Leatt (LEAT) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 1% year-over-year to $12.14 million, marking a return to growth, but net income fell 75% to $116,000 due to higher operating expenses.

• Sequential revenue growth of 20% from Q2 to Q3, with improving margins and inventory management.

• International sales comprised 71% of Q3 revenue, rising 5% year-over-year as inventory digestion and improved ordering patterns supported recovery, while US sales declined as dealers managed inventory.

• Direct-to-consumer sales grew 12% during the quarter, with strong performance in South Africa.

• For the nine months ended September 30, 2024, revenue declined 12% to $32.83 million and the company posted a net loss of $1.76 million versus net income of $2.26 million in the prior year period.

Financial highlights

• Gross profit for Q3 was $5.17 million; gross margin was 43%, unchanged year-over-year, but improved 4% sequentially from Q2.

• Net income was $116,000, or $0.02 per share, down from $460,000, or $0.08 per share, in Q3 2023; nine-month EPS was $(0.28) basic, $(0.27) diluted.

• Cash and cash equivalents stood at $12.47 million as of September 30, 2024, up from $11.35 million at year-end 2023.

• Cash flows from operations were $2.98 million for the nine months ended September 30, 2024, down from $6.6 million in the prior year.

• Inventory levels decreased by $4.62 million (23%) over the last nine months, to $15.77 million at quarter-end.

Outlook and guidance

• Management expects positive trends in participation, ordering, and inventory digestion to continue, but elevated industry inventory and economic headwinds may affect dealer/distributor orders and consumer spending.

• New distributor partnerships in the UK, Europe, and emerging markets, and a strong product pipeline, are anticipated to boost future revenues.

• Plans to expand sales and marketing teams globally to capitalize on industry turbulence.

• Current cash and credit facilities are considered sufficient for at least the next twelve months; no major capital expenditures planned.