Chris Brennan

Chris Brennan from Baird asked about Yum! Brands' envisioned growth profile if the Pizza Hut business were to be sold, specifically whether this would lead to a faster ongoing growth trajectory for the company. He also inquired about potential interest in other long-term portfolio moves, such as adding new growth assets.

Answer

CEO Chris Turner reiterated Yum's laser focus on growth, driven by KFC and Taco Bell, which constitute nearly 90% of divisional operating profit. He highlighted ongoing unit development, AUV growth initiatives, and the strength of Taco Bell International. Turner stated that the company's job is to constantly evaluate the portfolio but confirmed no other changes are planned at this time beyond the Pizza Hut strategic review.

Chris Brennan noted that Leatt's revenue is similar to 2020 levels while operating expenses have doubled, leading to recent net losses. He asked if the $100 million sales target is still feasible and whether the company expects to achieve profitability on the path to that goal, or only after reaching it. Brennan also inquired about management's view on a normalized level of sales for the industry, given current depressed conditions.

Answer

CEO Sean MacDonald affirmed the $100 million sales goal is feasible and stated that the company expects to be profitable on the way to achieving it, not just upon arrival. He explained that the current cost structure is designed to support future growth and that profitability should grow as the company returns to double-digit revenue growth. Regarding normalized sales, MacDonald found it difficult to provide a specific level due to varying recovery rates across categories but agreed the industry is still depressed, highlighting that Leatt's low market share presents a significant opportunity for growth regardless of the broader market.

Chris Brennan of ROTH Capital Partners questioned Leatt's path to its $100 million sales target, noting that operating expenses have nearly doubled since 2020 while revenue has remained flat. He asked about the feasibility of the goal, the expectation for profitability during the growth phase, and how management views a 'normalized' level of sales for the business given the currently depressed industry.

Answer

CEO Sean MacDonald affirmed the $100 million sales goal is achievable and expects strong profitability upon reaching it, stating the current cost structure is built for future growth. He anticipates a return to double-digit annual growth and profitability along the way. Regarding normalized sales, MacDonald acknowledged the industry is still depressed but noted that Leatt's small market share provides significant growth opportunities independent of the broader market recovery, which he estimates could take 1-2 years of strong growth to normalize.