JOUT - Earnings call transcript Q3 2018

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Operator

Hello, everyone, and welcome to Johnson Outdoors Third Quarter 2018 Earnings Conference Call. Today’s call will be held by Helen Johnson-Leipold, Johnson Outdoors’ Chairman and Chief Executive Officer. Also on the call is David Johnston, Vice President and Chief Financial Officer. [Operator Instructions]. After the prepared remarks, the question-and-answer session will begin. is call This Instructions] being recorded. [Operator

implies participation consent to call. this recording our Your

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

Patricia Penman

us for Good fiscal the morning, joining third thank of discussion quarter. you and you. our Johnson XXXX Thank for everyone, for Outdoors’ results

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

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

Helen Johnson-Leipold

review quarter Outdoor. a XX% warm weather us. the programs. million, our questions. products financial Thanks, our a and sales your great $XXX and new had valuable record-high will Johnson season an provide this highlights quarter, to to is response Good high markets performance take consumer insights in gear during I’ll perspective and increased we’ll into The us and and third for We third giving Pat. the thanks overview morning, Dan joining quarter. on with then begin of results our brands’ quarter,

quarter brands Minn months. ongoing best as year’s share. wholly is that. Our Fishing unprecedented touch profit as were sync last with which story. significantly staying main a per period. XX% diluted Sales nearly and last sales maximize our guideposts, Consumer quarter prior outstanding in identify the the to They reached Net grew to the share the three $XX year’s ahead XX% Operating underscores million, about doing sales in are engine driver of our Humminbird with period profits ahead nine we’re over building over innovation consumer new product $X.XX Year-to-date are essential business this behind their two million, same the profit increase is million, marketing consumers. are and over profitable period, past that a and power, well increased is than Operating of in results same programs XX% year up quarter and marketplace net $X.XX insights-driven quarters. nine-month $XX a year’s goal to faster to importance and income Kota the of grow nine-month to Clearly, similar Fishing increase selling last the advanced potential and of about million the the diluted XX.X% insights in blocks per income flagship same innovation. years. the first with helping remains the our innovation our above essential in last us by XX% for on our year of $XXX with time. at growth XX% $XX ideas performance emphasis primary

new distribution markets, and of cycle our product two our channels Given years. the nature is

target of for a XXXX and accounted to perspective third new Normally, the about about account For products for we products of revenue. new in sale. Fishing XXXX, XX%

response from the electric at have pedal-controlled the our with welcome. providing steer exceeded steering been giving breakthrough the demand has the has patented The this way phenomenal, features we first a response Importantly, exceptional the cable been navigation fishing been new been Leading product of has Ultrex, Minn enthusiasts lineup challenge has timeframe foot. award-winning market and pioneering within Kota motor, tap expectations. us and a

line, We this our these a which advancements excitement and category. sparked add-on steer also Ulterra Minn Minn as technical nice Kota and with entire gave wireless to Overall, i-Pilot as and motor did innovations Kota growth in electric technological upgrade lift us deploy across a Link like i-Pilot stow accessories. legacy well

strong, equally underwater definition been Side Year same our mid clarity, drove to took MEGA significant technology in has and series fierce screen MEGA every and growth at well. and of for as very sonar has a are other the larger we fast consumer consumer providing are detail expectations is It’s ever category. where biggest fishfinders. whole isn’t level, period, bar, display to and two a SOLIX, the new Humminbird done Imaging and Down During Competition very a in electronics market fishfinder new Imaging greatest pace for long. new Helix the this market high

fishing and across brands the technical in our knowhow growth of in leading us products escalation unusually coupled is to both a consumers gives what Our market. sustain in position this pace led two-year this period percentage extraordinary edge knowledge the fishing new of with fishing. and within The of high to

Going continue at pace. forward, we slower fishing will to grow a anticipate

grabbed news directly will the world’s which boat. year’s ICAST, powerhouse Imaging the Down series wiring at long. fishfinder equipment in key Fishing new level and all ICE be to business to to with passing new Johnson capability In it will motors year years. honors MEGA the brands.. transducer it so. benefit through another with to with along Best Outdoors’ focus. of tranducer and when both mounting the we’re the also, with innovation unique Kota provide giving success our only can Humminbird show. this Next Imaging, our chip HELIX and for trolling use. Delivering year, mark a the further clear models ICE product MEGA brand chip again, and And all big our our taking two of Kota clearly progress Beginning Accessory portfolio across to be we is the anglers products Ultrex ICE capacity X transom a open-water complete of the fishing a wear Minn comes rigging are and of fishing Humminbird, beginning are is protected use working is continuous available first, Down concerted prestigious innovation new The the this integrated and and delivered Helix first and bow-mounted we the giving combination pack of and clean include entire anglers Minn fully priority, next XXXX Once organizational Boating fishing select most the mount award-winning tear, viewing built-in crystal and popular from few see same GXN anglers below into strengthen to fishing option network do the seeing

competitiveness in brand for equity world. For categories strengthening and most instance, license respected diving, further in products SCUBAPRO, in the core are brand for the new

award-winning that challenging sculpting to Pro in total For compensator, is instance, drive in starting prior are the two lightweight advancements. coming led SXXX, sales represent buoyancy new in the In than Hydros due line grew an and Fluxring compact more to a products the unique double-digit button breathing Jetboil lightweight Camping of retailer new our products Camping regulator push a year-to-date above gain new design, gains bankruptcies expanding by with market Consumer heat segment and growing year, customer sales very technology leveraging traction market Camping, body of on easy years diving. foot start of products the the Jetboil. is control in consolidation. and segment and leader third the

brand fully targeted of market analytics to brands. and will new a are programs and all New and against important Consumer and to profitable a also products challenging weak this new channels online enabling e-commerce are are direct And enhance on innovation in on heading tide Without of to than maintain from conditions. focus track Jetboil third both insights products our account customers to consumers market sales digital plans purchase, leverage is for marketing position our to strategies. and increasingly transformation for year. Future us go-to-market very driving our shop and product sales for Watercraft more data growth company-wide ever accelerated long-term. design the

to years, brands. phase an experience of We beginning and in every to our our relationships foundations e-commerce implementation the we’re two transformation, digital see a into uptick past for with consumers moved great sales we’ve strengthen invested online the building already the Over in provide and brand.

These ahead, profitable growth insights and against delivering richer long-term. Looking progress our cornerstones success innovation digital will the continue of processes are advance three we foundation priorities, to sustained sophistication. and accelerated strategic in key enhanced consumer for

highlights. turn the Now call I’ll of overview to Dave, an over financial the

David Johnson

Helen. you, Thank

year-to-date and performance As both innovation a factor quarter Helen noted, and in was period. key the

mix pricing as the with R&D basis, in and great the Our a in products marketing-related margins of quarter. costs sales-related and largely strategic expenses costs keeping sales due a on and operating bringing, growing. $X.X value well sales in we’re that the the healthy and in expense, sales-related strong expenses. period products the increased The the million Fishing. $XX.X year-to-date delivering quarter, strong points combined innovation of nine-month new is a improved drive reflects that point due volume the in record-setting to in margins demand, Gross X.X compensation growth increased in higher a million, to in higher resulted as significant expenses increase digital operating On expenses focus

the declined X.X and points in a up points quarter nine-month of during were expenses for X.X period. operating it as While the sales dollars, percent

remains ahead, in enables against and balance to continue business and In us sheet plans growing net Looking our the potentials. recently cash of we’re closing, to expand announced the tariffs, growth position we’re strategic priorities address opportunities and determining and our them. the formulating process impact healthy mitigate the and strong of to investment

consistently to shareholders. in to value create and pay long-term ability confident our and We’re dividends plans

Now I’ll for operator Q&A turn Operator? the back over the session. to the call

Operator

Instructions] Imperial question from line Kelly [Operator Capital. first from And you. of Thank comes the George our

open. Your is line

George Kelly

really congrats guys, quarter. Hi, on another strong

David Johnson

Thanks, George.

Helen Johnson-Leipold

Thanks.

George Kelly

Fishing start few questions a with to on the segment. So

network read network? to major sort like where are – your there First, the brands. feel and believe I I one-vote lot is between something, there if already still improvement the your it’s you a wondering different connectivity of your recently are And be could I’ve seems still connected. it of was areas there like about called made products

sort where going? that’s anything So that about can – where tell is of you there

Helen Johnson-Leipold

Kota innovation it with we whatever network, on can product. Minn the one the to work big our advantages is every connects And because that, think is year. Humminbird our and I strategy enhance ongoing think, we do our we Well, I have of

And important part model. an I good right of looking And always product. between Humminbird to Kota. for think, it’s well, a that now, enhance business So it’s working Minn pretty partnership it’s our and we’re ways but

George Kelly

part where you think extend, of that you an that have not or products do currently where opportunity would for Are extend a there you to new make an offering sense to there currently, compete you brand into there is platform are new be or products don’t areas?

Helen Johnson-Leipold

at No, I always always and looking are mean, that we evaluating.

looking. of keeping as the far So considering, we’re always not we’re what but out as anything equation

George Kelly

Okay. growth or even next as how more – is room year, manufacturing Do And we’re year, handle of if able then, kind the growth do are you if it? capacity? same next looking to – your to you to have modest you if is

David Johnson

growth Yes. year we’re we consolidating expect will bit. the we there, chasing bit I Mankato good space some our about under we’ve actually this and of a us flexibility. facility of But orders give a more next year. we know – I little mean, capacity. which our been don’t adding kind feel little same But level

George Kelly

just you for this do backlog, remainder currently large season? And fishing have Okay. the a of

David Johnson

yes, backlog. There still been it’s is a But a there’s diminishing bit. backlog there, a

George Kelly

could just then tariffs? more in you think what the broader can indicators general, And there’s Any of kind Fishing Any early and do specifically you of it about – more more what income potential if it operating fishing, will to early on sign just outside Okay. the a impact? of business talk be?

David Johnson

give we materials mean, do indication any products I from yet. you of electric import Yes. and raw China, kind can’t components. Unfortunately, we

that. assessing still help we’re kind that impact in So of mitigate to our plants

more to come there’ll on be that. So

George Kelly

was full-year? in what and quarter CapEx Okay. then for expectations the And

David Johnson

that. the about get $X I full-year, last Actually, But be I��ll up year. I if million I number, quarter think will a think see can versus don’t it have for I

full-year. So I’m at the we’re for looking million looking in to think, $XX $XX – I million CapEx

David Johnson

this boat? going, to then, you technology charge own and your And really it. so It’s And just this can XXXX It keep how guess, as of able confidence in question? their a last products successful, couple business. for isn’t you’re these XX,XXX-foot of a refreshing of what the last they question of over I you Fishing Okay. kind question, out like your we you’ve one-time, look just XXXX seems years. margin What that been on sort the to people I re-rated view gives – guess, have and is

Helen Johnson-Leipold

very and innovation consumer is is this good that’s passionate and core fisherman fishing it values a a Well, – But question. the very highly.

is So that what that purchase point it. new they’re product we’ve step to that has willing every launch meaningful of seen and with up difference

year-after-year, key continually to those and the to same but different larger and cost not the the from try we think, move but dollar innovate, I challenge it’s also taken, hit a different to is it So, our But and segments, the we be Fishing sales segments the have incremental that we point to the have And sure unit group. is sales we to your challenge, only the benefit will around. not technology. well group group within make

hit we of great can. in with Minn That willing, most We’ve is we all is I’m these So seek great that products. not that as about past something both at has new We’ve going we kicking feel economy. as once. Humminbird had everything going innovation, we’ll years and have but a been be and had to much Kota like likely couple are

George Kelly

guess, I do one. last And I one Okay. have

there year. next a can mentioned anything that year? the Is Ultrex You or new to so product, most next substantial will – talk be else for new you

David Johnson

Well…

Helen Johnson-Leipold

Oh, go ahead.

David Johnson

Ultrex. I’m new sorry. not It’s a

have new transducer Minn We’re a Kota actually motor. we on – the integrated

Down that motor Humminbird have actually MEGA have transducer So again, networking you fishfinder on Minn the where enhancing it’s Kota and Imaging. kind see the again you can and of a

George Kelly

the Minn Kota? of different across models that be will And

David Johnson

Yes.

George Kelly

Okay, you very Thank great. much.

Operator

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

Your is line open.

Anthony Lebiedzinski

for morning, Yes. taking you Thank guys. Good questions. the

product consistent just shrink first, longer, you’ve forward. thoughts perhaps your going or get on mean, expectation I kind wanted So get the what just your to guess, remain wondering with you to of of as cycle I the expect about do that? lengths or lately to it

Helen Johnson-Leipold

determines fishermen having of I that seasonality talking using but, to time, innovation, You’re motors. two-year motor seasons new launch it kind cycle time of takes it’s a just We growth cycle. couple aware cycle. a purchase been because and the But and to – – long motors up about of depending the what the would a it’s longer one. always of and then get purchase the innovation, we is think, I say. – to innovation And the it and think, make what the them stay and But but have that the the With the again, cycle on the is given the we will gets over launch purchase of buy I condense nature cycle changed for last the launch, the consumer length then same. its given the category, innovation, our condense the But of I time. give think, the

Anthony Lebiedzinski

Got it.

versus of would the if you pricing, explanation. – And segment, units quarter helpful? for some any Fishing Okay. that within curious could was that or be for just give units versus color the color volume us either the could year-to-date Thanks also, the if I for provide you

David Johnson

both the we see quarter And to grow, that – Yes. growth. year-to-date, did numbers, the of doing the unit price but I give hesitant because for exact it’s rest you innovation. of up growth I’m the and and up then the the unit value-added from makes was you meaningful mean,

units the both seen We’ve both. it’s growth both pricing. well as as – in So

Anthony Lebiedzinski

Camping, sales spark is and has as I expectation there What obviously turnaround there? far as that’s the a so in there, cycle also And that. your going for increase struggled you there. Thank Okay. mean, forward nice what long

David Johnson

quarter good a for was it Camping. Yes,

new the led of kind product. with Jetboil our flash way think, I

product continue our see well to good and do there. innovation. is It very there there. that. a to quarter a more work Again, we’ll that restage we’re So hopefully, of But core as was happy with

Anthony Lebiedzinski

it. Got

And as you Okay. questions, may. early have can any if more two that sense us Also websites that’s as now to as you I for far how the brands, e-commerce tracking? give your

Helen Johnson-Leipold

up every but year. versus early experimenting. the here was brand game of But launch ago, last and is kind year still It’s in we’re we’re learning and it a year the

say go. we’re So we still and early stages that as I in would learning

getting momentum. the we good we’re about So feel direction,

really about feel the So but future, launch good time. we it’s still

Anthony Lebiedzinski

Okay. a you that. appetite certainly what M&A as We of lastly, Thanks seen activity? have tremendous sheet balance haven’t for is that your there. for anything And late

some that? you from So get to you. just about wanted color Thank

Helen Johnson-Leipold

always M&A center it’s Yes. we’re is And now – and looking. in front

looking about offer. grow the think, buying I a to about and strategic we’re what buying – we’re for the not fit. right we’re It’s volume, the we pretty competitive out multiples are lineup there are market and But we enhance really our product to high.

looking. and it’s are what’s So we available it’s of a we thought matter about and

Anthony Lebiedzinski

luck. Okay. Thank and best of you

Helen Johnson-Leipold

Tony. Thanks,

Operator

any [Operator any time. for now call remarks. you. I showing back Instructions] And the to Johnson-Leipold this Thank would Helen turn not at like to questions speakers, I’m additional over closing

Helen Johnson-Leipold

have I just great everybody thanks to day. to us, and want for joining say a

Operator

conclude gentlemen, nice all thank in for you conference. you today’s Ladies may and have day. the participating does This disconnect. and Everyone, a program,

Johnson Outdoors (JOUT) 12 Aug 182018 Q3 Earnings call transcript