Leatt Corp. Q2 revenues down slightly

Macro conditions affect neck brace maker

South Africa-based Leatt Corporation, which manufacturers neck protection systems, posted revenues of $7.8 million for the first half of 2012, compared to $7.9 million in the first half of 2011.

For the three months ended June 30, revenues were $4.5 million, with net income of $377,432, compared to revenues of $5.0 million, with net income of $389,566, for the second quarter of 2011.

Although the company’s flagship Leatt Braces declined in revenue for the first two quarters of 2012, protective gear made a larger revenue contribution, and operating expenses decreased for the period. The company’s cash and cash equivalents increased to $1.7 million as of June 30, and its current ratio was strong at 5.48:1. The company has no long-term debt.

“We believe that the Leatt Brace continues to be the gold standard for riders in both professional and amateur categories worldwide, and we are pleased that our newer personal protective gear products are finding acceptance through our dealers and distributors,” CEO Sean Macdonald said. “Given the volatile and unpredictable macro-economic environment, and the recent fluctuations in currency exchange rates, we are exercising prudence with regard to expenses, but we plan to continue aggressively marketing the classic Leatt Brace and our new protective products globally and to expand the range of sports in which our safety and protective products are used. Although we believe the 2012 third quarter will continue to be difficult, we plan to introduce new products later this year, which we expect will generate better fourth quarter results for the company.”

Macdonald went on to say that some competitors in both men’s and women’s BMX events in the London Summer Games wore custom Leatt Braces, including four of the eight finalists in the women’s event.

Gross margins for the quarter were 57 percent, as compared to 60 percent in the prior year period, primarily due to higher freight costs, and because the company’s personal protective gear products have lower margin rates than its flagship neck protection products. The company continues to evaluate mechanisms to reduce its product and freight related costs.