Operator:
Good afternoon, and welcome to the Lakeland Industries, Inc. 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 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, as 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. 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 press release detailing these results was issued this afternoon and is available in the Investor Relations section of our company's website at ir.lakeland.com. At this time, I would like to introduce your host for this call, Lakeland Industries, Inc.’s President, Chief Executive Officer, and Executive Chairman Jim Jenkins; Chief Financial Officer, Calvin Sweeney; Chief Commercial Officer, Global Industrials, Cameron Stokes; Chief Revenue Officer, Barry Phillips; and Executive Vice President of EMEA Fire Sales, Kevin Ray. Mr. Jenkins, the floor is yours.

Jim Jenkins:
Thank you for joining us today to discuss the results of our fiscal 2026 fourth quarter and full year ended 01/31/2026. Fiscal 2026 was a year of meaningful top-line growth and important strategic progress for Lakeland Industries, Inc. 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 $0.8 million, 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 meaningfully for the full year, increasing $12.1 million, or 28.7%, while fourth quarter year 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; freight 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 the actions we have been taking are beginning to work. Subsequent to the fiscal year-end, we completed the divestiture of our HPFR and HiViz 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 gear, Meridian gloves and fire particulate-blocking hoods, Jolly boots, and Pacific helmets are now fully certified, enabling customers to order from a complete head-to-toe NFPA-certified range of products across Lakeland Industries, Inc.’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 just recently named Executive Vice President of EMEA Fire Sales. You will be hearing more from both of them shortly. We also welcomed Lee Rudow 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 compliant 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 our Decatur, Alabama warehouse property, generating an approximately $4.3 million pretax gain and reducing our fixed cost exposure. And Lakeland Industries, Inc. was added to the Russell 3000 and Russell 2000 in the season June, 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 2027. 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. 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 margin. We also saw softer performance in select areas in the fourth quarter; we 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 single to 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 would like to pass the call to our Chief Commercial Officer, Cameron Stokes, to provide an update on our industrial and chemical critical environment businesses.

Cameron Stokes:
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 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 at 11%. On the strategic side, the divestiture of our high performance FR and high viz 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 lines 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 faced 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, disciplined 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 would 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 to our cost base. 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.

Barry Phillips:
Thank you, Cameron. Turning to fire services. Revenue for Q4 was $21.7 million, an increase of $0.5 million or approximately 2% compared to the prior year. For the full year, fire service revenue grew $30.6 million, or 48.6%, to $93.6 million. This is a significant milestone. Our fire segment now represents approximately 49% of our total revenue, a significant transformation from where we stood just two years ago when it represented approximately 21%. The full-year growth was supported by contributions from Viridian, LHD, Jolly, and Pacific Helmets, as well as Arizona PPE and California PPE. These acquisitions have expanded our geographic reach, broadened our product offering, and positioned us as the head-to-toe provider in global fire protection, a platform we believe is unique in the market. Fire demand is increasing as certification cycles are completed and tender timelines are tracking on schedule across multiple regions. These have been timing delays rather than structural demand issues. Opportunities remain in the pipeline and have simply shifted later than expected. Our tender pipeline is active globally, and we continue to see strong engagement from the fire departments and procurement agencies across the regions we serve. We also saw meaningful international wins during the year, including significant emergency follow-on orders from the National Fire Department of Colombia, an order from the Fire and Rescue Department of Malaysia, and a fire equipment tender award from ANAC, Argentina’s National Civil Aviation Administration. A particularly important milestone was receiving numerous NFPA 1970, 2025 edition certifications across our portfolio, enabling customers to order a complete head-to-toe certified range across our brands for the first time. These certifications are a commercial unlock that we have been working toward, and we look forward to showcasing the full core portfolio at FDIC 2026. On decontamination and services, our ISP business is growing faster than initially projected, and the greenfielding and ISP M&A pipeline remain robust. California PPE’s new Fresno location opened in January 2026, and our Denver location is expected to open in 2026. This recurring revenue model builds long-term customer relationships, generates predictable cash flow, and positions us well as fire departments increasingly invest in gear maintenance and NFPA 1950 compliance. Fire service margins remain structurally sound; as volume normalizes and tenders convert, margins are expected to recover without requiring broad pricing actions. LHD Germany is stabilizing, and we expect a formal relaunch of the brand at Interschutz 2026 in June, with leadership in Kevin Ray driving momentum across our EMEA brands. Looking ahead into fiscal 2027, we have the strongest backlog in Lakeland Fire’s history. We expect continued success with our head-to-toe offering and anticipated tender wins in Europe and the U.S. Our new NFPA product portfolio rollouts are well underway, and we look forward to showcasing our entire lineup at FDIC next week. I will now pass the call to Executive Vice President of EMEA Fire Sales, Kevin Ray, for an EMEA update. Thank you.

Kevin Ray:
Before I begin, I would like to provide you with a bit of my background. I have over twenty years of leadership experience in personal protective equipment and fire safety across the U.K. and EMEA. I joined Lakeland upon the acquisition of Eagle Technical Products, where I served as the Managing Director since 2013, and then Vice President of EMEA Fire and Global M&A Integration from 2022 until just recently, having been named Executive Vice President, EMEA Fire Sales, helping to shape Lakeland’s fire strategy across the region and integrate key acquisitions into a unified operating platform. Turning to EMEA, Europe revenue for the fourth quarter was $12.1 million, down $2.4 million versus the prior-year period. This was driven primarily by the timing of LHD and Jolly orders, as well as delayed government tenders and macroeconomic conditions across several markets. For the full year, Europe revenue grew $12.1 million, or 28.7%, to $54.2 million, a strong result that reflects the full-year contribution of LHD and Jolly. The Q4 softness that we have discussed is a timing story; it is not a structural one. The tender pipeline is intact, and underlying demand dynamics across the region remain supportive. On LHD Germany specifically, conditions in that market have been challenging, and we have been direct about that. We are actively restructuring the business to reduce the overhead and to rightsize the cost base for the current conditions. Stabilization is underway, and we are planning a formal relaunch of the LHD brand at Interschutz 2026. This is the largest fire industry event in the world and is only held every five years, so this really is a significant commercial moment for us. Interschutz will serve as our EMEA platform launch for the combined Lakeland Fire and Safety brand. We intend to demonstrate our integrated head-to-toe offering to the European market at this event and show what our portfolio now looks like as an integrated head-to-toe offering. We view it as a pivotal opportunity for LHD Germany in particular, and for our European fire brands broadly. Our LHD Hong Kong and LHD Australia businesses secured new contracts during the year that solidify those operations and build a stronger foundation for future growth in the Asia Pacific region. Late-stage tenders across the region are up, and the quality of the pipeline has improved meaningfully. Integration across the acquired EMEA businesses is beginning to unlock access and scale that we could not if operating these brands independently. We are now seeing what we estimate to be over $5 million of incremental business opportunities flow directly through intercompany collaboration within the group. These are cross referrals, shared supply chain economics, and joint initiatives, and that represents a growing, previously untapped source of revenue. This dynamic is extending beyond EMEA and beginning to manifest in Asia, Latin America, and North America as well, which speaks to the stability of the integrated platform. Our objectives from here are clear: to improve the conversion across our late-stage pipeline, to convert intercompany opportunities into tangible recurring revenue, and to continue building a more balanced and predictable tender pipeline across the region. I will now hand over the call to Calvin to review the financials. Thank you, Kevin, and hello, everyone. I will provide a brief overview of our fiscal 2026 fourth quarter financials before diving into the details.

Calvin Sweeney:
Net sales were $45.8 million for Q4 fiscal 2026, a decrease of $0.8 million, or 1.7%, compared to $46.6 million for the prior-year quarter. Adjusted gross profit for Q4 was $15.4 million, a decrease of $4.4 million, or 22%, compared to $19.8 million for the prior-year quarter. Adjusted gross margin was 33.5% in Q4, compared to 42.4% in the fourth quarter fiscal 2025. Adjusted operating expenses, excluding FX, were $14 million, up from $13.7 million in the prior year. Net loss was $166.2 million, or $0.61 per diluted share, compared to a net loss of $18.4 million, or $2.42 per diluted share in fiscal 2025. Adjusted EBITDA, excluding FX, was approximately $1.3 million for the fourth quarter, compared to $6.1 million for the prior-year quarter. Adjusted EBITDA, excluding FX margin, was 2.9%. Turning to the full fiscal year, net sales were $192.6 million for fiscal 2026, an increase of $25.4 million, or 15.2%, compared to $167.2 million for fiscal 2025. Adjusted gross profit was $66.4 million for fiscal 2026, a decrease of $4.7 million, or 6.6%, compared to $71.1 million for fiscal 2025. Adjusted gross margin was 34.4% for the full year, compared to 42.5% in fiscal 2025. Adjusted operating expenses, excluding FX, increased 10.2% to $59.2 million for fiscal 2026 from $53.7 million for fiscal 2025. Adjusted EBITDA, excluding FX, was approximately $7.2 million for fiscal 2026, compared to $17.4 million for fiscal 2025, with an adjusted EBITDA excluding FX margin of 3.7%. Net loss was $25.3 million, or $2.63 per diluted share, compared to $1.8181 billion, or $2.43 per diluted share for fiscal 2025. Looking at the fourth quarter in more detail, geographically, U.S. revenue increased $1.3 million, or 7.1%, to $19.6 million for Q4. Europe revenue decreased $2.4 million to $12.1 million, reflecting timing of orders from LHD and Jolly. Asia revenue increased $0.7 million, or 19.4%, to $4.3 million. Latin America revenue was $3.8 million, down modestly versus the prior-year period. Adjusted EBITDA excluding FX for Q4 fiscal 2026 was approximately $1.3 million compared to $6.1 million for the prior-year quarter. The decrease was primarily driven by the decline in gross margin related to the factors I just mentioned. Adjusted operating expenses, excluding FX, were $14 million in Q4 and declined sequentially across the prior three quarters, demonstrating that our expense discipline has held at the business scale. The key driver of the year-over-year adjusted EBITDA decline was gross profit compression, not expense growth. As gross margin recovers through utilization improvement, pricing discipline, mix management, and supply chain optimization, EBITDA will follow with meaningful operating leverage. Adjusted gross margin decreased to 33.5% in fiscal 2026 Q4 from 42.4% in fiscal 2025 Q4, a decrease of approximately 890 basis points. The primary drivers were product mix shift as fire services grew as a proportion of revenues at lower initial margins, manufacturing underutilization in Mexico and Vietnam, raw material cost pressure, elevated inbound freight and duties, and execution gaps in production planning. Partially offsetting these headwinds, Q4 showed sequential improvement in freight and duties versus Q3 and a more favorable sales mix within the quarter. Adjusted EBITDA excluding FX decreased from approximately $6.1 million in the fourth quarter fiscal 2025 to approximately $1.3 million in the fourth quarter fiscal 2026, a decrease of $4.8 million or 78%. Gross profit compression was the dominant driver. Operating expense changes were minimal year over year, confirming that expense discipline has held. The path to EBITDA recovery runs primarily through gross margin improvement, which we are addressing through utilization improvement, pricing discipline, mix management, and supply chain optimization. For the full year, adjusted gross margin was 34.4% compared to 42.5% for fiscal 2025, a decrease of approximately 810 basis points. The full-year bridge reflects three primary themes. First, mix: our fire acquisitions entered the portfolio at a lower gross margin profile than our legacy industrial lines, and as fire grew to approximately 49% of revenues, blended margin came under structural pressure. Second, cost headwinds: raw materials, tariffs, and elevated freight costs impacted the full year. Third, underutilization: manufacturing capacity in Mexico and Vietnam was sized for higher volumes; the fixed-cost deleverage in a period of below-target output was significant. We are addressing all three through manufacturing footprint consolidation, supply chain restructuring, and targeted pricing actions. Reviewing our revenue mix over the past three fiscal years is clear on both the geographic and product basis. On the geographic side, Europe grew from approximately 13% of revenues in fiscal 2024 to approximately 25% in fiscal 2025 and approximately 28% in fiscal 2026, a direct result of our LHD and Jolly acquisitions expanding our European fire platform. The U.S. has remained at approximately 42% in fiscal 2026, reflecting the growth of Viridian, Arizona PPE, and California PPE offsetting softness in industrial. This geographic diversification provides broader exposure to the global fire protection market. On the product side, fire went from approximately 21% of revenues in fiscal 2024 to approximately 38% in fiscal 2025 to approximately 49% in fiscal 2026. To us, this is the clearest illustration of our strategic pivot to the higher-margin, higher-growth global fire protection sector. Disposables moderated from approximately 40% to 27% as fire grew. The divestiture of HPFR and HiViz further simplifies this picture heading into fiscal 2027. As our acquired businesses integrate and fire gross margins recover toward their structural potential, our growing fire concentration should become a meaningful margin tailwind. Now turning to the balance sheet. Lakeland Industries, Inc. ended the fiscal year with cash and cash equivalents of $12.5 million and working capital of approximately $96.5 million. This compares to $17.5 million in cash and working capital of approximately $101.6 million as of 01/31/2025. Cash decreased $5 million versus the prior year reflecting $15.8 million of operating cash usage and $1.2 million of net investing outflows, offset by $12.5 million provided by financing activities. As of 01/31/2026, we had total borrowings of $32.3 million, with $28.5 million outstanding under the revolving credit facility, with an additional $11.5 million available under the revolver. Net investing activities included $6.2 million for the Arizona PPE and California PPE acquisitions, offset by $5.7 million proceeds from the Decatur warehouse sale, of which we used 100% of those net proceeds to repay our revolving credit facility. Importantly, Q4 generated approximately $1.8 million of operating cash, demonstrating that our focus on cost discipline and working capital management is beginning to yield results. We are in advanced stages of negotiating an ABL facility, which we expect to close soon, although there can be no assurances that the ABL facility will close on that timeline or at all. A Bank of America covenant waiver has been secured, and we anticipate to be in covenant throughout fiscal 2027. We expect the ABL facility to further strengthen our financial flexibility and support growth initiatives in fiscal 2027. Subsequent to year-end, the divestiture of the HPFR and HiViz product lines generated approximately $14 million in additional cash proceeds that are not reflected in year-end cash balances, further reinforcing our liquidity position. At the end of Q4, inventory was $80.5 million, down approximately $5.4 million from $87.9 million at the end of Q3 fiscal 2026 and essentially flat on a year-over-year basis despite revenue growing approximately 15%. That year-over-year stability reflects meaningful progress on our supply-demand alignment initiatives. The quarter-over-quarter decline in inventory is broad-based: organic finished goods were $36.3 million, down from $38.8 million in Q3; organic raw materials were $30.9 million, down from $33 million in Q3. Reductions were also achieved across Meridian, LHD, and Jolly as integration and planning processes improved. Our immediate priorities have been in the U.S. industrial, Jolly, and LHD’s regions where we saw the greatest opportunity to align balances with demand and improve working capital efficiency. Inventory optimization is one of the key levers in our path to improved free cash flow generation. As inventory levels normalize further, carrying costs decrease and working capital is released. This helps our business become more efficient operationally, and we see opportunities to continue this strategy to drive inventory lower in fiscal 2027 in a disciplined, demand-driven manner. With that, I would like to turn the call back over to Jim before we begin to take your questions. Thank you.

Jim Jenkins:
Fiscal 2026 was a year of significant transformation. We grew revenue 15.2% to $192.6 million driven by 48.6% growth in fire services, built a head-to-toe global fire protection platform through multiple strategic acquisitions, and made meaningful progress simplifying and strengthening the business, even as we navigated a challenging cost and operating environment. We are entering fiscal 2027 with key financial metrics showing sequential improvement over Q4 2026. The fourth quarter demonstrated that our operational discipline is improving. We generated positive operating cash flow, held expenses essentially flat, and delivered adjusted EBITDA despite lower revenue versus Q3. These are early but tangible signs of the operational improvement we have been working toward. As we enter fiscal 2027, our priorities are clear: we will continue executing margin recovery actions across logistics, operations, and pricing, including manufacturing footprint consolidation; continue efforts at cost containment across logistics and operations, including in the face of the Iran conflict and its potential impact on freight and supply chain costs; tighten forecasting accountability and implement a stronger structure around sales and production planning; revise the ERP rollout plan with our new implementation partner targeting 2027; actively drive greenfielding in the M&A pipeline within our ISP space—we opened our Fresno facility in January and Denver is expected to open in summer 2026, as Barry had mentioned; capitalize on the fire tender pipeline, including expected tender wins in Europe, and showcase our full NFPA-certified portfolio at FDIC 2026; and leverage our balance sheet to execute on our acquisition strategy focused on fire turnout gear decontamination, rental, and services. Today, as we are now almost through fiscal first quarter 2027, I am very optimistic about our business trajectory, given the recent customer wins around the globe, enhanced product development and differentiation with our new Firefox Elite L100 structural firefighting boot, and a recently achieved full head-to-toe range of NFPA 1970 2025 certified product offerings across our brand portfolio. Customer interest and demand are strong. Operationally, we are correctly positioned. The core team is in place, and we are ready to capitalize on an amazing opportunity that is on the horizon for Lakeland Industries, Inc. Based on these factors, we believe fiscal 2027 will see high single-digit revenue growth and a clear line of sight to positive cash flow from operations. We are grateful to our customers, distribution partners, and team members worldwide for their continued trust and commitment, and especially to those first responders around the world who risk their lives every single day to protect all of us. We will now open the call for questions.

Operator:
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from the line of Gerry Sweeney with ROTH Capital Partners LLC. Please proceed with your question.

Gerry Sweeney:
Hey, Jim and team. Thanks for taking my call.

Jim Jenkins:
Hey, Gerry.

Gerry Sweeney:
Wanted to start with the fire side. I think in some of the prepared comments, the comment was largest pipeline in history. And I want to see—you know, some of this was definitely pushed out from 2025 due to government shutdown, NFPA standards, etcetera. So I think we sort of anticipated a building pipeline, but the question is, how do we unlock this, and maybe some more detail on the size of the pipeline and how does it flow through for this year?

Jim Jenkins:
I think I am going to have Barry, who has been working closely on that, respond to that, and then I will chime in.

Barry Phillips:
The comment was the largest open orders for Lakeland Fire in the company’s history, so our open book of orders coming through, scheduled for production and having a C-sale and invoice, that is the largest. The pipeline is the clearest view that we have been able to develop as we have been working through integrating our CRM software and program Salesforce globally, and our sales operations team structuring it for a full view across the business. We now actually have over $130 million in open pipeline that is visible to us, over $22 million of that in higher probabilities over half, and we have that view that we are working diligently with our teams to keep active. What we are seeing now is the opening of the spigot, so to speak, with the certifications coming through. Departments have been waiting for that certification approval, and then they start to look and bring things through. FDIC is the key component next week, where most of the NFPA push is through North and South America. Then we will be rolling things out with the rest of the world at the big show in June. On the FDIC show next week, generally, it is not an order-writing show, but it is a very visible show. It is Fire Department Instructors Conference, the longest-standing fire show in North America, and one of the globe’s largest ones other than Interschutz, which is once every five years and more global. Departments will come and, in a sense, kick the tires. Some of them have already started to have input for a field trial or user trial; those sorts of things take place. Sometimes you will get orders for commodity items, whether it is helmets or boots. If it is a larger department conversion, it is going to generally have some sort of a tender relationship or RFQ that will come into play or a wear trial.

Gerry Sweeney:
Got it. That is helpful. And then, switching gears slightly to the cleaning, the PPE opportunity. Obviously expanded in Arizona, sounds like it is going well. You are going into Denver. How big is that business in terms of revenue today, and how quickly can you grow that? Or do you have a target that you want to grow to in the next couple of years?

Jim Jenkins:
The goal is to get, in the services space, up to $30 million by fiscal 2028. We are ramping up rapidly, and I would be very disappointed if it was not much sooner than that at this point. When we acquired Cal PPE and Arizona PPE—Calvin, correct me if I am wrong—maybe $4.8 million, $4.7 million in annualized revenue. They have significantly ramped that up. They are winning customers; they are doing it the right way. The reason we are opening in Denver is we are not going to just open it and hope they come. We have active customers who have said, we need you to do this for us, and we need you to do it quickly. So when we open Denver, we would expect several fire brigades to be providing services for the moment we open that up. Fresno, we have seen similar. What happened with Fresno is that we had so much activity at our Riverside facility, it was busting at its seams. Having Fresno in Central California allowed us to shift some of those opportunities to Fresno while we were continuing to grow our opportunities in Southern California. While Fresno was working on some of that offload of capacity, they are also finding additional opportunities within Central California, adding to the Fresno mix. Arizona PPE—we are having a dialogue as a team now about expanding that footprint or increasing its warehouse capacity because they are bursting at the seams right now. As opposed to last year, Gerry, where we were pulling stuff in from quarters on the fire front, now we are trying to figure out how to make sure we can service it properly. Barry talks about the outstanding order flow that we have. That is driving us to do things. We have our North American manufacturing leader camped out right now at Meridian. Because Viridian was so slow last year, we had some personnel issues where we had to move on some sewing folks. We have since added capacity to that plant and individuals to that plant so that we can fulfill order flow for the first and second quarter. We have got visibility into order flow now into the second quarter and parts of the third quarter. We went from three and a half weeks’ worth of work at a place like Meridian to eight and a half or nine, and that has created challenges because we have to make sure the customer gets that delivery in a timely way. That is how we differentiate. In some of these ways, some of this happened very quickly, and we do not anticipate that momentum moving in the other direction. That is why we feel so optimistic, because for the first time, we have a production problem, not a sales problem.

Gerry Sweeney:
On your guidance, you said high single digits. On the chemical/woven side, the commentary is that it is stable. Is that high single-digit guidance a function of the visibility you are seeing on the fire side today?

Jim Jenkins:
Yes. It is a combination of that and what we also are seeing on the industrial side. The industrial segment—just as an example, in the United States—I get something called Cleveland Research from our partners at LineDrive. It is a survey of industrial channel partners, large and regional, and their view of where the market is going to be. Cameron’s philosophy has always been about trying to steal market share, which is really important in a business as mature as industrial. Historically the Cleveland Research report was saying half a percent growth in the North American industrial market, maybe 0.8% to 1%. Now it is 5%. When you are racing and being the most nimble in a market, and you have the team in your sales field and regional leaders we did not have historically, that foments a lot of optimism on the industrial space as well. Coupled with what we see in fire both in the U.S. and globally—Kevin Ray’s got his team in play in a lot of different opportunities. We would expect to hear soon on several opportunities in Europe where I think we have such close visibility to it, I would be really docked if we did not win. I look at places like the U.K. and Great Britain; I think we are in really good shape there.

Gerry Sweeney:
One more quick question. Margins—can you do a quick margin bridge? So it is around 30%; you were at 41% a year ago. You have volume, logistics/input costs, and pricing. Can you bucket those three out quickly as to how much of the downturn in margins each one played?

Calvin Sweeney:
Gerry, the bulk of that is mix; it is sales mix, followed by freight, duties, and materials cost that get you the rest of the way, but the majority of it was mix.

Gerry Sweeney:
So if you say mix, would that mean if fire volumes improve, we should see an improvement? Or are the margins in the gear low and you have to up the price?

Calvin Sweeney:
In fire services, the higher margin is the turnout gear, and then you have lower margin on boots.

Jim Jenkins:
We are currently in certification right now. We are working on getting certification from UL to be able to manufacture a Viridian product in Mexico. I have talked about this for quite a while. UL has been backed up doing certifications for fire. That backup, I think, has subsided, so I would expect to hear from them sometime in the summer. Then I can start manufacturing Viridian products in Mexico, and that is—Latin America for Viridian is their fastest growing. I am also looking for a certification for Lakeland product at Meridian so that, where needed, I can win departments that require made in U.S. I am now manufacturing LHD in China, and I am currently manufacturing Eagle in China, where we do not have issues with proximity to some regions in Europe where Kevin will still use third-party contractors. Yes, we would expect those margins to improve. As we garner critical mass in the services business—while those services businesses do not necessarily have great gross margin—their EBITDA margins are significant. That is why we have an urgent need to continue to drive growth in those businesses.

Gerry Sweeney:
Got it. I will jump back in. I apologize—quite a few questions, but thank you.

Operator:
Thank you. Our next question comes from the line of Michael Shlisky with D.A. Davidson. Please proceed with your question.

Michael Shlisky:
Yes. Hi. Good afternoon. Thanks for taking my questions. It was a little hard to tell how you feel, quarter to quarter, about the organic growth rate throughout the year. Do you think it might start off the year on a slower-than-high single-digit rate and end up at a higher rate, or could it be somewhat smoother organically throughout the four quarters?

Calvin Sweeney:
I think historically we start off a little slow in the first quarter of the year, and you will see improvement as we move throughout the year, especially now since we are picking up the certifications and see the demand increase. That happened mid-first quarter, so it is going to take a little bit of time for orders to come through.

Michael Shlisky:
Got it. On the ISP growth, interesting to see that you are opening in Denver. Any sense as to start to finish—when did you first hear you should be opening in Denver, and what was the time frame from that point to when you actually opened or are about to be opening? And are there any opportunities in other cities or states beyond Denver later on this year?

Jim Jenkins:
Barry, you are at the heart of the Denver effort right now. Why do you not answer that one?

Barry Phillips:
The Denver opportunity came to light just a few months ago. Our team and the leaders—our ISP’s Mike Glaze—is very well connected and known across the country. He used to be with Cal Fire; he ran their PPE program for many years before retiring and opening up California PPE. So, well connected. We know who to do and what and where. We were aware of an opportunity because a major competitor pulled out of the region. We know some of the technology providers because we have partnerships with them for the cleaning gear that drives our high efficacy ratings, and we found departments in that area that were looking for us and actually spoke to Mike in particular about coming in and taking care of their products for them. So we acted quickly. We have hired the leader for that site—she comes with a strong background and experience in the industry—and we are in process of getting things up and running. Our Fresno site, for example, as a footprint—we use that as a template to build out our sort of cookie-cutter, franchise-type thought on how to quickly ramp up. We did that in about a month and a half. The longest lead item is, first, securing the site; then after that, it is getting UL certification. The other parts—we know what to do, where to set it up, how to set the flow and process, and what resources we need to fulfill it. And, Mike, to the other part of your question—

Jim Jenkins:
We have several other opportunities that we are looking at from a greenfield perspective. We are doing some market research. Mike is checking out some opportunities in the Southeast; he has a few meetings next week—he is leaving FDIC for a meeting in the Southeast to look at opportunity there. Obviously, we want to be in the Midwest. I would envision over the course of the next year another three to five add-ons, in a perfect world, for greenfield—so we have another three to five between greenfield and acquired companies. As I said, these acquisitions are much lower cost, much higher rate of return from a pure synergy perspective because they kind of drive themselves and they can scale quite nicely, and Mike knows how to scale them and identify the people within a region to help drive that growth. He has already got a business plan on that front. I would envision three to five additional ones beyond Denver in North America. Kevin Ray has reached out—he wants one in Germany. It would make sense for us to do that. I think three to five in North America is probably the next twelve months of what I would be focusing on, though.

Michael Shlisky:
Great. And one last quick one for me. Kevin, welcome—glad you are head of EMEA Fire. What is the structure of the sales organization globally? Is someone going to be head of Americas soon that you are going to be hiring? I want to get a sense of the leadership structure.

Jim Jenkins:
We have a North American sales leader already. He reports into Barry. Everyone—other than Kevin—reports up through Barry. Barry is ultimately responsible for our global strategy. He and Kevin work together on the European side. I brought Kevin on board formally because, frankly, de facto, he had been a member of the management team for at least the last year, helping integrate the Jolly and LHD brands.

Michael Shlisky:
Just clarifying. Thank you so much. I will pass it along.

Operator:
Thank you. Our next question comes from the line of Analyst with Lake Street Capital Markets. Please proceed with your question.

Analyst:
Hi, guys. You have got Alex Donix on the line for Mark Smith today. Thanks for taking my questions. One for me—gross margins have been under pressure all year. Walking into fiscal year 2027, what are the biggest drivers of margin improvement there? What does the sequencing look like—what gets better first versus what takes longer to come through?

Calvin Sweeney:
It is really going to be the sales mix that drives that, and what we see is with increased demand on the fire side, especially in the higher-value products, we will see that starting maybe in late Q1 but most likely Q2 is where you really start to see the improvement. And you add that to some of the synergies we are driving with manufacturing—

Jim Jenkins:
—in place for products like Eagle and LHD in China, as opposed to utilizing third-party manufacturers, and the move of Meridian’s fire manufacturing for Latin America into Mexico. We think that, along with selling more turnout gear on the fire front, really adds to the margin.

Analyst:
That is helpful. And then last one for me. The high performance and high viz sale brought in about $14 million. It sounds like the balance sheet is the priority for those proceeds, but is any of that set aside for bolt-on deals, or any additional color on M&A would be great?

Calvin Sweeney:
Balance sheet.

Jim Jenkins:
The M&A opportunities—we are looking at an ABL because we would like a little more availability to do some of these smaller acquisitions. Whether we go that route or others, we will find a way to do it. As I said, they are not expensive deals.

Analyst:
Perfect. Thanks for taking my questions.

Operator:
Thank you. Our next question comes from the line of Analyst with Maxim Group. Please proceed with your question.

Analyst:
Hey. Thanks for taking my questions. I think you mentioned $5 million intercompany sales activity. I am wondering how you expect that to evolve now that you have the head-to-toe certifications, and what do you expect from it in the next fiscal year?

Jim Jenkins:
We expect it to grow significantly. We have an NFPA boot now for Jolly that we just got certified, so we will be rolling that out. Boots, gloves, helmets, and hoods—those are in-stock products that we need to have. The reception on the helmets right now is significant and has exceeded our expectations in the U.S. markets. That will continue to grow. The boots were very well received in the wear trials, so we will see pickup from that. Kevin has only recently started to drive the sales teams within the Eagle—well, not so much Eagle, he has been doing it with Eagle—but more with LHD and with Jolly, the cross-selling of the brands within other markets. Jolly has been very well received in the Latin American market, and now that we have an NFPA boot—where Latin America likes to have the choice of an NFPA offering—we would envision the ability to sell into that market as well. Do I have a dollar amount on that? I do not. But it is going to be, in my perspective, very easy to drive some of the growth in brands within a market like the U.S. that, until these certifications were standardized and finalized, we were not able to sell.

Kevin Ray:
Across the globe, the brand recognition—Lakeland Fire and Safety in the last twelve to eighteen months—is becoming a much higher-profile brand. It is getting credibility across the categories that we are supplying, so we are seeing more inquiries of a higher quality because of that.

Barry Phillips:
And to add to that, these brands that were regional manufacturers that worked through distribution globally with limited sales resources now have the full Lakeland sales team around the globe representing them. They are getting in front of end users and key channel partners that they did not have the opportunity to reach in the past, and that is where it is growing.

Analyst:
Great. Thank you.

Operator:
And we have reached the end of our question-and-answer session. I would like to turn the call back over to Mr. Jenkins for his closing remarks.

Jim Jenkins:
Thank you, operator. Thank you all for joining us for today’s call, and thank you to our customers and distributor partners worldwide for trusting us with your lives and safety. Lakeland Industries, Inc. continues to be well positioned for long-term growth, and we look forward to sharing our continued progress on the next call. We will also be attending FDIC 2026 in Indianapolis from April [inaudible], so please stop by and say hello if you are there. If we were unable to answer any of your questions today, please reach out to our IR firm, MZ Group. We will be more than happy to assist.

Operator:
This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.