Leatt Corporation (OTC:LEAT) Q1 2026 Earnings Call Transcript

Leatt Corporation (OTC:LEAT) Q1 2026 Earnings Call Transcript August 8, 2025

Operator: Good day, everyone, and welcome to today’s Leatt Corporation Second Quarter 2025 Results Conference Call. [Operator Instructions] Please note this call is being recorded and then I will be standing by should you need any assistance. It is now my pleasure to turn today’s program over to Michael Mason.

Michael Mason:

Investor Relations: Thanks, [ Chelsea ]. Good morning, and welcome to the Leatt Corporation investor conference call to discuss the financial results for the second quarter 2025. The company issued a press release today, Thursday, August 7, 2025, at 8:00 a.m. Eastern and filed its report with the SEC. The press release is posted on Leatt’s website at leatt-corp.com. This call is being broadcast live and may be accessed on the company’s website. An audio replay of this call will be available for 7 days and may be accessed from North America by calling 1 (844) 512-2921 or (412) 317-6671 for international callers. The replay pin number is 11159724. A replay of the webcast will be available immediately following this call and will continue for 7 days.

Certain statements in this conference call may constitute forward-looking statements. Actual results could differ materially from those discussed in this call. Leatt Corporation does not undertake any obligation to update such statements made in this call. Please refer to the complete cautionary statement regarding forward-looking statements in today’s press release dated August 7, 2025. The company will make a presentation on the quarterly results and then open the call to questions. I would now like to turn the call over to Mr. Sean MacDonald, CEO of Leatt Corporation. Good afternoon to you in Cape Town, Sean.

Sean MacDonald: Good morning, Mike, and thank you. Thank you all for joining us today. The second quarter was a fantastic quarter for Leatt with strong revenue growth and profitability. Total global revenues increased by $6.1 million to $16.8 million, a 61% increase over the second quarter of 2024. This was our fourth consecutive quarter of growth and third consecutive quarter of double-digit growth since the post-COVID inventory surplus caused an industry-wide revenue contraction. In the second quarter of 2025, we achieved double-digit revenue growth in all of our major product categories as we continue to develop cutting-edge products to reach a wider rider community and invest in a pipeline of innovative products. Body armor revenues, including upper body armor, limb protection and footwear increased by 48%, helmet revenues increased by 117%.

Other product, parts and accessory sales, including apparel, goggles and components, increased by 65% and neck brace sales increased by 19% compared to the second quarter of 2024. Gross profit as a percentage of sales continued to improve, increasing from 39% in the second quarter of 2024 to 43% in the same 2025 quarter as domestic trading conditions continue to improve despite some tariff uncertainty. Sales to our international distributors increased by 74% during the quarter as sell-through ordering patterns and demand continues to improve. Consumer direct sales, the channel that remains an encouraging growth enterprise increased by 35% compared to the second quarter of ’24. Dealer direct MOTO and MTB sales in the U.S. were another highlight of the quarter, returning to growth with global dealer sales increasing by 45% in the second quarter of 2025.

Although U.S. MOTO and MTB brick and mortar dealers continue to manage some areas of elevated inventory and industry turmoil that is stabilizing, our dealer outreach and selling capabilities are gaining fantastic momentum and participation and demand for our products remains strong. Our profitability and liquidity continues to improve. Net income for the 2025 second quarter was $1.14 million, a 208% increase when compared to the same 2024 quarter. Liquidity continues to improve. We expect working capital investments to increase in the coming months as ordering patterns at the consumer dealer and distributor levels continue to show growth patterns, but we are confident that we have sufficient liquidity to fuel this growth. On a year-to-date basis, for the first 6 months of 2025, our revenue increased by $10.8 million or 52% to $31.54 million and net income increased by $4.13 million or 221% to $2.26 million.

Cash increased by $3.36 million to $15.73 million for the first 6 months of the year with cash flows provided by operations of $4.11 million. Now I’ll turn to more details on sales of our product category for the second quarter of 2025. Sales of our flagship neck brace were $700,000 during the ’25 second quarter, 19% increase over the same 2024 period, primarily due to a 35% increase in the volume of neck braces sold in the ’25 quarter. Neck braces represented 5% of our total revenues for the quarter. Our body armor products are comprised of chest protectors, full upper-body protectors, knee braces, knee and elbow guards, off- road motorcycle boots and mountain biking shoes. Body armor revenues during the 2025 second quarter were $8.29 million, a 48% increase over the same 2024 quarter.

This increase was primarily attributable to a 35% increase in revenues from the sale of upper body and limb protection and a 108% increase in the sale of footwear, comprising motorcycle boots and mountain biking shoes sold during the 2025 second quarter. Body armor products represented 51% of revenues for the quarter. Helmet sales in the 2025 second quarter were $3.11 million, a 117% increase primarily attributable to a 51% increase in the sale of motor helmets over the same ’24 quarter and a 275% increase in the volume of MTB helmets sold in the 2025 second quarter. Helmet revenues represented 19% of total revenues during the quarter. Our other products, parts and accessories category was comprised of goggles, hydration bags and apparel items, including jerseys, pants, shorts and jackets as well as bicycle components.

Revenues during the ’25 second quarter were $4 million. 65% increase, primarily attributable to a 101% increase in the sale of MTB, ADV and motor apparel over the 2024 second quarter. Other products, parts and accessory revenues represented 25% of our total revenues for the quarter. We are also pleased that Leatt was once again recognized as Eurobike, the world’s leading trade fair for cycling and ecomobility, winning awards for our ability to consistently develop technical innovations and functional rider protection pieces. Our 5.0 gravity helmet won the Gold Award for technical performance and our 6.0 HydroDri Jacket won in the performance clothing category. Now I’ll turn to our financial results in a bit more detail. Total revenues for the second quarter of 2025 were $16.18 million, up by 61% compared to $10 million for the second quarter of 2024.

This increase in worldwide revenues is attributable to a $2.7 million increase in body armor sales, a $1.68 million increase in helmet sales, a $1.6 million increase in other product, parts and accessory sales and a 110% increase in neck brace sales. Gross profit for the second quarter was $6.89 million, up by 76% compared to $3.92 million for the second quarter of 2024. Net income for the second quarter of ’25 was $1.14 million or $0.18 per basic and $0.18 per diluted share, up by 208% as compared to a net loss of $1.06 million or $0.17 per basic and $0.16 per diluted share for the second quarter of 2024. And on a year-to-date basis, net income for the first 6 months of 2025 was $3.36 million or $0.36 per basic and $0.35 per diluted share, up 221% as compared to a net loss of $1.87 million or $0.30 per basic and $0.29 per diluted share for the same period in 2024.

We have continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. And at 30 June 2025, the company had cash and cash equivalents of $15.73 million and a current ratio of 7.4:1. Looking forward, our entire team is energized by the increasingly strong demand for Leatt products around the world, of consistent revenue growth and the tremendous progress that we are making despite some challenging industry conditions. The strong revenue growth is being fueled by international sell-through and restocking dynamics and domestic sales and outreach programs that are gaining fantastic momentum as we continue to invest in our team, our selling capabilities and our brand. We expect this trend to continue as reordering patterns continue to improve and focus through to our revenues.

Although there are still some challenging geopolitical and economic headwinds globally, particularly in the U.S. where tariffs could impact inflation, uncertainty and demand, inventory continues to be digested. Our domestic sales outreach and capabilities are gaining traction and participation remains strong. We continue to manage our cost of sales actively and are working closely with suppliers and customers to mitigate tariff risks and costs wherever possible. We strongly believe that our strategy of investing in talent, innovative product development and Leatt as a global consumer-facing brand that appeals to a wide community of riders around the world will continue to fuel our growth moving forward. We remain passionate about our future with a strong portfolio of innovative products in the global market and in the pipeline and a multichannel sales organization that is growing and developing.

We remain confident that we are well positioned for future growth and sustained shareholder value. As always, we’d like to thank our entire Leatt family, our dedicated employees, business partners and team riders for their continued strong support. And with that, I’d like to turn the call over for any questions. Operator?

Q&A Session

Operator: [Operator Instructions] And our first question will come from Christopher Muller, private investor.

Christopher Muller: Maybe 3 or 4 questions today. First, could you maybe add some color around the exceptionally strong U.S. sales this quarter? It looks like nearly 50% growth both sequentially and year-over-year and similar across both the consumer direct and dealer channels. So I guess I’m trying to understand how much of this could be attributed to any onetime factors, maybe related to the timing of tariffs and those associated price increases versus this being more of an inflection point towards sustainable growth after all the personnel and operational changes you’ve made there?

Sean MacDonald: Yes. I think this is primarily due to the operational and personnel changes that we made there. I mean we have new sales leadership in place on the MOTO side part of the business. And we’ve made quite a lot of changes in terms of the program that we’re offering to dealers and our relationship with dealers has certainly strengthened a lot over the last 5 to 6 months. On the MTB side, we’ve been working really hard to develop our distribution capabilities. We have various different rep groups that are now involved in the [indiscernible] that are very experienced and are considered to be the premium reps in the U.S. MTB industry and are all very charged up and very passionate about [indiscernible] can go to. So a lot of opportunity on the mountain biking side of the business.

As I said, on MOTO, a whole new sales team in terms of management in place with new goals, new strategies, new programs that are going out to the dealers and are certainly opening new doors. And of course, we have the ADV program that has been absolutely fantastic. Our ADV products are doing extremely well around the world in Europe, South America and very strong in the U.S. market. So we certainly don’t feel that a large percentage of our growth is coming from onetime items or tariff increases. This is a lot of hard work that we’ve been doing in terms of programs, structuring and product development and brand building and talent management over the last several months.

Christopher Muller: That’s great to hear. And it’s great to see that ADV line doing so well. Is it possible to maybe roughly quantify ADV sales like as a percentage of Q2 revenue?

Sean MacDonald: Currently, ADV sales are 15% to 20% of global revenues, obviously, depending on the quarter and the period. And we do expect that to increase. So it’s proving to be a lot stronger than what we had expected. The Leatt brand and our ADV products and our distribution that we already have in place is really doing a lot better than what we had thought. It’s been very well accepted by the market. We’ve had fantastic reviews on many of the different products that we put out there. So these products are attractive at the distributor dealer and consumer level.

Christopher Muller: That’s great. It looks like you’re also continuing the partnership with Surefoot this summer for those Bike Park pop-up stores. I assume this must be going well since I think it’s maybe the 10th year you’ve been doing this. But I’m only aware of you doing it in a few locations. I guess I’m wondering whether the opportunity for that pop-up store model is really that limited? Or maybe what metrics you’d look to when considering to expand that channel?

Sean MacDonald: Absolutely. I think there’s a lot of opportunities in terms of partnering with various different shops on the [ slots ]. That’s not only in the U.S. and Canada, but also in Europe. It certainly worked for us in terms of being a great partnership to display Leatt as a brand and all of our products in a single concept type of store. So there’s big brand building opportunity there. And of course, there’s a selling opportunity as well, but it really functions very well as a touch point for consumers to experience Leatt products firsthand. And many consumers are enthusiastic about the size of the range and how far we’ve come in a relatively short amount of time with some of those products. So certainly, lots of opportunities. These are really just the first steps that you’re seeing in terms of Surefoot kind of partnerships.

Christopher Muller: Understood. And then lastly for me, I saw you recently hired 2 new marketing managers in Asia, both with some lengthy MOTO industry experience. Are these hires tied to any new distributor relationships or the opening of new sales channels there? Or is this just broadly a greater brand investment in the region?

Sean MacDonald: So we really — our sales and brand manager model that we’ve implemented really around the world has worked very, very well for us in terms of growing sales and improving market penetration and making contact with bringing on the best distributors in the region. So we took a decision in terms of Asia that focus on Asia was needed. It’s a very different kind of market to some of the other regions around the world, and it needed specialist skill. And that’s the reason why we brought on a sales and brand manager and a marketing manager that will focus solely on Asia, building a distribution, helping us with content that is appropriate in terms of Asian engagement and ultimately contributing to revenue growth in the area. We do see Asia as a potential growth area for us, but it is specialized and it does need specialist skill.

Operator: Our next question will come from Olivier Colombo, private investor.

Olivier Colombo: Congratulations on a very impressive Q2, and it’s nice to see growth in the U.S. again. So congratulations to you and the whole team. I have 3 questions for you.

Sean MacDonald: Yes.

Olivier Colombo: So my first question is regarding tariffs. Some outdoor brands have given their growth impact for sales for this year. How much would you think that represents — would represent for you?

Sean MacDonald: I think in worst case, I mean, we try to manage the tariff situation carefully and acutely and of course, we’ve been discussing the situation thoroughly with our suppliers and watching the market really carefully in terms of what’s been happening in terms of retail and selling prices. And I think the biggest impact is, of course, in terms of the uncertainty that it creates and the potential impact on demand should we have inflationary pressures. Of course, many of our competitors that are importing from Asia. So they’re exposed to tariffs just like we are. So it’s difficult to quantify exactly what the impact will be. It’s just difficult to know exactly where tariffs are going to settle. I certainly think that we might have a bit of a contraction — might be a little bit lower than what we had kind of forecasted in the U.S. If we do see big increases in tariffs, the tariffs settle on very high double-digit numbers, we might have some contraction.

I don’t feel that it’s going to be significant unless there are massive tariffs like the tariffs that were originally proposed. The tariffs settle close to where they currently are, I think the market will adjust to that. Some of the price increases will obviously get passed on to consumers, and we’ll manage some of it through the supply chain. So Olivier, I don’t feel that it’s going to be a significant impact on our numbers. It is difficult to quantify exactly how much because, of course, there’s a lot of uncertainty around where the tariffs are going to eventually settle.

Olivier Colombo: That’s perfect. I really appreciate. And then my last question would be regarding Eurobike. It seemed that you had a very big event there. Can you give us a quick recap of the meetings that you have with dealers and distributors? And what were the positives on your side and eventually the concerns on theirs?

Sean MacDonald: Absolutely. It’s a fantastic show. I think the really good news that’s coming through from the distributors is that they are starting to see an uptick in their stock requirements, which is reflected in the ordering patterns that we’ve seen. That’s been going on for the last several quarters and it’s filtering through to our revenue. So we see it on our side. Many of our distributors and some of the new distributors that we brought on are starting to gain really good market traction for U.S. as a brand. Some of the overstocking that existed in the industry over the last few years post-COVID is starting to improve and that’s industry-wide, a lot of competitive stock that’s been out there has been blocking repurchasing of their stock because of cash constraints at the dealer level.

We start to see that improving now. Dealers are starting to be less conservative regarding what they are able to invest in. And that means that distributors are also less conservative, which is why we started to see this [ focus ] to our numbers. I do still feel that there’s some uncertainty out there. If I could wave a magic wand and things were a lot more certain in terms of the tariffs and some of the geopolitical risks in the Middle East in Europe, some of those things have settled down, I think that the sentiment will be far better than what it currently is. So there are still some concerns around where all of that is going to settle. But the good news is that demand for the products is up. The new distributors that we brought on are doing exceptionally well with Leatt as a brand.

Pleasantly surprised regarding consumer and dealer reaction to stock with Leatt and participation is still strong. As I said, in terms of the concerns, that is geopolitical risk. And there are still some pockets of overstock, particularly on the bicycle side of things. There are still some bike brands that we’ve seen have been in trouble so there’s a bit of bike stock that’s still out there that hasn’t disappeared. It’s still being digested, but the sentiment is positive. Things are certainly moving in the right direction and the bike industry is certainly getting a lot stronger than it was when I was [indiscernible] last year.

Operator: And at this time, there are no further questions. So I’d like to turn the call back over to Sean MacDonald for any additional or closing remarks.

Sean MacDonald: Thank you all for joining us today. We look forward to our next call to review the results of the 2025 third quarter.

Operator: Thank you, ladies and gentlemen. This concludes today’s presentation, and we appreciate your participation. You may disconnect at any time.