Lakeland(LAKE) - 2026 Q2 - Quarterly Results

Executive Summary Lakeland Fire + Safety reported record fiscal Q2'26 net sales of $52.5 million, a 36% increase YoY, primarily driven by a 113% surge in Fire Services products. The company achieved positive net income of $0.8 million and improved sequential gross margin, despite ongoing global tariff uncertainties Q2'26 Key Financial Highlights Fiscal Q2'26 saw significant financial improvements, including a 36% increase in net sales to $52.5 million and a return to positive net income of $0.8 million, a 157% improvement YoY. Adjusted EBITDA excluding FX also grew substantially by 89% to $5.1 million Fiscal Q2'26 Key Financial Highlights (YoY Comparison) | Metric | Q2'26 | Q2'25 | $ Change YoY | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $52.5M | $38.5M | $14.0M | 36% | | Gross Profit | $18.8M | $15.2M | $3.6M | 24% | | Gross Margin | 35.9% | 39.6% | — | (370)BPS | | Net Income (Loss) | $0.8M | ($1.4M) | $2.2M | 157% | | Adjusted EBITDA ex. FX | $5.1M | $2.7M | $2.4M | 89% | Q2'26 Key Operational Highlights Operational highlights for Q2'26 include robust growth in Fire Services products, strong performances in North America and Europe, and strategic initiatives like a $6.1 million property sale and facility closures aimed at cost reduction and efficiency - Fire Services product line sales increased by $13.6 million or 113% YoY, reaching $25.6 million and representing 49% of total revenue[1][13] - U.S. net sales increased 78% to $22.1 million, and Europe net sales increased 113% to $15.1 million[1][13] - Completed a $6.1 million sale and partial leaseback of its Decatur, Alabama, warehouse property to strengthen the balance sheet and provide financial flexibility[13] - Announced closures of its Hull, England warehouse and Veridian manufacturing facility in Quitman, Arkansas, as part of an operational consolidation strategy to enhance efficiency and reduce costs[13] Management Commentary & Business Outlook Management highlighted record Q2'26 net sales driven by Fire Services and strong regional performance, despite global tariff uncertainties. Strategic focus includes expanding sales in key verticals, optimizing inventory, and implementing operational efficiencies. The company updated its FY26 guidance, reflecting continued tariff impacts and order delays CEO's Strategic Overview CEO Jim Jenkins emphasized record Q2'26 net sales, led by Fire Services, and sequential margin improvement. He noted strong performances in North America, Asia, and Europe, offset by softness in Latin America due to tariff and currency issues. Future strategies include expanding Fire Services, optimizing inventory, and enhancing operational efficiencies to achieve higher margins and free cash flow, while capitalizing on long-term industry tailwinds - Record fiscal Q2'26 net sales revenue growth of 36% to $52.5 million, led by a 113% increase in Fire Services revenue[5] - Strong performances in North American Industrial and Fire segments, Asia, and LHD Australia, with rebounds in Europe and Canada, partially offset by softness in Latin America due to tariff uncertainty and currency issues[6] - Focus on navigating tariff uncertainties, growing top-line revenue in fire services and industrial verticals, and implementing operating and manufacturing efficiencies for higher margins and improved free cash flow[8] - Initiated targeted actions to optimize inventory levels in U.S. Critical Environment, Jolly, LHD Australia, and Veridian, with further initiatives planned for the second half of FY26[8] - Expects U.S. and EMEA Fire Services tender cycles to restart in late FY26 and into Q1 FY27, increasing demand and improving performance[9] CFO's Financial Review CFO Roger Shannon detailed the 36% revenue growth, driven by U.S. and Canadian Fire Services and Industrial divisions, with organic revenue up 14%. He noted a consolidated gross margin decrease to 35.9% due to tariffs and supply chain costs, but a sequential improvement of 240 basis points. Operating expenses increased due to acquisitions but declined sequentially due to cost reduction initiatives, leading to an 89% increase in Adjusted EBITDA excluding FX. The balance sheet remains strong, supported by $4 million in annual cost reduction initiatives and a property sale - Revenue grew $14.0 million (36%) YoY, with organic revenue increasing 14% to $42.0 million, driven by growth in the U.S., Canada, Europe, and Asia[26] - Consolidated gross margin decreased to 35.9% YoY due to increased tariffs and supply chain expenses but improved sequentially by 240 basis points from 33.5% in Q1'26[27] - Operating expenses increased by $2.5 million (15%) YoY (with $1.6 million from acquisitions) but declined sequentially by $1.0 million (5%) to $19.3 million due to expense reduction initiatives[28][29] - Adjusted EBITDA excluding FX increased by $2.4 million (89%) YoY to $5.1 million, and by $4.5 million (740%) QoQ, reaching a margin of 9.6%[30] - Balance sheet strengthened by $4 million in annual cost reduction initiatives, including facility closures, and a $6.1 million property sale[31] FY 2026 Guidance Update Lakeland updated its fiscal year 2026 guidance, adjusting revenue expectations to the lower end of the $210-$220 million range and Adjusted EBITDA excluding FX to $20-$24 million. This revision reflects continued uncertainty with the global tariff environment, lower margins, and near-term order delays FY 2026 Guidance Update | Metric | Previous Guidance | Updated Guidance | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | $210M - $220M | Near lower end of $210M - $220M | Continued uncertainty with global tariff environment | | Adjusted EBITDA ex. FX | (Not specified) | $20M - $24M | Lower margins, near-term order delays, tariff uncertainty, higher operating expenses | - The company is actively assessing the financial impact of tariffs and is committed to protecting margins through pricing adjustments, operational efficiencies, and supply chain diversification[33] Fiscal Second Quarter 2026 Detailed Financial & Operational Highlights Lakeland's Q2'26 financial results show strong top-line growth driven by acquisitions and Fire Services, alongside challenges in gross margin due to tariffs and supply chain costs. Despite an increase in operating expenses from acquisitions, the company achieved positive net income and significantly improved Adjusted EBITDA, while managing cash and debt Net Sales Performance Net sales for Q2'26 reached a record $52.5 million, a 36% increase YoY, with acquisitions contributing $9.0 million and organic sales growing 14% to $42.0 million. Fire Services sales surged 113% to $25.6 million, becoming 49% of total revenue. Domestic sales increased to 42% of total revenue, while international sales remained dominant at 58% Q2'26 Net Sales Breakdown | Category | Q2'26 Sales | % Change YoY | Contribution to Total Sales | | :--- | :--- | :--- | :--- | | Total Net Sales | $52.5M | 36% | 100% | | Organic Revenue | $42.0M | 14% | 80% | | Acquisition Revenue | $9.0M | N/A | 17% | | Fire Services Product Line | $25.6M | 113% | 49% | | U.S. Net Sales | $22.1M | 78% | 42% | | Europe Net Sales | $15.1M | 113% | 29% | | LATAM Net Sales | $4.3M | (42%) | 8% | | Asia Net Sales | $3.7M | 6% | 7% | Gross Profit and Margin Analysis Gross profit increased 24% to $18.8 million in Q2'26, but the gross margin percentage decreased to 35.9% from 39.6% YoY. This decline was primarily attributed to increased supply chain costs, tariffs, higher inbound freight, and amortization of acquired inventory step-up. Organic gross margin also saw a slight decrease to 38.6% Q2'26 Gross Profit and Margin | Metric | Q2'26 | Q2'25 | % Change YoY | | :--- | :--- | :--- | :--- | | Gross Profit | $18.8M | $15.2M | 24% | | Gross Margin | 35.9% | 39.6% | (370)BPS | | Organic Gross Margin | 38.6% | 41.0% | (240)BPS | - Gross margin percentage decreased due to increased supply chain costs and tariffs, higher inbound freight expenses, and amortization of the step-up in the basis of acquired inventory[16] Operating Expenses and Loss Operating expenses rose by $2.5 million (15%) to $19.3 million in Q2'26, mainly due to the acquisitions of Veridian and LHD ($1.6 million), higher equity compensation, and depreciation/amortization. These increases were partially offset by reductions in acquisition expenses, restructuring costs, and professional fees. The company reported an operating loss of $4.0 million, exacerbated by a $3.6 million impairment of the Monterrey, Mexico facility lease Q2'26 Operating Expenses and Loss | Metric | Q2'26 | Q2'25 | $ Change YoY | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Operating Expenses | $19.3M | $16.8M | $2.5M | 15% | | Operating Loss | ($4.0M) | ($1.6M) | ($2.4M) | (150%) | | Operating Margins | (7.6%) | (4.1%) | — | (350)BPS | - Operating expenses increased primarily due to $1.6 million from Veridian and LHD acquisitions, higher equity compensation, and depreciation/amortization, partially offset by reductions in acquisition, restructuring, and professional fees[17] - Operating loss was significantly impacted by a $3.6 million impairment of the Monterrey, Mexico facility lease[17] Net Income and EPS Lakeland achieved a net income of $0.8 million, or $0.08 per diluted share, in Q2'26, a significant turnaround from a net loss of ($1.4) million, or ($0.19) per diluted share, in Q2'25 Q2'26 Net Income and EPS | Metric | Q2'26 | Q2'25 | $ Change YoY | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $0.8M | ($1.4M) | $2.2M | 157% | | Diluted EPS | $0.08 | ($0.19) | $0.27 | 142% | Adjusted EBITDA Performance Adjusted EBITDA excluding FX for Q2'26 increased by $2.4 million (89%) to $5.1 million, driven by strong North American performance and reduced operating expenses, despite lower sales in the higher-margin LATAM region. The Adjusted EBITDA excluding FX margin improved significantly to 9.6%, up 270 basis points YoY and 830 basis points QoQ Q2'26 Adjusted EBITDA excluding FX | Metric | Q2'26 | Q2'25 | Q1'26 | $ Change YoY | % Change YoY | BPS Change YoY | BPS Change QoQ | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA ex. FX | $5.1M | $2.7M | $0.6M | $2.4M | 89% | — | — | | Adjusted EBITDA ex. FX Margin | 9.6% | 6.9% | 1.3% | — | — | 270 | 830 | Balance Sheet and Cash Flow As of July 31, 2025, cash and cash equivalents totaled $17.7 million, with working capital at $106.9 million, both showing slight increases from January 31, 2025, primarily due to inventory increases. The company had $24.9 million outstanding on its revolving credit facility, which was fully repaid post-quarter-end using proceeds from a $6.1 million property sale. Net cash used in operating activities increased to $9.7 million for the six months ended July 31, 2025. A quarterly dividend of $0.03 per share was paid Key Balance Sheet and Cash Flow Metrics (as of July 31, 2025) | Metric | July 31, 2025 | January 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $17.7M | $17.5M | +$0.2M | | Working Capital | $106.9M | $102.6M | +$4.3M | | Revolving Credit Facility Outstanding | $24.9M | N/A | N/A | - Net cash used in operating activities for the six months ended July 31, 2025, was $9.7 million, compared to $4.1 million in the prior year, driven by increased net loss and non-cash charges[24][59] - The company paid a quarterly dividend of $0.03 per share on August 22, 2025[25] Non-GAAP Financial Measures Reconciliation This section provides a detailed reconciliation of GAAP results to various non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and organic revenue/gross margin. It also explains the rationale behind using these non-GAAP measures and the specific adjustments made to provide a clearer view of the company's core operational performance Reconciliation Tables The reconciliation tables present the adjustments made to GAAP net income (loss) to derive EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding FX, along with the calculation of Adjusted EBITDA margins. It also shows the reconciliation for Adjusted Operating Expenses excluding FX, Organic Revenue, and Organic Gross Margin Reconciliation of GAAP Results to Non-GAAP Results (Three and Six Months Ended July 31, 2025 & 2024) ($000's) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $766 | ($1,376) | ($3,147) | $277 | | EBITDA | $841 | ($281) | ($2,550) | $2,580 | | Adjusted EBITDA | $5,013 | $1,816 | $4,836 | $5,669 | | Adjusted EBITDA Margin | 9.6% | 4.7% | 4.9% | 7.6% | | Adjusted EBITDA excluding FX | $5,056 | $2,659 | $5,658 | $6,519 | | Adjusted EBITDA excluding FX Margin | 9.6% | 6.9% | 4.9% | 7.6% | | Operating Expenses | $19,283 | $16,826 | $39,561 | $30,809 | | Adjusted Operating Expenses excluding FX | $14,574 | $13,176 | $30,433 | $25,685 | | Net Sales | $52,496 | $38,512 | $99,242 | $74,822 | | Organic Revenue | $41,959 | $36,973 | $78,743 | $73,282 | | Gross Profit | $18,818 | $15,235 | $34,462 | $31,420 | | Organic Gross Profit | $16,183 | $14,612 | $30,012 | $30,796 | | Organic Gross Margin | 38.6% | 39.5% | 38.1% | 42.0% | Explanation of Non-GAAP Measures and Adjustments Management uses non-GAAP measures like EBITDA, Adjusted EBITDA, and organic revenue/gross margin to provide more meaningful period-to-period comparisons, guide internal decision-making, and offer investors a clearer understanding of core business performance. These measures exclude items not directly related to ongoing core operations, such as interest, taxes, depreciation, amortization, equity compensation, acquisition-related expenses, restructuring costs, and specific litigation/project costs - Non-GAAP measures (EBITDA, Adjusted EBITDA, organic revenue/gross margin) are used to make meaningful period-to-period comparisons, guide management decisions, and provide investors with a better understanding of core business performance[43] - Exclusions from non-GAAP measures include interest, taxes, depreciation, amortization, equity compensation, acquisition-related expenses, severance and restructuring costs, Mexican operations start-up costs, PFAS litigation expenses, ERP Project costs, and earnout revaluation[42][43] - Organic revenue and organic gross margin exclude the effects of acquisitions completed within the previous fiscal year to understand trends in the legacy business[42][43] Company Information Lakeland Fire + Safety is a global manufacturer of protective clothing and accessories for industrial and first responder markets, serving diverse industries and governmental agencies across more than 50 countries. The company's press release includes a standard "Safe Harbor" statement regarding forward-looking statements and provides contact information for investor relations About Lakeland Fire + Safety Lakeland Fire + Safety manufactures and sells a comprehensive line of fire services and industrial protective clothing and accessories globally. Its products are distributed to end-users in various industries, including oil, chemical, automotive, healthcare, and governmental agencies, across over 50 countries, with significant presence in China, Europe, Canada, and other emerging markets - Lakeland Fire + Safety manufactures and sells protective clothing and accessories for industrial and first responder markets[49] - Products are sold globally through in-house sales, customer service, and authorized distributors to diverse industries (e.g., oil, chemical, healthcare) and governmental agencies (e.g., fire, law enforcement, Department of Defense)[49] - International sales are made into more than 50 foreign countries, including China, the European Economic Community, Canada, India, and Australia[49] Safe Harbor Statement The "Safe Harbor" statement clarifies that the press release contains forward-looking statements, including estimates, predictions, and expectations for future financial and operational performance. These statements involve risks, uncertainties, and assumptions, and actual results may differ materially. The company disclaims any obligation to update these statements, except as required by law - The press release contains forward-looking statements regarding future business, financial performance, goals, and strategies, including M&A and tariff mitigation plans[52] - Forward-looking statements involve risks, uncertainties, and assumptions, and actual results may differ materially from expectations[52] - The company disclaims any obligation to publicly update or revise these statements, except as required by law[52] Contacts Contact information for Lakeland Fire + Safety's Chief Financial Officer, Roger Shannon, and Investor Relations, Chris Tyson of MZ Group - MZ North America, is provided for inquiries Company Contacts | Role | Name | Contact | | :--- | :--- | :--- | | Chief Financial Officer | Roger Shannon | rdshannon@lakeland.com | | Investor Relations (MZ Group) | Chris Tyson | LAKE@mzgroup.us | Financial Statements This section presents the unaudited condensed consolidated financial statements for Lakeland Industries, Inc. and its subsidiaries, including the Statements of Operations, Balance Sheets, and Statements of Cash Flows for the reported periods Condensed Consolidated Statements of Operations The Condensed Consolidated Statements of Operations provide a summary of the company's revenues, costs, and profitability for the three and six months ended July 31, 2025, and 2024, detailing net sales, gross profit, operating expenses, and net income (loss) Condensed Consolidated Statements of Operations ($000's) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $52,496 | $38,512 | $99,242 | $74,822 | | Cost of goods sold | 33,678 | 23,277 | 64,780 | 43,403 | | Gross profit | 18,818 | 15,235 | 34,462 | 31,419 | | Operating expenses | 19,283 | 16,826 | 39,561 | 30,809 | | Lease impairments | 3,577 | — | 3,577 | — | | Operating (loss) income | (4,042) | (1,591) | (8,676) | 610 | | Other income, net | 38 | 165 | 144 | 177 | | Interest expense | (445) | (370) | (1,028) | (542) | | (Loss) income before taxes | (4,449) | (1,796) | (9,560) | 245 | | Income tax benefit | (5,215) | (420) | (6,413) | (32) | | Net income (loss) | $766 | ($1,376) | ($3,147) | $277 | | Basic EPS | $0.08 | ($0.19) | ($0.33) | $0.04 | | Diluted EPS | $0.08 | ($0.19) | ($0.33) | $0.04 | Condensed Consolidated Balance Sheets The Condensed Consolidated Balance Sheets present the company's financial position as of July 31, 2025, and January 31, 2025, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets ($000's) | Asset/Liability/Equity | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $17,749 | $17,476 | | Accounts receivable, net | 30,931 | 27,607 | | Inventories, net | 90,202 | 82,739 | | Total current assets | 147,064 | 136,531 | | Property and equipment, net | 13,539 | 13,948 | | Operating leases right-of-use assets | 9,031 | 13,917 | | Goodwill | 15,047 | 16,240 | | Intangible assets, net | 26,007 | 25,503 | | Total assets | $226,304 | $212,531 | | LIABILITIES | | | | Accounts payable | $18,116 | $15,742 | | Total current liabilities | 40,221 | 34,907 | | Loans payable – long term | 28,100 | 16,426 | | Total liabilities | $79,042 | $65,905 | | STOCKHOLDERS' EQUITY | | | | Total stockholders' equity | 147,262 | 146,626 | | Total liabilities and stockholders' equity | $226,304 | $212,531 | Condensed Consolidated Statements of Cash Flows The Condensed Consolidated Statements of Cash Flows detail the cash inflows and outflows from operating, investing, and financing activities for the six months ended July 31, 2025, and 2024, showing the net change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows ($000's) | Cash Flow Activity | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net (loss) income | ($3,147) | $277 | | Net cash (used in) operating activities | (9,660) | (4,053) | | Net cash (used in) investing activities | (2,130) | (24,431) | | Net cash provided by financing activities | 10,941 | 27,048 | | Effect of exchange rate changes on cash | 1,122 | 1,094 | | Net increase (decrease) in cash | 273 | (342) | | Cash and cash equivalents at beginning of period | 17,476 | 25,222 | | Cash and cash equivalents at end of period | $17,749 | $24,880 | Conference Call Information Lakeland Fire + Safety hosted a conference call on September 9, 2025, to discuss its fiscal Q2'26 financial results, with details provided for accessing the live call and subsequent replay Call Details The conference call for Q2'26 financial results was held on Tuesday, September 9, 2025, at 4:30 p.m. Eastern Time. Participants could access it via dial-in numbers or webcast, with a replay available until December 9, 2025 Q2 2026 Financial Results Conference Call Details | Detail | Information | | :--- | :--- | | Date | Tuesday, September 9, 2025 | | Time | 4:30 p.m. Eastern Time | | U.S. Dial-in | 1-877-407-9208 | | International Dial-in | 1-201-493-6784 | | Conference Code | 13754808 | | Webcast | Q2 2026 Financial Results Conference Call | | Replay Availability | Through December 9, 2025 | - Lakeland President, CEO, and Executive Chairman Jim Jenkins and CFO Roger Shannon hosted the conference call, accompanied by a presentation accessible via the company's investor relations website[38]