CAPE TOWN, South Africa, Aug. 9, 2024 /PRNewswire/ -- Leatt Corporation (OTCQB: LEAT), a leading developer and marketer of head-to-toe protective equipment for Moto, MTB, and a wide range of extreme and high-velocity sports, today announced financial results for the second quarter ending June 30, 2024. All financial numbers are in U.S. dollars.
Second Quarter 2024 Summary
Revenues for the second quarter were $10.08 million, down 18%, compared to the second quarter of 2023.
Cash flows provided by operations were $2.99 million for the six months ended June 30, 2024.
Income (loss) from operations for the second quarter was $(1.13) million, down 186%, compared to the second quarter of 2023.
Cash and cash equivalents increased 17% to $13.33 million for the six months ended June 30, 2024.
Successful launch of new product category, a portfolio of bicycle components including handlebars, grips, and ultra-light stems and pedals, at Eurobike Tradeshow.
Chief Executive Officer Sean Macdonald commented, "We are beginning to see progress in a return to sustainable growth. Encouraging growth in sales at the consumer and dealer direct level have started to filter through to ordering from our distributors and we have started to see a level of growth in some key product categories. While there are still some challenging industry and economic headwinds globally as inventory is digested, we believe that this promising uptick in ordering patterns will filter through to our results in due course and is a trend that will contribute to growth over the next few periods and beyond.
"Total global revenues for the second quarter of 2024 were $10.08 million, an 18% decrease from last year's second quarter. U.S. sales increased to $3.73 million and international sales decreased to $6.34 million. Consumer direct sales increased by 19% and dealer direct sales increased by 14%, which we believe is a testament to strong brand recognition and the success of our drive to reach a wider group of consumers globally. While sales to our global distributors decreased by 33% as distributors continued to manage industry-wide stocking dynamics, current ordering patterns and the addition of some very exciting new distributor partnerships in the United Kingdom, Europe, and emerging markets are a highlight that we believe will filter through to our results over the next several quarters.
"At a product level, declines in helmet sales and our other products, parts, and accessory category during the second quarter were partially offset by increases in body armor sales and neck braces. It was particularly encouraging to see neck brace, body and limb protection, knee brace, and MTB apparel returning to growth on a global basis. We also continued to ship promising ADV apparel orders during the quarter and look forward to delivering a pipeline of innovative product categories to the growing ADV market over the next several quarters.
"Cash increased by $1.98 million, to $13.33 million, with cash flows provided by operations of $2.99 million for the six months ended June 30, 2024. Our liquidity also continues to improve as our team continues to manage working capital efficiently.
"On a year-to-date basis, despite a decrease in revenues and an increase in costs, we generated cash flows from operating activities of $2.99 million as of June 30, 2024, reflecting the robustness of our business model.
"Our inventory levels continue to stabilize and have decreased by $5.65 million or 28% over the last six months, as we continue to seek opportunities to turn over slower moving inventory."
Financial Summary
Total revenues for the second quarter of 2024 were $10.08 million, down 18%, compared to $12.35 million for the second quarter of 2023. The decrease in worldwide revenues is attributable to a $2.09 million decrease in helmet sales and a $0.44 million decrease in other products, parts, and accessory sales, which were partially offset by a $0.21 million increase in body armor sales and a $0.05 million increase in neck brace sales, as our distributors continue to constrain ordering and manage industry-wide stocking dynamics.
Income (loss) from operations for the second quarter of 2024 was $(1.13) million, down 186%, compared to $1.31 million for the second quarter of 2023.
Net income (loss) for the second quarter of 2024 was $(1.06) million, or $(0.17) per basic and $(0.16) per diluted share, down 236%, as compared to net income of $776,139, or $0.13 per basic and $0.12 per diluted share, for the second quarter of 2023.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At June 30, 2024, the Company had cash and cash equivalents of $13.33 million and a current ratio of 9.6:1, compared to a current ratio of 6.3:1 at June 30, 2023.
Founder and Chairman Dr. Christoper Leatt remarked, "Our new MTB portfolio of bicycle components including handlebars, grips, and ultra-light stems and pedals, are all more examples of Leatt innovation, design, and technical expertise."
Business Outlook
Mr. Macdonald added, "Although there are still some challenging industry and economic headwinds globally, inventory continues to be digested, participation remains strong, and ordering patterns continue to improve and have started to filter through to our international distributors. We also continue to see very encouraging growth trends at the dealer and consumer level as the demand for Leatt products continues to be very encouraging.
"We continue to invest heavily in consumer brand recognition and building out a high-performing team of sales and marketing professionals around the world as industry-wide turbulence presents an opportunity to grow the Leatt family by adding talented team members. Although these investments typically take time to add to our financial results, we believe that investing in brand momentum and building a great team remain cornerstones of our future growth plans.
"We look forward in the coming months to what we believe will be successful global launches of our 2025 product lines for MOTO, MTB, and ADV as our team of developers and engineers continue to strive for product excellence. We expect that the 2025 MTB lineup will include an exciting new category—top-level, innovative bicycle components.
"We are all enthusiastic about the future with our strong portfolio of innovative products in the market and in the pipeline, a multi-channel sales organization that is growing and developing, and a robust balance sheet to fuel brand and revenue growth. We remain confident we are well-positioned for future growth and shareholder value."
Conference Call
The Company will host a conference call at 10:00 am ET on Friday, August 9, 2024, to discuss the 2024 second-quarter results.
Participants should dial into the call ten minutes before the scheduled time, using the following numbers: 1-877-407-9716 (U.S.A) or +1-201-493-6779 (international) to access the call.
Audio Webcast
There will also be a simultaneous live webcast through the Company's website, www.leatt-corp.com. Participants should register on the website approximately ten minutes prior to the start of the webcast.
Replay
An audio replay of the conference call will be available for seven days and can be accessed by dialing 1-844-512-2921 (U.S.A) or +1-412-317-6671 (international) and using passcode 13748296.
For those unable to attend the call, a recording of the live webcast will be archived shortly following the event for 30 days on the Company's website.
About Leatt Corp
Driven by the science of thrill, Leatt Corporation develops head-to-toe personal protective gear for various sports, with a focus on mountain biking and extreme motorsports. This includes the award-winning Leatt-Brace®, a neck brace system considered the gold standard for neck protection when worn in conjunction with a helmet. Leatt products are designed for participants in extreme sports that use motorcycles, bicycles, mountain bikes, all-terrain vehicles, snowmobiles, and other open-air vehicles.
This press release may contain forward-looking statements regarding Leatt Corporation (the "Company") within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the continued impact of the ADV range of products and direct-to-consumer sales on the Company's results of operations; the Company's ability to continue developing a pipeline of innovative products and global industry talent to fuel future growth; the general ability of the Company to achieve its commercial objectives, including development and growth of a multi-channel sales organization; the business strategy, plans and objectives of the Company; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipates," "seeks," "should," "could," "intends," or "projects" or similar expressions, and involve known and unknown risks and uncertainties. These statements are based upon the Company's current expectations and speak only as of the date hereof. Any indication of the merits of a claim does not necessarily mean the claim will prevail at trial or otherwise. Financial performance in one period does not necessarily mean continued or better performance in the future. The Company's actual results in any endeavor may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, which factors or uncertainties may be beyond our ability to foresee or control. Other risk factors include the status of the Company's common stock as a "penny stock" and those listed in other reports posted on The OTC Markets Group, Inc.
[FINANCIAL TABLES TO FOLLOW]
LEATT CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2024
December 31, 2023
Unaudited
Audited
Current Assets
Cash and cash equivalents
$ 13,329,948
$ 11,347,420
Accounts receivable, net
5,733,601
6,970,322
Inventory, net
14,738,542
20,391,873
Payments in advance
1,168,433
664,754
Deferred asset, net
9,601
9,601
Income tax refunds receivable
521,088
623,081
Prepaid expenses and other current assets
2,592,893
2,297,934
Total current assets
38,094,106
42,304,985
Property and equipment, net
3,678,621
4,026,821
Operating lease right-of-use assets, net
699,260
845,209
Accounts receivable, net
244,383
309,947
Deferred tax asset, net
84,200
84,200
Other Assets
Deposits
37,527
36,210
Total Assets
$ 42,838,097
$ 47,607,372
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses
$ 3,217,573
$ 5,202,368
Notes payable, current
72,025
112,858
Operating lease liabilities, current
282,581
299,432
Short term loans, net of finance charges
400,398
1,135,761
Total current liabilities
3,972,577
6,750,419
Notes payable, net of current portion
15,595
30,652
Operating lease liabilities, net of current portion
416,679
545,777
Commitments and contingencies
Preferred stock, $.001 par value, 1,120,000 shares
authorized, 120,000 shares issued and outstanding
3,000
3,000
Common stock, $.001 par value, 28,000,000 shares
authorized, 6,215,440 and 6,215,440 shares issued
and outstanding
130,553
130,553
Additional paid - in capital
10,749,136
10,745,384
Accumulated other comprehensive loss
(1,375,246)
(1,398,258)
Retained earnings
28,925,803
30,799,845
Total stockholders' equity
38,433,246
40,280,524
Total Liabilities and Stockholders' Equity
$ 42,838,097
$ 47,607,372
The accompanying notes are an integral part of these consolidated financial statements.
LEATT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended
Six Months Ended
June 30
June 30
2024
2023
2024
2023
Unaudited
Unaudited
Unaudited
Unaudited
Revenues
$ 10,078,695
$ 12,350,224
$ 20,693,165
$ 25,429,567
Cost of Revenues
6,157,282
7,007,442
12,763,419
14,314,015
Gross Profit
3,921,413
5,342,782
7,929,746
11,115,552
Product Royalty Income
92,780
10,248
132,083
23,384
Operating Expenses
Salaries and wages
1,608,372
1,228,491
3,176,643
2,469,927
Commissions and consulting expenses
165,601
110,925
289,817
207,249
Professional fees
120,617
111,785
419,588
449,028
Advertising and marketing
1,183,282
863,378
2,075,699
1,704,472
Office lease and expenses
163,190
161,572
314,744
311,812
Research and development costs
628,793
632,968
1,184,571
1,217,959
Bad debt expense (recovery)
314
(230,616)
10,278
(181,221)
General and administrative expenses
977,160
868,595
1,920,048
1,686,774
Depreciation
297,250
292,374
591,384
572,184
Total operating expenses
5,144,579
4,039,472
9,982,772
8,438,184
Income (Loss) from Operations
(1,130,386)
1,313,558
(1,920,943)
2,700,752
Other Income (Expenses)
Interest and other expenses, net
98,016
(16,874)
73,533
(37,798)
Total other Income (expenses)
98,016
(16,874)
73,533
(37,798)
Income (Loss) Before Income Taxes
(1,032,370)
1,296,684
(1,847,410)
2,662,954
Income Taxes
24,993
520,545
26,632
863,594
Net Income (Loss) Available to Common Shareholders
$ (1,057,363)
$ 776,139
$ (1,874,042)
$ 1,799,360
Net Income (Loss) per Common Share
Basic
$ (0.17)
$ 0.13
$ (0.30)
$ 0.30
Diluted
$ (0.16)
$ 0.12
$ (0.29)
$ 0.29
Weighted Average Number of Common Shares Outstanding
Basic
6,215,440
5,971,340
6,215,440
5,971,340
Diluted
6,490,828
6,268,520
6,490,828
6,268,520
Comprehensive Income (Loss)
Net Income (Loss)
$ (1,057,363)
$ 776,139
$ (1,874,042)
$ 1,799,360
Other comprehensive income (loss) , net of $0 deferred income
taxes in 2024 and 2023
Foreign currency translation
160,564
(163,320)
23,012
(437,069)
Total Comprehensive Income (Loss)
$ (896,799)
$ 612,819
$ (1,851,030)
$ 1,362,291
The accompanying notes are an integral part of these consolidated financial statements.
LEATT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
2024
2023
Cash flows from operating activities
Net income (loss)
$ (1,874,042)
$ 1,799,360
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation
591,384
572,184
Stock-based compensation
3,752
-
Bad debts reserve
1,559
(202,905)
Inventory reserve
(28,390)
180,164
Deferred asset allowance
-
(37,518)
Loss on sale of property and equipment
-
12
(Increase) decrease in:
Accounts receivable
1,235,162
2,692,726
Deferred asset
-
762,012
Inventory
5,681,721
3,466,369
Payments in advance
(503,679)
5,079
Prepaid expenses and other current assets
(294,959)
865,006
Income tax refunds receivable
101,993
-
Long-term accounts receivable
65,564
-
Deposits
(1,317)
924
Increase (decrease) in:
Accounts payable and accrued expenses
(1,984,795)
(858,760)
Income taxes payable
-
(2,026,505)
Deferred compensation
-
(400,000)
Net cash provided by operating activities
2,993,953
6,818,148
Cash flows from investing activities
Capital expenditures
(239,094)
(265,819)
Net cash used in investing activities
(239,094)
(265,819)
Cash flows from financing activities
Repayment of notes payable to bank
(55,890)
(52,141)
Repayment of short-term loans, net
(735,363)
(738,228)
Net cash used in financing activities
(791,253)
(790,369)
Effect of exchange rates on cash and cash equivalents
18,922
(867,308)
Net increase in cash and cash equivalents
1,982,528
4,894,652
Cash and cash equivalents - beginning of period
11,347,420
7,102,945
Cash and cash equivalents - end of period
$ 13,329,948
$ 11,997,597
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
$ 42,210
$ 42,127
Cash paid for income taxes
$ 26,633
$ 2,846,403
Other noncash investing and financing activities
Common stock issued for services
$ 3,752
$ -
The accompanying notes are an integral part of these consolidated financial statements.
