CAPE TOWN, South Africa, Oct. 29, 2024 /PRNewswire/ -- Leatt Corporation (OTCQB: LEAT), a leading developer and marketer of head-to-toe protective equipment for Moto, MTB, ADV and a wide range of extreme and high-velocity sports, today announced financial results for the third quarter ending September 30, 2024. All financial numbers are in U.S. dollars.
Third Quarter and First Nine Months 2024 Snapshot
Global revenues returned to growth as revenues for the third quarter of 2024 were $12.14 million, up 1%, compared to the third quarter of 2023.
Gross profit margins increased 4% sequentially, compared to the second quarter of 2024.
Cash flow generated from operations for the first nine months of 2024 was $2.98 million.
Net Income was $115,837, down 75%, compared to the third quarter of 2023.
Direct-to-consumer sales increased 12% for the third quarter of 2024.
Cash and cash equivalents at September 30, 2024 was $12.47 million, up 10%, compared to cash on hand at December 31, 2023.
Chief Executive Officer Sean Macdonald commented, "We are all very encouraged by the results of the third quarter of 2024, which we see as a pivotal quarter as global revenues returned to growth, albeit still marginal at this stage. Total global revenues for the quarter were $12.14 million, a 1% increase year-over-year. Body armor sales were up $0.27 million, helmet sales were up $0.14 million and neck brace sales were up $0.04 million. International sales were $8.58 million, up 5% as inventory continues to be digested and an uptick in ordering begins to filter through to our revenues. Gross profit for the third quarter was $5.17 million.
"Our margins also continued to improve on a quarterly basis, increasing by 4% sequentially over the second quarter of 2024, as we manage clearing older inventory and selling newer stock at higher margins. Our inventory levels continue to stabilize, decreasing by $4.62 million, or 23%, over the last nine months, as we continue to seek opportunities to turn over slower-moving inventory and replenish stock levels in preparation for stronger ordering.
"During the quarter we continued to ship orders for our new ADV (Adventure) apparel product line, designed for motorcycle enthusiasts seeking comfort and safety while riding in all weather conditions and terrains. We remain confident that we have the initial distribution, track record, core competencies and talent to deliver a pipeline of other innovative ADV product categories to reach this substantial segment.
"Footwear, comprising MTB shoe and MOTO boot revenues, contracted on a global basis during the quarter. Footwear has been particularly constrained in the current environment with aggressive competitive pricing and high inventory levels causing very cautious buying at the dealer level. We do expect this area to improve as inventory is digested, and ordering continues to pick up.
"We continue to see very encouraging trends at the direct-to-consumer level as consumer direct sales increased by 12%. Our consumer direct platform in South Africa continued to display strong sales, exceeding our expectations.
"Despite current industry-wide conditions, re-investments in working capital and our push to invest in long-term growth, cash increased by $1.12 million to $12.47 million, with cash flows provided by operations of $2.98 million for the nine months ended September 30, 2024. Our liquidity continues to improve as our team continues to manage working capital efficiently.
"Overall, despite some constrained brick-and-mortar MOTO dealer sales in the US, our team remains enthusiastic about the pivotal moment in our recovery that is currently in play. We strongly believe that our strategy of investing in talent, innovative product development and the brand, and our distribution capabilities will fuel growth moving forward."
Financial Summary
Total revenues for the third quarter of 2024 were $12.14 million, up 1%, compared to $12.01 million for the third quarter of 2023.
This increase in worldwide revenues is primarily attributable to a $0.27 million increase in body armor sales, a $0.14 million increase in helmet sales, and a $0.04 million increase in neck brace sales, that were partially offset by a $0.32 million decrease in other products, part and accessory sales.
Income from operations for the third quarter of 2024 was $25,898, down 96%, compared to $620,395 for the third quarter of 2023.
Net income for the third quarter of 2024 was $115,837 or $0.02 per basic and $0.02 per diluted share, down 75%, as compared to net income of $460,474, or $0.08 per basic and 0.07 per diluted share, for the third quarter of 2023.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At September 30, 2024, the Company had cash and cash equivalents of $12.47 million and a current ratio of 6.5:1.
Founder and Research and Development Lead, Dr. Christopher Leatt remarked: "As evidenced by our new ADV apparel line, and our new range of bicycle components, which will commence initial shipment in the coming months, our pipeline of innovative head-to-toe products continues to be very strong."
Business Outlook
Mr. Macdonald added, "Although there are still some challenging economic headwinds globally that may impact demand to some extent, inventory continues to be digested, participation remains strong and ordering patterns continue to improve and have started to filter through to our international distribution revenues and ultimately our revenue position. This is a trend that we expect to continue over the next few periods and beyond.
"We will continue to optimize our selling capabilities by building a team of sales and marketing professionals around the world as industry-wide turbulence presents an opportunity to continue growing the Leatt family by adding talent.
"We are all enthusiastic about the future at Leatt 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 that 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 Tuesday, October 29, 2024 to discuss the third quarter 2024 results.
Participants should dial in to 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 13749831.
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. For more information, visit www.leatt.com.
Follow Leatt® on Facebook, Twitter, and Instagram.
Forward-looking Statements
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 attracting global industry talent to fuel future growth; the ability of the Company to ship and successfully gain market acceptance of its new bicycle components category; 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.
LEATT CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2024
December 31, 2023
Unaudited
Audited
Current Assets
Cash and cash equivalents
$ 12,470,005
$ 11,347,420
Accounts receivable, net
7,862,982
6,970,322
Inventory, net
15,772,146
20,391,873
Payments in advance
977,703
664,754
Deferred asset, net
-
9,601
Income tax refunds receivable
523,888
623,081
Prepaid expenses and other current assets
2,846,213
2,297,934
Total current assets
40,452,937
42,304,985
Property and equipment, net
4,055,879
4,026,821
Operating lease right-of-use assets, net
626,949
845,209
Accounts receivable, net
146,477
309,947
Deferred tax asset, net
84,200
84,200
Other Assets
Deposits
37,960
36,210
Total Assets
$ 45,404,402
$ 47,607,372
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses
$ 5,889,080
$ 5,202,368
Notes payable, current
52,078
112,858
Operating lease liabilities, current
276,062
299,432
Short term loans, net of finance charges
5,795
1,135,761
Total current liabilities
6,223,015
6,750,419
Notes payable, net of current portion
7,147
30,652
Operating lease liabilities, net of current portion
350,887
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
(1,100,976)
(1,398,258)
Retained earnings
29,041,640
30,799,845
Total stockholders' equity
38,823,353
40,280,524
Total Liabilities and Stockholders' Equity
$ 45,404,402
$ 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
Nine Months Ended
September 30
September 30
2024
2023
2024
2023
Unaudited
Unaudited
Unaudited
Unaudited
Revenues
$ 12,138,123
$ 12,008,847
$ 32,831,288
$ 37,438,414
Cost of Revenues
6,968,051
6,890,845
19,731,470
21,204,860
Gross Profit
5,170,072
5,118,002
13,099,818
16,233,554
Product Royalty Income
123,706
1,767
255,789
25,151
Operating Expenses
Salaries and wages
1,676,828
1,267,455
4,853,471
3,737,382
Commissions and consulting expenses
138,124
168,299
427,941
375,548
Professional fees
108,627
156,868
528,215
605,896
Advertising and marketing
1,304,215
974,488
3,379,914
2,678,960
Office lease and expenses
141,420
145,863
456,164
457,675
Research and development costs
620,019
610,589
1,804,590
1,828,548
Bad debt expense (recovery)
(30,788)
46,113
(20,510)
(135,108)
General and administrative expenses
993,031
830,145
2,913,079
2,516,919
Depreciation
316,404
299,554
907,788
871,738
Total operating expenses
5,267,880
4,499,374
15,250,652
12,937,558
Income (Loss) from Operations
25,898
620,395
(1,895,045)
3,321,147
Other Income (Expenses)
Interest and other expenses, net
105,430
(1,150)
178,963
(38,948)
Total other Income (expenses)
105,430
(1,150)
178,963
(38,948)
Income (Loss) Before Income Taxes
131,328
619,245
(1,716,082)
3,282,199
Income Taxes
15,491
158,771
42,123
1,022,365
Net Income (Loss) Available to Common Shareholders
$ 115,837
$ 460,474
$ (1,758,205)
$ 2,259,834
Net Income (Loss) per Common Share
Basic
$ 0.02
$ 0.08
$ (0.28)
$ 0.38
Diluted
$ 0.02
$ 0.07
$ (0.27)
$ 0.36
Weighted Average Number of Common Shares Outstanding
Basic
6,215,440
5,971,340
6,215,440
5,971,340
Diluted
6,485,890
6,270,691
6,485,890
6,270,691
Comprehensive Income (Loss)
Net Income (Loss)
$ 115,837
$ 460,474
$ (1,758,205)
$ 2,259,834
Other comprehensive income (loss) , net of $0 deferred income
taxes in 2024 and 2023
Foreign currency translation
274,270
(27,708)
297,282
(464,777)
Total Comprehensive Income (Loss)
$ 390,107
$ 432,766
$ (1,460,923)
$ 1,795,057
The accompanying notes are an integral part of these consolidated financial statements.
LEATT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
2024
2023
Cash flows from operating activities
Net income (loss)
$ (1,758,205)
$ 2,259,834
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation
907,788
871,738
Stock-based compensation
3,752
-
Bad debts reserve
(31,247)
(175,448)
Inventory reserve
128,096
299,942
Deferred asset allowance
(6,400)
(75,971)
Gain on sale of property and equipment
-
(2,375)
(Increase) decrease in:
Accounts receivable
(861,413)
2,342,233
Deferred asset
16,001
992,389
Inventory
4,491,631
3,802,173
Payments in advance
(312,949)
413,276
Prepaid expenses and other current assets
(548,279)
548,208
Income tax refunds receivable
99,193
(340,492)
Long-term accounts receivable
163,470
-
Deposits
(1,750)
792
Increase (decrease) in:
Accounts payable and accrued expenses
686,712
(567,611)
Income taxes payable
-
(3,382,700)
Deferred compensation
-
(400,000)
Net cash provided by operating activities
2,976,400
6,585,988
Cash flows from investing activities
Capital expenditures
(861,567)
(1,412,558)
Proceeds from sale of property and equipment
-
2,793
Net cash used in investing activities
(861,567)
(1,409,765)
Cash flows from financing activities
Repayment of notes payable to bank
(84,285)
(79,353)
Repayment of short-term loans, net
(1,129,966)
(1,024,949)
Net cash used in financing activities
(1,214,251)
(1,104,302)
Effect of exchange rates on cash and cash equivalents
222,003
(391,114)
Net increase in cash and cash equivalents
1,122,585
3,680,807
Cash and cash equivalents - beginning of period
11,347,420
7,102,945
Cash and cash equivalents - end of period
$ 12,470,005
$ 10,783,752
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
$ 69,515
$ 56,602
Cash paid for income taxes
$ 55,906
$ 4,529,602
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.
