Lakeland Industries, Inc.

Good afternoon, and welcome to the Lakeland Fire and Safety Fiscal Fourth Quarter and Full Year 2026 Financial Results Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. During today's call, we may make statements relating to our goals and objectives for future operations, including our goals for revenue and cash flow from operations for fiscal year 2027, financial and business trends, business prospects, and management's expectations for future performance that constitute forelooking statements under federal securities laws. Any such forelooking statements reflect management expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our SEC filings. Our actual results, performance, or achievements may differ materially from those expressed in or implied by such forelooking statements. We undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. On this call, we will also discuss financial measures derived from our financial statements that are not determined in accordance with US GAAP, including adjusted EBITDA, adjusted EBITDA excluding FX, adjusted EBITDA margin, adjusted EBITDA excluding FX margin, organic revenue, organic gross margin, and adjusted operating expenses. A reconciliation of each of the non-GAAP measures discussed on this call to the most directly comparable GAAP measure is presented in our earnings release and or the supplemental slides filed with our earnings release. A fresh release detailing these results was issued this afternoon and is available in the Investing Relations section of our company's website, ir.lakeland.com. At this time, I would like to introduce your hosts for this call. Lakeland Fire and Safety's President, Chief Executive Officer and Executive Chairman, Jim Jenkins, Chief Financial Officer, Calvin Sweeney, Chief Commercial Officer, Global Industries, Cameron Stokes, Chief Revenue Officer, Barry Phillips, and Executive Vice President of EMEA Fire Sales, Kevin Ray. Mr. Jenkins, the floor is yours.

Thank you, Operator, and good afternoon, everyone. Thank you for joining us today to discuss the results of our fiscal 2026 fourth quarter and full year ended January 31, 2026. Fiscal 2026 was a year of meaningful top-line growth and important strategic progress for Lakeland. Calvin will walk through the financials in detail shortly, so I will provide you with a brief overview here. For the full year, net sales increased 25.4 million, or 15.2%, to 192.6 million, driven by continued strength in fire services. In the fourth quarter, net sales were 45.8 million, down 800,000, or 1.7% from the prior period. U.S. sales increased 35.1% for the full year to 81.6 million and increased 7.1% in the fourth quarter to 19.6 million. Europe also grew meaningful for the full year, increasing 12.1 million, or 28.7%, while fourth quarter year of sales were down 2.4 million, due primarily to timing on LHD and Jolly Orders. On profitability, adjusted EBITDA, excluding FX, was 7.2 million for the full year and 1.3 million in the fourth quarter. Gross margin was 32.9% for the full year and 32.2% in the fourth quarter. Those results were below our expectations, and I want to be direct about why. We grew revenue at a strong rate, but we did not convert that growth into the earnings we expected. We view this as an execution issue, not a demand issue. The underlying demand environment across our core markets remains intact. We operated in a volatile cost environment during fiscal 2026. Great inflation, raw material pressure, tariffs, and certification timing delays exposed weaknesses in our planning and pricing response that we are actively addressing. Against that backdrop, I want to note something important. The fourth quarter generated approximately $2 million of operating cash. Delivering that level of cash generation on lower revenue than the third quarter reflects improved discipline across the organization, stronger cost control, and better day-to-day execution. We are seeing early signs that the actions we have been taking are beginning to work. Subsequent to the fiscal year end, we completed the divestiture of our HPFR and high-vis product lines to national safety apparel generating approximately $14 million of cash proceeds. This transaction simplifies the business and allows management to concentrate fully on our core fire services and industrial protective product lines, where we see the greatest long-term opportunity. On the product side, we achieved a significant milestone with numerous NFPA 1970-2025 certifications across our brand portfolio, products including Lakeland Structural Turnout and Proximity Gears. Meridian Gloves and Fire Particulate Blocking Hoods, Jolly Boots and Pacific Helmets are now fully satisfied enabling customers to order from a complete head to toe NFPA certified range of products across Lakeland's brands. This certification was a meaningful commercial unlock and we look forward to showcasing our portfolio at FDIC 2026 next week. We strengthened the organization with several important appointments. Calvin Sweeney was named Chief Financial Officer in February 2026, having served as interim CFO since December 2025. And Kevin Ray was recently, just recently named Executive Vice President of EMEA Buyer Sales. You'll be hearing more from both of them shortly. We also welcome Lee Rideau to our Board of Directors in early April. Lee previously served as CEO of NASDAQ-listed Transcat, and his invaluable business and strategic M&A integration experience in the industrial markets with a strong track of execution across both organic growth and acquisition-driven strategies will be a valuable addition to our governance. During the year, we completed the acquisitions of Arizona PPE and California PPE, expanding our U.S. fire services distribution and rental capabilities with ISP locations in Arizona, California, and soon Denver. California PPE also opened a new state-of-the-art facility in Fresno, providing compliance decontamination, inspection, and repair services to California fire departments. These recurring revenue service businesses strengthen our fire platform and build long-term customer relationships. We also completed the $6.1 million sale and partial leaseback of Decatur Alabama Warehouse property, generating an approximately $4.3 million pre-tax gain and reducing our fixed cost exposure. And Lakeland was added to the Russell 3000 and Russell 2000 indices in June of last year, reflecting our growing market profile. Alongside these actions, we are working to further strengthen liquidity and flexibility through our pending ABL facility, which we expect to close soon, although there can be no assurance that the ABL facility will close on that timeline or at all. The Bank of America covenant waiver has been secured, and we anticipate to be in covenant throughout fiscal 27. Taken together, these steps reflect a company that is not standing still, but that one is actively reshaping its operating model to support improved performance. From a macro standpoint, fiscal 2026 was affected by tariff uncertainty, freight inflation, raw material cost pressure, and certification timing delays across both fire and industrial. Those factors pressured production efficiency, revenue timing, and gross margins. We also saw softer performance in select areas in the fourth quarter, but do not view the issues in front of us as demand destruction. We view them as timing, execution, and cost challenges that are addressable, and that is an important distinction. As we move into fiscal 2027, we are encouraged by the progress already underway and continue to make structural improvements that we believe will strengthen the business over the long term. We are tightening forecasting, strengthening accountability, and putting more structure around sales and production planning. As an example, inventory ended January at 82.5 million and is down meaningfully from October as we continue to better align supply with demand. We are entering fiscal 2027 with a simpler portfolio, improved internal discipline, and a pipeline that continues to build. We are now tracking modestly ahead of budget entering fiscal 2027, and our forecast is clear. Convert demand into more consistent, repeatable financial performance, improve forecasting, better align sales and operations, increase utilization, and drive stronger margins and cash flow. Based on the foundation we have built, we are comfortable providing goalposts for fiscal 2027 of high single-digit revenue growth and a clear line of sight to positive cash flow from operations. Taken together, these steps reflect a company that is not standing still, but one that is actively reshaping its operating model to support improved performance. With that, I'd like to pass the call to our Chief Commercial Officer, Cameron Stokes, to provide an update on our industrial and chemical critical environment businesses.

Thank you, Jim. Turning to industrial and chemical critical environment, for the fourth quarter, chemical revenue increased $0.3 million to $5 million, demonstrating continued strength in that product line. Disposables revenue decreased 0.9 million, and wovens revenue decreased 1 million in Q4, reflecting the macro headwinds Jim referenced, particularly softer performance in the North American industrial markets late in the quarter. For the full year, these three product lines combined represented approximately 49% of total revenue, with disposables at 27%, chemical at 11, and wovens performing at 11%. On the strategic side, the divestiture of our high-performance FR and high-vis product lines meaningfully simplifies the industrial portfolio. These lines required significant management attention and resources that we are now redirecting towards higher margin, faster-growing opportunities within chemical critical environment and core industrial protective apparel. The decision to divest was the right one, and it sharpens our focus on the product lines where we have a competitive differentiation and credible path to improving profitability. Within the business, we are seeing differentiated performance across our product line so far in fiscal 2027. Chemical critical environment is outperforming, driven by continued demand from industrial and pharmaceutical end-users while wovens are tracking to plan with good visibility into the pipeline. Disposables face the most pressure during the year, driven by tariff-related cost increases and softness in select North American markets, and we have defined specific recovery initiatives underway at the account level to address that gap. From a competitive standpoint, we are not seeing broad-based shifts across the market. The movement we are seeing remains limited and localized, and competitors have generally not responded with meaningful price action to date. At the same time, fuel and logistics instability has become a more relevant variable across the market than tariff uncertainty. That backdrop reinforces our focus on tighter channel discipline, better market segmentation, and more targeted execution by product line and end market. Our strategy for growing these lines is straightforward. continue to develop products and expand the range of certified high performance offerings, discipline strategic pricing to protect and improve margins as cost pressures ease, reach a broader set of end users and reduce distributor concentration while optimizing operations to drive better utilization at our manufacturing facilities. I'd like to note that the industrial segment tends to see its highest seasonal activity in the spring when scheduled maintenance shutdowns at nuclear, coal, oil, and gas and chemical facilities drive meaningful order activity. We are entering that period now, and our teams are positioned to execute on the incoming demand. Looking ahead into fiscal 2027, our industrial priorities are clear. We are tightening demand forecasting and improving the alignment between sales commitments and production planning. We are also actively pursuing pricing actions where cost increases warrant them. We are working to improve manufacturing utilization at our Mexico and Vietnam facilities as we consolidate our footprint and transition production from India into those sites. The tariff environment remains a factor, but we are working through mitigation strategies and believe we can manage the impact without structural disruption at our cost base or to our cost Overall, the industrial and chemical business is stable, and we are focusing on converting that stability into consistent, improving profitability throughout fiscal 2027. I will now hand the call over to Chief Revenue Officer Barry Phillips to provide an update on our fire services business.