Lakeland Industries, Inc. Q4 FY2026 earnings call

• Fiscal 2026 was a year of meaningful top-line growth and strategic progress. Net sales grew 15.2% to $192.6 million. Fire services grew 48.6% for full year. • Completed divestiture of HPFR and HiViz product lines, generating ~$14 million cash proceeds. • Achieved significant milestone with numerous NFPA 1970 2025 certifications across brand portfolio. • Strengthened organization with key appointments. • Completed acquisitions of Arizona PPE and California PPE, expanding U.S. fire services distribution and rental capabilities. • Completed sale and partial leaseback of Decatur, Alabama warehouse property. • Industrial and chemical: chemical critical environment outperforming, wovens tracking to plan, disposables facing pressure with recovery initiatives underway. • Fire services: Q4 revenue $21.7 million, up $0.5 million; full year fire service revenue $93.6 million, significant milestone as ~49% of total revenue. Strong tender pipeline globally. • EMEA: Europe full year revenue grew 28.7%, Q4 softness due to timing. LHD restructuring underway, new contracts secured in Hong Kong and Australia. Intercompany collaboration unlocking incremental business opportunities.

Full year net sales increased $25.4 million, or 15.2%, to $192.6 million, driven by fire services. Fourth quarter net sales were $45.8 million, down $0.8 million, or 1.7% from prior period. Fire services revenue for full year grew $30.6 million, or 48.6%, to $93.6 million. Industrial and chemical: fourth quarter chemical revenue increased $0.3 million to $5 million; disposables revenue decreased $0.9 million and wovens revenue decreased $1 million. Full year industrial product lines combined ~49% of total revenue, with disposables at 27%, chemical at 11%, wovens at 11%. Europe full year revenue grew $12.1 million, or 28.7%, to $54.2 million; fourth quarter Europe revenue decreased $2.4 million. U.S. full year sales increased 35.1% to $81.6 million; fourth quarter U.S. revenue increased $1.3 million, or 7.1%, to $19.6 million.

• Entering fiscal 2027, tracking modestly ahead of budget. • Goalposts for fiscal 2027: single to high single-digit revenue growth and clear line of sight to positive cash flow from operations. • Priorities include executing margin recovery actions, cost containment, tightening forecasting accountability, revising ERP rollout plan, driving greenfielding in M&A pipeline, capitalizing on fire tender pipeline, leveraging balance sheet for acquisition strategy.

• Volatile cost environment including freight inflation, raw material pressure, tariffs, certification timing delays. • Fuel and logistics instability has become a more relevant variable across the market. • Tariff uncertainty remains a factor. • Iran conflict and its potential impact on freight and supply chain costs.

Q: On fire side, size of pipeline and how it flows through for this year?

A: Open pipeline over $130 million, over $22 million in higher probabilities. FDIC next week and Interschutz in June important. Departments waiting for certifications.

Q: On cleaning, PPE opportunity, size of business today and growth?

A: Goal to get services space to $30 million by fiscal 2028. Acquired Cal PPE and Arizona PPE with annualized revenue ~$4.7 million, ramping up. Opening Denver due to customer demand, expecting several fire brigades to use services upon opening.

Q: Guidance, high single digits, function of fire side visibility?

A: Combination of fire side visibility and positive outlook on industrial side due to improved market research results.

Q: Margins, margin bridge?

A: Bulk of margin downturn due to mix, followed by freight, duties, and materials cost. Fire services higher margin on turnout gear, lower on boots.

Q: Organic growth rate start of year?

A: Historically start off a little slow in first quarter, improvement expected as move through year with certifications and demand increase.

Q: ISP growth, Denver opening time frame and future opportunities?

A: Denver opportunity came to light a few months ago, hired leader, in process of getting up and running. Envision three to five additional greenfield opportunities in North America over next year.

Q: Gross margins improvement drivers, sequencing?

A: Sales mix improvement, especially with increased demand on higher-value fire products, and manufacturing synergies. Improvement likely to start in late Q1 or Q2.

Q: Proceeds from HPFR and HiViz sale, use for M&A?

A: Primarily for balance sheet, looking at ABL for more availability for bolt-on deals.

Q: Intercompany sales activity evolution, expectation for next fiscal year?

A: Expected to grow significantly with new certifications, cross-selling of brands within markets, growing brand recognition leading to more inquiries and business.