Favorable results for the first quarter of fiscal 2025 (which ended April 30) reported on June 4 have shares of Lakeland Industries (LAKE) trading 17% higher since. Sales for the period of $36.3 million were up 27% from the prior year and exceeded analysts’ expectations by $3.8 million. This was driven by $3.9 million of combined contributions from its recent acquisitions of Pacific Helmets and Jolly Scarpe and strong growth of 13% from existing operations thanks to healthy demand for its high-value fire-fighters gear, critical environment products, limited use/disposable protective garments and chemical protective suits.
Moreover, an apparent profit miss was entirely caused by $1.2 million of one-time, non-cash expenses, mostly related to the acquisitions. Earnings per share were up just 22% to 22 cents, but backing out the charges I estimate LAKE would have enjoyed a near doubling in profitability to over 33 cents per share thanks to a favorable shift in sales toward higher-margin value-added products.
LAKE thinks its strong start to the year and contributions from the acquisitions can bring sales in fiscal 2025 to a range of $150 million to $155 million, $7.5 million higher than its outlook presented on April 10. It sees that producing adjusted Ebitda of $17 million to $20 million, up $850,000. That indicates consensus-beating sales growth of 21% for the rest of the year versus the 17% expected by Wall Street and an Ebitda gain of 59% against 47%.
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When you consider that this doesn’t even include the benefits it stands to gain from its acquisition of Germany’s LHD Group—which was announced on April 2, is expected to boost revenue by about $27 million a year as soon as the deal closes in June, and comes with much higher margins than LAKE’s current ones—it’s not hard to see why actual results for the year will likely be even stronger. As this plays out, I think the stock’s recent momentum can persist.
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