Innovations from Minn Kota, including a new trolling motor and anchor anglers can deploy and retract with a remote control, propelled growth at Johnson Outdoor Inc in the fiscal third quarter ended July 3, while a sharp decline in one-time charges sent profits surging.
The Racine, WI-based owner of Minn Kota and Humminbird marine electronics, Eureka! Tents and Jetboil stoves, Old Town and Necky kayaks and SCUBAPro diving gear reported sales of $140.9 million up 3 percent, or 6 percent in currency-neutral (c-n) terms.
“A solid new product line-up is fueling positive marketplace momentum as we head into the final months of the warm-weather outdoor recreational season,” said Helen Johnson-Leipold, Chairman and CEO for the Racine-WI-based company. “The revolutionary Ulterra fishing motor and the Talon 12' shallow water anchor are powering growth for Minn Kota, our $100+ million flagship fishing brand. In Watercraft, the Old Town Predator series is also enhancing our position in the all-important outdoor specialty channel. And, the new MiniMo from Jetboil, the leader in outdoor cooking systems, has ignited growth in our consumer camping portfolio. Work is underway to strengthen new product development and competitiveness in Diving where weak economies in European markets have impacted results.”
Minn Kota, which is Johnson Outdoor's largest and most profitable brand and provides a blueprint for how JOUT wants to grow brands into adjacent categories, drove an 8 percent increase in sales at Marine Electronics, where sales reached a record $86.2 million.
Significantly higher sales of Eureka! tents and Jetboil backpacking stoves could not offset declines in sales to commercial and military customers, resulting in a 1 percent dip in Outdoor Gear revenue.
“If you take out the effect of the big tent business, the commercial and military business, the consumer piece of it year to date was up high single-digits and the quarter was up double digits,” said Johnson-Leipold.
Watercraft revenue held steady with the prior year quarter as Old Town continued to gain share in the key fishing kayak segment. Unfavorable currency translation had an 11 percent unfavorable impact on Diving sales accounting for the 9 percent drop in revenue for the quarter.
Gross margins reached 41.7 percent, up 100 basis point from a year earlier, while operating expenses declined 390 basis points to 30.0 percent of net sales.
Operating profit surged 480 basis points to 11.6 percent of net sales due largely to the absence of $8.5 million in non-cash impairment charges taken at the company's Outdoor Gear segment in the year earlier quarter, which was partially offset by another $1.4 million in spending on patent litigation asserting infringement of Humminbird's patented side scan sonar technology by Garmin International. Excluding the net effect of one-time items in both years, operating profit would have increased $1.6 million compared with the prior year.
Third quarter net income was $10.0 million, or $1.00 per diluted share, compared to net income of $4.7 million, or 47 cents.
The performance enabled JOUT to enter its final quarter with fiscal-year-to-date sales running 1 percent (3 percent c-n) higher than the comparable year-ago period, although operating and net income were still lagging year ago levels.
“We made up a lot of ground in the third quarter and orders are still coming in, but it's too soon to predict how the full year will look,” said Johnson-Leipold. “e hope the good summer weather continues and extends the season. And we are working hard to deliver a strong finish to the year.”
JOUT ended the quarter with cash, net of debt, of $46.4 million as of July 3, versus $44.2 million as of June 27, 2014.
The company has since won several product awards that should stimulate orders for Spring 2016. Humminbird took home Best in Show in Electronics at the iCAST fishing show July 15 with the its HELIX 7 Series, the first compact format fish finder fully customizable with a full array of sonar technology options and features to fit with the way an angler likes to fish. The series extends accessibility of Humminbird's patented side scan sonar technology into the mid-price range of fish finders, bringing a big value-add to that segment.
Johnson-Leipold said she expects the legal expenses related to JOUT's patent fight with Garmin to wind down in the coming six months. On July 13, JOUT got a signal that it may prevail in that fight, when an administrative law judge at the International Trade Commission ruled Garmin violated trade legislation by importing and selling SideVu sonars, which he determined had infringed a JOUT patent. Should the ITC adopt the judge's findings, Garmin could no longer import its infringing SideVu sonars to the United States.
Last week, Outside Magazine selected Jetboil's new Genesis base camp cooking system as one of the best products exhibited at the Outdoor Retailer Summer Market. Jetboil named the stove Genesis to mark a new generation of cooking solutions for “foodies who like to enjoy the great outdoors and great food at the same time.”