JOUT - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello everyone and welcome to the Johnson Outdoors' Second Quarter 2019 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 the prepared remarks, the question-and-answer session will begin [Operator Instructions] This call is being recorded.

to this consent implies participation our call. recording Your

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

Patricia Penman

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

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

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

Helen Johnson-Leipold

growth. then the you. I'll be on questions. fiscal review will joining then Good take for year-to-date and performance we'll quarter unprecedented outlook perspectives share year, us. your and Last businesses morning. results overview an Thank and Dave on giving Thank we and and I'll the you for key experienced financials

moderate and would has. eventually expected We growth it

March halfway versus stand XXXX, million quarter of revenues on they are the quarter this was products Sales is preseason slightly total year. compared quarter Current year's for results to operating the primary last prior were of diluted company period. X% profit company year. the the In million in year-to-date fiscal of record income total was at fiscal previous share of At the Dave second reinforce During during six sales in par was operating for quarter this $XXX.X months. ahead ahead sales, season. the X.X% prior quarter Total first importance year's last net year-to-date slightly mark the quarter. will of and X.X% and million year's period year-to-date $XXX.X last of $X.XX selling $XX.X bringing increased than new key first financial million ramp-up later the retail and with year, fiscal second with which or six higher discuss per the fiscal up million, ending in months drove and fishing, the selling $XX.X well the we quarter's as this Performance higher year-to-date as the $XX.X innovation. drivers quarter call. profit second

of give products customer to want. best use absolute to experience they enhancing equity, what consistently drive and dedicate and this who annual sales they strengthening outdoor and or products, our they have how loyalty a New to our building and are, key the time the really consumers brand third are they want possible We margins. they more are, means where to we understand

opportunity help in maximize design the Throughout innovation. behind with to better needs process, understand to we messaging. process and us consumer of after the innovation our relevant fine-tuning continually on we even our drivers back development successful for for insights are new target the key are We are and loop phase, the which uncover us product input

success two growth new unprecedented past in product driven years, has For the Fishing.

and Connectivity the this brands across one preseason far Minn be Fishing this to of to is Kota so Humminbird between success. continues selling year, And drivers our strong.

Kota and work Humminbird One-Boat by together fun Our platform anglers and unison. to in Network enhances for the Minn ease products enabling

anglers the to look capabilities offer Kota more Down our boat. this Imaging We ways Minn this to transducer innovation of bow-mount that product pioneering anglers for easily products first that directly in only connected and what's the Humminbird constantly integrates launch Kota Minn year's into potential fishing. Outdoors unlocking see motor Johnson allows is below and for another features, select new Our Down Imaging motors. communicate bow is everywhere. of and can company the seamlessly integrate This

patented We are capability impress Ultrex, series in sales market. depth American performance wireless was the an pedal-controlled GPS with second year and consumers. a sonar success The also enthusiasts to its ultra-big larger and HELIX due Minn The The our up are of fishing clarity the sized HELIX midsized the while screen steer in small to successful mega imaging image. with with our in even improved first most for launch global In most provides on our business award-winning third offers Diving, motor enhancing North Kota's the and SOLIX significantly markets. motor SOLIX series series and sales Kota of electric to quarter, continued of seeing group extended fishfinders. state-of-the-art our imaging range Minn our the

to particularly one-third continue SCUBAPRO sales strong about New sales products category. with computer dive our drive in of

efforts which the also trend direct-to-consumer product Our in see most GX to measure we're in brand digital of truest doing transmission dive a sustain and dive trusted In terms helping in monitor is new heart online are and is rate equipment of which excited we believe SCUBAPRO's the world. our of sales the in success. wireless retail. market sell-through beginning watch sales, e-commerce seeing computer position positive to and more diving We're well the with driving in as a Diving, the both

businesses marketing working e-commerce overall in conditions to investment expectations. digital investment new strategies digital innovation target-specific consistent to what is tailor with of and Work align is and importance being our wants contributor applying trying their profitability. in brands critical the and continuing to this we're and of in needs enhanced meaningful future underway effectiveness. learned. We're consumers' a Camping and Challenging emphasize in things to Watercraft and the we go-to-market market sales e-commerce Our important both sophistication towards and to our all and

our as to it the will equipment ability of can tool the use They future. evolving a purchasing two investments committed e-commerce areas to long-term and businesses investing our into these as that will and -- marketplace, in continued toward use profitable in see about We they our We're from consumers off-season -- for brands sustained key as now give accelerated new progress season. position are these Across anticipate as delivering is heading goal well strong execution range full sustaining leadership the in the the feel hard make focus consumers, we into the are them in and our in in the investments of and heading planning it ensuring all into of marketing and we during to the and are are excellence the research year. benefits sources investment understanding we each of our growth for good growth. brands, can innovation to Our these opportunity where tool. ongoing season paths markets see as working on of focus to of sophistication we and digital identifying finish our we we the success

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

David Johnson

from Good everyone. I a the Helen. wanted morning, items you, quarter. few highlight Thank to

sales and fairly the the As prior were X.X% would an Helen Section for on On first mentioned, X% year a tariffs that versus in for approximately have flat components months improved subject for exclusion United over granted the that's in year. the our we're XXX sales prior currency basis. We're a products we States. pleased used to assembled year-to-date increased quarter six basis, constant

on XXXX tariffs to that projected Chinese have potential on previously we fiscal profits. a $X million Now, goods impact million will $X

we other Operating to increased lower Now potential the fiscal first expense declined adjustment due primarily of affected a impact continuing due expense assets. product higher the components. during with anticipate the also year-over-year from upward quarter expense of resulting the expense. on $X during warranty $X We're fiscal deferred the planed million to to of $X million compensation Operating in valuation this million year. efforts X.X% year, half respect primarily profits tariff-mitigation various a to lower

tax associated the of U.S. Reform was expense. was months of initial However, an lower reflected of other year-to-date Act. with six last XX.X% significantly new than effective rate rate Tax with XX.X% in gain charges year's implementation offsetting The reflected

tax expecting consistent For tax to rate the year, be rate. with full the year-to-date the we're

continue cash balance the remains by flexibility enabling our ongoing sheet Section affected manage the margins to the our with and moderate expect us we of cash is invest strong capacity businesses, and shareholders. pay while to and the protect continuing healthy components. from the position in XXX expect to be growing efforts ahead financial Looking to providing efficiency, we sales our capital. continue strategically working out year, dividend to The tariffs Nonetheless, improve benefit growth rest operational to us to on and profitability we to to effectively

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

Operator

Our you. of [Operator Capital. Thank first Instructions] Imperial Kelly comes George question from

may proceed You question. your with

George Kelly

guys. questions. Hi, for Thanks taking my

David Johnson

Sure.

George Kelly

First, guidance provided. calls. just to correctly? income in about of down a you I that – Am didn't Dave that I hearing thought you question you kind expect I operating you guidance that that said say be general you the hear that as prior

David Johnson

Yeah.

but negative. With will the be us will with profitability sales tariffs the a help that growth

the we don't number So in necessarily profit growth number. – in expect that

George Kelly

the said So full you be to case? to quarters income still negative in that year-over-year. that thought operating the just expected clarify, prior – you I Is So

David Johnson

Yeah.

profit in fair year, to could there this it's think I – yeah. think some decline say, be I

George Kelly

Okay.

Thanks. Humminbird at and years continues the then the to business versus I Can happen as Fishing improve? far – Kota quarter at couple detail Minn like And and business. to continue kind any everything of seeing Okay. changed you're has the get what in mix what it of really to of there And segment even – trying guess, just year-to-date give is about I'm all a strong Humminbird, as this that – else? profitability it's Is ago? year has you any that

David Johnson

Sorry, George question to improve. question? Is has your of continuing your that the like profitability part last

George Kelly

of With an Humminbird, more becoming even specifically is mix? it

David Johnson

No. We're both seeing strength of brands.

yes, good good pricing good overall think both I brands mix, innovation. I And with the in are mean, So really just positions.

pleased we're both so brands. performance of And with the

George Kelly

still last at segment. far question cetera? Fishing the seeing point-of-sales -- level, the with on reasonable Okay. is And how retail inventory Thank et And Is at What you data? then so inventory is are you. retail dynamic? for how the me

Helen Johnson-Leipold

it looks This -- Helen. retail. seeing we're is good. preseason, at still but good Again, just pull-through it's solid We're

George Kelly

you. Thank Okay.

Operator

from Thank comes you. next Company. question [Operator Our Anthony Sidoti Lebiedzinski of Instructions] &

with question. proceed may your You

Anthony Lebiedzinski

Yes. for taking morning you again. the Good Thank question.

provided looks for to products. like of about sales third far it as you as as the us diving know new you year-to-date come sense Fishing from percentage from new what a give of your that coming I introductions? quarter and for a have percentage data So some product Can

David Johnson

extraordinary really basically, innovation. last strong had this Fishing. still months so, Last Well, we the XX innovation pretty we've with good we had year. count year, And

strong still due it's couple intros. years the last So of really to of

Helen Johnson-Leipold

add as -- industry, than just put consider the just that there cycle And we it's that you that the -- -- -- those you the of two to businesses. years given would to of more launch one-year a nature the because consider cycles the launch period purchase Fishing in

Anthony Lebiedzinski

it. Got

that. you for Okay. Thank

segment, As far more some done to as with Are initiative? still there diving operations. of side? streamlining you is come you the have I know Or done that that on

Helen Johnson-Leipold

come. that more We can to. if -- Dave, to what that we've answer to this some up have lead just seeing expenses you're want got And preliminary is going. initiatives you to is you

David Johnson

Yes.

to to look things. segmentation to operationally do lot of product there's of continue and both from a business that initiatives area to kinds those We that in line a simplify that

So, more that's yes the there's on horizon.

Anthony Lebiedzinski

it. Got

that. Okay. Thanks for

and like be as remarks it from two that other your you're So as Recreation with segments, Camping, smaller to prepared Watercraft patient those. far willing the sounds

that make that I to sure wanted correctly? heard Just

Helen Johnson-Leipold

Yes.

You are correct.

product participation but with see a are there going and of of biggest that of took take -- do camping is is I in long-term. fishing. are an to actually they forward millennials camp. lot the terms be think growth the opportunity growth driving in advantage that our thought top are one it both little segment also of Camping, do it's with with behavior right of there But for that only levels we plan and segments think on up the have our a businesses we fact We is and it and channel, changes a Maybe we're changing with consumer the certainly in longer to segment. bit And really participation happened a little how things it how not consumer. than identify camping

key. a that's So

and never you if the again behavior and have and stop happened watercraft, in what will think that we well in know I recreating competition change changed. and thought market, changed channels about has certainly has people ever as the water to But business. changed consumer that

think yes going as but worthwhile. we patient fast do forward we Maybe to, see will opportunity patient. we being we the and wanted we So the see as be definitely didn't changes is that

Anthony Lebiedzinski

it, Got okay.

update are So where as give efforts can you point? direct-to-consumer you also to this an us with at your

Helen Johnson-Leipold

got up with we're running. all and running every and Well, site up We've direct-to-consumer. that's

I to just consumers think it we want work, which also but driving driving online are -- sales not way it's into bricks-and-mortar. we is the our it's it's working

a very it's And good. process -- and heavy I always a lifting. feel have We its

this got short the how how site. But we go to present and a team and website out as what learning optimizing but still offer we big and we our in e-commerce of Our also up in leverage they as about such and our there are other well. there's done things have a -- certainly running time of we're to lot period be that e-tailers

and we as forward. get for go it's a but process the definitely to it on we just So road look are stronger

Anthony Lebiedzinski

okay. it, that there? thoughts for deals? still on are looking your updated any assume your potential And I activity? What Got acquisition lastly you're thoughts

Helen Johnson-Leipold

dive looking We there good we there's of always we a out a businesses lot a are dollars. have we consider we looking It's acquisitions that and are buyer's solid something really and it's focus we're strategic always itself, tough it. very, lot and -- looking a presents -- those and into thing for very is strategic for a mature the of time and for it going when market not are but

out can buy that So that the there enhancing something market. is strategically I growth alone, by say for we is we're thing not sales and our but worse go the and not do sitting position sidelines would in the

So we're there, we're looking.

Anthony Lebiedzinski

Understood, okay. you and Well, luck. best thank of

David Johnson

Anthony. Thanks,

Operator

Imperial our Thank you. of Kelly from And next question Capital. comes George

question. proceed may your You with

George Kelly

for guess business. I I fishing taking a thanks Hi, couple about do have your questions -- other

and I still growing? question prepared cool really is years from well now first believe And products are Minn correct And old. three me, then two new wondering is is integration it and so second are the lot two and focused Ultrex Kota wrong a those of part old if integrating remarks, I'm those but just Helen, is, the and together. So around if part between Ulterra years two Humminbird they your like fit sounds your and of stuff lines the

a next that lot bundle is that direction. years as sort if So more you're if sort pipeline product you wondering, your if coming -- over the Thank of at integrated packages stages early in you. few there's look going of

David Johnson

take I'll part of the So first question. the

seeing the Ultrex are no We across growth and product are exception. line and Ulterra

So still they are be -- they're product still to stalwarts of our stalwarts line.

good. still it's So

Helen Johnson-Leipold

a we also there. And just you connectivity piece that great not piece is emphasis both. has doing of more had truly is lot so the themselves, it's your the connectivity because to for brands technology Humminbird -- it's not world individual think of or comment available new we but most on we're its Kota, but gives approach, specific to the none as don't and which connectivity on is having Minn the on -- on I out another But, put connectivity, the that. have has we've Because got heavy we innovating part -- all functionality innovation

-- it's aspects of to moving a their And the we're range So trying all really pipeline, very forward. pipeline. good they've product keep in got

Operator

turn to to remarks. this now further not showing Thank I'm And further at for like any the I would time. Johnson-Leipold Helen over back any questions you. call

Helen Johnson-Leipold

hope Thanks great again a for everybody joining us. day. I has

Operator

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

Johnson Outdoors (JOUT) 3 May 192019 Q2 Earnings call transcript