Leatt Corp

Good day, everyone, and welcome to today's LIAT Corporation second quarter 2025 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. You may register to ask a question at any time by pressing star 1 on your telephone keypad. 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.

Thanks, Chelsea. Good morning and welcome to the LIAT 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 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 1-844-512-2921 or 412-317-6671 for international callers. The replay PIN number is 111 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. LEF 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 McDonald, CEO of Liat Corporation. Good afternoon to you in Cape Town, Sean.

Good morning, Mike, and thank you. Thank you all for joining us today. The second quarter was a fantastic quarter for Liat with strong revenue growth and profitability. Total global revenues increased by $6.1 million to $16.18 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 network 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 continued to improve, despite some tariff uncertainties. Sales to our international distributors increased by 74% during the quarter, as sales through ordering packages and demand continues to improve. From Shiba Direct sales, the channel that remains an encouraging growth enterprise increased by 35% compared to the second quarter of 2014. Diva Direct, MoCa and MTV sales in the U.S. were another highlight of the quarter, but turned into growth. global dealer sales increasing by 45% in the second quarter of 2025. Although U.S. motor and MTV 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 the market 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 feel this growth. On a yesterday basis, for the first six months of 2025, our revenue increased by $10.85 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 six months of the year, with cash flow provided for operations of $4.11 million. Now I'll turn to more details on sales of our product academy 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 ready use for the quarter. Our body armor products are comprised of chest protectors, tall 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 in 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. Armor sales in the 2025 second quarter were $2.11 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 NTD helmets sold in the 2025 second quarter. Helmet revenues represented 19% of total revenues during the quarter. 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. Revenue during the 25th second quarter, $44 million. A 65% increase, primarily attributable to a 101% increase in the sale of NTD, AEV, and motor hotel over the 2024 second quarter. Other products, parts, and accessories in revenue, represented 25% of our total revenue for the quarter. We are also pleased that Liat was once again recognized at Eurobox, 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 5.0 Gravity Helmets won the Gold Award for Technical Performance and our 6.0 Hydro-Dry Jackets 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 was $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 accessories sales, and a 110% increase in net gross 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 2025 was $1.14 million, or $0.18 per basic and $0.18 per diluted share, up by 208% as compared to the net loss. of $1.06 million, or 17 cents per basic and 16 cents per diluted share for the second quarter of 2024. And on a year-to-date basis, net income for the first six months of 2025 was $2.26 million, or 36 cents per basic and 35 cents per diluted share Up 221% as compared to a net loss of $1.87 million, or $0.30 per day, so it's $0.29 per dilution share for the same period between 2004. Net continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. And at 50 June 2025, the company had cash and cash equivalents of $15.73 million and a current ratio of 7.41%. Looking forward, our entire team is energized by the increasing and strong demand for Lear 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 brands. We expect this trend to continue as reordering patterns continue to improve and filter 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 tariffs and costs wherever possible. We strongly believe that our strategy of investing in talent, innovative product development and 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 multi-channel 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 Lear family, our dedicated employees, business partners, and team writers for their continued strong support. And with that, I'd like to turn the call over for any questions. Thank you.