Business news : Johnson Outdoors' Q2 Sales Growth Powered by Marine and Jetboil

Johnson Outdoors Inc. reported that its net income surged 23 percent on a 3 percent rise in sales in its second fiscal quarter ended March 29. Sales at its Marine Electronics segment and newly acquired Jetboil more than offset declines at its Watercraft and Diving segments.

Sales reach $132.1 million and net income grew to $8.9 million, up $1.7 million year-over-year. Fiscal year-to-date revenue is up 5 percent to $219.4 million and net earnings increased 112 percent to $9.2 million during the fiscal first six-months.

Key drivers behind the year-over-year comparison in each business unit were:

• Marine Electronics revenue increased 9 percent year-over-year due to growth in all brands from innovative new products. JOUT’s marine brands include Minn Kota motors; Cannon downriggers; Humminbird marine electronics and LakeMaster electronic charts. 


• Outdoor Gear revenue increased 7 percent due to the acquisition of the Jetboil brand midway through the fiscal first quarter, which added $2.4 million to sales during the current quarter to more than offset a 42 percent decline in military sales. Outdoor brands include Silva compasses; Jetboil outdoor cooking systems; and Eureka! camping and hiking equipment. 


• Watercraft sales compared unfavorably to the same period last year due to a continuing de-emphasis on low-margin product lines and lower sales in Europe.  Watercraft brands include Old Town canoes and kayaks; Ocean Kayak and Necky kayaks; Carlisle paddles; Extrasport personal flotation devices.


• Diving sales were 6 percent behind the prior year due to weak economic conditions in key diving markets. The segment sells SCUBAPro and Subgear dive equipment.

Total company operating profit of $12.6 million during the second quarter was $1.3 million below the prior year quarter, a period during which the company benefitted from a $3.5 million settlement with the company's insurance carriers. Higher gross margin was driven by successful new products in Marine Electronics. The company reported record second-quarter net income of $8.9 million, or $0.90 per diluted share, during the current quarter, compared to net income of $7.3 million, or $0.74 per diluted share, in the same quarter last year.

Marine continues to power growth and profits

"Growth in North America and Northern Europe more than offset declines in challenging markets across Southern Europe this year,” said Helen Johnson-Leipold, Chairman & CEO. “Marine Electronics remains our primary growth engine with an 11 percent jump in sales and significant growth in operating profit year-to-date. Exceptional new products generated more than half of Marine Electronic sales, in particular, the Minn Kota iPilot Link which is exceeding expectations. Equally important, meaningful innovation is driving organic growth in core segments and key channels across all Marine Electronic brands.”

Ensuring a better balance of profit contribution across Johnson Outdoors' portfolio is a key focus of our new three-year Value Plus strategic plan, Johnson-Leipold continued. Comprehensive efforts are underway to reinvigorate and build momentum in Watercraft and Camping, and deliver innovation in core life-support categories in Diving, against that goal.

She said that while financial results are solid thru the first half of the year, it is still too early to predict full-year performance. “Unseasonably cold and wet Spring weather has delayed the retail season in some parts of the country and consumer demand is always the critical determining factor,” she said. “We feel good about where we are and our ability to adjust accordingly to unpredictable variables and meet our 2015 plan goal of consistently growing profits faster than sales."

Year-to-date results
Fiscal 2013 year-to-date net sales were $219.4 million, a 5 percent increase over net sales of $208.9 million in the same year-to-date period last year. Total company operating profit increased 38 percent to $14.2 million during the first six months of fiscal 2013 compared to an operating profit of $10.3 million during the prior year-to-date period which included a favorable $3.5 million settlement with the company's insurance carriers.

Net income for the first six months of the year was a record $9.2 million, or $0.93 per diluted share, a 112 percent increase compared to net earnings of $4.3 million, or $0.44 per diluted share, in the first six months of the prior year. Net interest expense declined 37 percent compared with the same period last year. The company's effective tax rate during the fiscal first six months was 33 percent compared to an effective tax rate of 57 percent in the prior year-to-date period.

At March 29, 2013, debt, net of cash was $20.2 million which was slightly below debt, net of cash of $21.8 million at the end of the prior year quarter. Depreciation and amortization was $5.1 million year-to-date, compared to $5.7 million during the prior year-to-date period. Capital spending totaled $6.1 million during the first six-month period compared with $5.0 million in the previous 2012 year-to-date period.

 

"Pre-season demand and a delay in shipments due to a delayed season in some U.S. markets resulted in the increase in inventory. Access and analysis of proprietary point-of-sale data helps ensure we take the right steps at the right time throughout the year to keep inventory levels consistent with demand," said David W. Johnson, vice president and CFO. "Our cash position is strong, providing us the ability to invest in targeted strategic growth opportunities as we continue to evaluate a range of capital deployment strategies."

JOHNSON OUTDOORS INC.
(thousands, except per share amounts)
	THREE MONTHS ENDED		SIX MONTHS ENDED
Operating Results	March 29 2013	March 30 2012	March 29 2013	March 30 2012
Net sales	$ 132,100	$ 128,726	$ 219,374	$ 208,902
Cost of sales	78,016	78,199	131,476	127,274
Gross profit	54,084	50,527	87,898	81,628
Operating expenses	41,446	36,546	73,734	71,366
Operating profit:	12,638	13,981	14,164	10,262
Interest expense, net	453	807	871	1,382
Other expense (income), net	(878)	(104)	(380)	(1,296)
Income before income taxes	13,063	13,278	13,673	10,176
Income tax expense	4,126	5,995	4,489	5,837
Net income	$ 8,937	$ 7,283	$ 9,184	$ 4,339
Weighted average common shares outstanding - Dilutive	9,546	9,382	9,491	9,363
Net income per common share - Diluted	$ 0.90	$ 0.74	$ 0.93	$ 0.44
Segment Results
Net sales:
Marine electronics	$ 87,778	$ 80,256	$ 141,429	$ 128,027
Outdoor equipment	10,096	9,437	18,536	15,727
Watercraft	13,754	17,060	20,568	24,545
Diving	20,815	22,098	39,298	40,856
Other/eliminations	(343)	(125)	(457)	(253)
Total	$ 132,100	$ 128,726	$ 219,374	$ 208,902
Operating profit (loss):
Marine electronics	$ 15,594	$ 12,317	$ 20,340	$ 14,390
Outdoor equipment	(268)	831	(44)	579
Watercraft	(542)	3,061	(2,224)	603
Diving	1,379	1,706	2,081	1,608
Other/eliminations	(3,525)	(3,934)	(5,989)	(6,918)
Total	$ 12,638	$ 13,981	$ 14,164	$ 10,262
Balance Sheet Information (End of Period)
Cash and cash equivalents			$ 40,392	$ 29,649
Accounts receivable, net			109,176	111,357
Inventories, net			85,192	79,304
Total current assets			248,024	233,808
Total assets			346,175	312,880
Short-term debt			52,542	42,867
Total current liabilities			132,532	115,247
Long-term debt			8,057	8,604
Shareholders' equity			180,365	168,428

Source Johnson Outdoor through SportsOneSource