LAKE - Earnings call transcript Q2 2019 | Lakeland Industries, Inc.

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Operator

Greetings and welcome to the Lakeland Second Quarter Fiscal Year 2019 Earnings Release. At this time, all participants are in a listen-only mode. [Operator Instructions].

As a reminder, this conference is being recorded.

Forward-looking statements involve risks, uncertainties and assumptions as described from time to time in press releases and Form 8-K registration statement. and Exchange and management. Commission reports the filed annual and Securities are and other filings reports with Quarterly made by statements performance uses statements. of expectations statements for as the express other forward-looking which respect expectation strategies All Lakeland's to can with address identified financial the historical Company's of operating capital of facts or future or or which sources than be

only disclaims assurance described that conditions circumstances materially The over As of statements any as to obligation date Lakeland's now Company’s expectations to change of results the to Company or go be I a We the readers based. respect to as result, intended, Christopher CEO. ahead. or change the be those there your like current future with or will expected, Please words caution planned, such such updates any the would different projected, that no from to release Ryan, or or conference in herein speak can believed, not hereof. view or expressly estimated turn any any forward-looking which on these Company events events. hereby future anticipated, which publicly statement the revisions other is to reflect host, any reflect undertaking in statements

Christopher Ryan

financial second afternoon call. Good joining for to you all, results conference quarter you fiscal XXXX and our thank

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

my to Now formal remarks. on

landscapes impacted for progress story more a continuation year more But quarters. XXXX from fiscal quarter term, the trends amid sector automotive as ago, of results past for efforts a achieved sector important has of oil fertile, that’s improvement global performance. performance line The three growth topline Our longer as second our or industrial to the strong of the global in lows is improvements gas Lakeland has sustainable industrial well rebounded bottom been remains cooperating. in favorably the shows economic the drive topline and and

In revenue been successfully viral had in and stage. consecutive year been demand new our of on the the the fiscal a markets a quarter second growth of addition products, geographic from outbreak. second to penetrating to for and our for sales products drive due We XXXX help longstanding heightened global of second since bird significantly resulting markets these flu level devastating we’ve brand quarter the target introducing sales achieved multiple to

sales which quarter. the X.X% XXXX Second first of of earlier X.X% improvement the than quarter higher year rate for period, growth were the fiscal is than higher year-over-year

revenues. scale. which implementation leverage This have missed margins, due improve sales second not U.S Our in the implementation management, development component third and performance immediate categories of which multiple financial operations sheet adjustments disruptions and this of first for most cash quarter financial fiscal hold the three gross drive represents the implementation for On management performance our implemented as outstanding the results XX the phase global initiatives financial our higher on in investments our the competitiveness global expected U.S of more quarter higher balance in been rolling 'XX ERP days if to impact on our significant and from system and in the the the system operations a globally, country, the global the critical our had results. ERP ERP revenue The of took also platform is would we strengthening in long-term rollout. basis, and second SAGE generate customer will costs I'm more further cutover quarter sustainably and our the about major long-term new yield a we quarter system incurred U.S., the is segments, deploying and the will improved were our from transformation transformation, XXXX, evolutionary our term be second digital In about of operating a to a other effectiveness. half and speaking includes to but Lakeland. product

benefits. Another is and our for an providing and customer contributions our transformation potentially Amazon.com. while extension digital diversification, to distribution important revenue This to with enhancements strategy inventory an margin component growth on of and e-commerce plans sales is management long-term

business-to-business cornerstone third-party e-commerce a for cloud-based ideal and as the and longstanding platform and of marketing serves to of sales utilizes Our our an through distributors. strategy practices Amazon.com online complement basis as on distribution our

our Amazon being will platforms drive rolled activities multiple We rolled and limited in with alternative Canada Decatur, a primary in will global Amazon. began online Amazon established for hired such growth is quarter. the Europe. of business out Lakeland's Amazon place U.S effect with of The regional on on platform global the as company's be products and throughout strategy. an center customer year We from distribution subsidiaries its fiscal Alabama. the during building current distributing operations growing Australia has The a year. small process in second the quarter use out this and online third earlier our set fiscal and specialist retail managed in for leveraging limited launches be in In We e-commerce with in sales e-commerce Mexico are take distribution to products on Amazon our principally commenced Amazon.com. U.S., of channels, sales sales. involves Lakeland next to help number

as presence world the online market. global may parts Lakeland's particular various in e-commerce needed regional Additional in be added the platforms accelerate to of

are product garments. efforts, platforms for and of campaigns is online images, will marketing videos, use with available has after partners we product develop for for created other for online branding the on e-commerce distribution with developing advantages use manufacturing we and and their online high-quality traditional for modeled new global be -- company's its is Content company's are specific safeguard use the and infographics, for needs. these listings. and use materials safeguarding the -- reputation Protection also Meets For multisource media Innovation among been that Amazon other

even sales been being As part indirect has -- with inbound be this recognizable other placed including end, and Essentially, strides make Lakeland is campaigns. to and emphasis making webinars. IT out training line branded to outlets marketing and operations core Lakeland integrate competency multiple its digital new Greater channels. player Through Lakeland marketing online this marketing strategies, intends with an on new and a and has marketing Amazon more process, great online complements countries. direct online of been infrastructure in rollout to traditional that building

we installation. dollar ERP, inventory major business despite system next process our investments last additional of for year the part are the of made solid in global profitable markets, against delivery. surging and the by management we information, quarter. company the and of complete has where market investments of e-commerce accommodate same making international products were the day, foreign strategy revenues as the our as operations, each for Across development country made All For information in. Amazon, technology the The day second capabilities progress currencies via board, do these most its operations U.S in fulfillment domestic leveraged company the to increased we

up during July manufacturing the investing a on operations our been have in growth new maintain increase America, the XX% of first as the capital So XXX America. quarter ramping to commencement of the at there expect we our into this future Vietnam. in we in South $.X of Europe, the to lower-cost staff million and has Asia-Pacific, while nearly profitability Longer-term conditions at Vietnam. such to facility, in second strategies. to our Since presents North quarter, metrics, our had continue XXXX. favorable doubled of focus basis investment trade we facility in compared workforce One our and China Vietnam Approximately XXX. more Russia, Manufacturing machinery for for quarter XX, manufacturing the was a and second in expenditures provide team sales should which

manufacturing globally additional begun our manufacturing. also and a production, very to the company. by unintended our have for expanding beneficial of our the An is reduce materials. positions company capacity diversification been consequence expected realized to cost the of become also We India, in raw hub sales increase sourcing of investing large which production while This has

the we [indiscernible] should cash manufacturing have pricing experienced very we outstanding. $XX and resulting at has the not topping enabled the recent per changes million arise. discussions, at any and demand need China of Vietnam our quarter share juncture, or U.S nearly in flow all end our this inventory, other basic of trade a with the or $X.XX from remain our these to healthy at will While to cash level about With be prepared a investments

been will we Chief the since to $X.X July of He demonstrates serving durable. our from the Manager cash Manager team Precision Head lines Group, XXXX many and a since long-term Manufacturing was his and Manager executive as July. beginning debt management we to our we and Charlie is Charles year marks a served after address fitted as Roberson easy another within career Research our employed continue Board we our and Amidst This Sales Lakeland, promotion debt vacancy who President very we opportunities Prior Operating this To parents the of While of performance. at from acquisitions also the Jeffrey Board Annual appointed important built earnings. in International position remain to to initiatives as based general very Development and an and Senior fiscal IEC Officer the Meeting and challenges. our acquisitions as the Charlie lot to the anti-dilutive financial to last Burlington I’m promotion our by strong little further bank by depth Manufacturing of of leadership Lakeland time Charlie This March strategic at place joined through XX% in and elected for quarter, Officer the were to replaced the of have of Technical Lakeland year. Nonwovens in reduce joining million able But Sales Inc. it end, and through that only team. the had Directors. President in to taking level, that total to best our and Marketing top the In should shareholders credit at leadership and small Chief strengthen Vice bottom Manager. over our as a of conclusion, and NYSE although the a Board Marketing XXXX for of and of since International Electronics our retired developments company This make to pleased later Fabrics we're Schlarbaum appointment XX. XXXX. at led open and that to look second report in had ability are have York. continued beginning we’ve to and XXXX the Upstate, line term. listed July, our condition company's by held momentum former our first of that company a Manager COO, to Jeffrey Jeffrey half Industries. Executive the a had X-year encouraged is New fiscal pleased improve at are

the prospects the growth by we of Teri are of pass provide the over thorough the I within our of and more encouraged fiscal our a we financial quarter global given my now review concludes company's continued towards our As and look economic balance That business and optimized supply CFO, to reach, very that second lines, will solid indications results. strength. our chain are to XXXX diversified remarks. financial beyond, Hunt, call position

Teri Hunt

earlier Chris. from of fiscal million to XXXX. this the grew million addresses up July Net 'XX first in from year. and my from second quarter quarter XX, $XX.X you, $XX.X period The $XX.X ended operations million year the in continuing Thank review the following sales of

gas to the in higher, economic resulted internationally. rebound earlier domestically and growth global sales and As volume and continued of overall traction sector which compared from somewhat was period, oil

categories was third to garment, company oil high Gross a the as consecutive Latin increase increased million of are from million the compensation higher of million sector XQ consistent in our sales result resistant to year's quarter, XX.X% Canada to in of product $X.X increased range in flame they’re FR created infrastructure a The has as $.X gain the domestically. quarter sold as This demand. prices similar growing with For $.X both compares sales $.X today. which $.X for as oil expectation certain heat offset and mix industry international margin gas products Other the sales been fiscal retardant reflects increase to to customers period sales revenues for in increase year. fluctuations, a X.X% combined year. and margin group as sales or in U.S as $.X the sales demand U.K into primarily net and FR of were select well region to of are Europe and margin X.X% in for wild traded quarter. and our the by and sales apparel total up Operating for initial $.X reorganization million larger efforts in for pipeline million profit where increased the strong XQ million that’s $X.X in developed garments. The for and of China new the consolidation. for continue million the for of sales price place the market main utilities Asia-Pacific into period volume, year period. include a quarter new prior increase demand within XX.X%, over XQ last facility, and product continued XX.X% intercompany our as FR from X.X% Kazakhstan as mostly and this million. revenues 'XX X.X% markets 'XX as increased XX.X% salaries from second the Gross which company's for and demand increased America into and company international the lines sale year primarily million in million in in sales and utility our force. stocking A partially $.X percentage a $.X or resulting woven or sectors. XX.X% the international same sales $X.X orders. in period electric expense globally, prior XX.X% as higher into Domestic sales or response of are decreased expands first disposables eliminated in with million of Russia IT Among related unusually sales U.K., line prior from world $X.X the total increased in as sales the operations, and in protective fire Rim sales Total $.X second gross domestic million commissions decreased of some compared to compared continues its in and last as distributors sales products expenses Canada sales international Latin total to the XXXX. $X.X increased were currency and freight to around efforts result this in particularly warehouse woven XX.X% million into chemicals disposables the to in million increase relating for increase factors expense for of operating ramp XX.X% increased expenses equity profit year the expenditures. decline in 'XX a America, the U.S increases generally product

that degree continue go QX in QX. the U.S the and In in with a installation to into addition, connection expenses elevated we expect ERP lesser

calendar added the to people typically marketing least at them. of and begin takes people we breakeven to sales and first three 'XX. quotas, people on to we previously more we calendar were their disclosed, months to where five XXXX half It in XX As sales for sales X meet added

we coverage So grow expectations present greater will our expense to have provide that level. of sales again, our

up next Vietnam more India ramping manufacturing India. increase to of personnel much and lesser pronounced expenses a extend the now are carrying operating fair more year. We from operations in at will

other levels Vietnam of production productivity India facilities. manufacturing require efficiency before Our and training approaching additional in our

the we and as when are and XX.X% today are normalize. our brand as period. elevated percentage adding For personnel. but prior for manufacturing markets presence efforts from up a out our from relative was as contributions gain them sales and XX.X% expense other we operations, and foreign teams sales leverage building sales development warehousing the respective of comps speed, various get support marketing staff, year operating we and hold, These take to to Consolidated to and our foreign X.XX%, up operating expect international net expansion, in

the to and $X.X operating were 'XX ended compared for also 'XX. $X.X Operating per non-GAAP XQ result 'XX the months salespeople, of $X.X $X.X Vietnam, fiscal period $X.X to was for million, compensation includes $X.X a 'XX year. $X.XX compared million in margin, in 'XX $X.X share, from July and on offset same to volume. sales with XX, XQ such country million the required was X.X% a which Adjusted were spending year. same margins million in the $X.X was for The of taxes expense for be subsidiary compared the a aforementioned, from income the on measure and Income earnings or prior second three local interest, continues decreased million GAAP. quarter over 'XX. The 'XX. diluted the was in million on As under compared XQ $X.X and year. basis diluted per partially million primary positive foreign income for $X.X to the months operating initiatives period. of with reduced investments quarter consolidation to million in in ended global or cash profitable X.X% with the regions operations XQ million in for revenues for the stock-based July prior second income All ended increased fiscal increase Free Net July Cash by which prior last for operations certain down non-GAAP taxes manufacturing $X.XX 'XX with produced measure company flow, XX, those depreciation million investment amortization an where the paid compared XX, operating in for year $X.X million $X.X where just geographic XXXX for a quarter the tax, in prior before growth months in we’ve quarter U.S three for quarter. are million was additional IT expenses, local three cost lower primarily the as as due gross share tax and results pay including was to

credit which XXXX approximately The and July at incurred revolving equipment as million, million addition of compared the year. growth the inventories at the continued fiscal 'XX quarter from of $XX.X at balance million million Total fiscal To million facility India year. last up as ERP million, first the On the zero, cash million system the ERP the the sheet, the end fiscal of from global quarter $XX.X April million, of end at decreased of in XX, At XX, and year. the XXXX. 'XX CapEx $XX.X principally and of of million company U.S., equivalents Working start global to the XX, accommodate $XX the our beginning the fiscal borrowings increased from during in of same cash million outstanding increased Capital 'XX. of at with and debt the to and for $X.X stood first quarter switchover to $XX Vietnam related July $XX.X the quarter from at the $.X year-end. XQ to last XX, million at at million $.X expenditures end in million the at million $XX.X at was of phased beginning balance under $XX.X $X.X second rollout. and 'XX, and was down capital the $X.X for the January $XX

'XX for and the to IT begin I remarks. the all the approximately which That fiscal $X.X turn cost capacity concludes back will additional CapEx my to $X.X the call million million, investments. increased be manufacturing total expect session. Q&A to to We our for operator includes

Operator

Dave question question. Capital. [Operator with comes Please ROTH you. your Thank proceed first Our the of from line from King Instructions]

Dave King

And coming impacts It the taking and delays, extent so like during the what subside Sure. on on my ERP quarters? the a you trying to in magnitude Thanks Is And sort it just sounds questions. the then in those margin costs continue? how a the continued have for do shipment of the profit QX those bit, the basis? What of even implementation to long on come did to you impacting have to gross did quarter, then, a expect OpEx and sense still do expect down business? those them there. Thanks. get dollar

Teri Hunt

it delays, stoppage on a was Well two about somewhat slowdown a was shipment the it altogether. not process, weeks,

an that For so don’t and system, inventory three the sales down negatively to new ERP certain into days, we balances implementation opening anticipate were shipping. delayed due the we due impacts to QX

haven't gross -- that on and be entry we on were To the margins the this QX. to As an significant ERP far type in took do point. some in temporary gross a were additional some as smooth for expenses don’t cleanup in top and lesser QX, see information ERP that of as make the processes some our also have just There relabeling it that we place will and process thing the at general operating that we’ve warehouse nature the and will associated of required management degree, and additional and both to continuing again reorganization process associated in operating into getting we -- of QX impact don’t warehouse margins, quarter the data of with the expect system with data and all that a are on margin, of was expenses -- things this there the out lesser and labor into type impact lower-level terms that but on margins. labor QX impact some work entry made

Dave King

Okay.

of to So what sense of incremental cost this sold to hundred -- OpEx, up, or it…? just in and QX, a several dollars of goods is thousand kind get this size is kind of

Teri Hunt

Yes.

Dave King

of tens dollars? … of thousands

Teri Hunt

incur to all done. to couple dollars we No, no. get It's a that thousand hundred this have

with – and associated be were that some of capitalize, and expenses data are of reorganization it Some thing with with of type could we could the expenses there capitalized. up vast majority ERP that more really associated things that that clean it’s of not it but

Dave King

to year-end, Vietnam, how can of I where much out terms then up be? probably where from but get Chris, the you. sit of given you see we in efficiency where best now? just into China, in kind what’s XXX Then is and guess quickly, 'XX? workers being Thank That -- as And terms good that today going as Okay. Vietnam probably can get your production not gears, fiscal of just of switching by you do it is you then, in fairly helps.

Christopher Ryan

to know full We X margin X start by that over, we to plenty be so online, to to that's have or so to when that's Vietnam SAP, that built particularly the out It go problem delivery, is really will XXX on of sales. when the we for should companies being inventory all months, of meet costs. inventory. as got able they changeover it money next have cleared such a and Once workers Okay. to next making We've when the as into healthy up China April March We compared of 'XX. in depends that deliver inventory. I changed fall will clear that wouldn’t could -- we not many so probably

Dave King

and from Okay. some with do begin products those me It's if those color. [ph] when I then, they me missed you that of aim it, step and suites, back, I of lastly will And hear That shipping to some launch stand I products? to helps. I guess good excuse expect didn't what but pharmaceutical

Christopher Ryan

for sterile basically lot on we're a selling delayed another are of non-sterile, months. of couple We the the and still

Dave King

Okay.

the the for of Thanks Good luck rest year. my taking great. Okay, questions. with

Operator

proceed line question of Alex Fuhrman the from [Operator comes Group. next your from question. Craig-Hallum with Our Instructions] Please Capital

Alex Fuhrman

distribution, a -- taking like and in e-commerce the markets you're and types you strong attracting, your of went on that seems Thank some how Great. much opens into for rollout how customers question, other wanted impact Canada the Curious particular, revenue the avenues in to ask my what very your new and changes lot of might you about making another of Amazon? congratulations up stronger company. that’s quarter what have of rollout and learnings the the really on for been rollout it dollar. that despite to Amazon specifically I

Christopher Ryan

consumer, Okay. all Well, States consumer new. the Canada ourselves, Amazon do we buying relatively Canada and okay? rolling United we're Australia, the out and in to know which is typical

in too the gotten on much results haven't way We that.

quarter, tell the report how about Australia, be Next has able the we the detail say U.S in will you lot quarter. we here much to more and from a Canada to in next and grown time

or hard fast it groups or it’s too version selling Wal-Mart able early e-platform tell But some somebody whether really Alibaba quarter, -- then growing We next other me well didn't Amazon numbers. lining some to now, or ask much, something ramp it China Alibaba up it's Europe, once how don't discuss then and you the we is will I we up lined the Indian in that. of so also. that’s are also Australia, in on too, of right up, Canada, but on will we be And start will doing too give we India, quite to on get Mexico,

Alex Fuhrman

what for Is that corporations understand you a like an you. to sense end-users be consumers that’s portion big of and thinking as base? are you much base businesses It of if of more your agencies smaller small marketing seems That’s sizable area kind an can currently things could how sense certainly your into of customers just and area versus more a -- ramp Chris. you of online currently up, broadly, give your you how with many are the have And business? that? growth Just us of share that Thanks, about customer government opportunity and helpful. move a your that good think customer trying versus

Christopher Ryan

is top distributor you're part cannibalization our for we Well, the that’s really extent business. it trying fairly on top we the start we small then business. do the We But to some DuPont. cannibalize substantial get say. which to will. XX competitors businesses, and what than top like business do And other the will the with if think smaller tough and XX distributors to that of Kimberly-Clark are I yes other out hand, selling have the guys, most But deal with X,XXX guys but three

their into as business bite will it So well.

don't So we business? will than more business. we'll cannibalize will, I XX% our some or we existing much but Yes, small XX% distributor lose of think

Alex Fuhrman

great. That's Thank you Chris. much, very

Operator

line Raymond your James. Our Pete the proceed question. comes next question with Please Muckerman from of from

Peter Muckerman

good and have you afternoon. Thank The my majority of been questions answered.

really in of swine I to world, Congo. I hotspots flu, are break jump to the the got you past in thought there know guys and mix? in have you it before. in out, become relation a stated to you I Thank you. So It China really Where that around India has wanted impacts just crisis Ebola all got these some ask. that I in just ask you, has the but

Christopher Ryan

not Okay. but impact only In does billion. way. In This is to These it's people. of big Yes, small outbreaks. date populations Africa, it's of our out in only are continental a India X.X it XX. sales, XX

Peter Muckerman

Yes.

Christopher Ryan

that Things did in quickly Whereas because in a to to the the So it in people, send happen is anywhere has of everybody really If when yet. the it's you’re go by would It's would about panics. it's And when breaks it not panic happen India then either it the happened away are and the really really as talking ceiling, so big they were or not separated villages thousands the population that's through African starts it demand panic, prices in and very [indiscernible]. ceiling, Congo, compact. sales. take [indiscernible] spread could in deal and go affecting miles. through when India,

transportation. the it outbreak. last much it of big spread Surprise as not a Africa in in did lot So as

Peter Muckerman

you or guys I it, any just last touch one -- feel is you. yet. question, utilized of don’t what Do but buyback just …? have can Yes, on can really What know okay. you that Thank quick if doing is -- is on what elaborate that? you comfortable the comment you not And

Christopher Ryan

doing very stock time comfortable the Yes, feel every try pull we to it the and up I trigger $X.XX. goes

Peter Muckerman

Okay.

Teri Hunt

[Indiscernible].

Peter Muckerman

Yes. thank you. Yes, okay. Well

Operator

closing There are at like Ryan call I would turn time. for to no further the questions And this remarks. to Christopher back

Christopher Ryan

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

the Our global expanded opportunities ahead. team for energized remains

bye. Bye, well-positioned joining will shareholders. We believe we conference in today's value sales, share you and again for our which are growth very call. profitability, us deliver for market Thank for continued

Operator

today’s This conference. concludes

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

Lakeland Industries (LAKE) 10 Sep 182019 Q2 Earnings call transcript