Cover
Cover - shares | 3 Months Ended | |
Apr. 30, 2021 | Jun. 03, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | LAKELAND INDUSTRIES, INC | |
Entity Central Index Key | 0000798081 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Apr. 30, 2021 | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 8,032,993 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Entity File Number | 0-15535 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 13-3115216 | |
Entity Address Address Line 1 | 202 Pride Lane SW | |
Entity Address City Or Town | Decatur | |
Entity Address State Or Province | AL | |
Entity Address Postal Zip Code | 35603 | |
City Area Code | 256 | |
Local Phone Number | 350-3873 | |
Security 12b Title | Common Stock | |
Trading Symbol | LAKE | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||
Net sales | $ 34,092 | $ 45,582 |
Cost of goods sold | 19,706 | 23,438 |
Gross profit | 14,386 | 22,144 |
Operating expenses | 8,148 | 9,774 |
Operating profit | 6,238 | 12,370 |
Other income (expense), net | (12) | 6 |
Interest expense | (1) | (17) |
Income before taxes | 6,225 | 12,359 |
Income tax expense | 1,584 | 3,725 |
Net income | $ 4,641 | $ 8,634 |
Net income per common share: | ||
Basic | $ 0.58 | $ 1.08 |
Diluted | $ 0.57 | $ 1.07 |
Weighted average common shares outstanding: | ||
Basic weighted | 7,989,215 | 7,972,423 |
Diluted weigted | 8,143,805 | 8,044,849 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | ||
Net income | $ 4,641 | $ 8,634 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | (55) | (289) |
Comprehensive income | $ 4,586 | $ 8,345 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Apr. 30, 2021 | Jan. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 60,322,000 | $ 52,596,000 |
Accounts receivable, net of allowance for doubtful accounts of $873 and $700 at April 30, 2021 and January 31, 2021, respectively | 19,184,000 | 21,702,000 |
Inventories | 43,881,000 | 43,833,000 |
Prepaid VAT and other taxes | 2,302,000 | 1,343,000 |
Other current assets | 3,462,000 | 4,134,000 |
Total current assets | 129,151,000 | 123,609,000 |
Property and equipment, net | 9,437,000 | 9,819,000 |
Operating leases right-of-use assets | 2,230,000 | 2,347,000 |
Deferred tax assets | 2,913,000 | 2,839,000 |
Prepaid VAT and other taxes non current | 329,000 | 329,000 |
Other assets | 118,000 | 112,000 |
Goodwill | 871,000 | 871,000 |
Total assets | 145,049,000 | 139,925,000 |
Current liabilities | ||
Accounts payable | 7,267,000 | 7,397,000 |
Accrued compensation and benefits | 3,259,000 | 3,902,000 |
Other accrued expenses | 2,660,000 | 1,793,000 |
Income tax payable | 2,315,000 | 1,534,000 |
Current portion of operating lease liabilities | 956,000 | 768,000 |
Total current liabilities | 16,457,000 | 15,394,000 |
Long-term portion of operating lease liabilities | 1,212,000 | 1,613,000 |
Total liabilities | 17,669,000 | 17,007,000 |
Commitments and contingencies | 0 | 0 |
Stockholders' equity | ||
Preferred stock, $0.01 par; authorized 1,500,000 shares (none issued) | 0 | 0 |
Common stock, $0.01 par; authorized 20,000,000 shares Issued 8,542,235 and 8,498,457; outstanding 8,032,993 and 7,984,518 at April 30, 2021 and January 31, 2021, respectively | 86,000 | 85,000 |
Treasury stock, at cost; 509,242 shares | (5,023,000) | (5,023,000) |
Additional paid-in capital | 76,656,000 | 76,781,000 |
Retained earnings | 57,328,000 | 52,687,000 |
Accumulated other comprehensive loss | (1,667,000) | (1,612,000) |
Total stockholders' equity | 127,380,000 | 122,918,000 |
Total liabilities and stockholders' equity | $ 145,049,000 | $ 139,925,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Apr. 30, 2021 | Jan. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 873 | $ 700 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,500,000 | 1,500,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 8,542,235 | 8,498,457 |
Common stock, shares outstanding | 8,032,993 | 7,984,518 |
Treasury stock, shares | 509,242 | 509,242 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (UNAUDITED) - USD ($) | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated other comprehensive loss |
Balance, shares at Jan. 31, 2020 | 8,481,665 | (509,242) | ||||
Balance, amount at Jan. 31, 2020 | $ 85,052,000 | $ 85,000 | $ (5,023,000) | $ 75,171,000 | $ 17,581,000 | $ (2,762,000) |
Net income | 8,634,000 | 0 | 0 | 0 | 8,634,000 | |
Other comprehensive loss | (289,000) | $ 0 | 0 | 0 | (289,000) | |
Restricted stock plan, shares | 3,852 | |||||
Restricted stock plan, amount | 143,000 | $ 0 | $ 0 | 143,000 | 0 | 0 |
Balance, shares at Apr. 30, 2020 | 8,485,517 | (509,242) | ||||
Balance, amount at Apr. 30, 2020 | 93,540,000 | $ 85,000 | $ (5,023,000) | 75,314,000 | 26,215,000 | (3,051,000) |
Balance, shares at Jan. 31, 2021 | 8,498,457 | (509,242) | ||||
Balance, amount at Jan. 31, 2021 | 122,918,000 | $ 85,000 | $ (5,023,000) | 76,781,000 | 52,687,000 | (1,612,000) |
Net income | 4,641,000 | 0 | 0 | 0 | 4,641,000 | 0 |
Restricted stock plan, amount | 336,000 | $ 0 | 0 | 336,000 | 0 | 0 |
Restricted stock issued, shares | 43,778 | |||||
Restricted stock issued, amount | 1,000 | $ 1,000 | 0 | 0 | 0 | 0 |
Other comprehensive income | (55,000) | 0 | 0 | 0 | (55,000) | |
Return of shares in lieu of payroll withholding | (461,000) | $ 0 | $ 0 | (461,000) | 0 | 0 |
Balance, shares at Apr. 30, 2021 | 8,542,235 | (509,242) | ||||
Balance, amount at Apr. 30, 2021 | $ 127,380,000 | $ 86,000 | $ (5,023,000) | $ 76,656,000 | $ 57,328,000 | $ (1,667,000) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 4,641,000 | $ 8,634,000 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Provision for doubtful accounts | 173,000 | 150,000 |
Deferred income taxes | (75,000) | 2,314,000 |
Depreciation and amortization | 499,000 | 453,000 |
Stock based and restricted stock compensation | 336,000 | 163,000 |
Gain on disposal of property and equipment | 17,000 | 7,000 |
Non-cash operating lease expense | 117,000 | 214,000 |
(Increase) decrease in operating assets | ||
Accounts receivable | 2,328,000 | (7,589,000) |
Inventories | (57,000) | 6,656,000 |
Prepaid VAT and other taxes | (959,000) | (288,000) |
Other current assets | 634,000 | (1,199,000) |
Increase (decrease) in operating liabilities | ||
Accounts payable | (128,000) | (1,008,000) |
Accrued expenses and other liabilities | 1,007,000 | 2,017,000 |
Operating lease liabilities | (214,000) | (271,000) |
Net cash provided by operating activities | 8,318,000 | 10,253,000 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (135,000) | (194,000) |
Cash flows from financing activities: | ||
Loan repayments, short-term | 0 | (1,181,000) |
Loan borrowings, short-term | 0 | 158,000 |
Shares returned to pay employee taxes under restricted stock program | (461,000) | (20,000) |
Net cash (used in) financing activities | (461,000) | (1,043,000) |
Effect of exchange rate changes on cash and cash equivalents | 3,000 | (149,000) |
Net increase in cash and cash equivalents | 7,726,000 | 8,867,000 |
Cash and cash equivalents at beginning of period | 52,596,000 | 14,606,000 |
Cash and cash equivalents at end of period | 60,322,000 | 23,473,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 1,000 | 17,000 |
Cash paid for taxes | 1,152,000 | 861,000 |
Noncash investing and financing activities | ||
Leased assets obtained in exchange for operating lease liabilities | $ 268,000 | $ 215,000 |
Business
Business | 3 Months Ended |
Apr. 30, 2021 | |
Business | |
1. Business | 1. Business Lakeland Industries, Inc. and Subsidiaries (“Lakeland,” the “Company,” “we,” “our” or “us”), a Delaware corporation organized in April 1986, manufacture and sell a comprehensive line of industrial protective clothing and accessories for the industrial and public protective clothing market. Our products are sold globally by our in-house sales teams, our customer service group, and authorized independent sales representatives to a network of over 1,600 global safety and industrial supply distributors. Our authorized distributors supply end users, such as integrated oil, chemical/petrochemical, automobile, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical, and high technology electronics manufacturers, as well as scientific, medical laboratories and the utilities industry. In addition, we supply federal, state and local governmental agencies and departments, such as fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control. Internationally, we sell to a mixture of end users directly, and to industrial distributors depending on the particular country and market. Sales are made to more than 50 foreign countries, the majority of which were into China, the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India and Southeast Asia. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Apr. 30, 2021 | |
Basis of Presentation | |
2. Basis of Presentation | 2. Basis of Presentation The condensed consolidated financial statements of the Company are unaudited. These condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary by management to fairly state the Company's results. Intercompany accounts and transactions have been eliminated. The results reported in these condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire fiscal year ending January 31, 2022, or for any future period. The January 31, 2021, Condensed Consolidated Balance Sheet data was derived from the audited Consolidated Balance Sheet, but does not include all disclosures required by accounting principles generally accepted in the United States of America (U.S. GAAP).The accompanying condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto as of January 31, 2021 and 2020, and for each of the two years in the period ended January 31, 2021, included in our most recent annual report on Form 10-K filed on April 16, 2021. In this Form 10-Q, (a) “FY” means fiscal year; thus for example, FY22 refers to the fiscal year ending January 31, 2022, (b) “Q” refers to quarter; thus, for example, Q1 FY22 refers to the first quarter of the fiscal year ending January 31, 2022, (c) “Balance Sheet” refers to the unaudited condensed consolidated balance sheet and (d) “Statement of Income” refers to the unaudited condensed consolidated statement of income. |
Inventories
Inventories | 3 Months Ended |
Apr. 30, 2021 | |
Inventories | |
3. Inventories | 3. Inventories Inventories consist of the following (in $000s): April 30, 2021 January 31, 2021 Raw materials $ 18,624 $ 18,941 Work-in-process 794 409 Finished goods 27,145 27,047 Excess and obsolete adjustments (2,682 ) (2,564 ) $ 43,881 $ 43,833 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Apr. 30, 2021 | |
Long-Term Debt | |
4. Long-Term Debt | 4. Long-Term Debt Revolving Credit Facility On June 25, 2020, the Company entered into a Loan Agreement (the “Loan Agreement”) with Bank of America (“Lender”). The Loan Agreement provides the Company with a secured (i) $12.5 million revolving credit facility, which includes a $5.0 million letter of credit sub-facility. The Company may request from time to time an increase in the revolving credit loan commitment of up to $5.0million (for a total commitment of up to $17.5 million). Borrowing pursuant to the revolving credit facility is subject to a borrowing base amount calculated as (a) 80% of eligible accounts receivable, as defined, plus (b) 50% of the value of acceptable inventory, as defined, minus (c) certain reserves as the Lender may establish for the amount of estimated exposure, as reasonably determined by the Lender from time to time, under certain interest rate swap contracts. The borrowing base limitation only applies during periods when the Company’s quarterly funded debt to EBITDA ratio, as defined, exceeds 2.00 to 1.00. The credit facility will mature on June 25, 2025. As of April 30, 2021, the Company had no borrowings outstanding on the letter of credit sub-facility and no borrowings outstanding under the revolving credit facility. Prior to the execution of the Loan Agreement with Bank of America, the Company repaid a $1.2 million term loan that was outstanding under a similar agreement with SunTrust Bank. The Company has terminated the borrowing agreement with SunTrust Bank. Borrowings in UK On March XX, 2021, Lakeland UK entered into an extension of the maturity date of its existing facility with HSBC Invoice Finance (UK) Ltd. to March 31, 2022 with no additional changes to the terms. There were no borrowings outstanding under the Company’s existing credit facility with HSBC Bank at April 30, 2021 and January 31, 2021. Amounts due, under the facility with HSBC Invoice Finance (UK) Ltd., of $1.6 million and $2.0 million as of April 30, 2021, and January 31, 2021, respectively, are included in other current assets on the accompanying consolidated balance sheets. |
Concentration of Risk
Concentration of Risk | 3 Months Ended |
Apr. 30, 2021 | |
Concentration of Risk | |
5. Concentration of Risk | 5. Concentration of Risk Credit Risk Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and cash equivalents, and trade receivables. Concentration of credit risk with respect to trade receivables is generally diversified due to the large number of entities comprising the Company’s customer base and their dispersion across geographic areas. The Company routinely addresses the financial strength of its customers and, as a consequence, believes that its receivable credit risk exposure is limited. The Company does not require customers to post collateral. The Company’s foreign financial depositories are Bank of America; China Construction Bank; Bank of China; China Industrial and Commercial Bank; HSBC (UK); Rural Credit Cooperative of Shandong; Postal Savings Bank of China; Punjab National Bank; HSBC in India, Argentina and UK; Banco Nacion in Argentina; TD Canada Trust; Banco Itaú S.A., Santander in Chile; Banco Mercantil Del Norte SA in Mexico; ZAO KB Citibank Moscow in Russia, and JSC Bank Centercredit in Kazakhstan. The Company monitors its financial depositories by their credit rating which varies by country. In addition, cash balances in banks in the United States of America are insured by the Federal Deposit Insurance Corporation subject to certain limitations. There was approximately $19.4 million total included in the U.S. bank accounts and approximately $40.9 million total in foreign bank accounts as of April 30, 2021, of which $59.6 million was uninsured. Major Customer No customer accounted for more than 10% of net sales during the three months ended April 30, 2021 and 2020. Major Supplier No vendor accounted for more than 10% of purchases during the three months ended April 30, 2021 and 2020. |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Apr. 30, 2021 | |
Stockholders Equity | |
6. Stockholders' Equity | 6. Stockholders’ Equity On June 21, 2017, the stockholders of the Company approved the Lakeland Industries, Inc. 2017 Equity Incentive Plan (the “2017 Plan”). The executive officers and all other employees and directors of the Company, including its subsidiaries, are eligible to participate in the 2017 Plan. The 2017 Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”), except that with respect to all non-employee directors, the Committee shall be deemed to include the full Board. The 2017 Plan provides for the grant of equity-based compensation in the form of stock options, restricted stock, restricted stock units, performance shares, performance units, or stock appreciation rights (“SARS”). An aggregate of 360,000 shares of the Company’s common stock are authorized for issuance under the 2017 Plan, subject to adjustment as provided in the 2017 Plan for stock splits, dividends, distributions, recapitalizations and other similar transactions or events. If any shares subject to an award are forfeited, expire, lapse or otherwise terminate without issuance of such shares, such shares shall, to the extent of such forfeiture, expiration, lapse or termination, again be available for issuance under the 2017 Plan. The Company recognized total stock-based compensation costs, which are reflected in operating expenses (in 000’s): Three Months Ended April 30, 2021 2020 2017 Plan: Restricted Stock Program $ 306 $ 149 Stock Options 30 14 Total stock based compensation $ 336 $ 164 Total income tax expense recognized for stock-based compensation arrangements $ 71 $ 34 Restricted Stock Under the 2017 Plan, as described above, the Company awarded performance-based shares and service-based shares of restricted stock to eligible employees and directors. The following table summarizes the activity under the 2017 Plan for the three months ended April 30, 2021. This table reflects the amount of awards granted at the number of shares that would be vested if the Company were to achieve the maximum performance level under the December 2019 and April 2020 grants. Performance-Based Service-Based Total Weighted Average Grant Date Fair Value Outstanding at January 31, 2021 245,210 30,930 276,140 $ 13.24 Awarded ---- ---- ---- Vested (58,574 ) ---- (58,574 ) Forfeited ---- ---- ---- Outstanding at April 30, 2021 186,636 30,930 217,566 $ 12.13 The actual number of shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three year performance measurement period based on measures that include Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) margin, revenue growth, and free cash flow for the December 2019 and April 2020 grants. The performance targets have been set for each of the Minimum, Target, and Maximum levels. The actual performance amount achieved is determined by the Committee and may be adjusted for items determined to be unusual in nature or infrequent in occurrence, at the discretion of the Committee. The compensation cost is based on the fair value at the grant date, is recognized over the requisite performance/service period using the straight-line method, and is periodically adjusted for the probable number of shares to be awarded. As of April 30, 2021, unrecognized stock-based compensation expense totaled $1.1 million pursuant to the 2017 Plan based on outstanding awards under the Plan. This expense is expected to be recognized over approximately two years. Stock Repurchase Program On July 19, 2016, the Company’s board of directors approved a stock repurchase program under which the Company may repurchase up to $2,500,000 of its outstanding common stock. During the three months ended April 30, 2021, the Company did not repurchase any shares. The Company has repurchased 152,801 shares of stock under this program as of April 30, 2021 for $1,671,188, inclusive, of commissions. On February 17, 2021, the Company’s Board of Directors authorized a new stock repurchase program under which the Company may repurchase up to $5,000,000of its outstanding common stock. This new program replaced the prior program which had approximately $800,000 remaining for repurchases. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 30, 2021 | |
Income Taxes | |
7. Income Taxes | 7. Income Taxes Deferred Taxes and Valuation Allowance The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. The valuation allowance was $2.5 million and $2.7 million at April 30, 2021 and January 31, 2021, respectively. The state net operating loss (“NOL”) carryforwards as of April 30, 2021 were approximately $0.8 million after tax effects. The state NOLs with carry forward limitations will begin to expire after January 31, 2025 and will continue to expire at various periods up until January 31, 2039 when they will be fully expired. The states have a larger spread because some only carryforward for 10 years and some allow 20 years. The Georgia NOLs generated after January 31, 2018 can be carried forward indefinitely. Income Tax Expense Income tax expenses consists of federal, state and foreign income taxes. Items impacting the effective rate are state taxes, an adjustment for foreign tax rates lower than the US statutory tax rate, Global Intangible Low-taxed Income (“GILTI”), and an adjustment to reflect the recapture of U.S. NOLs as a result of applying the GILTI high tax exclusion in tax years FY19 and FY20. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Apr. 30, 2021 | |
Net income per common share: | |
8. Net Income Per Share | 8. Net Income Per Share The following table sets forth the computation of basic and diluted net income per share at April 30, 2021 and 2020 as follows (in $000s except per share amounts): Three Months Ended April 30, 2021 2020 Numerator: Net income $ 4,641 $ 8,634 Denominator: Denominator for basic net income per share (weighted-average shares which exclude shares in the treasury, 509,242 at April 30, 2021 and 2020 7,989,215 7,972,423 Effect of dilutive securities from restricted stock plan 154,590 72,426 Denominator for diluted net income per share (adjusted weighted average shares) 8,143,805 8,044,849 Basic net income per share $ 0.58 $ 1.08 Diluted net income per share $ 0.57 $ 1.07 |
Contingencies
Contingencies | 3 Months Ended |
Apr. 30, 2021 | |
Contingencies | |
9. Contingencies | 9. Contingencies Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been or is probable of being incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. The Company’s Exit from Brazil On March 9, 2015, Lakeland Brazil, S.A. changed its legal form to a Limitada and changed its name to Lake Brasil Industria E Comercio de Roupas E Equipamentos de Protecao Individual LTDA (“Lakeland Brazil”). Transfer of Shares Agreement On July 31, 2015 (the “Closing Date”), Lakeland and Lakeland Brazil, completed a conditional closing of a Shares Transfer Agreement (the “Shares Transfer Agreement”) with Zap Comércio de Brindes Corporativos Ltda (“Transferee”), a company owned by an existing Lakeland Brazil manager, entered into on June 19, 2015. Pursuant to the Shares Transfer Agreement, the Transferee has acquired all of the shares of Lakeland Brazil owned by the Company. Pursuant to the Shares Transfer Agreement, Transferee paid R$1.00 to the Company and assumed all liabilities and obligations of Lakeland Brazil, whether arising prior to, on or after the Closing Date. In order to help enable Lakeland Brazil to have sufficient funds to continue to operate for a period of at least two years following the Closing Date, the Company provided funding to Lakeland Brazil in the aggregate amount of USD $1,130,000in cash, in the form of a capital raise, on or prior to the Closing Date, and agreed to provide an additional R$582,000 (approximately USD $188,000) (the “Additional Amount”), in the form of a capital raise, to be utilized by Lakeland Brazil to pay off certain specified liabilities and other potential contingent liabilities. Pursuant to the Shares Transfer Agreement, the Company paid R$992,000 (approximately USD $320,000) in cash, on July 1, 2015 and issued a non-interest bearing promissory note for the payment to be due for the Additional Amount (R$582,000) (approximately USD $188,000) on the Closing Date which was paid to Lakeland Brazil in two (2) installments of (i) R$288,300 (approximately USD $82,000) which was paid on August 1, 2015, and (ii) R$294,500 (approximately USD $84,000) on September 1, 2015. The closing of this agreement was subject to Brazilian government approval of the shares transfer, which was received in October 2015 (The “Final Closing Date”). Although the Company formally completed the terms of the “Shares Transfer Agreement”, pursuant to which our entire equity interest in Lakeland Brazil was transferred, during the fiscal year ended January 31, 2016, we may continue to be exposed to certain liabilities arising in connection with the operations of Lakeland Brazil, which was shut down in late March 2019. The Company understands that under the laws of Brazil, a parent company may be held liable for the liabilities of a former Brazilian subsidiary in the event of fraud, misconduct, or under various theories. In this respect, as regards labor claims, a parent company could conceivably be held liable for the liabilities of a former Brazilian subsidiary. Although the Company would have the right of adversary system, full defense and due process, in case of a potential litigation, there can be no assurance as to the findings of the courts in Brazil. VAT Tax Issues in Brazil Value Added Tax (“VAT”) in Brazil is charged at the state level. We commenced operations in Brazil in May 2008 through the acquisition of Lakeland Brazil. Having successfully settled that largest of the VAT claims against Lakeland Brazil, three claims remain open. Our attorney informs us the three claims totaling R$1.3 million (USD $0.5 million) excluding interest, penalties and fees of R$2.7 million (USD $0.9 million) were likely to be successfully defended based on state auditor misunderstanding. Furthermore, with regards to foreign tax claims, our US attorney informs us that the US courts will not hear foreign tax claims and therefore will not enforce them. Labor Claims in Brazil As disclosed in our periodic filings with the SEC, we agreed to make certain payments in connection with ongoing labor litigation involving our former Brazilian subsidiary. While the vast majority of these labor suits have been resolved, two significant claims remain; one labor claim and one civil claim filed by separate former officers of our former Brazilian subsidiary. While Lakeland was initially named as a co-defendant in the labor suit, Lakeland was dismissed from the case by the labor judge. Lakeland is a named co-defendant in the civil matter. In the labor case filed in 2014, the former Brazilian manager was initially awarded USD $100,000 and appealed the award amount. Having recently completed that appeals process, the case has been returned to the initial hearing phase for witness testimony and collection of evidence before the same judge that previously dismissed Lakeland. Currently, Lakeland is not a co-defendant in this case, but that could change should the judge change his prior ruling. In the civil matter filed five years ago in 2016, a former Lakeland Brazil manager is seeking approximately USD $700,000 he alleges is due to him against an unpaid promissory note. Lakeland has not been served with process and no decision on the merits has been issued in this case yet. These two cases are the only two cases filed within the last 5 years against the parent company Lakeland Industries, Inc. and represent the majority of the remaining exposure for Lakeland. Lakeland Brazil may face new labor lawsuits in the short term as a result of the shutdown of its operations in March 2019. The Company has no obligation under the Shares Transfer Agreement to make any additional payments in connection with these potential new labor lawsuits. The Company also understands that under the labor laws of Brazil, a parent company may be held liable for the labor liabilities of a former Brazilian subsidiary in the case of fraud, misconduct, or under various theories. Although the Company would have the right of adversary system, full defense and due process in case of a potential litigation, there can be no assurance as to the findings of the courts of Brazil. There are additional cases in Labor and Civil courts against Lakeland Brazil in which Lakeland is not a party, and other outstanding monetary allegations of Lakeland Brazil. General litigation contingencies The Company is involved in various litigation proceedings arising during the normal course of business which, in the opinion of the management of the Company, will not have a material effect on the Company’s financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters. As of April 30, 2021, to the best of the Company’s knowledge, there were no outstanding claims or litigation, except for the labor contingencies in Brazil described above. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Apr. 30, 2021 | |
Segment Reporting | |
10. Segment Reporting | 10. Segment Reporting We manage our operations by evaluating each of our geographic locations. Our US operations include a facility in Alabama (primarily the distribution to customers of the bulk of our products and the light manufacturing of our chemical, wovens, reflective, and fire products). The Company also maintains one manufacturing company in China (primarily disposable and chemical suit production), a manufacturing facility in Mexico (primarily disposable, reflective, fire and chemical suit production), a manufacturing facility in Vietnam (primarily disposable production) and a small manufacturing facility in India. Our China facilities produce the majority of the Company’s products and China generates a significant portion of the Company’s international revenues. We evaluate the performance of these entities based on operating profit, which is defined as gross profit less operating expenses. We have sales forces in the USA, Canada, Mexico, Europe, Latin America, India, Russia, Kazakhstan, Australia and China, which sell and distribute products shipped from the United States, Mexico, India, Vietnam or China. The table below represents information about reported segments for the three month periods noted therein: Three Months Ended April 30, (in millions of dollars) 2021 2020 Net Sales: USA Operations (including Corporate) $ 16.41 $ 24.13 Other foreign 2.46 3.04 Europe (UK) 4.40 3.01 Mexico 1.81 1.82 Asia 18.19 20.02 Canada 1.78 4.31 Latin America 3.56 2.54 Less intersegment sales (14.51 ) (13.29 ) Consolidated sales $ 34.10 $ 45.58 External Sales: USA Operations (including Corporate) $ 15.70 $ 23.11 Other foreign 1.58 2.30 Europe (UK) 4.40 3.01 Mexico 1.55 1.37 Asia 5.64 9.05 Canada 1.78 4.31 Latin America 3.45 2.43 Consolidated external sales $ 34.10 $ 45.58 Intersegment Sales: USA Operations (including Corporate) $ 0.71 $ 1.02 Other foreign 0.88 0.74 Mexico 0.26 0.45 Asia 12.55 10.97 Latin America 0.11 0.11 Consolidated intersegment sales $ 14.51 $ 13.29 Operating Profit (Loss): USA Operations (including Corporate) $ 0.27 $ 4.33 Other foreign 0.57 1.23 Europe (UK) 1.60 0.46 Mexico 0.05 0.22 Asia 3.35 4.51 Canada 0.47 1.13 Latin America 0.90 0.57 Less intersegment profit (0.97 ) (0.08 ) Consolidated operating profit $ 6.24 $ 12.37 April 30, 2021 January 31, 2021 (in millions of dollars) Total Assets: USA Operations (including Corporate) $ 52.81 $ 52.31 Other foreign 8.65 8.37 Europe (UK) 11.88 11.33 Mexico 5.66 5.62 Asia 49.93 47.29 Canada 7.82 8.03 Latin America 8.30 6.97 Consolidated assets $ 145.05 $ 139.92 The table below presents external sales by product line: Three Months Ended April 30, (in millions of dollars) 2022 2021 External Sales by product lines: Disposables $ 19.70 $ 31.21 Chemical 8.26 8.88 Fire 1.90 1.45 Gloves 0.45 0.78 High Visibility 1.30 1.35 High Performance Wear 0.86 0.29 Wovens 1.63 1.62 Consolidated external sales $ 34.10 $ 45.58 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Inventories | |
Schedule of inventory | April 30, 2021 January 31, 2021 Raw materials $ 18,624 $ 18,941 Work-in-process 794 409 Finished goods 27,145 27,047 Excess and obsolete adjustments (2,682 ) (2,564 ) $ 43,881 $ 43,833 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Stockholders Equity | |
Schedule of share-based compensation, restricted stock units award activity | Three Months Ended April 30, 2021 2020 2017 Plan: Restricted Stock Program $ 306 $ 149 Stock Options 30 14 Total stock based compensation $ 336 $ 164 Total income tax expense recognized for stock-based compensation arrangements $ 71 $ 34 |
Schedule of stock option activity | Performance-Based Service-Based Total Weighted Average Grant Date Fair Value Outstanding at January 31, 2021 245,210 30,930 276,140 $ 13.24 Awarded ---- ---- ---- Vested (58,574 ) ---- (58,574 ) Forfeited ---- ---- ---- Outstanding at April 30, 2021 186,636 30,930 217,566 $ 12.13 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Net income per common share: | |
Schedule of earnings per share, basic and diluted | Three Months Ended April 30, 2021 2020 Numerator: Net income $ 4,641 $ 8,634 Denominator: Denominator for basic net income per share (weighted-average shares which exclude shares in the treasury, 509,242 at April 30, 2021 and 2020 7,989,215 7,972,423 Effect of dilutive securities from restricted stock plan 154,590 72,426 Denominator for diluted net income per share (adjusted weighted average shares) 8,143,805 8,044,849 Basic net income per share $ 0.58 $ 1.08 Diluted net income per share $ 0.57 $ 1.07 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Segment Reporting | |
Segment information | Three Months Ended April 30, (in millions of dollars) 2021 2020 Net Sales: USA Operations (including Corporate) $ 16.41 $ 24.13 Other foreign 2.46 3.04 Europe (UK) 4.40 3.01 Mexico 1.81 1.82 Asia 18.19 20.02 Canada 1.78 4.31 Latin America 3.56 2.54 Less intersegment sales (14.51 ) (13.29 ) Consolidated sales $ 34.10 $ 45.58 External Sales: USA Operations (including Corporate) $ 15.70 $ 23.11 Other foreign 1.58 2.30 Europe (UK) 4.40 3.01 Mexico 1.55 1.37 Asia 5.64 9.05 Canada 1.78 4.31 Latin America 3.45 2.43 Consolidated external sales $ 34.10 $ 45.58 Intersegment Sales: USA Operations (including Corporate) $ 0.71 $ 1.02 Other foreign 0.88 0.74 Mexico 0.26 0.45 Asia 12.55 10.97 Latin America 0.11 0.11 Consolidated intersegment sales $ 14.51 $ 13.29 Operating Profit (Loss): USA Operations (including Corporate) $ 0.27 $ 4.33 Other foreign 0.57 1.23 Europe (UK) 1.60 0.46 Mexico 0.05 0.22 Asia 3.35 4.51 Canada 0.47 1.13 Latin America 0.90 0.57 Less intersegment profit (0.97 ) (0.08 ) Consolidated operating profit $ 6.24 $ 12.37 April 30, 2021 January 31, 2021 (in millions of dollars) Total Assets: USA Operations (including Corporate) $ 52.81 $ 52.31 Other foreign 8.65 8.37 Europe (UK) 11.88 11.33 Mexico 5.66 5.62 Asia 49.93 47.29 Canada 7.82 8.03 Latin America 8.30 6.97 Consolidated assets $ 145.05 $ 139.92 |
Schedule of revenue from external customers geographic areas | Three Months Ended April 30, (in millions of dollars) 2022 2021 External Sales by product lines: Disposables $ 19.70 $ 31.21 Chemical 8.26 8.88 Fire 1.90 1.45 Gloves 0.45 0.78 High Visibility 1.30 1.35 High Performance Wear 0.86 0.29 Wovens 1.63 1.62 Consolidated external sales $ 34.10 $ 45.58 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Apr. 30, 2021 | Jan. 31, 2021 |
Inventories | ||
Raw materials | $ 18,624 | $ 18,941 |
Work-in-process | 794 | 409 |
Finished goods | 27,145 | 27,047 |
Excess and obsolete reserves | (2,682) | (2,564) |
Inventories, net | $ 43,881 | $ 43,833 |
LongTerm Debt (Details Narrativ
LongTerm Debt (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 30, 2021 | Jan. 31, 2021 | |
SunTrust Bank [Member] | ||
Repayment of debt | $ 1.2 | |
HSBC Bank [Member] | ||
Due amount | $ 1.6 | $ 2 |
Loan Agreement | Bank Of America | ||
Warranties to the Lender in the Loan Agreement | The Company may request from time to time an increase in the revolving credit loan commitment of up to $5.0million (for a total commitment of up to $17.5 million). Borrowing pursuant to the revolving credit facility is subject to a borrowing base amount calculated as (a) 80% of eligible accounts receivable, as defined, plus (b) 50% of the value of acceptable inventory, as defined, minus (c) certain reserves as the Lender may establish for the amount of estimated exposure, as reasonably determined by the Lender from time to time, under certain interest rate swap contracts. The borrowing base limitation only applies during periods when the Company’s quarterly funded debt to EBITDA ratio, as defined, exceeds 2.00 to 1.00. The credit facility will mature on June 25, 2025 | |
Revolving credit facility | $ 12.5 | |
Credit sub facility | $ 5 | |
Credit facility mature date | Jun. 25, 2025 |
Concentration of Risk (Details
Concentration of Risk (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Cash balances in banks in the United States of America | $ 19.4 | |
Cash balances in foreign bank accounts | 40.9 | |
Uninsured amount | $ 59.6 | |
Major Customer [Member] | ||
Concentration risk of net sales | 10.00% | 10.00% |
Major Supplier [Member] | ||
Concentration risk of net sales | 10.00% | 10.00% |
Stockholders Equity (Details)
Stockholders Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
2017 Plan [Member] | ||
Total stock-based compensation | $ 336 | $ 164 |
Total income tax benefit recognized for stock-based compensation arrangements | 71 | 34 |
Stock Option [Member] | ||
Total stock-based compensation | 30 | 14 |
Restricted Stock Program | ||
Total stock-based compensation | $ 306 | $ 149 |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) | 3 Months Ended |
Apr. 30, 2021$ / sharesshares | |
Total [Member] | |
Outstanding at January 31, 2021 | 276,140 |
Vested | (58,574) |
Outstanding at April 30, 2021 | 217,566 |
Weighted Average Grant Date Fair Value [Member] | |
Outstanding at January 31, 2021 | $ / shares | $ 13.24 |
Outstanding at April 30, 2021 | $ / shares | $ 12.13 |
Performance Based [Member] | |
Outstanding at January 31, 2021 | 245,210 |
Vested | (58,574) |
Outstanding at April 30, 2021 | 186,636 |
Service Based [Member] | |
Outstanding at January 31, 2021 | 30,930 |
Outstanding at April 30, 2021 | 30,930 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jul. 19, 2016 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | |
Common stock, shares authorized | 20,000,000 | 20,000,000 | ||
2017 Plan [Member] | ||||
Common stock, shares authorized | 360,000 | |||
Other Compensation Plans/Programs [Member] | ||||
Unrecognized stock-based compensation expense | $ 1,100,000 | |||
Stock Repurchase Program [Member] | ||||
Inclusive of commissions | 1,671,188 | |||
Remaining value of repurchase of outstanding common stock | $ 800,000 | |||
Repurchase of outstanding common stock | 152,801 | |||
Repurchase of outstanding common stock, amount | $ 2,500,000 | $ 5,000,000 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Apr. 30, 2021 | Jan. 31, 2021 | |
Income Taxes | ||
Change in valuation allowance | $ 2.5 | $ 2.7 |
Net operating loss carryforwards | $ 0.8 | |
Net operating loss carryforwards descriptions | The state NOLs with carry forward limitations will begin to expire after January 31, 2025 and will continue to expire at various periods up until January 31, 2039 when they will be fully expired. The states have a larger spread because some only carryforward for 10 years and some allow 20 years |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Net income per common share: | ||
Net income | $ 4,641 | $ 8,634 |
Denominator for basic net income per share (weighted-average shares which exclude shares in the treasury, 509,242 at April 30, 2021 and 2020 | 7,989,215 | 7,972,423 |
Effect of dilutive securities from restricted stock plan | 154,590 | 72,426 |
Denominator for diluted net income per share (adjusted weighted average shares) | 8,143,805 | 8,044,849 |
Basic net income per share | $ 0.58 | $ 1.08 |
Diluted net income per share | $ 0.57 | $ 1.07 |
Contingencies (Details Narrativ
Contingencies (Details Narrative) - USD ($) | 3 Months Ended | ||
Apr. 30, 2021 | Jul. 31, 2015 | Jul. 01, 2015 | |
Vat tax claim | $ 500,000 | ||
Penalties and fees | 900,000 | ||
Employee claim awad amount | 100,000 | ||
Unpaid promissory note due | $ 700,000 | ||
On July 31, 2015 [Member] | Shares Transfer Agreement [Member] | |||
Cash | $ 1,130,000 | $ 320,000 | |
Additional cash in form of capital raise | $ 188,000 | ||
Additional amount due | $ 188,000 | ||
Description of installments of amount due | (i) R$288,300 (approximately USD $82,000) which was paid on August 1, 2015, and (ii) R$294,500 (approximately USD $84,000) on September 1, 2015 |
SEGMENT REPORTING (Details )
SEGMENT REPORTING (Details ) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Jan. 31, 2020 | |
Operating profit | $ 6,238 | $ 12,370 | |
Total [Member] | |||
Net sales | 34,100 | 45,580 | |
External sales | 34,100 | 45,580 | |
Intersegment sales | 14,510 | 13,290 | |
Operating profit | 6,240 | 12,370 | |
Total assets less intersegment | 145,050 | $ 139,920 | |
USA [Member] | |||
Net sales | 16,410 | 24,130 | |
External sales | 15,700 | 23,110 | |
Intersegment sales | 710 | 1,020 | |
Operating profit | 270 | 4,330 | |
Total assets less intersegment | 52,810 | 52,310 | |
Other Foreign [Member] | |||
Net sales | 2,460 | 3,040 | |
External sales | 1,580 | 2,300 | |
Intersegment sales | 880 | 740 | |
Operating profit | 570 | 1,230 | |
Total assets less intersegment | 8,650 | 8,370 | |
Europe (UK) [Member] | |||
Net sales | 4,400 | 3,010 | |
External sales | 4,400 | 3,010 | |
Operating profit | 1,600 | 460 | |
Total assets less intersegment | 11,880 | 11,330 | |
Mexico [Member] | |||
Net sales | 1,810 | 1,820 | |
External sales | 1,550 | 1,370 | |
Intersegment sales | 260 | 450 | |
Operating profit | 50 | 220 | |
Total assets less intersegment | 5,660 | 5,620 | |
Asia [Member] | |||
Net sales | 18,190 | 20,020 | |
External sales | 5,640 | 9,050 | |
Intersegment sales | 12,550 | 10,970 | |
Operating profit | 3,350 | 4,510 | |
Total assets less intersegment | 49,930 | 47,290 | |
Canada [Member] | |||
Net sales | 1,780 | 4,310 | |
External sales | 1,780 | 4,310 | |
Operating profit | 470 | 1,130 | |
Total assets less intersegment | 7,820 | 8,030 | |
Latin America [Member] | |||
Net sales | 3,560 | 2,540 | |
External sales | 3,450 | 2,430 | |
Intersegment sales | 110 | 110 | |
Operating profit | 900 | 570 | |
Total assets less intersegment | 8,300 | $ 6,970 | |
Intersegment [Member] | |||
Net sales | (14,510) | (13,290) | |
Operating profit | $ (970) | $ (80) |
SEGMENT REPORTING (Details 1)
SEGMENT REPORTING (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Total [Member] | ||
External sales | $ 34,100 | $ 45,580 |
Fire [Member] | ||
External sales | 1,900 | 1,450 |
Chemical [Member] | ||
External sales | 8,260 | 8,880 |
Disposables [Member] | ||
External sales | 19,700 | 31,210 |
Gloves [Member] | ||
External sales | 450 | 780 |
High Visibility [Member] | ||
External sales | 1,300 | 1,350 |
Wovens [Member] | ||
External sales | 1,630 | 1,620 |
High Performance Wear [Member] | ||
External sales | $ 860 | $ 290 |