EXEC: Johnson Outdoor’ Quarterly Earnings Boosted By Restoration In Fishing

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Johnson Outdoors, Inc. said a strong recovery in its fisheries segment, driven by relief from supply chain issues, led to an 18.1 percent increase in sales and improved profitability in the fiscal fourth quarter ended Sept. 30.

“Managing the challenging supply chain environment remains a key priority and we will continue to evaluate all options to mitigate cost pressures in the next fiscal year,” said Helen Johnson-Leipold, chairman and CEO, speaking to analysts.

Revenue for the quarter was $196.4 million compared to $166.3 million a year earlier.

Operating profit fell 2.2 percent to $13.3 million. Gross margins eroded 620 basis points to 34.9 percent, primarily due to increased material costs and inventories.

Operating expenses were roughly flat at $55.3 million from $54.7 million a year ago, but as a percentage of revenue were reduced to 28.2 percent from 32.9 percent a year ago due to revenue leverage. Operating expenses were flat year-over-year despite higher sales volumes, due in large part to lower warranty and bad debt expenses.

Net income increased 40.5 percent to $9.7 million, or 95 cents per share, compared to $6.9 million, or 68 cents, in the fourth quarter of fiscal 2021. Net income also benefited from a lower tax rate.

The quarter’s performance represented an improvement over recent quarters, which were hampered by lower fish stocks due to supply chain disruptions. The company also faced harsh comparisons to the same period last year, which was boosted by higher interest in outdoor activities related to the pandemic.

For the year, sales fell 1.1 percent to $743.4 million. Operating income for fiscal 2022 was $66.3 million, down 40.4 percent from $111.3 million in the prior fiscal year. Net income fell 46.6 percent to $44.5 million, or $4.37 per share.

Fishing segment revenue grows 38 percent in Q4
On the earnings call, Johnson-Leipold said that in its fisheries segment, while supply chain challenges persisted in the fiscal first half, availability began to improve in the fiscal fourth quarter to drive a recovery in revenue growth. The segment includes Minn Kota fishing motors (battery and anchor), Cannon downriggers and Humminbird marine electronics.

Revenue for the segment increased 37.7 percent to $152.3 million for the quarter, while operating income increased 42.4 percent to $21.3 million. For the year, sales fell 4.8 percent to $526.6 million. Operating profit fell 46.6 percent to $65.4 million.

According to Johnson-Leipold, the fishing segment continues to benefit from finding new ways to connect Humminbird and Minn Kota products to enhance the user experience. She said: “Our latest innovation in Humminbird, the award-winning Mega Live Imaging TargetLock, used in conjunction with our Minn Kota Ultrex trolling motor, makes it easier for anglers to stay on target and catch more fish. In fiscal year 2022, Mega Live Imaging TargetLock received the Best in Category honor for Electronics at this year’s ICAST, marking our 11th award in this category in the past 12 years.”

Watercraft Recreation segment posts loss in Q4
In the Watercraft Recreation segment, revenue for the quarter fell 48.5 percent from $16.5 million. The segment reported an operating loss of $1.4 million compared to an operating profit of $1.84 million a year earlier. The segment includes Old Town canoes and kayaks; ocean kayak; and Carlisle Paddle.

For the year, segment revenue increased 2.2 percent to $67.9 million while operating revenue decreased 32.7 percent to $6.2 million.

“The success of our Old Town Sportsman line gave us momentum in a slowing market,” Johnson-Leipold said of the year’s sales growth. “Part of this innovative line of boats is the award-winning, highly versatile and lightweight Sportsman Discovery Solo 119, a solo canoe that uses paddles like a kayak and is great for fishing, waterfowl hunting and enjoying lakes and rivers.”

Camping’s Q4 sales fell 27 percent
Camping segment revenue for the quarter was $13.6 million, down 27.3 percent year-over-year. Operating profit fell 86 percent to $548,000 from $3.95 million a year earlier. The segment includes Jetboil outdoor cooking systems and Eureka! Camping and hiking equipment.

For the year, segment revenue increased 11.8 percent to $70.4 million; Operating income fell 4.3 percent to $13.4 million.

Johnson-Leipold on the year’s growth: “Our camping business experienced double-digit growth even as the market began to slow down compared to last fiscal year’s unprecedented high demand. Participation in the activity remains high and demand for our unique consumer tents and stoves is strong. And at Jetboil, consumers remain excited about the innovative super-lightweight Stash Stove, which has continued to grow since its launch.”

Dive sales up 7 percent in Q4
In the diving (ScubaPro) segment, revenue increased 7.4 percent to $22.0 million from $20.5 million, although operating income increased 44.9 percent to $631,000 from $1.15 million -dollar declined in the previous year. Full-year revenue increased 13.6 percent to $78.9 million; Operating income tripled from $1.5 million to $4.7 million.

Johnson-Leipold said the dive business remains on a growth trajectory as dive markets continue to recover as several regions around the world reopen and tourism resumes. She said: “Sustainable innovation is critical to our growth and divers love the award-winning, high-performance Seawing Supernova fin that ScubaPro recently launched. The Supernova is the ideal fin for avid recreational and professional divers looking for maximum speed, power and pedaling control in all diving conditions.”

Forecast for the 2023 financial year
Looking ahead, David Johnson, CFO, said Johnson Outdoors remains focused on closely monitoring demand and proactively managing higher inventory levels. At the end of the quarter, inventories were $248.6 million, a 49 percent increase from $166.6 million a year ago.

He added that while the company has seen improvements in the supply chain for raw materials and purchased components, fiscal 2023 is expected to face some supply chain constraints and margins are expected to continue to be impacted by inflationary pricing conditions.

Concluding, Johnson-Leipold said, “In summary, it is good news that we are seeing some relief from supply chain issues and we continue to evaluate all options to mitigate challenges in our overall profitability. Orders for our products remain strong and we continue to work hard to replenish stock with our loyal customers. While it is unclear to what extent economic conditions and inflation will impact consumer purchasing behavior going forward, as always, our team takes a long-term view and is working hard to position our brands and businesses for growth well beyond next quarter or next year position.”

Photo courtesy of Johnson Outdoors