Chris Brennan's questions to Leatt (LEAT) leadership • Q4 2024
Question
Chris Brennan from Brennan Asset Management questioned Leatt's path to profitability, noting that while revenue is similar to 2020 levels, operating expenses have nearly doubled. He asked if the $100 million revenue target is still feasible and whether the company can achieve profitability during its growth phase, or if it will be a breakeven effort until the target is reached. He also inquired about management's view on a "normalized" level of sales for the industry and how they factor that into their investment strategy.
Answer
CEO Sean MacDonald affirmed the $100 million revenue goal is achievable and expects the company to be "strongly profitable" at that scale, not merely breakeven. He explained that the current cost structure is designed to support future growth and that profitability is expected to increase alongside a return to double-digit revenue growth. Regarding normalized sales, MacDonald stated the industry is still depressed but that Leatt's relatively small market share in key categories provides substantial growth opportunities independent of the broader market recovery.