Johnson Outdoors, Inc. said a strong bounce back in its Fishing segment, due to the easing of supply chain issues, drove an 18.1 percent sales increase and improved profitability in its fiscal fourth quarter ended September 30.
“Managing the challenging supply chain environment remains a key priority, and we will continue to evaluate all avenues to mitigate cost pressures into the next fiscal year,” said Helen Johnson-Leipold, chairman and CEO, on a call with analysts.
Sales in the quarter reached $196.4 million versus $166.3 million a year ago.
Operating profit dropped 2.2 percent to $13.3 million. Gross margins eroded 620 basis points to 34.9 percent due primarily to increased material costs and inventory reserves.
Operating expenses were about flat at $55.3 million versus $54.7 million a year ago, but were reduced as a percent of sales to 28.2 percent from 32.9 percent a year ago due to sales leverage. Operating expenses remained consistent year-over-year despite higher sales volumes due in large part to lower warranty and bad debt expenses.
Net income gained 40.5 percent to $9.7 million, or 95 cents a share, compared to $6.9 million, or 68 cents, in the fiscal 2021 fourth quarter. Net earnings also benefited from a lower tax rate.
The quarter’s performance marked an improvement from recent quarters that were hampered by lower stock in fishing due to supply chain disruption. The company also faced tough comparisons against a year-ago period that was boosted by higher interest in outdoor activities tied to the pandemic.
In the year, sales dipped 1.1 percent to $743.4 million. Operating profit was $66.3 million in fiscal 2022, down 40.4 percent from $111.3 million in the prior fiscal year. Net income for the year fell 46.6 percent to $44.5 million, or $4.37 a share.
Fishing Segment Sales Grow 38 Percent In Q4
On the call, Johnson-Leipold said that in its Fishing segment, while supply chain challenges remained during the first part of the fiscal year, availability started to improve in the fiscal fourth quarter to drive a recovery in sales growth. The segment includes Minn Kota fishing motors (batteries and anchors), Cannon downriggers and Humminbird marine electronics.
Sales in the quarter in the segment rose 37.7 percent to $152.3 million while operating profits rose 42.4 percent to $21.3 million. In the year, sales dropped 4.8 percent to $526.6 million. Operating profits declined 46.6 percent to $65.4 million.
Johnson-Leipold said the Fishing segment continues to benefit from finding new ways to connect Humminbird and Minn Kota products to improve the user’s experience. She said, “Our recent innovation in Humminbird, the award-winning Mega Live Imaging TargetLock used in conjunction with our Minn Kota Ultrex trolling motor, makes it easier for anglers to stay on point and catch more fish. During fiscal 2022, Mega Live Imaging TargetLock received the Best In Category for electronics honors at this year’s ICAST, marking our 11th Award in this category in the past 12 years.”
Watercraft Recreation Segment Posts Loss In Q4
In the Watercraft Recreation segment, sales in the quarter were down 48.5 percent from $16.5 million. The segment posted an operating loss of $1.4 million versus an operating profit of $1.84 million a year ago. The segment includes Old Town canoes and kayaks; Ocean Kayak; and Carlisle paddles.
For the year, segment revenues inched up 2.2 percent to $67.9 million while operating income declined 32.7 percent to $6.2 million.
“The success of our Old Town Sportsman line gave us momentum in a moderating market,” said Johnson-Leipold about the year’s revenue growth. “Part of this innovative line of boats is the award-winning wildly versatile lightweight Sportsman Discovery Solo 119, a solo canoe that uses paddles like a kayak and is great for fishing, waterfowl hunting and enjoying lakes and rivers.”
Camping’s Q4 Sales Decline 27 Percent
Camping segment sales reached $13.6 million in the quarter, down 27.3 percent year over year. Operating profits eroded 86 percent to $548,000 from $3.95 million a year ago. The segment includes Jetboil outdoor cooking systems and Eureka! camping and hiking equipment.
For the year, segment sales rose 11.8 percent to $70.4 million; operating income slumped 4.3 percent to $13.4 million.
Johnson-Leipold of the year’s growth, “Our camping business saw double-digit growth even as the market started to moderate compared to the unprecedented high demand of last fiscal year. Participation in the activity remains high and demand for our unique consumer tents and stoves is strong. And in Jetboil, consumers remain excited about the innovative superlight Stash Stove that continues to grow since launch.”
Diving Sales Gain 7 Percent In Q4
In the Diving (ScubaPro) segment, sales increased 7.4 percent to $22.0 million from $20.5 million, although operating earnings were down 44.9 percent to $631,000 from $1.15 million a year prior. Full-year revenues were up 13.6 percent to $78.9 million; operating income tripled to $4.7 million from $1.5 million.
Johnson-Leipold said the diving business continues on a growth trajectory as dive markets continue to experience recovery with several regions around the world reopening and tourism resuming. She said, “Sustaining innovation is critical to our growth, and divers are loving the award-winning powerful Seawing Supernova Fin that ScubaPro recently launched. The Supernova is the go-to fin for avid recreational and professional divers seeking maximum speed, power and kicking control in all diving conditions.”
Fiscal 2023 Guidance
Looking ahead, David Johnson, CFO, said that Johnson Outdoors remains focused on closely monitoring demand and proactively managing higher-than-normal inventory levels. At the quarter’s end, inventories were $248.6 million, up 49 percent against $166.6 million a year ago.
He added that while the company has seen improvement in the supply chain for raw materials and purchased components, some supply chain constraints are expected to periodically occur during fiscal 2023 and margins are expected to continue to be impacted by inflationary pricing conditions.
Concluded Johnson-Leipold, “In summary, it’s good news that we are seeing some relief with supply chain issues, and we continue to look at all options to mitigate challenges in our overall profitability. Orders for our products remain strong, and we continue to work hard to replenish inventory levels with our loyal customers. While it’s unclear the extent to which economic conditions and inflation may affect consumer buying behavior in the future, as always, our team takes the long-term view, working hard to position our brands and businesses for growth well beyond the next quarter or next year.”
Photo courtesy Johnson Outdoors