Johnson Outdoors Inc. reported record sales and earnings in the second quarter ended April 1 as dealers loaded up on its trolling motors, fish finders and other marine electronics.
Net sales grew 14.1 percent to $128.9 million, compared to $112.9 million in the prior-year quarter, while net income jumped 37.2 percent to $8.5 million, or 87 cents per diluted share, compared to $6.2 million, or 64 cents per diluted share, in the year-ago quarter.
“The growing trend toward an active outdoor lifestyle and improving economic conditions are boosting continued recovery for the outdoor recreational products industry, said company Chairman and CEO Helen Johnson-Leipold. While the level and pace of recovery varies by category, overall our unparalleled portfolio of consumer-preferred brands gained share to outperform their markets and competition.
Johnson-Leipold said the company is on track to deliver 5 percent compound annual growth in sales, and 6 percent operating margin by the end of fiscal 2012.
Total company operating profit increased 41.8 percent to $11.4 million compared to operating profit of $8.1 million in the prior-year quarter. JOUT was able to boost gross profit margin by 90 basis points versus the year-ago quarter to 41.1 percent of sales by cutting overhead and growing sales to offset rising commodity costs.
The bulk of the sales growth came from the Marine Electronics unit, where revenue rose 27.1 percent versus fiscal Q2 last year due to strong demand for new products from Minn Kota, Humminbird and Cannon across all markets and channels. OEM sales rose 67 percent, indicating a steep recovery in orders for new boats of less than 25 feet. Based on data from retailers, the company estimates dealers have boosted their inventory of Johnson Outdoors marine electronics products by 18 percent in preparation for the spring selling season, Johnson-Leipold said. Sales of the Minn Kota i-Pilot, which uses GPS technology to automatically steer and position a boat, are tracking ahead of last year, when the product was launched. Segment operating margins reached 16.3 percent of net sales, up 330 basis points from the year ago quarter.
Watercraft sales climbed 11.8 percent to $18.1 million as a result of growth in national and regional sporting goods channels, where inventories of JOUT Watercraft product are 10 percent higher than a year ago. The companys brands include Old Town, Ocean Kayak, Necky Kayaks and Extrasport PFDs. Operating profits in the segment reached $669,000, up nearly five-fold from a year earlier. JOUT recently realigned its programs to better coincide with dealers peak selling season Were working hard to improve performance in the independent specialty channel and well have a better read on progress with these customers by mid-July, Johnson-Leipold said.
Strikes and political unrest in the Middle East and natural disasters in Japan slowed an incipient recovery in the global Dive market, where JOUT sells dive gear under the SCUBAPro and mid-priced Subgear brands. Diving revenues rose 2.7 percent to $21.9 million thanks to 12 percent sales growth in the U.S. and favorable exchange rates.
Japan is a major dive market and the devastating earthquake, tsunami and radiation spread have had a ripple effect throughout the Asia Pacific regions, said Johnson-Leipold. Although the disaster had virtually no impact on second quarter results, Japanese dealers are struggling to survive the seriously depressed local economy and popular dive vacation spots in the South Pacific are suffering.
She added that the Diving market would remain challenging in the Mid-East and Japan for the foreseeable future.
Still, segment operating profits were just $6,000 compared to $300,000 a year ago.
Outdoor Equipment sales declined 25.2 percent due largely to budget gridlock in Washington D.C., which has delayed military orders. A 20 percent decline in military sales more than offset an uptick in commercial sales of Eureka! tents in the U.S. Sales of consumer camping gear were essentially flat, but JOUT dealers are carrying 16 percent more inventory than last spring thanks in part to the popularity of Eureka! chairs and tables. Operating profits in the segment plunged 66.3 percent to $652,000, or 6.3 percent of net sales.
In 2010, Eureka! fought all year to stay up with demand, said Leipold-Johnson. This year, retailers are filling in early to make up for out-of-stocks, so no sales are missed when the season hits its stride.
