Almost exactly a month ago, long before the Texas Ebola fiasco, when virtually nobody had heard of a small company out of Ronkonkoma, NY called Lakeland Industries and whose only product is "industrial protective clothing for industry, municipalities, healthcare and to first responders" i.e., Hazmat suits, we asked [4]"i) who will get sick next and ii) how bad could it get?" For the answer we focused on the recently announced order of 160,000 Hazmat suits by the US State Department which had come at a time when the CDC was urging everyone that there is nothing to fear and that Ebola is under control. Not surprisingly, shortly thereafter the Ebola situation promptly escalated and led to not only the first Ebola death and Ebola transmission on US territory, but also the first Ebola infection in New York City.
Fast forward to today when shortly after the close, and minutes after it announced the completion of another $11 million follow on offering, Lakeland surprised everyone, and especially those who are short the stock, when it released the following "Update on Business Activity Relating to Ebola Crisis [5]" in which it announced that it has, by now, received a stunning 1 million Hazmat suit orders and rising exponentially.
Through its direct sales force and numerous distribution partners throughout the world, Lakeland has secured new orders relating to the fight against the spread of Ebola. Orders have been received from government agencies around the world as well as other public and private sector customers. Certain of these contracts require weekly delivery guarantees or shipments through the first calendar quarter of 2015. The aggregate of orders won by Lakeland that are believed to have resulted from the Ebola crisis amount to approximately 1 million suits with additional orders for other products, such as hoods, foot coverings and gloves. Lakeland started shipping such orders only in October, which is the end of its fiscal 2015 third quarter reporting period. The main impact from Ebola-related orders received to date will not be realized until the Company's fiscal 2015 fourth quarter ended January 31, 2015.
Additionally:
Monthly production capacity for sealed seam ChemMAX and MicroMAX protective suit lines has increased by nearly 50% from August 2014, prior to Ebola-related product demand, to October 2014, and is on track for a 100% increase from that level by January 2015, with the ability for additional increases as needed. Substantially all of the available production capacity in August 2014 had been allocated to purchases by the Company's industrial customers (for non-Ebola related purposes). The Company will continue to service its industrial customers who are dependent upon Lakeland to conduct their work safely. The expanded capacity is necessary in order to meet obligations for both traditional customers as well as for protection against the spread of Ebola.
Conveniently enough, we put the 1 million Hazmat suits in context just two weeks ago [6]when it was revealed that Ebola-stricken Liberia alone needs about 1 million suits for its population.
[7]
Some additional context: earlier today the World Health Organization said that 4,910 people had died of Ebola and anew record, or 13,676 confirmed, probable or suspected cases, had been reported in the three hardest-hit countries of Guinea, Liberia and Sierra Leone.
As we said in the summery when the Ebola cases in those countries were orders of magnitude fewers, "let's hope these cases do not cross borders and certainly not the Atlanic."
Finally, to remind everyone what the hoopla is all about, and why LAKE stock was up 30% after hours despite the equity dilution, here is what a Lakeland suit looks like... and costs. Something tells us LAKE's $60 million market cap as of today's close will be quite a bargin in the coming months. Especially with 44% of the float short.
[8]
