Leatt Corp (LEAT)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue grew 14% year over year to $11.20M, while net loss narrowed to $(0.45)M; gross margin expanded to 41% from 36% in Q4 2023 as newer product shipments and stabilizing inventory mix aided pricing and mix. International distributor sales rose 24% in the quarter .
• Sequentially, revenue declined versus Q3 2024 ($12.14M → $11.20M) as international restocking helped YoY but did not fully offset Q3’s stronger quarterly base; EPS moved from $0.02 (Q3) to $(0.07) (Q4) .
• Full-year 2024 revenue fell 7% to $44.03M and the company posted a $(2.20)M net loss amid first-half promotions to clear older inventory; operating cash flow was $2.79M, ending cash at $12.37M and current ratio ~5.2x, underscoring solid liquidity for planned working capital investments .
• No formal quantitative guidance provided; management emphasized continued inventory digestion, improving reorder patterns, margin recovery, and growth in ADV apparel; U.S. brick-and-mortar MOTO remains a headwind, but leadership additions and new distribution partners are expected to help over the next few quarters .

What Went Well and What Went Wrong

• What Went Well

  • Return to double-digit growth in Q4: revenue +14% YoY to $11.20M; international distributor sales +24% as restocking resumed .
  • Margin recovery: gross margin improved to 41% in Q4 (from 36% LY), supported by newer product shipments and stabilizing inventory levels; management expects these trends to continue .
  • Strong product traction in Q4: helmets +41% YoY, body armor +14%, other parts/accessories +9%; ADV apparel “exceeded expectations.” Quote: “Gross profit as a percentage of sales continued to improve... increasing by 5%, from 36%... to 41%... International distributor sales grew by 24% in the fourth quarter” .

• What Went Wrong

  • Sequential step-down vs Q3: revenue decreased from $12.14M (Q3) to $11.20M (Q4), and EPS slipped from $0.02 to $(0.07) despite YoY improvement in Q4 results .
  • Neck brace softness and footwear pressure: neck braces were down 25% YoY in Q4 as dealers/distributors digested inventory; footwear constrained by aggressive competitive pricing and elevated industry inventory earlier in the year .
  • U.S. brick-and-mortar MOTO remains challenged; management is reorganizing sales coverage (employee/independent reps) and intensifying field execution to service dealers “more professionally” .

Financial Results

Note: The Q4 revenue was stated as $11.20M in the press release; the call transcript also referenced $11.19M (rounding). We anchor to the press release .

Q4 2024 product/category trends (YoY):

Full-year 2024 product mix context:

Key KPIs and balance sheet:

Guidance Changes

Management outlook highlights: improving reorder patterns, strong participation, ADV traction, and planned increases in working capital to support growth; liquidity viewed as sufficient .

Earnings Call Themes & Trends

Management Commentary

• “Our team is very encouraged by our return to double-digit revenue growth in the 2024 fourth quarter... fueled by international sell-through, re-stocking dynamics, and the addition of strong distribution partners...” .
• “Gross profit as a percentage of sales continued to improve... increasing by 5%, from 36%... to 41%... Inventory levels continued to stabilize. International distributor sales grew by 24% in the fourth quarter...” .
• “Cash increased by $1.02 million, to $12.37 million, with cashflows provided by operations of $2.79 million for the full year... Our liquidity continues to improve as our team continues to manage working capital efficiently.” .
• “We also have some very exciting new distributor partnerships in the United Kingdom, Europe, and emerging markets that will continue to filter through to revenues over the next few quarters.” .
• On scale and profitability: “We remain focused on trying to double our revenues every 3 to 5 years... we are targeting to have profitability along the way... should we double our revenues, we certainly will be a strongly profitable business.” .

Q&A Highlights

• Path to scale and profitability: Management reiterated a long-term goal to reach ~$100M revenue with profitability on the way; current cost base and marketing are set to support growth across MOTO, MTB, ADV; expect double-digit annual growth “as soon as possible” with growing profitability, though near-term choppiness possible .
• Industry normalization: Management views the industry as still “depressed” but improving; double-digit growth for 1–2 years could normalize conditions; Leatt’s low shares in many categories provide ample runway .
• Tariffs/supply chain: Company has diversified suppliers outside China (Cambodia, Bangladesh, Thailand, Taiwan; soon Vietnam) to maintain flexibility and margins despite tariff risks; no material margin impact yet .
• U.S. dealer strategy: Intensifying MOTO sales efforts with a VP hire, optimizing mix of employee vs independent reps, and elevating service to dealers to drive better coverage and sell-through .
• Working capital and investment focus: Expect inventory and receivables to increase to support growth; plan to invest in marketing, especially ADV, consistent with growth ambitions .
• Dealer sentiment risks: KTM-related uncertainty and macro (rates/inflation) weigh on U.S. dealers, but participation remains strong; normalization should improve financing appetite and demand .

Estimates Context

• S&P Global consensus estimates: Not available for LEAT for Q4 2024 (no EPS or revenue consensus/coverage returned). As a result, we cannot determine beat/miss versus Street for this quarter (via S&P Global) [GetEstimates: Q4 2024 returned no consensus fields].
• Implication: Absent consensus anchors, investor focus should center on YoY growth reacceleration, margin recovery, channel restocking, and qualitative outlook inflections for 2025 rather than headline beat/miss framing .

Key Takeaways for Investors

• Q4 inflected positively: double-digit YoY revenue growth and 500 bps gross margin expansion signal improving product mix and pricing environment as inventory digestion progresses; international restocking was a key driver .
• Sequential softness (Q3 → Q4) and negative EPS underscore that recovery is early; execution on U.S. brick-and-mortar MOTO and sell-through remains critical over the next few quarters .
• ADV apparel is emerging as a growth vector; management plans to increase marketing and working capital to capture share in a substantial segment .
• Liquidity is a strength: $12.37M cash, positive FY operating cash flow ($2.79M), and a 5.2x current ratio provide flexibility to fund inventory/receivables and go-to-market investments .
• Supply chain de-risking (multi-country sourcing) helps mitigate tariff/trade risks and protect margins in 2025 .
• Product-category mix is normalizing: Q4 gains in helmets/body armor/other offset neck brace declines; footwear remains a competitive/inventory-challenged area to monitor .
• No formal guidance: Near-term stock drivers are likely to be evidence of sustained reorder momentum, margin follow-through, ADV traction, and updates on U.S. dealer execution and macro-sensitive demand cues .

Appendix: Additional Context and Full-Year Metrics

• Full-year 2024: Revenue $44.03M (−7% YoY); net loss $(2.20)M; cash $12.37M; operating cash flow $2.79M; current ratio 5.2x .
• Category FY 2024: Body armor $22.46M (51%), helmets $8.39M (19%), other $10.74M (24%), neck brace $2.44M (6%) .
• Q3 2024 snapshot (for trend): Revenue $12.14M (+1% YoY), net income $0.12M, margins improved sequentially from Q2; DTC +12% .
• Q2 2024 snapshot: Revenue $10.08M (−18% YoY), net loss $(1.06)M; DTC +19%; early signs of order improvement; inventory down 28% YTD .