Johnson Outdoors Benefits from Upswing in Consumer Camping

 

Total company operating income reached $8.1 million, compared to $5.8 million in the prior year quarter. Net income reached $6.2 million, or 64 cents per diluted share, up 151% from $2.5 million, or 27 cents per diluted share, in the same quarter last year. Interest expense declined 54% during the quarter as a result of the company’s improved debt restructuring announced in September 2009.

 

JOUT attributed a 25.2% drop in sales at its Watercraft business to a decision to delay shipments of boats and gear to help specialty retailers keep their inventories to a minimum. The companys paddlesports brands include Old Town, Ocean Kayak and Necky. While April orders are strong, its unclear how much of those sales JOUT will recover in the current quarter.

 

The paddling market is rebounding, and weve given up ground to the competition whose programs incentivize pre-season orders, particularly in the specialty channel, said Chairman and CEO Helen Johnson-Leipold. Weve moved quickly to better align our programs with the pace of recovery in paddle sports markets…I am also meeting and speaking with the specialty dealers to ensure we do a better job of meeting their needs and expectations going forward.

 

Thanks to an ongoing restructuring of its kayak and canoe building operations, JOUTs Watercraft unit posted its first second quarter profit in three years and Johnson-Leipold predicted the business would return to profitability this year.

 

Executives said they see continued stabilization in outdoor recreation markets. Sales and product mix continued to improve in the Marine Electronics, Diving and Outdoor Equipment units.

 

Importantly, it appears customers have worked through old inventory, said Johnson-Leipold. So what were seeing are orders for new stock to meet the expected seasonal demand.

 

Eureka! tent sales are up 25% year-to-date, bolstered by sales of the redesigned Timberline mid-priced family tent. The CEO said availability had become an issue, but that growth is likely to slow in coming months and Eureka! is on track to have one of its best years ever.

 

Net sales at JOUTs largest business-Marine Electronics – rose 5.7% due to growth in Minn Kota, Cannon and Humminbird fish finders, electric motors and other fishing gizmos across all channels in both domestic and international boat markets. New England and the Great Lakes are leading a slow recovery in the power boat market.

 

Although retail marine boat markets continue to be soft, fishermen are upgrading electronics and accessories on their boats, said Johnson-Leipold. Minn Kota and Cannon have strengthened their number one category positions, and Humminbird is in a neck-and-neck race to become the number one fish finder brand in the world…our challenge will be keeping up with demand.

 

Net sales at JOUTs Diving unit rebounded dramatically, increasing 18.8% over the prior year quarter on the strength of new products, and big gains in Europe.

 

While industry sales are flat, Johnson-Leipold said JOUT has been able to grow by taking market share. Favorable exchange rates accounted for 4.8 points of the sales growth.

 

The company said aggressive cost cutting, particularly in its Watercraft operations, boosted gross profit margin to 40.2 % from 37.5 % in the prior year quarter. Variable costs associated with higher sales, increased R&D spending and bonus accruals accounted for the increase in operating expense during the current quarter.

 

Net sales in the first six months of fiscal 2010 rose 4.0% to $183.4 million versus $176.4 million in the same six-month period last year. Operating profit was $4.5 million compared to $600,000 in the same period a year ago. Net income for the first six months of the year was $1.9 million, or 20 cents per diluted share, versus a net loss of $4.4 million, or 49 cents per diluted share.