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00:32 Thanks Rob very much. Good morning, and welcome to the Leatt Corporation investor conference call to discuss the financial results for the twenty twenty one second quarter.

The company issued a press release today, Thursday, August 12, at 8 AM Eastern and also filed its report with the SEC. A press release is posted on Leatt’s website at www.leatt-corp.com 00:57 This call is being broadcast live and may be accessed on the company's website.

An audio replay of this call will be available for seven days and may be accessed from North America by calling one eight four four five one two two nine two one or one four one two three one seven six six seven one for international callers. The replay pin number is one hundred and thirty seven two two one hundred and thirty three.

A replay of the webcast will be available immediately following this call and will continue for thirty days. 01:32 Certain statements in this conference call may constitute forward looking statements.

Actual results could differ materially from those discussed in the call. Leatt Corporation does not undertake any obligation to update such statements made in this call.

Please refer to the complete cautionary statement regarding forward looking statements in today's press release dated August twelve, twenty twenty one. The company will make a presentation on the quarterly results and then open the call to questions.

I would now like to turn the call over to Mr. Sean Macdonald, CEO of Leatt Corporation.

Good afternoon to you in Cape Town, Sean.

02:07 Good morning. Thank you, Mike and thank you all for joining us today.

I am very pleased to report that our performance over the last several quarters continues to improve as we work to deliver a suite of exceptional award winning protective gear and position Leatt to the global consumer brand. The second quarter of twenty twenty one was another ground breaking and record setting quarter for Leatt.

We had strong double digit revenue growth across all of our head to toe product categories, and we grew our revenues in every major geographic area that we sell to. 02:41 Global revenues more than doubled to fourteen point three million dollars for the second quarter, the strongest quarterly revenue in our company's history and an increase of one hundred and six percent over the twenty twenty second quarter.

02:54 Net income rose to two point four million dollars, an increase of two fifty seven percent over the twenty twenty second quarter. On a year-to-date basis, for the first six months of twenty twenty one, our revenues were twenty seven point two million dollars, up eighty eight percent over the same period last year.

And net income for the first six months was four point five million dollars, up a staggering three fifty one percent. These numbers demonstrate our ability to achieve strong revenue growth while remaining operationally efficient and effective.

We are all very pleased with the tremendous momentum that we are building. Twenty twenty one second quarter marked the fourth quarter in a row of record breaking revenue, and thirteen consecutive quarters of revenue growth.

03:43 We believe that this period of ongoing growth is a testament to the discipline and focus on our strategy for building Leatt into a global consumer brand by growing our product categories to anticipate and serve the needs of riders around the world. The highlighted results are certainly very encouraging.

04:01 Let us now drill down a bit further to look at performance by product category. We are very pleased with the performance of our neck brace products for the quarter as they continue to generate a higher gross margin than our other product categories.

The forty six percent increase during the quarter is due to continued strong demand both in the U. S.

and abroad for neck braces. Neck brace sales accounted for eleven percent of second quarter revenue.

04:28 Our body armour products comprised of a range of chest protectors, body protectors and vests, back protectors, knee braces, knee and elbow guards, off-road motorcycle boots, mountain biking shoes. The one hundred and seven percent increase in body armour revenue is attributable to remarkable worldwide demand for our full line of upper body and limb protectors, as well as our footwear category, consisting of off-road motorcycle boots and mountain biking shoes.

Body armour accounted for sixty percent of twenty twenty one second quarter revenue. 05:00 Our helmets continued to be refined, and in some cases completely redesigned to meet the needs of a wider riding community.

All Leatt’s helmets contain our patented three sixty degree turbine technology for brain protection. The ninety one percent increase in helmet sales is due to strong global demand for our innovative award winning MTB helmet line and our MOTO helmet line for off-road motorcycles.

Helmets accounted for seven percent of our twenty twenty one second quarter revenue and remained an absolutely key focus area. 05:29 Our other products, parts, and accessory categories comprised of our goggles, hydration bags, and an apparel line of jackets, pants and jerseys.

The one hundred and sixty five percent increase during the twenty twenty one second quarter is due to continued strong demand for our line of cutting edge MOTO and MTB apparel designed for off-road motorcycle and mountain biking. With consistent demand for our innovative Velocity line of military tested bullet proof goggles also contributing to this growth.

The other products, parts, and accessories category accounted for twenty two percent of second quarter revenue. 06:02 For the last several quarters, consumer spending patents on ortho [ph] products has continued to increase as people around the world participate widely in ortho activities that provide some escape from the COVID-19 pandemic.

This is a trend that we do expect to continue. 06:18 Now turning to the detailed financial results for twenty twenty one second quarter.

Total revenues for the second quarter of twenty twenty one increased to fourteen point three million dollars, up one hundred and six percent compared to six point nine million dollars for the second quarter of twenty twenty. 06:36 Second quarter income from operations increased to three point one million dollars, up two forty six percent compared to nine hundred and nine thousand dollars for the second quarter of twenty twenty.

06:47 Net income for the second quarter of twenty twenty one was two point four million dollars or zero point four four cents per basic and zero point three nine dollars per diluted share compared to six hundred seventy five thousand dollars or zero point thirteen dollars per basic and zero point twelve dollars per diluted share for the second quarter of twenty twenty. 07:08 Margins did decrease from forty seven percent for the first six months of twenty twenty to forty five percent for the first six months twenty twenty one, mainly due to our sales mix and increases in global shipping and logistics costs.

We are actively managing our global supply chain in the midst of rising raw material and shipping costs in Asia to improve margins and to create predictable and stable supply of our products. To that end, we will continue to work closely with our supply chain team around the world, particularly in Asia, where we are streamlining and optimizing our supply chain processes to mitigate rising costs.

7.44 Our operating costs increased by thirty two percent when compared to the twenty twenty second quarter led by increases in salaries, commissions, and general and administrative costs that are in line with our expectations as we continue to grow, continue to build a team of sales, marketing and product development professionals. 08:04 In addition, we invested in strategic global marketing campaigns and online media campaigns to increased products and brand awareness.

The increase in operational costs was compounded by the company's normalizing of salaries that had been reduced as part of the cost reduction measures implemented by the company to partially mitigate the potential effects of the COVID-19 pandemic during the twenty twenty quarter. 08:29 Now turning to the balance sheet.

We are currently meeting our working capital needs through cash on hand, a revolving line of credit that is mainly used for supply chain opportunities, as well as internally generated cash from operations. As of June thirty, twenty twenty one, we had cash and cash equivalents of three point seven five million dollars compared to two point six million dollars on June thirty, twenty twenty.

Current debt to equity ratio stands at four point three to one and we have no long term debt. 09:00 We believe that our current cash and cash equivalent balances along with net cash generated from operations are sufficient to meet anticipated cash requirements for at least the next twelve months.

We have no major plans for any capital intensive expenditures in the next twelve months. On our last quarter, I made an observation that I think [indiscernible] repeating given this remarkable quarter.

09:22 In two thousand and six, we pioneered and produced a revolutionary single product that didn't exist, our gold standard neck brace for a single market. Now fifteen years later, we produced an impressive array of products that protect virtually every part of the body and appeals to a wide consumer base in growing consumer markets, yet has grown into a world-recognized consumer brand, respected for performance and cutting edge innovation.

09:50 We have certainly come a long way, and we are proud of the momentum that we are evolving. That being said, we remain focused and determined.

In fact, we are working harder than ever and moving quickly to the next phase of gaining market share and building this incredible brand and company, as well as creating long term shareholder value. 10:12 This is an exciting time for Leatt as the company and its stockholders begin to reap some of the rewards of over a decade of hard and persistent dedication to excellence.

We look forward to presenting our twenty twenty two product line to consumers around the world in the second half of this year. As always, we'd like to thank our entire Leatt family of dedicated employees, business partners, and team riders for their continued strong efforts and support in making Leatt the success that it has become.

10:42 With that, I’d like to turn the call over for questions. Operator?

11:38 Good afternoon Sean.

11:40 Hello Olivier. How are you?

Doing fine. Thank you very much.

Congratulations on the best quarter of Leatt’s history. I have the impression that I repeat myself from quarter to quarter.

11:53 Thank you Olivier.

11:55 I have three questions for you this afternoon, Sean. The first one is can you please explain the eighty three percent increase in volume for the body protection?

Have you released any new product in that category during the quarter that justifies this increase?

12:11 So, Olivier, it is a combination of things. The two biggest reasons are really just the strong demand that we've seen for our full line of body protection, upper body protection.

And then also the boot line and the mountain biking line, shoe line is really taking off nicely. So, we haven't actually added any major category there.

It's just shipments of all of the products going out because of increased demand that we're seeing both in the distributor, dealer, and a consumer level. So the volume has really increased because demand is surging.

12:50 That's perfect. Thank you.

Then on the helmet side, helmets represented roughly seven percent of your sales during this quarter. What you have in plans here to really push harder for this segment?

13:07 It’s a good question, Olivier. Of course, the helmet segment is the single biggest safety segment industry wide, and it’s seven percent of sales, so that is something which of course we’re really doing a push.

We need to get that percentage higher. We do have some plans in place both on the marketing side of things in terms of creating awareness for the new helmet that we brought to the market, and then also on the product side, we really brought a whole new line of product of -- motorcycle products to the market.

And we've got some MTB helmets that are also in the pipeline that I think will be very, very exciting for consumers. We're are addressing some new needs.

So, this is going to be a product push. This is going to be a marketing push, and this is going to be a distribution push from our side Olivier.

13:58 Okay. So, would you say that's one of your priorities?

14:03 It's one of our priorities, yes. We need to increase helmet sales.

14:07 Okay, That's perfect. Then my last question is, can you tell me what were your biggest challenges during the quarter?

And I guess that might have something to do with the logistics cost that have seen pretty big increases by two to three times what you used to pay in normal conditions. Some outdoor brands have recently mentioned on their conference call that they used to ship their products via containerships and now they are considering shipping by air.

Is this something that you have looked at?

14:43 So, in terms of the challenges, yes, logistics has been a major challenge for us not only in terms of pricing, in fact in the last three weeks, if you look at the World Container Index for some of the shipping lines that we're using, it's up three fifty four percent to four hundred percent. So, there are definitely some cost increases there for forty foot high cube containers.

But it's also just availability. We're finding it more challenging to actually get containers and get them -- get our products in the containers and ship them out.

So, that's also been a big challenge for us. 15:27 There's obviously a huge amount of congestion around the world in the ports because consumer goods ex-China have really -- manufactured goods have really skyrocketed in terms of demand.

But we do expect this to normalize over time. We're looking at absolutely every avenue Olivier in order to make sure that we can achieve a consistent level of supply and not increase pricing significantly.

So, of course, we look at air freight as well. But unfortunately, I must say that in terms of availability, airlines have also cut back massively on the flights that they are doing because people are just not flying with the continued pandemic pressure that we're seeing.

16:14 So costs and availability on the airfreight side of things is also not ideal, but we're looking at all the different avenues to make sure that we can secure containers at the absolute, best pricing possible.

16:33 That's perfect. That's all the questions that I had for you today.

So, wish you all the best. Stay safe.

16:40 Thank you Olivier. Talk to you soon.

16:50 Hi, Sean. Congrats on another great quarter.

16:53 Hi Chris, good to hear from you.

16:56 Yeah, nice to hear from you as well. Just a couple questions for you today.

First, could you provide an update on the opening of the Reno office, How is that progressing?

17:06 Yes. Good question, Chris.

And we'll certainly put out a release just in terms of the progress soon. So we're just about to start shipping out of Reno.

We've got the business licenses and everything in place now. It's looking really, really good there.

We had a temporary warehouse that we set up in the Reno area. We've actually shipped everything out of the temporary warehouse now into the new warehouse.

So, we should be all systems go on Reno in the next week or so. So it's progressing really nicely.

17:41 That's good to hear. And I thought you had a number of job postings for Reno as well as sales reps nationwide.

Of course, it's been a pretty tight labor market here. So, I'm just wondering how that hiring process is going?

17:56 Yes. As you said, pretty tight labor market and we want to make sure that we get really skilled individuals into those those roles.

And certainly Reno, we've got to build a solid base there in terms of operational, mainly in terms of operational warehouse staff. We are finding that with the labor market being so tight, it's taking a little longer than what we had expected to fill those roles.

And I'm confident that we will be able to fill them with the right people in a reasonable timeframe.

18:33 Okay, great. Well, that's all I have for you today.

Stay Safe and talk to you soon Sean.

18:38 Thanks a lot, Chris.

18:48 Thank you all for joining us today. We look forward to speaking with you again to recap the third quarter of twenty twenty one.