CAPE TOWN, South Africa, Nov. 12, 2019 /PRNewswire/ -- Leatt Corporation (OTCQB: LEAT), a leading developer and marketer of protective equipment and ancillary products for many forms of sports, especially extreme high-velocity sports, today announced financial results for the third quarter ending September 30, 2019. All financial numbers are in U.S. dollars.
Financial and Business Highlights
- Revenues increased by 12 percent, to $9.6 million for the 2019 third quarter
- Year-to-date global revenues of $21 million
- Net income increased 19 percent, to $1.3 million for the 2019 third quarter
- Other Products, Parts and Accessories category increased by 13 percent for the 2019 third quarter on continued strong demand for the new Velocity 6.5 line of goggles
Sean Macdonald, Chief Executive Officer said, "The third quarter of 2019 was an exceptional quarter for Leatt, and is in fact the strongest quarter ever reported in our company's history. Global revenues were up 12 percent, to $9.6 million compared to last year's third quarter, and net income was up 19 percent during the quarter, thanks to sales growth in every major product category. While overall neck braces contracted very slightly on a year-to-date basis, our flagship neck brace and our innovative new, award-winning 3.5 neck brace with advanced materials and manufacturing technology are both experiencing growing demand. Sales of our bulletproof 6.5 goggle continues to soar, exceeding our expectations. Helmet sales, which had been under pressure for most of the year, also strengthened. Helmet revenue was up 56 percent, fueled by sales of our innovative convertible DBX 3.0 and DBX 4.0 helmets for bicycle riders. Our entire team is encouraged by the results of the quarter which we believe are a testament to our ability to not only innovate, which has always been a Leatt hallmark, but also to execute our sales strategy and operate efficiently."
Mr. Macdonald continued, "Body armor products, which include an array of upper body and limb protectors, have become an important part of our overall revenue growth stream, representing 48 percent of our sales. Our medically proven knee braces that address a wide range of price points and consumer preferences continue to be a key revenue driver that we are continuing to refine.
"For the first nine months of the year, revenues were up 11 percent, to $21 million, and net income was up 17 percent, to $1.4 million. Sales were up in every product category except for neck braces, which contracted very slightly, only 1 percent. Helmet sales were up 4 percent, body armor sales were up 10 percent, and our other products, parts and accessories category increased 45 percent during the period."
Mr. Macdonald added, "The growing market acceptance of our newest, most innovative products has energized our entire team. The sales growth in such items as goggles, knee braces and helmets demonstrate once again that we can efficiently bring to the market protective gear that is scientifically proven, functionally exceptional and aesthetically in line with global consumer trends."
Dr. Christopher Leatt, Chairman of the Board and Lead Research and Development Consultant, added, "Our research and engineering team continues to develop a pipeline of products and technologies that are truly innovative and medically proven, such as our patented 360 turbine technology designed to reduce brain injuries. We are confident that products incorporating this kind of advanced technology will continue to stimulate customer demand and provide strong growth engines for the company in the future."
Total revenues for the three-month period ended September 30, 2019 increased to $9.6 million, up 12 percent, compared to $8.6 million for the 2018 third quarter.
The increase in revenues for the 2019 third quarter was driven by a 56 percent increase in helmet sales, a 13 percent increase in sales of other products, parts and accessories, an 11 percent increase in Neck brace sales, and a 5 percent increase in body armor sales. Neck brace sales continue to grow and generate a higher gross profit margin than our other product categories.
For the 2019 third quarter, gross profit was $4.5 million, or 47 percent of revenues, compared to $4.01 million, or 47 percent of revenues, for the 2018 third quarter. Third quarter income from operations rose 19% to $1.8 million compared to $1.5 million for the third quarter of 2018. Net income for the 2019 third quarter rose 19 percent, to $1.3 million or $0.25 per basic share, compared to $1.1 million, or $0.21 per basic share, for the same 2018 period.
During the quarter, Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At September 30, 2019, the Company had cash and cash equivalents of $1.9 million, a current ratio of 2:1, and there was no long-term debt.
Mr. Macdonald said, "We are pleased by this record-breaking quarter and what it means for the future of our company. These results prove that our strategy of building a pipeline of exceptional protective gear in multiple categories can fuel revenue growth which we expect to continue in the future. Our design team is making use of advanced manufacturing technology and efficient materials to design and deliver products at exceptional value to a wide range of consumers globally. Our customers are enthusiastic about our 2020 product offering that started shipping during the third quarter and will continue through the fourth quarter and beyond.
"On an operational level, we are starting to see the benefits of our ability to operate efficiently, as evidenced by third quarter revenue increasing by more than $1 million or 12 percent, while our operating expenses increased by $200,000 or 9 percent. Salaries and wages increased 17 percent on a year to date basis, as we continue to build our in-house team of sales and e-commerce professionals in the United States and abroad. This investment is absolutely key as we grow our product categories, and work to improve distribution and grow into new consumer areas.
"Finally, we'd like to thank our Leatt family–our dedicated employees, business partners and team riders—for their continued strong efforts and support in making Leatt the success that it has become. The year 2019 is lining up to be yet another groundbreaking year for our Company in terms of product category, revenue and profitability. We believe that the Leatt brand will continue to gain traction as we design and engineer new products, invest in aspirational marketing campaigns and sponsor teams of athletes globally."
The Company will host a conference call at 10:00 am ET on Tuesday, November 12, 2019, to discuss the 2019 third quarter results.
Participants should dial in to the call ten minutes before the scheduled time, using the following numbers: 1-888-348-8777 (U.S.A) or +1-412-902-4245 (international) to access the call.
There will also be a simultaneous live webcast through the Company's website, www.leatt-corp.com. Participants should register on the website approximately ten minutes prior to the start of the webcast.
An audio replay of the conference call will be available for seven days and can be accessed by dialing 1-844-512-2921 (U.S.A) or +1-412-317-6671 (international) and using passcode 10136620.
For those unable to attend the call, a recording of the live webcast, will be archived shortly following the event for 30 days on the Company's website.
About Leatt Corp
Leatt Corporation develops personal protective equipment and ancillary products for all forms of sports, especially extreme motor sports. The Leatt-Brace® is an award-winning neck brace system considered the gold standard for neck protection for anyone wearing a crash helmet as a form of protection. It was designed for participants in extreme sports or riding motorcycles, bicycles, mountain bicycles, all-terrain vehicles, snowmobiles and other vehicles. For more information, visit www.leatt.com.
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This press release may contain forward-looking statements regarding Leatt Corporation (the "Company") within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the continued impact of the Company's new protective gear, including its helmets and goggles, on the Company's results of operation; the likelihood that the Company will continue to expand its product lines with technologically innovative products and to benefit from global market acceptance; the financial outlook of the Company; the general ability of the Company to achieve its commercial objectives, including the Company's ability to rollout a new product in the second half of 2019; the business strategy, plans and objectives of the Company and its subsidiaries, including its ongoing strategy to diversify and extend its product line into new sports and markets; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipates," "seeks," "should," "could," "intends," or "projects" or similar expressions, and involve known and unknown risks and uncertainties. These statements are based upon the Company's current expectations and speak only as of the date hereof. Any indication of the merits of a claim does not necessarily mean the claim will prevail at trial or otherwise. Financial performance in one period does not necessarily mean continued or better performance in the future. The Company's actual results in any endeavor may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, which factors or uncertainties may be beyond our ability to foresee or control. Other risk factors include the status of the Company's common stock as a "penny stock" and those listed in other reports posted on The OTC Markets Group, Inc.
CONSOLIDATED BALANCE SHEETS
September 30, 2019
December 31, 2018
Cash and cash equivalents
Payments in advance
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets, net
Total other assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Note Payable to Bank
Accounts payable and accrued expenses
Operating lease liability, current
Income tax payable
Short term loan, net of finance charges
Total current liabilities
Deferred tax liabilities, net
Operating lease liability, net of current portion
Commitments and contingencies
Preferred stock, $.001 par value, 1,120,000 shares authorized, 120,000 shares issued and outstanding
Common stock, $.001 par value, 28,000,000 shares authorized, 5,386,723 and 5,370,028 shares issued and outstanding
Additional paid - in capital
Accumulated other comprehensive loss
Total stockholders' equity
Total Liabilities and Stockholders' Equity
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three Months Ended September 30
Nine Months Ended September 30
Cost of Revenues
Product Royalty Income
Salaries and wages
Commissions and consulting expenses
Advertising and marketing
Office lease and expenses
Research and development costs
Bad debt expense
General and administrative expenses
Total operating expenses
Income from Operations
Interest and other expenses, net
Total other expenses
Income Before Income Taxes
Net Income Available to Common Shareholders
Net Income per Common Share
Weighted Average Number of Common Shares Outstanding
Other comprehensive income, net of $0 and $0 deferred income taxes in 2019 and 2018
Foreign currency translation
Total Comprehensive Income
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SOURCE Leatt Corporation