Lakeland Industries (LAKE) investor relations material

Executive summary

• Net sales rose 4% year-over-year to $47.6 million, driven by a 31% increase in Fire Services products and strategic acquisitions, but offset by declines in other segments.

• U.S. sales increased up to $21.0 million, Europe up to $16.0 million, while Latin America and Asia saw declines due to political and macroeconomic headwinds.

• Adjusted EBITDA excluding FX dropped 95% year-over-year to $0.2 million, with net loss of $16 million compared to net income of $0.1 million a year ago.

• Management withdrew formal guidance due to forecasting challenges, focusing on operational rigor, cost cuts, and cash generation.

• Acquisitions of Arizona PPE, California PPE, Veridian, LHD, and Jolly expanded the Fire Services segment and contributed to revenue growth.

Financial highlights

• Adjusted gross margin fell to 29.7%–31.3% from over 40% year-over-year, with gross profit dropping to $14.1–$14.9 million.

• Adjusted EBITDA margin excluding FX was 0.5%, down from 10.3% year-over-year.

• Cash and cash equivalents were $17.2 million at quarter end; borrowings under revolving credit facility were $33.2 million.

• Operating expenses increased 13% to $20.1 million, mainly due to acquisitions and higher compensation.

• Dividend suspended to prioritize reinvestment and cash preservation.

Outlook and guidance

• Formal guidance withdrawn due to macro uncertainty; focus is on operational rigor, cost reduction, and cash generation.

• Management expects fire services sales to accelerate as tenders convert and certifications are completed, with $178 million in global tender opportunities and $38 million in high-probability near-term wins.

• Targeting 10%-12% adjusted EBITDA margins over the next three quarters and 15%-17% over the next three years.

• Focus on inventory reduction, liquidity, and debt reduction to improve free cash flow.