- Revenue: $38.5 million, up from $33.1 million in the same quarter last year.
- Trailing 12-Month Revenue: $137.7 million, an increase of $18.6 million or 16% year-over-year.
- Organic Sales: Decreased by $300,000 year-over-year.
- International Sales: $26.1 million or 68% of total revenues.
- Domestic Sales: $12.4 million or 32% of total revenues.
- Fire Services Business Growth: Increased by $3 million or 34% year-over-year.
- Industrial Product Lines Growth: Increased by $2.4 million or 10% year-over-year.
- Disposables: Declined 2% year-over-year.
- Gross Profit: $15.2 million, up from $14.2 million in the same quarter last year.
- Gross Margin: 39.6%, down from 42.9% in the same quarter last year.
- Operating Loss: $1.6 million, compared to an operating profit of $3.7 million in the same quarter last year.
- Net Loss: $1.4 million or $0.19 per share, compared to net income of $2.5 million or $0.33 per share last year.
- Adjusted EBITDA (excluding FX): $2.7 million or 6.9% margin, compared to $4.7 million or 14.3% margin last year.
- Cash and Cash Equivalents: $24.9 million.
- Long-Term Debt: $29.5 million.
- Inventory: $67.2 million, up from $56.1 million at the end of Q1 FY25.
- Capital Expenditures: $600,000 for the quarter.
- Fiscal Year 2025 Revenue Guidance: $160 million to $170 million.
- Fiscal Year 2025 Adjusted EBITDA Guidance (excluding FX): $18 million to $21.5 million.
Release Date: September 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lakeland Industries Inc (LAKE, Financial) reported a significant revenue growth of $38.5 million for Q2 2025, up from $33.1 million in the same quarter last year.
- The acquisition of LHD Group, a leading provider of firefighter turnout gear and PPE, is expected to enhance Lakeland's global fire services offerings and footprint.
- Latin American operations saw a 63% increase in sales year over year, now representing close to 20% of Lakeland's total sales.
- The company has introduced new sales leadership, including a Chief Revenue Officer and VP of Global Industrial Sales, which is expected to drive future growth.
- Lakeland's fire service business grew by 34% year over year, driven by recent acquisitions and increased demand in this segment.
Negative Points
- Lakeland Industries Inc (LAKE) experienced a slowdown in organic sales in Q2, impacting profitability.
- The transition to a new North American industrial product market representative, LineDrive, resulted in some slippage in Q2 orders.
- Delays in the shipment of fire orders from Jolly and Eagle affected second-quarter revenue.
- Gross profit margins were negatively impacted by 3.8% due to the integration of newly acquired companies and 3.4% due to profit in ending inventory.
- Operating expenses increased significantly, with $2.4 million of the increase attributed to SG&A from newly acquired companies and $2.6 million due to acquisition-related expenses.
Q & A Highlights
Q: Can you segment out how much revenue was impacted by the transition to LineDrive?
A: We reviewed the first quarter with LineDrive methodically, account by account. The transition affected about $2.8 million year over year for Q2. We expect this to pick up in the second half of the year. (Roger Shannon, CFO)
Q: What does the building pipeline look like versus what you were doing in sales previously?
A: The approach to our pipelines is now more robust, with more interaction with end users. This gives us better visibility and confidence in the pipeline compared to six or nine months ago. (James Jenkins, CEO)
Q: How do gross margins rebound over the next couple of quarters?
A: Gross margins were impacted by purchase accounting and profit in inventory. We expect a 3.4% margin point benefit in the second half as inventory is sold. Organic sales mix provided a 4.4% margin uplift. (Roger Shannon, CFO)
Q: Is the $2.4 million in acquired SG&A expenses from new companies permanent?
A: We are scrubbing these expenses to work them down. Some are investments in people, while others are low-hanging fruits we can fix. (Roger Shannon, CFO)
Q: Can you talk about the backlog with LHD and its conversion?
A: The backlog issue is not unique to LHD; competitors face similar delivery issues. We are addressing backlog aggressively and capturing margins through better delivery terms and discounts. (James Jenkins, CEO)
Q: What levers can you pull to capture opportunities in Europe more effectively?
A: We are engaging more with end users and improving customer service and delivery times. We also see opportunities from the displacement caused by Kimberly-Clark selling their PVE business. (James Jenkins, CEO)
Q: How do you plan to expand the service maintenance business from LHD?
A: We see significant opportunities both organically and inorganically. We are already in discussions to replicate the successful Australian model in other markets. (James Jenkins, CEO)
Q: What is the penetration of the fire equipment service maintenance opportunity today?
A: It's significant, with millions of suits needing regular cleaning. We are in the early stages but plan to expand methodically over the next 12 months. (James Jenkins, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
