Leatt (LEAT) 6 Nov 232023 Q3 Earnings call transcript

Greetings. Welcome to Leatt Corporation Third Quarter 2023 Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Michael Mason, Investor Relations. Thank you.

begin. may You

and will results in Cape to of company in to available this call following call. make may Corporation materially Sean MacDonald, presentation the on Mr. call this A a posted third this undertake regarding morning. Good accessed complete at results or for Please may Leatt America Good Leatt press investor Town, the would November replay The X, days. Certain for delay forward-looking its Leatt's XXX-XXXX for Monday, the X for (XXX) for then the call live a with Sean. call be PIN company cautionary at Corporation. may Thanks, release report being is to afternoon North is a.m. An statements call to of forward-looking press not accessed patience. turn We open Eastern calling and in be Welcome release those the such in will to thanks statement today, callers. XXXX. the obligation the discussed results immediately financial available your discuss be update today's X, replay Corporation The number dated www.leatt-corp.com. This now CEO XXXX. the replay press from and to is to and you The any The (XXX) website. differ over on be of to does release issued and company's like XXXX, X quarterly questions. I XXX-XXXX on days Actual Sherry. X this statements. November the apologize international quarter X XXXXXXXX. will by the conference from made broadcast constitute website statements call SEC. conference call. X filed continue Leatt could audio webcast will statements for in this and refer call the

patience Mike, morning, joining and you, Good today. us thank your and you all and for for thank

income stock ever in of distributors our XXXX, early international the stocking ongoing was the already quarter months peak enthusiasm the for generated we level to in supply from XXXX, look of inflationary ordering one pressures. management compared that Although and $XX is in X revenues and overstocking consumer of our third of or from simply participation million for XX% a $X.X operations our XX% at at Cash experiencing of orders first by history. Net international compared million, third the last $X.X the $XX.X global our testament third of remain continue orders XX% XXXX and We that were to with growth decline believe returning XX%, a by basis, quarter in a in of latest the was marginal in dealer also at this key the XX% the We to $X.X strong pandemic up XXXX the uptick distribution increased a QX efficiency team. International continue and decreased a XXXX, compared compared we 'XX constrained to months the of company's shipped on to flow very and comparative focus patterns, the results decrease revenues enthusiastic about from million. the level patterns third first are by global and strongest was to quarter, million, commitment in MTB our levels brand margins ordering levels. third continues. to although areas. On equity, year. were indicates improvement boost for of a of of entire a our operating the net gross our ended prior year-to-date best trend strong QX with $X.X and and as in digest were the XX% future dynamics. the to partners, million, quarter MTB months demand XXXX of period, was for challenging dealers first year-over-year, More revenues XX% recent International cash The to forward the the income $XXX,XXX, was United million. current despite they year's retaining States decrease an terms sentiment equivalents. Total early X revenue placed and of as sales XXX% of don't particularly X from of the quarter to particularly $X.X to quarter in peak comparative chain reflect the exhibit million and that decreased placed

innovative continue the a the we As to an ability digest post our dealers stock, the consumer have of all multichannel that has selling to robust to riders efforts and levels. distributors and organization develop inventory base intensified our reach wide overhang pandemic, at

team in in business have of level build innovation help MTB sales business. This us MTB our MTB we will professionals continued passion riding and end, world. share. market X and and an our is the pulling a we focus are back share and and key marketing see around for of of To of We a who where the competitors have who success talented to and strong continue our our to area infectious build a product, great some recently to leaders bring opportunity added that new invested

to fastest-growing appeal segments. will Our include with of cycling Head XXXX offerings Toe the is launch to some and MTB imminent additional

range for level wide riders. at more seek excited riding Adventure These technical enable now adventure open of weather an dealer and, Toe in Italy. overall reach should EICMA, need all tomorrow This motorcycle and launch the is in a to our show a conditions all designed levels at that are Milan, terrains. gear gear at new that international also that importantly, Head and are of segment doors riders community and products specifically We to apparel motorcycle

are global once in-house on-site and engineering our that As believe design facility. boots professionals is and products, develop innovative for Leatt these We to our wider again our of Adventure our are a always, to and ability team's group include that a and globally. fully to at which riders safety line gloves tested protection new testament by developed gear appeal

flagship the turn accounting was quarter categories will of quarter revenues, brace million I third for sales In brace of the Now net and of decrease $XXX,XXX, X% neck product of a sales decrease of to our from details were XXXX. our XXXX, more on volume of our Sales our last revenues. sold U.S. the in of X% for primarily neck $X.XX third year prices the in to and due abroad. XX%

XX% category accounting our were chest in helmets. decrease which was The armor braces, from were for protectors, Our offroad of $X.XX includes XXXX, due the in knee decrease body mountain a XX% the of and decrease protectors, exceptionally Helmet for body XX% third quarter guards, sales sales knee were our helmets due of of revenue motorcycle was to million, in quarter $X.XX motor quarter strong decrease an a third XX% for boots primarily $XX.XX upper was million, XX% sales to decrease the our armor up XX% That XX% quarter. by motorcycle for million revenues. armor shoes. revenues to represent XXXX, XX% use. quarter of Body biking compared the armor offroad sales and helmet sales primarily year-over-year. was Helmet for and a XX% for quarter globally. In body revenues, upper exceptionally body sales comparative of strong revenues. The

jerseys, and pants, products, primarily of sales Our apparel a motorcycle in Moto for XX% by XX% and and compared quarter the strong mountain in Technical hydration accessories of parts XXXX. had the third apparel due in third designed this an and prior items, shorts $X.XX MTB jackets. use volume apparel Sales comprised to category offroad our 'XX quarter decrease the of were XX% over for million of goggles, increased or decrease to exceptionally the year. are bags biking quarter our technical revenues, of including of and

the to months decrease compared XX% quarter had to third financial million of Here million first up were hand of and XXXX. of flow third down 'XX X XXXX. income compared was of of of for is to Total the for increased capital to XXXX. And third quarter for for 'XX in compared operations. operations decrease in quarter $X.X margins down million, third XXX% from for for attributable a $XX diluted $X.X compared share, months quarter gross for $X.X in sales, share XX% same $X.X X a X income armor from million, per the XXXX, quarter million, for down ratio And cash million, Global by XXX% X $X.X $X.X X of a a the $X.XX body and quarter on continued $XXX,XXX of by sales, million from decrease from quarter for compared for months revenues cash XX% million and $X.XX the of by the the $X.XX $X.X And a summary per is current at by first the third million the million quarter first first XXXX. of $X.XX equivalents Net $X.X $XX.X the by flow and of the Net down XX, once during sales decrease internally XXXX. by million The to X revenues X needs to XX% $X.X XXXX. months of decrease $XX.X the of accessories helmet first first XXXX $XXX,XXX, company other global the meet the products, cash Leatt was and third and third to by September of per compared period X.X:X. in XXXX neck compared from was months net basic million, $X.X basic to to to the to sales. Income months the and of $XX.X or XXXX. generated down its per cash months million revenues third first cash brace generated working XX% for diluted months the million XX% as or for in profit the were operations X XXXX. compared first XX% up was income again, parts and

and well range, our new brand markets gains. exponential growing to enthusiastic passionate and team our product about growth momentum and positions ahead, exceptional wider for that Looking us outreach remains future expanding our talented

we expect diversified build our well ordering penetration Although leverage inventory digested, further particularly as and to and MTB internationally, we partners product market globally. multichannel to continue some a constrained offering, is organization sales from in brand momentum we products of terms are do patterns and

consumer our and results year-to-date our increased increasing period quarter grow, the compared on We testament that also to the of revenues continues consumer brands of for XXXX. direct period. further over several prior the and a our which that XX% that are channels in distributors. years. Revenues XX% our momentum selling, as indicator encouraging consumer products in direct of same efforts during increase XXXX products the inventory to is by third demand the our direct to encouraged leatt.com believe year the by dealers to evolve compared in and the We an is growth It's digested past have sales when consumer to built influence an by should by

surge pandemic-driven the continue conditions Elevated of consumers strong we ordering expanding our ability the which been distributor at our of in fuel patterns level. stock our growth result time months conclusion, a But commitment globally partners. In market as challenging believe accumulated and a and for demand, to growth X Leatt directly improve will that initiatives industry. has are actively as first to do with adjusted levels in distributors to dealer our the resulted time. as over XXXX to the products We entire sell

remains We will Participation overstocking stock the inflection are as a confident digested on resolve with strong. point positive that the dynamics is horizon.

to near course, we a capital and operations forward future on return management growth focus to to fund and position working robust growth. revenue our continue future initiatives. maintaining the and flow to look cash Of We

continued and team always, the our like we'd questions. partners like for Leatt their employees, our Operator? strong that, for to thank any With riders I'd to efforts dedicated over and support. family, entire As call business turn

Instructions] [Operator question first is Christopher Our from Muller.

Just a today. few questions

revenue initial quarter? orders fourth would results? material Adventure new any the the or in Endurance those quarter hit First, the line in third there line with upcoming the stocking Or was primarily associated

XXXX and Those have primarily fourth in moving not forward. so that will be the through of obviously coming yet, quarter shipped then

also suspect Great. some significant these and sales in facing And that at second, online retailers European large pretty product. of are some bike U.K. moment. uncertain Leatt it's I distributors the no secret the markets and channels financial that futures some are for

it could wondering, maybe there year? any over realize you how pretty situation, share this So I are out I but you thoughts was see is a around this next and fluid the playing

are I term, some future. customers. And surprised some And Sure. by course, some entities those certainly mean, of those the through the directly, company and looking of I e-commerce funding And absolutely. of their of of if that not in short picked have ordering be partners. mean, was strong would I an in that our are were think are holding patterns. They customers great they think, I brands that pulled very in some remain that for e-com those up might e-commerce impact not the of our way that I channels. growth on it's I channels some mean, sell the And affected. by supports indirectly, some And

brands So going some some I to But They ordering course, there the which stage. in to will here. future. situation, themselves, themselves e-commerce short-term think rescue business be might enter does at this continue kind the is of the the ability of affect have pain brands

So time They they're sell. And funding to these shops, their the closed to get seen new haven't e-commerce out They usual. doing of I either to will dedicated they and consumer is as for They're that imagine. of can a of it's have I best themselves get that I've in loyal space. far, situation fundamentally, owner some return brands business say, place. continuing in get what new committed are a and when but they strong e-commerce remains them very ordering, the or as and any on back kind it a to. and And to take place, to significant sell that, situation course, base would

said, So that some be market. -- them. we We significant don't of affect them impact might they will anything, from position in selling time a I have two, the the see coming out market. some pain to of that they might the still the as on in going remain some be there. through but in partners number short orders for expect there inventory It's take terms one. Number that solid get term, to again. some short-term course, of the think the just I of be That's into will And then future, it to to

there. Appreciate the color

you've but well only a have to seems And winning quite specific it bit from Do attractive received. feel new of me, success a changing convertible for helmets Enduro having consumer the Lastly category? like like viable you in these. marketing helmets been very perceptions competitors noticed some I've around maybe done as you're not maybe share

by and working Absolutely. say that very consumer I think the helmet a I refining long at the really the at mean, at reception very the course, we of would level, level category very distributor dealer that hard And I enthusiastic time. now, were been for We've at of level. the very,

so trailblazing many the that that to And wide around different helmet forward. product it's up that our there is is a some is encouraging purchase, And in And just an of revenue, area. helmet a against the intend entire segment top and as people can do that to which kind it actually growing we very with that important up source Vital category helmet done convertible recently appeal were in the moving strong to of surveys really it's to is products that competitors testament MTB, range has market world, which e-bike great. It the develop came strong are especially fact the We the some applications. of a consumers. see and

So heavily. continue segment can marketing that us to expect you

we've opportunity in several very MTB about board, are that people very, of product and got on the that some new the marketing that, related represents. people And excited marketing the products

week. to hope the That's this show I hear. great EICMA Well, well goes

Our next with Dunlap Equity. question is Chris from Jarrous

significantly ordering it depressed group discussed following feel they have would in with in question, Like with significantly way than everything missed Just we you But when that know while do associated peers? at I other the now. have -- the the you but like the that's it's that issues up otherwise answering, or maybe seem caused look you you like situation Chris's off than worse feel in partners worse is Europe do those obviously, on do Europe, in were it on their been? trouble, you

of funding financial don't I the from I that U.S. they're to current Their listed the difficulties very which continue that simple. the was why at group is the from was that were -- think pulled that not holding that overnight a the mean, form. having underneath you the very, if these main from of in kind look reason fund, in company they're feet And companies was involved, able reason is the

happened, So I was position obviously contact that them not actually these the situation, bad else, They have funding surprised difficulty think I a the kind was of businesses. trading a And people that everybody our before is before at in as all. that the that which overnight, bad on pulled. were were feedback exceptional positive are in as position now. But they These places trend. really partners. with work And very direct they're which in were a not means certainly they extreme in

the over And of to leatt.com. to The consumer the a Leatt gets end and we that terms had where better of closer in it's gets like the they last sure, been Europe, dynamic, kind in they business there what the which on overstock positive. situation were of the general, year, everybody stocking the there see e-commerce and purchasing. But leapfrog in times looks. have freeze but brand stock had situation, to with the course, sell-through level pressures is as is Of did, the sitting they in some same

in in business of in area was revenue where the leatt.com QX, grew we really by XX%. the So channel terms only

that some on that the channels, positive. that our Internet key e-commerce including selling. And have customers have the stores in of from So been trouble remains they of trend is to gotten through now still the I've these feedback sales guys, that some Leatt are selling

seeing course, few in more MTB they're our distributors, that was are ordering it they through, And the including that I patterns that Of seeing spoke bit selling more. what have, that stock is ago. little that's And they order earlier sells we're script. The distributors, able a position months to the the from as a and are positive than we international now.

through. it improvement. think don't mean, an and same. we ordering And some be to would short the of pressure e-commerce there's been again, I market, So there into flooding impact going a that some affected do the be year in the continue pricing. will the here. for from a will I managed. to will term, But and should now, stock of There they're now, have sell on be We've about huge been it need that some that stores managing see be and

Okay, great.

to You've still need do are what -- people grab great Is more? that or letting now look you you execs are on for been you some the go. from who able peers have

But really a terms very want from a the to team committed in still of bring there Yes, us we I'd that say high-level really we've we've -- development there, there. that key And sales great of got terms so a refine. capabilities the people on to also help added of a out members. execs the really and key building members rep great to still think the rep guys, in we categories U.S., few in employee there few and we I team are new will in team want family product be

good the MTB, force think more I sales of on rep pretty that part be focus So actual working as will be in our on hard particularly the U.S. we'll we're And really it there. and

product when great. at normalize, new that mean, areas And you as me question you things one, just standout or think is they'll Okay, as for particular hold you lines looking the looked last and in for at I launch product of products? lines, excitement be these current kind any

and Adventure is big Europe. very Endurance I and line of would been the great. And also I really the There's of We've great is your road of already there's to lot then chain a some at the Toe sure. which feedback in the got be that rider, a on quarters, Adventure typical something, And biking, opportunity. market For the MTB stores biking got products bit mean, fastest-growing contribution commuter it's from crossover segment, say between I with expect partners, must show Head It's I've the I side, would a e-bikes our several segments. a those to we've of the will opportunity there. next be got that will European on products. so say that, over With only not and is moment. existing start about talking distribution we've that side. that's which huge all And applicable bike that outside mountain that mountain the launching we'll kinds segment segment be to will gravel great Endurance,

So there. there's opportunity a I think huge

little audience. MTB system wide be of stock, caters course, I niche of because ride to terms is a going it come, for leverage is growth once as bit position under currently full our a think still of comes next wave brand to that we'll the stock. the well Of But a very and positioned pressure in

session. would comments. reached I conference our question-and-answer over We end back the like for turn to to the of closing have Sean

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

today's conclude will conference. This

for You may at lines thank your disconnect and participation. you your this time,