Table of Contents
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code) | |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large accelerated filer | ☐ | ☒ | ||||
| Nonaccelerated filer | ☐ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Class |
Outstanding at August 29, 2025 | |
Common Stock, $0.01 par value per share |
Table of Contents
LAKELAND INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-Q
The following information of the Registrant and its subsidiaries is submitted herewith:
PART I - FINANCIAL INFORMATION:
| Page | ||||||
| Item 1. |
||||||
| Condensed Consolidated Statements of Operations Three and Six Months Ended July 31, 2025 and 2024 |
3 | |||||
| 4 | ||||||
| Condensed Consolidated Balance Sheets As of July 31, 2025 and January 31, 2025 | 5 | |||||
| 6 | ||||||
| Condensed Consolidated Statements of Cash Flows Six Months Ended July 31, 2025 and 2024 |
8 | |||||
| 9 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
26 | ||||
| Item 3. |
32 | |||||
| Item 4. |
32 | |||||
| Item 2. |
34 | |||||
| Item 5 |
34 | |||||
| Item 6. |
35 | |||||
| 36 | ||||||
Table of Contents
Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||
2025 |
2024 |
2025 |
2024 |
|||||||||||||
Net sales |
$ | $ | $ | $ | ||||||||||||
Cost of goods sold |
||||||||||||||||
Gross profit |
||||||||||||||||
Operating expenses |
||||||||||||||||
Lease impairments |
||||||||||||||||
Operating (loss) income |
( |
) | ( |
) | ( |
) | ||||||||||
Other income, net |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
(Loss) income before taxes |
( |
) | ( |
) | ( |
) | ||||||||||
Income tax benefit |
( |
) |
( |
) | ( |
) | ( |
) | ||||||||
Net income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
Net income (loss) per common share: |
||||||||||||||||
Basic |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
Diluted |
$ | $ | ( |
) | $ | ( |
) |
$ | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
||||||||||||||||
Diluted |
||||||||||||||||
Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||
2025 |
2024 |
2025 |
2024 |
|||||||||||||
Net income (loss) |
$ | $ | ( |
) | $ | ( |
) |
$ | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation adjustments |
||||||||||||||||
Comprehensive income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| ASSETS |
July 31, 2025 |
January 31, 2025 |
||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $ |
||||||||
| Inventories, net |
||||||||
| Prepaid VAT and other taxes |
||||||||
| Assets held for sale |
— | |||||||
| Income tax receivable and other current assets |
||||||||
| Total current assets |
||||||||
| Property and equipment, net |
||||||||
| Operating leases right-of-use |
||||||||
| Deferred tax assets |
||||||||
| Other assets |
||||||||
| Goodwill |
||||||||
| Intangible assets, net |
||||||||
| |
|
|
|
|||||
| Total assets |
$ | $ | ||||||
| |
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | $ | ||||||
| Accrued compensation and benefits |
||||||||
| Other accrued expenses |
||||||||
| Income tax payable |
||||||||
| Current portion of loans payable |
||||||||
| Current portion of operating lease liabilities |
||||||||
| |
|
|
|
|||||
| Total current liabilities |
||||||||
| Deferred income taxes |
||||||||
| Loans payable – long term |
||||||||
| Long-term portion of operating lease liabilities |
||||||||
| |
|
|
|
|||||
| Total liabilities |
||||||||
| |
|
|
|
|||||
| Commitments and contingencies (Note 1 2 ) |
||||||||
| Stockholders’ equity |
||||||||
| Preferred stock, $ |
||||||||
| Common stock, $ |
||||||||
| Treasury stock, at cost; |
( |
) | ( |
) | ||||
| Additional paid-in capital |
||||||||
| Retained earnings |
||||||||
| Accumulated other comprehensive loss |
( |
) |
( |
) | ||||
| |
|
|
|
|||||
| Total stockholders’ equity |
||||||||
| |
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | $ | ||||||
| |
|
|
|
|||||
| Six Months Ended July 31, 2025 | ||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||||||||
| ($000’s) | ($000’s) | ($000’s) | ($000’s) | ($000’s) | ($000’s) | |||||||||||||||||||||||||||
Balance, January 31, 2025 |
$ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||
Net loss |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Other comprehensive income |
— | — | ||||||||||||||||||||||||||||||
Dividends ($ |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Stock-based compensation: |
||||||||||||||||||||||||||||||||
Restricted stock issued |
— | |||||||||||||||||||||||||||||||
Restricted stock plan |
— | — | ||||||||||||||||||||||||||||||
Return of shares in lieu of payroll withholding |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Balance, April 30, 2025 |
$ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||
Net income |
— | — | ||||||||||||||||||||||||||||||
Other comprehensive income |
— | — | ||||||||||||||||||||||||||||||
Dividends ($ |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Stock-based compensation: |
||||||||||||||||||||||||||||||||
Restricted stock issued |
— |
— | ||||||||||||||||||||||||||||||
Restricted stock plan |
— | — | ||||||||||||||||||||||||||||||
Return of shares in lieu of payroll withholding |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Balance, July 31, 2025 |
$ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||
| Six Months Ended July 31, 2024 | ||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||||||||
| ($000’s) | ($000’s) | ($000’s) | ($000’s) | ($000’s) | ($000’s) | |||||||||||||||||||||||||||
Balance, January 31, 2024 |
$ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||
Net income |
— | — | ||||||||||||||||||||||||||||||
Other comprehensive income |
— | — | ||||||||||||||||||||||||||||||
Dividends ($ |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Stock-based compensation: |
||||||||||||||||||||||||||||||||
Restricted stock issued |
— | |||||||||||||||||||||||||||||||
Restricted stock plan |
— | — | ||||||||||||||||||||||||||||||
Return of shares in lieu of payroll withholding |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Balance, April 30, 2024 |
$ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||
Net (loss) |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Other comprehensive income |
— | — | ||||||||||||||||||||||||||||||
Dividends ($ |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Stock-based compensation: |
||||||||||||||||||||||||||||||||
Restricted stock issued |
— | |||||||||||||||||||||||||||||||
Restricted stock plan |
— | — | ||||||||||||||||||||||||||||||
Return of shares in lieu of payroll withholding |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
Balance, July 31, 2024 |
$ | ( |
) | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||
| Six Months Ended July 31, |
||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: |
||||||||
| Net (loss) income |
($ | ) |
$ | |||||
| Adjustments to reconcile net (loss) income to net cash (used in) operating activities |
||||||||
| Deferred income taxes |
( |
) | ( |
) | ||||
| Depreciation and amortization |
||||||||
| Lease impairments |
||||||||
| Amortization of step-up in inventory basis |
||||||||
| Stock based and restricted stock compensation |
||||||||
| Gain on disposal of property and equipment |
( |
) | ||||||
| Equity in loss of equity investment |
||||||||
| Change in fair value of earnout consideration |
( |
) | ||||||
| Change in operating assets and liabilities, net of effect of business acquisitions |
||||||||
| Accounts receivable, net |
( |
) | ||||||
| Inventories |
( |
) | ( |
) | ||||
| Prepaid VAT and other taxes |
||||||||
| Other assets |
( |
) | ||||||
| Accounts payable |
||||||||
| Accrued expenses and other liabilities |
( |
) | ||||||
| Operating lease liabilities |
( |
) | ||||||
| |
|
|
|
|||||
| Net cash (used in) operating activities |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
( |
) | ( |
) | ||||
| Acquisitions, net of cash acquired |
( |
) | ||||||
| Investments in convertible debt instruments |
( |
) | ||||||
| |
|
|
|
|||||
| Net cash (used in) investing activities: |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Term loan borrowings |
||||||||
| Payments on debt facilities |
( |
) | ( |
) | ||||
| Credit line borrowings |
||||||||
| Dividends paid |
( |
) | ( |
) | ||||
| Shares returned to pay employee taxes under restricted stock program |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net cash provided by financing activities |
||||||||
| |
|
|
|
|||||
| Effect of exchange rate changes on cash and cash equivalents |
||||||||
| |
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
( |
) | ||||||
| Cash and cash equivalents at beginning of period |
||||||||
| |
|
|
|
|||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Supplemental disclosure of cash flow information: |
||||||||
| Cash paid for interest |
$ | $ | ||||||
| |
|
|
|
|||||
| Cash paid for taxes |
$ | $ | ||||||
| |
|
|
|
|||||
1. |
Business |
2. |
Basis of Presentation |
3. |
Acquisitions |
| Net working capital acquired, including cash of $0.5 million |
$ | |||
| Property, plant and equipment |
||||
| Right of use assets |
||||
| Customer relationships |
||||
| Trade names |
||||
| Goodwill |
||||
| Backlog |
||||
| Lease liabilities |
( |
) | ||
| Other liabilities assumed |
( |
) | ||
| |
|
|||
| Total net assets acquired |
$ | |||
| |
|
Net working capital acquired, including cash of $ 1.5 million |
$ | |||
Property, plant and equipment |
||||
Right of use assets |
||||
Customer relationships |
||||
Trade names and trademarks |
Technological know-how |
||||
Other |
( |
) | ||
Goodwill |
||||
Lease liabilities |
( |
) | ||
Other liabilities assumed |
( |
) | ||
Total net assets acquired |
$ | |||
Net working capital acquired, including cash of $3.0 million and inventory of $6.0 million |
$ |
|||
Property, plant and equipment |
||||
Right of use assets |
||||
Customer relationships |
||||
Trade names and trademarks |
||||
Technological know-how |
||||
Goodwill |
||||
Lease liabilities |
( |
) | ||
Other liabilities assumed, including debt of $3.7 million |
( |
) | ||
Total net assets acquired |
$ |
|||
(in millions, except per share amounts) |
Three Months Ended July 31, 2024 |
Six Months Ended July 31, 2024 |
||||||
Net sales |
$ |
$ |
||||||
Net (loss) income |
$ |
( |
) |
$ |
||||
Basic (loss) earnings per share |
$ |
( |
) |
$ |
||||
Diluted (loss) earnings per share |
$ |
( |
) |
$ |
||||
4. |
Inventories |
| July 31, 2025 |
January 31, 2025 |
|||||||
Raw materials |
$ | $ | ||||||
Work-in-process |
||||||||
Finished goods |
||||||||
Excess and obsolete adjustments |
( |
) | ( |
) | ||||
Total inventories |
$ | $ | ||||||
5. |
Assets Held for Sale |
6. |
Goodwill and Intangible Assets, Net |
2025 |
2024 |
|||||||
Balance at January 31, |
$ |
$ |
||||||
Currency translation |
||||||||
Acquisitions |
||||||||
Balance at April 30, |
$ |
$ |
||||||
Measurement period adjustments |
( |
) |
( |
) | ||||
Currency translation |
||||||||
Acquisitions |
||||||||
Balance at July 31, |
$ |
$ |
||||||
| 2025 | 2024 | |||||||
Balance at January 31, |
$ | $ | ||||||
Acquisitions |
— | |||||||
Amortization |
( |
) | ( |
) | ||||
Currency translation |
— | |||||||
Balance at April 30, |
$ | $ | ||||||
Amortization |
( |
) | ( |
) | ||||
Currency translation |
— | |||||||
Acquisitions |
— | |||||||
Measurement period adjustments |
( |
) |
||||||
Balance at July 31, |
$ | $ | ||||||
7 . |
Long-Term Debt |
8 . |
Concentration of Risk |
9 . |
Stockholders’ Equity |
| Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||
| 2025 | 2024 | 202 5 |
202 4 |
|||||||||||||
| 2017 Plan: | |
|
|
|||||||||||||
| Total restricted stock and stock option programs | $ | $ | $ | $ | ||||||||||||
| Total income tax expense recognized for stock-based compensation arrangements |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Performance- Based |
Service- Based |
Unrestricted Stock Awards |
Total |
Weighted Average Grant Date Fair Value |
||||||||||||||||
| Outstanding at January 31, 2025 |
$ |
|||||||||||||||||||
| Awarded |
$ |
|||||||||||||||||||
| Vested |
( |
) |
( |
) |
( |
) |
( |
) |
$ |
|||||||||||
| Forfeited |
( |
) |
( |
) |
( |
) |
||||||||||||||
| Outstanding at July 31, 2025 |
$ |
|||||||||||||||||||
| Performance- Based |
Service- Based |
Total | Weighted Average Grant Date Fair Value |
|||||||||||||
| Outstanding at January 31, 2024 |
$ | |||||||||||||||
| Awarded |
$ | |||||||||||||||
| Vested |
( |
) | ( |
) | $ | |||||||||||
| Forfeited |
( |
) | ( |
) | ( |
) | ||||||||||
| Outstanding at July 31, 2024 |
$ | |||||||||||||||
10 . |
Income Taxes |
1 1 . |
Net Income (Loss) Per Share |
| Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Denominator: | ||||||||||||||||
| Denominator for basic net income (loss) per share (weighted-average shares which exclude 1,358,208 treasury shares for the periods ended July 31, 2025 and 2024) |
||||||||||||||||
| Effect of dilutive securities from restricted stock plan |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Denominator for diluted net income (loss) per share (adjusted weighted average shares) |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Basic net income (loss) per share |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Diluted net income (loss) per share |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
1 2 . |
Contingencies |
1 3 . |
Segment Reporting |
| (in millions) |
Three Months Ended July 31, |
Six Months Ended July 31, |
||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Domestic |
$ | $ | $ | $ | ||||||||||||
| International |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total Sales |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (in millions of dollars) |
Three Months Ended July 31, |
Six Months Ended July 31, |
||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net Sales: |
||||||||||||||||
| U.S. Operations |
$ | $ | $ | $ | ||||||||||||
| Other foreign |
||||||||||||||||
| Europe |
||||||||||||||||
| Mexico |
||||||||||||||||
| Asia |
||||||||||||||||
| Canada |
||||||||||||||||
| Latin America |
||||||||||||||||
| Less intersegment sales |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Consolidated sales |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| External Sales: |
||||||||||||||||
| U.S. Operations |
$ | $ | $ | $ | ||||||||||||
| Other foreign |
||||||||||||||||
| Europe |
||||||||||||||||
| Mexico |
||||||||||||||||
| Asia |
||||||||||||||||
| Canada |
||||||||||||||||
| Latin America |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Consolidated external sales |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Intersegment Sales: |
||||||||||||||||
| U.S. Operations |
$ | $ | $ | $ | ||||||||||||
| Other foreign |
||||||||||||||||
| Europe |
||||||||||||||||
| Mexico |
||||||||||||||||
| Asia |
||||||||||||||||
| Canada |
||||||||||||||||
| Latin America |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Consolidated intersegment sales |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
(in millions of dollars) |
Three Months Ended July 31, |
Six Months Ended July 31, |
||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
Cost of Goods Sold: |
||||||||||||||||
U.S. Operations |
$ | $ | $ | $ | ||||||||||||
Other foreign |
||||||||||||||||
Europe |
||||||||||||||||
Mexico |
||||||||||||||||
Asia |
||||||||||||||||
Canada |
||||||||||||||||
Latin America |
||||||||||||||||
Less intersegment cost of goods sold |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Consolidated cost of goods sold |
$ | $ | $ | $ | ||||||||||||
Gross Profit: |
||||||||||||||||
U.S. Operations |
$ | $ | $ | $ | ||||||||||||
Other foreign |
||||||||||||||||
Europe |
||||||||||||||||
Mexico |
( |
) | ( |
) | ||||||||||||
Asia |
||||||||||||||||
Canada |
||||||||||||||||
Latin America |
||||||||||||||||
Less intersegment loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Consolidated gross profit |
$ | $ | $ | $ | ||||||||||||
Operating Expenses (1) : |
||||||||||||||||
U.S. Operations |
$ | $ | $ | $ | ||||||||||||
Other foreign |
||||||||||||||||
Europe |
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Mexico |
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Asia |
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Canada |
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Latin America |
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Less intersegment operating expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Consolidated operating expenses |
$ | $ | $ | $ | ||||||||||||
Operating (Loss) Income: |
||||||||||||||||
U.S. Operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Other foreign |
||||||||||||||||
Europe |
( |
) | ( |
) | ( |
) | ||||||||||
Mexico |
( |
) | ( |
) | ( |
) | ||||||||||
Asia |
||||||||||||||||
Canada |
( |
) | ( |
) | ||||||||||||
Latin America |
||||||||||||||||
Less intersegment loss (income) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Operating (loss) income |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||
(1) |
Includes lease impairments |
| As of July 31, | As of January 31, | |||||||
| (in millions of dollars) |
2025 | 2025 | ||||||
| Total Assets: |
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| U.S. Operations |
$ | $ | ||||||
| Europe |
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| Mexico |
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| Asia |
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| Canada |
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| Latin America |
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| Other foreign |
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| Less intersegment |
( |
) | ( |
) | ||||
| |
|
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| Consolidated assets |
$ | $ | ||||||
| |
|
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| Total Assets Less Intersegment: |
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| U.S. Operations |
$ | $ | ||||||
| Europe |
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| Mexico |
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| Asia |
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| Canada |
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| Latin America |
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| Other foreign |
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| Consolidated assets |
$ | $ | ||||||
| |
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| Total Goodwill and Intangible Assets |
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| U.S. Operations |
$ | $ | ||||||
| Europe |
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| Other foreign |
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| Consolidated goodwill and intangible assets |
$ | $ | ||||||
| |
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| (in millions of dollars) | Three Months Ended July 31, |
Six Months Ended July 31, |
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| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| External Sales by product lines: |
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| Disposables |
$ | $ | $ | $ | ||||||||||||
| Chemical |
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| Fire Service |
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| Gloves |
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| High Visibility |
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| High Performance Wear |
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| Wovens |
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| |
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| Consolidated external sales |
$ | $ | $ | $ | ||||||||||||
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1 4 . |
Subsequent Events |
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
The following discussion and analysis should be read in conjunction with the historical financial statements and other financial information included elsewhere in this quarterly report on Form 10-Q. This Form 10-Q may contain certain forward-looking statements. When used in this Form 10-Q or in any other presentation, statements which are not historical in nature, including the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” “project,” “plan,” “seek,” “will,” “may,” “might,” “would,” “could” and similar expressions, are intended to identify forward-looking statements. They also include statements containing a projection of sales, earnings or losses, capital expenditures, dividends, capital structure or other financial terms.
The forward-looking statements in this Form 10-Q are based upon our management’s beliefs, assumptions and expectations of our future operations and economic performance, taking into account the information currently available to us. These statements are not statements of fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. Some of the important factors that could cause our actual results, performance or financial condition to differ materially from expectations are:
| • | we are subject to risk as a result of our international manufacturing operations and are subject to the risk of doing business in foreign countries, particularly in China, Vietnam and India, including risks relating to the impacts of tariff policies and other trade maneuvers, which could affect our ability to manufacture or sell our products, obtain products from foreign suppliers or control the costs of our products; |
| • | a terrorist attack, other geopolitical crisis, or widespread outbreak of an illness or other health issue, such as the COVID-19 pandemic, could negatively impact our domestic and/or international operations; |
| • | our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates; |
| • | our results of operations may vary widely from quarter to quarter; |
| • | disruption in our supply chain, manufacturing or distribution operations could adversely affect our business; |
| • | climate change and other sustainability matters may adversely affect our business and operations; |
| • | some of our sales are to foreign buyers, which exposes us to additional risks; |
| • | because we do not have long-term commitments from many of our customers, we must estimate customer demand, and errors in our estimates could negatively impact our inventory levels and net sales; |
| • | we face competition from other companies, a number of which have substantially greater resources than we do; |
| • | our operations are substantially dependent upon key personnel; |
| • | technological change could negatively affect sales of our products and our performance; |
| • | cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information and adversely impact our reputation and results of operations; |
| • | data privacy and security laws relating to the handling of personal information are evolving across the world and may be drafted, interpreted, or applied in a manner that results in increased costs, legal claims, fines against us, or reputational damage; |
| • | our success depends in part on our proprietary technology, and if we fail to obtain or enforce our intellectual property rights successfully, our competitive position may be harmed; |
| • | we are implementing a new enterprise resource planning system; |
| • | we have identified a material weakness in our internal control over financial reporting; |
| • | we deal in countries where corruption is an obstacle; |
| • | we are exposed to U.S. and foreign tax risks; |
| • | we may be subject to product liability claims, and insurance coverage could be inadequate or unavailable to cover these claims; |
| • | environmental laws and regulations may subject us to significant liabilities; |
| • | provisions in our restated certificate of incorporation and by-laws and Delaware law could make a merger, tender offer or proxy contest difficult; |
| • | we may not achieve the expected benefits from strategic acquisitions, investments, joint ventures, capital investments and other corporate transactions that we have pursued or may pursue; |
| • | we may need additional funds, and if we are unable to obtain these funds, we may not be able to expand or operate our business as planned; |
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| • | adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our business, financial condition or results of operations; and |
| • | the other factors referenced in this Form 10-Q, including, without limitation, in the sections entitled “Part I – Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II – Item 1A – Risk Factors” and the factors described under “Risk Factors” disclosed in our fiscal 2025 Form 10-K. |
We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements that are based on current expectations. Furthermore, forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements after the date of this Form 10-Q, whether as a result of new information, future events or otherwise, except as may be required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-Q might not occur. We qualify any and all of our forward-looking statements entirely by these cautionary factors.
Business Overview
We manufacture and sell a comprehensive line of industrial protective clothing and accessories for the industrial and public protective clothing market. Our products are sold globally by our in-house sales teams, our customer service group, and authorized independent sales representatives to a network of over 2,000 global safety and industrial supply distributors. Our authorized distributors supply end users across various industries, including integrated oil, chemical/petrochemical, automobile, transportation, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical and high-tech electronics manufacturers, as well as scientific, medical laboratories and the utilities industry. We also supply federal, state and local governmental agencies and departments, including fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control. Internationally, we sell to a mixture of end-users directly and to industrial distributors, depending on the particular country and market. In addition to the United States, sales are made into more than 50 foreign countries, the majority of which are into China, the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Uruguay, Middle East, Southeast Asia, New Zealand, Australia and Hong Kong.
The Company’s strong market position across its focus product categories and markets is supported by continued and increasing investment in its global footprint, particularly owning and operating its own manufacturing facilities, acquiring complementary companies or products that expand and enhance product offerings and/or geographic customer territories and investing in sales and marketing resources in countries around the world. We believe that ownership of manufacturing is the cornerstone of building a resilient supply chain and providing high-quality products to our customers. Having ten manufacturing locations in eight countries on five continents, and sourcing core raw materials from multiple suppliers in various countries affords Lakeland superior manufacturing capabilities and supply chain resilience compared to our competitors who use contractors. Additionally, our focus on providing customers with best-in-class service includes the strategic location of our sales team members.
Lakeland is committed to protecting the world’s workers, first responders, and communities while creating value for its shareholders. Key elements of our corporate strategy include:
| • | Creating a high-performance culture driven by our corporate values, |
| • | Investing resources in high-growth geographies and product categories, |
| • | Building a premier global firefighter safety brand through product and marketing enhancements, |
| • | Driving profitable growth in high-end chemical and limited-use/disposable protective clothing through product development, strategic pricing initiatives, channel diversification, and operations optimization, and |
| • | Acquiring companies that improve Lakeland’s competitive advantage in focus markets. |
On December 16, 2024, the Company acquired U.S.-based Veridian Limited (“Veridian”) for cash consideration of approximately $26.1 million subject to post-closing adjustments and customary holdback provisions. Founded in 1992, Veridian is a leading provider of firefighter protective apparel, including fire and rescue garments, gloves and boots, with an annual revenue of approximately $21.0 million. Veridian has approximately 150 employees and is headquartered in Des Moines, Iowa.
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On July 1, 2024, the Company acquired the fire and rescue business of LHD Group Deutschland GmbH and its subsidiaries in Hong Kong and Australia (collectively, “LHD”) in an all-cash transaction subject to post-closing adjustments and customary holdback provisions. Total consideration was $14.8 million, net of $1.5 million cash acquired, of which $15.5 million was paid to retire LHD’s debt and $0.8 million was paid to the seller at closing. LHD is a leading provider of firefighter turnout gear, accessories, and personal protective equipment, as well as decontamination, repair and maintenance services. LHD has 111 employees worldwide and is headquartered in Wesseling, Germany, with operations in Hong Kong and Australia.
On February 5, 2024, the Company acquired Italy and Romania-based Jolly Scarpe S.p.A. and Jolly Scarpe Romania S.R.L. (collectively, “Jolly”) in an all-cash transaction. Total consideration was $9.0 million, of which $7.5 million was paid to the seller at closing, and $1.5 million remained unpaid subject to post-closing adjustments and customary holdback provisions. Jolly is a leading designer and manufacturer of professional footwear for the firefighting, military, police, and rescue markets. The company is headquartered in Montebelluna, Italy, with manufacturing operations in Bucharest, Romania, and has 150 employees. Jolly’s primary customers are based in Europe.
Our net sales attributable to customers outside the U.S. were $30.4 million and $26.1 million for the three months ended July 31, 2025 and 2024, respectively, and $56.4 million and $48.2 million for the six months ended July 31, 2025 and 2024, respectively.
Key Trends Affecting Our Operations
Trade Policies and Regulations
Recently, the executive branch of the U.S. government has pursued a policy of imposing tariffs on imports from many foreign countries, including countries where the Company has manufacturing facilities, such as China, India, and Vietnam, among others. In response, China and other countries announced retaliatory tariffs against certain U.S. imports. These tariffs have been, and may continue to be, announced, amended, paused, reinstated and rescinded with little or no advance notice. As the situation remains fluid due to the rapidly changing global trade environment, we continue to evaluate the potential implications of these actions on our business, and we are uncertain about the ultimate impact that these policies will have on our business. Thus far, however, they have increased the cost of importing certain products, which has affected our operating results and margins. Therefore, we expect that, as long as such tariffs are in effect, they will continue to affect our operating results and margins, and as a result, our historical and current gross profit margins may not be indicative of our gross profit margins for future periods.
Russia-Ukraine Conflict
We are continually monitoring the potential financial impact of the Russian invasion of Ukraine on our operations. For the first half of FY26, sales in Russia accounted for approximately 2.2% of our consolidated sales, and sales into Ukraine were not significant. We do not have any capital assets in Russia.
Results of Operations
Three Months ended July 31, 2025, Compared to the Three Months Ended July 31, 2024
Net Sales. Net sales were $52.5 million for the three months ended July 31, 2025, an increase of $14.0 million or 36.4%, compared to $38.5 million for the three months ended July 31, 2024. Sales of our Fire Service product line increased $13.6 million due to $5.1 million in sales from Veridian, and a net increase in sales of $8.5 million from LHD and Jolly acquired in FY25. Sales of our Disposable products increased $1.6 million and High Performance products sales increased by $0.8 million, offset by weakness in Wovens as sales declined $2.5 million, primarily in Latin America.
Gross Profit. Gross profit for the three months ended July 31, 2025 was $18.8 million, an increase of $3.6 million, or 23.7%, compared to $15.2 million for the three months ended July 31, 2024. Gross profit as a percentage of net sales decreased to 35.8% for the three-month period ended July 31, 2025, from 39.6% for the three months ended July 31, 2024. The gross profit percentage decreased in the second quarter of fiscal year 2026 due to increased material costs and tariffs, higher inbound freight expenses, and amortization of the step-up in the basis of acquired inventory.
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Operating Expenses. Operating expenses increased by $2.5 million, or 14.6%, from $16.8 million for the three months ended July 31, 2024 to $19.3 million for the three months ended July 31, 2025. This increase is attributable to the acquisitions of Veridian in December 2024 and LHD in July 2024, which resulted in an increase of $1.6 million in operating expenses. Equity compensation expense increased $1.0 million as a number of board members, executives and senior managers voluntarily elected to receive equity compensation in lieu of a portion of their cash compensation pursuant to a program approved by the Compensation Committee and the Board under the Lakeland Industries, Inc. 2017 Equity Incentive Plan. Depreciation and amortization expenses increased $0.4 million due to the acquisitions of LHD and Veridian. These increases were offset by reductions in acquisition, restructuring expenses and legal fees. Operating expenses as a percentage of net sales were 36.7% for the three months ended July 31, 2025, down from 43.7% for the three months ended July 31, 2024, primarily due to the factors noted above.
Lease Impairment. The Company recorded a $3.6 million impairment primarily related to the right-of-use asset for the Monterrey, Mexico facility. There were no lease impairment charges recorded for the three months ended July 31, 2024.
Operating (Loss) Income. Operating loss was $(4.0) million for the three months ended July 31, 2025, compared to an operating loss of $(1.6) million for the three months ended July 31, 2024, due to the impacts detailed above. Operating margins were (7.6%) for the three months ended July 31, 2025, as compared to (4.1%) for the three months ended July 31, 2024.
Income Tax (Benefit) Expense. Income tax (benefit) expense consists of federal, state and foreign income taxes. Income tax benefit was $5.2 million for the three months ended July 31, 2025, compared to a benefit of $0.4 million for the three months ended July 31, 2024. The Company’s effective tax rate for the second quarter of FY26 was 117.2% which differs from the U.S. federal statutory rate of 21% primarily due to the forecasted allocation of income for the current fiscal year and from the mix of jurisdictional income at differing statutory rates. The Company’s effective tax rate for the second quarter of FY25 was 23.4%, which differs from the U.S. federal statutory rate of 21% primarily due to the mix of income in various foreign tax jurisdictions, the impacts from GILTI and stock compensation vestings, offset by foreign withholding taxes accrued during the respective periods.
Net Income (Loss). Net income was $0.8 million for the three months ended July 31, 2025, compared to net loss of $(1.4) million for the three months ended July 31, 2024.
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Six Months ended July 31, 2025, Compared to the Six Months Ended July 31, 2024
Net Sales. Net sales were $99.2 million for the six months ended July 31, 2025 as compared to $74.8 million for the six months ended July 31, 2024, an increase of 32.6%. Our Fire Service product line increased by $24.1 million in the period due to the impact of the acquisitions of Veridian, LHD, Jolly and Pacific, which contributed $22.8 million in sales growth coupled with organic growth of $1.3 million. Sales of our Disposable product line increased $1.6 million, which was offset by declines in our Woven products of $2.3 million. Our remaining product lines delivered growth of $1.2 million.
Gross Profit. Gross profit was $34.5 million for the six months ended July 31, 2025, an increase of $3.1 million, or 9.9%, from $31.4 million for the six months ended July 31, 2024. Gross profit as a percentage of net sales decreased to 34.7% for the six months ended July 31, 2025, from 42.0% for the six months ended July 31, 2024 primarily due to higher manufacturing costs, increased tariff and inbound freight costs and the impact of deferred profit in ending inventory and amortization of the step-up in basis of acquired inventory.
Operating Expenses. Operating expenses increased $8.8 million, or 28.6%, to $39.6 million for the six months ended July 31, 2025 from $30.8 million for the six months ended July 31, 2024. The acquisitions of Veridian and LHD accounted for $4.4 million of the increase in operating expenses. Equity compensation expense increased $1.1 million as a number of board members, executives and senior managers voluntarily elected to receive equity compensation in lieu of a portion of their cash compensation pursuant to a program approved by the Compensation Committee and the Board under the Lakeland Industries, Inc. 2017 Equity Incentive Plan. The impact of the adjustment to the earnout consideration accrual related to the Eagle acquisition was a reduction in operating expenses of $0.7 million for the six months ended July 31, 2024. The remaining increase was related to additional selling expenses including travel and trade shows, professional fees and administrative expenses of $2.4 million. Operating expenses as a percentage of net sales were 39.9% for the six months ended July 31, 2025, down from 41.1% for the six months ended July 31, 2024.
Lease Impairment. The Company recorded a $3.6 million impairment primarily related to the right-of-use asset for the Monterrey, Mexico facility. There were no lease impairment charges recorded for the six months ended July 31, 2024.
Operating (Loss) Income. Operating loss was $(8.7) million for the six months ended July 31, 2025 compared to an operating income of $0.6 million for the six months ended July 31, 2024, due to the impacts detailed above. Operating margins were (8.8%) for the six months ended July 31, 2025, as compared to 0.8% for the six months ended July 31, 2024.
Income Tax (Benefit) Expense. Income tax expense consists of federal, state and foreign income taxes. Income tax benefit was $6.4 million for the six months ended July 31, 2025, compared to a benefit of less than $0.1 million for the six months ended July 31, 2024.
The Company’s effective rate was (67.1%) for the six months ended July 31, 2025 and (13.1%) for the six months ended July 31, 2024.
Net (Loss) Income. Net loss was $(3.1) million for the six months ended July 31, 2025 and net income was $0.3 million for the six months ended July 31, 2024.
Liquidity and Capital Resources
At July 31, 2025, cash and cash equivalents were approximately $17.7 million, and working capital was approximately $106.9 million. Cash and cash equivalents increased $0.3 million, and working capital increased $5.3 million from January 31, 2025 due to the balance sheet fluctuations described below.
Of the Company’s total cash and cash equivalents of $17.7 million as of July 31, 2025, cash held in Latin America of $1.6 million, cash held in the UK of $2.3 million, cash held in Russia and Kazakhstan of $1.6 million, cash held in the EEC of $4.5 million, cash held in India of $0.2 million, cash held in Vietnam of $0.2 million, and cash held in Hong Kong of $1.1 million would not be subject to additional U.S. tax in the event such cash was repatriated due to the change in the U.S. tax law as a result of the December 22, 2017 enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”). When the Company repatriates cash from China, of the $3.0 million balance at July 31, 2025, an additional 10% withholding tax may be incurred in that country. The Company expects to repatriate cash from China during FY 26 and in anticipation of doing so, has accrued withholding tax expense of $0.3 million as of July 31, 2025.
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Cash used in operations was $9.7 million due to a net loss of $(3.1) million, an increase in working capital of $5.3 million and non-cash credits of $1.7 million. Net cash used in investing activities was $2.1 million, primarily for capital expenditures related to ERP implementation costs and the replacement of manufacturing equipment. Net cash provided by financing activities was $10.9 million due to $13.8 million borrowed under our credit facility to fund working capital increases and the addition of a $2.1 million working capital loan for Jolly to support their operations, offset by dividends of $0.6 million, repayment of debt facilities of $4.1 million and $0.3 million in shares returned to pay income taxes on shares vested under our equity compensation program.
We believe our current cash, cash equivalents, borrowing capacity under our Loan Agreement, and the cash to be generated from expected product sales will be sufficient to meet our projected operating and investing requirements (including planned capital expenditures) for at least the next twelve months. However, our liquidity assumptions may prove to be incorrect, and we may need to utilize our available financial resources sooner than we currently expect.
On June 25, 2020, the Company entered into a Loan Agreement (the “Original Loan Agreement”) with Bank of America, N.A. (“Lender”), as amended by Amendment No. 1 to the Loan Agreement, dated June 18, 2021 (“Amendment No. 1”), Amendment No. 2 to the Loan Agreement, dated March 3, 2023 (“Amendment No. 2”), Amendment No. 3 to the Loan Agreement, dated November 30, 2023 (“Amendment No. 3”), Amendment No. 4 to the Loan Agreement, dated March 28, 2024 (“Amendment No. 4”), Amendment No. 5 to the Loan Agreement, dated December 12, 2024 (“Amendment No. 5”) and Amendment No. 6 to the Loan Agreement, dated July 7, 2025 (“Amendment No. 6” and, collectively with Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, and Amendment No. 5, the “Loan Agreement Amendments”; and the Original Loan Agreement, as amended by the Loan Agreement Amendments, the “Amended Loan Agreement”).
The Amended Loan Agreement provides the Company with a secured revolving credit facility of up to $60.0 million of borrowings from December 12, 2024 through January 31, 2026 and of up to $50.0 million of borrowings from February 1, 2026 through January 31, 2027 (in each case, such limits remain subject to a reduction to no less than $40.0 million from the net proceeds of equity issuances if the Company raises capital during such periods). The revolving credit facility includes a $10.0 million letter of credit sub-facility. On January 24, 2025, as required by the Amended Loan Agreement, the Company used certain net proceeds of its equity issuance to reduce the principal amount outstanding under the Amended Loan Agreement. As a result thereof, the maximum principal amount under the revolving credit facility was reduced to $40.0 million. The credit facility matures on December 12, 2029.
Borrowings under the revolving credit facility bear interest at a rate per annum equal to the sum of (i) the greater of the daily Secured Overnight Financing Rate (“SOFR”) or an index floor of 1% plus (ii) the Applicable Rate (as defined in the Amended Loan Agreement). The Applicable Rate is based on a funded debt-to-EBITDA ratio (discussed below) and includes four different levels, constituting a SOFR margin range of 1.25% to 2.00%. All outstanding principal and unpaid accrued interest under the revolving credit facility are due and payable on the maturity date. On a one-time basis, and subject to there not existing an event of default, the Company may elect to convert up to $5.0 million of the then outstanding principal of the revolving credit facility to a term loan facility with an assumed amortization of 15 years and the same interest rate and maturity date as the revolving credit facility. The Amended Loan Agreement provides for a fee on any difference between the line of credit commitment and the amount of credit it actually uses, determined by the daily amount of credit outstanding during the specified period. Such fee is calculated at the Applicable Rate and is payable quarterly.
The Company made certain representations and warranties to the Lender in the Amended Loan Agreement that are customary for credit arrangements of this type. The Company also agreed to maintain, as of the end of each fiscal quarter a minimum “basic fixed charge coverage ratio” (as defined in the Amended Loan Agreement) of at least 1.20x and a “funded debt to EBITDA ratio” (as defined in the Amended Loan Agreement) not to exceed 3.5x (with step-downs to 3.25x and 3.0x on February 1, 2026 and February 1, 2027, respectively), in each case for the trailing 12-month period ending with the applicable quarterly reporting period. In addition, the Company has agreed to maintain a springing “asset coverage ratio” (as defined in the Amended Loan Agreement) of at least 1.10x, provided that this ratio is only applicable to the extent that the maximum funded debt to EBITDA ratio exceeds 3.25x at any reporting period. The Company was in compliance with all of its debt covenants as of July 31, 2025.
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Stock Repurchase Program. On April 7, 2022, the Board of Directors authorized a stock repurchase program under which the Company may repurchase up to $5.0 million of its outstanding common stock, which became effective upon the completion of a prior share repurchase program. On December 1, 2022, the Board of Directors authorized an increase in the Company’s stock repurchase program, under which the Company may repurchase up to an additional $5.0 million of its outstanding common stock.
No shares were repurchased in the six months ended July 31, 2025 leaving $5.0 million remaining under the share repurchase program at July 31, 2025. The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.
Quarterly Cash Dividend. On May 1, 2025, the Board of Directors declared a quarterly cash dividend. The quarterly dividend of $0.03 per share was paid on May 22, 2025, to stockholders of record as of May 15, 2025.
Capital Expenditures. Our capital expenditures were $2.1 million for the six months ended July 31, 2025 which principally relate to capital investment in our new ERP system and some replacement equipment for our manufacturing sites. We anticipate FY26 capital expenditures to be approximately $4.0 million to replace existing equipment in the normal course of operations, expand our fire services products manufacturing capabilities and invest in our new ERP system. We expect to fund the capital expenditures from our cash flows from operations. The Company may also expend funds in connection with potential acquisitions.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our fiscal year 2025 Form 10-K. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult, or complex judgments, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2025 Form 10-K. There have been no significant changes in the application of our critical accounting policies and estimates during the six months ended July 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A smaller reporting company is not required to provide the information required by this Item, and therefore, no disclosure is required under Item 3 for the Company.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of July 31, 2025. The term “disclosure controls and procedures” means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of July 31, 2025, our disclosure controls and procedures were not effective due to the material weakness in internal control over financial reporting described below.
Notwithstanding the ineffective disclosure controls and procedures as a result of the identified material weakness described below, management has concluded that the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows in accordance with U.S. GAAP.
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Material Weakness in Internal Control over Financial Reporting
As previously disclosed in our 2025 Form 10-K, management identified certain deficiencies in the Company’s internal control over financial reporting that aggregated to a material weakness related to the completeness and accuracy of its foreign reporting packages. Specifically, the Company has undergone significant changes in size, complexity and geographic footprint primarily due to multiple acquisitions, and has numerous systems that process financially relevant data. Of these systems, Sage X3 (United States, Canada and the United Kingdom) and Kingdee (China and Hong Kong), were in the Company’s scope for testing of information technology general controls (“ITGCs”) in support of management’s assessment of internal control over financial reporting. The Company’s consolidation process is manual and based upon reporting packages submitted by the various locations. For those locations where the financially relevant systems were not in-scope and not subject to the Company’s testing of ITGCs, the financial reporting controls, as designed, do not adequately address the completeness and accuracy of the foreign reporting packages. The reporting packages form the basis of multiple controls, including a key management review control designed to detect a material misstatement in the Company’s consolidated financial statements as well as other controls. Additionally, the Company did not update the control activities documentation for numerous locations and, in some cases, did not change control processes to reflect changes in operating structure. This contributed to the material weakness disclosed in our 2025 Form 10-K in the Company’s internal controls.
Management’s Remediation Plan and Status
In response to the material weakness, management has taken, or is in the process of taking, the following actions:
| • | Implementing an enterprise resource planning (“ERP”) system, which is expected to roll out in phases over the next several years. Phase I is expected to be completed during the 2027 fiscal year; |
| • | Established a technology committee of the Board of Directors to oversee the role of technology in executing the Company’s business strategy and risks associated with technology strategies, major technology investments, operational performance and technology trends; and |
| • | Migrating substantially all of our operations to a common accounting system and utilizing a common chart of accounts and improved accounting close and revise procedures. |
While we have taken steps to remediate the identified material weakness and will continue to complete the remediation process as quickly as possible, we cannot currently estimate the time required to remediate this material weakness. The material weakness will not be considered remediated until the controls are designed, implemented, and operating for a sufficient period of time and management has concluded, through independent testing, that these controls are operating effectively. As management continues to evaluate and work to improve our disclosure controls and procedures and internal control over financial reporting, we may take additional measures to address these control deficiencies or modify certain remediation measures described above.
Changes in Internal Control Over Financial Reporting
Other than continuing to make progress on the ongoing remediation efforts described above, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended July 31, 2025 that materially affected, or are reasonably likely to affect materially, the Company’s internal control over financial reporting.
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| Period |
Total Number of Shares Purchased (1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Programs |
Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Programs (2) |
||||||||||||
| May 1 – May 31 |
— |
$ |
— |
— |
$ |
5,030,479 |
||||||||||
| June 1 – June 30 |
4,697 |
$ |
— |
— |
$ |
5,030,479 |
||||||||||
| July 1 – July 31 |
5,842 |
$ |
— |
— |
$ |
5,030,479 |
||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
10,539 |
$ |
— |
— |
$ |
5,030,479 |
||||||||||
(1) |
Includes withholding of 10,539 restricted shares to cover taxes on vested restricted shares during the second quarter of FY26. |
(2) |
Represents the amount remaining under our share repurchase program as of July 31, 2025. |
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Item 6. Exhibits
| * | Filed herewith |
| † | Management contract or compensatory plan or arrangement |
| ‡ | Furnished herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| LAKELAND INDUSTRIES, INC. (Registrant) | ||||||
| Date: September 9, 2025 | /s/ James M. Jenkins | |||||
| James M. Jenkins, Chief Executive Officer, President and Executive Chairman | ||||||
| Date: September 9, 2025 | /s/ Roger D. Shannon | |||||
| Roger D. Shannon, Chief Financial Officer and Secretary (Principal Financial Officer and Authorized Signatory) | ||||||
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