Johnson Outdoors Reports Fiscal Second Quarter Results
May 03 2019 - 6:00AM
Johnson Outdoors Inc. (Nasdaq:JOUT), a leading
global innovator of outdoor recreation equipment and
technology, today reported increased sales and earnings during the
Company’s 2019 second fiscal quarter ending March 29, 2019, and
double-digit growth in net income during the first fiscal six-month
period.
"Innovation is at the core of who we are,
powering sustained marketplace success and growth of our
brands. This year’s strong customer response to new products
and the ongoing popularity of legacy innovations firmly position
Minn Kota® and Humminbird® on an upward trajectory
heading into the warm-weather season. Likewise, Diving is
benefitting from new product performance, currently representing
about a third of Scubapro® sales. Conversely, challenging
market conditions in Watercraft Recreation and Camping emphasize
the critical importance of continued investment in digital and
marketing excellence and eCommerce sophistication,” said Helen
Johnson-Leipold, Chairman and Chief Executive Officer.
SECOND
QUARTER
RESULTS
Sales in the second fiscal quarter reflect
shipments to customers in anticipation of the primary
retail-selling period for the outdoor recreation industry’s
warm-weather products. Net sales rose 7 percent to $177.7
million in the current fiscal second quarter compared to $165.8
million in the prior year quarter, driven by positive momentum in
the Company’s Fishing and Diving groups. Key contributing factors
in year-over-year quarterly comparisons in each group were:
- Favorable response to new products propelled a 10.1 percent
increase in Fishing revenue.
- Strong performance in North America drove a 3.7 percent
increase in Diving sales. On a currency neutral basis, sales
were 7.4 percent higher than the prior year quarter.
- Watercraft Recreation sales declined due to continued kayak
market weakness.
- Lower sales across tent categories primarily accounted for the
unfavorable year-over-year comparison in Camping.
Total Company operating profit in the fiscal
second quarter was $27.8 million compared with operating profit of
$26.0 million in the previous year quarter. Gross margin of
44.5 percent was slightly below the prior year quarter due in part
to the unfavorable impact of $1.4 million in Section 301 tariffs on
Chinese goods and components. Operating expense during the
quarter increased 6.4 percent year-over-year due primarily to
higher deferred compensation expense resulting from a $2.0 million
upward adjustment in the valuation of the plan’s assets; however,
an offsetting gain was reflected in other income/expenses. Net
income of $21.9 million, or $2.18 per diluted share, in the fiscal
second quarter improved slightly versus the previous fiscal year’s
second quarter.
YEAR-TO-DATE
RESULTS
Fiscal 2019 year-to-date net sales of $282.1
million were on par with the record-high fiscal six-month period
last year. Total Company operating profit increased 2.4
percent to $33.8 million compared with the prior fiscal
year-to-date period. Year-to-date gross margin improved to
43.8 percent versus 43.6 percent for the previous fiscal year first
six months, despite the negative impact of $2.1 million in Section
301 tariffs. Operating expense declined during the first half of
the fiscal year due primarily to lower warranty expense and a
favorable impact from valuation adjustments in the Company’s
deferred compensation plan during the period. Net income of
$25.4 million, or $2.53 per diluted share, in the first fiscal
six-month period compared favorably to net income of $21.9 million,
or $2.18 per diluted share, in the prior year-to-date period. The
year-to-date effective tax rate of 25.9 percent compared favorably
to the previous year fiscal first six months, which reflected
charges associated with initial implementation of the new U.S. Tax
Reform Act.
OTHER
FINANCIAL
INFORMATION
As of March 29, 2019, cash totaled $68.2 million
compared with the Company’s cash position of $51.1 million at March
30, 2018. Depreciation and amortization were $6.8 million in
the current year-to-date period versus $6.4 million in the prior
fiscal first six-months. Capital spending totaling $8.2 million
during the first six-month period declined from $10.9 million in
the previous year-to-date period.
On March 19, 2019, the Company received an
exclusion from Section 301 tariffs for a component for products
assembled in the United States. As a result of this
exclusion, the Company now estimates a reduced impact of Section
301 tariffs on fiscal 2019 profits of $5-7 million. The exclusion
applies for one year from the date it was granted, and the Company
will be reimbursed for tariffs previously assessed and paid on the
excluded component. At this time, other product components remain
subject to Section 301 tariffs.
“Looking ahead, we continue to expect moderate
sales growth this fiscal year and will pursue a range of additional
Section 301 tariff mitigation efforts with respect to other
affected product components with the goal of further reducing their
impact on profitability,” said David W. Johnson, Vice President and
Chief Financial Officer. “Nonetheless, we continue to benefit
from our ongoing focus on improved operational efficiency, enabling
us to protect margins and effectively manage working capital. The
balance sheet remains strong, and our growing cash position enables
us to continue investment against strategic priorities and
opportunities to expand our business and growth potential. We
remain confident in our ability and plans to create long-term value
and consistently pay dividends to shareholders.”
WEBCAST
The Company will host a conference call and
audio web cast at 11:00 a.m. Eastern Time on Friday, May 3,
2019. A live listen-only web cast of the conference call may
be accessed at Johnson Outdoors’ home page. A replay of the
call will be available for 30 days on the Internet.
About Johnson Outdoors Inc.
JOHNSON
OUTDOORS is a leading global
innovator of outdoor recreation equipment and technologies that
inspire more people to experience the awe of the great outdoors.
The company designs, manufactures and markets a portfolio of
winning, consumer-preferred brands across four categories:
Watercraft Recreation, Fishing, Diving and Camping. Johnson
Outdoors' iconic brands include: Old Town® canoes and kayaks; Ocean
Kayak™; Carlisle® paddles; Minn Kota® fishing motors, batteries and
anchors; Cannon® downriggers; Humminbird® marine electronics and
charts; SCUBAPRO® dive equipment; Jetboil® outdoor cooking systems;
and, Eureka!®camping and hiking equipment.
Visit Johnson Outdoors at
http://www.johnsonoutdoors.com
Safe Harbor Statement
Certain matters discussed in this press release
are “forward-looking statements,” intended to qualify for the safe
harbors from liability established by the Private Securities
Litigation Reform Act of 1995. Statements other than
statements of historical fact are considered forward-looking
statements. These statements may be identified by the use of
forward-looking words or phrases such as "anticipate,'' "believe,''
"confident," "could,'' "expect,'' "intend,'' "may,'' "planned,''
"potential,'' "should,'' "will,'' "would'' or the negative of those
terms or other words of similar meaning. Such forward-looking
statements are subject to certain risks and uncertainties, which
could cause actual results or outcomes to differ materially from
those currently anticipated. Factors that could affect actual
results or outcomes include the matters described under the caption
“Risk Factors” in Item 1A of the Company’s Form 10-K which was
filed with the Securities and Exchange Commission on December 7,
2018, and the following: changes in economic conditions, consumer
confidence levels and discretionary spending patterns in key
markets; uncertainties stemming from changes in U.S. trade
policies, tariffs, and the reaction of other countries to such
changes; the Company’s success in implementing its strategic plan,
including its targeted sales growth platforms, innovation focus and
its increasing digital presence; litigation costs related to
actions of and disputes with third parties, including competitors;
the Company’s continued success in its working capital management
and cost-structure reductions; the Company’s success in integrating
strategic acquisitions; the risk of future write-downs of goodwill
or other long-lived assets; the ability of the Company’s customers
to meet payment obligations; movements in foreign currencies,
interest rates or commodity costs; fluctuations in the prices of
raw materials or the availability of raw materials or components
used by the Company; any disruptions in the Company’s supply chain
as a result of material fluctuations in the Company’s order volumes
and requirements for raw materials and other components necessary
to manufacture and produce the Company’s products; the success of
the Company’s suppliers and customers and the impact of any
consolidation in the industries of the Company’s suppliers and
customers; the ability of the Company to deploy its capital
successfully; unanticipated outcomes related to outsourcing certain
manufacturing processes; unanticipated outcomes related to
litigation matters; and adverse weather conditions. Shareholders,
potential investors and other readers are urged to consider these
factors in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements included herein
are only made as of the date of this filing. The Company assumes no
obligation, and disclaims any obligation, to update such
forward-looking statements to reflect subsequent events or
circumstances.
FINANCIAL TABLES FOLLOW
Johnson Outdoors Inc. (thousands, except per
share amounts) |
|
(thousands, except per
share amounts) |
|
|
|
|
|
|
THREE MONTHS
ENDED |
|
SIX MONTHS ENDED |
Operating Results |
March 29 2019 |
March 30 2018 |
|
March 29 2019 |
March 30 2018 |
Net sales |
$ |
177,707 |
|
$ |
165,778 |
|
|
$ |
282,147 |
|
$ |
282,357 |
|
Cost of
sales |
|
98,578 |
|
|
91,583 |
|
|
|
158,699 |
|
|
159,351 |
|
Gross profit |
|
79,129 |
|
|
74,195 |
|
|
|
123,448 |
|
|
123,006 |
|
Operating
expenses |
|
51,285 |
|
|
48,193 |
|
|
|
89,626 |
|
|
89,967 |
|
Operating profit |
|
27,844 |
|
|
26,002 |
|
|
|
33,822 |
|
|
33,039 |
|
Interest (income)
expense, net |
|
(281 |
) |
|
(76 |
) |
|
|
(784 |
) |
|
(206 |
) |
Other
(income) expense, net |
|
(1,895 |
) |
|
(3,367 |
) |
|
|
255 |
|
|
(4,524 |
) |
Income before income
taxes |
|
30,020 |
|
|
29,445 |
|
|
|
34,351 |
|
|
37,769 |
|
Income
tax expense |
|
8,097 |
|
|
7,825 |
|
|
|
8,907 |
|
|
15,914 |
|
Net income |
$ |
21,923 |
|
$ |
21,620 |
|
|
$ |
25,444 |
|
$ |
21,855 |
|
Diluted average common shares outstanding |
|
10,028 |
|
|
9,993 |
|
|
|
10,015 |
|
|
9,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common share |
$ |
2.18 |
|
$ |
2.15 |
|
|
$ |
2.53 |
|
$ |
2.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Results |
|
|
|
|
|
Net sales: |
|
|
|
|
|
Fishing |
$ |
138,229 |
|
$ |
125,506 |
|
|
$ |
217,026 |
|
$ |
214,413 |
|
Camping |
|
9,529 |
|
|
10,082 |
|
|
|
15,349 |
|
|
15,928 |
|
Watercraft Recreation |
|
9,851 |
|
|
10,808 |
|
|
|
14,176 |
|
|
15,165 |
|
Diving |
|
20,085 |
|
|
19,370 |
|
|
|
35,623 |
|
|
36,808 |
|
Other/eliminations |
|
13 |
|
|
12 |
|
|
|
(27 |
) |
|
43 |
|
Total |
$ |
177,707 |
|
$ |
165,778 |
|
|
$ |
282,147 |
|
$ |
282,357 |
|
Operating profit
(loss): |
|
|
|
|
|
Fishing |
$ |
34,590 |
|
$ |
30,762 |
|
|
$ |
46,012 |
|
$ |
44,827 |
|
Camping |
|
419 |
|
|
302 |
|
|
|
(267 |
) |
|
(422 |
) |
Watercraft Recreation |
|
(516 |
) |
|
(170 |
) |
|
|
(2,008 |
) |
|
(1,314 |
) |
Diving |
|
1,423 |
|
|
14 |
|
|
|
716 |
|
|
(371 |
) |
Other |
|
(8,072 |
) |
|
(4,906 |
) |
|
|
(10,631 |
) |
|
(9,681 |
) |
Total |
$ |
27,844 |
|
$ |
26,002 |
|
|
$ |
33,822 |
|
$ |
33,039 |
|
Balance Sheet Information (End of Period) |
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
$ |
68,205 |
|
$ |
51,066 |
|
Accounts
receivable, net |
|
|
|
|
124,750 |
|
|
124,237 |
|
Inventories, net |
|
|
|
|
116,231 |
|
|
94,607 |
|
Total
current assets |
|
|
|
|
316,273 |
|
|
272,273 |
|
Total
assets |
|
|
|
|
427,993 |
|
|
383,926 |
|
Total
current liabilities |
|
|
|
|
102,585 |
|
|
99,902 |
|
Total
liabilities |
|
|
|
|
127,292 |
|
|
122,681 |
|
Shareholders’ equity |
|
|
|
|
300,701 |
|
|
261,245 |
|
At
Johnson
Outdoors
Inc. |
David
Johnson |
|
Patricia Penman |
VP & Chief Financial Officer
|
|
VP – marketing services & global
communications |
262-631-6600 |
|
262-631-6600 |
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