Johnson Outdoors Inc. has announced higher sales and increased net income versus prior year for the Company’s second fiscal quarter ending March 31, 2023.
“Supply chain challenges have significantly improved, and we continue to work hard to fill customer orders in our Fishing business,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer. “Diving continues to benefit from an increase in travel. Conversely, our Camping and Watercraft Recreation businesses are experiencing softer markets as they stabilize after high growth experienced during the pandemic. Looking ahead, while we continue to monitor consumer demand and navigate uncertainties in the marketplace, we remain focused on sustaining innovation leadership for the growth and success of our brands.”
SECOND QUARTER RESULTS
Total Company net sales in the second quarter increased 7% to $202.1 million compared to $189.6 million in the prior year second fiscal quarter. Key contributing factors include:
- Fishing sales increased by 20%, driven primarily by price increases and improved supply and component availability which allowed for fulfillment of orders driven by solid customer demand
- Increased product availability in the current year, as well as continued growth in global travel post-pandemic helped Diving sales increase by 12% over the prior year second quarter
- Camping revenue decreased 28%, due to high retail inventories and a decline in consumer spending
- Watercraft Recreation revenue declined 44%, reflecting significant reductions in the overall market
Total Company operating profit was $11.4 million for the second fiscal quarter versus $15.4 million in the prior year second quarter. Gross margin was 37.3%, compared to 36.2% in the prior year quarter. The margin improvement was due primarily to price increases and efficiencies from increased sales volumes. Operating expenses of $63.9 million rose $10.8 million from the prior year period due primarily to the impact of higher sales volume-driven expenses, as well as higher warranty, compensation, professional services and deferred compensation expenses between quarters.
Profit before income taxes of $19.9 million in the current year quarter increased $6.7 million from the prior year second quarter, driven primarily by a $10.1 million increase in Other (income) expense, net year over year, which more than offset the decline in operating profit. Included in the current quarter other income was a $6.6 million gain on the sale of the Military and Commercial Tents product lines in the Camping segment, which closed on March 17, 2023. Additionally, net investment gains and earnings on the asset related to the Company’s non-qualified deferred compensation plan improved by $3.3 million, fully offsetting the increase in deferred compensation expense in operating expenses above.
Net income for the quarter was $14.9 million, or $1.45 per diluted share, versus $9.9 million, or $0.97 per diluted share in the previous year’s second quarter. The effective tax rate was 25.5% compared to 25.1 percent in the prior year second quarter.
Fiscal 2023 year-to-date net sales were $380.5 million, an 11% increase over last year’s first fiscal six-month period. Total Company operating profit declined to $16.9 million compared to $29.2 million in the prior fiscal year-to-date period. Gross margin declined to 36.3% in the first fiscal six months versus 37.7% in the prior fiscal year-to-date period. Operating expenses were $121.3 million in the six-month period ending March 31, 2023, an increase of $21.2 million from the first half of the prior year due to the same volume-related and variable costs noted above for the quarter.
Profit before income taxes for the year-to-date period was $28.1 million versus $27.8 million in the first six months of the prior year. Other income increased by $11.3 million helping to offset the decline in operating profit year over year. As noted for the quarter, other income in the current year-to-date period included a $6.6 million gain on the sale of Military and Commercial Tents product lines as well as $2.8 million of gains on deferred compensation plan assets compared to losses of $0.7 million in the prior year-to-date period.
Net income during the first fiscal six months was $20.7 million, or $2.02 per diluted share, versus $20.8 million, or $2.04 per diluted share, in the prior fiscal year-to-date period. The Company’s effective tax rate increased slightly to 26.2% in the current year versus 25.3% in the prior year six-month period.