Sign in

You're signed outSign in or to get full access.

LI

LAKELAND INDUSTRIES INC (LAKE)·Q1 2026 Earnings Summary

Executive Summary

  • Record net sales of $46.7M (+29% YoY) driven by a 100% increase in Fire Services; gross margin compressed to 33.5% (−1,110 bps YoY) and diluted EPS was ($0.41) on higher SG&A and purchase variance flowing through COGS .
  • Management maintained FY2026 revenue guidance at $210–$220M and guided Adjusted EBITDA ex-FX to the lower end of $24–$29M, citing tariff uncertainty and integration costs; expects sequential improvement in Q2 gross margin and Adjusted EBITDA ex-FX .
  • Mix shifted toward Fire Services (45% of revenue) with strong U.S. (+42% to $22.5M) and Europe (+102% to $12.1M) offset by Latin America (−12% to $4.3M) and Canada softness due to tariff-related delays .
  • Near-term catalysts include resolution of tariff uncertainty, $3.1M Jolly boot shipment cycle timing, cost reductions (~$4M identified), and NFPA standard transitions affecting U.S. order timing .

What Went Well and What Went Wrong

What Went Well

  • Record Q1 revenue with Fire Services up 100% YoY to $21.0M; Fire now 45% of total revenue .
  • Strong regional growth: U.S. net sales +42% to $22.5M; Europe +102% to $12.1M, reflecting acquisition momentum and organic gains .
  • Management expects sequential improvement in Q2 gross margin and Adjusted EBITDA ex-FX as purchase variances normalize and tariff mitigation strategies taper: “We anticipate sequential growth in gross margins and adjusted EBITDA, excluding FX in the second quarter” .

What Went Wrong

  • Gross margin fell to 33.5% from 44.6% YoY due to geographic mix shift, purchase accounting inventory step-up amortization (~$0.4M), elevated freight, and COGS-expensed purchase variances expected to reverse in subsequent quarters .
  • SG&A and operating expenses increased $6.3M (+45%), with travel, freight, and acquisition-related costs; Adjusted EBITDA ex-FX declined to $0.6M (1.3% margin) .
  • Latin America (−12% YoY) and Canada delays tied to tariff uncertainty reduced higher-margin regional contributions, pressuring overall margins .

Financial Results

Consolidated P&L Snapshot (YoY and Sequential)

MetricQ1 2025Q4 2025Q1 2026
Revenue ($USD Millions)$36.309 $46.628 $46.746
Gross Margin %44.6% 40.1% 33.5%
Diluted EPS ($)$0.22 ($2.42) ($0.41)
Adjusted EBITDA ex-FX ($USD Millions)$3.838 $6.110 $0.602
Adjusted EBITDA ex-FX Margin %10.6% 13.1% 1.3%

Product Mix (Q1 2026)

SegmentQ1 2025Q1 2026
Fire Services Revenue ($USD Millions)$10.5 $21.0
Fire Services % of Revenue29% 45%
Disposables % of Revenue—28%
Chemicals % of Revenue—13%
FR/AR + High Performance/High Viz % of Revenue—14%

Geography (Q1 2026 vs YoY)

RegionQ1 2025 ($USD Millions)Q1 2026 ($USD Millions)
U.S.$15.9 $22.5
Europe (incl. Eagle, Jolly, LHD)$6.0 $12.1
LATAM$4.9 $4.3
Asia$10.4 $12.0

KPIs and Balance Sheet

MetricQ4 2025Q1 2026
Cash & Cash Equivalents ($USD Millions)$17.5 $18.6
Working Capital ($USD Millions)$101.6 $104.4
Inventories ($USD Millions)$82.7 $85.8
Revolver Borrowings ($USD Millions)$13.2 $19.8
Available Credit ($USD Millions)$26.8 $20.2
Capex ($USD Millions, Q1)—$1.2 (ERP)
Dividend per share (quarter)$0.03 (Feb 24, 2025 payment) $0.03 (May 22, 2025 payment)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2026$210–$220M (initiated Q4 FY2025) $210–$220M (maintained Q1, note “near lower end”) Maintained (tone lowered)
Adjusted EBITDA ex-FXFY 2026$24–$29M (initiated Q4 FY2025) Lower end of $24–$29M (Q1 tone) Maintained range; lower-end bias

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2025)Current Period (Q1 FY2026)Trend
Tariff uncertainty and mitigationPre-positioned inventory; shifts to Vietnam/Mexico; >90% Mexico under USMCA Inventory build (+$3.1M); purchase variances flowed to COGS; expect sequential margin lift as mitigation tapers Improving into Q2 (management)
Fire Services expansion (head-to-toe)LHD, Jolly, Pacific, Veridian acquisitions; pipeline robust Fire +100% YoY; 45% mix; customer engagement and bundled offerings (helmets, turnout gear, boots, gloves) Strong momentum
Latin America and CanadaLATAM softness; Canada mixed LATAM −12%; Canada delayed orders on tariffs; recovery expected later in year Near-term headwind; recovery expected
Cost actionsIntegration ongoing; ERP project initiated Identified ~$4M cost savings; SG&A to moderate; facility closures and consolidation underway Improving OpEx run-rate
Standards/regulatory (NFPA 1970/1971)—NFPA transition influencing U.S. order timing; certifications in process Temporary timing friction
Inventory and supply chainBuild for H1 FY26; LHD backlog cleared Inventory $85.8M; profit in ending inventory $1.3M; targeted optimization across categories Optimization underway

Management Commentary

  • CEO Jim Jenkins: “We achieved record net sales… driven by a 100% increase in fire services products… partially offset by softness in Latin America and Canada… due to tariff-related delays” .
  • CFO Roger Shannon: “Adjusted EBITDA excluding FX was $0.6M… the shortfall was a direct result of revenue falling in key high-margin regions, … purchase variance… elevated freight costs… and dilution from acquisitions” .
  • On outlook: “We anticipate sequential growth in gross margins and adjusted EBITDA, excluding FX in the second quarter” .
  • Strategic focus: pursuing M&A (rental, decontamination, services) and consolidations to drive mix and margin expansion; target EBITDA margins mid-to-high teens over 3–5 years .

Q&A Highlights

  • Gross margin headwinds: purchase accounting (~1% margin impact) and materials purchase price variances (2–3 margin points) expensed in COGS; management expects reversal in Q2–Q3 as inventory sells through .
  • SG&A normalization: first-quarter travel and freight elevated; ~$4M cost savings targeted via SG&A discipline, procurement optimization, and consolidation (e.g., Veridian facilities) .
  • Fire “head-to-toe” strategy: bundling helmets, turnout gear, boots, gloves to deepen engagement; new leadership at Pacific to drive product management and growth .
  • Standards timing: NFPA 1970/1971 change causing purchase deferrals; Lakeland pushing certifications to be early mover .
  • Jolly boot order: management remains confident in shipment timing post Italian Ministry procurement transitions; expects material contribution in H1 FY26 .

Estimates Context

Q1 2026 Actual vs Wall Street Consensus (S&P Global)

MetricConsensusActual
Revenue ($USD)$48.844M*$46.746M
Primary EPS ($)$0.19*($0.41)
  • Result: Revenue and EPS missed consensus; margin compression from mix, purchase accounting, and freight explains the miss. Values retrieved from S&P Global.*

Sequential View (Q2 2026 for context)

MetricConsensusActual
Revenue ($USD)$54.586M*$52.496M
Primary EPS ($)$0.0825*$0.08
  • Result: Near in-line EPS and modest revenue miss with improved margins and Adjusted EBITDA ex-FX ($5.1M) on lower OpEx and partial reversal of purchase variances . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix shift to Fire Services (45% of revenue) is structurally positive for medium-term margins as post-acquisition integration and pricing discipline take hold; watch sequential margin normalization in Q2–Q3 and stabilization in LATAM/Canada .
  • Near-term earnings sensitivity to tariffs persists, but mitigation actions (Mexico USMCA exempt, supplier diversification, inventory optimization) and freight normalization should support EPS recovery trajectory .
  • Execution on ~$4M cost reduction and facility consolidations (e.g., Hull, UK; Quitman, AR; Decatur sale-leaseback) is an identifiable driver of EBITDA expansion and free cash flow improvement in 2H FY26 .
  • NFPA standard transition introduces temporary U.S. order timing noise; early certification and head-to-toe bundling strategy are catalysts for order wins and improved pricing/margins .
  • Monitoring the Jolly boot program and European tenders (Eagle, LHD) is key for H2 revenue cadence; a resumption in LATAM demand materially benefits corporate margin mix .
  • For trading, the setup favors a sequential improvement narrative into Q2 with potential estimate revisions upward on margin recovery; risk remains tied to tariff outcomes and pace of cost actions .
  • Medium term, the thesis centers on mix improvement, consolidation synergies, and disciplined OpEx driving EBITDA margins toward mid/high-teens over 3–5 years, contingent on execution and tariff stability .
S&P Global estimate disclaimer: Values marked with * are retrieved from S&P Global consensus data.