Good day, and welcome to the Lakeland Industries Preliminary Fiscal 2022 Fourth Quarter Financial Results Conference Call. All lines have been placed on a listen-only mode and the floor will be opened for your questions and comments following the presentation. During today's call, we may make statements relating to our preliminary financial results, goals and objectives for future operations, financial and business trends, business prospects and management's expectations for future performance that constitute forward-looking statements under federal securities laws. Any forward-looking statements reflect management expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our SEC filings. Our actual results, performance or achievements may differ materially from those expressed in or implied by such forward-looking statements. We undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. During today's call, we will discuss financial measures derived from our financial statements that are not determined in accordance with U.S. GAAP, including EBITDA, adjusted EBITDA and EBITDA margin. Reconciliation of each of the non-GAAP measures discussed on this call to the most directly comparable GAAP measure and presented -- is presented in our earnings release. At this time, I would like to introduce you to your host for this call, Lakeland Industries' Chief Executive Officer, Charlie Roberson. Mr. Roberson, the floor is yours.

Thank you, operator. Good afternoon, and thank you all for joining us. I'm joined today by Lakeland's Chief Operating and Financial Officer, Allen Dillard. As was highlighted in today's press release, Lakeland reported solid fourth quarter and strong full year preliminary results. I'm extremely proud of our team's efforts as we continue to position the company for success in the post-pandemic era through continued pricing discipline, investments in our sales and marketing functions and multiple operational capability enhancements and growth initiatives, which together have broadened and strengthened our customer relationships, positioning Lakeland for continued above-market growth going forward. Our revenue was $26.8 million for the fourth quarter and $118.4 million for the fiscal year. Importantly, while these revenues have declined on a quarter-over-quarter and year-over-year basis, as expected, the business has maintained its profitability in the face of multiple supply chain and inflationary constraints as evidenced by our ability to deliver gross margin performance this quarter that was largely in line with our long-term stated goal of greater than 40%. This achievement was noteworthy as several onetime items held back our performance in the quarter including what we regard as higher near-term expenses that could reverse in the future, such as elevated freight costs. We believe that higher cost of goods sold, COGS, due to manufacturing curtailments are behind us and that freight costs and sales revenue will improve going forward. Together, manufacturing curtailment in our Vietnam facility and increased freight costs added approximately $600,000 to cost of goods sold for the quarter. Additionally, the natural effect that lower revenues present to the maintenance of margins tested the flexibility and durability of our new model. Gross margin was 39.2% for the fourth quarter and 43% for the fiscal year. Our performance for the year and in particular during the fourth…

Thanks, Charlie, and good afternoon, everyone. As Charlie mentioned in his comments, COVID-related demand surges were largely absent from our fourth quarter results. However, while we are confident that the pandemic overhang is behind us, we have not yet seen a full return of pre-COVID levels of demand across some of our key market areas such as oil and gas and more broadly within the industrial disposables market due to distribution channel overstocking, which is now showing signs of dissipating based on recent order size and frequency in affected markets. On a consolidated basis for the fourth quarter of fiscal 2022, domestic sales were $11.2 million or 42% of total revenues, and international sales were $15.6 million or 58% of total revenues. This compares with domestic sales of $16 million or 43% of the total and international sales of $20.9 million or 57% of the total in the same period of fiscal 2021. In terms of product mix for the quarter, we saw disposables decrease to 52.6% of sales without the COVID surge demand, while chemical, fire and our utility lines were increased as we are beginning to see customer activity increase in these areas. As it relates to broader inventory corrections, we believe distribution channel inventory levels are continuing to correct themselves and that sales have largely returned to normal rates in the U.S. and Europe as evidenced by larger orders coming from our distributors, further signaling that overstock inventory levels are dissipating. As was the case in previous quarters, efforts to improve our gross margin profile has shown durability, which we expect will prove sustainable. There are several key aspects to our business strategy we have successfully executed during the pandemic, key components of which are a greater discipline around pricing, a focus on quality product mix, and…

[Operator Instructions]. And the first question is coming from Alex Furman with Craig Hallum Capital Group.

First, I wanted to ask about the results in the fourth quarter. It seems like revenue was a little bit less than we were looking for. I'm curious if that was your read as well? And if that's the case, where specifically was that coming from? I know you mentioned in your prepared remarks that the COVID-related demand is mostly dried up. I mean has there been a kind of a mismatch of just the timing of the industrial recovery, maybe being a little bit slower than what had been expected? Anything you can kind of give us to help size us -- size up the fourth quarter demand and kind of what that looks like now heading into the first quarter would be really helpful.

Sure, Alex. While it's not the -- industrial demand, in general, is still depressed. There is one single subset of the industrial market that would have closed the gap entirely had it come back to its full force, and that's the oil and gas business. If we take that alone and at a 15% rate and add it back in, we're back to where we think we ought to be. And unfortunately, as we were looking forward at what our revenue run rate would be, we did not foresee the Russia-Ukraine war.

Yes. No, that makes a lot of sense. And then, Charlie, can you talk a little bit about these 3- to 5-year goals that you're unveiling here. Looks like kind of getting to a high teens to low 20s, EBITDA margin would certainly be one of the highlights of those goals. Can you kind of talk about the path you see of kind of getting there over the next 3 to 5 years, just the numbers that you just reported here. I mean you're already pretty close there with kind of a 15% EBITDA margin. So is it your goal to be in that high teens to low 20s range for each year within the next 3 to 5? Or is that kind of where you'd like to end up 4 or 5 years from now?

Yes. It is where -- we want to attain that goal as quickly as possible, Alex. The best I can say about where we are now and where we're going is with the scalability or the leverage in our business, I think we're at the low end of our leverage right now. If we meet our growth objectives to outperform the market by a couple of hundred basis points per year, I think we get there relatively quickly. I don't think it takes us 5 years, but that's why we've got the 3- to 5-year span in there. Does that answer your question?

Yes. Yes, that does. Thank you. And then lastly, I guess, just thinking about the different regions in which you operate. I know you mentioned some have been coming back faster than others. Are there any key regions that you're kind of looking at this year that could kind of make or break the year? Any kind of key developments in terms of the economic recovery that we should be looking out for as it relates to your business?

Well, the single largest piece for us is the U.S. and the North American market. And that is where the bulk of our oil and gas business resides. So that's key for us. We're focusing on growing other areas. We're not just waiting for oil and gas to return. We're focusing on our utilities business, that vertical and our critical environment verticals, trying to replace some of that while we wait for that market to recover. And as I mentioned in my remarks, given where oil and gas is, the Gulf Coast refineries are currently looking to replace feedstocks, that's not going to go on forever. But it doesn't make sense to turn around a refinery when you don't have any feedstock for it. So once they identify a new source -- because the Gulf Coast largely uses Russian oil, the #1 replacements for which are Venezuelan and Iranian oil, so that explains part of that in the news. Once they find a new feedstock, we anticipate they'll have to change their operations to accommodate the new source of the crude oil, and that's when they'll begin executing turnaround.

[Operator Instructions] Okay. We have no further questions in queue.

Thank you all for joining today's call. We're excited about the future of Lakeland and truly believe we are building a company positioned to deliver sustainable long-term growth and profitability. Have a great day.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.