Lakeland Industries, Inc., a leading global manufacturer of industrial protective clothing for industry, municipalities, healthcare and to first responders on the federal, state and local levels, announced financial results for its third quarter of fiscal year 2014 ended October 31, 2013.
Excluding operations in Brazil and the inventory adjustments in the US, the Company is reporting the best quarter in over three years other than its second quarter for adjusted EBITDA.
Financial Results Highlights-third quarter of fiscal 2014, and Recent Company Developments:
-The Company has earned operating income before corporate overhead in the US of $1.1 million in Q3 of the fiscal year ending January 31, 2014, compared $0.4 million in Q3 of last year.
-Reflected in the operating income in the US are two inventory charges: $353,000 for overhead rate revisions and a $375,000 reserve for a discontinued product line in disposables.
-Brazil operations in Q3 this year included inventory adjustments of $1,158,000. Further, Brazil incurred a loss of $213,000 on sales of raw material from inventory in order to raise cash in Brazil.
-In Q3 of this year, sales of Lakeland worldwide decreased 6.0% and, excluding Brazil, increased 4.6% year over year. Net sales (including Brazil) of $22.8 million in Q3FY14 compared with $24.2 million in Q3FY13. Net sales, however, excluding Brazil, increased 4.6% from $19.95 million last year to $20.87 million this year.
-Sales were weak in Q3 due to:
Overall sales increased in the US by $1.6 million, or 16.7%. Excluding direct shipment billing in US numbers this year, net disposables were down $0.5 million, due largely to lower sales of Tyvek as remaining stock has depleted, absence of last October's Hurricane Sandy and large shipments to the USDA, softness in the wind energy market, and lower sales of disposable FR coveralls due to lower cost FR SMS competition, which we expect to reverse by publicizing its adverse protection data.
Fire sales were up $.6 million, reflective sales up $0.2 million, chemical sales were flat, and wovens were down $0.3 million due to continued deferred refinery turnarounds.
-China external sales in Q2 included a major sale to a Chinese auto company and also a number of Q3 deliveries to an Asia Pacific distributor were delayed until Q4.
-Argentina: we resolved our internal working capital shortages immediately following our financing in late Q2, however, governmental restrictions on imports in Argentina caused shortfalls in sales in Q3. Coordination of customs import issues remains an issue. Management is pursuing all possible remedies. We believe we will have at least partial success which should be reflected in greater sales in Q4.
-Chile: in Q3 last year Chile had large sales to Peru and Ecuador. Bids for both are being processed and management expects some sales in Q1 of FY15 for these customers.