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Johnson Outdoors reports Fiscal second quarter results

by Johnson Outdoors Inc 5 May 2020 18:01 PDT
Johnson Outdoors Inc. © Johnson Outdoors Inc

Johnson Outdoors Inc. (Nasdaq: JOUT), a leading global innovator of outdoor recreation equipment and technology, today reported lower sales and net income during the Company's 2020 second fiscal quarter ending March 27, 2020. Year-to-date revenue and net income compared favorably to the prior year fiscal six-month period.

Following a temporary suspension of operations at some of the Company's locations, on April 22, 2020, the Company resumed production and shipments in its North American operations in compliance with government-ordered procedures and public health safety guidelines for COVID-19. During the temporary suspension, all facilities were deep-cleaned and sanitized, and strict operating procedures and protocols, consistent with CDC guidelines, were put in place, along with good personal hygiene directives. Employees' benefits were unaffected during the suspension. Employees with positions conducive to working from home have been and will continue to do so.

"During this unsettling time, we are taking steps to protect the health and safety of our people and ensure the future for Johnson Outdoors. Government mandates in response to COVID-19 have overlapped with our primary selling season, and the third quarter is expected to be significantly impacted as a result. However, as stay-at-home orders are lifted, Johnson Outdoors will be there ready to help people have a great outdoor experience," said Helen Johnson-Leipold, Chairman and Chief Executive Officer. "Importantly, our unwavering commitment to building a thriving enterprise long-term remains stronger than ever. Now, as always, consumer-driven innovation will play a critical role in helping us overcome challenging times and emerge stronger and better positioned for the future."

Second Quarter Results

Sales in the second fiscal quarter reflect shipments in anticipation of the primary retail-selling period for the outdoor recreation industry's warm-weather products. Net sales decreased 8 percent to $163.1 million in the current fiscal second quarter compared with $177.7 million in the previous year quarter. Government-mandated "stay-at-home" orders resulted in temporary suspensions across Company operations around the world during the quarter and were a key contributing factor to the year-over-year unfavorable comparison in total Company net sales. While each unit experienced a different degree of impact from COVID-19, other factors affecting unit results were:

  • Fishing revenue declined 3 percent to $134 million due to the pacing of new product introductions in the prior year quarter.
  • Camping sales decreased 7 percent to $8.8 million as strong growth in Jetboil® could not offset lower sales in other categories.
  • Diving revenue dropped 29 percent due to the impact on dive markets across Europe, Asia-Pacific and North America as a result of the COVID-19 pandemic.
  • Watercraft Recreation sales fell 38 percent due largely to COVID-19 impacts on production and demand.

Total Company operating profit in the fiscal second quarter was $31.8 million compared to $27.8 million in the prior year fiscal second quarter. Gross margin improved to 46.1 percent from 44.5 percent, due primarily to stronger pricing and improved mix in the current year quarter. Operating expense declined $7.9 million driven primarily by a $5.5 million favorable impact from valuation adjustments to the Company's deferred compensation plan assets, which are totally offset in Other Income, and a $3.4 million reduction in incentive compensation costs. Net income was $20.4 million, or $2.02 per diluted share, in the current quarter versus $21.9 million, or $2.18 per diluted share, in the previous year quarter.

Year-To-Date Results

Fiscal 2020 year-to-date net sales were $291.1 million, a 3 percent increase over last year's first fiscal six-month period, driven by strong first quarter sales. Total Company operating profit increased 14 percent to $38.6 million compared with the prior fiscal year-to-date period. Gross margin improved to 44.2 percent in the first fiscal six-months versus 43.8 percent in the prior fiscal year-to-date period. Operating expenses increased slightly in the current year period, where increased sales volume-related expenses were largely offset by the items noted above for the quarter. Net income during the first fiscal six months was $26.8 million, or $2.66 per diluted share, versus $25.4 million, or $2.53 per diluted share, in the prior fiscal year-to-date period. The Company's effective tax rate increased slightly year-over-year to 27.5 percent.

Other Financial Information

The Company reported cash and short-term investments of $131.3 million as of March 27, 2020, a 93 percent increase over $68.2 million as of March 29, 2019. Depreciation and amortization were flat year-over-year at $6.8 million. Capital spending was $7.8 million in the first fiscal six months compared to $8.2 million in the previous year-to-date period.

"We have cut travel and non-essential spending, deferred capital expenditures and are working to scale operations consistent with demand. In addition, the Board of Directors and Executives have voluntarily taken reductions in pay," said David W. Johnson, Vice President and Chief Financial Officer. "Looking forward, our debt-free balance sheet remains strong, and our healthy cash position will be beneficial as we work through challenges ahead, while continuing to make smart investments in strengthening the business and driving value for our shareholders."

Webcast

The Company will host a conference call and audio web cast at 11:00 a.m. Eastern Time on Tuesday, May 5, 2020. A live listen-only web cast of the conference call may be accessed at Johnson Outdoors' home page. A replay of the call will be available for 30 days on the Internet.

For more information visit www.johnsonoutdoors.com.

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