Johnson Outdoors delivered significant improvement in operating profits in its first quarter ended December 29. Revenues grew 24 percent on strength in its Fishing and Diving segments.
“We’re pleased by the strong start to the year, particularly pre-season performance in Fishing and Diving, which highlight the importance of our ongoing focus on innovation that delivers bigger, better new product success. Continued progress in our work to reposition Eureka for the future and taking actions to strengthen efficiency in Watercraft Recreation are key priorities in the face of very challenging market conditions,” said Helen Johnson-Leipold, chairman and chief executive officer.
First Quarter Results
During the first fiscal quarter, the company is ramping up for the primary selling period of its warm-weather outdoor recreation products across the second and third fiscal quarters. Total company net sales in the quarter rose 24 percent to $116.6 million compared to net sales of $93.7 million in the prior year quarter. Key contributing factors to the results were:
- Continued positive momentum in new products from Minn Kota and Humminbird brands drove a 33 percent increase in pre-season Fishing sales.
- Growth in new core life-support products spurred a 17-percent jump in Diving revenue.
Sales in Camping were flat year-over-year due to ongoing market challenges.
- Tightened retail inventory levels due to overall kayak market declines led to lower Watercraft Recreation sales.
By segment, Fishing sales jumped 32.6 percent to $88.9 million. Operating profits in the segment doubled to $14.1 million from $7.2 million.
In the Camping segment, sales increased slightly to $5.85 million from $5.74 million. The operating loss was $724,000 versus $7772,000 a year ago. In the Watercraft Recreation segment, sales slid 29.9 percent to $4.4 million from $6.2 million. The segment’s loss was $1.1 million against $798,000 a year ago.
In the Diving segment, sales grew 17.1 percent to $17.4 million from $14.9 million. The operating loss was trimmed to $385,000 from $1.06 million.
Total company operating profit for the first fiscal quarter was $7.0 million, a $6.6 million improvement over $0.5 million in the prior year first quarter. Significantly higher sales volume, and margin expansion due to a favorable mix of new products sold, drove the favorable quarter-to-quarter comparison. Gross profit gains more than offset the increase in operating expense, driven in part by implementation of the company’s digital transformation strategy.
New U.S. tax reform legislation prompted a change in the valuation of deferred tax assets and a one-time transition tax on previously tax-deferred foreign earnings, resulting in a charge of $6.4 million and an unfavorable year-over-year comparison in net income. The company reported net income of $0.2 million, or two cents per diluted share, versus $4.1 million, or 40 cents per diluted share, in the previous year’s quarter.
Other Financial Information
At December 29, 2017, the company reported cash and short-term investments, net of debt, of $78.3 million versus $38.9 million in the prior year. Depreciation and amortization was $3.2 million compared to $3.1 million in the previous year’s quarter. Capital spending increased to $6.5 million in the current quarter versus $2.7 million in the prior year quarter due to strategic investment in systems upgrades and digital transformation. In December 2017, the company’s Board of Directors approved a quarterly cash dividend to shareholders of record as of January 11, 2018 which was payable on January 25, 2018.
“We continue to benefit from our ongoing efforts to improve operational efficiency, enabling us to strengthen margins, keep working capital in check and spend today for the future,” said David W. Johnson, vice president and chief financial officer. “Additionally, the balance sheet remains strong, providing us the financial capacity and flexibility to strategically invest in growing our business while also paying a cash dividend to our shareholders.”
Johnson Outdoors’ brands include: Old Town canoes and kayaks; Ocean Kayak; Carlisle paddles; Minn Kota fishing motors, batteries and anchors; Cannon downriggers; Humminbird marine electronics and charts; SCUBAPRO dive equipment; Jetboil outdoor cooking systems and, Eureka! camping and hiking equipment.
Photo courtesy SCUBAPRO