CAPE TOWN, South Africa, May 13, 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 first quarter ending March 31, 2019. All financial numbers are in U.S. dollars.
First Quarter 2019 Highlights
- Revenues increased by 11%, to $6.1 million
- Knee brace sales volume increased by 49%
- Helmet revenues increased by 9%; strong demand continues
- Other Products, Parts and Accessories category increases by 99% on strong demand for new line of goggles
- Successful global launch of Leatt Velocity 6.5 line of goggles; awarded product of the month in April 2019 by Descend Mountain Bike
Leatt CEO, Sean Macdonald, said, "Revenue for the first quarter, traditionally the most challenging quarter of the year for us, was $6.1 million, representing an 11 percent increase over the 2018 first quarter. International sales continued to grow consistently, quarter over quarter, while U.S. sales for the first quarter contracted due mainly to extreme weather conditions in February and March that caused headwinds for our retail partners. Our early revenues in the U.S. for the second quarter have already rebounded and returned to more stable trading conditions, and we are confident that the momentum we achieved in the marketplace throughout 2018 remains intact."
Mr. Macdonald added, "We are very pleased with the sales performance of our new Velocity 6.5 line of goggles that helped us achieve a 99% increase in our other products, parts and accessories category. Our full range of goggles are available in a variety of colors that are designed to function in all conditions. They were developed with WideVision anti-glare and anti-fog technology and are bullet-proof in accordance with military ballistic standards. The reception of our goggles in the marketplace confirms our team's ability to bring competitively priced and innovative protective gear to the market.
"We believe that our success in growing sales is based on the investments we are making in key personnel, aspirational athlete sponsorships, developing our sales and marketing teams, launching our expanding product categories and building our consumer brand globally. We have bolstered our global distribution network and added new top tier partners to our long-term distribution team. We have also added a new, in-house team of sales professionals for our expanding motorcycle and bicycle product lines. These investments have increased our expenditures in the short term, but we believe they are key to driving our growth in the future."
Founder and Chairman, Dr. Christopher Leatt, added, "The recent successful launch of our new, full range of Velocity goggles continues our long track record of creating, developing and comprehensively testing the highest quality safety and protective gear in the global sports industry. Our engineering and design teams made these goggles to the most stringent military specifications for quality and durability. Developed to protect another critical area of a rider's anatomy, our goggles were stylized for a sleek, appealing look, featuring a detachable nose piece and self-draining frames that accommodate nine different anti-fog lenses."
Financial Summary
Total revenues for the three-month period ended March 31, 2019 increased to $6.1 million, up 11%, compared to $5.5 million for the 2018 first quarter.
The increase in revenues for the first quarter was driven by a 99% increase in sales of other products, parts and accessories, a 9% increase in helmet sales, a 6% increase in body armor sales, that were partially offset by a 18% decrease in neck brace sales. Although neck brace sales were down slightly, they continue to generate a higher gross profit margin than our other product categories.
For the 2019 first quarter, gross profit was $2.9 million, or 47% of revenues, compared to $2.8 million, or 50% of revenues, for the 2018 first quarter.
First quarter income from operations was $15,338 compared to $191,210 for the first quarter of 2018. The decrease is primarily due to costs associated with global marketing campaigns to support brand awareness.
Net income for the three months ended March 31, 2019 was $9,238, or $-0- per basic and diluted share, compared to $140,819, or $0.03 per basic and diluted share, for the same 2018 period. The decrease in net income for the first quarter of 2019 was due to increases in operating costs associated with marketing and advertising.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At March 31, 2019, the Company had cash and cash equivalents of $1.6 million, a current ratio of 2.5:1, and there was no long-term debt.
Business Outlook
Mr. Macdonald said, "We are now experiencing the best year in our history in terms of revenue so we are all excited about our future. While revenue in the U.S. in the first quarter of 2019 was softer than we hoped, the second quarter of 2019 is already showing promising results. We believe our overall strategy of bringing exceptional protective gear categories to a much wider group of riders is on point. Investments we are making are driving expenses higher in the short term, but we believe that these investments are necessary for building revenue growth and sustained profitability in the future.
"Our team is encouraged by continuing customer ordering patterns for our existing and new product categories both in the US and abroad. Our goal is to add one new product category each season to extend into new markets and grow our brand recognition globally. Sales of our new helmets increased in the first quarter year over year. Our new helmets and our new Velocity goggle line, which we officially introduced in March, are uniquely designed products and an ideal medium for introducing new consumers to the Leatt brand. We were all excited to receive Descend Mountain Bike Product of the Month accolade for April."
Conference Call
The Company will host a conference call at 10:00 am ET on Monday, May 13, 2019, to discuss the 2019 first quarter results.
Participants should dial in to the call ten minutes before the scheduled time, using the following numbers: 1-877-407-9716 (U.S.A) or +1-201-493-6779 (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.
Replay
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 13690641.
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.
Follow Leatt® on Facebook, Instagram, and Twitter.
Forward-looking Statements:
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 impact of the Company's new Goggle range on the Company's results of operation; likelihood that the Company will continue to expand its product lines and to benefit from global market acceptance of its branded products; the ability of the Company to derive financial benefit from its receipt of awards; the financial outlook of the Company; the general ability of the Company to achieve its commercial objectives; 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.
LEATT CORPORATION
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CONSOLIDATED BALANCE SHEETS
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ASSETS
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| March 31, 2019
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| December 31, 2018
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| Unaudited
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| Audited
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Current Assets
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|
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|
Cash and cash equivalents
| $ 1,555,676
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| $ 1,709,900
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Short-term investments
| 58,233
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| 58,232
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Accounts receivable
| 2,569,519
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| 2,049,331
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Inventory
| 6,318,051
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| 4,815,215
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Payments in advance
| 389,328
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| 473,286
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Prepaid expenses and other current assets
| 611,332
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| 1,247,233
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Total current assets
| 11,502,139
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| 10,353,197
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|
|
|
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Property and equipment, net
| 2,286,971
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| 2,317,490
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Operating lease right-of-use assets, net
| 458,001
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| -
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|
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|
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Other Assets
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|
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Deposits
| 25,355
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| 25,380
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Intangible assets
| 40,309
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| 40,466
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Total other assets
| 65,664
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| 65,846
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Total Assets
| $ 14,312,775
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| $ 12,736,533
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities
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Accounts payable and accrued expenses
| $ 3,908,605
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| $ 2,779,182
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Operating lease liability, current
| 171,617
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| -
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Income tax payable
| 48,337
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| 70,258
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Short term loan, net of finance charges
| 384,072
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| 582,128
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Total current liabilities
| 4,512,631
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| 3,431,568
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Deferred tax liabilities, net
| 170,900
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| 170,900
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Deferred Compensation
| 100,000
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| 80,000
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Operating lease liability, net of current portion
| 286,384
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| -
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|
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Commitments and contingencies
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Stockholders' Equity
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Preferred stock, $.001 par value, 1,120,000 shares authorized, 120,000 shares issued and outstanding
| 3,000
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| 3,000
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Common stock, $.001 par value, 28,000,000 shares authorized, 5,386,723 and 5,370,028 shares issued and outstanding
| 130,068
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| 130,053
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Additional paid - in capital
| 8,049,354
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| 7,868,119
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Accumulated other comprehensive loss
| (610,996)
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| (609,303)
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Retained earnings
| 1,671,434
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| 1,662,196
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Total stockholders' equity
| 9,242,860
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| 9,054,065
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Total Liabilities and Stockholders' Equity
| $ 14,312,775
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| $ 12,736,533
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LEATT CORPORATION
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
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| Three Months Ended
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| March 31
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| 2019
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| 2018
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| Unaudited
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| Unaudited
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Revenues
| $ 6,090,928
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| $ 5,502,542
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Cost of Revenues
| 3,228,826
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| 2,746,097
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Gross Profit
| 2,862,102
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| 2,756,445
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Product Royalty Income
| 8,701
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| 12,309
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Operating Expenses
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Salaries and wages
| 876,904
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| 777,763
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Commissions and consulting expenses
| 78,061
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| 125,339
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Professional fees
| 252,968
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| 168,471
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Advertising and marketing
| 563,994
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| 504,162
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Office lease and expenses
| 69,992
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| 70,438
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Research and development costs
| 340,096
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| 323,280
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Bad debt expense
| 16,521
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| 9,767
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General and administrative expenses
| 467,234
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| 435,560
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Depreciation
| 189,695
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| 162,764
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Total operating expenses
| 2,855,465
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| 2,577,544
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Income from Operations
| 15,338
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| 191,210
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|
|
|
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Other Income (Expenses)
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Interest and other income (expenses), net
| (3,021)
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| (3,452)
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Total other income (expenses)
| (3,021)
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| (3,452)
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Income Before Income Taxes
| 12,317
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| 187,758
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Income Taxes
| 3,079
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| 46,939
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Net Income Available to Common Shareholders
| $ 9,238
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| $ 140,819
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Net Income per Common Share
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Basic
| $ -
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| $ 0.03
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Diluted
| $ -
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| $ 0.03
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Weighted Average Number of Common Shares Outstanding
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Basic
| 5,380,747
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| 5,366,382
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Diluted
| 5,556,134
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| 5,545,564
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Comprehensive Income
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Net Income
| $ 9,238
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| $ 140,819
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Other comprehensive income, net of $0 and $0 deferred income taxes in 2019 and 2018
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Foreign currency translation
| (1,693)
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| 58,232
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Total Comprehensive Income
| $ 7,545
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| $ 199,051
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LEATT CORPORATION
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
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| 2019
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| 2018
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|
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Cash flows from operating activities
|
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Net income
| $ 9,238
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| $ 140,819
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Adjustments to reconcile net income to net cash provided by
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operating activities:
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|
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Depreciation
| 189,695
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| 162,764
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Stock-based compensation
| 166,250
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| 150,332
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Bad debts
| 14,087
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| 6,503
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Inventory reserve
| 1,000
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| 16,522
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(Increase) decrease in:
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Accounts receivable
| (534,275)
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| (242,407)
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Inventory
| (1,503,836)
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| (16,587)
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Payments in advance
| 83,958
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| 129,921
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Prepaid expenses and other current assets
| 635,901
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| 373,816
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Income tax refunds receivable
| -
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| 46,939
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Deposits
| 25
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| (336)
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Increase (decrease) in:
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Accounts payable and accrued expenses
| 1,129,423
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| (512,306)
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Income taxes payable
| (21,921)
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| -
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Deferred compensation
| 20,000
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| -
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Net cash provided by operating activities
| 189,545
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| 255,980
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|
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Cash flows from investing activities
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Capital expenditures
| (160,353)
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| (201,157)
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Increase in short-term investments, net
| (1)
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| (4)
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Net cash used in investing activities
| (160,354)
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| (201,161)
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|
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Cash flows from financing activities
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Issuance of common stock
| 15,000
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| -
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Repayments of short-term loan, net
| (198,056)
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| (172,804)
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Net cash used in financing activities
| (183,056)
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| (172,804)
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|
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Effect of exchange rates on cash and cash equivalents
| (359)
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| 45,673
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|
|
|
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Net decrease in cash and cash equivalents
| (154,224)
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| (72,312)
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|
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Cash and cash equivalents - beginning of period
| 1,709,900
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| 1,518,157
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|
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Cash and cash equivalents - end of period
| $ 1,555,676
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| $ 1,445,845
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
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Cash paid for interest
| $ 5,449
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| $ 4,085
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Cash paid for income taxes
| $ 25,000
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| $ -
|
|
|
|
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Other non-cash investing and financing activities
|
|
|
|
Common stock issued for services
| $ 166,250
|
| $ 150,332
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SOURCE Leatt Corporation