Lakeland Industries, Inc.

Overview

Lakeland Industries, Inc. (doing business as Lakeland Fire + Safety) manufactures and sells protective clothing and related services for industrial and first-responder markets worldwide.

Products and services

• Personal protective wear: disposables, chemical protection, fire/heat protective apparel, gloves, high-visibility, high-performance wear, wovens, and related accessories.
• Complementary services: decontamination, inspection, repair, and rental services.

Markets and customers

• Sales to more than 50 countries across industries including oil/chemical, automotive, transportation, steel, construction, cleanroom, pharmaceuticals, scientific labs, and utilities.
• Customers include federal, state, and local government agencies (including DoD, DHS, CDC) and fire/law enforcement.
• Sales channels: direct U.S. sales, international distributors, in-house sales teams, customer service, and authorized distributors.

Corporate footprint and operating structure

• Seven geographic operating segments: U.S. Operations, Europe, Mexico, Asia, Canada, Latin America, and Other Foreign.
• China and Vietnam facilities are significant for product delivery; global operations include wholly owned subsidiaries and foreign manufacturing sites.

Recent organizational activity

• Acquisitions:
  • LHD Group Deutschland GmbH (Germany) with subsidiaries in Hong Kong and Australia
  • Veridian Limited (Des Moines, Iowa, U.S.)
  • California PPE Recon, Inc.
  • Arizona PPE Recon, Inc.
  • Jolly Scarpe S.p.A. (Italy) and Jolly Scarpe Romania S.R.L. (Romania)
• Equity financing: January 2025 underwritten public offering raised net proceeds of about $42.6 million, used to pay down debt.
• ERP implementation underway to improve IT controls and unify financial systems; management identified a material weakness in internal control over financial reporting as of January 31, 2026, with remediation plans in progress.

Post-year event

• March 27, 2026: Sold certain high-visibility and high-performance workwear assets to National Safety Apparel for approximately $14.0 million, with escrow and customary indemnification protections.

Revenue by region (FY26 vs FY25, $ millions)

| Region | FY26 | FY25 | |---|---:|---:| | U.S. Operations | 81.6 | 60.4 | | Europe | 54.2 | 42.1 | | Mexico | 4.7 | 5.0 | | Asia | 14.5 | 13.9 | | Canada | 8.9 | 10.3 | | Latin America | 16.4 | 21.2 | | Other foreign | 12.3 | 14.3 | | Consolidated external sales | 192.6 | 167.2 |

Revenue by product line (FY26 vs FY25, $ millions)

| Product line | FY26 | FY25 | |---|---:|---:| | Disposables | 51.3 | 52.2 | | Chemical | 21.7 | 21.5 | | Fire | 93.6 | 63.0 | | Gloves | 1.3 | 1.7 | | High Visibility | 5.1 | 5.4 | | High Performance Wear | 8.1 | 6.6 | | Wovens | 11.5 | 16.8 | | Consolidated external sales | 192.6 | 167.2 |

Financial performance (GAAP)

| Metric | FY26 ($ millions) | FY25 ($ millions) | |---|---:|---:| | Net sales | 192.6 | 167.2 | | Gross profit | 63.3 | 68.7 | | Operating expenses | 77.0 | 67.4 | | Goodwill impairment | 2.6 | 10.54 | | Gain on sale-leaseback | (4.33) | — | | Lease impairments | 3.58 | — | | Operating loss | (15.51) | (9.27) | | Impairment of equity method investment | — | (7.64) | | Other (expense) income, net | (0.04) | 0.20 | | Interest expense | (2.15) | (1.65) | | Pre-tax loss | (17.70) | (18.36) | | Income tax expense (benefit) | 7.61 | (0.28) | | Net loss | (25.31) | (18.08) | | Net loss per share (basic and diluted) | (2.63) | (2.63) | | Weighted-average shares outstanding (millions) | 9.626 | 9.626 |

Cash flows and liquidity

• Net cash used in operating activities: FY26 $(15.8) million; FY25 $(15.9) million. Drivers include net loss, non-cash charges (depreciation/amortization, stock-based compensation, lease impairments, goodwill impairment), and working capital changes.
• Net cash used in investing activities: FY26 $(1.18) million; FY25 $(47.74) million. Includes acquisitions and proceeds from sale of Decatur facilities.
• Net cash provided by financing activities: FY26 $12.51 million; FY25 $56.59 million. Includes borrowings under the revolving credit facility, other borrowings, equity issuance proceeds used to pay down debt, dividends, and debt repayments.
• Cash and cash equivalents at year-end: FY26 $12.515 million; FY25 $17.476 million.
• International repatriation and tax items: FY26 repatriated $0.5 million from two Chinese subsidiaries; identified an additional $3.0 million in excess cash in Chinese operations targeted for repatriation; withholding tax liability recorded of $0.3 million.

Cash and capital structure

• Revolving Credit Facility:
  • Capacity up to $40.0 million with a $10.0 million letter of credit sub-facility; maturity December 12, 2029.
  • Interest: SOFR (or floor) plus applicable margin (1.25%–2.00% depending on funded debt/EBITDA).
  • As of January 31, 2026: borrowings outstanding $28.5 million; $11.5 million available.
  • As of January 31, 2025: borrowings outstanding $13.2 million; $26.8 million available.
  • Covenant status: not in compliance with the basic fixed charge coverage ratio and funded debt to EBITDA as of January 31, 2026; Limited Waiver obtained April 13, 2026.
• January 2025 equity issuance raised net $42.6 million; proceeds used to pay down debt.

Acquisitions and purchase accounting highlights

• LHD Group Deutschland GmbH / Hong Kong / Australia (effective July 1, 2024): total consideration $16.292 million; customer relationships $5.021 million; goodwill $5.267 million.
• Veridian Limited (Dec 16, 2024): total net assets acquired $26.316 million; customer relationships $9.950 million; trade names $1.400 million; backlog $0.2 million; goodwill $5.204 million.
• Jolly Scarpe S.p.A. / Romania (Feb 5, 2024): total net assets acquired $8.981 million; customer relationships $0.425 million; goodwill $1.363 million.
• Arizona PPE Recon, Inc. (Sept 15, 2025): net assets acquired $4.101 million; customer relationships $2.600 million; trade names $0.190 million; goodwill $0.987 million.
• California PPE Recon, Inc. (Sept 15, 2025): net assets acquired $5.761 million; customer relationships $3.600 million; trade names $0.210 million; goodwill $1.438 million.

Pro forma information

• Unaudited pro forma combined results (assuming acquisitions occurred at the beginning of FY25):
  • Net sales: FY26 $195.9 million; FY25 $203.3 million.
  • Net income: FY26 $(26.0) million; FY25 $(3.9) million.
  • Basic/diluted EPS: FY26 $(2.70); FY25 $(0.52).
• Pro forma figures are presented for informational purposes and are not indicative of future results.

Tax matters and reinvestment

• Income taxes: FY26 current tax expense $2.971 million; deferred tax expense $4.641 million; total income tax $7.612 million. FY25 tax benefit $(0.281) million.
• Deferred tax assets (liabilities) net: $(1.049) million as of January 31, 2026.
• Valuation allowance: increased against domestic deferred tax assets, resulting in a full valuation allowance for domestic deferred tax assets as of October 2026 (third quarter).
• Repatriation policy: foreign earnings generally reinvested offshore; China cash repatriation occurred in FY26 with related withholding tax recorded.

Other items

• IT and controls: management identified a material weakness in internal control over financial reporting related to limited IT general controls at locations outside core systems; remediation includes ERP rollout and consolidation of the chart of accounts.
• Leases and asset impairment: lease impairments recorded in FY26 related to the Monterrey, Mexico facility; right-of-use asset impairments and a gain on sale-leaseback were recognized in the period.
• Contingencies: ongoing litigation related to AFFF/PFAS matters; a putative securities class action was filed in February 2026 in the Southern District of New York. The company intends to defend these matters.