Johnson Outdoors Inc. Announces Fiscal 2007 Second Quarter Results

Friday, 27 April 2007
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Johnson Outdoors LogoRACINE, Wis.--(BUSINESS WIRE)--Johnson Outdoors Inc. (Nasdaq: JOUT), a leading global outdoor recreation company, today announced net sales of $122.1 million for the second quarter ended March 30, 2007, a 14 percent increase compared to net sales of $107.4 million for the prior year quarter. Net earnings were $1.6 million, or $0.17 per diluted share, for the second quarter of 2007 compared to net earnings of $4.2 million, or $0.46 per diluted share in the prior year quarter.

SECOND QUARTER RESULTS

Second quarter sales reflect initial shipments to customers in anticipation of the primary consumer retail selling period for the Companys seasonal outdoor products. Gains in Marine Electronics, Watercraft and Diving business units more than offset the anticipated continued slowing of military sales. Excluding the $2.4 million military sales decline, total Company net sales would have increased $17.1 million or 16 percent. Key drivers during the quarter included:

  • Marine Electronics revenues rose 25 percent above last year due to favorable reception to new products across all brands in what has become one of the worlds leading marine electronic fishing system portfolios.
  • Watercraft sales were 12 percent ahead of last year led by strong performances across the entire paddle sport brand portfolio. Key international markets posted double-digit growth year-over-year led by market and distribution expansion in Europe.
  • Diving revenues increased 14 percent based on the strong performance of the SCUBAPRO® brand internationally. Excluding the impact of currency, Diving revenues would have grown 9 percent compared with the previous quarter.
  • Outdoor Equipment revenues were down 16 percent due to a 25 percent decline in military sales versus the prior year quarter.

Total Company operating profit was $4.1 million compared to operating profit of $8.3 million in the prior year quarter. Net income was $1.6 million, or $0.17 per diluted share, compared to net earnings of $4.2 million, or $0.46 per diluted share, in the same quarter last year. Key drivers behind the comparisons were:

  • Lower military sales
  • Operational inefficiency in UWATEC® and Marine Electronics
  • One-time corporate investment of $1.8 million in strategic future growth initiatives

Corporate spending during the quarter was critical to help generate long-term value for shareholders and sustainable, profitable growth. We have been testing new go-to-market strategies to drive sales and enhance brand equity. We have also completed a comprehensive analysis of the outdoor recreational landscape to identify new growth platforms and targeted acquisition opportunities, said Helen Johnson-Leipold, Chairman and Chief Executive Officer. All in all, we feel very good about the topline growth, the success of our investments in innovation, the consumer demand for our products, and we are working to address the supply chain challenges which led to operational inefficiencies in Diving and Marine Electronics. We continue to be very excited for the future of Johnson Outdoors.

YEAR-TO-DATE RESULTS

Net sales in the first six months of fiscal 2007 were $193.8 million versus $179.9 million in the same six-month period last year, an increase of 8 percent. Excluding the anticipated $4.8 million decline in military sales, total Company net sales would have increased 10 percent. Consistent with second quarter, key drivers in the year-to-date period were:

  • Successful new product launches in Marine Electronics, particularly Humminbird® and Cannon® brands which posted double-digit revenue growth during the six-month period.
  • Strong demand behind new paddle sport product launches and international market expansion in Watercraft.
  • Growth in SCUBAPRO® brand sales in Europe, Asia and developing markets. Favorable currency translation added 5 percent to year-to-date revenues in Diving.

Total Company operating profit was $1.4 million during the first six months compared to $7.5 million during the prior year-to-date period. Net loss for the first six months of the year was $0.5 million, or ($0.06) per diluted share, versus net income of $3.1 million, or $0.34 per diluted share, in the first six months of the prior year. Consistent with the second quarter, primary drivers behind the year-to-date comparison were:

  • The significant drop in military sales versus the prior year six-month period.
  • Reduced margins in Marine Electronics and Diving.
  • Significant corporate investments in current and future growth initiatives.

OTHER FINANCIAL INFORMATION

The Companys debt to total capitalization stood at 33 percent at the end of the second quarter versus 31 percent at March 30, 2006 as a result of increased working capital levels. Debt, net of cash and short-term investments, was $56.1 million at the end of this quarter versus $45.1 million at the end of the prior year quarter. Depreciation and amortization is $4.5 million year-to-date compared to $4.7 million last year. Capital spending totaled $5.7 million year-to-date, compared with $4.0 million in the prior year first six months.

We continue to expect revenue growth in 2007 equal to last year, and improvement in core consumer brand operating margins. Strong growth in the quarter and continued high product demand has resulted in higher working capital. Orders are pacing well-ahead of last year at this time, and working capital levels should decline significantly by the end of the year, said David W. Johnson, Vice President and Chief Financial Officer.

INNOVATION UPDATE

Johnson Outdoors delivers meaningful innovation to the outdoor recreation marketplace driven by unique consumer insights, with new products representing one-third of total Company net sales for the past three years. Strong new product growth continues to bolster the Companys already robust existing brands and differentiate the Company in the industry. Among the 2007 innovations from Marine Electronics are:

  • Humminbird® CannonLink Downrigger Control System allows anglers to control up to six downriggers from one central 900, 700 or Matrix Series fishing system, and offers multiple convenience features, including automatic deployment and retrieval, on-screen downrigger depth monitoring and measurement of water temperature, water clarity and speed, among others. The revolutionary technology won the prestigious Innovation Award from the National Marine Manufacturers Association in the Consumer Electronics and Software category at the recent 2007 Miami International Boat Show, the largest consumer boating show in the world.
  • The Minn Kota® Powerdrive V2 is an enhanced design of one of the most popular trolling motors ever made. The V2, an electric steer bow-mount motor, features an improved deployment mechanism, and new ergonomically designed foot pedal and digital electronics. Among the new features is a speed control slide on the foot pedal offering easier access and more precise speed selection. A cordless foot pedal is optional, and utilizes the award-winning CoPilot technology that captured the coveted ICAST Award for Innovation when first introduced five years ago.

WEBCAST

The Company will host a conference call and audio webcast on Friday, April 27, 2007 at 11:00 a.m. Eastern Time. A live listen-only webcast of the conference call may be accessed at Johnson Outdoors' home page. A replay will also be available on Johnson Outdoors' home page, or by dialing (888) 286-8010 or (617) 801-6888 and providing confirmation code 29803437. The replay will be available through May 4, 2007 by phone and for 30 days on the Internet.

ABOUT JOHNSON OUTDOORS INC.

Johnson Outdoors is a leading global outdoor recreation company that turns ideas into adventure with innovative, top-quality products. The company designs, manufactures and markets a portfolio of winning, consumer-preferred brands across four categories: Watercraft, Marine Electronics, Diving and Outdoor Equipment. Johnson Outdoors' familiar brands include, among others: Old Town® canoes and kayaks; Ocean Kayak and Necky® kayaks; Lendal paddles; Escape® electric boats; Minn Kota® motors; Cannon® downriggers; Humminbird® and Fishin Buddy® fishfinders; SCUBAPRO®, UWATEC® and Seemann Sub dive equipment; Silva® compasses and digital instruments; and Eureka!® tents. The Company has 23 locations around the world and employs 1,300 people.

Visit Johnson Outdoors at http://www.johnsonoutdoors.com

SAFE HARBOR STATEMENT

Certain matters discussed in this press release are forward-looking statements, intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical fact are considered forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include changes in consumer spending patterns; the Companys success in implementing its strategic plan, including its focus on innovation; actions of and disputes with companies that compete with the Company; the Companys success in managing inventory; movements in foreign currencies or interest rates; the Companys success in restructuring of its European Diving operations; unanticipated issues related to the Companys military sales; the success of suppliers and customers; the ability of the Company to deploy its capital successfully; adverse weather conditions; and other risks and uncertainties identified in the Companys filings with the Securities and Exchange Commission. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

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JOHNSON OUTDOORS INC.

                 
(thousands, except per share amounts)
Operating Results   THREE MONTHS ENDED   SIX MONTHS ENDED
   

March 30
2007

  March 31
2006
  March 30
2007
  March 31
2006
Net sales   $ 122,124   $ 107,374   $ 193,824   $ 179,937
Cost of sales   75,039   63,033   118,258   106,167
Gross profit   47,085   44,341   75,566   73,770
Operating expenses   43,014   36,070   74,135   66,310
Operating profit   4,071   8,271   1,431   7,460
Interest expense, net   1,344   1,218   2,197   2,120
Other (income) expense, net   (131)   222   (130)   293
Income (loss) before income taxes   2,858   6,831   (636)   5,047
Income tax expense (benefit)   1,265   2,657   (117)   1,968
Net income (loss)   $ 1,593   $ 4,174   $ (519)   $ 3,079
Basic earnings (loss) per common share   $ 0.18   $ 0.46   $ (0.06)   $ 0.34
Diluted earnings (loss) per common share   $ 0.17   $ 0.46   $ (0.06)   $ 0.34
Diluted average common shares outstanding   9,181   9,127   9,017   9,135
Segment Results                
Net sales:                
Marine electronics   $ 64,538   $ 51,572   $ 94,004   $ 81,546
Outdoor equipment   15,584   18,514   29,274   33,037
Watercraft   22,729   20,244   34,470   32,528
Diving   19,530   17,119   36,449   32,937
Other/eliminations   (257)   (75)   (373)   (111)
Total   $ 122,124   $ 107,374   $ 193,824   $ 179,937
Operating profit (loss):                
Marine electronics   $ 8,804   $ 8,445   $ 9,008   $ 10,861
Outdoor equipment   1,232   2,970   2,875   4,618
Watercraft   (501)   (1,140)   (2,894)   (3,631)
Diving   125   969   755   1,035
Other/eliminations   (5,589)   (2,973)   (8,313)   (5,423)
Total   $ 4,071   $ 8,271   $ 1,431   $ 7,460
Balance Sheet Information (End of Period)                
Cash and short-term investments           $ 36,738   $ 31,710
Accounts receivable, net           111,861   99,367
Inventories, net           93,227   73,664
Total current assets           261,925   219,858
Total assets           364,985   321,387
Short-term debt           82,801   56,000
Total current liabilities           161,704   123,350
Long-term debt           10,005   20,800
Shareholders equity           184,487   169,341
Contacts

At Johnson Outdoors Inc.
David Johnson
VP & Chief Financial Officer
262-631-6600
or
Cynthia Georgeson
VP - Worldwide Communication
262-631-6600

David Johnston

David Johnston

David Johnston has been introducing people to the sport of sea kayaking for the past 15 years. He is a senior instructor trainer with Paddle Canada and teaches for several paddling schools in Ontario, Canada. Full Bio.

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