Chris Ryan - President and CEO Gary Pokrassa - CFO.

Michael Groban - Private Investor Sheldon Grodsky - Grodsky Associates Ryan Hamilton - Morgan Dempsey Capital Management Michael Keeney - Private Investor.

Good afternoon, and welcome to the Lakeland Industries, Inc. Third Quarter Fiscal Year 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

Before we begin, parties are reminded that statements made during this call contain forward-looking information within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.

Forward-looking statements are 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, December 10, 2014.

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, expected future developments and other factors it believes are appropriate under certain 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 of 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 its behalf are expressly qualified in their entirety by these cautionary statements. At this time, I would like to introduce your host for this call, Lakeland Industries' Chief Executive Officer, Christopher J. Ryan. Mr. Ryan, you may begin..

Okay, thank you. Good afternoon to you all and thank you all for joining our fiscal 2015 third quarter financial results conference call. We are going to provide a brief operating statement on the status of the operations and on our financial results for the quarter. The call will then be opened up, so that we may respond to your questions.

Now I'd like to discuss our operating strategies and the progress that has been made along with the view of our objectives as we move forward.

On a consolidated basis for Lakeland's growing global operations, the strategies that have been implemented, and the favorable trends we have begun to experience in prior quarters of this fiscal year have continued to be realized in our most recently completed quarter, and are now even more pronounced particularly in key areas of our operating performance and financial metrics.

Here are some of the highlights. Our debt was reduced by over 50% since the end of the fiscal second quarter and some of this was the result of early extinguishment, which had a one-time charge. We raised 11.1 million in gross proceeds through an offering of common stock to institutional and accredited investors.

Cash and equivalents at the end of the third quarter was the highest level in several years. Consolidated sales in the third quarter grew by 10% as compared with last year. For the second consecutive quarter, our gross margin as a percentage of sales set another company record.

For the third consecutive quarter, operating losses for our business in Brazil declined by over 60% as compared with prior year periods. Our consolidated operating profit improved to 0.7 million in the third quarter of fiscal 2015, up from a loss of 1 million in the prior period, and these are operating profits.

All business in operations for two to three years, which is our planned breakeven point are on a run rate of profitability, except Brazil, which we've been restructuring. Russia and Argentina, by design are not yet consistently profitable, but are fast approaching this objective.

Overall, Russia is slightly profitable for the nine months of this year, but had a modest loss of 15,000 in the third quarter.

Net income this year without Brazil, the cumulative effect of a change to maximum performance level of our restrictive stock and without the charges related to the early extinguishment of debt charge and without the tax on dividend related into Chinese operations would have been $0.20 per share, up 300% as compared with $0.05 in Q3 of the prior year.

With all these non-cash charges, we are pleased with our cash flow from operating activities, which for the first nine months of this year was nearly 3.5 million, a star contrast from cash used in operating activities in the same period of last year of 3 million, and our shareholders equity with the benefit of our capital raise in October increased by 16% since the end of the second quarter.

We remain encouraged by the global growth trends and our strength in the operation and financial condition, which should enable us to drive improved profitability from the leverage in our business. Furthermore and as previously disclosed we have experienced a significant increase in order activity from demand, relating to the Ebola crisis.

The main impact from Ebola-related orders will begin to be realized in our fiscal 2015 fourth quarter and to January 31, 2015. To the extent that this demand continues, we will be able to drive incremental leverage and profits beyond the improvements as reported in our third quarter.

Moving on to some developments in the third quarter, on October 29th we completed a private placement for the issuance and sale of 1.1 million shares of our common stock at a purchase price of $10 per share to a number of institutional investors for growth proceeds of a 11.1 million and net proceeds of a 10.2 million.

Proceeds for the private placement were used by us to fully repay our former financing facility with the junior lender in the approximate amount of $3.6 million, which was very expensive debt, as that being bearing interest of 12%. The balance of the proceeds was used to pay down a portion of our senior revolving credit facility with a senior lender.

We repaid 6 million out of a total of 12 million outstanding under a 15 million facility and bearing interest at 6.25%. As we indicated, last quarter we continued our strategy for fiscal 2015 for increased spending on business development activities while aggressively managing coerce to drive improved profitability.

With sales increasing from our traditional customers, our gross margin in dollars and as a percent of sales increased dramatically. Our operating margins also substantially increased, despite the increase in operating expenses. We are investing in building out of our product lines and sales and marketing channels.

Operating expenses as a percentage of sales increased to 31.5% this quarter on 10% higher revenues from 26.8% in the same period of last year. Due to adjustments and other non-cash charges, net income in the third quarter on a reported basis makes it difficult to ascertain the full impact of our otherwise solid performance.

Gary Pokrassa, our CFO will explain the many non-cash charges, which are one-time in nature and that negatively impacted our net income on a reported basis. At our Brazil subsidiary we have been reducing losses amid a decline in sales year-over-year.

In the fourth quarter however, and as filed in our 10-Q today, management is in the process of planning to restructure the Brazil operations because of its failure to progress as planned profitability.

We intend to perceive with closing the facility in Salvador, Brazil, selling the real estate and then selling off the remaining old corporation and/or its assets together or separately. We expect these changes to result in a substantial pre-tax restructuring charge and allow a tax deduction in the USA.

Such charges are not expected to generate a net loss after taxes and may result in the net gain after taxes in view of the anticipated tax benefit.

We are targeting a confirmation of these activities anywhere from Q4 FY '15 through Q2 FY '16, however these negotiations will be complex and may require more time than anticipated in order to execute in such a way that maximize the shareholder value.

It's important to note that we are non-exiting Brazil, but addressing how we operate in the country while optimizing our competitive position to deliver enhanced contributions on a consolidated basis to the parent company and our shareholders. We are now about two and a half years into the transition and turnaround of Lakeland industries.

The key elements of our efforts include sales diversification and growth strategies, financial liquidity, leadership enhancement, and manufacturing in our operational efficiencies.

As I've discussed thus far on today's conference call, in the third quarter we've clearly made advancements on financial liquidity through increased cash flow from operations, the pipe equity raise, and debt reductions.

The greatly improved growth in operating margin support our manufacturing and operational efficiencies, and we increased spending in the third quarter for SG&A, which goes toward our sales diversification and growth strategies.

Also having a meaningful impact to our business, which we had not initially accounted for, was the influence on our company relating to the Ebola crisis. At its onset, this has ramification for our sales growth and manufacturing initiatives.

In response to increasing demand for specialty protective suits to be worn by healthcare workers and others being exposed to Ebola, Lakeland began late in the third quarter to increase its manufacturing capacity for these garments, which includes proprietary processes for specialized seam sealing, a far superior technology for protecting against viral hazards and non-sealed products.

We accelerated our purchasing of machinery to accommodate increased production levels, but we'll remain within the budget of under 1 million in capital expenditures for the fiscal year.

We also made advanced purchases in the third and fourth fiscal quarters for a total of 2 million new orders [ph] of material used in the cutting and selling of ChemMAX and MicroMAX suits. The company has indeed been experiencing significant interest globally for its ChemMAX and MicroMAX protective suit lines.

Orders have been received from governmental agencies around the world as well as other public and private sector customers. Certain of these contracts require a weekly delivery guarantees or shipments through the first calendar quarter of 2015, which ends April 30th.

The aggregate of orders won by Lakeland that are believed to have resulted from Ebola crisis amounted to approximately 1 million suits as of the end of this quarter with additional orders for other products such as hoods, foot coverings, and gloves. Lakeland started shipping such orders only in October.

To accommodate this order flow, we increased production levels by hiring and training new staff and accelerating spending on equipment and materials.

Monthly production capacity for sealed seam ChemMAX and MicroMAX protective suit lines were increased by nearly 50% from August 2014, prior to the Ebola-related product demand through October 14, and is now on track for further increase of 100% of that level by January 2015.

We presently have the capacity to make 300,000 ChemMAX suits per month or 1 million MicroMAX suits per month, depending on the end garment requirements for sealed or bound seams among other features.

Substantially all of the available protection capacity in August 2014 has been allocated to purchase by the company's industrial customers for non-Ebola related purposes, and we continue to service these customers in the normal course of business.

As we have stated, the Ebola-related demand for our suits will be incremental to the existing growth the company is experiencing internationally. We view the Ebola crisis as possibly having two distinctively separate influences on our business.

The first is more cute in nature and directly related to the present needs in Western Africa, and those infected, but traveling elsewhere. To this end, we account for the aggregated orders of 1 million suits as reported at the end of our third quarter.

The second pool of potential purchases maybe evident within the next 12 to 24 months; this is part of preparedness strategies and accompanying spending by government and healthcare organizations around the world. We see this coming to fruition similar to the spending on first responder apparel in the years following September 11, 2001.

A new bill by President Obama requested 6.2 billion for fighting Ebola at home and in Africa. This is indicative of the second pool of spending we anticipate, but we view as being incremental to the traditional organic growth that we had been experiencing in our regular product lines.

To summarize our view of the third quarter, we are quite pleased with the solid performance we've reported on an operating basis. I would like to thank our management employees around the world for a job well done.

The improved operating and financial results reflect a successful turnaround strategy that our team began implementing two and a half years ago.

With most of our business performing well, our consolidated operating performance is expected to continue to improve, and this is before the contributions from demand relating to Ebola crisis in the near-term and preparing the spending for similar considerations in the longer term. That concludes my remarks.

I will now pass the call over to Gary Pokrassa to provide a more thorough view of the company's financial results for the third quarter..

Thank you, Chris. And the following addresses my review of the third quarter. We completed a private institutional placement of equity of 11.1 million. Cash and cash equivalents increased by 14% from 6.2 million at the end of Q2 to 7 million at the end of Q3, and a balance increase by 55% since the beginning of the fiscal year.

We paid of very expensive subordinating debt, our total debt has been reduced by about 10 million in Q3 from Q2, and this is expected to be accretive to earnings per share by $0.04 in Q4 and $0.16, including the reduction in the senior debt balances.

Q3 sales worldwide were 25.1 million this year, 22.8 million last year, an increase of 10%, excluding Brazil sales with 23.5 million this year, 20.9 million last year, an increase of 12.7%. Sales growth was achieved in USA, Canada, U.K. and Chile. Ebola related sales were only shift to getting in October.

The full impact of the Ebola sales will not be reflected until Q4. The nine month year-to-date sales were 73.2 million this year, 69.2 million last year, an increase of 5.9%. Nine-month worldwide sales excluding Brazil, 68.1 compared with 63.8 last year, 6.7% increase. Q3 gross margin worldwide was a record 34.3%, compared to 22.1 last year.

Excluding Brazil, gross margin increase were 28.4 last year to 34.9 this year, and that is the second consecutive quarter we've established new all-time highs in our gross margin. The nine-month year-to-date gross margin was 32.5 compared with 26.9 last year, and again excluding Brazil, gross margin for the nine months, 32.5 and 25.9 last year.

Q3 operating expenses worldwide increased by 1.8 million and increased as a percent of sales to 31.5 and 26.7 last year.

operating expenses for Lakeland worldwide excluding Brazil, increased by 1.9 million, again mainly as a result to revise as in by our board in our restricted stock plan that when the restricted stock plan three year plan expires or terminates next June 2015, that our performance level is anticipated to be at maximum. We had been at zero up until now.

So we took a cumulative charge of $1 million just to bring it up to current. That accounts for the main part of the increase in operating expenses.

In addition, the increase rate out and commissions expense of about 300,000 associated with the increase in consolidated sales, currency fluctuation expenses of about 300,000, operating expenses and percentage sales excluding Brazil increased in 24.1 to 29.2. Q3 operating income increased to 700,000 from in operating loss of 1 million last year.

Excluding Brazil operating income was 1.3 million this year, compared to a 900,000 last year. The Brazil Q3 operating loss was reduced to 586,000 this year, from a million 9 31 last year. Nine-month year-to-date operating income 2.7 million, compared with a breakeven last year.

Including Brazil operating income 3.9 million in nine months year-to-date this year, compared to 3.8 for the same period last year. Q3 adjusted EBITDA worldwide was 2.3 million versus 1.6 million last year, and excluding Brazil adjusted EBITDA was 2.8 million this year, compared to 2.1 last year.

The nine month adjusted EBITDA was 57 this year, 4.2 last year. Excluding Brazil, 9 month adjusted EBITDA was 6.6 this year, 6.2 last year.

Net loss per share included a non-cash charge of 2.3 million, which was $0.35 a share, which resulted from the early extinguishment of the subordinated debt; 200,000 was the tax charge for taxes on a dividend from China and various small foreign tax adjustments.

The early extinguishment charge consisted writing off original with discount and on amortized fees. The change to the maximum on our restricted stock brand resulted in a $0.11 a share charge which again is a one-time charge also.

So let's recap, the Q3 net loss of 2.5 million or $0.42 a share, compared to a net loss of 1.8 million last year in Q3 or $0.31 a share, which included a 1.0 million non-cash charge for the, again the cumulative effect of the restricted stock plan, boards estimate that performance level would be at maximum at June 2015, $0.11 a share.

We have the $0.42 as we [technical difficulty]. We have a one-time charge of $0.35 a share for the debt repayment, early extinguishment of the debt. We have $0.03 of share with some tax issues on the dividend. We have a $0.11 a share for the one-time charge for the equity change, one-time cumulative effect and Brazil lost $0.13 a share.

Excluding all those and normalize operations for the company for Q3 wouldn't have reported a profit of $0.20 a share. Brazil net loss this year was 700,000 or $0.13 a share, compared with a net loss of 2.1 million or $0.36 a share last year.

Q3 net income this year without Brazil, without the extinguishment of debt charge, without the change to maximum on the restricted stock plan and without the tax on dividend, as I said would have been $0.20 a share compared with $0.05 in Q3 last year.

Net income for share for the nine months, without Brazil, without the tax on the dividend, without the change to maximum and without the early extinguishment, debt charge would have been $0.42 income.

Compared with fiscal '14, nine months net income per share excluding Brazil and last year we had the tax valuation allowance that would have been $0.21 a share.

So, we're comparing nine months normalized of $0.42 a share for the nine months compared to $0.21 last year and we're comparing Q3 this year $0.20 a share normalized, $0.05 a share last year normalized. We have started to pay dividends from future income from some of our foreign sales in Canada and China.

This will trade to some additional non-cash tax charges in the USA, going forward, and we use the net loss carry forwards available to us. The banking covenants are mainly based on worldwide adjusted EBITDA, excluding Brazil. Further, there's a covenant prohibiting any new cash invested or advanced from parent company into Brazil.

The bank had structured this in a way that allows management the freedom to restructure in Brazil. And that concludes my remarks. I'll turn the call back to the operator to begin the Q&A session..

Thank you. [Operator Instructions] Our first question comes from Dr. Michael Groban, Private Investor..

Good afternoon guys, thank you for the comprehensive and very, very extended comments. I am a trauma doctor and an emergency doctor. A lot of my questions have to do with some of the sophistication of your equipment as it compares to others.

I have a number of questions; number one, first of all, as we all know that there are companies providing protective equipment, what if anything distinguishes and differentiates like on the other companies?.

Do you want that answer first?.

Why would they want to buy our stuff versus DuPont or somebody else?.

Okay. There is really only two players in this game, and that's DuPont and Lakeland, because they have the capacity to make hundreds of thousands of suits.

Okay? Both DuPont and Lakeland put out a sealed seamed taped garment, and if you've ever watched people particularly in the African theater come out of the patient ward, they are sprayed down with a mixture of chlorine and water.

I think Clorox poured in a bucket of water, then, pumped up into a heavy pressure spray, and they spray down you as you come out of the ward. So the garment you're wearing has to be almost like a raincoat. It has to be able to withstand a pressurized spray of chlorinated water, and this is heavily chlorinated water.

Okay? Therefore you cannot use the typical garment that you use in a hospital. Cannot use it because what will happen is the spray will push the bacteria and the viruses right through the garment, and I'm talking even about supposedly fluid-resistant garments used in surgery. Those are good against blood borne pathogens, blood.

They're not good against pressurized spray of chlorine water. Okay? We make the garments that basically can withstand this type of pressure, almost a fire hose sprayed at you, and at the same time all the seams are completely sealed.

The size of the Ebola virus, if you think of a pinhole in your normal shirt, you wear an Oxford shirt from Brooks Brothers, the pinhole in that shirt is big enough to allow 12,000 Ebola viruses through, lined up diameter-to-diameter. So it's like a balloon going through a window in a hotel that's 15 feet by 15 feet.

None of the garments that are being worn in hospitals will stop a virus like that, particularly when it's being pushed under pressure by a spray. That's why we're saying these are the garments that we make, DuPont makes them also, and Casey makes them, but not in any real number.

We're the only ones really making these types of garments that have the capacity to do it. As I said, we have the capacity to make 300,000 of these garments per month. Other than DuPont, nobody else comes close..

So are you saying to me and to the rest of the investing community that's listening that Lake and DuPont are effectively approached in terms of the sophistication of the garments that are being provided and that there is nothing that distinguishes Lake from DuPont other than the volume of which they can put into the theater or they can provide domestically?.

That's fairly true. They make a very similar garment to us..

Okay. What assurances do we have at this point in time that the 1 million will not be amended to last or will be amended to more.

Are there any anecdotal comments that you're aware of, that would lead one to think that -- there is an article that said, "Doctors without borders like the Lakeland garment," I don't know if that was PR or not, but the reality is that, a lot of us here are very, very interested in knowing what to differentiate and distinguishes this company and why wish to continue to invest in it?.

Okay. On the product line, as I just explained, we're the only one besides DuPont that can make this in any real true numbers. None of the medical companies make these type of garments, and most of the garments, they don't even pass the blood borne pathogen test..

Right..

In other words, when you go into surgery into the OR, there are special garments used, when you have a person with HIV or Hepatitis C that the doctors will use so that the blood doesn't get through it..

Right..

Our garments are certified to those standards, but they're industrial garments. These are tough garments. They're good in the field in Africa. What is worn in a controlled situation in a hospital OR ain't going to work in Africa, believe me. You walk by a nail and some can, it's going to rip the garment right open.

So when you're saying -- yes, other people can make them, but sure, it'll take them at least six months to get certified to HIV AIDS certification, blood borne pathogen certification, it takes months and months and months to set up an operation to do this.

It takes very, very specialized equipment to do these seams and it's very, very labor intensive. And you had some other question about a million, I didn't understand that..

Oh, the question was you put a press release saying that there was a request for a million of these garments from Lakeland, and I wondered if that is still casting storm of there have been anecdotal or other conversations with anyone, either domestically or in the African theater with regard to augmenting or not augmenting a relationship with Lakeland which would have positive earnings expectation..

Yes, there have. I mean, since the end of October, we related that we have firm orders for a million suits, but this is a very fluid situation and it does not involve just Africa and the United States, okay? This involves a lot of countries that are sending teams to Africa, involves a lot of countries that are doing preparedness thinking right now.

So yes, it's very fluid, this will continue for another couple of months, and it continues in the first phase which I mentioned in my tour, "Africa Now." Okay? The second phase is the preparedness by other countries recognizing that they have nothing to deal with an Ebola type situation whether it's SARS where we led the fight in SARS; we provided most of the garments to Beijing and Toronto, because again you were dealing with a 60 nanometer virus.

These are incredibly tiny. They are 10 times more than typical streptococcus..

What confidence do we have, the Lake will be chosen to provide additional protective gear beyond a 1 million?.

I can't give you any guarantees. It's just that there is -- neither of us can provide what we've been ordered to make now. In other words, I can tell you DuPont can't take all the business. They put all their customers on allocation. There is no guarantee in this world, but ….

No, I'm well aware that -- what about -- when you say that the evidence of the value of the sales of these garments won't be recognized until the next quarter.

When do you expect that you'll be communicating to investors with regard to the value of this in terms of revenue and in terms of earnings?.

Well, we'll be reporting our fourth quarter at a certain date, generally about 45 to 50 days after January 31st. We are not going to go out every week and say we sold this much. We'll quote sales when we actually ship something..

Let me jump in for one minute. That's not a quarter, that's a fiscal year end and I would expect our fiscal year end results will be reported somewhere around mid to late April ….

Do I understand you correctly that you're saying that you will not give us any indication as to what's going on with the sale of the Ebola garments until April, is that right?.

Well, we may announce certain large contracts, but the regulatory authorities do not quote into people gunning stocks like that..

Well, if it is, it is.

You tell everybody that you sell a million, if you sell another million, are you going to tell us?.

If that would be significant, if it's a significant development, we will announce it..

Okay.

Yes, you guys discovered so much and you're really, really doing a wonderful job and I certainly appreciate everything that you're doing on the behalf of the investors and I want you to know that I'm very pleased with what you're doing and have some sophistication, and this is a medical provider, actually, a trauma emergency doctor, so, I'm very, very aware of what you're talking about, and you guys are doing a great job..

Thank you..

Thank you..

The next question comes from Sheldon Grodsky, Grodsky Associates..

Hello, gentlemen..

Hello..

Hi..

Let me first congratulate you on apparently putting behind the financial torture that you've been going through. I know that you're not completely out of the woods in terms of Brazil, but hopefully you'll never have to deal with loan sharks again to keep the company afloat..

Thank you..

Anyhow; this could be a tricky question for you, but it's an obvious one.

What is the price of a suit, an Ebola protective suit?.

That depends on the sophistication of the buyer. Okay? I'll try to explain that to you. Our suits are made with a serged seam. Now, that would be your typical Oxford shirt is a serged seam shirt. Any cotton shirt that you wear around the house is a serged seam type of shirt.

Then there is a bouncing, which means the seams are doubled up and so on a compressed spaces, then there is what we call a sealed tape seam, where the seam is doubled up like it's bound and then it's heat sealed, the plastic is heat sealed and then taped. Okay? So, nothing can get through the seam.

The latter one is what we recommend for Ebola because of the size of the virus. Okay? On our ChemMAX sealed taped seam can run as high as $15. Now if you're ordering in huge quantities, like some of these people are, the price is negotiated. Okay? On a sealed seam MicroMAX, which is a much lighter fabric, which is what USA bought from us.

You're looking at something on the order of $3.50 a garment to $5. It depends, on sizing and styles, because certain styles don't have boots, don't have hoods, certain styles have them. So, they can generally vary from a low $3.50 to a high of $15. And it all depends on the seam, the style, the size.

So, that's why so hard to get into contracts with this, because the contracts are all over the place in regard to what they're ordering..

Moving in this different direction, going back to Brazil, I think you referred to the Brazilian restructuring in then look at the 10Q, which isn't easy reading necessarily, but I noticed that the assets in Brazil went up in the first three quarters of this year, which surprised me and could you explain that?.

Let me jump in. That was just an internal reclassification. What we had before is the VAT tax issue that we've had on the book since April 2010, four years. According to Brazilian -- GAAP of Brazilian accounting, that was not allowed to be put on the books, says the liability in assets.

So we had that and we couldn't, it wasn't the liability of the parent company. We had that as consolidation [ph] entry in like that, and the other world company that just in bringing together the worldwide operations of Lakeland, we had an entry come through.

In re-assessing our accounting, it was determined that we push that down to the Brazil books, just for the U.S. GAAP accounting. That's not the Brazilian accounting. So it's just an internal reclassification, nothing sets into that. I think we're actually trying to do that, you obviously read it very barely, in a short time..

Well, I looked at it, and I can't say I fully understand it but everything about Brazil has proven to be a nightmare. So hopefully most of the nightmare ….

Okay. Unfortunately, that's very true, yes. We all agree with that..

Okay. I'll let someone else go on with more questions. Thank you..

Thank you, Sheldon..

Our next question comes from John Neats [Ph], Private Investor..

Hello, thanks for presentation. You folks, can you disclose what specific contracts you received from the governments around the world, is it United States is allocated or attempting to allocate 6.2 billion towards medical equipment to fight these contagious diseases.

What contracts specifically have you received or can you divulge that?.

Okay. Those moneys are not yet spend, okay? And apparently something came out today that had more detail on how the money was going to be spend, I was in a plane, so I haven't seen it. But my initial read-on, it was a 4 billion what's going to go into the African push and another 2.2 billion would be spend here in the United States on preparedness.

And of that 2.2 billion, my guess is and that's why I'm saying in my speech today, 12 to 24 months, is the second spend. It will take while, the CDC and OSHA are still formulating what should the -- what these garments should look like. And I know, and generally take congress 12 months to even fund something.

So I don't see these moneys being spent and so the hospitals have the money in their hand. Okay. And CDC and OSHA and NIOSH have all decided, "Oh, this is what these garments should look like," but I think most of them are going to be sealed seam, which really helps us a lot, and we have the facilities. We have over a 1000 employees in China.

Not many people can claim that and they're our employees, that's key. They're not contractors. So as far as contracts go, we're not going to go through these 25 contracts we have. Some are small, some are huge. And so, we're not going to go that way.

That's why we said there's about a million suits that we have contract for and those vary between our MicroMAX which is a lighter fabric, but superior to its competitor at DuPont, and then there is the heavier fabric where DuPont and Lake will have very comparable offerings..

Thank you, for your answer. Shall, or you do another question..

[Operator Instructions] And our next question comes from Ryan Hamilton, Morgan Dempsey Capital Management..

Good evening, guys..

Good evening..

I was wondering if you could maybe talk briefly about the Ebola suit market, you said you and DuPont have a pretty much a lion share, would you say it split 50/50 or you may give some idea?.

Yes. I would be speculating. But I do know DuPont has more capacity and DuPont is doing more sales than we are.

But if I, I'd be speculating, 2/3rds, 1/3rd, they're a bigger company than I are, they have more money than we do, they have a bigger sales force than we do, but the thing, but the fact of the matter is they can't make everything that's being ordered..

Okay. It sounds like you guys have done a great job stepping up production.

There are any bottlenecks that you're seeing, as far as like zippers or any other components that are going into this?.

No, we have no component shortages. We have all the machines, we added a 100 heat sealing machines to our inventory. The bottleneck now is training sellers to do it. It's not like selling, this is complex, melting is seen and then taping it at the same time you melt it, it goes very slowly, it's very labor intensive.

So, it's really the bottleneck right now is hiring and training young ladies to do it..

Okay. That goes into my other question.

My next question, are you seeing any other like position fills that are -- that you're running into other than source?.

What do you mean, position -- positions in our company?.

Yes, just anywhere, not necessarily with Ebola, just anywhere you have..

No, we have it, basically because we have our own factories and they're all our employees. We offer the ladies time and a half and double time to go to second shifts and to do overtime, and we can do this at a moment's notice, because they're our employees.

When you use contractors like our competitors do, it don't happen that way, it's a very difficult thing to get contractors to change their whole process and deal with all the other customers. We can do it much more simply in-house. And we're not experiencing any problems with delivery with our regular customers.

We've been through this many times before. It started with SARS and we supplied Beijing into run the majority of their garments. It happened again in New Orleans hurricane, the Gulf oil spill. We've been through this a lot of times..

Okay, great.

And as far as commodity pressures, are you seeing any there?.

No. The price where going down might help us a little bit on some of the fabrics we buy but they try to keep -- they don't break on price like the price of oil is going down..

Right.

Would you -- as a previous question asked, as far as the Brazil turnaround, are you guys are you seeing an end to that, when do you think that restructuring will be totally complete?.

We have it, we are aiming at the fourth quarter to the first quarter, but we have to sell a piece of real-estate here. So therefore that can take some time in order to realize the highest price, but once we close all the facilities and sell off all these assets, we will take a very large tax deduction against our U.S. taxes..

All right, great, and as far as this stock issue, would it -- is it safe to say is more of like a timing issue, you struck when iron was hot or is that something that you had been planning for some time?.

We had been planning it since June. Okay? But on the price, yes, we're striking while the iron is hot..

Okay, great. That's all I got, let somebody else step in..

The next question comes from Michael Keeney, Private Investor..

[Indiscernible] I just thought I would mention that 10-Q, they're rarely easy to understand. It's just kind of industry specific. So I emphasize with the problem that people are having reading them, but that's not the question, that's a rhetorical statement.

The question I have though is, do you have any type of investment, I missed the first part of the conference call I was having difficulty getting on.

Do you have any estimate in terms of the -- and some type of Ballpark in terms of the number of suits that you're going to be producing this quarter?.

This quarter it's going to be a bang-up quarter. I mean, we're going to be producing, we said we had orders for a million suits. Well, we didn't get to ship a whole bunch of them in October because that's when the orders came in. So, we'll be shipping that million suits right after April 30th, and we are still looking at other bids.

There are other bids out there. There are other countries getting involved both in terms of sending teams or suits to Africa and then looking at their own situation, their own homeland situation, much like the Obama administration as with his 2.2 billion that we'll be spending in the United States. We'll be quite busy.

I mean, it will take, and this is guesstimate and this is my opinion. It'll take six to 12 months just to clear up the African situation, because you have 10,000 people been exposed. Now, who did those 10,000 people speak with and touch. I mean, you got a lot of people that you've got to check and follow before the African situation goes away.

And from what I understand, I think I read something today, there are 200 new cases every day..

It's spreading. Yes, that makes sense.

Do you have -- are these suits reusable?.

They could be, theoretically, they could be, yes. I mean, they're top suits, once they are completely sprayed with Clorox and water, most of the germs and the viruses have been killed.

But most people are not going to do that, simply because there is a remote chance that there are still viruses on that garment, because you see, outside the garment, when you're attending to a patient, it's the outside of the garment that's going to get the feces, the urine, the blood, the sweat, any saliva.

Any of the bodily fluids, including sweat, you can contract it. So that all gets on the outside of the garment and that's the key to having the really tough garment that can be sprayed with a nozzle type spray. The typical garments you find in the hospital operating room that are certified will not stand up onto that type of pressure..

Right. That explains some more of a multimillion order then..

And the other thing is, well, the nurses in Dallas were not wearing our garment and this is the problem because if you don't spray the garment with a chlorine spray, you're probably three or four times more likely to contract the virus, in taking off those garments, because the garments are covered, they're covered with bodily fluids of the patients, and that's why being able to spray them down, not only kills the virus, but it also cleans off the garments.

So when you take it off, you're not exposing it to your skin. That's the key to our garment..

Okay, that makes sense. It looks like you're in business for a long time.

That was my primary question, I was wondering if you're just going to rapidly produce the main and there'd be nothing after that?.

No. We've been going out telling most people this is a turnaround, we've had a terrible two years, and the stock went from, has descended from 24 quite a few years to four at the bottom. And this is a turnaround situation. We're going to organically grow with or without Ebola. And this the book value the stock is close to $8 or so..

Yes. That makes sense. When I was in the army, I was a medic for a while, it was a horrible job in the work situation, but yes, it was very similar, we had very similar experiences with gowns there using it for surgery. Okay, thank you very much..

The next question comes from Robert Meyado [ph], Private Investor..

Yes, gentlemen, I was wondering what percentage of your business is attributable to the garments that protecting Ebola? Thank you..

That's a difficult thing to say without a calculator. I mean, it almost goes country-by-country. One of the things that Gary, my CFO alluded to that the sales increases were in the United States, Chile, Canada, I mean these are the countries buying now. Okay? We see other countries coming in later buying.

So it's really hard to attribute -- I just can't do it. I'd have to go back and figure it out, and it would take me almost an hour with the calculator..

So prior to the Ebola outbreak, could you give me an estimation on what the percentage was of your business?.

Well, the way we break our business down is when you look at Ebola, we have products, MicroMAX and ChemMAX. MicroMAX falls into our disposable product lines, which constitutes about 60% of our revenues. And the ChemMAX falls into our chemical suit product lines, which I believe are about 7% of our revenues.

So these two falling categories represent about 67% of our revenues..

Very good, thank you..

[Operator Instructions] There are no further questions. I'll turn the call back to management for closing remarks..

Okay..

Actually we do have a few more questions that popped up, do we take them?.

Yes, we will..

Sure..

Okay. We have Stephen Highfill [ph] from Upside Property Investment..

Okay..

Hey, guys, congratulations on a good quarter..

Thank you..

Thank you..

I've been keeping up with the recent news, especially the news related to the Ebola funding that's being placed into the bill working its way through this week, and they gave some detail out today, whereby they have a specific number of treatment centers and hospitals being set up here in the United States, and they're earmarking I think $166 million just for the PPE suits.

And apparently the hospitals are asking for 500 million, instead, and if it's still lobbying for that.

The peers like there, the government is setting up a fund to reimburse the hospitals or give the hospitals the funding to purchase or make purchases, and they're also talking about an additional amount to be earmarked for stock power beyond just the hearing out break in the future.

And since you're the primary competitor with DuPont and you seem to have the capacity and the quality products needed to defend against the Ebola virus, can you give any forward guidance as to your expectations of your ability to capture a part of this significant amount of money, not just for the U.S.

and abroad, and how that might affect your growth in sales and earnings going forward?.

I really can't give any guidance on something that's 12 to 24 months out. It's still being battered around in Washington.

I can't say that we would certainly like to get a significant piece of that, and it can be gotten in different ways, but when you look at the manufacturing capacity that we have and the type of suits that we have and that our suits and our fabrics are already certified to blood borne pathogen testing both in Europe and in the United States.

I think we stand a good chance of doing pretty well..

Okay, I think that distinction is pretty important, man, and your ability to compete for the -- fight for that pie. Okay, very good. Well, congratulations and good luck on the current quarter and the next couple of quarters. I think you guys are going to be busy..

I hope so, yes..

The next question comes from [indiscernible] Private Investor..

Gentlemen, can you hear me?.

Yes, we can..

Yes, we can..

All right, [indiscernible]. My question is why wouldn't you using the -- just spraying -- maybe make like the little tents where they would be atomized to get better penetration, and then people just walk into the tent, they stand there for three or four minutes to get atomized, so it goes to all the different premises. Why? I don't understand that..

This is something we do not control. This is doctors without borders, this is human services, this is CDC. This is what they are doing in the bush in Africa, okay? You got to understand that conditions there are not ideal. And so, this is what they are doing.

When they walk out of a patient ward, they stand in what looks like, yes, a tent, and they're sprayed with a fire hose of Clorox and water, and they do this constantly..

Okay. All right, I'll just -- steam has more pressure or steam has more penetration.

I'm bit curious -- anyway, otherwise it look like you have an interesting industry, you're having a good run on the price of the stock, in the fullback you raise money, there is two bed that you have to be dealing with, you're in an industry where you have to be dealing with people who are concerned in order to make a profit, this is a business and what's going to happen here, you mentioned you have one person walk in, it's just like with HIV, how many people have had sex with, and how many people they had sex with, and how many people they get sex with, so I think it's blowing, it could be a major problem in the world..

The reason it spreads in Africa I believe is because what can spread it, and in West Africa it's very hot, therefore you can bump a person on the street and get it..

Yes, I know how hard it is [indiscernible] in Vietnam. All right. Thank you very much for your time and answering my questions. Good luck ….

Sure. Okay, thank you..

Do you have facilities on Long Island?.

We have our headquarters on Long Island, no facilities..

You're not going to do any hiring, is it?.

No..

All right, all right. Thank you very much..

Our next question comes from Philip Wade, Wade [ph] Capital..

Hi, thank you for taking my call; great quarter. I may have missed this, but just was wondering in terms of your current sales, the split between what I guess had already been shipped into the Ebola theater in Africa, just to get some perspective in terms of what you'd see as the growth potential there over the next couple of quarters? Thank you..

Well, in my opinion, this is going to go on in West Africa for another six to nine months. We will be shipping suits in there pretty much during that period. It should peak in a month or two, and then start trending down and garments -- our product may trend down with it. But then there will be this hiatus and then the spending in the U.S. will pick up.

And do you know what most people are saying as we operate in ten countries, and so on 40 other countries, and a lot of other countries are doing the same thing as the Obama administration is doing..

Thank you..

At this time, I show no other questions.

Would you like to make any closing remarks?.

Okay. We appreciate your participation on Lakeland fiscal 2015 third quarter financial results conference call.

As we are committed to delivering value for our shareholders we believe this is the 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. Thank you again, and goodbye..

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