Johnson Outdoors Inc. reported a 1% decrease in net sales for the fiscal first quarter to $71.7 million from $72.6 million in the prior year quarter. The company's net loss widened for the quarter to $2.1 million or 23 cents per diluted share from a net loss of $1.1 million or 12 cents in the prior year quarter.
The company noted that historically, first quarter results are not indicative of the year's overall performance due to the warm-weather seasonality of its 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.
Excluding the anticipated slowdown in military sales, which was $2.4 million below the prior year quarter, total company net sales for the first quarter would have been $1.5 million higher than the prior year quarter. Key changes included:
- Marine Electronics revenues dipped 1.7% below last year due to delays in shipments to customers which resulted from a temporary gap in product component availability, as well as the transition to a new distribution center and ERP system upgrade.
- Watercraft sales were 4.4% behind last year due largely to a shift in the pacing of orders from large national retailers.
- Diving revenues increased 7% due to strong performance in key international markets and favorable currency translation.
- Outdoor Equipment revenues were down 5.7% as the expected slowing of military sales continued, declining 21% versus the prior year quarter, and growth in Consumer camping was offset by weaker Commercial tent sales.
Total company operating loss during the seasonally slow first quarter of $2.6 million compared to an operating loss of $0.8 million in the prior year quarter. Key drivers behind the unfavorable comparison were:
- Lower volume and higher commodity costs in the current quarter, together with the aforementioned ERP upgrade and distribution center move in Marine Electronics, which had a significant impact on labor efficiency and accounted for the year-over-year decline in total Company gross margins.
- Lower sales in Watercraft due to a shift in customer order pacing.
- Increased spending in marketing and sales to support innovative new product launches.
The company reported a net loss of $2.1 million, or 23 cents per diluted share, during the historically slow first quarter. This compares to a net loss of $1.1 million, or 12 cents per diluted share, in the same quarter last year.
“We have set our sights on growing to a half billion dollars in revenue over the next few years, and on growing profits faster than sales. Winning innovation to keep our market-leading brands strong is key to our future success,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer. “Importantly, we are dedicating more resources to creative marketing strategies to drive retail store traffic. It is far too early to predict the season, let alone the year, but we feel good about the potential to grow sales and capture share from the competition in the months ahead. We are also working to enhance internal processes and systems to ensure our operations are continuously 'simpler, better, faster.' Our focus remains on driving sustainable, profitable growth behind our commitment to enhanced shareholder value.”
OTHER FINANCIAL INFORMATION
The company's debt to total capitalization stood at 27% at the end of the quarter versus 29% at December 30, 2005. Debt, net of cash, was $20.3 million compared to $20.6 million in the prior year quarter. Depreciation and amortization was $2.1 million year-to-date compared with $2.2 million in the prior year. Capital spending totaled $2.7 million during the first quarter compared with $1.5 million in the 2006 first fiscal quarter.
“A healthy balance sheet and solid cash position give us a strong financial foundation on which to build as we enter our main selling season. Working capital is a challenge due primarily to lower volume in Marine Electronics during the quarter. Orders are strong and ahead of the prior year at this time, and we feel confident in our ability to bring working capital back in line when the season kicks into full gear,” said David W. Johnson, Vice President and Chief Financial Officer.
JOHNSON OUTDOORS INC.
(thousands, except per share amounts)
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Operating Results THREE MONTHS ENDED(a)
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Dec 29 Dec 30
2006 2005
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Net sales $71,701 $72,563
Cost of sales 43,221 43,134
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Gross profit 28,480 29,429
Operating expenses 31,121 30,241
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Operating loss (2,641) (812)
Interest expense, net 852 903
Other expenses, net 1 69
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Loss before income taxes (3,494) (1,784)
Income tax benefit (1,382) (690)
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Net loss $(2,112) $(1,094)
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Net loss basic and diluted per common share $(0.23) $(0.12)
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Diluted average common shares outstanding 9,006 8,977
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Segment Results
Net sales:
Marine electronics $29,466 $29,974
Outdoor equipment 13,690 14,524
Watercraft 11,741 12,284
Diving 16,919 15,818
Other/eliminations (115) (37)
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Total $71,701 $72,563
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Operating profit (loss):
Marine electronics 204 2,416
Outdoor equipment 1,643 1,648
Watercraft (2,393) (2,491)
Diving 631 66
Other/eliminations (2,726) (2,451)
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Total $(2,641) $(812)
