Revenues increase 32% to $6.9 million; net income up 815%
Strong demand for “Head-to-Toe” protective products
CAPE TOWN, South Africa, (August 13, 2020). 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 financial results for the second quarter ending June 30, 2020. All financial numbers are in U.S. dollars.
Financial and Business Highlights
- Revenues increased by 32%, to $6.9 million for the quarter, compared to the 2019 second quarter
- Net income grew by 815% for the quarter, compared to the 2019 second quarter, to $1 million on a year to date basis
- Strong revenue growth fueled by continued investment in “Head-to-Toe” brand delivery
Leatt CEO Sean Macdonald said, “We had a remarkable second quarter this year, the best second quarter in our history in terms of revenue, despite the global turmoil caused by the Covid-19 pandemic. Total global revenues for the quarter were $6.9 million, an increase of 32% over the second quarter of 2019. We saw revenue growth in virtually all of our “Head-to-Toe” product categories. Our line of helmets and footwear – which include our motorcycle boots and mountain biking shoes – are all trending higher, and the sustained strong demand from a wider rider audience, that we are seeing for our line of body protection, is particularly encouraging.
“International revenues grew by 16% during the quarter, while revenues in the U.S. grew by a staggering 51%, led by strong e-commerce sales and a resurgence in demand from MOTO dealers, MTB dealers and ultimately, end consumers. We believe that this strong demand is in part due to the growth experienced in the outdoor industry at large, as a result of consumer preference for being outdoors during the pandemic. This trend is especially noticeable in the bicycle industry, which has helped drive demand for our mountain biking products.”
For the first six months of 2020, global revenues were $14.5 million, an increase of 27%. Net income for the six-month period was $1.0 million – an increase of 1,150%, when compared to the same period of 2019.
“The increase in net income for the first six months was fueled by strong revenue growth and our ability to marginally decrease our costs on a year to date basis, in order to navigate the COVID-19 pandemic,” said Mr. Macdonald.
Founder and Chairman, Dr. Christopher Leatt added, “Over the past several years, our global team of product developers and engineers supported by team riders have been on a mission to design the ultimate “Head-to-toe” assortment of mountain biking and motorcycle gear. Our latest product category – shoes for both flat pedal and clipless mountain bike riding contain our RideGrip rubber compound for ultimate control and once again redefine the category. Our team continues to work on a pipeline of cutting-edge products that deliver safety and performance to riders globally.”
Financial Summary for Second Quarter 2020
Total revenues for the three-month period ended June 30, 2020 were $6.9 million, up 32%, compared to $5.3 million for the 2019 second quarter.
The increase in revenues for the second quarter was driven by a 70% increase in sales of other products, parts and accessories, a 48% increase in body armor sales, and a 18% increase in helmet sales, that were partially offset by a 18% decrease in neck brace sales due to close outs that did not repeat in 2020. Neck brace sales continue to generate a higher gross profit margin than our other product categories.
For the second quarter of 2020, gross profit was $3.3 million, or 47% of revenues, compared to $2.6 million, or 50% of revenues, for the second quarter of 2019.
Total operating expenses were $2.3 million, down 7%, compared to $2.5 million for the second quarter of 2019.
Net income for the three months ended June 30, 2020 was $675,000, or $0.12 per diluted share, up 815%, compared to $74,000, or $0.01 per diluted share, for the second quarter of 2019.
During the quarter, Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. Cash increased by 27%, primarily due to working capital measures put in place to mitigate some of the effects of the pandemic. At June 30, 2020, the Company had cash and cash equivalents of $2.6 million, and a current ratio of 3.6:1.
Mr. Macdonald said, “Although we have seen some conservative buying patterns at the distributor level since the COVID-19 pandemic shocked global markets, we remain enthusiastic about the launch of our 2021 range of products in the second half of 2020. Recent launches of goggles, boots and other exceptional protective gear, and now our MTB shoe line, have shown very encouraging demand levels, reviews and performance in the field. These products define Leatt as a premium “Head-to-Toe” brand and are testament to our team’s ability to develop a full offering of cutting-edge products that appeal to a wide rider audience.
Mr. Macdonald added, “We believe that the consumers’ desire to participate in exhilarating outdoor activities like riding will continue to be an important driver for buying trends going forward, and that our investments in this area will gain further momentum. However, we are cautiously monitoring the COVID-19 pandemic on a daily basis, as we continue to plan for the possibility of future pandemic-related headwinds and economic fallout into 2021 and beyond.
The Company will host a conference call on Thursday, August 13, 2020 at 10:00 AM ET to discuss the 2020 second 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 conference ID # 13708075.
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
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 contains 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 consumer engagement in outdoor activities like riding will continue to drive buying trends, that the Company will continue to develop and introduce additional products to the market at the same rate as before the Covid-19 pandemic, or that the Company will continue to develop its e-commerce capabilities to benefit from the increase in customer e-commerce buying patterns during the pandemic; the likelihood that the Company will continue to achieve growth in international markets, or benefit from market acceptance of its branded products; the financial outlook of the Company; the general ability of the Company to achieve its commercial objectives in view of the ongoing global pandemic; the business strategy, plans and objectives of the Company and its subsidiaries; 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 could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, which factors or uncertainties could 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.