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LAKELAND INDUSTRIES INC (LAKE)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 net sales rose 49% year over year to $46.6M, driven by a 226% surge in Fire Services; GAAP gross margin expanded 420 bps to 40.1% while Adjusted EBITDA margin improved to 11.0% .
  • EPS was a large miss due to non-cash items: GAAP diluted EPS of ($2.42) reflected $10.5M goodwill impairments (Eagle, Pacific) and a $7.6M Bodytrak write-off; organic gross margin strengthened to 48.5% .
  • FY26 guidance introduced: revenue $210–$220M and Adjusted EBITDA ex-FX $24–$29M, underpinned by Fire Services acquisitions and tariff mitigation actions; management flagged Q1 FY26 as the lightest quarter with Q3 strongest .
  • Stock reaction catalysts: strong Fire Services momentum (Fire now 46% of revenue) and robust Europe growth; watch tariff trajectory, integration progress at Pacific/Jolly, and monetization of Bodytrak IP .

What Went Well and What Went Wrong

What Went Well

  • Fire Services outperformance: Q4 Fire revenue reached $21.2M (+226% YoY), taking Fire to 46% of total revenue; management emphasized “head-to-toe” portfolio, superior lead times and global coverage across North America, Europe, APAC .
  • Organic profitability strength: Organic gross margin jumped to 48.5% (from 35.8% YoY), aided by product mix and reversal of profit in ending inventory; consolidated gross margin reached 40.1% (+420 bps) .
  • Strategic capital and M&A pipeline: Closed a $46.0M equity offering, paid down revolver; reiterated active pipeline (decontamination/services focus) and FY26 growth targets. “We are focused on new M&A opportunities…to further consolidate the fragmented fire market” .

What Went Wrong

  • GAAP EPS and operating loss: Q4 GAAP diluted EPS ($2.42) and operating margin (-22.9%) were hit by goodwill impairments (Eagle, Pacific) and Bodytrak write-off; mgmt noted the non-cash nature but acknowledged impact .
  • Execution issues at Jolly/Pacific: A large Jolly boot order (~€3M) slipped to H1 FY26; Pacific faced production issues and product update timing, dampening Q4 results .
  • Working capital build: Inventory rose to $82.7M and operating cash flow was ($15.9)M due to tariff mitigation pre-build and LHD backlog catch-up; mgmt expects recovery in H1 FY26 .

Financial Results

Quarterly performance vs prior periods

MetricQ4 FY24Q3 FY25Q4 FY25
Revenue ($USD Millions)$31.2 $45.8 $46.6
Gross Margin %35.9% 40.6% 40.1%
Operating Margin %-10.6% 1.8% -22.9%
Adjusted EBITDA ($USD Millions)$1.77 $4.26 $5.11
Adjusted EBITDA Margin %5.7% 9.3% 11.0%
GAAP Diluted EPS ($)($0.13) $0.01 ($2.42)

Organic metrics (year-over-year focus)

MetricQ4 FY24Q4 FY25
Organic Revenue ($USD Millions)$30.19 $33.45
Organic Gross Margin %35.8% 48.5%

Regional revenue breakdown

RegionQ4 FY24 ($M)Q4 FY25 ($M)
U.S.$12.7 $18.3
Europe (incl. Eagle, Jolly, LHD)$3.7 $14.5
LATAM$4.3 $4.0
Asia$4.0 $3.6

Product/category highlights

MetricQ4 FY24Q4 FY25
Fire Services Revenue ($M)$6.5 $21.2
Fire % of Revenue—46%
Disposables % of Revenue—38%

KPIs and balance sheet

KPIQ4 FY25
Adjusted EBITDA ex-FX ($M)$6.10
Inventory ($M)$82.7
Cash and Equivalents ($M)$17.5
Working Capital ($M)~$101.6
Net Cash Used in Operating Activities ($M, FY25)($15.9)
Equity Offering$46.0M gross; 2,093,000 shares at $22.00

Actual vs Wall Street consensus (S&P Global) – Q4 FY25

MetricConsensus*Actual
Revenue ($USD)$46.474M*$46.628M
EPS (Normalized) ($)$0.38*($0.035)*
NoteValues marked * retrieved from S&P Global

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY26—$210–$220M Inaugural
Adjusted EBITDA ex-FXFY26—$24–$29M Inaugural
RevenueFY25≥$165M (reaffirmed Dec-24) Actual $167.2M Above prior guidance
Adjusted EBITDA ex-FXFY25≥$18M (reaffirmed Dec-24) Actual $17.4M Below prior guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY25)Previous Mentions (Q3 FY25)Current Period (Q4 FY25)Trend
Tariffs/MacroNoted LineDrive friction; discussed tariff exposures and mitigation plans; inventory build for H2 Reiterated profit-in-ending-inventory mechanics; tariff backdrop implicit; inventory build continues Detailed mitigation: pre-position inventory, shift production (China→Vietnam/Mexico), >90% USMCA exempt; monitoring Vietnam tariff pause Elevated focus; proactive mitigation
Supply chain/logisticsMonterrey facility issues; consolidation of EU warehousing to Venlo planned Centralized EU warehousing; freight contract renewals; logistics optimization Ongoing logistics optimization; capacity alignment, cross-certification for NFPA1970 Execution phase
Product performance (Fire)Fire +34% YoY; pipeline strengthening; LHD acquisition introduced Fire +245% YoY; Europe up 350% YoY; U.S. rebound Fire +226% YoY; Fire $21.2M; Europe +292% YoY; Disposables +12% Sustained strength
Regional trendsLATAM +63% YoY; Mexico +58% YoY; Europe soft; Asia double-digit growth LATAM +20% YoY; Europe +350% YoY; Asia +15% YoY; U.S. +2% YoY U.S. +44% YoY; Europe +292% YoY; LATAM -7% YoY; Asia -10% YoY Mixed; Europe strong, LATAM seasonal
ERP/Lean Six SigmaERP rollout planned; process consolidation ERP phase 1 by year-end; Lean Six Sigma launch company-wide Lean Six Sigma driving Pacific, Jolly shop-floor initiatives; ERP integration ongoing Scaling
Services/decontaminationLHD services highlighted; plan to replicate globally Maintaining backlog clear; services key differentiator FENZ 12-year renewal (LHD Care); focus on services M&A (2–3 targets next 12–18 months) Strategic emphasis
Bodytrak (regulatory/tech)——$7.6M impairment; plan to monetize IP via licensing/enforcement and targeted deployments Reset with monetization intent

Management Commentary

  • “The fourth quarter…was underscored by continued strong sales revenue, driven by a 10% sequential and 226% year-over-year increase in Fire Services…” .
  • “We have taken several steps to help mitigate the effects [of tariffs]…pre-positioned certain Asian-produced inventory…moving certain production from China to Vietnam…over 90% of our Mexico-produced products…are not subject to additional tariffs” .
  • “During the quarter, we closed an oversubscribed $46.0 million public equity offering…positioned us to accelerate further growth in the fragmented, higher margin, $2.0 billion fire protection sector” .
  • CFO on impairments: “Net loss…was affected by a $7.6 million write-off of our investment in Bodytrak” and “goodwill impairment…$3.0M Pacific, $7.5M Eagle” .
  • FY26 outlook: “We expect fiscal year 2026 revenue of $210 to $220 million and Adjusted EBITDA excluding FX of $24 to $29 million” .

Q&A Highlights

  • Guidance vs tariffs: Management maintained guidance despite tariff headlines; noted potential revenue uplift but margin pressure if tariffs rose, with mitigation and price pass-through levers .
  • Bodytrak strategy: Plan to monetize IP through potential patent enforcement and a revised go-to-market in select regions leveraging Lakeland’s channel and balance sheet .
  • Jolly order slippage: €3M order is built and awaiting customer sign-off; would have enabled FY25 Adjusted EBITDA guidance achievement if shipped in Q4 .
  • Margin path: Aim to lift acquired brand gross margins (Veridian low-30s) toward mid-30s via Lean Six Sigma, ERP efficiencies, and mix; organic margins already strong near 50% .
  • Cadence: Expect Q1 FY26 lightest, Q3 strongest; backlog conversion and order flow to drive sequential improvement .

Estimates Context

  • Q4 FY25 revenue beat vs consensus: Actual $46.628M vs consensus $46.474M*; normalized EPS was a major miss: actual ($0.035)* vs consensus $0.38* (impairments drove GAAP EPS to ($2.42)) .
  • Next quarter snapshot (Q1 FY26): Consensus revenue $48.844M*, consensus EPS $0.19* (actuals subsequently came in below on both) *.
  • Note: Values marked * retrieved from S&P Global.

Key Takeaways for Investors

  • Fire Services momentum is intact with expanding global footprint; Europe strength and Fire mix shift support revenue durability into FY26 .
  • Expect near-term margin volatility from tariff dynamics and acquired-brand integration; organic margin resilience provides underlying support .
  • Watch H1 FY26 cash conversion as LHD backlog shipments and Jolly order release drive AR collections and inventory normalization .
  • Bodytrak impairment resets GAAP optics; potential IP monetization offers asymmetric optionality without core distraction .
  • FY26 guide implies ~26% top-line growth at midpoint; delivery hinges on execution at Pacific/Jolly and decontamination/services M&A .
  • Trading lens: Near-term prints could be choppy (Q1 light) but narrative inflection tied to Fire wins, services growth, and tariff outcomes; pullbacks on GAAP noise may present entries for medium-term Fire/services thesis .
  • Monitor Lean/Six Sigma and ERP milestones for margin/working-capital unlock across acquired assets .