Johnson Outdoors’ operational improvements worked their way down to the bottom line for the company’s fiscal fourth quarter and the 2006 fiscal year with a mid-single digit sales increase translating to an income increase in excess of 20% for the full year. New products represented one-third of overall sales for the year.

The Watercraft division saw double-digit growth in international paddle sport revenues drive sales 4% ahead of last year's strong fourth quarter results. The division’s operating loss improved from $2.3 million in the fourth quarter of last year to $1.99 million this year. The primary reason for the operating loss was the company’s investment in electronic boats, which masked the success in this division.

Marine Electronics realized a 13% increase in quarterly net sales due to growth in mass and sporting good channels for Minn Kota. The acquisition of Cannon and Bottom Line brands added $2.1 million in net sales to the division during the quarter. Excluding acquisitions, the Marine Electronics segment saw sales increase 3.8%. The division’s operating margins were essentially flat at 3.4% of sales.

Diving revenues were 11% ahead of last year, driven by solid growth in North America and improved performance in key international markets. The division reported healthy operating margins for the quarter, at 10.4% of sales, compared to an operating loss in the fourth quarter of last year.

Outdoor Equipment revenues decreased 16% due entirely to a 57% decline in military tent sales. The company expects military sales to decline even further next year, but going forward it does not consider the military business to be a “core business.” The company is expecting $25 million to $35 million in military sales for 2007.

Commercial tent sales dipped slightly below last year due to low inventories resulting from the temporary halt of production in the 2006 fiscal third quarter caused by flooding in the company's tent manufacturing facility in Binghamton, New York. Consumer camping continued to “benefit significantly” from specialty market sales this quarter.

The reduction in military sales and the flood of the Binghamton, New York facility also impacted the operating margin in the outdoor division, which was 9.1% of sales compared to 11.7% during Q4 last year.

During a conference call with analysts and the media, Helen Johnson-Leipold, chairman and CEO of Johnson Outdoors, said that acquisitions remain an important part of the company’s strategy.

The first acquisition of JOUT’s fiscal 2007 year was Lendal Paddles, a small specialty sea kayak paddle manufacturer based in England. Many specialty paddlesports shops are watching the development and integration of this acquisition closely.

“The purchase was small in terms of dollars, but the opportunity for growth is big,” said Johnson-Leipold. “With Lendal in the mix, we will go to market with a total premium paddle sports package, from boat to accessories.”

While some analysts questioned the efficiency of acquiring new brands when it appears to be much more profitable for JOUT to buy its own stock, which is trading for a relatively inexpensive price at the moment, Johnson-Leipold said that investments in the business will go towards growing the company.

Going forward, the company expects approximately one-third of their growth to come from acquisitions, one-third from product extensions, and one-third from organic growth.
Commodity costs continue to be a concern, but management is “cautiously optimistic.”

The improvement to JOUT’s bottom line was due primarily to a growth in gross margins, coupled with new cost-saving programs and pricing strategies. These programs more than offset higher commodity costs and freight charges.

Going forward, management expects to see more cost savings come from these programs, particularly in the Marine Electronics segment. The Watercraft division is expected to continue its growth curve and a re-positioning of the electronic boat line to better focus on resort and rental fleets is expected to improve profitability. Overall, the company is placing a focus on improving the operating margins of all of their core consumer brands.

Johnson Outdoors 
Fiscal Fourth Quarter & Full-Year Results
(in $ millions)  Fourth Quarter Full-Year
2006 2005 Change  2006 2005 Change 
Net Sales $80.3  $77.1  +4.2% $395.8  $380.7  +4.0%
Outdoor $12.5  $14.9  -16.3% $65.9  $75.3  -12.5%
Watercraft $19.2  $18.5  +4.1% $87.3  $80.8  +8.0%
Diving $23.3  $21.1  +10.5% $78.5  $79.4  -1.2%
Marine Elec. $25.3  $22.5  +12.7% $164.5  $145.2  +13.2%
Gross Margin 42.4% 37.1% +530 bps 41.7% 41.1% +70 bps
Net Income  ($0.9) ($3.4) +72.8% $8.7  $7.1  +22.7%
Diluted EPS  (1¢) (39¢) +74.4% 95¢ 81¢ +17.3%
Inventories* $63.8