LAKE - Earnings call transcript Q1 2019 | Lakeland Industries, Inc.

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Operator

Good morning and welcome to the Lakeland Industries Fiscal First Quarter Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note that this event is being recorded.

Securities are information statements the within of and parties call during Securities begin, XXXX. XXXX forward-looking of contain the the we reminded made that the Act Before Act Exchange meaning of

Forward-looking statements statements facts speak and reflect which only events, other as expectations future June performance of X, regarding XXXX. historical management’s operating all are statements than and of today

those on Executive Chief Ryan, would to Industries, introduce like J. acting qualified in for statements. I time, statements. beyond perception number are presented changes call, statements in by filing of are are conditions, the on These may pursued their and Christopher trends, are statements factors of Listeners in in to factors cautioned experience may current company. the are control Lakeland made you or company and company a to based business materially persons factored the Securities its to or expressly Ryan. by announcements its and business forward-looking forward-looking the other cautionary in the regulations or general actual your of behalf are statements these the statements expected Forward-looking developments and appropriate differ many and opportunities from are this conditions, future that and its historical any economic entirety current and you circumstances. by with begin. At future of the light assumptions assumptions, results guarantees that subject these the and Officer, All maybe under company’s developments & other of certain not this subsequent believes which Mr. performance and company projected risks attributable uncertainties law the Exchange it Commission, of host

Christopher Ryan

good results XXXX all XXXX call. quarter quarter] for you, fiscal financial first Thank afternoon conference our year fourth and full to you you joining thank and [fiscal and

that the on questions. on provide The to opening then financial going results. will are status may statements call our so and your of We to we up, respond operations opened be

were protection solid Now our to workforce We XXXX, remarks. on to market. fiscal my to further formal in which start global solidifies a leadership the off position very

been to review market in our higher conference fourth on Considerable call. which have made to growth this due our in and talked results and to like strategy earnings customer growth the emerging the quarter. manufacturing was fiscal quite had update start U.S. I the economic in part resurgence landscape has similar a fashion continued While of industrial we first particular operations. work year rebound, shipments and year year-end of Sales we of effort demands. quarter overall into as heightened well above growth global of as growth the fiscal We were this fiscal the meet quarter revenue marginal the of our in XXXX and achieved the international concerted in focus is of strong continuing in once growth in terms in effort sales consecutive first you gas sector. for and XXXX XXXX from as oil our large to lower on are seeing lines. growing when elements fiscal our the level the on increase year. with This strategy a In quarter, second we all in regions experienced down of again major product devastating we XXXX, order first was in flu had from nearly eclipsed operating inventory the last strategy about I’d quarter and the capabilities first our the bird the significantly demand outbreak. of revenue investment to progress the revenue sales resulting

geographic In five, revenue I increased distribution of and production hiring additional markets; our of at information technology. margin two, entry addition new targeted new investments discussed into three, in elements growth underserved Most our scaling these Amazon vertical people; strategy have dovetail strategy to platform; improvement four, one, includes; into initiatives. markets; growth products capacity, of sales gross

and While our our first increase seeing are improvement uptick the in an in the for we topline have longer-term in great position already company and we strides margins, gross gross margins. reporting for made quarter, to parallel an gains a

include, a a XXXX, to we and quarter as quarter XX.X% XXXX, for increase in the seen our principally of ongoing first improving retail entry margins The limited manufacturing; our a manufacturing material XXXX. of through sales. XX.X% XX% of our channel, margin first the investments leveraging have to international which key fiscal cost increased Amazon gross lowering effort three, markets distribution in into components five, growing the to two, specialty significant improve four, of for recent highest competition; percent of quarter at of Our operational our sales multi-sourcing history, fiscal level new first in technology; alternative with from the with quarter materials; of raw in fiscal first gross and faster from benefit the introduction products effectiveness including of of expertise,

world. immune utility underserved in for U.S. These higher products less garments. and also fire This of particularly the the of are are intended products important markets, increasing market to markets vertical our In lines cleanroom competition. for development our margin operations. addition, is which prices The select includes are garments retardant we around for

an basis marquee utility market secured penetrated. products initially national within the have customers customers to beginning these and once are on our We use increasingly

our most leading of it showcase one learning towards leaning products, where here the -- mature market, is Given new, of the manufacturing is we capabilities. PPE U.S. for products margin and introduction are global which that to design regions higher exposure the our

sales domestic began booking say, market line to We international by currently product, orders U.S. into product sale the a second in in be recorded in and beginning spans supply we are particularly opportunities. This disposables. the is than margins ChemMax gross market significantly quarter. traditional higher new the that for We pharmaceutical excited be first to has have will with This marketed quarter cleanroom which what our sales the chain. with, large

calendar rate the expansion and gained Traction more international India markets U.S. and in market. growing manufacturing, people more to margins and should far breakeven have personnel to and be marketing months the a implementation the sales. to believe margin for you in calendar competitive, is strategy territories; existing people we than their unlike penetrate sales efforts of sales So first begin primarily quotas, fiscal them. of environment to course on year as able of these deliver to takes competitive XXXX sales the and the globally, into at are X being thus addition Vietnam. The we seeing the our from and we includes less our long-term three U.S., It XX marketing on months of in markets faster to where new sales sales so international performance are through Five increase competitive five last been our progresses. higher of and growth XXXX. typically year we’ll added added which the and and XXXX, be sales that in contributing into Through people we meet expansion focused again,

grow on China. these our in been will continues labor part manufacturing, expansion, contribute offset our addition Improvement to topline partially In to new gross margins. which our costs as hires of global international our be by we to in and spending higher margin also have

Vietnam will that to us We about fully first are working made employees now and have is toward pleased we provide operational, facilities new announce with these of Mexico. continued XXX with and with January. Vietnam. from production locations shipments. nearly productions in expansion compared cost Once that and establishment increased as up in zero running and partially India I’m China lower our

members will calls time year. our XXX for are gain plan as manufacturing experience. Our by of staff trained and efficiencies next improve Production team this

are added phase complement Europe will with India, expansion operations, the be India, Vietnam. already in have nice same in roughly our in be capabilities the platform. manufacturing Last development the In Australia, the We and Amazon next selling invested a going we added so to as to for gain In scaled share. delivery. In year later sales although we’ve United gaining will in day, traction. staff last three similarly Also States sales first fulfillment the it are same the we year, distribution day have who we of there. we people U.S.

and As over we basically we’ve the a allocation. is Amazon this year, requires and almost off platform discussed, to great it a last inventory limited quite of in nothing with nicely. up ramped started start, amount We

fiscal XXXX. a product out Amazon platform Canada second we I number experimenting fiscal but plan size strong distribution launch will our Australia, to the success. still a mix, limited Canada during just rolling of replicate with with U.K. enough the have very the and quarter. in We’re in in sample Distribution on Amazon right to be our We believe products

see, increase product percentage our As the of growth to IT our presence revenues income net we’ve in continued in expenses Operating of expenses spending. X while while Company effectively investment by Teri, XX% also first of very managing from last include X%, X%. approximately that levels, quarter upon in expanding which from you reported with of can as increased by increased our quarter the The year support development. implementation in we operating sales operations aided touch at global remarks. global on consolidated and will are a the an the busy consistent first remain grew spending been and but The her fourth million quarter over the investment net in many profitability our enhancements, expanded

no million in to first net by increased higher nearly line in net improvement $X.XX by continued while Our margin April grow top of continued further overall ability have strong primarily per We We expenses. million bottom with a increased by than $XX XX or XX, we more revolving by XXXX Along on credit to quarter, operating outstanding and increased total spending, was international partially conditions reduce debt our facility. a Cash X% increased and at the now debt. about income remain and gross cash sales this our million cash financial reflects over the during and an higher, and the share improve period. $XX.X to company’s X% our our encouraged borrowings very balance offset reduced performance.

fiscal partner indications given global business market. by growth of diversified encouraged increasingly global beyond, chain economic the the protection of and industries are lines, within XXXX solid we the in towards balance we prospects As choice Lakeland the supply our our and that continued is very optimized are financial workforce of and position our look reach strength.

and we so and has improving are addressable the excess topline That our company’s deliver growth deliver contributions. to results Teri I call We over provide pass us of results. more a will the can financial strong vast before progress to our my serve, that the quality been sustainable of the of to one-time available to leveraging thorough remarks. earnings CFO, while in concludes the we made Hunt review markets markets

Teri Hunt

ended addresses continuing from Thank sales Net following QX, you, of Chris. in operations were $XX up XXXX my the April from The million XX, XXXX. fiscal XXXX. million first review quarter $XX.X

mix domestic total XX% first compared $XX.X rebound domestic sales with higher or continued in the As decreased oil XX% the year in margin the renewals. sales from to and total orders which XX% same volume XX% million to of due disposable XXXX. disposables or were sector. and approximately or primarily million $XX.X of and compares gas strategic of resulted U.S, was Sales was the of product period sales represent economic of earlier period, or for In total adjustments quarter a lower the modestly the fiscal and fiscal domestic the sales. of period sales from international with XXXX, in XX% fulfillment consolidated prior This total were million revenues, of overall million of revenues. basis revenue the sales $XX.X total the the selective U.S. international On growth globally $XX of

most and or garments in lowest for Disposable include garments retardant FR although margin by among commonly reflective of woven, least we are far the we other U.S. Chemicals, profile line the The and fire U.S., yields for product internationally. similar glove. commoditized the apparel it the sell. in have a Therefore the margins garments sophisticated marketing different

the brought Additional which raw reduce new cost and our is India sales positions production our and increase in capacity while expanding to sourcing production being Vietnam, of line in facilities globally manufacturing of materials. company on

Germany to that signed reporting. gross country in country compared prior an of Sales of driven business company XX% increased in Germany XX% placement and activity, efforts year to quarter other out the the and and sales large gas through in customers around or a Europe the new in direct were chemical relating backlog sector and is several $X.X which targeting fourth several sales, by last in turn as continues turn the million stocking or the quarter. works safety gear gas online In replace large Pacific by in $X.X growth and sales the remediation operations, period. XX% to been for our apparel national as we or apparel. first these million accounts. As sales protective that products larger million to larger led XX% the successful me inventories of industrial international oil fire U.K. $X.X the are concentration This oil going the larger ago. secured in for rebound, as the to sector consolidation our of million into in initiated China a accounts, $X.X sold Mexico distributors to for through year, which demand. of Mexico oil fighting country orders. to were company’s Canada eliminated leasing China has sales sales Asia financial drawn a in excuse experience are and depleted into and Among gas large included $X.X Rim intercompany result $X.X and increased to sales as of improved which on company nearly to successfully of months million attributable are as and the increased beginning products new increased million international increased

higher XXXX. as for in currency net sales salaries expense compared for the on in freight marketing cost operating domestically. the quarter, first year. from as million QX $X.X for the $X.X million $X U.S. foreign The from percentage flat Kazakhstan higher million higher quarter expands essentially company the XX, in XX% $X.X and internationally new of FY based QX, select quarter increased is chemical main the other additional strategy Amazon and The volume, higher the FY million as of sales increased from and an implementations FY to and product XXXX a net in suits, to Russia prior or Finally, for FY expenses factors percentage increase XX.X% progress. million of XX.X% a XXXX of expenses XXXX. markets mix million. QX, or million from lines of sales XX% distribution apparel in and a XX.X% development increase XXXX. in costs are as combined and sales months $X.X QX, including Operating are commissions profit and $X.X profit XX.X% ended FR the for for for Operating The $X.X the gross sales for was FY up increase exchange product to as benefited increased XXXX fluctuations. for XX% products, and three Gross Gross products, of implemented sales sales margin woven increases margin and key expense pricing international personnel April from

which compares down our geographic X.X%, quarter this and contribution, the the to we These in net $X.X presence leverage for The operating income XXXX, for tied for continues million as first operating considering million with same margins increased development capacity were expenses to all expense compared for came FY country and QX, operation regions amortization income we're is to stock-based basic relative gained or basis. as enhancement product for certain production profitable positive or where $X.XX Free million non-GAAP operating sales in Income various in an X.X offset of and markets, to EBITDA year. higher period. add warehousing sales XXXX. those operations brand interest, the in our measure, million in tax, before take compared but million Operating primarily initiatives, increases, margins increased As last and $X.X the X.X% for XX.X% year year. year-over-year and the which earnings last just other where with to the in income year, quarter. net margin from non-GAAP support FY were $X.X are operations was to QX partially XXXX, expenses. in produced elevated Net share $X.X income quarter are pleased The to down international revenue million also $X.X gross prior in future local million the per share a over to flow income taxes costs and of growth, line required operating $X.XX the largely income depreciation company with of quarter million on same by tax $X.X million a FY $X.X the build for cash personnel. QX, operating million was compensation was $X.X Operating basic quarter Adjusted on increased in quarter pay excludes development FY quarter effort XXXX. from hold. as be in $X.X that for attributable measure $X compared million we top under local out we today

higher quarter facility and To credit $XX.X the million down to April quarter of of beginning our $XX.X million, from than January the is an to fiscal XXXX, as At end balance XXXX the the $XX.X This $XX.X which additional XXXX. $XX million ERP million $X.X $XX.X under quarter the of at of but the inventories fiscal increase million, $X.X zero the and the XX, China the of approximately year XX, the year fiscal the million $X.X of during increased incurred XXXX, borrowings Mexico stood end Total year. debt QX, from growth, fiscal XXXX, and improvement same and Capital the revolving first was amount at at related working is same incurred at of XX, XXXX. X%. outstanding of start X.X capital essentially million principally from balance million last nearly up the at in fiscal million to the capital prior first up in then in XXXX million, at of at continued of global equivalents down cash million XX, from end from the as equipment at last expenditures year new On XXXX. quarter expenditures fourth for the cash to of end April million $X.X from accommodate the The and April sheet, implementations. year. company and of XX% first $X.X increased

total expect locations approximately fiscal resource rollout We planning the increased million XXXX for for the $X.X a $X capital around to enterprise capacity expenditures manufacturing the be all our includes software. million and phased world cost to global and new of which

ERP allocate track provide third year Our for on and implementation production capacity, inventory fiscal on quarter to USA and Canada in capitalized management is enhanced cycles. this is sales with ability and improved to opportunities expect

at January $XX.X remarks. concludes as session. the April quarter XX, QX, from XX, Total up to I XXXX the $XX.X begin was was million XXXX. at to Q&A the shareholders million to $XX.X XXXX. of X.XX year turn at operator call the at Our million ratio end compared and X:X XX, April back of current this X.XX end That the my throughout equity the XXXX, will at and

Operator

Thank you.

session. and Instructions] the And Dave first question [Operator question answer Capital. our begin We ROTH King ahead. with comes go will from Please now

Dave King

Morning everyone. Thanks.

Christopher Ryan

morning. Good

Dave King

– revenue. couple on on first questions guess I of the

growth? Thanks. launched the And material of is you from meaningful took, more do basis? a utility quarter. more in pharma in X% were thinking terms increases those like products, just pricing separately kind importantly, In margin contribution high those terms the then be contribution about an of expect annual of on to utility it quarter? and should it we broadly, the in Did you And And the ship I more pharma next QX. the sounds then driver say the like how a when guess revenue later those you Were launching? sounds

Christopher Ryan

increases. in launching part And Okay. Utility was was products these It the very, should of to fourth quarter. margins. Both Yes. very have price good third other the the what be question?

Teri Hunt

increase the QX, I we'll in think effects quarter, lighter the the price QX, that see that in of and was stronger QX. and

Christopher Ryan

line, third going we're And not divisional on until to just June certain the see so a we prices that raised quarter. X,

Dave King

are these or a percentage material drive then couple And is topline Okay. lines; on of to overall they the increase enough this…?

Christopher Ryan

on it’s mean, prices raised Yes we've of X% and about I the sales. just no, one on,

So the they through is really, increases there in it year. rest flow the the not of as year-end

Dave King

Vietnam, about Okay. terms of And lot in switching over Chris, to India then we IT, ramping? but that you thinking Amazon course helps. for be those some of about a investments make how further currency, of the in sales sounds increases the That year there, in should think line? how international it expenses the and gears more should do increase expect potential was with or then like expense hires to the we the

Teri Hunt

our coming the stock so experience this as claims. [ph] we'll our that as China, America associated investments that flux around we and primarily We point Russia We're operating last status Typically implemented in that, in in around QX India, changed well through some well in think filer extent us. I comes do accelerated to did was currency XXXX. at see to globally. compliance of was that in audit as in the a work This small level filers on most higher expenses came the tax tax as done additional I particular, see Latin were on made of and and the came terms quarters. some We the self-insured, transition slightly we've fees at with has lot of December year, year phase out came sales additional from year had staff end in there some that a through. think But as medical audit expenses. this

Dave King

current still me, like and XX Congo thinking that's of assume back. looks like helps. now. That there situation preposition at The guess is Okay. from for everyone one way step Ebola I I'd then working least now? I'll is the cases it then that supplies, on, some in right last And about

Christopher Ryan

Yes. this percentage It it although a outbreak. actually hell a a watching can't they spreading which is bats, seriously huge disease the probably that I'm lot looks of carried actually government relatively much Indian like by Congolese We there predict more taking new outbreak. going have that, with in India there is do government unless the won't than is in on what's low Africa. that

Dave King

Interesting.

Thanks right. taking my All for Okay. questions and nice quarter.

Operator

[Operator question Instructions] comes Alex Fuhrman Please ahead. And from next go Capital our Group. with Craig-Hallum

Alex Fuhrman

very looking those scale get here. from operational? you're Thank expect to see we’d many you Great. India sense and for that we to questions. what you the running each to XXX have to you're should of love manufacturing with in taking rate looking us in milestones think and line at production. I employees Vietnam Chris, sense much up Couple my and give mentioned us and locations. fully Can Vietnam a regard One, to a once time of of become you that to up about you in of how then currently get

Christopher Ryan

Okay.

standard what now okay. to we real people scaling really is time that XXX Indian Delhi as , up we our XX we facility. China in to up real India scale start me at the that's ramped where – lower that's getting words hiring what called to about to have but and standard other at in more year. money. saving We – wages. in we've but XXX to productivity, the heads, sows The same cutters XXX We'll in key sowers the is this And next up certainly a our up here them only people. not Vietnam add at sit probably New okay, thing. by to today, sow ladies for We'll equal the We

have not longer sector. in and particularly sector site to yet both things government the with simply it because India negotiate the private chosen the We takes

gain So versus watching we need that for the our a trying problem. months. capacity, on because build capacity in we're you’ve very you that something don't closely, have you extra We're sales if – three need in should got

You got an any revenues. isn't that expense yielding

in So those building it's tandem.

are the start few the one can countries like stays that same very, a So contractors, you quarter, just to last long are internalize closely. supply see of Vietnam term about can very wages after do I will the did more if continuing, is relative because you suspect sucked And we with supply but than skyrocketing. we're rest or the XX% still up very five fourth China There's just that you've be in watching cover them But is play, left world. that to There and the through in in got four words fourth what that of spike, immediately. quarter, spike it’s tends to competitive there, under going is with India there, X.X will Vietnam then situation in XX, labor years, now, billion wages the and India. demand. won't other simply our the get long, any India be people going into of can larger world it in isn't very, that to China we that population

Alex Fuhrman

That's to persist the understanding that And growth foreseeable of related better future? the you sustainability continue of be to to is a lift unpack driver in the gross really just to the gross anticipate internationally then, trying the that. your good-sized grow the of probably first continue quarter, that the it And a for U.S. pretty you trying growth margin just and to environment sounds margin helpful. and your internationally, portion markets Chris. like like sounds to forward? Do really pricing strong as margin it magnitude that outside And should saw in Thanks then, going understand I'm comments if your businesses we correctly I'm internationally

Christopher Ryan

countries, the that cost started market Yes. that world. of good foot countries prices. we Primarily we out many good market hole mature a by the in even with And low because lowest fact the getting the in had driven emerging or was the

a established more we're that a brand. have have name, Now we we

we raise when and to why the prices see do margins ability beginning the prices, across beginning you're board, the and have continue that to that's we're what to that We raises basically to and this. raise

So go to have with to brand good even we we with competitors a guys prices our the do name. get before way very a big

So all countries, we room which quite then margins. raise prices in the raises a to have certain

Alex Fuhrman

great. Chris. lot a That's Thanks

Operator

further at there are time. now questions this And

So over concludes Chris like closing any question to and the session. back answer turn this remarks. for I'd conference Ryan our to

Christopher Ryan

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

energized team for opportunities ahead. the is Our global

for we deliver well-positioned will very are which believe continued value We profitability, for in growth share and our sales, market shareholders.

on remains objectives. these focus Our

we For meeting bye. welcome there. in Long you call. Good today's for you for joining conference look to our to meeting I XX, on June again annual shareholder, you forward will attend and Island, Thank us Ronkonkoma, scheduled

Operator

conference now today's Thank concluded. attending you presentation. is The for

disconnect. may now You

Lakeland Industries (LAKE) 8 Jun 182019 Q1 Earnings call transcript