Greetings, and welcome to the Leatt Corporation fourth quarter and full year 2023 results conference call. At this time, all participants are in 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, Investor Relations. Thank you, sir. You may begin. Thanks, Christine. Good morning, and welcome to the Leatt Corporation Investor Conference Call to discuss the financial results for the fourth quarter and full year 2023. The company issued a press release today, Wednesday, March 13, 2024, at 8 A.M. Eastern, and filed its report with the SEC. The press release is posted 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 844-512-2921 or 412-317-6671 for international callers. The replay PIN number is 13744705. 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 March 13, 2024. The company will make a presentation on the quarterly and year-end 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, and thank you, Mike, for and all of you for joining us today. Although 2023 was a challenging year for the cycling and motorcycle industries, the fourth quarter represented the first signs of the green shoots of a recovery in certain areas. We remain extremely optimistic that ordering patterns will improve over time because participation remains strong globally. The increase in our operating cash flow and our ability to remain profitable in a constrained environment is testament to our commitment to create long-term shareholder value. We believe that our continued investment in a strong pipeline of innovative products in global industry channels and in Leatt as a consumer brand will fuel future growth. Total global revenues in 2023 were $47.24 million, a 38% decrease from a very strong 2022, as dealers and distributors continue to regulate ordering in the context of elevated industry-wide inventory levels that continue to be digested as participation remains robust. While international distributor revenues were $33.27 million, down 44% year-over-year, dealer direct revenues decreased by 26%, and consumer direct sales grew by 18% when compared to 2022. Revenues for the fourth quarter of 2023 were $9.8 million, a 10% decrease compared to the fourth quarter of 2022. Although international revenues in the quarter did increase by 15%, as we continue to manage credit risk growth globally - sorry, did decrease by 15% as we continue to manage credit risk globally, dealer direct sales were encouraging, decreasing marginally by 2% in total, and consumer direct sales grew by 23%. We continue to strive to reach a wider group of consumers on a multi-channel basis that includes leveraging digital and traditional brick-and-mortar channels with our partners around the world. Our goal this year was to efficiently manage through and mitigate the impact of industry headwinds. We managed the impact of sustained inflationary pressure and kept spending under control, increased our margins, and reinforced our sales and marketing team. We increased our operating cash flows by $3.57 million to $6.66 million. We also successfully launched an entirely new line of adventure gear designed for all weather and all-terrain conditions, representing a new milestone for us and the opportunity to reach a wider global community of riders, which we'll talk about shortly. As a company and as a brand, we have always strived for design excellence and innovation in all that we do, despite the headwinds that we have experienced. Just last month, we were awarded again for those efforts. We won the 2024 Design and Innovation Award, this time for the MTB All Mountain 5.0 jersey and All Mountain 4.0 pants. This is our 10th Design and Innovation Award and testament to the competency of our global design and engineering team. Now I'll turn to some more details on sales of our product categories for the full year of 2023 compared to 2022. Sales of our flagship neck brace for 2023 were $2.75 million, representing 6% of our revenues for the year. The 49% decrease in revenues from 2022 was primarily attributable to dealers and distributors continuing to adjust ordering patterns and digest industry-wide inventory levels.... Our body armor products are comprised of chest protectors, upper body protectors, knee braces, knee and elbow guards, off-road motorcycle boots, and mountain biking shoes. Body armor revenues were $22.58 million, representing 48% of our total revenues for the year, and the 42% revenue decrease compared to 2022 was primarily due to a 43% decrease in upper body armor sales and a 48% decrease in off-road motorcycle boots sold in 2023. Motorcycle boot sales were exceptionally strong in 2022, up by 58% from 2021. Helmet revenues were $11.2 million in 2023, representing 23% of our revenues for the year. Sales of our motor helmet line for off-road motorcycle use were a highlight, increasing by 45% year-over-year, but were offset by a 49% decrease in MTB helmets sold in 2023, once again, as dealers and distributors, particularly in the cycle industry, continue to cautiously manage ordering and industry-wide inventory levels. Our other products, parts, and accessories category is comprised of goggles, hydration bags, and apparel items, including jerseys, pants, shorts, and jackets. Revenues for this category were $10.8 million for the 2023 year, representing 23% of our total revenues. The 39% decrease in revenues in this category was primarily due to a 47% decrease in global sales of technical apparel designed for off-road motorcycle and mountain biking use on a year-over-year basis. Here is the financial summary for the fourth quarter and full year 2023. Total revenues for the fourth quarter were $9.8 million, down by 10% compared to $10.9 million for the fourth quarter of 2022. Net loss for the quarter was $1.46 million or $0.24 per basic and $0.23 per diluted share, as compared to a net loss of $1 million or $0.18 per basic and $0.17 per diluted share for the fourth quarter of 2022. Total revenues for the 2023 full year were $47.2 million, down by 38% as compared to $76.3 million for the full year of 2022. The decrease in global revenues is attributable to a $2.64 million decrease in neck brace sales, a $3.36 million decrease in helmet sales, a $6.81 million decrease in other products, parts, and accessory sales, and a $16.29 million decrease in body armor sales. Net income for the full year of 2023 was $803,000, or $0.13 per basic share and $0.13 per diluted share, down 92% compared to $9.96 million, or $1.71 per basic share and $1.62 per diluted share for 2022. Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At December 31, 2023, the company had cash and cash equivalents of $11.35 million and a current ratio of 6-to-1. Looking ahead, we remain optimistic about the progress that we are making toward a return to sustainable growth as inventory continues to be digested and industry turbulence normalizes. Our industry is adjusting, but participation remains very strong, and our team remains energized about our future. As I mentioned earlier, the fourth quarter of 2023 represented the first signs of a recovery in our revenue performance. Although revenues decreased by 10% during the quarter, we did see revenue growth in emerging market areas in Europe and domestic motor dealer sales in the United States increased marginally. Our e-commerce revenues grew by double digits, and we expect continued expansion in this area. We are very excited about the recent launch of our entirely new line of adventure gear, designed for all weather and all-terrain conditions. This line represents a solid growth opportunity for the company, with a large total addressable market, as it is our first ever entrance into a much wider crossover motorcycle market, with products designed for a diverse community of riders around the world. We have developed core competencies that create significant opportunities to build new, innovative head-to-toe offerings. In conclusion, we are incredibly enthusiastic about the future of Leatt. Participation in the industry remains very strong, with a strong portfolio of innovative products in the market and in the pipeline, a multi-channel sales organization that continues to grow and develop, and a robust value position. We believe that we are well positioned for future growth and shareholder value. As always, we'd like to thank our entire Leatt family, our dedicated employees, business partners, and team riders for their continued strong support. With that, I'd like to turn the call over for 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. Thank you. Our first question comes from the line of Christopher Muller, a private investor. Please proceed with your question. Hi, Sean. I hope you're doing well today. Hi, Chris. Nice to hear from you. Yeah, just two or three questions for you today. No problem. Firstly, we've spoken before about some of the challenges in building out the U.S. MTB dealer network, and I see you've recently been hiring for a number of U.S. sales reps, both moto and on the bike side. Could you maybe provide an update on progress with respect to the MTB sales and marketing efforts in the U.S.? Absolutely, and I think it's a great question because that is a strong focus area for us, currently. Ever since we employed a Dain as our VP of Sales and Marketing on the MTB side, we've been working really hard at getting industry talent on board. It's going well. We've got a couple of new reps that we've employed. Those are company employee reps, and we're looking at whether we should be bringing on some independents as well. Marketing on the MTB side is going extremely well. We've grown the team in the U.S. on that side as well. So the distribution network continues to grow, and we, in fact, in Q1, we are starting to see some positive indicators of some of the areas that we put in place to date. So, to answer your question, it's going well. We're carrying on. We've still got a lot of work to do, but we think we've got some good people on board to help us get us to where we need to be on the MTB side. That's good to hear. And switching over to the international side of things. I see you've launched with some new distributors recently, including last week's announcement from Vedamotors with the Sport Tech Brazil launch. I would imagine that any time you're changing distributors, that there's an expectation for greater brand and dealer penetration, but are there any specific changes or opportunities you see with some of these new distributor relationships that would be particularly optimistic about? Yes, I think there are some, there are some big opportunities coming. I mean, a lot of the new distributors that we're bringing on are in emerging areas where we don't actually have strong representation. But with the sales and brand managers that we've brought on that are focusing strongly in those areas, there's a lot of opportunity for growth. So it certainly you're quite correct that the new distributors that we're bringing on are, of course, stronger financially, but are stronger in terms of their reach to dealers and generally are also stronger on the marketing side and the management side. So you know, that's the reason why we making some changes. You'll also see that we will be adding new distributors that can get us into some of these new exciting channels that we are now entering, like ADV. In certain cases, a distributor can service moto dealers and can also service ADV dealers that are a little bit more crossover and in some cases, more chain store-like. But in some areas, we'll be bringing on new ADV distributors, which should open up some really nice new doors and channels for us, and that's something that we really are excited about. Great. And just one last follow-up, if I may. Once we get beyond this initial launch with ADV, would you expect that the majority of product sales to still be with existing Leatt Moto dealers, or would you expect that this line would ultimately open up new sales channels and dealers that may lean more heavily in the on-road or maybe even commuter side of the market? It's a great question. I mean, ADV is one of those areas where there is a large amount of crossover with the street market. You know, just because a lot of ADV riders, they need to ride on the road in order to get to some of the off-road areas that they need to access. In some cases and in some geographical areas, that is the same dealer. But in many areas, it's a completely different channel. So this is gonna open brand new doors for us. You know, ADV is a strong and growing market. You know, if you look, for example, at BMW, which is a great example, BMW Motorcycles, there's about 200,000 BMW motorcycles that are sold globally around the world, and of those, the GS, which is the ADV kind of segment, 60,000 of the 200,000 are ADV GS bikes. So it's obviously a very attractive area for us to go into. We're expecting some really good growth. If you look at the numbers for last year, for 2023, you know, you'll see there's some apparel in there. Those are the initial shipments, but there's a lot more to come. So that is certainly very exciting. Great. That was all very helpful. Thanks for the time, Sean. Chat soon. Thank you, Chris. Chat soon. Our next question comes from the line of Christopher Jarrous with Dunlap Equity. Please proceed with your question. Hey, Sean. Hi, Chris. How are you? It's very good. Very good, thank you. Good. Good to hear things seem like they're turning. Two questions. Yep. One is, off the back of Chris's question before. With the new people you have on board, whether it's anecdotal or any data you can share, what market share looks to be given, given the environment? And then, promotional activity, whether it's you guys or feeling the need to do something, versus what competitors are doing or what other people are doing, just how would you rate promotional activity at this point in the cycle? And what your expectations for market share are for here and beyond. Our market share is still in the, you know, in the 2%-5% range in many areas. In terms of promotional activity, if I look at our competitors, you know, I think there have been some handbrakes that have pulled up. We are pushing hard still. We're not holding back on promoting our products. We're pushing hard in terms of getting products on the inventory side out to riders so that we can get some awareness out there, you know, to generate some sales in the future. So I would say that in the cycle right now, with inflation, we've been, you know, we've seen cuts across the board with many of our competitors and many industry players. But we are pushing hard still. We still feel strongly that there's an opportunity to invest right now for the future. So market share for us is still in the 2%-5% range, depending on the product category, but we'd like to get much higher than that. And hopefully, with the gap in the market right now, on the promotional side, you know, we can push quite hard. Okay. And what about the promotional activity by your competitors in terms of pricing? So, you know, the sales, Okay. Just trying to get product to move. What do you see? Totally understand. I understand what you mean in terms of pricing and discounting. So, if looking at our competitors, I mean, there's some huge discounts out there. Many of our competitors are-- it looks like they are going at well below cost on some of their product lines. We tried really hard not to do that. You can see that our margins have increased. We've also had to take a really hard look at our inventory levels over the last year to see any areas where we might need to you know improve efficiency of the inventory holding, taking a hard look at that. And despite that, we still have healthy margins. There is certainly some promotional activity that is going on out there. We are trying our hardest not to bite into that too much because, you know, we believe in the strength of our brand moving forward. But of course, you know, I mean, there is a point when inventory does need to be discounted, and, I mean, Leatt will do its best to retain brand equity. And we do see a lot of discounting out there on the competitor, you know, in the competitor landscape. And I think we're trying to balance it out as best as possible, Chris. But as I said, our margins did increase last year, which I think is positive in the context of the current market conditions. Okay. Fantastic. Thank you. That's it for me. Thanks, Chris. Our next question comes from the line of Olivier Colombo, a private investor. Please proceed with your question. Yes. Hello, Sean. Hello, Olivier. I just had some follow-up regarding the new adventure line that you have launched this year. And first of all, congratulations, because it really looks nice. So did I understand you properly, that some of the products have been shipped already in Q4, and the rest will be shipped probably in the next two quarters? And which are the regions that have the full assortment of products so far? So we ship. Yes, you are correct, Olivier, you understood correctly. We, we shipped a portion of the products out last year. And there's some, some hangovers in our products that are selling, that are, but, that are gonna be shipping during Q1 and Q2. I mean, currently now, Germany, Switzerland, and a few other European areas, they do have the full range. Those are currently on the way to dealers, which is, which is great, and to chain stores. We've got some big chain stores that we're selling to now in Europe, which is also great. Yes, we, we shipped out a portion in Q4 and we're starting to see the bulk of the shipments shipping out now during Q1. We did split some of the shipments in order to make sure that we had the CE certification for those products before they were shipped. So we got a lot of the CE certificates towards the end of Q4, and we managed to ship. And now we are continuing to ship during Q1 and Q2. As I was saying to Chris earlier, this is, of course, apparel, so primarily jackets, pants, and gloves. And of course, you know, Leatt always strives to be a head-to-toe brand, so there's still a lot of opportunity on the ADV side of things. That's perfect. Thank you very much. I have some questions regarding the European online retailers that have had a lot of problems over the last 12-18 months. Some have disappeared, some are discounting their inventory up to 70%. So I would just like to know, how hard have you been hit by these retailers? I mean, of course, you know, they do attempt to discount some Leatt products, and we haven't had a huge impact from them. What we have done, Olivier, is we've changed some of our pricing structures when it comes to dealing with the typical e-commerce player that might, you know, look to discount deep. And we've done that in order to make sure that we protect the brand as much as possible. In terms of the number of the large e-commerce kinds of players that we are dealing with, that has decreased over time. And we are now looking to, as opposed to going with e-com players directly, although some of them are still good customers, and, you know, we still do work with them. As a multi-channel brand, we feel quite strongly that that's what we need to do in order to reach as many consumers as possible. But we are partnering with our distributors on the e-com side as well in order to make sure that we not only get the Leatt brand front and center with as many consumers as possible, but we also, you know, can work with our distributors with the current inventory levels that they have and the future inventory that they're gonna get to get that inventory through the distributor and either to the dealer or to the end consumer. So, as I said, clients, we see ourselves as a multi-channel business. We sell to dealers, we sell to consumers, we sell to distributors, we sell to e-commerce players. You know, we do what needs to be done in order to get the brand Leatt into the hands of as many consumers as possible. That's perfect. Thank you very much. And then my last question is related to the press release. What do you exactly mean when you say first indications of recovery in certain areas? Right. It's a good question, Olivier. And what I was really referring to are some of the sales numbers that we're seeing. So looking at some areas in Europe during Q4, even though we were down by 10% in Q4, and, you know, that is, of course, a narrowing of a gap in our revenues when compared to 2022. We did have to manage some credit issues, so there were some orders and stock that we didn't ship during Q4 because, you know, for us, it's important that we make the right long-term decisions when it comes to shipping and when it comes to credit management. So if we had shipped those, you know, the gap would have been narrower. So from our side, we're starting to see sales catching up now to prior year levels. And if you look at moto sales to dealers in the U.S., we were marginally up. It's the same in South Africa. In fact, in South Africa, we were up moto and MTB. So we're starting to see the sales increasing in some areas. And generally, what we see is that it starts out at the consumer and dealer level. Of course, direct-to-consumer sales are up by 23%, which is also a great indicator for us. So we normally would say, would see that at the consumer and at the dealer level, you know, they, they are the closest to the market, obviously. So, you know, we start to see increases in sales in those areas, and then it filters through to international distributors over time. So these are just the first indicators. It's not all areas, Olivier, but it's some areas, as I said in the discussion earlier, it is some areas where we're starting to see some positive indicators. And also sentiment is just improving slightly. Obviously, we are still in a high interest rate environment, you know, that hasn't changed yet. But I think the market perception in general is that that is also gonna improve. So macroeconomic conditions are seen to improve during 2024 and going into 2025. So that's also a positive indicator for us. And just in general, you know, the feeling on our side is that we're starting to see some of the green shoots of a bit of an improvement in revenues in some areas. It's not across the board yet, but I think, you know, we will get there over time. That's perfect. Thank you very much for these, detailed, answers to my questions. I really appreciate it and wish you all the best, and the team, of course. Thank you, Olivier. Thank you. Thank you. We have no further questions at this time. Mr. Macdonald, I would like to turn the floor over to you for closing comments. Thank you all for joining us today. We look forward to our next call to review the results of the 2024 first quarter. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.