Lakeland Industries, Inc. (LAKE) reported fourth-quarter fiscal 2024 (ended Jan 31, 2024) adjusted earnings of 22 cents per share, missing the Zacks Consensus Estimate of 30 cents.On a reported basis, the company reported a net loss of 13 cents per share, against net income of 2 cents per share in the year-ago quarter. Lakeland incurred a one-time charge of $2.7 million for excess and obsolete inventory during the quarter.Net sales of $31.2 million missed the Zacks Consensus Estimate of $33 million. However ...

EX-99.1 2 lake_ex991.htm PRESS RELEASE EXHIBIT 99.1 Lakeland Industries, Inc. Reports Fiscal 2024 Fourth Quarter Financial and Full Year Financial Results Fiscal 2024 net sales of $124.7 million and gross margin of 41.1% Fire Services further supported by announced acquisitions of Jolly Boots and the LHD Group fire and rescue business after year-end. FY 25 Revenue expected to be in the range of $140 million to $150 million HUNTSVILLE, AL / ACCESSWIRE / April 10, 2024 / Lakeland Industries, Inc. (NASDAQ:LAKE ...

PART I [ITEM 1. BUSINESS](index=3&type=section&id=ITEM%201.%20BUSINESS) Lakeland Industries is a global provider of safety products, expanding its portfolio through strategic acquisitions - Lakeland Industries is a global provider of quality safety products, including firefighter protective apparel, high-end chemical protective suits, limited use/disposable protective clothing, durable woven garments, high visibility clothing, gloves, and protective sleeves[17](index=17&type=chunk) - The company's strategy includes investing in high-growth geographies and product categories, building a global firefighter safety brand, driving profitable growth in high-end chemical and limited-use/disposable protective clothing, and acquiring complementary companies[19](index=19&type=chunk) - On November 30, 2023, Lakeland acquired New Zealand-based Pacific Helmets NZ Limited for approximately **NZ$14,000,000 ($8.6 million)**, enhancing its fire service protective helmets portfolio[19](index=19&type=chunk) - Effective February 5, 2024, the company acquired Jolly Scarpe S.p.A and Jolly Scarpe Romania S.R.L for approximately **$9.3 million**, adding a comprehensive range of firefighting and safety boot models[23](index=23&type=chunk) - As of January 31, 2024, the Company employed approximately **1,750 people worldwide**, with 90 in the U.S and 1,660 outside the U.S[34](index=34&type=chunk) - The company holds **14 U.S patents** (expiring between 2024 and 2037) and **76 trademarks**, actively protecting its intellectual property globally[33](index=33&type=chunk) - Operations are moderately seasonal, with higher sales in March-May, though this pattern is shifting due to increased demand from first responders and growth in the southern hemisphere[50](index=50&type=chunk)[51](index=51&type=chunk) [ITEM 1A. Risk Factors](index=8&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces risks from international operations, geopolitical instability, competition, and legal challenges - Significant international manufacturing operations (China, Vietnam, Mexico, Argentina, India) expose the company to risks like corruption, war, political instability, tariffs, trade embargoes, and currency fluctuations[62](index=62&type=chunk)[63](index=63&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - Geopolitical crises (e.g., Ukraine invasion) and pandemics (e.g., COVID-19) can disrupt supply chains, manufacturing, and demand, increasing costs and potentially leading to asset impairments[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) - The safety products market is **highly competitive and fragmented**, with larger competitors having greater resources[31](index=31&type=chunk)[32](index=32&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - Cybersecurity incidents could disrupt operations, lead to loss of confidential information, and damage reputation, requiring significant resources to mitigate[83](index=83&type=chunk)[84](index=84&type=chunk) - Evolving data privacy and security laws globally may increase compliance costs, lead to legal claims, fines, or reputational damage[85](index=85&type=chunk)[86](index=86&type=chunk) - The company is subject to product liability claims and faces lawsuits related to **PFAS in firefighter turnout gear**, which could result in substantial damages[118](index=118&type=chunk)[122](index=122&type=chunk) - Foreign currency exchange rate fluctuations can negatively impact profit margins if the U.S dollar strengthens[101](index=101&type=chunk)[102](index=102&type=chunk)[105](index=105&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=17&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[126](index=126&type=chunk) [ITEM 1C. Cybersecurity](index=17&type=section&id=ITEM%201C.%20Cybersecurity) The company maintains a comprehensive cybersecurity program and has experienced no material incidents recently - The company employs a range of tools and services for cybersecurity risk management, including network and endpoint monitoring, vulnerability assessments, and penetration testing[128](index=128&type=chunk)[129](index=129&type=chunk) - Cybersecurity controls include monitoring emerging data protection laws, regular employee training, multi-factor authentication, system access policies, and annual tabletop exercises[130](index=130&type=chunk)[137](index=137&type=chunk) - A Cyber Security Council, under the oversight of the Audit Committee, is responsible for cybersecurity threat risk oversight[135](index=135&type=chunk)[136](index=136&type=chunk) - In the last three fiscal years, Lakeland Industries has **not experienced any material cybersecurity incidents**, and related expenses were immaterial[134](index=134&type=chunk) [ITEM 2. Properties](index=19&type=section&id=ITEM%202.%20Properties) The company operates owned and leased manufacturing facilities globally, all in good repair - Principal executive office is in Huntsville, AL, with owned and leased manufacturing locations in China, Mexico, Argentina, India, and Vietnam[140](index=140&type=chunk) [ITEM 3. Legal Proceedings](index=19&type=section&id=ITEM%203.%20Legal%20Proceedings) No current litigation is expected to have a material adverse effect on the company - The company is not currently involved in any material litigation or legal proceedings[142](index=142&type=chunk) [ITEM 4. Mine Safety Disclosures](index=19&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[143](index=143&type=chunk) PART II [ITEM 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=19&type=section&id=ITEM%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on NASDAQ, a quarterly dividend was initiated, and a stock repurchase program is active - Common stock is traded on NASDAQ under the symbol **"LAKE"**[3](index=3&type=chunk) - As of April 10, 2024, there were **7,371,730 shares of common stock outstanding**[7](index=7&type=chunk) - The company began paying a quarterly cash dividend of **$0.03 per share** in February 2023[146](index=146&type=chunk) - A stock repurchase program allows for repurchases of up to an additional **$5 million** of outstanding common stock, with **$5.0 million remaining** under the program as of January 31, 2024[149](index=149&type=chunk)[210](index=210&type=chunk) Issuer Purchases of Equity Securities (November 1 - January 31) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Programs | |:---|:---|:---|:---|:---| | November 1 – November 30 | — | $ — | — | $ 5,030,479 | | December 1 – December 31 | — | $ — | — | $ 5,030,479 | | January 1 – January 31 | — | $ — | — | $ 5,030,479 | | Total | — | $ — | — | $ 5,030,479(1) | [ITEM 6. [Reserved]](index=20&type=section&id=ITEM%206.%20%5BReserved%5D) This item is reserved and contains no information [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY24 saw increased net sales and improved gross profit, though operating expenses rose due to various costs [Overview](index=20&type=section&id=Overview) The company manufactures protective clothing globally, manages costs through diversified operations, and faces inflationary pressures - Lakeland manufactures and sells industrial protective clothing and accessories globally, serving diverse end-users from integrated oil and chemical plants to fire and law enforcement agencies[153](index=153&type=chunk) Net Sales (FY24 vs FY23) | Metric | FY24 ($ millions) | FY23 ($ millions) | |:---|:---|:---| | Net Sales | $124.7 | $112.8 | - Manufacturing operations in Mexico, China, Vietnam, and India provide access to lower labor costs and raw materials, with recent expansions in Vietnam and India to offset rising costs in China[155](index=155&type=chunk) Net Sales Attributable to Customers Outside US (FY24 vs FY23) | Metric | FY24 ($ millions) | FY23 ($ millions) | |:---|:---|:---| | International Net Sales | $69.4 | $63.9 | - Acquired New Zealand-based Pacific Helmets NZ Limited on November 30, 2023, for approximately **$8.6 million**, enhancing its fire service protective helmets portfolio[157](index=157&type=chunk) - Acquired UK-based Eagle Technical Products Limited on December 2, 2022, for approximately **$10.5 million**, expanding fire service protective clothing and sales presence in the Middle East and Europe[159](index=159&type=chunk) - Experienced continued inflationary pressure and higher costs in FY24 due to increasing raw material, finished goods, labor, and transportation costs[160](index=160&type=chunk) [Impact of Russia's Invasion of Ukraine on Our Business](index=21&type=section&id=Impact%20of%20Russia's%20Invasion%20of%20Ukraine%20on%20Our%20Business) The Russia-Ukraine conflict creates market uncertainty, though its direct business impact remains limited - The Russia-Ukraine conflict creates substantial uncertainty, leading to market disruptions, supply chain issues, increased cyber incidents, and volatile commodity markets[161](index=161&type=chunk) Russia Business Contribution (FY24 vs FY23) | Metric | FY24 | FY23 | |:---|:---|:---| | Consolidated Net Revenues | ~3.0% | ~2.4% | | Consolidated Assets | ~2.6% | ~2.5% | | Net Book Value of Assets (Jan 31, 2024) | $4.0 million | - | | Cash in Russia (Jan 31, 2024) | $0.3 million | - | - **No impairment charges** related to Russian assets have been recognized to date, but the conflict's outcome could impact asset values[162](index=162&type=chunk) [Critical Accounting Policies and Estimates](index=21&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies involve significant estimates for revenue, inventory, taxes, and business combinations - Revenue is primarily from product sales to distributors, recognized upon shipment, with estimates for variable consideration like rebates and discounts[164](index=164&type=chunk)[165](index=165&type=chunk) - Inventories are stated at the lower of cost or net realizable value, with allowances for slow-moving or obsolete inventory; FY24 adjustments included **$2.3 million** for discontinued products[166](index=166&type=chunk) - Income taxes require estimating current and deferred taxes, with a valuation allowance applied to deferred tax assets; a change in valuation allowance of **$3.1 million** was recorded in FY24[167](index=167&type=chunk) - Business combinations use the acquisition method, allocating purchase price to acquired assets and liabilities at fair value, involving significant judgment for intangible assets and contingent consideration[169](index=169&type=chunk)[170](index=170&type=chunk) - Equity method investments are evaluated for impairment based on fair value estimates, which involve discounted cash flow models and market-based approaches[172](index=172&type=chunk) [Recent Developments](index=23&type=section&id=Recent%20Developments) The company declared a dividend, completed an acquisition, and expanded its credit facility in early FY25 - On February 1, 2024, a quarterly cash dividend of **$0.03 per share** (approximately $0.2 million) was declared and paid[174](index=174&type=chunk) - On February 5, 2024, acquired Jolly Scarpe S.p.A and Jolly Scarpe Romania S.R.L for approximately **$9.3 million**, funded by drawing **$12.3 million** from its credit line[175](index=175&type=chunk) - On February 13, 2024, made an additional **£500,000 ($0.6 million)** investment in Bodytrak's convertible notes[176](index=176&type=chunk) - On March 28, 2024, amended the Loan Agreement, extending the credit facility to March 28, 2029, increasing availability to **$40.0 million** (with a **$10.0 million** accordion feature)[177](index=177&type=chunk) [Significant Balance Sheet Fluctuation January 31, 2024, as Compared to January 31, 2023](index=23&type=section&id=Significant%20Balance%20Sheet%20Fluctuation%20January%2031%2C%202024%2C%20as%20Compared%20to%20January%2031%2C%202023) Cash increased due to operating activities and an asset sale, while working capital decreased - Cash increased by **$0.7 million**, driven by **$10.8 million** from operations and **$4.6 million** from an asset sale, offset by acquisitions and capital expenditures[178](index=178&type=chunk) - Working capital decreased by **$3.8 million**[178](index=178&type=chunk) - Financing activities included **$3.5 million** used for debt paydown, stock repurchases, and dividends[178](index=178&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) FY24 net sales and gross profit increased, driving significant net income growth despite higher operating expenses External Sales by Product Line (FY24 vs FY23, $ millions) | Product Line | FY24 | FY23 | |:---|:---|:---| | Disposables | $49.6 | $55.2 | | Chemical | $20.3 | $22.2 | | Fire Services | $26.5 | $14.7 | | Gloves | $2.2 | $2.3 | | High Visibility | $6.6 | $5.8 | | High Performance Wear | $6.9 | $5.0 | | Wovens | $12.6 | $7.6 | | **Consolidated external sales** | **$124.7** | **$112.8** | External Sales by Region (FY24 vs FY23, $ millions) | Region | FY24 | FY23 | |:---|:---|:---| | USA | $55.2 | $49.0 | | Other foreign | $9.9 | $7.2 | | Europe (UK) | $16.3 | $8.3 | | Mexico | $4.0 | $3.7 | | Asia | $13.8 | $24.7 | | Canada | $9.4 | $9.1 | | Latin America | $16.1 | $10.8 | | **Consolidated external sales** | **$124.7** | **$112.8** | Consolidated Results of Operations as % of Net Sales (FY24 vs FY23) | Metric | FY24 | FY23 | |:---|:---|:---| | Net sales | 100.0% | 100.0% | | Cost of goods sold | 58.9% | 59.4% | | Gross profit | 41.1% | 40.6% | | Operating expenses | 36.3% | 35.7% | | Operating profit | 4.8% | 4.9% | | Other income, net | 2.7% | 0.0% | | Interest expense | 0.0% | 0.1% | | Income before tax | 7.5% | 4.8% | | Income tax expense | 3.2% | 3.2% | | Net income (loss) | 4.4% | 1.6% | - Net sales increased by **$11.9 million (10.5%)** to **$124.7 million** in FY24, driven by growth in the U.S, Europe, and Latin America, while Asia sales decreased by **$10.9 million (44.1%)**[183](index=183&type=chunk) - Gross profit increased by **$5.4 million (11.8%)** to **$51.2 million** in FY24, with gross profit margin improving to **41.1%** from 40.6%[184](index=184&type=chunk) - Operating expenses increased by **12.2%** to **$45.2 million** in FY24, primarily due to currency translation expense, restructuring costs, and acquisition-related expenses[185](index=185&type=chunk) - Operating profit increased to **$6.0 million** in FY24 from $5.5 million in FY23, while operating margin slightly decreased to **4.8%**[186](index=186&type=chunk) - Other income included a pre-tax gain of approximately **$3.8 million** from the sale of the Canada office and warehouse facility[187](index=187&type=chunk) - Net income increased to **$5.4 million** in FY24 from $1.9 million in FY23[189](index=189&type=chunk) - Q4 FY24 net sales were **$31.2 million**, with a net loss of **($1.0) million**, compared to Q4 FY23 sales of $29.0 million and net income of $0.6 million[190](index=190&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with cash from operations and an expanded credit facility Liquidity Metrics (January 31, 2024) | Metric | Amount ($ millions) | |:---|:---| | Cash and cash equivalents | $25.2 | | Working capital | $83.2 | | Uninsured cash in foreign bank accounts | $21.9 | | Available credit under Loan Agreement | $25.0 | | Remaining under stock repurchase program | $5.0 | - Net cash provided by operating activities was **$10.9 million** in FY24, primarily due to a **$7.7 million** decrease in inventories[196](index=196&type=chunk) - Net cash used in investing activities was **$5.1 million** in FY24, including **$5.5 million** for the Pacific acquisition, offset by **$4.6 million** from an asset sale[196](index=196&type=chunk) - Net cash used in financing activities was **$3.5 million** in FY24, including **$0.9 million** in dividends and **$0.3 million** in stock repurchases[196](index=196&type=chunk) - The revolving credit facility was increased to **$40.0 million** (with a **$10.0 million** accordion feature) and extended to March 28, 2029[177](index=177&type=chunk)[205](index=205&type=chunk) - Capital expenditures for FY24 were **$2.1 million**, with **$3.0 million** anticipated for FY25[211](index=211&type=chunk)[212](index=212&type=chunk) [Recently Adopted and Recently Issued Accounting Standards](index=28&type=section&id=Recently%20Adopted%20and%20Recently%20Issued%20Accounting%20Standards) The company is evaluating new accounting standards for income taxes and segment reporting for future adoption - ASU 2023-09 (Income Taxes) requires additional disclosures and will be adopted in FY26[213](index=213&type=chunk) - ASU 2023-07 (Segment Reporting) requires disclosure of significant expense categories for each reportable segment and will be adopted in FY25[214](index=214&type=chunk) - The OECD's Pillar Two Model Rules for a global minimum tax are **not expected to have a significant impact** on the company's effective tax rate or financial results[215](index=215&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, these disclosures are not required - As a smaller reporting company, Lakeland Industries is not required to provide quantitative and qualitative disclosures about market risk[216](index=216&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=28&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements and supplementary data for FY24 and FY23 [Reports of Independent Registered Public Accounting Firm](index=29&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued unqualified opinions on the financial statements and internal controls - Deloitte & Touche LLP issued an **unqualified opinion** on the consolidated financial statements for the years ended January 31, 2024 and 2023[220](index=220&type=chunk) - An **unqualified opinion** was also expressed on the effectiveness of the company's internal control over financial reporting as of January 31, 2024[221](index=221&type=chunk) - Critical audit matters included the fair value determination of intangible assets from the Pacific Helmets NZ Limited acquisition[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - Another critical audit matter was the estimation of future cash flows and discount rate for the equity method investment in Bodytrak[228](index=228&type=chunk)[229](index=229&type=chunk) [Consolidated Statements of Operations](index=32&type=section&id=Consolidated%20Statements%20of%20Operations) Net income increased significantly in FY24, driven by higher net sales and gross profit Consolidated Statements of Operations (FY24 vs FY23, $000's) | Metric | 2024 | 2023 | |:---|:---|:---| | Net sales | $124,688 | $112,846 | | Cost of goods sold | $73,496 | $66,997 | | Gross profit | $51,192 | $45,849 | | Operating expenses | $45,200 | $40,308 | | Operating profit | $5,993 | $5,541 | | Other income (expense), net | $3,415 | ($33) | | Interest expense | ($52) | ($37) | | Income before taxes | $9,356 | $5,471 | | Income tax expense | $3,930 | $3,598 | | Net income | $5,425 | $1,873 | | Basic EPS | $0.74 | $0.25 | | Diluted EPS | $0.72 | $0.24 | | Basic Weighted average common shares outstanding | 7,352,356 | 7,562,187 | | Diluted Weighted average common shares outstanding | 7,539,705 | 7,737,963 | [Consolidated Statements of Comprehensive Income (Loss)](index=32&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income improved significantly in FY24 due to higher net income Consolidated Statements of Comprehensive Income (Loss) (FY24 vs FY23, $000's) | Metric | 2024 | 2023 | |:---|:---|:---| | Net income | $5,425 | $1,873 | | Foreign currency translation adjustments | ($1,669) | ($2,193) | | Comprehensive income (loss) | $3,756 | ($320) | [Consolidated Balance Sheets](index=33&type=section&id=Consolidated%20Balance%20Sheets) Total assets and stockholders' equity increased in FY24, reflecting growth from recent acquisitions Consolidated Balance Sheets (January 31, 2024 vs 2023, $000's) | Asset/Liability/Equity | 2024 | 2023 | |:---|:---|:---| | **ASSETS** | | | | Cash and cash equivalents | $25,222 | $24,639 | | Accounts receivable, net | $19,169 | $17,296 | | Inventories | $51,250 | $58,176 | | Total current assets | $101,505 | $105,591 | | Property and equipment, net | $10,685 | $9,140 | | Operating leases right-of-use assets | $10,969 | $5,472 | | Goodwill | $13,669 | $8,473 | | Intangible assets, net | $6,830 | $6,042 | | Equity investments | $4,719 | $5,354 | | Convertible debt investments | $2,161 | - | | **Total assets** | **$153,745** | **$142,936** | | **LIABILITIES** | | | | Accounts payable | $7,378 | $6,558 | | Accrued compensation and benefits | $3,922 | $2,522 | | Accrued earnout agreement | $643 | $3,182 | | Total current liabilities | $18,346 | $18,597 | | Deferred income taxes | $2,097 | $769 | | Loans payable – long term | $731 | - | | Long-term portion of operating lease liability | $9,121 | $3,580 | | **Total liabilities** | **$30,294** | **$22,946** | | **STOCKHOLDERS' EQUITY** | | | | Common stock | $87 | $87 | | Treasury stock | ($19,979) | ($19,646) | | Additional paid-in capital | $79,420 | $78,475 | | Retained earnings | $69,282 | $64,765 | | Accumulated other comprehensive loss | ($5,360) | ($3,691) | | **Total stockholders' equity** | **$123,450** | **$119,990** | [Consolidated Statements of Stockholders' Equity](index=33&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased in FY24, driven by net income and offset by dividends and share repurchases Consolidated Statements of Stockholders' Equity (FY24 vs FY23, $000's) | Metric | 2024 | 2023 | |:---|:---|:---| | Balance, January 31, 2023 | $119,990 | $125,100 | | Net Income | $5,425 | $1,873 | | Dividends paid | ($908) | — | | Other comprehensive income (loss) | ($1,669) | ($2,193) | | Stock-based compensation (Restricted stock plan) | $1,365 | $1,491 | | Return of shares in lieu of payroll tax withholding | ($420) | ($842) | | Treasury stock purchased | ($333) | ($5,440) | | Balance, January 31, 2024 | $123,450 | $119,990 | [Consolidated Statements of Cash Flows](index=34&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations improved significantly in FY24 due to effective inventory management Consolidated Statements of Cash Flows (FY24 vs FY23, $000's) | Cash Flow Activity | 2024 | 2023 | |:---|:---|:---| | Net cash provided by (used in) operating activities | $10,912 | ($5,451) | | Net cash used in investing activities | ($5,116) | ($14,768) | | Net cash used in financing activities | ($3,452) | ($5,876) | | Effect of exchange rate changes on cash and cash equivalents | ($1,761) | ($1,985) | | Net increase (decrease) in cash and cash equivalents | $583 | ($28,080) | | Cash and cash equivalents at end of year | $25,222 | $24,639 | | Cash paid for interest | $63 | $37 | | Cash paid for taxes | $2,169 | $3,151 | | Leased assets obtained in exchange for operating lease liabilities | $6,110 | $1,148 | - Operating cash flow improved significantly due to a **$7.7 million decrease in inventories** and a **$2.4 million increase in accounts payable and accrued expenses**[196](index=196&type=chunk) - Investing cash flow included **$5.5 million** for the Pacific acquisition and **$2.2 million** for Bodytrak investment, offset by **$4.6 million** from the sale of the Canadian facility[196](index=196&type=chunk) [Notes to Consolidated Financial Statements](index=35&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, acquisitions, and financial statement components [1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=35&type=section&id=1.%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company manufactures protective clothing globally, with key accounting policies for revenue, inventory, and acquisitions - Lakeland Industries manufactures and sells industrial protective clothing and accessories globally, with sales in over 50 countries[257](index=257&type=chunk) - Revenue is recognized for product sales to distributors upon shipment, with contracts typically short-term and payment due within 30-90 days[272](index=272&type=chunk) - Inventories are valued at the lower of cost (FIFO or moving average) or net realizable value, with allowances for obsolescence[263](index=263&type=chunk) - Business combinations are accounted for using the acquisition method, allocating purchase price to assets and liabilities based on estimated fair values[267](index=267&type=chunk)[268](index=268&type=chunk) - Foreign operations' assets and liabilities are translated at balance sheet date exchange rates, with adjustments reported in accumulated other comprehensive loss[281](index=281&type=chunk) External Sales by Product Lines (FY24 vs FY23, $ millions) | Product Line | 2024 | 2023 | |:---|:---|:---| | Disposables | $49.6 | $55.2 | | Chemical | $20.3 | $22.2 | | Fire | $26.5 | $14.7 | | Gloves | $2.2 | $2.3 | | High Visibility | $6.6 | $5.8 | | High Performance Wear | $6.9 | $5.0 | | Wovens | $12.6 | $7.6 | | **Consolidated external sales** | **$124.7** | **$112.8** | External Sales by Region (FY24 vs FY23, $ millions) | Region | 2024 | 2023 | |:---|:---|:---| | USA | $55.3 | $49.0 | | Other foreign | $9.9 | $7.2 | | Europe (UK) | $16.3 | $8.3 | | Mexico | $4.0 | $3.7 | | Asia | $13.8 | $24.7 | | Canada | $9.3 | $9.1 | | Latin America | $16.1 | $10.8 | | **Consolidated external sales** | **$124.7** | **$112.8** | [2. INVENTORIES](index=40&type=section&id=2.%20INVENTORIES) Total inventories decreased in FY24, reflecting a reduction in finished goods and raw materials Inventories (January 31, 2024 vs 2023, $000s) | Category | 2024 | 2023 | |:---|:---|:---| | Raw materials | $27,417 | $29,036 | | Work-in-process | $668 | $952 | | Finished goods | $29,719 | $32,855 | | Excess and obsolete adjustments | ($6,554) | ($4,668) | | **Total Inventories** | **$51,250** | **$58,176** | [3. PROPERTY AND EQUIPMENT, NET](index=40&type=section&id=3.%20PROPERTY%20AND%20EQUIPMENT%2C%20NET) Net property and equipment increased due to additions in machinery, equipment, and computer hardware Property and Equipment, Net (January 31, 2024 vs 2023, $000s) | Category | 2024 | 2023 | |:---|:---|:---| | Machinery and equipment | $10,773 | $5,436 | | Furniture and fixtures | $988 | $492 | | Leasehold improvements | $2,388 | $2,094 | | Computer hardware and software | $5,430 | $5,015 | | Land and building | $7,625 | $9,508 | | Less accumulated depreciation and amortization | ($17,600) | ($14,406) | | Construction-in-progress | $1,081 | $1,001 | | **Total Property and Equipment, Net** | **$10,685** | **$9,140** | - Depreciation and amortization expense for FY24 was **$1.9 million**, up from $1.4 million in FY23[291](index=291&type=chunk) [4. INVESTMENTS](index=40&type=section&id=4.%20INVESTMENTS) The company holds a strategic equity investment in Bodytrak® and has provided convertible loan notes - The company holds a **22.5% equity stake** in Bodytrak®, a UK-based wearable monitoring solutions provider, accounted for using the equity method[292](index=292&type=chunk)[293](index=293&type=chunk) - Additional investments in Bodytrak's convertible notes totaled **£1,700,000 ($2.2 million)** in FY24, bearing interest at 12% (cash) or 15% (payment in kind)[294](index=294&type=chunk)[295](index=295&type=chunk) - Recognized losses from the Bodytrak investment were **$0.6 million** in FY24 and **$0.4 million** in FY23[297](index=297&type=chunk) [5. GOODWILL AND INTANGIBLE ASSETS](index=41&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill and intangible assets increased due to recent acquisitions, with no impairment recognized Changes in Goodwill ($000s) | Metric | 2024 | 2023 | |:---|:---|:---| | Balance at February 1 | $8,473 | $871 | | Measurement period adjustment | $1,447 | ---- | | Acquisitions | $3,749 | $7,602 | | **Balance at January 31** | **$13,669** | **$8,473** | Intangible Assets, Net (January 31, 2024 vs 2023, $000s) | Category | Weighted Average Life (Years) | Gross Carrying Amount (2024) | Accumulated Amortization (2024) | Net Carrying Amount (2024) | Gross Carrying Amount (2023) | Accumulated Amortization (2023) | Net Carrying Amount (2023) | |:---|:---|:---|:---|:---|:---|:---|:---| | Customer relationships | 15 | $3,558 | ($267) | $3,291 | $3,283 | ($37) | $3,246 | | Trade names and trademarks | 15 | $1,773 | ($109) | $1,664 | $1,333 | ($15) | $1,318 | | Technological know-how | 15 | $1,989 | ($114) | $1,875 | $1,493 | ($15) | $1,478 | | **Total** | | **$7,320** | **($490)** | **$6,830** | **$6,109** | **($67)** | **$6,042** | - Intangible asset amortization expense is expected to be approximately **$0.5 million** per year over the next five years[299](index=299&type=chunk) - **No impairment of goodwill** was recognized during FY24 and FY23[271](index=271&type=chunk) [6. ACQUISITIONS](index=41&type=section&id=6.%20ACQUISITIONS) The company completed acquisitions of Pacific Helmets and Eagle Technical Products, expanding its product portfolio - Acquired Pacific Helmets NZ Limited on November 30, 2023, for approximately **$8.5 million**, enhancing fire service protective helmets[300](index=300&type=chunk) Preliminary Fair Values of Pacific Assets Acquired and Liabilities Assumed ($000s) | Category | Amount | |:---|:---| | Net working capital acquired (including cash of $0.1 million) | $1,694 | | Property, plant and equipment | $2,265 | | Customer relationships | $275 | | Trade names and trademarks | $440 | | Technological know-how | $495 | | Goodwill | $3,749 | | Total assets acquired | $8,918 | | Less liabilities assumed | ($2,787) | | **Net assets acquired** | **$6,131** | - Acquired Eagle Technical Products Limited on December 2, 2022, for approximately **$10.5 million**, expanding protective apparel in fire and industrial sectors[306](index=306&type=chunk) - The estimated earnout payment for Eagle was reduced by **$2.5 million** in FY24 due to not reaching revenue thresholds[309](index=309&type=chunk) Preliminary Fair Values of Eagle Assets Acquired and Liabilities Assumed ($000s) | Category | Amount | |:---|:---| | Current assets acquired (including cash of $2.2 million) | $3,729 | | Property, plant and equipment | $41 | | Customer relationships | $3,283 | | Trade names and trademarks | $1,333 | | Technological know-how | $1,493 | | Goodwill | $7,602 | | Total assets acquired | $17,481 | | Less liabilities assumed | ($2,334) | | **Net assets acquired** | **$15,147** | Pro Forma Combined Financial Information (Unaudited, $ millions) | Metric | Year Ended January 31, 2024 | Year Ended January 31, 2023 | |:---|:---|:---| | Net sales | $129.8 | $122.3 | | Net income | $5.8 | $1.6 | | Basic earnings per share | $0.79 | $0.22 | | Diluted earnings per share | $0.77 | $0.21 | [7. LONG-TERM DEBT](index=44&type=section&id=7.%20LONG-TERM%20DEBT) The company amended and expanded its revolving credit facility, maintaining compliance with all covenants - The revolving credit facility with Bank of America was amended on March 28, 2024, extending its expiration to **March 28, 2029**[325](index=325&type=chunk) - The credit facility's availability was increased to **$40.0 million**, with an accordion feature for an additional **$10.0 million**[325](index=325&type=chunk) - Interest rate is based on Daily SOFR plus an Applicable Rate (**1.25% to 2.00% margin**), with a SOFR floor of 1.00%[325](index=325&type=chunk) - Financial covenants include a Funded Debt to EBITDA Ratio not exceeding 3.5x and a Basic Fixed Charge Coverage Ratio of at least 1.20x[325](index=325&type=chunk) - As of January 31, 2024, the company had **no borrowings outstanding** under the Loan Agreement and was in compliance with all debt covenants[324](index=324&type=chunk) - Pacific Helmets has a trade finance facility and two term loans with the Bank of New Zealand, secured by real property[328](index=328&type=chunk) [8. CONCENTRATION OF RISK](index=46&type=section&id=8.%20CONCENTRATION%20OF%20RISK) Credit risk is diversified, with no single customer or vendor representing over 10% of sales or purchases - **No single customer** accounted for more than 10% of net sales in FY24 and FY23[331](index=331&type=chunk) - **No single vendor** accounted for more than 10% of purchases in FY24 and FY23[332](index=332&type=chunk) - As of January 31, 2024, approximately **$22.0 million** of cash was held in foreign bank accounts, of which **$24.4 million** was uninsured[330](index=330&type=chunk) [9. STOCKHOLDERS' EQUITY](index=46&type=section&id=9.%20STOCKHOLDERS'%20EQUITY) The company manages an equity incentive plan and an active stock repurchase program - The 2017 Equity Incentive Plan authorizes **840,000 shares** for equity-based compensation, including stock options, restricted stock, and SARs[335](index=335&type=chunk) Stock-Based Compensation Costs ($000s) | Metric | 2024 | 2023 | |:---|:---|:---| | Total restricted stock and stock option programs | $1,365 | $1,491 | | Total income tax expense recognized | $287 | $313 | Restricted Stock Activity (Shares) | Metric | Performance Based | Service Based | Total | |:---|:---|:---|:---| | Outstanding at January 31, 2023 | 127,480 | 40,665 | 168,145 | | Awarded | 64,953 | 130,390 | 195,343 | | Vested | (71,202) | (26,336) | (97,538) | | Forfeited | (38,901) | (31,829) | (70,730) | | **Outstanding at January 31, 2024** | **82,330** | **112,890** | **195,220** | - Unrecognized stock-based compensation expense totaled **$1.0 million** as of January 31, 2024, expected to be recognized over approximately two years[339](index=339&type=chunk) - Shares repurchased in FY24 totaled **27,514 shares** at a cost of **$0.3 million**, leaving **$5.0 million** remaining under the share repurchase program[341](index=341&type=chunk) [10. INCOME TAXES](index=48&type=section&id=10.%20INCOME%20TAXES) The FY24 effective tax rate was 42.01%, impacted by valuation allowance changes and foreign tax credits Domestic and Foreign Pretax Income (Loss) ($000s) | Category | 2024 | 2023 | |:---|:---|:---| | Domestic | $8,648 | $15,322 | | Foreign | $708 | ($9,851) | | **Total** | **$9,356** | **$5,471** | Income Tax Expense (Benefit) ($000s) | Category | 2024 | 2023 | |:---|:---|:---| | Current Federal | $17 | $2 | | Current State and other taxes | $58 | $68 | | Current Foreign | $4,674 | $3,450 | | Total Current Tax Expense | $4,749 | $3,520 | | Deferred Domestic | ($186) | ($756) | | Deferred Foreign | ($633) | $834 | | Total Deferred Tax Expense | ($819) | $78 | | **Total Income Taxes** | **$3,930** | **$3,598** | Effective Income Tax Rate Reconciliation | Item | 2024 | 2023 | |:---|:---|:---| | Statutory rate | 21.00% | 21.00% | | State Income Taxes, Net of Federal Tax Benefit | 0.49% | 0.05% | | Adjustment to Deferred | (23.26)% | 13.54% | | GILTI | 9.07% | 24.84% | | Foreign Tax Credit – GILTI | (2.42)% | (14.86)% | | Section 250 Deduction | (4.92)% | (15.74)% | | Permanent Differences | 0.20% | 0.07% | | Valuation Allowance-Deferred Tax Asset | 33.29% | 6.41% | | Foreign Tax Credit | (15.24)% | (9.74)% | | Section 78 Gross-up | 0.77% | 6.64% | | Argentina Flow Through Loss | 7.20% | 1.09% | | Withholding Taxes | 5.72% | 36.55% | | Foreign Rate Differential | 18.25% | 2.11% | | Change in State Apportionment Rate | (1.48)% | (1.38)% | | Foreign employee benefits | (1.58)% | (3.58)% | | Foreign Dividends Paid to U.S. | 25.69% | 73.01% | | Foreign Dividends Received Deduction | (25.69)% | (73.01)% | | Earnout Adjustment | (5.70)% | --- | | Other | 0.62% | (1.25)% | | **Effective Rate** | **42.01%** | **65.74%** | - The valuation allowance for deferred tax assets increased to **$6.7 million** in FY24 from $3.6 million in FY23[351](index=351&type=chunk) - Repatriated **$4.5 million** from Canada and **$7.0 million** from China in FY24[348](index=348&type=chunk) [11. NET INCOME PER SHARE](index=50&type=section&id=11.%20NET%20INCOME%20PER%20SHARE) Basic and diluted net income per share increased significantly in FY24 Net Income Per Share (FY24 vs FY23) | Metric | 2024 | 2023 | |:---|:---|:---| | Numerator – Net Income ($000s) | $5,425 | $1,873 | | Denominator for basic net income per share (weighted-average shares) | 7,352,356 | 7,562,187 | | Effect of dilutive securities | 187,349 | 175,776 | | Denominator for diluted net income per share | 7,539,705 | 7,737,963 | | **Basic net income per share** | **$0.74** | **$0.25** | | **Diluted net income per share** | **$0.72** | **$0.24** | [12. DERIVATIVE INSTRUMENTS AND FOREIGN CURRENCY EXPOSURE](index=50&type=section&id=12.%20DERIVATIVE%20INSTRUMENTS%20AND%20FOREIGN%20CURRENCY%20EXPOSURE) The company uses forward contracts to manage foreign currency risk, though none were outstanding at year-end - The company uses forward contracts to manage foreign currency exposure, primarily for Canadian Dollars and Euros[355](index=355&type=chunk) - These forward contracts are **not designated as hedging instruments**, with gains and losses recognized in current earnings[355](index=355&type=chunk)[357](index=357&type=chunk) - There were **no outstanding forward contracts** at January 31, 2024, or 2023[357](index=357&type=chunk) [13. COMMITMENTS AND CONTINGENCIES](index=50&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) The company manages various operating leases and does not expect current litigation to have a material effect - The company assesses contingent liabilities, accruing estimated losses when probable and estimable[359](index=359&type=chunk)[360](index=360&type=chunk) - No significant outstanding claims or litigation are expected to have a material effect on the company's financial position as of January 31, 2024[363](index=363&type=chunk) - All real estate leases are classified as operating leases, with renewal options evaluated for reasonable certainty[365](index=365&type=chunk)[366](index=366&type=chunk) Operating Lease Cost ($000s) | Classification | 2024 | 2023 | |:---|:---|:---| | Cost of goods sold | $1,092 | $272 | | Operating expenses | $1,402 | $1,035 | | Short-term lease cost | $221 | $169 | Maturity of Lease Liabilities (January 31, 2024, $000s) | Year ending January 31, | Operating Leases | |:---|:---| | 2025 | $2,164 | | 2026 | $2,092 | | 2027 | $1,876 | | 2028 | $1,805 | | 2029 | $1,490 | | Thereafter | $5,547 | | Total lease payments | $14,974 | | Less: Interest | $3,689 | | **Present value of lease liability** | **$11,285** | - Weighted-average remaining lease term for operating leases was **8.0 years**, with a weighted-average discount rate of **10.4%** as of January 31, 2024[368](index=368&type=chunk) [14. SEGMENT REPORTING](index=52&type=section&id=14.%20SEGMENT%20REPORTING) The company operates through seven geographic segments, with strong sales growth in the USA and Latin America - The company has seven revenue-generating reportable geographic segments: USA Operations, Other Foreign, Europe (UK), Mexico, Asia, Canada, and Latin America[21](index=21&type=chunk)[375](index=375&type=chunk) Domestic and International Sales ($ millions) | Category | 2024 | 2023 | |:---|:---|:---| | Domestic | $55.3 | $49.0 | | International | $69.4 | $63.8 | | **Total** | **$124.7** | **$112.8** | Net Sales by Segment ($ millions) | Segment | 2024 | 2023 | |:---|:---|:---| | USA Operations (including Corporate) | $60.9 | $53.8 | | Other foreign | $14.0 | $9.5 | | Europe (UK) | $16.4 | $8.3 | | Mexico | $6.7 | $5.2 | | Asia | $46.2 | $63.7 | | Canada | $9.3 | $9.0 | | Latin America | $16.3 | $10.9 | | Less intersegment sales | ($45.1) | ($47.6) | | **Consolidated sales** | **$124.7** | **$112.8** | Operating Profit (Loss) by Segment ($ millions) | Segment | 2024 | 2023 | |:---|:---|:---| | USA Operations (including Corporate) | ($3.5) | ($6.4) | | Other foreign | $2.0 | $0.4 | | Europe (UK) | $0.1 | ($1.3) | | Mexico | ($2.1) | ($1.4) | | Asia | $4.6 | $10.9 | | Canada | $1.5 | $1.5 | | Latin America | $2.8 | $1.9 | | Less intersegment (profit) loss | $0.3 | ($0.1) | | **Consolidated operating profit** | **$5.7** | **$5.5** | Total Assets by Segment (Less Intersegment, $ millions) | Segment | 2024 | 2023 | |:---|:---|:---| | USA Operations (including Corporate) | $47.1 | $65.2 | | Other foreign | $19.6 | $9.2 | | Europe (UK) | $27.2 | $12.5 | | Mexico | $10.2 | $5.3 | | Asia | $29.0 | $35.6 | | Canada | $8.3 | $5.8 | | Latin America | $12.3 | $9.3 | | **Consolidated assets** | **$153.7** | **$142.9** | [15. SUBSEQUENT EVENTS](index=54&type=section&id=15.%20SUBSEQUENT%20EVENTS) The company completed two acquisitions and amended its loan agreement after the fiscal year-end - On February 5, 2024, acquired Jolly Scarpe S.p.A and Jolly Scarpe Romania S.R.L for approximately **$9.3 million**, adding professional footwear for firefighting, military, police, and rescue markets[374](index=374&type=chunk) - On March 28, 2024, the Loan Agreement was amended, extending the credit facility and increasing its availability[375](index=375&type=chunk) - On April 2, 2024, Lakeland Global Safety, Ltd agreed to acquire the fire and rescue business of LHD Group Deutschland GmbH for **EUR 15.4 million (approximately $16.7 million)**, expected to close in May 2024[376](index=376&type=chunk)[377](index=377&type=chunk) [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=55&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes in or disagreements with accountants to report - No changes in or disagreements with accountants on accounting and financial disclosure[378](index=378&type=chunk) [ITEM 9A. Controls and Procedures](index=55&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Disclosure controls and internal controls were deemed effective, and a prior material weakness was remediated - Disclosure controls and procedures were **effective** as of January 31, 2024[379](index=379&type=chunk) - A material weakness in internal control over financial reporting related to foreign subsidiary currency translation was **remediated** through enhanced review and process reconfiguration[380](index=380&type=chunk)[381](index=381&type=chunk) - Management concluded that the company maintained **effective internal control** over financial reporting as of January 31, 2024, excluding the recently acquired Pacific Helmets NZ Limited[385](index=385&type=chunk)[386](index=386&type=chunk) [ITEM 9B. Other Information](index=56&type=section&id=ITEM%209B.%20Other%20Information) There is no other information to report under this item - No other information to report[388](index=388&type=chunk) [ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=56&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) There are no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections[389](index=389&type=chunk) PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=56&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This information is incorporated by reference from the company's upcoming proxy statement - Information is incorporated by reference from the definitive proxy statement for the June 2024 Annual Meeting of Stockholders[390](index=390&type=chunk) - Executive officer information is also presented in Item 1 of this report[390](index=390&type=chunk) [ITEM 11. Executive Compensation](index=56&type=section&id=ITEM%2011.%20Executive%20Compensation) This information is incorporated by reference from the company's upcoming proxy statement - Information is incorporated by reference from the definitive proxy statement for the June 2024 Annual Meeting of Stockholders[391](index=391&type=chunk) - Executive officer information is also presented in Item 1 of this report[391](index=391&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters](index=56&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholders%20Matters) Security ownership information is incorporated by reference, with details on equity compensation plans provided - Information regarding security ownership is incorporated by reference from the definitive proxy statement for the June 2024 Annual Meeting of Stockholders[392](index=392&type=chunk) Equity Compensation Plans (January 31, 2024) | Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price per share of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (c) | |:---|:---|:---|:---| | Equity Compensation plans approved by security holders | 193,151 | $15.92 | 190,466 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **193,151** | **$15.92** | **190,466** | [ITEM 13. Certain Relationships and Related Transactions, and Director Independence](index=57&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This information is incorporated by reference from the company's upcoming proxy statement - Information is incorporated by reference from the definitive proxy statement for the June 2024 Annual Meeting of Stockholders[396](index=396&type=chunk) [ITEM 14. Principal Accountant Fees and Services](index=57&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) This information is incorporated by reference from the company's upcoming proxy statement - Information is incorporated by reference from the definitive proxy statement for the June 2024 Annual Meeting of Stockholders[397](index=397&type=chunk) PART IV [ITEM 15. Exhibit and Financial Statement Schedules](index=57&type=section&id=ITEM%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed with the Form 10-K - Includes Consolidated Statements of Operations, Comprehensive Income, Balance Sheets, Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[399](index=399&type=chunk) - Exhibits include acquisition agreements, corporate governance documents, employment agreements, loan agreements, and certifications[400](index=400&type=chunk)[401](index=401&type=chunk)[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk) [ITEM 16. Form 10-K Summary](index=60&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[406](index=406&type=chunk)

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the Company [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Lakeland Industries, Inc. and its subsidiaries, including statements of operations, comprehensive income (loss), balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining business operations, accounting policies, investments, debt, equity, and segment performance [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This chapter presents the Company's Condensed Consolidated Statements of Operations for the specified periods | Metric ($000s) | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :-------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $31,678 | $28,387 | $93,449 | $83,849 | | Gross profit | $13,361 | $12,304 | $39,988 | $34,987 | | Operating profit | $3,621 | $2,222 | $9,289 | $5,465 | | Net income (loss) | $2,618 | $1,431 | $6,402 | $1,690 | | Basic EPS | $0.35 | $0.19 | $0.87 | $0.22 | | Diluted EPS | $0.34 | $0.19 | $0.85 | $0.22 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This chapter presents the Company's Condensed Consolidated Statements of Comprehensive Income (Loss) for the specified periods | Metric ($000s) | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :-------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $2,618 | $1,431 | $6,402 | $1,690 | | Foreign currency translation adjustments | $(483) | $(1,744) | $(2,110) | $(2,916) | | Comprehensive income (loss) | $2,135 | $(313) | $4,292 | $(1,226) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This chapter presents the Company's Condensed Consolidated Balance Sheets for the specified periods | Asset/Liability ($000s) | October 31, 2023 | January 31, 2023 | | :---------------------- | :--------------- | :--------------- | | Cash and cash equivalents | $26,425 | $24,639 | | Accounts receivable, net | $18,227 | $17,296 | | Inventories | $54,350 | $58,176 | | Total current assets | $104,020 | $104,982 | | Total assets | $148,315 | $142,327 | | Total current liabilities | $15,511 | $17,988 | | Total liabilities | $24,726 | $22,337 | | Total stockholders' equity | $123,589 | $119,990 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This chapter presents the Company's Condensed Consolidated Statements of Stockholders' Equity for the specified periods - Total stockholders' equity increased from **$119,990 thousand** at January 31, 2023, to **$123,589 thousand** at October 31, 2023, primarily driven by net income of **$6,402 thousand**, partially offset by accumulated other comprehensive loss of **$2,110 thousand** and dividends paid of **$687 thousand**[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This chapter presents the Company's Condensed Consolidated Statements of Cash Flows for the specified periods | Cash Flow Activity ($000s) | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $7,733 | $(5,230) | | Net cash (used in) investing activities | $(3,015) | $(4,334) | | Net cash (used in) financing activities | $(1,845) | $(6,245) | | Effect of exchange rate changes on cash and cash equivalents | $(1,087) | $(1,961) | | Net increase (decrease) in cash and cash equivalents | $1,786 | $(17,770) | | Cash and cash equivalents at end of period | $26,425 | $34,949 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Business](index=8&type=section&id=1.%20Business) This note describes Lakeland Industries' global operations in industrial protective clothing and accessories - Lakeland Industries, Inc. manufactures and sells industrial protective clothing and accessories globally through in-house sales teams, customer service, and a network of over 2,000 distributors to various end-users and governmental agencies in over 50 countries[24](index=24&type=chunk) [2. Basis of Presentation](index=8&type=section&id=2.%20Basis%20of%20Presentation) This note outlines the basis for preparing the unaudited condensed consolidated financial statements and their limitations - The condensed consolidated financial statements are unaudited, include normal recurring adjustments, eliminate intercompany accounts, and are not necessarily indicative of full fiscal year results, requiring review with the most recent Form 10-K[25](index=25&type=chunk) [3. Investments and Acquisitions](index=8&type=section&id=3.%20Investments%20and%20Acquisitions) This note details the Company's strategic investments and recent acquisitions, including earnout adjustments - The Company increased its investment in Bodytrak, a wearable monitoring solutions provider, through additional Series A1 Shares and a secured convertible loan, bringing its total share capital ownership to **22.5%**[28](index=28&type=chunk)[29](index=29&type=chunk) - Lakeland acquired **100%** of Eagle Technical Products Limited for **$10.5 million** in December 2022, enhancing its fire service protective apparel portfolio and expanding its sales presence in the Middle East and Europe[33](index=33&type=chunk)[90](index=90&type=chunk) - The estimated earnout payment for the Eagle acquisition was adjusted from **$3.2 million** to **$0.5 million** for the period May 1, 2023, through April 30, 2024, as the prior period's revenue threshold was not met, resulting in a **$2.7 million** reduction in operating expenses for the nine months ended October 31, 2023[35](index=35&type=chunk)[36](index=36&type=chunk)[101](index=101&type=chunk) [4. Inventories](index=9&type=section&id=4.%20Inventories) This note provides a breakdown of inventory components and related adjustments | Inventory Component ($000s) | October 31, 2023 | January 31, 2023 | | :-------------------------- | :--------------- | :--------------- | | Raw materials | $26,798 | $29,036 | | Work-in-process | $760 | $952 | | Finished goods | $31,088 | $32,855 | | Excess and obsolete adjustments | $(4,296) | $(4,668) | | Total Inventories | $54,350 | $58,176 | [5. Goodwill and Intangible Assets, Net](index=9&type=section&id=5.%20Goodwill%20and%20Intangible%20Assets,%20Net) This note presents the carrying values and amortization of goodwill and intangible assets | Intangible Assets ($000s) | Amount | | :------------------------ | :----- | | Balance at February 1, 2023 | $6,042 | | Amortization expense | $(306) | | Balance at October 31, 2023 | $5,736 | - There were no material changes to goodwill during the three and nine months ended October 31, 2023[42](index=42&type=chunk) [6. Contract Advances](index=9&type=section&id=6.%20Contract%20Advances) This note details the changes in contract liability balances over the period | Contract Liability ($000s) | Amount | | :------------------------- | :----- | | Contract liability – January 31, 2023 | $1,627 | | Increases to contract liability | $326 | | Decreases to contract liability | $(1,752) | | Contract liability – October 31, 2023 | $201 | [7. Long-Term Debt](index=9&type=section&id=7.%20Long-Term%20Debt) This note describes the Company's revolving credit facilities and outstanding borrowings - The Company has a secured **$25.0 million** revolving credit facility with Bank of America, maturing on June 25, 2025, with no outstanding borrowings as of October 31, 2023[44](index=44&type=chunk)[46](index=46&type=chunk) - The benchmark interest rate for the credit facility was changed from LIBOR to SOFR on March 3, 2023[45](index=45&type=chunk) - Borrowings outstanding under the HSBC Bank credit facility in the UK decreased from **$0.4 million** at January 31, 2023, to **$0** at October 31, 2023[47](index=47&type=chunk) [8. Concentration of Risk](index=10&type=section&id=8.%20Concentration%20of%20Risk) This note discusses the Company's credit risk diversification and cash holdings in foreign accounts - The Company's credit risk is diversified across a large customer base and geographic areas, with no single customer or vendor accounting for more than **10%** of net sales or purchases[48](index=48&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - As of October 31, 2023, approximately **$20.1 million** of cash was held in foreign bank accounts, with **$25.6 million** of total cash uninsured[49](index=49&type=chunk) [9. Stockholders' Equity](index=10&type=section&id=9.%20Stockholders'%20Equity) This note covers stock-based compensation, unrecognized expenses, and the ongoing stock repurchase program | Stock-Based Compensation ($000s) | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total restricted stock and stock option programs | $302 | $351 | $747 | $1,141 | | Total income tax expense recognized for stock-based compensation arrangements | $63 | $74 | $157 | $240 | - As of October 31, 2023, unrecognized stock-based compensation expense totaled **$1.9 million**, expected to be recognized over approximately two years[57](index=57&type=chunk) - The Company has an ongoing stock repurchase program with **$5.0 million** remaining under authorization as of October 31, 2023, with no expiration date[58](index=58&type=chunk)[59](index=59&type=chunk) [10. Income Taxes](index=12&type=section&id=10.%20Income%20Taxes) This note provides details on income tax expense, effective tax rates, and valuation allowances for deferred tax assets | Metric | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income tax expense | $937 | $715 | $2,677 | $3,610 | | Effective tax rate | 26.4% | 33.3% | 29.5% | 68.1% (33.8% excluding discrete items) | - The effective tax rate for the nine months ended October 31, 2022, was significantly impacted by a **$2 million** withholding tax for planned cash repatriation from China operations and **$0.2 million** deferred tax benefits for China social taxes[62](index=62&type=chunk)[104](index=104&type=chunk) - The valuation allowance for deferred tax assets increased from **$3.6 million** at January 31, 2023, to **$4.0 million** at October 31, 2023[63](index=63&type=chunk) [11. Net Income (Loss) Per Share](index=12&type=section&id=11.%20Net%20Income%20(Loss)%20Per%20Share) This note presents the basic and diluted net income (loss) per share for the reported periods | Metric | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic net income (loss) per share | $0.35 | $0.19 | $0.87 | $0.22 | | Diluted net income (loss) per share | $0.34 | $0.19 | $0.85 | $0.22 | [12. Contingencies](index=13&type=section&id=12.%20Contingencies) This note addresses potential impacts from facility defects and the absence of material outstanding claims or litigation - The Company is in discussions with the landlord regarding structural defects at its newly constructed facility in Monterrey, Mexico, which may impact the facility's intended use and the carrying value of the right-of-use asset[69](index=69&type=chunk)[89](index=89&type=chunk) - As of October 31, 2023, there were no significant outstanding claims or litigation that management believes would have a material effect on the Company's financial position, results of operations, or cash flows[70](index=70&type=chunk) [13. Segment Reporting](index=13&type=section&id=13.%20Segment%20Reporting) This note provides a breakdown of external sales and operating profit by product line and geographic segment | External Sales by Product Line ($ millions) | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Disposables | $11.9 | $14.1 | $36.7 | $41.3 | | Chemical | $4.7 | $5.2 | $15.4 | $17.5 | | Fire service | $5.6 | $3.6 | $20.0 | $9.2 | | Gloves | $0.5 | $0.6 | $1.7 | $1.7 | | High Visibility | $2.6 | $1.7 | $5.4 | $4.6 | | High Performance Wear | $2.4 | $1.3 | $5.2 | $3.8 | | Wovens | $4.0 | $1.9 | $9.0 | $5.7 | | Consolidated external sales | $31.7 | $28.4 | $93.4 | $83.8 | | Operating Profit (Loss) by Segment ($ millions) | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Nine Months Ended Oct 31, 2023 | Nine Months Ended Oct 31, 2022 | | :-------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | USA Operations (including Corporate) | $1.9 | $(0.1) | $1.6 | $(3.4) | | Other foreign | $0.6 | $0.3 | $1.8 | $0.4 | | Europe (UK) | $(0.4) | $(0.5) | $0.0 | $(1.1) | | Mexico | $(0.4) | $(0.3) | $(1.3) | $(0.9) | | Asia | $1.3 | $2.4 | $3.1 | $8.4 | | Canada | $0.5 | $0.3 | $1.1 | $1.3 | | Latin America | $0.8 | $0.4 | $2.9 | $1.2 | | Intersegment profit (loss) | $(0.7) | $(0.3) | $0.1 | $(0.4) | | Consolidated operating profit | $3.6 | $2.2 | $9.3 | $5.5 | - USA Operations showed a significant turnaround in operating profit, moving from a loss of **$(0.1) million** in Q3 FY23 to a profit of **$1.9 million** in Q3 FY24, and from a loss of **$(3.4) million** to a profit of **$1.6 million** for the nine months[73](index=73&type=chunk) - Asia's operating profit declined from **$2.4 million** to **$1.3 million** for the three months and from **$8.4 million** to **$3.1 million** for the nine months, reflecting weakness in the region[73](index=73&type=chunk) [14. Subsequent Events](index=15&type=section&id=14.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including dividends, asset sales, and acquisitions - On November 1, 2023, the Board declared a quarterly cash dividend of **$0.03 per share**, paid on November 22, 2023[77](index=77&type=chunk) - On November 27, 2023, the Company sold its Brantford, Ontario facility for **$4.9 million**, expecting a pre-tax gain of approximately **$3.8 million**, and will transition to third-party logistics in Canada[78](index=78&type=chunk) - On November 30, 2023, Lakeland acquired New Zealand-based Pacific Helmets NZ Limited for approximately **NZ$14.0 million ($8.6 million)**, enhancing its fire service protective helmets portfolio, funded through the revolving credit facility and cash balances[79](index=79&type=chunk)[117](index=117&type=chunk) - The Loan Agreement was amended on November 30, 2023, to consent to the Pacific acquisition, permit additional indebtedness for Pacific, exempt Pacific from certain guaranty/pledge requirements, and waive borrowing base limitations through January 31, 2024[80](index=80&type=chunk)[115](index=115&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, and future outlook, highlighting key operational results, balance sheet changes, liquidity, capital resources, and critical accounting policies [Forward-Looking Statements](index=19&type=section&id=Forward-Looking%20Statements) This chapter discusses the inherent risks and uncertainties associated with the Company's forward-looking statements - The report contains forward-looking statements based on management's beliefs and expectations, which involve risks and uncertainties that could cause actual results to differ materially[81](index=81&type=chunk)[82](index=82&type=chunk) - Key risks include international manufacturing operations (China, Vietnam), material weakness in foreign currency accounting, geopolitical crises, foreign currency exchange rate fluctuations, ERP system implementation, supply chain constraints, and competition[82](index=82&type=chunk)[87](index=87&type=chunk) [Business Overview](index=19&type=section&id=Business%20Overview) This chapter provides an overview of Lakeland's global operations, manufacturing strategy, and market monitoring efforts - Lakeland manufactures and sells industrial protective clothing globally, with manufacturing facilities in Mexico, China, Vietnam, and India, aiming for diversified supply chains and cost efficiency[85](index=85&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk) - Foreign sales accounted for **$16.6 million** and **$50.8 million** for the three and nine months ended October 31, 2023, respectively[91](index=91&type=chunk) - The Company is monitoring the financial impact of the Russian invasion of Ukraine (Russia sales ~**3.2%** of consolidated sales for nine months) and the Middle East conflict, which could affect sales levels and timing[92](index=92&type=chunk)[93](index=93&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This chapter analyzes the Company's financial performance, including sales, gross profit, operating expenses, and net income, for the reported periods Three Months Ended October 31, 2023 vs 2022 | Metric | 2023 ($ millions) | 2022 ($ millions) | Change ($ millions) | Change (%) | | :----- | :---------------- | :---------------- | :------------------ | :--------- | | Net Sales | $31.7 | $28.4 | $3.3 | 11.6% | | Gross Profit | $13.4 | $12.3 | $1.1 | 8.9% | | Gross Margin | 42.2% | 43.3% | -1.1 pp | | | Operating Expenses | $9.7 | $10.1 | $(0.4) | -4.0% | | Operating Profit | $3.6 | $2.2 | $1.4 | 63.6% | | Operating Margin | 11.4% | 7.6% | 3.8 pp | | | Net Income | $2.6 | $1.4 | $1.2 | 85.7% | Nine Months Ended October 31, 2023 vs 2022 | Metric | 2023 ($ millions) | 2022 ($ millions) | Change ($ millions) | Change (%) | | :----- | :---------------- | :---------------- | :------------------ | :--------- | | Net Sales | $93.4 | $83.8 | $9.6 | 11.5% | | Gross Profit | $40.0 | $35.0 | $5.0 | 14.3% | | Gross Margin | 42.8% | 41.7% | 1.1 pp | | | Operating Expenses | $30.7 | $29.5 | $1.2 | 4.1% | | Operating Profit | $9.3 | $5.5 | $3.8 | 69.1% | | Operating Margin | 9.9% | 6.5% | 3.4 pp | | | Net Income | $6.4 | $1.7 | $4.7 | 276.5% | - Sales of fire service and industrial product lines increased by **$6.1 million** (Q3) and **$14.1 million** (9M), driven by market share expansion and strength in oil & gas and utilities, with Eagle contributing **$1.3 million** (Q3) and **$6.8 million** (9M)[95](index=95&type=chunk)[100](index=100&type=chunk) - Disposable and chemical product lines declined by **$2.8 million** (Q3) and **$6.7 million** (9M) due to diminishing COVID-19 demand and weakness in Asia/China[95](index=95&type=chunk)[100](index=100&type=chunk) - Operating expenses for Q3 FY24 decreased by **$1.5 million** due to a reduction in the Eagle earnout accrual, partially offset by **$0.7 million** in currency fluctuations (Argentine peso)[96](index=96&type=chunk) - Gross profit margin improved for the nine months ended October 31, 2023, due to increased sales in strategic product lines, reduced manufacturing costs from higher throughput, lower freight costs, and inventory reduction[101](index=101&type=chunk)[105](index=105&type=chunk) [Significant Balance Sheet Fluctuation October 31, 2023, Compared to January 31, 2023](index=21&type=section&id=Significant%20Balance%20Sheet%20Fluctuation%20October%2031,%202023,%20Compared%20to%20January%2031,%202023) This chapter highlights key changes in the Company's balance sheet, focusing on cash, investing, and financing activities - Cash increased by **$1.8 million**, primarily from **$7.7 million** in operating cash flow (driven by a **$3.2 million** inventory reduction and profitable operations), offset by **$3.0 million** in investing activities and **$1.8 million** in financing activities[106](index=106&type=chunk) - Investing activities included **$1.5 million** in manufacturing equipment purchases and an additional **$1.5 million** investment in Bodytrak[107](index=107&type=chunk) - Financing activities included **$0.7 million** in dividends, **$0.3 million** in share repurchases, **$0.4 million** in short-term borrowing repayments, and **$0.4 million** for employee tax payments on vested restricted stock[107](index=107&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) This chapter assesses the Company's ability to meet its financial obligations and fund operations, including cash, working capital, credit facilities, and dividend programs | Metric ($ millions) | October 31, 2023 | January 31, 2023 | | :------------------ | :--------------- | :--------------- | | Cash and cash equivalents | $26.4 | $24.6 | | Working capital | $88.5 | $87.0 | - The Company believes its current cash balance and operating cash flow are sufficient for projected working capital and capital expenditures, with FY24 capital expenditures anticipated to be approximately **$2.0 million**[112](index=112&type=chunk)[122](index=122&type=chunk) - A **$25.0 million** revolving credit facility is available, with no outstanding borrowings as of October 31, 2023, and the borrowing base limitation waived through January 31, 2024, following the Pacific acquisition[113](index=113&type=chunk)[115](index=115&type=chunk) - The Company was in compliance with all debt covenants as of October 31, 2023[116](index=116&type=chunk) - The Company has a recurring quarterly dividend program, with **$0.03 per share** declared for Q3 FY24[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) [Critical Accounting Policies and Estimates](index=21&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This chapter confirms the consistency of the Company's critical accounting policies and estimates - There have been no significant changes in the application of the Company's critical accounting policies during the nine months ended October 31, 2023, as detailed in its fiscal year 2023 Form 10-K[124](index=124&type=chunk)[125](index=125&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Lakeland Industries, Inc. is not required to provide quantitative and qualitative disclosures about market risk - No disclosure is required under Item 3 for the Company as it is a smaller reporting company[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were not effective as of October 31, 2023, due to a material weakness in internal control over financial reporting related to foreign currency translation, with remediation efforts ongoing [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This chapter details management's assessment of the effectiveness of the Company's disclosure controls and procedures - Management concluded that the Company's disclosure controls and procedures were not effective as of October 31, 2023, due to a material weakness in internal control over financial reporting[126](index=126&type=chunk) - Despite the ineffective controls, the condensed consolidated financial statements present fairly, in all material respects, the Company's financial position, results of operations, and cash flows in accordance with U.S. GAAP[127](index=127&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=26&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) This chapter identifies a material weakness in the Company's internal control over financial reporting related to foreign currency accounting - A material weakness was identified related to the Company's internal control over accounting for foreign currency exchange and foreign currency translation or remeasurement for its international subsidiaries[128](index=128&type=chunk) [Management's Remediation Plan and Status](index=26&type=section&id=Management's%20Remediation%20Plan%20and%20Status) This chapter outlines the Company's plan and ongoing efforts to remediate the identified material weakness in internal control - Remediation actions include enhancing monthly financial statement management review with reconciliation of key account balances, reconfiguring the trial balance import process for the Argentina subsidiary, and developing enhancements to quantify and review currency fluctuation impact on financial statements[129](index=129&type=chunk)[131](index=131&type=chunk) - The material weakness will not be considered remediated until controls are designed, implemented, and operate effectively for a sufficient period, confirmed by independent testing[129](index=129&type=chunk) [Changes in Internal Control Over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This chapter reports on any changes in internal control over financial reporting during the quarter - Other than ongoing remediation efforts for the identified material weakness, there were no other changes in internal control over financial reporting during the quarter ended October 31, 2023, that materially affected or are reasonably likely to affect the Company's internal control over financial reporting[132](index=132&type=chunk) PART II - OTHER INFORMATION This section includes details on unregistered equity sales, a list of exhibits, and the report's signature pages [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's stock repurchase program, including authorizations and activity during the third quarter of fiscal 2024 [Issuer Purchases of Equity Securities](index=27&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This chapter provides information on the Company's stock repurchase activities - The Board of Directors has authorized a stock repurchase program, with **$5.0 million** remaining under the authorization as of October 31, 2023, and no expiration date[132](index=132&type=chunk) | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Programs | | :----- | :----------------------------------- | :--------------------------- | :-------------------------------------------------------------------- | :------------------------------------------------------------------------- | | August 1 – August 31 | --- | $--- | --- | $5,030,479 | | September 1 – September 30 | 771 | $— | — | $5,030,479 | | October 1 – October 31 | --- | $--- | --- | $5,030,479 | | Total | 771 | $--- | --- | $5,030,479 | - The **771 shares** purchased during September 2023 include withholding of restricted shares to cover taxes on vested restricted shares[134](index=134&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents, agreements, certifications, and XBRL financial statements - Exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, a General Release and Separation Agreement, CEO and CFO certifications (pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350), and financial statements formatted in Inline XBRL[135](index=135&type=chunk)[136](index=136&type=chunk) [Signature Pages](index=29&type=section&id=Signature%20Pages) The signature page confirms the due authorization and filing of the Form 10-Q report by Lakeland Industries, Inc.'s Chief Financial Officer - The report was signed on December 7, 2023, by Roger D. Shannon, Chief Financial Officer of Lakeland Industries, Inc[139](index=139&type=chunk)

Safe Harbor Statement � Lakeland ~$114.0 million ~$0 15 in 11 countries What We Do 5% 13% 49% 13% 20% ■High-Visibility 3 Product Lines · Volunteer Fire | --- | |-----------------| | | | | | | | | | · Energy | | · Utilities | | | | · Petrochemical | | · Industrial | · Energy · Utilities · Transportation · Construction · Industrial "High Value" references products that provide exceptional benefits to our customers and end users. When sourcing these products, customers actively solicit our engagement in the de ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number: 0-15535 LAKELAND INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) Delaware 13 ...

| --- | --- | --- | --- | |----------------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | Fiscal First Quarter 2024 Financial Results Call June 8, 2023 | | | | | | | | | Non-GAAP Financial Measures Lakeland Overview (Nasdaq: LAKE) Debt (4/30/2023) ~$0 Distribution 78 countries 74% of global population 49% 20% 13% 13% 5% Disposables Focus on High Value Applications • Municipal Fire • Volunteer Fire • Search & Rescue • Wild Land • Utilities • Energy • ...

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and detailed notes for Q1 FY23 and Q1 FY22 [Condensed Consolidated Statements of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20Three%20Months%20Ended%20April%2030%2C%202023%20and%202022) | Metric | Three Months Ended April 30, 2023 ($000s) | Three Months Ended April 30, 2022 ($000s) | | :----------------------- | :--------------------------------------- | :--------------------------------------- | | Net sales | 28,700 | 27,278 | | Cost of goods sold | 16,256 | 16,222 | | Gross profit | 12,444 | 11,056 | | Operating expenses | 10,506 | 9,607 | | Operating profit | 1,938 | 1,449 | | Income before taxes | 1,861 | 1,414 | | Income tax expense | 541 | 285 | | Net income | 1,320 | 1,129 | | Basic EPS | $0.18 | $0.15 | | Diluted EPS | $0.18 | $0.14 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20Three%20Months%20Ended%20April%2030%2C%202023%20and%202022) | Metric | Three Months Ended April 30, 2023 ($000s) | Three Months Ended April 30, 2022 ($000s) | | :------------------------------ | :--------------------------------------- | :--------------------------------------- | | Net income | 1,320 | 1,129 | | Foreign currency translation adjustments | (718) | (760) | | Comprehensive income | 602 | 369 | [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20April%2030%2C%202023%20and%20January%2031%2C%202023) | Metric | April 30, 2023 ($000s) | January 31, 2023 ($000s) | | :-------------------------- | :--------------------- | :--------------------- | | Cash and cash equivalents | 26,021 | 24,639 | | Total current assets | 107,942 | 104,982 | | Total assets | 145,094 | 142,327 | | Total current liabilities | 20,533 | 17,988 | | Total liabilities | 24,956 | 22,337 | | Total stockholders' equity | 120,138 | 119,990 | [Condensed Consolidated Statements of Stockholders' Equity](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20Three%20Months%20Ended%20April%2030%2C%202023%20and%202022) | Change in Equity | Three Months Ended April 30, 2023 ($000s) | Three Months Ended April 30, 2022 ($000s) | | :----------------------- | :--------------------------------------- | :--------------------------------------- | | Net Income | 1,320 | 1,129 | | Other comprehensive loss | (718) | (760) | | Dividends | (246) | - | | Stock-based compensation | 407 | 407 | | Treasury stock purchased | (276) | (406) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20Three%20Months%20Ended%20April%2030%2C%202023%20and%202022) | Cash Flow Activity | Three Months Ended April 30, 2023 ($000s) | Three Months Ended April 30, 2022 ($000s) | | :------------------------- | :--------------------------------------- | :--------------------------------------- | | Operating activities | 3,670 | 1,911 | | Investing activities | (690) | (2,356) | | Financing activities | (1,151) | (1,084) | | Effect of exchange rate changes | (447) | (336) | | Net increase (decrease) in cash | 1,382 | (1,865) | | Cash and cash equivalents at end of period | 26,021 | 50,854 | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Business](index=6&type=section&id=1.%20Business) - Lakeland Industries, Inc. manufactures and sells industrial protective clothing and accessories globally, serving over **1,600** distributors and end-users across various industries and governmental agencies[23](index=23&type=chunk) - The company's products are sold in more than **50** countries, with significant sales in China, the European Economic Community, Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Middle East, and Southeast Asia[23](index=23&type=chunk) [2. Basis of Presentation](index=6&type=section&id=2.Basis%20of%20Presentation) - The condensed consolidated financial statements are unaudited and include normal recurring adjustments, with intercompany accounts and transactions eliminated[24](index=24&type=chunk) - Results are not necessarily indicative of the full fiscal year ending January **31**, **2024**, and should be read in conjunction with the audited consolidated financial statements from the most recent Form **10-K**[24](index=24&type=chunk) [3. Investments and Acquisitions](index=6&type=section&id=3.Investments%20and%20Acquisitions) - Lakeland acquired **100%** of Eagle Technical Products Limited for **$10.5 million** in December **2022**, enhancing its fire and industrial protective apparel portfolio and expanding sales in the Middle East and Europe[32](index=32&type=chunk)[33](index=33&type=chunk) - The estimated earnout payment for the Eagle acquisition was reduced by **$0.5 million** in Q1 FY24, as Eagle did not meet the revenue threshold for the period May **1**, **2022**, through April **30**, **2023**[34](index=34&type=chunk)[35](index=35&type=chunk) - The company recognized losses of **$0.1 million** and **$27,000** for the three months ended April **30**, **2023**, and **2022**, respectively, as its share of Bodytrak's net loss, accounted for under the equity method[29](index=29&type=chunk) Pro forma combined financial information (Unaudited) | (in millions, except per share amount) | Quarter Ended April 30, 2023 | Quarter Ended April 30, 2022 | | :------------------------------------- | :--------------------------- | :--------------------------- | | Net sales | $28.7 | $28.2 | | Net income | $1.3 | $1.1 | | Basic earnings per share | $0.18 | $0.15 | | Diluted earnings per share | $0.18 | $0.15 | [4. Inventories](index=8&type=section&id=4.Inventories) | Inventory Component | April 30, 2023 ($000s) | January 31, 2023 ($000s) | | :-------------------- | :--------------------- | :--------------------- | | Raw materials | 29,473 | 29,036 | | Work-in-process | 992 | 952 | | Finished goods | 32,378 | 32,855 | | Excess and obsolete adjustments | (4,947) | (4,668) | | **Total Inventories** | **57,896** | **58,176** | [5. Goodwill and Intangible Assets, Net](index=8&type=section&id=5.%20Goodwill%20and%20Intangible%20Assets%2C%20Net) | Intangible Assets | Amount ($000s) | | :------------------------ | :------------- | | Balance at February 1, 2023 | 6,042 | | Amortization expense | (102) | | Balance at April 30, 2023 | 5,940 | - There were no material changes to goodwill during the quarter ended April **30**, **2023**[41](index=41&type=chunk) [6. Contract Advances](index=8&type=section&id=6.%20Contract%20Advances) | Contract Liability Activity | Amount ($000s) | | :-------------------------- | :------------- | | Contract liability – January 31, 2023 | 1,627 | | Increases to contract liability | 212 | | Decreases to contract liability | (500) | | Contract liability – April 30,

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commission File Number: 0-15535 LAKELAND INDUSTRIES, INC. (Exact Name of Registrant as Specified in its Charter) (State or Other Jur ...

Financial Data and Key Metrics Changes - For Q3 2023, net sales were $28.4 million with a gross margin of 43.3%, showing sequential revenue growth primarily driven by volume [5][28] - Operating profit was $2.2 million, resulting in operating margins of 7.8%, up from 6.4% in Q2 2023 but down from 14.1% in Q3 2022 [29] - Net income for the quarter was $1.4 million or $0.19 per share, compared to a loss of $900,000 in Q2 2023 and a profit of $2.9 million in Q3 2022 [30] - EBITDA for Q3 2023 was $2.6 million, while adjusted EBITDA was $3 million, reflecting a decline from the prior-year period [31][32] Business Line Data and Key Metrics Changes - Disposables accounted for 50% of total revenues, down from 60% in the year-ago quarter, indicating a strategic shift towards higher value, higher margin products [27] - Gross profit margin improved to 43.3% from 41.3% in Q2 2023, benefiting from an improved product mix and pricing power [28] Market Data and Key Metrics Changes - Domestic sales were $14 million (49% of total revenues), while international sales were $14.4 million (51% of total revenues), indicating a shift towards U.S. markets due to challenges in European and Latin American markets [25][26] - Currency fluctuations negatively impacted revenues by approximately $1.6 million [26] Company Strategy and Development Direction - The company is focusing on shifting towards high-performance and critical environment product lines to reduce cyclicality and achieve long-term performance targets [13] - The acquisition of Eagle Technical Products for approximately $10.8 million is aimed at expanding global reach and enhancing product offerings, particularly in firefighting applications [14][21] - The company plans to proactively reduce inventory levels to align with current demand and free up capital for growth investments [12][37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds affecting revenue growth, particularly in European and Asian markets due to inflation and COVID policies [6][10] - The company anticipates continued challenges in the first half of the next year but sees potential growth opportunities in India as it aims to replace China as a manufacturing hub [7][46] - Management remains focused on operational efficiency and adapting to market conditions while pursuing long-term strategic goals [9][10] Other Important Information - Capital expenditures for the year are expected to be approximately $2 million, primarily for expanding manufacturing facilities in Mexico, Vietnam, and India [33] - The company ended the quarter with cash and cash equivalents of approximately $34.9 million and no debt, with an additional $25 million available from bank credit facilities [34] Q&A Session Summary Question: Update on business size in India and growth potential - Management indicated that India is currently a mid-sized facility with under 100 employees, serving European and American markets, with growth expected primarily in the domestic market [46] Question: Potential for further acquisitions - Management acknowledged awareness of opportunities for M&A but emphasized a balanced approach to capital use, indicating that while M&A is not a priority, it remains a possibility [50]