Johnson Outdoors Inc. reported earnings slipped 7.1 percent in the third quarter ended June 28 due to higher operating expenses and lower margins tied to tariffs. Revenues grew 3 percent.

“Outstanding new product success over the past three years continues to power growth in Fishing and sets the stage for exciting innovations on the horizon. At the same time, work continues to strengthen performance in Diving. Camping and Watercraft Recreation are transitioning product lines to capitalize on marketplace evolutions. We feel good about where we are headed,” said Helen Johnson-Leipold, chairman and chief executive officer. “The scope of Johnson Outdoors’ portfolio and the many opportunities for growth it provides puts us in a strong, unique position in an increasingly competitive outdoor recreation industry.”

Third Quarter Results

Fiscal third quarter results reflect in-season replenishment orders for the company’s warm-weather outdoor recreation products. Total company net sales increased 3 percent to $176.3 million compared to $170.8 million in the previous year quarter. Key factors behind the year-over-year comparison in each business unit were:

  • Fishing revenue increased 5 percent due to continued success of new products in both Minn Kota and Humminbird.
  • Growth in Jetboil helped fuel higher revenue in Camping.
  • Diving sales were down 3 percent, but flat on a currency-neutral basis versus the prior-year period.
  • Watercraft Recreation revenue declines reflect ongoing weakness in paddle boat markets.

Total company operating profit during the quarter was $28.0 million compared to $32.0 million in the prior year’s quarter.

Operating expenses for the third quarter increased $4.3 million versus the prior year period due primarily to higher sales volume-related expense, higher bad debt expense, and increased marketing support. Gross margin was 45.2 percent, versus 46.5 percent in the previous quarter, due in part to $1.9 million in tariffs on Chinese components. Net income in the fiscal third quarter was $22.1 million, or $2.19 per diluted share, compared to $23.8 million, or $2.37 per diluted share, in the previous year third quarter.

Year-To-Date Results

Fiscal 2019 year-to-date net sales grew 1 percent to $458.4 million versus net sales of $453.1 million in the same fiscal nine-month period last year. Total company operating profit was $61.9 million compared with $65.0 million during the prior fiscal year’s first nine months. While favorable product mix helped offset the impact of $4.0 million of the aforementioned tariffs on Chinese components, increased operating expenses drove the decline in operating profit year over year. The increase in operating expense was due primarily to bad debt and continued investment in marketing sophistication.

Net income in the fiscal nine-month period improved 4 percent to $47.5 million, or $4.72 per diluted share, compared with $45.6 million, or $4.54 per diluted share, in the same nine-month period last year. The year-to-date effective tax rate of 24.9 percent compared favorably to the previous fiscal first nine months, which reflected charges associated with the initial implementation of the new U.S. Tax Reform Act.

Other Financial Information

The company reported cash and short-term investments of $149.0 million as of June 28, 2019, versus $129.3 million on June 29, 2018. Depreciation and amortization were $10.4 million, compared to $9.6 million during the first nine months of the prior fiscal. Capital spending totaled $12.0 million during the first nine months of fiscal 2019 compared with $14.7 million in the same fiscal 2018 period.

“At this time, our clear focus is on ending the year strong and ensuring our brands are well-positioned for the future. We remain confident in our ability and plans to drive ongoing success, and our growing cash and debt-free position enables us to invest in strategic priorities and other opportunities to strengthen our brands and grow our businesses, while consistently paying dividends to shareholders,” said David W. Johnson, Chief Financial Officer.

Product News

Humminbird received “Best of Electronics” honors at the 2019 ICAST, the world’s most prestigious fishing show, with the brand’s new Mega 360 Imaging™. Showing anglers exactly what’s going on beneath the water so they can make every cast count, Mega 360 Imaging is the only sonar option that provides a high-resolution 360-degree view around the boat. Sweeping 125 feet in every direction, Mega 360 Imaging delivers unmatched detail and coverage, built-in mapping and customized viewing options, so anglers can choose how their returns appear and dial them in based on their fishing style, conditions and what they’re after. And not only that, but Mega 360 Imaging enhances the ability for anglers to provide full use of the trolling motor, so they can use Spot-Lock™ and other important Minn Kota features without limiting their ability to use 360-degree sonar.

Humminbird’s Ice Helix Chirp GPS G3n All-Season also grabbed “Best of Ice Fishing” honors, a new category added to ICAST this year. Humminbird leads the industry in ice fishing innovation, and the Ice Helix Chirp GPS G3n All-Season brings the exciting new feature of AutoChart Live Ice which allows ice anglers to quickly map and find humps and drop-offs that were previously unknown on remote or unmapped lakes. Combined with the clarity and detail of Humminbird’s proven Dual Spectrum CHIRP sonar, AutoChart Live Ice enables ice anglers to more easily locate productive fishing holes.