Lakeland Industries, Inc.

Net sales were $50.1 million, down 4.5% from $52.5 million a year ago and up 5.7% sequentially from $47.4 million. Gross margin was 37% versus 35.9% a year ago and 31.4% in the first quarter; adjusted gross margin was 37.7%, up 410 basis points sequentially. Net loss was $4.9 million, or $0.50 per share, versus net income of $0.8 million, or $0.08 per share, a year ago, and the quarter included an approximately $3.2 million non-cash goodwill impairment charge related to LHD. Adjusted EBITDA excluding FX was $2.7 million versus $5.1 million a year ago and $1.1 million in Q1, for a 5.4% margin. Cash ended at $17.9 million, up from $12.5 million at year end, debt declined to $28.7 million, and operating cash flow in the first half was $5.4 million, a $15.1 million year-over-year improvement. For the second half, management said tariff refunds should not be a major factor, but gross margin should continue improving from a normalized mid-30s run rate, with Q3 and Q4 benefiting from Fire growth and higher-margin turnout gear. They also expect some fire orders to shift into Q4, and reiterated their goal of positive operating cash flow in fiscal 2027 and sustainable margin/EBITDA improvement.

Jim Jenkins emphasized that the quarter showed continued progress, with stronger Fire demand, improving margins, and a clearer strategic focus. He highlighted tender wins across 9 countries, expansion of certified products and manufacturing capacity, and a push toward higher-margin recurring revenue through Fire Services and ISP locations such as Denver. His tone was constructive but pragmatic, stressing that the company is simplifying the business, reallocating capital, and expects meaningful portfolio actions over the next 6 months that should help fiscal 2028.

Calven Swinea focused on the financial recovery in margins and cash generation. He noted gross profit of $18.5 million, adjusted operating expenses excluding FX of $16.2 million, adjusted EBITDA excluding FX of $2.7 million, and first-half operating cash flow of $5.4 million; he also pointed to cash of $17.9 million, working capital of about $90.8 million, and debt of $28.7 million with $15.1 million of revolver availability. He said the tariff refund added $1.4 million to gross margin this quarter but should not have a significant second-half impact, while the underlying margin run rate is in the mid-30s and should keep improving as Fire and turnout gear mix improve.

Analysts pressed on the sustainability of gross margin, the pace of Fire Services/ISP growth, and whether SG&A and one-time costs like Interschutz, expedited freight, and startup expenses would fall off. Management said the tariff refund will not be a meaningful second-half driver, the normalized gross margin run rate is in the mid-30s, and Fire Services should be leveraged over time as new locations ramp. On tender timing, management said the U.K. program is a 7-year scheme with awards flowing over 12 to 18 months, and confirmed that Fire demand supports high single-digit to low double-digit organic growth. On operations, they said sequential growth is expected from Q2 to Q3 and Q3 to Q4, and that further portfolio simplification and site consolidation are under review.