Executive Summary
- Lakeland posted Q2 FY2025 revenue of $38.51 million, up ~16% year over year from $33.10 million in Q2 FY2024, supported by organic growth and acquisitions (including one month of LHD Group). Despite top-line strength, profitability declined as the company absorbed acquisition-related costs and carried a sizable inventory step-up impact from purchase accounting. Operating loss of $0.69 million contrasted with a $3.70 million operating income in the prior-year quarter, and net loss widened to $1.38 million from net income of $2.50 million a year ago. The company reported adjusted EBITDA excluding FX of $2.7 million (margin 6.9%), down from $4.7 million (margin 14.3%) in Q2 FY2024, reflecting integration costs and inventory timing effects, though management expects improvement in H2 as acquired inventory is shipped and cost synergies take hold.
- Management emphasized the strategic rationale of the SSQ (Strategic, Structural, and Quick) M&A program, highlighted ongoing post-acquisition integration (LHD, Jolly, Pacific Helmets) and the newly formed Lakeland Fire & Safety brand. The management team noted meaningful contributions from LatAm (63% YoY growth; now ~20% of sales), expanded fire service offerings, and early-stage monetization opportunities from LHD’s care and software platform. They also flagged LineDrive as a near-term headwind in the US but expect the sales pipeline to accelerate into the second half of the year as the go-to-market model shifts toward end-user engagement.
- The FY25 revenue guidance was reaffirmed at $160–$170 million and adjusted EBITDA excluding FX at $18–$21.5 million, factoring in the acquisitions and expected second-half back-end loading of orders. The near-term risk mix includes European market softness, the LineDrive transition’s execution risk, and the pace of backlog conversion in Germany and other regions. With continued backlog execution, product mix shift toward fire services, and cross-region productization of services (including care and maintenance software), Lakeland remains positioned for mid-single-digit organic growth with margin leverage as the year progresses.
Key Performance Indicators
QoQ: -128.77% | YoY:-118.53%
QoQ: -183.24% | YoY:-155.82%
QoQ: -186.36% | YoY:-157.58%
Key Insights
Revenue: $38.51 million (Q2 FY2025) vs. $33.10 million (Q2 FY2024); YoY growth ~16% and QoQ growth from Q1 FY25 to Q2 FY25 +6.1%
Gross Profit: $15.24 million; gross margin 39.56% vs. 42.86% in Q2 FY2024 (margin decline due to acquisition-related purchase accounting and inventory step-up)
Operating Income: -$0.69 million; margin -1.79% vs. +$3.70 million and +11.3% in Q2 FY2024
Net Income: -$1.38 million; diluted EPS -$0.19 vs. $0.32–$0.33 in prior-year period
Adjusted EBITDA (ex-FX): $2.70 mil...
Financial Highlights
Revenue: $38.51 million (Q2 FY2025) vs. $33.10 million (Q2 FY2024); YoY growth ~16% and QoQ growth from Q1 FY25 to Q2 FY25 +6.1%
Gross Profit: $15.24 million; gross margin 39.56% vs. 42.86% in Q2 FY2024 (margin decline due to acquisition-related purchase accounting and inventory step-up)
Operating Income: -$0.69 million; margin -1.79% vs. +$3.70 million and +11.3% in Q2 FY2024
Net Income: -$1.38 million; diluted EPS -$0.19 vs. $0.32–$0.33 in prior-year period
Adjusted EBITDA (ex-FX): $2.70 million; margin 6.9% vs. $4.70 million and 14.3% in Q2 FY2024
TTM Revenue: $137.7 million (+16% YoY vs. $119.2 million in TTM ended Q2 FY2024)
TTM Adjusted EBITDA (ex-FX): $14.5 million (+10% YoY)
Cash & Debt: cash $24.9 million; long-term debt $29.5 million; net debt $18.9 million; total debt $43.8 million
Working Capital & Liquidity: cash conversion cycle impacted by higher inventory; current ratio 4.24x; quick ratio ~2.00x; inventory $67.2 million; total current assets $128.5 million; total liabilities $73.7 million; total equity $124.7 million
Backlog & Acquisitions: LHD backlogs and shipments expected in Q3–Q4 FY25; LHD Germany resuming manufacturing; Hong Kong renewal with revenue up from $3.5 million to $5.3 million (Sep 2024–Sep 2025)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
38.51M |
16.45% |
6.07% |
| Gross Profit |
15.24M |
7.42% |
-5.86% |
| Operating Income |
-691.00K |
-118.53% |
-128.77% |
| Net Income |
-1.38M |
-155.82% |
-183.24% |
| EPS |
-0.19 |
-157.58% |
-186.36% |
Key Financial Ratios
operatingProfitMargin
-1.79%
operatingCashFlowPerShare
$-0.59
freeCashFlowPerShare
$-0.64
dividendPayoutRatio
-16.1%
priceEarningsRatio
-31.69
Management Commentary
- Acquisition-driven growth and strategic branding: Jim Jenkins outlined Lakeland Fire & Safety consolidating Eagle, Pacific, Jolly, and LHD, with LHD expanding fire services footprint in Germany, Australia, and Hong Kong; a broader, head-to-toe fire offering is anticipated to drive cross-sell and recurring revenue.
- LineDrive transition risk and near-term revenue slippage: management acknowledged that the shift of coverage to LineDrive contributed to Q2 order slippage, particularly in the US, while pipeline visibility is improving and leadership believes orders will accelerate in H2.
- Margin dynamics tied to purchase accounting and inventory timing: Roger Shannon explained a 3.8 percentage-point gross-margin headwind from acquired companies and a 3.4-point drag from profit in ending inventory due to purchase accounting; management expects these effects to reverse as inventory ships in H2. A 4.4% margin uplift from organic mix suggests improving operating leverage as mix shifts toward higher-margin products.
- LatAm growth and international diversification: LatAm grew 63% YoY and now represents about 20% of total revenue, with strong woven product momentum and expansion into Mexico with 58% YoY growth. Asia and Canada reported double-digit growth, while Europe remained soft; management emphasized end-user engagement and European logistics improvements as key to reopening growth avenues.
- Operational and organizational investments: New sales leadership (CRO Barry Phillips, Global Industrial Sales VP Cameron Stokes) and CHRO Laurel Yartz were introduced to accelerate growth and culture transformation, supporting the focus on efficiency, data analytics, and scalable go-to-market execution.
“As the relationship develops with LineDrive, we’re starting to get more visibility to their pipeline approach and the way they work their pipeline. We are – our team is having weekly meetings with them. ... I am feeling a lot more confident about how that pipeline is being generated.”
— Jim Jenkins
“The profit in ending inventory that affected our gross profit and gross margins in the quarter is expected to reverse and be a benefit in the second half of the year once that inventory is shipped.”
— Roger Shannon
Forward Guidance
- Revenue outlook: Lakeland reaffirmed FY25 revenue guidance of $160–$170 million, incorporating the expected contribution from Jolly Boots, Pacific Helmets, and LHD Group acquisitions and the anticipated late-year shipment of backlog orders.
- Profitability trajectory: Adjusted EBITDA excluding FX is targeted at $18–$21.5 million for FY25. Management cautions that the second-half margin leverage hinges on inventory flow-through and integration-related SG&A reductions, but expects the ending-inventory profit to reverse as backlog ships.
- Catalysts and risk factors: (1) Backlog conversion in Europe and Germany; (2) Ramp of LineDrive pipeline alongside end-user engagement; (3) Continued adoption and monetization of LHD Care in Australia and potential expansion to other regions; (4) Macro headwinds in Europe and currency volatility (Argentina FX) could affect cost structure; (5) Integration costs and realignment of SG&A across acquired businesses. Investors should monitor quarterly progress on LineDrive’s national accounts, shipment timing of large orders (Jolly, Eagle), and the pace of LatAm expansion into new industrial products and fire-service offerings.