U.S. Sales Grow 15%, International Expansion Continues
CAPE TOWN, South Africa, May 10, 2018 – Leatt Corporation (OTCQB: LEAT), a leading developer and marketer of protective equipment and ancillary products for many forms of sports, especially extreme high-velocity sports, today announced its financial results for the first quarter ending March 31, 2018. All financial numbers are in U.S. dollars.
Summary of 2018 First Quarter and Subsequent Business Highlights
- Revenues of $5.5 million, down 5%, compared to the year ago period
- Net income of $141,000, down 48%, compared to the year ago period
- Cash provided by operating activities of $256,000, compared to $316,000 in the year ago period
- Commenced shipment of its highly anticipated and award-winning 3.5 neck brace
- Commenced shipment of its award-winning DBX 2.0 helmet for bicycle use
- 2019 product launches and ordering patterns at international sales conferences encouraging
Leatt CEO, Sean Macdonald said, “Leatt continues to broaden its brand recognition and expand its global distribution channels, positioning the company for a strong 2018 and incremental growth as we continue to develop and introduce additional products to the market. In the 2018 first quarter, we added three new company-employed sales representatives in the United States, which helped drive 15% year-over-year growth in this important market. Outside the United States we saw weaker sales year-over-year partially due to the strong record stocking sales in the fourth quarter of 2017 that affected our sales to distributors this quarter. However, we are encouraged by sales growth in key areas where we have new distributors that have embraced the Leatt brand. Although our revenues may continue to fluctuate as we develop new product categories and fine tune our sales timelines, we believe that this strengthened distribution network will pay dividends as we continue to innovate and introduce new products and categories, including the award-winning 3.5 neck brace, which shipped to our customers during the 2018 first quarter, and the GPX 4.5 Helmet, both of which were winners of the Powersports Nifty 50 awards. In addition, media reaction to our new DBX 2.0 Helmet has been positive and we expect that our stable of exceptional products will help drive growth in the second-half of 2018.”
“We generated cash from operations and continue to maintain a strong balance sheet,” added Mr. Macdonald. “I remain excited about the opportunities before Leatt and believe we are well-positioned for success.”
“Leatt continues to lead the industry in terms of innovation and a focus on bio-medical and technology driven research to make extreme sports safer,” added Founder and Chairman, Dr. Christopher Leatt. “Our group of global athlete ambassadors are actively showcasing and promoting the technology, safety, and style of our new and existing product categories to consumers around the world.”
Total consolidated revenues for the three-month period ended March 31, 2018 decreased to $5.5 million, down 5%, compared to $5.8 million for the first quarter of 2017. The decrease was primarily driven by an 18% decrease in Neck brace sales and a 17% decrease in Body armor sales, which were partially offset by a 51% increase in sales of Other products, parts and accessories and a 47% increase in Helmet sales, during the quarter ended March 31, 2018. Although the company shipped its highly anticipated and award-winning 3.5 neck brace and continued to experience increased sales of its knee brace line, neck brace sales declined compared to the first quarter of 2017 due to substantial customer inventory restocking following a period of foreign currency exchange rate pressures, which occurred during the first quarter of 2017.
For the first quarter of 2018, gross profit was $2.8 million, or 50% of revenues, compared to $2.9 million, or 50% of revenues, for the first quarter of 2017. The company continues to generate improved gross profit margins from its helmet products, which accounted for 16% of total consolidated revenues in the first quarter of 2018 and 10% of total consolidated revenues in the first quarter of 2017.
First quarter 2018 income from operations was $191,000 compared to $421,000 for the same period last year.
Net income for the three months ended March 31, 2018 was $141,000, or $0.03 per basic and diluted share, compared to $272,000, or $0.05 per basic and diluted share, during the three months ended March 31, 2017. The decrease in net income for the three months ended March 31, 2018 was primarily driven by a decrease in revenues and a 3% increase in operating expenses.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At March 31, 2018, the Company had cash and cash equivalents of $1.4 million, a current ratio of 2.4:1 and there was no long-term debt.
Mr. Macdonald said, “We are confident in the long-term prospects for our business and the marketability and demand for our award-winning exceptional protective gear. We reaffirm our expectations for growth for the year, with much of the growth occurring in the second-half of the year, and moving forward, as we benefit from the introduction of new product categories and the improved strength of our distribution channels around the world. In addition, we remain committed to our goal of building a global consumer brand and adding one new category per season.”
The Company will host a conference call at 10 a.m. ET on Thursday, May 10, 2018, to discuss the 2018 first quarter 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.
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.
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 13679708.
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.
Leatt Corporation develops personal protective equipment and ancillary products for all forms of sports, especially extreme motor sports. The Leatt-Brace® is an award-winning neck brace system considered the gold standard for neck protection for anyone wearing a crash helmet as a form of protection. It was designed for participants in extreme sports or riding motorcycles, bicycles, mountain bicycles, all-terrain vehicles, snowmobiles and other vehicles. For more information, visit www.leatt.com.
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 likelihood that the Company will continue to develop and introduce additional products to the market at a rate of one category per season, that the Company will achieve growth in international markets, or benefit from market acceptance of its branded products; the likelihood that the Company will derive financial benefit from the endorsements of its products by professional athletes; the financial outlook of the Company; the general ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries, including its strategy to diversify and extend its product line into new sports and markets; 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.
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