JOUT - Earnings call transcript Q2 2020

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Operator

Hello to everyone and welcome to the Johnson Outdoors Second Quarter 2020 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. is call This Instructions] being recorded. [Operator

implies participation consent to call. this recording our Your

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

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

Patricia Penman

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

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

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

or If Dave you the contact please have questions, additional Johnson me. call, either following

to to It is pleasure my now call turn Helen Johnson-Leipold. over the

Helen Johnson-Leipold

everyone. ongoing morning, review the key overview quarter on we'll months, things financials help as us. questions. six Thank we our with for first outline to impact review turn its and work begin Good of and to financial joining results your our mitigate the of COVID-XX initial a effect. priorities, the brief I'll take you for businesses over to I'll Dave then and

to in lower X% and differently declined million sales. of margins the quarter. earlier, some Dave factors during helped cost-cutting Improved $XXX.X discuss offset section. sales some to pandemic million improved by this some the for profit the the behind and will impacted company this business increase later. Total quarter some the less, his was Operating $XX.X more, second Each impact efforts quarter,

six-month ordered mandates, sales, was $XX.X operations. year temporary and before led performance. favorably Government suspensions taxes at first year's profit income basis, On our per income year-to-date many stay-at-home to all share. due prior very million strong period, to quarter of compared net Net a this diluted $X.XX or to

to Diving, the our most due around COVID-XX of first world. spread the rolling global business was affected

As mandates. March, have production early Watercraft globe the by a in late April. to Fishing negatively ordered Camping stay-at-home government was in result guide impacted temporarily mid- markets followed by suspended across and been

timing Due impacted the season, of we has primary the result of be all to of as to expect our a significantly at disrupted heart third this, dramatically quarter COVID-XX. selling the and

employees was sanitized, During put and these with were health and good guidelines has strict COVID-XX primary and unsettling and consistent while and safety advanced. on with directive times, personal hygiene deep processes working cleaned been operating and home for location CDC every employee hiatus, our production place, shipments procedures from focus, temporary into

applicable ramp a needs. and business of clarity and to state management priorities us, longer-term requirements, to with result situation this team my has these at changing Despite location. in operations measures, government able up we and by closely to demand each all of with bring aspects consistent rapidly As together, physical near-term monitoring vary which the levels are between worked distance

thus far. consumers while warm beginning recreation ease, year's be restricted Government to And will this outdoor mandates outdoor are enjoyed activities season have constricted. these our by just weather

in-market to capacity to implementing for sales. and is e-commerce capability be opportunities. of optimize Our year marketing remainder this plans digital designed now strategies and our to the focus the leveraging Key maximize and and will

the greater are out and outdoor our hope year and have eased, there outdoors, great experience able full be industry and there COVID-XX When will clarity we clear impact view mandates Johnson recreation and restrictions the the outlook. are on to once to on travel to our thus markets them. Outdoors Once-stay-at-home get of a consumers the for again on fuller on

remains unwavering stronger a building Importantly, to long-term enterprise thriving ever. commitment our than

role overcome critical a the Now, challenging stronger as better and emerge times helping future. us will and always, for innovation play in positioned consumer-driven

things over Dave. turn I'll to Now,

David Johnson

Thank morning. you, Good Helen.

this disruption our and COVID-XX to said, life declines of The key core dive which to quarter. Helen government virtual has closures drove temporarily widespread of much the production for dive diving. come and a dive cost global impacted specialty primary destinations mandates in halt As support suspended and channel are Travel operations have dive equipment. to markets shops, forced the retail

just versus to of dive anticipate recover, unclear will now, it's long for gradual, markets it will but immediate. it As we take how be

largely X% minimally fell Fishing declined affected during introductions pacing new production comparison. to of Watercraft Camping year-over-year by year quarterly stay-at-home XX% nonessential from bottom cutting were the incentive spending, product reducing quarter, sales quarter. unfavorable quickly production and expenditures orders deferring and last We to moved and demand. prior shipments and sales The led compensation. year the on by capital line due the to impacts COVID-XX protect

are incentive a in expense $X.X impact Operating plan which due favorable declined million $X.X million quarter, totally other And primarily in compensation declined compensation $X.X offset adjustments the million. to income. assets, the to company's deferred valuation costs from

addition, reductions executives and Board In have taken pay. voluntarily the in

a Going quarter, keeping quarter in of demand key capital was million working forward, more favorable with scaling working the operations capital the on we're end in to focus each year. than to prior $XX check. At

through our the work Looking in as make to beneficial remains will ahead, cash value balance we shareholders. strengthening for continuing forward, position drive healthy our and and debt-free challenges sheet our investments while business smart strong be

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

Operator

question Anthony first line Lebiedzinski your Sidoti. [Operator from Instructions] from And the of comes audio

Anthony Lebiedzinski

I few you getting difficulties call to And for minutes Yes. joined call. Good I questions. late thank and hope ask the and technical well on the you're some both the morning, I had opportunity a healthy.

of but then this business and give how already, your early through can March So have us performed addressed the outbreak? may a you COVID-XX you after sense

Helen Johnson-Leipold

Helen. is This Yes.

season. I momentum into think we had selling quite a bit going our normal of

a felt we quarter. first good had pretty our we say would I that about So position. strong

numbers year-to-date hit when COVID So really different good. were a quite was story. obviously And that

with selling our important exactly season our which -- key. with overlapped it is So

we good and got the felt impacted. So we about coming season then into

the restricted on a got season other end. we've So

have is have to we'll wait but good, time. see point goes. little all the this But optimistic. and in always demand can remainder future But we of I'm how we we're at that sure, the of or good to view a which be year pent-up the seeing don't a bit So

Anthony Lebiedzinski

Sure.

Okay.

is gross the product going that? how as to gross in more margin far improvement So anything bit a about think the second talked can forward? the know mix about the pricing. that? as quarter that? here, drove you margins base think about should else touch just What little you we and And But there about I

David Johnson

little promotion I activity, pricing to It's and mostly been going to gross expect mix year. would tame tame bit like huge I expect due forward. Yes. businesses. margins kind going necessarily said a forward as the stronger But gross don't last activity improvement have I in margin pretty well. Costs a of versus across

Anthony Lebiedzinski

Thanks for that. Okay. it. Got

can the which wondering the economy interested jewel. on the recession you is your your Obviously, in of I'm each now talk just expected fishing particularly so the So with impact segment crown in about different segments?

possibly trading to just or for down a of So an to models. as spending some your people or could get Ulterra, be wanted sense Ultrex customers there be $X,XXX to an willingness to lower-priced $X,XXX the

business a get your to just in how about a we So of sense should recession? think wanted that

Helen Johnson-Leipold

a side of of have a things. core obsessive-compulsive avid we very the group they're little fishermen on and Well bit

to And dedicated are the so season. they very

a motor. back prior, we -- they is But have we look will not boat, if I different than actually really buy which buy people may the very we at recession they but or don't better had motor in to and if always a that in who their boats today. may get trade think they

could a accessory So be new purchase. item or we either we get involved an boat in

of ways consumers that So purchase we've got our a lot products. different can

bigger is season. given we've got I think consumer the think I a constricted issue loyal So base, our very

we a big so And our chunk of selling missed season.

they is, get The question come that's want can big those make that and they lose there. purchases, we in? to pretty them unknown. That's out question a Did a I back the they -- we've loyal base will up? will got But or

the things pretty impacted. say get they're side on of lot but pent-up reason people all But recession as avid. of I would consumers of also again to variables of impacting. other our lot the of But well, things obviously, think a being lot want a fishing, you've is have a out core got I a why so

-- it's answer. by looking pretty forward, you can there's hard my So tell to predict as

Anthony Lebiedzinski

expect And that. for know those they're as, would Thanks briefly far maybe perform? the to other to you how Yes. could as on touch you well, as if compared fishing, but Sure. just far I segments smaller

Helen Johnson-Leipold

have COVID. every one of right timing the and was Well in season core set of of And a it I companies. our of pretty seasonal impacted because our think was we businesses

the we March. businesses There's impact. all So down that was probably in of -- were -- shut the some there's biggest during

And So a different They across is the early this as diving Dave got there's globe. there. lot across has said, in impact board But business. pent-up some very of hit demand. the variables by

So travel they also have involved.

they you've they've hit but would you can't our go good to these been Watercraft little restricted camping a kind days. of harder. -- probably then businesses, out And got So gotten say, which houses are and we've

pretty the So industry, got is hopefully impact we've depending some but there's some pent-up the loyal different by business demand. But consumers. on

that they I when can ready get think recreate. So we'll all outdoors is be and say we them can for

Anthony Lebiedzinski

out the have far then as you anything so couple segment And a to as of call more seen if this at point? okay. it, questions notable Got I in may, competition fishing

Helen Johnson-Leipold

you're have haven't If Obviously, gotten referring out the motors business, there we activity. new are seen a and new of motors to lot placement.

things what's I'm and gets the out sure has variable COVID the stores more it's everything big to mix out going think of get as a put can I see how and going, opened really are in are on really everybody we'll there. hard then consumers to So back determine the

Anthony Lebiedzinski

lastly Got priorities it. base this your touch allocation at as -- can And you capital as on point? far

David Johnson

continue to of money, I appropriately. costs same mind in with an they that ways in Yeah. the capital they we do can, be we the Sure. that tool more mean, before. at toolbox; as were what want I terms pretty we to mean, of continues still save to I top remain is to dividend to M&A save Paying where look but much we're our money. important allocate think in

we're cash So the really be and so ready, know as interesting it we'll shape. in of our good see marketplace, $XXX balance million in how out all you but got we've be sheet plays will to on this

Anthony Lebiedzinski

absolutely. Yeah, Right.

far seen still are as So high? I mean, those are activity, multiples the as or you come have down, -- they M&A

Helen Johnson-Leipold

on I soon the there. time COVID during impact issues of a see but certainly the lot out too to happening it's think, of little that, a

things at early do. right opportunities that now But looking. multiples. our are We've it's look and There think You're I come out hoping got that eyes really about. to

Anthony Lebiedzinski

last if may. actually question one And I it. Got

said, you the has been business, around? So, recreation no perhaps At to from impacted divesting obviously, last about COVID-XX of the segment some but point, segments being has Watercraft that in four segment, the still challenged would couple or patient of standpoint. all are and be that most that trying you to question profitability turn willing it, the years consider a the

Helen Johnson-Leipold

we're Well, selling. not no at at this certainly point, looking

key. innovation got we focus a business bit the and reenergize but with plans whole on are our is think I about forward future business. look little that we the good that to we've got doing to like And COVID, interrupted still that feel the we've and plans the with

Anthony Lebiedzinski

All it. luck. Well, best and of right. you Got thank

David Johnson

Anthony. Thanks,

Operator

Instructions] [Operator

Helen Johnson-Leipold

Okay. Operator, us to safe healthy. for and like stay thank stay Thank joining you. everybody thank I'd you. and

Operator

day. today's gentlemen, wonderful for Ladies concludes conference. you your Thank this a and participation and have

now all may disconnect. You

Johnson Outdoors (JOUT) 9 May 202020 Q2 Earnings call transcript