Sales from Johnson Outdoors Inc.’s Marine Electronics segment and recently acquired Jetboil brand more than offset declines its Watercraft and Diving segments and lower military sales at its Outdoor Gear segment in the fiscal year ended Sept. 27
The Wisconsin company reported total net sales increased 3.4 percent to $426.5 million compared with $412.3 million in fiscal 2012. Gross margin was 40.1 percent, up 30 basis points (bps) from fiscal 2012. Operating expenses increased 1.78 percent, but fell by 50 basis points (bps) as a percentage of sales to 34.1 percent. Operating profit rose 20 percent to a 20-plus year high of $25.6 million compared to $21.4 million in fiscal 2012, which included a favorable $3.5 million legal settlement. Operating margin increased 80 bps to 6.0 percent, or the high end of the target in the company’s three-year plan. Net income soared 90 percent to $19.3 million due primarily to a lower effective tax rate.
The results included fiscal fourth quarter sales $77.3 million, up 3 percent thanks primarily to $2.8 million in revenue from Jetboil, which JOUT acquired in November, 2012. Gross margin dipped 70 bps to 37.3 percent in the quarter as margins dropped on certain end-of-life product lines in the Marine Electronics. Operating losses widened to -$4.7 million compared to -$3.1 million in the fourth quarter of 2012., leading to a net loss of -$3.5 million compared with a net loss of -$3.2 million in the fourth quarter a year ago.
JOUT ended the fiscal year with cash, net of debt, of $47.4 million. That was just $2.7 million below the prior fiscal year-end despite pay $15.4 million in cash to acquire Jetboil.
Sales at the Marine Electronics segment increased 7.1 percent to a record $247.7 million for the full fiscal year, while operating margin reached 13.0 percent, up 110 bps. Minn Kota and Humminbird brands both broke the $100 million sales marks.
Outdoor Gear revenue increased 25 percent to $44.2 million, but would have fallen if not for Jetboil, which brought in $10.7 million, which more than offset declines in government tent sales. Operating margins, however, declined 307 bps to 4.93 percent.
In the Diving segment, sales declined 3.9 percent and operating margins declined 55 bps to 6.73 percent, reflecting continued weakness in Europe and weather-related delays in the diving season in other key markets.
At the Watercraft division, which owns the Old Town Ocean Kayak and Necky brands, sales declined 13 percent $50.9 million and operating losses increased more than fivefold to $2.12 million. The decline reflected the company’s decision to back away from low-margin sales to big box stores, close its Watercraft subsidiary in Europe and focus on rebuilding business with specialty paddlesports dealers.
During the company’s earnings call, CEO Helen Johnson-Leipold was again urged by an investor to divest the Watercraft and Outdoor Gear segments and focus on the higher margin Marine Electronics and Diving segments. But she cited the Old Town’s Predator sit-on-top fishing kayaks as proof that a new management team is turning the business around. With maximum capacity of about 400 pounds and a removable seat, The Predator 13 (MSRP: $1,299) and Predator MX (MSRP: $1,199) are designed to accommodate larger men whether they want to fish sitting or standing. The Predators’ design also eliminates the need to drill holes in the hull for attaching rod holders, trolling motors, fish finders and other accessories.
“Their first boat out of the gate, the Old Town Predator fishing kayak, is winning awards and rave reviews and orders are strong heading into the new year,” Johnson-Leipold said.
“Looking forward,” she continued, “more work lies ahead to achieve a better balance of profitability across our portfolio. Our 2015 strategic plan is focused on sustaining leadership in fishing electronics, gaining share in core dive equipment segments and improving performance in key paddling and camping specialty channels.”