Leatt Corporation reported that total revenues for the second quarter declined 18 percent to $10.08 million,  compared to $12.35 million for the second quarter of 2023.

“Consumer-direct sales increased by 19 percent, and dealer-direct sales increased by 14 percent, which we believe is a testament to strong brand recognition and the success of our drive to reach a wider group of consumers globally,” offered company CEO Sean Macdonald. “While sales to our global distributors decreased by 33 percent 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 other products, parts, and accessory categories 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,” Macdonald continued. “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.

The company attributed the decrease in worldwide revenues to:

  • Helmet sales declining $2.09 million year-over-year;
  • Body Armor sales increasing $0.21 million;
  • Neck Brace sales growing $0.05 million; and
  • Other products, parts and accessory sales decreasing $0.44 million.

Company 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.”

Region Summary

  • U.S. sales increased to $3.73 million, and
  • International sales decreased to $6.34 million.

“We are beginning to see progress in a return to sustainable growth,” added Macdonald. “Encouraging growth in sales at the consumer and dealer direct level has 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.“

Income Statement Summary
The loss from operations was $1.13 million for the second quarter, compared to an operating profit of $1.31 million for the second quarter of 2023.

Net loss for the second quarter was $1.06 million, or a loss of 16 cents per diluted share, compared to net income of $776,139, or 12 cents per diluted share, for the second quarter of 2023.

Balance Sheet and Cash Management Summary
Inventory levels reportedly continued to stabilize and decreased by $5.65 million or 28 percent over the last six months, as the company said it continues to seek opportunities to turn over slower-moving inventory.

Leatt said it continued to meet its working capital needs from cash on hand and internally generated cash flow from operations.

“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,” Macdonald detailed.

The company’s current ratio was 9.6:1 on June 30, 2023, compared to 6.3:1 on June 30, 2023.

Outlook
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,” concluded Macdonald.

Image courtesy Leatt Corporation