Protective gear brand Leatt Corp. reported earnings dipped 5 percent in the third quarter on September 30 although sales grew 5 percent.

Third Quarter 2022 Highlights

  • Third quarter global revenues of $23.3 million, up 5 percent, compared to third quarter 2021;
  • Year-to-date revenues of $65.4 million, up 33 percent, compared to the same period of 2021;
  • Year-to-date net income of 11.0 million, up 26 percent, compared to the same period of 2021; and
  • Year-to-date EPS increased to $1.90.

CEO Sean Macdonald commented: “The 2022 third quarter was our 18th consecutive quarter of year-over-year revenue growth. Total global third-quarter 2022 revenues were $23.3 million, an increase of 5 percent over the third quarter of 2021. Gross profit for the quarter was $10.1 million, up 6 percent over 2021. Our entire team, as well as our MTB and MOTO customers, remain enthusiastic about the solid momentum and market penetration that the Leatt brand and our ‘head-to-toe’ offering of exceptional protective gear have achieved over the past several years.

“Global revenues for the first nine months of 2022 were $65.4 million, up 33 percent over the same period last year. Net income for the first nine months grew to $11.0 million, an increase of 26 percent over the prior year period. That’s a tremendous achievement, compared to the very strong first nine months of 2021 when revenues grew by 91 percent. We maintained a return on revenue of 17 percent and earnings of $1.90 per basic share, once again displaying our ability to grow revenues, invest in growth, and remain operationally efficient in these challenging times of macroeconomic headwinds and some stocking congestion globally.

“The increased revenue for the third quarter was primarily due to upticks in sales of helmets and in sales from our other products, parts and accessories category, offset by slight decreases in sales in our body armor and neck brace categories. We were particularly pleased with our results in the U.S. where revenues increased by $1.1 million or 26 percent over the 2021 third quarter, as we fulfilled pre-booked orders to re-stock dealer inventory around the country. We continue to invest heavily in our U.S. sales and distribution capacity are well stocked in our new U.S. warehouse to meet dealer demand on an on-going basis.

“On a year-to-date basis, we saw double-digit revenue growth in all our expanding product categories, with the exception of neck braces, our most established product, where sales decreased in the 2022 period, compared to an extraordinary 74 percent increase in the prior year comparison period as a result of dealer pre-stocking to meet demand. Growth in sales of apparel, MOTO and MTB helmets, and off-road motorcycle boots were also encouraging over the 2021 nine-month period.”

Founder and Chairman Dr. Christopher Leatt remarked: “As always, our engineers and designers are dedicated to creating products that protect the riders who use them, and saving lives. Safety is the core of our business.”

Financial Summary
Total revenues for the third quarter of 2022 increased to $23.3 million, up 5 percent, compared to $22.1 million for the third quarter of 2021. The increase was driven by an 88 percent increase in helmet sales, and a 38 percent increase in other products, parts and accessories, which were partially offset by a 15 percent decrease in body armor and a 30 percent decrease in neck brace sales.

Income from operations for the third quarter of 2022 decreased to $5.5 million, down 5 percent, compared to $5.8 million for the third quarter of 2021. Net income for the third quarter of 2022 decreased to $4.1 million, or $0.70 per basic and $0.65 per diluted share, down 5 percent, compared to $4.3 million, or $0.79 per basic and $0.69 per diluted share, for the third quarter of 2021.

Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At September 30, 2022, the company had cash and cash equivalents of $4.8 million and a current ratio of 3.1:1.

Outlook
Macdonald added: “We continue to grow despite the macroeconomic geo-political headwinds that have caused currency fluctuations and have impacted the sentiment of customers and consumers around the world. We are seeing some moderation in the extraordinary consumer demand levels that the global MOTO and MTB industries have enjoyed over the last several quarters, but these headwinds do not change the overall strategy and solid fundamentals that have contributed to our success. Consumers continue to ride and participate heavily in outdoor activities, and dealers continue to digest inventory and re-order. These are trends we expect to continue.

“In the U.S., our Reno, Nevada warehouse is now fully up and running and well-stocked to ship products to customers and consumers efficiently. The U.S. sales team continues to grow substantially as we reach and service a wider group of MOTO and MTB dealers around the country.

Internationally, our team of global sales and marketing managers in some of our most important regions continues to be an important focus as we aim to leverage the momentum that the Leatt brand has gained over the last several years and grow our multi-channel sales approach.

“We remain proud of our operational efficiencies, resilience and ability to control costs, despite the strong global inflationary environment. We believe that the sales traction, market penetration and brand development that we have achieved over the last several years are testaments to our team’s ability to develop, market and sell innovative products to wider groups of consumers all over the world. Many of our innovative products are still in their infancy, in terms of market share, with significant opportunity for further gains, and we believe that we are well-positioned to deliver long-term growth and shareholder value.

Photo courtesy Leatt Corp.