Lakeland(LAKE) - 2023 Q1 - Quarterly Report

Financial Performance - Consolidated external sales decreased to $27.28 million in Q1 FY22, down 19.9$34.10 million in Q1 FY21[69] - Gross profit for Q1 FY22 was $11.1 million, a decrease of 25$14.8 million in Q1 FY21, with gross profit margin dropping to 40.5%[70] - Operating profit fell to $1.4 million in Q1 FY22 from$6.6 million in Q1 FY21, resulting in an operating margin of 5.3%[71] - Net income decreased by $3.9 million to$1.1 million in Q1 FY22 compared to $5.0 million in Q1 FY21[73] Cash Flow and Liquidity - Cash and cash equivalents were approximately$50.8 million as of April 30, 2022, with a decrease of $1.9 million from January 31, 2022[74] - Net cash provided by operating activities was$1.9 million for Q1 FY22, primarily due to net income of $1.1 million[78] Sales and Market Challenges - The company experienced a decrease in sales to international customers, with net sales of$16.0 million in Q1 FY22 compared to $18.4 million in Q1 FY21[64] - Operating expenses increased by 18.5$9.6 million in Q1 FY22, primarily due to higher travel, trade show, and administrative expenses[70] - The company is facing challenges related to hiring, retention, and wage inflation, which may impact future growth[67] Strategic Initiatives - Manufacturing operations in China and Mexico are being expanded to control rising costs and achieve growth objectives[63] - The Company entered into a Loan Agreement providing a secured $12.5 million revolving credit facility, with a potential increase to$17.5 million[80] - An Amendment to the Loan Agreement increased the credit limit from $12.5 million to$25.0 million, allowing acquisitions up to $7.5 million individually or$15.0 million cumulatively without prior consent[81] - The Loan Agreement requires a Funded Debt to EBITDA ratio of 3.0 to 1.0 or less and a Basic Fixed Charge Coverage Ratio of at least 1.15 to 1.0, with compliance confirmed as of April 30, 2022[82] - The Company approved a stock repurchase program allowing repurchases of up to $5 million, with an additional$5 million authorized later, and approximately $0.4 million remaining as of April 30, 2022[84] - Capital expenditures for the first three months of FY23 were$0.4 million, with an anticipated total of approximately $3.0 million for FY23, focusing on ERP deployment and strategic capacity expansion[85]