Shares of Lakeland Industries, Inc. (NASDAQ: LAKE) lost momentum on Thursday after it delivered weaker-than-expected results for the first quarter of Fiscal 2023 (ended April 30, 2022). Its earnings lagged the consensus estimate by 37.5%, while revenues missed the same by 0.1%.
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In the normal trading session on Thursday, shares of this manufacturer of protective gears decreased 1.2% to close at $18.11. Dismal results for the first quarter further weakened the sentiments, which resulted in a 9.4% fall in the share price in the extended trading session.
Financial Highlights
The company’s earnings in the quarter came in at $0.14 per share, below the consensus estimate of $0.24 per share. On a year-over-year basis, the bottom line was down 77%.
Revenues were $27.28 million in the quarter, down compared with the consensus estimate of $27.32 million. Also, the top line decreased 20% year-over-year, due to soft industrial demand, supply-chain issues, and loss of COVID-19-related business.
The cost of revenues decreased 16% year-over-year in the quarter, while gross profit was down 25.2% to $11.1 million. The gross margin declined 290 basis points to 40.5%. Operating expenses in the quarter increased 17.9% year-over-year.
Adjusted earnings before interest, taxes, depreciation and amortization in the quarter were $2.3 million, down 69.4% from the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Lakeland had cash and cash equivalents of $50.9 million, down 3.5% from the previous quarter. Its total liabilities were $17.8 million, up 13.7% from the end of Fiscal 2022 (ended January 2022).
In the quarter, the company generated $1.91 million from its operating activities, down 77% from the year-ago quarter. Spending on the purchase of property and equipment stood at $0.47 million, up 244.4% year-over-year. Also, cash of $0.41 million was used for repurchasing shares.
Exiting the quarter, the company was left to repurchase shares worth $5.4 million under its approved program.
Official Comments
Lakeland’s President and CEO, Charles D. Roberson, said, “As we look ahead, order quantities and frequency are increasing in the U.S. and Europe, indicating that overstocked inventory in these markets continues to diminish, setting the stage for growth going forward.”
Performance on TipRanks
On TipRanks, Lakeland has a Moderate Buy consensus rating. LAKE’s average price forecast of $30 suggests 65.65% upside from current levels. Over the past year, shares of Lakeland have declined 21.6%.
Meanwhile, bloggers are 80% Bullish on LAKE, compared to the sector average of 75%.
Conclusion
Despite top-line weakness in the first quarter because of diminishing demand related to the COVID-19 pandemic, Lakeland is showing healthy signs of growth in orders, especially from Europe and the U.S. Improving order and the company’s effective pricing as well as inventory management efforts are likely to be beneficial in the quarters ahead.
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