Executive Summary
Lakeland Industries reported strong top-line momentum in Q3 FY2025, with revenue of $45.8 million, up 45% year over year and driven primarily by a 245% year-over-year increase in the Fire Services segment, aided by the LHD acquisition and cross-selling opportunities. Organic revenue growth persisted at 7.3% year over year, underscoring the company’s ability to scale through a mixed portfolio of Fire Services and Industrial PPE. Gross profit rose 39% to $18.56 million, but gross margin declined to 40.6% from 42.2% a year ago, pressured by amortization of acquired inventory step-ups and higher inbound freight ahead of Q4 sales. Organic gross margins expanded by 200 basis points to 44.2% versus 42.2% prior year, signaling improving core efficiency even as one-time acquisition-related factors temporarily compress reported margins.
Management reaffirmed FY2025 guidance, projecting revenue of at least $165 million and adjusted EBITDA excluding FX of at least $18 million, aided by a substantial multi-year LHD backlog and continued growth in LATAM, Europe and Asia. The quarter featured a material backlog backlog unwind in Q4, with management targeting 80–90% of the LHD multi-year backlog to ship in the fourth quarter. The company also highlighted a ramp in U.S. Fire Services penetration and ongoing integration/enhancement of cross-selling across recent acquisitions. Balance sheet discipline remains important as Lakeland navigates a deliberate build in working capital to support higher volumes, with cash of about $15.8 million and total debt of roughly $45.8 million (net debt around $30.0 million). The near-term cash flow profile remains challenged by working capital needs, as evidenced by negative cash flow from operations in the nine months ended October 31, 2024 (-$12.5 million) and negative free cash flow (-$9.08 million). The investment thesis rests on: (i) rapid acceleration of Fire Services leadership, (ii) a diversified, global go-to-market footprint with improving margins, (iii) a strong backlog-driven revenue runway into FY2026, and (iv) accretive M&A and cross-selling to expand profitability faster than underlying markets.
Key Performance Indicators
QoQ: 216.79% | YoY:-77.71%
QoQ: 106.25% | YoY:-96.72%
QoQ: 106.11% | YoY:-96.69%
Key Insights
Revenue: $45.8 million in Q3 FY2025, up 45% YoY; Organic revenue 70% of total; Acquisition contribution: 25% of Q3 revenue; Fire Services revenue up 245% YoY and 61% sequential; Gross profit: $18.56 million; Gross margin: 40.6% (vs 42.2% prior year); Organic gross margin: 44.2% (vs 42.2% prior year); Operating income: $0.807 million; Operating margin: 1.8%; Net income: $0.086 million (GAAP); EPS: $0.0116; EBITDA: $2.026 million; Adjusted EBITDA (Ex-FX) for Q3 FY2025: $4.7 million; TTM revenue: $...
Financial Highlights
Revenue: $45.8 million in Q3 FY2025, up 45% YoY; Organic revenue 70% of total; Acquisition contribution: 25% of Q3 revenue; Fire Services revenue up 245% YoY and 61% sequential; Gross profit: $18.56 million; Gross margin: 40.6% (vs 42.2% prior year); Organic gross margin: 44.2% (vs 42.2% prior year); Operating income: $0.807 million; Operating margin: 1.8%; Net income: $0.086 million (GAAP); EPS: $0.0116; EBITDA: $2.026 million; Adjusted EBITDA (Ex-FX) for Q3 FY2025: $4.7 million; TTM revenue: $151.8 million; TTM Adjusted EBITDA (Ex-FX): $14.7 million; Backlog and backlog-related dynamics: 80–90% of LHD multi-year backlog expected to ship in Q4; Inventory: $72.7 million; Cash: $15.84 million; Long-term debt: $31.1 million; Total debt: $45.84 million; Net debt: $30.0 million; Working capital change (9M ended 10/31/2024): +$12.5 million in working capital; Inventory build to support Q4/Q1 2026; Q4 revenue expectation anchored by large orders (LHD, Jolly, Pacific Helmets); U.S. revenue rebound to $15.4 million in Q3; LATAM revenue now ~11% of total; Europe revenue up 350% to $14.4 million in Q3; LATAM growth: +20% YoY; Mexico revenue +25% YoY; Europe, Asia, LATAM growth underpinning outlook; Backlog management and line-drive transition progressing with improving pipeline; Guidance reaffirmation indicates management confidence in execution and cash generation potential.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
45.76M |
44.46% |
18.82% |
| Gross Profit |
18.56M |
38.91% |
21.82% |
| Operating Income |
807.00K |
-77.71% |
216.79% |
| Net Income |
86.00K |
-96.72% |
106.25% |
| EPS |
0.01 |
-96.69% |
106.11% |
Key Financial Ratios
operatingProfitMargin
1.76%
operatingCashFlowPerShare
$-1.1
freeCashFlowPerShare
$-1.19
priceEarningsRatio
414.17
Management Commentary
Themes from the Q3 earnings call include: (1) Strategy and Growth Framework: Lakeland reaffirmed a capital-light growth strategy with a focus on Fire Services and industrial PPE, aided by accretive acquisitions and cross-selling to accelerate margins. CEO Jim Jenkins emphasized the goal of becoming a top-three competitor in Fire Services through a leading portfolio of premium brands and faster time-to-market. (2) Backlog and Acquisitions: CFO Roger Shannon highlighted the LHD multi-year backlog, with 80–90% expected to ship in Q4, supported by the return of Germany-based operations and a leadership re-hire to accelerate German production. The combined LHD, Jolly, and Pacific helmets contributed $11.4 million in Q3, with expectations for acceleration as backorders clear. (3) Geographic Execution: The company cited meaningful growth across LATAM (now 11% of sales), Europe (up strongly, led by LHD and Eagle), and Asia, with notable U.S. revenue rebound to $15.4 million in Q3 and a 25% QoQ increase. (4) Margin Dynamics: While gross margin declined to 40.6% due to acquired inventory step-up amortization as well as higher inbound freight, organic gross margins rose 200 bps to 44.2%, signaling improving core profitability as the mix shifts toward higher-margin Fire Services. (5) Guidance and Visibility: Management reaffirmed FY2025 revenue of at least $165 million and adjusted EBITDA ex FX of at least $18 million, underscoring confidence in the backlog-driven fourth quarter and ongoing cross-selling opportunities. (6) Operational Execution and Risks: They acknowledged inventory builds and timing around Line Drive transitions, but expressed confidence in ramping production and backlog shipment, with expectations of cash generation as orders ship and receivables are collected.
“Based on our existing backlog and our outlook for the remainder of the year, we are maintaining guidance for our 2025 fiscal year. Please note that these expectations include the announced Jolly Boots, Pacific Helmets and LHD Group acquisitions. We remain confident in our global sales platforms and ability and earning ability for the last quarter of the year and we are reaffirming expectations for fiscal year 2025 revenue of at least $165 million. Additionally, we reaffirm our expectations for fiscal year 2025 adjusted EBITDA excluding FX to be at least $18 million.”
— Jim Jenkins
“We do still expect to ship 80% to 90% of that multi-year backlog in Q4.”
— Roger Shannon
Forward Guidance
Lakeland reaffirmed FY2025 guidance: revenue at least $165 million and adjusted EBITDA excluding FX at least $18 million. The outlook hinges on: (i) continued execution of acquired platforms (LHD, Jolly, Pacific Helmets) and cross-selling opportunities, (ii) a robust fourth quarter with 80–90% of the LHD backlog shipping, (iii) normalization of gross margins as acquired inventory step-ups are amortized and inbound freight costs stabilize, and (iv) steady organic growth in LATAM, Europe, and Asia alongside a U.S. rebound. The main risks to the forecast include potential delays in backlogged shipments, higher freight/inbound costs, FX headwinds, integration risks from acquisitions, and working capital pressure from inventory builds. Investors should monitor: quarterly progress on LHD/Jolly/Pacific cross-sell opportunities, the cadence of Q4 orders, the rate of backlog digestion, changes in gross margin from acquired inventory, and the company’s ability to convert operating earnings into sustained free cash flow as working capital normalizes.