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

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

Reports Operating Income of $1.3 million in Q2

Sales up 4.9% consolidated and 22.0%, excluding Brazil, over Q2 last year

PR Newswire

RONKONKOMA, N.Y., Sept. 12, 2013

RONKONKOMA, N.Y., Sept. 12, 2013 /PRNewswire/ -- 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 second quarter of fiscal year 2014 ended July 31, 2013.

(Logo:http://photos.prnewswire.com/prnh/20120611/NY21959LOGO )

The Company completed a new financing of $15.0 million Senior debt and $3.5
million Junior debt during the recently completed second quarter. Excluding
operations in Brazil, the Company is reporting the most profitable quarter in
many years.

Financial Results Highlights-second quarter of fiscal 2014, and Recent Company
Developments:

  oThe Company has earned operating income in the US of $479,000 in Q2 of the
    fiscal year ending January 31, 2014, compared with an operating loss in
    the US of $787,000 in Q2 of last year.
  oSales of Lakeland worldwide increased 4.9% and, excluding Brazil,
    increased 22.0% year over year.
  oGross margin for Lakeland worldwide was 30.3%, the same as last year, but
    excluding Brazil, increased from 30.9% last year to 32.0% this year.
  oOperating expenses worldwide decreased by $814,000 and decreased as a
    percent of sales to 25.0% from 29.7% last year. Operating expenses for
    Lakeland worldwide, excluding Brazil, decreased by $247,000 even as sales
    increased by $4,134,000. SGA as a percent of sales, excluding Brazil,
    decreased from 28.8% to 22.5%.
  oAdjusted EBITDA increased to $1.9 million this year from $543,000 last
    year. Adjusted EBITDA for Lakeland worldwide, excluding Brazil, increased
    from $721,000 last year to $2,704,000 this year.
  oMost of this improvement was generated in the United States and China.
  oThe Company believes it has now completely recovered from the loss of the
    DuPont license in July 2011, as far as gross margins and profitability.
  oNet sales (including Brazil) of $24.6 million in Q2FY14 compared with
    $23.5 million in Q2FY13.
  oOperating income of $1,297,000 Q2FY14 vs. operating income of $152,000 in
    Q2FY13, but this year includes $160,000 for plant relocation costs for its
    factory in Qingdao, China which has been sold.
  oQ2 of fiscal 2014 included a benefit for income taxes of $3.6 million,
    resulting from a reversal of a deferred tax asset valuation allowance of
    $4.5 million.
  oQ2 of fiscal 2013 was positively affected due to a $2.1 million adjustment
    due to the settlement of the Brazilian arbitration at less than the amount
    awarded.
  oNet profit of $4.2 million ($0.75 per share) this year vs. $3.3 million
    profit ($0.61 per share) last year.
  oThe Company completed the sale of its plant in Qingdao, China and one of
    the plants in India.





Operating Earnings and Adjusted EBITDA - Lakeland Consolidated with and without
Brazil (000's)*
              Three Months Ended July 31 2013 || Three Months Ended July 31 2012
                                    Lakeland                           Lakeland
              Lakeland     Brazil** worldwide || Lakeland     Brazil** worldwide
              consolidated          excluding    consolidated          excluding
                                    Brazil                             Brazil
Sales         24,639       1,701    22,938    || 23,499       4,698    18,801
Year over
year growth   4.9%         (63.8)%  22.0%     || -----        -----    -----
(decline)
Gross profit  7,462        117      7,345     || 7,131        1,322    5,809
Gross margin  30.3%        6.9%     32.0%     || 30.3%        28.1%    30.9%
Operating     6,165        998      5,167     || 6,979        1,565    5,414
expenses
 Operating
expense as %  25.0%        58.7%    22.5%     || 29.7%        33.3%    28.8%
of sales
Operating     1,297        (881)    2,178     || 152          (243)    395
income (loss)
Less other    (296)        (360)    64        || 1,750        1,750    -----
expenses
Other income  27           -----    27        || (26)         -----    (26)
Add
depreciation  343          77       266       || 371          65       306
and
amortization
 EBITDA     1,371        (1,164)  2,535     || 2,247        1,572    675
                                              ||
Equity        84           -----    84        || 46                    46
compensation
Brazil
arbitration   -----        -----    -----     || (2,126)      (2,126)  -----
judgment
Fees relating (75)         -----    (75)      || -----        -----    -----
to financing
QingDao plant
relocation    160          -----    160       || -----        -----    -----
costs and
costs of sale
Brazil
foreign       360          360      -----     || 376          376      -----
exchange
losses
                                              ||
 ADJUSTED   1,900        (804)    2,704     || 543          (178)    721
EBITDA
              Six Months Ended July 31 2013   || Six Months Ended July 31 2012
Sales         46,376       3,484    42,892    || 47,480       9,888    37,592
Year over
year growth   (2.3)%       (64.8)%  14.1%     || -----        -----    -----
(decline)
                                              ||
Gross profit  13,542       416      13,126    || 14,443       3,612    10,831
Gross margin  29.2%        11.9%    30.6%     || 30.4%        36.5%    28.8%
Operating     12,482       2,227    10,255    || 14,266       3,481    10,785
expenses
 Operating
expense as %  26.9%        63.9%    23.9%     || 30.0%        35.2%    28.7%
of sales
Operating     1,060        (1,811)  2,871     || 177          131      46
income (loss)
Less other    (452)        (387)    (65)      || (8,565)      (8,565)  -----
expenses
Other Income  28           -----    28        || 33           -----    33
Depreciation
and           777          189      588       || 746          137      609
Amortization
 EBITDA     1,413        (2,009)  3,422     || (7,609)      (8,297)  688
                                              ||
Equity        159          -----    159       || 177          -----    177
compensation
Brazil
arbitration   -----        -----    -----     || 7,874        7,874    -----
judgment
Additional
Brazil        80           80       -----     || -----        -----    -----
severance
Financing
Fees in      75           -----    75        || -----        -----    -----
Other Expense
(adjustments)
Qingdao plant
relocation    480          -----    480       || -----        -----    -----
costs and
costs of sale
Brazil
Foreign       387          387      -----     || 692          692      -----
Exchange
losses
                                              ||
 ADJUSTED   2,594        (1,542)  4,136     || 1,134        269      865
EBITDA

*This table is a reconciliation of GAAP to non-GAAP Financial Measures.

**Brazil numbers, as presented in this table, include immaterial intercompany
transactions.

Management's Comments

Christopher J. Ryan stated, "As I have said in previous public disclosures,
our focus and time is being devoted to downsizing the expenses in Brazil to
conform same to its existing sales and we hope to be there by our fiscal year
end in January 2014.

"We decreased operating expenses by $1.8 million in the last six months and we
will continue to reduce expenses where appropriate. In the fiscal year ended
January 31, 2013, we had $17.0 million of DuPont product revenues and $28.0
million of such revenues in FY11. In the current Q2, we lost $3.0 million in
revenues in Brazilian operations compared to last year. We are responding by
eliminating expenses that supported these revenues, while developing new
revenues to replace these lost revenues. In spite of the lost DuPont and
Brazilian revenues, overall sales increased 4.9% in Q2 of fiscal 2014 compared
with Q2 last year. Most of the gains are in the US and China."

Financial Results Conference Call

Lakeland will host a conference call at 4:30 PM (EDT) today to discuss the
Company's second quarter fiscal 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), 412-858-4600 (International), or
1-866-605-3852 (Canada) Pass Code 10033395.

A conference call replay will be available by dialing 877-344-7529 (Domestic)
or 412-317-0088 (International), Pass Code 10033395.

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.

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 consolidated income, excluding Brazil. 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.



Lakeland Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except share data)


                                                July 31, 2013 January 31, 2013
ASSETS                                          (Unaudited)
Current assets
Cash and cash equivalents                       $5,834        $6,737
Accounts receivable, net                       13,644        13,783
Inventories                                     40,418        39,271
Deferred income tax                             3,861         -----
Assets of discontinued operations in India      206           813
Prepaid income tax                              1,484         1,565
Other current assets                            1,973         1,703
Total current assets                            67,420        63,872
Property and equipment, net                     12,461        14,090
Prepaid VAT and other taxes, noncurrent         2,402         2,461
Security deposits                               1,189         1,546
Other assets, net                               1,663         478
Goodwill                                        871           871
Total assets                                    $86,006       $83,318
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable                                $9,263        $6,704
Accrued compensation and benefits               991           976
Other accrued expenses                          2,421         2,409
Liabilities of discontinued operations in India -----         25
Current maturity of long-term debt              -----         100
Current maturity of arbitration settlement      1,000         1,000
Short-term borrowing                      2,340         1,579
Term loans to TD Bank                           -----         5,550
Borrowings under revolving credit facility      10,403        9,559
Total current liabilities                       26,418        27,902
Accrued arbitration award in Brazil (net of     4,259         4,711
current maturities)
Canadian warehouse loan, net of current         -----         1,298
maturities
Subordinated debt, net of OID                   1,302         -----
Other liabilities - accrued legal fees in       76            87
Brazil
VAT taxes payable long term                     3,331         3,329
Total liabilities                               35,385        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 5,707,422 and

5,688,600; outstanding 5,350,981 and 5,332,159  57            57
at July 31, 2013 and January 31,

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

2013, respectively
Additional paid-in capital                      53,341        50,973
Retained earnings deficit                       2,854         (473)
Accumulated other comprehensive loss            (2,280)       (1,214)
Total stockholders' equity                      50,620        45,991
Total liabilities and stockholders' equity      $86,006       $83,318



LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three months and six months ended July 31, 2013 and 2012


                                       THREE MONTHS ENDED  SIX MONTHS ENDED
                                       July 31,            July 31,
                                       2013      2012      2013      2012
Net sales                              $24,639   $23,499   $46,376   $47,480
Cost of goods sold                     17,177    16,368    32,834    33,037
Gross profit                           7,462     7,131     13,542    14,443
Operating expenses                     6,165     6,979     12,482    14,266
Operating profit                       1,297     152       1,060     177
Foreign exchange charge (loss) Brazil  (360)     (376)     (387)     (692)
Arbitration judgment in Brazil         --------  2,126     --------  (7,874)
Other expense and other income, net    91        (26)      (37)      33
Interest expense                       (467)     (259)     (741)     (495)
Income (loss) before income taxes      561       1,617     (105)     (8,851)
Benefit from income taxes              3,610     27        3,432     373
Net income (loss)                      $4,171    $1,644    $3,327    $(8,478)
Net income (loss) per common share
Basic                                  $0.75     $0.31     $0.61     $(1.62)
Diluted                                $0.74     $0.30     $0.60     $(1.62)
Weighted average common shares
outstanding:
Basic                                  5,559,573 5,271,997 5,445,348 5,235,957
Diluted                                5,668,236 5,441,167 5,519,073 5,235,957



SOURCE Lakeland Industries, Inc.

Website: http://www.lakeland.com
Contact: Lakeland Industries, 631-981-9700, Christopher Ryan,
CJRyan@lakeland.com, Gary Pokrassa, GAPokrassa@lakeland.com