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Lakeland Industries Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: June 8, 2011 04:42PM
Lakeland Industries Inc. (LAKE) filed Quarterly Report for the period ended 2011-04-30.
Highlight of Business Operations:
Cash increased by $0.1 million as borrowings under the revolving credit facility increased by $4.6 million at April 30, 2011. Accounts receivable increased by $1.9 million as sales for the three months ended April 30, 2011, increased by 3% from the three months ended January 31, 2011. Inventory increased by $4.3 million, including a decrease in intercompany profit elimination of $0.3 million or $0.06 per share. $2.3 million of this increase was in Brazil, of which $0.5 million resulted from exchange rate differences and $1.8 million resulted from increased raw material orders in anticipation of larger orders later in the year. Other assets decreased by $1.4 million, mainly due to VAT and other taxes refundable in Europe and China and the use of prepaid VAT tax credits resulting from last year s payment to the amnesty program in Brazil.
At April 30, 2011, the Company had an outstanding loan balance of $16.1 million under its facility with TD Bank, N.A. compared with $11.5 million at January 2011. Total stockholders equity increased $2.5 million principally due to the net income for the period of $1.2 million and the changes in foreign exchange translations in other comprehensive income of $1.4 million.
Net Sales. Net sales increased $0.4 million, or 1.5% to $25.8 million for the three months ended April 30, 2011, from $25.4 million for the three months ended April 30, 2010. The net increase was due to an increase of $1.4 million in foreign sales, offset by a $0.9 million decrease in domestic sales. External sales from China were flat with the year ago period. This is due in large part to a decline in direct container shipments to the US, resulting from high stock levels at larger customers in the US after the Gulf oil spill. Domestic sales in China and to the Asia Pacific Rim remain strong. UK sales increased by $0.6 million, or 48.7%. Chile sales increased by 13%. US domestic sales of disposables decreased by $1.9 million, but chemical suit sales increased by $0.1 million, wovens increased by $0.4 million, reflective sales increased by $0.1 million and glove sales increased by $0.1 million. Sales in Brazil increased by $1.1 million, an increase of 39.3%.
Net Income (Loss). Net income increased $2.5 million to an income of $1.2 million for the three months ended April 30, 2011, from a loss of $1.3 million for the three months ended April 30, 2010. The increase in net income primarily resulted from the $1.6 million charge for VAT tax expense in Brazil in the prior year and stronger volume and margins in the current year.
Cash Flows. As of April 30, 2011, we had cash and cash equivalents of $6.1 million and working capital of $68.2 million. Cash and cash equivalents increased $0.1 million, and working capital increased $6.0 million from January 31, 2011. Our primary sources of funds for conducting our business activities have been cash flow provided by operations and borrowings under our credit facilities described below. We require liquidity and working capital primarily to fund increases in inventories and accounts receivable associated with our net sales and, to a lesser extent, for capital expenditures.
Net cash used in operating activities of $3.6 million for the three months ended April 30, 2011, was due primarily to net income from operations of $1.2 million, offset by an increase in inventories of $4.1 million and an increase in accounts receivable of $1.9 million. Net cash used in investing activities of $0.6 million in the three months ended April 30, 2011, was due to purchases of property and equipment and expansion in Brazil.
Stocks Discussed: LAKE,