DECATUR, AL / ACCESSWIRE / March 13, 2020 / Lakeland Industries, Inc. (NASDAQ:LAKE) (the "Company" or "Lakeland"), a leading global manufacturer of protective clothing for industry, healthcare and to first responders on the federal, state and local levels, today addressed the impact on its operations from organic growth and demand relating to the CoVID-19 (or "coronavirus") pandemic. Lakeland's manufacturing facilities in China, Vietnam and India produce disposable personal protective equipment (PPE) apparel that are the most commonly requested type of garments for use amid viral outbreaks such as coronavirus and the Company is experiencing heightened demand for these products.
Charles D. Roberson, President and Chief Executive Officer of Lakeland Industries, said, "As a substantial and diversified manufacturer of PPE apparel, we are pleased to announce that Lakeland is accelerating previously planned expansion of our sealed seam manufacturing capacity by 30%. In the last two years, Lakeland has invested $6 million to expand its global manufacturing footprint into Vietnam and India, update and add IT systems, improve efficiencies, and increase margins. In our most recent quarterly financial results (Q3 FY20), we reported an increase in cash and a reduction of debt, with a net cash position of approximately $8 million, $77 million of working capital, and access to available borrowings under our $20 million of untapped credit facilities. We have ample liquidity to advance our ongoing organic business initiatives while aiding in the exigent circumstances relating the coronavirus outbreak by moving up our previously planned expansion by approximately 9 months to mid-April and May FY20.
"The increase in our seam sealing production capacity announced today will allow us to meet our immediate coronavirus related demand and have the increased capacity required to continue organic revenue growth when coronavirus demand subsides. Our manufacturing approach has always been to place a priority on satisfying the needs of our traditional customers. On this basis, Lakeland has been experiencing solid organic growth as evidenced by the 14% year-over-year improvement in sales which we reported in our most recent quarterly results. It is our mission to continue to grow organically in excess of the overall market which is estimated at approximately 7% annually worldwide.
"Since late January 2020, we have fielded orders in connection with what we believe is demand arising from the coronavirus outbreak. Since the large majority of our orders come in through our globally diversified customer base of distributors, who then resell the garments, it is difficult for us ascertain whether the products are being purchased for stocking purposes in anticipation of future orders, or for immediate need by end users. For this reason, we are not disclosing specifics on the orders being received, as some of these orders are likely being held in inventory by our distributors for future use.
"As the coronavirus has taken hold, we have worked to ensure, to the extent possible, the safety of our global workforce, many of whom are located in China. Fortunately, no member of our staff has been reported to have been infected by coronavirus, to date. Lakeland has complied with all government regulations and safeguards while implementing its own corporate policies. For Lakeland staff and our customers, our company motto continues to be "Protect Your People™", and this has never been more important than right now. In China, Lakeland personnel returned to work 4 days prior to the end of their scheduled Chinese New Year Holiday in order to meet the demand for protective garments in Wuhan. Since returning to work in China, our facility has been running at full capacity (12 hours/day), on all coronavirus related production lines. Our first shipments for coronavirus-related orders took place in the last 2 weeks of our fiscal fourth quarter ended January 31, 2020. Effective February 14, 2020, we increased our hours of operation in our Vietnam and India plants, which were previously curtailed in order to draw down inventories, from approximately 40-45 hours per week to 12 hours/day; 7 days/week. In aggregate, we estimate these schedule changes amount to a nearly 50% increase in capacity above our curtailment schedule and about 20% above our normal operating schedule. The additional seam sealing equipment will further increase this capacity in Vietnam.
"At the present time, our sealed seam, finished goods inventories have been drawn down below our normal stocking levels in all of our warehouses around the world and we are quoting June deliveries for new orders in many cases. We are servicing coronavirus orders only to the extent that we have capacity beyond what is required to service our traditional customers plus an additional percentage for our anticipated organic growth expectation and an allowance for developing new end users who will become permanent customers regardless of emergency situations. We believe this process upholds our long- term growth strategies and supports our commitment to our customers as their go-to source for a wide variety of high quality, competitively priced PPE products."
Lakeland's management notes that production capabilities and actual garments delivered may vary depending on workflow, product type, customer requirements and availability of raw materials. As a diversified manufacturer of PPE apparel, Lakeland maintains production facilities in six countries, on three continents, all manufacturing multiple product families. As a result, the Company has developed raw materials sources with multiple global partners around the world. At present, and for the foreseeable future, the Company does not anticipate any supply issues that will affect its ability to provide products required to service current demand. This situation remains fluid and is subject to change. Lakeland has seen some extended delivery dates and some raw materials price increases, from some vendors, but its strategy to multi-source raw materials has, so far, allowed the Company to mitigate the impact of these issues. Shipping and delivery issues present both challenges and opportunities. Rates for ocean shipping have been reduced, while air freight prices have increased; both options may be hampered by availability of ships/aircraft and personnel in coronavirus-impacted areas, although this has been moderately abating in China. The aforementioned and other factors not discussed herein may alter anticipated production, deliveries and financial results.
Lakeland is scheduled to report financial results for the fiscal fourth quarter ended January 31, 2020 on April 15, 2020 and will conduct a conference call on that day. Conference call details will be announced on or about March 30, 2020.
Lakeland offers multiple products which may be used in combatting coronavirus, including garments from its proprietary MicroMax® and ChemMax® lines. Recommended products include but are not limited to the following:
MicroMax NS is a line of general purpose protective clothing that can be used in work environments where hazardous or nonhazardous contaminants may be present. Very economical and lightweight, MicroMax NS features a high Moisture Vapor Transmission Rate (MVTR) for added wearer comfort. Liquid under pressure will not pass through MicroMax NS fabric, making it an ideal solution for power washing and wastewater treatment plants. This also allows MicroMax NS to provide the Blood and Viral protection that many other well-known brands do not. Additional information available: https://www.lakeland.com/uploads/data-sheets/US/Disposable/MicroMax-NS-DataSheet.pdf
MicroMAX TS products are made with MicroMAX NS fabric with stitched and sealed seams for a liquid tight seal. CE Type 4 protection with superior barrier against biological and infectious hazards. Certified to EN 14126 and passes all the required tests in the highest class. Additional information available: https://www.lakeland.com/uploads/data-sheets/Asia-Pacific/Disposable/Micromax-TS.pdf
ChemMax 1 is constructed with a unique polyethylene barrier film and a continuous filament polypropylene nonwoven fabric. The garment provides economical, lightweight protection against most industrial acid and base chemicals. Bloodborne pathogen and viral protection make it a cost-effective option for wastewater treatment facilities. ChemMax 1 also meets the requirements of EN-1149 for Electrostatic available with serged, bound and sealed seams for scalability. Additional information available: https://www.lakeland.com/uploads/data-sheets/US/Chemical/ChemMax1-4492-20200108-v1.pdf
About Lakeland Industries, Inc.:
We 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 the United States, China, the European Economic Community ("EEC"), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Uruguay and Southeast Asia.
For more information concerning Lakeland, please visit the Company online at www.lakeland.com.
Lakeland Industries, Inc.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Forward-looking statements involve risks, uncertainties and assumptions as described from time to time in Press Releases and Forms 8-K, registration statements, quarterly and annual reports and other reports and filings filed with the Securities and Exchange Commission or made by management. All statements, other than statements of historical facts, which address Lakeland's expectations of sources or uses for capital or which express the Company's expectation for the future with respect to financial performance or operating strategies can be identified as forward-looking statements. As a result, there can be no assurance that Lakeland's future results will not be materially different from those described herein as "believed," "projected," "planned," "intended," "anticipated," "estimated" or "expected," or other words which reflect the current view of the Company with respect to future events. We caution readers that these forward-looking statements speak only as of the date hereof. The Company hereby expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events conditions or circumstances on which such statement is based.
SOURCE: Lakeland Industries, Inc.
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