Leatt Corp Financial Results for the Second Quarter and First Half 2016:
CAPE TOWN, South Africa, August 12, 2016 – Leatt Corporation (LEAT) today announced its financial results for the second quarter and six months ended June 30, 2016. Leatt Corporation develops and markets protective equipment and ancillary products for many forms of sports, especially extreme high-velocity sports. All financial numbers are in U.S. dollars.
For the three months ended June 30, 2016, revenues were $3.7 million, with a net loss of $11,456, or $0.00 per share, as compared to revenues of $5.2 million, with net income of $423,937, or $0.08 per share, for the 2015 second quarter. For the six months ended June 30, 2016, revenues were $8.5 million, with a net income of $101,524, or $0.02 per share, as compared to revenues of $9.2 million, with net income of $478,042, or $0.09 per share, for the 2015 second quarter.
“The second quarter of 2016 continued to be difficult for companies providing consumer products around the world because of the strength of the US dollar,” said CEO Sean Macdonald. For a non-U.S. consumer, this has meant up to a 20 percent price hike for products that are priced and invoiced in U.S. dollars.
“We expect to build on our areas of strength despite otherwise disappointing results for the first half of the year. We are still experiencing overall sales growth in the geographic U.S., which has not been impacted by the currency turmoil in other markets, and our new helmet line continues to be enthusiastically received by the global market. The U.S. market is the world’s single largest geographic market, and the helmet market is one of the largest product categories in sports safety equipment. So we are expanding our U.S. and helmet sales marketing teams, with the addition of key managers and marketers to both areas. We are also continually working on refining our brand and marketing message to our consumers across all our markets, especially in the bicycle market. We are focused on the development of the Leatt brand to support our growing range of product categories and foster our continued growth.
Macdonald continued, “In the coming third quarter we expect to ship our 2017 range of products, which includes new product categories that are required for riders to participate in the sports that they love. The new 2017 range has been presented to, and well received by, our international distributors at conferences in Europe and Asia and we look forward to shipping these products to distributors, dealers and consumers globally. In light of these efforts, we believe that the 2016 third and fourth quarters will mark a recovery for us, and that the results will be more positive, though possibly not strong enough to cancel out the negatives of the first six months.”
Founder and Chairman, Dr. Christopher Leatt, added, “We have been particularly pleased with the success of our new helmets in the market place. They have had excellent reviews from the trade press and are recording growing demand from our customers. As such, we expect that the range of our helmet designs for specific sports will continue to expand. Our engineers and designers have created an impressive portfolio of new products and we are working on designing products for new categories and much larger markets. We are also working on developing and fine tuning our successful knee brace range for wider market applications, including medical rehabilitation.”
Mr. Macdonald went on to say that helmet sales, including the GPX 5.5 Composite helmet, the GPX 6.5 Carbon helmet, the DBX 6.0 Carbon helmet and the DBX 5.0 Composite helmets, accounted for 10 percent of revenues in the second quarter.
“Our body armor and neck brace sales continue to be negatively impacted by the strengthening of the U.S. dollar against the local currencies of our customers,” remarked Macdonald, “But we believe that our ongoing efforts will return improved results for the third and fourth quarters.”
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At June 30, 2016, the Company had cash and cash equivalents of $1 million and there was no long term debt.
“As we work through the rest of 2016 and into 2017, we see trend lines improving,” Macdonald said. “We are expecting a more positive 2017, due to further expansion of our helmet business, continued focus on marketing the Leatt brand in new markets, and the addition our new product categories. We are also continuing our efforts to engineer new products for all forms of high-velocity sports and to expand our dealer network and B2B portal. These developments are consistent with our long-range plan to grow the Company, diversify our product line, and strengthen our market position. This is a very busy and important time for Leatt.”
“Despite headwinds from currency volatility in international markets, our engineers and designers have put together a pipeline of superlative innovations that we expect will power us into larger consumer markets and into completely new categories that are required in order for riders to be out on the road, track or mountain and that will help to reinforce the Leatt brand. We have never been more excited about our prospects.”