Greetings, and welcome to the Leatt Corporation Second Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Mason. Please go ahead. Thanks, Stacy. Good morning, and welcome to the Leatt Corporation Investor Conference Call to discuss the financial results for the second quarter of 2023. The company issued a press release today, Thursday, August 10, 2023, at 8:00 A.M. Eastern. Also filed its report with the SEC. The press release is located on Leatt's website at leatt-corp.com. 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 1-844-512-2921 or 1-412-317-6671 for international callers. The replay PIN number is 13740487. A replay of the webcast will be available immediately following this call and will continue for seven days. Certain statements in this conference call may constitute forward-looking statements. Actual results could differ materially from those discussed in this 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 10, 2023. 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. Good morning, thank you, Mike, and thank you all for joining us today. Compared to last year, the best year in our company's history in terms of revenue, 2023 continues to be a challenging period for the entire moto and MTB industry. Current industry headwinds remain centered around post-COVID stocking and sell-through dynamics. Ordering patterns displayed by our international distribution partners, particularly on the MTB side, are indicative of constrained purchasing and conservative dealer sentiment, which we believe will remain prevalent as high distributor and dealer post-COVID inventory levels are digested. We are, however, enthusiastic about the momentum that the Leatt brand continues to maintain globally and do expect the early stages of a moderate recovery in domestic consumer sales to continue to appear in our results over the next several quarters. Total global sales for the second quarter were $12.35 million, a decrease of 31% from last year's second quarter. Total global revenues for the first six months of 2023 were $25.43 million, a decrease of 40% over the first six months of 2022, which was an exceptionally strong period for our company. Revenues for the period increased by 55% when compared to the 2021 comparative period. Net income after sales for the 2023 second quarter was $776,000, with year-to-date net income of $1.8 million. The decrease in revenues and resultant net income contraction came in the context of continued industry-wide distributor and dealer adjustments to ordering patterns. We do expect this trend to be temporary as inventory levels are digested and consumer participation in outdoor sport activities remains strong. We are particularly enthused by global sales of our helmets, featuring our innovative 360 degrees Turbine Technology. Overall, helmet sales increased by 48% to $3.52 million over last year's second quarter and accounted for 29% of our total revenues for the second quarter of 2023. Our award-winning MTB helmet lineup was a key contributor to this growth, generating a sales revenue increase of 116%, led by initial shipments of our highly anticipated MTB 3.0 Enduro helmet, designed to reach a wide rider audience of elite and amateur athletes. The MTB 3.0 helmet showcases unrivaled versatility and innovation, with three levels of protection for any trail. The three-in-one design means that it can be worn as a half shell, open-face helmet for light trail riding, in the jet style, with the addition of over-the-ear guards for added coverage, or the clip can be used on the full chin guard for maximum protection. Our redesigned moto helmets are generating strong demand, with sales volume increasing by 141% in the period. We also remain energized by continued growth in consumer and athlete direct sales in the US and the moderate improvement in domestic dealer buying, activity, and sentiment as inventory is digested in some key categories. Our leatt.com site activity and consumer purchasing continued to grow during the second quarter, increasing by 11% and now representing 7% of our global revenues on a year-to-date basis. Other important highlights during the 2023 period include the improvement in our gross margins from 41% to 44% year to date, as global and shipping costs continue to stabilize. An increase of $5 million to $12 million in cash and cash equivalents, which we see as a testament to the resilience of our business model and prioritization of cash and working capital management at this time. Cash flows generated from operations were $6.8 million for the first six months of 2023, with a current ratio of 6.25 to 1 at 30 June 2023, up from 4.25 to 1 at 30 June 2022. We will continue to carefully manage margins in order to maintain long-term brand equity and expect to see global shipping and logistics costs continue to stabilize as COVID-19 pandemic supply chain constraints continue to improve. International revenues for the second quarter were $8.93 million, a decrease of 36% compared to a very strong 2022 second quarter. Sales in the U.S. decreased by $610,000, or 15% compared to last year. Although U.S. dealers continue to manage some elevated stocking areas and order conservatively, we are encouraged by increased activity on our consumer direct channels and a moderate improvement in domestic dealer activity and buying sentiment. Our global team of sales and brand managers, covering key established and emerging markets, continue to build a strong Leatt presence at the dealer and consumer levels and to leverage fluid market conditions. We are continuing to focus on building and refining a strong multi-channel selling organization that has the ability to distribute our exceptional head-to-toe products to a much wider rider audience. Now I'll turn to more details on sales of our product categories for the second quarter of 2023. Sales of our flagship neck brace were $540,000, accounting for 4% of our second quarter 2023 revenues, a 59% decrease due primarily to a decrease in the volume of neck braces sold in the U.S. and abroad. In the second quarter of 2022, neck brace sales were $1.3 million and 7% of our revenues. Our body armor products category is comprised of chest protectors, full upper body protectors, upper body protection vests, back protectors, knee braces, knee and elbow guards, off-road motorcycle boots, and mountain biking shoes. Body armor sales were $5.38 million, accounting for 43% of our second quarter 2023 revenues. A 43% decrease, due primarily to a 60% decrease in the volume of upper body protection units sold globally. In the second quarter of 2022, body armor product sales were $9.5 million and 53% of our revenues. As mentioned earlier, helmet sales were $3.52 million, accounting for 29% of our second quarter 2023 revenues. A 48% increase, due primarily to a strong increase in MTB helmet sales, which increased by 116%. Additionally, motor helmet sales volumes increased by 141% due to strong demand for our redesigned motor helmet lineup. In the second quarter of 2022, helmet sales were $2.38 million, accounting for 13% of our revenues. Our other products, parts, and accessories category is comprised of goggles, hydration bags, and apparel items, including jerseys, pants, shorts, and jackets, as well as aftermarket support items required primarily to replace worn or damaged parts through our global distribution network. Sales in this category were $2.91 million, accounting for 24% of our second quarter 2023 revenues, a 39% decrease from last year. The decrease was due primarily to a 33% decrease in sales volumes of motor and MTB technical apparel designed for off-road motorcycle and mountain biking use, respectively. In the 2022 second quarter, sales in this category were $4.73 million, accounting for 27% of our revenues. Here is the headline financial summary for the second quarter of 2023. Total revenues for the second quarter were $12.35 million, down by 31% compared to $17.94 million for the second quarter of 2022. The decrease in global revenues is attributable to a $4.14 million decrease in body armor sales, a $1.82 million decrease in other products, parts, and accessory sales, and a $770,000 decrease in neck brace sales. That was partially offset by a $1.15 million increase in helmet sales. Despite the current global inflationary environment, total operating costs remained relatively flat and only increased by 2% or $79,000 to $4 million for the second quarter. Income from operations for the second quarter was $1.31 million, down by 65% compared to $3.73 million for the second quarter of 2022. Net income for the second quarter was $776,000, or $0.13 per basic and $0.12 per diluted share, down 72% as compared to net income of $2.73 million, or $0.47 per basic and $0.44 per diluted share for the second quarter of 2022. One additional item to note, we had a once-off tax charge of approximately $200,000 relating to a 2021 assessment of taxes payable in California that we received in April 2023 as a result of our move from California to Nevada, which impacted our effective taxation percentage and our net income for the second quarter. We expect that this is an extraordinary once-off item. Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At June 30, 2023, the company had cash and cash equivalents of $12 million and a current ratio of 6.25 to one. Looking ahead, while industry-wide inventory stocking dynamics remain a challenge that has caused temporary adjustments in ordering patterns, we continue to focus heavily on areas that we believe will stimulate growth and profitability moving forward. We are actively refining and building our multi-channel sales organization in established and emerging markets, building internal and partner-level e-commerce capabilities, and investing in product launch and brand-building campaigns that leverage the tremendous momentum that the Leatt brand has achieved. We will also continue to focus on financial resilience and cash flow through working capital, as well as margin and the management of operational expense, with investment in areas that we believe will drive future growth. We continue to strive to develop exceptional product offerings to a wider rider community. Our team is focused on gaining market share through product innovation and consumer brand management, and many of our categories remain in their infancy and show great potential to meet the needs of riders at all levels and contribute to exponential growth. Although we do expect international distributor purchasing levels to remain constrained, we are particularly excited about our entry into much wider MTB and motor markets in the second half of the year. Our international distributors continue to evaluate dealer purchasing patterns, and they note that the Leatt brand's momentum remains positive as the riding season gains traction. We are looking forward to continued rider participation around the world, the launch of some exciting new market segment opportunities, and a return to revenue growth a return to revenue growth, as inventory is digested and ordering patterns return to more robust levels that reflect the tremendous brand and company momentum that we have built over the last several years. Of course, we will continue to monitor the current macroeconomic environment that influences disposable income and revenue spending globally, including worldwide geopolitical risks, the inflationary environment, and the resultant currency fluctuations that impact consumer sentiment in order to adjust for any potential economic headwinds. We believe that we have built a solid foundation and are in a very strong position to gain market share and deliver long-term shareholder value moving forward. As always, we'd like to thank our entire Leatt family, passionate, dedicated employees, business partners, partners, and team riders for their continued dedication and support. With that, I'd like to turn the call over for any questions. Operator? Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. First question comes from Christopher Muller, Private Investor. Please go ahead. Hi, Sean. Hope you're doing well today. Hey, hey, Chris. Good, thanks. How are you? I'm doing well, thanks. Just two questions for you today. Sure. You know, first, I've, I've seen an expanded presence in China this year in terms of sponsorship, trade shows, social media. Knowing that the Chinese market is one that some Western brands have failed to penetrate in a meaningful way, and I'm just curious to hear your thoughts around both the opportunity and your approach in China. I think there's a huge opportunity in China, and as you say, we've, we've got distribution partners now in China that are doing a great job in terms of marketing the Leatt brand to the domestic Chinese market, which obviously is quite unique in terms of the approach that is required. We're looking at all channels. We're looking at the digital side of things. You'll see a social media presence. There's some really good and really strong digital sales and e-commerce platforms there that Leatt is trying to turn the heat up on a little bit. We're really gonna use a multi-channel approach there, both selling through e-commerce partners and through the traditional distribution channels and brick-and-mortar dealers. What we have done is engaged with some experts in the field in terms of getting into the Chinese market, mainly through our distribution partners. We've been working really, really hard on that opportunity, which we think is quite significant. Great. That's, that's good to hear. Second, I, I noticed that several of your distributors have launched Leatt-branded consumer websites recently, Australia, Canada, Brazil, et cetera. You know, I'd like to understand a bit more about your strategy there. I, I would imagine that this brings you closer to the end consumer, probably gives you greater control over brand messaging, might open up access to a wider range of SKUs. But I, I would also assume that there must be some balance in managing existing dealer relationships when you do this, particularly those already selling online. You know, just as well as the requirements it places on a distributor to, to now manage a consumer-facing business. Any thoughts you can provide around, around that would be helpful. Absolutely. I think this is absolutely one of our, our key strategic decisions that we took, you know, with, with the current stocking environment that's out there at the moment at the distributor level and, and also at the dealer level. You know, we've realized that there's some, some really good consumer demand for, for certain categories, but the products are not actually able to get through to the consumer because of the constraints that our, that our distribution partners and our dealers are facing. We've had a lot of discussions with our distributors about this, and we decided to, to, to take the step, exactly as you said, now, just to get a little bit closer to the end consumer. It's not necessarily that we, we want to control the way that our distributors operate or the way that dealers operate. It's more that we wanna, we wanna make sure that there's a uniform Leatt presence online in the various different countries, and that the inventory that distributors have got is able to move through to the end consumer as soon as possible. So this really is one way that we are supporting our distributors around the world by allowing them to, to build these, these websites. Of course, we have got, you know, ultimate control over this. We, we own the domains, and everything will, will be uniform in terms of the Leatt brand presence around the world. Of course, you know, there's some linguistic things that we have to take care of in certain countries in order to make sure that, you know, consumers, that the consumer engagement and communication is, is great. We're working really, really hard on that. I think this is one of the areas that the current stocking situation has, has created an opportunity to, to address. I think, you know, although we, we are fully committed to multi-channel sales, selling through distributors, selling through dealers, brick-and-mortar dealers, e-commerce dealers, you know, we realize that there's a, there's a growing number of consumers out there, that still need to get exposed to the Leatt brand. By going a little bit more direct, supporting our dealers, who obviously are in a position where they can also support their dealers, a lot of them have decided that for certain sales they'll still take care of their dealer in the certain areas so that the dealers still get some form of kickback in order to make sure that they are still getting margin from, from online sales. The overall strategy has indicated that we need to get closer to the end consumer, number 1. Number 2, it's very, very important that the stock that is currently out there moves through to the consumers that want it as soon as possible without eroding margin too much. Of course, number three, there's a big marketing angle here because it's probably one of the most important areas that we see here. Of course, you know, we are marketing the Leatt brand around the world through our distributors, with a little bit more control than what we've had before. You know, and, and I think, you know, that has meant that the pie is just bigger for everybody. Dealers, in areas where we have a really good web presence, are benefiting from the, the fact that people are walking into dealerships, brick-and-mortar, and actually asking for, for the Leatt products. That is obviously something that is really, really important. It creates a great pool of end consumers towards Leatt as a brand. If the distributors have got the stock and the consumers are out there, then this is something that we are quite, quite committed to. We haven't seen much fallout from the brick-and-mortar dealers. They appreciate the situation that is currently, you know, in the market, and they can see the benefits in terms of brand engagement. Great. That's, that's all very good to hear. I appreciate the color. That's all I had today, so thanks for the time, Sean. Okay. Talk soon. Thank you. I would like to turn the floor back to Sean for closing remarks. Thank you all for joining us today. We look forward to our next call to review the results of the 2023 third quarter. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.