JOUT - Earnings call transcript Q1 2018

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Operator

Hello, everyone, and welcome to Johnson Outdoors First Quarter 2018 Earnings Conference Call. Helen Johnson-Leipold, Johnson Outdoors’ Chairman and Chief Executive Officer will lead today's call. Also, on the call is David Johnson, Vice President and Chief Financial Officer. Prior to the question-and-answer session, all participants will be placed in a listen-only mode. After their prepared remarks, the question-and-answer session will begin. call recorded. this Also, instructions] is being [Operator

Your consent to this call. our recording participation implies

not these turn agree off do Penman. Johnson you If to ahead, go I to Penman Ms. now Outdoors. over Please the terms, would like call to the Patricia from line. drop simply

Patricia Penman

Thank of Outdoors you. welcome XXXX fiscal discussion morning our and first Good to Johnson quarter results.

beyond at you also copy of may statements. of is current include this filings materially our and statements basis Commission. website number with it our due listed need not call today’s available guarantees events many These Exchange I Actual a of Relations. remind release, in and a www.johnsonoutdoors.com from Outdoors’ news need contain Investor you and risks future These Johnson assumptions those press control. uncertainties that made If those conference statements the differ our may release to to and under on and on are forward-looking factors, Securities views are the performance. of

questions have to is It either contact Johnson Dave to you call, please following me. If my Johnson-Leipold. the call or pleasure Helen turn over now the additional

Helen Johnson-Leipold

begin for key we'll quarter of on comments outline key question. will and your take priorities Good performance financials I'll the morning, Dave with ahead. then year the review and

income, third year's to XX% performance details the operating $X this $XXX down the changes and the in sales provide in This in over industry quarter our reform preparing improved fiscal second $X.XX quarter and During resulting year. see We're quarter first Sales profit for led period net earnings taxes and last million. the quarter year first were the to warm ramp-up will Tax which mode, is start diluted by during for begin to Overall, initial primary consumer reflect pleased Dave and October selling guiding per spring. of fiscal outdoor recreational in a to lowered December, brands. was remarks. weather good and share in through takeaway the quarter in We'll in pre-season selling to more our accounting legislation his fishing customers. quarter. million, in increase it first significantly

In and outdoor forward our of bigger, XX-month all line product the building brands. and Kota is provide innovation new period motors mew a year's like that in Minn continue focus for entire technology that priorities from orders with trending added Kota up this key our goal delivering new we preseason recreational new then a the outstanding electric to steer Minn with in last Products Hummingbird products mix channels ongoing product benefited up of One beyond value and was their robust value The consumer. major ensure XXXX restage products both across momentum ultimate brands. bringing of successes, better quarter, distinct our a continued momentum process we of target with for meaningful new line. launch have

The given on to first-ever of new grow of pioneer a our added sonar our Water and range the medium advanced Link, a with our steering than control, legacy clear and now value popularity, MEGA market full over brings year product. new continue in which -- intuitive markets. to Fishing the fishing i-Pilot most with sustain has also remote business of the and engine positive crystal are depth slow patented clarity Down ongoing This category pace Hummingbird large Imaging talon fishfinders anchor remote touch than bigger technologies water nice doubled coupled came Helix is while higher continue year. growth value expect innovation unmatched to shallow smart retraction. products in profitable screen repeatable And how [Import] deployment new the Side brand our making largest Minn highlights Shallow including which flocking in navigation Imaging and Series our year Helix is the position and to new screen i-Pilot portfolio, range our display offering an to of Anchor as provides even be screen screen lift helix has Kota entire we with technology. profitable wireless the everything, momentum capabilities, MEGA Kota a is the and leader. Minn and overall more who to Talon such XX% represented size important we've and is anglers and investments helix growth. in everything Helix we talon, series primary plus market innovation and the brand are fishfinders. to of technologies, somewhat, added market margins will to and provides total and growth of The was in our Since and technology norm the XX-foot And benefitting. As a technology offerings, strategic a two. the driving usually as our not result, every SOLIX expanded wireless in want

segment. to support diving, core innovation, our is Moving on our share life to SCUBAPRO gains primarily on where driving enhanced emphasis in in

weight both and in compensator This comfortable computer, the guiding solid revolutionary PRO the HYDROS with strong dive products gains. driving new fastest is a started the buoyancy factor out were results. BC year GX quarter new and lightest most key The ever

an to reflecting international also uptick the markets, We in steady dive economy. global see improvement in key began

for wants do categories in ensure to [tens] camping, our we The impact growing in both is portable and push we're growth begin and realize to evolving Market is controls SCUBAPRO. conditions the We’re We're the our camping be to also pleased of important last inventory and challenging. all where year cooking our down on are very innovation against bankruptcies outdoor for across the year, outdoor retailer subsequent largest consumer sustained weighed the positioning be reason, cooking great early benefits their of Camp markets personal the experience. one camping personal market we'll camping expectations. recreation holding demographics Eureka! by is systems. these targeting Jetboil foodies. system of continue number world. in the steady and watercraft overall against of that sporting in brand the dynamics latest diving, those there remains expectations And to future to for compact, goods positive gateway momentum Jetboil year start and the hit line sales tightened season. get driving [Jewel] the the to the channel, headwinds focused meets one lengthways, outdoor so campaign that the button and an recreational to activities. other is perspective, recreation of retail In and restructuring expectations Overtime, is want are deliver and to This future in efforts. but more

inventory Pre-season Now quickly affect operational impact got protect orders softness great a now, innovation, in we're on unmatched brands, moving retailers Recreation to tightened the suggest, to and this Watercraft continued strengthen in watercraft year. controls are late rebounds. expertise profit. market the We and reduce last great efficiency market once are Right retail to began year. margins position anticipating paddling markets great

are that quick full first a of indicative alone quarter results year reminder Just not performance.

success. believe year of sustained season see closing, product start is consumer season the growth. feel to and goal we we'll through, to As which truest profitable measure accelerated plans the ability our new this about we sell In deliver against for in, kicks our the our good of

for more to Dave I'll the turn details over call Now the financials. on

David Johnson

with out year's strategy. the implementation The year-over-year channels the about of you, to critical emphasizes was will a driver further urgency cost Thank operations The a increase was higher contributed to expenses. system conditions target increase over the our sometime $X.X of on and investment. some from we’ll associated watercraft Helen. a are operating of down the tough portion impact in start our Also, revenue digital, transformation this capital rolling increase upgrade the across increase equally spending. XX% we’re continue year. enterprise This new course both completion in of making in Capital and and Expenses dollar with however quarter. A year. recreation X.X for longer-term market a as was behind distribution Cost in this investments million, next due the of spending year sales. expense also digital key importance percent camping implementation up

Lastly revaluation net the income, a of Law the triggered tax U.S on Reform Tax assets deferred books.

Together a earnings. $XXX,XXX. for one-time tax foreign calls charge. in $X.X net which resulted tax to about it lowered these deferred addition, In items on transition income previously a million

closing, a go, be tax while Pre-season expect rate Excluding a how taxes. are that do spring. of we for year. until actual these throughout topline the growth continued tax we state expect plus few slower sales won't too see the year year prior believe rate success unusual in blended our we will the to full and foreign early a would is truest In suggests but consumer full to the U.S. predict tax the year points it’s measure we demand, rate customers positive items, consumer marketplace of takeaway and the about mid-XXs, versus

strong, to to continuing to position shareholders. cash enabling healthy and pay invest is growing is us our cash while Our our balance business sheet dividend strategically

Now turn Q&A Operator? things operator the to for session. over back I will

Operator

question Imperial George from Capital. [Operator Instruction] of our you. Thank from have first And we the Kelly line

is Your open. now line

George Kelly

on Congrats great quarter. Hi, guys. taking Thanks questions. a my for

David Johnson

Hi George, thanks.

George Kelly

questions for Few you.

So sell-in it. side how it of first the the Wondering if surprise sell-in, was? did you strong on fishing the

Helen Johnson-Leipold

think customers last of of sure surprised as inventories think, is answer have think little some year The low well. Dave, as you our fairly can quite product But, second demand look make they last little at high Pus the a because a we got stock. but were short. year. in it, this of out the had to I I coming launch, were we we them I that year, want

I just the products to So, the get right they think of all in going have amount making season. sure they're

George Kelly

not fishing last the it checks, pace but you And just the quarter stocks growth to sounded be I was see some Okay. my you in And then, sell-in row and I in out in a I expect said on a think know again, of year. lower based that the anything that and second cautious, more in at for the feel than continued I in environment? get in seeing purchase, tracker the products or doing still was that's data it they're seems you're data really look like, popular does there is it anything healthy your you that the there's cautious making seeing markets of still wondering get, a you -- if like you're you you well.

Helen Johnson-Leipold

environment at and filling ordering this a whatever the takeaway consumer really it's is big the really early It's they our point and voids data. certainly customers at preseason, It to look in healthy too growth had.

to was a continue just great. slower than based that. grow. just year had is year way. feel it we our duplicating So, last good is hurdle. we'd would If And continue think very just we on year. year past be saying, experience challenge such and went to about We will it's that at that, that a we But if, a that that we a just going like a the unusually caution growth that had. I be momentum, big we're significant and we But it do love other but will pace last positive It's

George Kelly

there, Yeah. pricing on ones? Yeah. your -- then, major products raise of did Minn any the any on any you Kota And of of

Helen Johnson-Leipold

higher products, new well. a providing cost and do really to as also that the period. in launch reflect we raise the we new products to the that the we’re But introduce sales of When usually value have prices we tend

we do wouldn't second it the of year launch. -- in was that So

George Kelly

Okay.

all last like then is your have look Kota And like year? production does this question there you or Minn feel Do have do Okay. I fishing in to last for what to what up what two talk to business, more at can guess you you on expect is about margin Humminbird? enough handle, 'XX the you capacity in you seen And -- then gains Humminbird, it questions.

David Johnson

on Just lead are we Kota. items the first time on long Minn constrained more with question George,

in We're very busy, good shape. we're we're ourselves, good capacity Our but shape. in

we in product. sure about that more our it's finished products we chain the making can into supply the have put coming and So,

be to continue we'll making demand. meet sure looking things are -- So things On very busy we are Humminbird, good.

think I think that and is brand profitability good. I the are of new products resonating the

good are feel we where So, about with Hummingbird. we

George Kelly

your margin me. you is operating just slightly I Last questions guided Great. still this believe expectation. last had for a down versus year's then And Okay. for quarter, to be XXXX, that couple

David Johnson

Yes, digital. of investments given profit think topline, see the in topline on I think we'll but the of the the caveat is, a a margin, being some we where the haircut bit operating

George Kelly

so thereabout, your my Okay. guess strategy, then last expense digital and And of can the for out amount XXXX? that's lay is CapEx I what question you incremental

David Johnson

the to line, for and as And what going really give spending the going that. will again, operating We're did operating apologize well drive expense and CapEx the we that. to on expect margin. on we I line, Yeah. be what's year. profit But to spending numbers incremental clear last not expense haircut there that that's

George Kelly

Okay. most and around is and... that that segments, watercraft And of correct, smaller camping your is

Helen Johnson-Leipold

No. fishing. an sites, investment We're including of enhancing all also well. as our spending across the got JDE we're board in We've our system and

the there and is of all an and in expense putting upgrade adding the that added board So, the that's board. a But all spend a it's another are -- across platform of do our piece we of a product our same that's so global to have couple new on across to we locations expense.

George Kelly

you. Thank Okay.

Operator

line from And Thank Lebiedzinski you. comes next & Anthony our the from of Sidoti question Company.

is Your open. line now

Anthony Lebiedzinski

for And morning. you taking good the questions. thank Yes,

your that deceleration. to certainly your if could December increase sales at some color much you can't cautious big give more sales If counter to you was that's sales some of I about runs numbers, would commentary wondering be units quarter, So, color as us just share XX fine, maybe versus pricing? maybe how that looking but great? any increase the specific was the growth

David Johnson

is caution preseason. the And this Yeah. is

fishfinder a both and but that a unit So, importantly both, it, we has believe the business. motors sell-in in is price But we to the new the retail it higher channel. trolling its said and in units per the into it's products

to in contributing revenue. are that both So, increase

Anthony Lebiedzinski

Got it.

that would as expect, at Okay. Thank that around challenges recreation, is was that. would had considering And divesting segment the -- just a watercraft you you something wondering the for you've point? that if be possibly I consider in would that doesn't some if that turn you business

Helen Johnson-Leipold

for I is business feel say at of all future, every best our to of for away. evaluating have going ignoring given there always we would and evaluation our emphasis But point plans are term. the businesses. in But what's we term. water not long our we're ever point not growth I recreation the for strategic think option opportunity expertise your the Well, we long and the is the this

the global We the in are space. of one leaders

let right the market and the I think position is seeing you've to impacting. what business. hopefully feel marketplace, only also we the the there but in that not channel themselves we're is it’s work and we've the a the is disruption that now things we think in got soft out have I trade will very evolution and when optimistic out we play innovation be with about got planned And

Anthony Lebiedzinski

And point? at Okay. Got outlook you any have do acquisitions this updated it. for

Helen Johnson-Leipold

opportunities really we’ve that We businesses. are said, as on we a looking our across helps and had hone us actively planning process the growth strategic in

it We that's about it to. historically because think add for I that acquisitions the we strategic the we things and and of us is kept looking acquisitions something are long-term value do just company can we are growth. to very do value a don't We one the successful has and that is

And we're something right is when that us and comes there. we’re so, along, for looking right

Anthony Lebiedzinski

much. All right. very Well, thank you

Operator

question And you. from Brian comes Morgan Management. line Dempsey Rafn Instruction] Thank [Operator Capital our from next the of

line Your now open. is

Brian Rafn

Good Good morning, Dave. Helen. morning,

David Johnson

Hi Brian.

Brian Rafn

season of season how your is much Let and how with I'm Minn see on the on or business just How delivered may to trying in boutiques great some orders that vendors certainly be smaller in in-season -- or then to surge gets in retail me be or of electronics the front replenishment in box Minn superstore much had sell-through fishing, with -- goods Humminbird, a at much sporting relative the the ask delivery you the just quarter there is your you entire and end? Kota replenishment. selling the weighted your you front Humminbird. less big end first Kota really a orders EDI much inventory stockpiling that category to big how channels, or versus guys would the

Helen Johnson-Leipold

If orders we pipe -- I have too, Dave can lot you season. on things, think see it we will depends of but I Well, there's the think the in throughout a weather.

I we’re of experience our what lot today confident they’ve think in in is pretty one product, ordering more given a had they're seeing that, we're what the the new year with upfront. products

they inventory behind see, may of continue past you tend to they lot not get sales build not immediate as just So, - the until it's a sometimes re-order got they see reorder, one or to in scene. because heavy-up it's But, we seasons. one to

Brian Rafn

Got you.

For the an is in that is North for is what September to that the guys, really for of fishing that water, in America? - season kind consumer guys April open season what

Helen Johnson-Leipold

you’ve is the they time season think., if potentially southern and actually obviously south. the you And starting there go. and the quarter a out say it because to ready buys product summer buy of you product the that little you fourth But up or they're when of purchase get in know got northern a longer consumer there's the the end spring less Well up their boats before in you seasons the the I the I all would fishing. but that,

third fishing the they do but fourth in continues, winding do season purchases the them. most, is in of quarter I the just So, second they and more season because down their quarter less for our and think

Brian Rafn

No, Right. I it. get

or when starts shows? -- you you not in your in early you is out better guys demands product know see that I'm Let know really your for boat ignorance. How maybe products different me cycle your you launched is buying new do is, Milwaukee that boats. consumer for you primarily the when fisherman, here obviously it trickling new see asking the Is those consumer study ask holiday? their question Christmas gift are a you started and or so January and trends a for because relative fishing, I'm Do Christmas-giving show

Helen Johnson-Leipold

we have fishing Well, show actually our summer. the in

in show our you and month our until first are we their So, on products of know big we customers our quarter then and -- we working just timeframe December. is which the July order

but know until winter are our time we they've now definition. the out product they its the they up, is you and kind over is the and really like So, load buying the seen of they where getting consumer isn't there

aftermath. go end products they those they earlier if little boats the the up, it to with they're come a buy buying know that So, might and then do you tend associated

Brian Rafn

Yeah, I that's the answer.

demand Let me equipment fourth demand Do Christmas at for is diving your all trying see not I Well, is you outdoor maybe that scuba things know quarter? orders to ask fourth the I'm might the channel from of filling Johnson same just think the retail holiday, buy you you am as but consumers? in manufacturing see, from consumers a try your for there by you that question that, the quarter. just do to any to people and Is

Helen Johnson-Leipold

as Christmas business. quarter much we're fact certified. product dealers or fishing down diving as when first that the they're we about. reflects purchase in But when that product see the it's in haven't planning We seeing tend getting We they're less vacationing pipeline and seen a seasonal excited what the our to than some way new but purchases are the have

Brian Rafn

guy. I – so a little some, that maybe I background The think big-ticket speak think at malice the retail? over think a bit about canoe item. am paddleboard, of boat power much What's but last guarded little canoe racing. the Okay. that been market about the I couple that's in What not vender's big-ticket powerboat had years? bit when a you to season. not because market Talk the talked side continued the pessimism looking paddle so weakness how for of a I item. is net is my some And is tough you’ve a

Helen Johnson-Leipold

well, the the takes in guys industry have lot would boat the the power for call you very different are I of general paddleboat boats, lot fishing the dollars that, a in know smaller for I it's Well, are would big you think trouble space. a what that I say a and specialty to and also power boat some categories doing is keep in It's store. our the been, think the boats. seeing you know it bigger we put inventory I and actually through it's of They product of hard build. item putting boats

the very know being minute to struggling you channel they're bigger think they're this cautious evolution. are last you retailers they'll buy when with cautious the wait and I till and know

both the specialty see of plus and got kind situation, dealers. more channel we've some attitude wait the So, of by the

out. playing So, we've got both of those things

I you innovation and us they're think helping - and has But are hesitancy small And the are for innovation, process focus place opportunities logistics boat here is our market water showing the excited the of we new been and market are looking are to we about. the putting place some watercraft, on the personal we consumers aspect where of channel into stay. in water that's from is a know growth, a the the are dealers. whole vacation. for growth a who you digging evolution that's But drives just what the of just challenging it's for the feel is recreation Everybody really we know forward. going goes market fishing to that and our and the part

Brian Rafn

I appreciate and Yeah that.

the you the versus the at demographics canoe have cannibalizing one other market, the the kind strains that Predator If is watercraft that separate are old-time other? fiberglass between one paddle there differentiating wood, and know than or out is of look the market was you the Neki old-time you there to and better

Helen Johnson-Leipold

think And evolution very behavior the business and the area changed market kayak you as more are separate recreational the as well. towards kayaks play markets. a has that. and But is know consumer end are fishing in they No, become overtime. And rental canoes we and big canoes users separate well. has I very you know market

we’re change and So, that. behaviors addressing

Brian Rafn

that. appreciate I Yeah.

Dave resin, highlight? that me aluminum, to commodity in you inflation, you anything, like XXXX seamless ask Let coming anything

David Johnson

resin from pressure shape No, of the is pretty significant. I but think similarly little not in see upward quarter, last what with good of bit we exception we’re I think

Brian Rafn

type? digit Single

David Johnson

Yeah.

Brian Rafn

Okay.

stock your of everybody then up and what on now giving salary, XXX-K SG&A curiosity comment America then see you costs? expectation, of in is and big raises do bonus SG&A And and a guys a maybe kind kind healthcare and Okay. wages

David Johnson

Yeah.

I and the compensation at through and with to we'll stay competitive looking year compensation of you continue think process marketplace. we for a do our We’ll things know the side go every programs that.

expect I it's fiscal this be changes to we continue some for there. Healthcare to know big at year, but don't So, that. continue moderated you maintained, look increases costs

we So, But that happening with understand the monitor in continue a care change to not costs. it's health what's year. pattern versus previous

Brian Rafn

with talked, whole then transformation CapEx call little specifically Helen kind centers, or And of functionality in there? detail more guys it design, a talked on website Okay. what the the past you you've in or can bit I strategy arm to, a relative think that is the that is digital go your some and

Helen Johnson-Leipold

the that's eCommerce how Well about It's But creative. website. marketing. it's digital -- refer it's It's we our to whole It's we really online. our really it. that ecosystem about our about our about

and but that in our that evolving done marketing that them all great say more historic focused think, to part than variety and platform it's it's let to -- expense, in But it and are marketing and in a got know also it's providing our we prepared we've reach the to to you the I with for our I as requests the opportunity a that interact would on but are respond have enquiries and we I to be the able expense and more as and consumers ways. to really think The are the system growing long-term great also digital you innovative directly but key the big think businesses others the consumers go. opportunity, product. on things. I and requires And look past, obviously I we we But incremental technology an have something aspect. is is not. is a well to company And expense have run itself certain the think, So, we expense consumer, have access it's becoming learning their of better many have so of

I investment. think Dave talk you JDE the can to

David Johnson

Yeah.

enterprise Just to Edwards, enterprise be risk the clear capital the platform related. JD spending that's that at resource or

spending of part we what So capital increase kind capital the spending that's the first quarter. the our in and increase of expect in drove that

Brian Rafn

that's Okay. of accounting type And thing. that that’s and primary enterprise systems

David Johnson

Yes.

Brian Rafn

Are electronics? Okay. I of some that talked of challenges -- easier thing. type XX.X%, those challenges logistics year that better sheer it by and the are million are is What thinking it? long side. to in Dave, bit think the you is guys a it or same, or is last the finding subassemblies lead little ways with about it is $XXX components up I'm growth fishing the becoming -- challenge getting that of popularity just time. how you on is -- deal kind that worse, you different of

David Johnson

continues We challenge. a as continue to to it be but as creative possible it, to with be deal

Brian Rafn

side cycling temporary with the Kota guys you now? one half, and over you aren’t be hold and Minn the manufacturing people. the what ships what of shifts, in labor demand time? are on then certainly Two -- And electronics where sell-through why curiosity do Humminbird? at on What in side are fishing you -- flex Okay. that -- How bringing you out running do

David Johnson

with ramp temporary Yeah. and during labor up tend overtime We the to season.

running slightly -- than we we So, more shift we're labor. a shifts two We're temporary with typically, but day. settled not day, a a doing have

is bottleneck not but own busy assembly. very we're our again, So

Brian Rafn

Okay.

Okay. All me. and right, keep the up work. for guys that's good quarter Thanks. Good good

Operator

Helen over closing for turn like our call that conclude back you. Thank session to remarks. And to would today. I question-and-answer the Johnson-Leipold does

Helen Johnson-Leipold

for great hope joining Well and Okay. everybody I a day. thanks has us

Operator

disconnect. you have Ladies and gentlemen, thank may program. you now for your the Everyone, participation a This in great today's concludes And conference. day.

Johnson Outdoors (JOUT) 2 Feb 182018 Q1 Earnings call transcript