LAKELAND INDUSTRIES INC

Previous wording

Our net sales attributable to customers outside the U.S. were $27.3 million and $26.0 million for the three months ended April 30, 2026 and 2025, respectively.

Current wording

Our net sales attributable to customers outside the U.S. were $28.7 million and $30.4 million for the three months ended July 31, 2026 and 2025, respectively, and $56.0 million and $56.4 million for the six months ended July 31, 2026 and 2025, respectively.

Previous wording

Since early 2025, the executive branch of the U.S. government has pursued a policy of imposing tariffs on imports from many foreign countries, including countries where the Company has manufacturing facilities, such as China, India, and Vietnam, among others. In response, China and other countries announced retaliatory tariffs against certain U.S. imports. These tariffs have been, and may continue to be, announced, amended, paused, reinstated and rescinded with little or no advance notice. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”), and the U.S. Court of International Trade (“CIT”) subsequently ordered U.S. Customs and Border Protection to process refunds of tariffs paid under the IEEPA. While we have submitted claims for refunds related to certain eligible tariffs paid, the ultimate availability, timing, and amount of any potential refunds of such tariffs remain uncertain and are subject to further legal, regulatory, and administrative developments. No tariff refund receivables have been recorded in the accompanying condensed consolidated financial statements as of April 30, 2026. However, after April 30, 2026, we began receiving refunds, but the amount received to date is not material.

Current wording

Since early 2025, the executive branch of the U.S. government has pursued a policy of imposing tariffs on imports from many foreign countries, including countries where the Company has manufacturing facilities, such as China, India, and Vietnam, among others. In response, China and other countries announced retaliatory tariffs against certain U.S. imports. These tariffs have been, and may continue to be, announced, amended, paused, reinstated and rescinded with little or no advance notice. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”), and the U.S. Court of International Trade (“CIT”) subsequently ordered U.S. Customs and Border Protection to process refunds of tariffs paid under the IEEPA. While we have submitted claims for refunds related to certain eligible tariffs paid, the ultimate availability, timing, and amount of any potential refunds of such tariffs remain uncertain and are subject to further legal, regulatory, and administrative developments. During the six months ended July 31, 2026, the Company received approximately $2.1 million of refunds related to previously paid IEEPA tariffs. The tariff refunds were recorded in the condensed consolidated financial statements as a reduction to cost of goods sold.

Previous wording

After the Supreme Court’s ruling on the IEEPA tariffs, the Trump Administration immediately imposed new global tariffs pursuant to Section 122 of the Trade Act of 1974, which allows for tariffs of up to 15% for a period of up to 150 days, and indicated its intention to consider other legal options for imposing tariffs. However, in May 2026, the CIT held that the tariffs imposed under Section 122 were unlawful. This ruling has been appealed and is subject to ongoing litigation.

Current wording

After the Supreme Court’s ruling on the IEEPA tariffs, the Trump Administration immediately imposed new global tariffs pursuant to Section 122 of the Trade Act of 1974, which allows for tariffs of up to 15% for a period of up to 150 days, and indicated its intention to consider other legal options for imposing tariffs. However, in May 2026, the CIT held that the tariffs imposed under Section 122 were unlawful. This ruling has been appealed and is subject to ongoing litigation. Subsequently, the Trump Administration imposed new tariffs on imports from more than 80 countries at varying rates under a number of different statutory provisions, including Section 301 of the Trade Act of 1974 and Section 338 of the Tariff Act of 1930.

Previous wording

We are continually monitoring the potential financial impact of the Russian invasion of Ukraine on our operations. For the three months ended April 30, 2026, sales in Russia accounted for approximately 2.3% of our consolidated sales, and sales into Ukraine were not significant. We do not have any capital assets in Russia.

Current wording

We are continually monitoring the potential financial impact of the Russian invasion of Ukraine on our operations. For the six months ended July 31, 2026, sales in Russia accounted for approximately 2.1% of our consolidated sales, and sales into Ukraine were not significant. We do not have any capital assets in Russia.

Previous wording

We are continually monitoring the potential financial impact of the U.S. and Israel coordinated military operation against Iran on our operations. Our sales in the Middle East were not significant during the three months ended April 30, 2026. However, ongoing supply chain disruptions or increased freight costs resulting from the reduction in shipping volume through the Strait of Hormuz could have material adverse effects on our business.

Current wording

We are continually monitoring the potential financial impact of the U.S. and Israel coordinated military operation against Iran on our operations. Our sales in the Middle East were not significant during the six months ended July 31, 2026. However, ongoing supply chain disruptions or increased freight costs resulting from the reduction in shipping volume through the Strait of Hormuz could have material adverse effects on our business.

Previous wording

Gross Profit. Gross profit for the three months ended April 30, 2026 was $14.9 million, a decrease of $0.8 million, or 4.9%, compared to $15.6 million for the three months ended April 30, 2025. Gross profit as a percentage of net sales decreased to 31.4% for the three months ended April 30, 2026, from 33.5% for the three months ended April 30, 2025, primarily due to increased labor, rent and certification costs partially offset by lower production and material costs.

Current wording

Gross Profit. Gross profit for the three months ended July 31, 2026 was $18.5 million, a decrease of $0.3 million, or 1.5%, compared to $18.8 million for the three months ended July 31, 2025. Gross profit as a percentage of net sales increased to 37.0% for the three months ended July 31, 2026, from 35.8% for the three months ended July 31, 2025, primarily due to $2.1 million in tariff refunds received related to previously paid import duties, as well as lower labor, production and material costs. These impacts were partially offset by increased rent, new tariffs and freight costs.

Previous wording

Operating Expenses. Operating expenses decreased by $1.2 million, or 6.0%, from $20.3 million for the three months ended April 30, 2025 to $19.1 million for the three months ended April 30, 2026. The decrease was primarily due to lower freight costs, incentive compensation and professional fees, partially offset by an increase in stock based compensation and amortization expense. Operating expenses as a percentage of net sales were 40.3% for the three months ended April 30, 2026, down from 43.4% for the three months ended April 30, 2025, primarily due to the factors noted above.

Current wording

Operating Expenses. Operating expenses increased by $1.3 million, or 7.0%, from $19.3 million for the three months ended July 31, 2025 to $20.6 million for the three months ended July 31, 2026. The increase was primarily due to currency fluctuations, tradeshow, advertising and amortization expenses, partially offset by decreases in stock based compensation, incentive compensation and professional fees. Operating expenses as a percentage of net sales were 41.2% for the three months ended July 31, 2026, up from 36.7% for the three months ended July 31, 2025, primarily due to the factors noted above.

Previous wording

Operating Income (Loss). Operating income was $2.3 million for the three months ended April 30, 2026, compared to an operating loss of $(4.6) million for the three months ended April 30, 2025, due to the impacts detailed above. Operating margins were 4.8% for the three months ended April 30, 2026, as compared to (9.9)% for the three months ended April 30, 2025.

Current wording

Operating Loss. Operating loss was $(3.3) million for the three months ended July 31, 2026, compared to an operating loss of $(4.0) million for the three months ended July 31, 2025, due to the impacts detailed above. Operating margins were (6.7)% for the three months ended July 31, 2026, as compared to (7.7)% for the three months ended July 31, 2025.

Previous wording

Income Tax Expense (Benefit). Income tax expense consists of federal, state and foreign income taxes. Income tax expense was $1.3 million for the three months ended April 30, 2026, compared to a benefit of $1.2 million for the three months ended April 30, 2025. The Company's effective tax rate for the first quarter of FY26 was 78.5% which differs from the U.S. federal statutory rate of 21% primarily as a result of a valuation allowance against the Company’s U.S. operations.

Current wording

Income Tax Expense (Benefit). Income tax expense (benefit) consists of federal, state and foreign income taxes. Income tax expense was $1.2 million for the three months ended July 31, 2026, compared to a benefit of $(5.2) million for the three months ended July 31, 2025. The Company's effective tax rate for the second quarter of FY26 was a tax expense of 32.4% which differs from the U.S. federal statutory rate of 21% primarily as a result of a valuation allowance against the Company’s U.S. operations.

Previous wording

Net Income (Loss). Net income was $0.4 million for the three months ended April 30, 2026, compared to a net loss of $(3.9) million for the three months ended April 30, 2025.

Current wording

Net (Loss) Income. Net loss was $(4.6) million for the six months ended July 31, 2026, compared to a net loss of $(3.1) million for the six months ended July 31, 2025.

Previous wording

At April 30, 2026, cash and cash equivalents were approximately $17.4 million, and working capital was approximately $92.8 million. Cash and cash equivalents increased $4.9 million, and working capital decreased $3.4 million from January 31, 2026 due to the balance sheet fluctuations described below.

Current wording

At July 31, 2026, cash and cash equivalents were approximately $17.9 million, and working capital was approximately $90.8 million. Cash and cash equivalents increased $5.4 million, and working capital decreased $5.4 million, from January 31, 2026 due to the balance sheet fluctuations described below.

Previous wording

Of the Company’s total cash and cash equivalents of $17.4 million as of April 30, 2026, cash held in Latin America of $1.0 million, cash held in the UK of $1.3 million, cash held in Russia and Kazakhstan of $1.8 million, cash held in the EEC of $3.9 million, cash held in India of $0.6 million, cash held in Vietnam of $0.2 million, and cash held in Hong Kong of $0.4 million would not be subject to additional U.S. tax in the event such cash was repatriated due to the change in the U.S. tax law as a result of the December 22, 2017 enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”). When the Company repatriates cash from China, of the $3.0 million balance at April 30, 2026, an additional 10% withholding tax may be incurred in that country. The Company expects to repatriate cash from China during FY 27 and in anticipation of doing so, has accrued withholding tax expense of $0.3 million as of April 30, 2026.

Current wording

Of the Company’s total cash and cash equivalents of $17.9 million as of July 31, 2026, cash held in Latin America of $1.2 million, cash held in the UK of $1.1 million, cash held in Russia and Kazakhstan of $2.8 million, cash held in the EEC of $3.9 million, cash held in India of $0.6 million, cash held in Vietnam of $1.2 million, and cash held in Hong Kong of $0.4 million would not be subject to additional U.S. tax in the event such cash was repatriated due to the change in the U.S. tax law as a result of the December 22, 2017 enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”). When the Company repatriates cash from China, of the $3.0 million balance at July 31, 2026, an additional 10% withholding tax may be incurred in that country. The Company expects to repatriate cash from China during FY 27 and in anticipation of doing so, has accrued withholding tax expense of $0.3 million as of July 31, 2026.

Previous wording

Cash provided by operations was $5.8 million. Net income of $0.4 million was adjusted for non-cash charges of $4.5 million, primarily related to the gain on sale of inventory and intellectual property associated with our high performance and high visibility product lines and an increase in operating assets and liabilities of $9.6 million primarily related to changes in deferred revenue, inventory and other assets. Net cash provided by investing activities was $10.0 million, primarily due to the proceeds from the sale of the high-visibility and high-performance workwear styles partially offset by purchases of capital equipment. Net cash used in financing activities was $5.2 million due to $14.0 million borrowed under our credit facility to fund working capital increases offset by the repayment of debt facilities of $19.1 million and $0.2 million in shares returned to pay income taxes on shares vested under our equity compensation program.

Current wording

Cash provided by operations was $5.4 million. Net loss of $(4.6) million for the six months ended July 31, 2026 was adjusted for non-cash charges of $(1.2) million, primarily related to the gains on sale of inventory and intellectual property associated with our high performance and high visibility product lines and lease termination and settlement of the Monterrey, Mexico facility, partially offset by the goodwill impairment of the LHD reporting unit. There was an increase in operating assets and liabilities of $11.2 million primarily related to changes in inventory, deferred revenue and accounts payable. Net cash provided by investing activities was $3.6 million, primarily due to the proceeds from the sale of the high-visibility and high-performance workwear styles partially offset by purchases of capital equipment. Net cash used in financing activities was $3.5 million due to $30.3 million borrowed under our credit facility to fund working capital increases offset by the repayment of debt facilities of $33.9 million and $0.2 million in shares returned to pay income taxes on shares vested under our equity compensation program.

Previous wording

As of April 30, 2026, the Company had no borrowings outstanding on the letter of credit sub-facility and borrowings of $23.8 million outstanding under the revolving credit facility, and there was $16.2 million of additional available credit under the Loan Agreement. As of January 31, 2026, the Company had no borrowings outstanding on the letter of credit sub-facility and borrowings of $28.5 million outstanding under the revolving credit facility, and there was $11.5 million of additional available credit under the Loan Agreement. The interest rate on outstanding borrowings was 5.74% at April 30, 2026 and 5.76% at January 31, 2026.

Current wording

As of July 31, 2026, the Company had no borrowings outstanding on the letter of credit sub-facility and borrowings of $24.9 million outstanding under the revolving credit facility, and there was $15.1 million of additional available credit under the Loan Agreement. As of January 31, 2026, the Company had no borrowings outstanding on the letter of credit sub-facility and borrowings of $28.5 million outstanding under the revolving credit facility, and there was $11.5 million of additional available credit under the Loan Agreement. The interest rate on outstanding borrowings was 5.26% at July 31, 2026 and 5.76% at January 31, 2026.

Previous wording

No shares were repurchased in the three months ended April 30, 2026 leaving $5.0 million remaining under the share repurchase program at April 30, 2026. The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.

Current wording

No shares were repurchased in the six months ended July 31, 2026, leaving $5.0 million remaining under the share repurchase program at July 31, 2026. The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.

Previous wording

Capital Expenditures. Our capital expenditures were $1.4 million for the three months ended April 30, 2026 which primarily relates to replacement equipment for our manufacturing sites and developed technology projects. We expect to fund the capital expenditures from our cash flows from operations. The Company may also expend funds in connection with potential acquisitions.

Current wording

Capital Expenditures. Our capital expenditures were $1.4 million for the six months ended July 31, 2026 which primarily relates to replacement equipment for our manufacturing sites and equipment for our greenfield ISPs. We expect to fund the capital expenditures from our cash flows from operations. The Company may also expend funds in connection with potential acquisitions.

Previous wording

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our fiscal year 2026 Form 10-K. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult, or complex judgments, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2026 Form 10-K. There have been no significant changes in the application of our critical accounting policies and estimates during the three months ended April 30, 2026.

Current wording

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our fiscal year 2026 Form 10-K. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult, or complex judgments, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2026 Form 10-K. There have been no significant changes in the application of our critical accounting policies and estimates during the six months ended July 31, 2026.