Lakeland Industries (LAKE) 9 Jun 212022 Q1 Earnings call transcript

[Call Starts Abruptly] current conditions, including business affairs, pertaining to the COVID-19 pandemic, expect future developments and other factors that believes are appropriate under circumstances. These statements are subject to a number of assumptions, risks, and uncertainties that are factored into the company's filings with the Securities and Exchange Commission; general economic and business conditions, the business opportunities that may be presented to you and pursued by the company, changes in law or regulations and other factors, many of which are beyond the control of the company. Listeners are cautioned that these statements are not guarantees of future performance and the actual results or developments may differ materially from those projected in any forward-looking statements. All subsequent forward-looking statements attribute to the company or persons acting on his behalf are expressly qualified in their entirety by the cautionary statements. At this time, I would like to introduce you to your host for this call, Lakeland Industries' Chief Executive Officer, Charles D. Roberson. Mr. yours. is floor the Roberson,

quarter Thank the see XXXX. of past financial of you fiscal Lakeland's the you we and here by we fiscal strong the XXXX quarter subsides. year I'm the first a to very call. of tremendous delivered XXXX fiscal accelerated now was good Financial quarter and improvements. our Officer, year, the to on that afternoon. XXXX, first improvements due durability fiscal Chief our appreciate demand of to joined impact results Alan magnitude conference these time After XX, improvements first over We're our XXXX today sustainability to April COVID-XX made join and Business in results the process our financial the performance Diller. taking believe as results COVID-XX beginning We ended business as display demonstrate

positive pandemic there's process in accelerated million and in to place the process while pace that XXXX the five-year detail. we the fact, of year In significance the the fiscal of our the development conference financial first business environment. pandemic, I'd derive operational we formal on of COVID-XX plans. Only results began largely of assumed cash fiscal consecutive my improvements our remarks believe become successful we our like related today. strategy has masked transformation quarter the quarter business declining year today's and our over review and and plan also for a no of global by call, our value in progress the $XX implementation year a elevated second into one and it of that our COVID-XX progress performance balance Allen significant made. to have now perspective through the pandemic more onset we Later, from Prior in of our sales developments the entirety on provide the some XXXX, to approximately and growth had quarter post-COVID impact question for put improvements does will apparent. Through on a

the continued for which in, The quarter. elements the generation the demand free our end present margin cash initiatives COVID-XX our expect planning to strengthening and the of of team, a early profit approach higher markets. and We leadership centric all enhancement flow future, product as data of focusing addressable supporting in led our capacity factors plan foreseeable elimination as investing on in expansion include, by of development new the critical

to first actionable our centric put President position to this of cornerstone Manufacturing plan manufacturing as industry. for operations our Development. is grow and we PPE a to development in cash has are player always virtually Vice Lakeland in to Most corporate easy it's the seek our Sure the to past of team The leadership is the several one can no capabilities make of ongoing possesses scale. differentiators, And that. And value. in critical elements as quarters, manufacturing, Corporate our owned to entry. global to synergies on market Lakeland industry we new now our as allow since barriers similar our operations. there culture a opportunities increasing opportunities. in other for no do shareholder unique are This mask, we're global additions success work utilize its fairly us way, grow industry organically of recently, we rates to the and at During added we rates our maximize excess in data made that well. intended and move our investments inorganically sizeable

into quality, jump and what manufacturers automotive able on apparel, has to even overnight. focused Lakeland a remained year, XX-year Because last saw protective of virtually we we history furnishings were manufacturing that As highly-specified arena global and home Industries companies years, in who safety and manufacturing customers significantly employees. China. best, expanded do garments value we we Vietnam for capacity Furthermore, high improved India, the in our the of past few their

Our largely with specifically environment niche directed entry, Utility significant High our barriers expansions to are growth critical at higher and lines. Electrical Performance markets product

to sound sustainable the we decision result, to pandemic improvement. a knew focus hit, growth This performance expense believed of market drove at the strategy the the to be be pandemic. we As that when during the with reluctant were long-term chase gains short-term we our on industrial what to

validate specialized our gross results and will year are year, remarks. pre curtailed products industrial from XXXX, pre-pandemic PPE niche the the temporary demand XXXX and these operations, over income margin revenues the on and higher market significantly spending under and our products, locked Our we production on other focused provide pause higher defense post-pandemic quarter COVID color understandably than first customers Lakeland’s more his or margin Last saw other customers in this schedules. decision growing performance as contrast as year as down during our favored for as pandemic, in the as fiscal high-end operating fiscal purchases between we a revenues Allen were

global meaningful is in QX we this market of have Lakeland. the future more This for pandemic. customers these as we many placed industrial PPE industrial increasing emerges seek on encouraging fiscal quarters, of new have alone. reorders pandemic to for improvement we potential the new retain We the our of developed performance during see sustainability the been than we over our past on seen Now XX% XXXX, we've QX while two front. economy that the today, customers we as from in the XXX financial spending And is as can. as – estimate in penetration year data

we $X expansions, capital optimistic fiscal for have shown and able during to we performance manufacturing we $XX XX% the how forecast to in In of as XXXX tremendous level growth have of production a of will million. this Again, revenues we with rate black a Overall, factor operations, that support U.S. our it only our to capacity On makes approximately less pre-pandemic sustain by of under our Lakeland capacity higher are we’re progresses. and increase for growth utilize leverage, learned owning a expanding attain our investments are strength manufacturing events possible. performance retention swan this year that XX% afterward. ERP XX% our than and has been accelerate our to operating to installation has revenues. which now million

economic our of costs. timing in in environment. has process overhead, world return commissions levels we success gains have have forecast primarily of for fixed on benefits to in from we we our actively specialized profitability and and investment incremental freight well the business. of system As penetration, investments and improvements been growth not managing this returns confirmation expenses of performance post-COVID the us how This globally, and major out greater is our further implement are from The current sustainability even The Lakeland elevated its the flex based for limited around most where business results to expenses apparel. enabling product our production technology of sales could demand through for expect industrial driving markets our our in to market balance of already a as business variable protective Lakeland costs margin lines and increased bodes of higher realize emphasis rationalization post-pandemic better.

although freight in recovery, performance sales robust being large on relatively quarter for offset core first Leading potential that a exist excess the chain applications Our by and challenges. suggest direct-COVID increases part ongoing market industrial industrial is in demand businesses. supply indicators indicates decreased inventories continuing largely our economic headwinds

As our have COVID-XX of we've other to and We transformation. discussed reach for pressures our the catalyst recovery and absent-COVID growth more are demonstrated financial resiliency other global vertical and of by XXXX, our advantage diversified as use fiscal in At first performance. sustainability end than expected to of the operations demand, be quarter offset markets. from our we a expanded

company's complimented strategy Continued or can pass are to technological impairing inorganic of growth financial efficiencies ongoing and investments that expected the profitability. with The our synergistic are along only in and now are to our in in without are concludes delaying opportunities industry. IT candidates insight quite that the exciting this provide ability will business key times our continue into be are should process be data processes manufacturing of improvements by centric Allen PPE be our the I not drive These to aspects organic platforms. and identifying results. the growth will rollout with That These development, pursuing. the remarks. integrated to to but more productivity, sales our and accretive, systems and we my planning call

improved. performance our quarter first on and financial to sheet to our perspective, based you, Thank as track improve made XXXX From a the results key balance Charlie. strength showed expectations progress consistency measures, fiscal

For been the our revenues in of five million. past each of quarters have $XX excess

down and that needs indeed COVID in enter. non-pandemic historically to would are from for healthcare winding resurgence sales into a in segment from demand, we certain have tap we traditional related while We opportunities also not industrial strong attempted are related the benefiting

accounted estimate related of sales all related of sales of XXXX, For XX% COVID consolidated fiscal XX% XXXX for In to were we COVID. QX revenues. to XX%

outbreaks COVID-XX see from declines larger we sufficient of well-positioned outpace current As throughout larger much market targets traditional decline the to faster with resulting India, year have will on proportionally to overall stage may healthcare the which supply this supply, since Charlie of have the post our mentioned, revenue a focusing PPE that decreases in demand we reiterate we emerge except by and most COVID-XX to believe We early to XXXX in the growing fiscal experiencing the regions sales still not business continue on expect in that that availability market. set pandemic, industrial quarter, the demand in chain. and a book is

product. Due quarter our for this markets most back results scaling to first major of execution thus COVID-XX the related far. Our indicate strategy in successful

with Our sales. for chemicals were compared which disposables first down COVID sales and of level XX% our represented as quarter first XXXX highest sales, our quarter

million, to nearly half known of the one revenues as all grew nearly the rapidly and fiscal wear million. was than garment last in $X.X As fiscal quarter sales, were impacted COVID XXXX, up we fiscal our year XXXX, have high-performance prior sales periods, quarter in the ware At emerge $X.X compared XXXX, of of more year XXXX recent the XXX,XXX first XXX% more period. already from sales first and high-performance lines in as

saw curtailment related in course year we PPE purchases. non-pandemic spending as last on Of a noted, we

is returning prior industrial year. apparel to woven's increased XXXX fiscal year-over-year fire all are a compared uneven the in as of the economies wear, comparison as quarter purchasing. So the first High-performance and many bit to traditional

I'll million revenues PPE. of disposables, $XX.X of same have gross or domestic our quarter than XX% differentiated sales of profit of to wear all improvements On with speak in revenues. XX% or total first period total were to of $XX.X international domestic a the gross total sales to fiscal efforts fiscal higher or moment. million million or While sales particular consolidated international more increase XXXX, XXXX. high-performance these and $XX.X in margin the This of lines in basis were contributes margins long-term the and over garment typically the a sales our of with the of compares XX% total million XX% of $XX.X for

revenues. quarter international XXXX of or million total $XX.X total were XX% domestic million $XX were revenues or fourth sales XX% While sales of and

have share As been the growth have market two in higher strength excess revenues manufacturing these overall far revenues than past our numbers for of of business. quarters, on the we the show, the international U.S. arena, compelling our remained our prospects side place are domestic more the we while growth taking in industrial our believe this international

provides for far to involve times, business. products All value operational inventory. offered we of Efforts fewer customer certain Mexico. call particularly which in investments margins benefits from continued shorten product plans and capacity inventory India extent chemical lead Vietnam, to and will our the disposable, perspective past, had be in improve between manufacturing capacity expansions manufacturing fungible the near turns reduced and domestic improve we Our increase possible for the growth our investing for in production To and than shoring efficiencies be to ancillary primary gross will through manufacturing Environment. lines Critical add

At have gained our ERP most in had SKU better extremely continuity to first terms, the for reductions system freight about by and for countries diversify suppliers, component operations end inventory and reduction proven to providing from suppliers multiple as possible quarter, have and reduce we sourcing complexities The the XX% our through press well We our and the to We were enable of in raw brought supply. order costs pre-COVID the of to continue levels. qualifying levels. pandemic material from we from whenever be insights valuable. us materials components payment of price also as to on reduced targeted managing which the raw of

We margin have which in are benefiting from on gross strategies, our relied improvement decision driven IT large these part making.

percentage quarter margin sales XX.X% about in when XX% a as higher. of gross First sales was XXXX that's QX XX.X%, were XXXX down

For of of was versus XX.X% fiscal this gross sales further QX nearly an as year our XXXX a improvement XX in reflection, XX.X% points two years. percentage profit for in

So first pricing we been the side see quarter pre-pandemic mix a COVID, in this pricing and we've has above even reductions, been continue year. elevated supply certain of SKU the experienced the and have in on strategies, settlement of already product focus after market of and will as variations. through on continue that believe era, efficiencies, we to improvements we to pricing the terms result Pricing chain PPE

the For COVID substantially of in gross year fiscal gross prior revenues and leverage than fiscal $X.X struggling increases compared prior $XX.X the the fiscal and April higher we X.X% which was XX, fiscal ERP more XX.X% quarter levels, higher the XXXX, XX.X% more first sales with X.X% implementation in operating negative quarter. XXXX our profit from period, margins for out. normalized reported driven and revenue Lakeland three first elevated in than million million ended offset and the profit of fiscal period. were demand freight the for XXXX In operating more, the as on were company's XXXX, margins, by commissions first Operating the XXXX but down with year, the of when the quarter for months to

in million from variable $X.X the heavier state expenses XXXX tax rate XX% costs loss tax XXXX. taxes impacted as in fully down U.S. quarter down and in had million first $X.X income in QX XXXX. compared income we XXXX Lakeland's expense was XXXX; period. and $X.X XXXX Income of sales, fiscal were with million, tax utilized for operating foreign QX was million our during income purposes million QX fiscal with consists from in sales an $X.X periods, lower of net $X.X lower As federal, approximately tax federal expense COVID of from operating

and purposes XXXX net per beginning $X.X was multiple $X.X jurisdictions. XXXX. million $XX.X company operating share the this the at Net However, had common losses of for state down fiscal of $X.XX basic approximately year $X.XX QX million from across million per income QX in or or share in

net shown consistent existing quarter. support that million million we now XXXX systems flexibility, forward and to planning. of how production. Meanwhile, data-driven global year of remained our to XX% are efficiencies and relatively the yielded operations, our technology the already XX% with methods operations, spin our complimenting reduction this our will Capital larger business. have majority record income, to of Lakeland reduction on international the and data-centric efficiencies operations. expand only while investments for objectives floor the experienced spending flow $X.X turn cash from for to is business. IT and last cost relatively year to we'll benefits On look fiscal balance we the have ramp million, $X the we are in similar XXX,XXX we asset-light and be these at the spending solutions fiscal targeted resiliency These by higher by with in our growth, period. first of savings expenditures million further yet annual generated XXXX factory manufacturing In domestic our only year or level This ERP of can production prior $XX.X $X.X the in the in Amid flexing XX% sales from and levels down in

up balance million end quarter from Cash The at from was the ratio of company's X.X-to-X at at up to $XXX.X XXXX, current year has from XXXX. remained $XX.X $XXX.X of the working at beginning of sheet, current first Moving the capital fiscal to beginning bank fiscal the the the available. million first the XX, and year. XX% the XX, beginning the million fiscal of April at year. of million all and from beginning and at of borrowings had April of is no the $X.X end the of up company currently was The by million and its $XX.X debt or XXXX $XX.X available facilities, the quarter which million

provide to incrementally use As other synergies strategic remarks, margin to these can pursue to addition Charlie financial or higher accretive lead acquisitions during we greater access mentioned products manufacturing our intend where that to an or to even his our accelerated capabilities business. resources

quarter, our were remarks. program, than the repurchase my growth share which turn to quarter. capital shares leaves During program operator first platforms. our I the back continued a and the this global pursuits questions. for investments call No the during our million This under $X enough repurchased to in authorized in Board more will engage first concludes

with comes Instructions] Alex your [Operator Craig-Hallum Group. Capital Our Please question. you. first question Fuhrman Thank from state

thanks for the a on start Guys and question Great. to very congratulations taking nice year. my

wanted off is purchases customers $XX it quarter. be You sounds to Can related as related and It bit SKUs of baseline first you ask sort up? to some the of of maybe as non-COVID the going be breakdown start bring revenue pick that here you about the starts making back? higher the that we little you're thinking non-COVID a as to non-COVID industrial start in about to growing production between more COVID Or business. of know, about revenue and million like had the

to fruition come Alex, in we yet. industrial the have that think seen I recovery market the don't economic

is sales higher little for I the be number baseline than bit It us. will XX a industrial So million don't new that. that, think

like a Josh you're any targeting? there opportunities? made Are then guys bit of And or it front, seeing about particular hire the there mind looks what in helpful, That's you talk you're distribution great channels M&A that thanks. a in categories you little you onboard. have Can Okay. that on more bringing terms out product

come Right yet, far we're place some defining internally benefits in quite that use working we'll put That be our already. that have not He's road way processes our Josh that also potential still and interested have Alex. in now that objectives we We're procedures we We're would that opportunities in the own with and funnel making to down the and sure for evaluation. process. acquiring. said the still we're starting we a seen

of brings that acquisition and are aware for mean We us. an the challenges that multiple what our given current might

So we as going where need are are for that's to kind well. define the we for those quite fact to we to as synergies and might be. they that what look cognizant be we're synergistic how of acquisitions working that And of

there customers? change that are? last or demand particular the and saw new that how towards, those the were you Thanks. those year. COVID QX, brought little give of XXX makes Okay. customers new about to in you Are of industries That about I $X customers. in us COVID Can path just any saw demand demand then, million something more customers much to and year of I'd close who that bit on the sense. of sounds from new that that sense and these mean, And like you're thinking on then the retain a love it you ask coming a they XXX XX% gravitate cater you past to

at we sales because of – $XX $XX between million? earlier lack Allen, is our of transparency the of that estimated end pretty believe we difficult. and revenue Quantifying I We their million put QX, at

That's correct.

exactly but $XX I million, that $XX in was or it whether was can't remember it million range.

orders base sales kind resemble customer taking We’ve of industrial COVID customers largely focused are. They what we had Alex. our our team existing took to they before for As applications on applications.

our reflected distinguishable. only both are very course will that sales. customers. say So in of they're is, readily What not distribution, And international about revenue of of domestic in and those are international them I that's new XX% order

why we referring were we increased internationally also that's where So penetration market most our successful. keep that's to as

Thanks Thanks. helpful. really guys. That's Okay.

you, Thank sir.

with you. question. your Phoenix Capital our Management. And state question Cam next comes Please Thank Johnson[ph] from

for in gross newer talk from? rest you what raw are they're And materials a the the it bit thanks little how business? taking about portfolio, Hi, the discuss margin the call. the from, sourced relates profile Can products the and of to made the where

raw say XX% get talk about readily can All there's about with details too they XX% to no to our competitors run that issues our I there. above typically don't right. margin. materials pretty target I other margins as the to on deep want into than

with is, gross four expect probably of from margin that in we've to repeatedly, we XX%. So, emerge said lower a begins half COVID with which the the

China, they the – easily or The fabrics, are the that spun-bonded the it's but anywhere a microporous which diaper products used materials raw for sources business. constructions. sourced for film are in actually are These and laminated As on world. largely polyethylene polypropylene in India in by

they anywhere minimum validation and disposable this full The statistical that clean conform have a part that's process of have means run. which to So six make control, is entry a hard diapers, source process process market the we and you you requires long to sterility barrier product it. month a manufacturing of of can to your

whole you it run for Let you bioburden you've may of a and if grow it, three got trash. to and do, fail age months

had benefits brings and near to your strategies shoring another I competitive and is the is, question Thanks. discuss cost One Okay. you can the positioning you basis? it mentioned

Sure.

Standards of have six watching isolation a has been the month the for gone better are XX U.S. predicated stockpiling very for – closely. weeks million that million Congress word by We didn't rejection XX lack of meet the for – dormant The gone for gowns. the efforts garment the source stockpile AAMI have of U.S. last that

they're USA how what – it products process USA rushing the what or in a Congress made result, Act. the in to right writing defined replace those is PPE in, made now. means out is not As of

if in seen should legislation sourced And U.S. provides materials. go foreign Amendment they at to U.S. All or pricing then failing it date a and to of not problem you the starts made raw demand, Made of of availability a for Berry be unmet USA exceptions, quality we've grown tier which Tier of with X, foreign variations or materials. least that a have is that or foreign Made product still to is a that off if

So into Tier looking which we enter X in that would which where can very in raw what in we're level, be or made to come to Canada manufacturing is of foreign Caribbean U.S. makes the base Mexico attractive. do materials,

We not we are believe turn be XX% every successful long-term orders can not stockpile of stockpiling that in initial year. We manufacturing looking. only will do the They United will while States, huge. that be

So falls Made going in that is that's unlikely volume in is level, to continuing pay have will the a And USA. sustainable get not XX% to year your that two, sector highly that the it operation. prices government of to pay and the for private to just

Thank you.

Thank questions you. for management at no closing are I'll further There this remarks. turn back time. to it

fiscal XXXX you. We call. quarter financial in Lakeland's conference results Okay. your first participation appreciate Thank

continue flow even for ahead as the to sheet free continued for the Within we As foreseeable manufacturers, in world. we well-positioned PPE anywhere be cash of look the to year, from and an excellence outlook fiscal the for beginning the future. stronger balance of the balance XXXX, of standard new

June nice lies a conference have XXth. the for Our excited to and at you day. opportunities. story sustainable enabling again growth us Thank culture unlock look financial what on forward call, for our to data is centric, Conference sharing and on We're operating today's the joining additional Virtual Sidoti ahead Investor performance

you. And this Thank today's that with concludes teleconference.

disconnect this Thank now lines for your a have participation, your You time. may you day. wonderful at and