Lakeland(LAKE) - 2026 Q1 - Quarterly Results

Lakeland Industries Fiscal First Quarter 2026 Financial Results Financial & Operational Highlights Record net sales were driven by Fire Services growth, but profitability significantly declined due to margin contraction and a net loss Q1 FY2026 vs Q1 FY2025 Key Financial Metrics | $ in millions | FY Q1'26 | FY Q1'25 | $ Change YoY | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $46.7 | $36.3 | $10.4 | 29% | | Gross Profit | $15.6 | $16.2 | ($0.6) | (4%) | | Gross Margin | 33.5% | 44.6% | - | -1,110 BPS | | Net (Loss) Income | ($3.9) | $1.7 | ($5.6) | (337%) | | Adjusted EBITDA | ($0.2) | $3.8 | ($4.0) | (105%) | | Adjusted EBITDA ex. FX | $0.6 | $3.8 | ($3.2) | (84%) | - Fire Services product line sales doubled to $21.0 million, increasing its share of total revenue to 45%[1][12] - Significant regional sales growth was observed in the U.S. (+42% to $22.5 million) and Europe (+102% to $12.1 million)[1][12] - The company's LHD subsidiary secured a contract renewal of up to 12 years with Fire and Emergency New Zealand (FENZ) for apparel and decontamination services[12] Management Commentary Management noted strong revenue growth offset by regional softness and margin pressures, while pursuing M&A and expecting future improvement - CEO Jim Jenkins noted that while revenue approached expectations, shortfalls in Latin America (shipment timing) and Canada (tariff delays) impacted results[5] - The company is actively pursuing M&A opportunities, particularly in fire suit rental, decontamination, and services, to expand its head-to-toe fire portfolio[6] - CFO Roger Shannon specified that Q1 consolidated gross margin fell to 33.5% due to geographic revenue mix, amortization of inventory write-up from acquisitions ($0.4 million), and elevated freight costs ($0.6 million)[21] - Management has identified up to $4 million in cash savings and is pursuing a sale-leaseback of its Decatur facility to enhance financial flexibility[24] - The company targets expanding EBITDA margins to the mid-to-high teens over the next 3-5 years as it gains scale and realizes efficiencies[25] Q1 FY2026 Financial Performance Analysis Net sales grew significantly driven by acquisitions, but gross profit declined and increased operating expenses led to a substantial net loss Q1 FY2026 Revenue Breakdown ($M) | Category | Q1 FY2026 | Q1 FY2025 | % Change YoY | | :--- | :--- | :--- | :--- | | Total Net Sales | $46.7 | $36.3 | 29% | | - Organic Sales | $36.9 | $36.3 | 2% | | - Acquisition Sales | $9.9 | - | N/A | | By Segment | | | | | - Fire Services | $21.0 | $10.5 | 100% | | By Geography | | | | | - U.S. | $22.5 | $15.9 | 42% | | - Europe | $12.1 | $6.0 | 102% | | - Asia | $12.0 | $10.4 | 15% | | - LATAM | $4.3 | $4.9 | (12%) | - Organic gross margin decreased to 35.9% from 44.6% in the prior year, primarily due to lower sales in high-margin Latin American and Canadian markets and material price variance allocations[9][13] - Operating expenses increased by $6.3 million (45%) to $20.3 million, driven by $3.0 million in expenses from newly acquired Veridian and LHD, as well as severance, litigation, and selling costs[14][22] - The company ended the quarter with $18.6 million in cash and cash equivalents and had $19.8 million in borrowings outstanding under its revolving credit facility[17] Tariff Mitigation & Operational Updates Lakeland strategically increased inventory and shifted production to lower-tariff countries and Mexico to mitigate tariff uncertainty - The company executed a strategic inventory buildup, increasing net inventories by $3.1 million to a total of $85.8 million to get ahead of imposed tariffs[9] - Key tariff mitigation strategies include[9] - Strategic stocking of raw materials and finished goods - Shifting production in Asia to lower-tariff countries - Utilizing tariff-exempt production from its Mexican facility FY 2026 Guidance and Outlook Lakeland reaffirms FY2026 revenue guidance but expects Adjusted EBITDA ex-FX at the lower end of its range, anticipating sequential improvement Fiscal Year 2026 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $210M - $220M | | Adjusted EBITDA excluding FX | Lower end of $24M - $29M | - The company anticipates sequential growth in both gross margin and Adjusted EBITDA (excluding FX) in the second quarter of fiscal 2026[1] - Guidance is based on the current order backlog and expectations, and is subject to risks including tariff uncertainty and other economic factors[26][41] Financial Statements & Reconciliations Reconciliation of GAAP to Non-GAAP Results The company provided detailed reconciliations, adjusting GAAP net loss to Adjusted EBITDA ex-FX and total revenue to organic revenue Q1 FY2026 Reconciliation of Net Loss to Adjusted EBITDA ex. FX ($000) | Line Item | Amount | | :--- | :--- | | Net loss | ($3,913) | | Interest expense | $583 | | Taxes | ($1,198) | | Depreciation and amortization | $1,138 | | EBITDA | ($3,390) | | Adjustments (Acquisition, Severance, etc.) | $3,214 | | Adjusted EBITDA | ($176) | | Currency Fluctuation | $778 | | Adjusted EBITDA excluding FX | $602 | Q1 FY2026 Organic Revenue & Gross Margin Reconciliation ($000) | Line Item | Amount | | :--- | :--- | | Net Sales | $46,748 | | Revenue from acquisitions | ($9,873) | | Organic Revenue | $36,875 | | Gross Profit | $15,644 | | Gross Profit from acquisitions | $2,410 | | Organic Gross Profit | $13,234 | | Organic Gross Margin | 35.9% | Condensed Consolidated Statements of Operations The statement of operations shows a net loss of ($3.9) million or ($0.41) per share, driven by lower gross profit and higher operating expenses Condensed Consolidated Statements of Operations (Unaudited, $000s) | | Three Months Ended April 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | Net sales | $46,746 | $36,309 | | Gross profit | $15,644 | $16,184 | | Operating (loss) income | ($4,634) | $2,202 | | Net (loss) income | ($3,913) | $1,653 | | Diluted (loss) income per share | ($0.41) | $0.22 | Condensed Consolidated Balance Sheets The balance sheet as of April 30, 2025, shows total assets of $218.1 million, with increased inventories and long-term loans payable Key Balance Sheet Items (Unaudited, $000s) | | April 30, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $18,618 | $17,476 | | Inventories | $85,823 | $82,739 | | Total current assets | $140,706 | $136,531 | | Total assets | $218,128 | $212,531 | | Total current liabilities | $36,267 | $34,907 | | Loans payable – long term | $24,651 | $16,426 | | Total liabilities | $74,746 | $65,905 | | Total stockholders' equity | $143,382 | $146,626 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was ($4.8) million, driven by net loss and inventory increase, while financing activities provided $8.5 million Cash Flow Summary (Unaudited, $000s) | | Three Months Ended April 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | Net cash (used in) provided by operating activities | ($4,841) | $293 | | Net cash (used in) investing activities | ($1,209) | ($9,246) | | Net cash provided by financing activities | $8,507 | $11,586 | | Net increase in cash and cash equivalents | $1,142 | $3,143 | | Cash and cash equivalents at end of period | $18,618 | $28,365 |