Lakeland Industries Q1 2026 Earnings Call Transcript

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Provided by Quartr
June 9, 2025

Key Takeaways

  • Record net sales of $46.7M, up 29% YoY, driven by a 100% jump in fire services products and strong acquisition momentum; US sales rose 42% and Europe 102% year over year.
  • Gross profit margin fell to 33.5% from 44.6% last year, reflecting lower margins from recent acquisitions, tariff-related inventory builds and weaker Canada/Latin America sales.
  • Adjusted EBITDA excluding FX dropped to $0.6M from $3.8M, hurt by purchase accounting variances flowing through COGS, higher SG&A costs and inventory buildup for tariffs.
  • Implemented tariff mitigation strategies including cross-certification of Mexico and US facilities under USMCA and built inventory by $3.1M to $85.8M to stabilize the supply chain.
  • Reiterated FY26 guidance of $210–$220M in revenue and adjusted EBITDA (ex FX) at the lower end of $24–$29M, backed by organic growth, operational efficiencies and an active M&A pipeline.
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Earnings Conference Call
Lakeland Industries Q1 2026
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Operator

Good day, and welcome to the Lakeland Fire and Safety Fiscal First Quarter twenty twenty six Financial Results Conference Call. All lines have been placed on a listen only mode, and the floor will be open for your questions and comments following the presentation. During today's call, we may make statements relating to our goals and objectives for future operations, 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 guidelines 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 or implied by such forward looking statements.

Operator

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 U. S. GAAP, including adjusted EBITDA, excluding FX and adjusted EBITDA, excluding FX margin organic sales organic gross margin organic SG and A operating expenses and adjusted operating expenses. A reconciliation of each of the non GAAP measures discussed on this call to the most directly comparable GAAP measures is presented in our earnings release.

Operator

A press release detailing these results crossed the wire 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 host for this call, Lakeland Fire and Safety's President, Chief Executive Officer and Executive Chairman, Jim Jenkins and Chief Financial Officer and Secretary, Roger Shannon. Mr. Jenkins, the floor is yours.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Thank you, operator, and good afternoon, everyone. Thank you for joining us today to discuss the results of our fiscal twenty twenty six first quarter ended 04/30/2025. We continue to build on the momentum from our fiscal twenty twenty five revenue growth in the first quarter of twenty twenty six as we focus on accelerating growth within the fragmented $2,000,000,000 fire protection sector in the largest global markets. Roger will go over the financials in more detail shortly, so I will provide you with a brief overview. We achieved record net sales of $46,700,000 representing a 29% year over year increase driven by a 100% increase in fire services products and the ongoing momentum from our recent acquisitions.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

In The U. S, our net sales increased 42% year over year to $22,500,000 including organic U. S. Growth of $2,100,000 or 15%. And in Europe, our net sales increased 102% year over year to $12,100,000 Gross profit as a percentage of net sales decreased to 33.5% from 44.6% for the comparable period year ago period.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Robust growth in our organic and acquisition driven fire services vertical in The US market was partially offset by weakness in Canada and Latin America where margins are typically above our corporate average. Additionally, as expected lower gross margins from our recent acquisitions including the impact of purchase accounting continue to reduce corporate gross margins. Adjusted EBITDA excluding FX was $600,000 which was a decrease of $3,200,000 compared with $3,800,000 for the comparable year ago period. SG and A as reported increased $6,300,000 from the first quarter of fiscal twenty twenty five, while organic cash SG and A increased year over year by 1,000,000 mostly driven by labor costs and outbound freight. Capital expenditures of 1,200,000.0 principally related to capital investment in our new enterprise resource planning system.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

In December, we began implementing a new company wide SAP ERP system, which will enhance, modernize and consolidate our disparate company wide systems to further support our growth and profitability. The first quarter reflected the full impact of tariff uncertainty and the associated mitigation strategies we have employed to build inventory. Our diversified manufacturing footprint makes us well equipped to adapt to shifting trade dynamics and minimize potential disruptions. This flexibility enables us to maintain stability across our supply chain and production processes even in the face of uncertainty. Even so, we did see lower sales in Canada and a delay in expected sales in Latin America, two of our higher margin geographies due to the tariff uncertainty.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Our focus remains on strengthening customer relationships, driving operational efficiency and maintaining sound financial stewardship. Our positioning within two relatively recession resistant sectors, industrial and fire continues to provide us with a solid foundation. We are not entirely insulated from the uncertainty surrounding global tariff developments, but we are navigating this period with clear priorities, thoughtful planning and strong confidence in our long term outlook. To mitigate the effects of potential imposed tariffs, net inventories increased by $3,100,000 totaling $85,800,000 as of 04/30/2025. To comment further on our tariff mitigation measures, in North America, we employ cross certification of Lakeland's Mexico produced fire turnout gear by Viridian for production in The US.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

All Viridian turnout gear is currently manufactured in The US, and these facilities have the capacity to manufacture Lakeland brand of turnout gear. Our Mexico facility is also becoming certified to produce Viridian turnout gear for the Canadian and LatAm markets. We have shared compliance under NFPA nineteen seventy between our Mexico facility and Viridian with technical documentation to facilitate cross production initiatives. It's important to note that over 90% of our Mexico produced products, which fall under the provisions of the USMCA trade agreement are exempt from additional tariffs. In Asia, are exploring other lower tariff reasons for manufacturing industrial products, while communicating expected price increases or surcharges to channel partners for products made in Vietnam and China.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We are continuing to assess the possibility of manufacturing disposable products at our newly acquired U. S. Manufacturing facilities or at other Lakeland facilities worldwide. We believe that we do not have a material risk of retaliatory tariffs from foreign entities as we manufacture only a limited set of products in The US for non US countries and only a limited range of China produced products are imported into The US. We also believe that garment manufacturing is not the primary focus of the administration's tariff policies.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

While our revenue was close to our internal expectations, tariffs did cause regional delays in the industrial space with additional factors affecting revenue including currency issues, as well as the production issues and product offering updates at Pacific Helmets. The tariff related delays were most apparent in Canada and Latin America, although our outlook for these regions remains positive. We believe momentum in these markets will rebound once uncertainty around tariffs subsides. Additionally, we continue to believe that a significant jolly fire boots order originally anticipated for shipping in Q2 of fiscal twenty twenty five is still likely to materialize. While timing remains subject to the Italian government's final procurement steps, we remain encouraged by ongoing engagement and the customers reaffirmed intent to proceed.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

As such, 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. Looking ahead into the remainder of fiscal year twenty twenty six, we remain focused on growing revenue in our fire services and industrial verticals, implementing operating and manufacturing efficiencies to achieve higher margins, significantly reducing operating expenses and continuing to navigate tariff uncertainties. We are also continuing to execute on our strategic acquisition strategy by realizing cross selling and operational synergies to accelerate growth while pursuing additional opportunities in the fire suit rental decontamination and services business. We maintain a robust M and A pipeline and are in active conversations to explore new opportunities for further consolidating the fragmented fire market, utilizing our strong balance sheet to support this acquisition strategy. With the four 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 Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

With that, I'd to pass the call to Roger to cover our financial results.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Thank you, Jim, and hello, everyone. I'll provide a quick overview of our fiscal twenty twenty six first quarter financials before diving into the details. Revenue for the quarter grew $10,400,000 year over year to a record $46,700,000 an increase of 29% compared to the first quarter of fiscal twenty twenty five. Consolidated gross margin decreased to 33.5% from 44.6% for the first quarter of fiscal twenty twenty five. Operating expenses increased by $6,300,000 or 45% from $14,000,000 to $20,300,000 in the first quarter of fiscal twenty twenty six, primarily due to inorganic growth, acquisition expenses, and higher organic operating expenses.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Net loss was $3,900,000 or $0.41 per basic share and diluted earnings per share for the first quarter of fiscal twenty twenty six compared to net income of $1,700,000 or $0.22 per basic and diluted earnings per share for the first quarter of fiscal twenty twenty five. Adjusted EBITDA excluding FX was $600,000 for the quarter. Cash and cash equivalents were $18,600,000 on 04/30/2025 compared to $17,500,000 on January thirty first of twenty twenty five. Looking at our first fiscal quarter of twenty twenty six, the increase in net sales was driven by 100% growth in the fire services segment or a $10,500,000 increase year over year. Sales from our recent acquisitions accounted for 9,900,000.0 of the increase while organic sales increased $600,000 or 2% over the prior year.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Organic revenue increased $600,000 or 2% to $36,900,000 compared to $36,300,000 from the first quarter fiscal twenty twenty five due to strong growth in The US and Europe, partially offset by weakness in Latin America and Canada. Within our important US market, our organic fire services business grew $1,000,000 or 32% year over year and our U. S. Industrial organic business grew $1,100,000 or 9.7%. Gross profit for the first quarter of fiscal twenty twenty six was $15,600,000 a decrease of $600,000 or 4% compared to $16,200,000 for the first quarter of fiscal twenty twenty five.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

The gross margin percentage decreased in the first quarter of fiscal twenty twenty six due to a shift in the geographic revenue mix combined with as expected lower margins in our acquired businesses primarily due to the impacts of purchase accounting and higher manufacturing and freight costs. Margins in the acquired businesses were impacted by the amortization of the write up in inventory as part of purchase accounting. Our organic gross margin percentage decreased to 35.9% from 44.6% in the first quarter of fiscal twenty twenty six, primarily due to lower sales in our higher margin Latin American and Canadian markets, as well as the impact of material price variance allocations. Due to systems limitations, all of our purchase price variances compared to standard costs were reflected in cost of goods sold rather than partially capitalized into inventory. We expect this impact to reverse in future quarters.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Operating expenses increased by $6,300,000 or 45 percent from $14,000,000 for the first quarter of fiscal twenty twenty five, $20,300,000 for the first quarter of fiscal twenty twenty six. Operating expenses increased due to the acquisitions of Meridian and LHD which added $3,000,000 to operating expenses as well as severance costs, litigation expenses and selling expenses. Adjusted operating expenses increased by $3,300,000 primarily due to the operating expenses of acquired companies. Operating loss was $4,600,000 for the first quarter of fiscal twenty twenty six compared to an operating profit of 2,200,000 for the first quarter of fiscal twenty twenty five, primarily due to the aforementioned impacts. Operating margins were negative 9.9% for the first quarter of fiscal twenty twenty six compared to 6.1% for the first quarter of fiscal twenty twenty five.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Net loss was $3,900,000 or $0.41 of earnings per diluted share for the first quarter of fiscal twenty twenty six compared to net income of $1,700,000 or $0.22 of earnings per diluted share for the first quarter of fiscal twenty twenty five. Adjusted EBITDA excluding FX for the first quarter of fiscal year twenty twenty six was $600,000 a decrease of $3,200,000 or 84% compared with $3,800,000 for the first quarter of fiscal twenty twenty five. The decrease was primarily driven by the previously mentioned materials purchase variance as well as higher organic SG and A in year over year increase in profit and ending inventory resulting from our tariff related inventory build during the quarter. As of quarter end, total profit and ending inventory was $1,300,000 Revenue for the trailing twelve months ended April thirtieth of twenty twenty five was $177,600,000 an increase of $45,300,000 or 34% versus the Q1 fiscal twenty twenty five TTM revenue of $132,300,000 With our recent fire services acquisition supporting Lakeland's continued growth. Trailing twelve month adjusted EBITDA excluding the impacts of FX was $14,100,000 compared to $16,500,000 for the prior quarter's trailing twelve months.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

The shortfall was a direct result of the revenue falling in key high margin regions, The impact of the purchase variance described previously higher than expected SG and A expenses, including increased travel and trade show participation. As well as commission and incremental cost operating costs associated with the Meridian acquisition. Considering that we completed four major acquisitions in the past twelve months, the full integration and implementation of which does take some time, we believe those benefits will begin translating into even greater improved financial performance that will be recognized in coming quarters. Gross margin percentage decreased in the first quarter of fiscal twenty twenty six due to geographic revenue mix coupled with lower margins in our acquired businesses, higher manufacturing and freight costs. Margins in the acquired businesses were impacted by the amortization of the inventory write up as part of purchase accounting.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Organic gross margin percentage decreased to 35.9% from 44.6% for the first quarter of fiscal twenty twenty six primarily due to lower sales in our higher margin Latin American and Canadian markets and material price variance allocations. As we migrate to new systems, we expect to seamlessly ensure that purchase variances are properly identified and accounted for in alignment with inventory capitalization standards. The primary effect of this variance relates to the timing of expense recognition rather than underlying operational performance and has introduced short term volatility into our gross margin report. We anticipate a corresponding improvement in gross margins in future quarters as this timing difference normalizes. Adjusted EBITDA excluding FX for the first quarter of fiscal twenty twenty six was $600,000 a decrease of $3,200,000 or 84% compared with 3,800,000 for the first quarter of fiscal twenty twenty five.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

The decrease was driven by this purchase variance where the full amount was expensed through COGS instead of being partially capitalized. As I noted on the prior slide, the $3,200,000 decrease in adjusted EBITDA excluding FX was driven by materials purchase variance, which will be reversed in subsequent quarters. We anticipate sequential growth in gross margin and adjusted EBITDA excluding FX in the second quarter. Reviewing our performance for the first quarter, our most recent acquisition, Veridian, contributed $4,400,000 in revenue during the quarter. Revenues for Eagle, Pacific Helmets, Jolly, LHD and Veridian totaled $15,600,000,000 and we expect these to accelerate as we fulfill open orders and capitalize on cross selling opportunities, including Jolly's substantial fire orders that were previously delayed to the first half of fiscal twenty twenty six.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Looking at our organic business, our Latin American operations decreased 12% in sales year over year due mainly to shipment timing and the previously mentioned impact of tariffs. In Asia, however, we saw sales increase 15% year over year. We're very excited about the new sales leadership that we have put in place in Asia and we're encouraged by the growth we're seeing in both China and the new Asian markets outside Our European revenue, including Eagle, Jolly and our recently acquired LHC business grew by $6,100,000 or 102% to $12,100,000 We continue to see very good sales opportunities in Europe and are committed to its growth trajectory. Our U.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

S. Revenue increased 42% to $22,500,000 driven by continued growth in the Lakeland fire services business as well as a $1,100,000 or 10% increase in our U. S. Industrials business. Regarding product mix for the first quarter, our fire services business grew $10,500,000 or 100% versus the same period last year and represents 45% of total revenue driven by a recent LHC acquisition, a full quarter of Viridian sales and organic gains in The U.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

S. And from Eagle as we start to see gains from our head to toe strategy. For our industrial product lines, disposables represented 28 of revenue for the quarter, while chemicals represented 13%. The remainder of our industrial products, including FRAR high performance and high biz accounted for 14% of sales. Now turning to the balance sheet.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Lakeland ended the quarter with cash and cash equivalents of approximately $18,600,000 and long term debt of $24,700,000 This compares to $17,500,000 in cash and $16,400,000 in long term debt as of 01/31/2025. As of 04/30/2025, we had borrowings of $19,800,000 outstanding under the revolving credit facility with an additional $20,200,000 of available credit under the loan agreement. We were in compliance with all credit facility covenants. Net cash used in operating activities was $4,800,000 in the three months ended 04/30/2025 compared to net cash provided of $300,000 in the three month ended 04/30/2024. The increase was driven by a net loss of $3,900,000 and increase in working capital of $3,000,000 offset by non cash charges of $2,100,000 Capital expenditures were $1,200,000 for the three months ended April thirty of twenty twenty five, primarily related to capital investment in our new ERP system.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

At the end of Q1, inventory was $85,800,000 up from $82,700,000 at the end of Q4 of fiscal year twenty twenty five due to inventory buildup in preparation for the forecasted increase in sales in the first half of fiscal twenty twenty six, the delayed shipment of a large boot order from Jolly and tariff mitigation initiatives. Inventory of acquired companies totaled $15,000,000 Year over year we saw an increase in our organic inventory of $14,800,000 versus the quarter ended 04/30/2024. Organic finished goods were $37,200,000 in the first quarter of fiscal twenty twenty six, up $9,400,000 year over year and up $700,000 quarter over quarter. Organic raw materials were $32,200,000 in the first quarter of fiscal twenty twenty six, up 4,900,000.0 year over year and up 1,200,000.0 quarter over quarter. Despite margin pressure in Q1, we remain confident in our fiscal year outlook, including expected revenue between $210,000,000 to $220,000,000 Due to lower margins and higher operating expenses in the first quarter, we are trending toward the lower end of our previously issued FY twenty twenty six adjusted EBITDA excluding FX guidance of 24,000,000 to $29,000,000 This reflects near term order delays and uncertainty related to tariffs.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Looking further ahead, we believe our cost discipline acquisition strategy and operational improvements will position the company for accelerating growth over the next three to four years. With that overview, I'd like to turn the call back over to Jim before we begin taking questions.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Thank you, Roger. In conclusion, we continue to demonstrate strong net sales growth driven by 100% year over year increase in our fire services and strong growth in both The US and in Europe of 42102% respectively. Our near term strategy is focused on growing top line revenue in our fire services and industrial verticals and implementing operating and manufacturing efficiencies to achieve higher margins while navigating the ongoing environment surrounding tariff uncertainties. Long term, our strategy is to grow both our fire services and industrial PPE verticals with our strategically located company owned capital light model, focusing on operating and manufacturing efficiencies to achieve higher margins with positioning to grow faster than the market served. Our acquisition pipeline remains strong and we are engaged in active discussions aligned with our growth strategy.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We maintain a fortified balance sheet from our $46,000,000 oversubscribed capital raise in January and have identified up to $4,000,000 in cash savings excluding the Meridian consolidation with our expectation of continued top line revenue growth in our fire services and industrial verticals combined with operating and manufacturing efficiencies, we are maintaining our fiscal year twenty twenty six guidance range for revenue of $210,000,000 to $220,000,000 and adjusted EBITDA excluding FX in the lower end of a range of $24,000,000 to $29,000,000 As we look toward the future, we are confident that our continued focus on cost discipline, targeted acquisitions and operational enhancements will serve as key growth drivers over the next three to four years. As we scale, we anticipate steady expansion in EBITDA margins moving into the mid to high teens range over the next three to five years, driven by improved efficiencies, a stronger product mix and disciplined pricing execution across the platform. With that, we will now open the call for questions. Operator?

Operator

Thank you. We'll now be conducting a question and answer Our question is from Gerry Sweeney with ROTH Capital Partners.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Good afternoon, Jim and Roger. Thanks for taking my call. A lot of information out there. I had a few questions, I to dig into certain a couple of areas, I mean, specifically around gross margins, a couple of different things moving there. But Roger, I think you talked about purchase variance and amortization right up in some of the products sold and that may reverse itself over time. Could you give a little bit more details to how much of a headwind that was this quarter and what we how the next couple of quarters are going develop and when do we see sort of the net benefit coming through?

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Yeah, Jerry, no, thanks for taking The reversal side.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Yeah, sorry. Yeah, sorry. No problem.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

As you likely saw on the graph, we were talking about the bar chart about the impact to EBITDA.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

The total increase to manufacturing costs was close to $3,000,000 impact to adjusted EBITDA. And we think a fairly significant part of that relates to a full flow through of the purchase variance into COGS rather than being capitalized into inventory. Again, it's a systems related issue as we related it's just not possible at a detailed product by product level to break that out at the level that's required for auditors and for financial statements. And similarly on the purchase accounting, we're in early days of purchase accounting with Meridian, but we're still kind of still going through that. Now, I guess the kind of the good news on that one is they tend to have fairly light in finished goods because of the made to order.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

And we're coming up kind of toward the end of the purchase accounting impact Jolly. And you can imagine being about halfway through with LHD, we're kind of about halfway in the middle. So kind of as I think about that, thinking about the numbers, I think the impact was somewhere in the $500,000 range or about, about a 1%, impact to gross margins.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

That is separate from

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

purchase accounting. Purchase accounting was about a 1% impact to gross margins. So we've about eight months left on Meridian, and we're about halfway through LHD. The impact from the cost variance was, you would expect, larger than that. It was, say, two to three margin points I would estimate.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

In addition to, as I mentioned in the notes, while it has not been as large as it had been in some quarters, we did have a slight headwind again in the profit and ending inventory compared to last quarter where we had a big reversal. And that relates to again getting to a build of inventory as part of our tariff mitigation strategies.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Gary, I guess the good news is that on purchase variance, should reverse in Q2 and Q3 as inventory sold through. So we'll see sort of a natural lift, would think, in that. The purchase accounting, we're still working our way through that.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Gotcha. But part of that headwind was you built the inventory and for future sales and that caused some of the issues. Got it.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Yes, correct. Correct.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

What about on the OpEx side? So I mean, and A was or I mean, operating costs were $20,000,000 plus. I think that was probably higher than a lot of people had modeled on the street. Again, a lot of numbers being thrown around here. So, you know, anything in there that is one time or we can adjust.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

I saw some adjustments at the end, but didn't have a time to go through with a fine tooth comb. But maybe help me where SG and A can kind of

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

fall out longer Yeah, a few things. Our travel expenses were up considerably in Q1, and we expect those back off pretty stiffly. We had the FDIC fire show in the first quarter. And quite frankly, there was just a significant amount of travel by the executive team really all around the world as we were visiting the different acquisition sites, manufacturing sites. And that's naturally was going to taper off, but we put some additional measures in place and that's part of that 4,000,000 in costs we've identified that we're focusing on and potential cost cutting.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Other things that were up in the quarter, G and A labor were, up a bit year over year, again, kind of getting the right people in the right places. The outbound freight number was up, quite a bit, related to, again, inventory movements related to tariff strategies and we would kind of expect that to more normalize going forward.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Yeah, Terry, was a Roger, if I just add on the freight, there was sort of a window when there was a loosening on the tariffs that there was a buildup of freight demand and the freight costs came in abnormally high for that period of time. We're working through that now on the procurement front to reduce that for us in the coming quarters. And we've got a strategy to do that. And frankly, there's also just going to be a natural lowering of that as this starts to normalize.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Got it.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

I think just lastly, had increases from the acquired company OpEx. And having just closed on two of those, we're kind of going through that as we speak as part of the integration and kind of rationalization process. So that's really starting to ramp up. So that'll kind of be ongoing over the next couple of quarters.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

And suffice to say, you've identified $4,000,000 in sort of cost out. I think that does that come from the OpEx side? Or is that a mix of OpEx and cost of control?

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

That is for the OpEx then.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Yeah. That's the OpEx. That's the SG and A discipline, I think optimizing procurement, streamlining overhead, and then consolidating some of our acquired companies.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Got it. Some of it is just natural consolidation. One last question, jump back in line. When I head over to the growth side, obviously fire, big opportunity for you. Can you maybe give us a little details how things are going on?

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Mean, was up, obviously, as you highlighted, but some of it was certainly by acquisition. But really interested in sort of maybe the head to toe strategy bundling, What are we seeing on that front and just opportunities as we move forward?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Oh, I'll start and Roger, you can jump in. But I mean, we've got much greater engagement We're seeing a lot more opportunities. We're seeing opportunities with some of the larger places that we wouldn't have expected to. And I think that's primarily as a result of sort of a focus that we adopted from our Meridian acquisition with their glove strategy.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

I mean, Meridian sells, if you don't want to be bothered with the real hassle sometimes of a major metro market, selling gloves into that market is the easiest thing to do. Gloves, firefighters use gloves, you know, in a matter of a few months they can burn through them and need another pair. And the Viridian glove is obviously something that is very well regarded in the marketplace. I think I'd mentioned they've got Dallas as a customer, LA Fire Department as a customer, so know there's some big opportunities and even some of the what you might think to be sort of a lower cost commodity type product. So that is going very well.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

We brought in a new leader into Pacific Helmets and with Barry Phillips's strong product management skill set, you know, I'm expecting to see some real growth out of that. We're seeing real opportunities in a lot of different spaces all over the world, you know, just just closed on an opportunity and with the Korean fire department, nothing nothing huge, but that's obviously a nice market for us and one that we haven't really been terribly active in. So, yeah, there's a there's a there's a lot of steps being taken, you know, as we start pruning, you know, the opportunities and and and being a little bit more laser focused on those, Pacific Helmet being one of them. Obviously, LHD, we've got, you know, it was no surprise to us when we took over the backlog that we had and some of the customer issues that we had to attend to. We're seeing some lift with that.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

And then in our own name brand in Lakeland, we're seeing significant opportunities. Unfortunately, there's a couple of really cool ones we can't talk about, Jerry, but because they haven't let us talk about them yet, but we're hoping that in the coming weeks, we've been able to make some announcements about some pretty cool developments where we've gotten some wins.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

And those developments are wrapped around that sort of head to toe. I mean, whether gloves give you an

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

option They are absolutely head to toe. They're head to toe and they're partnering with, you might see an opportunity where we have a Pacific helmet, a Viridian turnout gear, you know, and even a Viridian boot, know, and Viridian gloves or, you know, Lakeland turnout gear and Viridian gloves. So, you know, the use of the portfolio is something that we've got several arrows in our quiver, greater engagement with our customers, more targeted focus on channel partners. And then Roger and his team with the deal desk sort of an operational real time visibility for regions to see where we might be have some flexibility in margin is where we're putting together a full head to toe offering.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Gotcha.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

I'll check on our next One thing I would point out though, one thing I would point out that is creating possibly some timing within the current year is an evolution of another NFPA standard in 1970, 1971. So there is that change is going to be happening later this year. So had anecdotally, I think we've been seeing some hold off on purchases in The US kind of waiting until the new standard does come out later this year. Not it didn't go negative. But I think they're anecdotally, we've been hearing that there is some desire to hold off.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

I know we're in Viridian facilities. We're gearing up. In a lot of cases, it's a matter of kind of getting inventory staged up into the point that the product label goes in. And we don't want to put the 1970 label in when it needs to be labeled 1971. So really, it's kind of a matter of managing that inventory tightly of what's going to be sold under the current standard, universities being prepared for the new standard.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

I'll add, Gary, that we are driving hard to get those certifications. And it's really a the backup right right now, the backlog isn't at u is at UL, which is the certifying body. But we've got to Roger's point, you know, you wanna be the one that you wanna get that certification to be an early mover on that because, you know, the fire it's it's sort of like I liken it to the new model of car. You know, if you come out in in August, you wanna buy your 2026 you wanna buy a 2025 model and you know the twenty twenty sixes are coming out in October, you might wait. So we wanna make sure that we've got that lined up and that certification ready so that when the firefighter says, well, I'm looking for the 1970 certification, not the old one, we have it ready to go.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

So we've got our products in front of UL to get those certifications. It's a function of hearing from them.

Gerard Sweeney
Managing Director & Senior Research Analyst at Roth Capital Partners, LLC

Got it. Okay. I appreciate it. Thanks, guys.

Operator

Our next question is from Mike Schlisky with D. A. Davidson.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Yes. Hi. Good afternoon. Good afternoon. Hi.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Thanks for taking my question. If I read everything correctly and heard your comments, your kind of the bottom line organic growth in the quarter, think it was 2%, if I'm mistaken, correct me. But can you update us on your expectations for organic growth for the full year? Is it still high single digits or has that changed at all?

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

It is. And like I mentioned in the call, saw a really strong organic growth in The U. S, almost 10% growth in our industrial product and as well as in our fire product. Where we saw the drop off, as we mentioned in the comments, was in Latam where we had a 12% year over year decrease and in Canada. So those are the two higher margin countries to start with.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

So right off the bat, while they were both down, excuse me, that also impacted the gross margins of the company because they tend to be higher gross margin. So to have 2% across the company kind of given the headwinds we saw in Canada and especially in LATAM was very encouraging. It's very encouraging to see the growth returning in The US. And like we said in the prepared remarks, we're also very enthusiastic about the results and the turnaround we're seeing in our Asian market.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Okay. And then to reach that full year goal and really your overall revenue goal for the year, do you need to have that Jolly order that's been kind of hung up here shipped during the year? Or is that kind of a bonus on top of what you're already thinking you could be getting?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Look, I'm actually I'm going to meet with the Italian government next week. One to thank them for the relationship because it's been a long standing relationship and two to get better understand the timing of the delivery of that. We've been engaging with them for the last several months, all indications are positive. I think I may have said this on the last call, but, you know, the issue isn't with anything related to Jolly, the entire procurement division of the Ministry of Interior in Italy, they were under investigation, so they moved people out and moved new people in and it was sort of a corruption investigation, so you're dealing with a whole subset of new individuals within the procurement space, senior official of whom I'm going to meet with next week, we remain very optimistic. There's no indication of anything about the quality of the boot or anything.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Mean, we've been a long standing traditional customer, it's just a function of we're now dealing with a whole new subset of people within the government, all of whom have communicated to us their satisfaction with the product, it's a function right now of dealing with internal sort of politics. That is an important component of our go forward forecast, but I have every confidence in our ability to be able to have that materialize.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Okay, perfect. And maybe lastly, just on the cadence of how the rest of the year is going to play out from an EBITDA perspective and some of the accounting machinations that happened here in the first quarter, does it completely reverse in 2Q? Or is there some kind of gradual roll up that's going happen for the rest of the year with kind of what was lost here and

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

We really we already had it kind of increasing quarter over quarter. Part of it will be the kind of seeing the impact of that materials purchase price variance versus the standard start to work itself out. And that's a matter of kind of working through that inventory. Part of it will be kind of picking up the momentum of the cost containment, cost cutting efforts that we have. And then, of course, kind of seeing the timing of the LATAM Canadian and an ongoing US organic shipments accelerating.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

So I would discourage putting it all into the second quarter. We already had it kind of increasing quarter over quarter, but we do expect an improvement in the second quarter.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Okay, I appreciate the commentary. I'll leave it there. Thank you.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Sure.

Operator

Our next question is from Mark Smith with Lake Street Capital Markets.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Hi, guys. Off, just want to look at the balance sheet a little bit here on inventories and just kind of your comfort level with where inventories are and maybe if there even needs to be more build as we think about tariff mitigation?

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

You're speaking for myself. I don't really believe that there is a kind of overwhelming increase for more build. I think we positioned ourselves well for the inventory that we bring in from China, which is primarily the clean room. We talked about that in the previous quarter of how we had begun our year sorry, our year end call just several weeks ago about how we begin staging and building that. On the inventory from Vietnam, we believe there will continue to be kind of progress toward a deal with that country.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Know the administration has said that they're not it's not a matter of clothing and shirts that they're concerned about bringing that back to The U. S. So we do expect that environment to improve and likely will settle at around a 10% level for Vietnam. So we kind of got our handle, got our arms around that and those conversations with the customers as that's being passed along. I guess the wildcards at this point are what's going to happen with the EU.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Of course, Jolly Boots are made in Romania and we are again still expecting that NFPA, North American Fire Boot, to be rolled out in early fall of this year into The US market. That has certainly been slower than we originally expected, but expect that in early fall. And we really don't see anything a big concern from Pacific and New Zealand. So we'd expect that to probably stay in the 10% range as well. So obviously, would like to see the inventory start to work down.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Yeah, that's where I am, Roger. I, you know, We've obviously made the strategic purchase or we brought in strategically that critical environment piece. We will continue to drive that down. I know we've got several opportunities in the pipeline that I'm very confident about that I think are going to help us winnow that down over the course of the coming quarters. So and then of course, we fired up our Vietnam clean room capacity so that we're not we're no longer reliant on China for that critical environment piece.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Okay. Next, I wanted to dig back into gross margin a little bit, just kind of looking at the bar chart you guys have in your presentation here, manufacturing costs being kind of the biggest headwind. Obviously, a lot of things happening there, but I I'm curious if you just kind of break out just, if you call it organic kind of headwinds there, you know, labor, increased costs of materials, what's kind of hurting there and what you can do to kind of help fix that a little bit and including price increases and what you maybe have done or looking at as far as price.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

Yep. You know, a good part of it is this kind of systems challenge of the price area. And so what we mean by that is we use here into our current system. We use a standard costing system and with the kind of with the tariff situation, we've been adding more vendors. I think there's been a fairly large increase to number of suppliers and vendors, there's a standards not necessarily set up on those so that this variance kicks out and because you are challenged and kind of accurately identifying it between what goes in COGS and what goes to inventory, it pretty much all flowed through COGS.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

So that's part of it. Know, we mentioned in gross margins, the purchase accounting was about one margin point. Profit in the inventory, the year over year impact was about one margin point. I guess what I would add to that is, like I said in the prepared comments, we've got about 1,300,000.0 in profit and in the inventory. So there was a where Q1 of last year was a I believe this is 200,000 health, was a 300,000 hurt this time, so about a half a million dollar swing year over year.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

But the number and we did see a large increase or decrease kind of coming out of that build last year, but we are monitoring that quarter to quarter, and do have 1,300,000.0 of property in the inventory that will still kind of flush through. And then the other part is you're kind of really digging in in the acquired company gross margins, and that's something that is really starting up in earnest. We're having conversations about opportunities with Meridian to improve their margin. We've talked about that. We've hired a new Managing Director at Pacific.

Roger Shannon
Roger Shannon
Chief Financial Officer at Lakeland Industries

There's certainly been some challenges with manufacturing and with OpEx at Pacific. That new MD has been on the job about five weeks and they're coming in next week for kind of a preliminary readout with us. And there's others as well with Jolly. We're still not where we need to be from a gross margin perspective and a production efficiency in in the factory there. So all those are initiatives that are underway.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Okay. And my last question, digging a little deeper on the SG and A here. I'm curious as we look at the breakdown that you guys gave on kind of organic cash SG and A, just up a little bit year over year. I'm curious about the inorganic cash SG and A. It seems like these acquired companies are pretty clean, but are there opportunities to cut at all or to get more efficiencies within SG and A on some of these acquired companies?

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

There absolutely is. I mean, I'm in Quitman, Arkansas today at one of the former Veridian facilities, now our facility, where they manufacture gloves. And I've spent the entire day with the team and our North American Global VP of Manufacturing looking into efficiencies within the plant and there are several that we can achieve. In addition, we're looking at, you know, we've talked about this before consolidating Viridian, you know, into, you know, two operations, probably shorter term and then three, I mean, one longer term. So there are some opportunities here to squeeze some significant savings out over the short term, medium term and long term.

Mark Smith
Senior Research Analyst at Lake Street Capital Markets, LLC

Great. Thank you.

Operator

This concludes the question and answer session. I would now like to turn the call over to Mr. Jenkins for his closing remarks.

James Jenkins
James Jenkins
President, CEO & Executive Chairman at Lakeland Industries

Thank you, operator. Thank you all for joining us for today's call and thank you to our customers and distributor partners worldwide for trusting us with your lives and safety. Lakeland continues to be well positioned for long term growth. If you're unable to answer any of your questions today, please reach out to our IR firm MZ Group, who will be more than happy to assist. And for those of you attending the upcoming ROTH London Conference, June 24 through the twenty sixth, we look forward to seeing you there.

Executives
    • James Jenkins
      James Jenkins
      President, CEO & Executive Chairman
    • Roger Shannon
      Roger Shannon
      Chief Financial Officer
Analysts
    • Gerard Sweeney
      Managing Director & Senior Research Analyst at Roth Capital Partners, LLC
    • Michael Shlisky
      Managing Director & Senior Equity Research Analyst at D.A. Davidson
    • Mark Smith
      Senior Research Analyst at Lake Street Capital Markets, LLC
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