Leatt Corp

Greetings and welcome to the LIAT Corporation first quarter 2025 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Mason of Investor Relations. Thank you. You may begin.

Thanks, Ashi. Good morning and welcome to the Liat Corporation investor conference call to discuss the financial results for the first quarter 2025. The company issued a press release today, Wednesday, May 14, 2025 at 8 a.m. Eastern and filed its report with the SEC. The press release is posted on Liat's website at liat-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 seven days and may be accessed from North America by calling 844-512-2921 or 412-317-6671 for international callers. The replay pin number is 13753843. A replay of the webcast will be available immediately following this call and will continue for seven days. Certain statements in this conference call may constitute forward-looking statements. Actual results could differ materially from those discussed in this call. LEAD 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 May 14, 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 McDonald, CEO of LIAC Corporation. Good afternoon to you in Cape Town, Sean.

Thank you, Mike, and thank you all for joining us today. The first quarter of 2025 was a strong and encouraging start to the new year. Global revenues increased by $4.75 million, a 45% increase over last year's first quarter. It was our third consecutive quarter of revenue growth, in the second consecutive quarter of double digit growth. Growth profit was up 68% to $6.72 million, and growth profit as a percentage of sales increased from 38% to 44% compared to last year. Overall, we believe that we are making important progress in working our way back to a position of sustainable growth after the contraction that we experienced post-COVID. All of our major product categories grew by double digits compared to last year. Body armor revenues by 37%, helmet revenues by 101%, other products, parts, and accessories sales by 33%, and neck brace sales by 21%. Helmet sales were particularly strong as we continued to ship strong ADV helmet orders, and sales of our innovative and consumer-focused lineup of MTV helmets were exceptionally strong. We continue to invest in design and innovation, and are building a promising pipeline of cutting-edge products in ADV and our other categories that will fuel our growth in future. International distributor sales increased by 79% as strong rider participation continues, inventory is being digested, and sales through and constrained ordering patterns continue to improve. The uptick in orders from our international distributors is filtering through to our revenues. a trend that we believe will continue as our expanded long-term distributor partners grow sales over the next several quarters. Consumer direct sales increased by 14%. Domestic sales on our consumer-facing channels in the U.S. continue to gain momentum. And Lear.co.za, our consumer direct platform in South Africa, continues to deliver very strong sales. Dealer direct sales in the U.S. at the brick-and-mortar level contracted by 9%. as US motor and MPB dealers continue to manage some elevated inventory levels and some short-term turmoil. We expect to see an improvement over the next several quarters and a return to sales momentum as our reorganized US sales force gains traction. Our revenue growth and momentum is being fueled by encouraging international sell-through and restocking dynamics and the important work of our distribution partners and our sales and brand managers around the world. As reordering patterns continue to improve, we expect growth to continue. Now I will turn to more details on sales of our product categories for the first quarter of 2025 compared to 2024. Sales of our flagship neck brace were $680,000, a 21% increase attributable to a 21% increase in the volume of neck braces sold. Neck brace sales represented 4% of our total revenues for the first 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 were $6.87 million, a 37% increase over 2024. The increase was primarily the result of a 48% increase in revenues from sales of upper body and limb protection. Body armor products represented 45% of our revenues for the quarter. Helmet sales were $3.4 million, a 101% increase over last year. The increase is primarily attributable to a 51% increase in sales of helmets for mountain biking, off-road motorcycle and adventure motorcycle riding over last year. Helmet revenues represented 22% of our total revenues for the quarter. Our other products, parts and accessories category is comprised of goggles, hydration bags and apparel items including jerseys, pants, shorts and jackets. Revenues were $4.42 million, a 33% increase over last year. While sales of our motor apparel line decreased, the increase in revenues during the quarter was primarily due to strong shipments of our ADV and MCV apparel lines for mountain biking and adventure motorcycle riding. Our other products, parts, and accessories represented 29% of our sales for the quarter. Now I will turn to our financial results in a bit more detail. Total revenues for the first quarter of 2025 were $15.37 million, up by 45%, compared to $10.61 million for the first quarter of 2024. The increase in global revenues is primarily attributable to a $1.84 million increase in body armor sales, a $1.71 million increase in helmet sales, a 1.09 million dollar increase in sales of other products parts and accessories and 120 000 increase in necro cells gross profit for the first quarter was 6.72 million dollars up by 68 percent compared to 4 million dollars for the first quarter of 2024 and net income for the first quarter of 2025 was 1.12 million dollars or 18 cents per basic and $0.17 per diluted share, up by 237% as compared to a net loss of $820,000 or $0.13 per basic and $0.13 per diluted share for the first quarter of 2024. Liat continues to meet its working capital needs from cash on hand and internally generated cash flow from operations. Our liquidity continues to improve as we continue to manage our working capital and invest for the future. Cash increased by $331,000 with cash flows provided for operations of $768,000. And at March 31, 2025, the company had cash and cash equivalents of $12.7 million and our current ratio at quarter end was 7.321. In conclusion, this was a strong and encouraging quarter. I've recently returned from trips to China and the U.S. for meetings with our long-term vendors and U.S. sales and marketing teams. Everyone is excited about the future. Our motor, ADV, and MTB teams are making positive strides, and it's really great to see our new team taking shape. Of course, we face some industry-wide geopolitical and economic headwinds, particularly in the U.S., where the trade war could impact inflation, consumer confidence, and potentially demand to some extent. To that end, we are working closely with suppliers and customers to mitigate tariff risks and costs wherever possible. We are continually refining our global selling capabilities and are confident that the newest additions to our team will have a strong impact on our performance going forward. These investments can take time to make a significant impression on results, but we believe our success in building a great team is a cornerstone for our future growth. It was particularly encouraging to see all of our product categories, body armor, neck braces, helmets, and other products, parts, and accessory sales returning to double-digit growth. Cutting-edge product engineering and design remain at the core of the expanding Lear brand. We do expect working capital investment to grow in the coming period, as ordering patterns at the consumer, dealer, and distributor levels continue to show encouraging growth. We are confident that we have sufficient liquidity to fuel this expansion. Importantly, inventory continues to be digested, rider participation remains strong, and ordering patterns are improving and are faltering through to our revenue. We expect these trends to continue. In conclusion, we remain very enthusiastic about our future. Given our strong portfolio of innovative products in the market and in the pipeline, a multi-channel sales organization that continues to grow and develop and a robust balance sheet to fuel our brand expansion and revenue growth. We remain confident that we are well positioned for future growth and sustained shareholder value. As always, we'd like to thank our entire Lear family, our dedicated employees, business partners, and team writers for their continued strong support. With that, I'd like to turn the call over for any questions. Operator?