Johnson Outdoors Inc. posted net sales of $76.0 million for the first fiscal quarter ended December 28, an increase of 6.4% compared to sales of $71.4 million for the prior year quarter. JOUT saw the net loss from continuing operations for the period widen almost three-fold to $3.6 million, or a loss of 40 cents per diluted share, compared to a net loss from continuing operations of $1.3 million, or 14 cents per diluted share, in the year-ago quarter.
The net loss from discontinued operations totaled $1.1 million versus a $0.3 million loss in the same quarter last year. Total net loss for the quarter was $4.7 million compared to $1.6 million in the prior year.
Historically, first quarter results are not indicative of the years overall performance due to the warm-weather seasonality of the companys business. Quarterly sales are typically at their lowest levels during the first fiscal quarter when the company is ramping up for the primary selling period of its outdoor recreation products which occurs during the second and third quarters.
The increase in total company net sales was driven by double-digit revenue growth year-over-year in three of the Companys four business units, while strength in export sales offset slower domestic sales growth in Marine Electronics and Diving.
Marine Electronics revenues were 12.9% ahead of last year due to growth in Humminbird® and export sales.
Watercraft sales increased 17.3% over the prior year quarter due to positive response to new products in the paddle sports segment.
Diving revenues grew 27.3% above last years first quarter due to the continued successful rollout of a new-to-world dive computer and favorable currency translation which added 6.4% to sales.
Outdoor Equipment revenues compared unfavorably to last years first quarter due to the expected slowdown of military sales and one-time special market sales of $1.4 million in the prior year quarter. Excluding military and one-time orders, Outdoor Equipment revenues would have increased 22.7%.
The total company operating loss from continuing operations during the seasonally slow first quarter was $4.6 million compared to an operating loss of $2.2 million in the prior year quarter. Key drivers behind the unfavorable comparison were:
- Lower military sales.
- Lower margins in Marine Electronics driven primarily by both unfavorable product and geographic mix.
- Lower margins in Diving due in part to cost increases from imported goods to the U.S. market.
On January 18, 2008, JOUT announced it had incurred $1.3 million in pre-tax impairment charges related to inventory and fixed assets during the 2008 first fiscal quarter as a result of its decision to explore strategic alternatives for its Escape® brand of products. The company anticipates incurring an additional $0.2 million in charges related to Escape®, and results of the Escape® brand products will be reported as discontinued operations.
“We enter 2008 with our long-term strategic growth plan on target, working hard to deliver on its cornerstones of winning innovation, targeted acquisitions and geographic expansion. Our healthy balance sheet and solid cash position gives us the financial flexibility to move forward aggressively with our plans,” said Helen Johnson-Leipold, chairman and CEOicer. “At the same time, we will continue investing in strengthening operations and supply chain optimization to ensure we manage growth efficiently. As always, our focus is on driving sustainable, profitable growth behind our commitment to enhanced shareholder value.”
The companys debt to total capitalization stood at 29% at the end of the quarter versus 27% at December 29, 2006. Debt, net of cash, was $44.8 million compared to $20.3 million in the prior year quarter. Depreciation and amortization was $2.2 million year-to-date, flat with prior year. Capital spending totaled $2.4 million during the first quarter compared with $2.7 million in the 2007 first fiscal quarter.
“Along with lower-margin products and exports driving topline growth, there was a corresponding erosion in profitability. Once our warm-weather domestic selling season kicks in, we expect to see margins and profitability improve,” said David W. Johnson, VP & CFO. “Increased working capital is due to higher sales volume in the quarter, and inventory ramp-up in preparation for our primary selling season. We are watching this closely and ready to take action and make adjustments to help bring working capital more in line when the season kicks into full gear.”
