CAPE TOWN, South Africa (BRAIN) — Protective gear maker Leatt Corp. said its revenue increased 20 percent in the first quarter, to $4.8 million, up from $4 million in the same period last year.
Net income increased 109 percent to $113,000 in the quarter as the brand began delivering its new DBX 6.0 Carbon and DBX 5.0 Composite helmets for downhill and BMX.
"We had an excellent 2016 first quarter, highlighted by solid financial results and the successful launch of our new carbon and composite-shelled DBX bicycle helmet at the Subaru Sea Otter Classic," CEO Sean Macdonald said.
"Revenue increased by 20 percent, and net income doubled in the first quarter, which has typically been our weakest quarter. All our new products continued to soar, although neck braces saw a slight decline."
Dr. Christopher Leatt, the company's chairman of the board and head of research and development, added, "The reception accorded our new bicycle helmets — in the press, in the industry and among the riders — was promising. We believe that our new helmets again demonstrate the ingenuity and agility of our entire team in terms of research, design, engineering and product development. Our strategy continues to be to diversify and extend our multi-faceted product line into new sports and markets. We expect that our innovative, lightweight helmets for motocross, extreme sports and now bicycling are a potentially game-changing product for us, with a global market potential."
Helmet sales accounted for $809,000, or 17 percent of revenue, in the quarter. "These helmet revenues are due to the continuation of the initial shipment of our GPX 5.5 Composite and GPX 6.5 Carbon helmets that first shipped to our customers in the United States and abroad during the 2015 fourth quarter. Additionally, we shipped the DBX 6.0 Carbon and DBX 5.0 Composite helmets to our international customers during the 2016 first quarter."
Body armor sales accounted for $2.19 million. "The category was up 9 percent overall, with strong sales in upper body protectors and knee and elbow guards within the category. In addition, our C-Frame knee brace continues to gain traction, and we are now seeing reorders from our distributors and dealers," Macdonald said.
Sales of the brand's flagship neck brace accounted for $1.59 million, down from $1.79 million a year earlier.
"In the United States the decrease in neck brace revenues was primarily the result of a decrease in the sales of the MRX pro neck brace for motor sports, which were particularly strong during the 2015 first quarter, but we note that neck brace sales for the motorcycle and bicycle markets in the United States were stable," Macdonald said. The decrease in sales of neck braces to customers outside the United States was caused by the significant strength of the U.S. dollar in relation to the local trading currencies of customers in the respective regions, the company said.
Macdonald said the strong U.S. dollar may have a more noticeable effect on revenue in more established product categories. Approximately 61 percent percent of the company's revenue is derived from sales outside of the United States.
Macdonald said the brand was expanding its dealer base in the U.S. "Sales through our B2B portal for dealers in the U.S. is beginning to pick up speed as dealers can easily place orders online. This allows our sales managers to get out of the office and meet dealers and sales representatives face-to face, build relationships and offer technical support. It also ensures that the Leatt brand is properly represented in the market place," Macdonald added.
Leatt's R&D is done in Cape Town, South Africa, with production predominantly in China. Leatt has warehouses and a distribution office in California for the North American market and a network of distributors in other markets. Its stock is traded on the OTCQB under the symbol LEAT.
