Leatt Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: Total global revenues increased by 61% year-over-year to $16.18 million in Q2, marking the fourth consecutive quarter of growth.
  • Positive Sentiment: Net income was $1.14 million in Q2, a 208% increase compared to a year-ago loss, driven by improved margins and sales growth.
  • Positive Sentiment: All major product categories delivered double-digit growth: body armor up 48%, helmets up 117%, other products and accessories up 65%, and net product sales up 19% YoY.
  • Positive Sentiment: Sales momentum continued across channels with international distributor revenue up 74%, consumer direct up 35%, and global dealer sales up 45%.
  • Negative Sentiment: Despite strong performance, the company cautioned that tariff uncertainties and geopolitical headwinds could create demand volatility and may require increased working capital investment.
AI Generated. May Contain Errors.
Earnings Conference Call
Leatt Q2 2025
00:00 / 00:00

There are 5 speakers on the call.

Operator

Good day, everyone, and welcome to today's Liat Corporation Second Quarter twenty twenty five Results Conference Call. At this time, all participants are in a listen only mode. Later, you will have an opportunity to ask questions during the question and answer session. Please note this call is being recorded and that I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Michael Mason.

Speaker 1

Thanks Chelsea. Good morning and welcome to the Liat Corporation Investor Conference Call to discuss the financial results for the second quarter twenty twenty five. The company issued a press release today, Thursday, 08/07/2025 at eight a. M. Eastern and filed its report with the SEC.

Speaker 1

The press release is posted on LIAT's website at leattcorp.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 seven days and may be accessed from North America by calling 40921 or (412) 317-6671 for international callers. The replay pin number is one million one hundred fifty nine thousand seven hundred twenty four. A replay of the webcast will be available immediately following this call and will continue for seven days.

Speaker 1

Certain statements in this conference call may constitute forward looking statements. Actual results could differ materially from those discussed in this call. Liat Corporation does not undertake any obligation update such statements made in this call. Please refer to the complete cautionary statement regarding forward looking statements in today's press release dated 08/07/2025. The company will make a presentation on the quarterly results and then open the call to questions.

Speaker 1

I would now like to turn the call over to Mr. Sean McDonald, CEO of Liat Corporation. Good afternoon to you in Cape Town, Sean.

Speaker 2

Good morning, Mike, and thank you. Thank you all for joining us today. The second quarter was a fantastic quarter for me with strong revenue growth and profitability. Total global revenues increased by $6,100,000 to $16,180,000, a 61% increase over the 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.

Speaker 2

In the 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%. Homeless revenues increased by 117%. Other product parts and accessory sales, including apparel, goggles, and components, increased by 65%, and net product sales increased by 19% compared to the 2024. Gross profit as a percentage of sales continued to improve, increasing from 39% in the 2024 to 43% in the same twenty twenty five quarter as domestic trading positions continue to improve despite some tariff uncertainties.

Speaker 2

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 engine size, increased by 35 compared to the '24. Dealer Direct, multi and LTV sales in The US were another highlight of the quarter, The change to growth with global dealer sales increasing by 45% in the 2025. Although US motor and MTD 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 in demand for our products remains strong. Our profitability and liquidity continues to improve.

Speaker 2

Net income for the twenty twenty five second quarter was $1,140,000, a 208% increase when compared to the same twenty twenty four 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 level 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 June 2025, our revenue increased by $3,850,000 or 52% to $31,540,000, and net income increased by $4,130,000 or 221% to $2,260,000.

Speaker 2

Cash increased by $3,360,000 to $15,730,000 for the first six months of the year with cash flows provided by operations of $4,110,000. Now I'll turn to more details on sales of our product revenue for the 2025. Sales of our flagship net price were $700,000 during the twenty five second quarter, 19% increase over the same 2024 period, primarily due to a 35% increase in the volume of net prices sold in the twenty five quarter. Neck braces represented 5% of our total revenues for the quarter. Our body armor products are comprised of chest protectors, tall outer body protectors, knee braces, knee and elbow guards, or pro motorcycle boots, and mountain biking shoes.

Speaker 2

Body armor revenues during twenty twenty five second quarter were $8,290,000, a 48% increase over the same twenty twenty four quarter. This increase was primarily attributable to a 35% increase in revenues in the sale of upper body and limb protection and 108% increase in the sale of footwear comprising motorcycle boots and mountain biking shoes sold during the twenty twenty five second quarter. Volume of products represented 51% of revenues for the quarter. Helmet sales in the twenty twenty five second quarter were $3,110,000, a 117% increase, primarily attributable to a 51% increase in the solar motor helmets over the same twenty four quarter and a 275% increase in the volume of MTB helmets sold in the twenty twenty five second quarter. Helmet revenues represented 19% of total revenues during the quarter.

Speaker 2

Other products, parts, and accessories category is comprised of goggles, hydration bags, and apparel items including jerseys, pants, shorts, and jackets, as well as bicycle components. Revenues during the twenty five second quarter were at $4,000,000, a 65% increase, primarily attributable to a 101% increase in the sale of NCD, AED, and motor apparel over the twenty twenty four second quarter. Other products, parts and accessory revenues represented 25% of our total revenues for the quarter. We are also pleased that UF was once again recognized as Eurobot, the world's leading trade fair for cycling and eco mobility, winning awards for our ability to consistently develop technical innovations and functional rider protection features. Our five point zero Gravity Helmets won the gold award for technical performance, and our six point zero Hydro Dry Jackets won in the performance clothing category.

Speaker 2

Now I'll turn to our financial results in a bit more detail. Total revenues for the 2025 were $16,180,000, up by 61% compared to $10,000,000 for the 2024. This increase in worldwide revenues is attributable to a $2,700,000 increase in body armor sales, a $1,680,000 increase in helmet sales, a $1,600,000 increase in other product parts and accessory sales, and a 110% increase in net price sales. Gross profit for the second quarter was $6,890,000, up by 76% compared to $3,920,000 for the 2024. Net income for the '25 was $1,140,000 or 18¢ per basic and 18¢ per diluted share, up by 208% as compared to a net loss of $1,060,000 or 17¢ per basic and 16¢ per diluted share for the 2024.

Speaker 2

And on a year to date basis, net income for the 2025 was $2,260,000 or 36¢ per basic and 35¢ per diluted share, up 221% as compared to a net loss of $1,870,000 or 30¢ per basic and 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 thirty June twenty twenty five, the company had cash and cash equivalents of $15,730,000 at a current ratio of 7.421. Looking forward, our entire team is energized by the increasingly strong demand for new products around the world, our 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.

Speaker 2

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 US where tariffs could impact inflation, uncertainty, and demand, inventory continues to be digested. Our domestic sales outreach and capabilities are gaining traction and participation remain 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 yet the global consumer facing brand that appeals to a wide community of riders around the world will continue to fuel our growth moving forward.

Speaker 2

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 VF 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?

Operator

Thank And our first question will come from Christopher Mueller, Private Investor.

Speaker 3

Hey, Sean. I hope you're doing well today.

Speaker 2

It's just nice to hear from you.

Speaker 3

Good to speak with you. Maybe three or four questions today. First, could you maybe add some color around the exceptionally strong U. S. Sales this quarter?

Speaker 3

It looks like nearly 50% growth both sequentially and year over year and similar across both the consumer direct and dealer channels. So guess I'm trying to understand how much of this could be attributed to any one time 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?

Speaker 2

Yeah. 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 motor side of the business. And we've made quite a lot of changes in terms of the programs that we're offering to dealers. And our relationship with dealers has certainly strengthened a lot over the last five to six months.

Speaker 2

On the NPV side, we've been working really hard to develop our distribution capabilities. We have various different rep groups that are now involved in the business that are very experienced and are considered to be the premium reps in The US MTB industry and all very charged up and very passionate about where yet can go to. So a lot of opportunity on the mountain biking side of the business. As I said, a lot of a whole new sales team in terms of management in place with new goals, new strategies, new programs that are going out to to the dealers and are certainly opening new doors. And, of course, we have the ABB program that has been absolutely fantastic.

Speaker 2

Our ADD products are doing extremely well around the world, in Europe, South America, and very strong in the various markets. So we certainly don't feel that a large percentage of our growth is coming from one time 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.

Speaker 3

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

Speaker 2

Currently, ADV sales are 15% to 20% of global revenues, obviously depending on the quarter and the period. And we do expect that to to increase. So it's proven to be a lot stronger than what we had expected. The Lyot 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.

Speaker 2

We've got 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.

Speaker 3

That's great. It looks like you're also continuing the partnership with Shorefoot this summer for those bike park pop up stores. I assume this must be going well since I think it's maybe the tenth 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?

Speaker 2

Absolutely. I think there's a lot of opportunities in terms of partnering with various different shops you know, on the slopes. That's not only in The US and Canada, but it's just in Europe. It certainly worked for us in terms of being a great partnership to display Veep as a brand and all of our products in a single concept type of store. So there's big brand building opportunities there.

Speaker 2

And, of course, there's a, you know, there's a selling opportunity as well, but it really functions very well as a touch point for consumers to experience new 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 the first steps that you're seeing in terms of short term partnerships.

Speaker 3

Understood. And then lastly for me, I saw you recently hired two 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?

Speaker 2

So we really and our sales and brand manager model that we implemented really around the world has worked very, very well for us in terms of growing sales, improving market penetration, and making contact with, like, you know, bringing on the best retailers in the region. So we took a decision, in terms of Asia, that focus on Asia was 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, you know, 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 doesn't need specialist skill.

Speaker 3

Thanks. That was helpful as always. Thanks for the time, Sean. Chat soon.

Speaker 2

Thanks, Chris. Talk to you. See you.

Operator

You. Our next question will come from Olivier Colombo, Private Investor.

Speaker 4

Good afternoon, Sean.

Speaker 2

Hi, Olivier.

Speaker 4

Congratulations on a very impressive Q2. And it's nice to see growth in The U. S. Again. Congratulations to and the whole team.

Speaker 2

Have Yes. Three questions for

Speaker 4

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?

Speaker 2

I think in The U. Price, I mean, we we try to manage the tariff situation carefully and acutely. And, of course, we've been discussing the situation thoroughly with our our suppliers and watching the market really carefully in terms of, what's been happening, in terms of, retail selling prices. And I think the, you know, the biggest impact is, of course, in terms of uncertainty that it creates and the potential impact on demand, you know, should we have inflationary pressures. Of course, many of our competitors are, you know, importing from Asia, so they're exposed to tariffs just like we are.

Speaker 2

So it's difficult to quantify exactly what the impact will be. It's also difficult to know exactly where tariffs are are gonna settle. You know, I certainly think that we might have bit of a contraction in, you know, in my sales, it might be a little bit lower than what we had kind of forecasted in The US if we do see, big increases in tariffs, if the tariffs settle on very high double digit numbers, we might have some contraction. I don't feel that it's gonna be significant unless there are massive tariffs like the tariffs that were originally proposed. The tariffs stay close to where they currently are.

Speaker 2

I think the market will adjust to that. Some of the price increases will obviously get passed on to consumers and we'll we'll manage some of it through the through the supply chain. So, Olivia, I don't feel that it's gonna 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.

Speaker 4

That's perfect. Thank you very much. I really appreciate. And then my my last question would be regarding Eurobike. It seemed that you had a a very big event there.

Speaker 4

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?

Speaker 2

Absolutely, Mark. It was a fantastic show. I think the very 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 revenues. So we see it on our side.

Speaker 2

Many of our distributors and some of the new distributors that we brought on are starting to gain really good market traction for years 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 weird stuff because of cash constraints at the dealer level. We start to see that improving now.

Speaker 2

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 we started to see the full thing to to our numbers. I do still feel that there's some uncertainty out there. You know, if I could wave a magic wand and and things were a lot more certain in terms of the tariffs and and some of the geopolitical risks in in The Middle East and and in Europe, and some of those things have trickled down. I think that the that the sentiment would be far better than what it currently is. So there are still some concerns around where all of that is going to settle.

Speaker 2

But the good news is that demand for their products is up. The new distributors that we built on are doing exceptionally well with Liet as a brand, clearly surprised regarding consumer and dealer action to to stopping the year. And and participation is still strong. As I said, in terms of the concerns, there is geopolitical risk. And there are still some pockets of other stuff, particularly on the bicycle side of things.

Speaker 2

You know, there are also some bike lanes that we've seen have been in trouble. So there's a bit of bike stuff that's still out there, that hasn't disappeared. It's still being digested. But the statement is positive. Things are certainly moving in the right direction and back industry is certainly getting a lot stronger than it was when I was thinking about last year.

Speaker 4

That's perfect. Thank you very much. I really appreciate. And wish you and the team an excellent second half of the year. Thank you very much, Sean.

Speaker 2

So thank you, Olivia. Hope to see you.

Operator

Thank you. And at this time, there are no further questions. So I'd like to turn the call back over to Sean McDonald for any additional or closing remarks.

Speaker 2

Thank you all for joining us today. We look forward to our next call to review the results of the twenty twenty five third quarter.

Operator

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

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