05/12/2012

Business news : Johnson Outdoors Sees Double-Digit Profit Gain in FY 2012

Johnson Outdoors Inc. reported double-digit operating profit growth on higher revenue for fiscal 2012.

Net sales increased 1.2 percent to $412.3 million in fiscal 2012, compared to $407.4 million in fiscal 2011, due to record sales in Marine Electronics which more than offset declines in other units. On a constant currency basis, net sales were 2.5 percent above the prior year.  Net income for the fiscal year was $10.1 million or $1.03 per diluted share, versus reported net income of $32.6 million, or $3.36 per diluted share, in the prior year.  Meanwhile, total net sales for the fourth quarter ended Sept. 28 declined 3.3 percent compared to the prior year quarter.  Net loss for the fiscal fourth quarter was $3.2 million or 32 cents per diluted share, down from net income for the prior year quarter of $17.3 million, or $1.77 per diluted share.

Pre-tax income was 62.7 percent above the prior year, however a significantly higher effective tax rate in the current year resulted in an unfavorable comparison to prior year adjusted net earnings.

"Our three-year plan ending in fiscal 2012 focused on strengthening operations and enhancing marketplace performance against the backdrop of a gradual recovery of outdoor recreation markets. We set the bar high and delivered, growing profits faster than sales and exceeding a targeted 5 percent compound annual growth rate in sales by the end of fiscal 2012. While more work lies ahead, we have made significant progress toward our long-term goal of sustained profitable growth and our commitment to enhanced shareholder value," said Helen Johnson-Leipold, chairman and CEO of Johnson Outdoors Inc.

 "Looking ahead to 2015, our plans embrace our mission to exceed the ever-growing expectations of outdoor enthusiasts and the channel customers that serve them with the most innovative, most valued and most sought-after brands and equipment. Investments will focus on sustaining leadership in fishing electronics, maintaining positive momentum in core dive equipment segments, regaining leadership in specialty camping and paddling channels and maximizing opportunities to enhance the long-term profitability profile of every business."

FISCAL YEAR RESULTS
Total company net sales increased 1.2 percent to $412.3 million in fiscal 2012, versus $407.4 million in fiscal 2011, due to record sales in Marine Electronics which more than offset declines in other units. On a constant currency basis, net sales were 2.5 percent above the prior year. Successful new products generated more than 45 percent of total company sales. Key contributing factors in the year-over-year comparison were:
  • Continued growth by Minn Kota and Humminbird brands across key channels, with both exceeding $100 million in sales for the year.
  • Strong performance in North America and Asia/Pacific Diving markets was offset by unfavorable currency translation which had a negative 4.3 percent impact on sales. On a currency neutral basis, Diving sales were 2.6 percent above the prior year.
  • Outdoor Gear revenue declined 9.1 percent due to a significant drop in U.S. military spending and exiting of non-strategic consumer camping accounts.
  • Watercraft sales were 0.8 percent above prior year due to higher sales of low-margin products and the sale of inventory to a distributor related to closure of the unit's U.K. sales office.
Total company operating profit rose 21.2 percent to $21.4 million for fiscal 2012 compared to operating profit of $17.7 million in fiscal 2011. Operating profit benefitted from the favorable $3.5 million settlement of a long-standing dispute with insurers announced during the second quarter which was partially offset by restructuring costs in Watercraft of $1.5 million in the last six-months of the year. Higher volume, lower operating expense and continued strong performance of Minn Kota and Humminbird brands, were also key factors in the favorable year-over-year comparison.  
Net income for the fiscal year was $10.1 million or $1.03 per diluted share, versus reported net income of $32.6 million, or $3.36 per diluted share, in the prior year.  Net income in the previous year benefited significantly from a reversal of the company's U.S. tax asset valuation allowance. Excluding this non-cash item in the previous year, adjusted net income in fiscal 2011 was $10.7 million, or $1.11 on an adjusted earnings per share basis.  In the current year, valuation allowances in countries where losses were incurred precluded the company from realizing any tax benefit on the loss, resulting in a significant increase in the company's effective tax rate.
The company reported a 69.4 percent increase in cash net of debt as of Sept. 28. On Nov. 14, Johnson Outdoors announced the purchase of Jetboil, Inc., the leading brand of outdoor cooking systems, which will become part of the Company's Outdoor Gear business unit. The $16 million acquisition is expected to be accretive to earnings in the first full fiscal year of ownership. 

FOURTH QUARTER RESULTS
Due to the seasonality of the warm-weather outdoor recreational products industry, the company's fourth quarter results historically reflect an industry-wide slowing of sales and production. Higher Outdoor Gear sales during the quarter partially offset lower volume in Marine Electronics due to shipments to distributors shifting into the fiscal 2013 first quarter. Total company net sales declined 3.3 percent compared to the prior year quarter.  
Total company operating loss was ($3.1) million for the fourth fiscal quarter compared to an operating loss of ($4.2) million in the prior year quarter.  Lower legal costs contributed largely to the favorable quarter-to-quarter comparison. 
Net loss for the fiscal fourth quarter was ($3.2) million or ($0.32) per diluted share. The Company reported net income for the prior year quarter of $17.3 million, or $1.77 per diluted share, due primarily to the reversal of the Company's tax valuation allowance. Adjusted net loss for the fiscal 2011 fourth quarter was ($4.6) million, or ($0.48) per diluted share. Interest expense for the quarter was 33.9 percent below the prior year period.

OTHER FINANCIAL INFORMATION
The company's debt to total capitalization stood at 5 percent at the end of the year versus 8 percent at Sept. 30, 2011.  Cash, net of debt, was $50.0 million at year-end versus cash, net of debt, of $29.5 million at Sept. 30, 2011.  Depreciation and amortization was $11.9 million year-to-date compared with $10.9 million in the prior year. Capital spending totaled $12 million in 2012 compared with last year's $9.4 million.
"The balance sheet remains very strong due to rigorous inventory controls resulting in record low working capital levels. Cash flow is robust and healthy, with every business contributing. We expect Jetboil to add more than $10 million in sales and an additional $1.5 million to operating profit in fiscal 2013," said David W. Johnson, Johnson Outdoor’s VP and CFO.  

( SportsOneSource Media )

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