Leatt Corp. reported sales fell 53 percent in the fourth quarter against difficult year-ago comparisons while sales for the year rose 5 percent.
Leatt, the maker of the Leatt-Brace, develops personal protective equipment and ancillary products for all sports, including extreme motorsports. Financial numbers are in U.S. dollars.
Full Year 2022 and Recent Highlights
- Record full-year revenues of $76.3 million, up 5 percent, compared to 2021;
- International sales of $59.02 million, up 13 percent, compared to 2021;
- Net Income of $9.96 million or $ 1.71 per share;
- Award-winning helmet category sales increase by 60 percent, compared to 2021;
- Cash and cash equivalents increased 41 percent to $7.1 million, compared to $5.02 million in 2021;
- Winner of 2023 Design & Innovation Award for Mono Suit MTB HydraDri 5.0 and MTB 3.0 Enduro Helmet; and
- Partnership with Orbea Leatt Speed Company Racing Team and Expansion into Marathon Endurance Segment.
Leatt CEO Sean Macdonald commented: “By many important measures, 2022 was the best year in our Company’s history. Total global revenues were $76.3 million, a 5 percent increase over 2021 which was itself a strong record year with an 88 percent increase over the prior year period. International sales grew by $6.68 million, or 13 percent, despite challenging market dynamics. Sales of some of our most innovative product categories, including helmets, footwear and technical apparel, all increased during 2022 by double digits over 2021. These products showcase our engineering and design teams’ ability to build exceptional products that appeal to large addressable global markets. We believe that our successes in these critical product areas bode very well for our future.
“The second half of 2022 proved to be a difficult period for the global MTB and MOTO industry. COVID supply chain dynamics, global geo-political issues, inflation, the strengthening of the US dollar, and the resultant moderation in consumer demand have resulted in over-stocked inventory across brands at the global distribution and dealer level, and have caused a reduction in product purchases. Changes in our customer buying patterns have begun to filter through in the fourth quarter of 2022.
“Although many consumers, distributors and dealers have noted that the Leatt brand continues to gain momentum backed by cutting-edge product innovation, the industry must digest stocking positions before it can return to the buying levels that will support the growth that we have experienced over the last several quarters.
“These market and economic conditions, directly affected our fourth quarter and year-end results, compared to 2021. Although full fiscal year 2022 sales of our more established neck brace and body armor categories were down by 36 percent and 6 percent, respectively, when compared to exceptionally strong 2021 sales, helmet sales increased by 60 percent and other products, parts and accessory sales that include our apparel category increased by 28 percent Net income for the year was $9.96 million, down 21 percent with a return on revenue of 13 percent. Earnings per share for the full year 2022 was $1.71 per basic share.
“Fourth quarter 2022 revenues were $10.9 million, a decrease of 53 percent compared to a very strong fourth quarter of 2021. Net loss for the fourth quarter was $1.1 million, based on the decrease in revenues and a 17 percent increase in total operating costs driven by our investments in sales, product development and marketing of our growing product range and the development of a globally recognized consumer brand.”
Founder and Chairman Dr. Christopher Leatt remarked: “Our design and engineering team, along with our team of test riders, continue to innovate and enthusiastically create products that are recognized by the industry for their design excellence. In recent weeks we received yet another Design & Innovation award for our Mono Suit MTB HydraDri 5.0 and our MTB 3.0 Enduro Helmet, the eighth time that Leatt has been honored for products, suited not only for the best racers in the world, but for a wide range of riders.”
Total revenues for the fourth quarter of 2022 were $10.9 million, down 53 percent, compared to $23.2 million for the fourth quarter of 2021.
Net loss for the fourth quarter of 2022 was ($1.1) million or ($0.18) per basic and ($0.17) per diluted share, as compared to net income of $3.8 million, or $0.68 per basic and $0.62 per diluted share, for the fourth quarter of 2021.
Total revenues for the full year 2022 were $76.3 million, up 5 percent, as compared to $72.5 million for the full year of 2021. The increase in global revenue is attributable to a 60 percent increase in helmet sales, and a 28 percent in increase in other products, parts and accessories sales that were partially offset by a 36 percent decrease in neck brace sales and a 6 percent decrease in body armor sales.
Net income for the full year 2022 was $9.9 million, or $1.71 per basic share and $1.62 per diluted share, down 21 percent, compared to $12.6 million or $2.29 per basic share and $2.07 per diluted share, for 2021.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At December 31, 2022, the Company had cash and cash equivalents of $7.1 million and a current ratio of 4.25:1.
Macdonald added: “While the current market dynamics are expected to continue for several quarters as our customers continue to digest inventory, with varying impacts on the different markets and geographical locations we sell to, we believe Leatt as a company and a brand is resilient and well-positioned for future growth and increased shareholder value. Despite the moderation in the exceptional consumer demand levels that the MOTO and MTB industry has experienced over the last several quarters, consumers are still riding and actively participating in outdoor activities – a trend we expect to continue.
“The second half of the year will also see Leatt’s expansion into new areas in the global MTB and MOTO marketplace with well-differentiated product categories that showcase innovation and our dedication to consumer adventure. We believe that this continued expansion will appeal to very large total addressable markets.
“Our first partnership with a professional endurance mountain biking team – The Orbea Leatt Speed Racing Company (SCR), a competitive force in a cross-country marathon and gravel racing, is an ideal partner for our shared vision of excellence in performance, innovation and design, and marks our entry into the endurance mountain biking world. In the coming year, SCR team athletes will showcase Leatt helmets and apparel as they compete in the Epic Series and select UCI MTB World Cup events.
“Our customers, dealers and distributors remain enthusiastic about the tremendous momentum and penetration that the Leatt brand and head-to-toe offering of exceptional protective gear have achieved over the last several quarters. Many of our innovative products are still in their infancy in terms of market share.
“As always, we remain focused on our strategy of bringing exceptional protective gear to a wider rider community.”
Photo courtesy Leatt Corp.