Lakeland Industries, Inc. (NASDAQ:LAKE)

WEB NEWS

Thursday, June 15, 2017

Research

Ex-GeoBargain $LAKE ($11.85, marked up ~5%) announced Q1 2018 results:

  • Sales of $23.0 million vs $20.4 million in the prior year and ahead of analyst estimates of $21.9 million

  • Non-GAAP EPS of $0.25 vs $0.06 in the prior year and well ahead of analyst estimates of $0.16

Quotes from management:

"Both domestic and international revenue increased in the first quarter as the dollar modestly strengthened from the prior year in many of the markets in which we operate, while consolidated in-country sales in local currencies increased from the prior year period.  Approximately $8 million in domestic sales for key product lines remained flat in the quarter primarily due to continued weakness in the oil and gas sector, but our profitability was enhanced as we transitioned away from lower margin subset markets.  We have been placing concerted emphasis on allocating our resources toward higher margin products using modifications of existing product lines to create new, higher margin garments sold into new vertical markets.  This capability is somewhat unique to Lakeland because we own our own manufacturing facilities and employ a highly trained workforce spanning five countries on three continents...

...With a strengthened balance sheet, all major global operations turning a profit in the first quarter and productivity and market share enhancement strategies in place, we are well positioned for continued growth during the balance of the year and beyond."

Q2 and Q3 fiscal 2018 Guidance Commentary from conference call Q&A:

Q2 seasonally will be a little bit less than Q1 simply because of the summer months. July and August tend to be the months, everybody in the northern hemisphere takes vacation. And if they’re not working at a factory, they’re not wearing our garments. So Q2 will probably fall just a little shy of this quarter on the revenue side. Earnings and margin should remain the same okay?

Third quarter, it seasonally will pick up again, get close to this quarter, if not exceed it. And if we exceed it, it will be because of new product introductions and some new verticals. As I said, the only thing that’s sort of sitting back there that could pop on is the European market and it may very well, but not in the second quarter. The Europeans take the whole month of August off so.


Friday, August 7, 2015

Comments & Business Outlook

RONKONKOMA, N.Y., Aug. 6, 2015 /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 that on July 31, 2015 it completed a conditional closing of the sale of its wholly-owned Brazilian subsidiary ("Lakeland Brazil") to a company owned by a current manager of the subsidiary. This sale is pursuant to a shares transfer agreement previously signed on June 19, 2015 which set out the details to finalize the Company's exit from Brazil. The sale, which shall be deemed to have been consummated as of July 31, 2015, is subject to acceptance of the shares transfer on the Commercial Registry by the Brazilian authorities, which is expected to be completed within approximately the next thirty days. Although no assurances can be given in that regard, the Company expects Commercial Registry processing of the shares transfer will not adversely affect the closing.

In exchange for receiving the shares entitling full ownership of Lakeland Brazil, the new owner has assumed all liabilities and obligations of Lakeland Brazil, whether arising prior to, on or after the closing date of the shares transfer. In contemplation of the shares transfer, the Company provided approximately US$1,130,000 through August 1, 2015 to Lakeland Brazil and has agreed to provide additional amount of approximately US$95,000 on September 1, 2015 to support certain operational costs of Lakeland Brazil. In addition, the Company has agreed to provide partial funding in respect of certain labor court case reimbursements over the next two years. There are further bonus payments of US$150,000 conditional upon Lakeland Brazil's new owner not declaring bankruptcy or reorganizing after 12 months from the date of share transfer and an additional US$100,000 under similar circumstances after 24 months. The Company believes the transfer of Lakeland Brazil and its commitment to contingency coverage relating to labor court claims over the next two years will be more than offset by the anticipated U.S. tax benefit of approximately US$9.5 million to be gained through a worthless stock deduction for the Brazil business that the Company will claim on its U.S. tax return for the fiscal year endedJanuary 31, 2015.  

The conditional closing of the transaction announced today includes the transfer by Lakeland Brazil of its Brazilian land ownership to the Company. The Company's exposure to certain liabilities arising in connection with the prior operations of Lakeland Brazil and the Company's claiming of the tax deduction is more fully disclosed in the Company's filings with the Securities and Exchange Commission. The Company estimates that the transactions involved with the completion of its exit from Brazil will result in a loss of approximately $1.2 million to be reflected on its income statement and an increase of approximately $46,000 to stockholders equity as a result of recording this transaction.

Christopher J. Ryan, President and Chief Executive Officer of Lakeland Industries, commented, "We are pleased to have completed this process which has been an extraordinary drain on our management team.  The Company may now focus all of its energy on driving organic growth in the 12 regions around the world in which we operate. In turn, we'll be in a better position to improve our manufacturing leverage, operating efficiencies, profitability and cash flow. With our improved outlook and without the burden of Brazil, we'll have a broader runway to bolster our sales and marketing efforts and concentrate on new product innovations. We are very excited and revitalized by the completion of this exit process as well as concluding a three year turnaround that has put Lakeland Industries in a stronger position as we enter our next chapter of growth.

"Lakeland continues to gain brand awareness around the world which we believe will enhance our growth prospects. We've proven Lakeland's manufacturing and delivery platform is unique, which helped us win large contracts from epidemics, including Ebola, Avian Flu, and MERS, because we have the capability to produce and ship product quickly, meeting the demanding requirements of customers. We believe this demonstrated an important competitive advantage in execution and reputation which is increasingly making us a go-to choice not only for the major infectious disease emergencies that occur every year or two, but also for the many oil and chemical spills that occur on a regular basis.

"Our existing product lines are suitable for most every need within the industrial protective apparel industry. We have proven that we are among the leaders in product quality while possessing the ability to ramp up production based on market demand. Additionally, now that that we have the time to focus on them, a number of new initiatives being implemented -- including end-user market diversification and upgraded information systems and inventory management procedures -- are expected to deliver further benefits to our profitability and ability to serve our customers better. These are the results we are looking to achieve that will ultimately lead to building more shareholder value."


Friday, June 26, 2015

Comments & Business Outlook

RONKONKOMA, N.Y., June 25, 2015 /PRNewswire/ -- Lakeland Industries, Inc. (the "Company") (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 that it has signed a definitive agreement to exit its Brazilian operations through a transfer of shares of its wholly-owned Brazilian subsidiary ("Lakeland Brazil") to a company owned by a current manager of the subsidiary. The shares transfer and related details to finalize the Company's exit from Brazil are expected to be completed on or around July 31, 2015.

In exchange for receiving the shares entitling full ownership of Lakeland Brazil, the new owner will assume all liabilities and obligations of Lakeland Brazil, whether arising prior to, on or after the closing date of the shares transfer. In contemplation of the shares transfer, the Company has provided US $717,000 to Lakeland Brazil in the form of a capital raise and has agreed to provide an additional approximate US $508,000 through September 1, 2015 to support certain operational costs of Lakeland Brazil. In addition, the Company has agreed to provide partial funding in respect of certain labor court case reimbursements over the next two years.  The Company believes the transfer of Lakeland Brazil and its commitment to contingency coverage relating to labor court claims over the next two years will be more than offset by the anticipated U.S. tax benefit of approximately US $9.5 million to be gained through a worthless stock deduction for Brazil that the Company will claim.  The closing of the transaction announced today is subject to several conditions precedent, including the transfer by Lakeland Brazil of its Brazilian land ownership to the Company. The Company's exposure to certain liabilities arising in connection with the prior operations of Lakeland Brazil and the Company's claiming of the tax deduction is more fully disclosed in the Company's filings with the Securities and Exchange Commission (Form 8-K). While management is still analyzing the transaction management believes there will not be a material adverse change to stockholders equity as a result of recording this transaction.

Christopher J. Ryan, President and Chief Executive Officer of Lakeland Industries, commented, "The agreement announced today represents a significant milestone in the Company's strategy to exit from Brazil. For nearly three years we have expended considerable resources in terms of personnel and time working toward reducing or eliminating Lakeland Brazil's negative contributions to our consolidated results while working on this exit strategy.  We are very pleased to have arrived at this point of our strategic efforts in a position to unlock a seemingly unrecognized value in the form of a tax benefit while significantly removing risks and uncertainties. As we have stated, our exit from Brazil will enable us to focus on improving our growth, profitability and cash flow generation in other markets and areas of the business which hold greater promise for Lakeland." 


Tuesday, June 16, 2015

Comments & Business Outlook

First Quarter 2016 Results

  • Q1 2016 sales were $24.8 million vs $21.7 in the prior year period but below analyst estimates of $26.0 million.
  • Q1 2016 EPS from continuing operations were $0.30 vs $0.06 in the prior year and ahead of analyst estimates of $0.27.

Quotes from management:


Christopher J. Ryan, President and Chief Executive Officer of Lakeland Industries, stated, "The first quarter of fiscal 2016 continued if not accelerated the momentum from the second half of last year.

Effective in the first quarter, we implemented discontinued operations that reflects our decision to exit Brazil. The pending exit from our business unit in Brazil is making progress and we believe it will be completed within the second quarter of our current fiscal year. The Company's impressive performance in the first quarter is more evident now that we have removed Brazil from our consolidated global operations and report results from continuing operations on a year-over-year basis. Upon completion of the Brazil transaction, we will have essentially completed the turnaround strategy that commenced approximately three (almost four as the DuPont license terminations was July 2011) years ago. The impact from this turnaround can be seen across the board in our financial performance metrics, which has been further aided by higher margin sales relating to the Ebola crisis.

"In the first quarter of fiscal 2016, revenues from continuing operations increased 14% from the prior year. Less than 10% of fiscal 2016 first quarter revenues of $24.8 were derived from protective chemical and disposable garment purchased in connection with the Ebola outbreak. Despite the strong dollar that reduces sales on a reported basis in the U.S. and weakness in the global petrochemical market resulting from lower oil prices, we delivered organic sales excluding Ebola-related garments which is consistent with our annual growth plans.

"Lakeland's continuing operations delivered tremendous improvement. Beyond the top line growth, we also benefited from the manufacturing leverage in our business and disciplined expense management to drive improvements in our efficiencies and profitability. Net income from continuing operations increased by over 500%, while we also reported significant growth in free cash flow and Adjusted EBITDA.

"With our exit from Brazil nearing completion, we'll be able to sharpen our focus on organic growth initiatives, including new product introductions, further development of the global healthcare sector, and otherwise attaining market share in the 10 countries where we have continuing operations. The organic growth strategies that have been implemented continue to bear positive results, while we remain focused on expense management, profitability enhancements and cash flow generation. We reiterate that the Company's financial performance outlook from continuing operations remains very encouraging."


Tuesday, May 19, 2015

Research

Took a small position in $LAKE at current levels based on Q1 results

We will be more aggressive on adding $LAKE if shares pullback.   In related news, Craig Hallum upped his $LAKE target to $19 from $17.


Friday, September 12, 2014

Comments & Business Outlook

RONKONKOMA, N.Y., Sept. 12, 2014 /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 the global availability of its protective apparel for use in handling the Ebola virus.  In response to the increasing demand for specialty protective suits to be worm by healthcare workers and others being exposed to Ebola, Lakeland is increasing its manufacturing capacity for these garments and includes proprietary processes for specialized seam sealing, a far superior technology for protecting against viral hazards than non-sealed products. 

"Lakeland stands ready to join the fight against the spread of Ebola," said Christopher J. Ryan, President and Chief Executive Officer of Lakeland Industries.  "We understand the difficulty of getting appropriate products through a procurement system that in times of crisis favors availability over specification, and we hope our added capacity will help alleviate that problem.  With the U.S. State Department alone putting out a bid for 160,000 suits, we encourage all protective apparel companies to increase their manufacturing capacity for sealed seam garments so that our industry can do its part in addressing this threat to global health.

Mr. Ryan continued, "With our diverse global operations and the breadth of our protective apparel line incorporating superior sealed seam technology, we are ideally situated to assist organizations worldwide as they handle Ebola.  Despite reports citing the short supply of protective suits for handling hazardous materials, we believe it is very important to alert those in need around the world that Lakeland has appropriately qualified and  certified suits, ample manufacturing capacity, and numerous distribution points to supply these garments."

Last Friday, U.N. Secretary-General Ban Ki-moon laid out plans to set up an Ebola crisis center, with a mission to halt the spread of the virus in West African countries in six to nine months. He is counting on public and private funding from around the world of some $600 million needed for supplies in West Africa. Nearly 2,300 people have died and 4,300 confirmed or probable cases of Ebola have been reported since March.  Mr. Ban said in a statement, "The number of cases is rising exponentially. The disease is spreading far faster than the response. People are increasingly frustrated that it is not being controlled." 

Within the past several weeks, Lakeland has provided suits that are being used by Doctors Without Borders in West Africa.  Lakeland's global team worked with leaders from Doctors Without Borders to ensure that the technical data and performance specifications for Lakeland's garments exceeded the necessary protective requirements.


Monday, April 28, 2014

Comments & Business Outlook

Fourth Quarter 2014 Results

  • Revenues for the fourth quarter 2014 were $22.2 million vs $23.3 million in the prior year
  • Operating income was a loss of $388,000 in Q4 this year compared with an operating loss of $1,401,000 in Q4 last year and, excluding Brazil, increased from $35,000 loss last year to $280,000 profit this year.
  • Adjusted EBITDA for Q4 increased from a loss of $15,000 last year to a positive EBITDA of $1,403,000 this year and, excluding Brazil, increased from $522,000 last year to $1,628,000 this year.

 

Management's Comments

Christopher J. Ryan stated, "As stated previously, management believes it will have Brazil turned around by the second quarter in FY15. 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 completely reorganize it, and we have and will continue to follow such a course of action."


Thursday, December 12, 2013

Comments & Business Outlook

Third Quarter 2013 Results

  • The company reported net sales of $22.8 million in Q3FY14 compared with $24.2 million in Q3FY13.
  • The company reported a loss per share of $0.31 in Q3FY14 compared to earnings per share of $0.05 in Q3FY13.

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."


Wednesday, October 2, 2013

Deal Flow
  Entry into a Material Definitive Agreement.

On September 27, 2013, Lakeland Protective Real Estate, Inc. (the “Borrower”), a subsidiary of Lakeland Industries, Inc., closed on a loan arrangement with Business Development Bank of Canada (the “Lender”) for a secured term loan in the amount of Cdn$1,100,000 Canadian dollars (approximately US $1,063,933) (the “Loan Amount”). The terms of the loan are set forth in a Letter of Offer, dated August 30, 2013, between the Borrower and the Lender, which become effective on the closing date (the “Loan Agreement”). The maturity date of the loan is October 23, 2033. The per annum interest rate on the loan is fixed at 6.45% through August 23, 2018, and is subject to adjustment thereafter. Commencing November 23, 2013 and through August 23, 2018, the Borrower shall be obligated to make monthly payments of $8,168.96, which amount is inclusive of principal and interest.

At its option, Borrower may, once in any twelve month period, prepay up to 15% of the then outstanding Loan Amount without penalties or fees payable to Lender (the “Annual Prepayment”) provided that the loan is not in default. In addition to the Annual Prepayment, the Borrower may prepay at any time all or a part of the then outstanding Loan Amount, subject to a prepayment fee equal to three months interest on the principal amount being prepaid calculated at the fixed interest rate then in effect, plus any Interest Differential Charge (as defined in the Loan Agreement).

The Borrower’s repayment of the Loan Amount is secured by a security interest in substantially all of the assets of Borrower, including, without limitation, Borrower’s Canadian warehouse, pursuant to a general security agreement (the “Security Agreement”) entered into concurrently with the Loan Agreement.

The foregoing description of the Loan Agreement and Security Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement attached as Exhibit 10.1 and the Security Agreement attached as Exhibit 10.2 to this Current Report on Form 8-K, each of which are incorporated herein by reference.


Tuesday, September 17, 2013

Company Rebuttal

RONKONKOMA, N.Y., Sept. 16, 2013 /PRNewswire/ -- Lakeland Industries, Inc. (NASDAQ: LAKE), a leading global manufacturer of protective clothing for industry, healthcare and to first responders on the federal, state and local levels, is responding to recent inquiries of shareholders and investment articles surrounding the junior and senior financing transactions completed by Lakeland Industries, Inc. (the "Company") in June 2013.

The per annum interest rate on the Company's senior credit facility of $15 million with Alostar Business Credit, a division of Alostar Bank of Commerce, is LIBOR plus 525 basis points (with a floor of 6.25%).  Since the applicable per annum LIBOR rate is lower than 0.5%, the current effective per annum interest rate on the senior debt is 6.25%. 

As a condition precedent of the senior loan, the Company was required to obtain a $3.5 million subordinated loan. The Company secured a junior loan with LKL Investments, an affiliate of Arenal Capital, which provides for per annum interest at the rate of 12% through December 27, 2016, and the issuance to the junior lender of a common stock warrant to purchase 566,015 shares of the common stock of the Company at $.01 per share.  The overall per annum rate of return of the entire $3.5 million junior debt financing, taking into account the 12% interest rate and assuming a three year exit on the warrant, is approximately 30%.

Being that the junior loan was a condition of the senior financing transaction, the Company has calculated a blended per annum rate of the loans of approximately 10 to 11% based upon certain reasonable assumptions, including the relative size of the two loans and attributing a value to the warrant based upon the market price of the common stock.

In addition, as part of the junior financing, the junior lender was given the right to elect one director to the Board of Directors of the Company commencing with the Company's annual meeting of stockholders in 2014.  Accordingly, no representative of the junior lender is currently a member of the Board of Directors of the Company.

On September 13, 2013, the Company hired Eduardo Tavares as the executive in charge of its wholly-owned subsidiary, Lakeland Brasil S.A. ("Lakeland Brasil"). Mr. Tavares is primarily responsible for running the Company's Brazilian operations.  Mr. Tavares was hired by the Company for his experience in turning-around distressed companies in Brazil, including companies which operate in the same markets as does Lakeland Brazil. Mr. Tavares also has extensive knowledge of the Company's customer base and its competitors.


Friday, September 13, 2013

Comments & Business Outlook

Second Quarter Fiscal 2014

  • The company reported sales of $24.6 million in Q2FY14 compared with $23.5 million in Q2FY13.
  • The company reported non-GAAP EPS of $0.14, compared to a loss of $0.09 for the same quarter of fiscal 2013.

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."


Thursday, May 2, 2013

Comments & Business Outlook
A 13D just filed indicates that a large mutual fund has taken a large position in GeoSpecial LAKE.

Wednesday, May 1, 2013

13D and 13G Activity

13D filed 5/01/2013 by ANCORA ADVISORS takes 7.33% stake in LAKE

The shares of Common Stock covered by this Schedule 13D were acquired in recent months by Ancora Advisors, LLC for investment purposes in the ordinary course of business. Ancora Advisors, LLC reserves the right to take any and all actions that they may deem appropriate to maximize the value of their investments, including, among other things, purchasing or otherwise acquiring additional securities of the Issuer, selling or otherwise disposing of any securities of the Issuer beneficially owned by them.  In each case, in the open market or in privately negotiated transactions or formulating other plans or proposals regarding the Issuer or its securities to the extent deemed advisable by Ancora Advisors, LLC in light of their general investment policies, market conditions, subsequent developments affecting the Issuer and the general business and future prospects of the Issuer.  Ancora Advisors, LLC may take any other action with respect to the Issuer or any of the Issuer’s debt or equity securities in any manner permitted by applicable law.


Tuesday, April 23, 2013

Deal Flow

8-K 4/23/2013

Loan Agreement dated on April 19, 2013 between Lakeland Industries, Inc. and Bank Itau in Brazil to borrow R$560 thousand (approximately USD$280 thousand) for working capital


Tuesday, February 26, 2013

Deal Flow
RONKONKOMA, N.Y., Feb. 25, 2013 /PRNewswire/ -- Lakeland Industries, Inc. (the "Company") (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 that its UK subsidiary has closed with HSBC Invoice Finance (UK), Ltd ("HIF"), a £1,000,000 (approximately USD $1,500,000) Accounts Receivable Financing. The use of proceeds is for working capital. The terms allow for borrowing of up to 80% of eligible accounts receivable as defined.

Wednesday, October 17, 2012

Deal Flow
RONKONKOMA, N.Y., Oct. 17, 2012 /PRNewswire/ -- Lakeland Industries, Inc. (the "Company")  (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 amendments to its primary credit facility with TD BANK, N.A.  The Company is now in compliance with all covenants relating to the revised revolving credit agreement.
The amendments were required as a result of the arbitration award issued against the Company in May 2012 and the subsequent entry into a settlement agreement in respect thereof, as well as due to recent operating results of the Company, which collectively caused certain events of default under the TD Bank revolving credit facility and term loan facility, including an event of default for failure to comply with the minimum EBITDA covenant, which allowed TD Bank, at its option, to accelerate the loan. 

"We are pleased to have successfully amended our credit agreement with TD Bank," said Lakeland Industries President and Chief Executive Officer Christopher J. Ryan .  "The terms of the revised credit facility along with the recently announced Brazil arbitration award settlement remove a great deal of uncertainty for the Company.  We appreciate that TD Bank has been supportive of our business pursuits and operational challenges.  Management of Lakeland now looks forward to working toward international growth for the Company."   

The amendments announced today modify the covenants of the former credit facility and as such waive all previous defaults while requiring no forbearance agreements.  The revolving credit facility has been revised to a total borrowing commitment of $17.5 million, with a revised expiration date of June 30, 2013 at a maximum interest rate of LIBOR plus 3.50%, with current outstanding borrowings of approximately $15,500,000.  The prior credit agreement allowed up to $30.0 million of borrowing capacity at a maximum interest rate of LIBOR plus 2.50% and had an expiration date of June 30, 2014.  The revised credit facility -- as well as the prior agreement -- requires access fees for all unused portions of the total borrowing capacity provided to the Company.  With the borrowing base formulas currently in place, the Company would be limited to approximately $17.5 million in any case.

Mr. Ryan added: "We have made significant progress in coming to terms on the Brazil arbitration settlement and successfully amending our bank facility.  These have been two of the three pressing issues that need to be resolved so that we may fully focus our attention on the third issue which is the capital requirements associated with the Brazil arbitration settlement and other matters for which we continue to work with our advisors Raymond James in the evaluation of a range of strategic alternatives.  We will announce developments at the appropriate time."


Tuesday, October 16, 2012

Maximization of Shareholder Value

Latest developments on Lake's details surronding their efforts to sell the company.
 
On June 12, 2012, the Issuer announced that it had engaged the investment banking firm of Raymond James & Associates, Inc. to assist the Issuer’s Board of Directors in its evaluation of a broad range of financial and strategic alternatives, including, but not limited to, changes in the Issuer’s capitalization, potential restructuring of existing debt or a possible sale of all or part of the Issuer.  Subsequent to such announcement, representatives of the Issuer contacted Ansell Healthcare Products LLC, an affiliate of the Reporting Persons (“Ansell”), to inquire regarding its interest in exploring a range of potential transactions with the Issuer.  Thereafter, following the execution of the Confidentiality Agreement (as defined below), Ansell conducted a due diligence investigation of the Issuer in connection with Ansell’s consideration of a potential acquisition or similar transaction involving the Issuer.
 
Based on its initial due diligence investigation of the Issuer, Ansell was unable to conclude that an acquisition or similar transaction was in the best interest of Ansell.  Ansell has not made a determination whether to conduct further due diligence with respect to the Issuer but, subject to the consent of the Issuer, reserves the right to do so.  In the event Ansell determines to conduct further due diligence with respect to the Issuer, there can be no assurance that Ansell will determine to make a proposal to the Issuer with respect to an acquisition or similar transaction, but (subject to the terms of the Confidentiality Agreement) Ansell reserves the right to do so.

To see more on this topic, please see our original report on LAKE here.


Friday, June 15, 2012

Comments & Business Outlook

First Quarter 2013 Results

  • Net sales from continuing operations decreased $1.6 million, or 6.2%, to $24.0 million for the three months ended April 30, 2012, from $25.6 million for the three months ended April 30, 2011.
  • Operating profit from continuing operations decreased $1.6 million for the three months ended April 30, 2012, from $1.6 million for the three months ended April 30, 2011.
  • Net income from continuing operations decreased $11.5 million to a loss of $(10.1) million for the three months ended April 30, 2012, from a profit of $1.3 million for the three months ended April 30, 2011. The decrease in net income primarily resulted from the $10,000,000 Arbitral Award in Brazil and loss in volume in the US resulting from the DuPont termination.
  • Earnings (loss) per share (EPS) from continuing operations on a fully diluted basis for the first quarter ended April 30, 2012 was $(1.94) as compared to EPS of $0.25 for the 2012 fiscal first quarter. Adjusting for the $10,000,000 charge EPS would have been break even for the quarter.

Management's Comments

Commenting on the financial results and recent developments, Lakeland Industries President and Chief Executive Officer Christopher J. Ryan said, "We reported yet another quarter of record top line performance for our international sales operations. This performance is driven by large bid orders received in Brazil and continued improvement in our other high growth markets in Latin America and Asia. International revenues from continuing operations as a percentage of consolidated sales increased to 59.2% in the first quarter of fiscal 2013, the highest level in the Company's history. This percentage grew from 52.5% in the fourth quarter of fiscal year 2012 and 42.5% in the first quarter of the prior year.

"Total international sales in the first quarter were a record $14.2 million, an increase of over 30% from $10.9 million in the same period of the prior year and 34% higher than the fourth quarter of last year. In Brazil, first quarter sales increased by 28% from the prior year, although this reflected only a portion of the shipments we had planned to make. As previously disclosed, the Company received large bid purchase orders for delivery in fiscal 2013, resulting in a marked anticipated rebound for total Brazil sales expected in fiscal 2013. Due to the timing of shipments and related revenue recognition, sales in the fiscal 2013 first quarter reflect only a portion of the total order backlog. Although on a smaller scale, our operations in other Latin American markets are experiencing significant growth. And China continues to deliver impressive double digit increases in revenue from sales throughout the region.

"Amid all of the progress we are making internationally, our performance improvements are being marred by the Brazil Arbitration Award which was ruled against Lakeland Industries. We have accrued $10,000,000 or a reduction of $1.91 per share in the first quarter for the judgment, although we are aggressively attempting to have the award set aside. As a result of this ruling, we are in default on our long term debt and also in default of the minimum EBITDA covenant related to our primary bank debt facility. We strongly believe that the arbitration decision is inconsistent with the underlying facts, and we continue to work with counsel to determine and evaluate our options. We believe that we have available resources, together with additional outside funding through debt or equity financings or asset sales, which will enable us to satisfy any potential award adverse to the Company and continue operations on a viable basis.

"To strengthen the Company's financial position, particularly in light of the Brazil Arbitration Award ruled against us, we have reduced our inventories by $3.4 million and paid down our bank debt by $1.7 million net, since the beginning of the fiscal year. These actions complement other previously announced initiatives, which include improvements to the Company's cost structure, reductions in overhead, and investments in sales and marketing to accelerate our top line growth both domestically and abroad.

"Now that we have removed our dependence on DuPont, we are in the process of effectuating a turnaround for our domestic operations, which will not be complete until we have regained our presence in the U.S. The turnaround in the U.S. along with continued growth internationally will put us in a position to accelerate earnings and cash flow based on the leverage in our business model. Due to the timing of certain large shipments in Brazil and related revenue recognition, some of the benefits to our consolidated financial performance that we had anticipated would impact our first quarter results will go into the second quarter. In summary, we remain very optimistic for the progress and potential of our international operations and at the same time are taking action to maximize our overall profitability and financial strength."


Thursday, June 14, 2012

Investor Alert

Prior news from 5/14/2012

RONKONKOMA, NY--(Marketwire - May 14, 2012) - Lakeland Industries, Inc. (NASDAQ: LAKE) today announced that it has received notice of an unfavorable arbitration award in the arbitration proceeding in Brazil to which it is a party together with its wholly-owned subsidiary, Lakeland Brasil S.A ("Lakeland Brasil" and together with Lakeland Industries, Inc., the "Company") involving the Company and two former officers (the "former officers") of Lakeland Brasil. The Company plans to file on the date hereof a request for clarification of the award in favor of the former officers that may result in a modification of the award. The award will not be final until the motion for clarification is decided, after which the Company may still file a lawsuit to set aside the award in a State Civil Court in Brazil. The filing of the motion for clarification will stay enforcement of the award. Given the difficulty in modifying or setting aside arbitration awards, there can be no assurance that the Company will be successful in achieving any significant modifications to the arbitration award or to have it set aside. Full release


Maximization of Shareholder Value

Prior news from 6/12/2012

RONKONKOMA, N.Y., June 12, 2012 /PRNewswire/ -- Lakeland Industries, Inc. (NASDAQ: LAKE) (the "Company") today announced that it has engaged the investment banking firm of Raymond James & Associates, Inc. to assist the Board of Directors in its evaluation of a broad range of financial and strategic alternatives, including, but not limited to, changes in the Company's capitalization, potential restructuring of existing debt or a possible sale of all or part of the Company.  The Company determined to pursue a review of these transaction alternatives in order to enhance shareholder value and strengthen its financial position in light of the potential enforcement of the $10 million arbitral award against the Company which was initially reported by the Company in May 2012.


Wednesday, April 18, 2012

Comments & Business Outlook

Fourth Quarter 2011 Results

  • Net sales from continuing operations decreased $4.7 million, or 18.8%, to $20.2 million for the fourth quarter ended January 31, 2012 compared to $24.8 million for the quarter ended January 31, 2011.
  • Net loss from continuing operations was $(1.0) million for the quarter ended January 31, 2012 as compared with net income from continuing operations of $1.2 million for the quarter ended January 31, 2011.
  • Earnings (loss) per share (EPS) from continuing operations for the fourth quarter ended January 31, 2012 was $(0.19) as compared to EPS of $0.23 for the 2011 fiscal fourth quarter.

Management's Comments

Mr. Ryan continued, "Lakeland Industries is clearly making progress in turning its business around through the creation of a global platform intended to deliver long term profitable growth. Important steps were taken throughout fiscal 2012 and thus far in 2013 to bring us closer to realizing the potential of our global platform.

"Notable developments include the receipt of a signed purchase order valued at approximately $5.3 million net of VAT taxes from the Brazilian Navy. Revenue from this order is expected to be recognized in the first through third quarters of fiscal 2013. We also received a separate signed purchase orders for firefighting gear in Brazil valued at approximately $2.3 million net of VAT taxes, with delivery of products and revenue recognition expected during the first half of fiscal 2013.

"Signed purchase orders from the Company's operations in Brazil combine for approximately $8 million, the highest backlog in our history.

"Further to our growth in Brazil, the timing of these large orders was fortuitous as they aligned with the expansion of our manufacturing facilities in that country. Our manufacturing capacity was doubled in fiscal 2012. We also have just completed the expansion of the capacity and capabilities of our Mexican plant, which will further accommodate our growth in Chile and Argentina and the plant closure in Missouri. A catalyst for the changes in Mexico is the increasing labor and shipping costs for manufacturing in China. We will take advantage of our geographically diversified manufacturing bases to profit from our international sales traction.

"Evidenced by large orders for proprietary products in Brazil and the need for Lakeland-branded products in the U.S. and other countries, we continue to invest in new product development and certifications. Research and development expenses relating to new product development initiatives were nearly $430,000 in fiscal 2012 and are projected to increase to approximately $510,000 this year.

"Among our cost savings initiatives in fiscal 2012, we designated our glove manufacturing subsidiary in India for discontinuation. In addition to pre-tax charges of $0.9 million taken in the third quarter relating to our manufacturing business in India, we have written down the real estate assets by $540,000 net of taxes in the fourth quarter. A total of $1.8 million in pre-tax charges have been recorded in fiscal 2012.

"A major aspect of our turnaround relates to the significant part of the Company's disposable and chemical product sales in the U.S. which have been removed as a result of the termination of our licensing agreement with DuPont terminating our licensing relationship. The fourth quarter saw a winding down and ultimate elimination of sales of DuPont products. We are in the process of replacing these lost sales with Lakeland-branded offerings. Charges were taken in the fourth quarter for approximately $223,000 pertaining to the reduction of manufacturing and warehousing capacity in Missouri that are no longer required, although the overhead savings will be realized beginning in our second quarter of fiscal 2013.

"As we enter the new fiscal year, we are pleased to report that we expect to return to profitability in the first quarter. This turnaround is occurring faster than we anticipated due to the strength of our Brazilian operations. Our international sales from continuing operations - comprising 52.5% of total sales in the fourth quarter, which marks the first time in the Company's history that foreign sales have been greater than domestic sales - are expected to continue to grow as a percentage of total revenues. And with domestic revenues at a low water mark, we have the opportunity for improvement here as well. With available, lower cost manufacturing capacity and the accumulation of market share in sales channels in some of the fastest growing markets around the world, we are excited for what 2013 holds for Lakeland Industries."


Monday, January 9, 2012

Notable Share Transactions

RONKONKOMA, NY--(Marketwire - Dec 28, 2011) - Lakeland Industries, Inc. (NASDAQ: LAKE) today responded to the Schedule 13D filed with the Securities & Exchange Commission on December 23, 2011 by Ansell Limited ("Ansell"). Such Schedule 13D reported pursuant to applicable securities regulations, the purchase and ownership by Ansell of 504,896 shares of common stock of Lakeland, representing 9.66% of the issued and outstanding shares. Ansell indicated that it acquired the shares for investment purposes.

Commenting on the filing, Christopher J. Ryan, Lakeland's President and Chief Executive Officer, said: "The purchases by Ansell, as reported this past Friday, were undertaken by Ansell through no solicitation or understanding with Lakeland. We believe such purchases reflect the undervaluation of the price of Lakeland's stock. At the current time, Lakeland's book value per common share is $14.34, and its tangible book value per share is $11.47. Based upon Friday's closing price of the common stock of $8.98, the aggregate common stock valuation of $46.9 million is less than one-half of Lakeland's trailing twelve (12) month's revenues of $101.2 million. This discount of greater than 50% exists, even after the Ansell announcement and the increase in the stock price from the $7.88 closing price on Thursday. In addition, given the foundation we have built for strong worldwide growth, which management expects will be reflected in improved financial performance both near and long term, we believe that our common stock market price does not reflect Lakeland's intrinsic value."


Friday, January 6, 2012

13D and 13G Activity
On December 28, 2012 LAKE responded to the Schedule 13D filed with the Securities & Exchange Commission on December 23, 2011 by Ansell Limited ("Ansell"). Such Schedule 13D reported pursuant to applicable securities regulations, the purchase and ownership by Ansell of 504,896 shares of common stock of Lakeland, representing 9.66% of the issued and outstanding shares. "We believe that our common stock market price does not reflect Lakeland's intrinsic value." (source)

Tuesday, June 15, 2010

Comments & Business Outlook

LAKE announced financial results for its first quarter fiscal year 2011 ended April 30, 2010.

Financial Results Highlights and Recent Company Developments

  • Revenue of $25.4 million in Q1FY11 at highest level in 6 quarters
  • International expansion efforts drive non-US revenue growth and improved market share
  • Revenues from outside the US were 39% of total in Q1FY11 as compared with 28% for Q1FY10
  • International Growth
    • Brazil acquisition added:
      • $2.9 million of sales in Q1FY11
      • Gross margin of 49.4% for Q1FY11
    • Stage set for further market expansion with strategically positioned global manufacturing facilities and enhanced product lines
  • Sales of disposable products in North America declined by 8% in Q1FY11 compared with prior year periods due to continued depressed economy, particularly in the automotive supply chain
  • Despite weakness in US sales during Q1FY11, the US Glove Division increased sales by 61.7% over Q1FY10, driven by Indian glove product finally gaining traction
  • Gross margin improves due to contributions from international operations
  • Operating expenses increased largely due to:
    • Additional SG&A in China resulting from $1.2 million increase in external sales from China
    • Foreign exchange losses mainly from unhedged losses against the Euro in China
    • Increased operating expenses in Brazil, largely sales personnel and related staff to support growth initiatives
  • Effective inventory control and cash management initiatives resulted in $4.6 million reduction of bank debt at 4/30/10 from 1/31/10
  • Cash position increased by 12% to $5.7 million at end of Q1FY11 from beginning of fiscal year
  • New leadership for Brazil operations; VAT tax issue arises from dispute between two states
  • Charge of $1.6 million has been taken as a result of VAT tax expense in Brazil relating to periods prior to the acquisition by Lakeland.

Management's Comments

Commenting on the financial results, Lakeland Industries President and Chief Executive Officer Christopher J. Ryan said, "We are pleased to report an improvement in consolidated revenues and gross margin for the first quarter of fiscal 2011. Upon reporting our year end results, we had anticipated a softer first quarter due to several larger contracts and certain seasonality issues. The improved performance was driven by continued growth from our international operations which generally deliver higher margins than our domestic sales.

"Since the end of the first quarter, a few events have occurred which we believe bode well for Lakeland Industries for the immediate and longer terms. The first event is the Gulf of Mexico oil spill. There appears to be minimal if any progress being made to contain the spill. As we have stated, in times of natural disaster, there typically is large and urgent need for the environmental, protective and safety apparel which we manufacture and distribute globally. Although we have increased production of these types of products at our facilities around the world to meet the substantial increase in demand for oil spill containment and remediation purposes, we are presently capacity constrained and the back orders are mounting. We are also experiencing severe stockout conditions as a result of our winding down inventory levels in anticipation of the EI DuPont de Nemours & Co. ("DuPont") transition.

"Reflecting the pick up in demand globally as the recession had abated with economic and industrial growth returning in many corners of the world, during the first quarter we had already begun to see our manufacturing capacity become challenged. As a result, we had anticipated sales growth in the second quarter and thereafter. The requirements pertaining to the Gulf of Mexico oil spill are incremental to this anticipated growth.

"Later in the year, we expect our manufacturing capacity to be realigned as a result of a second event. In May we disclosed a new agreement with DuPont relating to our licensing and production of garments using their material. Lakeland Industries was recently named one of what is expected to be a limited number of wholesale distributors for the sale of DuPont garments in the United States. To this end, we will remain a supplier to our existing customers and we will have additional marketing opportunities domestically. DuPont will supply us with finished goods, which means that, except for custom orders, we will no longer be purchasing from DuPont the raw materials that are made into the garments, nor will we be required to hold such large quantities of raw materials, work in progress and finished goods in our inventory. A substantial portion of shipping costs and related logistics and support personnel expenses also will be eliminated. This agreement is being phased in as we work through our remaining inventory and certain modifications are anticipated. However, we expect that upon full implementation as the year progresses we will significantly reduce our annual expenses.

"Consistent with our strategy for the past few quarters and in light of the new agreement with DuPont, we have systematically been reducing our inventory levels. Against a backdrop of increasing sales -- with the first quarter of fiscal 2011 at the highest level in a year and a half " we have seen an improvement in our working capital, inventory turns, cash generation, cash position and debt level. At April 30, 2010, we had reduced our inventory by nearly $5 million from the beginning of the fiscal year three months earlier, reduced the borrowings under our credit facility by nearly half to $5 million, and increased our cash balance nearly 12% since January 31, 2010 to $5.7 million. We have sufficient cash flow and balance sheet strength to accommodate the unanticipated Brazilian tax issue, and are well positioned for continued performance improvements with a markedly enhanced financial condition as well as to capitalize on the many growth opportunities we have identified within our global operating footprint."


Wednesday, May 19, 2010

Research

We will track the Lakeland Industries story.

Fiscal year 2010 ended January highlights:

  • Achieves milestone of 18th consecutive year of profitability
  • EPS of $.20 for 4Q10 represents best fourth quarter in three fiscal years
  • 4Q10 revenue increased 11.5% over 4Q09, reversing a year-long trend
  • 4Q10 sales from outside the U.S. as a percentage of consolidated sales increased by 25% over 4Q09 to 39.1% of total sales
  • Operating profits reported by new divisions in Brazil and China; India sales growth gaining traction
  • Reduced bank debt by $4.7 million in 4Q10 and by 61% in fiscal 2010

Strong Commentary:

Commenting on the year end financial results, Lakeland Industries President and Chief Executive Officer Christopher J. Ryan said, “It is with perseverance and successful implementation of our international growth strategy that Lakeland Industries reported its 18th consecutive year of profitability. Our performance in the final quarter of fiscal 2010 demonstrated the benefits of our global diversification as we rebounded from a loss in the third quarter to produce our highest level of fourth quarter earnings per share since fiscal 2007. Fourth quarter sales reversed a year-long trend of declining revenue by increasing 11.5% from the prior year.

“While sales in the U.S. have essentially stabilized after more than a year of deterioration, we view our investments in our international operations that commenced several years ago as being the key to our recently improved sales performance as well as for creating a more balanced and diversified platform for the long term. To this end, we believe we are positioned more competitively on a global scale. Lakeland has put in place the necessary infrastructure to target an addressable global market that dwarfs the U.S. market in size while growing significantly faster. With our mix of global distribution capabilities, manufacturing facilities, and a broad line of high quality products, we are poised to attain increased international sales and market share in fiscal 2011 and beyond.

“A key element in our international growth strategy has been our entry into Brazil. In the fourth quarter of fiscal 2010 our Brazil operations delivered impressive growth, which capped off improved sales for all of fiscal 2010 at $13.2 million. We continue to improve upon our business in Brazil through investment in new products and sales/marketing support. Our sales in fiscal 2010 in Brazil compares very favorably with calendar 2007 sales of $8.5 million, the last full year prior to our acquisition of this business in 2008.

“In addition to Brazil, we are gaining traction in our businesses in China, which until recently had only been a manufacturing base, India, Chile and the UK. International sales in the fourth quarter improved by 25% over the prior year and now comprise over 39% of our consolidated sales – up from approximately 5% in fiscal 2007 and 31% in fiscal 2009. To accommodate these sales channels, we have built, acquired and made capital investments for manufacturing of products in the U.S., Brazil, Mexico, China, and India, and presently offer 100 products worldwide. From this platform we intend to add scale in existing markets and to leverage our presence by broadening our reach into Argentina, which is already functioning, and into Russia and Kazakhstan later in fiscal 2011. By this time next year, we anticipate that new products and markets cultivated over the last four years should account for 50% of our total revenues."

If the company can build on its fourth quarter performance, its shares may eventually possess value.  With a trailing EPS of only $0.19, its likely a little early to take a position in LAKE unless an interview sheds some light on where EPS will end up in the Fiscal 2011 year ending in January.

Source: Business Wire (April 16, 2010)