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Leatt Corp Announces Record Breaking Revenue; Reports Results for Fourth Quarter and Full Year 2022

LEAT

Global Revenues Increase to $76.3 million

CAPE TOWN, South Africa, March 28, 2023 /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 record financial results for the fourth quarter and full year ending December 31, 2022. All financial numbers are in U.S. dollars.

Full Year 2022 and Recent Highlights

  • Record full year revenues of $76.3 million, up 5%, compared to 2021.
  • International sales of $59.02 million, up 13%, compared to 2021.
  • Net Income of $9.96 million or $ 1.71 per share.
  • Award-winning helmet category sales increase by 60%, compared to 2021.
  • Cash and cash equivalents increased 41% to $7.1 million, compared to $5.02 million in 2021.
  • Winner of 2023 Design & Innovation Award for Mono Suit MTB HydraDri 5.0 and MTB 3.0 Enduro Helmet.
  • Partnership with Orbea Leatt Speed Company Racing Team and Expansion into Marathon Endurance Segment.

Leatt Chief Executive Officer Sean Macdonald commented: "By many important measures, 2022 was the best year in our Company's history. Total global revenues were $76.3 million, a 5% increase over 2021 which was itself a strong record year with a 88% increase over the prior year period. International sales grew by $6.68 million, or 13%, despite challenging market dynamics. Sales of some of our most innovative product categories, including helmets, footwear and technical apparel, all increased during 2022 by double digits over 2021. These products showcase our engineering and design teams ability to build exceptional products that appeal to large addressable global markets. We believe that our successes in these critical product areas bode very well for our future.

"The second half of 2022 proved to be a difficult period for the global MTB and MOTO industry. Covid supply chain dynamics, global geo-political issues, inflation, the strengthening of the US dollar and the resultant moderation in consumer demand have resulted in over-stocked inventory across brands at the global distribution and dealer level, and have caused a reduction in product purchases. Changes in our customer buying patterns have begun to filter through in the fourth quarter of 2022.

"Although many consumers, distributors and dealers have noted that the Leatt brand continues to gain momentum backed by cutting-edge product innovation, the industry must digest stocking positions before it can return to the buying levels that will support the growth that we have experienced over the last several quarters.

"These market and economic conditions, directly affected our fourth quarter and year-end results, compared to 2021. Although full fiscal year 2022 sales of our more established neck brace and body armor categories were down by 36% and 6%, respectively, when compared to exceptionally strong 2021 sales, helmet sales increased by 60% and other products, parts and accessory sales that include our apparel category increased by 28% Net income for the year was $9.96 million, down 21% with a return on revenue of 13%. Earnings per share for the full year 2022 was $1.71 per basic share.

"Fourth quarter 2022 revenues were $10.9 million, a decrease of 53 percent compared to a very strong fourth quarter of 2021. Net loss for the fourth quarter was $1.1 million, based on the decrease in revenues and a 17% increase in total operating costs driven by our investments in sales, product development and marketing of our growing product range and the development of a globally recognized consumer brand."

Founder and Chairman Dr. Christopher Leatt remarked: "Our design and engineering team, along with our team of test riders, continue to innovate and enthusiastically create products that are recognized by the industry for their design excellence. In recent weeks we received yet another Design & Innovation award for our Mono Suit MTB HydraDri 5.0 and our MTB 3.0 Enduro Helmet, the eighth time that Leatt has been honored for products, suited not only for the best racers in the world, but for a wide range of riders."

Financial Summary

Total revenues for the fourth quarter of 2022 were $10.9 million, down 53%, compared to $23.2 million for the fourth quarter of 2021.

Net loss for the fourth quarter of 2022 was ($1.1) million or ($0.18) per basic and ($0.17) per diluted share, as compared to net income of $3.8 million, or $0.68 per basic and $0.62 per diluted share, for the fourth quarter of 2021.

Total revenues for the full year 2022 were $76.3 million, up 5%, as compared to $72.5 million for the full year of 2021. The increase in global revenue is attributable to a 60% increase in helmet sales, and a 28% in increase in other products, parts and accessories sales that were partially offset by a 36% decrease in neck brace sales and a 6% decrease in body armor sales.

Net income for the full year 2022 was $9.9 million, or $1.71 per basic share and $1.62 per diluted share, down 21%, compared to $12.6 million or $2.29 per basic share and $2.07 per diluted share, for 2021.

Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At December 31, 2022, the Company had cash and cash equivalents of $7.1 million and a current ratio of 4.25:1.

Business Outlook

Mr. Macdonald added: "While the current market dynamics are expected to continue for several quarters as our customers continue to digest inventory, with varying impacts on the different markets and geographical locations we sell to, we believe Leatt as a company and a brand is resilient and well-positioned for future growth and increased shareholder value. Despite the moderation in the exceptional consumer demand levels that the MOTO and MTB industry has experienced over the last several quarters, consumers are still riding and actively participating in outdoor activities - a trend we expect to continue.

"The second half of the year will also see Leatt's expansion into new areas in the global MTB and MOTO marketplace with well differentiated product categories that showcase innovation and our dedication to consumer adventure. We believe that this continued expansion will appeal to very large total addressable markets.

"Our first partnership with a professional endurance mountain biking team - The Orbea Leatt Speed Racing Company (SCR), a competitive force in cross country marathon and gravel racing, is an ideal partner for our shared vision of excellence in performance, innovation and design, and marks our entry into the endurance mountain biking world. In the coming year, SCR team athletes will showcase Leatt helmets and apparel as they compete in the Epic Series and select UCI MTB World Cup events.

"Our customers, dealers and distributors remain enthusiastic about the tremendous momentum and penetration that the Leatt brand and head-to-toe offering of exceptional protective gear have achieved over the last several quarters. Many of our innovative products are still in their infancy in terms of market share.

"As always, we remain focused on our strategy of bringing exceptional protective gear to a wider rider community."

Conference Call

The Company will host a conference call at 10:00 am ET on Tuesday, March 28, 2023, to discuss the 2022 fourth quarter and full-year 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 13737398.

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 motorsports. The Leatt-Brace® is an award-winning neck brace system considered the gold standard for neck protection for anyone wearing a crash helmet in two-wheeled sports 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, Twitter, and Instagram.

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 likelihood that the Company's momentum of record-breaking revenue growth will continue; the ability of the Company to continue to maintain its innovative and cutting edge pipeline of branded products or to financially benefit from its sales and marketing efforts; the ability of the Company's global supply chain to withstand any adverse impact on global supply chains and to meet customer demand; 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; 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.

[FINANCIAL TABLES TO FOLLOW]

LEATT CORPORATION

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2022 AND 2021






ASSETS



2022


2021

Current Assets





Cash and cash equivalents


$ 7,102,945


$ 5,022,436

Short-term investments


-


58,262

Accounts receivable, net


12,839,597


12,660,936

Inventory, net


22,805,462


21,081,481

Payments in advance


1,047,137


1,610,640

Deferred asset, net


1,016,815


-

Prepaid expenses and other current assets


2,878,112


4,178,427

Total current assets


47,690,068


44,612,182






Property and equipment, net


3,104,336


3,128,086

Operating lease right-of-use assets, net


1,092,170


1,393,213






Other Assets





Deposits


40,796


33,339






Total Assets


$ 51,927,370


$ 49,166,820






LIABILITIES AND STOCKHOLDERS' EQUITY






Current Liabilities





Accounts payable and accrued expenses


$ 6,011,390


$ 14,617,671

Note payable, current


108,398


83,270

Operating lease liabilities, current


280,743


318,621

Deferred compensation, current


400,000


-

Income taxes payable


3,382,700


2,738,818

Short term loan, net of finance charges


1,030,196


975,025

Total current liabilities


11,213,427


18,733,405






Deferred compensation, net of current portion


-


320,000

Note payable, net of current portion


141,967


189,249

Operating lease liabilities, net of current portion


811,427


1,074,592

Deferred tax liability, net


66,200


228,600






Commitments and contingencies










Stockholders' Equity





Preferred stock, $.001 par value, 1,120,000 shares





authorized, 120,000 shares issued and outstanding


3,000


3,000

Common stock, $.001 par value, 28,000,000 shares





authorized, 5,971,340 and 5,673,683 shares issued





and outstanding


130,309


130,162

Additional paid - in capital


10,645,497


9,230,847

Accumulated other comprehensive loss


(1,081,143)


(779,268)

Retained earnings


29,996,686


20,036,233

Total stockholders' equity


39,694,349


28,620,974






Total Liabilities and Stockholders' Equity


$ 51,927,370


$ 49,166,820











The accompanying notes are an integral part of these consolidated financial statements.




LEATT CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021







2022

2021






Revenues

$ 76,335,539

$ 72,475,813






Cost of Revenues

45,202,712

41,029,710






Gross Profit

31,132,827

31,446,103






Product Royalty Income

240,044

182,698






Operating Expenses




Salaries and wages

6,148,179

5,003,640


Commissions and consulting expenses

563,689

812,097


Professional fees

586,474

1,072,912


Advertising and marketing

3,342,791

2,170,788


Office lease and expenses

689,068

428,608


Research and development costs

2,179,996

1,826,846


Bad debt expense

474,019

222,250


General and administrative expenses

3,273,346

2,450,376


Depreciation

1,098,433

1,025,536


Total operating expenses

18,355,995

15,013,053






Income from Operations

13,016,876

16,615,748






Other Expenses




Interest and other expenses, net

(13,550)

(163)


Total other expenses

(13,550)

(163)






Income Before Income Taxes

13,003,326

16,615,585






Income Taxes

3,042,873

4,041,148






Net Income Available to Common Shareholders

$ 9,960,453

$ 12,574,437






Net Income per Common Share




Basic

$ 1.71

$ 2.29


Diluted

$ 1.62

$ 2.07






Weighted Average Number of Common Shares Outstanding




Basic

5,821,119

5,480,375


Diluted

6,136,781

6,068,276






Comprehensive Income




Net Income

$ 9,960,453

$ 12,574,437


Other comprehensive income, net of ($14,700) and ($1,000) deferred




income taxes in 2022 and 2021




Foreign currency translation

(301,875)

(216,568)






Total Comprehensive Income

$ 9,658,578

$ 12,357,869






The accompanying notes are an integral part of these consolidated financial statements.




LEATT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021



2022

2021

Cash flows from operating activities



Net income

$ 9,960,453

$ 12,574,437

Adjustments to reconcile net income to net cash provided by



operating activities:



Depreciation

1,098,433

1,025,536

Deferred income taxes

(162,400)

307,300

Stock-based compensation

1,158,997

866,740

Bad debts reserve

452,037

189,699

Inventory reserve

(11,111)

(408)

Deferred asset allowance

105,071

-

(Gain) loss on sale of property and equipment

(23,006)

5,040

(Increase) decrease in:



Accounts receivable

(630,698)

(5,676,806)

Deferred asset

(1,121,886)

-

Inventory

(1,712,870)

(11,411,037)

Payments in advance

563,503

(805,542)

Prepaid expenses and other current assets

1,300,315

(2,069,237)

Income tax refunds receivable

-

2,964

Deposits

(7,457)

360

Increase (decrease) in:



Accounts payable and accrued expenses

(8,606,281)

6,608,746

Income taxes payable

643,882

1,084,618

Deferred compensation

80,000

80,000

Net cash provided by operating activities

3,086,982

2,782,410




Cash flows from investing activities



Capital expenditures

(1,144,173)

(1,139,298)

Proceeds from sale of property and equipment

43,469

1,966

(Increase) decrease in short-term investments, net

58,262

(5)

Net cash used in investing activities

(1,042,442)

(1,137,337)




Cash flows from financing activities



Issuance of common stock

255,800

26,000

Proceeds from note payable

58,075

272,519

Repayment of note payable to bank

(80,229)

-

Proceeds from short-term loan, net

55,171

297,424

Net cash provided by financing activities

288,817

595,943




Effect of exchange rates on cash and cash equivalents

(252,848)

(185,622)




Net increase in cash and cash equivalents

2,080,509

2,055,394




Cash and cash equivalents - beginning of year

5,022,436

2,967,042




Cash and cash equivalents - end of year

$ 7,102,945

$ 5,022,436

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


Cash paid for interest

$ 58,825

$ 28,276

Cash paid for income taxes

$ 2,576,091

$ 2,680,978




Other noncash investing and financing activities



Common stock issued for services

$ 1,158,997

$ 866,740


The accompanying notes are an integral part of these consolidated financial statements.

Cision View original content:https://www.prnewswire.com/news-releases/leatt-corp-announces-record-breaking-revenue-reports-results-for-fourth-quarter-and-full-year-2022-301783275.html

SOURCE Leatt Corporation