Lakeland (NASDAQ:LAKE) reported fiscal second quarter 2026 earnings on September 3, 2025, posting record revenue of $52.5 million, up 36% year-over-year driven largely by fire services growth and recent acquisitions, and adjusted EBITDA of $5.1 million, up 90% year-over-year. Net income turned positive at $800,000 versus a $1.4 million loss in fiscal Q2 2025, but adjusted gross margin (non-GAAP) contracted to 37.4% from 41.1% a year prior due to tariffs and acquisition-related margin dilution. This analysis provides three actionable insights on strategic integration, margin management, and operational discipline taken from executive commentary and Q&A.
Acquisitions accelerate Lakeland’s revenue and market share
Recent deals, including Meridian, LHD, and Jolly, contributed $9 million of the $14 million total year-over-year revenue growth, with fire services products increasing by 113% year-over-year and comprising 47% of total revenue year-to-date. Lakeland’s exposure now spans the U.S., Europe, and Asia Pacific, and the company is actively engaged in multiple new M&A opportunities in the fire suit rental, decontamination, and services sector, especially within the United States.
“With the four recently completed acquisitions, which added product line extensions either made of new products and expanded our global footprint, We are well-positioned to grow our global head-to-toe buyer portfolio and generate long-term value for our shareholders.”
— Jim Jenkins, President, CEO, and Executive Chairman
These integrations enhance Lakeland’s competitive moat in consolidated fire and industrial protective markets by creating cross-selling opportunities and recurring revenue streams.
Tariffs and acquisition mix pressure Lakeland gross margins
Adjusted gross margin fell 370 basis points year-over-year to 37.4%, primarily due to lower acquired company margins, increased material costs, new tariffs, and inventory purchase accounting impacts, though it rose sequentially by 220 basis points, primarily due to a partial reversal of purchase price variance expense and some cost reductions. Tariff effects were prominent in Latin America and caused $3.6 million in year-over-year sales declines in that region, while U.S. and European revenues soared.
“Adjusted gross profit as a percentage of net sales in the second quarter was 37.4% versus 41.1% in the comparable year-ago period but increased 220 basis points sequentially from 35.2% in the first quarter. Our adjusted gross margin percentage decreased in the second quarter for fiscal 2026 compared to the same period last year. Primarily due to lower acquired company gross margins, increased material costs, and tariffs.”
— Jim Jenkins, President, CEO, and Executive Chairman
Lakeland’s near-term profitability will remain tied to its ability to offset input cost inflation and tariffs through price realization, operational efficiency, and a more favorable sales mix as newly acquired service businesses ramp up.
Lakeland ramps cost savings and working capital discipline
Operating expense reductions began contributing in the quarter, with adjusted OpEx declining 8.1% from Q1 to Q2 and identified savings of at least $1 million annualized to date for the remainder of the year; further cost initiatives are forecasted to yield an additional $3 million in annualized savings taking effect through the second half of the year. The company’s inventory balance increased 33% year-over-year to $90.2 million from $67.9 million, a key focus for improvement by optimizing working capital in line with demand and recent acquisition absorption.
“We have further identified and are executing initiatives expected to yield an additional $3 million in annualized savings. With the benefits anticipated to materialize in 2026. We believe these efforts will enable higher margins and build a more agile, and cost-effective Lakeland in the longer term.”
— Jim Jenkins, President, CEO, and Executive Chairman
Disciplined cost management and inventory optimization are vital for supporting margin recovery and EBITDA growth, strengthening Lakeland’s ability to self-fund continued M&A and platform reinvestment.
Looking Ahead
Management guided revenue to the lower end of the $210 million to $220 million range for fiscal 2026, with adjusted EBITDA excluding FX between $20 million and $24 million, reflecting Latin American sales weakness and tariff-driven uncertainty. The company expects sequential improvement in gross margin and adjusted EBITDA (non-GAAP) in the third quarter, and is targeting organic growth in the high single-digit to low double-digit range over the medium term. Over the next three to five years, Lakeland aims to expand EBITDA margin into the mid to high teens, driven by efficiency gains, strategic acquisition synergies, and a more profitable business mix.
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