Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Lakeland Industries Fiscal 2024 Second Quarter Financial Results Conference Call. All lines have been placed on a listen-only mode. And the floor will be opened for questions and comments following the presentation.

During today's call, we will make statements relating to our goals and objectives for future operations, financial and business trends, business prospects and management's expectations for future performance that constitute forward-looking statements under federal securities laws. Any such forward-looking statements reflect management's expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our SEC filings.

or implied differ by performance expressed from results, or in such actual achievements materially may those Our forward-looking statements. obligation events the no statements undertake to revise or We any to reflect of or date after developments this call. update forward-looking

call financial and will statements not A the of is of adjusted to accordance EBITDA call, in from GAAP, U.S. the are derived discussed each discuss margin. today's earnings comparable our measures non-GAAP on directly During including GAAP determined in with presented we financial release. that adjusted this measures most EBITDA reconciliation measure our

At Lakeland this would Industries' introduce is Mr. to call, Officer, your Executive floor you Roberson. Charlie to time, I Chief Roberson, this host for the like yours.

Charlie Roberson

thank our us for of call. IR and you our an XXXX also earnings our at Thank all second note fiscal presentation www.lakeland.com. you, for that we earnings page website Please have Good joining quarter on Holly. posted morning

our results. highlights increase results significant is producing see service sales growth it's this last value Our in our penetration Products, markets momentum we second markets. net quarter results quarter. with product million, Notably, like Technical our in see sales both lines This was to $X.X product significant the organically in very our of to building Eagle This within in up Lakeland million driven strategic fire strategic growth strong by and And and delivered year. growth category positive growth $XX.X contributed as to product to continued year-over-year. goal continued our XX.X% which high were up compared when lines. revenue very encouraging XXX%, improvements to

quarter. our by gross profitability, and our strong EBITDA the $X.X second over grew terms adjusted remained million XX.X% margin in to of In quarter at XX% importantly,

in to which XX.X% the EBITDA EBITDA quarter, European compared Lakeland's Technical Standard $XXX,XXX helping Eagle acquisition, prior Products quarter, this adjusted year. margin the gear, Services in to X% produced Our Fire elevate makes of consolidated

quarter Sales in we trends our U.S., continued strength sector U.S. and with particularly the mentioned the due gas advantage gear planning into that our Europe a regard QX. strong, the to oil into and have competitors from first similar markets, result of The efficiency as key demand refinery geographic lead were continued the turnarounds to proactive benefited earlier, With as materials market of U.S. in well strength America. saw fiscal to improvements. the as we raw largely Latin over our and manufacturing a turnout time

been targets have QX as markets Despite those a to China's through of an focusing as distribution multiyear were China and are sales. among China. disposables, as of on by continued delivered primarily also new batteries our lows continued the European our works and sales struggled in as position, the acquisition. markets and China's users overstock the Asian remain during Biopharma, at those strength applications. order large Eagle performance in markets, fire its strength economy Our weakness exports on grow experienced our sales increased. result of meeting for strengthened a driven PPE its throughout America in fiscal channels strong service are second end -- quarter. we Latin overstock unemployment weaker-than-expected, targeted quarter semiconductors

already quarter. positively I during very As Eagle the mentioned, results our to contributed

next the and performance generation year. certification and platform EBITDA we will to particle to turnout continue expect of enhance progressing blocking process through hood we efforts adjusted going NFPA the glove significant the continue our Eagle be cross including development to and designers forward. soon are fire Eagles Eagle's integration Our in generate synergies organizational our

produced been to Eagle's to and make some being those facilities certify Eagle products Lakeland of are of facilities have samples products. Additionally in used

currently our have second underway. impact go project are which This quarter is leased we expansion capacity site, live evaluating our Due underway damage evaluation previously during Monterey, currently Mexico. in initiatives, newly we an leasehold Shifting schedule, Monterey our to production our the may out still to timing. expansion gears at build as we communicated, experienced have improvement

However, and adverse ability and do our importantly, an going meet our we forecast. impact not believe to to not at or our risk. expectations operations anticipate results financial our are We forward

shift remainder strategic priorities to in relates revenue it As while growth driving we executing the sales fiscal strategic to towards remain resources higher our value of a for committed markets, in the our key products. year,

lead chemical strength market resulting core we in in combined are are new container and disposables program woven and our Our flexibility higher and to value utilizing shorter our with end strategic times attract and garments, in service our users products products. gains our manufacturing fire to

we fact products that a large full PPE supply facility to of range safety can single a manufacturing is The customers. from and our attractive

planning high customer's help value This We and containers container. they products their customers, by frequency to which reduces are leveraging improves the our fill products our which with core and freight inventory more costs. increases order can easily,

that with Moving to acquisition leadership strategic committed is and our pipeline robust forward, geographic Lakeland's product and opportunities reach. enhance a maintaining portfolio team identifying expand our

short in on efforts meet accretive like to strategy time. size, bottom Eagle highly that focused line M&A acquisition quick finding of our identifying that by strategic and period in targets opportunities are our strategic, Our SSQ, a are small, similar and

results. Roger to an of to Roger? pass overview I’ll financial our call the now provide

Roger Shannon

in XX% Charlie XXXX. July million $XX.X of $XX.X and XX% or total quarter international million of revenues. of of and morning, of total the or of fiscal sales XX% Thanks, the the and everyone. $XX.X XX% were of the Domestic total $XX.X Lakeland sales were domestic million XX, of second $XX.X second XXXX. total This or with revenues, or ended good quarter sales million compares sales sales international million in delivered

yesterday fire XXX% As strong very our with product our afternoon, we within press issued we year-over-year. category to noted sales, continue release in growth earnings service see up

last sales in for XX% quarter, fiscal from the In terms to XX% a of of the of same quarter, product increased fire year. quarter mix for up service the

fire reminder, XXX% up product As last service our was category a quarter.

reflects the continued of decrease calls. prior to period. mix commoditized sales and as year ago our represented less Disposables higher a in products in higher and to made total to Lakeland This margin the we've discussed shift as revenues, of efforts product toward XX% we've XX% percentage value, compared

reporting XXXX From strong compared quarter, Lakeland was quarter. of profit standpoint, European China, a is of in net Asian was a sales with saw continuation partially as softer as ago. we year sales by a growth markets. segment last growth Gross what second percentage the fiscal a XX.X% saw American which This our Latin for particularly sales in U.S., offset and XX.X%

improvement as sales focus primarily by driven gross supported that deliberate in strategic costs. by lead products, in highlighted, efficiencies a already our resulted has times, Charlie margin transportation well decreases have been as reduced on As manufacturing

reported last in million operating of as year. profit the QX compared ’XX, quarter of Lakeland million to $X.X $X.X second in

margins As the up year. in second the X.X% a quarter, quarter were operating second last of result, from XX.X% in

mix operating higher $XXX,XXX increase Our as operating resulting year. last profit benefited This revenue previously from operating partially from our was offset discussed. improved shift compared to gross approximately of from expenses, and an margins in leverage product resulting by

year-over-year related cost and is and startup OpEx Eagle to increased fluctuations, and OpEx in were severance to and to approximately labor Currency one-time severance $XXX,XXX. increased amortization related increase. One-time the Eagle Argentinean start-up to yuan acquisition increase Peso, approximately and fluctuations, costs, related $XXX,XXX, depreciation OpEx currency primarily and related totaled attributable to the expenses to and Chinese totaled related costs DNA and approximately expenses $XXX,XXX. The

$X.XX was $X.X These reduction which income to Lakeland as share recorded quarter. year of and partially of basic earnout in of million in the related the prior loss per reduction This period. Eagle consideration to acquisition, $X.XX per or increases diluted basic offset $XXX,XXX accrual operating diluted share a expenses. net during by were a share the $XXX,XXX compares and net $X.XX for in or a the delivered

million million cash delivered Adjusted compared $XXX,XXX. QX flow quarter EBITDA during $X.X $X.X was second ‘XX. in ‘XX, Lakeland approximately in operating of quarter the to

sheet robust our explore Our with opportunities, balance flexibility investments as and organic acquisition growth significant capital us returning continue we to shareholders. provides to

our equivalents bank $XX cash from the ended facilities. credit cash the company and to has FY at cash balance debt available Lakeland quarter million, no The have $XX.X to ended the with year of ’XX continued compared end and of million. $XX.X million to approximately up quarter of

Capital three July XXXX $XXX,XXX. XXst were ended expenditures months for the

we of $X building expect estimate the our capital fiscal operations replace million previously to and expansion now Charlie as damage expenditures year, our For be down leased equipment as to previous from full in pause Monterey discussed. we to existing course approximately the million, of $X assess the normal the

materials We expect products to to of fiscal capital XXXX. slightly declined take end increase share our [$XXX,XXX] quarter-over-quarter The million inventory growth $XXX,XXX. operations. to the from from decreased our driven by (ph), we Inventories cash as at in of while material the Raw value higher approximately expenditures market quarter competitors. million goods finished inventory from increased inventories raw position $XX.X strategically strategic second is ourselves $XX.X flow to fund by by continue from in

having More is specifically times versus can to on in favorable materials these key to raw of more having much end competition attributed the our be lead markets our success and strategy. hand

remain as previously decrease to of the this accelerating While was goods in year minimal, reduction we the communicated. overall our quarter committed inventory finished the during inventory

to We on are price programs reductions. inventory these aggressively deviations pursuing marketing drive channels, excess additional sales and

this fiscal efforts We to second-half expect the these of accelerate in year.

up call to for like the With back to that to overview questions. the now operator open turn I’d over

Operator

this Sweeney At coming time, Gerry session. we [Operator question Your from Instructions] Roth will for Capital. Certainly. at question-and-answer a today conducting be is first

Gerry Sweeney

Thanks Good taking morning, Roger and Charlie. my call. for

Charlie Roberson

Jerry. Please,

Gerry Sweeney

in Or maybe But resources a momentum talked wovens. products start from along times or things a you're advantage. to shape that little this what you momentum at, are there. you giving and looking to I we fire off, of explanation? about this getting steady momentum sort can you Is more the But on and accelerate a or obviously keep bit even give want going, to degree you are in the standpoint? those start Can lead some lines? you value raw great terms the it of, and and state some good little and do products materials high bit you to can obviously, sales

Charlie Roberson

America, start North let number and not a good planning its saying people, what and channels. in has of this right? have core distribution market but Well, And specific markets happened manufacturer our a globally And me those job. and that are turnout disposable our from of true, by to is operations, own done is And exclusive in distributors it's -- differs a this sales got well. as just very gear, chemical

the raw the kind three long tent lead quarters pole of market. last time Difficulty] materials in that's in for availability, [Technical the of Over managing

they've an of fact, As a matter done job. excellent

times have lead our continue below even And that, the Our though is year some down. extended be things of of to number lead competition were lead for been lead large as coming times of to result will are are product now. that early in cases. now competitors a a becomes weapon. the a over taking that's about And time There nice reduction distributors it Lakeland exclusive other one times -- a competitors

long quality a we wouldn't you a product, break relationship is they as even before, if great that just was product which product. the As a have had it

in reason Now to do we foot the door. they and have that, have our

opportunities far planning As continue time, meetings our additional and times know never the that we delivered by to operations, sales the planning in they've right lead I've And that maintaining out are as cross-functional team market that there. anybody. have that the seen regular lead done I now committed to market. are salespeople is to in continuing that the to pursue replicate that

Eagle think expanding avenue be But, U.S. we've will for a what maintain main great very Internationally this well, to and will done, I we growth see the a replicating growth, continue with for it in opportunity us. that interesting, we

Roger Shannon

Gerry… Hey

Gerry Sweeney

ahead. On Eagle, sorry yes go

about that. Sorry

Roger Shannon

but also Yes, significant that early on talked briefly was a and behind opportunity identified within we've -- about the addressable see calls, we we really no strategic And fire market service, a that is market, that fragmented. and Eagle referenced the previous just that rationale this we've we have as that very acquisition. see

competitors major part small the on of still we a although fairly time. major market. There's are -- overall make up seeing addressable lead advantages the So the versus competitors

we're we to opportunity So execution increase rationale, on that. and to that pleased strategic see see the market our share really globally the was

NFPA as tremendous that do which European and it’s that to standard We example, acquired that to the the Eagle standard, we kind to and add our expect able taking we're of a just product put with hoods, certification that portfolio, channel, global is that continue an -- we've running world. qualification we're kind into and particulate in found within portfolio, Charlie mentioned, now. through, that of, the increasing our around sales And and products opportunity Eagle distribution gloves the

Charlie a kind that think pipeline I I and strategy. market. we acquisition So grow acquisition similar we're we identify where a opportunities like to mentioned, robust that -- looking believe of that have and And validates

Gerry Sweeney

ask Actually, acquisition Eagle I was what Yes. next the wanted to about.

call, the Eagle opportunity. the going there about, into talked I just think, And to last of on South upon how Product the vice an think could touch ramping I'm up you the Latin that's On versa. as America, sales or was I and some cross-selling really curious you some if that? America, of and

Charlie Roberson

And traction have of Eagle's once with own certification South Europe products as products. America, hoods, some should the those the next from forward. in opportunities products. really facilities far bringing we're We current our in should to months. of Eagle Those accelerate see but within the make some we in as the through that manufacturing being six XX We're offered channel. and in North in kind of moving already getting have Eagle America And also we to our results is that gloves still infancy

Gerry Sweeney

Got it.

So which the positive. is that's gloves, a mean, North come, to America still on hoods, yet I

Charlie Roberson

that's cross-selling, development of while As gear. another year, it's involvement not quick next generation designers in American the important I mentioned of but our the Eagles NFPA it and the call, part, a North

So on a That huge gear. perspective have going our gen we entirely us. to next for is synergy different are an

Roger Shannon

in sales we Eagle a Eagle example, American just Gerry, with the Hey sales had specific for and past trading our during Latin quarter, team a personnel products conference country.

was very received. that well So

Gerry Sweeney

that? it's distribution bit the you you more just And maybe actually SSQ then what And to global I'm you Eagle. the Could that looks question, would strategy. had And like? maybe final Obviously, touched suspect a upon or upon acquisitions, gear curious a geographic you expansion. pipeline footprint. it. acquisition as touch have product-driven little Got I over

Charlie Roberson

product our are We You are primary do their correct might more -- that that is focus. interest companies it have geographic. primary -- be

not fragmented than market plenty out the in range, that healthy [Indiscernible]. size pipeline, is We think, quantify, the Eagle are to there actually manufacturers range are I but there there market stratified have more there, size fire Eagle the a in a of opportunities particularly globally such they're

some has largest that it a share. of idea estimation our to market mean, how the after player so the you I in XX% is gives The globally fragmented that's is. one down only next five, market that

process. repeating that that is it So market before a is right that the Eagle

you do that? add Roger, to to want

Roger Shannon

the mentioned Gosh, Speakers] supportive the [Multiple on being that in to you have to right. that call, that's We, we Eagle you exactly EBITDA, like currently I build able and debt. know, And strategy. also so no contribution know, we in that's made saw of

Gerry Sweeney

Obviously, start give hood advantage stratified the much How and but China in that think market? of for and turnout gloves products, you fire I additional the out much maybe versus or you gear? if some fire talked about building the that does the Eagle, competitive advantage how you

Charlie Roberson

question, Good Gerry.

selection gear, EMEA, globally. is that ability instance, there's of in what benefits there features certification and certified go the that to deal issues tremendous both also European There of product of a that other but well, people two reach confusion, global gear end in. garment the only with two there's NFPA Currently, end are there's to the lot the both only explain companies but with. to Having in actually and certified is is of gear is other, are offering, users. service of North number for users of coming the use American One trying, the a offer lines and and a CE

making. necessarily understand it's trade-offs So they don't mixed are the people and

of as XX%. gears the The or XX% as differences pricing much in

number already support are trying it. has of don't it’s you of savings for. amount individual up, it, to within giving advantages. the of tremendous a the problem to are Lakeland the manufacturing for we're what is are We you a that and markets credibility, so to There a products global in know, the what people global The know, are competitive. from cost that you that, ability supply the looking they footprint base have us So have lot CE, makes do

Roger Shannon

and being in deliver smaller these to RFPs, able our and be talked getting it suite and size, know, would distributors. that as full to What customers you talked able just to of head kind position of this CE probably advantages this Charlie And about, medium expect ensemble. to toe, think seen, channels to see I about, due then lead times, strengthens you we've both with Yes. someone also add that intuitive I We well. to continue having full know, -- who's distribution we is to certainly the that products, NFPA to would additional favor because and

Gerry Sweeney

Got back I'll helpful. guys. in queue. you. jump I Super appreciate Thanks, it. Thanks.

Operator

today Management. question from [Operator Your Melas MKH at Instructions] is next for coming George

George Melas

morning, a on this and like -- OpEx seems looks one-time quarter Quick was quarter. Good of lot a the breakdown seems quite like had lot Congratulations, -- of leverage Roger. operating OpEx the interesting, really sort it there's question great expenses. there Charlie your leverage you increase was like and of because of and margin a nice

more see Of to seems feel do course, like you're maintaining with the OpEx? a well, money there try you it sort to that or Or as share? you like have in control over going Do but future? to, was reduction as continuing not year the to you of, you're spend expand

Roger Shannon

recall And was we the and platform having our see operating We've -- the a case. either significant the manage said, recently. to leverage. the able manage with George, I a like quarter are large in growth. company currency with fairly to or obviously of one-time we very do We think previous scaled past, risk. and the you is including be was be any we that in thank to operating you question, have It question. for currently amount measures But like leverage in the to well believe alluded this Great we you, conversations to OpEx related taking saw currency good

So that. it nice was very to see

And going on sharper focus add Charlie you've intently we're make we're focus cash efficiencies. items improvements heard and And and to to focused me OpEx additional company on say we'll to continue drive the sure that I'm the even and we're thing is I in OpEx on continue would an those put hopefully across other free reduction. and to flow, very and as that before, looking

George Melas

maybe something on and good tell the don't That's with where little issues you you I can little don't are the considering? hear. monetary options much bit happened, just us what great. that how Okay, but where to can if And a know I explain you know are, stand? a And sort of the you're you clients. say, you what

Charlie Roberson

very Yes. in George, this we're early process.

said, that are we can not a that quite frankly, still I because answer. we were ourselves investigating can our say operations to we're of future think best the about looking have it there's As an add are see lot much still our earnings questions we ability I on our meet was thing it, Suffice don't or to is, and forecast. we while to first impact That or and our delayed we pause, we concern.

that associated -- was believe we that we're business with anyway. we startup a handled. And that time There have

know we point, share. But right not And projections. just, to have it's But immediate we not now, you at know, So can this we're unfortunately, once engineering more. there's else waiting we'll we reports. some on an much those, our impact

George Melas

you. Thank [Indiscernible]

Charlie Roberson

Thank you, George.

Operator

the for of And end I will turn Charlie now over the to remarks. call session. reached question-and-answer the closing have We

Charlie Roberson

look I'd vision, for I commitment us all thank ahead today's year. Have on hard our Thank to drive fiscal and to on you We have forward which for employees the great results work to -- help would opportunity our thank building like you, far large and the second quarter. call. also joining execute strategic their of so and Holly, capturing us momentum we like achieved in day. the strong a on this

Operator

may for you you time. your lines disconnect and this Thank conference today's at your concludes participation. This

Lakeland Industries (LAKE) 7 Sep 232024 Q2 Earnings call transcript