Leatt Q2 Earnings Call Highlights

Key Points

• Second-quarter revenue rose 1% to $16.39 million, but net income fell 20% to $909,000. Delayed shipments to global distributors, caused by container shortages and shipping-route disruptions, pressured results; Leatt said the products shipped in early Q3 and that no sales were lost.
• Growth was led by the U.S. market, which increased 11%, and direct-to-consumer sales, which jumped 68%. Body armor revenue rose 6% and helmet sales increased 14%, offsetting declines in apparel, accessories and neck braces.
• First-half performance remained strong: revenue grew 14% to $35.9 million, net income increased 19% to $2.68 million, and cash reached $19.53 million. Leatt is also expanding through a Cardo-integrated helmet partnership and its new Bike Care Technologies business, expected to begin contributing revenue in Q3.

Leatt OTCMKTS: LEAT reported second-quarter revenue that rose modestly from a year earlier as delayed shipments to global distributors offset gains in U.S. sales, direct-to-consumer business, body armor and helmets.

Total revenue for the quarter ended June 30 was $16.39 million, up 1% from $16.18 million in the prior-year period. Net income declined 20% to $909,000, or $0.15 per basic share and $0.14 per diluted share, compared with $1.14 million, or $0.18 per basic and diluted share, a year earlier.

Chief Executive Officer Sean Macdonald said the quarter was affected by temporary supply-chain timing issues that delayed several shipments scheduled for the latter half of the second quarter. He said the issue has since been resolved and that the affected products have already shipped in the early weeks of the third quarter.

“There was absolutely no revenue lost,” Macdonald said during the company’s earnings call. “This is really just weeks in terms of shipping.”

Sales Growth Led by U.S. and Direct-to-Consumer Channels

U.S. revenue increased 11% to $6.15 million during the quarter, while international revenue rose 4% to $10.24 million. Direct-to-consumer sales increased 68%, or $962,000, which Macdonald described as a continuing highlight for the company.

The delayed shipments primarily affected apparel, boots and helmets intended for global distributors. As a result, sales to global distributors fell 6%, or $653,000, during the quarter. Macdonald noted that global distribution revenue had increased 79% in the second quarter of 2025, creating a difficult comparison.

During the question-and-answer session, Macdonald said the shipping delays were related to a shortage of containers and changes to global shipping routes amid geopolitical disruptions. Leatt opted to wait for sea freight rather than use air freight, which he said would have improved second-quarter revenue but would not have been beneficial from a longer-term cost perspective.

“Nothing to do with our production, nothing to do with our manufacturing, and nothing to do with our planning,” Macdonald said of the delays.

Body Armor and Helmet Categories Increase

Body armor remained Leatt’s largest product category, accounting for 53% of quarterly revenue. Sales in the category rose 6% to $8.75 million, driven primarily by a 21% increase in revenue from its Moto and ADV boot range.

Helmet sales increased 14% to $3.56 million and represented 22% of revenue. The company attributed the gain primarily to a 15% increase in off-road Moto and ADV helmet revenue.

Sales of other products, parts and accessories declined 13% to $3.54 million. The category includes goggles, hydration bags, apparel, sunglasses and bicycle components. The decline reflected a 20% reduction in revenue from MTB, ADV and Moto apparel, partly offset by a 16% increase in bicycle component sales.

Neck brace revenue decreased 23% to $542,000, representing 3% of total quarterly revenue. Macdonald said the decrease was primarily due to a 43% reduction in neck braces sold.

Gross profit increased 8% to $7.44 million, while gross margin improved to 45% from 43% a year earlier. Operating costs rose 16% as Leatt continued to add sales and marketing personnel globally and increase brand-awareness initiatives.

First-Half Earnings and Liquidity

For the first six months of 2026, revenue increased 14% to $35.9 million from $31.54 million in the first half of 2025. The growth was driven by a $2.18 million increase in body armor sales and a $2.43 million increase in helmet sales, partly offset by declines in neck braces and other products, parts and accessories.

First-half net income rose 19% to $2.68 million, compared with $2.26 million a year earlier. Direct-to-consumer sales increased 61% over the six-month period.

Leatt ended June with $19.53 million in cash and cash equivalents, up $6.29 million from the prior period, and generated $7.44 million of operating cash flow during the first half. The company reported a current ratio of 7.421 as of June 30 and said it believes its liquidity is sufficient to support future growth.

The company is continuing its previously announced board-authorized share repurchase program of up to $750,000 of outstanding Leatt common stock.

Cardo Partnership and Bike Care Expansion

After the quarter ended, Leatt announced a partnership with Cardo Systems to integrate Cardo’s wireless real-time mesh communication system into Leatt’s Moto 8.5 helmets. Macdonald said Leatt expects to launch the integrated helmet offering during the second half of 2026.

Macdonald said Leatt will generate revenue from sales of the Cardo Venture helmets to Cardo and expects to earn a margin on those sales. He also said Cardo’s distribution network can reach customers beyond Leatt’s existing channels. He declined to provide further details regarding whether the agreement is exclusive, citing confidential elements of the arrangement.

Leatt also established and acquired Bike Care Technologies, a Polish entity that will develop, distribute and market premium bike-care products globally. Macdonald said the business will be 100% funded and owned by Leatt and is expected to begin contributing revenue in the third quarter. He said the company expects the venture to become largely self-funded as sales begin, though inventory investment will be required.

Looking ahead, Macdonald said participation and consumer demand remain strong, with ordering patterns supported by sell-through and rapidly growing direct-to-consumer sales. He added that Leatt expects to continue investing in its global sales and marketing organization and product-development pipeline.

About Leatt (OTCMKTS:LEAT)

Leatt OTCMKTS: LEAT is a designer and manufacturer of protective sports gear, specializing in advanced safety equipment for high-impact activities such as motocross, mountain biking, and snow sports. The company's product portfolio includes the patented Leatt Brace® neck protection system, impact-absorbing body armor, full-face and off-road helmets, goggles, gloves, and riding apparel. These offerings are engineered to mitigate the risk of spinal and head injuries, combining biomechanical research with lightweight materials and user-focused design.

Founded by Dr.

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