Leatt Corporation reported company revenues for the first quarter were $10.6 million, down 19 percent, compared to $13.1 million for the first quarter of 2023. The company reported decreases in worldwide revenues primarily from a decline of $1.3 million in Body Armor sales, a decline of $1.4 million in helmet sales, a decline of $0.22 million in neck brace sales, partially offset by a $0.53 million increase in the sale of other products, parts and accessories, as distributors continued to manage industry-wide inventory stocking dynamics.
“Although sales to our global distributors decreased by 31 percent as our distributors continue to manage industry-wide stocking dynamics, consumer direct sales increased by 15 percent and dealer direct sales increased by 9 percent,” shared company CEO Sean Macdonald in a media statement. “Domestic and South African dealer direct sales to both MOTO and MTB dealers also grew during the quarter, a very encouraging trend and testament to the gradual recovery that we believe will filter through to distribution over the next several quarters.”
Macdonald added that domestic sales on the company’s consumer-facing Leatt.com remain a highlight as it continues to refine the platform and sales surge.
“We successfully launched our direct-to-consumer store in South Africa during the first quarter of 2024, with initial orders exceeding our expectations,” he said. “Our digital direct-to-consumer channels continue to be a focus area as we strive to reach wider consumer groups around the world. Looking forward, we continue to build a multi-channel sales organization and look forward to some new distributor partnerships in the United Kingdom, Europe and emerging markets that we expect to filter through to revenues over the next few quarters.”
Income (loss) from operations for the first quarter of 2024 was a loss of $790,557, down 157 percent, compared to income of $1.4 million for the first quarter of 2023.
“We remain focused on our margins, which decreased in the first quarter, largely due to short-term promotional opportunities at the dealer direct level, particularly in the United States, as we successfully turn slower moving inventory to cash that will fuel future growth. We do expect our margins to improve as we release our exciting newest products globally and inventory levels continue to stabilize,” Macdonald cautioned.
Net income (loss) for the first quarter of 2024 was a loss of $816,679 or a loss of 13 cents per share, down 180 percent, as compared to net income of $1.0 million, or EPS of 17 16 cents per diluted share, for the first quarter of 2023.
Leatt said in a media statement that it continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. Liquidity reportedly improved as cash for the first quarter increased by $2.2 million.
At quarter-end, Leatt had cash and cash equivalents of $13.5 million, an increase of 19 percent from the December 31, 2023 level, and a current ratio of 9.4:1, compared to a current ratio of 5.6:1 at March 31, 2023.
Macdonald said inventory levels continue to stabilize, decreasing $3.3 million, or 16 percent for the first quarter. “Our liquidity also improved as our team continues to efficiently manage working capital,” he added.
Cash flows provided by operations for the first quarter were $2.8 million.
Business Outlook
Macdonald said that market conditions continue to normalize and although ordering patterns at the dealer level reflect a tapering in large pre-ordering, daily order volume continues to increase and dealer financial conditions, stocking levels and demand sentiment continue to improve. He expects the trends will continue to filter through to distribution over time.
“Although there are areas of the cycling and motorcycle industries that remain challenging, we continue to see the start of a return to growth ahead,” added Macdonald. “Participation remains strong, and the elevated inventory levels that have stalled growth are being digested. Consumer direct and dealer direct revenues continue to show solid improvement, and our newly launched Adventure (ADV) range of products continued to generate initial strong shipments during the first quarter. Despite the ongoing challenges, we believe that our expanding portfolio of innovative products, robust financial position and our growing and developing multi-channel sales organization have us well-positioned for future growth and shareholder value.”
Founder and Chairman Dr. Christopher Leatt remarked: “The strong initial consumer reaction to our new ADV range of products, which have all been rigorously tested and CE certified, demonstrates that continued growth from our pipeline of innovative products designed to reach a wide audience of riders at all levels, remains promising.”
Image courtesy Leatt Corp.
