Cover
Cover - USD ($) | 12 Months Ended | ||
Jan. 31, 2023 | Apr. 10, 2023 | Jul. 31, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | LAKELAND INDUSTRIES, INC. | ||
Entity Central Index Key | 0000798081 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --01-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Jan. 31, 2023 | ||
Entity Filer Category | Accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Common Stock Shares Outstanding | 7,325,005 | ||
Entity Public Float | $ 102.1 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 0-15535 | ||
Entity Incorporation State Country Code | DE | ||
Entity Tax Identification Number | 13-3115216 | ||
Entity Address Address Line 1 | 1525 Perimeter Parkway | ||
Entity Address City Or Town | Suite 325 Huntsville | ||
Entity Address State Or Province | AL | ||
Entity Address Postal Zip Code | 35806 | ||
Security 12b Title | Common Stock | ||
Trading Symbol | LAKE | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Icfr Auditor Attestation Flag | true | ||
Auditor Name | Deloitte & Touche LLP | ||
Auditor Location | Memphis, Tennessee | ||
Auditor Firm Id | 34 | ||
City Area Code | 256 | ||
Local Phone Number | 350-3873 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
CONSOLIDATED STATEMENTS OF INCOME | ||
Net sales | $ 112,846 | $ 118,386 |
Cost of goods sold | 66,997 | 67,473 |
Gross profit | 45,849 | 50,913 |
Operating expenses | 40,308 | 34,866 |
Operating profit | 5,541 | 16,047 |
Other income (expense), net | (33) | 121 |
Interest expense | (37) | (15) |
Income before taxes | 5,471 | 16,153 |
Income tax expense | 3,598 | 4,781 |
Net income | $ 1,873 | $ 11,372 |
Net income per common share: | ||
Basic | $ 0.25 | $ 1.44 |
Diluted | $ 0.24 | $ 1.41 |
Weighted average common shares outstanding: | ||
Basic1 | 7,562,187 | 7,900,131 |
Diluted2 | 7,737,963 | 8,053,876 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 1,873 | $ 11,372 |
Other comprehensive income: | ||
Foreign currency translation adjustments | (2,193) | 114 |
Comprehensive income (loss) | $ (320) | $ 11,486 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jan. 31, 2023 | Jan. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Cash and cash equivalents | $ 24,639,000 | $ 52,719,000 |
Accounts receivable, net of allowance for doubtful accounts of $800 and $666 at January 31, 2023 and 2022, respectively | 17,296,000 | 14,771,000 |
Inventories | 58,176,000 | 47,711,000 |
Prepaid VAT and other taxes | 1,963,000 | 1,675,000 |
Income tax receivable and oOther current assets | 2,908,000 | 3,770,000 |
Total current assets | 104,982,000 | 120,646,000 |
Property and equipment, net | 9,140,000 | 8,714,000 |
Operating leases right-of-use assets | 5,472,000 | 5,296,000 |
Deferred tax assets | 2,764,000 | 2,072,000 |
Other assets | 100,000 | 490,000 |
Goodwill | 8,473,000 | 871,000 |
Intangible assets, net | 6,042 | 0 |
Investments | 5,354,000 | 2,704,000 |
Total assets | 142,327,000 | 140,793,000 |
Current liabilities | ||
Accounts payable | 6,558,000 | 5,855,000 |
Accrued compensation and benefits | 2,522,000 | 3,225,000 |
Other accrued expenses | 4,068,000 | 1,372,000 |
Income tax payable | 0 | 321,000 |
Short-term borrowings | 405,000 | 0 |
Accrued earnout agreement | 3,182,000 | 0 |
Current portion of operating lease liability | 1,253,000 | 1,242,000 |
Total current liabilities | 17,988,000 | 12,015,000 |
Deferred income taxes | 769 | 0 |
Long-term portion of operating lease liability | 3,580,000 | 3,678,000 |
Total liabilities | 22,337,000 | 15,693,000 |
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 8,655,699 and 8,555,672; outstanding 7,325,005 and 7,615,967 at January 31, 2023 and 2022, respectively | 87,000 | 86,000 |
Treasury stock, at cost; 1,330,694 and 939,705 shares at January 31, 2023 and 2022, respectively | 19,646,000 | 14,206,000 |
Additional paid-in capital | 78,475,000 | 77,826,000 |
Retained earnings | 64,765,000 | 62,892,000 |
Accumulated other comprehensive loss | (3,691,000) | (1,498,000) |
Total stockholders' equity | 119,990,000 | 125,100,000 |
Total liabilities and stockholders' equity | $ 142,327,000 | $ 140,793,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jan. 31, 2023 | Jan. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 800 | $ 666 |
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 | 8,655,699 | 8,555,672 |
Common stock, shares outstanding | 7,325,005 | 7,615,967 |
Treasury stock, shares | 1,330,694 | 939,705 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated other comprehensive loss | Treasury Stock |
Balance, shares at Jan. 31, 2021 | 8,498,457 | 509,242 | ||||
Balance, amount at Jan. 31, 2021 | $ 121,751,000 | $ 85,000 | $ 76,781,000 | $ 51,520,000 | $ (1,612,000) | $ (5,023,000) |
Other comprehensive loss,amount | 114,000 | $ 0 | 0 | 0 | 114,000 | 0 |
Restricted stock issued,shares | 57,215 | |||||
Restricted stock issued,amount | 1,000 | $ 1,000 | 0 | 0 | 0 | 0 |
Restricted stock plan,amount | 1,667,000 | 0 | 1,667,000 | 0 | 0 | 0 |
Return of shares in lieu of payroll tax withholding,amount | (622,000) | 0 | (622,000) | 0 | 0 | 0 |
Treasury stock purchased,amount | (9,183,000) | $ 0 | 0 | 0 | 0 | $ (9,183,000) |
Treasury stock purchased,shares | 0 | (430,463) | ||||
Net Income (Loss) | 11,372,000 | $ 0 | 0 | 11,372,000 | 0 | $ 0 |
Balance, shares at Jan. 31, 2022 | 8,555,672 | 939,705 | ||||
Balance, amount at Jan. 31, 2022 | 125,100,000 | $ 86,000 | 77,826,000 | 62,892,000 | (1,498,000) | $ (14,206,000) |
Other comprehensive loss,amount | (2,193,000) | $ 0 | 0 | 0 | (2,193,000) | 0 |
Restricted stock issued,shares | 100,027 | |||||
Restricted stock issued,amount | 1,000 | $ 1,000 | 0 | 0 | 0 | 0 |
Restricted stock plan,amount | 1,491,000 | 0 | 1,491,000 | 0 | 0 | 0 |
Return of shares in lieu of payroll tax withholding,amount | (842,000) | 0 | (842,000) | 0 | 0 | 0 |
Treasury stock purchased,amount | (5,440,000) | $ 0 | 0 | 0 | 0 | $ (5,440,000) |
Treasury stock purchased,shares | 0 | (390,989) | ||||
Net Income (Loss) | 1,873,000 | $ 0 | 0 | 1,873,000 | 0 | $ 0 |
Balance, shares at Jan. 31, 2023 | 8,655,699 | 1,330,694 | ||||
Balance, amount at Jan. 31, 2023 | $ 119,990,000 | $ 87,000 | $ 78,475,000 | $ 64,765,000 | $ (3,691,000) | $ (19,646,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ (1,873) | $ (11,372) |
Adjustments to reconcile net income to net cash (used in) provided by operating activities | ||
Provision for (recovery of) doubtful accounts | 134 | (34) |
Deferred income taxes | 75 | 659 |
Depreciation and amortization | 1,505 | 1,868 |
Stock based and restricted stock compensation | 1,491 | 1,667 |
(Gain) loss on disposal of property and equipment | (6) | 39 |
Equity in (earnings) loss of equity investment | 411 | 79 |
(Increase) decrease in operating assets: | ||
Accounts receivable | (2,278) | 6,732 |
Inventories | (9,710) | (4,413) |
Prepaid VAT and other taxes | (260) | (333) |
Other current assets | 1,478 | 271 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 36 | (1,533) |
Accrued expenses and other liabilities | 69 | (3,178) |
Operating lease liabilities | (269) | (411) |
Net cash (used in) provided by operating activities | (5,451) | 12,785 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,985) | (801) |
Acquisition, net of cash acquired | 9,722 | 0 |
Investments | 3,061 | 2,783 |
Net cash used in investing activities | (14,768) | (3,584) |
Cash flows from financing activities | ||
Short term borrowings | 405 | 0 |
Purchase of Treasury Stock under stock repurchase program | 5,439 | 9,183 |
Shares returned to pay employee taxes under restricted stock program | 842 | 622 |
Net cash used in financing activities | (5,876) | (9,805) |
Effect of exchange rate changes on cash and cash equivalents | (1,985) | 727 |
Net (decrease) increase in cash and cash equivalents | (28,080) | 123 |
Cash and cash equivalents at beginning of year | 52,719 | 52,596 |
Cash and cash equivalents at end of year | 24,639 | 52,719 |
Cash paid for interest | 37 | 15 |
Cash paid for taxes | 3,151 | 5,315 |
Noncash investing and financing activities | ||
Leased assets obtained in exchange for operating lease liabilities | $ 1,148 | $ 3,368 |
BUSINESS AND SUMMARY OF SIGNIFI
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jan. 31, 2023 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 countries, the majority of which were into China, countries within the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Middle East and countries within Southeast Asia. For purposes of this Form 10-K, FY refers to a fiscal year ended January 31; for example, FY23 refers to the fiscal year ended January 31, 2023. Basis of Presentation The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). We have reclassified certain prior year amounts to conform to current year presentation. The following is a description of the Company’s significant accounting policies. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of Estimates and Assumptions The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that events could occur during the upcoming year that could change such estimates. Cash and Cash Equivalents The Company considers highly liquid temporary cash investments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of money market funds. Accounts Receivable, Net . Inventories Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out or moving average basis) or net realizable value. Adjustments are recorded for slow-moving, obsolete or unusable inventory. We assess our inventory for estimated obsolescence or unmarketable inventory and write down the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future sales and supply on hand, if necessary. If actual market conditions are less favorable than those projected by management, additional inventory adjustments may be required. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives on a straight-line basis. Leasehold improvements and leasehold costs are amortized over the term of the lease or service lives of the improvements, whichever is shorter. The costs of additions and improvements which substantially extend the useful life of a particular asset are capitalized. Repair and maintenance costs are charged to expense. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the account, and the gain or loss on disposition is reflected in operating income. Assets held for sale are measured at the lower of carrying value or fair value less cost to sell. Gains or losses are recognized for any subsequent changes to fair value less cost to sell. However, gains are limited to cumulative losses previously recognized. Assets classified as held for sale are not depreciated. Impairment of Long-Lived Assets The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable. The Company measures any potential impairment on a projected undiscounted cash flow method. Estimating future cash flows requires the Company’s management to make projections that can differ materially from actual results. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from the asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Business combinations In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of assets and liabilities is recorded as goodwill. Assigning fair market values to the assets acquired and liabilities assumed at the date of acquisition requires knowledge of current market values and the values of assets in use and often require the application of judgment regarding estimates and assumptions. While the ultimate responsibility resides with management for material acquisitions, we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities, including intangible assets, tangible long-lived assets, and contingent consideration. Acquired intangible assets, excluding goodwill, are valued using certain discounted cash flow methodologies based on future cash flows specific to the type of intangible asset purchased. Several significant assumptions and estimates were involved in the application of these valuation methods, including forecasted sales volumes and prices, royalty rates, costs to produce, tax rates, discount rates, attrition rates and working capital changes. If the contingent consideration is deemed significant or absent an agreed-upon payout amount, the initial measurement of contingent consideration and the corresponding liability is evaluated using the Monte Carlo Method. For this valuation method, management develops projections during the contingent consideration period utilizing various potential pay-out scenarios. Probabilities are applied to each potential scenario, and the resulting values are discounted using a rate that considers the weighted average cost of capital as well as a specific risk premium associated with the riskiness of the contingent consideration itself, the related projections, and the overall business. Goodwill and Other Intangible Assets Intangible assets with a finite useful life are amortized on a straight-line basis over their useful lives. Indefinite lived intangible assets are assessed for possible impairment annually on November 1st or whenever circumstances change such that the recorded value of the asset may not be recoverable. Prior to the Eagle acquisition completed on December 2, 2022, we did not have any acquired intangible assets. Goodwill is not amortized, but is subject to impairment assessments. On November 1st of each year, or more frequently if indicators of impairment exist or if a decision is made to sell a business, we evaluate goodwill for impairment. Judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a decline in expected cash flows, a significant adverse change in the business climate, unanticipated competition, slower growth rates, or negative developments in equity and credit markets, among others. Prior to the Eagle acquisition we had recorded goodwill totaling $0.9 million related to an acquisition completed in FY05 that is part of our High Visibility product line. There has been no impairment of our goodwill during the years ended January 31, 2023 and 2022. Revenue Recognition Substantially all of the Company’s revenue is derived from product sales, which consist of sales of the Company’s personal protective wear products to distributors. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within 30 to 90 days of the invoice date, and the contracts do not have significant financing components. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Shipping and handling costs associated with outbound freight are included in operating expenses, and for the years ended in FY23 and FY22 aggregated approximately $3.2 million and $2.9 million, respectively. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue. The transaction price includes estimates of variable consideration related to rebates, allowances, and discounts that are reductions in revenue. All estimates are based on the Company's historical experience, anticipated performance, and the Company's best judgment at the time the estimate is made. Estimates for variable consideration are reassessed each reporting period and are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur upon resolution of uncertainty associated with the variable consideration. All the Company’s contracts have a single performance obligation satisfied at a point in time, and the transaction price is stated in the contract, usually as quantity times price per unit. The Company receives advances under certain of its contracts for products sold by Eagle. Those advances are considered contract liabilities with revenues recorded upon delivery of promised goods to customers. These advances are included in Other Accrued Expenses on the Company’s consolidated balance sheet. The following is a rollforward of the advances from the date of the Eagle acquisition, December 2, 2022 through January 31, 2023 (in $000s): Contract liability – December 2,2022 $ 1,560 Increases to contract liability 158 Decreases to contract liability (91 ) Contract liability – January 31, 2023 $ 1,627 The Company has seven revenue generating reportable geographic segments under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its limited use/disposable protective clothing and secondarily from its sales of reflective clothing, high-end chemical protective suits, firefighting and heat protective apparel, reusable woven garments and gloves and arm guards. The Company believes disaggregation of revenue by geographic region and product line best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see table below). Net sales by geographic region and by product line are included below: Year Ended January 31, (in millions of dollars) 2023 2022 External Sales by product lines: Disposables $ 55.2 $ 67.2 Chemical 22.2 24.5 Fire 14.7 8.2 Gloves 2.3 2.2 High Visibility 5.8 5.6 High Performance Wear 5.0 3.6 Wovens 7.6 7.1 Consolidated external sales $ 112.8 $ 118.4 Year Ended January 31, (in millions of dollars) 2023 2022 External Sales by region: USA $ 49.0 $ 47.6 Other foreign 7.2 7.1 Europe (UK) 8.3 10.3 Mexico 3.7 4.1 Asia 24.7 29.8 Canada 9.1 8.2 Latin America 10.8 11.3 Consolidated external sales $ 112.8 $ 118.4 Advertising Costs Advertising costs are expensed as incurred and included in operating expenses on the consolidated statement of income. Advertising and co-op costs amounted to $0.5 million and $0.5 million in FY23 and FY22. Stock-Based Compensation The Company records the cost of stock-based compensation plans based on the fair value of the award on the grant date. For awards that contain a vesting provision, the cost is recognized over the requisite service period (generally the vesting period of the equity award) which approximates the performance period. For awards based on services already rendered, the cost is recognized immediately. Income Taxes The Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of preparing the consolidated financial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax and financial accounting purposes. These differences, together with net operating loss carryforwards and tax credits, are recorded as deferred tax assets or liabilities on the Company’s consolidated balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recovered from future taxable income. A valuation allowance may be required to reduce deferred tax assets to the amount that is more likely than not to be realized. In the event the Company determines that it may not be able to realize all or part of its deferred tax asset in the future or that new estimates indicate that a previously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset is charged or credited to income in the period of such determination. The Company recognizes tax positions that meet a “more likely than not” minimum recognition threshold. If necessary, the Company recognizes interest and penalties associated with tax matters as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the consolidated balance sheets. Foreign Operations and Foreign Currency Translation The Company maintains manufacturing operations in Mexico, India, Argentina, Vietnam and the People’s Republic of China and can access independent contractors in China, Vietnam, Argentina and Mexico. It also maintains sales and distribution entities in India, Canada, the U.K., Chile, China, Argentina, Russia, Kazakhstan, Uruguay, Australia and Mexico. The Company is vulnerable to currency risks in these countries. The functional currency for the United Kingdom subsidiary is the Euro; the trading company in China, the RMB; the Russian operation, the Russian Ruble, and the Kazakhstan operation, the Kazakhstan Tenge. All other operations have the U.S. dollar as their functional currency. Pursuant to US GAAP, assets and liabilities of the Company’s foreign operations with functional currencies other than the U.S. dollar are translated at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the periods. Translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. Cash flows are also translated at average translation rates for the periods; therefore, amounts reported on the consolidated statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction income (loss) included in net income for the years ended January 31, 2023 and 2022, were approximately $0.9 million and $0.3 million, respectively. Fair Value of Financial Instruments US GAAP defines fair value, provides guidance for measuring fair value and requires certain disclosures utilizing a fair value hierarchy which is categorized into three levels based on the inputs to the valuation techniques used to measure fair value. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that reflect management’s own assumptions. There were no foreign currency forward or hedge contracts at January 31, 2023 or January 31, 2022. The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, short-term borrowings, borrowings under revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fair value based on the short-term nature of these instruments. Net Income Per Share Net income per share is based on the weighted average number of common shares outstanding without consideration of common stock equivalents. Diluted net income per share is based on the weighted average number of common shares and common stock equivalents. The diluted net income per share calculation takes into account unvested restricted shares and the shares that may be issued upon the exercise of stock options, reduced by shares that may be repurchased with the funds received from the exercise, based on the average price during the fiscal year. Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. No recently issued accounting pronouncements had or are expected to have a material impact on the Company’s consolidated financial statements. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Jan. 31, 2023 | |
INVENTORIES | |
INVENTORIES | 2. INVENTORIES Inventories consist of the following (in $000s): January 31, 2023 2022 Raw materials $ 29,036 $ 20,231 Work-in-process 952 626 Finished goods 32,855 29,910 Excess and obsolete adjustments (4,668 ) (3,056 ) $ 58,176 $ 47,711 |
PROPERTY AND EQUIPMENT NET
PROPERTY AND EQUIPMENT NET | 12 Months Ended |
Jan. 31, 2023 | |
PROPERTY AND EQUIPMENT NET | |
PROPERTY AND EQUIPMENT, NET | 3. PROPERTY AND EQUIPMENT, NET Property and equipment consists of the following: Useful Life in January 31, Years 2023 2022 (000’s) (000’s) Machinery and equipment 3-10 $ 5,436 $ 4,826 Furniture and fixtures 3-10 492 1,067 Leasehold improvements Lease term 2,094 2,237 Computer hardware and software 3 5,015 4,741 Land and building 20-30 9,508 9,183 22,546 22,054 Less accumulated depreciation and amortization (14,406 ) (13,372 ) Construction-in-progress 1,001 32 $ 9,140 $ 8,714 Depreciation and amortization expense for FY23 and FY22 amounted to $1.4 million and $1.9 million, respectively. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Jan. 31, 2023 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS On October 18, 2021, the Company entered into an Investment Agreement (the “Investment Agreement”) with Inova Design Solutions Ltd, a private limited company incorporated under the laws of England and Wales and headquartered in the United Kingdom, doing business as Bodytrak ® On April 28, 2022, the Company, under the terms of the Investment Agreement, acquired an additional 381,679 Series A Shares of Bodytrak for £1,500,000 ($1.9 million). On October 26, 2022, the Company acquired an additional 254,452 Series A Shares of Bodytrak for £1,000,000 ($1.2 million). After completion of the additional investments, the Company owns 22.5% of Bodytrak’s total share capital. The investment in Bodytrak is accounted for under the equity method, given our board representation and the resulting ability to exercise significant influence. A substantial portion of our investment represents differences in our investment and our share of the underlying recognized net assets of Bodytrak. These differences are predominately attributable to non-amortizing intangible assets, including internally developed intellectual property, of Bodytrak. Bodytrak provides wearable monitoring solutions for customers in industrial health, safety, defense and first responder markets wanting to achieve better employee health and performance. Bodytrak’s solution is provided as a platform as a service (PaaS), delivering real-time data and cloud-based analytics and hardware that includes a patented earpiece for physiological monitoring and audio communications. For FY23, the Company recognized a loss of $0.4 million as the Company’s share of Bodytrak’s net loss. For the period October 18, 2021 (date of investment) through January 31, 2022, the Company recognized a loss of $0.1 million as the Company’s share of Bodytrak’s net loss. The loss is reflected in other income (expense), net in the consolidated statements of income. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Jan. 31, 2023 | |
ACQUISITIONS | |
ACQUISITIONS | 5. ACQUISITIONS Acquisition of Eagle On December 2, 2022, we acquired 100% of Eagle's common stock in an all-cash transaction valued at $10.5 million, net of net working capital acquired. Headquartered in Manchester, UK, Eagle is a leading designer and provider of protective apparel to the fire and industrial sectors. Eagle provides differentiated product offerings through its innovative and technical solutions. Eagle’s operating results are included in our consolidated financial statements from the acquisition date. The acquisition qualified as a business combination and was accounted for using the acquisition method of accounting. As part of the acquisition agreement, the Company will pay an earnout payment equal to the amount by which Eagle’s revenue exceeds 6 million GBP for the period May 1, 2022 through April 30, 2023. The Company will also pay an earnout payment equal to the amount by which Eagle’s revenue exceeds 6.3 million GBP for the period May 1, 2023 through April 30, 2024. The estimated amount of the earnout payment included in the valuation above is $3.2 million. The estimate was developed using a Monte Carlo simulation. The following table summarizes the preliminary fair values of the Eagle assets and liabilities assumed at the date of the acquisition: Current assets acquired (including cash of $2.2 million) $ 3,729 Property, plant and equipment 41 Customer relationships 3,283 Trade names and trademarks 1,333 Technological know-how 1,493 Goodwill 7,602 Total assets acquired 17,481 Less liabilities assumed (2,334 ) Net assets acquired $ 15,147 Assets acquired and liabilities assumed in connection with the acquisition were recorded at estimated fair values. Estimated fair values were determined by management, based in part on an independent valuation performed by a third-party valuation specialist. The valuation methods used to determine the estimated fair value of intangible assets included the excess earnings approach for customer relationships using customer inputs and contributory charges; the relief from royalty method for trade names and trademarks and technological know-how; and the cost method for the assembled workforce was included in goodwill. Several significant assumptions and estimates were involved in the application of these valuation methods, including forecasted sales volumes and prices, royalty rates, costs to produce, tax rates, capital spending, discount rates, attrition rates and working capital changes. Cash flow forecasts were generally based on Eagle’s pre-acquisition forecasts. Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives. The customer relationships, trade names and trademarks and technological know-how acquired in the Eagle transaction are being amortized over periods of 15 years, 15 years and 17 years, respectively. Liabilities assumed primarily relate to customer deposits included within Other Accrued Expenses. Goodwill is calculated as the excess of the purchase price over the estimated fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Among the factors that contributed to a purchase price in excess of the estimated fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, the expected synergies and other benefits that we believe will result from combining the operations of Eagle with our operations. Due to the timing of the completion of the acquisition, the purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding assets acquired and liabilities assumed, and revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals and valuations related to contingent consideration, inventory, contractual relationships and intangible assets. These changes to the purchase price allocation could be significant. The purchase price allocation will be finalized within the measurement period of up to one year from the acquisition date The following unaudited pro forma information presents our combined results as if the Eagle acquisition had occurred at the beginning of FY22. The unaudited pro forma financial information was prepared to give effect to events that are (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined company's results. There were no material transactions between the Company and Eagle during the periods presented that are required to be eliminated. The unaudited pro forma combined financial information does not reflect cost savings, operating synergies or revenue enhancements that the combined companies may achieve or the costs to integrate the operations or the costs necessary to achieve cost savings, operating synergies or revenue enhancements. Pro forma combined financial information (Unaudited) (in millions, except per share amount) Year Ended January 31, 2023 2022 Net sales $ 115.8 $ 122.2 Net income $ 2.0 $ 11.4 Basic earnings per share $ 0.26 $ 1.45 Diluted earnings per share $ 0.25 $ 1.42 The unaudited pro forma combined financial information is presented for information purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that we would have reported had the acquisition been completed as of the date and for the periods presented, and should not be taken as representative of our consolidated results of operations or financial condition following the acquisition. In addition, the unaudited pro forma combined financial information is not intended to project the future results of the combined company. The unaudited pro forma combined financial information was prepared using the acquisition method of accounting under existing U.S. GAAP. The Company has been treated as the acquirer. Total acquisition-related costs were $0.6 million for the year ended January 31, 2023. Transactional costs and acquisition-related amortization is included in operating expenses in the Consolidated Statements of Income. |
LONGTERM DEBT
LONGTERM DEBT | 12 Months Ended |
Jan. 31, 2023 | |
LONGTERM DEBT | |
LONG-TERM DEBT | 6. 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 $5.0 million (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. Borrowings under the revolving credit facility bear interest at a rate per annum equal to the sum of the LIBOR Daily Floating Rate (“LIBOR”), plus 125 basis points. LIBOR is subject to a floor of 100 basis points. All outstanding principal and unpaid accrued interest under the revolving credit facility is due and payable on the maturity date. On a one-time basis, and subject to there not existing an event of default, the Company may elect to convert up to $5 million of the then outstanding principal of the revolving credit facility to a term loan facility with an assumed amortization of 15 years and the same interest rate and maturity date as the revolving credit facility. The Loan Agreement provides for an annual unused line of credit commitment fee, payable quarterly, of 0.25%, based on the difference between the total credit line commitment and the average daily amount of credit outstanding under the facility during the preceding quarter. On June 18, 2021, the Company entered into Amendment No. 1 to the Loan Agreement (the “Amendment”) with the Lender, which modifies certain terms of the Company’s existing Loan Agreement with the Lender. The Amendment increases the credit limit under the Loan Agreement’s senior secured revolving credit facility from $12.5 million to $25.0 million. The Amendment also amends the covenant in the Loan Agreement that restricts acquisitions by the Company or its subsidiaries in order to allow, without the prior consent of the Lender, acquisitions of a business or its assets if there is no default under the Loan Agreement and the aggregate consideration does not exceed $7.5 million for any individual acquisition or $15.0 million on a cumulative basis for all such acquisitions. The Loan Agreement requires the Company to maintain a Funded Debt to EBITDA (as each such term is defined in the Loan Agreement) ratio of 3.0 to 1.0 or less and a Basic Fixed Charge Coverage Ratio (as defined in the Loan Agreement) of at least 1.15 to 1.0. The Loan Agreement also contains customary covenants, including covenants that, among other things, limit or restrict the Company’s and/or the Company’s subsidiaries’ ability, subject to certain exceptions and qualifications, to incur liens or indebtedness, pay dividends or merge, consolidate or sell or otherwise transfer assets. The Company was in compliance with all of its debt covenants as of January 31, 2023. The Company made certain representations and warranties to the Lender in the Loan Agreement that are customary for credit arrangements of this type. The Company also agreed to maintain, as of the end of each fiscal quarter, a minimum “basic fixed charge coverage ratio” (as defined in the Loan Agreement) of at least 1.15 to 1.00 and a “funded debt to EBITDA ratio” (as defined in the Loan Agreement) not to exceed 3.00 to 1.00, in each case for the trailing 12-month period ending with the applicable quarterly reporting period. The Company also agreed to certain negative covenants that are customary for credit arrangements of this type, including restrictions on the Company’s ability to enter into mergers, acquisitions or other business combination transactions, conduct its business, grant liens, make certain investments, make substantial change in the present executive or management personnel and incur additional indebtedness, which negative covenants are subject to certain exceptions. The Loan Agreement contains customary events of default that include, among other things (subject to any applicable cure periods and materiality qualifier), non-payment of principal, interest or fees, defaults under related agreements with the Lender, cross-defaults under agreements for other indebtedness, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments and material adverse change. Upon the occurrence of an event of default, the Lender may terminate all loan commitments, declare all outstanding indebtedness owing under the Loan Agreement and related documents to be immediately due and payable, and may exercise its other rights and remedies provided for under the Loan Agreement. In connection with the Loan Agreement, the Company entered into with the Lender (i) a security agreement dated June 25, 2020, pursuant to which the Company granted to the Lender a first priority perfected security interest in substantially all of the personal property and the intangibles of the Company, and (ii) a pledge agreement, dated June 25, 2020, pursuant to which the Company granted to the Lender a first priority perfected security interest in the stock of its subsidiaries (limited to 65% of those subsidiaries that are considered “controlled foreign subsidiaries” as set forth in the Internal Revenue Code and regulations). The Company’s obligations to the Lender under the Loan Agreement are also secured by a negative pledge evidenced by a Non-encumbrance Agreement covering the real property owned by the Company in Decatur, Alabama As of January 31, 2023, the Company had no borrowings outstanding on the letter of credit sub-facility and no borrowings outstanding under the revolving credit facility. Borrowings in UK On December 31, 2014, the Company and Lakeland Industries Europe, Ltd, (“Lakeland UK”), a wholly owned subsidiary of the Company, amended the terms of its existing line of credit facility with HSBC Bank to provide for (i) a one-year extension of the maturity date of the existing financing facility to December 19, 2016, (ii) an increase in the facility limit from £1,250,000 (approximately USD $1.9 million, based on exchange rates at time of closing) to £1,500,000 (approximately USD $2.3 million, based on exchange rates at the time of closing), and (iii) a decrease in the annual interest rate margin from 3.46% to 3.0%. In addition, pursuant to a letter agreement dated December 5, 2014, the Company agreed that £400,000 (approximately USD $0.6 million, based on exchange rates at time of closing) of the note payable by the UK subsidiary to the Company shall be subordinated in priority of payment to the subsidiary’s obligations to HSBC under the financing facility. This agreement has been subsequently amended with the most recent amendment on March 8, 2022. The cumulative result of the amendments through March 8, 2022 reflect a reduction of the service chargeto 0.765%. The agreement can be terminated with three months’ notice. There were $0.4 million in borrowings outstanding under this facility at January 31, 2023. |
CONCENTRATION OF RISK
CONCENTRATION OF RISK | 12 Months Ended |
Jan. 31, 2023 | |
CONCENTRATION OF RISK | |
CONCENTRATION OF RISK | 7. 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 principally within the United States. 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); Royal Bank of Scotland, Rural Credit Cooperative of Shandong; Postal Savings Bank of China; Punjab National Bank; HSBC in India, Argentina and UK; Raymond James in Argentina; TD Canada Trust; Banco Itaú S.A., Banco Credito Inversione 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 $1.3 million total included in the U.S. bank accounts and approximately $23.5 million total in foreign bank accounts as of January 31, 2023, of which $24.1 million was uninsured. Major Customer No customer accounted for more than 10% of net sales during FY23 and FY22. Major Supplier No vendor accounted for more than 10% of purchases during FY23 and FY22. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 12 Months Ended |
Jan. 31, 2023 | |
STOCKHOLDERS EQUITY | |
STOCKHOLDERS' EQUITY | 8. 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”). On June 16, 2021, the stockholders of the Company approved Amendment No. 1 (the “Amendment”) to the 2017 Plan. The Amendment increases the number of shares of common stock, par value $0.01 per share (the “Common Stock”), of the Company reserved for issuance under the Plan by 480,000 shares. An aggregate of 840,000 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): Year Ended January 31, 2023 2022 2017 Plan: Total restricted stock and stock option programs $ 1,491 $ 1,667 Total income tax expense recognized for stock-based compensation arrangements $ 313 $ 350 Restricted Stock Under the 2017 Plan, as described above, the Company awarded performance-based and service-based shares of restricted stock and restricted stock units to eligible employees and directors. The following table summarizes the activity under the 2017 Plan for the year ended January 31, 2023. 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 April 2020, June 2021 and June 2022 grants. Performance- Based Service-Based Total Weighted Average Grant Date Fair Value Outstanding at January 31, 2022 232,838 14,970 247,808 $ 20.89 Awarded 36,475 56,065 92,539 $ 18.19 Vested (141,833 ) (30,370 ) (172,203 ) $ 10.33 Forfeited Outstanding at January 31, 2023 127,480 40,665 168,145 $ 22.95 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 April 2020, June 2021 and June 2022 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 January 31, 2023, unrecognized stock-based compensation expense totaled $1.5 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 February 17, 2021, the Company’s board of directors approved a stock repurchase program under which the Company may Shares repurchased in FY23 totaled 390,989 shares at a cost of $5.4 million, leaving $5.4 million remaining under the share repurchase program at January 31, 2023. The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jan. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | 9. INCOME TAXES The provision for income taxes is based on the following pretax income (loss): Years Ended January 31, Domestic and Foreign Pretax Income (Loss) 2023 2022 Domestic $ 15,322 $ 1,519 Foreign (9,851) 14,634 Total $ 5,471 $ 16,153 Years Ended January 31, 2023 2022 Income Tax Expense (Benefit) Current: Federal $ 2 ($171) State and other taxes 68 88 Foreign 3,450 4,205 Total Current Tax Expense $ 3,520 $ 4,122 Deferred: Domestic ($756 ) $ 526 Foreign 834 133 Total Deferred Tax Expense $78 $ 659 Total Income Taxes $ 3,598 $ 4,781 The following is a reconciliation of the effective income tax rate to the Federal statutory rate: Years Ended January 31, 2023 2022 Statutory rate 21.00 % 21.00 % State Income Taxes, Net of Federal Tax Benefit 0.05 % (0.01 )% Adjustment to Deferred 13.54 % (0.26 )% GILTI 24.84 % 4.11 % Foreign Tax Credit - GILTI (14.86 )% - Section 250 Deduction (15.74 )% - Permanent Differences 0.07 % (0.83 )% Valuation Allowance-Deferred Tax Asset 6.41 % 4.81 % Foreign Tax Credit (9.74 )% (7.34 )% Section 78 Gross-up 6.64 % - Argentina Flow Through Loss 1.09 % 1.36 % Foreign Dividend & Subpart F - (5.27 )% Withholding Taxes 36.55 % - Foreign Rate Differential 2.11 % 9.22 % Change in State Apportionment Rate (1.38 )% 3.52 % Foreign employee benefits (3.58 )% - Foreign Dividends Paid to U.S. 73.01 % - Foregin Dividends Received Deduction (73.01 )% - Other (1.25 )% (0.71 )% Effective Rate 65.74 % 29.60 % The tax effects of temporary cumulative differences which give rise to deferred tax assets are summarized as follows: Years Ended January 31, 2023 2022 Deferred tax assets: Inventories $ 1,147 $ 806 US tax loss carryforwards, including work opportunity credit 186 167 Accounts receivable and accrued rebates 278 145 Accrued compensation and other 123 211 India reserves - US deduction 22 32 Equity based compensation 1,178 807 Foreign tax credit carry-forward 3,123 3,209 State and local carry-forwards 18 16 Depreciation and amortization (155 ) (186 ) Prepaid expenses (175 ) (219 ) Brazil write-down - 196 Right-of-use asset (697 ) (738 ) Operating lease liability 732 762 Foreign carry-forwards 438 - Withholding taxes (769 ) - Other 107 93 Deferred tax asset 5,556 5,282 Less valuation allowance (3,561 ) (3,210 ) Net deferred tax asset $ 1,995 $ 2,072 January 31, Balance sheet classification 2023 2022 Long-term deferred tax asset $ 2,764 $ 2,072 Long-term deferred tax liability $ 769 - The benefit relating to capital loss, operating loss, and credit carryforwards included in the above table at January 31, 2023, consisted of: Operating Loss Benefit Amount Valuation Allowance Expiration Beginning In State operating loss carryforwards $ 19,564 $ 18 $ (1 ) 2028 Foreign tax credit carryforwards 3,123 (3,123 ) 2024 Federal credit carryforwards 186 - 2035 Mexico operating loss carryforwards 1,457 437 (437 ) 2033 Total $ 3,764 $ (3,561 ) Significant net operating loss carryforwards were generated in the state of Alabama prior to the change in apportionment factor in 2021 which decreased the amount of income to be apportioned to Alabama in the future and therefore decreasing carryforward benefit available related to state operating losses. Indefinite Reinvestment Assertion We previously considered substantially all of the earnings in our non-U.S. subsidiaries to be indefinitely reinvested outside the U.S. and, accordingly, recorded no deferred income taxes on such earnings. At this time, the applicable provisions of the Tax Act have been fully analyzed and our intention with respect to unremitted foreign earnings is to continue to indefinitely reinvest outside the U.S. those earnings needed for working capital or additional foreign investment. During FY23 the Company changed its’ permanent reinvestment assertions for its Chinese operations due to increased volatility of the Chinese yuan and an updated evaluation of investment strategies. The Company’s plans are to repatriate a total of $20.0 million from China and recorded withholding taxes of $2.0 million which are included in income tax expense. During FY23 the Company’s subsidiaries in Canada, China and Hong Kong declared and paid total dividends of $15.5 million of which $12.5 million came from China. Income Tax Audits The Company is subject to US federal income tax, as well as income tax in multiple US state and local jurisdictions and a number of foreign jurisdictions. Returns for the years since FY19 are still open based on statutes of limitation only. Chinese tax authorities have performed limited reviews on all Chinese subsidiaries as of tax years 2008 through 2021 with no significant issues noted and we believe our tax positions are reasonably stated as of January 31, 2023. The 2022 tax review will be performed before May 31, 2023 in China. Change in Valuation Allowance We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. The valuation allowance for the year ended January 31, 2023 and January 31, 2022 was $3.6 million and $3.2 million, respectively. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Jan. 31, 2023 | |
Net income per common share: | |
NET INCOME PER SHARE | 10. NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share as follows: Years Ended January 31, (000’s except share information) 2023 2022 Numerator – Net Income $ 1,873 $ 11,372 Denominator for basic net income per share (weighted-average shares which reflect 1,330,694 and 939,705 treasury shares at January 31, 2023 and 2022, respectively) 7,562,187 7,900,131 Effect of dilutive securities from restricted stock plan and from dilutive effect of stock options 175,776 153,745 Denominator for diluted net income per share (adjusted weighted average shares) 7,737,963 8,053,876 Basic net income per share $ 0.25 $ 1.44 Diluted net income per share $ 0.24 $ 1.41 |
DERIVATIVE INSTRUMENTS AND FORE
DERIVATIVE INSTRUMENTS AND FOREIGN CURRENCY EXPOSURE | 12 Months Ended |
Jan. 31, 2023 | |
DERIVATIVE INSTRUMENTS AND FOREIGN CURRENCY EXPOSURE | |
DERIVATIVE INSTRUMENTS AND FOREIGN CURRENCY EXPOSURE | 11. DERIVATIVE INSTRUMENTS AND FOREIGN CURRENCY EXPOSURE The Company is exposed to foreign currency risk. Management has commenced a derivative instrument program to partially offset this risk by purchasing forward contracts to sell the Canadian Dollar and the Euro other than the cash flow hedge discussed below. Such contracts are largely timed to expire on the last day of the fiscal quarter, with a new contract purchased on the first day of the next quarter to match the Company's operating cycle. We designated the forward contracts as derivatives but not as hedging instruments, with loss and gain recognized in current earnings. The Company accounts for its foreign exchange derivative instruments by recognizing all derivatives as either assets or liabilities at fair value, which may result in additional volatility in current period earnings or other comprehensive income, depending on whether the instrument was designated as a cash flow hedge, as a result of recording recognized and unrecognized gains and losses from changes in the fair value of derivative instruments. We have one type of derivatives to manage the risk of foreign currency fluctuations. We enter into forward contracts with financial institutions to manage our currency exposure related to net assets and liabilities denominated in foreign currencies. Those forward contract derivatives, not designated as hedging instruments, were generally settled quarterly. Gain and loss on those forward contracts are included in current earnings. There were no outstanding forward contracts at January 31, 2023 or 2022. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jan. 31, 2023 | |
Commitments and contingencies | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND 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 legal counsel assess such contingent liabilities, which inherently involve 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. 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 January 31, 2023, to the best of the Company’s knowledge, there were no significant outstanding claims or litigation. Leases We lease real property, equipment and automobiles. The Company made the accounting policy election to account for short-term leases as described herein. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. All of the Company’s real estate leases are classified as operating leases. Most of our real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term for an additional four to five years. The exercise of lease renewal options is at the Company’s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants. Lease cost The components of lease expense are included on the consolidated statement of operations as follows (in 000’s): Classification Year Ended January 31, 2023 Year Ended January 31, 2022 Operating lease cost Cost of goods sold $ 272 $ 656 Operating expenses $ 1,035 $ 908 Short-term lease cost $ 169 $ 114 Weighted-average lease terms and discount rates are as follows: January 31, 2023 January 31, 2022 Weighted-average remaining lease term (years) Operating leases 8.16 8.25 Weighted-average discount rate Operating leases 5.25 % 4.32 % Supplemental cash flow information related to leases were as follows (in 000’s): Cash paid for amounts included in the measurement of lease liabilities: Year Ended January 31, 2023 Year Ended January 31, 2022 Operating cash flows from operating leases $ 1,436 $ 406 Leased assets obtained in exchange for new operating lease liabilities $ 1,148 $ 3,368 Maturity of Lease Liabilities Maturity of lease liabilities as of January 31, 2023 was as follows (in $000’s): Year ending January 31, Operating Leases 2024 $ 1,253 2025 626 2026 592 2027 577 2028 582 Thereafter 2,090 Total lease payments 5,720 Less: Interest 814 Present value of lease liability $ 4,906 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Jan. 31, 2023 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 13. SEGMENT REPORTING Domestic and international sales from continuing operations are as follows in millions of dollars: 2023 2022 Domestic $ 48.99 $ 47.61 International 63.86 70.78 Total $ 112.85 $ 118.39 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 income before income taxes, interest expense and other income and expenses. We have sales forces in the USA, Canada, Mexico, Europe, Latin America, India, Russia, Kazakhstan, and China, which sell and distribute products shipped from the United States, Mexico, India or China. The table below represents information about reported segments for the years noted therein: Year Ended January 31, 2023 2022 (in millions of dollars) Net Sales USA Operations (including Corporate) $ 53.79 $ 51.44 Other foreign 9.52 9.73 Europe (UK) 8.33 10.31 Mexico 5.23 5.23 Asia 63.68 75.82 Canada 9.04 8.20 Latin America 10.87 11.80 Less intersegment sales (47.61 ) (54.14 ) Consolidated sales $ 112.85 $ 118.39 External Sales USA Operations (including Corporate) $ 48.99 $ 47.61 Other foreign 7.17 7.07 Europe (UK) 8.33 10.31 Mexico 3.73 4.06 Asia 24.75 29.80 Canada 9.04 8.20 Latin America 10.84 11.34 Consolidated external sales $ 112.85 $ 118.39 Intersegment Sales USA Operations (including Corporate) $ 4.80 $ 3.83 Other foreign 2.35 2.66 Mexico 1.50 1.17 Asia 38.93 46.02 Canada — — Latin America 0.03 0.46 Consolidated intersegment sales $ 47.61 $ 54.14 Year Ended January 31, 2023 2022 (in millions of dollars) Operating Profit (Loss): USA Operations (including Corporate) $ (6.42 ) $ (4.09 ) Other foreign 0.43 1.84 Europe (UK) (1.26 ) 1.18 Mexico (1.44 ) (1.01 ) Asia 10.91 13.89 Canada 1.46 1.07 Latin America 1.93 2.35 Less intersegment (profit) loss (0.07 ) 0.82 Consolidated operating profit $ 5.54 $ 16.05 Depreciation and Amortization Expense: USA Operations (including Corporate) $ 0.61 $ 0.88 Other foreign 0.06 0.07 Europe (UK) - - Mexico 0.19 0.20 Asia 0.50 0.58 Canada 0.10 0.11 Latin America 0.04 0.03 Less intersegment - - Consolidated depreciation and amortization expense $ 1.50 $ 1.87 Year Ended January 31, 2023 2022 (in millions of dollars) Total Assets: USA Operations (including Corporate) $ 94.05 $ 77.76 Other foreign 10.40 9.32 Europe (UK) 12.53 8.79 Mexico 5.51 5.24 Asia 55.77 66.97 Canada 5.97 4.99 Latin America 10.62 7.46 Less intersegment (52.68 ) (39.74 ) Consolidated assets $ 142.17 $ 140.79 Total Assets Less Intersegment: USA Operations (including Corporate) $ 64.33 $ 53.36 Other foreign 9.24 8.92 Europe (UK) 12.53 8.79 Mexico 5.32 5.06 Asia 35.64 52.26 Canada 5.81 4.99 Latin America 9.30 7.41 Consolidated assets $ 142.17 $ 140.79 Property and Equipment: USA Operations (including Corporate) $ 3.28 $ 2.78 Other foreign 0.25 0.25 Europe (UK) 0.05 — Mexico 2.01 2.15 Asia 2.39 2.42 Canada 0.85 0.95 Latin America 0.22 0.07 Less intersegment 0.09 0.09 Consolidated long-lived assets $ 9.14 $ 8.71 Capital Expenditures: USA Operations (including Corporate) $ 1.21 $ 0.64 Other foreign - 0.04 Europe (UK) 0.02 - Mexico 0.02 0.03 Asia 0.54 0.06 Canada - 0.03 Latin America 0.20 - Consolidated capital expenditure $ 1.99 $ 0.80 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jan. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS The Company has reviewed and evaluated whether any material subsequent events have occurred from January 31, 2023 through the filing date of the Company’s Annual Report on Form 10-K. All appropriate subsequent event disclosures have been made in the consolidated financial statements. On March 3, 2023 the Company changed the benchmark interest rate in its credit facility from the LIBOR to the Secured Overnight Financing Rate (“SOFR”). On February 1, 2023, the Company announced that its Board of Directors declared a quarterly cash dividend as part of the initiation of a recurring quarterly dividend program. The initial quarterly dividend of $0.03 per share was paid on February 22, 2023, to stockholders of record as of February 15, 2023. |
BUSINESS AND SUMMARY OF SIGNI_2
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jan. 31, 2023 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business combinations | In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of assets and liabilities is recorded as goodwill. Assigning fair market values to the assets acquired and liabilities assumed at the date of acquisition requires knowledge of current market values and the values of assets in use and often require the application of judgment regarding estimates and assumptions. While the ultimate responsibility resides with management for material acquisitions, we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities, including intangible assets, tangible long-lived assets, and contingent consideration. Acquired intangible assets, excluding goodwill, are valued using certain discounted cash flow methodologies based on future cash flows specific to the type of intangible asset purchased. Several significant assumptions and estimates were involved in the application of these valuation methods, including forecasted sales volumes and prices, royalty rates, costs to produce, tax rates, discount rates, attrition rates and working capital changes. If the contingent consideration is deemed significant or absent an agreed-upon payout amount, the initial measurement of contingent consideration and the corresponding liability is evaluated using the Monte Carlo Method. For this valuation method, management develops projections during the contingent consideration period utilizing various potential pay-out scenarios. Probabilities are applied to each potential scenario, and the resulting values are discounted using a rate that considers the weighted average cost of capital as well as a specific risk premium associated with the riskiness of the contingent consideration itself, the related projections, and the overall business. |
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 countries, the majority of which were into China, countries within the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Middle East and countries within Southeast Asia. For purposes of this Form 10-K, FY refers to a fiscal year ended January 31; for example, FY23 refers to the fiscal year ended January 31, 2023. |
Basis of Presentation | The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). We have reclassified certain prior year amounts to conform to current year presentation. The following is a description of the Company’s significant accounting policies. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Use of Estimates and Assumptions | The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that events could occur during the upcoming year that could change such estimates. |
Cash and Cash Equivalents | The Company considers highly liquid temporary cash investments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of money market funds. |
Accounts Receivable, net | Accounts Receivable, Net . |
Inventories | Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out or moving average basis) or net realizable value. Adjustments are recorded for slow-moving, obsolete or unusable inventory. We assess our inventory for estimated obsolescence or unmarketable inventory and write down the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future sales and supply on hand, if necessary. If actual market conditions are less favorable than those projected by management, additional inventory adjustments may be required. |
Property and Equipment | Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives on a straight-line basis. Leasehold improvements and leasehold costs are amortized over the term of the lease or service lives of the improvements, whichever is shorter. The costs of additions and improvements which substantially extend the useful life of a particular asset are capitalized. Repair and maintenance costs are charged to expense. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the account, and the gain or loss on disposition is reflected in operating income. Assets held for sale are measured at the lower of carrying value or fair value less cost to sell. Gains or losses are recognized for any subsequent changes to fair value less cost to sell. However, gains are limited to cumulative losses previously recognized. Assets classified as held for sale are not depreciated. |
Impairment of Long-Lived Assets | The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable. The Company measures any potential impairment on a projected undiscounted cash flow method. Estimating future cash flows requires the Company’s management to make projections that can differ materially from actual results. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from the asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. |
Goodwill and Other Intangible Assets | Intangible assets with a finite useful life are amortized on a straight-line basis over their useful lives. Indefinite lived intangible assets are assessed for possible impairment annually on November 1st or whenever circumstances change such that the recorded value of the asset may not be recoverable. Prior to the Eagle acquisition completed on December 2, 2022, we did not have any acquired intangible assets. Goodwill is not amortized, but is subject to impairment assessments. On November 1st of each year, or more frequently if indicators of impairment exist or if a decision is made to sell a business, we evaluate goodwill for impairment. Judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a decline in expected cash flows, a significant adverse change in the business climate, unanticipated competition, slower growth rates, or negative developments in equity and credit markets, among others. Prior to the Eagle acquisition we had recorded goodwill totaling $0.9 million related to an acquisition completed in FY05 that is part of our High Visibility product line. There has been no impairment of our goodwill during the years ended January 31, 2023 and 2022. |
Revenue Recognition | Substantially all of the Company’s revenue is derived from product sales, which consist of sales of the Company’s personal protective wear products to distributors. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within 30 to 90 days of the invoice date, and the contracts do not have significant financing components. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Shipping and handling costs associated with outbound freight are included in operating expenses, and for the years ended in FY23 and FY22 aggregated approximately $3.2 million and $2.9 million, respectively. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue. The transaction price includes estimates of variable consideration related to rebates, allowances, and discounts that are reductions in revenue. All estimates are based on the Company's historical experience, anticipated performance, and the Company's best judgment at the time the estimate is made. Estimates for variable consideration are reassessed each reporting period and are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur upon resolution of uncertainty associated with the variable consideration. All the Company’s contracts have a single performance obligation satisfied at a point in time, and the transaction price is stated in the contract, usually as quantity times price per unit. The Company receives advances under certain of its contracts for products sold by Eagle. Those advances are considered contract liabilities with revenues recorded upon delivery of promised goods to customers. These advances are included in Other Accrued Expenses on the Company’s consolidated balance sheet. The following is a rollforward of the advances from the date of the Eagle acquisition, December 2, 2022 through January 31, 2023 (in $000s): Contract liability – December 2,2022 $ 1,560 Increases to contract liability 158 Decreases to contract liability (91 ) Contract liability – January 31, 2023 $ 1,627 The Company has seven revenue generating reportable geographic segments under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its limited use/disposable protective clothing and secondarily from its sales of reflective clothing, high-end chemical protective suits, firefighting and heat protective apparel, reusable woven garments and gloves and arm guards. The Company believes disaggregation of revenue by geographic region and product line best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see table below). Net sales by geographic region and by product line are included below: Year Ended January 31, (in millions of dollars) 2023 2022 External Sales by product lines: Disposables $ 55.2 $ 67.2 Chemical 22.2 24.5 Fire 14.7 8.2 Gloves 2.3 2.2 High Visibility 5.8 5.6 High Performance Wear 5.0 3.6 Wovens 7.6 7.1 Consolidated external sales $ 112.8 $ 118.4 Year Ended January 31, (in millions of dollars) 2023 2022 External Sales by region: USA $ 49.0 $ 47.6 Other foreign 7.2 7.1 Europe (UK) 8.3 10.3 Mexico 3.7 4.1 Asia 24.7 29.8 Canada 9.1 8.2 Latin America 10.8 11.3 Consolidated external sales $ 112.8 $ 118.4 |
Advertising Costs | Advertising costs are expensed as incurred and included in operating expenses on the consolidated statement of income. Advertising and co-op costs amounted to $0.5 million and $0.5 million in FY23 and FY22. |
Stock-Based Compensation | The Company records the cost of stock-based compensation plans based on the fair value of the award on the grant date. For awards that contain a vesting provision, the cost is recognized over the requisite service period (generally the vesting period of the equity award) which approximates the performance period. For awards based on services already rendered, the cost is recognized immediately. |
Income Taxes | The Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of preparing the consolidated financial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax and financial accounting purposes. These differences, together with net operating loss carryforwards and tax credits, are recorded as deferred tax assets or liabilities on the Company’s consolidated balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recovered from future taxable income. A valuation allowance may be required to reduce deferred tax assets to the amount that is more likely than not to be realized. In the event the Company determines that it may not be able to realize all or part of its deferred tax asset in the future or that new estimates indicate that a previously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset is charged or credited to income in the period of such determination. The Company recognizes tax positions that meet a “more likely than not” minimum recognition threshold. If necessary, the Company recognizes interest and penalties associated with tax matters as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the consolidated balance sheets. |
Foreign Operations and Foreign Currency Translation | The Company maintains manufacturing operations in Mexico, India, Argentina, Vietnam and the People’s Republic of China and can access independent contractors in China, Vietnam, Argentina and Mexico. It also maintains sales and distribution entities in India, Canada, the U.K., Chile, China, Argentina, Russia, Kazakhstan, Uruguay, Australia and Mexico. The Company is vulnerable to currency risks in these countries. The functional currency for the United Kingdom subsidiary is the Euro; the trading company in China, the RMB; the Russian operation, the Russian Ruble, and the Kazakhstan operation, the Kazakhstan Tenge. All other operations have the U.S. dollar as their functional currency. Pursuant to US GAAP, assets and liabilities of the Company’s foreign operations with functional currencies other than the U.S. dollar are translated at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the periods. Translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. Cash flows are also translated at average translation rates for the periods; therefore, amounts reported on the consolidated statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction income (loss) included in net income for the years ended January 31, 2023 and 2022, were approximately $0.9 million and $0.3 million, respectively. |
Fair Value of Financial Instruments | US GAAP defines fair value, provides guidance for measuring fair value and requires certain disclosures utilizing a fair value hierarchy which is categorized into three levels based on the inputs to the valuation techniques used to measure fair value. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that reflect management’s own assumptions. There were no foreign currency forward or hedge contracts at January 31, 2023 or January 31, 2022. The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, short-term borrowings, borrowings under revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fair value based on the short-term nature of these instruments. |
Net Income Per Share | Net income per share is based on the weighted average number of common shares outstanding without consideration of common stock equivalents. Diluted net income per share is based on the weighted average number of common shares and common stock equivalents. The diluted net income per share calculation takes into account unvested restricted shares and the shares that may be issued upon the exercise of stock options, reduced by shares that may be repurchased with the funds received from the exercise, based on the average price during the fiscal year. |
Recent Accounting Pronouncements | The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. No recently issued accounting pronouncements had or are expected to have a material impact on the Company’s consolidated financial statements. |
BUSINESS AND SUMMARY OF SIGNI_3
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of contract liability | Contract liability – December 2,2022 $ 1,560 Increases to contract liability 158 Decreases to contract liability (91 ) Contract liability – January 31, 2023 $ 1,627 |
Schedule of External Sales by product lines | Year Ended January 31, (in millions of dollars) 2023 2022 External Sales by product lines: Disposables $ 55.2 $ 67.2 Chemical 22.2 24.5 Fire 14.7 8.2 Gloves 2.3 2.2 High Visibility 5.8 5.6 High Performance Wear 5.0 3.6 Wovens 7.6 7.1 Consolidated external sales $ 112.8 $ 118.4 |
Schedule of External Sales by region | Year Ended January 31, (in millions of dollars) 2023 2022 External Sales by region: USA $ 49.0 $ 47.6 Other foreign 7.2 7.1 Europe (UK) 8.3 10.3 Mexico 3.7 4.1 Asia 24.7 29.8 Canada 9.1 8.2 Latin America 10.8 11.3 Consolidated external sales $ 112.8 $ 118.4 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
INVENTORIES | |
Schedule of inventory | January 31, 2023 2022 Raw materials $ 29,036 $ 20,231 Work-in-process 952 626 Finished goods 32,855 29,910 Excess and obsolete adjustments (4,668 ) (3,056 ) $ 58,176 $ 47,711 |
PROPERTY AND EQUIPMENT NET (Tab
PROPERTY AND EQUIPMENT NET (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
PROPERTY AND EQUIPMENT NET | |
Property and equipment | Useful Life in January 31, Years 2023 2022 (000’s) (000’s) Machinery and equipment 3-10 $ 5,436 $ 4,826 Furniture and fixtures 3-10 492 1,067 Leasehold improvements Lease term 2,094 2,237 Computer hardware and software 3 5,015 4,741 Land and building 20-30 9,508 9,183 22,546 22,054 Less accumulated depreciation and amortization (14,406 ) (13,372 ) Construction-in-progress 1,001 32 $ 9,140 $ 8,714 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
ACQUISITIONS | |
Schedule of fair values of assets and liabilities | Current assets acquired (including cash of $2.2 million) $ 3,729 Property, plant and equipment 41 Customer relationships 3,283 Trade names and trademarks 1,333 Technological know-how 1,493 Goodwill 7,602 Total assets acquired 17,481 Less liabilities assumed (2,334 ) Net assets acquired $ 15,147 |
Schedule of Pro forma combined financial information | (in millions, except per share amount) Year Ended January 31, 2023 2022 Net sales $ 115.8 $ 122.2 Net income $ 2.0 $ 11.4 Basic earnings per share $ 0.26 $ 1.45 Diluted earnings per share $ 0.25 $ 1.42 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
STOCKHOLDERS EQUITY | |
Schedule of share-based compensation, restricted stock units award activity | Year Ended January 31, 2023 2022 2017 Plan: Total restricted stock and stock option programs $ 1,491 $ 1,667 Total income tax expense recognized for stock-based compensation arrangements $ 313 $ 350 |
Schedule of stock option activity | Performance- Based Service-Based Total Weighted Average Grant Date Fair Value Outstanding at January 31, 2022 232,838 14,970 247,808 $ 20.89 Awarded 36,475 56,065 92,539 $ 18.19 Vested (141,833 ) (30,370 ) (172,203 ) $ 10.33 Forfeited Outstanding at January 31, 2023 127,480 40,665 168,145 $ 22.95 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
INCOME TAXES | |
Schedule of Income Tax Expense (Benefit) | Years Ended January 31, Domestic and Foreign Pretax Income (Loss) 2023 2022 Domestic $ 15,322 $ 1,519 Foreign (9,851) 14,634 Total $ 5,471 $ 16,153 Years Ended January 31, 2023 2022 Income Tax Expense (Benefit) Current: Federal $ 2 ($171) State and other taxes 68 88 Foreign 3,450 4,205 Total Current Tax Expense $ 3,520 $ 4,122 Deferred: Domestic ($756 ) $ 526 Foreign 834 133 Total Deferred Tax Expense $78 $ 659 Total Income Taxes $ 3,598 $ 4,781 |
Schedule of effective income tax rate reconciliation | Years Ended January 31, 2023 2022 Statutory rate 21.00 % 21.00 % State Income Taxes, Net of Federal Tax Benefit 0.05 % (0.01 )% Adjustment to Deferred 13.54 % (0.26 )% GILTI 24.84 % 4.11 % Foreign Tax Credit - GILTI (14.86 )% - Section 250 Deduction (15.74 )% - Permanent Differences 0.07 % (0.83 )% Valuation Allowance-Deferred Tax Asset 6.41 % 4.81 % Foreign Tax Credit (9.74 )% (7.34 )% Section 78 Gross-up 6.64 % - Argentina Flow Through Loss 1.09 % 1.36 % Foreign Dividend & Subpart F - (5.27 )% Withholding Taxes 36.55 % - Foreign Rate Differential 2.11 % 9.22 % Change in State Apportionment Rate (1.38 )% 3.52 % Foreign employee benefits (3.58 )% - Foreign Dividends Paid to U.S. 73.01 % - Foregin Dividends Received Deduction (73.01 )% - Other (1.25 )% (0.71 )% Effective Rate 65.74 % 29.60 % |
Schedule of Balance sheet classification | January 31, Balance sheet classification 2023 2022 Long-term deferred tax asset $ 2,764 $ 2,072 Long-term deferred tax liability $ 769 - |
Schedule of deferred tax assets | Years Ended January 31, 2023 2022 Deferred tax assets: Inventories $ 1,147 $ 806 US tax loss carryforwards, including work opportunity credit 186 167 Accounts receivable and accrued rebates 278 145 Accrued compensation and other 123 211 India reserves - US deduction 22 32 Equity based compensation 1,178 807 Foreign tax credit carry-forward 3,123 3,209 State and local carry-forwards 18 16 Depreciation and amortization (155 ) (186 ) Prepaid expenses (175 ) (219 ) Brazil write-down - 196 Right-of-use asset (697 ) (738 ) Operating lease liability 732 762 Foreign carry-forwards 438 - Withholding taxes (769 ) - Other 107 93 Deferred tax asset 5,556 5,282 Less valuation allowance (3,561 ) (3,210 ) Net deferred tax asset $ 1,995 $ 2,072 |
Schedule of income tax benefit carryforward | Operating Loss Benefit Amount Valuation Allowance Expiration Beginning In State operating loss carryforwards $ 19,564 $ 18 $ (1 ) 2028 Foreign tax credit carryforwards 3,123 (3,123 ) 2024 Federal credit carryforwards 186 - 2035 Mexico operating loss carryforwards 1,457 437 (437 ) 2033 Total $ 3,764 $ (3,561 ) |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
Net income per common share: | |
Schedule of earnings per share, basic and diluted | Years Ended January 31, (000’s except share information) 2023 2022 Numerator – Net Income $ 1,873 $ 11,372 Denominator for basic net income per share (weighted-average shares which reflect 1,330,694 and 939,705 treasury shares at January 31, 2023 and 2022, respectively) 7,562,187 7,900,131 Effect of dilutive securities from restricted stock plan and from dilutive effect of stock options 175,776 153,745 Denominator for diluted net income per share (adjusted weighted average shares) 7,737,963 8,053,876 Basic net income per share $ 0.25 $ 1.44 Diluted net income per share $ 0.24 $ 1.41 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
Commitments and contingencies | |
Schedule of lease rental cost | Classification Year Ended January 31, 2023 Year Ended January 31, 2022 Operating lease cost Cost of goods sold $ 272 $ 656 Operating expenses $ 1,035 $ 908 Short-term lease cost $ 169 $ 114 |
Weighted-average lease terms and discount rates | January 31, 2023 January 31, 2022 Weighted-average remaining lease term (years) Operating leases 8.16 8.25 Weighted-average discount rate Operating leases 5.25 % 4.32 % |
Supplemental cash flow information related to leases | Cash paid for amounts included in the measurement of lease liabilities: Year Ended January 31, 2023 Year Ended January 31, 2022 Operating cash flows from operating leases $ 1,436 $ 406 Leased assets obtained in exchange for new operating lease liabilities $ 1,148 $ 3,368 |
Maturity of lease liabilities | Year ending January 31, Operating Leases 2024 $ 1,253 2025 626 2026 592 2027 577 2028 582 Thereafter 2,090 Total lease payments 5,720 Less: Interest 814 Present value of lease liability $ 4,906 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Jan. 31, 2023 | |
SEGMENT REPORTING | |
Schedule of revenue from external customers geographic areas | 2023 2022 Domestic $ 48.99 $ 47.61 International 63.86 70.78 Total $ 112.85 $ 118.39 |
Segment information | Year Ended January 31, 2023 2022 (in millions of dollars) Net Sales USA Operations (including Corporate) $ 53.79 $ 51.44 Other foreign 9.52 9.73 Europe (UK) 8.33 10.31 Mexico 5.23 5.23 Asia 63.68 75.82 Canada 9.04 8.20 Latin America 10.87 11.80 Less intersegment sales (47.61 ) (54.14 ) Consolidated sales $ 112.85 $ 118.39 External Sales USA Operations (including Corporate) $ 48.99 $ 47.61 Other foreign 7.17 7.07 Europe (UK) 8.33 10.31 Mexico 3.73 4.06 Asia 24.75 29.80 Canada 9.04 8.20 Latin America 10.84 11.34 Consolidated external sales $ 112.85 $ 118.39 Intersegment Sales USA Operations (including Corporate) $ 4.80 $ 3.83 Other foreign 2.35 2.66 Mexico 1.50 1.17 Asia 38.93 46.02 Canada — — Latin America 0.03 0.46 Consolidated intersegment sales $ 47.61 $ 54.14 Year Ended January 31, 2023 2022 (in millions of dollars) Operating Profit (Loss): USA Operations (including Corporate) $ (6.42 ) $ (4.09 ) Other foreign 0.43 1.84 Europe (UK) (1.26 ) 1.18 Mexico (1.44 ) (1.01 ) Asia 10.91 13.89 Canada 1.46 1.07 Latin America 1.93 2.35 Less intersegment (profit) loss (0.07 ) 0.82 Consolidated operating profit $ 5.54 $ 16.05 Depreciation and Amortization Expense: USA Operations (including Corporate) $ 0.61 $ 0.88 Other foreign 0.06 0.07 Europe (UK) - - Mexico 0.19 0.20 Asia 0.50 0.58 Canada 0.10 0.11 Latin America 0.04 0.03 Less intersegment - - Consolidated depreciation and amortization expense $ 1.50 $ 1.87 Year Ended January 31, 2023 2022 (in millions of dollars) Total Assets: USA Operations (including Corporate) $ 94.05 $ 77.76 Other foreign 10.40 9.32 Europe (UK) 12.53 8.79 Mexico 5.51 5.24 Asia 55.77 66.97 Canada 5.97 4.99 Latin America 10.62 7.46 Less intersegment (52.68 ) (39.74 ) Consolidated assets $ 142.17 $ 140.79 Total Assets Less Intersegment: USA Operations (including Corporate) $ 64.33 $ 53.36 Other foreign 9.24 8.92 Europe (UK) 12.53 8.79 Mexico 5.32 5.06 Asia 35.64 52.26 Canada 5.81 4.99 Latin America 9.30 7.41 Consolidated assets $ 142.17 $ 140.79 Property and Equipment: USA Operations (including Corporate) $ 3.28 $ 2.78 Other foreign 0.25 0.25 Europe (UK) 0.05 — Mexico 2.01 2.15 Asia 2.39 2.42 Canada 0.85 0.95 Latin America 0.22 0.07 Less intersegment 0.09 0.09 Consolidated long-lived assets $ 9.14 $ 8.71 Capital Expenditures: USA Operations (including Corporate) $ 1.21 $ 0.64 Other foreign - 0.04 Europe (UK) 0.02 - Mexico 0.02 0.03 Asia 0.54 0.06 Canada - 0.03 Latin America 0.20 - Consolidated capital expenditure $ 1.99 $ 0.80 |
BUSINESS AND SUMMARY OF SIGNI_4
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 2 Months Ended |
Jan. 31, 2023 USD ($) | |
Contract liability | |
Opening Balance | $ 1,560 |
Increases to contract liability | 158 |
Decreases to contract liability | (91) |
Closing Balance | $ 1,627 |
BUSINESS AND SUMMARY OF SIGNI_5
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |||
Apr. 30, 2024 | Apr. 30, 2023 | Jan. 31, 2023 | Jan. 31, 2022 | |
Net sales | $ 6,300 | $ 6,000 | $ 112,846 | $ 118,386 |
Asia | ||||
Net sales | 24,700 | 29,800 | ||
Latin America | ||||
Net sales | 10,800 | 11,300 | ||
Mexico | ||||
Net sales | 3,700 | 4,100 | ||
Other Foreign Member | ||||
Net sales | 7,200 | 7,100 | ||
Europe UK | ||||
Net sales | 8,300 | 10,300 | ||
Consolidated External Sales By Region | ||||
Net sales | 112,800 | 118,400 | ||
USA [Member] | ||||
Net sales | 49,000 | 47,600 | ||
Canada | ||||
Net sales | 9,100 | 8,200 | ||
Fire Member | ||||
Net sales | 14,700 | 8,200 | ||
Disposables Member | ||||
Net sales | 55,200 | 67,200 | ||
Chemical Member | ||||
Net sales | 22,200 | 24,500 | ||
Gloves Member | ||||
Net sales | 2,300 | 2,200 | ||
High Visibility Member | ||||
Net sales | 5,800 | 5,600 | ||
High Performance Wear | ||||
Net sales | 5,000 | 3,600 | ||
Wovens | ||||
Net sales | 7,600 | 7,100 | ||
Consolidated external sales | ||||
Net sales | $ 112,800 | $ 118,400 |
BUSINESS AND SUMMARY OF SIGNI_6
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Shipping and handling costs | $ 3.2 | $ 2.9 |
Foreign currency transaction income (loss) | 0.9 | 0.3 |
Advertising cost | $ 0.5 | $ 0.5 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jan. 31, 2023 | Jan. 31, 2022 |
INVENTORIES | ||
Raw materials | $ 29,036 | $ 20,231 |
Work-in-process | 952 | 626 |
Finished goods | 32,855 | 29,910 |
Excess and obsolete reserves | (4,668) | (3,056) |
Inventories, net | $ 58,176 | $ 47,711 |
PROPERTY AND EQUIPMENT NET (Det
PROPERTY AND EQUIPMENT NET (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Property, plant and equipment, gross | $ 22,546 | $ 22,054 |
Construction-in-progress | 1,001 | 32 |
Less accumulated depreciation and amortization | (14,406) | (13,372) |
Property, plant and equipment, net | 9,140 | 8,714 |
Land and Building | ||
Property, plant and equipment, gross | 9,508 | 9,183 |
Machinery and Equipment | ||
Property, plant and equipment, gross | 5,436 | 4,826 |
Furniture and Fixtures | ||
Property, plant and equipment, gross | 492 | 1,067 |
Leasehold Improvements | ||
Property, plant and equipment, gross | $ 2,094 | 2,237 |
Property, plant and equipment, useful life | Lease term | |
Computer Hardware and Software | ||
Property, plant and equipment, gross | $ 5,015 | $ 4,741 |
Property, plant and equipment, useful life | 3 years | |
Maximum | Land and Building | ||
Property, plant and equipment, useful life | 30 years | |
Maximum | Machinery and Equipment | ||
Property, plant and equipment, useful life | 10 years | |
Maximum | Furniture and Fixtures | ||
Property, plant and equipment, useful life | 10 years | |
Minimum | Land and Building | ||
Property, plant and equipment, useful life | 20 years | |
Minimum | Machinery and Equipment | ||
Property, plant and equipment, useful life | 3 years | |
Minimum | Furniture and Fixtures | ||
Property, plant and equipment, useful life | 3 years |
PROPERTY AND EQUIPMENT NET (D_2
PROPERTY AND EQUIPMENT NET (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Property, plant and equipment | ||
Depreciation and amortization expense | $ 1.4 | $ 1.9 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Oct. 18, 2021 | Jan. 31, 2023 | Jan. 31, 2022 | |
Net loss | $ 1,873 | $ 11,372 | |
Convertible series A shares issued | 0 | 0 | |
Investment Agreement [Member] | Bodytrak's [Member] | |||
Payment of related party shares exchanged | $ 280 | ||
Net loss | $ 400 | $ 100 | |
Percentages of total share capital | 11.43% | ||
Ownership percentage | 22.50% | ||
Additional shares of Series A | 254,452 | ||
Series A shares acquired | 381,679 | ||
Convertible series A shares issued | 508,905 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | Jan. 31, 2022 USD ($) |
Less liabilities assumed | $ (2,334) |
Total assets acquired | 17,481 |
Net assets acquired | 15,147 |
Customer relationships | |
The Fair Values Of The Assets And Liabilities | 3,283 |
Property, plant and equipment | |
The Fair Values Of The Assets And Liabilities | 41 |
Goodwill | |
The Fair Values Of The Assets And Liabilities | 7,602 |
Trade names and trademarks | |
The Fair Values Of The Assets And Liabilities | 1,333 |
Technological know-how | |
The Fair Values Of The Assets And Liabilities | 1,493 |
Net working capital | |
The Fair Values Of The Assets And Liabilities | $ 3,729 |
ACQUISITIONS (Details 1)
ACQUISITIONS (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Net sales | $ (1,873) | $ (11,372) |
Pro forma combined financial information | ||
Net sales | 115,800 | 122,200 |
Net income | $ 2,000 | $ 11,400 |
Diluted earnings per share | $ 0.25 | $ 1.42 |
Basic earnings per share | $ 0.26 | $ 1.45 |
ACQUISITIONS (Details Narrative
ACQUISITIONS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||||
Apr. 30, 2024 | Apr. 30, 2023 | Jan. 31, 2023 | Jan. 31, 2022 | Dec. 02, 2022 | |
Revenue exceeds | $ 6,300 | $ 6,000 | $ 112,846 | $ 118,386 | |
Total acquisition-related costs | 600 | ||||
Earnout payment | $ 3,200 | ||||
Cash transaction | $ 10,500 | ||||
Customer relationships | |||||
Property, plant and equipment, useful life | 15 years | ||||
Trade names and trademarks | |||||
Property, plant and equipment, useful life | 15 years | ||||
Technological know-how | |||||
Property, plant and equipment, useful life | 17 years |
LongTerm Debt (Details Narrativ
LongTerm Debt (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Dec. 05, 2014 | Dec. 31, 2016 | Dec. 31, 2014 | Jan. 31, 2023 | Jun. 25, 2020 | Dec. 19, 2016 | |
Annual unused line of credit commitment fee, payable quarterly | The Loan Agreement provides for an annual unused line of credit commitment fee, payable quarterly, of 0.25%, based on the difference between the total credit line commitment and the average daily amount of credit outstanding under the facility during the preceding quarter | |||||
Granted Lender a first priority perfected security interest | 65% | |||||
Aggregate cumulative consideration | $ 600 | |||||
HSBC Bank [Member] | ||||||
Amendments in line of credit facility | a one-year extension of the maturity date of the existing financing facility to December 19, 2016 | Lakeland UK entered into an extension of the maturity date of its existing facility with HSBC Invoice Finance (UK) Ltd. to December 19, 2017 | ||||
Increase in line of credit facility | $ 190 | $ 230 | ||||
Decrease in annual interest rate | 3.46% | 3% | ||||
Note payable | $ 60 | |||||
Service charges | 0.90% | 0.85% | ||||
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 $5.0 million (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 | |||||
Revolving credit facility | $ 1,250 | |||||
Credit sub facility | $ 500 | |||||
Credit facility mature date | Jun. 25, 2025 | |||||
Maximum | Loan Agreement | ||||||
Aggregate cumulative consideration | $ 750 | |||||
Revolving credit facility | 2,500 | |||||
Minimum | Loan Agreement | ||||||
Revolving credit facility | $ 1,250 |
Concentration of Risk (Details
Concentration of Risk (Details Narrative) $ in Millions | 12 Months Ended |
Jan. 31, 2023 USD ($) | |
Cash balances in banks in the United States of America | $ 1.3 |
Cash balances in foreign bank accounts | 23.5 |
Uninsured amount | $ 24.1 |
Major Customer [Member] | |
Concentration risk of net sales | 10% |
Major Supplier [Member] | |
Concentration risk of net sales | 10% |
Stockholders Equity (Details)
Stockholders Equity (Details) - 2017 Plan [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Total restricted stock and stock option programs | $ 1,491 | $ 1,667 |
Total income tax benefit recognized for stock-based compensation arrangements | $ 313 | $ 350 |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) | 12 Months Ended |
Jan. 31, 2023 $ / shares shares | |
Weighted Average Grant Date Fair Value [Member] | |
Weighted Average Grant Date Fair Value, Outstanding at beginning balance | $ / shares | $ 20.89 |
Weighted Average Grant Date Fair Value, Awarded | $ / shares | 18.19 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 10.33 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Outstanding at ending balance | $ / shares | $ 22.95 |
Service Based [Member] | |
Outstanding at beginning balance | 14,970 |
Awarded | 56,065 |
Vested | (30,370) |
Forfeited | 0 |
Outstanding at ending balance | 40,665 |
Performance Based [Member] | |
Outstanding at beginning balance | 232,838 |
Awarded | 36,475 |
Vested | (141,833) |
Forfeited | 0 |
Outstanding at ending balance | 127,480 |
Total [Member] | |
Outstanding at beginning balance | 247,808 |
Awarded | 92,539 |
Vested | (172,203) |
Forfeited | 0 |
Outstanding at ending balance | 168,145 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Dec. 01, 2021 | Jul. 06, 2021 | Jun. 16, 2021 | Feb. 17, 2021 | Jan. 31, 2023 | Jan. 31, 2022 | |
Common stock, shares authorized | 20,000,000 | 20,000,000 | ||||
2017 Plan [Member] | ||||||
Common stock, shares authorized | 840,000 | |||||
Price per share | $ 0.01 | |||||
Repurchase of outstanding common stock | 480,000 | |||||
Unrecognized stock-based compensation expense | $ 1.5 | |||||
Stock Repurchase Program [Member] | ||||||
Remaining value of repurchase of outstanding common stock | $ 5 | $ 5.4 | ||||
Additional shares of common oitstanding | 5,000,000 | 5,000,000 | ||||
Repurchase of outstanding common stock | 390,989 | |||||
Repurchase of outstanding common stock, amount | $ 5.4 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Pretax income (loss) | $ 5,471 | $ 16,153 |
Income Tax Expense (Benefit) Current: | ||
Federal | 2 | (171) |
State and other taxes | 68 | 88 |
Foreign | 3,450 | 4,205 |
Current income tax expense (benefit) | 3,520 | 4,122 |
Income Tax Expense (Benefit) Deferred: | ||
Domestic | (756) | 526 |
Foreigns | 834 | 133 |
Total Deferred Tax Expense | 78 | 659 |
Total | 3,598 | 4,781 |
Domestic Tax Authority [Member] | ||
Pretax income (loss) | 15,322 | 1,519 |
Foreign Tax Authority [Member] | ||
Pretax income (loss) | $ (9,851) | $ 14,634 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
INCOME TAXES | ||
Statutory rate | 21% | 21% |
State Income Taxes, Net of Federal Tax Benefit | (0.05%) | (0.01%) |
Adjustment to Deferred | 13.54% | (0.26%) |
GILTI | 24.84% | 4.11% |
Foreign Tax Credit - GILTI | (14.86%) | |
Section 250 Deduction | (15.74%) | |
Permanent Differences | 0.07% | (0.83%) |
Valuation Allowance-Deferred Tax Asset | 6.41% | 4.81% |
Foreign Tax Credit | (9.74%) | (7.34%) |
Section 78 Gross-up | 6.64% | |
Argentina Flow Through Loss | 1.09% | 1.36% |
Foreign Dividend & Subpart F | (5.27%) | |
Withholding Taxes | 36.55% | |
Foreign Rate Differential | 2.11% | 9.22% |
Change in State Apportionment Rate | 1.38% | 3.52% |
Foreign employee benefits | (3.58%) | |
Foreign Dividends Paid to U.S. | 73.01% | |
Foregin Dividends Received Deduction | (73.01%) | |
Other | (1.25%) | (0.71%) |
Effective rate | 65.74% | 29.60% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | Jan. 31, 2023 | Jan. 31, 2022 |
Deferred tax assets: | ||
Inventories | $ 1,147 | $ 806 |
US tax loss carryforwards, including work opportunity credit | 186 | 167 |
Accounts receivable and accrued rebates | 278 | 145 |
Accrued compensation and other | 123 | 211 |
India reserves - US deduction | 22 | 32 |
Equity based compensation | 1,178 | 807 |
Foreign tax credit carry-forward | 3,123 | 3,209 |
State and local carry-forwards | 18 | 16 |
Depreciation and amortization | (155) | (186) |
Prepaid expenses | (175) | (219) |
Brazil write-down | 0 | 196 |
Right-of-use asset | (697) | (738) |
Operating lease liability | 732 | 762 |
Foreign carry-forwards | 438 | 0 |
Withholding taxes | (769) | 0 |
Other | 107 | 93 |
Deferred tax asset | 5,556 | 5,282 |
Less valuation allowance | (3,561) | (3,210) |
Net deferred tax asset | $ 1,995 | $ 2,072 |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) $ in Thousands | Jan. 31, 2023 | Jan. 31, 2022 |
INCOME TAXES | ||
Long-term deferred tax liability | $ 2,764 | $ 2,072 |
Long-term deferred tax asset | $ 769 | $ 0 |
INCOME TAXES (Details 4)
INCOME TAXES (Details 4) | 12 Months Ended |
Jan. 31, 2023 USD ($) | |
State operating loss carryforwards | |
Operating Loss | $ 19,564 |
Benefit Amount | 18 |
Valuation Allowance | (1) |
Valuation Allowance | $ 1 |
Expiration Beginning In | 2028 |
Mexico operating loss carryforwards | |
Operating Loss | $ 1,457 |
Benefit Amount | 437 |
Valuation Allowance | (437) |
Valuation Allowance | $ 437 |
Expiration Beginning In | 2033 |
Foreign tax credit carryforwards | |
Benefit Amount | $ 3,123 |
Valuation Allowance | (3,123) |
Valuation Allowance | $ 3,123 |
Expiration Beginning In | 2024 |
Federal credit carryforwards | |
Benefit Amount | $ 186 |
Valuation Allowance | 0 |
Valuation Allowance | $ 0 |
Expiration Beginning In | 2035 |
Total [Member] | |
Benefit Amount | $ 3,764 |
Valuation Allowance | (3,561) |
Valuation Allowance | $ 3,561 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Withholding tax expense | $ 200 | |
Change in valuation allowance | 360 | $ 320 |
Dividend paid | 12,500 | |
Hongkong [Member] | ||
Dividend paid | $ 1,550 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Net income per common share: | ||
Net loss | $ 1,873 | $ 11,372 |
Denominator for basic net income per share | 7,562,187 | 7,900,131 |
Effect of dilutive securities from restricted stock plan and from dilutive effect of stock options | 175,776 | 153,745 |
Denominator for diluted net income per share (adjusted weighted average shares) | 7,737,963 | 8,053,876 |
Basic net income per share | $ 0.25 | $ 1.44 |
Diluted net income per share | $ 0.24 | $ 1.41 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Short-term lease cost | $ 169 | $ 114 |
Operating expenses | 40,308 | 34,866 |
Cost of goods sold | 66,997 | 67,473 |
Operating Lease [Member] | ||
Operating expenses | 1,035 | 908 |
Cost of goods sold | $ 272 | $ 656 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) | 12 Months Ended | ||
Jan. 31, 2023 | Jan. 31, 2022 | Jan. 31, 2021 | |
Commitments and contingencies | |||
Weighted-average remaining lease term (years) operating leases | 8 years 1 month 28 days | 8 years 3 months | |
Weighted-average discount rate operating leases | 5.25% | 4.32% |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Commitments and contingencies | ||
Operating cash flows from operating leases | $ 1,436 | $ 406 |
Leased assets obtained in exchange for new operating lease liabilities | $ 1,148 | $ 3,368 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES (Details 3) $ in Thousands | Jan. 31, 2023 USD ($) |
Commitments and contingencies | |
2024 | $ 1,253 |
2025 | 626 |
2026 | 592 |
2027 | 577 |
2028 | 582 |
Thereafter | 2,090 |
Total lease payments | 5,720 |
Less: interest | 814 |
Present value of lease liability | $ 4,906 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Total [Member] | ||
Net sales from continuing operations | $ 112,850 | $ 118,390 |
USA [Member] | ||
Net sales from continuing operations | 48,990 | 47,610 |
International | ||
Net sales from continuing operations | $ 63,860 | $ 70,780 |
SEGMENT REPORTING (Details 1)
SEGMENT REPORTING (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2023 | Jan. 31, 2022 | |
Operating profit | $ 5,541 | $ 16,047 |
Depreciation and amortization expense | 1,505 | 1,868 |
Property and equipment | 9,140 | 8,714 |
Total assets | 142,327 | 140,793 |
Total [Member] | ||
Net sales | 112,850 | 118,390 |
External sales | 112,850 | 118,390 |
Intersegment sales | 47,610 | 54,140 |
Operating profit | 5,540 | 16,050 |
Depreciation and amortization expense | 1,500 | 1,870 |
Capital expenditures | 1,990 | 800 |
Total assets less intersegment | 142,170 | 140,790 |
Property and equipment | 9,140 | 8,710 |
Total assets | 142,170 | 140,790 |
Asia | ||
Net sales | 63,680 | 75,820 |
External sales | 24,750 | 29,800 |
Intersegment sales | 38,930 | 46,020 |
Operating profit | 10,910 | 13,890 |
Depreciation and amortization expense | 500 | 580 |
Capital expenditures | 540 | 60 |
Total assets less intersegment | 35,640 | 52,260 |
Property and equipment | 2,390 | 2,420 |
Total assets | 55,770 | 66,970 |
Latin America | ||
Net sales | 10,870 | 11,800 |
External sales | 10,840 | 11,340 |
Intersegment sales | 30 | 460 |
Operating profit | 1,930 | 2,350 |
Depreciation and amortization expense | 40 | 30 |
Capital expenditures | 200 | 0 |
Total assets less intersegment | 9,300 | 7,410 |
Property and equipment | 220 | 70 |
Total assets | 10,620 | 7,460 |
Mexico | ||
Net sales | 5,230 | 5,230 |
External sales | 3,730 | 4,060 |
Intersegment sales | 1,500 | 1,170 |
Operating profit | (1,440) | (1,010) |
Depreciation and amortization expense | 190 | 200 |
Capital expenditures | 20 | 30 |
Total assets less intersegment | 5,320 | 5,060 |
Property and equipment | 2,010 | 2,150 |
Total assets | 5,510 | 5,240 |
Intersegment [Member] | ||
Net sales | (47,610) | (54,140) |
Operating profit | (70) | 820 |
Depreciation and amortization expense | 0 | 0 |
Property and equipment | 90 | 90 |
Total assets | 52,680 | 39,740 |
Canada | ||
Net sales | 9,040 | 8,200 |
External sales | 9,040 | 8,200 |
Intersegment sales | 0 | 0 |
Operating profit | 1,460 | 1,070 |
Depreciation and amortization expense | 100 | 110 |
Capital expenditures | 0 | 30 |
Total assets less intersegment | 5,810 | 4,990 |
Property and equipment | 850 | 950 |
Total assets | 5,970 | 4,990 |
USA [Member] | ||
Net sales | 53,790 | 51,440 |
External sales | 48,990 | 47,610 |
Intersegment sales | 4,800 | 3,830 |
Operating profit | (6,420) | (4,090) |
Depreciation and amortization expense | 610 | 880 |
Capital expenditures | 1,210 | 640 |
Total assets | 94,050 | 77,760 |
Total assets less intersegment | 64,330 | 53,360 |
Property and equipment | 3,280 | 2,780 |
Other Foreign Member | ||
Net sales | 9,520 | 9,730 |
External sales | 7,170 | 7,070 |
Intersegment sales | 2,350 | 2,660 |
Operating profit | 430 | 1,840 |
Depreciation and amortization expense | 60 | 70 |
Capital expenditures | 0 | 40 |
Total assets less intersegment | 9,240 | 8,920 |
Property and equipment | 250 | 250 |
Total assets | 10,400 | 9,320 |
Europe UK | ||
Net sales | 8,330 | 10,310 |
External sales | 8,330 | 10,310 |
Operating profit | (1,260) | 1,180 |
Depreciation and amortization expense | 0 | 0 |
Capital expenditures | 20 | 0 |
Total assets less intersegment | 12,530 | 8,790 |
Property and equipment | 50 | 0 |
Total assets | $ 12,530 | $ 8,790 |