Christopher Ryan - Chief Executive Officer Teri Hunt - Chief Financial Officer.

Alex Fuhrman - Craig-Hallum Jeffrey Briggs - Singular Research Doug Ruth - Lenox Financial Services.

Good afternoon and welcome to the Lakeland Industries Incorporated second quarter fiscal year 2017 financial results conference call. All participants will be in listen-only mode.

[Operator Instructions] 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 the Securities and Exchange Commission or made by management.

All statements other than statements of historical fact 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 or 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 here in 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 listeners 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 change in events, conditions or circumstances on which such statement is based. Please note this event is being recorded.

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

Good afternoon to you all. And thank you for joining our fiscal 2017 second quarter financial results conference call. We're going to provide brief opening statements on the status of operations and on our financial results for the quarter. The call will then be opened up so that we may respond to your questions.

Before we go any further, as you may know from our press release issued earlier today, and from our most recent quarterly calls, we present our financial results based on our continuing operations. That will be the case with today's conference call unless otherwise specified.

The continuing operations financial results reflect our ongoing business following our exit from Brazil, which was effectuated in the third quarter of fiscal 2016 with additional issues addressed thereafter. Now I’d like to discuss our financial highlights, operating strategies and overall business with a view of our objectives as we move forward.

Our performance in the second quarter of fiscal 2017 continued the momentum we began to experience in the first quarter of the year.

Although there has been economic challenges and sluggishness in the industrial sectors around the world for over a year, particularly for the oil and gas markets, we have been successful in positioning Lakeland Industries for its next phase of growth.

We have been implementing initiatives intended to drive market share gains and expand our vertical reach. In turn, given the leverage we have in our business, our goal is to improve both sales and profitability sequentially going forward. And here is the evidence of our progress during the first two quarters of the current fiscal year.

Consolidated revenues of $22.3 million increased over 9% in the second quarter from $20.4 million in the first quarter of fiscal 2017. Net income increased to $1.4 million in the second quarter from a breakeven in the first quarter.

Gross margin as a percentage of sales in 2Q 2017 increased sequentially by 5.3 percentage points from Q1 2017, which increased sequentially from the fourth quarter by 4 percentage points. Operating expenses were reduced by nearly 10% from the first quarter and declined as a percentage of sales 26.8% from 32.4%.

We realized positive cash flow from our operations in both the first and second quarters which brought our cash at the end of the second quarter to $7.9 million from $7 million at the beginning of the fiscal year. This cash balance increase was achieved while reducing our debt by 35% or $3.3 million from the beginning of the fiscal year.

An integral component of our plan to drive growth in revenues, profits and cash flow is the targeting of new vertical markets and key multinational and government-related users to attain market share, which may also bring an ancillary benefit of further elevating the increasing recognition of our global brand.

The 9% sequential top line growth confirms that we are moving in the right direction with our organic growth efforts. Moreover our top line growth is quite encouraging considering the continued industrial headwinds particularly within the oil and gas sector.

Our organic sales expansion capitalizes on investments being made to penetrate new markets and the introduction of these products to take market share in some of the more developed regions we serve.

Impressive progress has been made in the traction for our fire and electrical arc safety and reflective apparel which are being heavily marketed to the government sector, utility and specialty distribution customers.

Our international sales now at $10.5 million or 47% of total sales in the second quarter, which is up from $8.2 million or 40% of sales in the first quarter have benefited from penetration of foreign firefighting departments and specialized distributors, with sales of turn-out gear and other FR products.

Chemical suits sales were also very strong in the second quarter on an international basis, primarily in Asia Pacific and Europe where we have been successful in converting customers to our products from those of our competitors. Increasingly, the Lakeland brand is being recognized for quality garments, customer service and expeditious delivery.

Latin America has had certain challenges in terms of consistent revenue growth where we are growing in some markets. Political and economic conditions are the key challenges in Latin America. In North America, U.S. sales were $11.8 million in the quarter, down modestly from the first quarter due in large part to seasonal considerations.

Canada continues to grow recording the highest second quarter level of sales in its history. The strength in this country is derived from sales of FR garments and disposals. Again we are seeing successful conversion of customers from other products to the Lakeland brand.

As we stated and which has been evident thus far in fiscal 2017, our growth strategies are expected to result in increased sales despite any pressure from global economic conditions, currency fluctuations or pullback in oil and gas sector, which impacts about 10% of our business.

Through the strength of our international operations, we have been further investing in future growth. Key sales management hires have been made for our plan for the slack markets in the Asia Pacific region and in Europe. Much of the financial performance comparisons I've been making pertain to the first two quarters of the year.

This is to mitigate to an extent an otherwise uneven comparison to the prior year periods when we were beneficiaries of demand for products relating to pandemic situations last year.

In the first two quarters of this year we did not have any meaningful revenues associated with pandemic or other emergency situations, such as large oil spills or weather events such as hurricane.

Putting the growth prospects for our top line in perspective, as we move forward incremental to all of the growth opportunities on a traditional basis is emergency demand, such as Ebola and bird flu pandemics related orders we received in the early part of the prior fiscal year.

These revenue growth inducing events and their gross margins were much higher than our traditional sales growth. So this skewed year-over-year comparisons. Also negatively impacting the year-over-year comparisons is currency volatility.

And as we have noted time and time again the continued weakness in the global industrial economy, particularly in the oil and gas sector has been a challenge that we have been dealing with. As with any business cycle we anticipate a recovery in demand for our products as oil prices rebound which may further compound our current sales momentum.

Understanding the current challenges facing the industry, we also have been focused on managing costs and expenses. Again we have performed here as well.

Gross margins as a percentage of sales increased for the second consecutive sequential quarter with each period still having negative changes in currency valuation and less than optimal global business conditions while none of these periods benefited from sales of higher margin emergency product orders.

Consolidated operating profit increased from $170,000 in the first quarter to over $2.6 million in the second quarter. This improvement demonstrates the leverage in our model, effective management of expenses and our top line growth.

Based on our solid results in the second quarter, our increasing free cash flow and the traction of our growth initiatives, we are very confident in our future. Reflecting this outlook, on July 25 our Board of Directors authorized a stock repurchase program under which the company may repurchase up to $2.5 million of its outstanding common stock.

This repurchase program reflects the view that our stock price perhaps recently impacted by geo-political, global economic and international currency conditions which may either be beyond our control or not directly impacting our operational performance, does not adequately represent Lakeland’s underlying long term value, or its prospect for continued growth.

While we continue to invest in growing our business, the stock repurchase program demonstrates the ongoing commitment of the Lakeland board to taking tangible steps intended to enhance shareholder value.

Our view of continued solid cash flow generation from organic growth initiatives puts us in a position to build the company and support shareholder value. That includes 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 results..

Thank you, Chris. The following addresses my review of the second quarter of fiscal year 2017 ended July 31, 2016. The fiscal 2016 financial results that I discuss on this conference call will be from continuing operations unless otherwise noted. The discontinued operations relate to the operating results in Brazil.

Net sales from continuing were $22.3 million, which was down from $29.5 million for the prior year period, as compared with the first quarter of $20.4 million in sales, Q2 sales were up by over 9%. On a year-over-year basis, sales in the fiscal 2016 period benefited from emergency sales relating to the bird flu pandemic.

Sales in the current fiscal year have been subject to softness in the global industrial sector, partially resulting from a continuing downturn in the oil and gas industry as well as currency headwinds in several of the foreign countries in which the company has operations.

The gross margin was 38.6% this quarter compared to 40% in Q2 of FY’16 and 33.3% in the first quarter of FY’17.

In addition to lower sales volume in the most recent periods which weighed down margins, last year's same period gross margin was favourably impacted by higher margin sales of products relating to use in dealing with the bird flu which we consider to be somewhat one-time in nature, thus making comparisons difficult.

As compared to the first quarter of the current fiscal year, 16% or 5.3 percentage point improvement in gross profit as a percentage of sales in Q2 benefitted from higher revenue and included comp reductions relating to a reduction in force in the USA to move production to more cost effective facilities in Mexico and China which the company implemented last quarter.

With the currency fluctuations the comparison of our first quarter to second quarter results is more appropriate than the year-over-year comparison given the distortions from the year ago period.

Reflecting the company's ongoing effort to reduce costs and operate more efficiently we reported lower operating expenses in the second quarter of this year as compared with both the first quarter and the second quarter of last year.

Operating expenses worldwide decreased to $6 million for the current year’s second quarter from $6.1 million last year’s second quarter and $6.6 million in the first quarter of this year. As a percentage of sales, operating expenses were 26.8% in Q2 FY’17 and 32.4% in Q1 FY’17.

The main factors for the decrease in operating expenses from the year earlier quarter are reduced sales commissions of $0.4 million and lower equity compensation and professional services fees, partially offset by a $0.3 million charge relating to currency fluctuations and other small increases.

The reduced expense level from the first quarter of the current fiscal year resulted from the aforementioned operational cost containment initiatives as well as severance associated with the reduction in force in Q1.

Similar to the past few quarters, while our cost containment efforts continue to lead to reduced expenses in many areas, we increased spending in certain areas with respect to the implementation of growth strategies, including sales and marketing expansion initiatives, new product development and enterprise planning systems.

We had an operating profit of $2.6 million in Q2 of FY’17, up from $0.2 million in Q1 of FY’17 and down from $5.7 million for Q2 of last year. The higher sales in the year earlier period were mainly a result of demand connected to a bird flu pandemic in the U.S.

As compared to the first fiscal quarter 2017 the improvement in operating profit is attributable to higher sales and reduced operating expenses. Operating margins were 11.8% for the three months ended July 31, 2016 compared to 19.3% for the year ago period and 8% for the three months ended April 30, 2016.

Second quarter net income was $1.4 million or $0.20 per share, up from breakeven in the first quarter of the year and as compared to $3.6 million and $0.50 per share in the second quarter of last year.

Against the prior year period, net income for the three months ended July 31, 2016 primarily reflects a lower sales volume from the lack of higher margin emergency demand.

As compared to the first quarter of this year the higher net income in the second quarter reflects improved traction for our organic growth initiatives and expense management initiatives. As a reminder, relating to our tax rate we don't expect any significant changes year over year in the effective tax rate.

We do have the benefit of a tax credit from the worthless stock deduction relating to our exit from Brazil. So there should not be cash taxes in the U.S. for the next two to three years. We do, however, pay taxes on certain country operations when those operations are profitable on a local basis. Moving on to the balance sheet.

With approximately $800,000 of net cash provided by operations in Q2 FY’17, cash and cash equivalents at the end of the quarter increased to $7.9 million from $7 million at the beginning of the fiscal year. Our cash balance has been moderated by our efforts to improve our overall financial condition.

At July 31, 2016 balance of borrowings under our revolving credit facility stood at $6.2 million, a $3.3 million reduction from $9.5 million at the beginning of the year. With our short-term assets increasing and our short-term liabilities decreasing since the beginning of the year, our current ratio improved to 3.4 to 1 from 3.2 to 1.

Total shareholders' equity also improved from the beginning of the year going from $67.5 million to $69.1 million. Thus our tangible book value at July 31, 2016 is up $1.7 million from the beginning of the year to $55 million. That concludes my remarks. I will turn the call back to the operator begin the Q&A session..

[Operator Instructions] The first question comes from Alex Fuhrman with Craig-Hallum Capital Group..

Great, thank you very much for taking my question. And certainly congratulations on a nice recovery here in the second quarter. I wanted to ask about gross margin here. I mean it was pretty significantly better than we were expecting in the second quarter.

Is there anything in particular that was driving that? And then looking out into the back half of the year, if we were to see similar revenue levels in the $22 million to $23 million per quarter, what kind of a gross margin will we be looking at in the back half of the year? I mean is there any reason to think it could come close to where it was in Q2 or perhaps somewhere in between Q1 and Q2?.

I believe the gross profit – the big improvement over the previous quarter, again we had the reduction in force in Q1 which we absorbed significant severance in that quarter. This quarter I think is normalized. We are working on our comps on a global basis, big reduction – big effort for reduction in costs.

So I don't see the margin changing significantly going forward. We do think that the sales are somewhat normalized as well unless we see a change in the indicators that Chris discussed in oil and gas sector..

And the currency..

Yes, and the currency headwind..

Yes, currency. From July 31, 2015 to this July 31, 2016 which these numbers reflect were still down, I mean they were down the year before, they’re down again this year. I mean to give you an example, we operate in Kazakhstan, that currency was down 88% this year..

Well, that is quite a headwind..

So we think we're at the nadir here on the revenue side because oil and gas as we think we've hit bottom. The currencies are weak because we report in dollars and as you can see 47% of our sales are overseas. The only currency that’s stayed even with the dollar this year was the Canadian dollar.

Every other currency in the world was down against the dollar, and some by 16%, 17%, it's huge. So I think we're at the nadir, the currency, unless our dear Federal Reserve raises interest rates. And I think we certainly are at the bottom of the oil and gas curve here.

So industry is soft, not only is the high dollar hurting our reported earnings in dollars, because we report in dollars. But it's also hurting heavy industry. The large companies like Boeing, Caterpillar, Deere are having a hard time selling their product overseas.

And the overseas competitors are selling lots of products in here because their currencies are so cheap. So as I said – I think we've hit the bottom of both the oil and gas – both the heavy industry and the currency headwind. So we’re really at bottom here.

So I can only see revenues going up sequentially and I'm pretty sure we can hold the gross margins..

That's terrific.

And then thinking about just capital allocation and the recent share repurchase authorization, is there any particular strategy for that or are you planning on doing that over a particular time horizon or looking to be opportunistic based on where your stock is? And just curious what you -- how you would feel about share repurchases here at around $10 a share?.

Well, I tend to look at it as share repurchasing in the book value area such that there is – we will always buy it at book or below, and that also is anti-dilutive move on repurchasing. But that's pretty much how we look at it. We’d stay opportunistic..

The next question comes from Jeffrey Briggs with Singular Research..

Hi. Great to see margins coming up this quarter, so that's really a good thing. I know I'm heeding your advice and taking the quarter-on-quarter comparison, compared to year over year because a lot of things, the currency and also the bird flu type jump in sales. So two quick questions.

One of them is without getting into a ton of detail on it, is there a ballpark number just for what the bump in sales was for Q2 2015 with the bird flu type sales?.

Yeah, it would be extreme ballpark. We have an idea when our product sells into an event such as that, based on the products that are ordering but we can't know with any finality due to the nature of our sales model. We sell through distributors and we don't sell directly to [users] [ph].

So it’s difficult to put an absolute number on this type of event, such as the bird flu. I mean certainly it was upwards of $3 million in that quarter..

No, that's helpful, and I'm not going to publish the number or anything. I'm just trying to get sort of a general handle on that. I know you guys really can't know for sure, so..

[Indiscernible]..

That's helpful for a general ballpark type level. And then a second question is more general in regards to sort of end use sectors you guys are in and sort of where you see organic growth coming from going forward. So I know oil and gas, like if you guys mentioned, is down globally and that hopefully we’re close to the bottom of that.

I'm just trying to look at some of the other major sectors you’re planning and kind of look at where some of sort of what’s growing globally.

And one thing that comes to mind, when you look at your product lineup and you mentioned earlier in the call, some of the arc protection type clothing and I know the primary issue that's mostly probably related to power lines and electrical, if you look at sort of utilities globally, telecom and wireless tower space, is something that's probably one of the bigger growth markets around the globe.

Is that something that any of your products go into and then is there any sectors you see that are sort of the prime spot for growth for you guys in the next couple of years?.

Well, we're making a real commitment to the utilities. As the arc flash, the fire protective rainwear and winter-wear that the utilities buy for the people who work outside on the line, we're making a real effort to go after that industry. We hired a pretty experienced salesman to go after the utilities themselves.

He's got experience with the utilities. So we're making a real commitment to push that product line. The other product line that seems to be doing quite well these days is our fire turnout gear which is what generally municipal firemen response to residential or commercial fires.

We're also pushing a new product in disposables and next quarter we'll give you more on that. I mean so basically we're looking at new products, taking business from other people but primarily new products, and when oil and gas come back and when the currencies come back, hopefully that will be a real tailwind in a couple of quarters.

But we're not going to sit back and wait for them to come back. I mean currencies may never come back. We're going to start introducing new products and we've got a target of a 40% gross margin minimum for new products and that's where we want to be.

We want to get to a 40% gross margin and we want to get over $100 million in sales next year, not FY’17 but FY’18 and considerably over $100 million..

The next question comes from Doug Ruth with Lenox Financial Services..

Hi, I also want to congratulate on the tremendous improvement sequentially.

Do you have an estimate as far as how much higher the revenue might have been without the currency fluctuations?.

Well we took a $0.3 million charge in the quarter for currency fluctuations..

We do cover a lot of the ambush by these currencies -- by hedging, and we probably take about 90% out of the risk category by hedging everything.

But there's a lot of currencies you just can't hedge and you can't hedge the Russian ruble that went down 8% this year, the Kazakhstani tenge, the Brazilian real, or the Argentine peso, there's a lot of these currencies you can’t hedge. I mean we actually are able to hedge the Chinese currency via Chinese bank.

So we do avoid a lot of it but that doesn't -- I know what you're saying, I know we haven't calculated it and we really should sit down and calculate it. Because you see the foreign revenues going up despite the fact that the currencies go down.

When you're reporting – reporting your sales in dollars you're reporting your earnings in dollars and as your earnings in those countries are just being pulled down arbitrarily by currency moves but what I'll do, Doug, we’ll calculate that next quarter for you. And we will try to go back two quarters..

That would be very helpful. I also want to congratulate you.

How were you able to increase the margins in disposables even though the sales went down, which was expected based on not having the bird flu and other events?.

Well it's product mix and basically keeping prices going up. Holding prices where they are high, not giving it away and the product mix has a lot to do with the two..

That was a tremendous achievement.

Can you tell us, have you bought back any stock so far?.

No, we haven't because we're waiting for the Chinese – our Chinese subsidiary to send back a dividend of about $1 million which is required by our bank to start the repurchase program. So when that happens we'll be in a position to repurchase..

You also made tremendous progress on the inventory. We have a lower inventory in the second quarter versus the first quarter, and then sequential -- or year over year a very large decrease.

Do you have an inventory goal for the year?.

We don’t have an inventory goal per se.

I believe that we're working to have the correct core products on hand that we need with a lesser stock on hand, we're evaluating all of our minimum stock levels and working to reduce SKUs as we move through these quarters and I think it's just an overall planning effort as management to focus on owning the inventory and moving off the shelves anything that we don't sell everyday..

Would you expect the sequential decrease in the inventory in the third quarter versus the second quarter?.

I don't know if I can predict that. I don’t predict it increasing. I believe we're getting to a point where we're fairly right sized. Again the nature of this business, if we work too hard and get too bare boned, then when there is an event we don't have the product to respond to it.

So it’s a very delicate balance for us to coordinate what stock we’ve got to have on hand and how much of it, keeping it in the pipeline at all times..

Of course we trust you to figure out what you need. I was just asking a question..

I mean we’re in the process of winnowing old product lines that – and once we winnow them, in other words, we just stop selling them because they don't make any sense, then we run them down that, that will take inventory down. So that is a process that takes 9 to 18 months..

What about -- could you maybe give us a little color, and you had talked previously that you had hoped for like Australia, the United Kingdom and India, could you maybe offer any color as far as what's happening in those markets?.

Australia is doing quite well. Wesfarmers, which is the largest distributor in Australia, kicked Kimberly Clark out of their catalogue and listed up as number one with eight or ten pages and Dupont is number two, and that’s it. So we're number one in Australia with our product lines now.

It’s not a huge market but it's a market that we're doing about 1 million in, that has the potential to be a $5 million to $6 million market. Because it's very similar to Australia, it's a national resources country. The populations are about the same, Anglo-Saxon law, very very similar countries.

So there's $4 million, $5 million of future promise in Australia..

Now similar to Canada, perhaps?.

Right. Similar to Canada who is doing very well. Europe is slow, they are not growing. There is just basically hiring more salesmen in countries where we do not have representations. We hope to hire one in Germany which is probably 40% of the EEC market for our product.

So it’s really -- there is no growth, it is just taking market share away from other people. Russia really I think is nadir which is part of Europe. Their currency only went down by 8% this year. So I think they are bottom too. And of course that’s oil and gas. If oil and gas recovers, Russia recovers.

Lot less of a hit than our competitors in Russia and Kazakhstan..

And then what about India? We hear great things about how that country seems to be growing –.

The currency there only depreciated 3.5%. But yes, we're profitable in India now, we're growing. We used to have no salesman, now we have four salesmen who we just hired. I mean we just filled this out. So India is going to be starting up from probably almost a half million in sales and move forward.

So there is another country that's a good potential to be $4 million to $5 million in sales in a couple years. And if that seems small for India, but they don't believe in safety too much. You know, things change over time..

And what about Mexico? How is that country doing?.

Mexico again is depressed by oil and gas. It's a big oil and gas economy, we're trying to -- PEMEX is not buying much, I can tell you. But what we're trying to do is we double our efforts and get into the automotive industry down there, because that is just booming. They are building five new plants down there every year, year over year.

So we're just redirecting our sales efforts in Mexico. So when you look around the world, oil and gas has really probably dropped $5 million, $6 million of our revenues from three years ago. It's a big deal. And when it comes back hopefully that all comes back. So there will be a lot of headwinds as things improve in the oil gas industry.

Three or four years you have an emergency event..

You've done a wonderful job based on not -- having a decline in the oil and gas revenue. I'm not complaining, I think you are putting your energy into the things that are working..

Well, as I said last time around I think it was an answer to your question, Doug, is that we will improve sequentially quarter by quarter by quarter as we move along.

And I just don't see any other things that could happen to us other than this big industrial downturn in oil and gas and the currencies, I mean the only thing that could happen is if they go up..

Yes, something that’s low should go higher..

Right. Without those sequentially we will do better and better each quarter on the top line and the bottom line..

What about that bank line of credit? That has to be renewed at some point.

Is there any news on that?.

It matures in June of 2017, Doug and of course we're talking to the bankers now and seeing what opportunities might be there. We haven't made any decision on any level to make our moves there but obviously we will have to either renegotiate the existing facility or move to another bank at that time.

We're not going to make a move before that because there is an early extinguishment penalty and we might pick up a couple of points if we did. If we did make a change, but then you’ve got the legal and bank fees to go along with it. So we believe it would be a wash. We're very confident in the facility right now, there's no rush..

And they're comfortable with us, they would renew the facility they had indicated..

With the improved results, it should be fairly straightforward to renew that line..

Yeah, we’re both very comfortable..

And then are you able to quantify at all how much of an increase you've experienced with that safety and reflective apparel? Are you able to put that out, or do you prefer not to say that?.

I just don't know it. I could think about it and come back to people if that’s necessary. I would just have to go to my salespeople to break it out..

Well it's a really nice improvement from the first quarter and thank you for all your hard work and I look forward to the next report..

[Operator Instructions] The next question comes from Shun Haget, a private investor..

Hello, thanks for taking my question. Can you give shareholders an idea of what you will be doing with the proceeds that your operations will be generating over the next couple quarters? You have about, what is it, $8 million of cash on the balance sheet.

Will you continue to pay down your revolver? Obviously you have the shareholder buyback program, but that will be done opportunistically.

Is there CapEx projects on the horizon, maybe tuck-in acquisitions? Can you give me some idea of what you're going to be doing with that cash?.

I think the only planned CapEx project at this point is we're still working with an ERP implementation. I think that in terms of acquisition we don't have any target at this time.

We are just trying to strengthen the balance sheet, and we don't want to over-extend management because an ERP implementation as everybody knows is a large undertaking and we don't want to stress management to a level that they can’t handle that as well as the day to day.

I do think that as a company we're able to focus much better on the projects that help us, on the things that improve our bottom line. Now that we have discontinued the operations in Brazil and there is a way from that, I think management is very much working together to move forward. But as far as CapEx, that's the only one that we have planned..

That’s reducing debt, repurchase the stock..

How much would be left on the CapEx program the ERP system, can you give me an idea of that?.

We're looking at a two to three year project over that period of time. We don't think significantly in excess of $1 million..

That sounds good.

So you will just be focusing on building your war chest and paying down your revolver?.

That's correct. End of Q&A.

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

Well, we appreciate your participation on Lakeland's fiscal 2017 second 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 continued implementation of strategies for effectively managing its balance sheet, controlling expenses and capitalizing on long term global growth initiatives.

We are very encouraged by our own growth prospects as we are well positioned to grow organically through our overall market expansion as well as capturing the market share. Thank you again and good bye..

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