JOUT - Earnings call transcript Q3 2019

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Operator

Hello, everyone, and welcome to the Johnson Outdoors Third 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. [Operator Instructions] This call is being recorded.

Your participation implies consent to our recording this call.

agree terms, not the drop do line. you to simply these off If

like call Penman. turn Penman would to I now the Outdoors. go from Please over ahead, Ms. Johnson Patricia to

Patricia Penman

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

website need our johnsonoutdoors.com you available of a news Relations. copy release, If under is Investor it today's on at

from differ filings listed and of These in views are Johnson statements risks on materially many control. I statements. releases These press forward-looking with guarantees those conference may the of number the performance. due to may also basis Outdoors' those contain Actual need our and to factors, Securities remind you and a our and and future of current include uncertainties are not Commission. that made assumptions this events statements beyond Exchange

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

Helen Johnson-Leipold

I'll reviewing morning. Dave off by our financials, review and business your year-to-date perspective provide and quarter on key questions. start results will we'll performance, then take markets Good and then and

response giving warm gear during quarter, in weather is insights programs. us products our high valuable outdoor into third fiscal The and the recreation consumer to season

profit Continued ongoing operating components. the in quarter-to-quarter products powered tariffs and reflects sales investment success quarter continuing digital unfavorable in of increase capability in of our new a on to The X% Fishing the during comparison $XXX.X in impact million. Chinese strategic

over fiscal month per Total profit period diluted $X.XX $X.XX were million, nine million, Year-to-date, for sales was year. the $XX.X or in $XXX.X same Company net per million advanced quarter nine increase diluted X% the million income income was X% share. last and share. operating month or to Net $XX.X $XX.X period a net the

Dave will results. behind on more the detail drivers financial the provide

importance of continued the reinforces growth brands. innovation success of This our quarter's to performance critical and

inspired growth spurs to from inspires Successful the sustained consumer and product. and using pioneering researching whole in is our insight fuels category-creating built purchasing with adventures, Outdoors' shopping innovation market on legacy the leadership begins and actually our spans Johnson brands. that to by markets online innovation experience

Being the has in the everywhere target. the significantly, defines best continuously moving years, a And change recent is of bar we for on constantly the pace what accelerated best. of do everyone raising what

One is the rise of of outdoor recreation. demographics engagement the millennial in most shifts important consumer in outdoor rapid

Today, millennials the consumer comprise segment. second-largest outdoor

consumer base. this on to segment While is baby now, consumer dependent ability as future largest emerging our younger boomers with win and remain success the of compete

investment ongoing it into translating us product consumers' and needs a gives markets has XX outdoor understanding new nearly advantage for just and as evolving competitive years. Our our in expectations unique bigger, in insights key increasingly success consumer better,

continuous from example. a in brands. success A brands our great Minn The to Fishing is and of of first, Humminbird Kota unprecedented have our growth led technology, stream an

and small. with is Beginning electric fishing and against our competitors, to innovation unmatched, technologies quiet on-the-boat well and sustaining market as large our more, side-imaging steering Spot-Lock motor as remote hands-free the leadership networking leadership first clean,

Best category this at innovation, XXX in MEGA Electronics world's eighth most captured marking years. ICAST, recent Our from award the the fishing Humminbird prestigious XX new past Imaging in most the our show, in

don't and high-resolution the XXX, only around the a of XXX sonar a the under with anglers directly providing to sweeps boat, view in can move boat, MEGA MEGA have XXX-degree coverage. know fish by front their know water. every spot Imaging over what's coming. is With to that They XXX even don't count cast boat detail feet the option unmatched make targeting what's

constantly more the and their products does redefine both command and the with Imaging our insights performance motor us and just will technological catch enhancing fish technologies of wireless and that, our and what boat. reimagine catch anglers new the in looking can to XXX effortless have communicate, anglers trolling of for an MEGA deep help GPS ways what fish. always consumer seamlessly integrate We're expertise finder, more - so and will anglers coupled advancements enable that

Humminbird also in technology. industry leads the ice fishing

all-new newest launch CHIRP map remote to with Dual at Best allows Our ICAST ICE won exciting of locate fishing the more our sonar award or ICE Spectrum productive terrain new easily which ice and AutoChart Live the anglers this And of lakes proven feature of holes. unmapped Fishing HELIX Ice quickly brings Ice, the HELIX the year.

and Innovation our is on watercraft priority, we fishing our traditional important market also market have shift dramatic innovation the leadership dynamics. pipeline is in and there in new has recreation exciting in where been critically business, position an top of products a Sustaining technological horizon. pedal the our

Importantly, watercraft future. emerging recreation and the engagement new steady, opportunity of millennials in provides remains in the participation

the in marketplace value deliver success always our forward. has going greatest Our in best price ability been embedded to

evolution both trajectory. be time, the this will remain on growth market. the and will accelerate which segments, product to of positive we to lines focus of working capitalize transitioning a both Fishing continue propulsion on A key same on in At growth

tailored strong largest is an which expectations. touches sets marketplace needs and stage all-important growing more the for recreation gateway that other. their than in and outdoor consumers outdoor activity, to new this Camping activity the among Participation any innovations recreation outdoor is millennials,

wilderness portable to with And foothold consumer. Jetboil, avid for doubled portfolio. of and avid this since strong, systems, nearly have joining camper the us be cooking acquisition the outdoor addition, a the sales our leader Camping In our technology gave brand the continues in

e-commerce segment. enhanced Looking digital more and ahead, engage our with to even consumer Camping we to will continue in invest marketing

retail by in positive enhanced momentum our driven in sales. trends e-commerce business has North American digital been Diving, and our footprint, positive in resulting In

other continuing to continue presence Diving well business by will simplify our We our strengthen to with - model. globally work our expanding as digital as work to business markets in

trusted the equipment with along profitability in enhance dive most innovation position brand. strengthen Diving world's efforts sustained SCUBAPRO's These will and growth and as

outdoor rapid experiencing change the summary, new for we're the industry. normal pace In of recreation the is

changes and anticipate to critical address ongoing to will be success. our ability Our

the Johnson Outdoors, quarter last next to creation. we value deliver the position to view, next a well and to long-term At year and enterprise growth or working built take brands thriving beyond businesses our that's long being for

on strategic in success leadership, of five drivers, understanding, markets, sources the constantly accelerated focus digital marketplace. in our enable innovation and key continued paths and Our helps our new consumer growth sustained sophistication evolving e-commerce,

industry. to in Going forward, will positions strategic technology outdoor sustain and leadership continue we increasingly make investments to smart, an recreation competitive market

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

David Johnson

Thank you, everyone. Helen. Good morning,

highlight a few to quarter. wanted I from items the

driven a X% third Helen sales growth As the over improved year-to-date year Fishing. prior by in for basis, improved quarter and the X% mentioned, on

for the tariffs due year was on from down Gross quarter third the XX.X%, components. margin quarter, Chinese prior primarily to

this on million we to continue potential We of estimate the exclusion $X fiscal million of to granted net year, impact were last quarter. a $X profits

the While for continuing we help operating the the we're to year's opportunities wait mitigate affected million $XX to components, prior other compared hear on exclusions with of going third for pursue $XX company forward. to tariff third Total tariffs quarter during effects other million was profit quarter.

the the volume-related debt in Operating quarter bad $X.X increase expenses. - sales year, higher by relate higher driven an sales prior during expenses expense, million and volume versus rose

position and strategic our In our investments we brands capability. success addition, on to for with them digital strengthen continue future increased

year's And of tax from was of an significantly the of quarter month last XX.X%. charges the basis, U.S. new effective during reflected benefiting XX.X%, reform year-to-date X%. This a X% was tax initial income tax than lower nine net which associated down improved implementation rate Net with rate on act. income the

growing growth current position our a year-to-date cash with healthy, out to the full strategically to future the providing pay rate invest to tax capacity year, continuing tax flexibility sheet we're expecting closing, consistent In be the us dividend For strong, drive balance financial the and cash our with debt-free while shareholders. to remains rate. to is

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

Operator

Anthony the Lebiedzinski first question Company. Sidoti Instructions] with from [Operator comes & Our of line

now is Your line open.

Anthony Lebiedzinski

Dave, wanted So to clarify, far just as tariff as the impact. I just -

the was the included government, the quarter? the was by Or that will just-reported in quarter? So be exclusion that that was in next granted actually

David Johnson

That in was the yes. quarter, included

Anthony Lebiedzinski

be XX%, by will you guys that? as then impacted the tariffs far yesterday, just-announced And as that

David Johnson

We that can to is first less are three than that tranche I will, impactful out the now. right tell you us there

but on that the it three us, come to to did. not the that, other but extent more will impact So just

Anthony Lebiedzinski

you sharing too without an you exciting Could have us products. of sneak you secret of a that provide Helen, new the preview pipeline with much sauce? mentioned with And some -

Helen Johnson-Leipold

planning But ahead full can't competitive, preview. and I and Well, Fishing at a a probably has say it's give ahead. planning you our much all more business I having too new that, we great gotten been and are historically, products, of pipeline is of sneak can

comes have have out. we to that's been one of to I it strongest when see it can But is all have. weapons you'll - you So say that our

Anthony Lebiedzinski

And than the the do there here, competitive few of other new products, in landscape, landscape as to the past far plan weeks has as obviously, else now? anything over competitive light is so that you changed

Helen Johnson-Leipold

and needed when those much toolbox aware is least as But attention certainly, of tool as we of new strong biggest to the are competitors possible. closely, look our to it, we anticipate in at threat. work in support get Well, innovation, pay our our products whatever competitive address and launch one the is segments, we and provide any to but and we obviously, try we very very

Anthony Lebiedzinski

this debt customer isolated the or And expense, Or Dave, just And you bad think for that lastly, more? one was just continue? isolated as higher possibly do far quarter? the could as is to this

David Johnson

track really the we've Well, debt had a interesting bad great on retail it's record because gyrations. all throughout

there's that took quarter, debt then and bad year we brought quarter we And a credit, expense one drove here then incident just actually, some had this was couple And the back. in that that. last - a we there so so things, we earlier

characterize isolated. be continuing we're would monitoring very I for But So diligent to that. as retail it environment,

Operator

from question George of the with Capital. next our And Imperial Kelly line

is line Your open.

George Kelly

for being what's much you. that What a are with mentioned remarks, is you that's been - times maybe and done? know how timeline for investments, I just And prepared the next? - - longer now So What year-and-half. few coming your you ongoing digital still what's whatever in still a several the

Helen Johnson-Leipold

would say is Well, that digital changing. environment always I the

what seeing continue allow will ever-changing think and to date, in ongoing, I I new it to be tools target that investing even you're and to ongoing. consumers, our mean, that's us

to it's investment be possible Also, use and in today's could also to our continued I would tools, think those in the making this investment. a it advantage. And expense, is I can is competitive compete be we our And use investment going a world. we sure necessary best in also, say to an just significant that so digital - way capability in

or digital goes. as categories far it the position leadership to as do we'll our get to to ourself So whatever keep takes in

George Kelly

a competitive maybe how bit What biggest do Just to view see What you digital? digital is a as the - advantage? that - opportunity wondering within about that. investments of you your area more

Helen Johnson-Leipold

Well, category it goes different - levels sophistication. every in has of we digital compete

shift, but they are So the be I mind, have know to channel competition we that as where capability, network, keeping in what targeting we have or consumers e-commerce with think than to our capability, certainly, better our have have and have that. to have we have we in and understand and to - using digital good the doing

media the think are vehicles have shifting, to be. used traditional and they not they strong I as And are as -

make products at target more We purchases. is all is online they and tune our showing in and even that - then go and more digital, have be research information using well good using this and as tool, to for with in-store the first new are decisions to millennial

So area it's critical us. a for absolutely

George Kelly

business, And summer. it despite pretty see your then was a I impressed quarter, weather challenging in grow Fishing been the early to on what's

about seen and inventories look all at weather if could And you Maybe, anything can you've you more do retail? the quarter? how share what talk So after recently? at

David Johnson

was weather had good pretty here. on, The but early a Yes. run we've spotty

business mean, looked for I things, at So Fishing the least, good.

in are - the channel. I think at fine retail inventories

I end to kind on us decent expect season So note. the of a

Helen Johnson-Leipold

well. fisherman the also, ahead kind plan of as But

And so spontaneous. not they're as

So they're hoping and planning be for good. weather to

be it on - might bad gets they're though it ahead they of even kind So already it of do planning better. weather, when do

George Kelly

quantify you from the then in the the two quarter And impact Can questions. last tariffs?

David Johnson

was $X.X It million. Yes. about

George Kelly

- in cost sold the the gross in goods And line? that's all to

David Johnson

Yes.

George Kelly

And Okay. has and last up this then before. me, come question from

think small, that's a you million M&A So I'm $XXX wondering asking not but very anything that. specific, about million cash. of there's And how I was annually. $X dividend just or about

going forward? been And it accumulating. just planning do so hasn't just cash? you Should there much - what's keep change how that how - the about I in on should Or think

Helen Johnson-Leipold

think for we always I'll are are And Dave been historically, looking in us well, Well, our but strategic. opportunities that chime heard would are we and you've this let as before, success I but we - acquisition. say I for from patient we again, has

come be see strategic an there continuing and market we And more but think will a forward and to makes basis when price we are ongoing the that on do at sense, evaluating things opportunities. opportunity going that an I will do research on

that is ongoing. So

are big - money we of we again, that have to big, are lot mistakes we if cash. I get you, And right agree with sales I and growing we the use kind to a to could there. make be the just not think the right of acquisition. decided we that's it's I sitting growing

different It's going a does actually to put us in in better forward. not position not situation, but a in use a way we're than being going better it that

want add if know So Dave, I to that. to you don't

David Johnson

think that's I perfect.

continue we the as we look for that. will pull. levers grow dividend. will opportunities one think the to I to try we of said, That But be to Helen continue invest to

Operator

time, And this on line. further any [Operator I'm not the questions showing Instructions] phone at

question-and-answer I back Helen that does the would Johnson-Leipold now to to So conclude remarks. today's session. turn any like further call for

Helen Johnson-Leipold

Just joining us, have want say great for everybody, day. to a and you, thank

Operator

Ladies This conclude conference. does today's you for participating in program. and gentlemen, thank today's

disconnect. a You great all day. have may Everyone,

Johnson Outdoors (JOUT) 4 Aug 192019 Q3 Earnings call transcript