Chris Brennan's questions to Leatt (LEAT) leadership • Q4 2024
Question
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.