23% Increase in Revenues Drives Record Year;
Expenses Increase only 2.9% as Company Generates Positive Free Cash Flow
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CAPE TOWN, South Africa, March 27, 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 record financial results for the fourth quarter and full year ending December 31, 2017. All financial numbers are in U.S. dollars.
Fourth Quarter 2017 and Subsequent Business Highlights
- Revenues of $5.4 million, up 64% compared to the year ago period
- Total operating expenses increased 13%, while revenues increased 64%
- Net Loss of $107,000, which narrowed by $489,000, or 82%, compared to the year ago period
- Leatt GPX 3.5 Neck Brace and the Leatt GPX 4.5 helmet received a 2018 Nifty 50 Award from the editors of Powersports Business
- Leatt DBX 2.0 Helmet and 3.5 Neck Brace recognized in a 2018 Design & Innovation Award
Full-Year 2017 Highlights
- Record revenues of $20.1 million, up 23% compared to 2016
- Total operating expenses increased 2.9%, while revenues increased 23%
- Income from Operations of $226,000, compared to a Loss from Operations of $(732,000) in 2016
- Net Income of $237,000, or $0.04 per diluted share, compared to a Net Loss of $(455,000), or $(0.08) per diluted share, in 2016
- Cash provided by operating activities of $1.7 million, compared to $320,000 in 2016
Leatt CEO, Sean Macdonald said, “Leatt delivered record full-year revenues of $20.1 million, an impressive 23% increase over 2016, with growth derived from a diversity of geographic locations across multiple product categories, demonstrating the accelerating demand for our products and the diversity of our revenue. The ongoing and methodical improvement of our distribution channels outside the United States continues to contribute to our long-term growth, and in the United States we are seeing growth as we continue to refine our sales organization with the addition of dedicated employee sales representatives coached by professional sales managers. In addition, we are seeing the benefits of ‘stand out’ point of purchase tools designed to drive traffic both in the United States and abroad. Our investments in sales and marketing to increase global brand awareness and launch our growing range of products to a wider group of consumers are producing results as evidenced by increased unit sales while pricing remains stable.”
“We are particularly excited about the consumer response to our 3.0 All Mountain and Enduro helmets for bicycle use,” continued Mr. Macdonald. “These products open a wider, global dealer network beyond our existing dealer footprint that we can readily serve. We are encouraged by the momentum we are building with product line expansion, which includes additional award-winning, innovative products, and product endorsements from a variety of accomplished, professional athletes.”
Founder and Chairman, Dr. Christopher Leatt, added, “For years, Leatt has built its reputation on world-class R&D, and industry accolades for the safety, design and style of our products are a strong testament to the expected marketability and demand for our highly innovative products, which we believe are among the best in their class.”
Total consolidated revenues for the three-month period ended December 31, 2017 increased to $5.4 million, up 64%, compared to $3.3 million for the fourth quarter of 2016. For the twelve months ended December 31, 2017, total consolidated revenues increased by $3.7 million, or 23%, to $20.1 million, up from $16.4 million for the twelve months ended December 31, 2016. The increase for the full year was primarily driven by a 27% increase in Body armor sales, a 48% increase in helmet sales and a 97% increase in other product and accessories sales, which were partially offset by a 9% decrease in Neck brace sales, during the year ended December 31, 2017. Price fluctuations did not impact revenues.
For the fourth quarter of 2017, gross profit was $2.2 million, or 42.0% of revenues, compared to $1.3 million, or 39.6% of revenues, for the fourth quarter of 2016. For the twelve months ended December 31, 2017, gross profit was $9.5 million, or 47.0% of revenues, up 15% compared to $8.2 million, or 50.2% gross margin, for the year-ago period.
Fourth quarter loss from operations was $(283,000), down from $(916,000) for the same period last year. For the twelve months ended December 31, 2017, income from operations was $226,000 compared to a loss from operations of $(732,000) for the prior year.
Net loss for the three months ended December 31, 2017 was $(107,000), or $(0.02) per basic and diluted share, compared to $(596,000) or $(0.11) per basic and diluted share, during the three months ended December 31, 2016. Net income for the twelve months ended December 31, 2017 increased 152% to $237,000, or $0.04 per basic and diluted share, compared to a net loss of $(455,000), or $(0.09) per basic and $(0.08) per diluted share, for the 12 months ended December 31, 2016. The increase in net income for the twelve months ended December 31, 2017 was primarily driven by a 23% increase in revenues.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At December 31, 2017, the Company had cash and cash equivalents of $1.5 million, a current ratio of 2.1:1 and there was no long-term debt.
Mr. Macdonald said, “For the past several years, we have expanded our addressable market by aiming to add approximately one new category per season, and we expect to maintain this aggressive expansion pace. We expect growth to continue as we progress throughout 2018, driven by new product categories, a wider range of product lines and an increased presence around the globe. Although severe weather in Europe this spring may present some challenges in the first half of 2018, we remain confident in the long-term prospects for our business and the marketability and demand for our award-winning exceptional protective gear.”
The Company will host a conference call at 10 am ET on Tuesday, March 27, 2018, to discuss the 2017 fourth quarter and full year 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 13677466.
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.
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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 expand its product lines and to benefit from global market acceptance of its branded products; the ability of the Company to derive financial benefit from its receipt of awards and professional endorsements of its products; 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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