Q1 2025 Lakeland Industries Inc Earnings Call
Operator: Good day, and welcome to the Lakeland Industries Fiscal 2025 First Quarter Financial Results Conference Call. All lines have been placed in a listen-only mode, and the floor will be open for your questions and comments following the presentation.
Good day and welcome to the Lakeland Industries fiscal 2025 first quarter financial results Conference call.
All lines have been placed on a listen only mode and the floor will be opened for your questions and comments following the presentation.
Operator: During today's call, we may make statements relating to our goals and objectives for future operations, financial and business trends, business prospects, and management's expectations for future performance that constitute forward-looking statements under federal securities laws. Any such forward-looking 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 forward-looking statements.
Speaker Change: During today's call, we may make statements relating to our goals and objectives for future operations financial and business trends business prospects and management's expectations for future performance that constitute forward looking statements under federal Securities laws.
Operator: 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 U.S. GAAP, including adjusted EBITDA and adjusted EBITDA margin. A reconciliation of each of the non-GAAP measures discussed in this call to the most directly comparable GAAP measure is presented in our earnings release. At this time, I would like to introduce you to your host for this call, Lakeland Industries President and Chief Executive Officer Jim Jenkins. Mr. Jenkins, the floor is yours.
Speaker Change: Any such forward looking 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 S. E C filings.
Speaker Change: Our actual results performance or achievements may differ materially from those expressed in or implied by such forward looking statements.
Speaker Change: We undertake no obligation to update or revise any forward looking statements to reflect events or developments. After the date of this call.
Speaker Change: On this call. We will also discuss financial measures derived from our financial statements that are not determined in accordance with U S GAAP, including adjusted EBITDA and adjusted EBITDA margin.
Speaker Change: A reconciliation of each of the non-GAAP measures discussed in this call to the most directly comparable GAAP measure is presented in our earnings release.
Speaker Change: At this time I would like to introduce you to your host for this call Lakeland Industries', President and Chief Executive Officer, Jim Jenkins, Mr. Jenkins the floor is yours.
James M. Jenkins: Thank you operator, good morning, and thank you all for joining us for our first quarter fiscal 2025 earnings call.
James M. Jenkins: Thank you, operator. Good morning, and thank you all for joining us for our first quarter fiscal 2025 earnings call. First, I'd like to start by expressing my appreciation to Lakeland's Board of Directors for the trust and confidence they have shown by appointing me to be Lakeland's President and CEO. I'm honored to lead Lakeland Industries and our nearly 2,000 employees worldwide, whose mission every day is to protect the world's workers, first responders, and communities by providing quality, protective solutions for the most critical situations.
James M. Jenkins: First I'd like to start by expressing my appreciation to Lakeland Board of directors for the trust and confidence they have shown by appointing me to be <unk>, President and CEO.
James M. Jenkins: I'm honored to lead Lakeland industries in our nearly 2000 employees worldwide, whose.
This mission every day is to protect the world's workers first responders and communities by providing quality protective solutions for the most critical situations.
James M. Jenkins: Lakeland has an exciting runway for growth and is primed to drive revenue and profit growth in key markets. This executive team and I will leverage Lakeland's strong competitive advantage in our high-value markets to deliver improved results and sustainable growth for our shareholders. I also want to thank our customers and distributor partners around the world for trusting us with your lives and safety. Our customers are heroes, and we never take that trust for granted.
Michael we have an exciting runway for growth is trying to drive revenue and profit growth in key markets.
James M. Jenkins: <unk> team and I will leverage <unk> strong competitive advantages with our high value markets to deliver improved results and sustainable growth for our shareholders.
James M. Jenkins: I also want to thank our customers and distributor partners around the world for trusting us with your lives in safety.
James M. Jenkins: Our customers are heroes, and we never take that trust for granted.
James M. Jenkins: Finally, I want to thank our Lakeland team members across the company for their continued commitment and enthusiasm as we further delivered on our strategic initiatives this quarter. During the first quarter, this dedicated team continued to execute our previously communicated growth strategies, and I appreciate all their hard work. We will talk more about those results and initiatives during this call.
James M. Jenkins: Finally, I want to thank our <unk> team members across the company for their continued commitment and enthusiasm as we further delivered on our strategic initiatives this quarter during.
During the first quarter. This dedicated team has continued to execute our previously communicated growth strategies and I appreciate all their hard work.
Speaker Change: We will talk more about those results and initiatives during this call.
James M. Jenkins: During our first quarter of fiscal 2025, our team continued executing our strategic plan of creating a high-performance culture driven by our corporate values, and we believe we are making excellent progress, as highlighted by our strong results, which I will discuss shortly. We are investing in high-growth geographies and product segments, including building a premier global fire brand through product, marketing, and sales enhancements. We are also working to drive profitable growth in our industrial product lines through product development, strategic pricing, channel diversification, and operations optimization.
Speaker Change: During our first quarter of fiscal 2025, our team continued executing our strategic plan of creating a high performance culture, driven by our corporate values.
Speaker Change: Believe we are making excellent progress as highlighted by our strong results, which I will discuss shortly.
Speaker Change: We are investing in high growth geographies and product segments, including building a premier global firebrand through product marketing and sales enhancements we.
Speaker Change: We are also working to drive profitable growth in our industrial product lines through product development.
Speaker Change: You took pricing channel diversification and operations optimization.
James M. Jenkins: Finally, as we will discuss more, we continue to look for and acquire companies that improve Lakeland's competitive advantage in focused markets. As previously announced, we closed on the Jolly Boots acquisition in early February and immediately began integrating their outstanding products into our global sales plan. Jolly manufactures and sells a premium boot product line with a global reputation for safety, design, and innovation, and we are excited to add their products to the Lakeland family of safety.
Speaker Change: Finally, as we will discuss more we continue to look for and acquire companies that improved Lakeland its competitive advantage in focused markets.
Speaker Change: As previously announced we closed on exactly boots acquisition in early February and immediately began integrating their outstanding products into our global sales platform.
<unk> manufactures and sells a premium boots product lines with a global reputation for safety design and innovation and we're excited to add their products to the Lakeland family of safety brands.
James M. Jenkins: We are pleased to announce that we are currently developing NFPA-certified Jolly Fire foods for the North American market, which we expect to roll out later this year, along with our Pacific Helmets acquisition in November of last year. The Jolly Fire acquisition completes Lakeland's head-to-toe FHIR product offering and strengthens our geographic diversity, and presents exciting cross-selling opportunities with global certifications across Lakeland's existing sales and In early April, we announced the signing of an agreement to acquire the LHD Group of Germany's fire service, along with the United States, Germany, and Australia.
We are pleased to announce that we are currently developing NFPA certified jelly fire boots.
Speaker Change: For the North American market, which we expect to rollout later this year along with our Pacific helmets acquisition in November of last year.
Speaker Change: Julie acquisition completes Lakeland head to toe fire product offering.
Speaker Change: Strengthens our geographic diversity and presents exciting cross selling opportunities with global certifications across lake on existing sales and distribution channels.
Speaker Change: In early April we announced the signing of an agreement to acquire LHC group of Germany's fire service business.
Speaker Change: Along with the United States, Germany, and Australia.
James M. Jenkins: Our top three global fire markets and LSD's fire and rescue offerings bring Lakeland a premium product portfolio with strong footprints in Germany, Australia, and Hong Kong. LHD's fire turnout gear also complements and aligns very well with our new Pacific and Jolly offerings and our Eagle technical products.
Speaker Change: Our top three global fire markets, and <unk> fire and rescue offerings bring Lakeland premium product portfolio with strong footprint in Germany, Australia and Hong Kong.
Speaker Change: LH DS fire turnout gear also complements and aligns very well with our new Pacific <unk> offerings, and our Eagle technical products.
James M. Jenkins: Additionally, the LHC CARES service offerings provide us with attractive recurring revenue streams and gross margins that Lakeland will work to leverage and expand. We are making very good progress on clearing all the closing conditions for the LHD acquisition and expect to close this soon. As we have previously discussed, these acquisitions reflect our commitment to executing and accelerating the pace of our small, strategic, and quick SSQ M&A strategy. We still have a very attractive SSQ acquisition pipeline, and we will continue to search for opportunities that further position Lakeland to execute our growth strategies and invest strategically to broaden and diversify Lakeland's range of products and markets. I trust everyone has had the opportunity to review the press release and Q1 earnings deck we published last evening. I encourage you to follow along in the earnings presentation as Roger and I review our results.
Speaker Change: Additionally, the LHC care service offerings provide us with attractive recurring revenue streams and gross margins that Lakeland will work to leverage and expand.
Speaker Change: We are making very good progress on clearing all the closing conditions for the <unk> acquisition and expect to close this month.
Speaker Change: As we have previously discussed these acquisitions reflect our commitment to executing and accelerating the pace of our small strategic and quick access to M&A strategy.
Speaker Change: They'll have a very attractive <unk> acquisitions pipeline.
We will continue to search for opportunities that further position Lakeland to execute our growth strategies and invest strategically to broaden and diversify lincolns range of products and end markets.
Speaker Change: I Trust, everyone has had the opportunity to review the press release and Q1 earnings deck, we published last evening.
Speaker Change: Courage you to follow along in the earnings presentation, as Roger and I review our results.
James M. Jenkins: As we stated in our earnings press release, we are very pleased with the start of our fiscal 25 fiscal year. Looking at our first quarter results, our net sales for the first quarter of fiscal 2025 increased by 27% to $36.3 million, compared to $28.7 million in the previous year. We were very encouraged by the growth in our North American and Latin American operations this fiscal year, as these important geographies grew 18 and 54% year-over-year, respectively.
Speaker Change: As we stated in our earnings press release, we are very pleased with the start of our fiscal year 'twenty five fiscal year.
Speaker Change: Looking at our first quarter results, our net sales for the first quarter of fiscal 2025.
Speaker Change: Increased by 27% to $36 3 million compared to $28 7 million in the previous years.
Speaker Change: We were very encouraged by the growth in our North American and Latin American operations. This fiscal year as these important geographies grew 18 and 54% year over year, respectively.
James M. Jenkins: While our Asian business remained soft in the first quarter, we continue to see healthy demand for our high-value Fire, Critical Environment, Disposables, and Chemical Product Categories in North and South America, led by strong sales efforts and our container program, programs with key national customers. Our fire services business continues to deepen and broaden, having grown over 92% versus last year's fiscal first quarter, driven by our strategic acquisition. Superior lead times from our manufacturing pipeline and onboarding successes with new distributors.
Speaker Change: Our Asian business remained soft in the first quarter, we continued to see healthy demand for our high value <unk>.
Speaker Change: Your critical environment, disposables, and chemical product categories in North and South America led by strong sales efforts and our container program.
Speaker Change: Programs with key national customers.
Speaker Change: Our fire service services business continues to deepen and broaden having grown over 92% versus last year's fiscal first quarter.
Speaker Change: Driven by our strategic acquisitions.
Speaker Change: Superior lead times from our manufacturing pipeline and Onboarding successes with new distributors.
James M. Jenkins: Our newly acquired companies, Pacific Helmets and Jolly Boots, represented 3.9 million, or 11% of our total Q1 FY25 sales. Over the coming months, we will continue to integrate Pacific's and Jolly's outstanding fire safety products into Lakeland's global sales channels and marketing platforms as we work to proactively leverage synergies across our global portfolio through market expansion and cross-selling opportunities. During the quarter, we had a very successful showing at the FDIC International Conference, the largest trade show for the fire and rescue industry in North America, where we were able to demonstrate to customers our new Pacific Helmets and Jolly Boots offer, along with our outstanding Lakeland and Beagle fire turnout. We also unveiled a new NFPA certified fire glove that is a major step forward in firefighter safety due to its power luminescent trim that will illuminate dark and smoky areas.
Speaker Change: Our newly acquired companies specific helmets and jelly boots represented $3 9 million or 11% of our total Q1, FY 'twenty five sales.
Speaker Change: Over the coming months, we will continue to integrate specifics and Julie's outstanding fire safety products in the Lakeland global sales channels and marketing platforms as we work to proactively leverage synergies across our global portfolio to.
Speaker Change: Through market expansion and cross selling opportunities.
Speaker Change: During the quarter, we had a very successful showing at the FDIC International conference the largest trade show for the fire and rescue industry in North America, where we were able to demonstrate to customers, our new Pacific helmets and jelly boots offerings.
Speaker Change: Along with our outstanding Lakeland and Eagle fire turnout gear.
Speaker Change: We also unveiled a new NFPA certified fired well that is a major step forward in firefighter safety due to its power luminescent trim.
Speaker Change: Illuminate dark and smoky areas.
James M. Jenkins: In terms of profitability, our first quarter gross margins came in at 44.6 percent, an increase of 1.2 percentage points over the same period last year. Our adjusted EBITDA for the first quarter of fiscal year 2025 was $3.9 million, an increase of $1.1 million, or 40%, compared with $2.8 million for the first quarter of fiscal 2024. Roger will discuss these in more detail later. Our gross margins and adjusted EBITDA for the quarter benefited from the improving product and geographical mix of our higher-value strategic product.
Speaker Change: In terms of profitability, our first quarter gross margins came in at 44, 6% an increase of one two percentage points over the same period last year.
Speaker Change: Our adjusted EBITDA for the first quarter of fiscal year, 2025 was $3 9 million, an increase of $1 1 million or 40% compared with $2 8 million for the first quarter of fiscal 2024.
Speaker Change: Roger will discuss these in more detail later, our gross margins and adjusted EBITDA for the quarter benefited from the improving product and geographical mix of our highest are higher value strategic products.
James M. Jenkins: From an earnings perspective, our first quarter fiscal 2025 net income was $1.7 million, an increase of 25%, resulting in net income per diluted share of $0.22 compared to $0.18 in the prior year. After quarter end, Lakeland announced a strategic partnership with LineDrive, a leading outsourced sales and marketing company for industrial maintenance, repair, and operation. We believe this exciting partnership will significantly expand Lakeland's products to large industrial distributors and customers in North America.
From an earnings perspective, our first quarter fiscal 2025, net income was $1 7 million an increase of 25%, resulting in net income per diluted share a 22 cents compared to 18 cents in the prior year.
Lakeland: After quarter end Lakeland announced its strategic partnership with line drive a leading outsource sales and marketing company for industrial maintenance repair and operations. We believe this exciting partnership will significantly expand lakeland products to large industrial distributors and customers in North America.
James M. Jenkins: Given the strong start to the year, we are pleased to raise our full year fiscal 2025 revenue and adjusted EBITDA guidance, which Roger will also discuss in more detail. Additionally, we expect to make further announcements within the next few weeks regarding our closing of the LHD acquisition and revise our guidance again at that time to reflect the impact of LHD on our fiscal year results. To summarize, our commitment remains unwavering, and I'm excited to see where this coming year takes us. From here, I'd like to pass it over to Roger and have him cover more of the financial results for you and provide an outlook for the coming year.
Lakeland: Given the strong start to the year. We are pleased pleased to raise our full year fiscal 2025 revenue.
Speaker Change: And adjusted EBIT guidance, which Roger will also discuss in more detail.
Roger: We expect to make further announcements within the next few weeks regarding our closing of the <unk> acquisition and revise our guidance again at that time to reflect the impact of <unk> on our fiscal year results.
Roger: Summarize our commitment remains unwavering.
Roger: Excited to see where this coming year takes us from.
From here I'd like to pass it over to Roger cover Havent cover more of the financial results for you will provide an outlook for the coming year.
Roger D. Shannon: Thanks, Jim, and hello, everyone. As noted in our earnings press release yesterday afternoon, we delivered strong year-over-year sales and profitability growth. Looking at our first fiscal quarter of 2025, Lakeland delivered sales of $36.3 million compared to $28.7 million for the first quarter of last year. Our organic revenue, excluding our Pacific Helmets and Jolly Boots acquisitions, grew by $3.7 million, or 13% year-over-year, driven by increases in our fire, chemical, wovens, and disposable products.
James M. Jenkins: Thanks, Jim and Hello, everyone.
Roger: As noted in our earnings press release yesterday afternoon, we delivered strong year over year sales and profitability growth.
Roger D. Shannon: On a trailing 12-month basis, Lakeland's TTM revenue as of Q1 fiscal 2025 was $132.3 million. This is an increase of $18 million, or 16%, versus the Q1 fiscal 2024 TTM revenue total of $114.3 million. We also saw double-digit year-over-year organic growth across North and South America, including 16 percent year-over-year growth in the U.S., 18 percent growth across North America, and 54 percent in Latin America.
Roger: Looking at our first fiscal quarter of 2025, Lakeland delivered sales of $36 3 million compared to $28 7 million.
Roger: In the first quarter of last year.
Our organic revenue, excluding our Pacific helmets, and Jolly boots acquisitions grew by $3 7 million or 13% year over year, driven by increases in our fire chemical woven and disposable products.
Roger: On a trailing 12 month basis liquids TTM revenue as of Q1 fiscal 2025 is a $132 $3 million.
Roger: This is an increase of $18 million or 16% versus the Q1 fiscal 2020 for TTM revenue total of $114.3 million.
Roger: We also saw double digit year over year organic growth across north and South America, including a 16% year over year growth in the U S, 80% growth across North America, and 54% in Latin America.
Roger D. Shannon: Our strong sales growth in North America and Latin America during the first quarter of fiscal 2025 was partially offset by slightly lower sales in Asia and Europe, despite some preliminary signs of growth from China. Lakeland's domestic sales were $14.3 million, or 39% of total revenue, and international sales were $22 million, or 61% of total revenue. This compares with domestic sales of $12.3 million, or 43% of the total, and international sales of $16.4 million, or 57% of the total, in the first quarter of fiscal 2024.
Roger: Our strong sales growth in North America, and Latin America. During the first quarter of fiscal 2025 was partially offset by slightly lower sales.
Roger: Asia and Europe, despite some preliminary signs of growth from China.
Roger: Liquids domestic sales were $14 3 million or 39% of total revenues and international sales were $22 million or 61% of total revenues.
Roger: This compares with domestic sales of $12 3 million or 43% of the total and international sales of $16 4 million or 57% of the total in the first quarter of fiscal 2024.
Roger D. Shannon: In terms of product mix for the first quarter, as Jim mentioned earlier, our fire services business, a key strategic growth focus for the company, grew $5 million, or 92% versus the same period last year, driven by $3.8 million in sales from our Jolly and Pacific acquisitions and organic growth of $1.2 million as a result of our superior lead times and onboarding successes with new distributors. Our disposables category continued to decrease as a percentage of Lakeland sales as a result of the growth in our fire services and chemicals categories and the continued weakness in the disposables product line in Asia.
Speaker Change: In terms of product mix for the first quarter as Jim mentioned earlier, our fire services business, a key strategic growth focus for the company grew $5 million or 92% versus the same period last year.
Speaker Change: Driven by $3 $8 million in sales from our geology and Pacific acquisitions, and organic growth of $1 $2 million as a result of our superior lead times and Onboarding successes with new distributors.
Speaker Change: Our disposables category continued to decrease as a percentage of Lakeland sales as a result of the growth in our fire services and chemicals categories and the continued weakness in the disposables product line in Asia.
Roger D. Shannon: It now represents 36% of total revenues compared to 43% in the year-ago period. However, despite continued weakness in Asia, disposable sales increased by $800,000, or 6%, versus the first quarter of last year. As Jim mentioned, we do see excellent opportunities to grow both our disposables and woven product categories, due in part to our new line drive relationship and accelerating market share growth in Latin America. We continue to have success with our North American Direct Container Program, and our oil and gas turnaround business remains strong. Additionally, we are very optimistic about our critical environment opportunities as our excellent sales team continues to identify and close new opportunities.
Speaker Change: It now represents 36% of the total revenues compared to 43% in the year ago period.
Speaker Change: However, despite continued weakness in Asia disposable sales increased by $800000 or 6% versus the first quarter of last year.
Speaker Change: As Jim mentioned, we do see excellent opportunities to grow both our disposables and woven product categories. Due in part to our new line drive relationship and accelerating market share growth in Latin America.
Speaker Change: We continue to have success with our North American direct container program, and our oil and gas turnaround business remains strong.
Speaker Change: Additionally, we are very optimistic about our critical environment opportunities is our excellent sales team continues to identify and close new opportunities.
Roger D. Shannon: Reported gross profit was $16.2 million for the first quarter of fiscal 2025, an increase of $3.8 million or 30% compared to $12.4 million in the first quarter of fiscal year 2024. Reported gross profit as a percentage of net sales was 44.6% for the first quarter of fiscal 2025, as compared to 43.4% for the first quarter of fiscal 2024. Versus the previous year, our gross profit margin was helped by a 4.1% improvement in sales mix from higher-value products and a 1.7% improvement in operating costs, offset by a 4.6 percent decrease resulting from the absence of non-recurring upsides in the first quarter of fiscal year 2024, as we show on slide 7.
Speaker Change: Reported gross profit was $16 2 million for the first quarter of fiscal 2025.
Speaker Change: The increase of $3 8 million or 30% compared to $12 $4 million in the first quarter of fiscal year 2024.
Speaker Change: Our reported gross profit as a percentage of net sales was 44, 6% for the first quarter of fiscal 2025.
Speaker Change: As compared to 43, 4% for the first quarter of fiscal 2024.
Versus the previous year, our gross profit margin was helped by a $4 one.
Speaker Change: Percent improvement in sales mix from higher value products and a one 7% improvement in operations costs are.
Speaker Change: Offset by a four 6% decrease resulting from the absence of nonrecurring upsides in the first quarter of fiscal year 2024, as we show on slide seven.
Roger D. Shannon: Lakeland reported an operating profit of $2.2 million for the first quarter of fiscal 2025 compared to an operating profit of $1.9 million for the first quarter of fiscal year 2024. The main drivers for the difference between the two periods were higher sales and gross margin in the current quarter, slightly offset by a $3.5 million negative impact from higher SG&A costs. While our operating expenses increased to nearly $14 million for the quarter, $1.2 million of the increase was due to acquisition, non-cash, and non-recurring expenses, and acquisition and sales-related growth expenses accounted for $1.9 million.
Speaker Change: Lakeland reported an operating profit of $2 $2 million for the first quarter of fiscal 2025 compared to an operating profit of $1 9 million for the first quarter fiscal year 2024.
Speaker Change: The main drivers for the difference between the two periods were higher sales and gross margin in the current quarter slightly offset by a $3 $5 million negative impact from higher SG&A costs.
Speaker Change: While our operating expenses increased to nearly $14 million for the quarter $1 $2 million of the increase was due to acquisition noncash and nonrecurring expenses.
Speaker Change: And acquired and sales related growth expenses accounted for $1 $9 million of the increase.
Roger D. Shannon: Operating margins were 6.1% for the first quarter of fiscal 2025 compared to 6.8% for the first quarter of fiscal year 2024 for the reasons discussed above. Tax expense for the quarter was $388,000 for an effective tax rate of 19% per Q1. Discreet items related to the settlement of the Pacific and Eagle Acquisitions positively impacted tax expense in the court.
Speaker Change: Operating margins were six 1% for the first quarter of fiscal 2020 compared to six 8% for the first quarter of fiscal year 2024 for the reasons discussed above.
Tax expense for the quarter was $388000 for an effective tax rate of 19% for Q1.
Speaker Change: Discrete items related to the settlement of the Pacific and Eagle acquisitions positively impacted tax expense in the quarter.
Roger D. Shannon: We currently estimate an annual tax rate of 25% for the current full fiscal year. Lakeland reported net income of $1.7 million, or $0.22 per basic and diluted share, compared to net income of $1.3 million, or $0.18 per basic and diluted share last year. Adjusted EBITDA for the first quarter of fiscal 2025 was $3.9 million, or a margin of 10.6%, compared to $2.8 million, or a margin of 9.6%, for the first quarter of fiscal 2024.
Speaker Change: We currently estimate an annual tax rate of 25% for the current full fiscal year.
Speaker Change: Liquid reported net income of $1 7 million or 22 cents per basic and diluted share.
Speaker Change: <unk> to net income of $1 $3 million or <unk> 18 per basic and diluted share last year.
Speaker Change: Adjusted EBITDA for the first quarter of fiscal 2025, or $3 $9 million or a margin of 10, 6% compared to $2 $8 million or a margin of nine 6% for the first quarter of fiscal 2024.
Roger D. Shannon: As shown on slide 7, our adjusted EBITDA for the quarter versus Q1 of fiscal 2024 benefited from improvements in our higher-value product sales mix and operational improvements, partially offset by a $1.6 million decrease resulting from the absence of the previously mentioned nonrecurring upsides in the first quarter of fiscal year 2024, along with higher selling expenses related to sales growth and acquired entity op-eds, and higher general administrative expenses, mainly professional. On a trailing 12-month basis, Lakeland's TTM adjusted EBITDA, excluding the impacts of FX as of Q1 FY2025, is $16.5 million. This is an increase of $5.3 million, or 47%, versus the Q1 fiscal 2024 trailing 12-month adjusted EBITDA excluding FX total of $11.2 million. Now, turning to the ballot.
Speaker Change: As shown on slide seven our adjusted EBITDA for the quarter versus Q1 of fiscal 2024.
Fitted from improvements in our higher value product sales mix and operational improvements.
Speaker Change: Partially offset by a $1 $6 million decrease resulting from the absence of the previously mentioned nonrecurring upsides in the first quarter of fiscal year 2024.
Speaker Change: Along with higher selling expenses related to sales growth and acquired entity Opex.
Speaker Change: And higher general and administrative expenses, mainly professional fees.
Speaker Change: On a trailing 12 month basis <unk> TTM adjusted EBITDA, excluding the impacts of FX as of Q1 fiscal 2025 is $16 $5 million.
Speaker Change: This is an increase of $5 3 million or <unk>, 47% versus the Q1 fiscal 2024 trailing 12 month adjusted EBITDA, excluding FX total of $11 $2 million.
Speaker Change: Now turning to the balance sheet.
Roger D. Shannon: Lakeland ended the quarter with cash and cash equivalents of approximately $28.4 million compared to our prior year-end cash balance of $25.2 million. Our continued focus on inventory reduction and generating cash flow resulted in an $8.6 million reduction, excluding the effects of acquisition, in our inventory year over year, mainly driven by a 21% decrease in finished goods. Though Q1 tends to be a higher cash usage quarter, our laser focus on cash further strengthens the company's financial position.
Speaker Change: Lakeland ended the quarter with cash and cash equivalents of approximately $28 $4 million compared to our prior year ending cash balance of $25 2 million.
Our continued focus on inventory reduction and generating cash flow resulted in an $8 $6 million reduction excluding the effects of acquisition.
Speaker Change: And our inventory year over year, mainly driven by a 21% decrease in finished goods inventory.
Speaker Change: So Q1 tends to be a higher cash usage quarter, our alerts our laser focus on cash further strengthens the company's financial position, particularly our robust balance sheet and cash position, which we believe allow us to continue pursuing organic and inorganic growth opportunities.
Roger D. Shannon: Particularly our robust balance sheet and cash position, which we believe will allow us to continue pursuing organic and inorganic growth opportunities. As of April 30, 2024, the company had long-term debt outstanding at $13 million. As we mentioned in our press release in early February, we drew down a portion of our revolving line of credit in conjunction with the closing of our acquisition of Jolly Boots. We expect to make some repayments of debt in the second quarter but also to draw down on our revolving credit agreement for the purchase of LHD.
Speaker Change: As of April 32024, the company had long term debt outstanding of $13 million.
Speaker Change: As we mentioned in our press release in early February we drew down a portion of our revolving line of credit in conjunction with the closing of our acquisition of Anjali boots.
Speaker Change: We expect to make some repayments of debt in the second quarter, but also to draw down on our revolving credit agreement for the purchase of El HD.
Roger D. Shannon: In addition, on March 28, 2024, we completed an amendment to our existing revolver to extend the facility for five years and to expand our line of credit availability up to $40 million with an additional $10 million, an accordion feature up from $25 million previously, along with improved terms. Capital expenditures for the three months ended April 30, 2024 were $500,000. We still expect FY25 capital expenditures to be approximately $3 million as we develop additional in-house fire services manufacturing capacity and replace existing equipment in the normal course of operation. Monterey Expansion, which we discussed last quarter, remains on pause as we continue to assess weather-related damage to our leased buildings.
Speaker Change: In addition on March 28, 2024, we completed an amendment to our existing revolver to extend the facility for five years and to expand our line of credit availability up to $40 million with an additional $10 million.
Speaker Change: Accordion feature up from $25 million previously along with improved terms.
Speaker Change: Capital expenditures for the three months ended April 32024 or $500000 we.
Speaker Change: We still expect FY 'twenty five capital expenditures to be approximately $3 million as we develop additional in house fire services manufacturing capacity and replace existing equipment in the normal course of operations.
Speaker Change: Monterrey expansion, which we discussed last quarter remains on pause as we continue to assess weather related damage to our leased building.
Roger D. Shannon: Now looking ahead to the rest of fiscal 2025. Based on our strong start to the first quarter of fiscal 2025, our existing backlog, and our outlook for the remainder of the year, we are revising upward our forward-looking guidance for our 2025 fiscal year. Please note that these expectations include the recently announced Jolly Boots and Pacific Helmets acquisition but do not include the LHD fire services business, which we expect to close this month.
Speaker Change: Now looking ahead to the rest of fiscal 2025.
Speaker Change: Based on our strong start to the first quarter of fiscal 2025, our existing backlog and our outlook for the remainder of the year. We are revising upward our forward looking guidance for 2025 fiscal year.
Speaker Change: Please note that these expectations include the recently announced Jolly boots and Pacific elements acquisitions, but do not include the LHC by our services business, which we expect to close this month.
Roger D. Shannon: We are becoming more confident in our global sales platforms and earning ability, and we now see fiscal year 2025 revenue in the range of $150 million to $155 million. Additionally, we expect FY25 adjusted EBITDA, excluding FX, to be in the range of $17 million to $20 million. We expect to update these expectations once we close the LHC transaction and are in fiscal 2025 progress. With that overview, I would now like to turn the call back over to Jim before we begin taking questions.
Speaker Change: We are becoming more confident in our global sales platforms, and our earning ability and we now see fiscal year 2025 revenue in the range of 150 million to $155 million.
Speaker Change: Additionally, we expect FY 'twenty five adjusted EBITDA, excluding FX to be in the range of $17 million to $20 million.
Speaker Change: We expect to update these expectations once we close the LHC transaction and as fiscal 2020 progresses.
Speaker Change: With that overview I would now like to turn the call back over to Jim before we begin taking questions.
James M. Jenkins: Thanks Roger.
James M. Jenkins: As I alluded to earlier, Lakeland is well positioned for profitable growth, and we believe our value proposition has never been stronger. Of course, driving execution will be the key. Strong organic growth remains at the heart of our strategy. Consistent with our revised guidance, we expect organic growth to be in the high single-digit range for the balance of fiscal 2025.
James M. Jenkins: As I alluded to earlier Lakeland is well positioned for profitable growth and we believe our value proposition has never been stronger.
James M. Jenkins: Of course, driving execution will be the key.
James M. Jenkins: Organic growth remains at the heart of our strategy consistent with our revised guidance, we expect organic growth to be in the high single digit range for the balance of fiscal 2025 year.
James M. Jenkins: We will also continue to identify and pursue acquisition opportunities that expand our addressable markets, geographical footprint, and capabilities. Acquisitions remain an important part of our growth strategy and increase the trajectory of our business. We have a strong balance sheet to support the conversion of our active M&A pipeline. We will continue to drive process improvement from our operations and finance teams as we strive to maintain the early sales momentum we saw in the first quarter. All in all, I like our team, our strategy, and the early returns on our plan. With that, we will now open the call for questions, Operator.
James M. Jenkins: We will also continue to identify and pursue acquisition opportunities and expand our addressable markets geographic.
James M. Jenkins: Graphical footprint and capabilities.
James M. Jenkins: Acquisitions remain an important part of our growth strategy and increase the trajectory of our business.
James M. Jenkins: We have a strong balance sheet to support the conversion of our active M&A pipeline, we will continue to drive process improvement from our operations and finance teams.
James M. Jenkins: We strive to maintain the early sales momentum we saw in the first quarter.
James M. Jenkins: All in all I like our team our strategy and the early returns on our plan.
Speaker Change: With that we will now open the call for questions operator.
Operator: Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from Gerard Sweeney with Ross MKM.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Your first question for today is from Gerry Sweeney with Roth and KN.
Gerard J. Sweeney: Hey, good afternoon, Jim and Roger. Thanks for taking my call. Hey, Gary. First of all, I'm going to apologize for any noise in the background; there's some work being done. But with that being said, you know.
Gerard J. Sweeney: Hi, good afternoon.
Roger: Roger Thanks for taking my call.
Thank you Jerry.
Speaker Change: First off I'm going to apologize for any noise in the background.
Speaker Change: There is some work being done but with that being said.
Speaker Change: Jim.
James M. Jenkins: Congratulations, you know, becoming CEO and, over the course of your interim term, you've also helped expand fire, you know, less than a degree of disposable, we'll say balance the product mix across Lakeland. The line drive seems interesting, and great acquisitions. So there's a lot going on, all good at Lakeland, but I'm just curious about maybe what you look at as maybe your major milestones over the next few years. Maybe two, three, even four quarters with all this going on internally.
Speaker Change: Congratulations on becoming CEO.
Speaker Change: And over the course of your interim term you've also helped.
Speaker Change: Spanned fire, let some degree of disposable will say balanced product mix across our Lakeland.
Speaker Change: Line drive seems interesting.
Speaker Change: Made acquisitions, so there's a lot going on all good at Lakeland, but I'm just curious of maybe what you look at as maybe your major milestones over the next maybe two three even four quarters with all this going on internally at Lakeland.
James M. Jenkins: Yeah, sure, Jerry. That's a great question.
Speaker Change: Yes, sure Jay that's a great question look I right now.
Speaker Change: I view my most critical.
James M. Jenkins: Look, right now, I view my most critical responsibilities as developing our team. Finding new additions to our team. And, frankly, the least favorite part of my job, firing people who I think at some point we've either outgrown or are just no longer where they need to be within the organization.
Speaker Change: Critical responsibilities and developing our team.
Speaker Change: Finding new additions to our team.
Speaker Change: And frankly, the least favorite part of my job exit exiting people, who I think at some point, we'd be there outgrown or.
Speaker Change: No longer where they need to be within the organization.
James M. Jenkins: And the first two parts of that, actually all three, are going to take some time. And we've already had a tremendous amount of change within this organization over the course of the last 12 to 15 months. So some of this stuff I'm going to take a little bit slower.
Speaker Change: And now the first two parts of that.
Speaker Change: All three youre going to take some time.
Speaker Change: And we've already had a tremendous amount of change within this organization over the course of the last 12 months to 15 months.
Speaker Change: So some of this stuff I'm going to take a little bit slower.
James M. Jenkins: We're starting to get some traction here on the strategy. We need to fill out our team on the sales front, and we would expect to see a new sales leader here in the not-too-distant future as we narrow down the opportunities we have there and run those out. And then I've got the need, I think, for some HR leadership that I'll need to bring to the table, as well. I spent a considerable amount of time traveling.
Speaker Change: We're starting to get some traction here on the strategy.
Speaker Change: We need to fill out our team on the sales front and we would expect to see.
Speaker Change: Our new sales leader here and.
Speaker Change: In the not too distant future as we narrow down the opportunities we have there and run those out.
Speaker Change: And then I've got the need I think for some HR leadership that will lead to a need to bring to the table.
James M. Jenkins: I'm in Hong Kong today meeting with the folks from LHD. I was in Adelaide the other day meeting with the Australian LHD team, and we were, of course, in Cologne a few days earlier meeting with Germany. So, you know, I like to say the sun never sets on Lakeland, and so I think primarily my job is going to be those three components while also touching our customers and touching our people, you know, and making sure that we're all rowing in the same direction.
Speaker Change: As well.
Speaker Change: I've spent a considerable amount of time traveling I mean, Hong Kong today meeting with the folks from <unk>.
Speaker Change: I was in Adelaide the other day meeting with the Australian LHC team and we are of course in Cologne, a few days earlier meeting with Germany. So.
Speaker Change: I'd like to say the Sun never sets on on Lakeland and so.
Speaker Change: Primarily my job is going to be those three components, while also touching our customers and touching our people.
Speaker Change: And make sure making sure that we're all rowing in the same direction, but I'm very pleased with the development of our current leadership team.
James M. Jenkins: But I'm very pleased with the development of our current leadership team, the responsibilities they've taken on, and the resiliency of the entire organization to some of the changes that have occurred, and I'm energized by it. It's a little past 12 a.m. here in Hong Kong, and I feel like it's midday already.
Speaker Change: The responsibility as they've taken on the resiliency of the entire organization to some of the changes that have occurred.
Speaker Change: And I am energized by it.
Speaker Change: Little Pac 12, a M here in Hong Kong and I feel like it's mid day.
James M. Jenkins: I would never have guessed that you're in Hong Kong. So, good connection, and you sound great. But, got it, that's helpful. Maybe we can touch upon LineDrive. I spoke with you about it earlier in May when you first initiated or announced the agreement, but it certainly seems like an interesting way of adding additional marketing capacity and growth to the organization. And maybe you can just give a brief highlight, if my memory serves correctly, Line Drive at Maybe some depth or ability to open the right doors to the right people in the right order to really try. I'm curious if maybe you can give a little bit of an update on that or even some background on where it's going.
Speaker Change: I would never have guessed that youre on Hong Kong.
Speaker Change: So [laughter] good.
Speaker Change: Good connection and you sound, great, but got it that's helpful. Maybe we can touch upon long line drive.
I spoke with you about it early in May when you first initiated or announced the agreement, but it certainly seems like an interesting way of.
Speaker Change: Adding additional marketing capacity and growth.
Speaker Change: To the organization and maybe you can just give a brief highlight if my memory serves correct.
Line drive adds maybe some depth or ability to open the right doors to the right people in the right order to really drive some additional growth, but just curious if maybe you can give us a little bit of an update on that or even some background and where it's going.
James M. Jenkins: So we've, we've, we've rolled out, this was the week for training for LineDrive. So many of our product management and sort of product evangelists were in Chicago meeting with LineDrive to help roll that out. I think all indications are that that went very well. You know, it will take some time to gain some traction on that, but, you know, we're very pleased with the homework we've done on LineDrive. We spent a considerable amount of time talking to their current customers, and we're pleased to hear what we were hearing from them.
Speaker Change: So we've we've rolled this was the weak for training for line drive so many of our.
Speaker Change: Product management.
Speaker Change: And sort of product evangelists were Orange Chicago meeting with line drive to help roll that out.
Speaker Change: All indications are that that went very well.
You know it will take some time to gain some traction on that but.
Speaker Change: We're very pleased with the homework, we've done online drive we spent a considerable.
Speaker Change: Considering amount of time talking to.
Speaker Change: There their current customers and we're pleased to hear what we were hearing from them.
James M. Jenkins: And frankly, I think to your point, it gets, you know, 35 or so additional feet on the street to get the Lakeland message out to, you know, a level of, a high level of national account type distributors that, you know, we see a strong ability.
Speaker Change: And frankly, I think to your point it gets 35 or so additional feet on the street.
Speaker Change: Get the Lakeland message out too.
A level of a high level of national account type distributors that.
Speaker Change: We see.
Speaker Change: A strong ability to leverage our brand.
Roger D. Shannon: Got it. And then maybe, yeah. Go ahead, Roger. Sorry.
Speaker Change: Got it and then maybe yeah go ahead Roger sorry.
Speaker Change: Yeah.
Roger D. Shannon: We have a lot of confidence in our sales force. We do have a strong sales team, and we're clicking on a lot of cylinders. But what LineDrive brings, like Jim said, is just a vastly enhanced level of access to about 30, 35 large national accounts, where LineDrive is already representing some of the top names that you would recognize in MRO across other verticals. So they take just one vertical, and will be the only industrial PPE provider in their portfolio.
Speaker Change: We have a lot of confidence in our sales force, we do have a strong sales team and we're clicking on a lot of cylinders, but what what line dry breeze like Jim said is.
Speaker Change: Vastly enhanced level of access to about 30 35 large national accounts.
Speaker Change: <unk> drive is already representing some of the top names that you would recognize and MRO across other verticals. So they they take just one vertical will be the only.
Roger D. Shannon: But there are other, you know, very prominent names that you would recognize that they go into these national accounts with. And, you know, the very compelling thing about the value proposition is that they have relationships not just in the field and in the regions but, you know, at the headquarters of these large national accounts. And they, you know, some of them have even come from those accounts. They know, you know, they know the right people to talk to.
Speaker Change: Industrial PPE provider in their portfolio.
Speaker Change: There are other very prominent names that you would recognize that they go.
Speaker Change: These national accounts with an.
Speaker Change: Very compelling thing to the value propositions. They have the relationships not just in the field and in the regions, but in.
Speaker Change: The headquarters of these large national accounts and some of them have even come from those accounts they know.
Speaker Change:
Speaker Change: No the right people to talk to and whats.
Roger D. Shannon: And, you know, what's kind of mentioned that the way we got this opportunity is that a large competitor of ours, a name you might recognize, decided to, you know, pull out of that relationship, you know, and it opened a fantastic door for us, and, you know, we're seeing promising leads already.
Speaker Change: Just kind of mentioned that the way we got this opportunity is that a large competitor of ours that you might know a name you might recognize.
Speaker Change: <unk> decided to new to pull out of that relationship.
Speaker Change:
Speaker Change: It opened a fantastic door for us and we're seeing promising leads already.
James M. Jenkins: Yeah, so Jerry, to add to that, one last thing to add to that, and that is that, you know, because of, as Roger alluded to, the talent that we have in our current sales group, it's not like we're excluding entirely any, you know, any of these relationships. We have several hybrid models where we have guys who have strong relationships with these distributors, and they're sort of, you know, joint venturing the relationship with Line Drive, and we see that as a critical enhancement as well.
Speaker Change: Yeah, So Jerry.
Speaker Change: And one last thing to add to that and that is that sure.
Speaker Change: Cuz because of as Roger alluded to the talent that we have in our current sales group the way its not like we are excluding entirely.
Speaker Change: Any of these relationships we have several hybrid models, where we have guys who have <unk>.
Long relationships with these distributors and their sort of.
Speaker Change: Joint venturing the relationship with line drive and we see that as a <unk>.
Speaker Change: Critical enhancement as well.
Gerard J. Sweeney: Got it. Maybe one more question, and this may be my last, I'm sorry, my apologies. It may be more for Roger, but you know, you highlighted operating margins down slightly year over year. Obviously, there's some noise in there. I think there were, you know, some legal costs and you mentioned something else, but where does that go from here? I mean, we can certainly understand X-ing out the legal costs, but just curious if there's a little bit more fine-tuning at some of the acquisitions to drive out costs or everything's aligned, and you just go into some of those costs that you've acquired.
Speaker Change: Got it.
Speaker Change: Maybe one more question and this maybe Mike I'm, sorry, I apologize it may be more for Roger.
Speaker Change: Yeah.
Speaker Change: You highlighted operating margins down slightly year over year, obviously theres some noise in there I think there was some legal cost and you mentioned something else, but where does that go from here I mean, we can.
Speaker Change: Certainly understand ex ing out the legal cost, but just curious if there's a little bit more.
Speaker Change: Fine tuning some of the acquisitions to drive out costs or everything's aligned and you just grow into some of those costs that you have acquired.
Roger D. Shannon: I think there absolutely is, and there will be additional costs that we drive out. We highlighted the acquired CapEx, and that's shown as one of the bridge items in our presentation. And we just brought those companies on. We talked about in the past that we like companies that have strong internal talent. We tend to run on a regional basis, so the company and their sales, and their workforce come over.
Speaker Change: No I think there absolutely is and there will be additional costs that we draw that we highlighted the.
Speaker Change: The required Capex and that's that's shown as one of the bridge items in our presentation.
Speaker Change: And we just brought those companies on.
Speaker Change: We've talked about in the past that we.
Speaker Change: Light companies that.
Speaker Change: Has strong internal talent, we tend to run on a regionalized basis. So.
The company and their sales and their workforce comes over but we're.
Roger D. Shannon: But we're, you know, we're really digging in that beginning now, beginning this quarter to look at, you know, not just their expenses, and we have identified some things that are no longer needed, you know, as a standalone company on their part, but also to continue to work on ours. And I'm still not happy with the level of expense, you know, in some areas of ours. It's not, you know, it's kind of more related to third-party and professional expenses and things that we're going to look at on that front.
Speaker Change: Really digging in that beginning.
Speaker Change: Getting now beginning this quarter to look at not just their expenses and we have identified some things that are no longer needed as a standalone company on their part.
Speaker Change: But also to continue to work hours and I'm still not happy.
Speaker Change: With the level of expense.
Speaker Change: In some areas of ours is not.
Speaker Change: You know as covered more related to.
Speaker Change: Third party and professional expenses and things that we're going to look at on that front.
Roger D. Shannon: And, you know, like we noted there, the transaction expenses, a lot of those did flow through this quarter, and we'll continue to have that until we close LHD. And, you know, that'll be a regular thing as we do other acquisitions. There are some expenses related to the Monterrey, Mexico, situation that, you know, they're being carved out until we get that result. And as you'd expect with acquisitions like this, depreciation amortization goes up through the purchase accounting mechanism.
Speaker Change: And like we noted there.
Speaker Change: Transaction expenses are a lot of those did flow through this quarter and will continue to have that until we close so H D and that'll be a regular thing as we do other acquisitions.
There are some expenses related to the.
Speaker Change: <unk> Mexico situation.
That they're being carved out until we get that resolved.
Hum.
Speaker Change: And as you would expect with.
Speaker Change: Acquisitions like this depreciation and amortization goes up purchase accounting mechanism. So.
Roger D. Shannon: So, you know, the short answer is it's not surprising. You know, yeah, we're not getting there, I'm not happy with where it is. And we're going to continue to press that and, you know, work with not just our duly acquired entities but all of our regions and teams in the field and in corporate to improve. Okay, perfect.
Speaker Change: Short answer is it's not surprising.
Speaker Change: Yeah, No we're not.
Speaker Change: We're not I'm not happy with where it is and we're going to continue to press that and work with.
Speaker Change: Not just our newly acquired entities, but are all of our regions.
Speaker Change: Regions and teams in the field and in corporate to improve that.
Speaker Change: Okay, perfect I'll jump back in queue, I don't want to monopolize. It. So thank you guys and safe travels.
Gerard J. Sweeney: Okay. I'll jump back into you. I don't want to monopolize it.
Operator: So, thank you guys. Safe travels. Take care.
Speaker Change: Thank you.
Operator: Your next question is from Matthew Galinko with Maxim Group.
Speaker Change: Your next question is from Matthew <unk> with Maxim Group.
Matthew Galinko: Hey Matt. Hey, good afternoon, or I guess good morning, depending on where you are.
Matt: Hey, Matt Hey, Hey, good afternoon, or I guess, good morning, depending on where you are thanks for taking my questions.
Matthew Galinko: Thanks for taking my questions. So, you know, I did notice that it was, I think, the first quarter of year-over-year disposable income growth in a while. So, I was hoping you could maybe comment on that a little bit more, you know, specific to your, you know, kind of working on, you know, shoring up go-to-market there, or was there just something, you know, anomalous in the quarter? And then, generally, how should we think about the disposable trajectory, you know, moving through this year, and what's sort of implied in your organic expectations for this year?
Speaker Change: So.
Speaker Change: I did notice that it was the I think the first quarter.
Speaker Change: <unk>.
Speaker Change: Year over year disposables growth in a while so I wanted to I was hoping you could.
Speaker Change: Maybe comment on that a little bit more.
Speaker Change: Specific to your you know kind of working on.
Speaker Change: Shoring up go to market, there or was there something anomalous in the quarter and then generally how should we think about.
Speaker Change: The disposal of trajectory.
Speaker Change: Moving through this year and what's sort of implied in your organic expectations for this year.
Roger D. Shannon: Matt, it's Roger. I'll jump on that first and let Jim follow along. There's, you know, again, some interesting dynamics at play there. And as we went through our strategic planning last summer and last fall, we really identified not just that the fire service was a strong growth priority for us but also, you know, we've got a fantastic disposables and PPE brand. And most places in North America, we've got, you know, 20 to 35% of the market there. And I think we, you know, fall on the sword a little bit.
Yes, Matt as Roger I'll jump on that first and let Jim follow on because there is.
Speaker Change: You know again there is some there's some interesting dynamics at play there and as we went through our strategic planning last summer and last fall, we really identified not just that.
Speaker Change: Fire service was strong growth priority for us, but also we've got a fantastic.
Speaker Change: Disposables and PPE brand in most places in North America, We've got new.
Speaker Change: 20% to 35% of the market there and I think we.
Speaker Change: Following the sort of little bit I think we caused some confusion, maybe with some customers and where their sales team about that.
Roger D. Shannon: I think we caused some confusion maybe with some customers and with our sales team about two years ago when we kind of started talking about commodity versus strategic. And, you know, that was a mixed message that this kind of new management team has worked to change because that is a very strong and important part of our portfolio. So, you know, on the one hand, we are still seeing weakness in Europe.
Speaker Change: Two years ago, when we can.
Speaker Change: Talk started talking about commodity versus <unk>.
Speaker Change: Strategic and.
Speaker Change: That was a mixed message that this kind of new management team has worked to change.
Change because that is a very strong and important part of our portfolio. So you know so on one hand, we are still seeing weakness in Europe, we're going to address that.
Roger D. Shannon: We're going to address that. China, we've talked about, we're going to address that. But, you know, we're very pleased with our sales efforts in the Americas, North America, South America. And again, this is even before the line drive relationship has really taken hold at all.
Speaker Change: China, we've talked about.
Speaker Change: The address that but you know we've got.
Speaker Change: We're very pleased with.
Speaker Change: Our sales efforts in the Americas, North America, South America and again this is even before line drive relationship has really taken hold at all.
Roger D. Shannon: So things like critical environment, we're seeing growth there. You know, we continue to make inroads on the high performance FRAR, the chemical we saw turn up. Our team in Latin America and South America is just doing a tremendous job growing that business there. So we, you know, we think we've cleaned up our message on what disposables are. It is, as Jim describes very well, a very good cash flowing business for us.
Speaker Change: So things like critical environment, we're seeing growth there we continue to.
Speaker Change: To make inroads on the high performance F. R. E. R. Chemical we saw a turn up.
Speaker Change: <unk> team in Latin America, South America is just doing a tremendous job growing that business there. So.
Speaker Change: So we think we've cleaned up our message on what disposables or it is.
Speaker Change: As Jim describes very well it is a very good cash flowing business for us we own our manufacturing and we do a very good job of it we've got a great brand there and you know.
Roger D. Shannon: We own our manufacturing, and we do a very good job of it. We've got a great brand there. And, you know, our task is just going to be to get Europe and Asia back moving in the right direction. And we'll be very pleased with that.
Speaker Change: Our task is just going to be to get Europe and Asia.
Speaker Change: Back move in the right direction and it will be very pleased.
James M. Jenkins: Yeah, I would echo a lot of what Roger said, and I would sort of pile on a little bit on Latin America. You know, obviously, there are currency issues that we've had there in the past, but it is, it's a developing market. There's a lot of activity in the spaces where we provide sort of the industrial disposables opportunities. So, and we're becoming a rapidly growing leader in that market.
Speaker Change: Yes, I would I would echo a lot of what Roger said I would I would sort of highlight a little bit on Latin America.
You know obviously, there's currency issues that we've had there in the past, but it is a it's a developing market.
Speaker Change: Theres, a theres a lot of activity in the spaces, where we provide.
Speaker Change: The industrial disposables.
Speaker Change: Opportunities, so and we're becoming rapidly.
Speaker Change: Growing leader in that market.
James M. Jenkins: You know, we obviously have some price pressures in places like Europe and China and, you know, we're, we're hopeful that, you know, we spend a lot of time educating our sales teams in those markets and showing them how we want us to be sort of a differentiator in partnership with some of our larger customers and distributors and, you know, layer on top of that. You know, you know, the pending opportunity to have a sales leader here soon, you know, I'm very optimistic about where we're going here. Yeah.
Speaker Change: We obviously have some price pressures in places like Europe and China.
Speaker Change: And.
Speaker Change: We're hopeful that.
Speaker Change: We spent a lot of time educating our sales teams in those markets and.
Speaker Change: Showing them, how how we want to be sort of a differentiator.
Speaker Change: They are partnering some of our larger customers and distributors and.
Speaker Change: Layer on top of that.
Speaker Change: I think that depending on opportunity to have a sales leader here soon.
Speaker Change:
Speaker Change: I am very optimistic about where we're going here.
Roger D. Shannon: Yeah, you know, and Matt, just one thing, the last thing I'd point out there as well is that you've seen our gross margins go up, and it's not just the fire, although that is driving a lot of it. But, you know, even on the acquired companies, the gross margins at those companies, as we've talked about before, tend to actually be a little bit lower.
Speaker Change: Yeah.
And then just one last thing I'd point out there as well as you've seen or haven't had a question on this but you've seen our gross margins go up and is not is not just the.
Speaker Change: Not just the fire, although that is driving a lot of it.
Speaker Change: But you know even on the acquired companies the gross margins that those countries as we've talked about before tend to actually be a little bit lower but.
Roger D. Shannon: But, you know, the programs that we have, some manufacturing efficiencies that we've gotten in place and we continue to work on. So, you know, that really is a business that we like and that we're, you know, continuing to focus on very intently.
Speaker Change: The programs that we have.
Manufacturing efficiencies that we've gotten in place and that we continue to work on.
Speaker Change: So that really is business that we like and we're continuing to focus on very intently.
Matthew Galinko: Got it. Thank you. And I guess just to follow up on the guidance, I know you're not going to get too granular, but I think you mentioned around a 9% organic growth rate for the rest of the year. I think it was maybe around 11% in the first quarter, but I'm just curious, or particularly around fire, what's a reasonable organic growth rate we should be thinking about this year?
Speaker Change: Got it thank you and I guess, just just a follow up.
Speaker Change: On.
Speaker Change: On the guidance I know youre, not going to get too granular, but I think you mentioned around a 9% organic growth rate for the rest of the year I think it was maybe around 11% in the first quarter, but I'm just curious.
Speaker Change: Additionally around fire.
Speaker Change: What's a reasonable organic growth rate, we should be thinking about.
Speaker Change: For this year.
Roger D. Shannon: Oh, that's a good question. And like you said, we're thinking about it really more as a whole, and one of the reasons that it's kind of hard to kind of peel out the organic, and this is actually a great point that you raised, because I can address something else there. You know, one of the reasons that, you know, we're not really going to get into say, what's the EBITDA, for example, at a Jolly or Pacific is, you know, cross selling.
Speaker Change: Oh, that's a good question and like you said.
Speaker Change: Yeah.
Speaker Change: Worth.
Speaker Change: We're thinking about it really more as a whole and one of the rehab, it's kind of hard to kind of Peel out the organic and is this actually I mean.
Speaker Change: <unk> point that you raised because they can address something else. There one of the reasons that we're not really going to get into say, what's the EBITDA for example at a.
Roger D. Shannon: So, you know, they would have had, you know, EBITDA of X or Y as a standalone company. Now they're part of Lakeland, and we're selling, you know, into the US now, and not just in the US, but even through Eagle channels and through, you know, through other sales operations that we have. We, we changed the, not to get technical on you, but change the transfer pricing between that entity, then into the US or to Europe or what have you.
Speaker Change: Jolley or a Pacific is.
Speaker Change: Is the cross selling so they would've had EBITDA of X or Y as a standalone company now that they're part of Lakeland and we're selling into the U S. Now and not just in the U S that EBIT Eagle channels.
Speaker Change: And through through other sale.
Roger D. Shannon: So, you know, what they're even doubting would have been, let's just say standalone will be very different than, than what it is into selling into the US or into, you know, through the Eagle channel. So it makes it a little tougher to say, well, what's the organic stuff? Because now, you know, we're selling those products through the US. So really, when you say, well, what's the organic fire for Lakeland, really, you're just talking about the Lakeland and Eagle turn out to, which I think is missing a lot of the picture because the value proposition, as we talked about, is the full head-to-toe kit.
Speaker Change: Sales operations that we have.
Speaker Change: We changed the not to get technical on you, but change the transfer pricing between that entity.
Speaker Change: And then into the U S or to Europe, or what have you. So so what their EBITDA would have been let's just say stand alone.
Speaker Change: We will be very different than.
Speaker Change: And then what it is.
Speaker Change: Two is selling into the U S or into through the Eagle channels. So it makes it a little tougher to say whats the organic because now now we're selling those products through.
Speaker Change: Through the U S. So really when you say well, what's the organic fire for Lakeland really you're just talking about.
Speaker Change: The Lakeland and Eagle turnout suits.
Speaker Change: Which I think is missing a lot of the picture because the value proposition as we've talked about is the forehead the tool kit.
Matthew Galinko: Yeah, fair points, and I appreciate that. Maybe a final question for me, and then I'll jump back in the queue.
Speaker Change: Yeah Fair point and I appreciate that maybe final question for me and then I'll jump back in the queue.
Speaker Change:
Matthew Galinko: Anything else you could add for investors regarding the LHD acquisition and the timing? Should we be confident that the final hurdles are, you know, relatively surmountable? Or, you know, should we be thinking of it as, you know, something that could slip further out of, you know, the first half? How should we be framing that?
Speaker Change: And anything else you could add on.
Speaker Change: For investors regarding the LH D acquisition and the timing can we be confident that you know kind of a final hurdles are.
Speaker Change:
Speaker Change: You know relatively surmountable or should we be thinking of it.
Speaker Change: Somebody that could slip further out of the first half yeah, how should we be framing that.
James M. Jenkins: You know, Matt, I guess I'll start with that. And, you know, M&A is an iterative process. And, you know, I have strong beliefs that this deal is going to get done. But, you know, when you've got between regulators and 3rd parties, you know, sometimes it's, it's, it's, it's like, it's like herding cats.
Matt: You know, Matt I guess I'll start with that and.
Speaker Change: M&A is an iterative process and.
Matt: Hi.
Speaker Change: We had strong.
Speaker Change: <unk> believes that this deal is going to get done.
James M. Jenkins: So, you know, I wouldn't be here in Hong Kong if I didn't think this deal was going to close. Um, but, uh, stranger things have happened, but I, I, that's not, you know, I'm not suggesting that. I mean, I don't do odds anymore on these kinds of things, but I can tell you I'm highly confident at this point because, you know, I wouldn't be here if I wasn't.
Speaker Change: But you know when you've got between regulators and third parties.
Speaker Change: Sometimes.
Speaker Change: It's like it's like herding cats so.
Speaker Change: I wouldn't be here in Hong Kong, but I didn't think this deal was going to close.
Speaker Change: But.
Speaker Change: Stranger things that happened, but that's.
Speaker Change: That's not.
Speaker Change: I'm not suggesting that.
Speaker Change: I don't do odds anymore on these types of things, but I can tell you I'm highly confident at this point because.
Speaker Change: I wouldn't be here if I wasn't.
Roger D. Shannon: Yeah, I mean, like, you know, like we mentioned in our comments, we are very close, we believe.
Speaker Change: Yes, I mean like you know like we mentioned in our comments. We are we are very close I believe.
Speaker Change: Terrific. Thank you.
James M. Jenkins: We have reached the end of the question and answer session, and I would now like to turn the floor back to Jim for closing remarks.
Speaker Change: We have reached the end of our question and answer session and I would now like to turn the floor back to Jim for closing remarks.
Speaker Change: Thank you operator.
James M. Jenkins: Thank you all for joining us on today's call. We appreciate your continued interest in Lakeland. We look forward to building on the strong momentum Lakeland has and sharing our success with you in fiscal 2025. Have a great day.
James M. Jenkins: Thank you all for joining us on today's call. We appreciate your continued interest in Lakeland, we look forward to building on the strong momentum Lakeland as it has and sharing our successes with you in fiscal 2025 have a great day.
James M. Jenkins: Yes.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.