Lakeland(LAKE) - 2025 Q1 - Quarterly Results

Executive Summary Fiscal 2025 First Quarter Financial Highlights The company reported strong Q1 FY25 results with a 27% year-over-year increase in net sales to $36.3 million, driven by organic growth and acquisitions Q1 FY25 Financial Highlights (YoY) | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $36.3 | $28.7 | 27% | | Organic Revenue | $32.4 | $28.7 (implied) | 13% | | Fire Services Growth | - | - | 92% | | Gross Margin | 44.6% | 43.4% | +1.2 pts | | Net Income | $1.7 | $1.3 | 31% | | Basic EPS | $0.22 | $0.18 | 22% | | Adjusted EBITDA | $3.9 | $2.8 | 39% | - Acquisitions of Jolly Scarpe and Pacific Helmets contributed $3.9 million in combined sales, with Jolly at $2.2 million and Pacific Helmets at $1.7 million[4][5] Management Commentary Management highlighted strong Q1 results, strategic acquisitions, and a new partnership to expand its North American industrial sector reach - Organic revenue grew by $3.7 million, or 13% year-over-year, driven by increases in Fire, Chemical, Wovens, and Disposables products[4][5] - Double-digit year-over-year organic growth was observed across North and South America, with 16% growth in the U.S. and 54% in Latin America[4] - Lakeland announced a strategic partnership with LineDrive to expand its products to a broader audience in the North American industrial sector[4] - The company signed an agreement to acquire the fire and rescue business of LHD Group, which will bring a premium product portfolio and recurring revenue LHD Care service offerings[6] CFO Commentary The CFO detailed strong financial performance, highlighting improved gross margin, increased operating profit, and a significant year-over-year inventory reduction - Operating Profit increased by 14% to $2.2 million, and Adjusted EBITDA grew by $1.1 million, or 40%, to $3.9 million[8] - Operating expenses increased to $14.0 million, with $1.2 million attributed to acquisition, non-cash, and non-recurring expenses, and $1.8 million to acquired and sales-growth-related expenses[8] - Inventory was reduced by $8.6 million year-over-year (excluding acquisitions), driven mainly by a 21% decrease in finished goods inventory[8] Balance Sheet Snapshot (Q1 FY25) | Metric | Amount (Millions) | | :--- | :--- | | Cash | $28.4 | | Total Long-Term Debt | $13.0 | Fiscal 2025 First Quarter Financial Results Net Sales Overview Net sales for Q1 FY25 increased significantly to $36.3 million, driven by strong product line growth and contributions from recent acquisitions Net Sales (Q1 FY25 vs Q1 FY24) | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $36.3 | $28.7 | $7.6 | 27% | Sales by Product Line The Fire product line drove sales growth, boosted by acquisitions, with Wovens and Chemicals also showing strong double-digit increases Sales Growth by Product Line (Q1 FY25 YoY) | Product Line | Change ($M) | Change (%) | | :--- | :--- | :--- | | Fire | +$5.0 | 92% | | Wovens | +$1.1 | 49% | | Chemicals | +$0.8 | 15% | | Disposables | - | 6% | - The 92% increase in Fire product line sales was driven by $3.8 million from newly acquired Pacific Helmets and Jolly Scarpe, and $1.2 million from organic growth[9] Sales by Geography International sales continued to represent the majority of total revenues, with strong growth in North and Latin America offsetting softer sales in Europe and Asia Sales Distribution by Geography (Q1 FY25 vs Q1 FY24) | Metric | Q1 FY25 ($M) | Q1 FY25 (%) | Q1 FY24 ($M) | Q1 FY24 (%) | | :--- | :--- | :--- | :--- | :--- | | Domestic Sales | $14.3 | 39% | $12.3 | 43% | | International Sales | $22.0 | 61% | $16.4 | 57% | - Strong sales growth was observed in North America and Latin America, partially offsetting slightly lower sales in Europe and Asia[10] Gross Profit Gross profit increased by 30% year-over-year, with the gross margin improving to 44.6% due to a favorable product and geographical mix Gross Profit (Q1 FY25 vs Q1 FY24) | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $16.2 | $12.4 | $3.7 | 30% | | Gross Margin | 44.6% | 43.4% | +1.2 pts | - | - Gross Profit was positively impacted by product and geographical mix, partially offset by the absence of a one-time profit in ending inventory adjustments from the prior year[11] Operating Profit Operating profit increased to $2.2 million, though operating margins declined slightly due to higher expenses related to sales growth and acquisitions Operating Profit (Q1 FY25 vs Q1 FY24) | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating Profit | $2.2 | $1.9 | $0.3 | 16% | | Operating Margin | 6.1% | 6.8% | -0.7 pts | - | - Operating expenses increased due to organic and inorganic sales growth, legal fees related to acquisitions, and higher amortization of intangibles, partially offset by the revaluation of earnout obligations[12] Net Income and EPS Net income for Q1 FY25 increased to $1.7 million, resulting in higher basic and diluted earnings per share compared to the prior year Net Income and EPS (Q1 FY25 vs Q1 FY24) | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $1.7 | $1.3 | $0.4 | 31% | | Basic EPS | $0.22 | $0.18 | $0.04 | 22% | | Diluted EPS | $0.22 | $0.18 | $0.04 | 22% | Adjusted EBITDA Adjusted EBITDA significantly increased by 40% to $3.9 million, driven by higher sales and improved organic gross margin Adjusted EBITDA (Q1 FY25 vs Q1 FY24) | Metric | Q1 FY25 (Millions) | Q1 FY24 (Millions) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $3.9 | $2.8 | $1.1 | 40% | - The increase in Adjusted EBITDA was driven by higher sales and improved organic gross margin, resulting from a positive sales mix[14] - Combined EBITDA margins of Jolly and Pacific Helmets were lower in Q1 due to integration and marketing costs, but synergy opportunities are on track[14] Dividend Declaration The Board of Directors initiated a recurring quarterly dividend program, declaring a cash dividend of $0.03 per share - A quarterly cash dividend of $0.03 per share was declared on May 1, 2024, and paid on May 22, 2024, as part of a new recurring quarterly dividend program[15] FY 2025 Updated Guidance and Outlook Updated Guidance Details The company raised its full-year fiscal 2025 guidance for revenue and Adjusted EBITDA, reflecting confidence in its current performance and acquisition strategy FY25 Updated Guidance | Metric | Previous Guidance | Updated Guidance Range | | :--- | :--- | :--- | | Revenue | - | $150 million to $155 million | | Adjusted EBITDA | - | $17 million to $20 million | - The updated guidance includes the Jolly Scarpe and Pacific Helmets acquisitions but does not include the LHD fire and rescue business, which is expected to close in June 2024[24] Management Outlook Management expressed confidence that its acquisition strategy and sales investments position the company for continued growth in fiscal 2025 - Management believes the SSQ acquisition strategy and investments in sales strategies position the company for growth in revenue and profitability[18] - The company entered Fiscal 2025 with momentum and high expectations, and is off to a strong start[18] Company Information About Lakeland Industries, Inc. Lakeland Industries is a global manufacturer of industrial protective clothing, serving a wide range of industries through a network of over 2,000 distributors - Lakeland manufactures and sells a comprehensive line of industrial protective clothing and accessories for industrial and public protective clothing markets[21] - Products are sold globally through in-house sales teams, customer service, and over 2,000 global safety and industrial supply distributors[21] - Key end-users include integrated oil, chemical/petrochemical, automobile, transportation, steel, glass, construction, cleanroom, pharmaceutical, high technology electronics manufacturers, scientific/medical laboratories, utilities, and federal, state, and local governmental agencies (fire, law enforcement, DoD, DHS, CDC)[21] - International sales are made into more than 50 foreign countries, including China, the European Economic Community, Canada, Latin America, Russia, India, the Middle East, and Southeast Asia[21] Contacts Contact information for Lakeland Industries, Inc. is provided for inquiries - Roger Shannon, CFO, can be reached at rdshannon@lakeland.com or 256-600-1390[23][24] Financial Results Conference Call Lakeland Industries hosted a conference call on June 5, 2024, to discuss its fiscal 2025 first-quarter financial results - A conference call and live webcast were held on Wednesday, June 5, 2024, at 12:00 p.m. Eastern[18] - Webcast available at: https://www.webcaster4.com/Webcast/Page/2237/48499. Dial-in: (888) 506-0062 or (973) 528-0011, passcode 635969[19] - An audio replay was available until June 12, 2024, by dialing (877) 481-4010 or (919) 882-2331, replay passcode 48499[20] Legal and Financial Disclosures "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 This section provides a 'Safe Harbor' statement, cautioning that the press release contains forward-looking statements subject to risks and uncertainties - The press release contains forward-looking statements regarding future business or financial performance, goals, and objectives, including expected benefits of acquisitions and M&A strategy[25] - Forward-looking statements involve risks, uncertainties, and assumptions, and there is no assurance that future results will not be materially different from those described[25] - The company expressly disclaims any obligation to publicly release updates or revisions to such statements, except as required by law[25] Non-GAAP Financial Measures The company uses non-GAAP measures like Adjusted EBITDA to supplement GAAP results, providing additional insights into operating performance - The company uses non-GAAP financial measures (Adjusted EBITDA, Adjusted EBITDA Margin) to supplement GAAP results, believing they provide useful information for operating results and enhance understanding of financial performance[26][40][41] - Management excludes items such as interest, taxes, depreciation, amortization, equity compensation, acquisition-related expenses, severance costs, and start-up costs from non-GAAP measures because they are not directly related to ongoing core business operations[40][41] - Limitations include that excluded charges/benefits are still recognized under GAAP and may consume cash, which management compensates for by reviewing GAAP results and providing reconciliations[41] - Detailed adjustments for non-GAAP measures include taxes, equity compensation, other income, acquisition expenses, earnout revaluation, employee separation expense, Monterrey, Mexico facility costs, and PFAS Litigation[42] Financial Tables Condensed Consolidated Balance Sheets The balance sheets show the company's financial position, with total assets and liabilities increasing primarily due to recent acquisitions Condensed Consolidated Balance Sheets (April 30, 2024 vs January 31, 2024) | Metric | April 30, 2024 ($000s) | January 31, 2024 ($000s) | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $28,365 | $25,222 | | Total current assets | $113,489 | $101,506 | | Goodwill | $15,494 | $13,669 | | Intangible assets, net | $7,922 | $6,830 | | Total assets | $171,520 | $153,745 | | LIABILITIES & EQUITY | | | | Total current liabilities | $21,096 | $18,345 | | Loans payable – long term | $12,965 | $731 | | Total Liabilities | $46,411 | $30,294 | | Total stockholders' equity | $125,109 | $123,451 | | Total liabilities and stockholders' equity | $171,520 | $153,745 | Condensed Consolidated Statements of Operations The statements of operations highlight significant year-over-year growth in net sales, gross profit, and net income for the first quarter Condensed Consolidated Statements of Operations (Three Months Ended April 30) | Metric | 2024 ($000s) | 2023 ($000s) | | :--- | :--- | :--- | | Net sales | $36,309 | $28,700 | | Cost of goods sold | $20,125 | $16,256 | | Gross profit | $16,184 | $12,444 | | Operating expenses | $13,982 | $10,506 | | Operating profit | $2,202 | $1,938 | | Income before taxes | $2,041 | $1,861 | | Income tax expense | $388 | $541 | | Net income | $1,653 | $1,320 | | Basic EPS | $0.22 | $0.18 | | Diluted EPS | $0.22 | $0.18 | Supplemental Operating Results This supplemental data details operating results and key performance metrics, illustrating the company's profitability and efficiency improvements Supplemental Operating Results (Three Months Ended April 30) | Metric | 2024 ($000s) | 2023 ($000s) | | :--- | :--- | :--- | | Net sales | $36,309 | $28,700 | | Year over Year change (Net sales) | 26.5% | 5.2% | | Gross profit | $16,184 | $12,444 | | Gross profit % | 44.6% | 43.4% | | Operating expenses | $13,982 | $10,506 | | Operating expenses as a percentage of sales | 38.5% | 36.6% | | Operating profit | $2,202 | $1,938 | | Operating profit as a percentage of sales | 6.1% | 6.8% | | EBITDA | $2,860 | $2,402 | | Adjusted EBITDA | $3,853 | $2,761 | Reconciliation of GAAP Results to Non-GAAP Results This section reconciles GAAP net income to non-GAAP measures like EBITDA and Adjusted EBITDA, detailing specific adjustments Reconciliation of Net Income to EBITDA (Three Months Ended April 30) | Metric | 2024 ($000s) | 2023 ($000s) | | :--- | :--- | :--- | | Net income | $1,653 | $1,320 | | Interest expense | $172 | $8 | | Taxes | $388 | $541 | | Depreciation and amortization | $647 | $533 | | EBITDA | $2,860 | $2,403 | Reconciliation of EBITDA to Adjusted EBITDA (Three Months Ended April 30) | Metric | 2024 ($000s) | 2023 ($000s) | | :--- | :--- | :--- | | EBITDA | $2,860 | $2,403 | | Equity compensation | $198 | $407 | | Other income (expense) | ($11) | $69 | | Acquisition expenses | $972 | $17 | | Earnout revaluation | ($689) | ($493) | | Employee separation expense | - | $320 | | Monterrey, Mexico facility costs | $276 | $38 | | PFAS Litigation | $247 | - | | Adjusted EBITDA | $3,853 | $2,761 | | Adjusted EBITDA Margin | 10.6% | 9.6% |