Johnson Outdoors announced increased net sales, operating profits and earnings for their second fiscal quarter ended April 2, 2004. Gains were attributable to continued strong top-line and bottom-line performances by the Motors and Outdoor Equipment Group segments. Continued unusually high volume in military sales accounted for the reported growth in Outdoor Equipment. Watercraft operations posted losses for the third consecutive reporting period.
Total net sales for the second quarter were $95.6 million, a 14.8% increase over the same quarter last year due to significant revenue gains in the Motors and Outdoor Equipment segments. New product performance and channel growth across all sectors drove increased sales in Motors, while Military sales grew 54.3% versus the same period last year resulting in the reported gains in Outdoor Equipment. Operating profit for the quarter grew 41.8% compared with the prior year ($8.7 million versus $6.1 million respectively) driven by double-digit profit growth in Motors (75.0%) and Outdoor Equipment (46.5%). Profit sagged in the Diving segment (down 2.9% versus the prior year) and Watercraft posted an operating loss for the third consecutive reporting period (-$2.1 million). Net income in the second quarter was $4.8 million (earnings per diluted share of $0.55) compared with $4.3 million (earnings per diluted share of $0.50) in the prior year period.
“Consumer response is the truest measure of the health of our markets, and whether we have turned consumer insight into winning products. We will get a clear picture of both in the consumer retail season which kicks into high gear in the third quarter” said Helen Johnson-Leipold, Chairman and Chief Executive Officer. “We have good momentum heading into this important period; however, two businesses continue to face challenges. Diving is struggling with a soft market where the pace of recovery is uncertain; and, investments in Watercraft have yet to benefit the bottom-line. Portfolio diversity is a key asset, and more focus is needed to ensure greater consistency and balance in profitability across our businesses.”
Year-To-Date
Total net sales for the first six months of 2004 were $158.5 million, up 14.7% versus the prior year's six-month period. Operating profit was $10.0 million, a 59.5% increase over the same six-months last year. Net income year to date was $5.0 million (earnings per diluted share of $0.57) compared with $4.0 million (earnings per diluted share of $0.47) in the prior period.
Financial Highlights
The Company reported debt-to-total-capital of 30.3% reflecting a six percentage point improvement from a year ago. The increase in accounts receivable ($9.1 million) was the result of higher sales and a favorable currency impact of $2.5 million. The build in working capital and inventory levels was consistent with the period leading into the Company's third fiscal quarter peak selling season. Gross profit grew in large part due to successful new product introductions and efficiency improvements.
“On the balance sheet, things remain positive,” commented Paul Lehmann, Vice President and Chief Financial Officer. “Working capital has peaked, so cash balances should begin to build over the remainder of the year, and our debt ratio has dropped to the lowest level in our history.”
JOHNSON OUTDOORS INC. AND SUBSIDIARIES(thousands, except per share amounts)
Operating Results THREE MONTHS ENDED SIX MONTHS ENDED
April 2 March 28 April 2 March 28
2004 2003 2004 2003Net sales $95,595 $83,265 $158,536 $138,160
Cost of sales 53,316 47,072 89,287 78,284
Gross profit 42,279 36,193 69,249 59,876
Operating expenses 33,593 30,069 59,218 53,586
Operating profit 8,686 6,124 10,031 6,290
Interest expense, net 980 1,114 2,184 2,132
Other (income) expense, net 68 (2,115) (53) (2,471)
Income before income taxes 7,638 7,125 7,900 6,629
Income tax expense 2,842 2,828 2,944 2,612
Net income $4,796 $4,297 $4,956 $4,017
Basic earnings per
common share $0.56 $0.51 $0.58 $0.48
Diluted earnings per
common share $0.55 $0.50 $0.57 $0.47
Diluted average common
shares outstanding 8,766 8,561 8,732 8,525Segment Results
Net sales:
Motors $31,883 $27,331 $49,892 $42,337
Outdoor equipment 24,170 18,820 39,972 30,710
Watercraft 19,693 19,949 32,133 31,858
Diving 20,048 17,686 36,990 34,161
Other/eliminations (199) (521) (451) (906)
Total $95,595 $83,265 $158,536 $138,160
Operating profit (loss):
Motors $7,517 $4,296 $10,556 $5,873
Outdoor equipment 4,451 3,038 6,932 4,440
Watercraft (2,062) (1,111) (5,573) (3,040)
Diving 3,065 3,157 4,750 5,183
Other/eliminations (4,285) (3,256) (6,634) (6,166)
Total $8,686 $6,124 $10,031 $6,290
