Johnson Outdoors Inc. reported double-digit growth in sales and operating profit for the fiscal third quarter ending June 30, 2017. Strong demand for new products drove significantly higher volume leading to a nearly threefold increase in net income quarter over quarter. During the current fiscal nine-month period, total company net income more than doubled as revenues surged 11 percent above the same prior year fiscal nine months.

“This quarter’s outstanding results emphasize the importance of our continued focus and investment on delivering market-winning innovation driven by a deeper understanding of, and unique insights into outdoor recreation consumers. Exceptional new products and technologies are powering tremendous growth in Fishing. Likewise, innovation in core life-support categories has created positive marketplace momentum and improved performance in Diving,” said Helen Johnson-Leipold, chairman and chief executive officer. “At the same time, our unique flux-ring technology in Jetboil and innovative Predator series of fishing boats from Old Town have helped us grow share in very challenging Camping and Watercraft Recreation markets. Overall, we are well-positioned to end the year strong with solid momentum heading into the next fiscal year. Looking ahead, we expect to see Fishing grow at a more normalized rate. We will continue to advance progress against our three key strategic plan priorities – richer consumer insights, enhanced innovation processes and digital sophistication – the cornerstones of a foundation for success in delivering accelerated, sustained profitable growth long-term.”

Third Quarter Results
Fiscal third-quarter results reflect in-season replenishment orders for the company’s warm-weather outdoor recreation products. Favorable marketplace response to new products energized an 11 percent increase in total company net sales of $155.3 million compared to $139.3 million in the previous-year third quarter. Foreign currency translation had a negligible impact on sales versus the prior year quarter. Key factors behind the year-over-year comparison in each business unit were:

  • Successful new products propelled double-digit growth in all Fishing brands, driving sales to $104 million for an 18 percent increase in segment revenue.
  • Diving sales increased 17 percent, driven by strong positive momentum behind new buoyancy compensator and dive computer innovations.
  • Growth in Jetboil could not offset declines in tent sales resulting from retailer restructuring across the camping market.
  • A sluggish kayak market led to lower sales quarter-over-quarter in Watercraft Recreation, masking share growth in its core brands.

Total company operating profit during the quarter was $24.7 million compared to $13.6 million in the prior fiscal-year third quarter. Gross margin increased by 290 basis points driven by a favorable product mix and sales volume related operating efficiencies. Higher volume-related expenses, higher incentive compensation expense and higher administrative and legal expenses in the current-year quarter were nearly offset by the impact of a $6.2 million goodwill impairment charge recognized during the third quarter of fiscal 2016. Third quarter net income was $16.6 million, or $1.65 per diluted share, compared to net income of $6.8 million, or 68 cents per diluted share, in the previous third quarter.

Year-To-Date Results
Strong marketplace performance of new products across the company’s Minn Kota, Humminbird, Cannon, SCUBAPRO and Jetboil brands generated higher year-to-date sales for the nine-month period of $398.8 million, an 11 percent increase compared with the same prior year period. Total company operating profit was $45.7 million versus operating profit of $27.8 million in the same nine-month period last year. Higher volumes in Fishing, stronger performance in Diving and improved margins in all units are key drivers in the improvement in operating profit.

The company’s effective tax rate during the nine-month period was 27 percent versus 44 percent for the previous year-to-date period. Tax expense for the nine-month period benefitted from foreign tax credits of $4.2 million recognized in the current year first quarter due to the repatriation of approximately $21.9 million of cash from overseas. Net income was $34.6 million, or $3.45 per diluted share, in the current nine-month period compared to $15.6 million, or $1.56 per diluted share, in the same nine-month period last year.

Other Financial Information
The company reported cash and short-term investments of $93.7 million as of June 30, 2017, versus $75.6 million as of July 1, 2016. Depreciation and amortization was $9.9 million year-to-date, compared to $8.9 million during the first nine months of the prior year. Capital spending totaled $7.9 million during the first nine months of fiscal 2017 compared with $8.6 million in the same period in 2016.

“Across the board, price-to-value innovation and increased efficiencies have expanded gross margins and driven enhanced bottom-line performance,” said David W. Johnson, vice president and chief financial officer. “The balance sheet is strong and our healthy cash position enables us to continue to invest in future growth strategies and platforms while continuing to pay cash dividends to our investors.”

Product News
For the seventh consecutive year, Humminbird grabbed “Best of Electronics” honors at the 2017 ICAST, the world’s most prestigious fishing show, with the brand’s new, big screen display SOLIX fishfinder. With two display-size options – 12.1- and 15.4-inch screen models – the SOLIX boasts Humminbird’s unique technologies designed to make locating fish easier – including MEGA Imaging™, CHIRP Digital Sonar, and AUTOCHART Live. Both models also come standard with Humminbird’s innovative Cross Touch Interface, letting anglers operate the unit via touchscreen or keypad depending on water conditions, all while customizing the screen with up to four independent viewing panes which can be individually zoomed or moved to different screen locations based on angler preference or fishing situation.

Photo courtesy Eureka