Lakeland Industries (NASDAQ:LAKE) released fourth-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
Lakeland Industries reported net sales of $192.6 million for fiscal 2026, up 15.2% from the previous year, driven by strong growth in the fire services segment.
The company faced challenges in converting revenue growth into expected earnings, citing execution issues amid a volatile cost environment, including freight inflation and raw material pressures.
Strategic initiatives included the divestiture of non-core product lines for $14 million, expansion in fire services through acquisitions, and certification of a full NFPA-compliant product range.
Operational highlights include the opening of new facilities to enhance service capabilities and an improved cash generation discipline reflected in positive operating cash flow in Q4.
Future guidance indicates expectations for high single-digit revenue growth and positive cash flow from operations in fiscal 2027, with a focus on improving margins and supply chain optimization.
Full Transcript
OPERATOR
Good afternoon and welcome to the Lakeland Fire and safety fiscal fourth quarter and full year 2026 financial results conference call. All lines have been placed on a listen only mode and the floor will be open for your questions following the presentation. During today’s call we may make statements relating to our goals and objectives for future operations, including our goals for revenue and cash flow from operations for fiscal year 2027, 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 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 our in or implied by such forward looking statements. 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 US gaap, including Adjusted ebitda, Adjusted EBITDA excluding fx, adjusted EBITDA Margin, adjusted EBITDA excluding FX Margin, Organic Revenue, Organic Gross Margin 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 and or the supplemental slides filed with our earnings Release. A press release detailing these results was issued this afternoon and is available in the Investor Relations section of our company’s website ir.lakeland.com at this time I would like to introduce your hosts for this call, Lakeland Fire and Safety’s President, Chief Executive Officer and Executive Chairman Jim Jenkins, Chief Financial Officer Calvin Sweeney, Chief Commercial Officer, Global Industrials Cameron Stokes, Chief Revenue Officer Barry Phillips and Executive Vice President of EMEA Fire sales Kevin Ray. Mr. Jenkins, the floor is yours.
Jim Jenkins (President, Chief Executive Officer and Executive Chairman)
Thank you Operator and good afternoon everyone. Thank you for joining us today to discuss the results of our fiscal 2026 fourth quarter and full year ended January 31, 2026. Fiscal 2026 was a year of meaningful top line growth and important strategic progress for Lakeland. Calvin will walk through the financials in detail shortly, so I will provide you with a brief overview here. For the full year, net sales increased 25.4 million or 15.2% to 192.6 million, driven by continued strength in fire services. In the fourth quarter, net sales were 45.8 million, down 800,000 or 1.7% from the prior period. US sales increased 35.1% for the full year to 81.6 million and increased 7.1% in the fourth quarter to 19.6 million. Europe also grew meaningfully for the full year increasing 12.1 million or 28.7% while fourth quarter Europe sales were down 2.4 million due primarily to timing on LHD and JOLLY orders on profitability adjusted EBITDA excluding FX was 7.2 million for the full year and 1.3 million in the fourth quarter. Gross margin was 32.9% for the full year and 32.2% in the fourth quarter. Those results were below our expectations and I want to be direct about why. We grew revenue at a strong rate, but we did not convert that growth into the earnings we expected. We view this as an execution issue, not a demand issue. The underlying demand environment across our core markets remains intact. We operated in a volatile cost environment during fiscal 2026. Freight inflation, raw material pressure, tariffs and certification timing delays exposed weaknesses in our planning and pricing response that we are actively addressing. Against that backdrop I want to note something important. The fourth quarter generated approximately 2 million of operating cash. Delivering that level of cash generation on lower revenue than the third quarter reflects improved discipline across the organization, stronger cost control and better day to day execution. We are seeing early signs that the actions we have been taking are beginning to work. Subsequent to the fiscal year end we completed the divestiture of our HPFR and HI VIS product lines to National Safety apparel generating approximately 14 million of cash proceeds. This transaction simplifies the business and allows management to concentrate fully on our core fire services and industrial protective product lines where we see the greatest long term opportunity. On the product side we achieved a significant milestone with numerous NFPA 1970-2025 certifications across our brand portfolio. Products including Lacon Structural Turnout and Proximity gear, Meridian Gloves and Fire Particulate Blocking hoods, Jolly Boots and Pacific Helmets are now fully certified enabling customers to order from a complete head to toe NFPA certified range of products across Lakeland’s brands. This certification was a meaningful commercial unlock and we look forward to showcasing our portfolio at FDIC 2026 next week. We strengthaned the organization with several important appointments. Calvin Sweeney was named Chief financial officer in February 2026, having served as interim CFO since December 2025 and Kevin Ray was just recently named Executive Vice President of EMEA Fire Sales. You will be hearing more from both of them shortly. We also welcome Lee Rideau to our Board of Directors in early April. Lee previously served as CEO of NASDAQ listed transcat and his invaluable business and strategic M&A integration strategic M&A integration experience in the industrial markets with a strong track of execution across both organic growth and acquisition driven strategies will be a valuable addition to our governance. During the year we completed the acquisitions of Arizona PPE and California PPE, expanding our US Fire services, distribution and rental capabilities with ISP locations in Arizona, California and soon Denver. California PPE also opened a new state state-of-the-art facility in Fresno providing compliant decontamination, inspection and repair services to California Fire departments. These recurring revenue service businesses strengthen our fire platform and build long term customer relationships. We also completed the 6.1 million sale and partial leaseback of Decatur, Alabama warehouse property generating an approximately 4.3 million pre tax gain and reducing our fixed cost exposure and Lakeland was added to the Russell 3000 and Russell 2000 indices in June of last year reflecting our growing market profile. Alongside these actions, we are working to further strengthen liquidity and flexibility through our pending ABL facility which we expect to close soon. Although there can be no assurance that the ABL facility will close on that timeline or at all, the bank of America Covenant labor has been secured and we anticipate to be in covenant throughout fiscal 27. Taken together, these steps reflect a company that is not standing still, but that one is actively reshaping its operating model to support improved performance. From a macro standpoint, fiscal 2026 was affected by tariff uncertainty, freight inflation, raw material cost pressure and certification timing delays across both fire and industrial. Those factors pressured production efficiency, revenue timing and gross margin. We also saw softer performance in select areas in the fourth quarter, but do not view the issues in front of us as demand destruction. We view them as timing, execution and cost challenges that are addressable and that is an important distinction. As we move into fiscal 2027. We are encouraged by the progress already underway and continue to make structural improvements that we believe will strengthen the business over the long term. We are tightening forecasting, strengthening accountability, and putting more structure around sales and production planning. As an example, inventory ended January at 82.5 million and is down meaningfully from October. As we continue to better align supply with demand, we are entering fiscal 2027 with a simpler portfolio, improved internal discipline, and a pipeline that continues to build. We are now tracking modestly ahead of budget entering fiscal 2027 and our forecast is clear Convert demand into more consistent, repeatable financial performance, improve forecasting, better align sales and operations, increase utilization and drive stronger margins and cash flow. Based on the foundation we have built, we are comfortable providing goalposts for fiscal 2027 of high single digit revenue growth and a clear line of sight to positive cash flow from operations. Taken together, these steps reflect a company that is not standing still, but one that is actively reshaping its operating model to support improved performance. With that, I’d like to pass the call to our Chief Commercial Officer Cameron Stokes to provide an update on our industrial and Chemical critical environment businesses.
Cameron Stokes (Chief Commercial Officer, Global Industrials)
Thank you Jim. Turning to Industrial and Chemical Critical environment for the fourth quarter, chemical revenue increased 0.3 million to 5 million, demonstrating continued strength in that product line. Disposables revenue decreased 0.9 million and Woven’s revenue decreased 1 million in Q4, reflecting the macro headwinds Jim referenced particularly softer performance in the North American industrial markets late in the quarter. For the full year, these three product lines combined represented approximately 49% of total revenue, with disposables at 27%, chemical at 11 and wovens performing at 11%. On the strategic side, the divestiture of Our high performance FR&HI VIS product lines meaningfully simplifies the industrial portfolio. These lines required significant management attention and resources and that we are now redirecting towards higher margin, faster growing opportunities within Chemical Critical Environment and core industrial protective apparel. The decision to divest was the right one and it sharpens our focus on the product lines where we have a competitive differentiation incredible path to improve improving profitability within the business. We are seeing differentiated performance across our product line so far in fiscal 2027. Chemical critical environment is outperforming driven by continued demand from industrial and pharmaceutical end users while wovens are tracking to plan with good visibility into the pipeline. Disposables face the most pressure during the year driven by tariff related cost increases and softness in select North American markets and we have defined specific recovery initiatives underway at the account level to address that gap. From a competitive standpoint, we are not seeing broad based shifts across the market. The movement we are seeing remains limited and localized and competitors have generally not responded with meaningful price action to date. At the same time, fuel and logistics instability has become a more relevant variable across the market than tariff uncertainty. That backdrop reinforces our focus on tighter channel discipline, better market segmentation and more targeted execution by product line and end market. Our strategy for growing these lines is straightforward. Continue to develop products and expand the range of certified high performance offerings, disciplined strategic pricing to protect and improve margins as cost pressures ease, reach a broader set of end users and reduce distributor concentration while optimizing operations to drive better utilization at our manufacturing facilities. I’d like to note that the industrial segment tends to see its highest seasonal activity in the spring, when scheduled maintenance shutdowns at nuclear, coal, oil and gas and chemical facilities drive meaningful order activity. We are entering that period now and our teams are positioned to execute on the incoming demand. Looking ahead into fiscal 2027, our industrial priorities are clear. We are tightening demand forecasting and improving the alignment between sales commitments and production planning. We are also actively pursuing pricing actions where cost increases warrant them. We are working to improve manufacturing utilization at our Mexico and Vietnam facilities as we consolidate our footprint and transition production from India into those sites. The tariff environment remains a factor, but we are working through mitigation strategies and believe we can manage the impact without structural disruption at our cost base or to our cost base. Overall, the industrial and chemical business is stable and we are focusing on converting that stability into consistent improving profitability throughout fiscal 2027. I will now hand the call over to Chief Revenue Officer Barry Phillips to provide an update on our fire services business.
Barry Phillips (Chief Revenue Officer)
Thank you, Cameron Turning to fire services, revenue for Q4 was 21.7 million, an increase of 0.5 million, or approximately 2%, compared to the prior year. For the full year, fire Service revenue grew 30.6 million, or 48.6%, to 93.6 million. This is a significant milestone. Our fire segment now represents approximately 49% of our total revenue, a significant transformation from where we stood just two years ago when it represented approximately 21% the full year. Growth was supported by contributions from Viridian lhd, Jolly and Pacific Helmets, as well as Arizona PPE and California ppe. These acquisitions have expanded our geographic reach, broadened our product offering and positioned us as the head to toe provider in global fire protection, a platform we believe is unique in the market. FHIR demand is increasing as certification cycles are completed and tender timelines are tracking on schedule across multiple regions. These have been timing delays rather than structured demand issues. Opportunities remain in the pipeline and have simply shifted later than expected. Our tender pipeline is active globally and we continue to see strong engagement from the fire departments and procurement agencies across the regions we serve. We also saw meaningful international wins during the year, including significant emergency follow on orders from the National Fire Department of Colombia, an order from the Fire and Rescue Department of Malaysia, and a Fire Equipment Tender Award from anac, Argentina’s National Civil Aviation Administration. A particularly important milestone was receiving numerous NFPA 19702025 edition certifications across our portfolio, enabling customers to order a complete Head to TOE certified range across our brands for the first time. These certifications are a commercial unlock that we’ve been working toward and we look forward to showcasing the full portfolio at FDIC 2026 on decontamination and services. Our ISP business is growing faster than initially projected and the green fielding and ISP M and A pipeline remain robust. California PPE’s new Fresno location opened in January 2026 and our Denver location is expected to open in the summer of 2026. This recurring revenue model builds long term customer relationships, generates predictable cash flow and positions us well as the fire departments increasingly invest in gear maintenance and NFPA 1950 compliance. Fire Service margins remain structurally sound as volume normalizes and tenders convert are expected to recover without requiring broad pricing actions. LHD Germany is stabilizing and we expect a formal relaunch of the brand@intenshutz 2026 in June this summer and with leadership in Kevin Ray driving momentum across our EMEA brands looking ahead into fiscal 2027, we have the strongest backlog in Lakeland Fires history. We expect continued success with our head to toe offering and anticipated tender wins in Europe and the us. Our new NFPA product portfolio rollouts are well underway and we look forward to showcasing our entire lineup at FDIC next week. I’ll now pass along the call to Executive Vice President of EMA FHIR Kevin Ray for an EMEA update.
Kevin Ray (Executive Vice President of EMEA Fire Sales)
Thank you Barry. Before I begin, I’d like to provide you with a bit of my background. I’ve over 20 years of leadership experience in personal protective equipment and fire safety across the UK and emea. I …
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