Johnson Outdoors, Inc. reported net profits fell 49 percent in the third fiscal quarter ending July 1 as sales declined 5 percent.
“Markets are starting to moderate versus the unprecedented past two seasons that were driven by the pandemic. Our orders remain strong, and we’re working hard to fill them as supply comes in. Managing ongoing global supply chain challenges, particularly in our Fishing business, remains our chief focus as we prioritize maximizing product build and shipments to customers,” said Helen Johnson-Leipold, chairman and chief executive officer. “The power of our innovation and the strength of our brands continue to position Johnson Outdoors for long-term marketplace success.”
Third Quarter Results
Total company net sales in the third quarter declined 5 percent to $203.8 million compared to the prior year’s record-high third fiscal quarter. Key contributing factors include:
- Fishing sales declined by 12 percent driven primarily by ongoing supply chain disruptions;
- Camping revenue increased 32 percent, including continued demand for tents and stoves;
- Watercraft Recreation revenue grew 10 percent, driven by higher sales for its Sportsman line; and
- Diving sales increased 7 percent as consumers resumed travel.
Total company operating profit was $23.8 million for the third fiscal quarter versus $38.1 million in the prior year’s third quarter. Gross margin of 36.1 percent was 9.6 points below the prior year’s quarter primarily due to increased materials costs driven by supply chain dynamics. Operating expenses of $49.7 million decreased from the prior year period due primarily to the impact of lower sales volume-driven expenses, as well as lower variable and deferred compensation expenses between quarters.
Net income was $14.1 million, or $1.38 per diluted share, versus $28.8 million, or $2.83 per diluted share in the previous year’s third quarter.
Fiscal 2022 year-to-date net sales were $547.0 million, a 7 percent decrease over last year’s fiscal nine-month period. Total company operating profit declined to $53.0 million compared to $97.7 million in the prior fiscal year-to-date period. Gross margin declined to 37.1 percent in the fiscal nine-month period versus 45.4 percent in the prior fiscal year-to-date period, primarily driven by increased material and inbound freight costs in the current year versus the prior year.
Operating expenses were $149.7 million in the nine-month period ending July 1, 2022, a decrease of $18.4 million from the prior year-to-date period due primarily to lower sales volume direct expenses and lower deferred compensation expenses between periods. Net income during the fiscal nine-month period was $34.8 million, or $3.42 per diluted share, versus $76.5 million, or $7.53 per diluted share, in the prior fiscal year-to-date period. The company’s effective tax rate increased to 25.9 percent in the current year period versus 25.3 percent in the prior year’s nine-month period.
The company reported cash and short-term investments of $117.6 million as of July 1, 2022. Depreciation and amortization were $10.4 million in the nine-month period ending July 1, 2022, compared to $10.0 million in the prior nine-month period. Capital spending totaled $25.1 million in the current year-to-date period compared with $15.5 million in the prior year period, due to additional capacity investments in the current year. In May 2022, the company’s Board of Directors approved a quarterly cash dividend to shareholders of record as of July 14, 2022, which was payable July 28, 2022.
“To help mitigate supply chain disruptions, we have built up significantly higher levels of raw material and component inventory as we work to fulfill our strong order position. Our gross margins have been negatively impacted by supply chain constraints and related inflationary trends in the marketplace,” said David W. Johnson, chief financial officer. “Our strong balance sheet and cash position continue to enable us to invest in opportunities to strengthen the business and to deliver long-term value and consistently pay dividends to shareholders.”
Photo courtesy Johnson Outdoors/Minn Kota