Q4 2020 Earnings Call
Thank you for holding ladies and gentlemen, you were currently in line for Lakeland Industries fourth quarter Conference call. At this time Youre stuck out there were additional participants we won't get started momentarily. We think you for your patience and I see you. Please continue to hold.
[music].
We're holding ladies and gentlemen, your line for the Lakeland Industries Conference call. At this time, we are still gathering dust all participants we thank you for your patience and ask that you. Please continue to hold.
[music].
Thank you for holding ladies and gentlemen, your online for the Lakeland Industries Conference call. At this time, we are still gathering additional participants we thank you for your patience. We ask that you. Please continue to hold.
[music].
Good day, ladies and gentlemen, we appreciate your patience welcome to the Lakeland industries fourth quarter fiscal 2020 financial results Conference call.
Lines have been placed on listen only mode and the four will be open for your questions and comments following the presentation.
This time it as my pleasure to turn the floor, but your host for today Mr. Charles Roberson, Sir the floor is yours.
Okay, Okay, I'd like to begin with.
Our safe Harbor statement.
Before we begin parties are reminded that statements made during this call can contain forward looking information within the meaning of the Securities Act of 1933, and the Securities Act of 1934.
Forward looking statements.
All statements other than statements of historical facts, which reflect management's expectations regarding future events and operating performance and speak only as of today April 15th 2020.
Forward looking statements are based on current assumptions and analysis made by the company in light of its experience and its perception of historical trends current conditions, including business affairs pertaining to the cobot 19 pandemic.
Expected future developments and other factors it believes are appropriate under circumstances.
These statements are subject to a number of assumptions risks and uncertainties and factored in the company's filings with the Securities and Exchange Commission General economic and business conditions. The business opportunities that may be presented to you and pursued by the company changes in law or regulations and other factors.
Many of which are beyond the control the company.
Listeners are cautioned that these statements are not guarantees of future performance and the actual results or developments may differ materially from those projected in any forward looking statements.
All subsequent forward looking statements attributable to the company or persons acting on his behalf are expressly qualified in their entirety by these cautionary statements.
[laughter] with that I'll move on to our comments.
Good afternoon I'd like.
Good afternoon, I'd like to thank you for joining our fiscal 2024th quarter and full year financial results call.
I'm joined here today by the Lakelands, Chief Financial Officer Allen dealer.
As many of our followers no I was appointed President and Chief Executive Officer of Lakeland Industries on February the first of this year.
This is the first quarterly earnings call in nearly two decades that is not being led by Chris right.
It is an honor to succeed Chris as our CEO he held the title.
Through the end of our fiscal year 2020, and it is fitting that it was an historic year marked by the highest levels of revenue in the company's history for the fourth quarter and full year alike.
Under Chris his leadership.
We've made incredible progress in replacing Dupont and tie back related sales with our own products and taking considerable market share away from them and others, while expanding and transforming the company to become a major player in the global personal protective equipment, where P.P.E. market.
As a founding investor in Lakeland and a member of its leadership team for more than 30 years. We're fortunate to continue to drive forward with Chris as our executive Chairman as of February the first.
I'm fortunate to have worked alongside him for the past 16 years, most recently as Chief operating officer before being appointed CEO and I share his vision for growth for like want.
So with a focus on strengthening our management team and introducing new perspectives into like one.
We were pleased to add Allen Dillard as our Chief financial officer in the middle of fiscal 2020.
This team has made considerable operational and financial progress this year.
And we continue to work very hard to address Oregon or organic growth initiatives as well as our response to the cobot 19 pandemic.
[noise] Lakelands leadership team is bolstered by a deep bench of talent globally, particularly within our senior and Middle management ranks.
Our managers coordinate in direct the efforts of approximately 2400 employees worldwide.
The differentiating term here is employees since our key customers rely work key competitors relied predominantly on outsourcing manufacturing.
Owning or manufacturing facilities, managing our own supplier relationships and having our employee our own employees, it's a significant competitive strength.
In the aggregate it equates to manufacturing resilience.
Our employees have risen to the challenges presented by Cobot night team.
We've been able to add production capacity.
Move production between facilities work with our supply chain partners to assure timely delivery of raw materials and distribute garments from our various manufacturing and warehousing facilities around the world as demand and market conditions necessitate.
In so doing we remain focused on supporting our day to day customers in responsibly addressing cobot 19 related demand.
We are confident in our ability to build on the success achieved in fiscal 2020 to navigate the challenges and opportunities presented by Cobot 19.
However, before we can service that demand our first duty is to ensure the safety of our team globally.
We're pleased to report thus far that our workforce is healthy and continues to abide by all relevant safety guidelines.
I'd like to congratulate our employees, who have risen to the occasion to keep our work places in their communities and family say, while contributing to our efforts to increase production.
[noise] Lakelands manufacturing facilities in China in Vietnam, and India produce disposable protective garments and chemical suits, including our popular line of sealed seam garments.
These types of garments afford the where maximum protection from infectious agents and are commonly requested during viral outbreaks such as Corona virus.
The company is experiencing heightened demand for these products and last month, we announced that likes been was accelerating its previously planned expansion of our sealed seam manufacturing capacity by 30%.
In the last two years Lakeland is invested approximately $6 million to expand its global manufacturing footprint into Vietnam in India.
Update in AD I T systems improve efficiencies and increase margins.
These investments have proven not only timely but effective is evident as evidenced by our current results.
Our fourth quarter saw a continuation of the strong demand we experienced in the third quarter in the Americas.
And an improvement in our sales in China to the extent that we were only pace for another quarter with revenue in excess of $27 million.
And record annual revenue of about 107 million.
And this is before the addition of late fourth quarter demand of approximately $1 million for the Corona virus outbreak in China.
In our fourth quarter results, we reported not only an increase in revenues to a record level, but improvements in our gross and operating margins as well as all major financial performance metrics, including further improvements to our balance sheet.
Alan will address many of these in his remarks.
We have ample liquidity to advance our ongoing business initiatives, while eating in the exit agent circumstances relating to the Corona virus outbreak by moving our previously planned capacity expansion forward by approximately nine months from the first quarter fiscal year 20.
To to mid April and May of this year.
The increase in our seem ceiling capacity allows us to meet our immediate.
Corona virus related demand combined with our regular industrial demand.
And have increased capacity required to continue revenue growth when the Corona virus demand subsides.
Our manufacturing approach even through times of emergency has always been to place a priority on satisfying the needs of our traditional customers.
Our organic growth has been robust for a few quarters now.
Cobot 19 demand so significant as it is remains incremental and requires management of our growth. So that we do not trade one customers protection for another customers protection.
It is our mission to continue to grow organically in excess of the overall market, which is estimated at approximately 7% worldwide.
We've exceeded this growth rate in both our fiscal 2023rd and fourth quarters, even without estimated cobot 19 related sales.
Since late January 2020.
We have fielded orders in connection with what we believe is demand arising from the Corona virus outbreak.
Since the large majority of our orders come in through our globally diversified customer base of distributors, who then resell the garments.
It's difficult for us to ascertain whether the products are being purchased for stocking purposes in anticipation of future orders were from for immediate use by end users.
For this reason, we're not disclosing specifics on the orders being received prior to our quarterly results report as some of these orders are likely being held in inventory by distributors and end users for future use. This is often the case during crisis situations.
But the cobot 19 pandemic is having an unprecedented impact on most businesses and the overall global economy.
In China.
Like when personnel returned to work for days prior to the end of their scheduled Chinese new year holiday in order to meet the demand for protective garments in hot.
Since returning to work in China, our facility has been running at full capacity for 12 hours a day on the come on all Corona virus related lines.
Our first shipments for Corona virus.
[noise] for Corona virus related orders took place in the last two weeks of our fiscal fourth quarter and on February the 14th 2020.
We increased our hours of operation and our Vietnam in India plants, which were previously curtailed in order to draw down inventories.
From approximately 40 to 45 hours per week to 12 hours per day seven days per week.
In aggregate.
We estimate the schedule changes amount to a nearly 50% increase in capacity above our curtailment schedule at about 20% above our normal operating schedule for products with cobot 19 application.
The additional seem ceiling equipment once installed will further increase this capacity in Vietnam.
Lakeland was well positioned for an emergency response at the onset of the Corona virus.
We have leveraged our inventory position previous investments in ERP planning and logistics tools and flexible manufacturing platform with our considerable experience in other emergency events to formulate a cobot 19 response plan that will still sustain our strategic growth.
Plans, so that we emerge from this event in a position to continue our healthy organic growth rate.
To this end like bins priority through these kinds of events is to remain focused on satisfying the needs of our traditional customers and to service emergency demand to the extent that we have excess capacity or to the extent that we can quickly increased capacity.
[noise] this focus on our traditional markets allows us to develop additive new customer relationships and increased market penetration that serves as a hedge against economic downturns or excess inventories within distribution channels.
Our plan is working.
Our current order backlogs have filled our manufacturing capacity through July and August for some products.
This is not only ended or manufacturing curtailment.
But now has us running at maximum capacity with inventories reduced to more normal operational levels as we seek to balance cobot 19 emergency need with the additional demand that is not corona virus driven within some of our vertical markets.
We have orders contracted for delivery beyond August the first of 2020 and Additionally, we have significant new accounts that are in development for the second half of the year.
Forward bookings and potential new accounts combined with our many market drivers market diversification.
And resilient manufacturing capability position us well for the second half of fiscal.
Yeah, the fiscal year F Watt 21.
But these are extraordinary times and we must be prepared for any eventuality. This includes the possibility of temporary closure of our customers or suppliers manufacturing facilities.
And the uncertainty of the oil sector, a market from which we derive approximately 20% of our sales.
Perhaps the preliminary oil production reduction agreement between OPEC and its allies announced last week will boost this industry.
Our focus will remain on organic growth initiatives.
Been Tory management, and the generation as well as preservation of cash so that we may invest accordingly to build upon the terrific year that we had in fiscal 2020.
That concludes my remarks, I will now pass the call to Alan to provide a more thorough review of the Companys financial results.
Thank you Charlie or the following addresses my review of the fiscal 2024th quarter and full year ended January 31st 2020.
Net sales were 28.2 million for the three months ended January 31st 2020, as compared to 25 million for the three months ended January 30, Onest 2019 for the third consecutive quarter, our revenues exceeded 27 million.
Corona virus related demand as best we can tail added approximately $1 million to our fiscal 2024th quarter sales, which were recorded in the final two weeks of that period.
The majority of these orders were fulfilled with products already in inventory.
Without the incremented Cobot 19 demand fourth quarter revenue would still have reached a record level for the period with an increase of 9% from the prior year a growth rate that as well in excess or what we believed to be the industry growth right.
Net sales increased a 107.8 million for the fiscal year ended January 31st 2020.
9% as compared to $99 million for prior year sales in the second and fourth quarter quarters reached the highest levels and the company's history for the respective periods.
On a consolidated basis for the year domestic sales were $55.9 million or 52% of total revenues and international sales were 51.9 million or 48% of total revenues. This compares with domestic revenues of $49.9 million.
Or 50% or the total and international sales of 41 point $49.1 million or 50% of the total in fiscal 2019.
In fiscal 2020 versus 29 team sales in the U.S. increase by approximately $6 million or 12%.
While international sales increased $2.8 million or 5.7%.
Among our major international operations sales in the UK were down less than 1% at nearly $9.4 million due to concerns related to Brexit.
Sales in Mexico were down $700000 or 20% due primarily to the loss of a large customer.
Sales in Asia were.
Just under 1% at nearly $18.2 million where China.
As our largest market and continues to experience limited economic growth.
Sales in Canada were at $1.1 million or 12.6% driven by demand for fire products or turnout gear.
And finally sales in Latin America increased $1.7 million or 25.3% as we expanded our customer base in Chile and Uruguay.
As previously disclosed.
In the third quarter of fiscal 2020, we initiated a curtailment of production and staff in Vietnam. After having built up sufficient inventories that we believed would be needed given the disruption we anticipated with the ERP system implementation.
They can turn up the curtailment eight into our gross margins during the middle of the fiscal year. The ERP system has now been and used for three quarters and is yielding most of the intended improvements to enable enhanced efficiencies and productivity as nearly half of our total revenues are processed using these capabilities.
That said, we did have a material weakness in our control.
Over financial reporting pertaining to inventory valuation.
That has been reported in accordance with FCC reporting guidelines and have identified and implemented a specific review and remediation program. We will provide updates on that remediation as we progress aside from this issue the ERP system higher revenue levels and margin improvement strategies, including.
No price increase for select products during the year have led to higher gross margins.
Tariff increases on products made in China and sold in the U.S. had minimal impact on our financial results. Since we have been able to shift most of the manufacturer these products to our Vietnam, and Mexico plant or instituted price increases to cover the differential.
Gross profit of $10.6 million for fiscal 2024th quarter increased from $6.9 million for the same period of the prior year.
Gross profit as a percentage of net sales was 37.7% for fiscal 2024th quarter, an increase of 10 percentage points compared to the same period in 2019 and was driven by volume price increases and fully reserved stock that we were able to sale into that.
Over 19 demand.
For fiscal 2020 gross profit was $37.9 million, an increase of $4 million or 11.8% from 33.9 million in 2019 as a percentage of net sales in fiscal 2020 gross margin was 35.2% up from 34.
0.2% in 2019.
Operating expenses increased in the quarter in full year is our business substantially group, but decreased as a percentage of revenue.
Reflection of our vigorous attention to cost management efforts operating expenses increased 5.5% to 8.9 million for the three months ended January 31st 2020 from 8.4 million for the three months ended January 31st 2019 operating expenses as a percentage of.
Net sales was 31.6% for the three months ended January 30, Onest 2020, as compared to 33.7% for the three months ended January 31st 2019.
The increase in operating expenses, primarily relates to higher shipping.
Currency adjustments and commission and compensation pertaining to the higher sales volumes, partially offset by reduced DNA expenses.
Primarily equity compensation and legal fees operating expenses of $32 million in fiscal 2020 increased 1.9 million or 5.6% from 30.6 million in 2019, while remaining at approximately 30% and 31% of sale.
Respectively.
Lakeland reported operating profit of $1.7 million in Q4, 2020 up from a loss of $1.5 million in the prior period operating margins were 6.1% for Q4, 2020 and were a negative 6% for the prior year API.
Operating income in fiscal 2000, $25.9 million increased $2.3 million or 65.4% from $3.6 million in 2000 2019.
All major operating regions, except Mexico were profitable or breakeven in fiscal 2020.
On the higher pre tax income overall taxes increased income tax expense consists of federal state and foreign income taxes.
Income tax expense was.
$500000 for Q4, 2020, and $2.5 billion for the full year of fiscal 2020 as compared to $400000.
In Q4, 2019, and $2 million for all of fiscal 2019.
Fiscal 2020 income tax expense included a noncash charge of $1 million associated with the guilty component of the tax Act of 2017. This is more completely discussed in our SEC filings.
As a reminder, we have substantial tax shields pertaining to our U.S. and corporate income tax. However, we are subject to taxation on profits in certain of our foreign subsidiaries.
Well as the new guilty tax which has been impacting us this fiscal year.
Lakelands net operating loss was approximately 15.9 million at January 31st 2020 down from $20.6 million at the beginning of the fiscal year.
Fourth quarter 2020, net income was $1.2 million or 15 cents per basic and diluted share compared to a net loss of one point ninemillion.
Or.
24 cents per basic share in the prior year.
Net income for fiscal 2020 was $3.3 million or 41 cents per basic and diluted share.
Which included the noncash guilty tax expense compared to net income in fiscal 2019 of $1.5 million or 18 cents per basic and diluted share.
The improved results in fiscal 2000, Tony.
Reflects higher sales and gross margin expense management and operating efficiencies due impart to the ERP system in factory utilization.
The company had 8.005 million 927 basic shares outstanding.
At January 30, Onest 2020.
37953 shares were repurchased in the fourth quarter as part of the company's two and a half million dollar stock stock buyback program that was approved July of 2016.
Approximately $500000 was spent to repurchase shares in fiscal 2020.
To date 1.7 million has been spent to repurchase shares with just over 800000 remaining available under the buyback program.
At January 31st 2020, Lakeland had cash and cash equivalents of 14.
Point $6 million up from $9.5 million at the end of fiscal third quarter, and an increase of $1.8 million or 14%.
From 12.8 million at the beginning of the fiscal year.
Inventories were increased by $1.9 million year over year.
But were down over $3 million.
Q3, as we continue to focus on improving cash conversion, we actually benefited from this increase in inventories as we began to respond to cope with 19 demand in late Q4.
At the present time, our sales same finished goods inventories remain below normal stocking levels in all of our warehouses around the world and we are now quoting July deliveries for new orders in many cases.
We're servicing Corona virus orders only to the extent we have capacity beyond what is required.
To service, our traditional customers inorganic growth targets. We believe this process of holds our long term growth strategies supports our commitment to our customers and contributes to the cobot 19 response.
Accounts receivable at year end increased by nearly $1.2 million due to higher sales as dsos remain relatively steady at 60 days or less accounts payable increased by $1 million and shareholders equity increased by $1.9 million.
Total assets reported increased $4.7 million in the year from 90.
From $94.7 million to $99.4 million.
In part due the impact of the new lease accounting requirements.
Total debt outstanding at January 31st 2020.
Was $1.2 million down $100000 from 1.3 million at the end of fiscal 2019.
The company has no borrowings outstanding on his 20 million dollar revolving credit facility. The company is currently negotiating a new revolving credit facility to provide for greater financial flexibility and reduced administration expense.
Working capital of $66.9 million, including cash at January 31, 2020 increased $1.8 million during the fiscal year.
Capital expenditures were approximately $300000 during the fourth quarter of fiscal 2020 down from $600000 and the prior year period for the year capital expenditures was $1 million down from $3.1 million in fiscal 2019.
Major investments remain in prior years as Charlie mentioned during his remarks, the majority of the spending in fiscal 2020 was allocated towards extending the global rollout of the ERP system and additional manufacturing capacity in Vietnam in India.
Most of which has been substantially completed.
Physical 21, Capex is budgeted at approximately $2 million.
Primarily for global ERP rollout and strategic capacity increases.
Adjusted free cash flow in fiscal 2020 was over $4 million, an increase of $3.8 million from $500000 in the prior year driven by increased profitability and the reduction in capital expenditures.
We have seen efficiencies come into play to enhance our results and we will continue to manage all areas of expenses as we invest in our growth the operating leverage in our business on higher sales volume has enabled us to drive better returns in 2020.
We believe there remain opportunities for topline growth and further performance improvements using the ERP system, along with other means for increasing margins and cash flow through fiscal 2021.
This is of course amid the current business conditions, which seem unpredictable given the economic impact globally from Kogan 19.
Challenges remain particularly with cobot 19.
She has been modifying the outlooks in the business decisions for many industries around the world.
In turn we have seen in the fourth quarter and upon entering into the first quarter that certain of our newer high margin products are not a priority with demand globally centered around disposable and chemical product lines.
In any case Lakeland isn't the best operating and financial condition. It has ever been and we are excited for what lies ahead in fiscal 2021.
That concludes my remarks, I'll turn the call back to the operator to open the call for questions.
Thank you Alan ladies and gentlemen, if you had a question or comment it is star one on your telephone keypad at this time using a speaker phone, we ask that while posing a question you pick up your handset to provide the best sound quality.
And ladies and gentlemen, if for any questions or comments. Please press star one on your telephone keypad at this time.
We'll go first to Alex Fuhrman at Craig Hallum Capital Group.
Great. Thank you very much for taking my question and congratulations on a really strong year and everyone in there in their new roles here heading into 2020.
I wanted to ask about the core business outside of Corona virus, certainly seen like the.
Outside of any sort of emergency demand very strong quarter.
For for the business can you talk a little bit about where where that's coming from.
Typically are there any industry groups that have really been contributing towards.
Towards that growth that you've been seeing the last couple quarters.
Just curious your outlook for for the business your outside of any emergency demand.
<unk>.
Alex.
Yes, it's hard for us to distinguish that a lot of our sales have been made through our normal distribution channels. One area that is cobot 19 related it is likely to continue even perhaps longer than cobot 19, as we have seen an up tick in institutional clean.
King services.
That are using our products.
So we've had some nice.
Orders.
Come in from that direction.
[music].
Yes, and otherwise.
Our chemical sales our fire sales.
Yes. It does does obviously are not covered 19 related and we are trying part of our growth strategy is focusing on those higher margin product lines into the second half of the year.
Okay. That's really helpful. Thanks, and then just thinking about the different geographies, where where are your active.
I know you have a lot of your of your resources.
For sales and marketing geared towards emerging market in can you talk about the growth that you've been seeing.
In emerging markets and what your outlook would be there for the next couple of years and what you're doing to go after those opportunities.
We're currently reworking our sales strategy in foreign markets we've run.
We've made some changes in the North American market space that we believe will improve performance and other developed markets around the world I mean Europe.
We're already using these systems in China and Asia.
South America will be next for us rolling them out but.
We see.
India, the Middle East and Latin America, as the areas of highest growth as we move forward and.
And we are looking to support those with additional sales personnel and.
Looking to our ERP system to.
Give us better visibility or.
Modeling of their demand so that we can service those markets better.
Okay. Thanks, that's a that's really helpful. Appreciate those those answers and look forward that the catching up against them.
Alright out Alex Thank you.
Well move next to Jerry Sweeney at Roth capital.
Good afternoon, gentlemen, thanks for taking my call I appreciate it.
So obviously, one or two maybe touch upon the covert side of the business I.
I know it sounds like you're a little bit reluctant to go into details but.
[music].
If you could give even wallet creatively.
Maybe some view as to what.
Maybe some inbound calls orders talking to distributors are related to covert today versus maybe.
The quarter.
If you will be.
Yes.
Yeah Jerry.
You know calls certainly haven't dried up there's still people looking for product, but I think that.
The most interesting dynamic that's going with that is looking at the second half of the year.
There are a number of industries pharmaceuticals.
Medical.
That.
Have run into supply issues, not necessarily with our products, but mass.
Medicines and that kind of things that are looking.
To assure that they don't repeat this situation in the future.
To that end you know, we talked about booking business out into the second half a year and we have a number of people and this is unusual for us.
That are booking months in advance.
Willing to wait for the product because.
I can only assumed their demand their demand is not based on what they see as a business or an immediate use of it but it's for stockpiling and preparation.
And I'm not I'm not talking government stockpiling here I'm talking about individual companies.
Got it.
In the wrong.
Well.
Yeah.
Got it and then sort of <unk>. The next step as we discussed the path.
Yes, covert potentially giving you an opportunity to move in with new customers.
And I think even touched upon it slightly.
<unk> companies that may not have been able to be supplied by their normal or.
The previous suppliers et cetera. So.
Opens the door essentially have you seen any of that coming from.
Yes, we have we've been successful in doing that if you go back.
Jerry and look at the timeline for coated 19, developing and you look at where the world really well.
[music].
The World Health organization declared a pandemic if you look at where that is on the timeline and you consider where our products are manufactured in China and you look at Assailing time.
You got 45 days from the time you realize you have the.
The emergency before you can get the first products for instance into the U.S. or Europe. Those products are just now arriving.
Unless you airfreight it so.
[music].
Yes, the demand is just starting to be satiated.
Got it Okay and then.
I think on the last call you talked about.
ERP system given you.
Better visibility in logistics, even to merge with.
Some of the containers.
Penalties.
Yes.
Gross margin and I think you threw out maybe 200 basis points to potential improvement and obviously gross margins up this quarter was that part of that.
Yeah ERP system.
Specific but.
How do we look at that.
Okay.
Jerry if you don't mind I'll pass that the Allen he is the accounted on all things margin related.
Yeah, Hey, Jerry that was that was a contributing factor to our margin improvement.
As we had planned but there were there were a number of factors that we experienced and particularly in the quarter.
On product mix.
Pricing.
Our ability to.
We use the system to help us manufacturer.
Through our manufacturing allocations, which assisted and improving margins and then we were able to utilize.
Existing stock on hand, so yeah. There are a combination of factors that really drove our margin improvement, we think that ERP and some of the pricing and product mix are things that will continue to to stick and help us continue to drive that increase.
Or sustain that increase as we move forward.
But it was it was a combination of all those factors, it's hard to specifically quantify exactly how much the ERP drove an improvement, but it's certainly gave us a much more aggressive approach to the way we met we managed our manufacturing allocations.
Got it if I can add to that if I can add to that it's only installed and half of our business at this point.
So yeah, we have.
A lot of low hanging fruit elsewhere within the company to go get with this.
Got it.
But maybe to summarize.
On the margin front, it was sort of ERP price, which are I don't want to say permanent but more are stickier and then probably some of the.
Uh huh.
A little bit more transitory.
The margin.
From a high level.
Fairways.
Some of that's a very yep, that's exactly right very fair okay.
And then obviously I think the RP or the second half of the rollout is that that's more international first half as more.
North America.
Yeah were yeah. We're we're we're.
Essentially fully installed.
In the U.S., which do you know to Charlie's point is approximately half of the business throughput, we're going to initiate a the first stages of our international rollout in the second half of this year.
I've got a solid roadmap for doing that.
And our goal is to progressively reduce the number of other systems that we have to used to manage our business too you know from you can imagine with with seven or eight international markets to drive all of those are the single system will you know substantially improve.
Through our management capability and our manufacturing allocation efficiencies.
I appreciate it.
My question and congratulations on a.
Okay.
Okay. Thank you Gerry.
[noise] I get a star one if you had a question we'll go next to Andrew Pikett am valuation.
Hi.
Good day, everybody My name's Andrew.
I'd like to say this very impressive company.
Really looks looks really great.
So.
This is my first time I'm one of your conference calls so there might be some things that you discussed in previous calls that I don't.
I'm not privy to so.
My apologies if I if the question comes across as something that might be well bid known to more more not to somebody the other people in this call.
I'm trying to get a better understanding.
The what be what's factories look like.
From the inside and I'm trying to understand.
Do you have a sort of.
Textile mills, where where you're producing clock or is it Jeff you just cutting Clos that you've taken from others is it mostly manual assembly on benches with people working or is it heavy machinery.
I know where were light industrial we're not we're not a textile mill.
We are in cut and sew operations assembling garments in various countries around the world.
The much the raw materials that that we use our in many Kate well our of our own design, but they are manufactured to our specifications by a number of different.
Textile companies.
In the U.S. Europe.
China, India various places around the world of one of the things that we.
Pride ourselves and especially where our core products are concerned is the development and qualification of multiple suppliers.
For pride.
And that's one of the that's one reasons we won't.
Okay.
No sorry go ahead.
Oh, that's one of the reasons, we won't manufacture our own fabrics.
We we become too dependent.
On suppliers of either.
Well Apollo and there's far fewer of those going there or have.
It's been been polypropylene or Phil.
Right.
Okay.
So when there was 6 million of copper expense over the past two years, we're focused on Vietnam, India, I T systems, which I believe to be the ERP systems.
I understand that light manufacturing must recover so is it correct that Vietnam in India that was just an expansion of the plants that that you extended it or.
Hi, Good news cabinets.
No those were new plants, new plant installs.
No artists me locations.
Hi, India was an existing location, but it was a glove plant, we refreshed it it and turned it into a cut and sew operation and Vietnam was a ground up.
Operation.
Greenfield fantastic.
Awesome and.
Sorry.
Flipping pages here I believe you said a 2 million.
Coming up in 2021, if I understood correctly is that going to be ERP or are you building out more plants.
There will be.
A part of that will be the international expansion of ERP.
Part of it will be a expansion of capacity and existing facilities and a part of it will be normal maintenance capital just to replace old worn machines and other plant and equipment.
Okay. Thank you and just one more before a pickup all my time here pick up everybody's time, my apologies everybody for that.
My last question is I'm trying to understand your your competitive strategy versus I think there's some pretty big players in this market.
And are you going for the speed and customization angle against the big players or are you going for the produce more cheaply, which.
I can't see how about so what's the strategy against the big competitors, how do you beat them at their game.
I.
Our key against the the big players in the market the Dupont the Kimberly Clark's the ancillary well Dupont Kimberly Clark is we own our manufacturing they use contract manufacturers. They typically work on a three month rolling forecast the quickest they can turn up the knob in the case of an emergency is.
30 days and that.
That result is 30 days beyond that 30 days.
Right, Okay, so on owning our own product.
Yeah.
We're in China were in Vietnam, We run into a trade war, we shift product from China to Vietnam, No duty problem solved right.
Yeah, we have owning our own plant only the other part of using contractors is you don't necessarily control the role good supply.
So we control who are vendors are and we have those relationships not our suppliers.
Right Okay.
Okay. So you can you can react faster.
And you've got better control over the quality for example.
Correct and we also so an extremely wide range of products compared to our competitors disposable in chemical we compete against Dupont Kimberly Clark. We go up you know in turnout gear, we go up against him as say in globe Yeah.
Fire decks, we compete in electric arc flash clothing against.
They're very few people is so is broader range of P.P. as we do.
So in fact, I can't think of anyone.
Okay.
Well I'd like to thank you very much for entertaining my questions and yeah. Good.
Much wishing much success, becoming year and hope everybody says healthy.
Well thank you Sir.
And that's all the time, we have her questions today I'll turn the conference back to management for any additional are closing comments.
Thank you very much we appreciate your participation on Lakelands fiscal 2024th quarter and year end financial results Conference call.
As we look ahead to fiscal 2021.
We continue to be poised for growth in sales market share attainment and margin expansion, which we believe will deliver value for our shareholders.
Thank you again for joining us on todays conference call.
Good bye.
Ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect at this time and have a great day.
[music].