Good afternoon, and welcome to the Lakeland Industries’ Fiscal Fourth Quarter and Year End Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [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, April 21, 2016. 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 circumstances. These statements are subject to a number of assumptions, risks, and uncertainties and are factored into 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.

Good afternoon to you all and thank you for joining our fiscal 2016 fourth quarter and full year financial results conference call. We are going to provide brief operating statements on the status of operations and on our financial results for the quarter and year. The call will then be opened up so that we may respond to your questions. Now, I’d like to discuss our financial highlights, operating strategies and overall business with a view of our objectives as we move forward. 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 would 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. With this back drop, now let's now turn to our prepared remarks regarding our continuing operations starting with some annual financial results highlights. Sales of continuing operations increased for the third consecutive year despite considerable currency headwinds in fiscal 2016, which significantly reduced revenues reported on a consolidated GAAP basis in US dollars. Sales of $99.6 million this year increased 7% from $93.4 million in the prior year driven by organic growth in the first three quarters of fiscal 2016 and emergency demand earlier in the year. Gross margin for the year was 36.5% compared to 33.9% last year. Operating expenses decreased by $200,000 and decreased as a percent of sales to 25% from 27% last year. Operating income increased to $11.8 million from operating income of $700,000 last year. Operating income as a percent of sales increased to 11.9% this year vs. 7.5% last year. Free cash…

Thank you, Chris. The following addresses my review of the fourth quarter and full 2016 fiscal year ended January 31, 2016. The fiscal 2016 financial results that I discuss on this call will be from continuing operations unless I note otherwise. The discontinued ops relate to the operating results in Brazil. As Chris mentioned, we completed the details pertaining to our exit for Brazil, but prior thereto we exercised discontinued operations accounting for Brazil. Discontinued operations accounting entails the reclassification of all of the financial results of the Brazil operations within the consolidated financial results of the parent company and the restatement of prior periods to reflect the same treatment. The global operations of Lakeland excluding Brazil are shown in financial reports as continuing operations. As of July 31, 2015 Lakeland transferred the ownership interest of its business in Brazil and effective with the fiscal 2016 third quarter that began August 1, 2015, the company expects no further losses from those discontinued ops or charges relating to Brazil beyond the existing accrual of $0.2 million which is included in the fiscal 2016 second quarter financial results. Financial results from the fourth quarter include net sales from continuing ops of $20.5 million for the three months ended January 31, ‘16 compared to $25.3 million for the prior year period or a decrease of 19%. The gross margin was 29.4% this quarter compared to 37.7% last year. In addition to lower sales volume in the most recent periods with write-down margin last year's gross margin was favorably impacted by higher margin sales of products relating to the Ebola crisis. Q4 FY16 operating expenses worldwide decreased by $0.2 million and increased as a percent of sales to 30.8% from 25.7% last year. As a result of lower volume and SG&A largely being fixed…

[Operator Instructions] Our first question comes from Alex Fuhrman of Craig-Hallum Capital Group. Please go ahead.

I would love to just get a sense on especially now I would imagine you have a lot of visibility here into Q1 but it sounds like a lot of the big uptick in orders you guys had around the time of the Ebola and bird flu may have had the unintended consequence of pulling some demand. At what point do you start to see those inventory levels of your customers normalize to the point where they’d be reordering, have you seen any of those customers back so far in Q1.

Business is just beginning to pick up in April. Orders were fairly slow in the first three months of this year. As we said manufacturing weigh down in the United States and oil and gas is just unbelievably bad. So we've seen down ticks in those areas. We are seeing for the first time I guess in three months that business is picking up; orders are picking up in April. And we know that in North America and we will be seeing whether that's happening in places like Russia or Kazakhstan or South America fairly soon. So yes, business is just beginning to pick back up but we have seen and all of our competitors have seen exactly the same drop off in revenues.

Now that makes sense, thanks Chris. And I guess just following up on, and you said about the oil and gas industry I mean it’s obviously a space you guys are active in but it’s not that big of a share of your business, I mean, how should we think about that in terms of how much oil and gas was down in Q4 and was it cut in half basically in Q4 and how should we think about that business for the rest of the year?

A lot of people just look at the United States or North America; we’re selling in Mexico, Kazakhstan, and Russia which also are affected by the oil and gas slow down, okay. And the other thing is that those countries are more affected in their currencies by the oil and gas slow down. The peso, the ruble, they almost trade with the price of oil. So, it's about I'm guessing this is an approximate, it’s about 18% of our business overall worldwide. And it's dropped off considerably I don't want to go over the numbers out of my head because we’re taking annual number and dividing it by four hitting the fourth quarter and fourth quarter was a lot worse than all the other quarters. But the price of oil was up, my personal feeling is it will go above 50 by year end but that's my personal opinion but at 50, they start making money again and at 50 bucks a barrel will start seeing some recovery in the oil and gas business.

Okay that's helpful thanks and I guess just kind of building on what we are discussing about Russia there. Can you give us a sense of that business is structured in terms of fixed versus variable costs? I mean are you preparing for a scenario where the ruble stays at the depressed level it’s been the last year or two, I mean would that be a market that would be a candidate for you to exit, if the conditions in the Russian economy stay kind of where they’ve been and if so how difficult would that be to accomplish?

The first thing we did was to did - up a big heck in Russia, we’re going to stay there because we’ve already – its hit bottom, I mean the Russian economy has hit bottom and now we are seeing it increase. The ruble is going up to the price of oil, the ruble hit a low when oil hit a $26 a barrel. The ruble is going up quite a bit now that oil has hit $40 a barrel. And what we're seeing is opportunities because we were small and because we had low fixed cost in a place like Russia and Kazakhstan what we're seeing is our very, very big competitors being absolutely crushed by this. Because they are so big, the restructuring costs are huge and we are being very opportunistic in grabbing business from them. So I mean Russia hit bottom about a month ago and now it's on its way up.

Our next question comes from Doug Ruth of Lenox Financial Services. Please go ahead.

I have a few questions for you. In America, where do you think the most opportunity is now for you?

Is strong in terms of organic growth that we’re seeing in that industry.

I think our high visibility in our chemical suites are probably the best opportunities for us because we have not really gotten a lot of share in the market. We’ve seem to be getting a lot more share in the market and its very high margin business. And that's where we want to sort of transform or change the way like is just to keep migrating towards higher, higher margin products in a way from the lower margin ones and it’s a slow but steady move. But that's where you're looking at utilities, utilities are just fine financially and we’re beginning to penetrate the utility business and it's a very, very profitable niche of the business. Chemical suits is another area where we’re really focusing our efforts, not only in the United States yet, but worldwide too. So those are the two product lines that are growing. We are growing them now, even through the fourth quarter, they’ve been growing and that's where we’re going to focus all our efforts, particularly in the United States, which is a much more mature market.

So that, sales growth like a 10% rate or better?

Better.

Awesome. Could you talk some about, you talked about some pockets of strength in China, could you give us a little additional color there?

China is turning to -- in other words, there was a business slowdown. I expect revenues and earnings to be up in China this year. They may publish figures of 6% growth, which may not be believable or not, but they’re still positive and they’re still higher than the United States. We do see a slowdown, but now we see a pickup again and we've introduced new products. I am very, very positive about China next year, because things are not as bad as they colored them and China is not an oil and gas producing country. So they don't have that negative like we say due in Mexico as an example.

And the customers are accepting the new products and the sell through has been pretty good?

Yeah. We've actually introduced three or four new products in China and they are doing very, very well.

Wonderful. How about Mexico? It seems like there is so much production and manufacturing, moving down there, what do you think is going to happen fiscal 2017 for the company?

It will be better than this year for sure. And we've actually seen some up quarters in Mexico, fourth quarter was down, but our third quarter not too long ago was up. So we’re seeing some real positive movements in the Mexican domestic sales. Because otherwise, Mexico is just a manufacturing operation for us. It’s a maquiladora, which is set to basically breakeven, but what we've introduced in the last year and a half is actually domestic Mexican sales and the only thing holding us back is that the oil and gas industry is weak. Pemex is not buying as much. So we’re diversifying into the oil companies and other areas that are growing much more quickly.

Yeah. Are you having any success with the auto manufacturers?

I expect to in the next 2 or 3 months.

Awesome. And what about your, could you talk about inventory, do you think it's at the right level, is it too high, too low?

The inventories had gone a little bit high in Q3. There were some expectations, I think, around the bird flu, running a little further out and it did. And there was some excess supply in the marketplace that we saw. But at the end of the year, it was down over Q3, about 6% and we think we’re going to bring it down about that amount for the end of Q1 and we do think that we have the inventory about where it should be in order to be able to service our markets.

Okay. And generally, you’re hoping though work is somewhat lower throughout the year?

That's our expectation at this point.

I recall you asked that question in October 31 numbers and I can't remember, but we do bring them down considerably from October 31 to January 31. We brought them down considerably again in the interim period.

Great. I think you’ve really done a wonderful job with this margin improvement. Can you comment some about what you think might be up with margins in 2017 versus 2016?

Certainly, we’re working towards cost-containment in that area. We’ve made some changes already in the US that will be effective in Q1 in terms of restructuring some of our supply chain moving from production out of the US. We don't have much left in the US, but we have reduced our footprint here in the terms of production and moving that across to Mexico and China. So we do -- our expectation is to continue the trend with improved margins as we improve processes and control cost.

So we could see some improvement in operating margin for fiscal 2017?

That's the expectation for -- as we continue as I’ve said with cost containment measures, improving processes, getting the inventory where it should be and management thereof.

For example, we reduced our -- basically our expense by reducing payroll in this quarter, not yet reported, by over $1 million. And those are expense reductions that stay there forever. The unfortunate thing about a bird flu to get this big bump in sales, big bump in margins, but then they’re not there forever, whereas when you’re reducing expenses, there they’re forever.

Okay. How are you doing with the new computer system? It sounds like that's moving at a faster rate at this point?

Yes. We are still working through that, we've got a lot of front-end work done in terms of streamlining our processes, identifying problems. Some of the report writing type details that we are working through, but yes, we’re certainly moving forward with that and expect to have something in place in FY17 that will be a significant help to management.

So we’re going to be ready to go live at some point during the year with the new system?

I believe that.

Okay, all right. Well, I appreciate the answer to my questions and looking forward to the next report.

Our next question comes from Greg Eisen of Singular research. Please go ahead.

Thanks, good afternoon. Yeah. This is Greg Eisen substituting for [Technical Difficulty] who couldn't be here this afternoon. If I can just go back to the subject on the gross margin for the fourth quarter, I understand the effect of not having the higher margin emergency orders from Ebola and such replicated in this past quarter, but were there any one-off items that would not be repeatable that would also account for the gross margin being where it was this quarter or was it really just the sales volume and the margin from the emergency orders?

The sales volume was a primary factor in the margins that we’re looking at it interferes with efficiencies and yes, on a comparative basis, with the sales mix in the previous year's quarter that did have those higher margin products, it does comparatively appear worse.

Okay. So there wasn't really anything other than that, that weren’t one-time cost in there because it was my question.

No, nothing significant.

Okay. Regarding the potential for future, so you said earlier, recurring non-recurring item, but crisis happened around the world. It’s always going to be the case. Would you have any comment to make about the new zika phenomenon and whether or not that actually pulls a potential for your product line?

That's not going to really increase the potential for our product line, it's there, but it’s small, it's not a big deal. The only people who will be wearing our garments is the people mixing the chemicals for the fumigators and some of the fumigators themselves, but that's not a large number and so that's it. It's not going to affect our business positively, I mean to a great extent.

Okay. I understand. Looking out to the New Year, I think the tax -- for the full year, the tax rate came in around 28.5%, where would you expect the tax rate, your effective tax rate to be for the New Year for fiscal ‘17?

I wouldn't expect any significant changes year-over-year in the effective tax rate. We do have the benefit of the tax credit from the worthless stock deduction, so there won't be cash taxes in the US for the next couple of years.

The US is free of faxes, but we're fairly profitable in many of the other countries we’re operating in. So we’re paying taxes. For instance, in China where we are very profitable, in Canada, where we are very profitable and the UK, where we are very profitable and Chile where we are profitable. So that's where most of the taxes are coming from.

Okay. So -- and that 28.5% range looks pretty good.

That's about right. China is 25% and that's where a lot of these countries come in.

Understood. We are on the high side now in the US

A little.

And because I guess it's a good thing that you have a lot of your income coming from other markets from that point of view. That was it for my questions. Thank you.

I’m seeing no further questions. This concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Ryan for any closing remarks.

Okay. We appreciate your participation on Lakeland's fiscal 2016 third 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 were very encouraged by our growth prospects as we are well positioned to grow organically through our overall market expansion, as well as capital and market share. We see the bottom in the oil and gas countries and I think they only have one place to go and that’s up. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.