Leatt Corp Financial results for the Fourth Quarter, Full Year 2016 - Management expects Strong growth in Q1 2017 and beyond
CAPE TOWN, South Africa, March 29, 2017 Leatt Corporation today announced its financial results for the fourth quarter and full year ended December 31, 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.
"As we signaled in previous quarters, we expected that our 2016 revenues would be less robust than prior period revenues due to worldwide currency fluctuations, especially the increase in the value of the U.S. dollar against the Euro, the currency of our primary international customers," said CEO Sean Macdonald. "While we expect these conditions to stabilize over time, we are continuously evaluating pricing and marketing strategies globally in order to remain competitive in international markets. Our strategic goal remains to create a comprehensive catalogue of uniquely engineered and designed protective gear that builds on the reputation of our life-saving and award-winning Leatt neck braces."
Fourth Quarter 2016
For the three months ended December 31, 2016, revenues were $3.26 million, with a net loss of $596,000 or $0.11 per share, as compared to revenues of $4.47 million, with a net loss of $82,000 or $0.02 per share, for the 2015 fourth quarter.
Chief Executive Officer, Sean Macdonald remarked, "The primary reason for the revenue decrease in the fourth quarter of 2016 was a decrease in helmets sold during the period. During the fourth quarter of 2015 we shipped substantial initial stocking orders of our GPX 5.5 Composite and GPX 6.5 Carbon helmets. The continued strength of the U.S. dollar compounded this decrease, sales of our more premium priced products are generally more affected than our other product categories."
Macdonald went on to say, "While revenues from quarter to quarter may fluctuate as we focus on product development, testing and refining sales timelines, we expect the sales trend to improve with the shipment of two new helmet products during the first half of 2017, the DBX 3.0 All Mountain and DBX 3.0 Enduro helmets."
Fiscal Year 2016 Highlights:
Fiscal Year 2016: For the year ended December 31, 2016 revenues were $16.4 million, with a net loss of $455,000 or $0.09 loss per share, as compared to revenues of $18.3 million, with a net income of $575,000, or $0.11 per share, for the year ending December 31, 2015.
"During 2016, our body armor and neck brace sales in Europe were 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 in 2017 and beyond. Although revenues in the United States, Australasia and the Middle East were marginally higher during 2016, we continued to experience headwinds as a result of the strengthening of the U.S. Dollar against the local currencies of some of our largest customers. These customers, who made significant investments in inventory in prior periods, adjusted their prior purchasing patterns during the period to manage the increased prices."
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At December 31, 2016, the Company had cash and cash equivalents of $1.1 million and there was no long-term debt.
Business Outlook: "We are encouraged by our 2017 performance so far," Macdonald said. "Many of our European distributors had strong sales during the Christmas period and we are now starting to see re-orders to replenish inventories. We continue to fine-tune our network and have appointed new distributors in some European areas and Central America during the first quarter of 2017. We are also aggressively building our bicycle distribution network globally as we grow our bicycle-related pipeline. Furthermore, during the period, we continued to build our sales management and in-store representation in the U.S. market. While we have a tremendous amount of work in front of us, the reception being received by our new products has made for a strong first quarter and is very encouraging for our team."
"During the first half of 2017 we will ship the highly anticipated DBX 3.0 range of bicycle helmet products to our customers globally as well as the 2017 ECE version of our GPX 5.5 Composite helmet for off-road motorcycle use the lightest motorcycle helmet that we have ever had."
"It is also rewarding to see the accolades for our products in the media," continued Macdonald. "Our helmets, jerseys, pants and gloves have all won plaudits from trade publications that cater to the cycling and motocross industry. Our reputation worldwide is based on stringent safety, high quality and innovation standards. We have consistently focused on remaining true to those values as we move into new product categories, including body armor, helmets, apparel, gloves, hydration and knee braces. We believe that our new pipeline of products, designed for much larger, global consumer markets, will be key to driving new revenue growth and shareholder value."
Founder and Chairman, Dr. Christopher Leatt, added, "We have a passion for pioneering extraordinary safety gear that is lab proven, engineered and innovative, and that gives all riders, professional and amateur alike, clear, functional benefits."
The Company will host a conference call at 10:00 am ET on March 29, 2017, to discuss the 2016 fourth quarter and full year results. Participants should dial in ten minutes before the scheduled call time, using 1-888-348-8777 (USA) 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 (USA) or +1-412-317-6671 (international) and using passcode 10103658.
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.