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Lakeland Industries, Inc. Reports Fiscal 2014 First Quarter Financial Results

Lakeland Industries, Inc. Reports Fiscal 2014 First Quarter Financial Results 
RONKONKOMA, N.Y., June 13, 2013 /CNW/ - Lakeland Industries, Inc. (NASDAQ: 
LAKE), a leading global manufacturer of industrial protective clothing for 
industry, municipalities, healthcare and to first responders on the federal, 
state and local levels, today announced financial results for its first 
quarter of fiscal year 2014 ended April 30, 2013. 
(Logo: http://photos.prnewswire.com/prnh/20120611/NY21959LOGO ) 
The Company earlier announced that the Company accepted a commitment letter 
from a bank for a Senior Credit Facility subject to certain terms and 
conditions and is currently working towards closing this financing.  However, 
no assurances can be given that this transaction or any transaction will be 
consummated. 
Financial Results Highlights and Recent Company Developments: 


       --  The Company has earned operating income in the US of $291,000
        in Q1 this year compared with an operating loss in the US of
        $1,465,000 in Q1 last year.
    --  Sales of Lakeland worldwide, excluding Brazil, increased 6.3%
        year over year.
    --  Gross margin for Lakeland worldwide, excluding Brazil,
        increased from 26.7% last year to 29.0% this year.
    --  Operating expenses for Lakeland worldwide, excluding Brazil,
        decreased by $281,000 even as sales increased by $1,163,000.
        SGA as a percent of sales, excluding Brazil, decreased from
        28.67% to 25.5%.
    --  Adjusted EBITDA for Lakeland worldwide, excluding Brazil,
        increased from $144,000 last year to $1,430,000 this year.
    --  Most of this improvement was generated in the United States.
    --  The Company believes it has largely recovered from the loss of
        the DuPont license in July 2011.
    --  Net sales of $21.7 million in Q1FY14 compared with $24.0
        million in Q1FY13.
    --  Operating loss of $237,000 Q1FY14 vs. a profit of $25,000 in
        Q1FY13, but this year includes an accrual for. $320,000 for
        plant relocation costs for its factory in Qingdao, China which
        is being sold.
    --  Net loss of $844,000 (0.16 per share) this year vs. $10,121,000
        loss ($1.94 per share) last year.
    --  Operating and net losses in the more recent period primarily
        reflect the poor results generated from Brazilian operations.

 _____________________________________________________________________________
|                                                                             |
|                                                                             |
|Operating Earnings and Adjusted EBITDA - Lakeland Consolidated with and      |
|without Brazil (000's)                                                       |
|_____________________________________________________________________________|
|            |Quarter Ended April 30 2013  ||||Quarter Ended April 30 2012    |
|____________|_____________________________|__|_______________________________|
|            |            |      |Lakeland |  |            |        |Lakeland |
|            |Lakeland    |      |worldwide|  |Lakeland    |        |worldwide|
|            |consolidated|Brazil|excluding||||consolidated|Brazil  |         |
|            |            |      |         |  |            |        |excluding|
|            |            |      |Brazil   |  |            |        |Brazil   |
|____________|____________|______|_________|__|____________|________|_________|
|Sales       |$21,737     |$1,783|$19,954  ||||$23,981     |$5,190  |$18,791  |
|____________|____________|______|_________|__|____________|________|_________|
|Year over   |-----       |----- |6.3%     ||||-----       |-----   |-----    |
|year growth |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|            |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Gross profit|6,080       |298   |5,782    ||||7,311       |2,290   |5,021    |
|____________|____________|______|_________|__|____________|________|_________|
|Gross margin|28.0%       |16.7% |29.0%    ||||30.5%       |44.1%   |26.7%    |
|____________|____________|______|_________|__|____________|________|_________|
|Operating   |6,317       |1,228 |5,089    ||||7,286       |1,916   |5,370    |
|expenses    |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Operating   |            |      |         |  |            |        |         |
|expense as %|29.1%       |68.9% |25.5%    ||||30.4%       |36.9%   |28.6%    |
|of sales    |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Operating   |            |      |         |  |            |        |         |
|income      |(237)       |(930) |693      ||||25          |374     |(349)    |
|(loss)      |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Less other  |(156)       |(27)  |(129)    ||||(10,316)    |(10,316)|-----    |
|expenses    |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Add other   |-----       |----- |-----    ||||59          |-----   |59       |
|income      |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Add         |            |      |         |  |            |        |         |
|depreciation|434         |112   |322      ||||375         |72      |303      |
|and         |            |      |         |  |            |        |         |
|amortization|            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|EBITDA      |41          |(845) |886      ||||(9,857)     |(9,870) |13       |
|____________|____________|______|_________|__|____________|________|_________|
|            |            |      |         ||||            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Add equity  |75          |----- |75       ||||131         |-----   |131      |
|compensation|            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Add Brazil  |            |      |         |  |            |        |         |
|arbitration |-----       |----- |-----    ||||10,000      |10,000  |-        |
|judgment    |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Add         |            |      |         |  |            |        |         |
|additional  |80          |80    |-----    ||||-----       |-----   |-----    |
|Brazil      |            |      |         |  |            |        |         |
|severance   |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Professional|            |      |         |  |            |        |         |
|fees in     |150         |----- |150      ||||-----       |-----   |-----    |
|relating to |            |      |         |  |            |        |         |
|financing   |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|QingDao     |            |      |         |  |            |        |         |
|plant       |            |      |         |  |            |        |         |
|shutdown    |320         |----- |320      ||||-----       |-----   |-----    |
|costs       |            |      |         |  |            |        |         |
|accrued     |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|Brazil      |            |      |         |  |            |        |         |
|foreign     |27          |27    |-----    ||||316         |316     |-----    |
|exchange    |            |      |         |  |            |        |         |
|losses      |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|            |            |      |         ||||            |        |         |
|____________|____________|______|_________|__|____________|________|_________|
|ADJUSTED    |$693        |$(738)|$1,431   ||||$590        |$446    |$144     |
|EBITDA      |            |      |         |  |            |        |         |
|____________|____________|______|_________|__|____________|________|_________|

Net Sales. Net sales decreased $2.2 million, or 9.4%, to $21.7 million for the 
three months ended April 30, 2013, from $24.0 million for the three months 
ended April 30, 2012. The net decrease was due to a $4.3 million decrease in 
foreign sales, primarily in Brazil, partially offset by an increase of $2.1 
million in domestic sales. Domestic sales in China and to the Asia Pacific Rim 
increased by $0.5 million, or 23.1%. Canada sales decreased by $0.2 million, 
or 10.4%. Argentina sales decreased by $0.4 million or 52.1%. Russia and 
Kazakhstan sales combined increased by $0.4 million, or 325.8%. US domestic 
sales of disposables increased by $1.0 million, chemical sales increased by 
$0.5 million and reflective sales increased by $0.5 million. Sales in Brazil 
decreased by $3.4 million, a decrease of 65.6%, as a result of several large 
bid orders shipped in the first quarter last year and a generally poor sales 
level in Brazil. There can be no assurance that sales in Brazil will improve. 
Sales for Lakeland worldwide, excluding Brazil, increased $1.2 million, or 
6.3%, over the  first quarter of last year.

Gross Profit. Gross profit decreased $1.2 million, or 16.8%, to $6.1 million 
for the three months ended April 30, 2013, from $7.3 million for the three 
months ended April 30, 2012. Gross profit as a percentage of net sales 
decreased to 28.0% for the three months ended April 30, 2013, from 30.5% for 
the three months ended April 30, 2012. Major factors driving the changes in 
gross margins were:
    --  Wovens gross margin increased by 25 percentage points in FY14
        compared with FY13. This increase was mainly due to the FY13
        inventory write-downs resulting from the closure of the
        Missouri plant, disruptions, inefficiencies and a shortage
        following the move
    --  Disposables gross margin increased by 5.8% due to higher volume
        resulting from conversion of customers to Lakeland branded
        products with a higher gross margin, a price increase and
        adjustments in transfer pricing
    --  Brazil gross margin was 16.7% for this year compared with 44.1%
        last year resulting from several large bid contracts at a high
        margin last year and heavy discounting in this year to promote
        sales
    --  Argentina gross margin decreased by 25 percentage points mainly
        due to poor volume resulting from lack of working capital
    --  Higher margins in chemical sales were reflected as a result of
        higher volume and a different sales mix
    --  China gross margins decreased 6.6% primarily due to the
        shutdown accrual in our Qingdao facility

Operating Expenses. Operating expenses decreased $1.0 million, or 13.3%, to 
$6.3 million for the three months ended April 30, 2013, from $7.3 million for 
the three months ended April 30, 2012. As a percentage of sales, operating 
expenses decreased to 29.1% for the three months ended April 30, 2013, from 
30.4% for the three months ended April 30, 2012. The $1.0 million decrease in 
operating expenses in the three months ended April 30, 2013, as compared to 
the three months ended April 30, 2012, was comprised of:


   million decrease in sales commission mainly resulting from two
$(0.5) large bid contracts in Brazil last year which resulted in high 
   commissions 
$(0.1) million decrease in officer salaries resulting from officers 
   voluntary reduction in cash compensation 
$(0.1) million reduction in currency fluctuation 
$(0.1) million reduction in research and development expense as 
   Lakeland branding efforts were accelerated in FY13 
$(0.1) million decrease in payroll administration due to staff 
   reductions 
$(0.1) million decrease to payroll tax as a result of staff reductions 
Operating profit. Operating profit decreased $0.3 million for the three months 
ended April 30, 2013, from $0.02 million for the three months ended April 30, 
2012. Operating margins were breakeven for the three months ended April 30, 
2013 and the three months ended April 30, 2012. 
Interest Expense. Interest expenses increased by $0.04 million for the three 
months ended April 30, 2013, as compared to the three months ended April 30, 
2012, due to higher rates prevailing in Brazil, the US and the UK. 
Income Tax Expense. Income tax expenses consist of federal, state and foreign 
income taxes.  Income tax expenses increased $0.5 million to $0.2 million for 
the three months ended April 30, 2013, from a benefit of $0.3 million for the 
three months ended April 30, 2012. Our effective tax rates were not meaningful 
due to the loss carryforwards. 
Net Income (Loss). Net loss decreased by $9.3 million to a loss of $0.8 
million for the three months ended April 30, 2013, from a loss of $10.1 
million for the three months ended April 30, 2012. The decrease to the net 
loss primarily resulted from the $10,000,000 Arbitral Award in Brazil in FY13. 
Management's Comments 
Mr. Ryan commented, "Only 12 months ago Brazil reported record sales and 
operating income of $325,000 for the quarter,  but as you can see in our 
adjusted EBITDA table:  the one and only major problem Lakeland has is Brazil, 
which we are working diligently on. We are in the midst of right sizing it to 
meet a huge drop off in sales. Making huge cuts is expensive given legal 
severance requirements and other concomitant expenses required in reductions 
of this proportion. Sale of assets or stock of Brazilian operations is also 
being investigated assiduously. 
Thus, we see Brazil, and therefore company, stabilization by the end of the 
fiscal year, and will continue to seek to cut fat from the older low margin 
operations and add muscle to the newer higher margin ones. 
In respect of the proposed refinancing of our primary loan, we are optimistic 
about a closing towards the end of the month and plan to file a Form 8-K with 
the SEC when such transaction is consummated, but as we all know no guarantees 
of success can be offered. 
This turnaround is not going to happen overnight, but we expect it to happen, 
and we can see it happening everywhere right now, except Brazil, which we hope 
to have sorted out one way or the other by fiscal year end." 
Financial Results Conference Call 
Lakeland will host a conference call at 4:30 PM (EDT) today to discuss the 
Company's first quarter 2014 financial results. The conference call will be 
hosted by Christopher J. Ryan, Lakeland's President and CEO, and Gary 
Pokrassa, Lakeland's Chief Financial Officer.  Investors can listen to the 
call by dialing 800-860-2442 (Domestic) or 412-858-4600 (International), Pass 
Code 10029993. 
A conference call replay will be available by dialing 877-344-7529 (Domestic) 
or 412-317-0088 (International), Pass Code 10029993. 
About Lakeland Industries, Inc.: 
Lakeland Industries, Inc. (NASDAQ: LAKE) manufactures and sells a 
comprehensive line of safety garments and accessories for the industrial 
protective clothing market.  The Company's products are sold by a direct sales 
force and through independent sales representatives to a network of over 1,200 
safety and mill supply distributors. These distributors in turn supply end 
user industrial customers such as chemical/petrochemical, automobile, steel, 
glass, construction, smelting, janitorial, pharmaceutical and high technology 
electronics manufacturers, as well as hospitals and laboratories. In addition, 
Lakeland supplies federal, state, and local government agencies, fire and 
police departments, airport crash rescue units, the Department of Defense, the 
Centers for Disease Control and Prevention, and many other federal and state 
agencies.  For more information concerning Lakeland, please visit the Company 
online at www.lakeland.com. 
"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. 
Lakeland Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data) 


                                        April 30, 2013 January 31, 2013

ASSETS                                  (Unaudited)

Current assets

Cash and cash equivalents               $7,004         $6,737

Accounts receivable, net                14,127         13,783

Inventories                             39,091         39,271

Assets of discontinued operations in    745            813
India

Prepaid income tax                      1,627          1,565

Other current assets                    2,052          1,703

Total current assets                    64,646         63,872

Property and equipment, net             13,968         14,090

Prepaid VAT and other taxes, noncurrent 2,458          2,461

Security deposits                       1,121          1,546

Intangibles and other assets, net       518            478

Goodwill                                871            871

Total assets                            $83,582        $83,318

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable                        $7,460         $6,704

Accrued compensation and benefits       1,240          976

Other accrued expenses                  2,710          2,409

Liabilities of discontinued operations  -------        25
in India

Current maturity of long-term debt      99             100

Current maturity of arbitration         1,000          1,000
settlement

Short-term borrowing                    1,794          1,579

Term loans to TD Bank                   5,285          5,550

Borrowings under revolving credit       9,559          9,559
facility

Total current liabilities               29,147         27,902

Accrued arbitration award in Brazil     4,461          4,711
(net of current maturities)

Other long-term debt                    1,260          1,298

Other liabilities - accrued legal fees  87             87
in Brazil

VAT taxes payable long term             3,328          3,329

Total liabilities                       38,283         37,327

Stockholders' equity:

Preferred stock, $.01 par; authorized   ------         --------
1,500,000 shares - (none issued)

Common stock, $.01 par; authorized
10,000,000 shares, issued 5,698,580 and
5,688,600; outstanding 5,342,139 and    57             57
5,332,159 at April 30, 2013 and
January 31, 2013, respectively

Treasury stock, at cost; 356,441 shares
at April 30, 2013 and January 31, 2013, (3,352)        (3,352)
respectively

Additional paid-in capital              51,030         50,973

Retained earnings deficit               (1,317)        (472)

Accumulated other comprehensive loss    (1,119)        (1,215)

Total stockholders' equity              45,299         45,991

Total liabilities and stockholders'     $83,582        $83,318
equity

LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended April 30, 2013 and 2012
                                            THREE MONTHS ENDED
                                            April 30,
                                            2013      2012

Net sales                                   $21,737   $23,981

Cost of goods sold                          15,657    16,670

Gross profit                                6,080     7,311

Operating expenses                          6,317     7,286

Operating profit                            (237)     25

Foreign exchange charge (loss) Brazil       (27)      (316)

Arbitration judgment in Brazil              -----     (10,000)

Other expense and other income, net         (128)     59

Interest expense                            (273)     (236)

(Loss) before income taxes                  (665)     (10,468)

Provision (benefit) for income taxes        179       (346)

Net (loss)                                  $(844)    $(10,122)

Net income (loss) per common share

Basic                                       $(0.16)   $(1.94)

Diluted                                     $(0.16)   $(1.94)

Weighted average common shares outstanding:

Basic                                       5,337,205 5,225,478

Diluted                                     5,337,205 5,225,478

Christopher Ryan, CJRyan@lakeland.com, or Gary Pokrassa, 
GAPokrassa@lakeland.com, both of Lakeland Industries, 631-981-9700

http://www.lakeland.com

http://photos.prnewswire.com/prnh/20120611/NY21959LOGO

SOURCE: Lakeland Industries, Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/June2013/13/c8098.html

CO: Lakeland Industries, Inc.
ST: New York
NI: TEX ERN CONF 

-0- Jun/13/2013 20:02 GMT


 
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