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

Lakeland Industries, Inc. Reports Fiscal 2014 Third Quarter Financial Results 
Reports Consolidated Operating loss of $1.0 million in Q3 and an operating 
profit of $0.9 million, excluding Brazil 
Sales down 6.0% consolidated and up 4.6%, excluding Brazil, over Q3 last year 
RONKONKOMA, N.Y., Dec. 12, 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 third 
quarter of fiscal year 2014 ended October 31, 2013. 
(Logo: http://photos.prnewswire.com/prnh/20120611/NY21959LOGO ) 
Excluding operations in Brazil and the inventory adjustments in the US, the 
Company is reporting the best quarter in over three years other than its 
second quarter for adjusted EBITDA. 
Financial Results Highlights-third quarter of fiscal 2014, and Recent Company 
Developments: 


    --  The Company has earned operating income before corporate
        overhead in the US of $1.1 million in Q3 of the fiscal year
        ending January 31, 2014, compared $0.4 million in Q3 of last
        year.
    --  Reflected in the operating income in the US are two inventory
        charges: $353,000 for overhead rate revisions and a $375,000
        reserve for a discontinued product line in disposables.
    --  Brazil operations in Q3 this year included inventory
        adjustments of $1,158,000. Further, Brazil incurred a loss of
        $213,000 on sales of raw material from inventory in order to
        raise cash in Brazil.
    --  In Q3 of this year, sales of Lakeland worldwide decreased 6.0%
        and, excluding Brazil, increased 4.6% year over year. Net sales
        (including Brazil) of $22.8 million in Q3FY14 compared with
        $24.2 million in Q3FY13. Net sales, however, excluding Brazil,
        increased 4.6% from $19.95 million last year to $20.87 million
        this year.
    --  Sales were weak in Q3 due to:
        o Overall sales increased in the US by $1.6 million, or 16.7%.
          Excluding direct shipment billing in US numbers this year,
          net disposables were down $0.5 million, due largely to lower
          sales of Tyvek as remaining stock has depleted, absence of
          last October's Hurricane Sandy and large shipments to the
          USDA, softness in the wind energy market, and lower sales of
          disposable FR coveralls due to lower cost FR SMS competition,
          which we expect to reverse by publicizing its adverse
          protection data. Fire sales were up $.6 million, reflective
          sales up $0.2 million, chemical sales were flat, and wovens
          were down $0.3 million due to continued deferred refinery
          turnarounds.
        o China external sales in Q2 included a major sale to a Chinese
          auto company and also a number of Q3 deliveries to an Asia
          Pacific distributor were delayed until Q4.
        o Argentina: we resolved our internal working capital shortages
          immediately following our financing in late Q2, however,
          governmental restrictions on imports in Argentina caused
          shortfalls in sales in Q3. Coordination of customs import
          issues remains an issue. Management is pursuing all possible
          remedies. We believe we will have at least partial success
          which should be reflected in greater sales in Q4.
        o Chile: in Q3 last year Chile had large sales to Peru and
          Ecuador. Bids for both are being processed and management
          expects some sales in Q1 of FY15 for these customers.
    --  In Q3 of this year, gross margin for Lakeland worldwide was
        22.1%, compared to 30.1% last year. Excluding Brazil, gross
        margin decreased from 30.7% last year to 28.4% this year.
        However, excluding Brazil and excluding the inventory charges
        in the US described above, gross margin increased to 31.9% as
        compared with 30.7% for Q3 last year.
    --  Operating expenses worldwide decreased by $947,000 and
        decreased as a percent of sales to 26.7% from 29.0% last year.
        Operating expenses for Lakeland worldwide, excluding Brazil,
        decreased by $448,000. SGA as a percent of sales, excluding
        Brazil, decreased from 27.5% to 24.1%.
    --  Adjusted EBITDA increased to $1.6 million this year from
        $1,001,000 last year. Adjusted EBITDA for Lakeland worldwide,
        excluding Brazil, increased from $1,289,000 last year to
        $2,102,000 this year.
    --  Most of the improvement in adjusted EBITDA was generated in the
        United States and China.
    --  Net loss of $1.8 million ($(0.31) per share) this year vs. $0.3
        million profit ($0.05 per share) last year.
    --  The Company completed its refinancing with BDC in Canada for US
        $1.06 million and closed a new loan in China for $0.8 million.
    --  During the Quarter ending October 31, 2013, Lakeland terminated
        the previous management in Brazil and hired a new CEO
        specializing in turnaround situations. We adopted a new
        strategy emphasizing industrial and smaller governmental agency
        orders, de-emphasizing large bid contracts. Accordingly,
        throughout the current fiscal year, there has been major cost
        cutting in Brazil to "right size" the operation to appropriate
        levels for the new lower volume strategy.
    --  Net book value per share, counting shares underlying warrant
        with a nominal exercise price, is $8.24.
    --  Next to Q2, the third quarter, excluding Brazil and inventory
        charges was the best quarter in respect to adjusted EBITDA in
        over three years.

Operating Earnings and Adjusted EBITDA - Lakeland Consolidated with and
without Brazil ($000) *
             Quarter Ended October 31 2013   Quarter Ended October 31 2012
                                  Lakeland                       Lakeland
             Lakeland     Brazil  worldwide  Lakeland     Brazil worldwide
                          **                              **
             consolidated         excluding  consolidated        excluding
                                  Brazil                         Brazil

Sales        $22,787      $1,914  $20,873    $24,239      $4,285 $19,954

Year over
year growth  (6.0)%       (55.3)% 4.6%       -----        -----  -----
(decline)

Gross profit 5,042        (895)   5,937      7,287        1,161  6,126
(loss)

Gross margin 22.1%        (46.7)% 28.3%      30.1%        27.1%  30.7%

Operating    6,073        1,037   5,036      7,020        1,536  5,484
expenses

Operating
expense as %
of           26.7%        54.2%   24.1%      29.0%        35.8%  27.5%

sales

Operating
income       (1,030)      (1,932) 902        267          (375)  642
(loss)

Less other   116          116     -----      (62)         (62)   -----
expenses

Add other    57           -----   57         52           -----  52
income

Add
depreciation
and          449          87      362        383          77     306

amortization

EBITDA       (408)        (1,729) 1,321      640          (360)  1,000

Equity       20           -----   20         189          -----  189
compensation

Brazil
severance
and
executive    74           42      32         -----        -----  -----

recruiter
fee

Brazil
additional
foreign      (116)        (116)   -----      62           62     -----

exchange
losses

Brazil
additional   153          153     -----      -----        -----  -----
VAT tax
charge

Brazil
additional
inventory    1,159        1,159   -----      -----        -----  -----

reserve
charge

Change in
accounting
estimate-    354          -----   354        -----        -----  -----

OH rates
revised

Inventory
reserve in
USA-         375          -----   375        -----        -----  -----
discontinued
product line

Severance
charges in   -----        -----   -----      110          -----  110
USA

Brazil CEO
termination  -----        -----   -----      -----        -----  -----

settlement

ADJUSTED     $1,611       $(491)  $2,102     $1,001       $(288) $1,289
EBITDA

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

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

Operating Earnings and Adjusted EBITDA - Lakeland Consolidated with and
without Brazil ($000) *
              Nine months Ended October 31     Nine months Ended October 31
              2013                             2012
                                    Lakeland                         Lakeland
              Lakeland              worldwide  Lakeland              worldwide
                           Brazil**                         Brazil**
              consolidated          excluding  consolidated          excluding
                                    Brazil                           Brazil

Sales         $69,163      $5,398   $63,765    $71,719      $14,173  $57,546

Year over     (3.6)%       (61.9)%  10.8%      (21.8)%      263.7%   (31.7)%
year growth

Gross profit  18,584       (478)    19,063     21,729       4,772    16,956

Gross margin  26.9%        (8.9)%   29.9%      30.3%        33.7%    29.5%

Operating     18,555       3,264    15,291     21,285       5,017    16,268
expenses

Operating
expense as %
of            26.8%        60.5%    24.0%      29.7         35.4%    28.3%

sales

Operating     30           (3,742)  3,772      444          (244)    688
income (loss)

Less other    (271)        (271)    -----      (8,627)      (8,627)  -----
expenses

Add other     20           -----    20         85           -----    85
income

Add
depreciation
and           1,226        276      950        1,129        224      905

amortization

EBITDA        1,005        (3,737)  4,742      (6,969)      (8,647)  1,678

Equity        179          -----    179        366          -----    366
compensation

Brazil
arbitration   -----        -----    -----      7,874        7,874    -----
judgment

Brazil
severance and
executive     154          122      32         -----        -----    -----

recruiter fee

Financing
fees in other
expenses      75           -----    75         -----        -----    -----

(adjustments)

QD plant
shutdown
costs and     480          -----    480        -----        -----    -----

costs of sale

Brazil
additional
foreign       271          271      -----      840          840      -----

exchange
losses

Brazil
additional    153          153      -----      -----        -----    -----
VAT tax
charge

Brazil
additional
inventory     1,159        1,159    -----      -----        -----    -----

reserve
charge

Change in
accounting
estimate-     354          -----    354        -----        -----    -----

OH rates
revised

Inventory
reserve in
USA-          375          -----    375        -----        -----    -----

discontinued
product line

Severance
charges in    -----        -----    -----      110          -----    110
USA

ADJUSTED      $4,205       $(2,032) $6,237     $2,205       $67      $2,139
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 stated previously, management believes it will 
have Brazil turned around by the first quarter in 2014. Other than Brazil, all 
of our other business units are doing well and as projected. Once Brazil is at 
breakeven, the full earning potential of the rest of the Company will be 
apparent.

"It is important to note that our current bank covenants and lines of credit 
are NOT dependent upon operations in Brazil. Thus, management is free to 
reorganize it, and we have and will continue to follow such a course of 
action."

Financial Results Conference Call

Lakeland will host a conference call at 4:30 PM (EST) today to discuss the 
Company's third 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 877-870-4263 (Domestic) 412-317-0790 (International) or 
855-669-9657 (Canada), Pass Code 10037639.

A conference call replay will be available by dialing 877-344-7529 (Domestic) 
or 412-317-0088 (International), Pass Code 10037639.

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)
                                      October 31, 2013 January 31, 2013

ASSETS                                (Unaudited)

Current assets

Cash and cash equivalents             $5,019           $6,737

Accounts receivable, net              15,047           13,783

Inventories                           40,440           39,271

Deferred income tax                   4,594            -----

Assets of discontinued operations in  20               813
India

Prepaid income tax                    629              1,565

Other current assets                  2,484            1,703

Total current assets                  68,233           63,872

Property and equipment, net           12,572           14,090

Prepaid VAT and other taxes,          2,417            2,461
noncurrent

Security deposits                     1,462            1,546

Other assets, net                     1,782            478

Goodwill                              872              871

Total assets                          $87,338          $83,318

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable                      $9,242           $6,704

Accrued compensation and benefits     1,300            976

Other accrued expenses                2,509            2,409

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

Current maturity of long-term debt    50               100

Current maturity of arbitration       1,000            1,000
settlement

Short-term borrowing                  2,701            7,129

Borrowings under revolving credit     11,791           9,559
facility

Total current liabilities             28,593           27,902

Accrued arbitration award in Brazil   4,008            4,711
(net of current maturities)

Canadian loan                         1,012            1,298

Subordinated debt, net of OID         1,539            -----

Other liabilities - accrued legal     78               87
fees in Brazil

VAT taxes payable long-term           3,330            3,329

Total liabilities                     38,560           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 5,711,727
and


                                  57               57
5,688,600; outstanding 5,355,286 and
5,332,159 at October 31, 2013 and 
January 31, 2013, respectively 
Treasury stock, at cost; 356,441
shares at October 31, 2013 and
January 31,                           (3,352)          (3,352) 
2013, respectively 
Additional paid-in capital            53,347           50,973 
Retained earnings (deficit)           1,019            (473) 
Accumulated other comprehensive loss  (2,293)          (1,214) 
Total stockholders' equity            48,778           45,991 
Total liabilities and stockholders'   $87,338          $83,318
equity 
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(UNAUDITED) 
Three months and nine months ended October 31, 2013 and 2012 


                               THREE MONTHS ENDED  NINE MONTHS ENDED
                               October 31,         October 31,
                               2013      2012      2013      2012

Net sales                      $22,787   $24,239   $69,163   $71,719

Cost of goods sold             17,745    16,952    50,579    49,989

Gross profit                   5,042     7,287     18,584    21,730

Operating expenses             6,072     7,020     18,554    21,285

Operating profit (loss)        (1,030)   267       30        444

Foreign exchange gain (loss)   116       (62)      (272)     (840)
Brazil

Arbitration judgment in Brazil -------   -----     --------  (7,874)

Other income, net              57        52        21        172

Interest expense               (649)     (270)     (1,391)   (766)

Income (loss) before taxes     (1,506)   (13)      (1,612)   (8,864)

Income tax expense (benefit)   329       (295)     (3,103)   (669)

Net income (loss)              $(1,835)  $283      $1,491    $(8,195)

Net income (loss) per common
share

Basic                          $(0.31)   $0.05     $0.27     $(1.55)

Diluted                        $(0.31)   $0.05     $0.26     $(1.55)

Weighted average common shares

outstanding:

Basic                          5,919,253 5,330,286 5,607,654 5,276,288

Diluted                        5,919,253 5,367,243 5,715,151 5,276,288



SOURCE  Lakeland Industries, Inc. 
Lakeland Industries, 631-981-9700, Christopher Ryan, CJRyan@lakeland.com, Gary 
Pokrassa, GAPokrassa@lakeland.com 
http://www.lakeland.com 
http://photos.prnewswire.com/prnh/20120611/NY21959LOGO 
To view this news release in HTML formatting, please use the following URL: 
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CO: Lakeland Industries, Inc.
ST: New York
NI: TEX CST ERN CONF  
-0- Dec/12/2013 21:02 GMT
 
 
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