Lakeland Industries Inc Q4 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Shlisky - D.A. Davidson & Co - Analyst : Good afternoon. Thanks for taking my questions. Sorry for the background noise if you can't hear me that all that well. I want to start with a question about the guidance that you put out. I guess, what dates or even time of day, was that guidance made? And are you -- I guess, given what happened a few hours ago, do you think now it seems that because of costs are going to go in the first quarter or two years, are you point towards the higher end of the guidance just from that alone? Or just some thoughts as to where the key variables are on tariffs that you mentioned now. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 09, 2025 / 8:30PM, LAKE.OQ - Q4 2025 Lakeland Industries Inc Earnings Call James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer That guidance did not change as a result of what happened today. And frankly, there's still that uncertainty, and I think the guidance stands as is. I mean we're one tweet away from a 46% tariff. So I guess I'm of the view at this point that we're sticking with our current guidance. I would agree with that. It's already (technical difficulty) what's going to happen when we originally thought about our guidance anticipated it, combination of the mitigation steps that we had taken and optimism that there would be cooler heads prevailing and the fact that we would pass along the increase to customers all factored in. Now had the -- or if the increased tariffs at a higher level take place, that, of course, you could expect revenue numbers to be higher, but possibly the margins to be lower, and then adjusted EBITDA probably would still well, it's hard to model that really given all the different possibilities. So let's just leave it with. We're confident with the range that we gave at this point in time, and we'll continue to keep everyone updated as we go throughout the year quarterly.

Question: Michael Shlisky - D.A. Davidson & Co - Analyst : Got it. Very helpful. I will pass it along. Thank you so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 09, 2025 / 8:30PM, LAKE.OQ - Q4 2025 Lakeland Industries Inc Earnings Call

Question: Gerard Sweeney - Roth Capital Partners - Analyst : Yes. Good afternoon, James, Roger. James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer How are you doing, Jay?

Question: Gerard Sweeney - Roth Capital Partners - Analyst : Okay. And then my follow-up was that was you basically answered it, but it was -- at what point does it not make sense to even move to the US or -- and it sounds like the US is the worst case scenario. But Mexico by itself, do you -- especially not too bad. James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer No. No, they'd be a USMCA compliant use of PPE, which would allow us to be able to sell that without a tariff. So yes.

Question: Gerard Sweeney - Roth Capital Partners - Analyst : Got to ask a question, very well could be early, but any idea of how much friction, i.e., margin or points that they can improve or cost that can take out. Obviously, you've made a lot of acquisitions. So there's probably some low-hanging fruit that you can fix, move around, et cetera. James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer Yeah. I mean we've already done at LHD, right? So we've -- we'll be looking at other alternatives. Pacific is certainly something we'll be looking at. As we look at other improvements, I will tell you that the owner of Veridian believes that we've got some options there as well to consolidate. I mean, look, part of the longer-term plan is to consolidate the operations of Veridian into probably one operation in Iowa. But given the current tariff environment, we haven't really accelerated that. And until we have a little more clarity on that, we're not going to.

Question: Gerard Sweeney - Roth Capital Partners - Analyst : EUR3 million. Got it. And that's just a push, correct? James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer Yeah. Timing.

Question: Gerard Sweeney - Roth Capital Partners - Analyst : Got it. So it's already manufactured. So that would have been -- that whole $3 million potentially should have been -- the expectation was fourth quarter for that. James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer Correct. And that would have -- we would have made guidance with that.

Question: Mark Smith - Lake Street Capital Markets - Analyst : Hi, guys. Just back on that Jolly boot order. So that's not shipped yet. But are there any other backlogs or orders or anything that we should be looking at that's sitting out there today that maybe was delayed or that we would look for any shifts? James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer Not that I'm aware of. No, no. No, that's the big one.

Question: Gerard Sweeney - Roth Capital Partners - Analyst : Okay. And the next question, just any thoughts you can give around gross profit margins, and this is excluding any changes on from tariffs, but just gross profit margins or strong organic margins mixed in with acquisitions. If we saw a steady state today, any thoughts around where you feel like gross profit margin really moves to.

Question: Gerard Sweeney - Roth Capital Partners - Analyst : Okay. And the last question for me is just as we think about the year, obviously, there's been a lot of acquisitions and changes over the last 12 months here. Just could you walk us through any cadence of revenue or any maybe lumpiness that you have any insight into today that we should be watching for? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 09, 2025 / 8:30PM, LAKE.OQ - Q4 2025 Lakeland Industries Inc Earnings Call James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer Yeah. So on the lumpiness front, look, we've got part of the Hi-Vis is it's tenders, right? So you've got multiple tenders all over the world that we're trying to participate in, with the number of brands we have, we believe that our win rate is going to increase. But as we start -- and I think I mentioned this even maybe six, nine months ago in Q2 when we had similar issues with Jolly, you've got some lumpiness associated with this stuff. And until we get to that critical mass component, which I think is going to be in the next 12 months as we start seeing revenue start with that two that lumpiness component, I'm not going to be dependent upon a Jolly boot order to ship on January 28 as opposed to February 4 to worry about whether I'm going to make that number. So that's where Roger and I sit, I think.

Question: Mark Smith - Lake Street Capital Markets - Analyst : Excellent. That's helpful. Thank you.

Question: Matthew Galinko - Maxim Group - Analyst : Hey. Good afternoon, guys. Thanks for taking my questions. Maybe post clearing the backlog in LHD in Europe, I guess what prospects that -- or how should we think about the run rate of that business? Or like are you building that pipeline as you clear the backlog? Or how is business there?

Question: Matthew Galinko - Maxim Group - Analyst : Got it. And I guess I guess my follow-up is, thematically, it seems, obviously, a lot of focus on tariffs and operations. But maybe if you could touch a little bit on growth initiatives as you see it. Is M&A still up in play this year as a services business still in play this year? what are you thinking about and factor driving. James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer Yeah. Look, on the organic front, we've got the right team in place. We've really been together for about seven or eight months. And now this is the year, I think, where we're starting to move with a real purpose together. So that -- so on the organic front, I'm very optimistic with what we're doing. I look at what our industrial team is doing in Europe right now. And Europe has been a real disappointment on the industrial side for us for many, many years. And I now have the right leadership and the right focus in that market. On the M&A front, what we've acquired and the cross-selling magic that my Chief Revenue Officer, Barry Phillips, is working is really quite impressive. And I was at FDIC today, which is the largest fire trade show in North America, and Barry knows everyone. I mean he literally knows everybody there. So including most of the firefighters. So I'm really, really energized by what he and Cameron are trying to do with our teams. And we mentioned, obviously, in the -- during the call that we'd added a lot of middle management sales staff that I look at and I get even more energized when I see that. So that's the organic front. On the M&A side, Roger and I, I think, have a number of initiatives and our pipeline is still significant and quite robust. But the focus is going to be -- I think the deals will be a little smaller over the course of the next 12 to 18 months. I think we're looking at what we would call the decontamination business, the service business. So we would anticipate probably in the next 12 to 18 months looking at two or three of those. And as I think -- I said before, those are -- those companies are generally doing $3 million to $5 million in revenue. There's a nice opportunity to scale those companies in markets where we have existing customers. So -- we're -- we think we're going to do something in the tune of two or three of those in the next 12 to 18 months, and we see those as real nice opportunities for us to generate recurring revenue, high-margin, and a sticky customer.

Question: Matthew Galinko - Maxim Group - Analyst : Great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 09, 2025 / 8:30PM, LAKE.OQ - Q4 2025 Lakeland Industries Inc Earnings Call James Jenkins - Lakeland Industries Inc - Executive Chairman of the Board, Acting President and Chief Executive Officer Thank you.