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Core Insights - Lakeland Industries, Inc. specializes in manufacturing and selling protective clothing for industrial and public safety markets, with significant sales in the U.S. and Europe [1] - The company reported earnings per share of $0.08, surpassing the estimated loss of $0.04, despite revenue of approximately $52.5 million being below the estimated $59.6 million [2][4] - A notable 36% increase in net sales was driven by a 113% rise in fire services product sales, which now account for 49% of total revenue [2][4] - U.S. net sales surged by 78% to $22.1 million, while European sales rose by 113% to $15.1 million [2] - The company's gross margin improved by 240 basis points to 35.9%, supported by lower operating expenses [3][4] - Lakeland reported a positive net income of $0.8 million and an adjusted EBITDA of $5.1 million, excluding foreign exchange impacts [3] - The company updated its fiscal year 2026 revenue and adjusted EBITDA guidance due to global tariff uncertainties [3] - The price-to-sales ratio is 0.77, indicating the stock is valued at less than one times its sales [3] - Lakeland maintains a low debt-to-equity ratio of 0.28 and a strong current ratio of 3.88, reflecting good short-term financial health [3]

Group 1 - Lakeland Industries reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of a loss of $0.04 per share, compared to a loss of $0.19 per share a year ago, representing an earnings surprise of +1,000.00% [1] - The company posted revenues of $52.5 million for the quarter ended July 2025, missing the Zacks Consensus Estimate by 1.51%, and this is an increase from year-ago revenues of $38.51 million [2] - Lakeland Industries shares have declined approximately 41.3% since the beginning of the year, while the S&P 500 has gained 10.4% [3] Group 2 - The company's earnings outlook is crucial for investors, including current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The estimate revisions trend for Lakeland Industries was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $61 million, and for the current fiscal year, it is $0.18 on revenues of $221.9 million [7] Group 3 - The outlook for the Security and Safety Services industry, where Lakeland Industries operates, is currently in the top 13% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Data and Key Metrics Changes - The company achieved record net sales of $52.5 million, representing a 36% year-over-year increase, driven by a 113% increase in fire service products [3][4] - Adjusted EBITDA, excluding FX, was $5.1 million, an increase of $2.4 million or 90% compared to the same period last year [14][18] - Net income was $800,000 or $0.08 per share, compared to a net loss of $1.4 million or $0.19 per share for the same quarter last year [14][24] - Adjusted gross margin percentage decreased to 37.4% from 41.1% year-over-year, primarily due to lower acquired company gross margins and increased material costs [4][20] Business Line Data and Key Metrics Changes - Sales from fire service products increased by $13.6 million year-over-year, with contributions from Meridian and LHD Group [16][22] - Organic sales increased by $5 million or 14% over the prior year [15][19] - Adjusted gross profit for the second quarter was $19.6 million, an increase of 24% compared to the same period last year [16][18] Market Data and Key Metrics Changes - Domestic sales were $22.1 million, representing 42% of total revenues, while international sales were $30.4 million, accounting for 58% of total revenues [15][19] - U.S. revenue increased 78% year-over-year, while European revenue grew 113% [22][23] - Latin American operations experienced a $3.6 million decrease in sales due to delayed purchase decisions from tariff uncertainty [23] Company Strategy and Development Direction - The company aims to continue robust growth in fire services and industrial segments, focusing on acquisition synergies and increasing market share [3][4] - Strategic initiatives include streamlining operations and improving profitability through facility closures and cost reduction measures [7][8] - The company is actively pursuing M&A opportunities within the fire suit rental, decontamination, and services business [11][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating tariff uncertainties and emphasized a focus on operational efficiency and customer relationships [9][10] - The company adjusted its fiscal year 2026 outlook for adjusted EBITDA to the range of $20 to $24 million, expecting revenue near the lower end of $210 to $220 million [29][30] - Management anticipates steady expansion in EBITDA margins over the next three to five years, driven by improved efficiencies and disciplined pricing [30] Other Important Information - The company reported an increase in institutional holdings by 447,000 shares, or 6.2%, to 7,622,035 shares [8] - The recent sale of the Decatur facility for $6.1 million is expected to strengthen the balance sheet and support the M&A pipeline [7][24] Q&A Session Summary Question: Full-year guidance and back half implied numbers - Management indicated that the current EBITDA run rate may not be sustainable due to challenges in Latin America but expects growth in the U.S. and Europe [34][36] Question: Expectations for full-year organic growth - Management anticipates mid-teens organic growth, depending on the timing of fire service RFPs and large orders [38][39] Question: Update on M&A targets - Management is in discussions for several imminent deals, focusing on service-related acquisitions [40][41] Question: Gross profit margin and tariff impacts - Management noted that tariffs impacted margins by about 1.2 points and expects improvements in gross margin in the coming quarters [46][48] Question: Inventory levels and comfort - Management acknowledged high inventory levels and plans to optimize them over the next six months [49][52] Question: Changes in buying in Latin America - Management is starting to see movement in Latin America, with expectations for a substantial catch-up in the second half of the year [54][56] Question: Normalization of client perspective on tariffs - Management feels more comfortable navigating the uncertain environment and is optimistic about future operations [60][62]

Financial Data and Key Metrics Changes - The company achieved record net sales of $52.5 million, representing a 36% year-over-year increase, driven by a 113% increase in fire service products [3][14] - Adjusted EBITDA, excluding FX, was $5.1 million, an increase of $2.4 million or 90% compared to the second quarter of fiscal 2025 [14][18] - Net income was $800,000 or $0.08 per share, compared to a net loss of $1.4 million or $0.19 per share in the same period last year [14] - Adjusted gross margin percentage decreased to 37.4% from 41.1% year-over-year, primarily due to lower acquired company gross margins and increased material costs [4][20] Business Line Data and Key Metrics Changes - Sales to the fire service products line increased by $13.6 million year-over-year, with contributions from recent acquisitions [16][22] - Adjusted gross profit for the second quarter was $19.6 million, an increase of $3.8 million or 24% compared to the prior year [16] - Organic sales increased by $5 million or 14% over the prior year, indicating strong underlying business performance [15][28] Market Data and Key Metrics Changes - Domestic sales were $22.1 million, representing 42% of total revenues, while international sales were $30.4 million, accounting for 58% of total revenues [15] - U.S. revenue increased 78% year-over-year, while European revenue grew 113% [22] - Latin American operations experienced a $3.6 million decrease in sales due to delayed purchase decisions from tariff uncertainty [23] Company Strategy and Development Direction - The company aims to continue robust growth in fire services and industrial segments, focusing on acquisition synergies and increasing market share [3][10] - Strategic initiatives include streamlining operations and improving profitability through facility closures and cost reduction measures [7][8] - The M&A pipeline remains strong, with active discussions for acquisitions in the fire suit rental and decontamination services sectors [11][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating tariff uncertainties and emphasized a focus on operational efficiency and financial stewardship [9][10] - The company anticipates continued top-line revenue growth in fire service products and industrial verticals, with a revised fiscal year 2026 outlook for adjusted EBITDA between $20 million and $24 million [29][30] - Management highlighted the importance of integrating recent acquisitions to realize synergies and drive future growth [19][29] Other Important Information - The company reported an increase in institutional holdings by 447,000 shares, or 6.2%, indicating growing investor interest [8] - The recent sale of the Decatur facility for $6.1 million is expected to strengthen the balance sheet and support the M&A pipeline [7][24] Q&A Session Summary Question: Full-year guidance and back half implied numbers - Management indicated that the current EBITDA run rate may not be sustainable due to challenges in Latin America but expects growth in the U.S. and Europe [34][36] Question: Expectations for full-year organic growth - Management anticipates mid-teens organic growth, depending on the timing of fire service RFPs and large orders [38][39] Question: Update on M&A targets - Management confirmed ongoing discussions for several imminent acquisitions, focusing on service-related opportunities [40] Question: Gross profit margin implications from tariffs - Management noted that tariffs impacted margins by approximately 1.2 points and expects improvements in gross margin in the coming quarters [46][48] Question: Inventory levels and comfort - Management acknowledged high inventory levels and plans to optimize them over the next six months [49][52] Question: Changes in buying behavior in Latin America - Management reported some movement in Latin America but noted that recovery would not fully compensate for earlier losses [54][56] Question: Normalization of client perspectives on tariffs - Management indicated that clients are becoming more comfortable with the tariff environment, which is expected to improve sales [60][62]

Financial Performance - Net sales for the three months ended July 31, 2025, were $52.5 million, an increase of $14.0 million or 36.4% compared to $38.5 million for the same period in 2024[124] - Gross profit for the three months ended July 31, 2025, was $18.8 million, an increase of $3.6 million or 23.7% compared to $15.2 million for the same period in 2024[125] - Net income for the three months ended July 31, 2025, was $0.8 million, compared to a net loss of $(1.4) million for the same period in 2024[131] - Net sales for the six months ended July 31, 2025, were $99.2 million, an increase of 32.6% compared to $74.8 million for the same period in 2024[132] - Gross profit for the six months ended July 31, 2025, was $34.5 million, an increase of $3.1 million, or 9.9%, from $31.4 million for the same period in 2024[133] - Net loss was $(3.1) million for the six months ended July 31, 2025, compared to net income of $0.3 million for the same period in 2024[138] Operating Expenses - Operating expenses increased by $2.5 million or 14.6% from $16.8 million for the three months ended July 31, 2024, to $19.3 million for the same period in 2025[127] - Operating expenses increased by $8.8 million, or 28.6%, to $39.6 million for the six months ended July 31, 2025, primarily due to acquisitions and increased selling expenses[134] - The company recorded a $3.6 million lease impairment related to the Monterrey, Mexico facility, with no lease impairment charges recorded for the same period in 2024[135] - Operating loss was $(8.7) million for the six months ended July 31, 2025, compared to an operating income of $0.6 million for the same period in 2024, resulting in operating margins of (8.8%)[136] Acquisitions - The company acquired Veridian Limited for approximately $26.1 million, which had an annual revenue of approximately $21.0 million[116] - The company acquired LHD Group for $14.8 million, which is a leading provider of firefighter turnout gear and has 111 employees[119] - The company acquired Jolly Scarpe for $9.0 million, a leading designer and manufacturer of professional footwear for firefighting and rescue markets[120] - Sales of the Fire Service product line increased by $24.1 million for the six months ended July 31, 2025, due to acquisitions and organic growth[132] Tax and Cash Position - The effective tax rate for the second quarter of FY26 was 117.2%, significantly higher than the U.S. federal statutory rate of 21%[130] - Income tax benefit was $6.4 million for the six months ended July 31, 2025, compared to a benefit of less than $0.1 million for the same period in 2024[137] - Cash and cash equivalents were approximately $17.7 million as of July 31, 2025, with working capital increasing by $5.3 million from January 31, 2025[139] Capital Expenditures and Stock Repurchase - Capital expenditures were $2.1 million for the six months ended July 31, 2025, with anticipated FY26 capital expenditures of approximately $4.0 million[150] - The company has a stock repurchase program authorized for up to $5.0 million, with no shares repurchased in the six months ended July 31, 2025[149] - The company expects to meet its projected operating and investing requirements for at least the next twelve months with current cash and borrowing capacity[142]

Financial Data and Key Metrics Changes - The company achieved record net sales of $52.5 million, representing a 36% year-over-year increase, driven by a 113% increase in fire service products [3][14] - Adjusted EBITDA, excluding FX, was $5.1 million, an increase of $2.4 million or 90% compared to the same period last year [4][18] - Net income was $800,000 or $0.08 per share, compared to a net loss of $1.4 million or $0.19 per share for the same quarter last year [14] - Adjusted gross profit as a percentage of net sales decreased to 37.4% from 41.1% year-over-year, but increased sequentially by 220 basis points from the first quarter [4][17] Business Line Data and Key Metrics Changes - Sales from fire service products increased by $13.6 million year-over-year, with contributions from Meridian and LHD Group [16][23] - Organic sales increased by $5 million or 14% over the prior year [15] - Adjusted gross profit for the second quarter was $19.6 million, an increase of 24% compared to the same period last year [16] Market Data and Key Metrics Changes - Domestic sales were $22.1 million, representing 42% of total revenues, while international sales were $30.4 million, accounting for 58% of total revenues [15] - U.S. revenue increased 78% year-over-year, while European revenue grew 113% [23] - Latin American operations experienced a $3.6 million decrease in sales due to delayed purchase decisions from tariff uncertainty [24] Company Strategy and Development Direction - The company anticipates continued robust growth in fire services and industrial segments, both organically and through acquisitions [4][10] - Strategic focus remains on expanding top-line revenue in fire service products and industrial verticals while driving operational efficiencies [29] - The M&A pipeline is robust, with active discussions underway for acquisitions in the fire suit rental and decontamination services [11][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating tariff uncertainties with clear priorities and thoughtful planning [10] - The company expects to achieve adjusted EBITDA excluding FX in the range of $20 to $24 million for fiscal year 2026, with revenue near the lower end of the $210 to $220 million range [30] - Management remains optimistic about long-term growth driven by cost discipline, acquisition strategy, and operational improvements [30][31] Other Important Information - The company completed four major acquisitions in the past 12 months, which are expected to generate long-term value for shareholders [12][19] - Cash and cash equivalents were $17.7 million, with long-term debt of $28.1 million [25] - The company is actively working on inventory optimization to align with demand and improve efficiency [26][50] Q&A Session Summary Question: Full-year guidance and margin improvement expectations - Management indicated that the current EBITDA run rate may not be sustainable, with expectations for growth in the U.S. and recovery in Latin America [35][36] Question: Expectations for full-year organic growth - Management anticipates mid-teens organic growth, depending on the timing of fire service RFPs and large orders [38][39] Question: Update on M&A targets - Management confirmed ongoing discussions for several imminent acquisitions, focusing on service-related opportunities [40] Question: Gross profit margin implications from tariffs - Management noted that tariffs impacted margins by approximately 1.2 points, with expectations for improvement in gross margins in the coming quarters [46][48] Question: Inventory levels and optimization - Management acknowledged high inventory levels and plans to optimize them over the next six months [49][50] Question: Changes in buying behavior in Latin America - Management reported some movement in Latin America, with expectations for substantial recovery in the second half of the year [53][54]

Financial Performance - Net sales increased by $14 million, or 36%, reaching a record of $52.5 million[12] - U S net sales increased 78% to $22.1 million[12] - Europe net sales increased 113% to $15.1 million[12] - Adjusted EBITDA excluding FX was $5.1 million, an increase of $2.4 million, or 89%, compared with $2.7 million for the comparable year ago period[12] - Adjusted Gross profit as a percentage of net sales decreased to 37.4% from 41.1% for the comparable year ago period[12] Operational Highlights - Fire Services products saw a 113% increase[12] - Shipment of a $3.1 million order through its Jolly Scarpe brand for fire intervention boots from the Italian Ministry of the Interior - Firefighters Department[12] - Completed a $6.1 million sale and partial leaseback of the Decatur, Alabama, warehouse property[12] Strategic Initiatives and Outlook - The company is executing on initiatives to realize up to $4 million in cash savings, excluding Veridian consolidation[45] - FY 2026 revenue guidance range at the lower end of $210 to $220 million and Adjusted EBITDA Excluding FX of $20 to $24 million[45]

Core Insights - Lakeland Industries reported a record net sales of $52.5 million for Q2 FY2026, marking a 36% increase year-over-year, driven primarily by a 113% increase in Fire Services revenue, which constituted 49% of total revenue [1][11][24] - The company experienced significant growth in U.S. net sales, which rose 78% to $22.1 million, and European net sales, which increased 113% to $15.1 million [1][11] - Despite the revenue growth, gross margin decreased to 35.9%, down from 39.6% in the previous year, attributed to increased supply chain costs and tariffs [1][15][25] Financial Performance - Net income for Q2 FY2026 was $0.8 million, a significant turnaround from a net loss of $1.4 million in Q2 FY2025 [1][18] - Adjusted EBITDA excluding FX for the quarter was $5.1 million, an increase of 89% compared to $2.7 million in Q2 FY2025, with an adjusted EBITDA margin of 9.6% [1][19][27] - Organic revenue increased by 14% to $42.0 million, with notable contributions from the U.S., Canada, and India, although Latin America showed weakness [11][13][24] Operational Highlights - The company is focusing on inventory optimization initiatives to align inventory levels with demand, particularly in U.S. Critical Environment and other key segments [6][28] - Management anticipates a material recovery in Latin America in Q4 FY2026, despite current delays in purchasing decisions due to tariff uncertainties [3][4] - Lakeland is well-positioned to capitalize on long-term industry trends and aims to transition to higher-margin products and services over the next three to five years [8][29] Guidance and Outlook - The company has adjusted its FY2026 revenue guidance to a range of $210 million to $220 million, reflecting ongoing uncertainties in the global tariff environment [29][33] - Adjusted EBITDA excluding FX is expected to be in the range of $20 million to $24 million for FY2026, influenced by lower margins and higher operating expenses [29][33] - Management remains confident in the company's ability to drive sustained EBITDA improvement despite macroeconomic challenges [31]