EPS of $-0.41 decreased by 286.4% from previous year
Gross margin of 33.5%
Net income of -3.91M
"With the 4 recently completed acquisitions, which added product line extensions, innovative new products and expanded our global footprint, we are strongly positioned to grow our global head-to-toe fire portfolio and to generate long-term value for our shareholders." - James M. Jenkins
Lakeland Industries Inc (LAKE) QQ1 2026 Results: Record Revenue Fueled by Fire Services Acquisitions Amid Tariff Headwinds and Margin Pressures
Executive Summary
Lakeland Industries reported a record first quarter (Q1 FY2026) with revenue of $46.7 million, up 29% year over year, driven by a 100% increase in Fire Services and meaningful contributions from the latest acquisitions. U.S. sales rose 42% to $22.5 million, aided by 15% organic growth, while Europe surged 102% to $12.1 million, underscoring accelerated cross-border demand for head-to-toe PPE solutions. However, gross margin compressed to 33.5% from 44.6% a year earlier, reflecting a shift in geographic mix toward lower-margin regions and the amortization impact of purchase accounting on acquired entities. Organic gross margin declined to 35.9% from 44.6% year-over-year, with continued margin pressure from higher manufacturing and freight costs and tariff mitigation inventory builds.
Adjusted EBITDA, excluding FX, was $0.6 million, down from $3.8 million in the prior-year period, as operating expenses rose $6.3 million largely due to inorganic growth, acquisition-related costs, and integration activity. The company posted a net loss of $3.9 million ($0.41 per diluted share) for the quarter, versus net income of $1.7 million a year ago. cash flow was negative from operations at $4.8 million, with capex of $1.2 million and free cash flow of approximately -$6.1 million. The balance sheet remains cash-rich on a nominal basis with $18.6 million in cash and equivalents and total debt of $40.2 million (net debt of $21.6 million), supported by a revolving line with roughly $20.2 million of unused capacity.
Looking ahead, management reaffirmed FY2026 guidance: revenue of $210â$220 million and adjusted EBITDA (ex FX) of $24â$29 million, underscoring expectations for sequential gross margin and EBITDA improvement as tariff-related inventory builds normalize and integration benefits from four acquisitions (Veridian, Eagle, Jolly, LHD, and LHC) materialize. The company is advancing price/flow-through discipline, cross-selling initiatives, and certificate approvals (NFPA 1970/71) to capture a broader head-to-toe PPE opportunity, while continuing ERP consolidation (SAP implementation) to unlock operating leverage. The near-term setup includes tariff mitigation strategies (e.g., cross-certification with Veridian, U.S.-manufacturing readiness, and Vietnam/China tariff diversification) that are expected to support mid-term margin expansion and top-line growth across Fire Services and Industrial PPE verticals.
Net income: -$3.913 million; diluted EPS -$0.41 (vs. +$0.22 in Q1 FY2025).
Adjusted EBITDA, excluding FX: $0.6 million; down 84% YoY from $3.8 million.
Financial Highlights
Revenue and margin metrics:
- Q1 2026 revenue: $46.746 million, up 29% YoY; QoQ growth: 0.25% (trailing quarterly momentum).
- Gross profit: $15.644 million; gross margin 33.5%, down from 44.6% a year ago; organic gross margin 35.9% vs 44.6% prior year.
- Operating income: -$4.634 million; operating margin -9.93% (vs. +6.1% in Q1 FY2025).
- Net income: -$3.913 million; diluted EPS -$0.41 (vs. +$0.22 in Q1 FY2025).
- Adjusted EBITDA, excluding FX: $0.6 million; down 84% YoY from $3.8 million.
- Revenue by geography: U.S. $22.5 million (+42% YoY); Europe $12.1 million (+102% YoY); Latin America and Canada weaker.
- Fire Services: net fire services revenue up 100% YoY to drive ~45% of total revenue; acquisitions contributed about $9.9 million of the increase; organic revenue up $0.6 million.
- Capital expenditures: $1.2 million for ERP (SAP) implementation.
- Inventory and working capital: end-period inventory $85.8 million, up from $82.7 million; inventory for acquired companies $15.0 million. Organic finished goods $37.2 million; organic raw materials $32.2 million.
- Cash flow and liquidity: net cash used in operating activities -$4.84 million; cash balance $18.62 million; total debt $40.21 million; net debt $21.60 million; revolver borrowings $19.8 million with $20.2 million available.
- Guidance: FY2026 revenue $210â$220 million; adjusted EBITDA (ex FX) $24â$29 million; margin expansion expected in subsequent quarters as tariff mitigation actions normalize and integration benefits accrue.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
46.75M
28.74%
0.25%
Gross Profit
15.64M
-3.34%
-16.32%
Operating Income
-4.63M
-292.92%
56.62%
Net Income
-3.91M
-336.72%
78.78%
EPS
-0.41
-286.36%
99.98%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the earnings call:
- Growth and portfolio strategy: Lakeland highlighted that the quarter delivered record net sales of $46.7 million, with a 100% rise in Fire Services and strong contributions from four acquisitions, emphasizing a strategy to cross-sell across head-to-toe PPE offerings.
With the 4 recently completed acquisitions, which added product line extensions, innovative new products and expanded our global footprint, we are strongly positioned to grow our global head-to-toe fire portfolio and to generate long-term value for our shareholders.
â James M. Jenkins
We anticipate sequential growth in gross margins and adjusted EBITDA, excluding the impact of FX in the second quarter, aided by the improving global tariff environment and reduction in necessary mitigation strategies.
â James M. Jenkins
Forward Guidance
Forecast and assumptions:
- Revenue guidance for FY2026 remains $210â$220 million; Adjusted EBITDA (ex FX) guidance is $24â$29 million, with management describing the outlook as maintaining long-term growth potential despite near-term tariff headwinds.
- The company expects sequential improvement in gross margins and EBITDA in Q2 2026 as tariff-related inventory builds normalize and cost containment actions take effect.
- Key drivers include further cross-selling across Veridian, LHD, Eagle, Jolly, and Lakeland brands; acceleration of the head-to-toe strategy; and ongoing benefit from ERP integration. Monitoring metrics include geographic mix, acquisition synergies, and tariff policy developments (USMCA readiness, NFPA standard changes, and Asia manufacturing shifts).
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
LAKE Focus
33.47%
N/A
N/A
N/A
GIII
41.00%
2.21%
0.38%
55.17%
JRSH
11.30%
-2.02%
-2.14%
-6.69%
GIL
31.20%
18.20%
6.03%
20.09%
SGC
0.00%
0.00%
-0.39%
-56.29%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Thesis: Lakeland remains a growth-focused PPE player leveraging its head-to-toe strategy and a robust M&A pipeline to accelerate revenue growth and margin expansion over the 3â5 year horizon. In the near term, earnings are pressured by acquisition-related costs and tariff-driven inventory builds, resulting in a negative Q1'26 EBITDA trajectory and a net loss. However, management targets revenue of $210â$220 million for FY2026 with EBITDA (ex FX) of $24â$29 million, implying a back-half recovery as integration benefits take hold and tariff headwinds abate. The ERP rollout (SAP) and ongoing manufacturing rationalization are expected to improve cost structure and operational efficiency, supporting margin expansion toward mid-to-high-teens EBITDA margins over 3â5 years.
Catalysts and watch points:
- Timely Jolly order realization in Italy and NFPA standard adoption effects on replenishment cycles.
- Accelerated cross-selling across Veridian, Lakeland, Eagle, LHD and Pacific Helmet to lift mix toward higher-margin fire services and head-to-toe bundles.
- Further consolidation benefits from Vermidian integration and regional portfolio optimization (Asia expansion and Vietnam/China tariff diversification).
- Monitoring tariff developments, currency moves, and the pace of 4-acquisition integration progress.
Investment case: Lakeland trades with modest near-term profitability but strong long-term growth potential anchored in its diversified PPE portfolio, cross-selling opportunities, and a disciplined acquisition strategy supported by a solid balance sheet. If the company can translate acquisition synergies into sustained gross margin expansion and control OpEx, the stock could re-rate as the FY2026 back half improves and 2027â2029 EBITDA margins move toward the mid-to-high teens.
Risks: The key downside risks are tariff and policy shifts, slower-than-expected integration, and macroeconomic pressures affecting industrial and public-safety PPE demand.
Key Investment Factors
Growth Potential
Strategic head-to-toe PPE cross-sell initiatives across Fire Services and Industrial segments; ongoing acquisition program (Veridian, Eagle, Jolly, LHD, LHC) to broaden product line extensions and expand global footprint; European and Asian market expansion supported by new leadership and product management optimization in Pacific Helmets.
Profitability Risk
Tariff and policy uncertainty (tariff mitigation strategies and potential new duties), integration risk from multiple recent acquisitions, margin pressure from geographic mix and purchase accounting, and dependence on large orders (e.g., Jolly) with timing risk; currency volatility and supply chain volatility amid global trade dynamics.
Financial Position
Solid liquidity with $18.6M cash and $20.2M available on revolver; total debt $40.2M; net debt ~$21.6M; ongoing ERP investment to capture operating efficiencies; strong balance sheet enables continued M&A and capex to scale growth.
SWOT Analysis
Strengths
Diversified, vertically integrated PPE portfolio with a clear head-to-toe strategy expanding cross-sell opportunities across Lakeland, Veridian, Eagle, Jolly, LHD and LHT.
Recent acquisitions (Veridian, Eagle, Jolly, LHD, and LHC) broaden product lines and global footprint, enabling larger addressable market and cross-region synergies.
Stable, recession-resistant sectors (industrial and fire protection) support long-term demand resilience.
Robust liquidity position and a capital-light acquisition strategy supported by a fortified balance sheet.
Weaknesses
Gross margin compression driven by geographic mix (higher mix to LatAm/Canada) and amortization of inventory write-ups from purchase accounting; Q1 gross margin 33.5% vs 44.6% prior year.
Integration risks and higher OpEx related to inorganic growth; Q1 operating loss (-$4.6m) and elevated SG&A ($20.3m) highlight near-term profitability headwinds.
Tariff and policy uncertainty causing regional delays (Canada and Latin America) and inventory build pressure.
Opportunities
Acceleraed cross-selling across full PPE portfolio (gloves, boots, turnout gear, headwear), with management citing strong Veridian glove channel and new leadership driving Asia growth.
NFPA standard changes (1970/1971) creating demand timing opportunities; readiness and certification pipeline could unlock near-term sales in North America.
Efficiency programs (SAP ERP, procurement optimization, plant consolidations) to unlock margin lift over 3â5 years.
Expansion in Europe and Asia with new sales leadership and channel strategies.
Threats
Tariff dynamics and currency fluctuations could reintroduce margin volatility and demand uncertainty by region.
Execution risk across four acquisitions in 12 months, including integration costs and potential disruption to operations.
Delays in large orders (e.g., Jolly boots) due to government procurement steps in Italy could impact revenue cadence.