Leatt Corp, the maker of the Leatt-Brace neck protection system for all helmeted sports, reported revenues increased by 32 percent in the second quarter ended June 30, to $6.9 million. The South African-based firm reports its figures in U.S. dollars.
The increase in revenues for the second quarter was driven by a 70 percent increase in sales of other products, parts and accessories, a 48 percent increase in body armor sales, and an 18 percent increase in helmet sales that were partially offset by an 18 percent decrease in neck brace sales due to closeouts that did not repeat in 2020. Neck brace sales continue to generate a higher gross profit margin than our other product categories.
For the second quarter of 2020, gross profit was $3.3 million, or 47 percent of revenues, compared to $2.6 million, or 50 percent of revenues, for the second quarter of 2019.
Total operating expenses were $2.3 million, down 7 percent, compared to $2.5 million for the second quarter of 2019.
Net income for the three months ended June 30, 2020 was $675,000, or $0.12 per diluted share, up 815 percent, compared to $74,000, or $0.01 per diluted share, for the second quarter of 2019.
During the quarter, Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. Cash increased by 27 percent, primarily due to working capital measures put in place to mitigate some of the effects of the pandemic. At June 30, 2020, the Company had cash and cash equivalents of $2.6 million, and a current ratio of 3.6:1.
Leatt CEO Sean Macdonald said, “We had a remarkable second quarter this year, the best second quarter in our history in terms of revenue, despite the global turmoil caused by the COVID-19 pandemic. Total global revenues for the quarter were $6.9 million, an increase of 32 percent over the second quarter of 2019. We saw revenue growth in virtually all of our “Head-to-Toe” product categories. Our line of helmets and footwear – which include our motorcycle boots and mountain biking shoes – are all trending higher, and the sustained strong demand from a wider rider audience, that we are seeing for our line of body protection, is particularly encouraging.
“International revenues grew by 16 percent during the quarter, while revenues in the U.S. grew by a staggering 51 percent, led by strong e-commerce sales and a resurgence in demand from MOTO dealers, MTB dealers and ultimately, end consumers. We believe that this strong demand is in part due to the growth experienced in the outdoor industry at large, as a result of consumer preference for being outdoors during the pandemic. This trend is especially noticeable in the bicycle industry, which has helped drive demand for our mountain biking products.”
For the first six months of 2020, global revenues were $14.5 million, an increase of 27 percent. Net income for the six-month period was $1.0 million – an increase of 1,150 percent when compared to the same period of 2019.
“The increase in net income for the first six months was fueled by strong revenue growth and our ability to marginally decrease our costs on a year to date basis, in order to navigate the COVID-19 pandemic,” said Macdonald.
Founder and Chairman, Dr. Christopher Leatt added, “Over the past several years, our global team of product developers and engineers supported by team riders have been on a mission to design the ultimate “Head-to-toe” assortment of mountain biking and motorcycle gear. Our latest product category – shoes for both flat pedal and clipless mountain bike riding contain our RideGrip rubber compound for ultimate control and once again redefines the category. Our team continues to work on a pipeline of cutting-edge products that deliver safety and performance to riders globally.”
Macdonald said, “Although we have seen some conservative buying patterns at the distributor level since the COVID-19 pandemic shocked global markets, we remain enthusiastic about the launch of our 2021 range of products in the second half of 2020. Recent launches of goggles, boots and other exceptional protective gear, and now our MTB shoe line, have shown very encouraging demand levels, reviews and performance in the field. These products define Leatt as a premium “Head-to-Toe” brand and are a testament to our team’s ability to develop a full offering of cutting-edge products that appeal to a wide rider audience.”
Macdonald added, “We believe that the consumers’ desire to participate in exhilarating outdoor activities like riding will continue to be an important driver for buying trends going forward and that our investments in this area will gain further momentum. However, we are cautiously monitoring the COVID-19 pandemic on a daily basis, as we continue to plan for the possibility of future pandemic-related headwinds and economic fallout into 2021 and beyond.”
Logo courtesy Leatt