Lakeland(LAKE) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended April 30, 2025, were $46.7 million, an increase of$10.4 million or 28.7% compared to $36.3 million for the same period in 2024[116] - Gross profit for the three months ended April 30, 2025, was$15.6 million, a decrease of $0.6 million or 3.7$16.2 million in the same period in 2024, with gross profit margin dropping to 33.5% from 44.6%[117] - The company reported an operating loss of $4.6 million for the three months ended April 30, 2025, compared to an operating profit of$2.2 million for the same period in 2024[119] - Net loss for the three months ended April 30, 2025, was ($3.9) million, down from net income of$1.7 million for the same period in 2024[121] Sales and Acquisitions - Sales from the Fire Services product line increased by $10.5 million, driven by$9.8 million in sales from the acquisitions of Veridian and LHD[116] - The company acquired Veridian for approximately $26.1 million and LHD for$14.8 million, enhancing its product offerings in firefighter protective apparel[111][112] Operating Expenses - Operating expenses increased by $6.3 million or 45.0$14.0 million in Q1 FY24 to $20.3 million in Q1 FY25, primarily due to acquisitions and transaction-related expenses[118] - Cash used in operations was$4.9 million due to the net loss and an increase in working capital[124] Cash and Liquidity - Cash and cash equivalents as of April 30, 2025, were approximately $18.6 million, with working capital at approximately$104.4 million[122] - The company expects to repatriate cash from China during FY26, with an accrued withholding tax expense of $0.3 million[123] Debt and Credit Facilities - The Company has a secured revolving credit facility of up to$60.0 million from December 12, 2024, through January 31, 2026, and up to $50.0 million from February 1, 2026, through January 31, 2027[128] - The maximum principal amount under the revolving credit facility was reduced to$40 million following the use of net proceeds from equity issuance[128] - The Company must maintain a minimum basic fixed charge coverage ratio of at least 1.20x and a funded debt to EBITDA ratio not exceeding 3.5x, with step-downs to 3.25x and 3.0x in 2026 and 2027, respectively[130] - The Amended Loan Agreement includes a fee based on the difference between the line of credit commitment and the actual amount used, calculated at the Applicable Rate[129] Shareholder Returns - The Company authorized a stock repurchase program allowing for the repurchase of up to $10.0 million of its outstanding common stock[131] - No shares were repurchased in the three months ended April 30, 2025, leaving$5.0 million remaining under the share repurchase program[132] - A quarterly cash dividend of $0.03 per share was declared on February 1, 2025, and paid on February 24, 2025[132] Capital Expenditures - Capital expenditures for the three months ended April 30, 2025, were$1.2 million, primarily for a new ERP system and replacement equipment[133] - Anticipated capital expenditures for FY26 are approximately $3.0 million for equipment replacement and expansion of manufacturing capabilities[133] Compliance - The Company was in compliance with all debt covenants as of April 30, 2025[130]