consists of federal, state and foreign income taxes.
Income tax expense was $3.7 million for the three months ended
April 30, 2020, compared to $0.1 million for the three months ended
April 30, 2019. The Company’s approximate NOL balance for
federal was $6.6 million and for state was $22.6 million at April
30, 2020.
The
Company reported net income of $8.6 million or $1.08 per basic and
$1.07 per diluted share for the three months ended April 30, 2020,
compared to the net loss of $(465,000) or $(0.06) per basic share
for the three months ended April 30, 2019. The improved results for
three months ended April 30, 2020 as compared to the prior period
reflects higher sales, elevated gross margin, expense management
and enhanced operating efficiencies due in part to the ERP system
and factory utilization.
As of
April 30, 2020, Lakeland had cash and cash equivalents of
approximately $23.5 million as compared to $14.6 million at January
31, 2020. The increase in cash from the end of fiscal 2020
primarily is a result of increased profitability and inventory
reduction driven by the demand related to the COVID-19 response.
Accounts receivable at April 30, 2020 increased $7.4 million from
January 31, 2020 due to the increased level of sales. Days sales
outstanding was approximately 50 at April 30, 2020. Accounts
payable and accrued liabilities at April 30, 2020 increased by
$900,000 to $11.8 million from $10.9 million at January 31,
2020.
Working
capital at April 30, 2020 was $77.9 million, an increase from $66.9
million at January 31, 2020 The Company’s $20 million
revolving credit facility had no borrowings as of April 30, 2020,
which is unchanged from the prior year end. The Company paid off
the term loan during the quarter. The Company had $0.1 million in
short term borrowing outstanding at April 30, 2020, as compared
with less than $1.2 million at January 31, 2020.
The
Company incurred capital expenditures of approximately $0.2 million
during the first quarter of fiscal 2021, essentially unchanged from
the prior year period. Capital expenditures for all of fiscal 2021
are expected to be approximately $2 million, as compared with $1.0
million for all of fiscal 2020. A portion of the fiscal 2021
spending is allocated toward the phased global rollout of the ERP
system but the majority will be targeted to capacity expansion and
manufacturing efficiencies.
During
the three-month period ended April 30, 2020, no shares were
purchased as part of the Company’s $2.5 million stock buyback
program approved on July 19, 2016. To date, $1.7 million has been
spent to repurchase 152,801 shares, with $800,000 remaining
available under the buyback program.
Financial Results Conference Call
Lakeland
will host a conference call at 4:30 pm eastern time today to
discuss the Company’s fiscal 2021 first quarter financial
results. The conference call will be hosted by Charles D. Roberson,
President and CEO, and Allen E. Dillard, Chief Financial Officer.
Investors can listen to the call by dialing
844-369-8770 (Domestic)
or 862-298-0840 (International). For a replay of this call through
June 16, 2020, dial 877-481-4010, Pass Code 34780.
3
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. Sales are made to more than 50
countries, the majority of which were into the United States,
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.
|
Darrow
Associates
|
|
256-445-4000
|
512-551-9296
|
|
Allen
Dillard
|
Jordan
Darrow
|
“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,” “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.
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.
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.
(tables
follow)
4
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($000’s Except Share Information)
|
ASSETS
|
April 30,
|
January 31,
|
|
|
2020
|
2020
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$23,473
|
$14,606
|
|
Accounts
receivable, net of allowance for doubtful accounts of $647 and $497
at April 30, 2020 and January 31, 2020, respectively
|
25,074
|
17,702
|
|
Inventories
|
37,470
|
44,238
|
|
Prepaid VAT and
other taxes
|
1,516
|
1,228
|
|
Other current
assets
|
3,229
|
2,033
|
|
Total current
assets
|
90,762
|
79,807
|
|
Property and
equipment, net
|
9,847
|
10,113
|
|
Operating leases
right-of-use assets
|
2,246
|
2,244
|
|
Deferred tax
assets
|
3,625
|
5,939
|
|
Prepaid VAT and
other taxes
|
292
|
333
|
|
Other
assets
|
81
|
98
|
|
Goodwill
|
871
|
871
|
|
Total
assets
|
$107,724
|
$99,405
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$6,119
|
$7,204
|
|
Accrued
compensation and benefits
|
2,020
|
1,300
|
|
Other accrued
expenses
|
3,713
|
2,445
|
|
Current maturity of
long-term debt
|
-----
|
1,155
|
|
Short term
borrowings
|
139
|
----
|
|
Current portion of
operating lease liabilities
|
925
|
835
|
|
Total current
liabilities
|
12,916
|
12,939
|
|
Long-term portion
of operating lease liabilities
|
1,268
|
1,414
|
|
Total
liabilities
|
14,184
|
14,353
|
|
Commitments and
contingencies
|
|
|
|
Stockholders’
equity
|
|
|
|
Preferred stock,
$0.01 par; authorized 1,500,000 shares (none issued)
|
-----
|
-----
|
|
Common stock, $0.01
par; authorized 20,000,000 shares
Issued 8,485,517
and 8,481,665; outstanding 7,976,275 and 7,972,423 at
April 30, 2020 and
January 31, 2020, respectively
|
85
|
85
|
|
Treasury stock, at
cost; 509,242 shares
|
(5,023)
|
(5,023)
|
|
Additional paid-in
capital
|
75,314
|
75,171
|
|
Retained
earnings
|
26,215
|
17,581
|
|
Accumulated other
comprehensive loss
|
(3,051)
|
(2,762)
|
|
Total stockholders'
equity
|
93,540
|
85,052
|
|
Total liabilities
and stockholders' equity
|
$107,724
|
$99,405
|
5
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
($000’s Except Share Information)
|
|
Three Months
Ended
April 30,
|
|
|
|
2020
|
2019
|
|
Net
sales
|
$45,582
|
$24,684
|
|
Cost of goods
sold
|
23,438
|
17,130
|
|
Gross
profit
|
22,144
|
7,554
|
|
Operating
expenses
|
9,774
|
7,869
|
|
Operating profit
(loss)
|
12,370
|
(315)
|
|
Other income
(expense), net
|
6
|
(27)
|
|
Interest
expense
|
(17)
|
(34)
|
|
Income (loss)
before taxes
|
12,359
|
(376)
|
|
Income tax
expense
|
3,725
|
89
|
|
Net income
(loss)
|
$8,634
|
$(465)
|
|
Net income (loss)
per common share:
|
|
|
|
Basic
|
$1.08
|
$(0.06)
|
|
Diluted
|
$1.07
|
$(0.06)
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
7,972,423
|
8,013,840
|
|
Diluted
|
8,044,849
|
8,013,840
|
6
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results ($000)
Reconciliation to GAAP Results
|
|
Three Months
Ended
April 30,
|
|
|
|
2020
|
2019
|
|
Net
sales
|
$45,582
|
$24,684
|
|
Year
over year growth
|
84.66%
|
1.40%
|
|
Gross
profit
|
22,144
|
7,554
|
|
Gross
profit %
|
48.58%
|
30.60%
|
|
Operating
expenses
|
9,774
|
7,869
|
|
Operating
expenses as a percentage of sales
|
21.44%
|
31.88%
|
|
Operating
income (loss)
|
12,370
|
(315)
|
|
Operating
income as a percentage of sales
|
27.14%
|
(1.28%)
|
|
Interest
expense
|
(17)
|
(34)
|
|
|
|
|
|
Other income
(expense), net
|
6
|
(27)
|
|
|
|
|
|
Pretax
income
|
12,359
|
(376)
|
|
Income
tax expense
|
3,725
|
89
|
|
Net
income (loss)
|
$8,634
|
$(465)
|
|
|
|
|
|
Weighted
average shares for EPS-Basic
|
7,972,423
|
8,013,840
|
|
Net
income (loss) per share
|
$1.08
|
$(0.06)
|
|
|
|
|
|
Operating
income
|
$12,370
|
$(315)
|
|
Depreciation
and amortization
|
453
|
383
|
|
EBITDA
|
12,823
|
68
|
|
Stock-based
compensation
|
163
|
201
|
|
Adjusted
EBITDA
|
12,986
|
269
|
|
Cash
paid for taxes (foreign)
|
861
|
276
|
|
Capital
expenditures
|
194
|
168
|
|
Free
cash flow
|
$11,931
|
$(175)
|
7
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
Operating Results ($000)
Reconciliation of Non-GAAP Results
|
|
Three Months
Ended
April 30,
|
|
|
|
2020
|
2019
|
|
Net
Income (loss) to EBITDA
|
|
|
|
Net
Income (loss)
|
$8,634
|
$(465)
|
|
Interest
|
17
|
34
|
|
Taxes
|
3,725
|
89
|
|
Depreciation
and amortization
|
453
|
383
|
|
Less
Other income (expense), net
|
6
|
(27)
|
|
EBITDA
|
12,823
|
68
|
|
EBITDA
to Adjusted EBITDA (excluding non-cash and one-time
expenses)
|
|
|
|
EBITDA
|
12,823
|
68
|
|
Equity
compensation
|
163
|
201
|
|
|
|
|
|
Adjusted
EBITDA (excluding non-cash and one-time expenses)
|
12,986
|
269
|
|
Adjusted
EBITDA to Adjusted Free Cash Flow (excluding non-cash and one-time
expenses)
|
|
|
|
Adjusted
EBITDA (excluding non-cash and one-time expenses)
|
12,986
|
269
|
|
Cash
paid for taxes (foreign)
|
861
|
276
|
|
Capital
expenditures
|
194
|
168
|
|
Adjusted
Free Cash Flow (excluding non-cash and one-time
expenses)
|
$11,931
|
$(175)
|
|
|
|
|
8