Lakeland Industries Inc (LAKE) 2017 Q4 法說會逐字稿

Good afternoon, and welcome to Lakeland Fourth Quarter 2018 Financial Results Conference Call.

(Operator Instructions) 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 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, 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 viewers 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 changes in events, conditions or circumstances on which such statement is based. Please note that this event is being recorded.

I would now like to turn the conference over to Chris Ryan, CEO. Please go ahead.

Good afternoon to you all, and thank you for joining our fiscal 2018 fourth quarter and full year financial results conference call. We're going to provide opening statements on the status of operations and on our financial results. The call will then be opened up so that we may respond to your questions. Now on to my formal remarks.

Reflecting on our fiscal year 2018, Lakeland's overarching business mission was to increase our manufacturing capabilities and to meet growing customer demands. Based on the progress we have made toward fulfilling this mission, we stand today as a significantly strengthened leading and valued brand in the global workforce protection market.

At the end of our fiscal year 2017, I spoke about the traction we had begun to experience for the strategic initiatives taken to improve our global presence and competitiveness, while executing with operational effectiveness. Our financial results of fiscal 2018 demonstrate significant execution of our plans, as we have made considerable progress across the board.

Having served the company for nearly 32 years, I can say with complete confidence that we have never been in a better position. And as an insider, who beneficially owns 6% of the company's outstanding common stock and more from stock-based compensation, I'm quite pleased with the prospect for potential wealth creation for myself and all shareholders. In August, our share price reached valuations which were at a high-end of our historical range. We capitalized on that opportunity by issuing common stock to raise over $10 million, which solidified our ability to put in place a series of additional strategies to extend our brand globally, while creating an even more profitable enterprise.

More recently, talks of global trade negotiations possibly affecting China and NAFTA may have resulted in recent pressure on our share price. However, we have not experienced any impact on our sales and overall financial performance.

Fiscal 2018 was quite strong indeed, and the start of our fiscal 2019 has continued in similar fashion. Nevertheless, certain onetime nonrecurring charges matters may cloud the analysis of our performance in 2018, as we reported adjusted EBITDA and free cash flow figures that allow greater transparency of the improvements in our operations and cash flow.

Sales for the year were up by more than 11% as momentum in the fourth quarter led to a 24% growth in that period. Through the course of the year, we focused on expansion into new and existing territories, while all along benefiting from global industrial growth, a return of activity in the oil field service sector and favorable foreign currency trends. In fact, perhaps, more positively boding for our energy sector exposure, crude oil rose to a 3-year high last week on Middle East tensions, while rig counts continue to rise globally.

According to Baker Hughes, there were approximately 2,080 rigs in service on April 6, 2018, an increase of about 9% or 170 from the year earlier.

In the fourth quarter, we delivered our fourth consecutive quarter of revenue growth to achieve the highest level of fourth quarter sales in 3 years. Although the fourth quarter is seasonally our slowest period of the year, our fiscal 2018 fourth quarter revenue on an annualized basis surpasses the $100 million mark, the first time at this level since 2015.

We experienced solid sales growth in all of our major as well as emerging market operations. Our revenue growth strategies include the following: increase production capacity; new products targeted at underserved vertical markets; entry into and scaling up new geographic markets; hiring of additional sales people; Amazon distribution platform; and ERP and MIS systems deployment.

Increased production is needed as we are nearing the end of our available capacity within our current operating footprint. With the proceeds from the equity raise, we will be able to deploy capital to begin opening up manufacturing facilities in India and Vietnam. Once fully operational, these locations will provide us with lower cost production as compared with China and Mexico. This is an element of our forward-looking profitability enhancement initiatives that I will discuss in more detail on today's call. New products front underserved vertical markets include our FR apparels sold into the utility industry. We have secured marquee customers, and we believe a lot more headway can be made.

New geographic markets, entry into -- is integral to our growth strategy. Here, we are targeting emerging and undeveloped regions where there is limited competition. Within our more established market as well as for our newer operating regions, we have been aiding -- adding salespeople, 5 salespeople have been added within the past 12 months, also in some cases from resonate we see from experienced people at some of our larger competitors.

As I've outlined, we have been investing in our growth, much of which has not yet had an impact on our top line, but has already been realized on our expense line.

Operating expenses increased in the fourth quarter and full year. This included the hiring of new sales associates, developing new higher-margin products and rolling out our Amazon distribution platform in the U.S.

Distribution on the Amazon platform will be rolling out in Australia, Canada, U.K., in fiscal 2019. With the new production facilities in India and Vietnam, we've added personnel and intend to leverage these locations, as a regional presence to focus on local and international sales with accommodating trade regulations to reduce tariff, shipping and related costs.

While spending more, particularly in the fourth quarter, our operating expenses as a percent of revenues for all of fiscal 2018 remained essentially flat as compared with 2017.

Fiscal 2018 was a year of considerable progress which truly was a team effort, I'd like to acknowledge the dedication of our global workforce, our executive management and our Board of Directors who collectively have led us to this point. We have a talented and deep bench. I'd also like to express our appreciation for the support of our expanded shareholder base. As we look forward the year -- to the year-end ahead, we are very encouraged by our solid financial position and the growth prospects that are within reach, given our diversified business lines, our optimized supply chain and indications of continued global economic strength.

Lakeland Industries is increasingly the partner of choice in the global workforce protection market.

That concludes my remarks. I will now pass the call over to our CFO, Teri Hunt, to provide a more thorough review of the company's financial statements.

Thank you, Chris. The following addresses my review of the fourth quarter and fiscal 2018 ended January 31, 2018.

Net sales increased to $25.2 million for the 3 months ended January 31, '18, compared to $20.3 million for the 3 months ended January 31, '17, an increase of 24%. On a consolidated basis for the fourth quarter of '18, domestic sales were $12.3 million or 49% of total revenues and international sales were $12.9 million or 51% of the total, this compared with domestic sales of $11.3 million or 56% and international sales of $9 million or 44% in the same period of fiscal 2017. So we continue to be well diversified while growing in both segments.

Among the company's larger international operations, sales in China into the Asia Pacific Rim increased 54%, as compared to the prior year period. This growth is attributable to higher overall volume, which increased intercompany sales, increased industrial activity and the activity of several larger customers to begin to reflect depleted inventories and -- as the company worked through a large backlog.

Canada sales increased 58%, as that country continues to experience an oil and gas turnaround. U.K. sales increased by 31%, as new distributors placed stocking orders. Amid continuously improving economies within Latin America, sales increased by 27% from the prior year. Favorable foreign exchange currency translations for sales in China, Canada, Mexico, the U.K. and Chile, as reported in USD, also contributed to the company's consolidated revenue growth. For the full year, net sales increased $96 million compared to $86.2 million for the prior year, an increase of 11%.

On a consolidated basis, domestic sales were 53% and international sales were 47% of total revenues as compared to the prior year of 54% domestic and 46% international. Gross profit increased 27% (sic) [27.7%] to $9.9 million for the 3 months ended January 31, '18, from $7.8 million in the prior year. The fourth quarter's revenue and gross profit reached the highest level since FY '16, Q2, when we benefited greatly from higher margin sales relating to the Ebola crisis. Though there were no special circumstances impacting our sales or gross margins in fiscal '18, the gross margin was positively influenced by our revenue mix, which contained a greater concentration of higher-margin chemical suits and FR products, but was offset by higher labor cost in China.

Gross profit for fiscal '18 was $36.2 million, an increase of 14% from $31.6 million in 2017. Gross margin as a percent of net sales in fiscal '18 was 37.7%, up from 36.7% in 2017.

Operating expenses of $8.7 million in the fourth quarter increased $2.8 million from $5.9 million last year, and as compared with $6.4 million in the third quarter.

Operating expense as a percent of net sales was 34.8% in the fourth quarter, up from 29.1% in the prior year and 26.7% for the third quarter. These expenses include increases to freight and commission related to the sales volume increase in the quarter as well as the onetime noncash expense related to the write-down to the assets held for sale, and onetime significant increases to accounting and legal fees associated with additional work performed due to our change in filer status and the change to the U.S. tax code.

As in the second and third quarters of this year, we have committed to spending as part of the building out process of sales and marketing and related infrastructure for some of our faster growing international operations and have been adding manufacturing, warehousing and other support personnel for our expanded geographic reach.

Operating expenses of $27.7 million in fiscal '18 increased approximately 12% from $24.8 million in 2017, while remaining at approximately 29% of sales in both years. As explained in the quarter results, these expenses include increases to freight and commissions related to the sales volume increase in the year as well as the onetime noncash expense related to the write-down to the assets held for sale and onetime significant increase of accounting and legal fees, associated with additional work performed due to our change in filer status and the change to the U.S. tax code.

Operating income of $1.2 million for Q4 FY '18 compares to $1.9 million for the prior year and $2.7 million in Q3 FY '18, and includes the onetime charges previously defined. Operating income in fiscal '18 of $8.5 million benefited from sales growth, margin improvement and operating leverage throughout the year, with an increase of 24% from $6.8 million in 2017.

Net loss for the 3 months ended January 31, '18, was $4.9 million or $0.61 per share as compared to net income of $0.9 million or $0.13 per share in the same period of '17. Net loss for the fourth quarter of '18 includes onetime items in operating expenses and a noncash tax charge of $5.1 million as a result of the changes enacted in the year in the U.S. tax code.

On December 22, 2017, the United States passed the 2017 Tax Cuts and Jobs Act, or the Tax Act, effective January 1, 2018.

The Tax Act requires Lakeland to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring any U.S. deferred tax asset as well as reassessing the net realizability of deferred tax assets.

This resulted in a reduction of the company's net deferred tax asset to $7.6 million, with a corresponding income tax expense of $5.1 million in fiscal '18. Income tax expense for the fourth quarter of fiscal '18 was $6.1 million compared with $0.8 million in income tax expense for the prior year period.

Net income for fiscal '18 was $0.4 million or $0.06 per share compared to net income of $3.9 million or $0.54 per share in '17. EBITDA, a non-GAAP measure adjusted for the exclusion of the real estate write-down in stock-based compensation, was $2.2 million in FY '18 Q4 as compared to $2.4 million in FY '17 Q4. Adjusted EBITDA for all of fiscal '18 was $10.4 million, up from $9 million in fiscal '17. Lakeland's cash balance at the end of fiscal '18 increased by 52% to $15.8 million. This includes free cash flow generated during the year and the proceeds from the equity raise in third quarter. Partially offset by cash used for debt reduction and inventory ramping, total debt was reduced by 71% to $1.7 million at year-end.

Cash used for inventory was necessitated to address current demand and in anticipation of continued growth and resulting in increase of $7.4 million at January 31, '18, as compared to the prior year-end. The company with this increase should be able to cover seasonal demand when utilities perform their turnovers for spring maintenance.

On the balance sheet, cash and equivalents at the end of the fourth quarter of fiscal '18 increased to $15.8 million from $10.4 million at the beginning of the fiscal year. Cash and cash equivalents increased 52% from the beginning of the fiscal year, which included $10.1 million from the net proceeds of the common stock offering in the third quarter as well as cash flow from operations, partly offset by increased inventory at the end of the fourth quarter. Fiscal '18 working capital increased by $18.3 million to $66.1 million at January 31 '18, an improvement of 38% from the end of the prior fiscal year.

Free cash flow was $0.9 million in Q4 FY '18 and compared to $1.4 million in the prior year period. Adjusted free cash flow for the fourth quarter, a non-GAAP measure which is adjusted EBITDA less cash paid for foreign taxes and CapEx, was $1.6 million in the fourth quarters of both FY '17 and '18. Free cash flow for the year was $7.5 million, up 11.3% as compared to $6.8 million in fiscal '17.

Full year adjusted free cash flow was $8.3 million in fiscal '18 as compared to $6.9 million in fiscal '17. At January 31, '18, the balance of borrowings under our revolving credit facility stood at 0, down from $4.9 million at the beginning of the fiscal year.

Total debt outstanding at January 31, '18, was $1.7 million, down from $2.8 million in October 31, '17; $5.8 million at January 31, '17; and $13.4 million at January 31, '16.

The company incurred CapEx of approximately $0.3 million during the fourth quarter of fiscal '18. As in prior quarters, fourth quarter capital expenditures principally relate to the addition of equipment in China and for new manufacturing facilities in India and Vietnam.

Total capital expenditures for the fiscal year was $0.9 million. This under our budget of approximately $1.2 million, simply due to timing and as compared with $0.4 million in fiscal '17.

We expect CapEx for fiscal 2019 to be in the $2.0 million to $2.5 million range, which includes the cost for a phased, global rollout of a new Enterprise Resource Planning or ERP System. With this implementation, management will be in a position to increase efficiency by accelerating all core business processes with one business management solution.

We will gain visibility across the business with real-time information, assisting in management decision-making and supply-chain and inventory management.

That concludes my remarks. I will turn the call back to management for closing remarks -- oh excuse me, back for the Q&A session.

Yes, we will now open the floor to questions.

(Operator Instructions) The first question comes from Dave King with Roth Capital Partners.

I guess first off, congratulations on the nice sales growth and gross margin expansion. I guess my question is on the expenses in the quarter, just trying to get a sense of how much of that's onetime, obviously, there's the Brazil write-down and then it sounds like there were some outsized accounting and legal fees for the filing status and tax code changes. I guess, how much -- how significant were those charges? What's the number there? And then more importantly, how should we be thinking about the kind of SG&A run rate as we look out into the year ahead.

Yes. The onetime charges that are included in operating expenses include the write-down to the asset held for sale. Something that was not, obviously, anticipated but was required after impairment analysis was conducted by management. So that's about 5% that we won't see again.

In addition, the professional fees associated with our change in filer status at July 31, we wanted to accelerate our filer status. There was a significant amount of work that had to be done in conjunction with management and our legal and accountant that we won't see again. The same applies to the change in the U.S. tax code. This required a significant amount of outside work by our tax accountant for the remeasurement process. We won't see those types of items again and that makes up for maybe 7% or 8% of that expense that will not be occurring.

So 7% or 8% of the, call it, $8.8 million? Is that the -- what you're saying? Or 7% to 8%...

Yes, it was $8.7 million in the quarter.

Okay. So call it, let's say, that's $650,000 or so. So is it right then to be thinking about run rate expenses being kind of the low-$7 million quarterly range or was there anything else in there between cost for the new facilities that may not -- in terms of building those out initially things like that, that won't necessarily recur, because, I guess, the reason I'm asking the question is, expenses were up kind of -- I don't want to say like 1 point, if I back out that real estate, on the Brazil charge, expenses were up like $1.6 million over the prior quarter and up over $2 million over the prior year, and so I'm just trying to get a sense of what's all in that bucket so we can -- it's like a model...

Obviously, they are some expenses that are going to increase with volume, commissions are going to increase, freight's going to increase. As we add salespeople, we'll continue to add salespeople in FY '19. I do believe that we don't give guidance on -- I would anticipate our operating expenses to run closer to 25%, or 24% to 26% of sales. Plus 26% mark.

Okay. Okay, that helps. And then you may have said it, Chris, but can you just talk about where things stand with India? I mean you talked about it a little bit but give us a little bit more in terms of where India and Vietnam stand, and when you expect to have those fully up and running?

Well, Vietnam is up, and just up and running this week with about 250 employees. We'll probably have 300 by June. We'll probably make our first shipment in 2 to 3 weeks, but it will be -- it won't be to the full 600 in Vietnam until this time next year, and that they'll all be running at standard.

With India, we haven't made the jump yet, we want to see where Vietnam goes, but we are in a position to jump almost immediately in India. As I said, we've got sewing operations in India, and we continue to expand that pilot plan. But we are looking, in fact I'm due to go to India in 2 weeks, so that's when the decision will be made, and the decision will be basically to jump into a certain area and that area will be completely built-out within -- from a year today.

Okay. Okay, that helps. And then I guess lastly, for me, then I'll step back. The -- in terms of the cash, so call it just under $16 million now. Some of that was for inventory build. I guess, how do you see that balance kind of changing going forward? You have a fair amount of excess cash. How much would you expect to deploy on some of these various initiatives and/or further inventory build for kind of new product lines?

Yes, CapEx will be at about $2 million to $2.5 million, that will be India and Vietnam. Also this is sort of a heavy inventory time. Our sales are growing, as you can see, in the fourth quarter, so we built inventory for a number of reasons. Inventory is about $7 million ahead of where it was this time last year. But that's basically being built because this is a big turn time for most of the utilities in the U.S. We expect our sales to grow, and we're also basically having lots of inventory around so that if we have any problems whatsoever with MRP, we won't have delivery problems.

Absolutely, okay. Which seems prudent, so it sounds to me then that with only -- call it, let's say, using the high-end of the CapEx guidance, $2.5 million. You've already then built the inventory. It sounds like you don't expect to dip that much further into that cash balance, is that kind of a fair...

That's fair.

That's true. That cash balance will hold for now, inventory may come down by August, as we get through the high season in the United States and Canada.

Our next question is from Alex Fuhrman with Craig-Hallum Capital Group.

I wanted to ask about some of the investments that you are making here and get a little bit more color on what we should expect to see from those. And one I'm particularly interested is the investments you've made to your sales force over the last couple of years. Chris, it sounds like it's -- you've added about 5 people, I think you said, relative to last year. Can you give us a sense of where those people are being deployed? Or is it new geographies? Are they, perhaps, working on any particular product line or market segment?

Okay. They are new geographies internationally. In Europe, we've added a salesperson. In Australia, we've added a salesperson. In the United States, it's new product lines, where we've added another 3 salespeople. So that is the 5, it's 2 in geography, 1 in Europe, 1 in Australia and 3 new people in the United States.

Great, that's helpful, Chris. And then similarly with the investments you're making in Amazon, it sounds like that's a couple of quarters in a row we've heard about your growth there. Can you give us a sense of, here in the U.S., how quickly that business is ramped up and what you're expecting as you launch the Amazon platform in some new geographies?

Okay. Well we basically started with almost nothing in Amazon and over the last year, we've ramped up. We're running at about 400,000 now, and we expect that to grow as time goes on, what we're -- we're still experimenting with just the right products. I feel like it's -- the 3 bears' story was just right. It's finding just the right products that move, rather than others. So -- but we are growing according -- or at least with our projections on this. So we're not at all disappointed.

With minimal impact...

That's helpful. Sorry, Teri. I didn't mean to cut you off.

No, just -- the investment dollars have not been significant at this point. We're seeing exceedingly optimistic returns on what we're investing.

All right, that's helpful. And then lastly, just the development of higher-margin products. Can you give us a sense of when we should start to see those, those products in the assortment? And is it primarily new customers you're going after there or an upsell on some of your existing products. And then it sounds like the very strong gross margins you had here in the fourth quarter were driven at least, in part, by the mix of your business. Was there any of these newer, higher-margin product lines in the fourth quarter and just curious what we could expect those to -- how we could expect those to impact the gross margin going forward?

Well, they've really just begun. So you -- there is not too many in the fourth quarter. So what we do expect to see some real movement in the next 3 to 6 months. In these product lines, they have significantly higher gross margins than what we currently have. So you should be seeing that building over the next year. But you haven't seen too much in the fourth quarter but we're very, very close right now, in the first quarter, particularly in the second quarter, you're going to start seeing some real movement that we'll be able to comment on and -- really in a hard way.

Our next question is from Geoffrey Scott with Scott Asset Management.

A couple of real quick ones. The Amazon 400k, is that per year or per quarter?

That's per year, that's we're running at now. I mean...

Okay. The Brazilian asset, was that real estate that was impaired?

I'm sorry, can you repeat that?

The brilliant (sic) [Brazilian] asset that was subject to impairment, was that real estate?

Yes, that's a real estate holding.

It is raw land with a factory on it.

Okay. In the press release, I'm not reading something correctly. In the press release, under the fiscal 2018 fourth quarter financial results, the first paragraph talks about U.S. sales, domestic sales were $12.3 million compared to domestic sales of $11.3 million and then the first sentence of the next paragraph, sales in the U.S. increased $1.6 million. Where is the $0.6 million difference?

I'm sorry, I'm looking for what you're quoting from the press release. You said its net sales...

Its fiscal 2018 fourth quarter financial results underlined. And then in the first paragraph, it talks about domestic sales of $12.3 million compared to domestic sales of $11.3 million, which is a $1 million difference. And then the first sentence in the next paragraph, it says sales in the U.S. increased $1.6 million.

So there's a $1.0 million difference in the first paragraph and $1.6 million in the second. Am I reading something incorrectly?

Frankly, I'm not -- I believe there might be a typo that I'm not seeing. And what I'm looking at here, the fourth quarter sales in the segment data, it's where you would find absolutely what the results are, so if you will hold on one second, while I look this up.

Do you see what I'm looking at though?

No, I don't.

Okay. While Teri is doing that, Chris, in China, what were the sales to Chinese end users for the quarter?

Did we break that out? I don't think we generally do.

It is in the segment data in the K, geographically. Give me one minute, I'm getting there.

Okay, because we don't normally break out the difference between sales to distributers and sales to end-users.

Were sales to Chinese end users significantly up?

They were up, but the intercompany was up as well so for the year ended, external sales out of China were $17.1 million versus last year $14.8 million. In the U.S....

So what about Chinese end-user sales?

Well, we sell through distribution and end users and our only distinction is the difference between an intercompany sale and external sale. So in the U.S., the external sales, and I don't have this broken out by the quarter, but I can get this to you in just a few minutes, if you want to give me your e-mail. But the external sales in the U.S. for 2018 were $50.45 million versus 2017 a $46.54 million.

Yes, I'm just -- I'm going back again, I don't want to dwell on it too much. But I was going back to the press release and I just -- I don't understand how I'm reading incorrectly.

No, I'm looking at net sales, gross margins -- I don't see a segment about U.S. sales.

Do you see the paragraph that says fiscal 2018 fourth quarter financial results?

In recent developments?

No, in the press release. Fiscal 2018 fourth quarter financial results is underlined.

Oh, I'm so sorry. I was looking at the very front. I was looking at the very front. So sales in the U.S. increased $1.6 million or 14%. And you're comparing that to...

In the first paragraph, it has, domestic sales were $12.3 million, an increase from $11.3 million. So I just wondered if I'm reading it incorrectly. Let me give you...

The domestic sales were $12.3 million, with domestic sales of $11.3 million. Give me one minute, and I will try to understand what happened there, because what that should be...

Let me give you a call offline, and we'll try to straighten it out.

Yes, if you would, please, that would be great. Because I've got these files in front of me but I'm going to have to sort out what is clearly a typo of some sort, but I don't want to tell you which one is correct.

I'll give you a call offline.

Most certainly. Okay.

(Operator Instructions) We have a follow-up question from Dave King from Roth Capital Partners.

Just one on an earlier question in terms of gross margin. So Chris, the gross margin improvement you had in the quarter from -- that resulted from mix, is it fair then to assume that, that's chemical suits and things of that nature? And I guess more importantly, what I'm to figure out is, is that also driven by shipments for the oil patch and should we kind of be thinking that, that is a sustainable trend, at least, in the inter -- near to intermediate term?

Well, chemical suits can go up and down quarterly but into the oil patch, yes, those are some of the higher-margin products that is picking up. I can't predict what the price of oil is going to be, but it seems to be a trend that's going to stick here in $60 to $70. So my best guess is that margins will hold here because the oil business is going to hold here.

I have another follow-up question from Geoffrey Scott with Scott Asset Management.

Chris, follow up on the pharmaceutical side. How is that going? It had been delayed in implementation. Where do we stand on that?

We're making our first sales, albeit small, but we're making our first sales in that area. They said, it really is just beginning this quarter, which we haven't reported yet and should be picking up in the second quarter.

Is that going to be a U.S. domestic business or do you...

It will be -- initially, it'll be primarily a U.S. domestic business. We've hired salespeople from Aramark, but it will turn into a global business. And the beauty of it is we don't have to do -- really change anything, except some labeling for it to be a global business.

This concludes our question-and-answer session. I would like to turn the conference back over to Chris Ryan for any closing remarks.

Okay. We appreciate your participation on Lakeland's fiscal 2018 fourth quarter financial results conference call. As we are committed to delivering value for our shareholders, we believe this is best achieved for Lakeland Industries through the continued implementation of strategies for effectively managing its balance sheet, controlling expenses and capitalizing on long-term global growth initiatives. We have made significant progress in the year toward optimizing our balance sheet, improving our cost structure and importantly, enhancing our competitive market position. It is our intent to continue on this path. Thank you.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.