Lakeland Industries Q4 2025 Earnings Call Transcript

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April 9, 2025
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Operator

Good day, and welcome to the Lakeland Fire and Safety Fiscal twenty twenty five Fourth Quarter and Full Year Financial Results Conference Call. All lines have been placed on a listen only mode, and the floor will be opened for your questions and comments following the presentation. During today's call, we will make statements relating to our goals and objectives for future operations, financial and business trends, business prospects and management's expectations for future performance that constitute forward looking statements under federal securities laws. Any such forward looking statements reflect management's expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our SEC filings. Our actual results, performance or achievements may differ materially from those expressed in or implied by such forward looking statements.

Operator

We undertake no obligation to update or revise any forward looking statements to reflect events or developments after the date of this call. On this call, we will also discuss financial measures derived from our financial statements that are not determined in accordance with U. S. GAAP, including adjusted EBITDA, including FX and adjusted EBITDA excluding FX margin, organic sales, organic gross margin, organic SG and A operating expenses and adjusted operating expenses. A reconciliation of each of the non GAAP measures discussed on this call to the most directly comparable GAAP measure is presented in our earnings release.

Operator

A press release detailing these results crossed the wire this afternoon and is available on the Investor Relations section of our company's website, ir.lakeland.com. At this time, I would like to introduce your host for this call, Lakeland Fire and Safety's President, Chief Executive Officer and Executive Chairman, Jim Jenkins and Chief Financial Officer and Secretary, Roger Shannon. Mr. Jenkins, the floor is yours.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Thank you, operator, and good afternoon, everyone. Thank you for joining us today to discuss the results of our fiscal twenty twenty five fourth quarter and year end 01/31/2025. For those of you new to the Lakeland story and our strategy, we are a global manufacturer of personal protective equipment, apparel and accessories with a head to toe portfolio of premium fire service brands and mission critical industrial PPE. Our management team is implementing strategies to accelerate growth and margins when the global fire turnout gear and industrial PPE markets with an acquisition focus on the fragmented fire industry. Our product portfolio includes firefighter protective apparel and accessories, high end chemical protective suits, limited use disposable protective clothing, durable woven garments, high visibility clothing, gloves and protective sleeves across our globally recognized brands, Lakeland Fire and Safety, Meridian, Eagle, LHD, Jolly and Pacific Helmets.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Over the last year and a half, we have closed four strategic acquisitions that have improved Lakeland's competitive advantage within our focus markets, which I will speak to momentarily. Finally, we operate from 18 locations in 14 countries with sales representatives in 23 countries outside The US and product sales in more than 50 countries. Lakeland Fire and Safety's mission critical product portfolio includes North American and globally certified fire turnout gear, safety helmets, fire boots, particulate blocking hoods and fire gloves for our fire services segment. Our industrial segment includes a wide range of high quality safety products, including chemical suits, PPE and disposable coveralls, high performance FRAR and woven garments and safety boots. In the past year, we have completed four strategic acquisitions that added product line extensions and innovative new products and expanded our global markets, channels and customers.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

The acquisitions have expanded our footprint in North America, Europe, Asia, Oceania, LatAm and The Middle East with strategic distributors and partnerships in each region. These acquisitions are a part of our initiative to build a portfolio of premium global fire brands under Lakeland Fire and Safety in this fragmented market available globally through strategic distribution partners across 78 countries. These include Meridian closed in December 2024, LHD closed in July 2024, Jolly Scarpe closed in February 2024 and Pacific Helmet closed in November 2023 plus Eagle closed in December 2022. Each of these acquisitions has placed our company in a strong position across our focused products categories and markets supported by continued and increasing investment in our global footprint, owning and operating our own manufacturing facilities, acquiring complimentary companies or products that expand and enhancing product offerings and or geographic customer territories and investing in sales and marketing resources in countries around the world. We feel this provides Lakeland with a strong competitive position with respect to delivery lead times.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

With a company owned manufacturing footprint and strong market share positions in top global markets that create a barrier to entry, Lakeland is positioning itself as the acquirer of choice. In addition, we own 14 patents with the U. S. Patent and Trademark Office and 76 trademarks. 2025 and 2026 to date has been a momentous period of transition and progress for Lakeland.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

During the quarter, we closed an oversubscribed $46,000,000 public equity offering. The proceeds utilized to pay down our loan agreements, substantially improving our balance sheet and improving net debt ratio and resulting in expected cash interest savings of approximately $2,500,000 annually. The capital also positioned us to accelerate further growth in a fragmented higher margin $2,000,000,000 fire protection segment in the largest global markets. We completed strategic acquisitions that added product line extensions, innovative new products and expanded global markets, channels and customers as part of our initiative to build a portfolio of premier global fire brands under Lakeland Fire and Safety in these fragmented markets, including Viridian, LHD, Jolly Scarpe and previously Pacific Helmets. To further support our growth and profitability, we have embarked on a project to enhance, modernize and consolidate our company wide ERP systems.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Our acquisitions of five new entities over the past two years has resulted in eight additional ERP systems that need to be brought under Lakeland's IT control environment. In December, we began implementing a company wide enterprise resource planning system, which will roll out in phases over the next several years. We expect to complete the first phase by the end of this fiscal year. Likewise, we are also undertaking an integration of our global operating and manufacturing resources, which includes certification, integration, procurement integration and production capacity layout. We have kicked off a company wide Lean Six Sigma project on the direction of a master black belt within our operations team.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

On the logistics front, we have deployed strategies that focus on a worldwide approach to shipping and distribution, including the completed centralization of our European warehouses at Benelux, Netherlands, the negotiation of the 2025, '20 '20 '6 freight contract and a global logistics optimization program. We assembled a new and experienced management team, including myself, Roger Shannon as CFO and Helena Ahn as COO. We have all executed strategy like Lakeland, a turnaround efficiency focus with accretive acquisitions and synergies to accelerate growth and value. We appointed Barry Phillips as Chief Revenue Officer and Cameron Stokes as a newly created role of Chief Commercial Officer, Global Industrial to drive sales initiatives for revenue growth, strategic market development and expanding market share. Finally, our global employee base of over 2,000 team members, we have brought on Laurel Yards as our CHRO to help manage our most important asset, our people.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

So I'm gonna go off script just briefly and say that we're gonna discuss tariffs. Obviously the world changed again today at 01:18 with a truth social tweet, And I'll go back on script now, but I just want to advise everyone that this is obviously a fluid situation as we sit at this moment. I will discuss tariffs in more detail later, but I want to highlight that we have initiated measures to minimize the tariff impacts through inventory buildup and production shifts. As global conditions continue to evolve, we remain focused on navigating a dynamic macroeconomic environment with resilience and agility, While increasing tariff pressures and broader economic uncertainties exist, we view these as opportunities to further strengthen our operations and adaptability. Recent trade tensions and new tariff announcements have added complexity to global markets.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

However, our diversified manufacturing footprint positions us well to respond to these changes and minimize disruption. By staying proactive, we are working to ensure continuity, stability and efficiency across our procurement and production networks. While some leading indicators suggest the potential for a cyclical slowdown, we are preparing thoughtfully for a range of economic scenarios. Through a continued focus on financial discipline, deepening customer partnerships and driving operational excellence, we are building a stronger, more resilient foundation for a longer term success. Importantly, we are well positioned with two relatively recession resistant sectors, industrial and fire, giving us confidence in our ability to weather near term challenges.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

While we are not completely insulated from the uncertainty surrounding global tariff developments, we are moving forward with clarity and confidence. We have taken a number of steps to mitigate the effects these tariffs might have. First, we increased net inventory by $14,200,000 which as of 01/31/2025 totaled $82,700,000 While developments are changing by the day, including just a few hours ago, where the majority of the tariffs were paused for ninety days, we are focusing on production shifts to incur the lowest possible tariffs on our products. In the North American marketplace, our tariff mitigation initiatives include cross certification of Lakeland's Mexico produced fire turnout gear by Viridian for production in The U. S.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

All Viridian turnout gear is currently manufactured in The U. S. And these facilities have the capacity to manufacture the Lakeland brand of turnout gear. Additionally, our Mexico facility is becoming certified to produce Viridian turnout gear for the Canadian and LatAm markets in our Mexico facility. Immediately following our acquisition of Viridian, Lakeland's Mexico and Viridian's U.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

S. Operations began sharing compliance under NFPA 1970 and technical documentation to facilitate cross production initiatives. We're also pleased to learn that over 90% of our Mexico produced products that fall under the provisions of the USMCA trade agreement are not subject to additional tariffs. In Asia, these measures include exploring other lower tariff regions for manufacturing industrial products along with communicating expected price increases or surcharges to channel partners for products made in Vietnam and China. We are continuing to closely monitor the Vietnam tariff situation as a significant portion of our US disposable products are manufactured at our Vietnam facility.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

And we are hopeful that the just announced pause in tariffs for Vietnam and most other countries will become permanent. In the meantime, we are continuing to assess the possibility of manufacturing disposable products at our newly acquired US manufacturing facilities or other Lakeland facilities around the world. One final note is that only a limited range of China produced products are imported into The U. S. And we believe that we do not have a material risk of retaliatory tariffs from foreign entities as we manufacture only a limited set of products in The U.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

S. For non U. S. Countries, primarily Viridian turnout gear. Looking back at fiscal 'twenty five and ahead to fiscal year 'twenty six, I can confidently say that we now have the right management team in place to execute our strategies, focusing on strategic acquisitions and synergies to accelerate growth and create value.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

These strategic acquisitions have grown our global presence and head to toe portfolio brands. The completed acquisition of Meridian in particular has expanded Lakeland's global fire service portfolio with Meridian's leading firefighter protective apparel offerings. We still have a very robust M and A pipeline and we are focused on new opportunities to further consolidate the fragmented fire market with a newly raised capital and are accelerating free cash flow to support this acquisition strategy. We also made two key sales leadership appointments in fiscal twenty twenty five and as well as new regional sales leaders in Asia and Europe. And we are already very encouraged by the early performance from these professionals.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We've also successfully combined the North American sales forces for Viridian and Lakeland fire turnout offerings and implemented a global sales fire sales strategy. As I just spoke to our tariff mitigation strategy is already underway with an inventory buildup and production shifts across The U. S, Mexico and Asia that will incur the widest burden possible on Lakeland and our customers. We have also employed logistics strategies that focus on a worldwide approach for shipping and distribution to optimize efficiencies and lower costs. These strategies and our experienced management teams execution of them are translating into strong financial performance.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We are well capitalized with a strong balance sheet and expanding free cash flow growth to fund our fire services acquisition strategy and initiatives. With that, I'd like to pass it over to Roger to cover our financial results.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Thanks Jim and hello everyone. I'll provide a quick overview of our fourth quarter and fiscal year financials before diving into the details. Revenue for the quarter grew $15,400,000 or 49.3% compared to the fourth quarter of fiscal twenty twenty four. For the fiscal full year '20 '20 '5 revenues increased $42,500,000 or 34.1% to $167,200,000. Consolidated gross margin increased by four twenty margin points versus Q4 of last year from 40.1% to 41.1% from 35.9% and held at 41.1% for both fiscal years twenty twenty five and 2024.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Operating expenses increased by $4,300,000 or 29.7% from 14,500,000.0 to 18,800,000.0 in the fourth quarter of fiscal twenty twenty five and by 22,200,000.0 or 49.1% from 45,200,000.0 in the fiscal year twenty twenty four to 67,400,000.0 in fiscal twenty twenty five due to inorganic growth acquisition expenses, restructuring and other non recurring expenses and increased organic SG and A operating expenses, primarily compensation and professional fees. Net loss was $18,400,000 or negative $2.42 per diluted earnings per share for the fourth quarter in fiscal twenty twenty five compared to $1,000,000 or a loss of 13¢ per share per diluted share for the fourth quarter of fiscal twenty twenty four. For fiscal twenty twenty five, net loss was $18,100,000 or $2.43 per diluted earnings per share compared to net income of $5,400,000 or 72¢ per diluted earnings per share for fiscal year twenty twenty four. Both Q4 and fiscal twenty twenty five were affected by $10,500,000 goodwill impairment at Eagle and Pacific helmets and a $7,600,000 write off of our investment at body track. Adjusted EBITDA excluding FX was $6,100,000 for the quarter and $17,400,000 for the full fiscal year twenty twenty five.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Cash and cash equivalents were $17,500,000 on 01/31/2025 compared to $25,200,000 on January thirty first of twenty twenty four. Looking at our fourth fiscal quarter of twenty twenty five net sales were $46,600,000 for the fourth quarter fiscal twenty twenty five, an increase of $15,400,000 or 49.3% compared to 31,200,000.0 for the fourth quarter of fiscal twenty twenty four sales from our recent acquisitions accounted for $12,100,000 of the increase while organic sales increased $3,300,000 or 11% over the prior year. Sales of the fire services product line increased $14,700,000 year over year due to $8,200,000 in sales from LHD acquired in July 2024 and organic fire services growth of $2,600,000. Jolly acquired in February of twenty twenty four also contributed to our growth in fire services. The significant increase in fire services was complemented by $1,500,000 or 12% increase in disposable sales, primarily in The US, partially offset by seasonal weakness and high performance in wovens.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

On a consolidated basis for the fourth quarter of fiscal year twenty twenty five domestic sales were $18,300,000 or 39% of total revenues and international sales were $28,300,000 or 61% of total revenues as our recent acquisitions continue to skew growth internationally. This compares with domestic sales of $12,700,000 or 41% of the total and international sales of $18,500,000 or 59% in the fourth quarter of fiscal twenty twenty four. Gross profit for the fourth quarter of fiscal twenty twenty five was $18,700,000, an increase of $7,500,000 or 67% compared to 11,200,000.0 for the fourth quarter of fiscal twenty twenty four. Gross profit as a percentage of net sales increased 40.1% for the fourth quarter of fiscal twenty twenty five from 35.9% for the fourth quarter of fiscal twenty twenty four. Gross margin percentage increased in the fourth quarter of fiscal twenty twenty five due to strong organic sales results, partially offset by lower gross margins from our recent acquisitions.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Organic gross margin percentage increased to 48.5% from 35.8% for the fourth quarter of fiscal twenty twenty four, due primarily to a $2,200,000 reversal of profit in ending inventory and positive product mix. Operating expenses increased by $4,300,000 or 29.7% from $14,500,000 for the fourth quarter of fiscal twenty twenty four to $18,800,000 for the fourth quarter of fiscal twenty twenty five. Operating expenses increased due to inorganic growth, acquisition expenses, various non recurring expenses and increased organic SG and A operating expenses, primarily compensation and professional fees. Adjusted operating expenses increased $3,000,000 primarily due to inorganic growth. Operating loss was $10,700,000 for the fourth quarter of fiscal twenty twenty five compared to an operating loss of $3,300,000 for the fourth quarter of fiscal twenty twenty four, due primarily to impairments of goodwill at our Eagle and Pacific subsidiaries into the above mentioned impacts.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Operating margins were negative twenty two point nine million dollars for the fourth quarter of fiscal twenty five compared to negative 10.5 for the fourth quarter of fiscal twenty twenty four. Net loss for the quarter was $18,400,000 or negative $2.42 per diluted earnings per share for the fourth quarter of fiscal twenty twenty five compared to $1,000,000 in the prior year, primarily due to non cash goodwill impairment at Eagle and Pacific helmets and an equity impairment, equity investment impairment related to the investment in BodyTrack, which has generated losses since its initial acquisition and has required repeated rounds of financing to maintain operations. In February 2025 body track entered insolvency proceedings in The United Kingdom Through 01/31/2025, we recognized a total of 1,500,000.0 in losses from our investment in BodyTrack. As of 01/31/2025, we recorded an impairment loss of $7,600,000 for the remaining recorded value of the equity method and convertible notes investment. As part of the liquidation process, we secured the intellectual property rights and all existing inventory, and we intend to devote some resources to body track in a way that does not take away from our core business as we believe it is a viable connected worker workplace safety system that has not been properly positioned.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Adjusted EBITDA excluding FX for the fourth quarter of fiscal year twenty twenty five was $6,100,000 an increase of $2,700,000 or 79.4% compared to 3,400,000.0 for the fourth quarter of fiscal year twenty twenty four. The increase was driven by higher revenue, including contributions from LHD, the expected reversal of profit in ending inventory and margin improvements in our organic sales mix, partially offset by higher manufacturing expenses. Moving on to our fiscal full year twenty twenty five results, net sales were $167,200,000 for the fiscal year twenty twenty five, an increase of $42,500,000 or 34.1% compared to 124,700,000.0 for fiscal year twenty twenty four. Fire services line was a key driver of revenue growth, increasing $36,500,000 or 137.7 percent year over year. The execution of the company's acquisition strategy and the acquisitions of Pacific in November 2023 and Jolly, LHD and Meridian in FY twenty five accounted for $33,100,000 of the increase.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

The significant increase in fire services was complemented by an $8,100,000 increase in our wovens, disposables and chemical products, partially offset by a $1,100,000 decline in our high visibility products. On a consolidated basis for the fiscal year 2025 domestic sales were 60,400,000 or 36% of total revenues and international sales were $106,800,000 or 64% of total revenues as our recent acquisitions continue to skew growth internationally. This compares with domestic sales of $55,200,000 or 44% of the total and international sales of $69,500,000 or 56% of the total in fiscal year twenty twenty four. Gross profit for the fiscal year twenty twenty five was $68,700,000, an increase of 17,500,000 or 34.2% compared to $51,200,000 for fiscal year twenty twenty four. Gross profit as a percentage of net sales was 41.1% for fiscal years twenty twenty five and 2024.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Organic gross margin percentage increased to 45.3% from 41.1% for fiscal year twenty twenty four, driven by increases in fire services and favorable product mix. Operating expenses increased by $22,200,000 or 49.1% from $45,200,000 for the fiscal year twenty twenty four to 67,400,000.0 for fiscal year twenty twenty five. Operating expenses increased due to inorganic growth, acquisition expenses, restructuring and other non recurring expenses, and increased organic SG and A operating expenses, primarily compensation and professional fees. Adjusted operating expenses increased from $38,900,000 in FY24 to $53,700,000 in FY25 driven by inorganic growth, higher sales expenses from increased revenue and higher compensation and professional fees. Operating loss was $9,300,000 for fiscal year twenty twenty five compared to operating profit of 6,000,000 for fiscal year twenty twenty four due to the above mentioned impacts.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Operating margins were minus 5.5% for fiscal year twenty twenty five compared to 4.8% for fiscal year twenty twenty four. Net loss was $18,100,000 or negative $2.43 per diluted earnings per share for the fiscal year twenty twenty five compared to net income of $5,400,000 or $0.72 per diluted earnings per share for fiscal year twenty twenty four. Adjusted EBITDA excluding FX for the fiscal year twenty twenty five was $17,400,000, an increase of $1,700,000 or 10% compared with $15,700,000 for fiscal year twenty twenty four. The increase was driven by higher revenue, including contributions from LHD and margin improvements in our organic sales mix, partially offset by higher SG and A expenses and the impacts of foreign exchange. Cash and cash equivalents were $17,500,000 on 01/31/2025 and working capital was approximately 101,600,000.0.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Cash and cash equivalents decreased by $7,700,000 and working capital increased by 18,400,000.0 from 01/31/2024 reflecting the impact of the company's acquisition strategy with the purchase of Jolly LHD and Meridian in 2025. Net cash used in operating activities was $15,900,000 in the year ended 01/31/2025 compared to net cash provided of $10,900,000 in the year ended 01/31/2024. The increase was driven by increases in working capital, primarily due to the inventory buildup in preparation for forecasted increases in sales in the first half of fiscal twenty twenty six, a large increase in accounts receivable resulting from LHD's catch up of a multi year backlog and the delayed shipment of a large boot order from Jolly. As we collect on these sales, we expect this cash to be recovered in the first half of fiscal year twenty twenty six. Revenue for the trailing twelve months ended 01/31/2025 was $167,200,000 or an increase of $42,500,000 or 34% versus the FY24 TTM revenue of 124.7.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

With our recent fire services acquisition supporting Lakeland's continued revenue growth. Trailing twelve months adjusted EBITDA excluding the impacts of FX was 17,400,000. This increase of $1,700,000 or 10% versus full year of fiscal twenty twenty four. The shortfall in our annual adjusted EBITDA guidance was a direct result of the slippage of a large boot order at Jolly into fiscal year twenty twenty six. Taking into account that we completed four major acquisitions in the past twelve months, the full integration and implementation of which does take some time, we believe those benefits will begin translating into even greater improved financial performance that will be recognized in the coming fiscal year.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Our fourth quarter consolidated gross margin increased by four twenty margin points versus Q4 of last year to 40.1% due to improved organic margin, the profit and ending inventory reversal and the impact of inventory write off in the fourth quarter of last year, partially offset by lower inorganic gross margin, higher manufacturing and freight cost. Meanwhile, organic gross margin saw a strong improvement from 35.8% to 48.5% year over year due to a positive product mix and the reversal of the previously mentioned profit in the inventory. Gross profit as a percentage of net sales was 41.1% for fiscal years twenty twenty five and 2024. Organic gross margins increased from 45.3% increased to 45.3% from 41.1% for fiscal year twenty twenty four, driven by increases in fire services and a favorable product mix. Adjusted EBITDA excluding FX for the fourth quarter fiscal year twenty twenty five was $6,100,000 an increase of $2,700,000 or 79.4% compared to 3,400,000.0 for the fourth quarter of fiscal year twenty twenty four.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

The increase was driven by higher revenue, including contributions from LHD, the expected reversal of profit at ending inventory and margin improvements in our organic sales mix, partially offset by higher manufacturing costs. Reviewing our performance, while we saw significant revenue growth overall, we continue to face some challenges that impacted our results. Yet we remain confident in our full year projections. In the fourth quarter, Jolly had substantial fire orders delayed to the first half of fiscal year twenty twenty six. Our most recent acquisition, Veridian contributed $1,900,000 in the fourth quarter.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Revenues for LHD, Jolly, Pacific helmets and Viridian were combined $13,200,000 and we expect those to accelerate as we deliver on open orders and cross selling opportunities. Looking at our organic business, our Latin American operations decreased $7,000,000 in sales year over year due to customer seasonal buying patterns. LATAM now represents 13% of Lakeland's total sales and they continue to grow. Our outstanding Latin American team is continually identifying and capitalizing on new market opportunities and we expect further growth in that region. We're working to expand our fire services offering in LATAM and we expect to introduce new industrial products from the Lakeland portfolio into that region going forward.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

We've also recently put our Mexico sales operations under our TAM management team and we're optimistic that they can replicate their success in that country. However, our Q4 sales in Mexico were down 15% year over year where we are in the process of making sales team enhancements. We also saw sales decrease year over year in Asia. We are very excited about the new sales leadership we've put in place in Asia. And we're encouraged by the growth we're seeing both in China and in the new Asian markets outside of China.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Our European revenue, including Eagle Jolly and our recently acquired LHC business grew by $10,800,000 or 292% to $14,500,000. We see very good sales opportunities in Europe and are committed to its growth trajectory. Following a slowdown in the second quarter due to our line drive transition, we were pleased to see our US revenue rebound to $18,300,000 or 36% driven by continued growth in our Lakeland fire services business and in disposables. Regarding product mix for the fourth quarter, our fire services business grew $14,700,000 or 226% versus the same period last year, driven by a recent LHD acquisition and organic gains in The US and from Eagle as we start to see gains from our head to toe strategy. Our industrial product lines grew $700,000 or 3% over the same period last year, led by disposables, which grew 12% and represented 38% of the revenue for the quarter.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Chemicals represented 10% of revenue for the quarter, while the remainder of our industrial products, including FRAR, high performance and high biz accounted for 15% of sales. Now, turning to the balance sheet, Lakeland ended the quarter with cash and cash equivalents of approximately $17,500,000 and long term debt of $16,400,000. This compares to $15,800,000 in cash and 31,100,000.0 in long term debt as of 10/31/2024. The decrease in cash was primarily due to the buildup of inventory for 2026 growth initiatives, tariff mitigation and the Jolly backlog. On 01/24/2025, we closed a public offering of common stock and full exercise of underwriters option to purchase additional shares with growth gross proceeds of approximately $46,000,000.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

We use the net proceeds, the offering to pay down the outstanding principal under our loan agreement. As of 01/31/2025, we had borrowings of $13,200,000 outstanding under the revolving credit facility and there was $26,800,000 of additional available credit under the loan agreement. Net cash used in operating activities was $15,900,000 in the year ended 01/31/2025, compared to net cash provided of $10,900,000 in the year ended 01/31/2024. The increase was driven by an increase in net inventories of $14,200,000, an increase in accounts receivable of $2,800,000, reduction in accrued expenses and other liabilities of $3,500,000 offset by an increase in accounts payable of $6,000,000. Capital expenditures were $1,900,000 for the year ended 01/31/2025, primarily for manufacturing equipment.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

With respect to cash usage, although elevated during the quarter, this suggests strong demand from our customers as the usage was driven by increases in working capital of $18,400,000 primarily due to a build in inventory in preparation for the forecasted increase in sales in the first half of FY twenty twenty six and the impact of clearing approximately 85% of the multi year backlog at LHD, which we expect to recover in the first half of fiscal twenty twenty six. At the end of Q4, inventory was $82,700,000 up from 72,700,000.0 at the end of Q3 fiscal year twenty twenty five due to the inventory build preparation for the forecasted increases in sales in the first half of fiscal twenty six. A large increase in AR resulting from LHD's catch up of a multi year backlog and the delayed shipment of a large food order from Jolly and tariff mitigation initiatives. 01/31/2024 inventory of acquired companies totaled 24,400,000. Year over year, we saw an increase in our organic inventory of $8,000,000 versus the quarter ended 01/31/2024.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Organic finished goods were $28,700,000 in Q4 twenty twenty five, up $3,500,000 year over year and up $2,300,000 quarter over quarter. Organic raw materials were $28,500,000 in Q4 twenty twenty five, up $3,900,000 year over year and up $600,000 quarter over quarter. Now, turning to our fiscal twenty twenty six guidance. Based on our current backlog of orders and current expectations, we expect FY 2026 revenue of $2.10 to 2 20 million dollars. This revenue expectation includes the recent Meridian LHD, Jolly Scarpe and Pacific Helmet acquisitions.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

We expect FY twenty twenty six adjusted EBITDA excluding any material negative impact from foreign exchange of 24 to $29,000,000. This expectation also includes the Viridian LHC, Jolly Scarpe and Pacific helmets acquisitions. With that overview, I'd like to turn the call back over to Jim before we begin taking questions.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Thank you, Roger. I'll conclude by saying that we continue to demonstrate strong net sales growth driven by 10% sequential and significant 226% year over year increase in our fire services line and rebounding global growth across Europe, Asia and Latin America. As I previously mentioned, near term, our strategy is to leverage a leading market position in fire protection premium brands and M and A to accelerate profitable growth in a higher margin $2,000,000,000 fire protection sector in the largest global markets. Our long term strategy is to grow both our fire services and industrial PPE verticals with our strategically located company owned capital light model focusing on operating and manufacturing efficiencies to achieve higher margins with positioning to grow faster than the market served. With a fortified balance sheet from our recent $46,000,000 oversubscribed capital raise and growing top line revenue in our fire services and industrial verticals, combined with operating and manufacturing efficiencies, we are targeting fiscal year twenty twenty six revenue of $210,000,000 to $220,000,000 and adjusted EBITDA excluding FX of 24,000,000 to $29,000,000 Before we move on to Q and A, I'd like to take a moment to address the goodwill impairment charge we recorded this quarter related to Eagle and Pacific Helmets as well as the equity investment write off of BodyTrac.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We invested in BodyTrac in early calendar twenty twenty one when we were flushed with COVID cash. We viewed it as a venture investment in the connected workplace. We believe the product remains cutting edge, but the sales strategy needs improvement. Once we secure the IP and other assets, we intend to focus on a strategy to monetize BodyTrack. This could include patent infringement enforcement, a modified channel strategy with specific end users in The Middle East and Latin American markets, where worker safety in high temperature environments is vitally important for employers to understand on a real time basis.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

About Eagle, the goodwill impairment really reflects the fact that a substantial amount of the purchase price was allocated to goodwill given that Eagle had very few fixed assets utilizing a subcontractor manufacturing model. There is also a certain lumpiness associated with Eagle's primary tender business. In fiscal year twenty twenty four, Eagle exceeded our forecast for it, but missed an aggressive earn out target. That earn out $3,500,000 was an added to an already significant goodwill number. Eagle performed profitably for us in fiscal year twenty twenty five, but missed its targets and sales were lower against fiscal year twenty twenty four.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Thus the write off. We believe as we continue to introduce Eagle in markets they were not otherwise selling in, LatAm and Asia specifically, the lumpiness associated with Eagle's tender business will ease. With respect to both Eagle and Pacific Helmet, some of the impairment related to certain intercompany sales had excluded a substantial amount of their respective gross margins. The non cash adjustments resulted from a routine valuation reassessment under current market conditions at a moment in time. It's important to emphasize that this change does not reflect a decline in our confidence in the strategic value of Eagle or Pacific Helmets, nor does it impact our cash flow, liquidity or ability to invest in future growth.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

As for Pacific Helmets, the underlying fundamentals of the acquired business remain solid and it continues to align well with our long term vision. Since the acquisition, we've seen encouraging performance potential and opportunities to unlock greater synergies. To ensure we're driving the most value from this asset, we've taken several key actions. We've refined our integration plan to sharpen execution and improve cost efficiency. To that end, we've hired a Lean Six Sigma black belt to drive Lean Six Sigma throughout the Pacific Helmet organization.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We hired a managing director to lead these improvements. We have restructured certain parts of the business to better align with our growth priorities, including a rollout of a new wildland and structural helmet in the APAC region in time for the next tender season in early calendar twenty twenty six. We also are reintroducing our Pacific helmet for The U. S. Markets and FDIC today where Roger and I are at moment.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

And we're closely monitoring Pacific performance metrics to ensure accountability and momentum. We believe these steps will enhance long term value for our shareholders and strengthen our overall position in the market. This impairment charge reflects prudent accounting at a specific point in time, but our strategic focus remains unchanged, delivering a sustainable growth, disciplined capital management and long term shareholder value. With that, we will now open the call for questions. Operator?

Operator

Thank you. We'll now be conducting a question and answer session. Our first question is from Mike Schlisky with D. A. Davidson.

Operator

Please proceed with your question.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Good afternoon. Thanks for taking my question. Sorry for any background noise, but you can't hear me that all that well. I want to start with a question about the guidance that you put out. I guess, what date or even time of day was that guidance made?

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

And are you I guess, given what happened just a few hours ago, do you think now things shift because of the way costs are going to go for the first quarter or two year? Are you pointing towards the higher end of guidance just from that alone?

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Or just some thoughts as to

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

where the key variables are as to how that might turn

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

That guidance did not change as a result of what happened today. And frankly, there's still that uncertainty. And I think the guidance stands as is. I mean, we're one tweet away from a 46% tariff again. You know, I guess I'm of the view at this point that we're sticking with our current guidance.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Can

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

I ask you that? Sorry.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Would agree with that.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

You know, we

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

time to place closer It's

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

hard to know from minute to

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

minute what's gonna happen, but I

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

think, you know, when we originally kinda thought about our guidance, anticipated it, you know, we we a combination of the mitigation steps that we had taken, you know, an optimism that there would be cooler heads prevailing and the fact that we would pass along the increase to customers all kind of factored in. Now, you know, had had the or if the if the increased tariffs at a higher level take place, then, of course, you could expect revenue numbers to be higher, but possibly the margins to be lower and then adjusted EBITDA probably would still well, it's kind of hard to model that really given all the different possibilities. So let's just kind of leave it with, we're confident with the range that we gave at this point in time and we'll continue to keep everyone updated as we go throughout the year, quarterly.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Okay.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

That's fair. That's fair.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Then I just want to follow-up on your comments both earlier in the call and just at the very end there, Jim, about BodyTrack. I am relatively new here. So it sounded like you do you intend to revamp it or keep that going? Or is this more of a hopefully a profitable wind

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

up for that business? I

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

just want make sure how some plans I think

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

what we've done is we've basically taken the company's assets. And those we believe we've got an ability to utilize that asset in a way that it could be a revenue generator for us in a couple of different avenues. Obviously, when you take an asset like that with multiple patents it has, you want to take a harder review as to whether anybody might be infringing that patent. There's certainly a way to monetize it that way. But I guess more importantly, and the easiest way to monetize it is to sell it differently.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

BodyTrack had a sales model that required end user to pay a significant upfront fee, and that was a result of a balance sheet that couldn't support that kind of a relationship. So Roger and I are of the view that we're going to roll it out a little differently, a little more strategically in regions where the reception for it was relatively strong. And we're going to do it utilizing our financial strength and the relationships that we have with channel partners and end users to that end. And I've already had a discussion with my LATAM team who is excited about our getting that asset in the door.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Would just add that BodyTrack was adding customers even in business, even through their last day of business. As a company like that grows, cash flow becomes an issue for the factors that Kim just mentioned, we weren't willing to put more cash into their model. And with the most recent rounds of investment that we did contribute was as secured convertible loans. So that enabled us to call on that asset and to take that on. And so now that we do own that IP and we own that inventory.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Got it. Very helpful. I will pass it along. Thank you so much.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Sure. Thank you. Safe travels.

Operator

Our next question is from Gerry Sweeney with ROTH Capital Partners.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Good afternoon. How are guys doing?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Good. Fantastic.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

So, obviously, are gonna be top of everyone's mind. We've already seen questions and you discussed. But as you look at mitigation strategies, what are some of the what are the bigger challenges you face there? Obviously, you're a little bit more asset light manufacturing, a lot of it's sewing. How challenging is it to move maybe some disposable manufacturing to The US?

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Secondarily, yeah, you go ahead then I'll ask another one, but follow-up.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Yeah,

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

so a couple of ways we're exploring this. Only until recently, I just had this discussion with my COO earlier again today, so I wanna make sure I was aligned with where she's looking at this. But we used to have a very large disposable operation in Mexico. We shifted strategically to fire turnout gear primarily in Mexico A Couple Of Years ago. And I think it was a decision that was made by the prior management team, I think it was a smart one.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

But we've got people who are trained to do disposables there. And with the meridian capacity that we have, these tariffs become, look, 10% is something we can live with. Okay. But if something were to go a little higher than that for Vietnam, the idea would be to train back up those folks in Mexico and then see if they can't drive because some of the stuff that they'd be utilizing would be under the USMCA and would allow us to do that tariff free. So Helena's got a plan for that.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

I mean, I think the worst case plan for us, frankly, would be a US operation. I think it would take us a lot longer to do it and to bring people up to speed. And we were looking very carefully at that. And even with the tariff from Vietnam, it probably still would have been cost prohibitive for us to utilize The US markets for those types of garments. I mean, there is real opportunity.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We've got high performance we can manufacture in The US, and then we can also move the disposables from Vietnam if we need to, to Mexico for The US market. And even prior to that, when the Vietnam tariffs were, I think, at 46%, India, I think, was in the mid-20s. And we were also looking at options for utilizing India as well and training those folks up. Helena's already got them working on piecework, which means you're going to start to see, I think, a more productive flow of manufacturing from India. So we do have some optionality here.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

And I think you're right, it doesn't happen overnight. The elves don't just magically sprinkle pixie dust and we turn to pivot. But I have been overwhelmed in terms of how impressed I've been with Helena and her ability and resiliency to drive her team in ways I couldn't have imagined. And I think she's certainly as prepared as she needs to be to drive this pivot if it becomes necessary.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Okay. And my follow-up was that was I basically answered it, but it was at what point does it not make sense to even move to The U. S. Or and it sounds like The U. S.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Is the worst case scenario, but Mexico by itself,

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

do you Yes.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Mexico got enough

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

capacity. Too bad?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

No, they'd be USMCA compliant use of PPE, which would allow us to be able to sell that without a tariff.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Got it.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

So yep.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Okay, got it. And then you also talked about optimization programs, I think manufacturing, logistics, etcetera. But some of it sounded like it was around Pacific Helmets, but I'm assuming this may be company wide at some point.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

It

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

is. Our Lean Six Sigma program will be rolled out company wide. And Roger has properly brought our Lean Six Sigma leader onto our ERP team to make sure that processes are not conflicting when we start putting business processes in with our ERP systems.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Got to ask the question very well, could be early, but any idea of how much friction, I. E. Margin or points that they can improve or cost they can take out? Obviously, you've made a lot of acquisitions, so there's probably some low hanging fruit that you can fix and move

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Mean, we've already done it at LHC, right? So we'll be looking at other alternatives. PACIFIC is certainly something we'll be looking at. As we look at other improvements, I will tell you that the owner of Viridian believes that we've got some options there as well to consolidate. I mean, look, part of the longer term plan is to consolidate the operations of Viridian into probably one ish operation in Iowa.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

But given the current tariff environment, we haven't really accelerated that. And until we have a little more clarity on that, we're not going to.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

That makes sense. Finally, that jolly order, how big of an order was that in terms of maybe revenue and even potentially EBITDA?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Million Euro.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

3 million

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Euro. Got it. And that's just a push, correct?

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Yep. Yes, timing. Yeah, it's shipped. I mean, it's built, ready to ship and the latest is the customer is doing the inspections and to sign off as we speak. And again, so it's been frustrating that it's pushed once already.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

We had thought with a pretty good level of certainty that it was going to happen in Q4, but obviously didn't. But it is teed up for the first half of this year.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Got it. So it's already manufactured. So that would have been that whole 3,000,000 should have been. The expectation was fourth quarter for that.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Correct. And we would have made guidance with that. Yep.

Gerry Sweeney
Managing Director, Senior Research Analyst at Roth Capital Partners, LLC

Got it. Okay. I'll jump back in line. Thanks, guys.

Operator

Sure. Our next question is from Mark Smith with Lake Street Capital.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Hi, Just back on that Jolly Boot order. So that's not shipped yet. But are there any other backlogs or orders or anything that we should be looking at that's sitting out there today that maybe was delayed or that we would look for any shifts?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Not that I'm aware of. No. No. Nope.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

That's the big one.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

No. Like we mentioned in prepared notes, did a phenomenal job of catching up this. What was an average of two and a half years or some orders that were four years past due and we've made a strategic decision to deliver on those to we think that Lakeland in the name is valuable and those people deserve to get their equipment. So, we made a phenomenal strides in getting 85% of that done.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

We've made operational efficiencies and improvements there and Australia and Hong Kong are really clicking along. We are very happy with that acquisition.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Okay. And the next question, just any thoughts you can give around gross profit margins, and this is kind of excluding any changes on from tariffs, but just gross profit margins with strong organic margins mixed in with acquisitions. If we saw steady state today, any thoughts around kind of where you feel like gross profit margin really moves to?

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Yeah, that's a good question. We are very intently focused on the kind of the previously discussed aspirational targets of mid to high teens and adjusted EBITDA margin. I know I certainly know understand why you're asking and need that. We were very, very pleased with the organic gross margins being close to 50%. Our challenge certainly is these operational improvements at Pacific and then Meridian that we're

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

just now

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

undertaking. Meridian's in the kind of currently in the low 30s in gross margin. Jolly's gross margins were absolutely impacted in Q4 by not shipping those orders. We've got some factory shop floor Lean Six Sigma initiatives going on there. So, either the long and short of it is, I think is the first step.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

I'd like to see the acquisition gross margins kind of get into the mid thirties and start to kind of move up the thirties. At the same time, we talked about the efficiencies we expect to start getting from the ERP project and the fact that Viridian and Eagle and LHD for that matter run very leanly. Their EBITDA margins are quite positive compared to their gross margins.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Okay. And the last question for me is just as we think about the year, obviously, there's been a lot of acquisitions and changes over the last twelve months here. Just could you walk us through any kind of cadence of revenue or any maybe lumpiness that you have any insight into today that we should be watching Yeah,

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

so on the lumpiness front, look, we've got part of the fire biz is of is tenders, right? So you've got multiple tenders all over the world that we're trying to participate in. With the number of brands we have, we believe that our win rate is to increase. But as we start, and I think I mentioned this even maybe six, nine months ago in Q2, when we had similar issues with Jolly, you've got some lumpiness associated with this stuff. And until we get to that critical mass component, which I think is going to be in the next twelve months, as we start seeing revenue start with a two, that lumpiness component, I'm not gonna be dependent upon a jolly boot order to ship on January 28, as opposed to February 4 to worry about whether I'm gonna make that number.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

So that's sort of where Roger and I sit, I think.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Yeah, and just give you just a little bit of context as we look at this year, we expect Q1 to be the lightest quarter and then improving Q2 and then the Q3. Q3, we would expect to be the strongest quarter and then Q4 maybe just a hair below Q2.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Excellent. That's helpful. Thank you.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Our

Operator

next question is from Matthew Galinko with Maxim Group.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Hi, Matt.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Hey, Matt.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Hey, good afternoon, guys. Thanks for taking my questions. Maybe post clearing the backlog in LHD in Europe, I guess, what are the prospects that or how should we think about the run rate of that business? Or like are you building that pipeline as you sort of clear the backlog or how is business there?

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Yeah, so when you think about LHD, you've got the Germany business, the Australia business and the Hong Kong, and of course, the Australia as well as the Hong Kong includes services. We've got with the clearing of the backlog. We're probably still in the call it the €8,000,000 range for this year as we win new tenders, win new awards. There are some very interesting RFPs that I can tell you that we have not factored in to winning, but that we're and we think about our guidance and budget numbers, but that we are that we know we're coming up and that we're going to bid on and that our team there feels good about getting a good look at. We've mentioned before that we would be disappointed if we only double the revenue in Germany from LHD.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Of course, that's not going to happen overnight and we're not like we did with others. We don't put a lot of hockey stick growth on the first year. Really? We're kind of getting past the backlog and going through some operational efficiencies. We've got this first year really kind of flat from a projection perspective, but there certainly is potential upside there.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Got it. Thank you. And I guess my follow-up is thematically it seems, obviously, a lot of focus on tariffs and operations. But maybe if you could touch a little bit on growth initiatives as you see it. Is M and A still up in play this year?

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Is the services business still in play this year? Kind of what are you thinking about factor driving it?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Yes. Look, on the organic front, we've got the right team in place. We've really been together for about seven or eight months. And now this is the year, I think, where we're starting to move with a real purpose together. On the organic front, I'm very optimistic with what we're doing.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

I look at what our industrial team's doing in Europe right now. And Europe has been a real disappointment on the industrial side for us for many, many years. And I now have the right leadership and the right focus in that market. On the M and A front, what we've acquired and the cross selling magic that my Chief Revenue Officer, Barry Phillips, is working is really quite impressive. Know, I was at FDIC today, which is the largest fire trade show in North America.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

And, you know, Barry knows everyone. I mean, he literally knows everybody there. So including most of the firefighters. So I'm really, really energized by what he and Cameron are trying to do with our teams. And we mentioned obviously during the call that we'd added a lot of sort of middle management in our sales staff that I look at and I get even more energized when I see that.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

So that's sort of the organic front. On the M and A side, Roger and I, I think, have a number of initiatives and our pipeline is still significant and quite robust. But focus is going to be, you know, I think the deals will be a little smaller over the course of

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

the next twelve to eighteen months.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

I think we're looking at, you know, what we would call the decontamination business, you know, the service business. So we would anticipate probably the next twelve to eighteen months looking at two or three of those. And as I think I said before, companies are generally doing 3,000,000 to $5,000,000 in revenue. There's a nice opportunity to scale those companies in markets where we have existing customers. So we think we're gonna do something to the tune of two or three of those in the next twelve to eighteen months.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

And we see those as real nice opportunities for us to generate recurring revenue, high margin and sort of a sticky customer.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Great. Thank you. And maybe if I could sneak one last one in there. It sounds like LINE Drive is doing well now. Are we kind of moving at full speed on that front or is there still work to be done?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

No, no, we're in a really good place with LINE Drive. They're getting it. They're walking the halls of the Facetalls and the Valens and the Granger's of the world. So I just had a call with my colleague there late last week, we were trying to, at that point, work on a tariff strategy and he was quite helpful on that front. But, you know, as we start getting more clarity and hopefully these 10% tariffs are all that we're going to see, he's been very helpful, they've been very helpful and our teams have really been working closely together.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

So, our optimism is not waning at all. And in fact, it's increasing with every day that we work with LINE DRIVE.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Great. Thank you.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Thank you.

Operator

You. There are no further questions at this time. I would now like to turn the call back over to Mr. Jenkins for his closing remarks.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Thank you all for joining. Thank you, operator. Thank you all for joining us on today's call. I would also like to thank our customers and distributor partners worldwide for trusting us with your lives and safety. Our customers are heroes, and we never take that trust for granted.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

I also want to thank our Lakeland team members across the company for their continued commitment and enthusiasm as we further delivered on our strategic initiatives this quarter. Lakeland continued to experience significant growth and change during this quarter, and I appreciate the hard work from our dedicated team as we continue to execute our growth strategies. If we were unable to answer any of your questions today, please reach out to our IR firm, MZ Group. We would be more than happy to help and assist you. Thank you.

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Executives
    • James Jenkins
      James Jenkins
      President, CEO & Executive Chairman
    • Roger Shannon
      Roger Shannon
      Chief Financial Officer
Analysts
    • Michael Shlisky
      Managing Director & Senior Equity Research Analyst at D.A. Davidson
    • Gerry Sweeney
      Managing Director, Senior Research Analyst at Roth Capital Partners, LLC
    • Mark Smith
      Senior Research Analyst at Lake Street Capital Markets, LLC
    • Matthew Galinko
      SVP & Senior Research Analyst at Maxim Group
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Earnings Conference Call
Lakeland Industries Q4 2025
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