Earnings call transcript Q3 2023

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Operator

Hello, everyone, and welcome to the Johnson Outdoors Third Quarter 2023 Earnings Conference Call.

Today's call will be led by Helen Johnson-Leipold, Johnson Outdoors Chairman and Chief Executive Officer. Also on the call is David Johnson, Vice President 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 call. simply off drop

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

Pat Penman

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

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

listed and with Exchange Securities uncertainties and include risks These our those filings and press the release Commission. in

contact questions Johnson If additional you myself. Dave or have following call the please

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

Helen Johnson-Leipold

and quarter will share for year, our we'll your questions. my Good begin and hoarse want got review then I'll thank just joining I voice. us. take my I'll overview on excuse businesses. to financial performance and with little everyone, an Pat. the and I'll Dave on then but the do today, perspective bit of outlook a morning, voice highlights, you a for and Thanks, best. I've

were third over million quarter. the year's third our up in ending prior XX, in compared sales nine-month $XXX period. last company Sales quarter million to X% year-to-date fiscal Total June $XXX.X declined XXXX fiscal to X% year

quarter $XX.X year in million the to million before $XX.X quarter. taxes increased Profit slightly for third prior income the versus

before profit million taxes prior period period. year-to-date versus $XX year-to-date $XX.X million in the the was For income

of the growth the from competitive of importance moderate and to the reinforcing our brand. continue the innovation time, critical same for the continued years. levels demand of strong the continues consumer seeing to marketplace past few pandemic-fueled At We're be success

line new Minn remain supporting In at of all-new ultimate year's exciting giving Fishing, QUEST this Kota to We we technology in world leaders. fishing being in motor control environment. largest tough the trolling announced innovative broad the products series the and a brushless committed anglers trade show announced recently ICAST

launched our of Minn restage experience. Humminbird Kota of seamless integration motors enhancement for also more technology bow-mount an products the suite the its enhance updated products. trolling all to fishing looking to We're and unify the ways in always with angler

Humminbird into at the launched fishing both one Also Kota Minn App anglers command unprecedented together was dashboard devices ICAST, to boat. bring and give their One-Boat Network of

and Sustaining our top market remains priority. a innovation leadership position fishing competitive a

best the just work about to of experience the announced products on new we to will fishing new give excited breadth are anglers a possible. and as continue innovation of pipeline We we've

were business, Diving quarter. this flat our In sales

However, Asian showed from growth year-to-date period positive markets. especially our European and

to innovation ensure and our brands. to remains dive continue will the world's We leverage trusted SCUBAPRO most brand-building efforts

and markets innovation committed and slowed. in at Camping time and slowdown. long-term a spending to post-pandemic business through to Recreation have two plays opportunity our due these to critical consumer-focused Retailers product softening to shelf the is has face Our Watercraft that. continuing businesses role still the in We're work on the same consumer

cutting and to the the pedal technology world is power drive that the level. propel this Old power-assisted to shipping contains This to announce received honor combines to experience Town to year's is ePDL+ of ICAST year. excited pedal Old Town new drive. Boats early its Watercraft revolutionary Best at and I'm technology that and to word next the ePDL+ and Old or Town next the This a fishing

sustained ongoing be markets. of to success position innovation our the hard them identify for evolving leadership brands, to continues marketplace, consumers, and across sources our our in in and near-term paths growth continued of to working all the While challenged we're new understand investments

Our key goal delivering of ensuring long-term growth. profitable sustained progress our toward to

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

David Johnson

for Thank pleased a price to XX.X% to from items everyone. year. and quarter improve and gross improved you, materials the costs. quarter's freight primarily continue margin and in of want lower and increases have to efficiencies our recover year's Helen. margins few quarter, The I the we'll gross to going. strong started maintain from We're Good gross margins last that to highlight to morning, look XX.X% ways due third

deferred $X.X expenses $XX.X market, entirely in the income. plan expense increased prior third in primarily increase to offset related the in compensation to million versus marketing is other Operating million a third year assets due to quarter quarter, which

the Additionally Earnings before taxes higher up profit to increase warranty operating third $XX.X between quarter million decreased $XX.X advertising the year contributed million for also promotion quarters. prior versus in quarter. Resulting and the prior versus costs fiscal quarter. expense the to and slightly

versus The was quarter prior million. year the the $XX.X Net for third effective period. and quarter XX.X% income million $XX.X tax quarter's third fiscal of was the nine-month for rate XX.X% was

June, from We'll through generated proactively manage levels to capital we the position operations cash continue appropriately. While strong high we're wind inventory and season. working have working down levels still through flow as our we inventory

margins. improve and Looking operational on remain ahead, we strengthen operating focused efficiency to continuing our

our the no us to confident consistently strengthen our to and debt to to business. Our remain cash deliver have to cash and enables shareholders. balance invest dividends position in long-term our ability in pay We value opportunities out sheet continues

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

Operator

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

Your line is open.

Anthony Lebiedzinski

taking – Hi, guys. Yes, and Good for first everyone. question. morning, thanks the so

know a think I quarter, just look the I Fishing versus your guess overall as you guys just especially you unit pricing speak I at in pricing, question broadly the segment. volumes? here. talked of about But first can to you housekeeping So type

David Johnson

general quarter – it's are the volumes for would I in Anthony flattish. Yes. say unit

in the so seeing profit revenue and pricing And related. we're increases gross is

Anthony Lebiedzinski

it. Got

Thanks, Okay. Dave.

of Okay. expectations. And up was margin our then your gross ahead nicely

decreases build material raw now costs. sequentially here think normalized can that you in ocean you've your have think costs you do – freight So seen I

So to as we wondering from the about how gross should trajectory think margin – here? just

David Johnson

at Yes. there I going It's of question. lot play forward. factors a a good mean are

good think for easing forward. activity forward I to probably promotional be do I expect going is going too. cost us

So being our factors is But there's intention play. lot going again definitely of above at forward. a XX%

Anthony Lebiedzinski

There's of takes Right. there. puts and a lot Understood.

Okay. good to the that But see certainly moving in right direction.

increase operating of was as called forward? will those that as of I out those Now know far expenses. advertising you maybe and forward do warranty increases, far think and how costs as types you whether your about expenses, you Can or expect talk promotion that some much you going going as an moderate higher

David Johnson

the comp expense about advertising for expense of of is a you increase. quarter, half exclude of Yes. increase in is promotion $X there's that the million about if that deferred I half mean, about operating the that's warranty

and promotion that our and think the front I guess products again, continue on some are I to make warranty forward. advertising ball no for forward. moderate. as would moderate would be for robust I crystal that, going marketplace us will I to would think there's sure going everybody. compete in to we center But expect Again, start but

Anthony Lebiedzinski

Got it.

has a they're hit that? far I hardest mean seeing the inventory just Camping far I and been But word could replenishments, as Watercraft as of you're certainly just most Camping levels here how if that from and what assume as retail, then about the the in you talk probably you retailers at see as the fullest as And Watercraft. Okay. do late.

as guess think will bottom of to that a that where I you follow-up So kind do out?

Helen Johnson-Leipold

I tunnel of have dealing of even products retail, at exciting Camping we have the the business. into that Watercraft, will you're right, been better are the and with do most new some for go Camping coming Well, seeing are And Watercraft think, end the Watercraft inventory market. we get But some hopefully, light the ones we as forward. the

an keep we'll on So that. eye

in has move But but think demand good think there Fishing and as retail still the the the others. I better certainly is in good is healthy products, place of been in fuel category there's I inventory we'll end that but activity is we year. is shape healthy, Fishing a been, more feel than by said it and to market. is that -- and have that we versus but some we be the It's softening, healthier softening,

altogether. shape. different is But good story it's in Diving a

different what's next. about is activity again, bringing out But to job And our retailers to it the category. put pull is it excited through. get there by new So innovation to

So be on we'll talking hopefully, which But it in good depends season, you're by market about. the the of shape. end

Anthony Lebiedzinski

All right.

to Sounds good. release, in question in about the guys press opportunities strengthen strategic business. talked last My investing you the

the opportunities have wondering seeing, future. could wondering, if you maybe what you as you on in So possible see you know I for you're a as talked far some I while, could far expand on about of that if that just as M&A? was as guys the but that expand

Helen Johnson-Leipold

the things. situation chain opportunity, are from business think and looking strengthening supply so can we I I our benefit Well, that two there's on for we efficiency. improving mean, focused

So strategic opportunities. And very activity there. with it's opportunities research letting think less are and business out strategy in fit our again And to externally But do not the that the up on there's again we're I for always in we to our looking they respect, again strengthening going have our visibility long-term. marketplace. -- and on

Anthony Lebiedzinski

you. Got

do you X% you And your mean, been as to of I think typically R&D should up guess that? around as quick that follow-up guess I I think you then will I mean need continue, step Okay. about spending? far that think expenses, we as do How or a that, they've to revenue?

Helen Johnson-Leipold

competition innovation we -- when of lot even as market. becomes it's times there's during said, important a challenging a I of Again think more

expect that point. So likely to growing from I most be would we think that

Anthony Lebiedzinski

Understood.

much, thank Well, luck. Okay. best you and very of

Operator

question. Please next our stand by you. for Thank

line Our of next question comes Riley. with the Glaessgen Anna B. from

is line open. Your

Anna Glaessgen

my Thanks morning. good taking question. Hi, for

how you trying if inventories demand or real in going color the in on understand First, a could as on field? sense to like to of versus some sell-through, retailer any light POS on distorted we're I'd provide of get what's perspective end are -- sell-in market

Helen Johnson-Leipold

been pull-through it than But it reflects demand is and -- piece again lower again but standpoint been we that the a the more categories. business our during has from so a has and is seeing the level challenged, demand at resilient pandemic, think that pretty we has we other than and are business of the Fishing on the actually Fishing that across seeing the demand Watercraft the -- I -- consumer one been board. Well, comments are the softening

So tighter little it's seeing think than either little to pulling Watercraft normalize the that from normalizing that demand them. a business, that I But starting the of consumer work swing of later because is now, going that a the through the on is bit most. than And helping to the pandemic. through, we're do rest we're which our

Anna Glaessgen

a more a And you that? come the Did into Was from it. there clarification. with benefit backlog? of Got any quarter

David Johnson

the into we're down orders. now coming but backlog We of had of a quarter, normal that levels bit to like --

yeah, point. I level we're in at this activity So, think normal a of order

Anna Glaessgen

Got it.

a as still basically the we it inventory be sell-through. or move Watercraft So or quarters, like about forward relatively Expiring sell-in, balanced places coming you where thinking there's excess inventory? normalizing should

David Johnson

Right. Yeah, yeah.

Anna Glaessgen

me. Super helpful. Thank it. That’s Got you. all from

Operator

no in you. I turn questions showing the the back like Thank to further now Helen to closing Instructions] queue. call [Operator remarks. I'm would for

Helen Johnson-Leipold

great Okay. us, for joining hope to and day. thanks everybody Well, a I you have

Operator

gentlemen, today's call. you this Ladies participation. Thank and concludes for conference your

now may You disconnect.

Johnson Outdoors (JOUT) 3 Aug 232023 Q3 Earnings call transcript