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Small Company Can’t Make Ebola Hazmat Suits Fast Enough

Image source: Lakeland

Image source: Lakeland

Ebola appears to be very good for business at Lakeland Industries Inc. (NASDAQ: LAKE), the manufacturer of hazmat suits which says it has received orders for 1 million of the outfits designed to shield people against biological hazards.

Many of those orders are from the US government.

Lakeland has increased its production by 50 percent since August and is on track to increase its level of production by 100 percent by January. The small New York company actually lost money last year but is on track to make a big profit this year.

“Recent developments have enabled us to strengthen our balance sheet, increase forward cash flow from the elimination of interest service on expensive debt, and increase production capacity to contribute to the fight against the spread of Ebola which has led to a material improvement in our business,” Lakeland CEO Christopher J. Ryan said in an Oct. 29 press release.

Ebola has been good for his company’s bottom line, Ryan said.

Lakeland makes the ChemMax and MicroMax brand suits that many healthcare workers use to protect themselves from Ebola.

Buyers of Suits Unknown

Who is buying them? The press release said “orders have been received from government agencies around the world as well as other public and private sector customers.”

One of those customers no doubt is the US government. Another press release from Lakeland last month revealed that the US State Department was taking bids for 160,000 hazmat suits.

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“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,” the press release noted.

Lakeland also manufactures a line of aprons and other protective clothing, including gloves. The CDC says Ebola spreads through contaminated body fluids. Healthcare workers and others who want to protect themselves against Ebola must wear a full body suit.

Ebola Sends Stock on a Roller Coaster Ride

The Ebola crisis has sent Lakeland’s stock on a roller coaster ride during the last month. On September 9, 2014, Lakeland was trading at $6.25 a share. By October 10, it had tripled in value to $19.63 a share. By Oct. 28, it had fallen back to $12.14 a share but it rose back to $14.26 a share on Oct. 30.

Lakeland reported revenues of $93.13 million on July 21, which was actually down slightly from July 2013 when it reported revenues of 94.01 million. Lakeland lost money last year, and it reported a free cash flow of $2.053 million – the money left over after it paid its bills. This year’s Ebola outbreak, though, likely means the company will make money.

To finance the increased production of Hazmat suits, Lakeland has issued 1.11 million additional shares of stock in a private placement. The private placement would raise around $110 million for Lakeland.

Do you believe the Ebola outbreak will get worse before it gets better? Leave your reply in the section below.

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