Lakeland Industries, Inc. Q1 FY2026 earnings call

• Revenue: Record net sales of $46.7 million, up 29% Y/Y, driven by Fire Services products and acquisitions. Fire Services segment grew 100% Y/Y, with recent acquisitions contributing $9.9 million of the increase.
• Geographic Performance: U.S. net sales up 42% to $22.5M; Europe net sales up 102% to $12.1M. Latin America and Canada had sales weakness. Asia saw 15% Y/Y sales increase.
• Tariff Mitigation: Inventory increased by $3.1M to $85.8M as of April 30, 2025. Cross-certification in Mexico, exploring lower tariff regions in Asia.
• Acquisitions: Veridian contributed $4.4M in revenue during the quarter. Revenues from Eagle, Pacific Helmets, etc., totaled $15.6M, with cross-selling opportunities expected.
• Systems: Implemented SAP ERP system to enhance growth and profitability.

Lakeland Fire and Safety achieved record net sales of $46.7 million in fiscal 2026 first quarter, a 29% year-over-year increase. The Fire Services segment saw 100% growth, contributing a $10.5 million year-over-year increase. U.S. net sales increased 42% year-over-year to $22.5 million, with organic U.S. growth of $2.1 million (15%). Europe net sales increased 102% year-over-year to $12.1 million. Gross profit as a percentage of net sales decreased to 33.5% from 44.6% in the comparable prior year period, due to a shift in geographic revenue mix and lower margins in acquired businesses.

• Fiscal year 2026 revenue guidance: $210 million to $220 million.
• Adjusted EBITDA, excluding FX: Originally $24M to $29M, now trending toward lower end due to Q1 margin and expense issues.
• Anticipate sequential growth in gross margin and adjusted EBITDA, excluding FX, in the second quarter.

• Tariff uncertainties impacting sales in Canada, Latin America, and industrial space.
• Systems-related challenges in accurately accounting for purchase variances, causing short-term gross margin volatility.
• Delay in Jolly fire boots order due to Italian government procurement steps.
• Impact of NFPA standard changes causing temporary hold on purchases in the U.S.

Q: About gross margin headwinds and reversal, what's the detail?

A: The total increase to manufacturing cost was close to $3 million impact to adjusted EBITDA. Purchase variance impact and purchase accounting effects are discussed, with expectation of reversal in subsequent quarters.

Q: On OpEx side, any onetime items?

A: Travel expenses were up due to visiting acquisition sites, expected to taper off. Outbound freight costs were high due to tariff strategies, expected to normalize. Acquired company OpEx increases are ongoing during integration.

Q: Expectations for organic growth full year?

A: Strong organic growth in U.S. industrial and fire products, but LatAm had 12% Y/Y sales decrease. Asian sales up 15% Y/Y. Jolly order timing pending Italian government steps but optimistic.

Q: Thoughts on inventories and tariff mitigation?

A: Inventory positioned well, expect reduction as opportunities materialize. Vietnam environment expected to improve, EU and other regions monitored.

Q: Gross margin breakdown and fixes?

A: Systems challenge with standard costing and vendor increases causing variance. Purchase accounting and acquired company margin issues discussed, with initiatives to improve margins.

Q: SG&A efficiencies in acquired companies?

A: Opportunities to squeeze savings in Veridian and other acquired firms, with ongoing efforts to consolidate operations and improve efficiencies.