10-Q - LAKELAND INDUSTRIES INC (0000798081) (Filer)

Fri, Sep 6, 4:11 PM (119 days ago)

Lakeland Industries, Inc. reported significant changes in its financial performance for the second quarter ended July 31, 2024. Net sales increased by 16.3% year-over-year to $38.5 million, driven by acquisitions of LHD, Jolly, and Pacific, which contributed $9.6 million in sales. However, gross profit rose only 7.0% to $15.2 million, with a decline in gross profit margin from 42.9% to 39.6%, attributed to higher manufacturing costs and amortization from acquired inventory. Operating expenses surged 61.5% to $16.8 million, primarily due to acquisition-related costs and restructuring expenses, leading to an operating loss of $1.6 million compared to a profit of $3.7 million in the prior year. Consequently, net loss was $1.4 million, contrasting with a net income of $2.5 million in Q2 FY23. Cash flow from operations was negative at $4.1 million, driven by working capital increases, while investing activities consumed $24.4 million, primarily for acquisitions. Financing activities generated $27.0 million from borrowings, reflecting the company’s strategy to finance growth through acquisitions. Overall, while sales growth is promising, rising costs and integration challenges present uncertainties for future profitability.