Leatt Corporation (LEAT) today announced its financial results for the first quarter ended March 31, 2016.
First Quarter Highlights:
Revenue increased 20 percent; Net income increased 109 percent; Initial shipments of DBX 6.0 Carbon and DBX 5.0 Composite helmets for high-velocity cycling and BMX to international customers commenced.
For the three months ended March 31, 2016, revenues were $4.8 million, with net income of $113,000, or $0.02 per share, as compared to revenues of $4.0 million, with net income of $54,000, or $0.01 per share, for the 2015 first quarter.
"We had an excellent 2016 first quarter, highlighted by solid financial results and the successful launch of our new carbon and composite shelled DBX bicycle helmet at the Subaru Sea Otter 2016 Classic in Monterey, California," said CEO Sean Macdonald.
"Revenue increased by 20 percent, and net income doubled in the first quarter, which has typically been our weakest quarter. All our new products continued to soar, although neck braces saw a slight decline."
Chairman of the Board and Head of Research and Development, Dr. Christopher Leatt, added, "The reception accorded our new bicycle helmets in the press, in the industry and among the riders was promising. We believe that our new helmets again demonstrate the ingenuity and agility of our entire team in terms of research, design, engineering and product development. Our strategy continues to be to diversify and extend our multi-faceted product line into new sports and markets. We expect that our innovative, lightweight helmets for motocross, extreme sports and now bicycling are a potentially game-changing product for us, with a global market potential."
Mr. Macdonald said that helmet sales accounted for $809,000, or 17% percent of revenues, for the first quarter of 2016. "These helmet revenues are due to the continuation of the initial shipment of our GPX 5.5 Composite and GPX 6.5 Carbon helmets that first shipped to our customers in the United States and abroad during the 2015 fourth quarter. Additionally, we shipped the DBX 6.0 Carbon and DBX 5.0 Composite helmets to our international customers during the 2016 first quarter."
Body Armor sales accounted for $2.19 million and $2.01 million, or 45 percent and 50 percent of revenues for the quarters ended March 31, 2016 and 2015, respectively. "The category was up 9 percent overall, with strong sales in upper body protectors and knee and elbow guards within the category. In addition, our C-Frame knee brace continues to gain traction, and we are now seeing re-orders from our distributors and dealers," said Macdonald.
Sales of the flagship neck brace accounted for $1.59 million and $1.79 million, or 33 percent and 45 percent of revenues, for the quarters ended March 31, 2016 and 2015, respectively.
"In the United States the decrease in neck brace revenues was primarily the result of a decrease in the sales of the MRX pro neck brace for motor sports, which were particularly strong during the 2015 first quarter, but we note that neck brace sales for the motorcycle and bicycle markets in the United States were stable," said Macdonald. The decrease in sales of neck braces to customers outside the United States was caused by the significant strength of the US dollar in relation to the local trading currencies of customers in the respective regions.
Macdonald opined that the strong U.S. dollar may have a more noticeable effect on revenues in more established product categories. Approximately 61% percent of the Company's revenues are derived from sales outside of the United States and the U.S. dollar has made the products more expensive for foreign distributors, dealers and end consumers.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At March 31, 2016, the Company had cash and cash equivalents of $1.42 million and there was no long term debt.
"We are very pleased with the initial sales of our innovative line of helmets and believe that they will continue to gain traction with consumers in 2016. They are a potentially game-changing development for the Company that we believe will become as important to the Company as our original neck brace."
The Company previously announced that it was actively developing and expanding its dealer network. "Sales through our B2B portal for dealers in the US is beginning to pick up speed as dealers can easily place orders online. This allows our sales managers to get out of the office and meet dealers and sales representatives face-to face, build relationships and offer technical support. It also ensures that the Leatt brand is properly represented in the marketplace," added Macdonald.
Finally, the Company is actively pursuing its youth development program. Macdonald said, "We believe that attending amateur events and identifying talent early is critical to developing young athletes. These are the superstars of the future and we want them to be early adopters of our braces and our full line of protective gear."
Conference Call: The Company will host a conference call at 10:00 am ET to discuss the 2016 first quarter results.
Participants should dial in to the call ten minutes before the scheduled time, using the following numbers: 1-888-348-8777 (USA) or +1-412-902-4245 (international) to access the call.
Audio Webcast: 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.