Leatt Corporation, a developer and marketer of protective equipment and ancillary products for many forms of sports, especially extreme high-velocity sports, saw total revenues for the first quarter decline 46 percent to $13.1 million, compared to $24.2 million for the first quarter of 2022 which was said to be an exceptional quarter for the company. Revenues for the first quarter of 2022 increased by 88 percent when compared to the prior-year period.
International revenues were $9.2 million, a decrease of 52 percent year-over-year, and sales in the U.S. were $3.9 million, a 26 percent decrease year-over-year. Least said in a statement that U.S. dealers continue to manage elevated stocking levels and adjust ordering patterns accordingly and we continue to actively grow and invest in our team of U.S. employee sales reps to reach a wider dealer base of both MOTO and MTB dealers throughout the country.
The decrease in overall global revenues was said to be attributable to a $6.1 million decrease in body armor sales, a $2.6 million decrease in helmet sales, a $1.7 million decrease in other products, parts, and accessories sales, and a $0.8 million decrease in neck brace sales. The impact of an exceptionally strong comparative quarter was compounded by industry-wide stocking dynamics that continue to affect distributor and dealer ordering levels.
“The wider MOTO and MTB industry continues to experience a variety of post-Covid issues including supply chain dynamics that have created challenging stocking and inventory issues,” said company CEO Sean Macdonald. “Although we continue to see consumer demand for Leatt products, the first quarter of 2023 was particularly challenging in terms of growth in comparison with the 2022 period. The first quarter of 2022 was by far the strongest quarter in our company’s history in terms of revenue, which increased 88 percent over the prior comparable period. However, we are optimistic that the arrival of the spring riding season after the extended cold weather period will increase consumer participation in outdoor activities which will in turn stimulate growth as industry-wide inventory levels are digested and replenished at distributor and dealer levels. Our team remains enthusiastic about the future of our brand and Company as we work towards a return to delivering double-digit growth”
Gross margin increased to 44 percent of sales in the first quarter of 2023 as a result of a strong improvement in global and domestic shipping and logistics costs as supply chain constraints continue to improve and our focus on maintaining margins and strong brand positioning strategies remain in place.
Total operating expenses increased by 8 percent, due to cost controls put in place despite a global inflationary environment. .
Income from operations for the first quarter of 2023 was $1.4 million, down 75 percent compared to $5.6 million for the first quarter of 2022.
Net income for the first quarter of 2023 was $1.02 million, or 17 cents per basic and 16 cents per diluted share, down 76 percent from net income of $4.2 million, or 73 cents per basic and 68 cents per diluted share, for the first quarter of 2022.
Leatt said it continued to meet its working capital needs from cash on hand and internally generated cash flow from operations.
“Cash flow generated from operations was $5.3 million, as our team continues to focus on working capital management and cash flow during a challenging industry period, a testament to the resilience of our business model and team,” said Macdonald.
At March 31, 2023, the company had cash and cash equivalents of $11.4 million.
Photo courtesy Leatt Corporation
